/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/031017.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, October 17, 2003, Vol. 7, No. 206 Headlines 866 3RD NEXT: Brings-In Katten Muchin as Litigation Counsel ADVANCED COMMUNICATIONS: Moving Forward with Restructuring Plan ALAMOSA HOLDINGS: Majority of Noteholders Back Prepackaged Plan AMERICAN FINANCIAL: Will Publish Third-Quarter Results on Oct 29 AMERICAN PLUMBING: Receives Court Approval of First Day Orders ANC RENTAL: Completes Sale of All Assets to Vanguard Car Rental ANC RENTAL: Balks at Deutsche Bank's Demand for $5.25MM Payment ANNUITY & LIFE: Look for Third-Quarter Results on November 13 ASBURY AUTOMOTIVE: Provides Prelim. Third-Quarter Ops. Results ATSI: Ch. 7 Trustee Hires Peisner Johnson as Tax Consultants BALDWIN CRANE: Nina Parker Serving as Bankruptcy Attorney BUDGET GROUP: Lease Decision Period Extension Hearing on Oct. 24 CELLSTAR CORP: Third-Quarter Results Enter Positive Territory CERUS CORP: Baxtel Capital Sues Company Seeking Debt Repayment CERUS CORP: Initiates Restructuring and Cost-Cutting Efforts CHANNEL MASTER: Taps CB Richard as Manufacturing Facility Broker CHESAPEAKE CROSSING: Wants to Use Wells Fargo's Cash Collateral CHI-CHI'S INC: Selling All Assets to CC Acquisition for $4 Mill. COLLINS & AIKMAN: Enters into Neutrality Agreement with UAW COLLINS & AIKMAN: UAW President Commends Company re Agreement CONSECO INC: CNC and CFC Dockets Will Be Maintained Separately CORNERSTONE PROPANE: Commences Search for Bidders for Assets CREDIT SUISSE: Class M Notes Rating Cut to Junk Level at CCC DAN RIVER: Sr. Lenders Waive Covenant Violation Under Credit Pact DELTA WOODSIDE: Will Publish First-Quarter 2004 Results on Tues. DELTRONIC CRYSTAL: Taps Nowell Amoroso for Legal Services ENRON: Enron Acquisition Seeks Clearance for Reemay Settlement EXIDE TECHNOLOGIES: Committee Earns Nod to Examine R2, et al. FEDERAL-MOGUL: Balks at Russell Reynolds Retention by Committees GENSCI ORTHOBIOLOGICS: Bankruptcy Court Confirms Chapter 11 Plan GLOBAL CROSSING: Court Disallows 335 Unsubstantiated Claims HQ GLOBAL: Court Confirms 2nd Amended Joint Reorganization Plan INFOUSA: Third-Quarter EBITDA Slides-Down to $17 Million INTEGRATED HEALTH: IHS Liquidating Want More Time to File Report INTERFACE INC: Look for Third-Quarter 2003 Results on Wednesday INTERNATIONAL PAPER: Martha Finn Brooks Elected to Co.'s Board IVACO INC: Canadian Court Extends CCAA Stay Until November 14 JACK IN THE BOX: Corp. Credit Rating Slides Down a Notch to BB K2 DIGITAL: Exploring Alternatives Including Asset Liquidation KAISER ALUMINUM: Seeking Approval of Agreements with Insurers KEYSTONE AUTOMOTIVE: S&P Assigns Low-B Credit & Debt Ratings KINGSLEY COACH: Mantyla Reynolds Expresses Going Concern Doubt LEAP WIRELESS: Wins Approval to Tap Falkenberg as Expert Advisor LNR PROPERTY: Commences Tender Offer for 10-1/2% Sr. Sub. Notes LNR PROPERTY: Agrees to Sell $300 Million Of Senior Sub. Notes LORAL SPACE: Unit to Build New Satellite for PanAmSat Corp. MAGNATRAX CORP: Plan Confirmation Hearing Set for October 28 MARV I & II: Fitch Affirms Ratings on Various Note Classes MAXXIM MEDICAL: Gets OK to Tap Thomas Howell as Tax Consultants MCALISTER ENTERPRISES: Case Summary & 8 Largest Unsec. Creditors MEASUREMENT SPECIALTIES: Joseph R. Mallon Steps Down from Board MEDIX RESOURCES: CEO Darryl Cohen Named Chairman of the Board MILLER INDUSTRIES: Taps Joseph Decosimo & Co. as PwC Replacement MIRANT CORP: Wants Approval of Amended Prepetition Credit Pact MUZAK HLDGS.: S&P Keeps Negative Outlook on Low-B Credit Rating NEW CENTURY FIN'L: Applauds S&P's BB- Credit and B+ Debt Ratings NRG ENERGY: Gets Nod to Implement McClain Bidding Procedures OMNOVA: Weak Oper. Results Prompt Fitch's Ratings Downgrade OWENS & MINOR: Third-Quarter 2003 Results Reflect Strong Growth OWENS-ILLINOIS: Holding 3rd Quarter Conference Call on Wednesday PETROLEUM GEO-SERVICES: Jr. Subordinated Creditors Approve Plan PETROLEUM GEO-SERVICES: Senior Creditors Approve Workout Plan PHIBRO ANIMAL: S&P Upgrades Junk Corporate Credit Rating to B- POLAROID CORP: Committee Sues Judith Boynton to Recoup $1.2 Mil. QUINTEK TECHNOLOGIES: Reports Progress on Debt Restructuring REDBACK NETWORKS: Sept. 30 Balance Sheet Upside-Down by $79 Mil. RELIANT RESOURCES: Closes Desert Basin Plant Sale to Salt River RIDGECREST VILLAGE: Weak Operating Results Spur Bond Rating Cut SAMSONITE CORP: Appoints Six New Members to Board of Directors SEL-LEB MARKETING: Loan Agreements with Merrill Lynch Terminated SIEBEL SYSTEMS: Third-Quarter 2003 Net Loss Reaches $59 Million SIEBEL SYSTEMS: Inks Definitive Pact to Acquire UpShot Corp. SIEBEL SYSTEMS: Acquires Motiva Inc.'s Assets SK GLOBAL: Wants Removal Period Extended Until December 19, 2003 SLM PALM BEACH: Case Summary & 5 Largest Unsecured Creditors SONO-TEK CORP: August 30 Net Capital Deficit Narrows to $620K STILLWATER: Inks Secondary Metal Sourcing Pact with Power Mount STOLT OFFSHORE: Lenders Extend Covenant Waiver Until November 26 STOLT OFFSHORE: Third-Quarter Net Loss Widens to $22 Million STONE & WEBSTER: Court to Consider Plan on October 31, 2003 SUPERIOR TELECOM: Plan Confirmation Hearing Set for October 22 SUTTER CBO: Fitch Takes Rating Actions on Series 1999-1 Notes US AIRWAYS: Reaches Stipulation Settling ABN AMRO Bank Claims U.S. WIRELESS DATA: June 30 Working Capital Deficit Tops $1.5MM USG CORP: L&W Wants to Purchase Secret Building Supply Business VIALINK COMPANY: Notes' Maturity Extended Until April 9, 2004 WEIRTON STEEL: Projected Distribution to Creditors Under Plan WESTERN WIRELESS: Will Host 3rd-Quarter Conference Call on Thurs WOLVERINE TUBE: Will Publish Third-Quarter Results on October 31 WORLDCOM INC: Court Approves $33-Mill. Asset Sale to Bracebridge WRC MEDIA: Names New Executives and Creates New Operating Unit * BOOK REVIEW: Competitive Strategy for Health Care Organizations: Techniques for Strategic Action ********* 866 3RD NEXT: Brings-In Katten Muchin as Litigation Counsel ----------------------------------------------------------- 866 3rd Next Generation Hotel, LLC wants to employ Katten Muchin Zavis Rosenman as Special Corporate and Litigation Counsel in connection with the corporate legal matters that may arise in the Debtor's reorganization proceeding and in interim hotel operations. Specifically, the Debtor expects Katten Muchin to provide services including: a. representing the Debtor's estate in connection with researching, analyzing and prosecuting any and all claims that may exist against others in regard to the past and present operation of the hotel, including Marriott International, Avendra LLC and vendors who may have engaged in commercial bribery in regard to this hotel, and others against whom the Debtor may have claims; b. providing all corporate legal services related to, or necessary for, the Debtor's reorganization, including interim operation of the hotel during the proceeding and contractual arrangements relating to that operation, on- going ownership legal matters which may require specialized real estate or hospitality industry legal knowledge during hotel operation, transition to other uses and/or shutting down of the hotel, and assistance with specialized hotel aspects of motions and orders in this proceedings and in any eventual proposed plan; and c. providing all other legal services to the Debtor necessary to fully perform the foregoing services. K.C. McDaniel, a partner of the firm of Katten Muchin, reports that in exchange for their services, will bill the Debtor with: Partners $400 to $650 per hour Associates $185 to $440 pr hour Paraprofessionals $65 to $180 per hour Headquartered in New York, New York, 866 3rd Next Generation Hotel, LLC, owns a commercial condominium unit located at 866 Third Avenue, New York, New York, which premises are maintained as a hotel and operated under the name "Midtown Courtyard by Marriott." The Company filed for chapter 11 protection on October 09, 2003 (Bankr. S.D.N.Y. Case No. 03-16375). Gerard Sylvester Catalanello, Esq., and Lawrence P. Gottesman, Esq., at Brown Raysman Millstein Felder & Steiner LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed over $50 million in both assets and debts. ADVANCED COMMUNICATIONS: Moving Forward with Restructuring Plan --------------------------------------------------------------- Advanced Communications Technologies, Inc. (OTCBB:ADVC) is in line with its strategic plan to restructure the Company, and has already taken its first proactive step towards turning ACT into a valuable operating business. The Company's access to capital under its equity line of credit facility with Cornell Capital Partners, L.P., which became available on July 31, 2003 when the SEC declared its registration statement effective, has enabled the Company to begin restructuring its outstanding debt with creditors and clean up its balance sheet. "We have either settled or are in the process of settling a majority of our debt obligations with our creditors," said Wayne Danson, ACT's President and CFO. Danson continued, "Our objective is to have the company's obligations significantly settled and discharged by the end of the year. While this goal may be aggressive, management is working conscientiously towards attaining this result." The Company has settled over $800,000 of debt obligations with creditors since September. As part of ACT's overall reformation, the Company is actively pursuing the acquisition of one or more operating businesses with a proven product and dynamic management. This process has just begun and the Company does not anticipate any meaningful transactions until the first quarter 2004. "We need to restructure the company's financial picture before we aggressively pursue our expansion plans," said Danson. Cornell Capital voiced their support and offered their availability to assist ACT in finding appropriate business expansion opportunities. Management is also considering the possible future spin-off or sale of its rights to the SpectruCell product, which include the exclusive marketing and distribution rights throughout the North and South American markets. "We are actively considering these possibilities as well as other options in an effort to provide multiple sources of growth for the company and value to our shareholders", said Danson. The potential spin-off or sale of the rights to the SpectruCell product is consistent with management's vision of a new and diverse Company. The Board of Directors expressed excitement about the future possibilities and new direction of the Company. Advanced Communications Technologies Inc., owns the exclusive marketing and distribution rights throughout the North and South American markets to SpectruCell, a software-defined radio (SDR) multiple protocol wireless system that is currently under development, consisting of hardware and software that enables network providers to install a single base station and configure it to any or all protocols. At June 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $6 million. ALAMOSA HOLDINGS: Majority of Noteholders Back Prepackaged Plan --------------------------------------------------------------- Alamosa Holdings, Inc. (OTC Bulletin Board: ALMO), the largest (based on number of subscribers) PCS Affiliate of Sprint (NYSE: FON, PCS), said that after modifying its proposed Exchange Offers, it has received commitments from holders of approximately 68% percent of its existing notes to support and tender into the Exchange Offers and vote in favor of the pre-packaged plan of reorganization. Based on the modifications and receipt of support from over 2/3rds of its note holders, Alamosa has now extended the Exchange Offers and the voting deadline on the Prepackaged Plan until October 29, 2003 at 5 P.M. Eastern. Alamosa modified the Exchange Offers by changing the dividend rate on the Series B preferred stock, increasing it on the Series B preferred stock from a 6% accretion/4.5% annual dividend rate to a fixed 7.5 percent annual dividend rate with payment of dividends quarterly as outlined above. The Exchange Offers were also modified to include a new Series C preferred stock with a conversion price of $4.25. Terms of the Series C preferred are identical to the Series B preferred stock to be issued under the Exchange Offers, except that the Series C conversion price is $4.25, compared to the Series B conversion price of $3.40. Through July 31, 2008, Alamosa has the option to pay preferred dividends: (i) in kind with Series C Preferred shares, (ii) in common stock valued at the stock's average closing price for the 5 trading days prior to the dividend record date, or (iii) in cash (subject to certain restrictions under the senior secured credit facility); or (iv) any combination thereof. All dividends payable after July 31, 2008 must still be paid in cash. Issuance of the Series B and Series C preferred stock could potentially result in an additional 6.9% dilution of the fully diluted, fully converted common stock based on the Exchange Offers, if all dividends are paid in Series C preferred stock until July 2008 and if Alamosa does not redeem the Series B and Series C preferred stock before its maturity in 2013. Other modifications include the elimination of the Contingent Value Rights, the addition of the right for Alamosa to redeem the preferred stock after 3 years and the elimination of the "automatic conversion" feature. The CVR's were initially offered as additional compensation if Alamosa's common stock did not trade above the $3.40 target price during a six-month period after the close of the Exchange Offers. Alamosa can also redeem the preferred stock, based on a tiered premium schedule, beginning in year 4 at a premium of 25 percent over the stated value of the preferred stock. The premium declines 5 percent per year until the premium is eliminated. Finally, Alamosa would have had the right to "automatically convert" the remaining preferred shares to common stock once 2/3 of the preferred shares were initially converted. That provision is no longer contained in the Exchange Offers. "The modifications we made to the Exchange Offers were needed to ensure its success, which is in the best interest of Alamosa and its stakeholders," said David E. Sharbutt, Chairman and Chief Executive Officer of Alamosa Holdings, Inc. "After having already received agreements from approximately 68% of our note holders to tender into the Exchange Offers and to vote in favor of the pre- packaged plan, we remain focused on reaching our target of 97 percent acceptance by the October 29, 2003 deadline and in achieving our long-term goals for Alamosa." As of the close of business on October 15, 2003, prior to these modified terms, approximately $233.2 million in principal amount of 12.5% Senior Notes due 2011 and principal amount of 13.625% Senior Notes due 2011 and $185.5 million principal amount of 12.875% Senior Discount Notes due 2010, had been validly tendered and not withdrawn in the Exchange Offers. Alamosa Holdings, Inc. (S&P, CC Corporate Credit Rating, Negative) 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 name 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. AMERICAN FINANCIAL: Will Publish Third-Quarter Results on Oct 29 ---------------------------------------------------------------- American Financial Group, Inc. (NYSE: AFG) expects to release its 2003 third quarter results on Wednesday, October 29, 2003 before 9:30am ET. The earnings release will be available shortly thereafter on AFG's Web site at http://www.amfnl.com In conjunction with its earnings release, AFG will hold a conference call to discuss the third quarter 2003 results at 11:30 am ET that day. There are two alternative communication modes available to listen to the call. Over the Telephone Telephone access will be available by dialing 1-800-946-0782. Please dial in 5 to 10 minutes prior to the scheduled start time. A replay of the call will also be available two hours following the completion of the call, at around 2:30 p.m. and will run until 8:00 p.m. on November 5, 2003. To listen to the replay, dial 1- 888-203-1112 and provide the confirmation code 778988. Live on the Internet The conference call will also be broadcast live over the Internet. To listen to the call via the Internet, go to AFG's Web site -- http://www.amfnl.com-- and follow the instructions at the Webcast link. The archived webcast will be available immediately after the call on AFG's Web site until Wednesday, November 5, 2003 at 11:59 pm. * * * The following rating American Financial Group, Inc., has been changed to align it with the revised notching established and presented in the criteria piece by A.M. Best. The revision of the rating does not reflect any change in A.M. Best's view of the overall quality, level of capitalization or expected operating performance of the company. From Revised to ---- ---------- American Financial Group, Inc. Preferred securities bbb- bb+ AMERICAN PLUMBING: Receives Court Approval of First Day Orders -------------------------------------------------------------- American Plumbing & Mechanical, Inc. announced that the United States Bankruptcy Court for the Western District of Texas, San Antonio Division approved all of the Company's first day motions. The relief requested by these motions is intended to provide AMPAM the necessary administrative, procedural and substantive tools to support its customers, employees, vendors and other business partners. Among these first day motions, the Company requested the authority to obtain interim financing, the use of cash collateral and to maintain existing cash management systems. AMPAM's financial and operational stability during the Company's voluntary restructuring under Chapter 11 was enhanced through the relief provided to the Company. Approval for immediate use of the proceeds of the debtor-in-possession financing and cash collateral should provide for the Company's cash requirements for working capital, collateralizing surety bonds and general corporate needs for the interim period. Robert Christianson, Chairman of the Board and CEO, stated, "We are pleased with the Court's prompt approval of all of our 'first day motions.' The relief granted will enable AMPAM to continue on a business-as-usual basis with our customers and suppliers during the restructuring process." American Plumbing & Mechanical, Inc. and subsidiaries, is the largest company in the United States focused primarily on the residential plumbing, heating ventilation and air conditioning (HVAC) contracting services industry. The Company also provides mechanical contracting services. AMPAM provides plumbing, HVAC and mechanical installation services to single family residential, multifamily residential and commercial construction customers. Additional information and press releases about AMPAM are available on the Company's Web site at http://www.ampam.com ANC RENTAL: Completes Sale of All Assets to Vanguard Car Rental --------------------------------------------------------------- The sale of the assets of ANC Rental Corporation, the owner of the Alamo and National rental car brands, was completed Tuesday. A new entity, Vanguard Car Rental USA Inc., has assumed ownership of substantially all of the U.S. assets and operations of ANC. Other affiliates of Vanguard also completed the acquisition of ANC's European and Canadian operations. "Alamo and National are two outstanding brands in the car rental industry. As a result of the closing of this acquisition and related financing commitments of $2.45 billion, our company has regained a strong financial base to assist in offering exceptional service to our business and leisure customers. We have a first- rate management team in place with significant industry experience, each of whom are working to ensure that customer expectations will be our primary focus," said William Lobeck, President and Chief Executive Officer. "We will concentrate on restoring National and Alamo to their former prominence. National will focus on meeting the needs of the high frequency business traveler, offering them an extraordinary level of service and great cars that can be accessed quickly. Alamo, The official rental car of the American vacation(TM), will focus on servicing customers that require the value car rental benefits that make it great- exceptional rates and extraordinary people." William Lobeck served as the Chief Executive Officer and a principal owner of National Car Rental from 1995 until its sale to AutoNation in 1997, and as President and Chief Operating Officer of AutoNation's Rental Group from 1997 to 1999. Mr. Lobeck served as the Chief Executive Officer of Thrifty Rent-A-Car System, Inc. from 1981 until 1993, when it was sold to DaimlerChrysler. Together, the Alamo and National brands make up one of the world's largest car rental companies, with annual revenue of $2.4 billion in 2002. Headquartered in Fort Lauderdale, Florida, the worldwide organization employs more than 14,000 associates, has more than 3,200 hundred locations in 83 countries and serves customers with a fleet of more than 217,000 automobiles. ANC RENTAL: Balks at Deutsche Bank's Demand for $5.25MM Payment --------------------------------------------------------------- Bonnie Glantz Fatell, Esq., at Blank Rome LLP, in Wilmington, Delaware, representing the ANC Rental Debtors, asserts that Deutsche Bank's request is premature. Although the Cerberus Sale has been approved, it has not closed and remains subject to certain closing conditions that have not yet been satisfied. Thus, the Court need not decide now whether or not the Sale could be deemed a termination of the Letter Agreement. Ms. Fatell contends that the Debtors have not in any way sought to elect to terminate the Letter Agreement. Deutsche Bank presupposes as a forgone conclusion that selling the Debtors' assets pursuant to the Purchase Agreement is tantamount to electing to terminate the Letter Agreement. However, this is not the case. While the effect of the Purchase Agreement and the Cerberus Sale may make further financings by the Debtors unnecessary, the Letter Agreement does not require the Debtors to enter into additional subsequent financings with Deutsche Bank. Rather, the Letter Agreement only requires that the Debtors use Deutsche Bank's services, and not the services of another structuring or placement agent, if the Debtors decide to engage in any subsequent financings. The language of the Letter Agreement makes it clear that the Debtors are not committed to enter into additional financings. Thus, Deutsche Bank's right of first refusal to act as exclusive placement agent exists only "in the event" that the Debtors want -- in their sole discretion -- to enter into new financings. There is no requirement that they enter into new financings and Deutsche Bank's attempt to convert the Engagement Letter into a requirements contract must be rejected. The Debtors also dispute the amount of Deutsche Bank's Termination Fee. Because the Letter Agreement is clear and unambiguous that the Termination Fee is only due and owing if the Debtors elect to terminate the Letter Agreement, and because the Debtors have not elected to terminate the Letter Agreement, Ms. Fatell asserts that the Termination Fee is not now due and owing. According to Ms. Fatell, the Cerberus Sale was clearly a possibility at the time the Letter Agreement was executed and the parties elected not to include any language providing that the Sale constituted a termination event. Furthermore, because the Debtors are not required to enter into any subsequent financings with Deutsche Bank, any argument that the Sale will cause the termination of the Letter Agreement also fails. If the Debtors did not sell their assets and yet chose not to enter into any additional financings, the Termination Fee would not at some point become due and payable. The Termination Fee would only become due and payable if the Debtors elected to enter into a financing arrangement with another financial institution contrary to the terms of the Letter Agreement. As a result, the Sale is of no import as to whether the Termination Fee is now due and payable. Even if the Debtors did terminate the Letter Agreement, Ms. Fatell notes that the Letter Agreement has been supplemented and the Termination Fee reduced. The Debtors have issued $825,000,000 of securities with Deutsche Bank and Deutsche Bank has earned fees in connection with the issuances amounting to $12,000,000. The terms of the amendment to the Letter Agreement make it clear that the termination fee is compensatory in nature. Had the Debtors issued Medium Term Notes up to the total $1,050,000,000 MTN Notional Amount, pursuant to the Letter Agreement, as amended, Deutsche Bank would be entitled to a $2,250,000 fee. In light of the Sale, Deutsche Bank is demanding $5,250,000 for a Termination Fee -- more than it would be entitled to if the Debtors actually issued the $225,000,000 outstanding under the MTN Notional Amount. Ms. Fatell maintains that the Termination Fee was not intended as a penalty. The Termination Fee is intended as a fee Deutsche Bank would have earned had the Agreement not been terminated. For all these reasons, the Debtors ask the Court to deny Deutsche Bank's request. (ANC Rental Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANNUITY & LIFE: Look for Third-Quarter Results on November 13 ------------------------------------------------------------- Annuity and Life Re (Holdings), Ltd. (NYSE: ANR) will release its earnings for the third quarter of 2003 on Thursday, November 13, 2003, and hold a conference call on Friday, November 14, 2003, at 9:00 a.m. EST. Conference Call Information November 14, 2003, 9:00 a.m. EST 719-457-2727 or 800-474-8920, Code # 557251 The call will be available for replay for seven days following the conference call. The replay numbers are: 719-457-0820 or 888-203-1112, Code # 557251 As previously reported, Fitch Ratings withdrew its 'C' insurer financial strength rating on Annuity & Life Reassurance, Ltd. The rating was withdrawn due to the company's announcement earlier this year that it had ceased writing new business and had notified its existing reinsurance clients that it could not accept additional cessions under previously established treaties. ENTITY/ISSUE/ACTION/PRIOR RATING Annuity & Life Reassurance, Ltd. -- Insurer financial strength Withdrawn/'C' ASBURY AUTOMOTIVE: Provides Prelim. Third-Quarter Ops. Results -------------------------------------------------------------- Asbury Automotive Group, Inc. (NYSE: ABG), one of the largest automotive retail and service companies in the U.S., disclosed selected preliminary financial information for the quarter ended September 30, 2003 in conjunction with its live "investor day" video web cast from the Company's new BMW Center in Richmond, Virginia. In his remarks during the web cast, Asbury President and CEO Kenneth B. Gilman discussed third quarter earnings expectations and highlighted the Company's same-store performance for the quarter in its four lines of business: new vehicle sales; used vehicle sales; parts, service and collision repair; and finance and insurance products. His comments primarily addressed Asbury's performance at the "platform" level; final consolidated financial results, including net income and earnings per share, will not be announced until the Company issues its third quarter press release on October 30, 2003. In terms of earnings expectations, the Company stated that it was comfortable with the current quarter analysts' consensus estimate of $0.50 per share, after taking into account the impact of discontinued operations and charges incurred in conjunction with management changes in Oregon, Texas and at the corporate level. Additional preliminary highlights for the quarter, as compared to the third quarter of 2002, were as follows: * At the platform level, both sales and gross profit on a GAAP basis are expected to be up approximately 7 to 8%, and 3% on a same-store basis, in-line with the Company's growth model which calls for an even split between organic and acquisition related growth. * The Company experienced solid new retail unit sales trends during the first two months of the quarter; however, total new retail unit sales for the quarter were down on a same- store basis approximately 4% due to difficult September weather on the east coast and continuing difficulties in Oregon. The Company noted that exclusive of Oregon's results, same-store new retail unit sales would have been flat. * On a dollar basis, new vehicle same-store retail sales were up approximately 4% due to the strength of the Company's brand mix and the resulting increase in average unit selling prices. As expected, new vehicle retail gross profit margin continued to be under pressure, down approximately 70 basis points, but only $27 per vehicle due to brand mix. * Used vehicle retail unit sales were flat on a same-store basis, while the average selling price was down slightly, and gross profit margin was down approximately 50 basis points, or $100 per vehicle. * Fixed operations (parts, service and collision repair) on a same-store basis experienced approximately a 6% increase in revenue and an 8% increase in gross profit. * Net finance and insurance (F&I) income increased approximately 8% on a same-store basis and 11% on a PVR (per vehicle retailed) basis. "In terms of our core businesses, the trends we saw during the third quarter were for the most part consistent with what we experienced in the previous quarter," said Mr. Gilman. "We continually work under the assumption that the retail side of our business can be challenging at times. That's why we emphasize the balance and hence profit consistency provided by the services side of our business. With that said, I think this quarter's results really serve to demonstrate the strength and balance of our diversified retail and services business model, a balance intended to deliver consistent results. We look forward to providing more details when we report our consolidated financial results on October 30." The Company also reported that year-to-date it has completed four acquisitions that represent approximately $330 million in annualized revenues, including a BMW and Volvo store in Atlanta, which is expected to generate in excess of $100 million in annualized revenue. Asbury Automotive Group, Inc. (S&P, BB- Corporate Credit Rating, Stable), headquartered in Stamford, Connecticut, is one of the largest automobile retailers in the U.S., with 2002 revenues of $4.5 billion. Built through a combination of organic growth and a series of strategic acquisitions, Asbury now operates through nine geographically concentrated, individually branded "platforms." These platforms currently operate 95 retail auto stores, encompassing 138 franchises for the sale and servicing of 35 different brands of American, European and Asian automobiles. Asbury believes that its product mix includes one of the highest proportions of luxury and mid-line import brands among leading public U.S. automotive retailers. The Company offers customers an extensive range of automotive products and services, including new and used vehicle sales and related financing and insurance, vehicle maintenance and repair services, replacement parts and service contracts. ATSI: Ch. 7 Trustee Hires Peisner Johnson as Tax Consultants ------------------------------------------------------------ Helen G. Schwartz, the Chapter 7 Trustee for the estates of ATSI Communications, Inc., and Telespan, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the Western District of Texas to employ Peisner Johnson & Company LLP as Special Tax Consultants for the estate. The Trustee has selected Peisner Johnson because it is one of the largest Certified Public Accountancy firms in the country that limits its practice to primarily excise, income, franchise, state and local use tax companies. In this regard, Peisner Johnson will: a) conduct a detailed review and analysis of the Debtors' sales and tax records; b) copy those invoices and other documents that may qualify for a tax refund; c) research the applicable issues and schedule those items qualifying for refunds and provide the Trustee with a detailed report of all areas of state and federal tax relief, along with documentation in support of its position; d) upon the Trustee's approval, file the appropriate refund claims or amend state, local or excise tax returns as necessary; and e) perform any other services commensurate with the Trustee's needs and Peisner Johnson's expert knowledge in connection with sales/tax use and excise tax matters. Andrew Johnson, in behalf of Peisner Johnson agreed to be paid a contingency fee of 50% to any actual cash refund identified and obtained by the firm. ATSI Communications, Inc., filed for chapter 11 protection on February 4, 2003 (Bankr. W.D.Tex. Case No. 03-50753). Martin Warren Seidler, Esq., at Law Offices Of Martin Seidler represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed over $10 million in assets and less than $10 million in debts. BALDWIN CRANE: Nina Parker Serving as Bankruptcy Attorney --------------------------------------------------------- Baldwin Crane & Equipment Corporation sought and obtained approval from the U.S. Bankruptcy Court for the District of Massachusetts to retain Nina M. Parker, Esq. and Parker & Associates as attorneys on a general retainer. The Debtor tells the Court that it needs to retain Ms. Parker to represent them in connection with: a) this chapter 11 case; and b) any chapter 7 proceedings, in the event that the Debtor seeks to convert this case to proceedings under chapter 7. Ms. Parker will be compensated in her usual hourly rate of $275 per hour and $95 to $195 per hour for associates who might be called upon to render their services. Headquartered in Wilmington, Massachusetts, Baldwin Crane and Equipment Corp., a crane-operating business, filed for chapter 11 protection on October 3, 2003 (Bankr. Mass. Case No. 03-18303). Nina M. Parker, Esq., at Parker & Associates represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $10 million each. BUDGET GROUP: Lease Decision Period Extension Hearing on Oct. 24 ---------------------------------------------------------------- Budget Group Inc., and its debtor-affiliates seek another 60-day extension of the period within which they may elect to assume or reject all of their remaining unexpired leases pursuant to Section 365(d)(4)3 of the Bankruptcy Code. Specifically, the Debtors ask the Court to extend their Lease Decision Period through and including December 1, 2003. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, explains that the Debtors have largely completed the process of evaluating each of their unexpired non- residential real property leases for their economic desirability and compatibility with their Chapter 11 process. The Debtors already obtained Court approval to assume and assign or reject a vast majority of their unexpired leases. Mr. Brady also relates that, since the Petition Date, the Debtors expended considerable time and resources on consummating the sale of their North American operations, which included the assumption and assignment of more than 7,000 contracts, including a majority of their unexpired leases. The Debtors also terminated several unnecessary and economically improvident leases. While the Debtors believe that they have made tremendous progress in evaluating their unexpired leases, an extension of the Lease Decision Period will provide them with the means to complete the lease evaluation process. There may also be additional unexpired leases that the Debtors have not yet identified. Mr. Brady assures the Court that the extension will not prejudice the affected lessors. Pending their election to assume or reject the unexpired leases, the Debtors will perform all of their obligations arising from and after the Petition Date in a timely fashion, including payment of postpetition rent due, as required by Section 365(d)(3) of the Bankruptcy Code. The Court will convene a hearing on October 24, 2003 at 10:30 a.m. to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Debtors' Lease Decision Period is automatically extended through the conclusion of that hearing. (Budget Group Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) CELLSTAR CORP: Third-Quarter Results Enter Positive Territory ------------------------------------------------------------- CellStar Corporation (Nasdaq: CLST), a value-added wireless logistics and distribution services leader, reported net income of $1.4 million or $0.07 per diluted share for the third quarter, compared to a net loss of $8.1 million or $0.40 per diluted share in the second quarter. Net income in the third quarter of 2002 was $6.1 million or $0.30 per diluted share. CellStar reported revenues of $442.4 million for the quarter ended August 31, 2003, compared to $436.1 million in the second quarter and $509.2 million in the third quarter of fiscal 2002. Consolidated revenues declined $66.8 million or 13.1% from the prior year primarily due to a decrease in sales in the People's Republic of China during the first half of the quarter as a result of the outbreak of severe acute respiratory syndrome, and increased market competition from local manufacturers in the PRC. Consolidated revenues compared to last year were further impacted by the conversion of a U.S. customer to consignment in the fourth quarter of 2002. Year to date revenues as of August 31, 2003 were $1.4 billion, compared to $1.7 billion in the first 9 months of fiscal 2002. The Company reported a year to date net loss of $23.5 million compared to net income of $11.6 million in 2002. The year to date loss in 2003 includes a $17.2 million, net of taxes, goodwill write-off related to the Company's operations in Asia Pacific, Sweden and The Netherlands. The year to date net income in 2002 included a $10.9 million gain, after tax, from early extinguishment of debt related to the exchange offer, which was completed in February of 2002. Gross profit for the third quarter increased to $24.3 million from $16.7 million in the second quarter and declined from $33.9 million in the prior-year quarter. In the second quarter, the market price on certain Motorola handsets in China declined and the Company accordingly wrote this inventory down below cost. During the third quarter, the Company returned the product to Motorola at original cost. Gross margin increased to 5.5% from 3.8% last quarter and declined from 6.7 % of revenues in the third quarter of 2002. Selling, general and administrative (SG&A) expenses for the third quarter declined to $20.8 million from $28.0 million in the second quarter and $27.3 million in the third quarter of 2002. The decline in SG&A from the second quarter was due to $3.0 million of expenses related to the IPO postponement in the second quarter as well as reductions in bad debt, payroll and benefits and insurance premiums. SG&A declined $6.5 million compared to the third quarter of 2002 due to reductions primarily in payroll and benefits, insurance premiums, bad debt and advertising and marketing expenses totaling $5.0 million. Exited operations accounted for $1.5 million of the decline. SG&A as a percent of revenues was 4.7% in the third quarter, 6.4% in the second quarter and 5.4% in the third quarter of 2002. Interest expense in the third quarter was $1.7 million, compared to $1.7 million last quarter and $1.6 million in the third quarter a year ago. "After reporting consolidated net losses for the last three quarters we are pleased to report a profitable third quarter," said Chief Executive Officer Terry S. Parker. "Asia was profitable once again, even though our operations in China did not begin to return to normal operating levels until the middle of the third quarter. Handset shipments in China have increased significantly in the last couple of months. During the months of August and September we shipped more handsets than any other month this year." Regional Results Revenues in Asia Pacific, the Company's largest revenue-producing region, were $189.0 million for the third quarter, compared to $193.2 million last quarter and $259.3 million in the third quarter of last year. Revenues in the PRC were up $4.4 million compared to the second quarter of this year and down $63.4 million compared to the third quarter of 2002. For the quarter ended August 31, 2003, the Company recorded operating income of $1.0 million for Asia Pacific, compared to an operating loss of $7.9 million in the prior quarter and operating income of $9.0 million in the third quarter of last year. Revenues in the North America region were $137.9 million compared to $120.6 million in the second quarter and $145.3 million in the third quarter of 2002. Revenues from a major carrier customer in the U.S. were down significantly as a result of converting that customer to a consignment model during 2002, and an overall decrease in handset volume to that customer during the third quarter of this year. Excluding this account, revenues in North America grew 23% from third quarter last year. North America continues to be profitable with operating income for the third quarter of $3.8 million compared to $3.2 million in the prior quarter and $6.7 million in the third quarter of 2002. Revenues in Latin America were $88.0 million compared to $101.6 million in the second quarter and $76.5 million in the third quarter of last year. Revenues in Mexico increased by 34.3% from the second quarter to $56.0 million, and by 10.9% from the third quarter of 2002. Revenues in the Miami export operation were $23.5 million compared to $38.3 million last quarter and $13.5 million in the third quarter of 2002. Revenues in Miami decreased sequentially due to a sourcing decision made by a carrier customer in Colombia. The Company primarily sources its Colombia business out of the Miami export operation. A large carrier customer in Colombia temporarily shifted its business from Motorola products to Korean products that are sourced directly from the manufacturer. Revenues in Miami increased year over year due to increased business with customers in Central America and the Caribbean. The Company reported operating income in Latin America of $492,000, compared to operating income of $99,000 last quarter, and an operating loss of $3.3 million in the prior year quarter. The Company recorded a currency loss of $549,000 this quarter and a currency gain of $1.8 million in Latin America in the second quarter of 2003. Revenues in Europe for the third quarter were $27.5 million compared to $20.6 million last quarter and $28.1 million in the prior year. Operating income for the third quarter was $2.5 million compared to a $1.1 million operating loss last quarter. The increase in operating income was due to the recovery of inventory reserves that were taken in Sweden last quarter and credits received from manufacturers. The Company also received a favorable settlement on the facility lease in the U.K. This transaction concludes all non-tax items related to the closure of the U.K. operation. In September, the Company announced that it had signed a definitive agreement to sell its Sweden operation to AxCom AB, one of Sweden's leading distributors within the telecom industry. Earlier this week the Company was notified that the competition authority in Sweden had approved the sale. The sale is expected to close during the fourth quarter, completing the Company's exit from all of its operations in Europe. "We have been very focused on operations this past year, as we have been exiting those markets that showed little opportunity for growth and profit, and have been improving those that were not performing," said President and Chief Operating Officer Robert Kaiser. "This quarter's results reflect those efforts, as we were profitable in all our regions for the first time since the first quarter of 2001." Consolidated Balance Sheet Cash, cash equivalents and restricted cash at the end of the third quarter were $77.6 million compared to $45.4 million last quarter, reflecting cash flow from operations of $46.8 million in the third quarter. Accounts receivable for the third quarter decreased to $186.8 million compared to $210.4 million at the end of second quarter 2003. Annualized accounts receivable days sales outstanding increased from 36.1 in the preceding quarter to 41.5. Inventory for the third quarter decreased to $172.8 million compared to $177.9 million in the second quarter of 2003. Inventory in Latin America decreased by $20.1 million while inventory in Asia increased by $12.7 million. The decline in inventory in Latin America is due to improved purchasing and inventory management practices. Inventory in Asia increased as a result of deferring purchase commitments from the second quarter to the third quarter because of market conditions in the PRC during the second quarter. The Company continues to work with its suppliers to reduce its exposure. Inventory turned at an annualized rate of 8.9 times compared to 8.7 times in the prior quarter. Accounts payable for the third quarter were $182.7 million compared to $161.5 million at the end of the second quarter 2003. Liquidity As of August 31, 2003, the Company had borrowed $24.5 million under its domestic revolving credit facility. Loans to support operations in China totaled $77.9 million. Restricted cash was $11.3 million compared to $18.3 million last quarter. The Company also had $5.3 million borrowed under its credit facilities in Sweden. On August 31, 2003 the Company had $12.4 million of 12% Senior Subordinated Notes outstanding that will mature January 2007. Handset Data CellStar handled 3.7 million handsets (including 0.8 million consignment units) in the third quarter of fiscal 2003 compared to 4.0 million (including 0.7 million consignment units) in the third quarter last year and 3.6 million (including 1.0 million consignment units) in the second quarter of this year. The average selling price of handsets in the third quarter was $136, compared to $147 in the third quarter a year ago and $151 in the second quarter this year. CellStar Corporation (S&P, SD Corporate Credit Rating) is a leading global provider of value-added logistics services to the wireless communications industry, with operations in the Asia- Pacific, North American, Latin American, and European regions. CellStar facilitates the effective and efficient distribution of handsets, related accessories and other wireless products from leading manufacturers to network operators, agents, resellers, dealers and retailers. CellStar also provides activation services in some of its markets that generate new subscribers for wireless carriers. For the year ended November 30, 2002, the Company generated revenues of $2.2 billion. Additional information about CellStar may be found on its Web site at http://www.cellstar.com CERUS CORP: Baxtel Capital Sues Company Seeking Debt Repayment -------------------------------------------------------------- Cerus Corporation (Nasdaq:CERS) announced that Baxter Capital Corporation, a financial subsidiary of Baxter International Inc., has commenced legal proceedings against Cerus seeking repayment of amounts outstanding under a credit facility it provided to Cerus. Baxter Capital alleges that changes in Cerus' business, including the recent termination of the Phase III red blood cell clinical trials, constitute a default under the credit facility. Cerus does not agree that any default has occurred. The collaboration agreements between Cerus and Baxter Healthcare Corporation relating to the INTERCEPT Blood System are not a subject of this action. Cerus currently has $50 million in principal plus accrued interest outstanding under the credit facility, which the company drew in January 2003. Under the terms of the five-year loan, no interest or principal is due until January 2008. "Cerus and Baxter Healthcare Corporation continue to collaborate on the development of the INTERCEPT Blood System, and Baxter's sales and marketing teams have begun commercializing INTERCEPT platelets in Europe," said Stephen T. Isaacs, president and chief executive officer of Cerus. "Cerus is committed to supporting the INTERCEPT collaboration with Baxter Healthcare and to continuing progress on the INTERCEPT programs, while we work through this loan issue with Baxter's separate finance subsidiary." Cerus and subsidiaries of Baxter International Inc. are collaborating on development of the INTERCEPT Blood System to enhance the safety of blood transfusions. The INTERCEPT Blood System for platelets is being launched in Europe. The product is not yet approved in the United States. The companies are also in late stage development of the INTERCEPT Blood System for plasma. Cerus Corporation is developing medical systems and therapeutics to provide safer and more effective options to patients. The company is developing products based on its proprietary Helinxr technology for controlling biological replication. Cerus' most advanced programs are focused on systems to enhance the safety of the world's blood supply. The INTERCEPT Blood System, which is being developed in collaboration with subsidiaries of Baxter International Inc., is based on the company's Helinx technology. The INTERCEPT Blood System is designed to inactivate viruses, bacteria, other pathogens, and white blood cells. The Concord, California-based company also is pursuing therapeutic applications of Helinx technology to treat and prevent serious diseases. CERUS CORP: Initiates Restructuring and Cost-Cutting Efforts ------------------------------------------------------------ Cerus Corporation (Nasdaq:CERS) is restructuring its operations to focus on its pathogen inactivation products for platelets and plasma and on its pipeline of therapeutics and vaccines. The company will reduce operating expenses primarily related to its red blood cell program while it investigates alternative approaches to advance that program. The company previously announced termination of Phase III clinical investigation of pathogen inactivated red blood cells. As a result of the restructuring, the company will reduce its current workforce by approximately 25 percent and expects to reduce its research and development expenses for 2003 to approximately $55 million, from previously projected expenditures of $60-65 million. The change in focus is expected to result in an overall expense reduction of $20-25 million in 2004 over 2003. "We are working expeditiously to cut expenses relating to the red blood cell clinical program," said Stephen T. Isaacs, president and chief executive officer. "Meanwhile, we are working with Baxter to commercialize INTERCEPT Platelets in Europe and to complete the regulatory process for the product in the United States. In addition, we are pleased to have a second product, the INTERCEPT Blood System for plasma, approaching completion of Phase III clinical trials and to have a pipeline of development-stage therapeutic products." Cerus separately announced the initiation of legal proceedings by Baxter Capital Corporation concerning the $50 million loan provided to it by Baxter earlier this year. The companies are in disagreement on whether or not the loan is due at this time. The collaboration agreements between Cerus and Baxter Healthcare Corporation relating to the INTERCEPT Blood System are not a subject of this action. In addition to the INTERCEPT Blood System, Cerus also is developing therapeutic and vaccine applications of its Helinx technology. The company's Epstein Barr virus vaccine is designed to protect organ transplant patients against this virus, which can potentially cause malignant lymphoma. The company is also developing an allogenic cellular immune therapeutic (ACIT) designed to improve the outcome of stem cell transplants in patients with lymphoma and leukemia. A second Phase I clinical trial of the ACIT is expected to begin soon. Cerus Corporation is developing medical systems and therapeutics to provide safer and more effective options to patients. The company is developing products based on its proprietary Helinxr technology for controlling biological replication. Cerus' most advanced programs are focused on systems to enhance the safety of the world's blood supply. The INTERCEPT Blood System, which is being developed in collaboration with subsidiaries of Baxter International Inc., is based on the company's Helinx technology. The INTERCEPT Blood System is designed to inactivate viruses, bacteria, other pathogens, and white blood cells. The Concord, California-based company also is pursuing therapeutic applications of Helinx technology to treat and prevent serious diseases. CHANNEL MASTER: Taps CB Richard as Manufacturing Facility Broker ---------------------------------------------------------------- Channel Master Holdings, Inc., and its debtor-affiliates want to hire and retain CB Richard Ellis--Raleigh LLC as broker in connection with the marketing and eventual sale of the Debtors' 740,000 square foot manufacturing and distribution facility located at 1315 Industrial Park Drive in Smithfield, North Carolina. CB Richard Ellis has extensive experience, knowledge and expertise as a commercial real estate broker and is well qualified to act as the Debtors' broker in facilitating a sale of the Property. Mr. J.D. "Butch" Miller informs the Debtors that the firm is a "disinterested person" as defined within section 101(14) of the Bankruptcy Code. In consideration for its services, CB Richard Ellis is to receive 4% of the gross sales price for co-brokered transactions, and 3% of the gross sales price for non-co-brokered transactions. Headquartered in Smithfield, North Carolina, Channel Master Holdings, Inc., with the Debtor-affiliates, are leading designer and manufacturer of high-volume, superior quality antenna products for the satellite communications industry both in the U.S. and internationally. The Company filed for chapter 11 protection on October 2, 2003 (Bankr. Del. Case No. 03-13004). David B. Stratton, Esq., at Pepper Hamilton LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $50 million each. CHESAPEAKE CROSSING: Wants to Use Wells Fargo's Cash Collateral --------------------------------------------------------------- Chesapeake Crossing Associates, LLC is asking approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to use cash collateral, which secures obligations to Wells Fargo Bank Minnesota, N.A. Prior to the Filing Date, the Debtor was a party to a note, payable to First Union National Bank, which is secured by property of the Debtor. The Note has been assigned to Wells Fargo Bank Minnesota, N.A., as assignee and successor in interest to First Union National Bank. The approximate balance owing on the Wells Fargo Note, as of the Filing Date was $12,068,092. To the best of the Debtor's information and belief, Wells Fargo is the only creditor of the Debtor with a lien upon Cash Collateral. In order to remain in possession of its property and continue its business activity in an effort to achieve successful reorganization, the Debtor must use Cash Collateral in its ordinary business operations. Consequently, the Debtor requests that the Court authorize and approve its use of Cash Collateral for the payment of its operating expenses, which amounts to $32,558 for the month of October 2003. In an effort to adequately protect the interests of Wells Fargo in the Prepetition Collateral, the Debtor will place any and all cash, checks or monies it collects, into the Debtor's Debtor-in- Possession bank account. Without further authorization from this Court, the Debtor will pay only reasonable and necessary operating expenses incurred in the ordinary course of the Debtor's business from the Account. The Debtor will provide Wells Fargo with replacement liens pursuant to and in accordance with Section 361(2) of the Bankruptcy Code, in and to all property of the estate of the kind presently securing repayment of the Note. If the Debtor is not authorized to use Cash Collateral, it will be unable to maintain its current business operations and propose a plan of reorganization as contemplated by the Bankruptcy Code. Without the use of Cash Collateral, the Debtor will be seriously and irreparably harmed, resulting in significant losses to the Debtor's estate and its creditors. Headquartered in Norfolk, Virginia, Chesapeake Crossing Associates, LLC, owns and operates a shopping center located at 1951 South Military Highway, Chesapeake. The Company filed for chapter 11 protection on October 1, 2003 (Bankr. E.D. Va., Case No. 03-76908). Frank J. Santoro, Esq., and Karen M. Crowley, Esq., at Marcus, Santoro & Kozak, P.C. represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $1 million and debts of over $10 million. CHI-CHI'S INC: Selling All Assets to CC Acquisition for $4 Mill. ---------------------------------------------------------------- On October 8, 2003, each of Chi Chi's, Inc. and Koo Koo Roo, Inc., both indirect operating subsidiaries of Prandium, Inc. filed a voluntary petition under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware, case numbers 03-13063-PJW and 03-13069-PJW, respectively. The Subsidiaries remain in possession of their assets and properties, and continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. In conjunction with the Subsidiaries' Chapter 11 filings with the Bankruptcy Court, Chi Chi's has entered into a non-binding letter of intent with CC Acquisition Holding Co., LLC, a newly formed entity whose majority owner is Worldwide Entertainment, Inc., a Delaware corporation controlled by Jack Utsick, and Koo Koo Roo has entered into a definitive asset purchase agreement with Fuddruckers, Inc. pursuant to which it will sell substantially all of its assets for a cash purchase price of $3,953,000. Additionally, Prandium is in negotiations to enter into a definitive asset purchase agreement whereby The Hamlet Group, Inc., another indirect operating subsidiary of Prandium, would sell substantially all of its assets to Fuddruckers in a separate transaction. There can be no assurance that the transactions contemplated by the non-binding letter of intent or the definitive asset purchase agreement will be consummated or that the negotiations with respect to the sale of substantially all of the assets of The Hamlet Group will result in the execution of a definitive asset purchase agreement. Further, it is not possible to presently determine what value, if any, will ultimately be received by Prandium, as the parent company shareholder of the Subsidiaries and The Hamlet Group. COLLINS & AIKMAN: Enters into Neutrality Agreement with UAW ----------------------------------------------------------- Collins & Aikman Corporation (NYSE: CKC) has reached an agreement to form a partnership with the International Union, United Automobile, Aerospace & Agricultural Implement Workers of America (UAW) in which both parties have pledged renewed energies and commitment to increase productivity, efficiency, long-term job security, and quality of operations that will maximize the competitive capability of the Company. UAW President Ron Gettelfinger, Vice President and director, UAW Competitive Shops/Independents, Parts and Suppliers Department, Bob King and Collins & Aikman Chairman & Chief Executive Officer David A. Stockman made the announcement at a joint press conference from "Solidarity House," the headquarters office of the UAW in Detroit, Michigan. Commenting on the agreement, David A. Stockman said, "We are extremely optimistic that this partnership with the UAW will assist us in both maintaining our current business and in achieving new business with our domestic OEM customers, which would be beneficial to Collins & Aikman, its employees and the UAW." The UAW currently represents Collins & Aikman employees at its plants in Evart, Sterling Heights, Westland and Adrian, Michigan, Morristown, Indiana and Oklahoma City, Oklahoma. These plants provide bumpers, interior plastic components and convertible tops primarily for the Chrysler Group. Collins & Aikman and the UAW recognize that dramatic changes in the domestic automotive market have created new quality, productivity, and competitiveness challenges for automotive component suppliers. Both parties believe these challenges will be more effectively met through a positive, non-adversarial partnership. The Company and the Union also recognize the significant contribution of the skills and loyalty of the workforce to Collins & Aikman's success and the importance of the investment Collins & Aikman places in the skills of its workers. Each recognizes the significant role that the other must play in the continued success of the Company. An employee's freedom to choose remains a paramount concern of the Company as well as the UAW. The agreement recognizes that membership in a union is a matter of personal choice and acknowledges that if a majority of employees wish to be represented by a union, Collins & Aikman will recognize that choice. If a Collins & Aikman employee chooses to be or not to be represented by the UAW, there will be no reprisals by the UAW or the Company due to their choice. Collins & Aikman Corporation (S&P, B+ Corporate Credit Rating, Negative), a Fortune 500 company, is a global leader in cockpit modules and automotive floor and acoustic systems and a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company's current operations span the globe through 15 countries, more than 100 facilities and over 25,000 employees who are committed to achieving total excellence. Collins & Aikman's high-quality products combine superior design, styling and manufacturing capabilities with NVH "quiet" technologies that are among the most effective in the industry. Information about Collins & Aikman is available on the Internet at http://www.collinsaikman.com COLLINS & AIKMAN: UAW President Commends Company re Agreement ------------------------------------------------------------- The UAW and Collins & Aikman, a major auto parts manufacturer, announced an agreement focused on productivity, quality and long- term job security for Collins & Aikman workers. The agreement was signed today at Solidarity House, the UAW's Detroit headquarters, by UAW President Ron Gettelfinger, Collins & Aikman CEO David Stockman, and UAW Vice President Bob King. As part of the agreement, the company has agreed to neutrality and card check with respect to union organizing campaigns at certain Collins & Aikman facilities which supply the U.S. auto industry. The UAW currently represents some 2,000 workers at Collins & Aikman plants in Michigan, Indiana and Oklahoma. "The UAW has always believed that when a strong union and a progressive company work together cooperatively, great things can be accomplished for the workers as well as for the company," said UAW President Gettelfinger. "An empowered workforce leads to a safer workplace, better quality and yes, improved productivity." "We're here [Wednes]day to commend this company, and in particular, David Stockman, for taking the high road and for sharing our commitment to working together for our common goals -- and resolving our differences in a respectful and constructive manner," added Gettelfinger. "We're looking forward to working with Collins & Aikman to help keep its plants competitive and to preserve and expand good manufacturing jobs in the United States," said UAW Vice President King, who directs the UAW Organizing Department as well as the union's Competitive Shop/Independents, Parts and Suppliers Department. "By agreeing to card check and neutrality procedures," King added, "Collins & Aikman is demonstrating its commitment to fairness in the workplace. That's an excellent way to build a relationship based on mutual trust and respect, in which worker involvement and participation can add significant value for workers, shareholders and customers." In a card check procedure, an employer agrees to recognize and bargain with a union once a majority of workers have signed union authorization cards, as verified by an independent third party. The neutrality agreement ensures that both the UAW and Collins & Aikman will respect the right of workers to choose whether or not to be represented by the union. When workers choose union representation, the company also agreed to make a good faith effort to reach a collective bargaining agreement within six months, and to refer outstanding issues to a neutral arbitrator if an agreement is not reached. The UAW has negotiated agreements similar to the one announced Wednesday with a number of major firms, including Lear, Johnson Controls, Ryder Logistics, Freightliner, Metaldyne, and Dana. Collins & Aikman Corporation (S&P, B+ Corporate Credit Rating, Negative), a Fortune 500 company, is a global leader in cockpit modules and automotive floor and acoustic systems and a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company's current operations span the globe through 15 countries, more than 100 facilities and over 25,000 employees who are committed to achieving total excellence. Collins & Aikman's high-quality products combine superior design, styling and manufacturing capabilities with NVH "quiet" technologies that are among the most effective in the industry. Information about Collins & Aikman is available on the Internet at http://www.collinsaikman.com CONSECO INC: CNC and CFC Dockets Will Be Maintained Separately -------------------------------------------------------------- James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, notes that the two Plan Confirmation Orders mandate that any post-Confirmation pleadings must contain captions differentiating between the Reorganizing Conseco Debtors' cases and the Finance Company Debtors' cases. To facilitate this protocol, the Clerk should keep separate dockets for each case. The docket separation is necessary for the proper administration of the Debtors' estates and the Court's proper supervision. Accordingly, at the Debtors' request, Judge Doyle directs the Clerk of the Bankruptcy Court for the Northern District of Illinois to maintain separate dockets for the cases of: (1) the Reorganizing Debtors under Case No. 02-49672, and (2) the Finance Company Debtors under Case No. 02-49675. Judge Doyle made the separation of dockets effective to September 9, 2003. (Conseco Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) CORNERSTONE PROPANE: Commences Search for Bidders for Assets ------------------------------------------------------------ Cornerstone Propane Partners, L.P., and its subsidiaries has furnished the SEC with its financial statements as of and for the year ended June 30, 2002. The financial statements were recently provided to a third party bidder in connection with the Partnership's previously announced attempts to seek bidders for its assets. Deloitte & Touche LLP delivered a management letter to the Partnership communicating, among other things, the following material weaknesses in internal controls during the year ended June 30, 2002: 1. The Partnership's need to implement a system to monitor and record customer propane storage tanks; 2. The Partnership's need to implement internal controls and procedures to ensure related party transactions are appropriately recorded and disclosed in its external financial reporting; and 3. The Partnership's need to implement procedures and controls to review, monitor and maintain general ledger accounts. The Partnership is seeking bidders for its assets. Based on the indications of interest the Partnership has received to date, the Partnership's management believes that it is unlikely the holders of the Partnership's Units will receive any distributions as a result of the sale of its assets, and any subsequent liquidation or restructuring of the Partnership's operations. As reported in Troubled Company Reporter's June 10, 2003 edition, Fitch Ratings withdrew rating coverage of Cornerstone Propane Partners, L.P. and Cornerstone Propane, L.P. At the time of withdrawal, the ratings were: CNO -- $45 million outstanding senior notes 'D'; CPLP -- $365 million senior secured notes 'DD'. Headquartered in Watsonville, California, CNO is a retail propane master limited partnership for CPLP, an operating limited partnership CREDIT SUISSE: Class M Notes Rating Cut to Junk Level at CCC ------------------------------------------------------------ Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2000-C1, $8.4 million class M is downgraded to 'CCC' from 'B-' by Fitch Ratings. In addition, Fitch affirms the following classes: -- $147.1 million class A-1 'AAA'; -- $677.5 million class A-2 'AAA'; -- Interest-only class A-X 'AAA'; -- $50.1 million class B 'AA'; -- $44.5 million class C 'A'; -- $15.3 million class D 'A-'; -- $29.1 million class E 'BBB'; -- $13.9 million class F 'BBB-'; -- $30.6 million class G 'BB+'; -- $12.5 million class H 'BB'; -- $11.1 million class J 'BB-'; -- $11.1 million class K 'B+'; -- $9.7 million class L 'B'. The $15.1 million class N is not rated by Fitch. The rating downgrades are primarily attributed to the anticipated losses associated with two loans that are real estate-owned (2.1%) and one loan that is 90 days delinquent (0.3%). Overall, Fitch has concerns with 27 loans representing 16.9% of the pool. Currently there are five loans (6.2%) in special servicing. The largest REO loan, 295 & 305 Foster Street Office Buildings (1.1%), was transferred to the special servicer in February 2003 due to imminent default. The loan is secured by two office buildings located in Littleton, Massachusetts. The year-end 2002 occupancy was 79% due to the departure of the buildings' two largest tenants. The other REO loan, Sheraton Four Points (1.0%), was transferred to the special servicer in April 2003 due to payment delinquency. The loan is secured by 199 room, full service hotel located in Williamsburg, Virginia. The YE 2002 debt service coverage ratio was 0.84 times due to a drop in occupancy. The Wellesley Inn and Suites, currently 90 days delinquent, is secured by a limited service hotel in Lakeland, FL. The loan transferred to the special servicer after the borrower filed for bankruptcy in August 2002. The affirmations to classes A-1 through K are a result of the consistent weighted average DSCR and limited paydown of the certificate balance. GMAC Commercial Mortgage, as master servicer, collected YE 2002 operating statements for 94.3% of the pool by balance. The year-end 2002 weighted average DSCR for those loans has increased to 2.09x from 1.97x at issuance. The pool's certificate balance has paid down 3.4%, to $1 billion from $1.1 billion at issuance DAN RIVER: Sr. Lenders Waive Covenant Violation Under Credit Pact ----------------------------------------------------------------- Dan River Inc. (NYSE: DRF) filed a Current Report on Form 8-K on October 14, 2003, in which the Company disclosed that it had entered into an amendment and waiver agreement whereby its senior secured lenders have waived a violation of the maximum leverage ratio covenant contained in its credit facility for the third quarter of fiscal 2003. The following comments are in response to questions proffered to the Company by investors in response to disclosure of the covenant shortfall. Net sales for the third quarter of fiscal 2003 were $103.7 million, down $43.7 million or 30% from $147.4 million for the third quarter of fiscal 2002. Sales of Dan River's home fashions products were $76.4 million, down $29.5 million or 28% compared to the same quarter of last year. Sales of apparel fabrics were $20.5 million, down $10.7 million or 34%. Sales of engineered products were $6.8 million, down $10.7 million or 40%. Coming into the third quarter, the Company expected sales to improve during the second half of fiscal 2003; however, the Company experienced a sales decline during the third quarter. EBITDA as defined under the Company's credit facility is expected to be positive but short of the amount required to meet the maximum leverage covenant for the third quarter of fiscal 2003. In its 8-K filing on October 14, 2003, the Company provided the form of the amendment and waiver so that investors could reference the terms and conditions of the waiver. Minimum EBITDA covenants, as defined, were added for each fiscal period of the fourth quarter. Under the terms of the amendment, for the fourth quarter of fiscal 2003 EBITDA is generally defined to be business segment operating income or loss plus depreciation and amortization. The added covenants reflect the Company's expectation that sales in the fourth quarter of fiscal 2003 will be at approximately the same levels as they were in the third quarter of fiscal 2003. Since the Company's sales fell short of expectations in the third quarter of fiscal 2003 and are expected to remain at those levels in the fourth quarter, the Company plans to curtail a large portion of its operations for extended periods during the fourth quarter in order to keep inventories in line. The cost of these curtailments will negatively impact the fiscal fourth quarter results. The fourth quarter will also be impacted by the normal amortization of capitalized manufacturing variances associated primarily with the low levels of manufacturing activity in the third quarter. Additionally, fiscal 2003 is a 53 week fiscal year and the fourth quarter is a 14 week fiscal quarter which will burden the quarter with an additional week of fixed cost and SG&A expense during a very weak sales period. For these reasons, the Company is anticipating negative EBITDA for the fourth quarter. The Company has agreed to engage a financial advisor to assist it in reviewing its fiscal 2004 projections as well as to assist it in securing future waivers or amendments that may be necessary to remain in compliance with the Company's senior secured credit facility. The Company expects to release its fiscal third quarter results in the second week of November, which is later than the usual release date. The additional time is necessary so that the Company can complete an impairment analysis of its goodwill which is required as a result of recent operating performance. It is likely that the evaluation will result in a non-cash charge for goodwill impairment of up to $91.7 million being included in operating results for the fiscal third quarter. On October 15, 2003, the Company paid the semi-annual interest payment under its $157 million, 12.75% senior notes issued April 15, 2003. After giving effect to the interest payment, the Company's availability under its revolver was $28.8 million. The Company has scheduled a conference call to discuss the contents of this release and its 8-K filing today at 1:30 P.M. E.D.T. The live broadcast and replay will be available from the Dan River home page at http://www.danriver.com(select "Investors"-Announcements). * * * As reported in Troubled Company Reporter's April 28, 2003 edition, Standard & Poor's Ratings Services raised its long-term corporate credit rating on home furnishings manufacturer Dan River Inc. to 'B+' from 'B-'. The ratings are removed from CreditWatch, where they were placed on March 17, 2003. At the same time, Standard & Poor's assigned its 'B-' senior unsecured debt rating to the Danville, Virginia-based company's new 12.75% senior notes due 2009. The notes are rated two notches below the corporate credit rating, reflecting their junior position relative to the significant amount of secured bank debt. Standard & Poor's also withdrew its existing rating on the $120 million subordinated notes due 2003. The outlook is stable. Dan River's total debt outstanding at Dec. 28, 2002, was about $252 million. DELTA WOODSIDE: Will Publish First-Quarter 2004 Results on Tues. ---------------------------------------------------------------- Delta Woodside Industries, Inc. (NYSE: DLW) will report first quarter fiscal 2004 results after the close of business on Tuesday, October 21, 2003. Bill Garrett, President and CEO, will hold an analyst conference call on Wednesday, October 22, 2003 at 9:30 A.M. eastern time to discuss financial results and give a business update. The conference call will be broadcast through the company's WEB site at the following Internet address: http://deltawoodside.com/investor_relations.htm Minimum requirements to listen to the webcast are accessible to the Internet through at least a 28.8 baud modem connection and Real One(TM) software which, is available for free download at: http://www.real.com/ A replay of the webcast will be available within one hour of the call and will be archived at the above address for 30 days following the release. Delta Woodside Industries, Inc. -- whose corporate credit rating is currently rated at CCC by Standard & Poor's -- is headquartered in Greenville, South Carolina. Through its wholly owned subsidiary, Delta Mills, it manufactures and sells textile products for the apparel industry. The Company employs about 1,600 people and operates five plants located in South Carolina. DELTRONIC CRYSTAL: Taps Nowell Amoroso for Legal Services --------------------------------------------------------- Deltronic Crystal Industries, Inc., asks the U.S. Bankruptcy Court for the District of New Jersey for a nod of approval to employ the legal services of Nowell Amoroso Klein Bierman, P.A. Nowell Amoroso is expected to: (a) advise the Debtor with respect to its powers and duties as Debtor-In-Possession in the continued operation of its business and in the management of its property. (b) negotiate with the Debtor's creditors towards a Plan of Reorganization and to take the necessary legal steps to confirm such a plan. (c) prepare on behalf of the Debtor, as Debtor-In- Possession, all appropriate applications, orders, reports and other legal pleadings. (d) appear before the Bankruptcy Court in order to protect the Debtor's interests. (e) perform all other necessary legal services for the Debtor, as Debtor-In-Possession. Nowell Amoroso's hourly rates for professionals are: Herbert C. Klein $325 per hour David Edelberg $295 per hour Anthony Pantano $250 per hour Denise T. O'Donnell $200 per hour Jason R. Mischel $175 per hour Paul S. Evangelista $150 per hour Deltronic Crystal Industries, Inc., provider of vertically integrated optical component solutions to the communications and laser photonics industries, utilizing its crystal growth experience, filed for chapter 11 protection on January 31, 2003 in the U.S. Bankruptcy Court for the District of New Jersey (Bankr. N.J. Case No. 03-13218). David Edelberg, Esq., at Nowell Amoroso Klein Bierman, P.A., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $7,691,899 in total assets and: $2,103,921 in total debts. ENERGY WEST: Moves Annual Shareholders' Meeting to November 12 -------------------------------------------------------------- Energy West, Incorporated (Nasdaq: EWST) announced that the 2003 Annual Stockholders Meeting will be held on November 12, 2003 instead of October 31, 2003, as previously scheduled. Commenting on the delay in the meeting date, the Company cited recent activities by a group of dissident shareholders, including The Turkey Vulture Fund XIII, Ltd., an Ohio limited liability company. The group including The Turkey Vulture Fund has indicated its intention to solicit proxies from shareholders of Energy West for election of directors at the 2003 Annual Stockholders Meeting, and the Company believes that the delay is required for the shareholders to have time to consider any information they receive in connection with any such solicitation. The Company intends to distribute additional materials supplementing the information in its 2003 Notice of Annual Meeting and Proxy Statement dated October 9, 2003. Energy West's March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $2.4 million. ENRON: Enron Acquisition Seeks Clearance for Reemay Settlement -------------------------------------------------------------- Enron Acquisition III Corporation, pursuant to Section 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, asks the Court to: (1) approve its Settlement Agreement with Reemay, Inc. and GESF Energy Capital, LLC; (2) authorize it to terminate an Energy Services Agreement, an Estoppel Agreement, certain Security Agreements, certain Loan Agreements and other related agreements; (3) authorize it to transfer all of its assets relating to a chilled water and compressed air generation facility free and clear of all liens, claims, encumbrances, recoupment, netting and deduction to Reemay; and (4) authorize it to enter into a mutual release of all claims, obligations and liabilities under the Energy Services Agreement, the Estoppel Agreement and certain Loan Agreements. On May 28, 1997, Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that FMES Incorporated and Reemay entered into an Energy Services Agreement. Pursuant to the Energy Services Agreement, FMES agreed to design, construct and operate a chilled water and compressed air generation facility at Reemay's manufacturing plant in Old Hickory, Tennessee. On June 10, 1997, FMES and Energy Capital Partners Limited Partnership entered into a Construction and Term Loan Agreement. Under the Construction and Term Loan Agreement, ECP agreed, inter alia, to finance the construction of the Facility. Moreover, pursuant to the Construction and Term Loan Agreement: -- FMES and ECP entered into a Security Agreement; -- ECP, Reemay and FMES entered into a Host Recognition and Estoppel Agreement; and -- FMES and ECP entered into an Assignment of Host Customer Agreement and Other Project Documents. In July 1997, Enron Capital and Trade Resources Corporation, doing business as Enron Energy Services, acquired certain assets of FMES, including all of the right, title and interest of FMES in and to the Energy Services Agreement, as amended. In addition, Enron Capital assumed all of FMES' obligations under the Energy Services Agreement, the Construction and Term Loan Agreement, the Security Agreement the Estoppel Agreement and the Assignment -- the Loan Agreements. Ms. Gray informs Judge Gonzalez that Enron Capital subsequently assigned the Energy Services Agreement to Enron Acquisition. On September 30, 1998, Enron Acquisition executed an Amended and Restated Note payable to Enron Capital for $4,003,000. Currently, the outstanding amount due under the Note is $2,500,000. On February 26, 1999, ABB Structured Finance Americas, Inc. acquired all of Enron Capital's right, title and interest in and to the Loan Agreements. GESF subsequently acquired ABB. Due to Enron Corporation's bankruptcy filing, Enron Acquisition's source of funding was terminated. Enron Acquisition sought to sell its assets, which consists primarily of the Facility. Ms. Gray reports that in April 2002, as part of its marketing efforts, Enron Acquisition contacted eight parties, including Reemay, as potential purchasers of the Facility. Six parties submitted bids, with Reemay having the highest and best offer for the Facility and related assets. In line with Reemay's offer, Enron Acquisition enter into a Settlement Agreement with Reemay and GESF wherein: (a) the parties will terminate the Energy Services Agreement and the Loan Agreements; (b) Enron Acquisition will transfer the Facility and related assets to Reemay free and clear of all liens, claims, encumbrances, rights of setoff, recoupment, netting and deduction; (c) Reemay will pay the loan balance to GESF; (d) Enron Acquisition will remit to Reemay a final invoice under the Energy Services Agreement for the period from and after the last date of service last invoiced by Enron Acquisition up to and including the last business date of the calendar month occurring immediately after the Court enters an order approving the Settlement Agreement; (e) Reemay will pay the final invoice amount to Enron Acquisition; and (f) the parties will release each other from all claims, liabilities under the Energy Services Agreement and the Loan Agreements. Ms. Gray contends that the contemplated transaction should be authorized because: (i) Enron Acquisition has taken substantial efforts to identify and contact potential purchasers for the Facility Assets and believes that the Settlement Agreement provides the best transaction for its estate and creditors; (ii) the termination of the Energy Services Agreement and Loan Agreements will relieve Enron Acquisition's estate from a substantial obligation and resolves the issues related to their termination consensually, without litigation; (iii) the Settlement is a product of arm's-length bargaining between the parties; (iv) except for the DIP Financing Facility, there are no known lien attached to the Facility Assets; notwithstanding the Assumed Liabilities, which will be transferred and attached to the gross proceeds of sale with the same validity and priority; and (v) the Settlement saves substantial administrative expenses, including attorney's fees and preserves the remaining assets of Enron Acquisition's estate for its creditors. (Enron Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 609/392-0900) EXIDE TECHNOLOGIES: Committee Earns Nod to Examine R2, et al. ------------------------------------------------------------- The Official Committee of Unsecured Creditors of the Exide Debtors sought and obtained the Court's authority to get documents and information concerning the conduct of R2 Top Hat, Ltd. and R2 Investments LDC. and their affiliates. The Court allows the Committee to investigate whether cause exists to designate R2's claims for voting purposes under Section 1126(c) of the Bankruptcy Code or to equitably subordinate R2's secured or unsecured claims under Bankruptcy Code Section 510(c). R2 holds over: * $75,000,000 face value of Senior Secured Bank Debt; * $103,000,000 face value of 10% Senior Notes; * $18,000,000 face value of 2.95% Convertible Senior Subordinated Notes; and * DM15,000,000 of 9.125% Senior DM Notes. In its capacity as holder of unsecured notes, R2 obtained a seat as an ex officio member of the Committee shortly after the Committee's formation. Although lacking voting rights, R2 was actively involved in the Committee's affairs, participating in Committee meetings, helping formulate Committee strategy, communicating regularly with Committee advisors and members on Committee matters, and receiving confidential information regarding the Committee's concerns on significant matters including plan and valuation issues. In March 2003, R2 abruptly withdrew its participation on the Committee only to resurface as a supporter of the Debtors' proposed Chapter 11 Plan. Pursuant to the Plan, R2 and other members of the Prepetition Bank Group wind up owning Reorganized Exide and controlling one seat on the board of directors, while the holders of over $1,000,000,000 in unsecured claims wind up with nothing. Given R2's switch of allegiances, and the fact that R2 had been privy to sensitive, confidential Committee communications and deliberations, the Creditors' Committee wants to obtain information relating to R2's claim, R2's exercise of and compliance with duties as ex officio, R2's communications with other parties-in-interest, and the circumstances surrounding R2's resignation. The Creditors' Committee believes that the documents requested are narrow in scope and can be easily produced by R2 with minimal time or expense. (Exide Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) FEDERAL-MOGUL: Balks at Russell Reynolds Retention by Committees ---------------------------------------------------------------- Federal-Mogul Corporation and its debtor-affiliates argue that the Official Committee of Unsecured Creditors and the Official Committee of Asbestos Claimants' application to hire Russell Reynolds Associates -- to assist in the selection of post- confirmation management personnel, specifically, the chief executive officer and chief financial officer -- is not based on allegation of any misfeasance or dereliction of duty on the part of existing management nor any assertion that the Debtors' existing CEO, Charles G. McClure, or CFO, G. Michael Lynch, are not adequately and capably managing the Debtors' business affairs. Rather, the Application is based solely on the Committees' desire to immediately begin selecting the Reorganized Debtors' top management. Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub PC, in Wilmington, Delaware, points out that the Application should be denied for these reasons: (a) The Application is premature and its timing is self- defeating; (b) The engagement of an executive search firm at this stage of the proceedings will be disruptive to the Debtors and their business operations, disruptive and demoralizing to employees without any necessity; (c) The Application represents a retaliatory measure by the Committees resulting from the Debtors' initial refusal to accede to the Unsecured Creditors Committee's demand that the Debtors defer the filing of their own request to amend and extend the employment contract of Mr. McClure -- a demand to which the Debtors have subsequently acceded by withdrawing the motion involving Mr. McClure's employment contract; and (d) The Court previously advised the Unsecured Creditors' Committee that it would not permit them to hire a "head hunter" at this stage in the Chapter 11 proceedings. Ms. Jones notes that under normal circumstances, the Court might conclude that it would be judicially efficient to grant the Application at this time so long as the executive search do not commence until 120 days before the Court-scheduled confirmation hearing date. This possible approach would have nearly the same disruptive and harmful effect as if the Court permitted the executive search to begin immediately. Moreover, harm would result to the Debtors' business even if the Court were to partially grant the Application at this time subject to deferring the commencement of the executive search until shortly before the confirmation hearing. The Debtors want the Application denied without prejudice to its renewal after the Court's approval of the disclosure statement. Additionally, Ms. Jones says, the Application is appropriately devoid of any challenge to the integrity, expertise or professionalism of the Debtors' existing management. As a result, even if they believe that the Application should be denied outright, the Debtors assert that its existing management personnel, including Mr. McClure and Mr. Lynch, should be included among the potential management candidates screened by Russell Reynolds. (Federal-Mogul Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENSCI ORTHOBIOLOGICS: Bankruptcy Court Confirms Chapter 11 Plan ---------------------------------------------------------------- IsoTis S.A. (SWX/Euronext Amsterdam: ISON) and GenSci Regeneration Sciences Inc. (TSX: GNS) announce that on October 14, the United States Bankruptcy Court confirmed GenSci OrthoBiologics' Chapter 11 Plan of Reorganization, thereby resulting in the company's emergence from bankruptcy protection. As widely expected, the emergence of GenSci OrthoBiologics effectively seals its merger with IsoTis. The Effective Date of the merger is October 27. Jacques Essinger, Chief Executive Officer of IsoTis, commented: "The recent near unanimous vote in favor of the merger by both shareholder bases was a tremendous vote of confidence in IsoTis OrthoBiologics. The result of [Tues]day's hearing takes away the last hurdle for the new combination. Since the announcement of the merger in June, we have operated throughout under the realistic assumption that the hearing would have a positive outcome, and we have prepared the organization accordingly. We can now effectively execute our action plan, deliver to the shareholders the growth they voted for, and overall fulfill the promises of IsoTis OrthoBiologics." James Trotman, MD, Founder and Chairman of GenSci and future Chairman of IsoTis, said: "[Wednes]day marks a momentous occasion. The emergence from Chapter 11 after almost two years is certainly something for us to celebrate. First I must thank our employees for their dedication, thus making the merger with IsoTis possible. Next, I want to thank our loyal customers, representatives and vendors who have helped us succeed in an environment where most companies would have failed. Our thanks also goes out to our shareholders, both long term investors as well as the new investors who have been recently introduced to our merging companies. Our full attention must now go to fulfill the immense potential which you have all made possible." Last Steps after Effective Date The Effective Date of the merger is October 27. Thereafter, the shares of GenSci OrthoBiologics and related assets are transferred to IsoTis by GenSci Regeneration Sciences Inc., for which IsoTis will deliver 27,521,930 IsoTis shares to GenSci Regeneration. These shares are to be distributed among GenSci Regeneration's shareholders (after a certain withholding to pay for Canadian taxes) in connection with a Plan of Arrangement under the Company Act (British Columbia). It is expected that GenSci Regeneration shareholders will be able to trade their new IsoTis shares on the Euronext and SWX on October 31 and on the TSX the following week, barring any unforeseen circumstances. IsoTis has received conditional approval to list the IsoTis Shares (including the IsoTis Exchange Shares) on the Toronto Stock Exchange. Listing is subject to IsoTis meeting TSX requirements, including the filing of documentation as soon as possible after the closing of the GenSci Plan of Arrangement, currently scheduled for October 27, 2003. Listing on TSX will occur as soon as practicable thereafter. Outlook As previously stated, in light of recent revenue growth and market penetration trends of the company's products, management expects that full-year 2003 sales of IsoTis OrthoBiologics will slightly exceed 2002 combined sales of US$ 23 million. Management expects IsoTis OrthoBiologics to become cash-flow break-even and profitable during 2005. GLOBAL CROSSING: Court Disallows 335 Unsubstantiated Claims ----------------------------------------------------------- Global Crossing Ltd., and its debtor-affiliates compared the claims filed against them with their books and records and have determined that 337 Claims cannot be substantiated. Michael F. Walsh, Esq., at Weil, Gotshal & Manges LLP, in New York, explains that: (a) the Claimants failed to provide sufficient documentation to support their Claims; (b) the liabilities asserted in the Claims are not contained in the Schedules; and (c) the Claims were not identifiable through the Debtors' examination of their books and records. Thus, the GX Debtors object to the 337 Unsubstantiated Claims totaling $8,929,530 and ask the Court to disallow and expunge them in their entirety. Among the Unsubstantiated Claims are: Claimant Claim No. Amount -------- --------- ------ Dennis White 8331 $162,083 Utelco, Inc. 4544 163,944 Ubet Telecom 836 144,980 William Simpson 5464 120,000 Margaret R. Lockwood 8161 119,600 James William Harrison 1660 3,000,000 Gadjraj and Sons 7822 3,394,298 ATX Communications 6052 398,993 Arvig Telephone Co. 4594 114,794 Mr. Walsh tells the Court that to the extent any of the Claimants provide the Debtors with evidence corroborating the Unsubstantiated Claims, the Debtors will consider the evidence available and proceed as if a response to the Objection has been filed in accordance with the Claims Objection Procedure. * * * The Debtors withdrew their objection to Robert G. Muejl's Claim No. 2110. Accordingly, Judge Gerber sustains the Debtors' objection to 335 Unsubstantiated Claims. The hearing on the Debtors' objection to Gadjraj and Sons' Claim No. 7822 is adjourned. (Global Crossing Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 609/392-0900) HQ GLOBAL: Court Confirms 2nd Amended Joint Reorganization Plan --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware confirmed the Second Amended Joint Plan of Reorganization of HQ Global Holdings, Inc., and its debtor-affiliates after finding that the Plan complies with each of the 13 standards articulated in Section 1129 of the Bankruptcy Code. The rights afforded under the Plan and the treatment of Claims and Interests under the Plan will be in exchange for and in complete satisfaction of all Interests arising on or before the Effective Date, including any interest accrued on Claims from the Petition Date. In accordance with Bankruptcy Rule 2002(c)(3), Sections 4.07, 11.02 and 11.03 of the Plan provide for, among other injunctions, as of the Effective Date: a. all entities that have held, currently hold or may hold a Claim or other debt or liability that is discharged or an Interest or other right of an equity security holder that is terminated pursuant to the terms of the Plan are permanently enjoined from taking any of the following actions on account of any such discharged Claims, debts or liabilities; b. all entities that have held, currently hold or may hold any claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action or liabilities that are released pursuant to the Plan are permanently enjoined from taking any action against any released entity or its property on account of such released claims; and c. to the extent any release is limited to those voting in favor of the Plan, any injunction relating to such release will be similarly limited to those voting in favor of the Plan. All subordination rights that a holder of a Claim may have are discharged and terminated, and all actions related to the enforcement of such subordination rights are permanently enjoined. Accordingly, the Debtor state that "distributions pursuant to the Plan to holders of Allowed Claims will not be subject to payment to a beneficiary of those terminated subordination rights or to levy, garnishment, attachment or other legal process by a beneficiary of those terminated subordination rights unless otherwise provided in the Plan." HQ Global Holdings Inc., one of the largest providers of flexible office solutions in the world, filed for chapter 11 protection on March 13, 2002 (Bankr. Del. Case No. 02-10760). Daniel J. DeFranceschi, Esq. at Richards, Layton & Finger, P.A. and Corinne Ball, Esq. at Jones, Day, Rtavis & Pogue represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of more than $100 million. INFOUSA: Third-Quarter EBITDA Slides-Down to $17 Million -------------------------------------------------------- infoUSA(R) (Nasdaq:IUSA) reports the financial results, key financial highlights of the company's operations and selected balance sheet items for the third quarter of 2003. (amounts in thousands, except per share amounts) 3rd Qtr 3rd Qtr YTD 2002 YTD 2003 2002 2003 ------- ------- -------- -------- Net sales 77,171 77,379 227,936 232,290 EBITDA 20,926 16,824 63,979 60,558 Operating income 14,113 9,742 42,886 39,199 Net income 6,404 3,632 15,496 15,212 Total debt 198,758 153,387 198,758 153,387 RESULTS OF OPERATIONS Vin Gupta, Chairman and CEO, infoUSA, said, "During the third quarter, two items reduced our reported earnings per share by $0.05 to $0.07. First, an accrual for litigation charges of $1.7 million involving a former employee's stock options. Second, special charges totaling $2.2 million related to the redemption of $31 million of our high yield bonds. This bond redemption benefits the company by reducing future interest payment obligations. "Our third quarter EBITDA of $16.8 million decreased by $4.1 million due to three factors. First, an accrual of $1.7 million for the aforementioned litigation charge. Second, the pre-planned increase in advertising and selling expenses as we hired additional sales professionals and we increased our mailings of catalogs and brochures. The third factor was that we did not achieve our expected revenue growth in Polk City Directories." "Over the third quarter, we progressed at our goal of growing revenue internally. Excluding the temporary setback at Polk, revenues at our two core business groups increased significantly. Our Small Business Group recorded revenue of $37.9 million during the third quarter. Excluding Polk City Directories, Small Business Group revenue grew by 8%, as we intensified our marketing and advertising efforts. Our Large Business Group revenue of $39.5 million remained strong, up 9%. Despite weakness in the 'email acquisition' business, our email division was profitable due to the strength of our 'email retention' business and our success at providing our large business customers with integrated database marketing and email management solutions. We have combined the Yesmail/ClickAction(R) companies at one location in San Carlos, California. By this combination, we are able to capitalize on the synergies of the two organizations." "We continue to de-leverage the company. Our strong operating cash flow enabled us to significantly reduce long-term debt to $153 million at the end of the third quarter, from $199 million the prior year. We have restructured our long-term credit facility and used a portion of the proceeds to purchase and redeem $62 million of our high yield bonds over the past nine months. In conclusion, we anticipate that internal revenue growth, encouraged by the increased marketing and advertising efforts, as well as lower interest costs, will enable us to accelerate our future growth in earnings and in shareholder value." BLUEPRINT FOR FUTURE GROWTH Gupta continued, "As previously announced, we have appointed Rob Jelinek our new general manager for Polk. He was a senior level sales professional at Procter & Gamble (NYSE:PG). He plans to grow revenue by bundling our printed directories with DVD and internet access for the Polk City Directories, at an affordable monthly subscription price. The subscription price will include many new features including frequent updates, greater selection features and downloadable information. The Polk City Directories will not only be a reference tool for small businesses, but also a sales and marketing tool. Rob Jelinek will also be hiring and training many new sales people to market this expanded set of solutions to small businesses." "A major component of our blueprint for internal revenue growth will be to lease our directory products in bundled format on a monthly subscription basis. The bundles will include a printed directory, DVD with four updates, Internet access and personalized service. We believe that our customer is willing to pay for complete solutions. We are hiring more sales people so they will be in touch with their customer on a monthly basis, making sure they are using the product and also to act as a consultant to help them in sales prospecting." "Another avenue of internal revenue growth will be the successful launch of our Sales Genie(R) solution to a wide audience of small businesses. Sales Genie(R) offers small business customers a dedicated PC that includes infoUSA's databases of businesses, consumers and business credit reports for their market area and sales prospecting software. The customer receives four updates to their DVD product. The DVD allows them lightning fast access, even if the internet is not available. The databases are continuously updated and available on demand. Sales Genie(R) represents a total sales prospecting and lead generation solution for small businesses at an affordable monthly subscription price of $250. We believe that most small businesses like to have a buffet of all products and services for sales prospecting at a reasonable price per month. Our recent launch of Sales Genie(R) in the Tampa/St. Pete market area and Omaha market area, leads us to believe that this is the right strategy to approach small businesses. In addition, every customer is assigned an account executive whose responsibilities include visiting customers once a month, face-to- face, to make sure that they are using the product and they teach the customer new applications, so that Sales Genie(R) becomes an integral part of their sales prospecting and marketing applications. We believe that the success that the Bloomberg(R) Terminal achieved in the financial industry, can easily be attained by Sales Genie(R) in the small business market as the premier sales prospecting application." "The Company has retained ZS Associates to conduct a marketing study of small businesses and their needs for sales prospecting. This study will help us match our products to the customer needs." "We have also retained AdStore(R), a leading Washington, DC based advertising agency for a major launch of Sales Genie(R) in the Tampa/St. Pete market area. AdStore(R) is a small boutique ad agency with clients like JetBlue(R). We believe branding and advertising is the key to the success of Sales Genie(R)." "We just launched our SalesLeadsUSA(R) product which will be sold through the retail channel. This DVD based product is meant for sales people and entrepreneurs. The early indications are that the sell through of these products through retailers has been better than expected. We intend to provide more advertising support for these products. We believe there are potentially 20 million sales people, such as real estate agents, insurance agents, stock brokers, contractors, multiple channel sales people, and work at home entrepreneurs. These sales people or entrepreneurs are willing to spend $25 per month for a sales prospecting database. Our SalesLeadsUSA(R) product gives them exactly that. They can find sales leads for their products and services in their local area and become more efficient. We are also experimenting with Direct Response TV for selling the SalesLeadsUSA(R) products to this marketplace. We have also upgraded our subscription sales department under the leadership of Jim Bata. It is our intention that every subscriber should be contacted once per month so that we can help them in using the product and have a higher retention of our subscription customers." "The growth of our organization depends on quality management. In the recent months, we have recruited many high caliber executives who have experience in the industry. To name a few, we have hired Rob Jelinek, Jim Bata, Bill Miklas, Raj Das, Tom Alison, Shirlee Jacobson, Chuck Hendriks, Diane Richardson, Ed Henrich and many other mid level executives. We believe that these key executives will help us in our growth next year." Gupta concluded, "At infoUSA we could easily coast, produce 30% EBITDA and be a cash cow. But we believe that that is not enough. We see a potential market of 3.8 million small businesses at $3,000 per year. That means $11 billion per year market potential. We plan to capture more and more of that market share. To accomplish that, we will be investing in product development, advertising, marketing, more sales people, more training for our customers and more branding. We believe that this investment is the right thing to do for the long-term growth of the company. During the last six months, we have been focusing on this growth and we believe that in the future we will see positive results." Highlights of the Third Quarter: Net Sales, Operating Income and EBITDA Net sales for the third quarter 2003 were $77.4 million versus $77.2 million in the third quarter of 2002. Operating income was $9.7 million compared with $14.1 million for the third quarter of the prior year. The decrease in operating income resulted primarily from lower than expected revenue at the Polk Directory division as well as a $1.7 million litigation settlement charge. These two items also impacted third quarter EBITDA, which was $16.8 million versus $20.9 million for the year-ago quarter. Earnings per Share Earnings per share for the third quarter of 2003 were $0.07 versus $0.12 for the comparable quarter of 2002. The earnings per share for third quarter 2003 included special charges of $3.9 million as follows: (i) $0.7 million for the write-off of deferred financing charges for the redemption of $30.8 million of high yield bonds; (ii) $1.5 million for the $.0475 per bond premium paid at redemption; and (iii) $1.7 million of litigation settlement charge involving a former employee's stock options. These special charges reduced our reported earnings per share by $0.05 to $0.07. OPERATING HIGHLIGHTS Large Customer Group - Donnelley Marketing, Walter Karl and Database Licenses The Large Customer group reported third quarter 2003 revenue of $39.5 million, up 9% from $36.1 million for the comparable quarter of the prior year. The group has been able to grow its revenue by better training of its sales force in selling the company's proprietary database products, which are of the highest quality in the industry. Small Business Group The Small Business Group reported third quarter 2003 revenue of $37.9 million, down from $41.1 million the prior year. Excluding the weakness in Polk Directories, which primarily caused the revenue decline, the group experienced an 8% revenue growth, which includes double-digit revenue growth in several of its divisions, namely, Reference USA, National Directories, Major Accounts Division and Consumer Lists. infoUSA -- http://www.infoUSA.com-- (S&P, BB Corporate Credit Rating, Stable), founded in 1972, is the leading provider of business and consumer information products, database marketing services, data processing services and sales and marketing solutions. Content is the essential ingredient in every marketing program, and infoUSA has the most comprehensive data in the industry, and is the only company to own a proprietary database of 250 million consumers and 14 million businesses under one roof. The infoUSA database powers the directory services of the top Internet traffic-generating sites, including Yahoo! (Nasdaq:YHOO) and America Online (NYSE:AOL). Nearly 3 million customers use infoUSA's products and services to find new customers, grow their sales, and for other direct marketing, telemarketing, customer analysis and credit reference purposes. infoUSA headquarters are located at 5711 S. 86th Circle, Omaha, NE 68127 and can be contacted at (402) 593-4500. INTEGRATED HEALTH: IHS Liquidating Want More Time to File Report ---------------------------------------------------------------- Alfred Villoch, III, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that Rule 5009-1(a) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware provides that the Court will enter a final decree at the expiration of 180 days after the entry of an order confirming a Chapter 11 Plan, unless a party-in-interest files a motion to delay the entry of a final decree. Pursuant to Local Rule 5009-1(a), the 180-day period is set to expire on November 10, 2003. Local Rule 5009-1(c) provides that a debtor will file a final report and account in the form prescribed by the United States Trustee the earlier of 150 days after entry of the confirmation order or 15 days before the hearing on any motion to close the case. By this motion, IHS Liquidating LLC asks the Court to: (a) delay the automatic entry of a final decree closing these cases until February 9, 2004; and (b) extend the date for filing a final report and accounting to the earlier of January 6, 2004 or 15 days before the hearing on any motion to close the case. The Court will convene a hearing on November 4, 2003 to consider IHS Liquidating's request. By application of Del.Bankr.LR 9006- 2, the deadline for IHS to file a final report is automatically extended through the conclusion of that hearing. Mr. Villoch notes that although the IHS Plan was confirmed on May 12, the Plan did not become effective until September 9, 2003. Thus, IHS Liquidating has only recently become empowered to carry out its duties under the Plan. While the Debtors were engaged in substantial efforts to reconcile, prosecute and resolve all pending claim objections, Mr. Villoch points out that the process is far from complete. There remain many disputed claims that have not been resolved or litigated, and IHS Liquidating is in the process of determining how best to address those claims, with the goal of maximizing the distribution for creditors. Delaying entry of a final decree will help ensure that distributions are made under the Plan only to those actual creditors, and in amounts, as are appropriate, Mr. Villoch says. Moreover, submitting a final report and accounting now will not be accurate since the claims administration process has not come to a conclusion. (Integrated Health Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTERFACE INC: Look for Third-Quarter 2003 Results on Wednesday --------------------------------------------------------------- Interface, Inc. (Nasdaq: IFSIA) intends to release its third quarter 2003 results on Wednesday, October 22, 2003, after the close of the market. In conjunction with this release, Interface will host a conference call on Thursday, October 23, 2003 at 9:00 AM Eastern Time that will be simultaneously broadcast live over the Internet. Certain information discussed on the conference call will be available on Interface's Web site at http://www.interfaceinc.com/results/investor/under the heading "Press Releases." Daniel T. Hendrix, President and Chief Executive Officer, and Patrick C. Lynch, Vice President and Chief Financial Officer, will host the call. Thursday, October 23, 2003 9:00 AM Eastern Time 8:00 AM Central Time 7:00 AM Mountain Time 6:00 AM Pacific Time Listeners may access the conference call live over the Internet at the following address: http://www.firstcallevents.com/service/ajwz390484001gf12.html or through the Company's Web site at: http://www.interfaceinc.com/results/investor/ Please allow at least 15 minutes prior to the call to visit one of these sites and download and install any necessary audio software. The archived version of the conference call will be available at these sites beginning approximately one hour after the call ends through October 23, 2004 at 11:59 PM Eastern Time. Interface, Inc. (S&P, B Corporate Credit and Senior Unsecured Debt Ratings, Negative Outlook) is a recognized leader in the worldwide commercial interiors market, offering floorcoverings, fabrics and interior architectural products. The Company is committed to the goal of sustainability and doing business in ways that minimize the impact on the environment while enhancing shareholder value. The Company is the world's largest manufacturer of modular carpet under the Interface, Heuga, Bentley and Prince Street brands, and through its Bentley Mills and Prince Street brands, enjoys a leading position in the high quality, designer-oriented segment of the broadloom carpet market. The Company provides specialized carpet replacement, installation, maintenance and reclamation services through its Re:Source Americas service network. The Company is a leading producer of interior fabrics and upholstery products, which it markets under the Guilford of Maine, Stevens Linen, Toltec, Intek, Chatham, Camborne and Glenside brands. In addition, the Company provides specialized fabric services through its TekSolutions business; produces carpets and textiles for residential uses; and produces InterCell brand raised/access flooring systems. INTERNATIONAL PAPER: Martha Finn Brooks Elected to Co.'s Board -------------------------------------------------------------- International Paper (NYSE: IP) announced the election of Martha Finn Brooks, president of Alcan Rolled Products Americas and Asia and senior vice president of Alcan Inc., to its Board of Directors. This election will be effective on December 9, at the board's next regularly scheduled meeting. "Martha brings a tremendous amount of global experience to our board, and IP will benefit from her business and marketing expertise," said John Dillon, chairman and chief executive officer. Ms. Brooks joined Alcan in 2002 having previously held various business development, marketing, sales and general management positions with Cummins Inc. While at Cummins, she worked in China, Mexico, the former Soviet Union, Europe, Africa, and the Middle East holding a wide range of positions. She held a vice president position for six years before moving to Alcan in 2002, as president of Alcan Rolled Products Americas and Asia and senior vice president of Alcan Inc. She holds a B.A. from Yale University in Economics and Political Science as well as a Master's of Public and Private Management specializing in international business. Brooks is a member of the Board of Trustees of Manufactures Alliance (MAPI), an executive committee and board member of The Aluminum Association, and a Trustee of the Yale-China Association. She lives in Cleveland with her husband and three sons. International Paper -- http://www.internationalpaper.com-- is the world's largest paper and forest products company. Businesses include paper, packaging, and forest products. As one of the largest private forest landowners in the world, the company manages its forests under the principles of the Sustainable Forestry Initiative (R) (SFI) program, a system that ensures the continual planting, growing and harvesting of trees while protecting wildlife, plants, soil, air and water quality. Headquartered in the United States, International Paper has operations in over 40 countries and sells its products in more than 120 nations. As previously reported, Standard & Poor's Ratings Services assigned its 'BB+' preferred stock ratings to International Paper Co.'s $6 billion mixed shelf registration. IVACO INC: Canadian Court Extends CCAA Stay Until November 14 ------------------------------------------------------------- Ivaco Inc. (TSX:IVA) announced that the Ontario Superior Court has granted an extension until November 24, 2003 of the Order made pursuant to the Companies' Creditors Arrangement Act (CCAA) granting a stay of proceedings against Ivaco and certain of its Canadian subsidiaries and related partnerships. The initial Order was issued on September 16, 2003 for a thirty- day period. The Company is in the process of preparing a plan of restructuring under the CCAA for the purpose of returning its core businesses to profitability. Ivaco further announced that it has signed an agreement to sell a property in the state of Virginia for US$4 million. The transaction is expected to close no later than January 9, 2004. The Company also announced that it is continuing its search for a Chief Restructuring Officer. Ivaco is a Canadian corporation and is a leading North American producer of steel, fabricated steel products and precision machined components. Ivaco's modern steel operations include Canada's largest rod mill, which has a rated production capacity of 900,000 tons of wire rods per annum. In addition, its fabricated steel products operations have a rated production capacity in the area of 350,000 tons per annum of wire, wire products and processed rod, and over 175,000 tons per annum of fastener products. Shares of Ivaco are traded on The Toronto Stock Exchange (IVA). JACK IN THE BOX: Corp. Credit Rating Slides Down a Notch to BB -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Jack in the Box Inc. The corporate credit rating was lowered to 'BB' from 'BB+'. The outlook is stable. The downgrade is based on the deterioration of credit protection measures over the past two years as a result of declining operating performance. The company has suffered from the soft economy, higher unemployment rates, low consumer confidence, increased price competition, and a shift in consumer preferences away from quick service meals. Standard & Poor's expects that Jack in the Box's results will progress over time due to its focus on food and service; however, the business environment and the company's plans to "reinvent" itself over the next three to five years will make it very challenging for the company to significantly improve credit quality in the near term. "The ratings on Jack in the Box reflect the company's participation in the intensely competitive quick-service segment of the restaurant industry and highly leveraged capital structure," said Standard & Poor's credit analyst Diane Shand. "These weaknesses are partially offset by the company's solid regional presence, generally good operating performance despite recent problems, and its ability to develop and market new products." San Diego, California-based Jack in the Box operates or franchises more than 1,900 Jack in the Box restaurants in 28 states. Financial flexibility is adequate. Liquidity is provided by a $200 million revolving credit facility and $10.2 million of cash and short-term investments as of July 6, 2003. Jack in the Box had availability of $165 million under its revolving credit facility as of July 6, 2003. A light debt maturity schedule over the next few years provides additional flexibility. K2 DIGITAL: Exploring Alternatives Including Asset Liquidation -------------------------------------------------------------- On October 8, 2003 K2 Digital, Inc. notified FutureXmedia Inc., that, in light of delays in its consummating the proposed merger with K2 Digital, it was exploring other options to enhance shareholder value. These options may include a merger or similar transaction with another entity, consummation of the merger with FX, or liquidation of K2 Digital, Inc. K2 Digital entered into an Agreement and Plan of merger with FX on January 15, 2002 and the closing of that transaction has been adjourned on three occasions, most recently to May 31, 2003. At June 30, 2002, the Company's total shareholders' equity deficit is reported at about CDN$200,967. KAISER ALUMINUM: Seeking Approval of Agreements with Insurers ------------------------------------------------------------- In May 2000, Kaiser Aluminum Corporation and its debtor-affiliates instituted an insurance coverage action against certain liability insurers before the Superior Court of California for the County of San Francisco. The coverage at issue in the Products Coverage Action spans the period from 1959 to 1985 and involves 300 insurance policies of 40 insurers, including three liability insurers: * Hartford Accident and Indemnity Company, * Nutmeg Insurance Company, and * Associated International Insurance Company. Hartford issued nine excess liability policies to the Debtors: Policy Number Policy Period ------------- ------------- 57XS 100281 April 1, 1977 to April 1, 1978 57XS 100368 April 1, 1978 to April 1, 1979 57XS 100453 April 1, 1979 to April 1, 1980 57XS 102006 April 1, 1980 to April 1, 1981 57XS 102411 April 1, 1981 to April 1, 1982 57XS 102602 April 1, 1982 to April 1, 1983 57XS 102731 April 1, 1983 to April 1, 1984 57XS 102765 April 1, 1984 to April 1, 1985 57XS 102766 April 1, 1984 to April 1, 1985 Nutmeg, a Hartford-affiliated company, issued one excess liability policy to the Debtors -- Policy Number BXS 100460 for the Policy Period, April 1, 1982 to April 1, 1984. Associated issued five excess liability policies to the Debtors: Policy Number Policy Period ------------- ------------- AEL 051075 April 1, 1980 to April 1, 1981 AEL 051140 April 1, 1981 to April 1, 1982 XS 101336 April 1, 1982 to April 1, 1983 XS 103052 April 1, 1983 to April 1, 1984 XS 106706 April 1, 1984 to April 1, 1985 In the Products Coverage Action, the Debtors seek a declaratory judgment against the Insurers as to their coverage obligations under the policies with respect to Kaiser's Asbestos Products Claims. The disputes between the parties include a dispute over whether Hartford, Nutmeg and Associated are obligated under certain of the policies to pay (a) defense costs in addition to the policies' limits of liability and (b) defense costs as they are incurred and for claims that are dismissed without payment by or on behalf of the Debtors. The Debtors entered into two separate confidential agreements, one with both Hartford and Nutmeg and another with Associated. The two stipulations will resolve the defense costs issues between the parties. Etta R. Wolfe, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, states that while the Stipulations do not resolve all the issues in dispute with Hartford, Nutmeg and Associated in the Products Coverage Action, they do resolve significant defense cost issues. Ms. Wolfe points out that the Stipulations will: (a) eliminate uncertainty regarding the payment of defense costs by Hartford, Nutmeg and Associated; (b) eliminate the continuing costs of litigating the defense cost issues with Hartford, Nutmeg and Associated; and (c) allow the Debtors to receive certain benefits under the Hartford, Nutmeg and Associated policies. At the Debtors' request, Judge Fitzgerald approves the Stipulations. Judge Fitzgerald also modifies the automatic stay to permit the Debtors and the Insurers to consummate the Stipulations. According to Ms. Wolfe, substantially similar stipulations that resolve defense coverage issues in dispute between the Debtors and other insurers will equally benefit the Debtors' estate. Judge Fitzgerald rules that the Debtors may enter into further settlements with other insurers without further Court approval. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, Judge Fitzgerald requires the Debtors to serve 10 days advance notice of any Future Stipulation to: * the Statutory Committee of Unsecured Creditors, * the Statutory Committee of Asbestos Claimants, and * Martin J. Murphy as the Legal Representative for Future Asbestos Claimants. (Kaiser Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) KEYSTONE AUTOMOTIVE: S&P Assigns Low-B Credit & Debt Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Keystone Automotive Operations Inc. In addition, Standard & Poor's assigned a 'B+' senior secured bank loan rating to Keystone's planned $165 million bank facility and a 'B-' rating to the company's planned $175 million senior subordinated note issue due in 2013. The ratings outlook is stable. The senior subordinated notes will be issued under Rule 144A with registration rights. Proceeds from the bank loan and senior subordinated note issue will be used for the acquisition of the company by Bain Capital for $440 million. The bank loan is rated the same as the corporate credit rating, indicating that there would be a strong likelihood of substantial recovery of principal in the event of default or bankruptcy, with minimal loss expected. "The ratings reflect Keystone Automotive Operations Inc.'s participation in the competitive and highly fragmented specialty equipment segment of the automotive aftermarket industry, small sales and EBITDA base, and high leverage," said Standard & Poor's credit analyst Patrick Jeffrey. These risks are mitigated somewhat by the company's leading position in its market segment. Keystone is the leader in the highly fragmented and competitive specialty equipment sector of the automotive parts aftermarket segment. This segment represents a relatively small part of the total automotive aftermarket industry, the majority of which consists of replacement parts. While Keystone maintains the leading position, with significantly greater sales than its next largest competitor, the company's sales and EBITDA are relatively small at about $370 million and $45 million, respectively, in 2002. This provides less cushion for a decline in operating performance given the company's highly leveraged pro forma capital structure. Liquidity is satisfactory for the rating. Bank loan amortization until year six is expected to be funded with free cash flow and the revolver. Maturities totaling $55 million in 2009 will most likely have to be refinanced. KINGSLEY COACH: Mantyla Reynolds Expresses Going Concern Doubt -------------------------------------------------------------- Mantyla Reynolds, of Salt Lake City, Utah, independent auditor for The Kingsley Coach, Inc., has stated in the Auditors Report to the Board of Directors of the Company, under date of September 29, 2003: "[T]he Company has accumulated losses since inception, has experienced a decline in revenue and has negative working capital which raise substantial doubt about its ability to continue as a going concern." The Company does not at this time have sufficient capital to fund significant growth. Unless additional capital is obtained, the Company will be unable to produce vehicles in sufficient quantities to meet demand. The Company has had poor financial results recently, has incurred substantial losses, and has negative working capital. Although many factors have contributed to this situation, the primary current cause of the situation is the Company's inability to fund production at a rate sufficient for the Company to be profitable. Unless additional capital is obtained, the Company is likely to continue to incur losses. The Company has only one executive officer employed full-time, its President. Until the Company's financial condition improves, it is unlikely that the Company will be able to attract additional competent management. Therefore the Company will depend on its President alone for its executive decision-making. The Kingsley Coach, Inc. is engaged in the business of manufacturing motorhomes, medical transport vehicles and emergency response vehicles, all under the tradename "Kingsley Coach." Although available for a broad variety of uses, each Kingsley Coach has the same sturdy and stable structural design, which characterizes the vehicle as a "Kingsley Coach." The Kingsley Coach, in essence, is a vehicle body (be it an R.V. body or a speciality body) mounted onto a stretched truck chassis. Kingsley Coach opens the back of the cab and welds the body to the open frame, creating a walk-through vehicle with the safety of uni-body construction. The Company's lack of working capital continues to limit its production. As a result, the Company has almost no inventory of finished or near-finished products, and is required to build vehicles only to order. This situation (a) limits Kingsley Coach's potential customers to those willing to wait many months for delivery and (b) eliminates reportable revenue if there is any interruption in production activities (as occurred in fiscal 2002), as the Company has no sales from inventory that can carry it through a trough in production. This situation does not preclude the Company from achieving profitability - it had the same lack of inventory in fiscal 2001, and achieved profits in that year. But the situation does put prospects for profitability at considerable risk. At June 30, 2003 Kingsley Coach had a working capital deficit of $1,638,084, a decline of $366,944 from its deficit at the end of June 2002. The primary reason for the decline is that it has a large liability for customer deposits that were received and used in prior periods. The cash that it now receives on delivery of a new vehicle is often not much greater than the cash expended in producing the vehicle, since the cash profit on the sale is represented by the deposit. Until the Company obtains a source of financing other than the deposits placed by new customers, it will be difficult for it to remedy its working capital deficit. LEAP WIRELESS: Wins Approval to Tap Falkenberg as Expert Advisor ---------------------------------------------------------------- Leap Wireless International Inc., and its debtor-affiliates obtained the U.S. Bankruptcy Court's authority to employ Falkenberg Capital Corporation to provide a market valuation of their personal communications service license portfolio and testify at the Plan confirmation hearing on September 29, 2003. Falkenberg Capital will provide independent valuation of financial advisory services on the Debtors' wireless license portfolio. Specifically, Falkenberg will be: (a) providing the Debtors with an independent review and valuation of their license portfolio on an aggregate and market-by-market basis. All licenses held for both operating and non-operating markets will be evaluated and will include: -- estimated Auction 35 values for licenses; and -- estimated current values for the licenses; (b) identifying and evaluating potential purchasers of the licenses; (c) preparing a written report on the licenses' value for submission to the Bankruptcy Court; (d) assisting the Debtors in preparing for depositions, hearings and trials; and (e) testifying regarding reports made as well as other experts' reports. For its services, Falkenberg Capital will be: (a) paid $85,000 -- half of which will be payable upon delivery of the final written report to the Debtors for submission to the Court and the balance payable upon testimony before the Court; (b) reimbursed for its expenses incurred in connection with its services to the Debtors; and (c) paid $7,500 for each additional day in excess of two days that it is required to testify. (Leap Wireless Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) LNR PROPERTY: Commences Tender Offer for 10-1/2% Sr. Sub. Notes --------------------------------------------------------------- LNR Property Corporation (NYSE: LNR) has commenced a tender offer for all of its outstanding 10-1/2% Senior Subordinated Notes due 2009 for a purchase price equal to 106.892% of their principal amount plus accrued interest to, but not including, the day LNR pays for the Notes it purchases, which is expected to be on November 14, 2003. The tender offer will expire at 5:00 p.m. New York City time on November 13, 2003, unless it is extended. Tendered Notes may be withdrawn at any time until 5:00 p.m. New York City time on the day the tender offer expires. Deutsche Bank Securities is acting as dealer manager for the offer. U.S. Bank Trust National Association will be the Depositary to which tendered 10-1/2% Notes must be delivered by book-entry transfer through The Depositary Trust Company. An Offer to Purchase and form of Letter of Transmittal with which to tender Notes are being sent to noteholders. Copies of these materials can also be obtained from MacKenzie Partners, Inc., which is acting as information agent with regard to the offer, at 105 Madison Avenue, New York, NY 10016; telephone (800) 322-2885. LNR Property Corporation (S&P, BB+ and BB- Debt Ratings, Stable Outlook) is a real estate investment, finance and management company. LNR PROPERTY: Agrees to Sell $300 Million Of Senior Sub. Notes -------------------------------------------------------------- LNR Property Corporation (NYSE: LNR) has agreed to sell $300 million of 7.25% Senior Subordinated Notes due 2013 to qualified institutional investors in a transaction complying with Securities and Exchange Commission Rule 144A. LNR had previously announced that it was proposing to offer at least $275 million of Senior Subordinated Notes. The final amount offered was increased to $300 million. The transaction is expected to close on October 29, 2003. As previously announced, LNR expects to use a portion of the proceeds from the Note sale to purchase all of its 10-1/2% Senior Subordinated Notes due 2009 that are tendered in response to a tender offer LNR is making, and to redeem the remainder of the 10-1/2% Notes on January 15, 2004 at a redemption price equal to 105.375% of their principal amount plus accrued interest. The remainder of the proceeds will be used to reduce senior debt and for general corporate purposes. The purchase of the 10-1/2% Notes as a result of the tender offer and the redemption of the remaining 10-1/2% Notes, together with purchases on October 14 and 15 of $79.9 million principal amount of 10-1/2% Notes, will result in charges to net earnings that may be as high as $16 million, primarily related to the premium being paid for the 10-1/2% Notes. With regard to the 10-1/2% Notes purchased on October 14 and 15 and 10-1/2% Notes purchased through the tender offer, the charge will be in the fourth quarter of LNR's current fiscal year, which ends on November 30, 2003. With regard to 10-1/2% Notes redeemed on January 15, 2004, the charge will be in the first quarter of fiscal 2004. The 7.25% 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 requirement. LNR Property Corporation (S&P, BB+ and BB- Debt Ratings, Stable Outlook) is a real estate investment, finance and management company. LORAL SPACE: Unit to Build New Satellite for PanAmSat Corp. ----------------------------------------------------------- Space Systems/Loral (SS/L), a subsidiary of Loral Space & Communications (OTC Bulletin Board: LRLSQ), announced that PanAmSat Corporation has agreed to issue SS/L an authorization to proceed (ATP) with the design and construction of a new satellite. Revenue for the construction of the satellite will be in excess of $100 million. In addition, PanAmSat has agreed to enter into an option for an in-orbit spare for one of its existing satellites on terms and conditions to be agreed to. The ATP from PanAmSat is for the Galaxy 16 program, a C- and Ku- band satellite with 48 transponders to be delivered December 31, 2005. At the same time, Hughes Electronics Corporation, majority owner of PanAmSat and parent of DIRECTV, notified Loral that the ATPs for two satellites previously issued to SS/L by DIRECTV are now fully enforceable and binding. Further, Hughes advised that DIRECTV will make advance payments of $25 million on each of those two satellite orders and PanAmSat will make an advance payment of $25 million on its new satellite order, for a combined total advance of $75 million. Proceeding with the construction of the satellite for PanAmSat and the two satellites for DIRECTV is subject to the approval of the Bankruptcy Court at a hearing scheduled for October 21, 2003. In connection with this matter, on October 9, 2003, Loral received a proposal from EchoStar Communications Corporation to acquire the DIRECTV 7S satellite (now under construction) for $100 million and to provide ATPs for two additional satellites. Loral, however, has indicated that it intends to proceed with the DIRECTV and PanAmSat agreements rather than the EchoStar proposal. Space Systems/Loral is a premier designer, manufacturer, and integrator of powerful satellites and satellite systems. SS/L also provides a range of related services that include mission control operations and procurement of launch services. Based in Palo Alto, Calif., the company has an international base of commercial and governmental customers whose applications include broadband digital communications, direct-to-home broadcast, defense communications, environmental monitoring, and air traffic control. SS/L is ISO 9001:2000 certified. For more information, visit http://www.ssloral.com Loral Space & Communications is a satellite communications company. Through its Skynet subsidiary, it owns and operates a global fleet of telecommunications satellites used by television and cable networks to broadcast video entertainment programming, and by communication service providers, resellers, corporate and government customers for broadband data transmission, Internet services and other value-added communications services. Loral also is a world-class leader in the design and manufacture of satellites and satellite systems through its Space Systems/Loral subsidiary. MAGNATRAX CORP: Plan Confirmation Hearing Set for October 28 ------------------------------------------------------------ On September 17, 2003, the U.S. Bankruptcy Court District of Delaware approved the Disclosure Statement prepared by Magnatrax Corporation and its debtor-affiliates to explain their Fifth Amended Joint Plan of Reorganization. The Court found that the Disclosure Statement contained adequate information, enabling creditors to make informed decisions whether to accept or reject the Debtors' Plan. Accordingly, the Court fixes a hearing to consider the confirmation of the Debtors' Plan for October 28, 2003, at 4:00 p.m. Eastern Time, before the Honorable Peter J. Walsh. Objections, if any, to the confirmation of the Plan must be received by Clerk of the Bankruptcy Court on or before October 22. Magnatrax Corporation is a diversified North American manufacturer and marketer of engineered building products and services for non- residential and residential construction markets. The Company filed for chapter 11 protection on May 12, 2003 (Bankr. Del. Case No. 03-11402). Joel A. Waite, Esq., Maureen D. Luke, Esq., at Young Conaway Stargatt & Taylor and Andrew A. Kress, Esq., Keith R. Murphy, Esq., at Kaye Scholer LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $207,000,000 in total assets and $326,000,000 in total debts. MARV I & II: Fitch Affirms Ratings on Various Note Classes ---------------------------------------------------------- Fitch has affirmed the ratings on the following classes of notes issued by MARV I Ltd. and MARV II Ltd.: MARV I Ltd. -- $143,397,903 class A-1 senior secured fixed-rate notes due 2009 'AAA'; -- $102,000,000 class A-2 senior secured fixed-rate notes due 2011 'BBB-'; -- $6,000,000 class B senior secured fixed-rate notes due 2011 'B'; -- $15,000,000 class C secured fixed-rate notes due 2030 'CC'. MARV II Ltd. -- $107,299,430 class A-1 senior secured fixed-rate notes due 2009 'AAA'; -- $135,000,000 class A-2 senior secured fixed-rate notes due 2011 'BBB'; -- $6,000,000 class B senior secured fixed-rate notes due 2011 'B+'; -- $12,000,000 class C secured fixed-rate notes due 2030 'CC'. Since Fitch's last rating action, the collateral pools of both MARV I Ltd. and MARV II Ltd. have experienced marginal credit deterioration and par loss consistent with Fitch's previous expectations. As of its Aug. 15, 2003 payment date, MARV I Ltd.'s A/B overcollateralization test was failing at 104.7% versus a trigger of 107.7% and its C OC test was failing at 99.2% versus a trigger of 102.1%. As of the same date, MARV II Ltd.'s A/B OC test was failing at 104.8%, versus a trigger of 105.4% and its C OC test was failing at 100.1% versus a trigger of 102%. Though these tests continue to fail, Fitch believes that the performance of both transactions does not warrant a further change in their respective ratings. Both MARV I Ltd. and MARV II Ltd. are static pool cash flow collateralized debt obligations that are backed by corporate debt, asset-backed securities, emerging market corporate debt, and credit-linked notes. Additionally, MARV I Ltd.'s portfolio includes emerging market sovereign debt. MAXXIM MEDICAL: Gets OK to Tap Thomas Howell as Tax Consultants --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave its stamp of approval to Maxxim Medical Group, Inc., and its debtor- affiliates' application to retain Thomas Howell Ferguson PA as Tax Consultants, nunc pro tunc to July 15, 2003. The professional services expected of Thomas Howell include: a. preparing US, federal tax returns, Ports 1120, state and local income and franchise tax returns, extension requests, amended tax returns and carryback claims; b. calculating federal tax depreciation (Regular, AMT, ACE), gains/losses on disposals of fixed assets, and state tax depreciation; c. performing required calculations under the Uniform Capitalization Rules; d. completing Federal Form 5471, Information Return of U.S, Persons with Respect to Certain Foreign Corporations and Federal Form 5472, Information Return of a 25% Foreign- Owned U.S Corporation or Foreign Corporation Engaged in a U. S Trade or Business; e. assisting and advising the Debtors as to the most optimal tax manner to achieve their postpetition operations and restructuring objectives; f. consulting with the Debtors regarding availability, limitations, preservation, and maximization of tax attributes such as net operating losses and alternative tax credits, minimization of tax costs in connection with stock or asset sales, if any, assistance with tax issues arising in the ordinary course of business while in bankruptcy, such as ongoing assistance with a federal IRS examination and related issues raised by the IRS agent and the mitigation of officer liability issues, and, as needed, research, discussions and analysis of federal and state income and franchise tax issues arising during the bankruptcy period; g. assisting in modeling various restructuring scenarios with regard to the impact of cancellation of indebtedness Income on various tax attributes such as net operating losses, tax basis of assets and alternative minimum tax credits; h. providing accounting assistance, including assisting with the evaluation and implementation of new accounting standards, the evaluation and implementation of improvements in internal accounting controls, recordkeeping and information systems and assisting in the evaluation of accounting implications of actual or proposed contractual arrangements; i. auditing and reporting on the financial statements and supplemental schedules of the Debtors' 401 (k) Plan for inclusion in the Plan's Form 5500 fling with the Department of Labor's Employee Benefits Security Administration; and j. providing such other tax consulting, tax compliance auditing and business advisory services as the Debtors may request. Winston K. Howell, a shareholder of Thomas Howell reports that the firm's standard hourly rates are: Shareholders $250 per hour Principals $190 per hour Managers $170 per hour Seniors $120 per hour Staff $100 per hour Clerical $45 per hour Maxxim Medical Group, Inc., a leading suppliers of custom- procedure trays, nonlatex examination gloves and other single-use products, filed for chapter 11 protection on February 11, 2003 (Bankr. Del. Case No. 03-10438). Brendan Linehan Shannon, Esq., Edward J. Kosmowski, Esq., Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor and Myron Treppor, Esq., Michael J. Kelly, Esq., at Wilkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed both debts and assets of over $100 million. MCALISTER ENTERPRISES: Case Summary & 8 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: McAlister Enterprises LLC 11720 Brockton Lane North Maple Grove, Minneapolis 55369 Bankruptcy Case No.: 03-47079 Type of Business: Provides equipment financing to its affiliated company, Twin Express, Inc. Chapter 11 Petition Date: October 9, 2003 Court: District of Minnesota (Minneapolis) Judge: Robert J. Kressel Debtor's Counsel: Michael L. Meyer, Esq. Ravich Meyer Kirkman Mcgrath & Nauman 80 S 8th Street Suite 4545 Minneapolis, MN 55402 Tel: 612-332-8511 Total Assets: $3,966,555 Total Debts: $5,251,618 Debtor's 8 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Bancorp Equipment Equipment Lease $1,647,087 Finance Inc. 1550 East 79th St #575 Bloomington, MN 55425 Attn: Rich Nelson Tel: 952-851-2505 Navistar Leasing Co. Equipment Lease $1,170,144 2850 West Golf Road Rolling Meadows IL 60008 Attn: Erik Arntzen Tel: 847-734-4518 Citicapital Equipment Lease $666,636 8430 W. Bryn Mawr Avenue 3rd Floor Chicago, IL 60631 General Electric Capital Equipment Lease $563,467 500 1st Avenue Pittsburgh, PA 15219 Tel: 800-754-2904 Wells Fargo Equipment Equipment Lease $348,065 Finance 733 Marquette Avenue #700 Minneapolis, MN 55402 Attn: Colleen Nuesse Tel: 612-667-9753 All Wheels Financial Equipment Lease $312,434 10700 Lyndale Avenue South Bloomington, MN 55420-9880 Attn: Barry Tel: 888-703-3478 Conseco Finance Leasing Equipment Lease $296,890 Trust 50 Washington St. 12th Floor South Norwalk, CT 06854 Tel: 800-998-7852 U.S. Bank Equipment Lease $246,891 MEASUREMENT SPECIALTIES: Joseph R. Mallon Steps Down from Board --------------------------------------------------------------- Measurement Specialties, Inc. (Amex: MSS), a designer and manufacturer of sensors and sensor-based consumer products, announced that Mr. Joseph R. Mallon, Jr. has resigned from the Company's Board of Directors. Effective October 15, 2003, R. Barry Uber will fill the vacancy created by Mr. Mallon's resignation. Joe Mallon served as Chairman of the Board from April 1995 until January 2003 and as Chief Executive Officer from April 1995 to June 2002. From April 1995 to February 1998, Mr. Mallon also served as President. Mr. Mallon commented, "I leave the Board of Directors of MSI with regret, but also with pleasure at having been given the opportunity to help see the Company through a difficult period to its present position of relative strength. This is a great company, with a strong product and technology portfolio and many opportunities for future growth. I have confidence in the Company and in its management team." "While Joe has had some meaningful challenges during his tenure, it was his foresight that put MSI in the sensors business", commented Frank Guidone, CEO. "His knowledge and guidance with respect to the sensor marketplace has been very valuable to me." Mr. Guidone continued, "I am very excited about the addition of Barry Uber to the Board. Barry's operating experience and network, particularly in the heavy equipment industry, will be a tremendous resource to the management team." Mr. Uber is the former President/COO of American Commercial Barge Line and the former President/CEO of North American Van Lines. Prior to that role, Mr. Uber spent 30 years at Ingersoll-Rand Company, where he held continuously expanding global responsibilities including his last role as corporate officer and President of the $ 1.2 billion Construction & Mining Group. "I look forward to working with the MSI management team as they transition from a period of restructuring and focus on future growth, driving the continued recovery and further creation of shareholder value", commented Mr. Uber. Measurement Specialties is a designer and manufacturer of sensors, and sensor-based consumer products. Measurement Specialties produces a wide variety of sensors that use advanced technologies to measure precise ranges of physical characteristics, including pressure, motion, force, displacement, angle, flow, and distance. Measurement Specialties uses multiple advanced technologies, including piezoresistive, application specific integrated circuits (ASICs), micro-electromechanical systems (MEMS), piezopolymers, and strain gages to allow their sensors to operate precisely and cost effectively. As previously reported, Measurement Specialties' independent accountants Grant Thornton LLP, in its Auditors' Report dated May 20, 2003, stated: "The accompanying [sic] consolidated financial statements have been prepared assuming that the Company will continue as a going concern...[T]he Company incurred net losses of $9,097,000 and $29,047,000 for the fiscal years ended March 31, 2003 and 2002, respectively. Additionally, the Company is a defendant in a class action lawsuit and is also the subject of investigations being conducted by the Division of Enforcement of the United States Securities and Exchange Commission and the United States Attorney for the District of New Jersey. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty." MEDIX RESOURCES: CEO Darryl Cohen Named Chairman of the Board ------------------------------------------------------------- Medix Resources, Inc. (Amex: MXR) announced that at a board meeting held on October 10, 2003, Darryl Cohen, 51, the Company's current Chief Executive Officer, was selected by its Board of Directors to serve as the Company's new Chairman of the Board. Cohen succeeds Patrick Jeffries, 50, who is leaving to pursue personal goals. Medix, through its wholly owned HealthRamp subsidiary, markets the CarePoint suite of technologies. CarePoint allows for electronic prescribing, lab orders and results, Internet-based communication, data integration, and transaction processing over a handheld device or browser, at the point-of- care. The combination of these technologies is designed to provide access to safer and better healthcare. Stated Jeffries, "In my role as Chairman, I have enjoyed working with Darryl and the members of the Medix board over the last year, which has been one of great challenges and rewards. I believe Darryl's varied experience, past successes, and continuing management positions make him the ideal Chairman for Medix at this juncture in its evolution." "During the past year we've worked extremely hard to ensure Medix's leadership position in the burgeoning healthcare connectivity marketplace. Patrick's extensive experience has been instrumental in guiding us in our interactions with physicians and other members of the healthcare delivery universe. We're grateful for his long-term service and wish him luck in all his endeavors," said Cohen. "As the new Chairman of Medix, I look forward to continuing my work with the Medix team in shaping and executing Medix's response to the wealth of opportunities in the rapidly evolving healthcare environment," Cohen concluded. An investor in private and public companies, in the past Cohen has frequently worked with the management of the companies in which he's invested, assisting them in the areas of marketing strategy and financing efforts. He is also co-owner of a financial services advisory firm, Omni Financial, providing financial restructuring services for individuals. Earlier, he was President of DCNL Incorporated, a privately held beauty supply manufacturer and distributor he founded in 1988 and sold to Helen of Troy in 1998. During his tenure as President of DCNL, Cohen was also co-owner and President of Basics Beauty Supply Stores. He is a member of the Board of Directors of Access Marketing and consults for a major media company in the cable television market. Cohen holds a BA in Political Science from the University of California at Berkeley. Medix, through its wholly owned HealthRamp subsidiary, markets the CarePoint suite of technologies. CarePoint allows for electronic prescribing, lab orders and results, Internet-based communication, data integration, and transaction processing over a handheld device or browser, at the point-of-care. The combination of these technologies is designed to provide access to safer and better healthcare. Medix's products enable communication of high value- added healthcare information among physician offices, pharmacies, hospitals, pharmacy benefit managers, health management organizations, pharmaceutical companies and health insurance companies. Additional information about HealthRamp, and its products and services, can be found at http://www.HealthRamp.com On June 20, 2003, upon recommendation and approval of the Company's Audit Committee, Medix Resources, Inc. dismissed Ehrhardt Keefe Steiner & Hottman, PC and engaged BDO Seidman, LLP as the Company's independent auditors for the fiscal year ending December 31, 2003. Ehrhardt Keefe Steiner & Hottman's reports of the Company's consolidated financial statements for each of the years ended December 31, 2002 and 2001 contained an explanatory paragraph as to the Company's ability to continue as a going concern. MILLER INDUSTRIES: Taps Joseph Decosimo & Co. as PwC Replacement ---------------------------------------------------------------- On October 9, 2003, Miller Industries Inc. engaged Joseph Decosimo and Company, LLP, to be its principal accountants. The decision to engage Joseph Decosimo and Company, LLP, was made upon the recommendation of the Company's Audit Committee and the approval of its Board of Directors. The Company's former principal accountants, PricewaterhouseCoopers LLP, resigned effective October 3, 2003. The report of PricewaterhouseCoopers for the year ended December 31, 2002 included an explanatory paragraph. This explanatory paragraph was included as a result of Miller Industries being in default of certain covenants under its senior and subordinated credit facility agreements, and because its subordinated credit facility matured on July 23, 2003. The senior and subordinated credit facility agreements contain certain cross-default provisions and provide for the acceleration of amounts due as well as other remedies in the event of default. The report of PricewaterhouseCoopers indicated that these circumstances raise substantial doubt about the Company's ability to continue as a going concern. The report of PricewaterhouseCoopers LLP for the period ending December 31, 2001 included a separate paragraph regarding the Company's default under certain credit agreements and related waivers. MIRANT CORP: Wants Approval of Amended Prepetition Credit Pact -------------------------------------------------------------- Ian Peck, Esq., at Haynes and Boone LLP, in Dallas, Texas, relates that Mirant Corporation is the borrower under a Four-Year Facility Agreement dated as of July 17, 2001 among Mirant, Credit Suisse First Boston, as administrative agent, and certain banks and other financial institutions as lenders. Under the Four-Year Credit Facility, the Prepetition Lenders agreed to make available to Mirant a working capital and letter of credit facility of up to $1,125,000,000 in aggregate principal amount. Pursuant to the terms of the Four-Year Credit Agreement, Mirant entered into a Letter of Credit Agreement dated September 4, 2001 with Wachovia Bank, N.A. Under the Letter of Credit Agreement, Wachovia agreed to issue letters of credit upon Mirant's request. Mr. Peck tells the Court that under the Four-Year Credit Agreement and the Letter of Credit Agreement, prior to the Petition Date, Wachovia issued letters of credit to support the businesses of Mirant and its various subsidiaries. As of September 5, 2003, $776,000,000 in aggregate principal amount of letters of credit remain undrawn -- the Existing letters of Credit. The beneficiaries under the Existing Letters of Credit include trading counterparties under "safe harbor" contracts, counterparties under power purchase agreements and transportation agreements, lenders under financing debt, Independent System Operators and other vendors and suppliers. Each of the Existing Letters of Credit contains an initial expiry date. However, Mr. Peck explains that a substantial number of the Existing Letters of Credit contain "evergreen" provisions stating that notwithstanding the Scheduled Expiry Date, unless Wachovia serves notice on the relevant Beneficiary of its intention not to renew the relevant Evergreen Letter of Credit, it will automatically renew on the Scheduled Expiry Date for an additional period. In some cases, the terms of the Existing Letters of Credit may provide that in the event Mirant fails to renew an Existing Letter of Credit by a certain period prior to the Scheduled Expiry Date, the relevant Beneficiary will be permitted to draw on the Existing Letter of Credit. A number of the Existing Letters of Credit were issued to support the businesses or operations of non-debtor affiliates. In these instances, the Debtors' primary concern is to ensure that the impact of their Chapter 11 cases on these operations and in particular, Mirant's inability to issue, renew or replace letters of credit, are minimized to the extent possible. Aside from being issued to support the non-debtors, some Existing Letters of Credit were issued pursuant to project financing agreements in lieu of the cash funding of debt service reserve requirements. The project companies whose debt service obligations were supported by Existing Letters of Credit included the Debtors and non-debtor affiliates. Mr. Peck notes that since the Petition Date, $38,700,000 worth of letters of credit has expired or were cancelled in the ordinary course of business and were not replaced, renewed or extended. This represents letter of credit capacity that the Debtors are now unable to utilize for the benefit of their estates. In addition, since the Petition Date, $169,000,000 worth of letters of credit has been drawn. Under the terms of the Four-Year Credit Agreement, upon a drawing of a letter of credit, each Prepetition Lender is required to pay to the Agent, on account of Wachovia, its pro rata share of the drawn amount. Thereafter, Mirant has a reimbursement obligation to the Prepetition Lenders in respect of the principal amount of the drawn letter of credit. Accordingly, since the Petition Date, contingent claims against Mirant in respect of the drawn letters of credit became liquidated. By Court Orders, Mr. Peck recalls that the Debtors were authorized, inter alia, to enter into Postpetition Assurance Agreements with certain trading counterparties who are otherwise entitled to terminate their prepetition contracts with the Debtors by reason of safe harbor contracts. The Orders also authorized Wachovia to extend any letter of credit held by any trading counterparty in its discretion; provided that the extension or replacement does not change, alter or otherwise modify the priority or characteristic of the Prepetition Lenders' reimbursement claims against the Debtors arising in connection with the letter of credit and that the extension or replacement letter of credit will have the priority and characteristic that it would have if it was issued prior to the Petition Date. After the Petition Date, the Prepetition Lenders requested a negotiation of the treatment of all outstanding letters of credit to avoid the drawing on the relevant Scheduled Expiry Date. The Prepetition Lenders proposed that certain outstanding letters of credit should, upon the relevant Scheduled Expiry Date, be extended for an additional period to avoid its drawing. After negotiation, the Debtors and the Prepetition Lenders agreed to enter into an amendment agreement in respect of the Four-Year Credit Agreement. The salient terms of the Amendment Agreement are: (a) All Existing Letters of Credit -- including Evergreen Letters of Credit -- will be capable of being extended pursuant to the terms of the Amendment Agreement; (b) Existing Letters of Credit may be extended, at the election of Mirant, to a date -- the Relevant Termination Date -- which is the earlier of: (i) the date falling six months after the relevant Scheduled Expiry Date for the Existing Letter of Credit -- or a date not falling not later than one year after the Scheduled Expiry Date, as may be required by the terms of the underlying agreement with the relevant Beneficiary with respect to which the Existing Letter of Credit was issued; (ii) the Relevant Termination Date Mirant specifies in a written Extension Notice; or (iii) September 30, 2004; (c) If Mirant wishes to extend any Existing Letters of Credit, it will be required to provide a written notice to the Issuing Bank, requesting the extension and providing all relevant information for the purposes thereof, within a specified period prior to the Scheduled Expiry Date of the relevant Existing Letter of Credit; (d) If the relevant Beneficiary does not deliver an acknowledgement accepting the terms of the extension within a specified period of time, notwithstanding the Extension Notice, the Existing Letter of Credit will expire on the Scheduled Expiry Date; (e) The relevant Beneficiary of an Extended Letter of Credit must be the same entity as the Beneficiary of the Existing Letter of Credit; (f) The face amount of the Extended Letter of Credit may be equal to the then undrawn amount of the relevant Existing Letter of Credit, or a lesser amount elected by Mirant; (g) The relevant Beneficiary's rights to draw on the Extended Letter of Credit will be substantially the same as those set out in the Existing Letter of Credit being so extended; and (h) The Issuing Bank may make modifications to the terms of an Extended Letter of Credit as may be necessary to reflect the terms of the relevant extension, including with respect to Evergreen Letters of Credit, removing the provision providing for the automatic renewal. Mr. Peck informs Judge Lynn that the Amendment Agreement will become effective on the date when certain conditions are satisfied, including Bankruptcy Court approval of the Amendment Agreement and providing: (a) that Mirant's reimbursement obligations in respect of and drawing under the Extended Letter of Credit will constitute a prepetition unsecured claim against Mirant with respect to its bankruptcy case; and (b) confirmation that the issuance of any Extended Letter of Credit pursuant to the terms of the Amendment Agreement will not be recharacterized or otherwise deemed to constitute a new extension of credit for the purpose of Section 364 of the Bankruptcy Code or otherwise. The Amendment Agreement is also conditioned on the Agent obtaining consent to the amendment from 100% of the Prepetition Lenders and from Wachovia. By this motion, the Debtors seek the entry of an interim and final order pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code: (i) authorizing the amendment of the Four Year Credit Agreement to permit the extension of Existing Letters of Credit; (ii) authorizing the execution and performance of the Amendment Agreement; and (iii) seeking confirmation that: (A) Mirant's reimbursement obligations in respect of any drawing under an Extended Letter of Credit will constitute a prepetition unsecured claim against Mirant with respect to the Bankruptcy Cases -- without waiver or prejudice to any objection by a party in interest to the "allowance" of such prepetition unsecured claims; and (B) the issuance of any Extended Letter of Credit pursuant to the terms of the Amendment Agreement will not be recharacterized or otherwise deemed to constitute a new extension of credit for the purposes of Section 364 of the Bankruptcy Code or otherwise. Mr. Peck asserts that the contemplated transactions should be authorized because: (a) By agreeing to assist the Prepetition Lenders in avoiding draws on the Existing Letters of Credit and preventing what are otherwise contingent liabilities against Mirant from becoming prematurely liquidated, the Debtors are building goodwill with their largest credit constituency, which will enhance the efficient administration of the estates and foster an environment of cooperation that may lead to a consensual resolution of these cases; (b) The Debtors expect to derive substantial benefit from the Amendment Agreement. In some cases, if an Existing Letter of Credit expires or is drawn by the Beneficiary, such event may give rise to a default -- or at least a colorable argument that a default had occurred -- on the underlying agreements supported by the Existing Letter of Credit. Where the relevant affiliate whose obligations are supported by the Existing Letter of Credit is not a debtor, the automatic stay is not available to prevent the relevant Beneficiary from exercising such rights as are available to it under the underlying agreement, to the detriment of the relevant non-debtor and indirectly the Debtors and their estates. Even where a potential default may arguably occur with respect to Debtor obligations, the otherwise avoidable expiration of Existing Letters of Credit will be disruptive to the Debtors' businesses and contrary to the general proposition that the Debtors' businesses are continuing to perform without adverse consequence resulting from the Chapter 11 filings; (c) The Debtors will receive a substantial economic benefit from the extension of Existing Letters of Credit supporting their trading activities since the face amount of certain Existing Letters of Credit exceeds the current amount of the underlying obligation -- giving the Debtors excess letter of credit capacity with no administrative cost to the estates; (d) In the event that a Beneficiary allows an Existing Letter of Credit to expire undrawn, the Debtors may be required to provide a collateral on an administrative cost basis; and (e) Absent an agreement with the Debtors, the Prepetition Lenders may seek to unilaterally extend the Existing Letters of Credit without input from the Debtors. * * * Pending a final hearing on the Debtors' request, the Court authorizes the extension of these Letters of Credit: L/C Number Expiry Date Beneficiary Principal Amount ---------- ----------- ----------- ---------------- [SM201633W 09/15/03 Southern California $1,500,000 Edison [SM202363W 09/15/03 Midwestern Gas 50,000 Transmission Co. LC870-130822 09/23/03 Chase as Trustee 85,850,000 LC870-131044 09/28/03 Mitsubishi Int'l. 1,000,000 Corporation LC870-131045 09/28/03 BNP, as Agent 6,118,750 LC870-131046 248,500 LC870-131047 696,890 LC870-131048 1,994,000 LC870-131049 5,142,936 LC870-132498 09/30/03 Reliant Energy Serv. 15,000,000 LC870-133365 09/30/03 Southern California 3,140,000 Gas Company SM200054W 09/30/03 Devon Gas Services 1,000,000 SM200530W 09/30/03 Distrigas of Mass 300,000 SM200780W 10/03/03 Public Utility 600,000 District No. 2 LC870-132495 10/28/03 TXU Electric Co. 27,500,000 LC870-132187 10/31/03 Credit Suisse 19,100,000 LC870-132187 10/31/03 Constellation Power 1,000,000 Source LC870-132450 10/31/03 BP Corporation 30,000,000 North America LC870-134319 10/31/03 Powerex Corporation 2,000,000 SM200590W 10/31/03 Vermont Public Power 250,000 SM200319W 12/31/03 State of Oregon 1,526,697 (Mirant Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) MUZAK HLDGS.: S&P Keeps Negative Outlook on Low-B Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on Muzak Holdings LLC and Muzak LLC, which are analyzed on a consolidated basis, to 'B' from 'B+'. The outlook remains negative. The Fort Mill, South Carolina-based business music services provider had $396 million in consolidated debt and $127 million in debt-like preferred stock as of June 30, 2003. "The downgrade is based on Standard & Poor's expectation of lower earnings and cash flow that will preclude Muzak from achieving the near-term improvement in discretionary cash flow and leverage required to maintain a 'B+' rating," said Standard & Poor's credit analyst Steve Wilkinson. The company's EBITDA growth of 1.9% in the second quarter on a sales gain of 6.5% was weak and reflected lower margin equipment sales and higher operating expenses for sales support, insurance, and other items. Moreover, continued high cash outlays for sales commissions and equipment for lease led to a widening of the company's discretionary cash flow deficit in the second quarter; reversing the steady gains that Muzak had previously exhibited. Ongoing cash flow improvement remains critical because Muzak's liquidity is limited. In addition, the company's cash interest expense is growing due to its second quarter debt refinancing and because its senior discount notes require cash interest payments starting in September 2004. The ratings reflect Muzak's high financial risk due to its reliance on debt and debt-like preferred stock to fund its growth. The ratings also reflect high business risk due to Muzak's lack of operating diversity, the limited demand for its products evidenced by its low target market penetration despite its long operating history, and the high levels of upfront capital required to fund new customer accounts. Balancing these concerns are the company's leading market position, sizable recurring revenue base, solid margins, and customer diversity. NEW CENTURY FIN'L: Applauds S&P's BB- Credit and B+ Debt Ratings ---------------------------------------------------------------- New Century Financial Corporation (Nasdaq: NCEN) has been assigned a long-term counterparty credit rating of 'BB-' from Standard and Poor's Ratings Services. Simultaneously, the Company was also assigned an unsecured debt rating of 'B+' on its recently issued unsecured $210 million convertible senior notes due 2008 issued pursuant to Rule 144A under the Securities Act of 1933, as amended. "We are pleased with the ratings assigned by Standard & Poor's with respect to both our outstanding convertible debt and the Company as a whole," said Robert K. Cole, Chairman and Chief Executive Officer. "These ratings reflect the significant improvement that the Company has made over the last several years in increasing its capital base, cash flow and liquidity. We believe that strategic initiatives recently implemented to strengthen our balance sheet, diversify our revenues and deliver a consistent and growing earnings trend will likely contribute to future upgrades by S&P in our credit ratings. Investment grade status is certainly the financial recognition we seek to achieve," added Cole. New Century Financial Corporation (Nasdaq: NCEN) is one of the nation's largest specialty mortgage companies, providing first and second mortgage products to borrowers nationwide through its operating subsidiaries. New Century is committed to serving the communities in which it operates with fair and responsible lending practices. To find out more about New Century, visit http://www.ncen.com NRG ENERGY: Gets Nod to Implement McClain Bidding Procedures ------------------------------------------------------------ Consistent with the Asset Purchase Agreement, the NRG Energy Debtors sought and obtained the Court's approval to implement these Bidding Procedures: A. Initial Qualification Any bidder wishing to receive information relating to the sale of the Sale Assets will first submit to NRG McClain LLC these Qualifying Information: (a) certified financial statements for the preceding two years; (b) other evidence establishing the bidder's ability to timely consummate the purchase of the Sale Assets; and (c) any additional information reasonably requested by NRG McClain or the Agent in connection with NRG McClain's evaluation of the bid. B. Confidentiality All bidders who request an information packet relating to the Sale Assets will be required to enter into a standard confidentiality agreement with NRG McClain. C. Due Diligence NRG McClain will provide the bidder reasonable access to its books, records and executives to allow the bidder to conduct due diligence prior to the submission of a bid on: (a) the execution of a confidentiality agreement; (b) the delivery of other Qualifying Information; and (c) NRG McClain's determination that the bidder is qualified to participate in the bidding process. NRG McClain will not provide any non-public information to any bidder that it has not delivered or made available to Oklahoma Gas and Electric Company. By participating in the Auction, all Qualified Bidders are deemed to acknowledge that they have had sufficient and reasonable access to NRG McClain's books, records and executives for the purposes of conducting due diligence and opportunity to conduct the due diligence. Qualified Bidders must complete their due diligence prior to the date of the Auction. D. Bid Deadline All Bids must be submitted, so as to be received by no later than 4:00 p.m., prevailing Eastern Time on October 22, 2003 to: -- Kirkland & Ellis LLP, -- Andrews & Kurth, -- Jones Day, -- Milbank, Tweed, Hadley & McCloy LLP, -- Bingham McCutchen, and -- counsel to any subsequently appointed committees. E. Qualifying Bids A qualifying bid will, at a minimum: (a) be delivered to NRG McClain and other parties-in- interest pursuant to the delivery requirements on or before the Bid Submission Deadline; (b) contain an executed copy of a modified version of the Asset Purchase Agreement; (c) provide an Initial Deposit to NRG McClain, which is 5% or, in the case of the OG&E, 2.5%, of the bid amount in cash or other form of consideration; (d) clearly state the portion of the consideration to be paid in cash which must be at least equal to the cash portion of the purchase price provided for in the Asset Purchase Agreement, plus the amount of the Break-Up Fee, and the portion to be paid in any other form of value; (e) provide for the purchase price, taking into account the conditions associated with the proposal, greater than or equal to $166,450,000. The sum is comprised of: (i) the Stalking Horse Bid -- $159,950,000; (ii) the Break Up Fee -- $5,000,000; and (iii) the Initial Overbid Amount -- $1,500,000. (f) identify each executory contract or unexpired lease, the assumption and assignment of which is a condition of closing; (g) provide a statement that the bid will be irrevocable until 10 days after the Closing Date; (h) not contain any contingencies to the validity, effectiveness or binding nature of the offer, including, without limitation, contingencies for financing, due diligence or inspection; (i) include evidence of authorization and approval from the bidder's Board of Directors with respect to the submission, execution and delivery of the bid; (j) provide satisfactory evidence of committed financing or other ability to perform; and (k) give sufficient indicia that its representative who will be attending the Auction is duly authorized to both bid on behalf of the Qualified Bidder at the Auction and enter into and bind the Qualified Bidder to the asset purchase agreement. Any party asserting a lien on the Sale Assets may credit bid the value of the lien; provided, however, that any bid must include a Cash Payment of at least $5,000,000 to cover the Break-Up Fee. If the Agent credit bids the value of the Prepetition Secured Lenders' liens, its bid must include a Cash Payment to cover the Break-Up Fee only if the purchase price is equal to or greater than the purchase price set forth in the Asset Purchase Agreement; provided that the Break-Up Fee will not be payable in the case of an Alternative Transaction resulting from a credit bid made by the Agent after any termination of the Asset Purchase Agreement by OG&E. F. Evaluation of Qualifying Bid Prior to the Auction, NRG McClain, in consultation with its professionals and the Agent, will evaluate each bid, to determine whether the bid is a Qualifying Bid. G. Initial Deposit All Initial Deposits paid to NRG McClain will be held in an interest bearing account subject to the jurisdiction of the Bankruptcy Court. H. Auction If more than one Qualifying Bid is received by the Bid Submission Deadline, NRG McClain will conduct an auction with respect to the Sale Assets. If no Qualifying Bid other than OG&E is received by the Bid Submission Deadline, NRG McClain will report the same to the Bankruptcy Court at the Sale Hearing, where NRG McClain will seek: (a) that OG&E's bid be deemed the highest or otherwise best offer for the Sale Assets, and (b) authority to proceed to close the Sale, in accordance with the Asset Purchase Agreement, as promptly as possible. If required, the Auction will take place on October 27, 2003, at 10:00 a.m., prevailing Eastern Time at the offices of Kirkland & Ellis. Only OG&E, NRG McClain, the Agent, representatives of the Committee, Qualified Bidders and their professionals will be entitled to attend and be heard at the Auction. Only Qualified Bidders will be entitled to make any subsequent bids at the Auction. All Qualified Bidders, or their qualified representatives, must be physically present at the Auction. During the Auction, bidding will begin initially with the highest Qualifying Bid and subsequently continue in minimum increments of at least $500,000 higher than the previous bid. Subsequent bids submitted by OG&E will be deemed to include a credit in an amount equal to the Break-Up Fee. Bidding at the Auction will continue until the highest or otherwise best bid is determined. At the conclusion of the Auction, NRG McClain, in consultation with the Agent, will select the highest or best Qualified Bid. The bidder submitting the Accepted Bid will become the "Winning Bidder," and will have rights and responsibilities of the purchaser. Within 24 hours after adjournment of the Auction, the Winning Bidder will complete and execute all agreements, contracts, instruments or other documents evidencing and containing the terms and conditions on which the Winning Bid was made. I. Sale Hearing The Accepted Bid will be subject to the approval of the Bankruptcy Court at the Sale Hearing. The Sale Hearing will be held on October 28, 2003 at 2:30 p.m., prevailing Eastern Time at the New York Bankruptcy Court. J. Closing After the approval of the Accepted Bid at the Sale Hearing, the Winning Bidder will close the transaction pursuant to the terms set forth in the applicable asset purchase agreement. K. Return of Initial Deposit Within 10 business days after the Closing Date, NRG McClain will return the Initial Deposits to each unsuccessful bidder. L. Failure to Close If the Winning Bidder fails to close the Accepted Bid in breach of the terms of the applicable asset purchase agreement, the Winning Bidder will forfeit the Initial Deposit to, and the Initial Deposit will be retained irrevocably by, NRG McClain. In addition, NRG McClain will also retain the right to seek all other appropriate damages from the Winning Bidder. In the event of a Purchase Default, the next highest or otherwise best Qualifying Bid will automatically be deemed to be the Accepted Bid, and the bidder submitting the bid will be deemed to be the Winning Bidder. (NRG Energy Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) OMNOVA: Weak Oper. Results Prompt Fitch's Ratings Downgrade ----------------------------------------------------------- Fitch Ratings has downgraded OMNOVA Solutions Inc.'s senior secured credit facility to 'BB-' from 'BB+' and senior secured notes to 'B+' from 'BB'. The Rating Outlook remains Negative. The ratings downgrade reflects Omnova's weak operating results during the fiscal third quarter, higher than expected leverage and its exposure to crude oil price volatility. This level of performance was expected to a certain degree, considering the cyclical weakness in refurbishment activity for commercial real estate, specifically for office and hospitality segments and the higher average crude oil costs (a raw material). Operating margins improved for the Building Products segment, however Decorative Products and Performance Chemicals' segment margins declined for the trailing nine months ending August 31, 2003 compared to the same period last year. The company's leverage and interest coverage were worse than expected due to higher debt and lower operating earnings for the twelve month period ending August 31, 2003. Fitch does not expect any substantial debt repayment in the next several quarters and without an improvement in operating earnings, Omnova may need to seek covenant relief under the credit agreement early next year. Omnova's ratings are supported by the company's strong market positions, and liquidity. The company is a leader in areas such as commercial vinyl wallcovering, vinyl and urethane fabrics, and styrene-butadiene latex. On a trailing twelve month basis for the period ended August 31, 2003, Omnova's EBITDA-to-interest incurred was 2.1 times and its total debt(including the A/R program balance)-to-EBITDA was 7.2x. The rating on the senior secured credit facility is one notch higher than the rating on the senior secured notes in part because of the liquidity of its collateral and the expected recovery for the lenders in the event of default. The Negative Rating Outlook continues to reflect the uncertainty of demand improvement in the near term and the potential for higher average raw material costs at the end of 2003 and into 2004. Omnova has been negatively affected by price increases in styrene, butadiene, and polyvinyl chloride; higher average raw material costs may continue to pressure operating margin. In addition, the company awaits an improvement in refurbishment activity, but the pace and strength of improving demand in the near term remains unclear. OMNOVA Solutions is a specialty chemical company with nearly $37 million in EBITDA on sales of $681 million in 2002. The company produces commercial wallcovering, coated fabrics, commercial roofing membrane systems, adhesives, and paper and paperboard chemicals. End-use markets for Omnova's products include construction and home furnishings, textiles, and paper. OWENS & MINOR: Third-Quarter 2003 Results Reflect Strong Growth --------------------------------------------------------------- Owens & Minor (NYSE: OMI) reported that sales for the third quarter ended September 30, 2003, were $1.06 billion, up 7 percent, or $71.1 million, compared to sales of $992.5 million in the third quarter last year. Earnings per diluted common share were $0.34, up 17 percent compared to $0.29 for the prior year quarter. Net income for the third quarter increased 19.5 percent to $12.8 million. These results reflect approximately $1.2 million in unprecedented additional self-insured healthcare costs included in selling, general and administrative expense (SG&A) for the quarter. For purposes of comparison, SG&A for the third quarter of 2002 included a $3.0 million charge resulting from the cancellation of a mainframe computer services contract. "Our business continues to be strong with growth in top line revenues and bottom line profits," said G. Gilmer Minor, III, chairman and chief executive officer of Owens & Minor. "In a competitive market, with less than one percent inflation in our healthcare sector, our top line growth is particularly gratifying. Asset management and cash flow performance also continue to be shining lights in our overall results. We are relentless in our pursuit of ways to reduce our customers' costs, using innovative technology, and eliminating redundancy in the supply chain. Good progress is being made." Other Third Quarter Results For the third quarter 2003, operating earnings remained steady at 2.3 percent of net sales, compared to the same period of last year. Gross margin was 10.5 percent of net sales, compared to gross margin of 10.6 percent from the prior year quarter. SG&A was 7.8 percent of net sales, down from 7.9 percent in the prior year quarter. SG&A expenses for the third quarter were adversely affected by teammate healthcare costs, which were significantly higher than the company has historically experienced. These higher costs resulted from an unusually high number of large claims during the period. "We continue to show success in growing our sales, with another solid increase this quarter," said Craig R. Smith, president and chief operating officer of Owens & Minor. "Our third quarter results reflect the acceleration of spending on our new initiatives. Since we now have new leadership in place for these initiatives, we expect that our spending on these programs will continue to build in the fourth quarter. While we are seeing increased competitive pressure in our marketplace, our supply chain management services, such as OMSolutions(SM), CostTrack(SM) and WISDOM(SM) are designed to help our customers and, over time, strengthen our operating margins. Overall, we had very strong results this quarter." Asset management was very strong in the third quarter, with an improvement in days sales outstanding to 27.5 days. Inventory turns for the quarter were 9.7, down slightly from 9.9 in last year's third quarter. Cash flow from operations for the third quarter was $13.5 million. During the quarter, Owens & Minor adopted Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. Accordingly, distributions on mandatorily redeemable preferred securities are classified as interest expense commencing July 1, 2003. These distributions were previously displayed separately on the income statement. Year-to-date results Year-to-date, sales were $3.1 billion, up 7 percent, or $197.3 million, from the prior year. Net income for the nine months ended September 30, 2003 was $39.3 million compared to $33.0 million, a 19 percent increase. Diluted earnings per share for the first nine months of 2003 were $1.06, up 19 percent from $0.89 in the same period in 2002. Year-to-date, operating earnings were 2.4 percent of net sales, consistent with the corresponding period in 2002, even as the company invested in new strategic initiatives. Gross margin for the first nine months of 2003 was 10.6 percent, consistent with 10.6 percent in the same period last year. SG&A held steady at 7.8 percent, compared to 7.8 percent in the comparable period of 2002. Cash flow from operations year-to-date was a very strong $128.4 million. Outlook for 2003 The company reaffirms its previous guidance on sales growth, which is expected to be in the 5 to 7 percent range for the year. The company also expects that EPS for the year will be an estimated $1.40, consistent with the company's year-long expectations. Abnormal healthcare costs in the third and fourth quarters, as well as the planned expense of building the company's new strategic initiatives, are expected to bring results in at the low end of the company's previous EPS guidance for the year. Recent Highlights During the third quarter, Owens & Minor was ranked number one in the 2003 InformationWeek 500, a prestigious annual listing of the most innovative users of information technology in the United States. Owens & Minor led all companies in the survey for the second time in three years and was the leader among healthcare companies for the fourth year in a row. Owens & Minor is only the fourth company in the survey's history to achieve the number one ranking more than once. For 15 years, InformationWeek, a publication of CMP Media LLC, has tracked the IT agendas of the nation's best-known companies. In all, 27 healthcare and medical companies were named to the InformationWeek 500, including several Owens & Minor supply chain partners. Also during the third quarter, Owens & Minor successfully converted to equity 99.97% of its outstanding $2.6875 Term Convertible Securities, Series A (Securities) issued by Owens & Minor Trust I, a business trust owned by the Company. The OMSolutions(SM) team has created a new Clinical Management consulting group, which will target the clinical areas of the hospital for OMSolutions(SM) services. Owens & Minor has named Dee Donatelli, as OMSolutions(SM) vice president, clinical consulting. She is a recognized leader in healthcare, and has more than 20 years of experience as a nurse, materials manager and healthcare consultant. During the third quarter, the OMSolutions(SM) team signed several new consulting and outsourcing agreements with hospitals across the country, including a comprehensive, three-year supply chain services consulting project with Baylor University Medical Center. Investor Day Owens & Minor will host its annual Investor Day for institutional investors and financial analysts in Richmond, Virginia at its Home Office. The event begins the evening of November 20, 2003, and continues through the day on November 21, 2003. The company intends to webcast a portion of the Investor Day events. Contact Trudi Allcott, Manager, Investor Communications, at 804-935-4291 or truitt.allcott@owens-minor.com to register for the event. Owens & Minor, Inc. (S&P/BB+/Stable), a Fortune 500 company headquartered in Richmond, Virginia, is the nation's leading distributor of national name brand medical/surgical supplies. The company's distribution centers throughout the United States serve hospitals, integrated healthcare systems and group purchasing organizations. In addition to its diverse product offering, Owens & Minor helps customers control healthcare costs and improve inventory management through innovative services in supply chain management and logistics. The company has also established itself as a leader in the development and use of technology. For more information about Owens & Minor, and virtual warehouse tours, visit the company's Web site at http://www.owens-minor.com OWENS-ILLINOIS: Holding 3rd Quarter Conference Call on Wednesday ---------------------------------------------------------------- Owens-Illinois, Inc., (NYSE: OI) expects to issue a news release announcing third quarter financial results after 5 p.m. (Eastern Time) on Tuesday, Oct. 21. The company will hold a conference call on Wednesday, Oct. 22, at 8:30 a.m. (Eastern Time) to discuss these financial results. A live webcast and a replay of the conference call will be available on the Internet at the Owens-Illinois Web site -- http://www.o-i.com The conference call also may be accessed by dialing 888-733-1701 (U.S. and Canada) or 706-634-4943 (International) by 8:20 a.m. (Eastern Time) on October 22. Ask for the Owens-Illinois conference call. A replay of the call will be available from approximately 11:30 a.m. (Eastern Time) on October 22 through October 31. In addition to the Owens-Illinois Web site, the replay also may be accessed by dialing 800-642-1687 (U.S. and Canada) or 706-645-9291 (International). The conference ID number to access the replay is 9410718. Owens-Illinois (Fitch, BB- Bank Debt and Senior Unsecured Note Ratings, Stable) is the largest manufacturer of glass containers in North America, South America, Australia and New Zealand, and one of the largest in Europe. O-I also is a worldwide manufacturer of plastics packaging with operations in North America, South America, Europe, Australia and New Zealand. Plastics packaging products manufactured by O-I include consumer products (blow molded containers, injection molded closures and dispensing systems) and prescription containers. PETROLEUM GEO-SERVICES: Jr. Subordinated Creditors Approve Plan --------------------------------------------------------------- Petroleum Geo-Services ASA (debtor in possession) (OSE:PGS) (OTC:PGOGY) announced that, according to a preliminary tabulation of the voting results in respect of the Company's First Amended Plan of Reorganization, which was filed with the U.S. Bankruptcy Court for the Southern District of New York on September 10, 2003, the requisite number and dollar amount of its junior subordinated debentures voted to accept the Plan. At the Confirmation Hearing for the Plan, scheduled for October 21, 2003, the Company will present to the Bankruptcy Court a final certification of the voting results as part of the Plan confirmation process. Following confirmation, the Company expects to consummate the Plan and emerge from Chapter 11 in November. Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic- and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units. PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit http://www.pgs.com PETROLEUM GEO-SERVICES: Senior Creditors Approve Workout Plan ------------------------------------------------------------- Petroleum Geo-Services ASA (debtor in possession) (OSE:PGS) (Other OTC:PGOGY) announced that, according to a preliminary tabulation of the voting results in respect of the Company's First Amended Plan of Reorganization, which was filed with the U.S. Bankruptcy Court for the Southern District of New York on September 10, 2003, the requisite number and dollar amount of its banks and bondholders voted to accept the Plan. Tabulation of voting results with respect to the Company's junior subordinated debentures will be completed later today. At the Confirmation Hearing for the Plan, scheduled for October 21, 2003, the Company will present to the Bankruptcy Court a final certification of the voting results as part of the Plan confirmation process. Following confirmation, the Company expects to consummate the Plan and emerge from Chapter 11 in November. Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic- and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units. PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit http://www.pgs.com PHIBRO ANIMAL: S&P Upgrades Junk Corporate Credit Rating to B- -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Phibro Animal Health Corp. (formerly Philipp Brothers Chemicals Inc.) to 'B-' from 'CCC+'. The ratings were also removed from CreditWatch, where they had been placed on Sept. 26, 2003. The CreditWatch listing followed the company's announcement that it would issue $105 million in senior secured notes. The proceeds of the issue will be used to repay looming maturities, including existing bank debt, an obligation to Pfizer Inc., and existing senior subordinated notes. The outlook on privately held Fort Lee, New Jersey-based Phibro is stable. Standard & Poor's has also assigned its 'B-' senior secured debt rating to Phibro's $85 million senior secured notes due 2007 and to the $20 million in senior secured notes (also due in 2007) of Phibro's wholly-owned Dutch subsidiary, Philipp Brothers Netherlands III BV. "The rating actions reflect the diminished financial pressure on Phibro following the debt refinancing," said Standard & Poor's credit analyst Arthur Wong. "However, Phibro's low, speculative- grade ratings continue to indicate the company's high level of debt leverage and the intense competition in the animal health and nutritional feed additives market." Phibro's primary business is manufacturing and marketing a diverse line of animal health and nutrition products such as medicated and nutritional feed additives. The company sells its products to international poultry, swine, and cattle markets and is the third- largest player in the animal health business. Rising worldwide demand for meat and greater calls for food safety bode well for the animal health industry. No one customer accounts for more than 4% of the company's total revenues. However, the animal health market is largely dominated by commodity-like products, and the pace of innovation is very slow. Only two new medicated feed additives have launched in the last decade. Standard & Poor's expects the industry to grow by less than 2% annually in the intermediate period. In addition, Phibro competes against both larger rivals with greater financial resources and lower cost generic manufacturers. POLAROID CORP: Committee Sues Judith Boynton to Recoup $1.2 Mil. ---------------------------------------------------------------- On the Polaroid Debtors' behalf, the Official Committee of Unsecured Creditors seeks to avoid and recover $1,197,622 in preferential transfers made to Judith Boynton within one year before the Petition Date. The Preferential Transfers include: Date Type of Transfer Amount ---- ---------------- ------ February 15, 2001 Deferred Compensation $48,937 February 15, 2001 Excess Pension 638,031 March 15, 2001 Stock Award 510,400 August 16, 2001 Deferred Compensation 254 The Preferential Transfers were made for or on account of antecedent debts the Debtors owed to Ms. Boynton before the Preferential Transfers were made. According to Maribeth L. Minella, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware, the Debtors were already insolvent at the time the Preferential Transfers were made. Because of the Preferential Transfers, Ms. Boynton received more than what she would have received as a creditor had the Debtors' bankruptcy cases been under Chapter 7 of the Bankruptcy Code, the Preferential Transfers had not been made, or if Ms. Boynton were to recover her claims in accordance with Bankruptcy Code provisions. Ms. Boynton was an Executive Vice President of Polaroid Corporation and an "insider" within the meaning given under Section 101(31) of the Bankruptcy Code and as used in Section 547(b). The Committee also believes that the Debtors made fraudulent transfers to Ms. Boynton within one year before the Petition Date. The Committee wants to recover these Fraudulent Transfers. Ms. Minella argues that the Fraudulent Transfers constitute transfers of an interest of some of the Debtors' property. The Debtors received from Ms. Boynton less than reasonably equivalent value in exchange for the Fraudulent Transfers. Unless and until Ms. Boynton returns the Preferential Transfers and the Fraudulent Transfers, the Committee insists that all claims Ms. Boynton filed against the Debtors' estates must be disallowed in full. (Polaroid Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 609/392-0900) QUINTEK TECHNOLOGIES: Reports Progress on Debt Restructuring ------------------------------------------------------------ Quintek Technologies, Inc. (OTCBB:QTEK) has filed its 10K-SB annual report online. Management is pleased to report progress on restructuring and retiring the debt of the Company. During the eight months prior to September 30, 2003, management focused on reducing the outstanding debt and liabilities in default. On January 30, 2003 Quintek's employees and prior management team signed agreements to convert $252,213 of monies owed into 1,008,854 shares of Series A Preferred Stock at a rate of ($0.25) twenty five cents per share. During the six month period ended June 31, 2003, the Company received commitments to convert $198,268 of debt into 724,077 shares of Series A Preferred stock and 648,256 shares of Series B Preferred stock at a rate of ($0.25) twenty five cents per share. Through September 30, 2003 we received agreements to convert $20,148 in outstanding past due payables into Series C Preferred stock at ($1.00) one dollar per share. These conversions will become effective at a later date based on other terms and conditions Through September 30, 2003 we received agreements to convert $74,452 in outstanding past due payables into $60,183 of three year promissory notes bearing an annual interest rate of 8%. Andrew Haag, CFO of Quintek stated, "The converted debt amount of just over $500,000, represents a significant portion of our current liabilities and signifies a strong vote of confidence from investors, creditors and vendors. The agreements that have been put in place should allow Quintek to operate in an environment that is more conducive to growth." Haag added, "Our ability to receive more favorable terms for debt and equity and reduce the amount of monies in default should allow us to focus on the next phase of restructuring and turning around Quintek. The next phase will consist of aggressively building and growing Quintek's core business while advancing key business development opportunities." Haag commented further, "Management will continue to work to create a healthier economic environment within the Company, thereby opening the doors for new opportunities to grow and expand Quintek Technologies." Quintek is the only manufacturer of a chemical-free desktop microfilm solution. The company currently sells hardware, software and services for printing large format drawings such as blueprints and CAD files (Computer Aided Design), directly to microfilm. Quintek does business in the content and document management services market, forecast by IDC Research to grow to $2.4 billion by 2006 at a combined annual growth rate of 44%. Quintek targets the aerospace, defense and AEC (Architecture, Engineering and Construction) industries. Quintek's printers are patented, modern, chemical-free, desktop-sized units with an average sale price of over $65,000. Competitive products for direct output of computer files to microfilm are more expensive, large, specialized devices that require constant replenishment and disposal of hazardous chemicals. REDBACK NETWORKS: Sept. 30 Balance Sheet Upside-Down by $79 Mil. ---------------------------------------------------------------- Redback Networks Inc. (Nasdaq:RBAK), a leading provider of advanced telecommunications networking equipment, announced its third quarter results for the period ended September 30, 2003. Net revenue for the third quarter of 2003 was $27.4 million, compared with $22.2 million for the second quarter of 2003 and $17.4 million for the third quarter of 2002. The results for the third quarter 2003 represent a 23 percent increase over the second quarter of this year. GAAP net loss for the third quarter of 2003 was $18.1 million or $0.10 per share compared to a GAAP net loss of $52.9 million or $0.30 per share in the third quarter of 2002. Non-GAAP net loss for the third quarter of 2003 was $21.4 million or $0.12 per share compared to a non-GAAP net loss of $34.8 million or $0.20 per share in the third quarter of 2002. Non-GAAP results exclude amortization of intangible assets, restructuring charges, stock- based compensation, write-off of certain investments, certain impairment and inventory charges, the reversal of an accrual for cancellation of an engineering services contract, the sale of previously reserved inventory and partial recovery of previously written down investments. See the attached table for a reconciliation of our non-GAAP results to GAAP results. At September 30, 2003, Redback's balance sheet shows a total shareholders' equity deficit of about $79 million. As previously announced, Redback has commenced an offer to exchange shares of its common stock for all of its outstanding 5% Convertible Subordinated Notes due 2007 in connection with Redback's proposed out-of-court financial restructuring. The exchange offer will expire at 12:00 midnight, New York City time, on October 30, 2003, unless extended. The terms and conditions of the exchange offer and other important information are contained in Redback's Prospectus/Disclosure Statement dated October 10, 2003. Separately, Redback has mailed a Proxy/Prospectus/Disclosure Statement dated October 10, 2003 to its stockholders in connection with a special meeting of stockholders to be held on October 30, 2003 to approve certain matters related to the proposed financial restructuring. Stockholders and noteholders may obtain additional copies of these disclosure documents by contacting The Altman Group, the information agent for the financial restructuring, at 800-467-0671, or at the Securities and Exchange Commission's Web site, http://www.sec.gov Noteholders may request additional copies of the Letter of Transmittal for the exchange offer by contacting The Altman Group. Redback Networks enables carriers and service providers to build profitable next-generation broadband networks. The company's User Intelligent Networks(TM) product portfolio includes the industry- leading SMS(TM) family of subscriber management systems, and the SmartEdge(R) Router and Service Gateway platforms, as well as a comprehensive User-to-Network operating system software, and a set of network provisioning and management software. Founded in 1996 and headquartered in San Jose, Calif., with sales and technical support centers located worldwide, Redback Networks maintains a growing and global customer base of more than 500 carriers and service providers, including major local exchange carriers, inter-exchange carriers, PTTs and service providers. RELIANT RESOURCES: Closes Desert Basin Plant Sale to Salt River --------------------------------------------------------------- Reliant Resources, Inc. (NYSE: RRI), has completed the sale of its 588-megawatt Desert Basin plant, located in Casa Grande, AZ, to Salt River Project Agricultural Improvement and Power District, of Phoenix, for $288.5 million. SRP had been purchasing all of the power from Desert Basin under a 10-year, power-purchase agreement since the plant went into operation in 2001. The transaction, which was announced July 9, was subject to specified approvals and consents, all of which have been obtained. Reliant Resources, Inc. based in Houston, Texas, provides electricity and energy services to retail and wholesale customers in the U.S. and Europe, marketing those services under the Reliant Energy brand name. The company provides a complete suite of energy products and services to approximately 1.7 million electricity customers in Texas ranging from residences and small businesses to large commercial, industrial and institutional customers. Its wholesale business includes approximately 22,000 megawatts of power generation capacity in operation, under construction or under contract in the U.S. The company also has nearly 3,500 megawatts of power generation in operation in Western Europe. For more information, visit http://www.reliantresources.com As reported in Troubled Company Reporter's October 7, 2003 edition, Fitch anticipated no change in Reliant Resources, Inc.'s credit ratings or Rating Outlook based on the announcement that RRI had reached a settlement agreement with the Federal Energy Regulatory Commission with respect to certain western energy market investigations. RRI's ratings are as follows: - senior secured debt 'B+'; - senior unsecured debt 'B'; - convertible senior subordinated notes 'B-' RIDGECREST VILLAGE: Weak Operating Results Spur Bond Rating Cut --------------------------------------------------------------- Standard & Poor's Ratings Services has lowered its rating to 'BB+' from 'BBB-' on bonds issued for Ridgecrest Village, Iowa by Scott County and the city of Davenport, reflecting weak operating results, lower-than expected liquidity, and thin debt service coverage. The outlook is stable. Factors that support the rating include liquidity that remains adequate on a days' cash basis, a budget for 2004 that projects improved operations, and rebounding occupancies. Ridgecrest Village reported a negative 14.1% operating margin and negative 8.7% excess margin in the year ended June 30, 2003. The weak operations are attributable to some increased expenses, including additional malpractice insurance and agency nursing costs. In addition, occupancy is lower than expected due to the delay in completion of Ridgecrest's new assisted living facility and a slower-than-anticipated fill-up of that facility, Finally, depreciation and interest expenses rose in 2003 due to the completion of the projects funded by the 2000 bond proceeds, including the assisted living facility. Liquidity has dropped in the past few years due to weak operations and construction cost overruns on the projects financed with the $14 million 2000 bond issue. Unrestricted cash and investments, $6.7 million at June 30, 2003, are down by about $1 million since 2001 and equal to 264 days' cash, versus 373 days' cash in 2001. Cash to debt is weak at 26%. Although the $1 million drop in liquidity is not a huge decline, management projected at the time of the 2000 bond issue that liquidity would be $14.3 million in 2004, a level that will clearly not be reached. The lower liquidity and weak investment market returns have hampered the ability to generate investment income, which totaled just $320,000 in fiscal 2003. Management is approaching the weak financial situation with a multipronged effort--increasing fees by 4%-8% in 2004, reducing expenses, and implementing new marketing plans to fill vacant units. The 2004 budget projects a small $147,000 bottom line. "With rate increases in place and efforts to improve occupancy, 2004's results should improve from 2003's level with at least a break-even bottom line," said Standard & Poor's credit analyst Liz Sweeney. "Long term, Ridgecrest will need to bring occupancies up to above 90% at all levels of service in order to restore financial equilibrium," she added. The downgrade affects $26 million in long-term debt. SAMSONITE CORP: Appoints Six New Members to Board of Directors -------------------------------------------------------------- Samsonite Corporation (OTC Bulletin Board: SAMC) announced the appointment of six new members of the Company's board of directors. The new directors consist of Donald Triggs, Richard T. Warner, Reed N. Wilcox and Charles Philippin, who are appointed as independent directors on the Company's board; Lee Sienna, who is a designee of Teachers' Merchant Bank, the private equity arm of Ontario Teachers' Pension Plan; and Ferdinando Grimaldi Quartieri, a designee of Bain Capital (Europe) LLC. Effective October 13, 2003, these new board members join the Company's existing board of directors consisting of Michael Lynton and Johan Tack, who are independent directors, and Antony Ressler, a designee of Ares Corporate Opportunity Fund, L.P. Samsonite (S&P, B Corporate Credit and CCC+ Subordinated Debt Ratings) is one of the world's largest manufacturers and distributors of luggage and markets luggage, casual bags, backpacks, business cases and travel-related products under brands such as SAMSONITE(R), AMERICAN TOURISTER(R), LARK(R), HEDGREN(R) and SAMSONITE(R) black label. SEL-LEB MARKETING: Loan Agreements with Merrill Lynch Terminated ---------------------------------------------------------------- Sel-Leb Marketing, Inc. announced that its loan agreements with its primary lender, Merrill Lynch Business Financial Services Inc., have terminated. As previously announced, the Company has been in default under its Merrill Lynch loans. Merrill Lynch is entitled to exercise all remedies available to it as a secured lender. The Company is in discussions with Merrill Lynch for an extension of its loan agreements. There can be no assurance that Merrill Lynch would extend the maturity of its loans to the Company, and there can be no assurance Merrill Lynch will not pursue actions as a result of the Company's default. Any inability to extend the Merrill Lynch loans or obtain adequate alternative financing would have a material adverse effect on the Company, including possibly requiring the Company to significantly curtail or cease its operations. Sel-Leb is a company primarily engaged in the distribution and marketing of consumer products through mass merchandisers, discount chain stores and food, drug and electronic retailers. The Company's business also includes marketing and selling products to be promoted by celebrity spokespersons and sold to mass merchandise retailers. SIEBEL SYSTEMS: Third-Quarter 2003 Net Loss Reaches $59 Million --------------------------------------------------------------- Siebel Systems, Inc. (Nasdaq:SEBL), a leading provider of business applications software, announced financial results for the quarter ended September 30, 2003, within the range of management guidance presented July 22, 2003, and consistent with preliminary financial results presented October 2, 2003. Revenues for the third quarter of 2003 were $321.4 million. Revenues from license fees for the third quarter of 2003 were $110.0 million. Revenues from maintenance, consulting, and other services were $211.4 million. The company's cash, cash equivalents, and short-term investments were $2.027 billion as of September 30, 2003, the net result of approximately $32 million in cash during the quarter offset by a reduction of $307 million from the redemption of convertible debt. The redemption of convertible debt eliminated substantially all of the company's debt as of September 30, 2003. Days sales outstanding in accounts receivable decreased to 53 days in the third quarter of 2003 versus 58 days in the second quarter of 2003. Net loss for the third quarter of 2003, including restructuring and other charges, was $59.3 million, or $0.12 per share. These charges relate to the company's previously announced restructuring and debt redemption. Net income for the third quarter of 2003, excluding restructuring and other charges, was $16.1 million, or $0.03 per share. Restructuring and other charges for the third quarter of 2003 included: -- Restructuring and related charges of $107.2 million -- Debt retirement and associated costs of $10.7 million incurred in connection with the redemption of the company's $300 million convertible subordinated debentures -- A tax benefit associated with both of these charges of $42.5 million With the completion of these restructuring activities, the company believes it is on track to achieve its previously stated goals of $30 million per quarter in savings in the fourth quarter of 2003 and $40 million per quarter in savings by the second half of 2004 as compared with Q2 2003 expenses prior to the initiation of this restructuring. Siebel Systems to Acquire UpShot Corporation: Siebel Systems announced that it has signed a definitive agreement to acquire UpShot Corporation, a pioneer in delivering hosted CRM service over the Internet, in a cash transaction valued at up to $70 million. Under the terms of the deal, $50 million will be paid in cash upon closing, with provisions for an additional $20 million to be paid in earn-outs during 2003 and 2004. The board of directors of each company has approved the acquisition, which is subject to customary closing conditions. The acquisition is expected to accelerate Siebel Systems' penetration of the hosted CRM market and significantly expand customer choice in this market segment. Siebel Systems Acquires Assets of Motiva, Inc.: Siebel Systems also announced the acquisition of assets of Motiva, Inc., a provider of enterprise incentive management (EIM) software. Siebel Systems is targeting availability for the enhanced integrated offering in the fourth quarter of 2003. The incorporation of Motiva's services-processing architecture will enable users of Siebel Incentive Compensation to handle a much broader variety of compensation plans with greater flexibility and increased performance. Gartner Group estimated the EIM market to be one of the few technology sectors to grow in 2002, and a recent Giga Information Group study predicted that the sector will continue to grow at a compound annual growth rate of 40 percent through 2005. The acquisition is expected to accelerate Siebel Systems' penetration of the EIM market and significantly expand customer choice in this market segment. Siebel Systems Product, Technology, and Industry Leadership Siebel Systems Expands New Product Strategy -- CRM for Everyone: Siebel Systems launched its "CRM for Everyone" product strategy, which provides customers the reach and depth needed to make CRM pervasive throughout their organizations and partner ecosystems at the lowest total cost of ownership. CRM for Everyone also encompasses new products, including Siebel CRM OnDemand, the industry's first and only CRM offering built to combine hosted delivery and fee models in any combination; Siebel 7.7, the company's next release of its enterprise CRM suite; Siebel Analytics 7.7, a new and enhanced suite of customer analytics applications and platform; and new deployment options for Universal Application Network, which now supports both the .NET and J2EE platforms, as well as newly emerging Web Services standards for business process integration. Siebel Systems and IBM Launch Siebel CRM OnDemand: Central to the CRM for Everyone product strategy, Siebel CRM OnDemand is the industry's first and only hosted CRM solution that offers both seamless integration and automated migration to an on premise Siebel CRM application. Siebel Systems, together with IBM Corp., announced that the two companies will jointly develop, market, sell, deliver, and service Siebel CRM OnDemand. Designed for the on demand era, Siebel CRM OnDemand is as easy to use and configure as a Web site. It is a high-availability Internet utility that enables customers to start with a small CRM project, with practically zero start-up time, deploy rapidly, and grow the system as needs change over time. Individuals and companies can sign up for Siebel CRM OnDemand for a monthly subscription price of $70 per user at http://www.crmondemand.com Industry Analysts Agree: "(Siebel) introduced a very credible hosted CRM offering with bells and whistles not seen in this space before," said Denis Pombriant of Aberdeen Group. And according to an October 2, 2003, AMR Research Alert, "Based on the shared data model, Siebel CRM OnDemand should be put at the top of the list by companies that already have Siebel and are pursuing a hosted solution to augment it." Siebel Systems Introduces New Customer Analytic Applications: Siebel Systems announced a number of new and expanded analytics products, including Siebel Analytics 7.7, a suite of enhanced customer analytic applications that includes new, guided analytics and business process integration, expanded vertical solutions, mobile functionality, and numerous analytic platform enhancements; Siebel Enterprise Analytic Platform 7.7, which provides customers new levels of business intelligence and insight across the enterprise; and an analytics partnership with IBM, which expands both companies' global strategic alliance to include a dedicated IBM Business Consulting Services team focused on Siebel Analytics Applications and the broader enterprise business intelligence marketplace. Siebel Systems Builds Significant Partner Momentum for Universal Application Network: Siebel Systems announced extended relationships with industry-leading integration server vendors to further expand their commitment to building the Universal Application Network ecosystem. The new expansion includes partnering with BEA Systems to deliver Siebel Business Integration Applications for the telecommunications, media, and energy industries on BEA WebLogic Integration 8.1, as well as additional industry-specific business integration applications for the financial services industry and other cross-industry applications. IBM and Siebel Systems also announced their expanded commitment to UAN with the product release of Siebel Business Integration Applications for the IBM WebSphere Business Integration platform. Finally, Siebel Systems and Microsoft are delivering support for UAN with Microsoft BizTalk Server, providing integration support for the .NET platform. By partnering with these integration server vendors, Siebel is delivering comprehensive, customer-driven business process integration solutions that aid customers in enabling the rapid and cost-effective deployment of cross- application, industry-specific business processes. Quarterly Highlights The following highlights were announced or occurred since Siebel Systems' last earnings statement: Siebel Systems Secures New Customers: The company concluded new software licensing agreements with more than 126 new customers in the third quarter, including Allianz First Life Insurance Company; Bridgestone Europe NV; Burberry Spain, S.A.; Burlington Northern Santa Fe Corp.; CarsDirect.com Inc.; Dun & Bradstreet; Energaia, Agencia Municipal de Energia de Gaia; ENI SpA; e-Systems Corporation; Hershey Foods Corporation; Hewlett-Packard Colombia Ltda; Kraft Foods International Ltd.; Locus Telecommunication Inc. Ltd; LSI Logic Corporation; Pfizer Italia, SRL; Ritchie Bros. Auctioneers (Canada) Ltd.; Royal Caribbean Cruise Lines; Sabre, Inc.; Systems Research & Applications Corp.; Thomson Broadcast and Media Solutions Inc.; and US Patent and Trademark Office. Siebel Systems Secures Repeat Orders: In the third quarter, the company concluded additional software licensing agreements with more than 191 existing customers, including Abbey National PLC; Agilent Technologies Inc.; Aspective Ltd.; Bally Gaming, Inc.; Bouygues Telecom; BT; Computer Network Technology Corp.; EDF Energy Plc; Honeywell ACS Industrial Solutions; La Poste; Lockheed Martin Corporation; Loews Cineplex Corporation; Minnesota Mining and Manufacturing, Inc.; National Archives and Records Administration; Nokia Corp.; Safelight Glass Corporation; Siemens AG; Taldor Computer Systems; Teva Neuroscience, Inc.; The Capital Group Companies, Inc.; Trema (Europe) AB; T-Systems International GmbH; and XM Satellite Radio, Inc. Customer Engagements The company concluded new engagements with more than 126 new customers and expanded engagements at more than 191 existing customers, including the following: Centers for Medicare and Medicaid Services, the largest health insurance provider in the United States, is extending its deployment of Siebel Healthcare across its 70 locations nationwide as part of its ongoing efforts to maximize its customer service and satisfaction. CMS is looking to its Siebel system to further improve its level of customer satisfaction as it works to unify the 76 call centers managed by nearly 40 different contractors and modernize its customer service systems. As part of its customer care solution, CMS also will deploy Siebel Reports Server, Siebel SmartScript, Siebel Advanced Search, Siebel Connector 7 for First Logic Libraries, Siebel Tools, Siebel FINS Analytics, Siebel Service Analytics, and Siebel Answers. CMS already has recognized early benefits from its Siebel deployment, including reduced training time, increased call agent productivity, and a reduction in "after-call" work time. DHL, a subsidiary of Deutsche Post World Net, and the world leader in global express and logistics services, has selected Siebel CRM applications for a global sales force automation solution serving more than 12,000 sales professionals across its international operations. DHL will use Siebel Sales to improve sales productivity and effectiveness by implementing sales best practices; reduce IT complexity and costs; and leverage a unified, real-time view of all customer interactions to expand revenue opportunities, improve the customer experience, and acquire and retain new customers. The comprehensive solution will advance Deutsche Post World Net's enterprise-wide value enhancement program (STAR) and will play an integral role in its 3-D initiative to become the world's premiere logistics provider by integrating its group companies -- DHL, Danzas, and Deutsche Post Euro Express -- into the "new DHL." KeyCorp, one of the nation's largest bank-based financial services companies with assets of approximately $85 billion, has chosen Siebel Finance to provide technology that will support its ongoing initiatives to deepen client relationships and generate revenues. KeyCorp chose the Siebel solution to help integrate business processes, make better use of customer data analytics, and provide seamless information to its sales and service teams. KeyCorp has been a customer of Siebel Systems for two years. Reuters, the global information company, has purchased an additional 300 user licenses of Siebel Communications and Media and upgraded 1,500 more to enable streamlined order management and business administration. Reuters has an existing worldwide Siebel capability of more than 4,000 user licenses that supports sales, service, help desk, and client training. As part of a company-wide initiative, Reuters will build on these capabilities using Siebel Order Management and Universal Application Network to deliver its vision of automating the customer interaction from prospect to selling, ordering, fulfillment, and support -- all within Siebel CRM applications -- with increased customer service levels. Reuters will leverage Siebel's industry-specific solution, Siebel Communications and Media, to establish a strategic integration platform based on Universal Application Network that will initially integrate billing and order fulfillment. South African Revenue Services, the tax, customs, and revenue collection arm of the government of South Africa, has selected Universal Application Network to integrate all taxpayer systems and thus provide personnel with a single, comprehensive view of the taxpayer. The Siebel solution will build on South African Revenue Services' existing Siebel Call Center implementation and will integrate citizen-facing service applications with systems managing account balances, payment and receipts history, and imports/exports. The availability of comprehensive, real-time taxpayer information will enable South African Revenue Services to improve citizen service, operate more efficiently, and immediately perform debt equalization to increase revenue collection. Siebel Systems Receives Industry Accolades: CRM Magazine inducted Thomas M. Siebel into its CRM Hall of Fame and honored Siebel Systems with its Enterprise CRM Suite Award. The leading CRM business and technology journal inducted Mr. Siebel into its inaugural CRM Hall of Fame in ceremonies held in August 2003 at the DCI CRM Conference and Exposition in New York City. The award cited Mr. Siebel's achievements as Siebel Systems' founder, Chairman, and CEO and recognized his pioneering vision, strong leadership, and enduring commitment to innovation. In conjunction with the Hall of Fame ceremonies, CRM Magazine also named Siebel Systems the winner of its Enterprise CRM Suite Award, which ranked the CRM suites of leading vendors based on revenue, revenue growth, market share, customer wins, and reputation for customer service. The recognition reflects Siebel Systems' unique position as the CRM application vendor offering customers the deepest domain expertise, the lowest total cost of ownership, and the broadest reach of application functionality. Siebel Systems, Inc. (Nasdaq:SEBL) (S&P, BB Corporate Credit and B+ Subordinated Ratings), is a leading provider of eBusiness applications software, enabling corporations to sell to, market to, and serve customers across multiple channels and lines of business. With more than 3,500 customer deployments worldwide, Siebel Systems provides organizations with a proven set of industry-specific best practices, CRM applications, and business processes, empowering them to consistently deliver superior customer experiences and establish more profitable customer relationships. Siebel Systems' sales and service facilities are located in more than 28 countries. SIEBEL SYSTEMS: Inks Definitive Pact to Acquire UpShot Corp. ------------------------------------------------------------ Siebel Systems, Inc. (Nasdaq:SEBL), the leading provider of customer relationship management solutions, has signed a definitive agreement to acquire UpShot Corporation, a pioneer in delivering hosted CRM service over the Internet, in a cash transaction valued at up to $70 million. Under the terms of the deal, $50 million will be paid in cash upon closing, with potentially an additional $20 million to be paid in earn-outs during 2003 and 2004. The board of directors of each company has approved the acquisition, which is subject to customary closing conditions. The acquisition is expected to accelerate Siebel Systems' penetration of the hosted CRM market and significantly expand customer choice in this market segment. Earlier this month, Siebel Systems and IBM jointly announced Siebel CRM OnDemand, a hosted offering specifically designed to meet the growing market demand for fast, easy, and affordable CRM. Siebel Systems will offer UpShot's widely adopted solutions as well as its own Siebel CRM OnDemand solution, with a roadmap to converge the products. Estimated to exceed $2.7 billion by 2006, the hosted CRM market is one of the fastest-growing segments of the overall CRM market. With its acquisition of UpShot, Siebel Systems will immediately establish a meaningful presence in the hosted CRM market. "We are doubling down on CRM," said Siebel Systems chairman and CEO Thomas M. Siebel. "The UpShot acquisition advances our strategy of CRM for Everyone--our commitment to provide CRM solutions for every segment of the market, every type of organization, and every type of user. The employees of UpShot bring us years of experience that will enable us to rapidly take a leadership position in the hosted CRM market." Privately held UpShot was the first company to offer a hosted CRM solution, followed by a series of innovations for the hosted CRM market -- including the first solutions for wireless, offline, and advanced Microsoft Outlook integration. Today, UpShot has over 1,000 customers -- including Fortune 500 companies such as General Motors Acceptance Corporation and Xerox Corporation. "It became clear to us that a new, hybrid CRM paradigm is emerging, combining hosted and on premise CRM deployment models," said UpShot president and CEO Robert Reid. "It's also clear that Siebel Systems is leading the market in delivering these hybrid solutions that customers are demanding. Joining our forces with the CRM, support, and distribution capabilities of Siebel is a huge win for our customers -- who will benefit from Siebel's strength, viability, and resources -- as well as for our employees. This combination vaults us into leadership in the hosted CRM marketplace." Siebel Systems will provide pre-built integration for both Siebel CRM OnDemand and UpShot's CRM solutions to Siebel on premise enterprise applications. This will give customers the choice of running their CRM system in a hosted environment, on premise, or in any combination. Over time, Siebel plans to combine Siebel CRM OnDemand and UpShot's products into a common offering, leveraging Siebel's CRM product architecture and UpShot's best practices for hosted CRM. Siebel will support both offerings and enable seamless transition from UpShot to Siebel CRM OnDemand, thus providing investment protection for existing UpShot customers. Customers who elect to continue using the existing UpShot product will receive support indefinitely. "Since inventing online CRM in 1999, we at UpShot have pursued a vision -- delivering the easiest-to-use, fastest-to-deploy solution for increasing a company's revenues -- on a massive scale," said UpShot founder and chairman Keith Raffel. "We believe nothing could bring our dream closer to reality than this merger with Siebel Systems." UpShot CEO Robert Reid, founder and chairman Keith Raffel, and other company executives will lead the merger of the UpShot workforce with Siebel's CRM OnDemand division. Siebel Systems has a long and consistent track record of entering new and growing CRM market segments, followed by selective acquisitions that have accelerated or extended its leadership in those segments. For example, following its initial entry into the call center market in 1996, Siebel acquired Scopus Technologies in 1998, thereby merging Siebel's leadership in sales force automation with Scopus's call center leadership. The combination effectively created the CRM industry, of which Siebel Systems became the immediate and continued market leader. Siebel Systems has used strategic acquisitions to extend its leadership in other categories as well, including marketing automation, with the acquisition of Paragren Technologies (2000); product configuration, with the acquisition of OnLink Technologies (2000); and customer analytics, with the acquisition of nQuire Software (2001). In each instance, Siebel successfully merged the acquired company into its business and is a market leader. Siebel Systems' acquisition of UpShot is currently expected to close by early November. Siebel Systems, Inc. (Nasdaq:SEBL) (S&P, BB Corporate Credit and B+ Subordinated Ratings), is a leading provider of eBusiness applications software, enabling corporations to sell to, market to, and serve customers across multiple channels and lines of business. With more than 3,500 customer deployments worldwide, Siebel Systems provides organizations with a proven set of industry-specific best practices, CRM applications, and business processes, empowering them to consistently deliver superior customer experiences and establish more profitable customer relationships. Siebel Systems' sales and service facilities are located in more than 28 countries. Founded in 1996, UpShot Corporation is backed by ABN AMRO Private Equity, Advanced Technology Ventures, Alloy Ventures, New England Partners, and ORIX Venture Finance. Individual investors include Bob Finocchio, former president of 3Com Corporation; and Tom Proulx, co-founder of Intuit. Headquartered in Mountain View, California, UpShot has more than 100 employees in nine regional locations in the U.S. and more than 1,000 customers. Its products include UpShot for small and midsize businesses, and UpShot XE(TM) for larger organizations. UpShot's innovative service offering and market success has earned the company prestigious industry awards, including Technology Partners Investors' Choice, Microsoft Industry Solution Award, TMC CRM Excellence Award, Willy Best Web- Based Subscription CRM Solution, Upside Top 100, Aberdeen Group What Works, Frost & Sullivan Market Engineering Award, and ASP News Top 20. SIEBEL SYSTEMS: Acquires Motiva Inc.'s Assets --------------------------------------------- Siebel Systems, Inc. (Nasdaq:SEBL), a leading provider of business applications software, announced the acquisition of assets of Motiva Inc., a provider of Enterprise Incentive Management software. Siebel Systems is targeting availability for the enhanced integrated offering in the fourth quarter of 2003. Siebel Incentive Compensation allows business users to design incentive plans, monitor progress, and analyze the results of sophisticated incentive compensation strategies. The incorporation of Motiva's services-processing architecture will enable users of Siebel Incentive Compensation to handle a much broader variety of compensation plans with greater flexibility and increased performance. These enhancements will allow users to better address the variety of compensation approaches that can differ considerably by industry. Examples of compensation techniques that will be easier to implement include 'weighted attainment' across multiple products, automatic graduation of sales professionals from one compensation plan to the next, and variations in commission rates at different times in a financial period. Motiva also provides a comprehensive modeling environment that will become part of the Siebel Incentive Compensation product line. "Companies are increasingly reliant on strategic incentive programs to drive business results through the proper alignment of employee and partner goals," said Jeff Scheel, Vice President and General Manager for CRM Products, Siebel Systems, Inc. "The enhanced Siebel Incentive Compensation product will enable our customers to improve financial performance, increase supplier and customer satisfaction, and better align and motivate employees through incentive compensation programs." Solutions for an Expensive, Complex Business Problem Typically, companies experience a significant amount of pain around issues of incentive management and variable compensation. It is not uncommon for companies to have error rates as high as ten percent in their compensation payments. As a result, organizations increasingly focus on this problem and deploy incentive compensation solutions. To this effect, Gartner Group estimated the EIM market to be one of the few technology sectors to grow in 2002, and a recent Giga Information Group study predicted that the sector will continue to grow at a compound annual growth rate of 40% through 2005. "Gartner believes this is a strong move for Siebel," says Joe Galvin, Vice President and Research Director, Gartner Group. "With this acquisition, Siebel gains a functionally complete application that will allow them to compete in their client base as well as the open market. Backing Motiva with the development, marketing and distribution resources of Siebel will create a compelling alternative." Demonstrated Flexibility, Proven Success Mellon Financial Corporation, a leading financial services provider, recently selected the Motiva suite to manage incentive compensation for all institutional sales of its financial services products. Mellon's legacy incentive compensation systems were no longer adequate to manage its diverse incentive plans for its disparate sales forces, and they found themselves seeking a flexible and scalable technology platform. "Mellon partnered with Motiva because we needed a solution that offered both broad and deep functionality with a proven implementation track record," said Karen Stephens, Senior Vice President of Institutional Marketing, Mellon Financial Corporation. "We see this acquisition as a positive move that will enhance and add depth to Siebel's Enterprise Incentive Management product offering, and will promote future growth and product development." Additional customers using Motiva software include: Acme Brick Company, Clorox Services Company, First Horizon Home Loans, First Tennessee Bank, and World Savings Bank. Comprehensive EIM Capabilities In addition to handling highly complex compensation plans and large transactional volumes, Siebel Incentive Compensation will be tightly integrated with the Siebel Sales suite to enable better territory and quota planning along with more timely reporting on variable compensation attainment. Siebel Incentive Compensation will also integrate with the Performance Management and Compensation Planning modules of Siebel Employee Relationship Management, providing support for incentive management requirements across the enterprise. The continued development of these product lines will be driven by the existing Siebel CRM product team, along with approximately 30 Motiva employees. Siebel Systems has a long and consistent track record of entering new and growing CRM market segments, followed by selective acquisitions that have accelerated or extended its leadership in those segments. For example, following its initial entry into the call center market in 1996, Siebel Systems acquired Scopus Technologies in 1998, thereby merging its leadership in sales force automation with Scopus's call center leadership. The combination effectively created the CRM industry, of which Siebel became the immediate and continued market leader. Siebel Systems has used strategic acquisitions to extend its leadership in other categories as well, including marketing automation, with the acquisition of Paragren Technologies (2000); product configuration, with the acquisition of OnLink Technologies (2000); and analytics, with the acquisition of nQuire (2001). In each instance, Siebel Systems successfully merged the acquired company into its business and now leads the market. More information on Siebel Incentive Compensation is available at http://www.siebel.com Siebel Systems, Inc. (Nasdaq:SEBL) (S&P, BB Corporate Credit and B+ Subordinated Ratings), is a leading provider of eBusiness applications software, enabling corporations to sell to, market to, and serve customers across multiple channels and lines of business. With more than 3,500 customer deployments worldwide, Siebel Systems provides organizations with a proven set of industry-specific best practices, CRM applications, and business processes, empowering them to consistently deliver superior customer experiences and establish more profitable customer relationships. Siebel Systems' sales and service facilities are located in more than 28 countries. Motiva, Inc. is the technology leader for global enterprise incentive management (EIM) software and services, enabling companies to create and manage flexible, highly targeted incentive programs that drive top-line and bottom-line results across the extended enterprise. Motiva is the EIM leader in financial services with customers that include First Tennessee Bank, First Horizon Home Loans, World Savings, Mellon Bank and Riggs Bank. The Motiva software solution allows businesses to rapidly align performance with strategic objectives for sales, services, channels, customers and suppliers. Founded in 1996, Motiva is headquartered in Pleasanton, California. More information is available at http://www.motiva.com SK GLOBAL: Wants Removal Period Extended Until December 19, 2003 ---------------------------------------------------------------- SK Global America, Inc. is a party to several prepetition civil actions pending before various courts across the United States. Since the Petition Date, the Debtor and its personnel and professionals have been working diligently to administer the Chapter 11 case and to address a vast number of administrative and business issues. The Debtor has expended substantial time and resources on issues relating to its orderly transition to operating in a Chapter 11 context. In addition to operating its business, the Debtor's personnel and professionals have been consumed since the Petition Date with many issues that are complex and time intensive, including, but not limited to: (a) continuing negotiations with representatives of the Foreign Creditors; (b) addressing the issues and concerns raised by the Debtor's lenders regarding the impact of the Chapter 11 case on their alleged security interests and claims; and (c) responding to information requests of the U.S. Trustee and other parties-in-interest, including lenders, utilities and landlords. Scott E. Ratner, Esq., at Togut, Segal & Segal LLP, in New York, asserts that the right to remove civil actions is a valuable right that the Debtor does not want to lose inadvertently. Therefore, in light of the recent status of its case, the Debtor seeks to preserve that right by requesting a 60-day extension of the deadline to file notices of removal for those civil actions. Specifically, the Debtor asks Judge Blackshear to extend its deadline to remove actions to December 19, 2003, pursuant to Section 105(a) of the Bankruptcy Code and Rule 9006(b) of the Federal Rules of Bankruptcy Procedure. Bankruptcy Rule 9006(b) provides that, subject to certain exceptions: "Except as provided in paragraphs (2) and (3) of this subdivision, when an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of the court, the court for cause shown may at any time in its discretion (1) with or without motion or notice order the period enlarged if the request therefor is made before the expiration of the period originally prescribed or as extended by a previous order or (2) on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect." Section 105(a) of the Bankruptcy Code provides, in pertinent part, that "the court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." The period of time under Bankruptcy Rule 9027 within which a debtor may remove civil actions to the Bankruptcy Court is not prohibited or limited by Bankruptcy Rule 9006(b)(2) or (3). Therefore, pursuant to Section 105(a) and Bankruptcy Rule 9006(b), the Court has the authority to extend the Debtor's deadline to file notices of removal. As its case is in its initial stages, Mr. Ratner says, the Debtor has not had an opportunity to review its records and determine whether it needs or should remove any claims or civil causes of action pending in the state or federal court. (SK Global Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) SLM PALM BEACH: Case Summary & 5 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: SLM Palm Beach Associates, LLC c/o Martin Honig, Esq. 35 Pinelawn Road Suite 204W Melville, New York 11474 Bankruptcy Case No.: 03-23734 Type of Business: The Debtor owns an unimproved parcel of ocean front real estate located at 2305-2315 South Ocean Boulevard, Palm Beach, Florida. The Debtor purchased the Property in August 2002. The Debtor plans on constructing 2 townhouses and a three-story structure containing 6 condominium units on the Property. Chapter 11 Petition Date: October 15, 2003 Court: Southern District of New York (White Plains) Debtors' Counsel: Arthur Goldstein, Esq. Todtman, Nachamie, Spizz & Johns, P.C. 425 Park Avenue New York, NY 10022 Tel: (212) 754-9400 Fax: (212) 754-6262 Total Assets: $4,500,000 Total Debts: $7,916,000 Debtor's 5 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Rafferty Funding, LLC $4,200,000 500 Fifth Avenue, Suite 415 (estimated at New York, NY 10110 $4,500,000) Sand Pillows, Inc. $3,700,000 30900 Telegraph Avenue (estimated at Bingham Farms, MI 48025 $4,500,000) Sand Pillows, Inc. Balance of purchase $3,400,000 30900 Telegraph Avenue price (plus 300,000 Bingham Farms, MI 48025 secured) Sand Pillows, Inc. 30900 Telegraph Avenue Bingham Farms, MI 48025 Modern Press Trade debt $16,000 SONO-TEK CORP: August 30 Net Capital Deficit Narrows to $620K ------------------------------------------------------------- Sono-Tek Corporation (OTC Bulletin Board: SOTK) announced sales of $690,735 for the three months ended August 31, 2003, a decrease of 2% or $14,398 compared to sales of $705,133 for the same period of last year. For the six months ended August 31, 2003 the Company reported sales of $1,449,257 as compared to $1,485,991 for the same period of last year. The decline in sales is due to a decrease in sales of specialty spraying systems partially offset by an increase in sales of medical device spraying systems for drug coated arterial stents. Operating income for the first six months of the year was $102,255 or 7% of sales compared to $64,902 or 4% of sales for the prior year period. For the six and three month periods ended August 31, 2003, the Company had net income of $16,795 and $5,749 as compared to $36,401 and $2,975 for respective the prior year periods. The Company's balance sheet is improved from last year at this time with working capital at $569,753 at August 31, 2003 from working capital of $200,085 last year, liabilities have been reduced from $2,126,562 at August 31, 2002 to $2,037,339 at August 31, 2003, and shareholders' deficiency reduced from $746,153 at August 31, 2002 to $622,658 at August 31, 2003. Management has taken action to preserve working capital by seeking longer term financing, and by restructuring agreements with current lenders to defer payments of principal. The Company has experienced a turn-around in profitability during the last nine quarters as a result of changes in management, discontinuance of unprofitable business segments, reductions in the cost structure, and settlements with creditors. The Company has benefited from maintaining a stable work force and a cohesive management team. The Company expects these benefits to be strategic assets as the economy recovers. The Company has returned its focus to its core business, ultrasonic nozzles and systems, and has partially offset the downturn in its traditional electronics industry offerings by developing new uses for its products in the growing medical products field, the defense industry, liquid metal powder manufacturing, nanotechnology coatings for glass, non-woven fabrics, and spray drying. According to Dr. Christopher L. Coccio, Sono-Tek's CEO and President, "The Company has developed and introduced the SonoFlux 2000F fluxer and a new liquid metal nozzle system and has sold numerous new systems specifically designed for coating arterial stents. We are continuing to develop coating systems for medical device customers and other customers in a diverse range of industries, and are working to create new business opportunities in these fields." For further information, visit http://www.sono-tek.com Sono-Tek Corporation is a leading developer and manufacturer of liquid spray products based on its proprietary ultrasonic nozzle technology. Founded in 1975, the Company's products have long been recognized for their performance, quality, and reliability. STILLWATER: Inks Secondary Metal Sourcing Pact with Power Mount --------------------------------------------------------------- Stillwater Mining Company (NYSE: SWC) has entered into a long-term secondary metal sourcing agreement with Power Mount Incorporated of Somerset, Kentucky. Under the agreement Stillwater will purchase from Power Mount secondary metals for recycling consisting primarily of spent catalytic converter material, which contain platinum group metals. The materials will be processed along with mine production in Stillwater's state of the art smelting and refining complex located conveniently next to Interstate Highway I-90 in Columbus, Montana. The spent catalytic converter material is sourced primarily from automobile repair shops and automobile yards that dissemble old cars for the recycling of their parts. Stillwater's operation recovers platinum, palladium and rhodium contained in these and other similarly spent materials that the Company treats. The metals once recovered are sold for reuse. Commenting on the signing of the agreement Frank McAllister, Stillwater's Chairman and Chief Executive Officer said, "We are delighted that we have formed a new business relationship with Power Mount. The recycling of secondary material is totally consistent with Stillwater's business. Our smelting and refining complex is among the most environmentally clean operations of its type in the world. The metals we mine are used by the automotive industry to protect the environment by cleaning auto emissions. Recycling these metal back into commerce after they have been used is also environmentally responsible. McAllister continued, "This contract enables our smelter and refinery complex to increase the amount of metals recovered. Stillwater Mining Company (S&P/BB+ Corporate Credit/Developing) is the only U.S. producer of palladium and platinum and is the largest primary producer of platinum group metals outside of South Africa. The Company's shares are traded on the New York Stock Exchange under the symbol SWC. Information on Stillwater Mining can be found at its Web site: http://www.stillwatermining.com STOLT OFFSHORE: Lenders Extend Covenant Waiver Until November 26 ---------------------------------------------------------------- Stolt Offshore S.A. (Nasdaq:SOSA) (OSE:STO) has been granted a covenant waiver extension to November 26, 2003 from its principal lenders. Contacts: Julian Thomson/Fiona Harris US +1 877 603 0267 (toll free) UK +44 1224 718436 julian.thomson@stoltoffshore.com Patrick Handley UK +44 207 396 5395 phandley@brunswickgroup.com Tim Payne US +1 212 333 3810 tpayne@brunswickgroup.com Stolt Offshore is a leading offshore contractor to the oil and gas industry, specialising in technologically sophisticated deepwater engineering, flowline and pipeline lay, construction, inspection and maintenance services. The Company operates in Europe, the Middle East, West Africa, Asia Pacific, and the Americas. STOLT OFFSHORE: Third-Quarter Net Loss Widens to $22 Million ------------------------------------------------------------ Stolt Offshore S.A. (Nasdaq:SOSA) (OSE:STO) reported results for the third quarter and nine months ended August 31, 2003. The net loss for the quarter was $22.5 million, or $0.24 per share, on net operating revenue of $397.9 million, compared with a net loss of $17.2 million, or $0.21 per share, on net operating revenue of $368.9 million for the same period last year. (Note 1) For the nine-month period ended August 31, 2003 the Company reported a net loss of $132.0 million, or $1.42 per share, on net operating revenue of $1.2 billion. This compares with a net loss of $12.1 million, or $0.14 per share, on net operating revenue of $996.4 million for the same period last year. Tom Ehret, Chief Executive Officer, Stolt Offshore, said: "A net loss for the quarter, while in line with our expectations, is still disappointing. That said, we are putting Stolt Offshore back on track and the Board is focused on returning the Company expeditiously to profit. "Despite the demanding market conditions, experienced throughout the industry, we continued to make substantial progress on four fronts since the period end. We have taken important steps towards settlements on legacy contracts, implemented the bulk of the changes required under the Blueprint for recovery, we are working towards an agreement with the banks on financial restructuring and are making commercial progress in our target markets. "We are on track to complete the worldwide implementation of the Blueprint model by November 30. The Board is targeting second half 2004 for improved earnings resulting from the Blueprint reforms. "All of us at Stolt Offshore are working hard to complete this period of restructuring. We have excellent people, assets and systems in Stolt Offshore but it will take time to demonstrate our full potential. I am however, confident that we will succeed." Quarter Review In line with market activity across the industry, we saw low order intake during the quarter, although bidding levels continue to be high. On an operational front, successful projects in a number of areas have underlined our ability to execute demanding contracts in traditional and new markets, particularly in deepwater. Good progress was made on the ExxonMobil Erha project in Nigeria with 65% of the design engineering complete and early fabrication work on target. The Total Girassol Phase Two project in Angola concluded in August with excellent results with the installation and tie-in of pipelines, umbilicals and manifolds accomplished in record time. The two long-term ship charters with Petrobras in Brazil continue to produce steady revenues. Projects in the UK and Norway are also running well. We have extended our profitable joint venture with Lukoil for the operation of Seaway Heavy Lifting for six years to 2010. At August 31, 2003 Stolt Offshore had $385 million drawn on long- term external debt facilities and available cash of $139.4 million. The cash balance is higher than historical levels as a result of being fully drawn on the external debt facilities and closing out foreign exchange hedges to capitalize on favorable exchange rate movements and to improve liquidity. In line with the treatment at the end of the second quarter, the Company continues to classify all debt as short term whilst restructuring negotiations are ongoing. Blueprint Progress The bulk of the changes in personnel, structure and processes required to implement the Blueprint are now in place, and the program is on schedule for completion by year-end, by which time we will be in a position to reflect the costs of the Blueprint implementation. However, the following steps have been completed: -- A new project-driven organization, with clear lines of accountability, is largely in place. All but two of the top thirty managerial positions are filled. Cost savings will be achieved through the geographic reorganization into new Regional Businesses. -- The adoption of the Blueprint has enforced stringent tendering practices across our Company. These measures are designed to contain revenue and contractual risk to areas within Stolt Offshore's control, to ensure projects are at all times cash positive, and to deliver an acceptable economic return. -- New corporate functions and control systems have been implemented across the Company, particularly in respect of financial control, project management, marine operations, strategic planning and supply chain management. -- The previously announced disposal of assets and businesses is progressing according to plan. Discussions are now being held with interested parties on the potential sale of Serimer Dasa, our welding services business, the ROV Drill Support business, and six individual ships. We are also examining the best ownership structure and ongoing operational relationship for the Paragon companies in Houston and Paris. Financial Restructuring The Blueprint for financial recovery and its rapid implementation has provided the basis for Stolt Offshore to progress its negotiations with its lead creditors. The purpose of these negotiations is to redress potential covenant breaches, to increase performance bond capacity and to agree appropriate utilisation of cash proceeds from the divestment programme. To facilitate this process the Banks are considering a waiver of covenant breaches to November 26, 2003. Projects - Revenue Recovery During the quarter, substantial progress was made towards collecting revenues from our legacy projects. -- We are working with our customers and making good progress completing the OGGS contract in Nigeria and closing the Burullus contract in Egypt. The Management aims to have these contracts closed by year-end. -- The Hubline project in North America is essentially complete, but due to a dispute over the cost-plus part of this contract, there may be a delayed collection of revenues. We are confident of our legal and contractual position as we seek to collect amounts owed to us. -- Progress continues with the installation of subsea umbilicals, risers and flowlines on the Bonga project in Nigeria. While losses have risen during the quarter, we are working closely with our customer to ensure timely completion and to mitigate losses. Outlook The backlog now stands at $1.2 billion, of which $334 million is for the remainder of this year. At the same point in 2002, the backlog was $1.8 billion, with $487 million for the remainder of that year. A year-on-year comparison does not reflect the improved quality of backlog or the uneven timing of contract awards inherent in our industry. Earnings Guidance Three outstanding issues prevent us from giving guidance at this time. These are the collection of receivables from the largely completed legacy contracts, the potential disposal of assets and businesses, and decisions on impairment of assets in the fourth quarter. It is because of the uncertainty surrounding these issues that the company indicated on September 17 that losses for the year may be substantially higher than previously indicated. The Board anticipates these will be resolved by mid-November and we expect to provide earnings guidance for Fiscal Year 2003 at that time. Stolt Offshore is a leading offshore contractor to the oil and gas industry, specialising in technologically sophisticated deepwater engineering, flowline and pipeline lay, construction, inspection and maintenance services. The Company operates in Europe, the Middle East, West Africa, Asia Pacific, and the Americas. STONE & WEBSTER: Court to Consider Plan on October 31, 2003 ----------------------------------------------------------- On September 4, 2003, the U.S. Bankruptcy Court for the District of Delaware ruled on the adequacy of the Disclosure Statement explaining the Third Joint Plan of Reorganization for Stone & Webster Inc., and its debtor-affiliates. The Court found that the Disclosure Statement contains the right kind and amount of information to enable creditors to decide whether to accept or reject the Joint Plan. A hearing to consider the confirmation of the Plan will convene on October 31, 2003, at 10:00 a.m. (Eastern Time), before the Honorable Peter J. Walsh. Objections, if any, to the confirmation of the Debtors' Plan must be filed with the Court before October 20, with copies sent to: 1. Counsel for the Debtors Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square PO Box 636 Wilmington, DE 19899 Tel: 302-651-3000 Attn: Gregg M. Gallardi, Esq. Eric M. Davis, Esq. 2. Counsel for the Creditors' Committee Orrick, Herrington, Sutcliff LLP 666 Fifth Avenue New York, NY 10103-0003 Attn: Anthony J. Princi, Esq, Lorraine S. McGowen, Esq. -and- Landis Rath & Cobb LLC 919 Market Street Suite 600 PO Box 2087 Attn: Adam G. Landis, Esq. 3. Counsel for the Equity Committee Bell Boyd & Lloyd LLC 70 West Madison Street Chicago, IL 60602 Attn: David F. Heroy, Esq. Carmen H. Lonstein, Esq. -and- Bifferato, Bifferato & Gentilotti 1308 Delaware Avenue Wilmington, DE 19899 Attn: Ian Connor Bifferato, Esq. 4. Counsel for Federal Insurance Company Mainer & Herod One Nashville Place Suite 2200 150 Fourth Avenue, North Nashville, TN 37219-2994 Attn: Sam H. Poteet, Jr., Esq. Thomas T. Pennington, Esq. -and- Duane Morris LLP 1100 North Market Street Suite 1200 Wilmington, DE 19801-1246 Attn: Michael R. Lastowski, Esq. 5. Counsel for Maine Yankee Atomic Power Company Pierce Atwood One Monument Square Portland, Maine 04101 Attn: William J. Kayatta, Esq. -and- Marcus, Clegg & Mistretta, P.A. 100 Middle Street East Tower Portland, Maine 04101-4102 Attn: George J. Marcus, Esq. -and- Ferry, Joseph & Pearce, P.A. 824 Market Square Suite 904 PO Box 1351 Wilmington, DE 19899-1351 Attn: Michael B. Joseph, Esq. Theodore J. Tacconelli, Esq. 6. The Office of the U.S. Trustee 844 King Street Room 2313 Wilmington, DE 19801 Attn: Margaret Harrison, Esq. Stone & Webster, Incorporated and 72 domestic subsidiaries filed for Chapter 11 relief on June 2, 2000, (Bankr. Del. Case No. 00- 2142-PJW). The Debtors continue to operate their businesses and manage the assets of the Estate. On July 14, 2000, the majority of assets and liabilities were sold to the Shaw Group pursuant to a court approved auction. Since that time the Debtor has been completing projects that were not assumed by the Shaw Group and defending litigation actions and claims against the Estate. SUPERIOR TELECOM: Plan Confirmation Hearing Set for October 22 -------------------------------------------------------------- As previously reported, the U.S. Bankruptcy Court for the District of Delaware ruled on the adequacy of the Disclosure Statement proposed by Superior Telecom and its Debtor-affiliates. The Court found that the Disclosure Statement contained the right kind and amount of information, pursuant to Sec. 1125 of the Bankruptcy Code, to allow creditors to make informed decisions about whether to vote to accept or reject the Debtors' Amended Joint Plan of Reorganization. Accordingly, a hearing before the Honorable Jerry W. Venters to consider the confirmation of the Debtors' Plan is set for October 22, 2003, at 1:30 p.m. Eastern Time. Superior TeleCom Inc., a leading manufacturer and supplier of communications wire and cable products to telephone companies, distributors and system integrators and magnet wire for motors, transformers, generators and electrical controls, filed for chapter 11 protection on March 3, 2003 (Bankr. Del. Case No. 03- 10607). Laura Davis Jones, Esq., and Michael Seidl, Esq., James I. Stang, Esq., and Curtis A. Hehn, Esq. at Pachulski, Stang, Ziehl Young Jones & Weintraub represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $861,716,000 in total assets and $1,415,745,000 in total debts. SUTTER CBO: Fitch Takes Rating Actions on Series 1999-1 Notes ------------------------------------------------------------- Fitch Ratings affirms three classes and downgrades five classes of notes issued by Sutter CBO 1999-1, Ltd. The transaction, a collateralized debt obligation, is supported by a diversified portfolio of high-yield bonds and leveraged loans. The following classes of Sutter CBO 1999-1 have been affirmed: -- $64,000,000 class A1-L notes 'AAA'; -- $75,000,000 class A2-L notes 'AAA'; -- $75,000,000 class A3-L notes 'AAA'. The following classes of Sutter CBO 1999-1, Ltd. have been downgraded: -- $5,000,000 class A4-L notes to 'BBB+' from 'A-'; -- $24,000,000 class A4 notes to 'BBB+' from 'A-'; -- $5,000,000 class B1-L notes to 'BB+' from 'BBB'; -- $6,000,000 class B1 notes to 'BB+' from 'BBB'; -- $10,000,000 class B2 notes to 'B+' from 'BB-'. The rating action is based on deterioration of the credit fundamentals of the portfolio to the point where the risk is no longer consistent with the current ratings. The portfolio contains a number of securities whereby default is probable, although only ten of the assets are classified as defaulted. Additionally the transaction has just begun to fail its class A and B overcollateralization tests, as well as its additional coverage test (based on trustee reports). Fitch modeled the transaction and noted that the current portfolio is underhedged. To date, the structure has benefited from a low interest rate environment. However, if interest rates rise the transaction may be adversely affected due to the mismatch in fixed- and floating-rate assets and liabilities. Sutter CBO 1999-1, Ltd., managed by Wells Fargo Bank, National Association, was established in November 1999 to issue $287,754,111 in notes and preferred shares. The turbulent market conditions of the last several years have resulted in credit migration of the portfolio. Fitch has discussed the current status of the transaction with the collateral manager and believes that the manager is managing the deal prudently given the extreme conditions over the recent credit cycle. Fitch will continue to monitor Sutter 1999-1, Ltd. to ensure that its ratings are accurate. US AIRWAYS: Reaches Stipulation Settling ABN AMRO Bank Claims ------------------------------------------------------------- ABN AMRO Bank, N.V. filed two partially secured proofs of claim against the Reorganized US Airways Debtors: (a) Claim No. 2862 for $18,024,786 relating to Aircraft bearing Tail No. N854US; and (b) Claim No. 2924 for $61,079,520 relating to Aircraft bearing Tail No. N855US. On the same day, Wilmington Trust Company, as Indenture and Security Trustee, filed Proof of Claim No. 4011 which included amounts relating to both of the Aircraft. Wilmington asserted a Claim for $8,985,997 with respect to Tail No. N854US and $8,895,997 with respect to Tail No. N855US. On January 24, 2003, the Reorganized Debtors objected to these claims. In settlement of the dispute, the Debtors and ABN AMRO Bank stipulate and agree that Claim No. 2862 is reduced and allowed as a General Unsecured Class USAI-7 Claim for $12,575,393. Claim No. 2924 is withdrawn. All other general unsecured claims of ABN AMRO Bank are disallowed. Claim No. 4011 is partially withdrawn for $17,971,995 as it relates to Tail Nos. N854US and N855US. All other general unsecured claims of the Trustee relating to these Aircraft are disallowed. (US Airways Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900) U.S. WIRELESS DATA: June 30 Working Capital Deficit Tops $1.5MM --------------------------------------------------------------- U.S. Wireless Data, Inc. (OTC: USWE), a leader in wireless transaction processing, released financial results for the year ended June 30, 2003. USWD reported an increase in total revenue of 48% to $3,725,000, with service revenue jumping 75% to $3,404,000, compared to the prior fiscal year. Total operating expenses declined by $11,147,000 or 52%, while the net loss improved by $16,972,000 or 66%. Net cash used in operating activities declined by $5,896,000 or 51% for the year ended June 30, 2003. At June 30, 2003, the Company's balance sheet shows that its total current liabilities outweighed its total current assets by about $1.6 million, while net capitalization dwindled to about $265,000 from about $8 million a year ago. "We made substantial progress in 2003, growing our revenue by almost 50 percent, while further reducing our burn rate," said Chairman and Chief Executive Officer Dean M. Leavitt. "We now provide our Synapse service to over 30,000 active sites, an increase of over 100 percent compared to last year. We remain excited by the dramatic yet largely untapped market for our wireless payments technology, including wireless enabling products and services for vending machines, multi-lane environments such as quickservice (fast-food) and quick casual restaurants, taxis and other transportation providers, home contractors, delivery services, and outdoor markets and events. Moreover, we are progressing steadily in our discussions with Pepsi, which we expect will both validate and propel the market for our leading technology." REVENUE Revenue for the year ended June 30, 2003 was $3,725,000, as compared to $2,521,000 for the prior fiscal year, a 48% increase. Service revenue was $3,404,000, up from $1,951,000 in the prior fiscal year, a 75% increase. Service revenue was derived primarily from the growing base of active wireless sites that use USWD's proprietary Synapse service to process payments transactions. Product sales decreased to $321,000, from $570,000 during the prior fiscal year. Product sales for the year included the sale of certain third-party products purchased on behalf of a client and other one-time product sales. GROSS PROFIT Gross profit for fiscal 2003 was $1,033,000, compared to a loss of $2,253,000 in the prior fiscal year. This increase was primarily due to a decrease in the write-down of inventory of Synapse Adapters and other CDPD-based inventory. For the years ended June 30, 2003 and 2002, gross profit was reduced by write-downs of inventory of $579,000 and $3,481,000, respectively. Without the write-downs of inventory, the improvement in total gross profit was primarily attributed to the growth of active sites for Synapse services. The increase was partially offset by the decrease in gross profit from product sales. Gross profit from services for the year ended June 30, 2003 was $1,600,000, compared to $1,127,000 for the prior fiscal year, a $473,000 or 42% increase. Gross profit from product sales for the year ended June 30, 2003 was negative $567,000, compared to negative $3,380,000 for the prior fiscal year, a $2,813,000 or 83% improvement. A significant portion of the negative gross profit from product sales is due to the write-downs of inventory. Without the inventory write-downs, the decrease was attributed to the lack of sales of the Synapse Adapter, partially offset by sales of Synapse Enabler products. In addition, product sales for fiscal 2003 included approximately $103,000 for the sale of certain third party products purchased on behalf of a client and sold at cost to such client. GROSS MARGIN Total gross margin for the year ended June 30, 2003, increased to 27.7% from (89.4)%. This increase was attributed to the reduction in the write-down of inventory as well as by the greater percentage of total revenue attributable to monthly fees due to the growth in active sites. Gross margin from services was 47.0% for the year ended June 30, 2003 compared to 57.8% for the prior fiscal year. Gross margin from product sales was (176.6)% for the year ended June 30, 2003, compared to (593.0)% for the prior fiscal year. NET LOSS/EBITDA For the year ended June 30, 2003, net loss totaled $8.6 million or $0.52 per share as compared to a net loss of $25.6 million or $1.92 per share for the prior fiscal year. EBITDA is presented because it is a widely accepted indicator of funds available to service debt, although it is not a measure of liquidity or of financial performance under accounting principles generally accepted in the United States of America. USWD uses EBITDA as an internal measure of operating performance, which is net loss excluding net interest, taxes, depreciation and amortization. The company believes that EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. The EBITDA loss for the year ended June 30, 2003 was $7.4 million as compared to the prior fiscal year's loss of $21.4 million. This improvement in EBITDA loss of $14.0 million or approximately 66% is primarily attributed to the increase in revenues and a reduction of cost of revenues and operating expenses as discussed in prior sections. FINANCIAL CONDITION, CAPITAL RESOURCES AND LIQUIDITY We need additional capital in the immediate future in order to continue operations. Since our inception we have incurred significant losses and negative cash flow from operations. As of June 30, 2003, USWD had an accumulated deficit of approximately $143 million. At June 30, 2003 the principal source of liquidity was approximately $602,000 in cash and cash equivalents. Based on current estimates of revenue levels, operating costs and other cash inflows and outlays, and taking into account the remaining proceeds available from the Bridge Loan discussed below, the Company will not have cash balances adequate to continue operations beyond December 2003 without a sufficient capital infusion by such time. Concerns about capital may lead USWD to take additional steps to cut costs and, depending on whether it is successful in its efforts to raise additional capital, may require the Company to eliminate or curtail certain of its projects and take additional steps to conserve cash that may adversely affect operations. In August 2003, USWD signed term sheets with Brascan Financial Corporation, a subsidiary of Toronto, Canada-based Brascan Corporation, to arrange for the purchase of $12.5 million of a newly issued Series D Preferred Stock representing at least 60% of USWD's equity. The term sheets contemplate that the Company enter into a strategic alliance with MIST Inc., Brascan's subsidiary, and a provider of card issuance and payments processing products and gateway services to banks, non-bank card issuers and the payments processing industry. The term sheets contemplate that Brascan would provide a bridge loan to allow USWD to continue operations while negotiating a definitive Series D Preferred Stock purchase agreement and to satisfy the anticipated closing conditions. In addition, the term sheets contain provisions with respect to break-up fees, non-solicitation and other miscellaneous matters. On September 16, 2003, USWD entered into a Term Loan and Security Agreement with Brascan, pursuant to which Brascan agreed to lend the Company up to $2.75 million, at an interest rate of 7.5% per annum payable monthly, with cash payments commencing March 28, 2004. The loan is secured by a general security interest in all of USWD's assets and is due March 16, 2005. A portion of the funds was used to repay a demand loan in the principal amount of $300,000 previously made to the Company on August 28, 2003, which was necessary in order to enable USWD to continue operations. As of October 13, 2003, USWD has drawn down approximately $1.24 million against the $2.75 million Bridge Loan commitment. The remaining portion of the loan will provide the Company with the working capital necessary to continue operations until December 2003. The Bridge Loan contains various covenants which include, among others, (i) a material adverse change clause, (ii) a minimum monthly revenue requirement of approximately $380,000, and (iii) a minimum net worth requirement of not less than negative $2 million. As of this date, the Company was in compliance with these covenants. USWD is currently in technical default under the Bridge Loan with respect to two post-closing covenants (relating to receiving a landlord waiver for our New York facility and completing the actions necessary to subject certain of our funds to a "blocked account" arrangement) that the Company is still in the process of satisfying. However, USWD has received informal assurances from Brascan that it will provide additional time to satisfy such covenants and will not pursue any actions with respect to a default at this time. In connection with this financing, Brascan received a warrant for 10 million shares of common stock exercisable at $0.15 per share. The warrant is exercisable only if the Series D financing is not consummated by December 31, 2003 or if USWD were to be acquired or were to sell substantially all of its assets. If the warrant becomes exercisable, it will expire on September 16, 2008. Brascan will have certain demand and piggyback registration rights as to the shares of common stock underlying the warrant. The warrant was issued pursuant to certain exceptions contained in the full ratchet anti-dilution provisions of the Series C Convertible Preferred Stock and Series C Warrants and therefore, USWD believes the issuance of the warrant will not trigger such anti-dilution provisions. The equity financing contemplated by the term sheets would involve the issuance to Brascan or its affiliates of shares of a newly issued Series D convertible preferred stock for $12.5 million. The proceeds from the contemplated financing will be used to repay the $2,750,000 Bridge Loan and for general working capital purposes. It is anticipated that the Series D preferred stock will be convertible at any time, at Brascan's option, into at least 60% of the shares of USWD's common stock, on a fully diluted basis. If the contemplated financing is successfully completed, Brascan or its designee will become the majority stockholder. It is anticipated that the terms and provisions of the contemplated financing, if successful, will have a substantial dilutive effect on the ownership interests of USWD's existing stockholders. There can be no assurances that the contemplated financing will be completed on the terms contemplated by the term sheets or at all. The contemplated financing is subject to a number of conditions, including, but not limited to, the execution of definitive financing documentation and the successful completion of a reorganization of USWD's capital structure, which will include the restructuring of currently issued and outstanding Series C Convertible Preferred Stock and Series C Warrants. These conditions raise substantial doubt about USWD's ability to continue as a going concern and if USWD is unable to obtain additional capital as needed, it will be required to cease operations altogether. The consolidated financial statements do not include any adjustments that might result from the Company's inability to continue as a going concern. USWD's financial statements for the year ended June 30, 2003, include an opinion from Deloitte & Touche LLP that contains an explanatory paragraph concerning the Company's ability to continue as a going concern. Nevertheless, USWD anticipates its negative cash flow will continue to improve on a quarterly basis. A large percentage of its operating expenses are fixed and the Company expects to continue increasing its revenues without incurring significant increases in operating expenses. The Company is also exploring ways of conserving cash and improving its cash flow through growth in the number of active sites and various product sales, including revenues from services and products for vending, and continued reduction of cash expenses. OPERATING HIGHLIGHTS USWD continues to make progress on key business objectives that are intended to establish Synapse services and products as the standard for wireless transaction payment services. Operating highlights for the year ended June 30, 2003 include: -- Pepsi vending solution - USWD continues to build and deploy units pursuant to purchase orders received from Pepsi. The Company now has approximately 500 operational units in the field in five cities across the U.S. with key Pepsi anchor bottlers and licensees. USWD has shipped an additional 250 units to Pepsi in late August 2003 for expected installation in the quarter ending December 31, 2003. The Company is in the process of finalizing the agreement with Pepsi for the full commercialization of the vending solution, after which USWD expects to receive additional orders from Pepsi and its bottlers. -- Active sites - Active sites have grown to approximately 30,500 as of June 30, 2003, an increase of 15,900 or 109% from the same date of the prior year. This follows the conversion in April 2003, of approximately 7,400 wireless sites, for a major processor using Cingular's Mobitex network, to USWD's Synapse service on the same wireless network. This conversion is expected to increase future activations and transactions due to the fact that new wireless activations for this customer will be made through the Company's Synapse service. -- Transactions - Transactions processed for the year ended June 30, 2003, were approximately 7,321,000, an increase of 2,141,000 or 41% from the prior fiscal year. This increase was primarily due to the growth in active sites. -- Creditel PowerSwipe(TM) - USWD launched PowerSwipe in early April. PowerSwipe is a specially designed attachment that converts certain "off-the-shelf" Motorola iDEN mobile phones into wireless point-of-sale devices. With patent-pending "secure-at-the-swipe" technology to protect against skimming and identity theft, the PowerSwipe enables merchants to safely swipe a customer's credit card and receive electronic authorization in the field. The PowerSwipe delivers greater security than that currently available and lowers overall payment processing costs. PowerSwipe transactions are routed to payment processors via USWD's Synapse service. U.S. Wireless Data provides wireless transaction delivery and gateway services to the payments processing industry. Our customers include credit card processors, merchant acquirers, banks, automatic teller machine distributors and their respective sales organizations, as well as certain businesses seeking new solutions to make it easier for their customers to buy their products or services. We offer these entities turnkey wireless and other transaction management services. We also provide those entities with proprietary wireless enabling products designed to allow card acceptance where such acceptance has heretofore been either too expensive or technologically unfeasible, or to displace conventional telephone lines for increased speed, cost reduction and/or convenience. These services and products may be utilized by conventional card accepting retailers as well as emerging card accepting market segments such as vending machines, quickservice (fast-food) and quick casual restaurants, taxis and limousines, in-home service providers, door-to-door sales, contractors, delivery services, sporting events, and outdoor markets. Our services and products may also be used for gathering telemetric information such as mission critical operational data on a real- time basis from remote equipment (e.g., vending machines). Further information is available at http://www.uswirelessdata.com USG CORP: L&W Wants to Purchase Secret Building Supply Business --------------------------------------------------------------- Pursuant to Section 363 of the Bankruptcy Code, the USG Debtors ask the Court to approve a proposed acquisition by Debtor L&W Supply Corporation of substantially all of the assets of an existing building materials distribution business and the related Asset Purchase Agreement. Furthermore, the Debtors seek the Court's authority to: (a) file the Acquisition Motion under seal so that the Motion is disclosed only to the Court; and (b) fix certain procedures with respect to the Acquisition Motion. Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, asserts that filing the Acquisition Motion under seal is warranted due to the nature of its contents and the impact the information it contains could have on the Debtors and on the Seller should the Acquisition Motion become public. Mr. Heath says that the Acquisition Motion contains detailed information regarding the existing business. The Acquisition Motion identifies: -- the name of the Seller, -- the location of the target business, -- a detailed description of the assets being purchased, -- the proposed purchase price, and -- the financial performance of the business. The Debtors, particularly L&W, have historically engaged in acquisitions of existing distribution businesses to establish themselves in a new market or to fortify their position in an existing market. Mr. Heath informs the Court that it is the Debtors' experience that a seller will not agree to enter into a sale transaction if the seller's identity and the proposed transaction are made known publicly prior to consummation of the transaction. The Seller of the Proposed Acquisition is no different, Mr. Heath notes. Apart from public relations, employment and other issues, potential sellers have expressed extreme concern that if the proposed acquisition were publicly disclosed before consummation, the Seller's current suppliers of gypsum wallboard would immediately refuse to supply products to the seller because of either: * the likelihood that the Debtors would become the sole suppliers to the businesses to be operated by L&W upon completion of the transaction; or * policies of major wallboard producers against supply of gypsum wallboard to L&W or to businesses selling assets or stock to L&W. A termination of supply would be disastrous for the seller, as it would be for any distributor. Mr. Heath contends that if the proposed acquisition were not consummated, the seller's business could be financially devastated. Yet, even if the acquisition ultimately was completed, the potential damage to the seller's business pending completion of the sale resulting from the withdrawal of suppliers -- and the potential corresponding loss of customers -- could negatively impact both the seller and the Debtors. Thus, Mr. Heath emphasizes, disclosure of information contained in the Acquisition Motion will make the consummation of the Proposed Acquisition exceedingly difficult, if not impossible. In fact, it is highly unlikely that the transaction will be completed without the protections requested. In addition, the Debtors believe that disclosing key financial information, like the purchase price, would reveal confidential commercial information and business strategies of the Debtors. Mr. Heath points out that L&W negotiated in five transactions that have closed in the past 12 months under the Court-approved acquisition procedures for smaller transactions, which do not require public disclosure of the transaction terms. Thus, Mr. Heath maintains, not permitting the Debtors to file the Acquisition Motion under seal would cause material future prejudice to the Debtors and their estates with respect to future acquisitions by the Debtors. In light of confidentiality concerns, the Debtors previously asked the Court to establish procedures where the Debtors may acquire existing businesses of a limited size without court approval but upon notice to the U.S. Trustee, the Committees and the Futures Representative. In February 2002, the Court approved these procedures with respect to transactions involving $7,500,000 or less, and the procedures subsequently were modified with a May 2003 Order. The Debtors have successfully utilized the Acquisition Procedures over the course of their Chapter 11 cases, resulting in their expeditious and cost- effective review of economically beneficial transactions. Mr. Heath relates that the purchase price with respect to the Proposed Acquisition exceeds the $7,500,000 cap established by the Acquisition Procedures. However, the same confidentiality concerns that supported approval of the Acquisition Procedures are present. Accordingly, the Debtors seek to file the Acquisition Motion under seal subject to these procedures: (a) The Debtors may file the Acquisition Motion with the Court under seal; (b) The Debtors will not be required to serve the Acquisition Motion on any party-in-interest other than: * the U.S. Trustee, * the counsel to the Committees, * the counsel to the Futures Representative, and * the counsel to the seller; (c) The hearing, if any, with respect to the Acquisition Motion will be held in camera and may only be attended by those parties who have received the Acquisition Motion; (d) All parties who receive a copy of the Acquisition Motion are directed to maintain the strict confidentiality of the Acquisition Motion and the information contained pursuant to the same terms established by the Acquisition Procedures Order; and (e) Any recipient of the Acquisition Motion that wishes to file any objection or response is required to: * omit any information that cannot be disclosed pursuant to the Acquisition Procedures Order; or * file the objection or response under seal. Ultimately, the Debtors believe that the Seal Procedures are necessary to ensure the confidentiality of the sensitive commercial information contained in the Acquisition Motion so as to permit the Proposed Acquisition to occur and to not prejudice the Debtors in potential future negotiations with other acquisition targets. By providing the Acquisition Motion to the notice party, the Debtors believe that all principal stakeholders in these cases will have an opportunity to fully review and assess the Proposed Acquisition. (USG Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 609/392-0900) VIALINK COMPANY: Notes' Maturity Extended Until April 9, 2004 ------------------------------------------------------------- The viaLink Company reported that it had extended the maturity dates for each of the notes due October 9, 2003 with a total principal balance of $1.3 million. The maturity dates were extended to April 9, 2004 through the issuance of new notes in the same form, as filed with the Company's Current Report with the SEC, dated April 10, 2003. The maturing notes were surrendered to the Company in exchange for the new notes and payment of all interest due under the maturing notes paid in common stock through September 30, 2003 and in cash for the period from October 1 through October 9, 2003. The notes bear interest at an annual rate of ten percent (10%) and mature upon the earlier of six months from the issuance date or a triggering event as defined in the notes. The Company expects that it will extend the maturity dates for the remaining notes outstanding on the same terms and conditions and in that event will periodically report such extensions. The viaLink Company (Nasdaq: VLNK) is the leading provider of data synchronization and advanced e-commerce services to the retail food industry. The viaLink Partner Package is a suite of services that use synchronized data to give trading partners visibility into product movement through the supply chain and enable collaborative business processes. In its Form 10-QSB filed for the quarter ended March 31, 2003, viaLink reported: "We provide subscription-based, business-to-business electronic commerce services that enable food industry participants to more efficiently manage their highly complex supply chain information. Our services allow manufacturers, wholesalers, distributors, sales agencies (such as food brokers) and retailers to communicate and synchronize item, pricing and promotion information in a more cost-effective and accessible way than has been possible using traditional electronic and paper-based methods. "Our strategy is to continue our investment in marketing and sales activities, development of our viaLink services and customer support services to facilitate our plan to penetrate the market and build recurring revenues generated from subscriptions to our viaLink services. Consequently, we resemble a development stage company and will face many of the inherent risks and uncertainties that development stage companies face. There can be no assurance, however, that these efforts will be successful. Our failure to successfully execute our strategy would have a material adverse effect on our business, financial condition and results of operations, including our viability as an enterprise. As a result of the high level of expenditures for investment in technology development, implementation, customer support services, and selling and marketing expenses, we expect to incur losses in the foreseeable future periods until such time, if ever, as the recurring revenues from our viaLink services are sufficient to cover the expenses. "Our clients and customers range from small, rapidly growing companies to large corporations in the consumer packaged goods and retail industries and are geographically dispersed throughout the United States. "We reported a substantial loss from operations for the fiscal years ended December 31, 2000, 2001 and 2002, and we expect to incur losses for the fiscal year ending December 31, 2003. The extent of these losses will depend primarily on the amount of revenues generated from implementations of and subscriptions to our viaLink services, which have not yet achieved significant market acceptance or market penetration and the amount of expenses incurred in generating these revenues. In order to achieve market penetration and acceptance we expect to continue our expenditures for development of our viaLink services. These expenses have substantially exceeded our revenues. "Our independent auditors have issued their Independent Auditors' Report on the Company's consolidated financial statements for the fiscal year ended December 31, 2002 with an explanatory paragraph regarding the Company's ability to continue as a going concern. We have generated net losses for the years ended December 31, 2000, 2001 and 2002 and have generated an accumulated deficit of $87.4 million as of March 31, 2003. We have incurred operating losses and negative cash flow in the past and expect to incur operating losses and negative cash flow during 2003. During 2001 and 2002 we began to experience delays in signing small supplier customers which were an important component of our expected implementation revenues. We experienced these delays again in early 2003. The signing of these suppliers is dependent upon the success of our retailer customers' 'community development' activities. We continue to pursue sales efforts with the small suppliers and still believe that they will become subscribers to our services. Due to these delays, we continue to focus our sales efforts on leading customers, particularly retailers, each of which could have a greater incremental effect on increasing subscription revenues. An increase in the number of leading customers is critical to generating positive cash flow from operations and creating sales opportunities through 'community development'. "The delay in generating revenues creates a need for us to obtain additional capital in 2003 in order for us to execute our current business plan successfully. The amount of capital will be dependent upon (a) our services achieving market acceptance, (b) the timing of additional customer signings, (c) our ability to sustain current decreased levels of spending, and/or (d) the amount of, if any, unanticipated expenditures. There can be no assurance as to whether, when or the terms upon which any such capital may be obtained. Any failure to obtain an adequate and timely amount of additional capital on commercially reasonable terms could have a material adverse effect on our business, financial condition and results of operations, including our ability to continue as a going concern." WEIRTON STEEL: Projected Distribution to Creditors Under Plan ------------------------------------------------------------- Weirton and its professionals have conducted an analysis of all its scheduled claims. D. Leonard Wise, Chief Executive Officer of Weirton Steel Corporation, relates that the estimated Allowed Claims and Allowed Interests and projected distribution represent the best estimates Weirton and its professionals determined, based on the information available to them: Class and Allowed Projected Type of Claim Estimated Amounts Distribution ------------- ----------------- ------------ Administrative $60,000,000 100% Professional Fees 9,000,000 100% DIP Facility 175,000,000 100% U.S. Trustee Fees 12,000 100% Priority Tax 4,600,000 100% Class 1 Section 507(a) Priority Claims 6,600,000 100% Class 2 Secured Tax Claims 4,600,000 100% Class 3 Mechanics Lien Claims 1,800,000 100% Class 4 Miscellaneous Secured Claims 3,000,000 100% Class 5 Secured 2002 Exchange Note and Secured Pollution Control Bonds Claims 145,590,300 TBD Class 6 General Unsecured Claims 600,000,000 TBD Class 7 Section 1114 Termination Claims 400,000,000 TBD Class 8 Preferred Stock Interests N/A None Class 9 Common Stock Interests N/A None Class 10 Securities Claims Unknown None (Weirton Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTERN WIRELESS: Will Host 3rd-Quarter Conference Call on Thurs ---------------------------------------------------------------- Western Wireless Corporation (Nasdaq:WWCA) will host its third quarter 2003 financial results conference call at 1:30 p.m. PST on Thursday October 23, 2003. Those wishing to participate in the call should dial 888/396-9185, 10 minutes prior to the start of the call. The passcode is the phrase "Western Wireless". A separate dial-up replay number will be available beginning at 3:30p.m. PST on Thursday, October 23, 2003 and will be accessible through midnight PST on Friday, October 31, 2003. The replay number is 800/568-9796 and the access code is 3703. In addition, the call and subsequent replay can both be accessed through the company's Web site at http://www.wwireless.com 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. WOLVERINE TUBE: Will Publish Third-Quarter Results on October 31 ---------------------------------------------------------------- Wolverine Tube, Inc. (NYSE: WLV) plans to report earnings for the third quarter and nine months ended September 28, 2003, on Friday, October 31, 2003. A news release and supporting financial data will be released to the news wire services and the New York Stock Exchange before the market opens, and a conference call will be held at 9:30 a.m. Central (10:30 a.m. Eastern) on October 31, 2003. The full text of the earnings news release and supporting financial data will be available prior to the start of this call on the Company's Web site -- http://www.wlv.com-- in the Investor Relations section under the "Press Releases" link. To listen, please dial in to the conference call line at (800) 311-9402 Access Code: Wolverine, ten minutes prior to the scheduled start time. This conference call will also be broadcast live on the Internet. A link to the broadcast can be found on the Company's Web site at http://www.wlv.com in the Investor Relations section under the "Conference Calls" link. If you are unable to participate at this time, a replay will be available through November 14, 2003, on this website or by dialing (800) 858-5309 (US) or (334) 323-7226 (International) Access Code: 40179 Pass Code: 40179. Wolverine Tube, Inc. (S&P, BB- Corporate Credit Rating, Negative Outlook) is a world-class quality partner, providing its customers with copper and copper alloy tube, fabricated products, metal joining products as well as copper and copper alloy rod, bar and other products. Internet addresses: http://www.wlv.comand http://www.silvaloy.com WORLDCOM INC: Court Approves $33-Mill. Asset Sale to Bracebridge ---------------------------------------------------------------- At the conclusion of the auction, and after consultation with the Official Committee of Unsecured Creditors, the Worldcom Debtors determined that the offer received from Bracebridge Corporation, an affiliate of MBNA, Inc., is the highest and best offer for the Wyndham Lane Property. The Final Auction Offer consists of a $33,000,000 sale price on the terms and conditions set forth in a Real Estate Purchase Contract between MCI WorldCom Network Services, Inc. and Bracebridge. The Final Auction Offer bested the $20,000,000 offer from Citigroup Technology Inc. Bracebridge wired $2,000,000 as good faith deposit for the Wyndham Lane Property. The Deposit is kept in an escrow account with Chicago Title Insurance Company, as escrow agent. At the Sale Hearing, Judge Gonzalez confirmed the Debtors' determination and authorized the sale of the Wyndham Lane Property to Bracebridge, free and clear of liens, claims and encumbrances. The transaction is exempt from any transfer, stamp or similar tax. The Debtors are permitted to pay $745,000 to Hilco Real Estate LLC, their real estate consultant. Judge Gonzalez also authorized the Debtors to assign to Bracebridge their rights under the Right of First Refusal Agreement dated December 7, 1999. (Worldcom Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900) WRC MEDIA: Names New Executives and Creates New Operating Unit -------------------------------------------------------------- New executive appointments and the creation of a new operating unit, WRC Consumer and Sponsored Publishing, were announced Wednesday. Martin E. Kenney, Chief Executive Officer said, "Our customers, K-12 schools and libraries nationwide, are facing unprecedented challenges and an uncertain environment. While educators are being held accountable for ever-increasing standards of learning for all children, as required by the No Child Left Behind legislation, falling tax revenues and competing spending priorities have put enormous pressure on state and local budgets. Yet, with such challenges come powerful opportunities for innovation and growth." Mr. Kenney continued, "This challenging environment requires new flexibility, a different operating infrastructure, and better internal communications and cooperation. Today we are responding to these unprecedented challenges and opportunities with a new executive organization designed to work with you to build on our considerable talent, market position, and vast potential to fulfill our commitment to investors, customers, and employees. We are pleased to announce the formation of a new operating unit, WRC Consumer and Sponsored Publishing. This new operating group will allow us to adapt and focus on our many brand and market opportunities, consistent with our heritage, creating new, accelerated growth in educational publishing and media. "The mission of WRC Consumer and Sponsored Publishing is to continue to grow WRC Media sales. It will mine the value of our brands and grow our consumer business through alternative outlets and alliances as we have done with our successful program with QVC. Through your imaginative and creative efforts this success will be repeated." In addition, the following appointments are effective immediately. Richard Nota, vice president of finance. Mr. Nota will have overall financial management responsibilities including finance and accounting, and investor relations. Rajeev Puri, president of CompassLearning. Prior to this appointment, Mr. Puri served as general manager of CompassLearning, and led business development, and served as chief technology officer of WRC Media. He successfully integrated the web-delivered assets of ChildU into a vibrant, new, product line, CompassLearning Odysseyb, and will continue to identify and implement other opportunities. Robert J. Jackson, president of World Almanac Education Group. Mr. Jackson will be charged with identifying growth and profit opportunities for all WAEG assets including World Almanac Education Library Services, Facts On File, and Gareth Stevens. Peter Esposito, president of WRC Consumer and Sponsored Publishing and executive vice president of marketing and sales for WRC Media. Mr. Esposito will be responsible for the development of new markets and sales channels for all of WRC Media. Emily Swenson, president, Weekly Reader. Ms. Swenson, previously an executive of Children's Television Workshop (CTW), best known as the producers of Sesame Street, where she served as executive vice president and chief operating officer. She will continue to develop value from our Weekly Reader subscriber base, grow circulation, and expand its reach through new publications and media partnerships. Kevin Brueggeman, president of American Guidance Service. Prior to joining AGS, Mr. Brueggeman was President and Chief Operating Officer of Experior Assessments, an examination and licensing service. He will continue to develop the established base of business and deep customer loyalty of AGS. Robert Evanson will join WRC Media in an advisory capacity to examine our financial, reporting, investments, and operating infrastructure. For over twenty-five years, Mr. Evanson has distinguished himself as an industry leader serving in senior positions including CFO at Harcourt and CEO of McGraw-Hill Education and Professional Publishing. Michael Carroll will serve as an advisor to WRC Media in developing a strong, responsive human resources function that encourages innovation with accountability. Mr. Carroll has extensive experience in human resources in publishing, having held senior positions at Disney, Rodale Press and Simon & Schuster. Robert Lynch, executive vice president, chief operating officer, and director, has resigned. Mr. Kenney concluded, "We are committed to continued market leadership and delivering on our promise and our potential. While the environment in which we are operating is unprecedented, we have assembled and redeployed our exceptional leadership and augmented it with seasoned, industry and functional experts, to meet the challenge. I am confident that the newly assembled executive committee will serve our customers and employees well. I know, as I have always known, I can count on your support to continue our core mission of developing exemplary multiple media educational products and services that produce measurable gains for learners everywhere." WRC Media Inc. (S&P, B+ Corporate Credit Rating, Negative), a leading publishing and media company, creates and distributes innovative supplementary educational materials for the school, library, and home markets. WRC Media's product suite includes some of the best-known brands in education, recognized for their consistent high quality and proven effectiveness. * BOOK REVIEW: Competitive Strategy for Health Care Organizations: Techniques for Strategic Action ------------------------------------------------------------- Authors: Alan Sheldon and Susan Windham Publisher: Beard Books Softcover: 190 pages List Price: $34.95 Review by Francoise C. Arsenault Order your personal copy today at http://www.amazon.com/exec/obidos/ASIN/1587981351/internetbankrupt Competitive Strategy for Health Care Organizations: Techniques for Strategic Action is an informative book that provides practical guidance for senior health care managers and other health care professionals on the organizational and competitive strategic action needed to survive and to be successful in today's increasingly competitive health care marketplace. An important premise of the book is that the development and implementation of good competitive strategy involves a profound understanding of change. As the authors state at the outset: "What may need to be done in today's environment may involve great departure from the past, including major changes in the skills and attitudes of staff, and great tact and patience in bringing about the necessary strategic training." Although understanding change is certainly important in most fields, the authors demonstrate the particular importance of change to the health care field in the first and second chapters. In Chapter 1, the authors review the three eras of medical care (individual medicine, organizational medicine, and network medicine) and lay the groundwork for their model for competitive strategy development. Chapter 2 describes the factors that must be taken into account for successful strategic decision-making. These factors include the analysis of the environmental trends and competitive forces affecting the health care field, past, current, and future; the analysis of the competitive position of the organization; the setting of goals, objectives, and a strategy; the analysis of competitive performance; and the readaptation of the business, if necessary, through positioning activities, redirection of strategy, and organizational change. Chapters 3 through 7 discuss in detail the five positioning activities that are part of the model and therefore critical to the development and implementation of a successful strategy: scanning; product market analysis; collaboration; restructuring; and managing the physician. The chapter on managing the physician (Chapter 7) is the only section in the book that appears dated (the book was first published in 1984). In this day of physician- owned hospitals and physician-backed joint ventures, it is difficult to envision the physician in the passive role of "being managed." However, even the changing role of physicians since the book's first publication correlates with the authors' premise that their model for competitive strategic planning is based exactly on understanding and anticipating change, which is no better illustrated than in health care where change is measured not in years but in months. These middle chapters and the other chapters use a mixture of didactic presentation, graphs and charts, quotations from famous individuals, and anecdotes to render what can frequently be dry information in an entertaining and readable format. The final chapter of the book presents a case example (using the "South Clinic") as a summary of many of the issues and strategic alternatives discussed in the previous chapters. The final chapter also discusses the competitive issues specific to various types of health care delivery organizations, including teaching hospitals, community hospitals, group practices, independent practice associations, hospital groups, super groups and alliances, nursing homes, home health agencies, and for-profits. An interesting quote on for-profits indicates how time and change are indeed important factors in strategic planning in the health care field: "Behind many of the competitive concerns.lies the specter of the for- profits. Their competitive edge has lain until now in the excellence of their management. But developments in the past half- decade have shown that the voluntary sector can match the for- profits in management excellence. Despite reservations that may not always be untrue, the for-profit sector has demonstrated that good management can pay off in health care. But will the voluntary institutions end up making the same mistakes and having the same accusations leveled at them as the for-profits have? It is disturbing to talk to the head of a voluntary hospital group and hear him describe physicians as his potential competitors." ********* 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 ***