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/raid1/www/Hosts/bankrupt/TCR_Public/031023.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 23, 2003, Vol. 7, No. 210 Headlines AIRTRAN AIRWAYS: Private Offering Registration Statement Effective ALLEGHENY TECHNOLOGIES: Undertakes Changes in Exec. Management AMAZON.COM INC: Sept. 30 Net Capital Deficit Narrows to $1.1BB AMERICAN NATURAL: Closes Convertible Secured Debenture Financing AMERICAN PRODUCTION: Inks Pact to Sell Assets to Southborrough ANC RENTAL: Has Until Nov. 28 to Continue Cash Collateral Use AQUILA INC: Selling Aquila Sterling to Powergen UK Subsidiary AVAYA INC: Reports Improved Fourth Fiscal Quarter Fin'l Results BP INTERNATIONAL: Auditors Doubt Ability to Continue Operations BIONOVA HOLDING: Fails to Meet AMEX Minimum Listing Requirements BOYD GAMING: Third-Quarter Results Reflect Weaker Performance BOYD GROUP: Will Make October 2003 Cash Distribution on Nov. 26 BUDGET GROUP: Committee Hires InteCap Inc. as Valuation Expert CABLE SATISFACTION: Bankers Exercise Rights re Cabovisao Shares CALPINE: Says Moody's Downgrade Has Less Impact on Operations CALYPTE BIOMEDICAL: Provides Fiscal Year 2004 Financial Guidance CHOICE ONE COMMS: Pulls Plug on PwC's Engagement as Accountants COVANTA ENERGY: Treatment of Claims Under First Amended Plan CROWN CASTLE: Declares Quarterly 6.25% Preferred Share Dividend DELTA WOODSIDE: Q1 2004 Operating Results Enter Negative Zone DISTRIBUTION MANAGEMENT: Ability to Continue Ops. Uncertain DLJ MORTGAGE: Fitch Ratchets Classes B-4 Note Rating Up to B+ DOMAN INDUSTRIES: Monitor Files Progress Report on Restructuring DT INDUSTRIES: Lenders Agree to Amend Senior Credit Facility EAST COAST BEVERAGE: Changes Name to North American Food & Bev. EASTGROUP PROPERTIES: Reports Improved 3rd-Quarter 2003 Results EASYLINK SERVICES: Ptek Closes Purchase of Debt/Equity Interest ENRON CORP: Hires Innisfree as Balloting and Tabulation Agent ESSENTIAL THERAPEUTICS: Reorganization Plan Declared Effective EXIDE TECHNOLOGIES: S&P Rates Proposed Sr. Sec. Bank Facility BB- EXIDE TECHNOLOGIES: Provides Solicitation and Tabulation Results FEDERAL-MOGUL: Sept. 30 Balance Sheet Upside-Down by $1.3 Bill. FISHER SCIENTIFIC: Prices $150-Mil. of Senior Subordinated Notes FLEMING: BancorpSouth Seeks Stay Relief to Allow Foreclosure GENERAL BINDING: Third Quarter Results Show Slight Improvement GEORGETOWN STEEL: Commences Chapter 11 Restructuring Proceedings GEORGETOWN STEEL: Case Summary & 20 Largest Unsecured Creditors GERDAU AMERISTEEL: Will Host Q3 Conference Call on October 31 GLEACHER CBO: S&P Affirms BB+ Ratings on Class B-1 & B-2 Notes HASBRO INC: S&P Affirms BB+ Rating & Revises Outlook to Stable HASBRO INC: Sues Maker of Highly Offensive Ghettopoly Game HOUGHTON MIFFLIN: Fitch Cuts Senior Ratings to Low B/Junk Levels HOVNANIAN ENTERPRISES: Fitch Assigns 'BB+' to $215MM Debt Issue I2 TECHNOLOGIES: Sept. 30 Net Capital Deficit Narrows to $250MM INTEGRATED HEALTH: Has Until March 10, 2004 to File Final Report INTRAWEST CORP: Will Redeem All of Outstanding 9.75% Sr. Notes ITC DELTACOM: Asks Court to Enter Final Decree to Close Case KAISER ALUMINUM: Retiree Claims Exempted from Bar Date Order LB COMMERCIAL: Fitch Junks Rating on Class G Notes at CCC LEAP WIRELESS: Bankruptcy Court Confirms Joint Chapter 11 Plan LEAP WIRELESS: Stipulation Assuming Nokia Purchase Pacts Okayed LENNOX INT'L: Reports Flat Third-Quarter 2003 Financial Results LOG ON AMERICA: Ch. 7 Trustee Taps Wallick as Collection Counsel LTV: Liquidation Debtors Want Court to Fix Solicitation Protocol MEDIACOM COMMS: Will Host Q3 2003 Teleconferece on November 5 METALS USA: J. Hageman Acquires 1,686 of Metals USA Shares METROCALL INC: Oaktree Capital Discloses 6.03% Equity Stake MILACRON INC: Will Publish Third-Quarter Results on October 31 MIRANT CORP: Proposes Uniform Miscellaneous Asset Sale Protocol MITSUBISHI: Weak Performance Spurs S&P to Cut Corp. Credit Rating MMCA AUTO OWNER: S&P Lowers 3 Note Class Ratings to Low-B Levels NATIONSRENT: Enters Stipulating Reducing Kroll Consummation Fee NET PERCEPTIONS: Third-Quarter Net Loss Reaches $1.7 Million NEXTEL PARTNERS: Sept. 30 Balance Sheet Upside-Down by $95 Mill. NIMBUS GROUP: Taps Berkovitz to Replace Rachlin as Accountants NORTHERN BORDER: Declares Third Quarter 2003 Cash Distribution NRG ENERGY: Appoints David W. Crane as New Company President & CEO OWENS & MINOR: Board Okays Payment of 4th Quarter Cash Dividend OWENS-ILLINOIS: Reports Deterioration in 3rd Quarter Performance PACIFIC GAS: Enters into Laguna Irrigation Settlement Agreement PETROLEUM GEO-SERVICES: SDNY Court Confirms Reorganization Plan QUANTUM CORP: Look for Fiscal Second-Quarter Results Today QUINTILES: Inks Peking Union Pact to Expand China Lab Services QWEST: Provides High-Speed Network for Illinois Research Project RIVERSTONE NETWORKS: Appoints Roger A. Barnes as New CFO STARBAND COMMUNICATIONS: Court Approves Disclosure Statement T.A.C. GROUP: Clear Thinking Will Administer Reorganization Plan TCW LINC: S&P Takes Actions on Four Low-B and Junk Note Classes TECHNOLOGY VISIONS: Taps Kabani as New Independent Accountants THAXTON GROUP: Wants Nod to Hire BSI as Claims and Notice Agent TOWER AUTOMOTIVE: Consolidates North American Product Groups TSI TELSYS: Completes Continuance to Delaware from Canada TWINLAB CORP: IdeaSphere Pitches Winning Bid to Acquire Assets UNIGLOBE.COM INC: Files Plan of Arrangement Under CCAA in Canada UNITED AIRLINES: Court Approves Debt Workout Pact with Boeing US AIRWAYS: Third-Quarter 2003 Net Loss Narrows to $90 Million VALCOM: Brings-In Tom Rooker as Consultant & Executive Producer WEIRTON STEEL: Calls PBGC Takeover 'Unfortunate Situation' WESTPOINT STEVENS: Court Okays KPMG as Debtors' H.R. Consultants WILBRAHAM CBO: Junk Ratings on 2 Classes Put on Watch Negative WORLDCOM INC: Wants Go-Signal to Assume East Meadow, NY Lease YPF S.A.: Fitch Upgrades Senior Unsecured FC & LC Ratings to BB XCEL ENERGY: Closes Sale of Black Mountain Gas to Southwest Gas * Jay P. Lefkowitz Rejoins Kirkland & Ellis LLP as a Partner * DebtTraders' Real-Time Bond Pricing ********* AIRTRAN AIRWAYS: Private Offering Registration Statement Effective ------------------------------------------------------------------ In connection with the May 2003 private offering of 7 Percent Convertible Notes due 2023, AirTran Holdings, Inc., (NYSE:AAI), and its wholly owned subsidiary, AirTran Airways, Inc., announced that the Registration Statement on Form S-3 relating to the resale of the previously issued $125 million principal amount 7 Percent Convertible Notes due 2023, and the common shares issuable upon conversion of these notes have been declared effective by the Securities and Exchange Commission. Neither AirTran Holdings nor AirTran Airways will receive any proceeds from the resale of the convertible notes by selling security holders or the common stock issuable upon conversion of the notes. AirTran Airways (S&P/B-/Negative) is one of America's largest low- fare airlines - employing more than 5,400 professional Crew Members and serving 492 flights a day to 43 destinations. The airline's hub is at Hartsfield Atlanta International Airport, the world's busiest airport (by passenger volume), where it is the second largest carrier operating 189 flights a day. The airline never requires a roundtrip purchase or Saturday night stay, and offers an affordable Business Class, assigned seating, easy online booking and check-in, the A-Plus Rewards frequent flier program, and the A2B corporate travel program. AirTran Airways, a subsidiary of AirTran Holdings, Inc., (NYSE:AAI), is the world's largest operator of the Boeing 717, the most modern, environmentally friendly aircraft in its class. In 2004, the company will begin taking delivery of 100 Boeing 737-700s, one of the most popular and reliable jet aircraft in its class. For more information, visit http://airtran.com ALLEGHENY TECHNOLOGIES: Undertakes Changes in Exec. Management -------------------------------------------------------------- Allegheny Technologies Incorporated (NYSE:ATI) announced several changes to its executive management leadership team. "To quickly move the Company forward and focus our efforts on building the ATI Business System, we've changed reporting relationships and expanded responsibilities of our executive team," said Pat Hassey, President and Chief Executive Officer. "ATI's major business units now report directly to me. Doug Kittenbrink has the critical task to accelerate the implementation of lean manufacturing through the ATI Business System. "The presidents of ATI's four largest business units will play key roles in assisting me and other corporate officers in setting policy, developing strategy and executing business initiatives across ATI." Changes in accountability include: -- Rich Harshman is now Executive Vice President, Finance and Chief Financial Officer. In addition to his responsibilities as CFO, Mr. Harshman will lead ATI's shared services, including procurement and information technologies. He also will chair the ATI corporate pension investment committee. -- Doug Kittenbrink is now Executive Vice President, ATI Business System and Group President, Engineered Products Segment (formerly called the Industrial Products segment). Mr. Kittenbrink will lead the implementation of the ATI Business System, oversee capital projects, chair the ATI Labor Relations Committee, and coordinate ATI's European growth strategy. -- Jack Shilling is now Executive Vice President, Corporate Development and Chief Technical Officer. Dr. Shilling will work on ATI's strategic growth opportunities, technology development, and other key technical matters. He also will have accountability for ATI's STAL - China JV, Uniti JV, and Asian international sales offices. -- Jon Walton is now Executive Vice President, Human Resources, Chief Legal and Compliance Officer, General Counsel, and Secretary of the Board. In addition to his current responsibilities as chief legal and administrative officer, Mr. Walton will lead ATI's human resource policy and administration, including compensation, benefits, and talent evaluation coordination. Allegheny Technologies Incorporated (NYSE:ATI) (S&P, BB+ Corporate Credit Rating, Stable Outlook) is one of the largest and most diversified specialty materials producers in the world with revenues of approximately $1.9 billion in 2002. The Company has approximately 9,650 employees world-wide and its talented people use innovative technologies to offer growing global markets a wide range of specialty materials. High-value products include nickel- based and cobalt-based alloys and superalloys, titanium and titanium alloys, specialty steels, super stainless steel, exotic alloys, which include zirconium, hafnium and niobium, tungsten materials, and highly engineered strip and Precision Rolled Strip(R) products. In addition, we produce commodity specialty materials such as stainless steel sheet and plate, silicon and tool steels, and forgings and castings. The Allegheny Technologies Web site can be found at http://www.alleghenytechnologies.com AMAZON.COM INC: Sept. 30 Net Capital Deficit Narrows to $1.1BB -------------------------------------------------------------- Amazon.com, Inc. (NASDAQ:AMZN) announced financial results for its third quarter ended September 30, 2003 -- with $16 million of net income to chisel away at an accumulated $1.1 billion shareholder deficit. Operating cash flow was $284 million for the trailing twelve months, compared with $151 million for the trailing twelve months ended September 30, 2002. Free cash flow was $239 million for the trailing twelve months, compared with $120 million for the trailing twelve months ended September 30, 2002. Common shares outstanding plus shares underlying stock-based employee awards totaled 433 million at September 30, 2003, an increase of 1% compared with a year ago. Net sales were $1.13 billion in the third quarter, compared with $851 million in third quarter 2002, an increase of 33%. Net sales benefited by $29 million from changes in foreign exchange rates compared with third quarter 2002. Operating income was $52 million in the third quarter, or 5% of net sales, compared with an operating loss of $10 million in third quarter 2002. Consolidated segment operating income improved $46 million to $74 million, or 6% of net sales, compared with $27 million, or 3% of net sales, in third quarter 2002. Net income was $16 million in the third quarter, or $0.04 per diluted share, compared with a net loss of $35 million, or $0.09 per share, in third quarter 2002. Pro forma net income in the third quarter grew to $48 million, or $0.11 per diluted share, compared with $0 million, or $0.00 per diluted share, in third quarter 2002. At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $1.1 billion. "Thanks to free shipping and low prices, we expect more customers to turn to us for their holiday gifting needs this year--producing our biggest holiday shopping season ever," said Jeff Bezos, Amazon.com founder and CEO. The Company currently offers Free Super Saver Shipping on orders over $25 at www.amazon.com and free shipping options at its U.K., German, French, Japanese and Canadian sites. Amazon.com also offers 30% off books over $15 and continues to lower prices every day across its product offerings including electronics, tools and bestselling CDs and DVDs. To encourage customers to try its newest stores, the Company is currently offering promotional discounts in apparel and sporting goods. Quarterly Highlights -- Worldwide unit growth was 36%, compared with third quarter 2002. -- Third-party seller units (new, used and refurbished items sold on the Company's Websites by businesses and individuals) grew to 22% of worldwide units in the third quarter, compared with 17% of units a year ago. -- North America segment sales, representing the Company's U.S. and Canadian sites, grew 21% to $709 million in the third quarter and segment operating income grew 137% to $63 million, or 9% of net sales, compared with third quarter 2002. -- International segment sales, representing the Company's U.K., German, French and Japanese sites, grew 61% to $425 million in the third quarter and benefited by $28 million from changes in foreign exchange rates compared with third quarter 2002. International segment operating income was $11 million, or 3% of net sales. -- Inventory turns for the trailing twelve months were 19, consistent with a year ago. -- The Company expanded selection by launching a sporting goods store in the U.S. and an electronics store in Japan. Financial Guidance The following forward-looking statements reflect Amazon.com's expectations as of October 21, 2003. Results may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the emerging nature and rate of growth of the Internet and online commerce, and the various factors detailed below. Fourth Quarter 2003 Guidance -- Fourth quarter net sales are expected to be between $1.76 billion and $1.91 billion, or grow between 23% and 34%, compared with fourth quarter 2002. -- Consolidated segment operating income is expected to be between $125 million and $155 million. -- Operating income is expected to be between $110 million and $140 million, assuming, among other things, that the Company does not record any revisions to its restructuring-related estimates and that the closing price of Amazon.com common stock on December 31, 2003 is identical to the closing price of $48.43 on September 30, 2003. Full Year 2004 Expectations -- Net sales are expected to be between $5.75 billion and $6.25 billion. -- Consolidated segment operating income is expected to be between $375 million and $475 million. -- Operating income is expected to be between $315 million and $415 million, assuming, among other things, that the Company does not record any revisions to its restructuring-related estimates and that the closing price of Amazon.com common stock on December 31, 2003 and December 31, 2004 is identical to the closing price of $48.43 on September 30, 2003. Amazon.com, a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers list millions of unique new and used items in categories such as sporting goods, apparel and accessories, books, music, DVDs, electronics and office, kids and baby and home and garden. AMERICAN NATURAL: Closes Convertible Secured Debenture Financing ---------------------------------------------------------------- American Natural Energy Corporation (TSX Venture: ANR.U) has completed a financing consisting of US$11.7 million in convertible secured debentures. ANEC anticipates completing a second closing consisting of an additional US$300,000 in debentures prior to the end of October. The debentures are repayable on September 30, 2005 with interest payable quarterly commencing December 31, 2003 at 8% per annum. The outstanding principal of the debentures is convertible into common shares of ANEC at any time prior to maturity at a conversion price of US$0.45 per share, subject to antidilution adjustment, and the debentures are redeemable by ANEC at any time after October 1, 2004 if the average weighted price per share on the TSX Venture Exchange for a 20 consecutive trading day period prior to the date notice of redemption is given has exceeded 166-2/3% of the conversion price. A finder's fee in the amount of US$350,850 was paid to Middlemarch Partners Limited of London, England in connection with the financing. ANEC used approximately US$5.9 million of the proceeds of the financing for the repayment of secured debt and intends to use the balance primarily for exploration and development of its Bayou Couba oil and gas leases within its ExxonMobil Joint Development Project in St. Charles Parish, Louisiana. The Debentures are collateralized by substantially all of ANEC's assets. The debentures and any common shares issued upon conversion of the debentures will be subject to a statutory hold period of four months under applicable Canadian securities legislation and stock exchange policies. The offer and sale of the Debentures was not registered under the US Securities Act of 1933, as amended, and the Debentures and the shares issuable on conversion may not be offered and sold free of any restrictions on resale under the Act absent registration under that Act or an applicable exemption from the registration requirements. In connection with the financing, John Fleming and Jules Poscente, both of Calgary, Alberta, were elected to the ANEC board of directors. Using a portion of the proceeds of the offering, ANEC intends to have a rig on location on approximately October 25, 2003 to commence drilling on the first of eight scheduled wells on its Bayou Couba properties. The wells are intended to include a mix of development and exploratory locations at depths of from 6,000 to 13,500 feet. ANEC is a Tulsa, Oklahoma based independent exploration and production company with operations in St. Charles Parish, Louisiana. * * * Going Concern Uncertainty As reported in Troubled Company Reporter's August 29, 2003 edition, the Company announced its financial statements have been prepared on a going concern basis which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. The Company has no current borrowing capacity with any lender. It has sustained substantial losses in 2002 and 2001, totaling approximately $8.7 million and $1.0 million, respectively, a stockholders' deficit of $1.4 million at December 31, 2002, a working capital deficiency of approximately $6.0 million including current amounts due under borrowings of approximately $4.5 million, and negative cash flow from operations in each of 2002 and 2001, all of which lead to questions concerning the Company's ability to meet its obligations as they come due. The Company also has a need for substantial funds to develop its oil and gas properties. As a result of the losses incurred and current negative working capital and other matters described above, there is no assurance that the carrying amounts of its assets will be realized or that liabilities will be liquidated or settled for the amounts recorded. The Company's ability to continue as a going concern is dependent upon adequate sources of capital and the ability to sustain positive results of operations and cash flows sufficient to continue to explore for and develop its oil and gas reserves. The independent accountants' report on American Natural Energy's financial statements as of and for the year ended December 31, 2002 includes an explanatory paragraph which states that the Company has sustained substantial losses, a stockholders' deficit, a working capital deficiency and negative cash flow from operations in each of 2002 and 2001 that raise substantial doubt about its ability to continue as a going concern. AMERICAN PRODUCTION: Inks Pact to Sell Assets to Southborrough -------------------------------------------------------------- The Board of Directors of Southborrough Ventures, Inc., (SBBV:OTC- BB) has signed an agreement to purchase the assets of American Production Machining, LLC of Detroit, MI. American Production Machining -- http://www.apm-machining.com-- is a respected manufacturer of high quality production machined parts and has the confidence of its major customer base that includes General Motors, the Ford Motor Company, Meritor, Visteon, and American Axle. APM has current sales of up to $350,000 per week; annualized at $18.2 million. The Company has agreed to purchase all the assets of APM for $4.1 million under a bulk asset sale for $2 million cash and an asset based loan from Comerica Bank, APM's corporate banking partner. To meet this additional cash requirement, the Company has secured financing for $2.2 million from a European financier. The proposal to purchase the assets of APM, as defined by the agreement, will be presented to the Bankruptcy Court, having carriage of the APM Chapter 11 file, for approval; such approval is anticipated. Upon closing, scheduled for November 15, 2003, the Company will establish its corporate headquarters at the APM facility. The Company plans to immediately apply its patented Laser Assisted Chip Control process to current orders and as a result, expects profits to significantly increase. The LACC process -- http://www.southborrough.com-- is designed to eliminate the "chip-control" problem inherent when steel parts such as axle and drive shafts, connecting rods, axle tubes and hubs are machined to a required specification. The acquisition of APM affords the Company the opportunity of not only processing parts for machining with the AmeriChip technology, but also to engage in the actual machining of automotive parts, thereby increasing the Company's market potential. Automotive News, in an article headlined Delphi sees consolidation in global parts business released October 20, 2003, states -- http://www.autonews.com/news.cms?newsId=6739-- "The auto industry has been hit by a wave of consolidation in recent years, typified by the formation of Daimler Chrysler AG in 1998. That has sent ripples though the parts industry, which is under increasing pressure to slash costs." It is the opinion of Southborrough management that in order for the auto giants to meet their cost cutting goals, outsourcing will become more prevalent than ever. The Company is poised, with the acquisition of APM, to assist the automakers domiciled in the United States to reach their profit targets, without having to go offshore, where labor costs are lower. Southborrough's revolutionary machining process has been proven to significantly reduce costs. It is anticipated that the Company will benefit from long-term contracts with its major clients. Southborrough Ventures, Inc., trades on the OTC: BB (SBBV). ANC RENTAL: Has Until Nov. 28 to Continue Cash Collateral Use ------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates obtained the Court's authority to continue using the cash collateral until the earlier of November 28, 2003 or the closing of the sale of substantially all of their assets to Cerberus Capital Management LP, on the same terms and conditions as set forth in the Current Cash Collateral Order. The Debtors need the Cash Collateral to continue operating their businesses and to fund their Chapter 11 cases. As previously reported, the Debtors provided the Court their cash projections through November 30, 2003: ANC Rental Corporation Cash Projection For the 9-Week Period Ending October 5, 2003 until November 30, 2003 (in thousands) Beginning Balance $4,153 Operating Receipts Per Bank Credit Card 288,827 A/R Receipts 61,720 Other 37,600 -------- Total Receipts 388,147 Operating Disbursements: Fleet Operating 21,241 Personnel 66,640 Travel, Meals Entertainment 1,001 Fuel 8,231 Airport Concession 24,124 Auto Liability 15,692 Other Insurance 3,880 Facility Fixed 34,218 Other - TA/TO Commissions 11,382 Advertising 8,988 IT Consulting 12,482 IT Other 1,656 Car Rental/Sales Tax 33,586 Professional Fees 2,334 Other Misc. 2,281 Bonding - Liberty Payments 8,000 Liability Insurance Program 2,535 -------- Total Operating Disbursements 258,272 Secured Lenders Payments - Professional Fees Bankruptcy 3,274 Capital Expenditure Total 1,967 Interests and Financing Fees 5,499 Fleet Financing& Lease Payments 160,882 Manufacturer Incentives (12,821) Recovery from Wholesales (3,093) PDI and Warranty (4,659) Fleet Purchases & Enhancement -- -------- Total Cash Disbursements 109,322 Potential Funding for Europe & Canada - -------- Total Disbursements 409,322 Net Receipts (Disbursements) ($21,175) -------- Ending Book Cash Balance ($17,022) ======== (ANC Rental Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) AQUILA INC: Selling Aquila Sterling to Powergen UK Subsidiary ------------------------------------------------------------- Avon Energy Partners Holdings announces that Aquila, Inc., (NYSE:ILA) and FirstEnergy Corp., have reached a definitive agreement to sell Aquila Sterling Limited to a subsidiary of Powergen UK plc for GBP 36 million. ASL through AEPH owns Midlands Electricity plc, the holding company for Aquila Networks plc, a UK electricity distribution company. Based on net debt as at 30 September 2003 of approximately GBP 484 million (excluding the AEPH bonds), Powergen's offer represents an enterprise value of approximately GBP 1.146 billion for ASL. Powergen's obligation to acquire ASL is conditional upon a commitment of the holders of the outstanding US Dollar notes and UK Sterling bonds of AEPH to sell their bonds to an affiliate of Powergen for 95.8% of their nominal value (less fees to the advisors of the ad-hoc committee of Bondholders) plus accrued interest to the date of completion. As at 20 October 2003, these fees are estimated to amount to approximately US$4.5 million to the date of completion, which would be equivalent to approximately 0.4% of the nominal value per bond. Powergen has already received commitments from the holders of approximately half of the outstanding AEPH bonds, to accept the terms of the Bond Offer. The AEPH bonds subject to the Bond Offer are the GBP 360m Variable Coupon Bonds due 2006, the US$250 million Senior Notes due 2007 and the US$250 million Senior Notes due 2008. The Bond Offer may include a tender offer, a scheme of arrangement and an extraordinary resolution of the Bondholders. The Sale is also conditional upon the following: -- no material adverse change in the Midlands business; -- no insolvency event at either of the Sellers or Aquila Sterling Holdings LLC (the parent company of ASL); -- approval from the European Commission; and -- approval from the State Corporation Commission of the State of Kansas, United States of America. Close Brothers Corporate Finance Limited is acting as financial adviser and Cadwalder Wickersham & Taft is acting as legal adviser to the ad-hoc committee of Bondholders in connection with Bond Offer. Bondholders should contact Close Brothers (Martin Gudgeon, Tel: +44 20 7655 3100) or Cadwalader (Andrew Wilkinson, Tel: + 44 20 7170 8700) for further information. Based in Kansas City, Mo., Aquila (S&P, B+ Credit Facility Rating, Negative) operates electricity and natural gas distribution networks serving customers in Missouri, Kansas, Iowa, Minnesota, Colorado, Michigan and Nebraska, as well as in Canada and the United Kingdom. The company also owns and operates power generation assets. More information is available at http://www.aquila.com AVAYA INC: Reports Improved Fourth Fiscal Quarter Fin'l Results --------------------------------------------------------------- Avaya Inc., (NYSE: AV) a leading global provider of communications networks and services for businesses, reported fourth fiscal quarter net income of $66 million or earnings of 15 cents per diluted share for the fourth fiscal quarter ended Sept. 30, 2003. These results compare to net income of $8 million or earnings of 2 cents per diluted share in the third fiscal quarter of 2003. Fourth fiscal quarter revenue of $1.118 billion was 4.3 percent higher than third fiscal quarter revenue of $1.072 billion. These results are reported in accordance with U.S. generally accepted accounting principles. Avaya noted its cash balance increased for the fifth straight quarter to $1.192 billion, giving the company a net cash position, for the first time since its inception, of $239 million. Selling, general and administrative expenses declined $30 million sequentially from the third fiscal quarter and operating income for the fourth fiscal quarter was $87 million, an increase of $70 million from the third fiscal quarter. In the fourth fiscal quarter of 2002, Avaya reported a net loss of $544 million or a loss of $1.50 per diluted share on revenue of $ 1.152 billion. CEO Comments "As I review the fiscal year just completed, I see Avaya in a substantially different position from where we were at our spin- off three years ago and compared to where we were just 12 months ago," said Don Peterson, chairman and CEO, Avaya. "Today, we are profitable, with a proven financial discipline that has helped provide us with a strengthened financial position. We have a scalable business and financial model that allows us to compete effectively for the opportunity in our marketplace. We are the market leader in IP telephony, with solution and services offers customers can use to extend their existing technology investments to improve operational performance. We'll continue to focus on three themes: performance, potential and positioning Avaya for profitable revenue growth." Fiscal 2003 Results Revenue for fiscal 2003 was $4.338 billion compared to revenue of $4.956 billion for fiscal 2002, a decline of 12.5 percent. The company had a net loss of $88 million or a loss of 23 cents per diluted share for fiscal 2003, compared to a net loss of $666 million or a loss of $2.44 per diluted share for fiscal 2002. Company Comments On Presentation Of Significant Events Avaya has provided information about significant quarterly events in a table, along with the dollar value of the events. Beginning this quarter however, the company will not provide the net per share effect of the events on quarterly earnings. Investors and others interested in the company will be able to use the information about such events to make their own assessment of the per share effect of the significant events on earnings. Among the significant events included in this quarter's results is a gain of $46 million as a result of curtailing pension and post- retirement plans. Business Highlights Since the end of the last quarter Avaya has made a number of key announcements, including: Grupo Santander, Spain's largest financial service group, will implement an Avaya converged communications network to support its new financial campus in Madrid. The 12-building facility will accommodate up to 5,000 people connected by the Avaya network and will centralize virtually all of Santander's IP telephony services. Mobistar, Belgium's second largest mobile network operator, will use Avaya's MultiVantageT Communication Applications-based solution to IP- enable its contact centers and eight Mobistar sites. The network will support 1,700 Mobistar employees, including Mobistar representatives at major client sites. The IP functionality lets Mobistar people work remotely at customer sites where they will be able to easily log onto the Mobistar network and have the same access to features and information as if they were physically in the office. The University of South Florida has upgraded its communications network with a converged Avaya Internet Protocol telephony solution. The new converged network is enhancing services and lowering operational costs for university faculty, staff and over 40,000 students. The upgrade to a converged voice and data network allowed school officials to reuse nearly 95 percent of its existing network infrastructure to support more than 16,000 IP, digital and analog phones. Avaya Global Services provided design and implementation services for the new network, including extensive project management to ensure that the large voice and data network would perform at optimal levels. Avaya acquired service delivery technologies and two business units from VISTA Information Technologies Inc. The acquisitions enhance Avaya Global Services' delivery of end-to-end design, implementation and management services for converged, multi-vendor networks and advanced multimedia contact centers. The acquired software tools will help streamline integration of complex multi- channel, multi-vendor contact center networks and enhance remote network management capabilities. The Avaya Customer Interaction Suite extends Avaya's patented predictive routing technology to contact center customers who come to the center via e-mail or the Web. Previously, this capability was only available when a customer called the contact center on a telephone. This new capability enables businesses to serve a larger number of customers more effectively. The suite also helps ensure contact centers comply with updated state and national regulatory rules, including "Do Not Call" registries. The suite helps contact centers manage business priorities while adhering to new regulatory requirements, and provides tools to generate a consolidated compliance report. Avaya Inc. (S&P, B+ Corporate Credit Rating) designs, builds and manages communications networks for more than 1 million businesses worldwide, including 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya Web site: http://www.avaya.com Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya Web site: http://www.avaya.com BP INTERNATIONAL: Auditors Doubt Ability to Continue Operations --------------------------------------------------------------- BP International, Inc. is a manufacturer of tennis court equipment, industrial fabrics, athletic field and gymnasium equipment, privacy and construction fence screening, fabric architecture shade structures and cabanas, sports lighting, and custom netting. The Company manufactures products in five categories: Tennis and Tennis Court Equipment, such as windscreens and accessories, tennis nets, net posts, benches, court cabanas, court accessories, divider netting, backdrop curtains, protective padding, customized logos, volleyball equipment, basketball equipment and tennis court lighting. Athletics Equipment, such as turf protectors, field covers, windscreens artificial turf mats, safety rails, and batting cages and frames Fencing Fabrics, such as privacy screens, decorative screens, kennel covers, horticultural fabrics, silt fencing, safety fencing, and temporary fencing. Netting, made with knotted and knotless nylon, knotted and knotless polyethylene, for sports activities such as baseball, soccer, golf, volleyball, tennis, hockey, lacrosse, and football, and for bird and scaffold netting. Shade Structures, Canopies and Cabanas, under the trade name 'ShadeZone(TM)'. In July of 2003, Company shareholders voted to change the Company's name from Allergy Immuno Technologies, Inc. to BP International, Inc. By the end of February 2002, BP International (we were called Allergy Immuno Technologies then) had liabilities of $357,972 and assets of only $18,974. Allergy had always experienced operating losses, and it had historically relied on borrowings from its parent, Biomerica, Inc., to maintain operations. Allergy had made attempts to sell its clinical testing business beginning in September 2000. From September 2000 through June 2001 Allergy contacted third party laboratories that might be interested in buying Allergy's clinical testing business. These efforts yielded one interested party who ultimately decided that Allergy's operations were too small for their needs. In late February 2002, Biomerica's management decided that it could no longer afford to lend money to Allergy to fund Allergy's operations. Biomerica's decision to cease lending money to Allergy significantly impacted Allergy's ability to continue to operate. Allergy's board met on March 7, 2002 to discuss the impact of Biomerica's decision to cease lending funds to Allergy. Allergy's board reasoned that Allergy's losses were likely to continue, and without borrowings from Biomerica, Allergy would no longer have enough capital to operate. The board concluded that Allergy's clinical testing services be terminated as of March 14, 2002. Allergy's board met again on March 25. At the March 25, 2002 meeting two alternatives for the future of Allergy were discussed. One alternative was to seek investors or purchasers for Allergy. The other alternative was to transfer some of the liabilities and all of the assets of Allergy to its parent, Biomerica. Ultimately, Allergy's management concluded that Allergy's liabilities and assets should be transferred to its parent Biomerica. Allergy's management, based upon its attempt to sell Allergy's clinical testing business in early 2001, determined that a sale of Allergy's assets to a third party would not yield a buyer without unreasonable effort. On April 30, 2002, Allergy transferred its assets and liabilities to its former parent company, Biomerica. The asset and liability transfer transaction between Allergy and Biomerica was memorialized in a General Assignment Agreement. Allergy's financial condition immediately before the asset and liability transfer to Biomerica was as follows: Allergy owed Biomerica loans totaling $333,382; these loans had accrued over several years. Allergy also owed accounts payable to third parties totaling $27,307.61. Allergy also had the following assets: $803 in cash, prepaid expenses totaling $582.31, aged accounts receivable totaling $5,104.71, inventory valued at $2,600.48, fixed assets such as computers and testing equipment, four patents, and options to purchase 10,000 units of Hollister-Stier, LLC at an exercise price of $10 per unit. In furtherance of Allergy's plan to transfer its assets and liabilities to Biomerica, Biomerica and Allergy agreed to the following General Assignment Agreement: First, Allergy agreed to transfer to Biomerica its cash, prepaid expenses, accounts receivable, inventory, fixed assets, and patents, and also issued 808,467 shares of Allergy common stock to Biomerica and in return Biomerica agreed to assume Allergy's accounts payable. Second, Biomerica reduced the amount of the loan owed by Allergy from $333,382 to $225,282 (a reduction of $108,100), and in return Allergy transferred to Biomerica the Hollister-Stier options. At the time of the asset and liability transfer from Allergy to Biomerica, Biomerica controlled 74.53% of Allergy's outstanding shares. Biomerica thus exercised control over Allergy's board and its management because of its shareholder majority. Furthermore, at the time of the asset transfer, Allergy and Biomerica shared common management. Biomerica's seven directors were Allen Barbieri, David Barrows, Carlos Beharie, Francis R. Cano, Zackary S. Irani, Janet Moore, and Dr. Robert A. Orlando. Three of the seven directors (Mr. Irani, Ms. Moore, and Dr. Orlando) were also directors of Allergy. Allergy's fourth director at such time was Susan Irani, Mr. Irani's cousin, whom Allergy deemed to be an affiliate of Biomerica. All of Allergy's directors were elected by Biomerica through its majority voting control of Allergy. Further, at such time, Mr. Irani served as the Chief Executive Officer and Ms. Moore served as the Chief Financial Officer and Secretary of both Biomerica and Allergy. The asset and liability transfer was negotiated and executed by management common to Allergy and Biomerica and was approved by all of the directors of both companies. Thus, the asset and liability transfer was a transaction with a related party. Allergy did not conduct a formal shareholder vote in connection with the decision to sell its assets to Biomerica, and thus did not mail proxy or information materials to shareholders. Allergy's board was advised by counsel that since Biomerica controlled 74.53% of Allergy's outstanding shares, Allergy did not have to conduct a formal shareholder vote in connection with the decision to sell the Allergy assets to Biomerica since they were not vital to the operation of the corporation. The majority shareholder, Biomerica, had approved the transfer of the assets. Allergy's assets at the time were not significant, and in fact Allergy's liabilities greatly exceeded its assets-the remaining assets only totaled $9,090. Allergy's only significant asset (which was actually valued on the books at $0) was an option to buy some shares in Hollister-Stier, a privately held company. Biomerica agreed to take that option as partial payment for the note payable that AIT owed to Biomerica and reduced the note accordingly. The value of $108,100 was assigned to the option after consulting with Hollister-Stier. Following the asset and liability transfer from Allergy to Biomerica, Allergy learned that the failure to call a shareholder vote in connection with the asset transfer may have violated a provision of Delaware's corporate law. Delaware's General Corporation Law requires that the disposition or sale of 'all or substantially all' of a corporation's assets can only be made following a formal shareholder vote called upon 20 days' notice. However, Delaware's GCL also contains an apparently conflicting provision: a statute that allows a corporation's majority shareholder to act by a written resolution in lieu of a shareholder vote. This conflict between the two statutes has never been resolved or interpreted by any specific case law. Thus, the failure to call a formal shareholder vote in connection with the sale of the assets could have potential consequences. Potentially, a minority shareholder could bring a legal action under Delaware state law against Allergy to either rescind the liability and asset transfer agreement, or to seek damages against Allergy. As of the date of this filing, no shareholder has filed such an action against the Company, and no shareholder has contacted it announcing an intention to bring an action. The Company's present attorney has advised the Company that the likelihood of such an action is remote. BP International's principal source of working capital is income from operations, borrowings under its revolving credit facilities, and capital investment. The Company has experienced losses in the last two years and has relied upon borrowings under its revolving credit facilities and capital investment to maintain liquidity and continue operations. Its auditors have raised substantial doubt about the Company's ability to continue as a going concern. BP has a revolving credit line which is secured by certain eligible receivables and certain eligible inventory. The Company can borrow up to 50% of its eligible inventory and up to 80% of its eligible receivables. The eligible inventory and eligible receivables is recalculated monthly, and audited quarterly. Presently, BP has borrowed the maximum available under the credit line. In addition, at May 31, 2003, the Company is not in compliance with certain covenants associated with its revolving line of credit agreement. During 2002 and early 2003, BP International began to more fully develop its industrial fabric operations. As a result, it incurred additional advertising, personnel and research and development costs associated with this effort. In addition, management has employed additional administrative, production and sales staff in anticipation of significantly increased sales volume (particularly with respect to industrial fabrics) in fiscal 2004 in accordance with the Company's business plan. In connection with this effort, it has restructured its long-term debt obligations and has identified sources of additional equity capital. Accordingly, management feels that the activities described in the preceding paragraph have positioned it to experience increased sales volume of more profitable industrial fabrics. Further, the Company contemplates that increased sales combined with anticipated additional capital contributions, will significantly improve operations and cash flow in 2003 and beyond. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations. The Company is aware of an uncertainty that could have a negative material impact upon its income and short-term liquidity. BIONOVA HOLDING: Fails to Meet AMEX Minimum Listing Requirements ---------------------------------------------------------------- By letter dated October 15, 2003, Bionova Holding Corporation (Amex: BVA) was informed of the intention of the American Stock Exchange to proceed to file an application with the Securities and Exchange Commission to strike the Company's common stock from listing and registration on the Exchange. The Exchange Staff stated this action was being taken because the Company is not in compliance with three of the standards for continued listing, as follows: (1) the Company's stockholders' equity is less than $2 million and it has sustained losses from continuing operations and/or net losses in two of its three most recent fiscal years; (2) the Company's stockholders' equity is less than $4 million and it has sustained losses from continuing operations and/or net losses in three of its four most recent fiscal years; and (3) the Company has sustained losses which are so substantial in relation with its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, as to whether it will be able to continue operations and/or meets its obligations as they mature. This determination by the Staff stemmed from its review of the Company's 10-Q for the quarter ended June 30, 2003. The Company had received a similar letter in September of 2002 and had submitted a plan to regain compliance. While the AMEX had accepted the plan, the Company understood it would continue to be subject to periodic review by the Exchange Staff during the extension period and that failure to make progress consistent with the plan or to regain compliance with the continued listing standards could result in the Company being delisted. Bionova Holding has notified the AMEX that it is appealing the determination of the Staff. While the Company is working on several alternative plans to address the deficiencies, there can be no assurance at this time that any of them can be realized or that the Company will be successful in convincing the review panel of the efficacy and timing of the plan. Because of this concern Bionova Holding also will look at alternative trading vehicles for the Company's common stock should it not be successful in maintaining its listing on the AMEX. The Company has been informed by the AMEX that the panel hearing for the appeal generally will occur within 45 days from Bionova Holding's request for appeal (which was sent today). Bionova Holding Corporation is a leading fresh produce grower and distributor. Its premium Master's Touch(R) and FreshWorld Farms(R) brands are widely distributed in the NAFTA market. Bionova Holding Corporation is majority owned by Mexico's SAVIA, S.A. de C.V. Bionova Holding's June 30, 2003 balance sheet shows a working capital deficit of about $80 million and a total shareholders' equity deficit of about $43 million. BOYD GAMING: Third-Quarter Results Reflect Weaker Performance ------------------------------------------------------------- Boyd Gaming Corporation (NYSE: BYD) reported its financial results for the third quarter 2003. The Company reported adjusted earnings of $.15 per share in the third quarter, versus $.23 per share in the third quarter last year. In both periods, adjusted earnings are before preopening expenses, and, in the third quarter last year, adjusted earnings also exclude a loss on early retirement of debt of $.03 per share. Per share amounts are reported on a diluted basis. This is the first earnings release that includes operating results of Borgata, the Company's joint venture property in Atlantic City, which opened on July 3, 2003. The Borgata results are reported on two lines on the consolidated statement of operations, first, "earnings (loss) from Borgata" to reflect the Company's 50% share of Borgata's operating income (including preopening expenses) and, second, "other expense from Borgata, net" to reflect the Company's 50% share of Borgata's non-operating items. As an unconsolidated joint venture, Borgata results do not appear in the Company's operating revenues or operating expenses. Revenues for the third quarter were $311 million, slightly above the $308 million reported last year. Blue Chip, Delta Downs and Sam's Town Tunica reported significant revenue gains that were partially offset by a decline in revenue at Par-A-Dice. Other properties reported revenues in the quarter close to prior period levels. The Company reported property EBITDA of $75.7 million in the third quarter versus $73.2 million reported in the third quarter last year. Included in this year's total is the Company's 50% share of Borgata's EBITDA. After corporate expense, the Company's EBITDA in the third quarter was $70.1 million, up from $65.4 million recorded in last year's comparable period. The Company's share of Borgata's preopening expenses in the third quarter were $3.5 million, or $.03 per share, all of which are reported in the Company's operating results for Borgata. Preopening expenses in the third quarter last year were $2.7 million, or $.03 per share, most of which were related to Borgata. In addition, in the third quarter last year, the Company retired debt through open market purchases and recorded a loss of $3.4 million, or $.03 per share. Net income in the third quarter was $7.7 million, or $.12 per share, versus $11.3 million, or $.17 per share, reported in the third quarter last year. Borgata The Company reported results for Borgata, which operated for all but two days in the third quarter. The property reported $184 million of gross revenue and $150 million of net revenue in the quarter. Gaming revenue in the quarter was $136 million, with the property reporting the second highest gaming win in the Atlantic City market, behind only the much larger Bally's Park Place. Table game win was $47.6 million in the quarter, placing Borgata number one in the market in table games. The property's EBITDA in the quarter was $30.5 million, for an EBITDA margin of 20.4%. William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming, said, "The opening of Borgata represented a true milestone in the history of our Company. The initial response from customers, employees, and the financial community has been most gratifying. In our opening months, we achieved significant market share premiums in slots, table games and poker. Our talented management team is off to a great start, and I am confident that Borgata has a very bright future ahead." Bob Boughner, Borgata's Chief Executive Officer, added, "In the property's start-up months, we concentrated on attracting and serving customers, building customer relationships, and growing revenues and market share. In the first 90 days of operations, table win per unit per day was $4,660, 26% higher than the number two property in the market and 64% above the average. Slot win in the quarter was $91.9 million. Slot win per unit per day was $282, 15% higher than the market average, ranking third in the market. "In the third quarter, 26% of gross revenue was non-gaming revenue, which the Company believes is the highest percentage of non-gaming revenue in the Atlantic City market. Approximately 56% of Borgata's non-gaming revenue was cash revenue versus complimentary revenue, also believed to be the highest percentage in the market. Hotel occupancy for the quarter was 80%, comprised of sequential monthly occupancy rates of 65%, 87% and 84% for July, August and September, respectively. The average daily room rate for the third quarter was $138. Customer intent-to-return surveys have been very gratifying and improving steadily along with the quality of the service provided. "It should be noted that Borgata's third quarter EBITDA includes expenses of approximately $13 million directly related to the property's signature grand opening events, extensive launch media campaign and other costs related to the opening. These programs, while costly in the current period, were essential elements of our strategy to properly position the property and drive initial customer trial. The launch media campaign is essential for stimulating future demand among new market segments. "As we move into our next phase of operations, we are now refining our marketing programs, building employee efficiency and building margins and our bottom line." Included in other expense from Borgata on the Company's consolidated statement of operations is the Company's share of Borgata's state income taxes. In connection with the commencement of operations, Borgata recorded a $5.2 million net tax benefit in the third quarter that is related to the recognition of operating loss carryforwards accumulated during Borgata's development period. The Company's share of that benefit, which is reflected in adjusted earnings for the third quarter, amounted to $2.6 million, or $.02 per share. Wholly-owned Properties The Company's nine operating units reported property EBITDA in the third quarter of $60.4 million versus $73.2 million reported in the comparable quarter last year. After corporate expense, third quarter wholly-owned EBITDA was $54.8 million as compared to $65.4 million reported in the third quarter last year. The Company cited three principal reasons for the decline: higher gaming taxes recently enacted in Illinois, Indiana and Nevada, the combination of which accounted for approximately $8 million in increased expenses; increased marketing expenses at Stardust that did not generate incremental revenue in the quarter; and lower gaming revenue at Par-A-Dice relating to increased competition from the property's outer-markets and disruptions stemming from the large gaming tax increase. On the positive side, both Delta Downs and Blue Chip reported strong quarterly gains in revenue in the recently completed quarter. In addition, Delta Downs reported a significant increase in EBITDA in the quarter. Nine-month Results of Operations The Company reported revenue of $945 million for the first nine months of 2003, up from $923 million in the same period of 2002. The gain was principally the result of a full period of dockside operations at Blue Chip, which commenced August 2002, and a full period of slot operations at Delta Downs, where slot operations commenced in February 2002. EBITDA (before a one-time Indiana gaming tax charge in the second quarter of 2003 of $3.5 million) for the nine months was $205 million, including the Company's share of Borgata's EBITDA, versus $209 million reported last year. On a same-store basis, EBITDA was $190 million for the first nine months in 2003 versus $209 million in the comparable period last year. Adjusted earnings for the first nine months of 2003 were $.64 per share as compared to $.82 per share for the same period last year. Net income for the first nine months of 2003 was $28.6 million, or $.43 per share, versus $36.1 million, or $.55 per share, reported for the first nine months last year. Prior year net income includes a charge for the cumulative effect of a change in the accounting for goodwill, which amounted to $.12 per share. Third Quarter Property Highlights Sam's Town Las Vegas reported slightly increased revenues in the third quarter, but higher costs, principally marketing expenses, caused a 5.6% decline in quarterly EBITDA from the prior year. The Downtown Las Vegas properties reported a $1.1 million year- over-year decline in EBITDA, about half of which was attributable to higher air charter costs and the other half to slightly lower revenues at the properties. Stardust reported a 2.0% decline in third quarter revenue as compared to the prior year third quarter. Stardust reported a small EBITDA loss for the quarter versus EBITDA of $3.1 million in the third quarter last year, principally due to heavier spending on marketing and promotions. Par-A-Dice's EBITDA in the third quarter was $6.8 million, a 50% decline from the third quarter last year. Based on this quarter's gaming revenue and admissions, gaming taxes at Par-A-Dice increased $4.3 million versus the comparable period last year. A 9.0% decline in revenue at Par-A-Dice in the quarter accounted for the remainder of the EBITDA decline. Revenue at Blue Chip in the quarter was 6.2% above the prior year. Dockside operations at the property commenced August 1, 2002. Blue Chip reported EBITDA in the quarter that was $1.1 million below the prior year's third quarter. Based on this quarter's revenue and admissions, gaming taxes at Blue Chip increased $3.3 million versus the third quarter in the prior year. Delta Downs reported a 10.8% increase in revenue in the third quarter versus the prior year. Except for gaming taxes on the incremental revenue, the property brought virtually all of its increased revenue to the bottom line, where EBITDA rose $2.0 million, or 34%, in the third quarter versus the comparable period last year. Financial Statistics The Company provided the following additional information for the third quarter ended September 30, 2003: -- September 30 debt balance: $1.073 billion -- Debt reduction in quarter: $15.4 million -- September 30 cash: $73.2 million -- Dividends paid in the quarter: $4.8 million -- Shares repurchased in third quarter: 75,000 shares at a weighted average price of $15.48 per share -- Capital spending in third quarter: $14.8 million, almost all related to normal maintenance items -- Cash contributed in the third quarter to the joint venture that owns Borgata: $18.0 million Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) (Fitch, BB+ Senior Secured Bank Credit Facility and BB- Senior Unsecured Debt Ratings) is a leading diversified owner and operator of 13 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. Boyd Gaming recently opened Borgata Hotel Casino and Spa at Renaissance Pointe (AOL keyword: borgata or http://www.theborgata.com), a $1.1 billion entertainment destination hotel in Atlantic City, through a joint venture with MGM MIRAGE. Additional news and information on Boyd Gaming can be found at http://www.boydgaming.com BOYD GROUP: Will Make October 2003 Cash Distribution on Nov. 26 --------------------------------------------------------------- Boyd Group Income Fund (TSX: BYD.UN) announced a cash distribution for the month of October 2003 of $0.095 per trust unit. The distribution will be payable on November 26, 2003 to unitholders of record at the close of business on October 31, 2003. Boyd Group Income Fund's policy is to pay monthly distributions to unitholders of record on or around the last business day of the month. Holders of units who are non-residents of Canada will be subject to withholding taxes in respect of any distributions made by Boyd Group Income Fund. The Fund is an unincorporated, open-ended mutual fund trust created for the purposes of acquiring and holding certain investments, including an interest in The Boyd Group Inc. and its subsidiaries. The Boyd Group Inc. is the largest operator of collision repair facilities in Canada and is among the largest in North America. Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) (Fitch, BB+ Senior Secured Bank Credit Facility and BB- Senior Unsecured Debt Ratings) is a leading diversified owner and operator of 13 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. Boyd Gaming recently opened Borgata Hotel Casino and Spa at Renaissance Pointe (AOL keyword: borgata or http://www.theborgata.com), a $1.1 billion entertainment destination hotel in Atlantic City, through a joint venture with MGM MIRAGE. Additional news and information on Boyd Gaming can be found at http://www.boydgaming.com BUDGET GROUP: Committee Hires InteCap Inc. as Valuation Expert -------------------------------------------------------------- By this application, the Official Committee of Unsecured Creditors of the Budget Group Debtors seeks the Court's authority, pursuant to Sections 327(a), 328(a) and 1103 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure, to retain Scott D. Phillips of InteCap, Inc. as its valuation expert, nunc pro tunc as of September 8, 2003. The Committee wants to retain Mr. Phillips and InteCap in connection with the litigation between Budget Rent-A-Car Corporation of America and Budget Rent-A-Car International, Inc. The retention relates to the representation of BRACC creditors alone, not BRACII. As valuation experts, Mr. Phillips and InteCap will provide certain independent professional consulting services including, without limitation, providing valuation of estate assets and providing expert testimony at trial, if necessary. Mr. Phillips is InteCap's managing director. William Bowden, Esq., at Ashby & Geddes, in Wilmington, Delaware, asserts that the services of a valuation expert are necessary and appropriate to enable the Committee to evaluate the complex financial and economic issues raised by the Debtors' reorganization proceedings and to effectively fulfill its statutory duties. The Committee selected Mr. Phillips and InteCap because of their expertise in the valuation of intellectual property rights. InteCap is an international consulting firm with its principal office located at 101 N. Wacker Drive, Suite 1600 in Chicago, Illinois. InteCap employs 200 consulting professionals in nine offices around the world. InteCap provides a broad range of corporate consulting services to its clients, including, without limitation, services pertaining to economic, valuation, and strategy issues related to intellectual property and complex commercial disputes. InteCap and its senior professionals have extensive experience in the valuation of intellectual property rights. Mr. Phillips is the head of InteCap's national trademark practice and one of the foremost experts in his field. His expertise in transactional, tax, litigation, strategy and financial reporting matters involving trademarks, patents, trade secrets, and copyrights has been provided to a wide array of clients, including Fortune 500 companies. Mr. Phillips has extensive experience in litigation matters and an excellent reputation for services he has rendered in large and complex litigation on behalf of companies throughout the United States. These matters include: (1) Verizon Communications Inc., et al. v. Inverizon International, Inc.; (2) Quantum National Corp. and Quantum National Bank v. MBNA America Bank; (3) Harrah's Entertainment, Inc., et al. v. Station Casinos, Inc., et al.; (4) Calvin Klein Trademark Trust and Calvin Klein Inc. v. Linda Wachner, et al.; (5) Simon Property Group, LP v. mySimon, Inc.; (6) Ethex Corporation v. Warner Chilcott, Inc.; (7) M2 Software, Inc. v. Viacom, Inc. et al.; (8) The Babcock and Wilcox Company v. Tidelands Oil Production Company et al.; (9) DHL Corporation & Subsidiaries v. Commissioner; and (10) Sun Life Assurance Company of Canada v. SunAmerica Inc. Mr. Phillips assures the Court that InteCap's principals and professionals do not have any connection with the Debtors, their creditors, or any other party-in-interest. InteCap does not hold or represent an interest materially adverse to the Debtors' estates, and is a "disinterested person" under Section 101(14) of the Bankruptcy Code. Because of InteCap's large client base, it is, however, possible that one of InteCap's clients or a counterparty to an engagement may hold claim or otherwise is a party-in-interest in the Debtors' Chapter 11 case. But Mr. Phillips ascertains that none of these business relationships constitutes interests materially adverse to the Committee in matters on which InteCap is employed. InteCap will be compensated on a monthly basis for hourly professional fees incurred. InteCap will also be reimbursed for all reasonable out-of-pocket expenses. InteCap's professional fees will be based on these hourly rates: Managing Directors $395 - 545 Directors 250 - 345 Associates 190 - 235 Analysts 125 - 175 The Debtors will indemnify and hold InteCap, its officers, employees, agents and affiliates, harmless for all claims, liabilities, demands and causes of action that arise from their involvement with providing expert services, except to the extent that the claims, liabilities, demands and causes of action resulted from willful misconduct. (Budget Group Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) CABLE SATISFACTION: Bankers Exercise Rights re Cabovisao Shares --------------------------------------------------------------- Cable Satisfaction International Inc. (TSX: CSQ.A), said it has been advised by the bankers of Cabovisao - Televisao por Cabo, S.A., the Company's subsidiary in Portugal, of their decision to exercise through their security agent the rights relating to the shares of Cabovisao including the right to call, attend and vote in general meetings of shareholders. As a result, the Company's ability as an indirect shareholder thereof to exercise control over the affairs of Cabovisao is likely to have been significantly reduced. The Company has previously announced that its bankers had declined to extend the waivers pertaining to the maturity date of Cabovisao's credit facility. The action described above does not constitute a notice of acceleration but Cabovisao's bankers have expressly reserved their rights under the applicable documentation. As previously announced, the Company has obtained from Quebec Superior Court an extension until January 23, 2004 of the protection initially granted on June 27, 2003 under the Companies' Creditors Arrangement Act. Under the motion granted by the Court, the Company is expected to file and submit to stakeholders an amended plan of arrangement and reorganization on or before December 15, 2003 and hold a creditors' meeting on or before January 16, 2004. In addition, the time to call an annual general meeting of shareholders is extended pending further order of the Court. There can be no assurance that the recapitalization plan proposed by Catalyst will be successfully completed or completed on the terms announced by the Company on October 14, 2003. Csii builds and operates large bandwidth (750 Mhz) hybrid fibre coaxial (HFC) networks and, through its subsidiary Cabovisao - Televisao por Cabo, S.A. provides cable television services, high- speed Internet access, telephony and high-speed data transmission services to homes and businesses in Portugal through a single network connection. The subordinate voting shares of Csii are listed on the Toronto Stock Exchange (TSX) under the trading symbol "CSQ.A". CALPINE: Says Moody's Downgrade Has Less Impact on Operations ------------------------------------------------------------- Calpine Corporation (NYSE: CPN), a leading North American power company, reaffirmed that its operations will not be materially impacted by the change of Moody's Investors Service Senior Implied rating on Calpine to B2 from Ba3, with a stable outlook. The ratings on the company's senior unsecured debt, senior unsecured convertible debt and convertible preferred securities were also lowered. The Moody's downgrade has no impact on the company's credit agreements, and the company continues to conduct its business with its usual creditworthy counterparties. "Our commitment to strengthening and enhancing our financial position continues to be one of our highest priorities. To date we have completed over $2.1 billion of our previously announced $2.3 billion liquidity program," stated Bob Kelly, chief financial officer for Calpine. "In addition, we continue to advance on our program of reducing debt. Following our recent offering of senior secured notes and term loans, we have reduced the amount of outstanding senior unsecured debt, senior unsecured convertible debt and convertible preferred securities by approximately $390 million." Calpine Corporation is a leading North American power company dedicated to providing wholesale and industrial customers with clean, efficient, natural gas-fired and geothermal power generation and a full range of energy products and services. The company generates power at plants it owns or leases in 22 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world's largest producer of renewable geothermal energy, and it owns approximately nine hundred billion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit http://www.calpine.com CALYPTE BIOMEDICAL: Provides Fiscal Year 2004 Financial Guidance ---------------------------------------------------------------- Calypte Biomedical Corporation (OTC Bulletin Board: CYPT), the developer and marketer of the only two FDA approved HIV-1 antibody tests for use with urine samples, announced financial guidance for its 2004 fiscal year ending December 31, 2004. Based upon its current backlog, the company expects to generate revenues of $23 million to $25 million and net income of approximately $5 million. The company does not expect to pay taxes next year as a result of Net Operating Loss Carryforwards. "We continue to generate growing interest in our urine HIV-1 EIA," said Tony Cataldo, Calypte Biomedical's Chairman. "In just the last three months, the company has dramatically transformed itself from teetering on the verge of insolvency to a strong and stable concern. We significantly strengthened our balance sheet by raising $12.5 million from Marr Technologies, our strategic partner. This financing has given us the flexibility to pursue many of the international opportunities that will result in significant contracts. We are only now beginning to close relationships with many of the countries in emerging markets. As we enter these new markets, our growth should accelerate even faster." The company believes most of its revenues and earnings will come from sales of its urine HIV-1 Rapid and EIA products to emerging markets. Recently, Calypte announced that it had received orders from Botswana and China and had initiated testing in Tanzania, Rwanda, Burundi, and Botswana. Calypte Biomedical Corporation -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $11 million -- headquartered in Alameda, California, is a public healthcare company dedicated to the development and commercialization of urine-based diagnostic products and services for Human Immunodeficiency Virus Type 1 (HIV-1), sexually transmitted diseases and other infectious diseases. Calypte's tests include the screening EIA and supplemental Western Blot tests, the only two FDA-approved HIV-1 antibody tests that can be used on urine samples. The company believes that accurate, non- invasive urine-based testing methods for HIV and other infectious diseases may make important contributions to public health by helping to foster an environment in which testing may be done safely, economically, and painlessly. Calypte markets its products in countries worldwide through international distributors and strategic partners. Current product labeling including specific product performance claims can be found at http://www.calypte.com CHOICE ONE COMMS: Pulls Plug on PwC's Engagement as Accountants --------------------------------------------------------------- On October 15, 2003, the Audit Committee of Choice One Communications Inc., dismissed PricewaterhouseCoopers LLP as the independent accountants for the Company. The report of PwC on the Company's consolidated financial statements for the fiscal year ended December 31, 2002 contained an explanatory paragraph for an uncertainty regarding the Company's ability to continue as a going concern. PwC did not render a report on the Company's consolidated financial statements for the fiscal year ended December 31, 2001 because the firm of Arthur Andersen LLP was then engaged as the Company's independent accountants. COVANTA ENERGY: Treatment of Claims Under First Amended Plan ------------------------------------------------------------ Pursuant to their First Amended Joint Plan of Reorganization, the Covanta Energy Debtors reclassify Claims and Equity Interests into 13 classes. The modifications include: Class Claims Status Voting Right ----- ------ ------ ------------ 5 Allowed Parent and Unimpaired Deemed to Accept Holding Company Guarantee Claims 6 Allowed Parent and Impaired Entitled to Vote Holding Company Unsecured Claims 7 Allowed Convertible Impaired Deemed to Reject Subordinated Bond Claims 11 Equity Interests in Unimpaired Deemed to Accept Subsidiary Debtors Class 2H Allowed Heber Secured Claims and Class 14 Equity Interests in Heber Debtors were deleted from the Amended Reorganization Plan. In view of the changes in the classification of claims, the treatment of some classified claims were also modified to include these provisions: Class 2: Allowed Project Debt Claims To the extent that defaults exist in connection with any Allowed Project Debt Claims, the Reorganized Debtors will comply with Section 1124(2) of the Bankruptcy Code on or before the Effective Date. The Reorganizing Debtors will pay in cash any Secured Project Fees and Expenses, 30 days after the Confirmation Date. Subclass 3A: Secured Bank Claims Immediately after making the Distribution on account of the Allowed Priority Bank Claims, the Allowed Non-Priority Subclass 3A Claim Holders will receive a Pro Rata Subclass Share of the remaining Subclass 3A Recovery; provided however, that with respect to the Distribution of the remaining Subclass 3A Recovery: (a) the New Facility Lenders in Subclass 3A will receive their Secured Value Distribution first, to the extent available, in the form of Distributable Cash and thereafter in the form of New High Yield Secured Notes; and (b) the Additional New Lenders in Subclass 3A will receive their Secured Value Distribution first, in the form of New Lender Warrants and thereafter solely in the form of New High Yield Secured Notes. It is provided that Non-Participating Lenders in Subclass 3A will receive their Secured Value Distribution solely in the form of New High Yield Secured Notes and will not receive any Distribution of Distributable Cash or New Lender Warrants. Subclass 3B: 9.25% Debenture Claims (a) The Subclass 3B Secured Claim will be deemed an Allowed Secured Claim in an amount equal to the Allowed Subclass 3B Settlement Amount and in full settlement, release and discharge of the Allowed Secured Claims of the Accepting Bondholders, each holder of an Allowed Subclass 3B Claim that is an Accepting Bondholder will, subject to payment of its Pro Rata share of the Settlement Distribution, receive its Pro Rata Subclass Share of Distributions of the Subclass 3B Accepting Bondholder Recovery; provided, however, that with respect to Subclass 3B Accepting Bondholder Recovery: (1) the New Facility Lenders in Subclass 3B that are Accepting Bondholders, if any, will receive their Secured Value Distribution first, to the extent available, in the form of Distributable Cash and thereafter in the form of New High Yield Secured Notes; and (2) the Additional New Lenders in Subclass 3B that are Accepting Bondholders, if any, will receive their Secured Value Distribution solely in the form of New High Yield Secured Notes plus a Pro Rata Subclass Share of the New Lender Warrants; It is provided further that the Non-Participating Lenders in Subclass 3B that are Accepting Bondholders will not receive any Distributable Cash or any Distribution of New Lender Warrants as part of the Secured Value Distribution. Distributions made to each Accepting Bondholder of the holder's Allowed Subclass 3B Claim will be subject to adjustment and modification in accordance with the provisions of the 9.25% Settlement, including the waiver of the 9.25% Deficiency Claims and any subordination benefits with respect to the Convertible Subordinated Bonds, and payment of the holder's Pro Rata share of the Settlement Distribution to the holders of Allowed Class 6 Claims; (b) In the event that the aggregate amount of Subclass 3B Claims held by Rejecting Bondholders is equal to or greater than $10,000,000, the Subclass 3B Claim of each Rejecting Bondholder will be deemed a Disputed Secured Claim, allowance will be subject to determination pursuant to the 9.25% Debentures Adversary Proceeding and on the Effective Date, the Reorganizing Debtors will deliver the Subclass 3B Rejecting Bondholder Recovery into a reserve account and be held subject to distribution; and (c) In the event that the aggregate amount of Subclass 3B Claims held by Rejecting Bondholders is less than $10,000,000, the Subclass 3B Claim of each Rejecting Bondholder will be deemed an Allowed Secured Claim in its full amount and in full settlement, release and discharge of the Allowed Secured Claims of the Rejecting Bondholders, on the Effective Date, each holder of an Allowed Subclass 3B Claim that is a Rejecting Bondholder will receive its Pro Rata Subclass Share of Distributions of the Subclass 3B Rejecting Bondholder Recovery. However, with respect to the Subclass 3B Rejecting Bondholder Recovery: (1) the New Facility Lenders in Subclass 3B that are Rejecting Bondholders, if any, will receive their Secured Value Distribution first, to the extent available, in the form of Distributable Cash and thereafter in the form of New High Yield Secured Notes; and (2) the Additional New Lenders in Subclass 3B that are Rejecting Bondholders, if any, will receive their Secured Value Distribution solely in the form of New High Yield Secured Notes plus a Pro Rata Subclass Share of the New Lender Warrants. It is provided further that the Non-Participating Lenders in Subclass 3B that are Rejecting Bondholders will not receive any Distributable Cash or any Distribution of New Lender Warrants as part of the Secured Value Distribution. In the event that the aggregate amount of Subclass 3B Claims held by Rejecting Bondholders is less than $10,000,000, the Distributions made to each Rejecting Bondholder of the holder's Allowed Subclass 3B Claim will not be subject to adjustment and modification, nor will they receive a release of claims asserted in the 9.25% Adversary Proceeding, in accordance with the provisions of the 9.25% Settlement. Class 4: Allowed Operating Company Unsecured Claims Holders of Allowed Class 4 Claim will not have the option to elect to be treated as an Elective Convenience Claim. Class 5: Allowed Parent and Holding Company Guarantee Claims On the Effective Date, the legal, equitable and contractual rights of the holders of Allowed Class 5 Claims will be reinstated in full satisfaction, release and discharge of their Class 5 Claims and will remain unaltered under the Reorganization Plan except as the Reorganizing Debtors and the holders of Allowed Class 5 Claims may otherwise agree or as holders may otherwise consent. No contractual provisions or applicable law that would entitle the holder of an Allowed Class 5 Claim to demand or receive payment of that Claim prior to the stated maturity of the Claim, terminate any contractual relationship or take other enforcement action from and after the occurrence of a default that occurred prior to the Effective Date will be enforceable against the Reorganized Debtors. Class 6: Allowed Parent and Holding Company Unsecured Claims In consideration of the agreement by the holders of Class 6 Claims to waive any claims, including all alleged avoidance actions that might be brought against the holders of Subclass 3A Claims and to settle the 9.25% Debentures Adversary Proceeding in accordance with the terms of the 9.25% Settlement, and to secure the support of the holders of Allowed Class 6 Claims for confirmation of the Reorganization Plan, the holders of Allowed Class 3 Claims have agreed to provide the holders of Allowed Class 6 Claims from the value that would otherwise have been distributable to the holders of Allowed Class 3 Claims, so that on the Distribution Date, each holder of an Allowed Class 6 Claim will receive, in full satisfaction, release and discharge of its Class 6 Claim, Distributions consisting of: (a) the holder's Pro Rata Class Share of the Distribution Class 6 Warrants; (b) the holder's Pro Rata Class Share of Class 6 CPIH Preferred Stock; (c) the holder's Pro Rata Class Share of the CPIH Participation Interest; and (d) the holders Pro Rata Class Share of the proceeds, if any, with respect to the Class 6 Litigation Claims. Additionally, each holder of an Allowed Class 6 Claim: (1) will receive from each Accepting Bondholder, in full satisfaction, release and discharge of its rights with respect to the 9.25% Debentures Adversary Proceeding against each Accepting Bondholder, a Distribution consisting of the holder's Pro Rata Share of the Settlement Distribution; and (2) may receive a further Distribution subject to the resolution of the 9.25% Debentures Adversary Proceeding. With respect to the Distribution to holders of Allowed Class 6 Claims, the Reorganizing Debtors will have the option to make all or any portion of the Distribution either directly to the holder of the Allowed Class 6 Claim or through a depository or trust arrangement that provides holders of Allowed Class 6 Claims with the equivalent economic benefits they would have received through a direct Distribution; provided, however, that the costs of implementing and maintaining any depository or trust arrangement will be paid for from the proceeds of the Distribution to holders of Allowed Class 6 Claims. Class 7: Allowed Convertible Subordinated Bond Claims On the Distribution Date, each holder of an allowed Class 7 Claim will not receive any Distributions from the Reorganizing Debtors or retain any property under the Reorganization Plan in respect of Class 7 Claims on account of its Class 7 claims. Class 9: Intercompany Claims Subclass 9B: Reorganizing Debtors Intercompany Claims In the sole discretion of the applicable Reorganizing Debtor or Reorganized Debtor, Subclass 9B Claims will be either: -- preserved and reinstated; -- released, waived and discharged, -- contributed to the capital of obligee corporation, or -- distributed to the obligee corporation. Class 11: Equity Interests in Subsidiary Debtors As of the Effective Date, all holders of Equity Interests in Subsidiary Debtors will be reinstated in full satisfaction, release and discharge of any Allowed Class 11 Claims and the Equity Interests will be evidenced by the existing capital stock, partnership and membership interests. Class 11 Equity Interests are unimpaired and the holders of Allowed Class 11 Equity Interests are conclusively presumed to accept the Reorganization Plan. (Covanta Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392- 0900) CROWN CASTLE: Declares Quarterly 6.25% Preferred Share Dividend --------------------------------------------------------------- Crown Castle International Corp. (NYSE: CCI) announced that the quarterly dividend on its 6.25% Convertible Preferred Stock will be paid on November 17, 2003 to holders of record on November 1, 2003. The dividend will be paid in shares of the Company's common stock, and the dividend rate will be announced in a press release on or before the record date of November 1, 2003. Contact regarding Dividend Payments: Patti Knight, Mellon Investor Services at 214-922-4420. Crown Castle International Corp. (S&P, B- Corporate Credit Rating, Stable Outlook) engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers and rooftops as well as analog and digital audio and television broadcast transmission systems. The Company offers near-universal broadcast coverage in the United Kingdom and significant wireless communications coverage to 68 of the top 100 United States markets, to more than 95 percent of the UK population and to more than 92 percent of the Australian population. Crown Castle owns, operates and manages over 15,500 wireless communication sites internationally. For more information on Crown Castle, visit: http://www.crowncastle.com DELTA WOODSIDE: Q1 2004 Operating Results Enter Negative Zone ------------------------------------------------------------- Delta Woodside Industries, Inc. (NYSE-DLW) reported net sales of $42.6 million for the quarter ended September 27, 2003, a decrease of 7.8% when compared to net sales of $46.2 million for the quarter ended September 28, 2002. The decrease was the result of a decrease in unit sales partially offset by a 1.4% increase in average sales price. Unit sales declined because customer demand declined, primarily as a result of weak retail sales. Also contributing to the decline was continued pressure from imports coupled with over capacity of domestic textile production. Product mix changes accounted for the increase in average sales price. The Company reported an operating loss of $1.9 million for the quarter ended September 27, 2003 compared to an operating profit of $3.1 million in the prior year quarter. The Company reported a net loss of $3.1 million or $0.53 per common share for the quarter ended September 27, 2003 compared to net income of $1.4 million or $0.24 per common share for the quarter ended September 28, 2002. The operating loss for the current year quarter was principally the result of unabsorbed manufacturing costs associated with reduced running schedules brought on by reduced customer demand. Increased employee benefit costs in the first quarter also contributed to the operating loss. There was no income tax impact for the current year quarter due to the requirement, previously announced on September 26, 2003, for a tax valuation allowance that reduced the Company's net deferred tax assets to zero as of the fiscal year ended June 28, 2003 and will similarly reduce it for subsequent periods. For the prior year quarter, the Company recorded a tax expense of $0.9 million. As a result of the operating loss in the current year first quarter, the Company's operating subsidiary Delta Mills, Inc. was not in compliance with the financial covenants of its $50 million revolving credit agreement with GMAC at the end of the first quarter of fiscal 2004. As reported on September 26, 2003, Delta Mills has already obtained a waiver of compliance with these covenants from GMAC for the first quarter of fiscal 2004. Management is currently in discussions with GMAC with respect to amending these covenants or extending the waiver. W.F. Garrett, President and CEO, commented, "The order flow on our books did not happen as planned due to unexpectedly slow retail late in the first quarter. Slow retail continued early in the second quarter, but recently, retail has improved and inventories throughout the supply chain should be corrected." 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. DISTRIBUTION MANAGEMENT: Ability to Continue Ops. Uncertain ----------------------------------------------------------- Distribution Management Services, Inc. was Incorporated in the State of Florida on January 25, 1995. The Company was organized for the purpose of operating a transfer station for recycling of construction and demolition materials in Miami, Florida. From incorporation, the Company was principally engaged in organizational activities, construction of its recycling facility, and raising capital until approximately May 1999. Accordingly, the Company was considered to be in the development stage throughout that period. On April 2003, the Company entered into a contract to sell its recycling center for $1,050,000. The closing of this transaction occurred on July 25, 2003 after the purchaser had completed satisfactory due diligence and all conditions precedent had been met. The Company used the net proceeds from the sale to (i) satisfy the existing mortgage on the Center, including all unpaid interest, (ii) repay accounts payable and debt to affiliated parties, and (iii) for working capital. On May 23, 2003, the Company acquired the rights, title and interest to two (2) full length motion picture scripts. It is the Company's intention to produce, market and distribute one or both of these scripts as full length motion pictures. On September 22, 2003, the Company entered into an agreement to buy 100% of an entity controlled by the individuals who sold the Company the rights to the movie scripts. These individuals are also directors of the Company. The newly formed entity has the right to manufacture and distribute a camera stabilizer to be used in marine filming. Loss from continuing operations for the three-month period ended August 31, 2003 is primarily comprised of professional fees and other operating expenses associated with the Company's efforts to develop new business ventures. Loss from discontinued operations for the three-month period ended August 31, 2003 included revenues of approximately $19,400, expenses of approximately $18,500 and a loss on the sale of the recycling center of approximately $32,000. Discontinued operations for the three-month period ended August 31, 2002 included approximately $36,600 of revenues and $39,000 of expenses. All revenues generated for the current and prior period related solely to the recycling center. The Company's financial statements have been prepared in conformity with generally accepted accounting principles which assume that the Company will continue on a going concern basis, including, the realization of assets and liquidation of liabilities in the ordinary course of business. The Company intends to finance production of the movie rights from the proceeds of a private offering of its restricted equity securities. No assurance can be given that the Company will be successful in it efforts relating to the above movie rights. There are significant uncertainties with regard to the Company's ability to generate sufficient cash flows from operations or other sources (including related party loans) to meet and fund its commitments with regard to existing liabilities and recurring expenses. These factors raise substantial doubt about the Company's ability to continue as a going concern. As of August 31, 2003, the Company had cash on hand of $320,347. The monthly gross revenue received by the Company from the recycling center averaged $12,500 per month. As a result of the sale of the recycling center the Company received gross proceeds of $1,050,000 from which $410,000 was used to fully satisfy the existing mortgage on the recycling center, $219,000 was to repay debt owed to unaffiliated third parties and approximately $101,000 was used to partially repay outstanding principal on loans from affiliates. There are currently outstanding two loans from related parties in the principal sum of $50,000 and $11,147, respectively, after partial repayment of principal in the aggregate amount of $101,000 and the conversion of $100,000 of principal into 769,231 shares of the Company's restricted common stock based on a per share price of $.13 which was the closing price on the trading date immediately preceding the conversion, other compensation of $89,475 for the fiscal years ended May 31, 2002 and 2003. All accrued interest on these loans, aggregating $99,546 as of year end May 31, 2003, was converted into equity during the period in the aggregate amount of 765,738 shares of the Company's restricted common stock based on the Conversion Price. The loans are due upon demand and bear interest at the applicable Federal rate. These related parties have no obligation to make any further loans to the Company in the future notwithstanding that they have made loans in the past. These loans may be converted, in whole or in part, by the related parties in their discretion into shares of the Company's restricted common stock at fair market value although there is no assurance given that this will occur. Currently the Company has no revenues since the sale of the recycling center in July, 2003. The balance of the net proceeds received from the sale after the repayment of non-affiliate debt, satisfaction of the mortgage and certain related party loans is being used for working capital. Management believes that these funds will be sufficient for the Company's working capital needs for the next 12 months, exclusive of the funds necessary for the production of the films, since the Company has also significantly reduced its outstanding debt to related parties. Management is in discussions relating to the acquisition of certain income producing assets. No assurances are given that any assets which may be acquired by the Company will produce sufficient assets to meet the Company's cash flow requirements. Further, the acquisition of such assets will require the expenditure of cash and the issuance of restricted securities. The Company does not have all of the cash that may be necessary to fund the acquisition and will be required to rely on the sale of its securities. Management has been in discussions for possible equity financing in an amount of up to $5,000,0000 through the registration of its securities. The Company may also determine to sell its restricted securities on a private placement basis. In either event, there can be no assurance that any of the funds so required will be available or, if available, on terms satisfactory to the Company. The Company will also require up to $3,000,000 to fund the production, marketing and distribution of one of the movie scripts it acquired in May 2003. Without the funding described, the Company will be unable to proceed with its business plans which would have a material adverse effect on its business and financial condition and it may be unable to continue as a going concern. DLJ MORTGAGE: Fitch Ratchets Classes B-4 Note Rating Up to B+ ------------------------------------------------------------- Fitch Ratings upgrades DLJ Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates, series 1996-CF2, as follows: --$30.6 million class A-3 to 'AAA' from 'AA'; --$25.5 million class B-1 to 'AAA' from 'A+'; --$12.7 million class B-2 to 'AA+' from 'BBB'; --$30.6 million class B-3 to 'BBB-' from 'BB'; --$17.8 million class B-4 to 'B+' from 'B'. In addition, Fitch affirms the following classes: --$75.6 million class A-1B 'AAA'; --$30.6 million class A-2 'AAA'; --Interest-only class S 'AAA'. Fitch does not rate the $14 million class C certificates. The rating upgrades are primarily attributed to the increased subordination levels resulting from the paydown of the pool's certificate balance. As of the October 2003 distribution date, the pool's aggregate certificate balance had decreased by 53%, to $237.4 million from $508.6 million at issuance. Midland Loan Services, Inc., the master servicer, collected year- end 2002 operating statements for 98% of the loans by principal balance. Based on these operating statements, the pool's 2002 weighted average debt service coverage ratio remains above issuance at 1.51 times from 1.37x at issuance. Currently, four loans (6%) are in specially servicing. The largest specially serviced loan (2.3%), Las Cortes Apartments, is secured by a multifamily property in Dallas, TX and is currently 30 days delinquent. The next largest specially serviced loan (1.9%), Northland Mall Shopping Center, is secured by a retail property in Carol Stream, IL. An anchor space at the property was recently leased and renovation has begun. One loan, Eagle Country Market (1.4%), is real estate-owned and expected to result in a loss. The loan is secured by a vacant big box retail property located in Clinton, IA. Eight loans (11.1%) have a YE 2002 DSCR less than 1.0x. Fitch applied various hypothetical stress scenarios taking into consideration all of the above concerns. Even under these stress scenarios subordination levels remain sufficient to justify the upgrades. Fitch will continue to monitor this transaction, as surveillance is ongoing. DOMAN INDUSTRIES: Monitor Files Progress Report on Restructuring ---------------------------------------------------------------- Doman Industries Limited announces that KPMG Inc., the Monitor appointed by the Supreme Court of British Columbia under the Companies Creditors Arrangement Act has filed with the Court a special purpose report which is primarily intended to provide summary information on the Company's progress with respect to certain provisions of the Restructuring Process Order issued by the Court on October 10, 2003, for the period up to October 20, 2003. A copy of the report may be obtained by accessing the Company's Web site -- http://www.domans.com-- or the Monitor's Web site -- http://www.kpmg.ca/doman DT INDUSTRIES: Lenders Agree to Amend Senior Credit Facility ------------------------------------------------------------ DT Industries, Inc. (Nasdaq: DTII), an engineering-driven designer, manufacturer and integrator of automation systems and related equipment used to manufacture, assemble, test or package industrial and consumer products, has reached an agreement with its lenders to amend its senior credit facility. The amended credit facility includes a waiver for the Company's covenant defaults for the fourth quarter of fiscal 2003 and the first quarter of fiscal 2004, revised financial covenants and a reduction of the revolving loan commitment from $45 million to approximately $42 million. Pursuant to the amended facility, the Company is subject to an increased interest rate on its outstanding indebtedness if it fails to reduce to $18 million the outstanding principal balance of the indebtedness and revolving loan commitment by January 31, 2004. In connection with the amended facility, the Company agreed to pay an amendment fee of 0.25% of the revolving loan commitment plus the outstanding term loan and, in the event it fails to divest certain assets and reduce the outstanding principal balance of the indebtedness by at least $22 million by January 31, 2004, a facility fee of 1.50% of the revolving loan commitment plus the outstanding term loan. In light of the reduced availability under the amended credit facility, the Company will need to effectively manage its cash to meet its liquidity and debt reduction needs through July 2, 2004, the maturity date of the facility. The Company believes that it will be able to satisfy its liquidity needs after July 2, 2004 by delaying or reducing capital expenditures, restructuring or refinancing its debt, selling assets or seeking additional equity capital. Standard & Poor's Ratings Services placed it 'B-' corporate credit rating on DT Industries Inc. on CreditWatch with negative implications because of the company's very weak operating results amid a challenging industry environment. Dayton, Ohio-based DT Industries, a supplier of automated production and equipment and systems, has total balance sheet debt of about $40 million. EAST COAST BEVERAGE: Changes Name to North American Food & Bev. --------------------------------------------------------------- East Coast Beverage Corp. ECBV, officially emerged from Chapter 11 on July 8, 2003, stated William R. Smith, CEO. The Company which filed for bankruptcy in April of 2002, announced that its Plan of Reorganization was confirmed by the U.S. Bankruptcy Court for the Southern District of Florida on July 8, 2003. Additionally, the Company also announced that as part of its restructuring, it has changed its name to NORTH AMERICAN FOOD & BEVERAGE, INC. NFBC. As called for by the Plan of Reorganization, the 1 for 15 reverse stock split was effective on the OTCBB on October 16, 2003. North American Food & Beverage, Inc. now emerges from Bankruptcy as a diversified Food and Beverage Distributor with an agreement with Royal Brokerage Group, LLC. North American Food & Beverage, Inc. sees its agreement with Royal Brokerage Group, LLC as an opportunity to serve the rapidly expanding Hispanic food market, whose sales are expected to grow to $75 billion by 2008. North American Food and Beverage, Inc. is now an exciting combination of marketing and distribution of both food and beverage products. The Company's food division will be representing various ethnic food manufacturers and its own beverage division will distribute "New Age" Ready to Drink (RTD) beverages and plans to distribute its own proprietary beverages in the future. The merging of these two divisions will result in a diversified food and beverage operation with unlimited potential in the growing specialty markets. EASTGROUP PROPERTIES: Reports Improved 3rd-Quarter 2003 Results --------------------------------------------------------------- EastGroup Properties, Inc. (NYSE-EGP) announced the results of its operations for the three and nine months ended September 30, 2003. FUNDS FROM OPERATIONS For the quarter ended September 30, 2003, funds from operations was $.53 per share compared with $.62 per share in the same period of 2002, a decrease of 14.5%. FFO per share for the third quarter of 2003 was reduced by $.09 per share due to the write-off of the original issuance costs of the Series A Preferred Stock which was redeemed on July 7, 2003. FFO per share for the third quarter of 2002 included $.02 per share from gains on securities. For the nine months ended September 30, 2003, FFO was $1.74 per share compared with $1.93 per share for the same period of 2002, a decrease of 9.8% per share. As mentioned above, a decrease of $.09 per share resulted from the write-off of the original issuance costs of the Series A Preferred Stock. Gains on securities were $.02 per share in 2003 compared with $.09 per share in 2002. Property net operating income (GAAP basis) from same properties held for both the current and past reporting periods increased 1.5% for the three months and was flat for the nine months ended September 30, 2003, respectively. Rental decreases on new and renewal leases averaged 10.1% for the quarter. David H. Hoster II, President and CEO, stated, "We are pleased to have achieved a 1.5% increase in same property operations for the third quarter on a GAAP basis. This growth is a definite positive given the current state of real estate fundamentals." EARNINGS PER SHARE On a diluted per share basis, earnings per common share was $.13 and $.50 for the three and nine months ended September 30, 2003 compared with $.16 and $.66 for the same periods in 2002. Diluted EPS for the third quarter of 2003 was reduced by $.09 due to the write-off of the original issuance costs of the Series A Preferred Stock which was redeemed on July 7, 2003. Increases to EPS were primarily a result of the positive effect on the EPS calculation due to the conversion of the convertible preferred stock. DEVELOPMENT The incremental growth of EastGroup's current development program and 2002 property transfers to the portfolio increased PNOI by $598,000 in the third quarter of 2003. At September 30, 2003, EastGroup had seven development properties containing 543,000 square feet with a projected total cost of approximately $30 million either in lease-up or under construction. Of this total, approximately 31% of the space was leased as of October 20, 2003. During the third quarter, EastGroup purchased 72 acres of land for new development in Orlando Central Park, Orlando's premier industrial location, for a price of $5.1 million. The property is strategically located in the northwest quadrant of the intersection of the Beeline Express and John Young with 3,400 feet of frontage on the Beeline, the major connector between Orlando International Airport and Interstate 4. EastGroup will create a master planned business park to be named SouthRidge Commerce Center which is projected to ultimately contain approximately 750,000 square feet of industrial space in eight to eleven business distribution type buildings. Site development costs are projected to total approximately $2 million as the land is developed. SouthRidge will offer a park setting with lakes, upscale landscaping and extensive highway visibility. Construction of the first building is scheduled for late in the first quarter of next year. Metro Airport Commerce Center (32,000 square feet) in Jackson, Mississippi, with total costs of $1,782,000, was transferred from development to the portfolio during the third quarter of 2003. This property is currently 33% leased with an expected straight- line yield of 11% upon lease-up. In October, the Company announced that it is developing a 66,450 square foot build-to-suit facility for Devon Energy Production Company, LP. The distribution building, which has a projected total cost of approximately $3.4 million, will be located on 4.22 acres in EastGroup's World Houston International Business Center development in north Houston between Beltway 8 and George Bush Intercontinental Airport. The initial term of the lease is 15 years. ACQUISITIONS In September 2003, EastGroup purchased a business distribution property in Dallas, Texas for a price of $4,425,000. Shady Trail Distribution Center, which contains 118,000 square feet, was built in 1998 and is located in the Walnut Hill/Stemmons Freeway submarket of Dallas. The property is currently 50% occupied and is projected to generate an unleveraged stabilized yield upon lease- up of approximately 9.5%. In October 2003, the Company purchased Crown Park Commerce Center (72,000 square feet) in Tampa, Florida for a price of $4,850,000. It is located in the Tampa International Airport submarket and is a multi-tenant business distribution building which was constructed in 2001. The property, which is 100% leased to five tenants, is projected to generate an unleveraged first year yield of approximately 9.5%. DIVIDENDS EastGroup paid dividends of $.475 per share of common stock in the third quarter of 2003, which represented 90% of funds from operations per diluted share for the quarter. This dividend was the 95th consecutive quarterly distribution to EastGroup's common stockholders and represents an annualized dividend rate of $1.90 per share, which yields 6.5% on the closing stock price of $29.04 on October 20, 2003. EastGroup also paid quarterly dividends of $.547 per share on its Series B Preferred Stock and $.4914 per share on its Series D Preferred Stock on October 15, 2003 to stockholders of record as of September 30, 2003. CAPITAL TRANSACTIONS On July 2, 2003, EastGroup closed a public offering of 1,320,000 shares of 7.95% Series D Cumulative Redeemable Preferred Stock with a liquidation preference of $25 per share. The offering resulted in approximately $32.3 million of net proceeds. In connection with the issuance of the Series D Preferred Stock, Fitch Ratings initiated coverage of EastGroup and assigned an issuer rating of BBB- along with a preferred stock rating of BB+. On July 7, 2003, EastGroup redeemed all of its outstanding 9.00% Series A Cumulative Redeemable Preferred Stock (Series A). The redemption price of these shares (excluding accrued dividends) was $43.125 million. The original issuance costs of $1,768,000 related to Series A in 1998 were recorded as a preferred issuance cost and reported similar to a preferred dividend in the third quarter. During the third quarter of 2003, 850,000 shares of 8.75% Series B Cumulative Convertible Preferred Stock were converted into 965,940 shares of common stock. For the nine months ended September 30, 2003, 2,250,000 preferred shares have been converted into 2,556,900 common shares. There were 550,000 Series B preferred shares outstanding at September 30, 2003. In August 2003, EastGroup closed a $45.5 million, nonrecourse first mortgage loan secured by ten properties in Texas, Arizona and Florida. The note has a fixed interest rate of 4.75%, a ten- year term, and an amortization schedule of 25 years. The proceeds were used to reduce floating rate bank borrowings. Mr. Hoster stated, "We have strengthened the balance sheet with the capital transactions completed during the second and third quarters. Debt-to- total market capitalization is at a healthy 37.0% at September 30, 2003, preferred dividend costs have decreased and common shares outstanding have increased by 21.7% in 2003. We are in a good position to take advantage of future acquisition and development opportunities with these transactions." "In addition, we are pleased that, after a review of EastGroup, Fitch issued an investment grade rating for us. This should have a positive effect on capital raising costs in the future." OUTLOOK FOR 2003 FFO per share for 2003 is estimated to be in the range of $2.35 to $2.38. Earnings per share for 2003 should be in the range of $.70 to $.73. The table below reconciles projected net income to projected FFO. SUPPLEMENTAL INFORMATION Supplemental financial information is available by request by calling the Company at 601-354-3555, or by accessing the report in the reports section of the Company's Web site at http://www.eastgroup.net EastGroup Properties, Inc. (Fitch, BB+ Preferred Stock Rating, Stable Outlook) is a self-administered equity real estate investment trust focused on the acquisition, ownership and development of industrial properties in major Sunbelt markets throughout the United States. Its strategy for growth is based on its property portfolio orientation toward premier distribution facilities clustered near major transportation centers. EastGroup's portfolio currently includes 19.1 million square feet with an additional 609,000 square feet of properties under development. EastGroup Properties, Inc. press releases are also available on the Company's Web site. EASYLINK SERVICES: Ptek Closes Purchase of Debt/Equity Interest --------------------------------------------------------------- Ptek Holdings, Inc. (NASDAQ: PTEK) -- http://www.ptek.com-- a leading provider of business communications services, completed the purchase of a 12% secured promissory note in the principal amount of $10,975,082 issued by Easylink Services Corporation (NASDAQ: EASY) and 1,423,980 shares of Easylink Class A common stock from AT&T Corp. (NYSE: T). In exchange for the note and shares, Ptek paid AT&T $1,894,606 in cash and issued to AT&T a seven year warrant to purchase 250,000 shares of Ptek common stock at $9.36 per share. In connection with the sale, Ptek agreed to amend the payment schedule of the note, as follows: Ptek is entitled to receive total payments of $13,745,846, consisting of 10 quarterly payments of $800,000 commencing December 1, 2003, and a balloon payment of $5,745,846 on June 1, 2006. The note is secured by a first lien on the assets of the Easylink business acquired by Easylink from AT&T. In addition, Easylink agreed to dismiss its pending lawsuit against Ptek and has released the Company from the claims in the lawsuit. "We are pleased to have completed the purchase of the Easylink note and shares from AT&T, as it provides us a solid investment opportunity," said Boland T. Jones, Founder, Chairman and Chief Executive Officer of Ptek Holdings, Inc. Ptek Holdings, Inc. is a leading provider of business communications services that enable global enterprises to better communicate with constituents, acquire and retain customers and automate business processes. These solutions, which include conferencing, Web collaboration and messaging, are marketed under the Premiere Conferencing and Xpedite brand names. Ptek Holdings' corporate headquarters is located at 3399 Peachtree Road NE, The Lenox Building, Atlanta, GA 30326. Additional information can be found at http://www.ptek.com EasyLink Services Corporation is a provider of services that power the electronic exchange of information between enterprises, their trading communities and their customers. Every business day, it handlez over 800,000 transactions that are integral to the movement of money, materials, products and people in the global economy such as insurance claims, trade and travel confirmations, purchase orders, invoices, shipping notices and funds transfers, among many others. The Company offers a broad range of information exchange services to businesses and service providers, including electronic data interchange services or "EDI"; production messaging services; integrated desktop messaging services; document capture and management services; boundary and managed email services; and other services largely consisting of legacy real time fax services. At June 30, 2003, EasyLink had $5.9 million of cash and cash equivalents. For the years ended December 31, 2002, 2001 and 2000, EasyLink received a report from its independent accountants containing an explanatory paragraph stating that the Company suffered recurring losses from operations since inception and have a working capital deficiency that raise substantial doubt about its ability to continue as a going concern. As of June 30, 2003, the Company had $7.1 million of notes payable and capitalized interest payable within one year. Although the Company has substantially reduced its outstanding debt obligations, cash payments of principal and interest due within one year from June 30, 2003, amount to $6.6 million. If the Company's cash flow is not sufficient it may need additional financing to meet this debt service requirement and other cash requirements for its operations. However, if unable to raise additional financing, restructure or settle additional outstanding debt or generate sufficient cash flow, the Company has indicated that it may be unable to continue as a going concern. EasyLink believes its ability to continue as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required, and ultimately to achieve profitable operations. Management is continuing the process of further reducing operating costs and increasing its sales efforts. There can be no assurance that the Company will be successful in these efforts. Sales of additional equity securities could result in additional dilution to its stockholders. In addition, on an ongoing basis, the Company continues to evaluate potential acquisitions to complement its business messaging services. In order to complete these potential acquisitions, it may need additional equity or debt financing in the future. ENRON CORP: Hires Innisfree as Balloting and Tabulation Agent ------------------------------------------------------------- Over 23,000 proofs of claim were filed against the Enron Debtors, exceeding $310,000,000,000, including duplication but excluding any estimated amounts for unliquidated claims. Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, anticipates that solicitation of votes on the Plan will be complicated. Solicitation of votes will be further complicated by the amount of publicly traded debt and equity securities and syndicated debt the Debtors issued prepetition. As of the Petition Date, Mr. Rosen notes that the Debtors had about 30 issues of publicly traded bonds or syndicated debt outstanding and 764,361,400 shares of publicly traded common stock issued and outstanding. Most of these publicly traded bonds and common stock are registered in the name of banks, brokers or trusts acting as the nominee holder on behalf of the beneficial holder, rather than in the name of the beneficial holder. Given these complexities, the Debtors determined that it is necessary and appropriate to retain the services of Innisfree M&A Incorporated. Innisfree is an international counseling firm whose employees are experienced in all areas pertaining to the identification and solicitation of holders of securities. Innisfree has a state-of-the-art mailing facility and tabulation system and is highly experienced in dealing with the back offices of the various departments of the banks and brokerage firms. Moreover, Mr. Rosen relates that Innisfree has extensive experience with handling large, complex Chapter 11 solicitations, including that of WorldCom, Inc., Global Crossing, Armstrong World Industries and Kmart. According to Mr. Rosen, Innisfree has worked closely with Bankruptcy Services, LLC, the Debtors' Court-approved claims agent, on a number of cases. Thus, Innisfree is experienced in coordinating with and utilizing data provided by BSI. This history inures to the Debtors' benefit as Innisfree and BSI, through their prior experiences, have already resolved any technological or other issues that might otherwise prove problematic. The Debtors and Innisfree intend to work closely with BSI to cost-efficiently incorporate the data contained in BSI's database into the balloting and tabulation process. Furthermore, because Innisfree and BSI are familiar with their roles, the danger of duplication of services and attendant duplicative costs is eliminated. Innisfree will coordinate any services performed at the Debtors' request with BSI and any other professionals retained by the Debtors, as appropriate, to avoid unnecessary duplication of effort. By this application, the Debtors seek the Court's authority to employ Innisfree as their Balloting, Tabulation and Solicitation Agent pursuant to Section 327(a) of the Bankruptcy Code. Pursuant to a Letter Agreement dated July 10, 2003, Innisfree agreed to: (a) provide advice to the Debtors and their professionals regarding all aspects of balloting, tabulation and solicitation of votes, including timing issues, voting and tabulation procedures, and documents required for the vote or notice purposes; (b) provide input regarding the voting procedures set forth in the Disclosure Statement and the ballots, particularly as may relate to beneficial owners of securities held in Street name; (c) work with the Debtors and BSI to request appropriate records for any claims not based on securities; (d) work with the Debtors to request appropriate information from the trustees of the Debtors' bonds, the equity transfer agent(s), The Depository Trust Company, and other parties, as appropriate; (e) mail voting and non-voting documents, as applicable, to the registered record holder of bonds and stock, and to other creditors; (f) coordinate the distribution of voting documents to beneficial holders of voting securities by forwarding the appropriate documents to the banks and brokerage firms or their agents, holding the securities, who in turn will forward these documents to the beneficial owners; (g) coordinate the distribution of notice documents to beneficial holders of any non-voting securities by forwarding the appropriate documents to the banks and brokerage firms holding the securities, who in turn will forward these documents to the beneficial owners; (h) distribute copies of the master ballots to the appropriate nominees for purposes of casting votes on behalf of beneficial owners; (i) prepare a certificate of service for filing with the Court; (j) handle requests for documents from parties-in-interest, including brokerage firms and bank back offices and institutional holders; (k) respond to telephone inquiries from holders regarding the Disclosure Statement and the voting procedures; (l) make telephone calls to confirm receipt of the plan documents and respond to questions about the voting procedures; (m) assist with an effort to identify beneficial owners of the Debtors' bonds; (n) receive and examine all ballots and master ballots cast by creditors, including date and time-stamping the originals of all ballots and master ballots upon receipt; (o) tabulate all timely received ballots and master ballots in accordance with court-approved procedures, and prepare a vote certification for filing with the Court; (p) testify at the confirmation hearing, or otherwise, if requested by the Debtors; and (q) undertake other duties as may be agreed upon by the Debtors and Innisfree. The Debtors agreed to indemnify and hold harmless Innisfree and its affiliates, directors, officers, members, agents, employees, and controlling persons for loss, damage, expense or claims arising out of Innisfree's fulfillment of the Agreement. According to Mr. Rosen, Innisfree will be compensated for its services in this manner: (i) A $15,000 project fee, plus $2,000 for each issue of public securities entitled to vote on the Plan and $1,500 for each issue of public securities not entitled to vote on the Plan, but entitled to receive notice; (ii) For the mailing to registered record holders of securities and any other creditors for which service is required or requested, labor charges are estimated at $1.75 to $2.25 per package, with a minimum of $500 per category of holder or plan class; (iii) A minimum $4,000 charge to take up to 500 telephone calls from creditors and equity holders within a 30-day solicitation period; (iv) A $100 per hour charge for the tabulation of ballots and master ballots, plus set up charges of $1,000 for each tabulation element involving two-tier voting and $10,000 for all tabulation elements relating to all other claims; (v) Mailing to registered record holders of securities and other creditors, if requested, would be charged at $0.50 to $0.65 per holder with a $250 minimum for each category of holder or plan class; (vi) $15,000 will be charged for a notice mailing to the Street name holders of debt and equity securities; and (vii) Consulting hours will be billed based on hourly rates. Consulting services include reviewing and advising on the development of solicitation materials and procedures, as well as preparing for the confirmation hearing as to solicitation and tabulation of the votes. Currently, the hourly rates are: Co-Chairman $400 Managing Director 375 Practice Director 325 Director 275 Account Executive 250 Staff Assistant 175 Furthermore, all out-of-pocket expenses related to any work undertaken will be charged separately, and will include travel costs, postage, messengers and couriers, telephone usage, among others. Jane Sullivan, a Director at Innisfree, assures Judge Gonzalez that to the best of her knowledge, Innisfree has not represented and does not represent any creditor or party-in-interest in matters adverse to the Debtors' estate. Innisfree is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Innisfree may have provided services to other parties-in-interests but it would not compromise in any way Innisfree's ability to provide the services to the Debtors. Innisfree will also not agree, at any point in the future, to provide services to any party that could compromise its ability to serve the Debtors as voting agent. (Enron Bankruptcy News, Issue No. 84; Bankruptcy Creditors' Service, Inc., 609/392-0900) ESSENTIAL THERAPEUTICS: Reorganization Plan Declared Effective -------------------------------------------------------------- Essential Therapeutics, Inc., and its subsidiaries, Maret Corporation and The Althexis Company, Inc., announced that their Plan of Reorganization filed with the Delaware Bankruptcy Court on May 2, 2003 was confirmed by the Bankruptcy Court on October 10, 2003 and has become effective. Among other things, the Plan provides for the merger of Maret and Althexis into Essential, the payment in full of obligations owed to certain creditors and the recapitalization of the company as a privately-held entity. EXIDE TECHNOLOGIES: S&P Rates Proposed Sr. Sec. Bank Facility BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its BB- rating to Exide Technologies' proposed $550 million senior secured bank credit facilities. The new credit facilities will support Exide's pending emergence from Chapter 11 bankruptcy. Following the company's emergence, the corporate credit rating on Exide will be revised to BB- from D, the CC rating on Exide's approximately 86 million Euro senior notes will be withdrawn, and the rating outlook will be stable. Exide's bank credit facilities will be rated the same as the corporate credit rating, based on Standard & Poor's expectation that lenders will realize substantial recovery of principal, in excess of 80%, with only minimal loss expected in the event of default or bankruptcy. Princeton, N.J.-based Exide, a manufacturer and distributor of automotive and industrial batteries, will have pro forma total debt, including operating leases, of about $585 million. Exide plans to continue to restructure its operations, particularly in Europe where several plant closings have already been announced. The restructuring program will be a substantial user of cash during the next two years. "Nevertheless, we believe that Exide's restructuring plan is credible and we expect Exide to be successful in improving efficiency and reducing costs," said Standard & Poor's credit analyst Martin King. "We also recognize the market and operational challenges Exide faces and the potential that these pressures could delay or offset some of the expected restructuring benefits." The market outlook for transportation batteries, which represent approximately 65% of Exide's sales, is expected to be stable in the near term, supported by currently strong automotive production and the relative stability of the aftermarket. The outlook for Exide's industrial batteries is weaker because of excess industry capacity resulting in weak pricing, continued soft demand for motive power batteries used in material handling equipment, and very weak demand for network power batteries used in telecom/datacom applications. A mostly unused $100 million revolving credit facility due 2008 will provide fair liquidity. Although debt maturities escalate in 2005 and 2006, they should be manageable, as restructuring benefits enhance cash flow generation. Exide has salable, separable assets that could be monetized to generate cash. EXIDE TECHNOLOGIES: Provides Solicitation and Tabulation Results ---------------------------------------------------------------- Bankruptcy Management Corporation employee, Tauheed Williams, relates that, immediately after the Court approved the Disclosure Statement, the Exide Debtors disseminated solicitation materials and votes to accept or reject their Third Amended Reorganization Plan. Plan votes were due October 7, 2003. According to Mr. Williams, the turnout of ballots indicate the overwhelming support of two creditor classes to the Plan. Class P3 and S3 creditors overwhelmingly voted to accept the Plan. Class P4 voted to reject the Plan. Pursuant to the Plan, Classes P1, P2, S1 and S2 are unimpaired and are presumed to have accepted the Plan. Class P5 and S4 as well as creditors and equity interest holders in Classes P6 and S5 will not receive any distribution or retain any property under the Plan and are deemed to have rejected the Plan. Number % of Amount Number % of Amount Class Accepting Voted Rejecting Voted ----- --------- ----------- --------- ----------- P3/S3 51 94.44% 3 5.56% --------------------------------------------------- P4 (x) 614 28.18% 1,565 71.82% Aggregate --------------------------------------------------- P4 614 28.27% 1,568 71.73% aggregate, excluding objected to claims --------------------------------------------------- P4-A (y) 467 28.97% 1,145 71.03% --------------------------------------------------- P4-A 467 20.10% 1,138 70.90% aggregate, excluding objected to claims --------------------------------------------------- P4-B (z) 147 25.93% 420 74.07% Amount % of Amount Amount % of Amount Class Accepting Voted Rejecting Voted ----- --------- ----------- --------- ----------- P3/S3 $727,821,746 98.08% $14,265,863 1.92% --------------------------------------------------- P4 (1) 18,744,534 3.43% 528,326,105 96.57% Aggregate --------------------------------------------------- P4 18,744,534 17.43% 88,767,288 82.57% aggregate, excluding objected to claims --------------------------------------------------- P4-A (2) 9,822,205 1.98% 486,203,105 98.02% --------------------------------------------------- P4-A 9,822,205 17.39% 46,644,288 82.61% aggregate, excluding objected to claims --------------------------------------------------- P4-B (3) 8,922,329 17.48% 42,123,000 82.52% (x) BMC Corp, the Debtors' voting agent, received but did not tabulate 223 deficient ballots pursuant to the Court- approved tabulation procedures. (y) P4-A represents ballots cast by general unsecured creditors whose claims are not derived from publicly traded securities. (z) P4-B represents Beneficial Holder ballots cast in connection with publicly traded securities. (Exide Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) FEDERAL-MOGUL: Sept. 30 Balance Sheet Upside-Down by $1.3 Bill. --------------------------------------------------------------- Federal-Mogul Corporation (OTC Bulletin Board: FDMLQ) reported results for the third quarter 2003. Highlights * Federal-Mogul was awarded new aftermarket business with Sears, Roebuck and Co. and Independent Factors Association. * Net sales remained steady at $1,346 million despite challenging market conditions. * Aftermarket sales increased by 7 percent to $644 million. * Asia Pacific region sales increased by 18 percent to $20 million. * Year-to-date cash flow from operating activities increased by 42 percent to $269 million. Overview For the third quarter 2003, Federal-Mogul posted sales of $1,346 million, compared to $1,345 million in 2002. Excluding the impact of divestitures in 2002 of $47 million and the effect of foreign exchange of $66 million in the third quarter 2003, sales decreased by 1 percent. Federal-Mogul reported a third quarter pretax loss of $17 million, compared to a pretax loss of $64 million in the third quarter of 2002. Excluding the effects of Chapter 11 and Administration related reorganization expenses and business divestitures, Federal-Mogul reported a $39 million improvement in pretax results from operations in the third quarter 2003 to $10 million (a reconciliation of pretax results from operations to reported net income is provided in the attached supplemental data). Operating cash flow for the third quarter 2003 was $68 million, compared to $82 million in the third quarter 2002. Year-to-date cash flow from operating activities was $269 million, compared to $189 million for the same period in 2002. At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $1.3 billion. "We are pleased with our third quarter results despite challenging market conditions and industry trends," said Chip McClure, chief executive officer and president. Aftermarket Sales Sales of replacement parts to aftermarket customers totaled 48 percent of Federal-Mogul's third quarter 2003 sales. Third quarter 2003 aftermarket sales were $644 million, compared to $604 million in third quarter 2002. Excluding the effect of foreign exchange, aftermarket sales increased by 3 percent compared to 2002. The sales increase can be attributed to Federal- Mogul's strong performing products particularly wipers and friction as well as recent new business contracts. Third quarter 2003 aftermarket sales by geographic region were 76 percent in the Americas and 24 percent in Europe. "During the third quarter, we launched our innovative new, glare resistant headlamp -- TruView(TM) -- which is marketed under the Wagner Lighting brand name," said Joseph Felicelli, senior vice president, worldwide Aftermarket. "We are also pleased with new business development this past quarter. The company secured a seven-year contract with Sears, Roebuck and Co. to supply automotive brake, chassis and wheel-end components to Sears Auto Service Centers in the United States. We also secured a three-year contract with the Independent Factors Association, a customer in the U.K., making Federal- Mogul the sole supplier of Moog(R) chassis parts for IFA's 200 branches," added Felicelli. Original Equipment Sales of parts to original equipment customers totaled 52 percent of the company's third quarter 2003 sales. Third quarter 2003 OE sales were $693 million, compared to $687 million in 2002. Excluding the effect of foreign exchange, sales decreased by 5 percent compared with 2002. Third quarter 2003 OE sales by geographic region were 37 percent in the Americas, 59 percent in Europe and 4 percent in the rest of the world. Third quarter OE sales of Friction products were $101 million, compared to $96 million in 2002. Excluding the effect of foreign exchange, sales of Friction products were unchanged. Third quarter 2003 OE sales by geographic region for Friction products were 27 percent in the Americas and 73 percent in Europe. Third quarter OE sales of Powertrain products, including Bearings, Pistons, Piston Rings and Liners, and Sintered Valve Train and Transmission Products, were $427 million, compared to $413 million in 2002. Excluding the effect of foreign exchange, sales of Powertrain products decreased by 4 percent. Third quarter 2003 sales by geographic region for OE Powertrain products were 29 percent in the Americas, 70 percent in Europe and 1 percent in the rest of the world. Third quarter OE sales of Sealing Systems and Systems Protection products were $142 million, compared with $158 million in 2002. Excluding the effect of foreign exchange, sales for Sealing Systems and Systems Protection products decreased by 12 percent. This is primarily due to business mix and the decrease in automotive volumes. Third quarter 2003 OE sales by geographic region for Sealing Systems and Systems Protection products were 70 percent in the Americas, 29 percent in Europe and 1 percent in the rest of the world. Third quarter sales for other products primarily in Asia Pacific region were $23 million, compared with $20 million in 2002. Excluding the impact of foreign exchange, sales for other products increased by 15 percent. "We are pleased with our progress in the Asia Pacific region," said McClure. "Our growth in the region is consistent with our strategic plan to expand to new geographic markets." Non-GAAP Financial Information In addition to the results reported in accordance with accounting principles generally accepted in the United States (GAAP) included within this press release, Federal-Mogul has provided certain information related to "results from operations," which is a non- GAAP measure. Such information is reconciled to its closest GAAP measure in accordance with SEC Regulation G and is included in the attached supplemental data. Management believes that results from operations is useful to both management and its stakeholders in their analysis of the company's ongoing business operations. Management also uses this information for operational planning and decision-making purposes. Results from operations should not be considered a substitute for net income or any other GAAP measure. Additionally, results from operations as presented by Federal-Mogul may not be comparable to similarly titled measures reported by other companies. Federal-Mogul is a global supplier of automotive components, sub- systems, modules and systems serving the world's original equipment manufacturers and the aftermarket. The company utilizes its engineering and materials expertise, proprietary technology, manufacturing skill, distribution flexibility and marketing power to deliver products, brands and services of value to its customers. Federal-Mogul is focused on the globalization of its teams, products and processes to bring greater opportunities for its customers and employees, and value to its constituents. Headquartered in Southfield, Michigan, Federal-Mogul was founded in Detroit in 1899 and today employs 47,000 people in 24 countries. On October 1, 2001, Federal-Mogul decided to separate its asbestos liabilities from its true operating potential by voluntarily filing for financial restructuring under Chapter 11 of the Bankruptcy Code in the United States and Administration in the United Kingdom. For more information on Federal-Mogul, visit the company's Web site at http://www.federal-mogul.com FISHER SCIENTIFIC: Prices $150-Mil. of Senior Subordinated Notes ---------------------------------------------------------------- Fisher Scientific International Inc. (NYSE: FSH) is issuing $150 million of 8 percent senior subordinated notes due 2013. The notes are being issued at a dollar price of 107.5 to yield 6.75 percent. These notes are a tack-on to the company's existing $150 million 8 percent senior subordinated notes due 2013. The company intends to use the proceeds from the issue to fund the tender offer for its 7.125 percent senior notes due 2005. The notes are being issued under the same indenture as, and with terms identical to, the company's existing 8 percent notes. The notes are being issued in a private placement and are expected to be resold by the initial purchaser to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, and outside the United States pursuant to Regulation S under the Securities Act. The notes are expected to settle on Nov. 4. The notes have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. As a world leader in serving science, Fisher Scientific International Inc. (NYSE:FSH) (S&P, B+ Senior Subordinated Debt Rating, Negative) offers more than 600,000 products and services to more than 350,000 customers located in approximately 145 countries. As a result of its broad product offering, electronic- commerce capabilities and integrated global logistics network, Fisher serves as a one-stop source of products, services and global solutions for its customers. The company primarily serves the scientific-research, clinical-laboratory and safety markets. Additional information about Fisher is available on the company's Web site at http://www.fisherscientific.com FLEMING: BancorpSouth Seeks Stay Relief to Allow Foreclosure ------------------------------------------------------------ BancorpSouth, a Mississippi Banking Corporation, wants to enforce its rights as a first mortgage holder on two grocery store properties of Fleming Companies, Inc., and debtor-affiliates. Robert Jacobs, Esq., at Jacobs and Crumplar, PA, in Wilmington, Delaware, informs the Court that James Leo Marvin, Jr. and Pamela Sue Marvin own the grocery stores on which the Debtors hold a subordinate second real estate mortgage lien and a lien on inventory. On March 4, 2003, BancorpSouth commenced an action to foreclose the Marvins' promissory notes and real estate mortgages in the United States District Court for the Eastern District of Oklahoma. The total amount of BancorpSouth's first mortgage claims against the Marvin Stores is $2,451,257, plus accruing interests and costs. The amount of the Debtors' second mortgage claim against the Marvin Stores is unknown. BancorpSouth alleges that there is no equity in the Marvin Stores to which the Debtors' mortgage attaches. BancorpSouth alleges that the Debtors' second mortgage on the Marvin Stores is not a property that is necessary to an effective reorganization. Mr. Jacobs contends that the Marvin Stores are not property of the Debtors' estate. Thus, the automatic stay should be modified pursuant to Section 362(d)(2) of the Bankruptcy Code. BancorpSouth wants the Court to lift the automatic stay to allow the determination of the priority of the mortgage held by the Debtors. BancorpSouth also wants to complete the Marvin foreclosure. Mr. Jacobs relates that service of process was obtained on the Debtors in the Marvin foreclosure before the Petition Date, but no pleading or response has been filed on the Debtors' behalf. (Fleming Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENERAL BINDING: Third Quarter Results Show Slight Improvement -------------------------------------------------------------- General Binding Corporation (Nasdaq:GBND) announced results for the third quarter of 2003. Sales totaled $175 million, approximately level with last year, and total segment operating income for the quarter increased by $2.0 million, or 16%. In addition, the Company reported diluted earning per share of $0.30 per share, compared to a net loss last year of $0.03 per share, which included $2.5 million of charges. "We are not yet seeing sustained revenue growth across our businesses, as soft markets and capital spending constraints at many of our customers continued to affect us in the third quarter," said Dennis Martin, GBC's Chairman, President and CEO. "Strong sales trends with some of our new products are being offset by declines in more traditional lines of business, particularly the visual communication boards in our Commercial and Consumer Group and the U.S. commercial films business in the Industrial and Print Finishing Group. While GBC still enjoys strong name brand recognition and leading product positions in the majority of its markets, pricing pressure in certain markets is intensifying from both customers and competitors." "Despite current market conditions, we are continuing to effectively manage the controllable areas of our businesses through the Operational Excellence initiatives we have been executing across the organization. Our margins continue to improve, and our operating costs continue to decline as a result of these activities." "In addition, our ongoing focus on generating free cash flow allowed us to reduce our net debt by about $23 million during the quarter. Interest expense is also down materially as a result of lower interest rates achieved through the refinancing we completed at the end of the second quarter, as well as lower debt levels during the quarter." 3rd Quarter 2003 Results Financial results for the quarter included the following highlights: -- Sales totaled $175 million, roughly flat with the $176 million recorded for the third quarter of 2002. International sales within all of the Groups were positively affected by exchange rate movements. Sales in the Commercial and Consumer Group were stable at $119 million relative to last year, as continuing lower demand in visual communication products was offset by growth in the three-ring binder business. The Industrial and Print Finishing Group's sales were down $1.2 million, or 3.4%, as lower domestic commercial films sales were not completely offset by higher international films sales. Sales in the Europe Group were up $0.7 million, or 3.3%, due to favorable exchange rates. -- The Company's gross profit margin increased by 0.5 points to 39.9% compared to the prior year, as the favorable impact of Operational Excellence initiatives and foreign exchange rates offset the adverse effect of slightly lower sales volumes and certain mix changes in the Commercial and Consumer Group. -- Selling, service and administrative expenses were down $1.4 million, or 2.5%, compared to prior year, primarily due to lower levels of discretionary spending in the Commercial and Consumer Group. -- Total segment operating income was $15.1 million, up $2.0 million compared to last year. Operating income in the Commercial and Consumer Group increased $2.0 million due to lower operating expenses. Income in the Industrial and Print Finishing Group was roughly flat, as reduced sales in the US commercial films business were offset by lower operating expenses. The Europe Group's operating income was up $0.5 million due to an improved gross profit margin resulting from sourcing initiatives and favorable exchange rates. Corporate expenses were higher in 2003 primarily due to increases in medical and insurance costs. -- Interest expense totaled $7.6 million, down 25% from the $10.1 million recorded last year. The decrease was primarily due to lower interest rates on the Company's borrowings resulting from the Company's refinancings completed in the second quarter, as well as lower average debt levels during the quarter. -- Net income totaled $0.30 per diluted share, compared to a net loss last year of $0.03 per share, which included $2.5 million of charges. -- Total net debt at the end of the quarter, adjusted for cash and equivalents, was $311 million, down $23 million from the amount outstanding at the end of the second quarter of the year and down a cumulative $12 million from year-end. Nine-Month Results For the first nine months of 2003, sales were $516 million, down 1.3% from the same period last year. The net loss for the period was $0.01 per share, including pre-tax charges totaling $9.8 million, compared to a net loss of $5.24 per share last year, including pre-tax charges of $8.0 million and the cumulative effect of the accounting change of $79 million, net of tax. GBC (S&P, B+ Corporate Credit Rating, Stable) is a world leader in products that bind, laminate, and display information enabling people to accomplish more at work, school and home. GBC's products are marketed in over 100 countries under the GBC, Quartet, and Ibico brands, and they help people enhance printed materials and organize and communicate ideas. GEORGETOWN STEEL: Commences Chapter 11 Restructuring Proceedings ---------------------------------------------------------------- Georgetown Steel, which converts scrap metal into steel wire, filed for Chapter 11 protection under the U.S. bankruptcy laws in Columbia, South Carolina. The Company, according to a report by the Associated Press, was compelled to seek court protection from creditors due to "higher costs for natural gas and scrap metal, coupled with weak market conditions, led to the company's financial problems." This year, the Company has already recorded $25 million in losses. The Georgetown Steel plant was originally designed and built to annually produce 250,000 tons of reinforcing bars using electric furnace and continuous caster technology. During its early years of production, the mill was referred to as an integrated mini-mill since the plant also operated the first commercial direct reduction plant ever built. Georgetown Steel is credited with pioneering the use of Direct Reduced Iron (DRI) in the electric arc furnace and with the production of high carbon steel wire products from continuously cast billets. As a result of the company's shut down of its milling operations, over 500 employees will be affected, although most of the workers have been permanently laid off before the bankruptcy filing. GEORGETOWN STEEL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Georgetown Steel Company, LLC PO Box 619 Georgetown, South Carolina 29442 aka Midcoast Industries LLC Bankruptcy Case No.: 03-13156 Type of Business: Georgetown Steel manufactures high-carbon steel wire rod products using the Direct Reduced Iron (DRI) process. Chapter 11 Petition Date: October 21, 2003 Court: District of South Carolina (Charleston) Judge: John E. Waites Debtor's Counsel: Michael M. Beal, Esq. McNair Law Firm P.A. NCNB Tower 1301 Gervais Street P.O. Box 11390 Columbia, SC 29211 Tel: 803-799-9800 Fax: 803-376-2277 Estimated Assets: $50 Million to $100 Million Estimated Debts: $50 Million to $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Progress Rail Trade Debt/Services $2,771,263 Attn: Warren Myers 1600 Progress Drive Albertville, AL 35950 Chemical Lime Co. Trade Debt/Commodity $276,960 Attn: Oliver Booth PO Box 479 Montevallo, AL 35115 LWB Refractories Trade Debt/Commodity $235,101 Stevedoring Services of Trade Debt/Services $232,743 America Applied Industrial Trade Debt/Commodity $211,391 Materials Corp. Praxair, Inc. Trade Debt/Commodity $193,391 Process Equipment Trade Debt/Commodity $182,417 International Mill Service Trade Debt/Services $172,243 Excel Apparatus Services, Trade Debt/Services $153,950 Inc. RSI Commodities Inc. Trade Debt/Services $144,659 Vesuvius USA Trade Debt/Commodity $141,420 Kimmel's Coat & Packaging Trade Debt/Commodity $130,735 Motion Industries Trade Debt/Services $104,614 Metallurg Vanadium Trade Debt/Commodity $104,423 Allied Transportation Trade Debt/Services $100,000 Intersource Inc. Trade Debt/Commodity $95,505 Essix Resources Inc. Trade Debt/Commodity $94,602 Syntex Trade Debt/Commodity $81,660 Amerada Hess Oil Trade Debt/Commodity $81,019 Transport Clearings East Trade Debt/Services $79,334 GERDAU AMERISTEEL: Will Host Q3 Conference Call on October 31 ------------------------------------------------------------- Gerdau Ameristeel Corporation (TSX: GNA) will host a conference call to discuss its third quarter financial results for the period ending September 30, 2003. The Company invites all interested parties to participate. DATE: Friday, October 31, 2003 TIME: 2:00pm, Eastern Time. Please call in 15 minutes prior to start time to secure a line. DIAL-IN NUMBER: 416-405-9310 or 1-877-211-7911 REFERENCE NUMBER: 1490438 LIVE WEBCAST: http://www.gerdauameristeel.com(Please connect to this Web site at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to hear the webcast) TAPED REPLAY: 416-695-5800 or 1-800-408-3053 Available until November 5 at midnight. Phillip Casey, President and CEO of Gerdau Ameristeel, will chair the call. A question-and-answer session will follow, at which time the operator will direct participants as to the correct procedure for submitting questions. A live audio webcast of the call will be available at http://www.gerdauameristeel.com Webcast attendees are welcome to listen to the conference in real-time or on-demand for 90 days. Gerdau Ameristeel (S&P, BB- Corporate Credit Rating, Stable) is the second largest minimill steel producer in North America with annual manufacturing capacity of over 6.8 million tons of mill finished steel products. Through its vertically integrated network of 11 minimills (including one 50%-owned minimill), 13 scrap recycling facilities and 26 downstream operations, Gerdau Ameristeel primarily serves customers in the eastern half of North America. The Company's products are generally sold to steel service centers, fabricators, or directly to original equipment manufacturers for use in a variety of industries, including construction, automotive, mining and equipment manufacturing. Gerdau Ameristeel's common shares are traded on the Toronto Stock Exchange under the symbol GNA.TO. For additional financial and investor information, visit http://www.gerdauameristeel.com GLEACHER CBO: S&P Affirms BB+ Ratings on Class B-1 & B-2 Notes -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'AA-' rating on the class A notes and its 'BB+' ratings on the class B-1 and B-2 notes issued by Gleacher CBO 2000-1 Ltd., a high-yield arbitrage CBO transaction. At the same time, the ratings are removed from CreditWatch with negative implications, where they were placed on Oct. 8, 2003. The transaction has experienced defaults worth $17.53 million since it was downgraded in February 2003. However, the class A notes have been paid down by $6.79 million since that time, which has helped sustain the credit enhancement available to support the ratings assigned to the class A, B-1, and B-2 notes. RATINGS AFFIRMED AND OFF CREDITWATCH Gleacher CBO 2000-1 Ltd. Rating Current Class To From Balance (mil. $) A AA- AA-/Watch Neg 269.2 B-1 BB+ BB+/Watch Neg 33.0 B-2 BB+ BB+/Watch Neg 10.0 HASBRO INC: S&P Affirms BB+ Rating & Revises Outlook to Stable -------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Hasbro Inc. to stable from negative, reflecting the company's improving operating performance resulting from its refocusing on more stable, established toy lines, and its lower debt leverage. At the same time, Standard & Poor's affirmed its ratings, including its 'BB+' corporate credit rating, and withdrew its 'BBB-' bank loan rating on the company. Hasbro is in the process of negotiating a new bank facility. The Pawtucket, R.I.-based company is the world's second-largest traditional toy company. Total debt as of Sept. 28, 2003, was $963 million. "The ratings on Hasbro reflect Standard & Poor's long-term concerns regarding increasing business risk in the traditional toy industry due to video game competition; mature industry growth prospects as children outgrow toys at younger ages; and consolidation of the retail customer base. These considerations are partly offset by the company's competitive position in the toy industry, good product line diversity, and a moderate capital structure," said Standard & Poor's credit analyst Hal F. Diamond. Hasbro has achieved modest success in its revised strategy to focus on its core product lines and reduce its license commitments to create a more stable earnings stream. Hasbro aims to obtain 10% of its sales from licensed products in 2003 versus 25% in 2000. Lackluster Star Wars sales and losses under the license led to a recent renegotiation of the license terms, with the remaining minimum guarantee reduced to $35 million in 2005 from $120 million. The contract was extended to 2018 from 2008. In addition, core brands have experienced slightly higher sales during the past two years, but remain well below peak year levels. Revenues rose 11% in the nine months ended September 28, while EBITDA increased 37% in the same period due to cost reductions. However, Standard & Poor's is uncertain if the focus on staples will be sufficient to fuel expansion consistent with the company's long-term goal to increase annual revenues between 3%-5%. Key challenges include the increased clout of a consolidated retail store base, the continued adoption of just-in-time inventory management practices, an increasing reliance on the Christmas selling season, and the resulting reduced predictability of earnings. HASBRO INC: Sues Maker of Highly Offensive Ghettopoly Game ---------------------------------------------------------- Hasbro, Inc. (NYSE:HAS) filed suit in U.S. District Court in Rhode Island against David Chang of Saint Mary's, PA, manufacturer of the highly offensive "Ghettopoly" game. "Hasbro will not tolerate Mr. Chang's unlawful use of its intellectual property to sell the reprehensible 'Ghettopoly' game," said Frank Bifulco, President of Hasbro's U.S. Games. "Mr. Chang has chosen to ignore our cease and desist demands, and therefore, we are taking the necessary legal action." In the complaint Hasbro stated that Chang violated Hasbro's trademark rights and copyrights to the MONOPOLY game, which has been a Parker Brothers game since 1935. The complaint also cites unlawful acts which "have caused and continue to cause irreparable injury to the value and goodwill of the MONOPOLY(R) real estate trading game trademarks, as well as to Hasbro's business, goodwill and reputation." Hasbro (Fitch, BB+ Secured Bank Facility and BB Senior Unsecured Debt Ratings, Stable) is a worldwide leader in children's and family leisure time entertainment products and services, including the design, manufacture and marketing of games and toys ranging from traditional to high-tech. Both internationally and in the U.S., its PLAYSKOOL, TONKA, MILTON BRADLEY, PARKER BROTHERS, TIGER, and WIZARDS OF THE COAST brands and products provide the highest quality and most recognizable play experiences in the world. HOUGHTON MIFFLIN: Fitch Cuts Senior Ratings to Low B/Junk Levels ---------------------------------------------------------------- Fitch Ratings has downgraded Houghton Mifflin Co.'s $600 million 8.25% senior unsecured notes due 2011 to 'B-' from 'B' and the $400 million 9.875% senior subordinated notes due 2013 to 'CCC+' from 'B-'. The 'BB-' ratings for the company's $325 million senior secured bank facility due 2008 and on the $137 million senior secured notes, with variable maturities ranging from 2004 through 2011, are affirmed. Approximately $1.2 billion of debt is affected by Fitch's actions. The Rating Outlook is Stable. The ratings action reflects the increased risk profile of HMC's senior unsecured notes and senior subordinated notes following HM Publishing's (HMC's parent holding company) recent $265 million senior unsecured discount debt issuance due 2013, which has a current accreted value of approximately $151 million. Proceeds from the debt issuance were used to fund a dividend payment to the shareholders, investment firms-Thomas H. Lee, Bain Capital, and The Blackstone Group. While HMC's existing bond indentures contain covenants that restrict its ability to make dividend payments and intercompany transactions and place limits on raising additional debt, Fitch believes that debt at the holding company level hinders the company's ability to enhance liquidity and financial flexibility and reinvest in operations. Affirmation of the company's 'BB-' senior secured debt incorporates the excess cash flow sweep requirements under the bank facility and the strong collateral support. The ratings also reflect the company's high debt balance and weaker credit protection measures compared to the other three major U.S. educational publishers, and significant working capital requirements associated with pre-publishing costs. Further, Fitch continues to be concerned that current budgetary pressures at the state level, partially offset by increased federal funding associated with the No Child Left Behind Act (NCLB), will constrain educational spending in the near term. Due to aforementioned concerns, Fitch does not anticipate significant improvement in credit protection measures over the near term. Pro forma for the transaction at June 30, 2003, Fitch estimated total debt-to-EBITDA less pre-publication and publishing rights amortization to be at 10.0 times and pro forma interest coverage at approximately 1.5x. It is important to note that the prepublication amortization was significantly higher than the prepublication capital expenditures due to the revaluation of the company's assets. At June 30, 2003, the company had cash balances of $24.4 million, generated positive free cash flow and had approximately $252 million available under the $325 million credit facility. Houghton Mifflin continues to have a prominent franchise in educational publishing, which benefits from well-developed, long- standing customer relationships and highly regarded brand names. While the company's basal programs are relatively more concentrated in key subject areas, Fitch considers Houghton Mifflin's leading 2002 adoption market shares in elementary reading, English and spelling as well as sixth grade to 12th grade math and world languages as positive rating factors as demographic trends for these markets are generally favorable. HOVNANIAN ENTERPRISES: Fitch Assigns 'BB+' to $215MM Debt Issue --------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to Hovnanian Enterprises, Inc. (NYSE:HOV) $215 million 6.50% senior unsecured notes due January 2014. The Rating Outlook is Stable. The issue will be ranked on a pari passu basis with all other senior unsecured debt, including Hovnanian's revolving and letter of credit facility. The proceeds will be used for general corporate purposes. Ratings for Hovnanian are based on the company's successful execution of its business model, conservative land policies and geographic, price point and product line diversity. The company has been an active consolidator in the homebuilding industry which has led to above average growth during the past six years, but has kept debt levels somewhat higher than its peers. Management has also exhibited an ability to quickly and successfully integrate its acquisitions. In any case, now that the company has reached current scale there may be less use of acquisitions going forward and acquisitions are likely to be smaller relative to Hovnanian's current size. Risk factors include the inherent (although somewhat tempered) cyclicality of the homebuilding industry. The ratings also manifest the company's aggressive, yet controlled growth strategy and Hovnanian's capitalization and size. The company's EBITDA and EBIT to interest ratios tend to be similar to the average public homebuilder, while inventory turnover tends to be moderately stronger. Hovnanian's leverage is somewhat higher and debt to EBITDA ratio is slightly below the averages. Although the company has certainly benefited from the generally strong housing market of recent years, a degree of profit enhancement is also attributed to purchasing design and engineering, access to capital and other scale economies that have been captured by the large national and regional public homebuilders in relation to non-public builders. These economies, the company's presale operating strategy and a return on equity and assets orientation provide the framework to soften the margin impact of declining market conditions in comparison to previous cycles. Hovnanian's ratio of sales value of backlog to debt during the past few years has ranged between 1.2 times to 1.9x and is currently 1.9x - a comfortable cushion. Hovnanian employs quite conservative land and construction strategies. The company typically options or purchases land only after necessary entitlements have been obtained so that development or construction may begin as market conditions dictate. Hovnanian extensively uses lot options. The use of non- specific performance rolling options gives the company the ability to renegotiate price/terms or void the option which limits down side risk in market downturns and provides the opportunity to hold land with minimal investment. At present 75.4% of its lots are controlled through options - a higher percentage than most public builders. Total lots, including those owned, were 69,623 at July 31, 2003. This represents a 6.3 year supply based on current production rates. However, the company has one of the lowest owned lot positions in the industry, typically owning only a one to two year supply. An estimated 85%-90% of its homes are pre-sold. The balance are homes under construction or homes completed in advance of a customer's order. Fitch estimates that in recent years at least half of Hovnanian's growth has resulted from a series of acquisitions (eleven during the past six years). The acquisitions have enabled the company to grow its position and increase market share, often broadening product and customer bases in existing markets. They have also enabled the company to enter new markets. The combinations typically were funded by debt and to a lesser degree by stock. At times there were earn-outs which reduced risk and served to retain key management. In the future Hovnanian's acquisition strategy will focus on purchasing smaller builders and land portfolios in current markets and on making selected acquisitions in new markets if there is a good strategic fit and appropriate returns can be achieved. The key analysis will be return on capital as to whether an acquisition will be executed. Fitch believes that management would balance debt and stock as acquisition currency to maintain current credit ratios. The company is publicly committed to maintaining an average net debt/equity ratio of 1.0:1.0. Hovnanian maintains a $590 million revolving and letter of credit facility, all of which was available at the end of the third quarter. The revolving credit agreement matures in July 2006. The company has irregularly purchased moderate amounts of its stock in the past. Share repurchase authorization of 1.14 million shares remains. I2 TECHNOLOGIES: Sept. 30 Net Capital Deficit Narrows to $250MM --------------------------------------------------------------- i2 Technologies, Inc. (OTC:ITWO) announced its results for the third quarter ended September 30, 2003. The Company reported earnings of $0.02 per share for the third quarter of 2003, as compared to breakeven results in the second quarter of 2003 and earnings of $0.07 per share in the third quarter of 2002. At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $250 million. "Across many of the key metrics we track, there are signs that the market for our products and services is beginning to strengthen," said Sanjiv Sidhu, i2 chairman and CEO. "These signs indicate that the fourth quarter may be a turning point for i2." i2 reported total revenues of $117 million in the third quarter of 2003, compared to $122 million in the second quarter of 2003 and $374 million in the third quarter of 2002. Software license revenues totaled $14 million for the third quarter of 2003, compared to $17 million in the second quarter of 2003 and $21 million in the third quarter of 2002. Total revenues for the third quarter also included $36 million in contract revenue consisting of $31 million in revenue deferred from earlier periods as a result of the Company's recent restatement and $5 million in revenue attributable to development services projects. Total costs and operating expenses for the third quarter of 2003 were $103 million, including approximately $4 million of expenses related to contract revenue which were deferred from prior periods as a result of the Company's recent restatement. This compares to $119 million in total costs and operating expenses in the second quarter of 2003 and $331 million in the third quarter of 2002, which included an $89 million restructuring charge. Operating income for the third quarter of 2003 totaled $14 million. The Company ended the quarter with $337 million in total cash and investments, a decrease of $18 million from the prior quarter. A leading provider of end-to-end supply chain management solutions, i2 designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. i2 has more than 1,000 customers worldwide -- many of which are market leaders -- including seven of the Fortune global top 10. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at http://www.i2.com INTEGRATED HEALTH: Has Until March 10, 2004 to File Final Report ---------------------------------------------------------------- The Reorganized Rotech Debtors obtained the Court's approval to delay the automatic entry of a final decree closing their cases until April 7, 2004 and extend the date for filing a final report and accounting to the earlier of March 10, 2004 or 15 days before the hearing on any motion to close their cases. (Integrated Health Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTRAWEST CORP: Will Redeem All of Outstanding 9.75% Sr. Notes -------------------------------------------------------------- Intrawest Corporation has elected to redeem all of its outstanding 9.75% Senior Notes due August 15, 2008 in accordance with the terms of the indenture governing the 2008 Notes. The 2008 Notes will be redeemed on November 21, 2008 at a redemption price of $1,048.75 per $1,000 principal amount of 2008 Notes, plus all interest accrued thereon up to but excluding the Redemption Date. The 2008 Notes will cease to bear interest from and after the Redemption Date. The 2008 Notes are currently the subject of a tender offer the terms of which are described in Intrawest's Offer to Purchase and Consent Solicitation Statement dated September 29, 2003 and related Letter of Transmittal. The Offer is not affected by the proposed redemption of the 2008 Notes and remains open for acceptance until 12:00 midnight, New York City time, on Tuesday, October 28, 2003. 2008 Notes tendered to the Offer prior to the expiration time will be purchased at a price of $1,038.75 per $1,000 principal amount of 2008 Notes. Intrawest Corporation (IDR:NYSE; ITW:TSX) (S&P, BB- Long-Term Corporate Credit Rating, Positive Outlook) is the world's leading developer and operator of village-centered resorts. The company owns or controls 10 mountain resorts, including Whistler Blackcomb, North America's most popular mountain resort. Intrawest also owns Sandestin Golf and Beach Resort in Florida and has a premier vacation ownership business, Club Intrawest. The Company is developing additional resort villages at six resorts in North America and Europe. The Company has a 45 per cent interest in Alpine Helicopters Ltd., owner of Canadian Mountain Holidays, the largest heli-skiing operation in the world. Intrawest is headquartered in Vancouver, British Columbia and is located on the World Wide Web at http://www.intrawest.com ITC DELTACOM: Asks Court to Enter Final Decree to Close Case ------------------------------------------------------------ ITC Deltacom, Inc., wants the U.S. Bankruptcy Court for the District of Delaware to enter a final decree and order closing its chapter 11 case. The Debtors assure the Court that it has satisfied all of its obligations to date under the Plan, including making the required Distributions to holder of Priority Non-Tax Claims, Secured Bank Claims, Other Secured Claims, Senior Debt Claims, Other Unsecured Claims, Subordinated Claims, Old Preferred Stock Interests and Old Common Stock Interests. Additionally, all required fees under 28 U.S.C. Section 1930 have been paid and no known disputes or unresolved claims remain. The Debtor submits that, because the Debtor's estate has been substantially administered, a final decree and order closing the Bankruptcy Case, subject only to the Court's retention of limited jurisdiction, should be granted. The Court may close the Bankruptcy Case and still retain limited jurisdiction over such matters as may be prescribed by the Plan and the Confirmation Order, including the interpretation and enforcement of orders and Plan provisions. ITC Delatacom, Inc., an exempt telecommunications company and a holding company, filed for chapter 11 protection on June 25, 2002. Rebecca L. Booth, Esq., Mark D. Collins, Esq. at Richards, Layton & Finger, P.A. and Martin N. Flics, Esq., Roland Young, Esq. at Latham & Watkins represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $444,891,574 in total assets and $532,381,977 in total debts. KAISER ALUMINUM: Retiree Claims Exempted from Bar Date Order ------------------------------------------------------------ On January 13, 2003, the U.S. Bankruptcy Court overseeing the Chapter 11 cases involving Kaiser Aluminum and debtor-affiliates approved a stipulation regarding the inapplicability of the general bar date to claims by salaried retirees for retirement and pension benefits. The Initial Stipulation provided that claims of retired or active disabled salaried employees and their covered dependents, beneficiaries and heirs are exempt from the initial general bar date. Because the appointment term of the Official Committee of Salaried Retired Employees expired on September 30, 2002, the Debtors and the new Official Committee of Retired Employees stipulate and agree to have all of the terms and conditions of the Initial Stipulation apply to the Second General Bar Date. Judge Fitzgerald promptly approves the Stipulation. (Kaiser Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) LB COMMERCIAL: Fitch Junks Rating on Class G Notes at CCC --------------------------------------------------------- Fitch Ratings downgrades LB Commercial Conduit Mortgage Trust II's commercial pass-through certificates, series 1996-C2, as follows: --$13.9 million class G to 'CCC' from 'B-'. Fitch also upgrades the following classes: --$27.8 million class B to 'AAA' from 'AA'; --$23.8 million class C to 'AA from 'A'; --$15.9 million class D to 'A' from 'BBB'; --$7.9 million class E to 'BBB' from 'BBB-'. In addition, the following classes are affirmed by Fitch: --$85.3 million class A 'AAA'; --$207.5 million class IO 'AAA'; --$21.8 million class F 'BB'. --$5.9 million class H 'CC'. Fitch does not rate the $5 million class J. These ratings actions follow Fitch's ongoing surveillance of the transaction, which closed in October 1996. The ratings upgrades and affirmations are the result of significant transaction pay down and increased subordination levels that offset the declining performance of certain mortgage loans and increasing number of loans of concern. The collateral balance has been reduced 47% from $397.2 million to $209.8 million as of the September 2003 distribution date. The weighted average debt service coverage ration for the 61.5% of loans that have reported year end 2002 information was stable at 1.54 times. The downgrade of the $13.9 million class G reflects Fitch's ongoing concerns regarding the portfolio including; the timeframe for the disposition of Real Estate Owned hotels, 36% concentration of hotel properties, 19% of the portfolio currently in special servicing, and several large loans of concern that are current and performing below a 1.0x DSCR. Fitch will continue to monitor the transaction, as surveillance is ongoing. LEAP WIRELESS: Bankruptcy Court Confirms Joint Chapter 11 Plan -------------------------------------------------------------- Leap Wireless International, Inc. (OTC Bulletin Board: LWINQ), an innovator of wireless communications services, said the U.S. Bankruptcy Court for the Southern District of California has confirmed the Company's Fifth Amended Joint Plan of Reorganization, clearing the way for the Company to complete its financial restructuring and emerge from Chapter 11 with a long-term capital structure that reflects a more than 80 percent reduction in the Company's long-term debt. Consummation of the Joint Plan of Reorganization is subject to compliance with the terms and conditions set forth in the Plan, including receipt of the required regulatory approval from the Federal Communications Commission. The judge's oral ruling on confirmation is subject to the entry of a formal written order. "Confirmation of the Plan in just over six months sets a very rapid pace for a case of this size and complexity, and we are emerging from the bankruptcy process with the wind at our backs," said Harvey P. White, Leap's chairman and CEO. "As we approach the end of our Chapter 11 proceedings, the actions we are taking to improve the operational and financial performance of our business will continue at a rapid pace. We have long been a leader in providing value to our customers by virtue of our industry leading cost structure. Upon emergence, we will reinforce our leadership position with a vastly de-levered balanced sheet, more than $100 million in cash to support our on- going operations and a strong business that is generating cash each month." "Our commitment to be the simple, straight forward provider of unlimited comfortable wireless communications in home towns across America make us the choice for many who do not have wireless services or who are paying too much for services that don't support their life style," continued White. "As we move into the fourth quarter of 2003, our energized team of employees remain focused on delivering a high quality, value based wireless service that customers deserve, want, and need. We believe our efforts further position us as the Company that enhances personal freedom for all customers." "With the dedication of our employees and the continued support of our suppliers, we have reduced our operating expenses to industry leading levels," said Susan G. Swenson, Leap's president and chief operating officer. "Throughout this process we have maintained a disciplined focus on cash flow while remaining committed to strengthening our position through the development of new products and services that are expected to contribute to the continued growth of our business. We have also concentrated on delivering a high quality of service, and independent third-party drive tests prove that our networks are among the best in the nation. As we look ahead, we are poised to launch new offers in time for the holiday season and have earmarked significant marketing muscle to promote these cost-competitive, value-added products. The Company expects that these new offers, together with an expanded distribution and sales strategy, will enable us to further our position as a leader within the wireless industry." The confirmed Joint Plan of Reorganization, which received approval from an overwhelming majority of creditors, implements a comprehensive financial restructuring that significantly reduces the Company's outstanding indebtedness. In connection with the Plan, the Company's current long-term debt will be reduced from more than $2.4 billion to approximately $426 million. "We are pleased with the rapid progress we have made in obtaining confirmation of our Joint Plan of Reorganization" said Stewart D. (Doug) Hutcheson, Leap's CFO. "The court's confirmation of our Plan is a significant step toward the completion of the Company's financial restructuring and a true testament to the support we have received from our creditors during this process. On behalf of the Company, I would like to take this opportunity to thank all of our dedicated employees who stayed focused on the Company's goals despite the challenges of operating under Chapter 11. I am extremely proud of the accomplishments of our team and thankful for the support the Company has received from its stakeholders during this process. I would also like to extend our appreciation for the attention that Judge Adler and the bankruptcy court, clerks and staff have given to this case." The existing stockholders of Leap will not receive any distribution under the Plan and the existing stock of Leap Wireless International, Inc. will be cancelled on the effective date of the Plan. New equity securities in the reorganized company will be distributed to creditors as provided for in the Plan. The full text of the Company's Fifth Amended Plan of Reorganization, and other documents related to the Company's Chapter 11 proceeding, can be found under the Restructuring Overview/Legal Documents section of the Company's Web site at http://www.leapwireless.com Leap, headquartered in San Diego, Calif., is a customer-focused company providing innovative communications services for the mass market. Leap pioneered the Cricket Comfortable Wireless(R) service that lets customers make all of their local calls from within their local calling area and receive calls from anywhere for one low, flat rate. For more information, please visit http://www.leapwireless.com LEAP WIRELESS: Stipulation Assuming Nokia Purchase Pacts Okayed --------------------------------------------------------------- Cricket Communications, Inc. is a party to certain agreements to purchase wireless phones and accessories from Nokia Inc. As of the Petition Date, Cricket owed Nokia $8,959,919. Cricket and Nokia agree that Cricket will assume the Nokia Agreements pursuant to Section 365 of the Bankruptcy Code. Nokia will receive $4,479,959 as cure to any defaults by Cricket under the Nokia Agreements. Cricket will pay the Cure Amount to Nokia in immediately available funds. Judge Adler approves the parties' stipulation. (Leap Wireless Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) LENNOX INT'L: Reports Flat Third-Quarter 2003 Financial Results --------------------------------------------------------------- Lennox International Inc. (NYSE: LII) announced third quarter 2003 diluted earnings per share of $0.46. LII also reported $0.46 EPS in the third quarter last year. Sales increased 2% to $839 million from last year's third quarter. Adjusting for $33 million in heat transfer revenues included in last year's sales - essentially all of which are now part of LII's joint venture with Outokumpu and no longer reported by LII - sales for the quarter increased 7%, up 4% when adjusted for currency exchange. Quarterly operating income was $53 million, up 1% from last year. Net income was $28 million, unchanged from the year-ago period. LII's cash flow performance continued to show significant strength in the third quarter. The company generated $83 million in free cash flow in the third quarter and continued to use that cash flow primarily to reduce debt. In the past 12 months LII has reduced debt by $37 million, lowering debt-to-capitalization ratio to 39.9% from 46.7% one year ago. Over the past three years LII has cut its debt in half for a total reduction of $366 million. "LII achieved solid results in the third quarter, with higher sales and improved margins in our manufacturing businesses offsetting soft results in our Service Experts segment," said Bob Schjerven, chief executive officer. "Based on the strength of our performance in the first nine months of the year and our momentum going into the final quarter of the year, we are comfortable with our current earnings guidance for 2003 and expect full-year EPS will be in the range of $1.10 to $1.20. We are, however, raising our guidance for free cash flow, and now project full-year free cash flow to substantially exceed our net income." The company's previous guidance was for full-year 2003 free cash flow to be approximately equal to net income. In the third quarter, LII realized a gain on the sale of its Electrical Products Division. As disclosed at the time of the sale, the financial impact of this transaction was not material to LII's operating performance. This gain was more than offset by reserve requirements related to the heat transfer joint venture agreement the company entered into with Outokumpu last year. The net result of these two items was an after-tax loss of $2 million, or $0.03 cents per share, which is included in the $0.46 EPS the company reported for the third quarter. The tables following the text in this news release provide description and financial detail, and reconcile the information provided to U.S. Generally Accepted Accounting Principles (GAAP) measures. Business segment highlights: Heating & Cooling: LII's Heating & Cooling business revenues rose 11% to $519 million, reflecting favorable cooling season weather in many key markets. Adjusting for fluctuations in exchange rates, sales were up 8%. Segment operating income increased 44% to $60 million and operating margins expanded 270 basis points to 11.5%. LII's Residential Heating & Cooling business continues to outperform the market, with double-digit sales growth for both the Lennox and Ducane brands and continued top line growth in the hearth products division. Revenues grew 7% in the third quarter to $368 million, with sales up 6% adjusting for foreign exchange. Segment operating income increased 24% for the quarter to $42 million. Segment operating margins expanded 160 basis points to 11.5% through higher volumes and purchasing savings that have translated to lower product costs. Driven primarily by increased domestic sales to new and existing National Account customers, as well as sales gains within the contractor community, Commercial Heating & Cooling revenues increased 20% to $152 million, up 16% when adjusted for currency fluctuations. Segment operating profit more than doubled to $18 million, with operating margins increasing to 11.5% from 5.9% last year. Higher volumes, increased factory productivity and the benefits realized from closing a plant in Europe earlier this year contributed to this improvement. Service Experts: Revenues were relatively flat at $251 million, down 3% adjusting for currency exchange. Consistent with the first half of the year, declines in commercial new construction offset modest revenue growth in residential new construction and both residential and commercial service and replacement. Segment operating income for the quarter declined from $13 million in 2002 to $300,000 this year. Operating margins contracted from 5.2% to 0.1%. "While Service Experts has positive cash flow, its profitability for the quarter was clearly unsatisfactory," Schjerven said. "Our aggressiveness in defending the topline in a price competitive environment significantly depressed our gross margins and increased marketing costs." Service Experts also incurred higher costs for insurance, inventory valuation adjustments, and bad debt, as well as increased overhead expenses. In addition, percentage-of- completion accounting adjustments in the commercial new construction business negatively impacted segment profitability. "We remain confident about the prospects for Service Experts and while we have developed the right tools to make it successful, we know execution is the key to improvement," Schjerven said. Refrigeration: Segment revenues increased 4% to $97 million, down 4% when adjusted for currency exchange. A focus on cost control and improved manufacturing efficiency in a challenging worldwide market helped segment operating income increase 8% to $10 million, with operating margins expanding 30 basis points to 9.8%. A Fortune 500 company operating in over 100 countries, Lennox International Inc. (S&P, BB- Corporate Credit Rating, Stable) is a global leader in the heating, ventilation, air conditioning, and refrigeration markets. Lennox International stock is traded on the New York Stock Exchange under the symbol "LII". Additional information is available at http://www.lennoxinternational.com LOG ON AMERICA: Ch. 7 Trustee Taps Wallick as Collection Counsel ---------------------------------------------------------------- Michael B. Joseph, Esq., serving as the Chapter 7 Trustee of the Bankruptcy Estate of Log On America, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to approve his application to retain Wallick & Associates as special counsel to perform collection services. Wallick will specifically represent the Trustee as special counsel with respect to the collection of judgment entered in favor of Log On America, Inc., in the sum of $20,000. Marc D. Wallick, Esq., will have primary involvement in this engagement. Mr. Wallick's hourly rate is $225 per hour. However, Mr. Wallick will be employed in a contingency fee basis in which he will retain 25% of the total amount collected on the judgment. Log On America is a full service provider of business communication technologies. The Company filed for chapter 11 protection on July 12, 2003 and later converted their cases under chapter 7 proceeding on October 17, 2003 (Bankr. Del. Case No. 02- 12022). Raymond H. Lemisch, Esq., at Adelman Lavine Gold and Levine PC represent the Chapter 7 Trustee in this proceeding. LTV: Liquidation Debtors Want Court to Fix Solicitation Protocol ---------------------------------------------------------------- The Liquidating LTV Debtors ask Judge Bodoh to: (1) approve their Disclosure Statement; (2) establish procedures for the solicitation and tabulation of votes to accept or reject the Joint Plan of the Liquidating Debtors; (3) approve the form of the ballots for submitting votes on the Plan; (4) set a deadline for creditors to cast their ballots; (5) approve the solicitation packages to be distributed to creditors and other parties-in-interest in connection with vote solicitation; (6) set the record date for Plan voting; and (7) schedule a hearing on confirmation of the Plan. At this time, no dates are suggested. (LTV Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 609/392-00900) MEDIACOM COMMS: Will Host Q3 2003 Teleconferece on November 5 ------------------------------------------------------------- Mediacom Communications Corporation (NASDAQ:MCCC) will host a teleconference to discuss its third quarter 2003 financial results on November 5, 2003 at 10:30 a.m. Eastern Time. The Company will issue a press release reporting its third quarter financial results before market hours that day. The teleconference will be available via live webcast at http://www.mediacomcc.com A recording of the call will be archived on the Web site. To automatically receive Mediacom Communications financial news by e-mail, please visit the Investor Relations link (under Corporate Info) at http://www.mediacomcc.comand subscribe to E-mail Alerts. The webcast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.fulldisclosure.com or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents -- http://www.streetevents.com Mediacom Communications (S&P, BB Corporate Credit Rating, Negative) is the nation's 8th largest cable television company and the leading cable operator focused on serving the smaller cities and towns in the United States. The Company's cable systems pass approximately 2.73 million homes and serve about 1.56 million basic subscribers in 23 states. Mediacom Communications offers a wide array of broadband products and services, including traditional video services, digital television, high-speed Internet access, video-on-demand and high-definition television. METALS USA: J. Hageman Acquires 1,686 of Metals USA Shares ---------------------------------------------------------- In an October 8, 2003 report to the Securities and Exchange Commission, John Hageman, Metals USA's Senior Vice President, discloses his acquisition of 1,686 shares of Metals USA Common Stock. As a result, Mr. Hagemen now has direct beneficial ownership over 15,204 shares of Metals USA Common Stock. (Metals USA Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) METROCALL INC: Oaktree Capital Discloses 6.03% Equity Stake ----------------------------------------------------------- Oaktree Capital Management LLC beneficially owns 6.03% of the outstanding common stock of Metrocall Inc., represented in the holding of 59,763 such common stock shares. Oaktree holds sole voting and dispositive power over the stock. The principal business of Oaktree is providing investment advice and management services to institutional and individual investors. The OCM Funds and Accounts generally invest in a diversified portfolio of high yield fixed income securities. The investment decisions for each of the OCM Funds and Accounts are made on an individual basis based on the respective guidelines of each of the OCM Funds and Accounts. Each of the OCM Funds and Accounts beneficially owns on an individual basis less than one percent of the outstanding shares of Metrocall Inc.'s common stock. Based on Oaktree's relationship with the OCM Funds and Accounts, Oaktree may be deemed to beneficially own the shares of common stock held by each of the OCM Funds and Accounts, although Oaktree has no material pecuniary interest in any such shares. All of the securities reported here were acquired from Metrocall in October 2002 in connection with the consummation of the bankruptcy reorganization of Metrocall. MILACRON INC: Will Publish Third-Quarter Results on October 31 -------------------------------------------------------------- Milacron Inc. (NYSE: MZ), a leading global supplier of plastics- processing technologies and industrial fluids, will report its financial results for the third quarter ended September 30, 2003, on Friday, October 31, 2003. Following its usual practice, on October 31 the company will release its results in the morning before the market opens. At 11:00 a.m. ET, management will conduct an open investor conference call to discuss the third quarter along with the current outlook. The call can be accessed live via Milacron's Web site at http://www.milacron.com For analysts and investors wishing to ask questions, the dial-in number will be (719) 457-2727. A recording of the conference call will be available from 2:00 p.m. Friday, October 31, through midnight Thursday, November 6, and may be accessed on Milacron's Web site -- http://www.milacron.com-- or by dialing (719) 457-0820 and providing the access code: 281630. First incorporated in 1884, Milacron is a leading global supplier of plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. For further information, visit the company's web site or call the toll-free investor hot line: 800-909-MILA (800-909-6452). First incorporated in 1884, Milacron is a leading global supplier of plastics-processing technologies and industrial fluids, with about 3,500 employees and major manufacturing facilities in North America, Europe and Asia. For further information, visit http://www.milacron.com Update on Revolving Credit Facility As reported in Troubled Company Reporter's August 18, 2003 edition, Milacron reached an agreement with its principal bank group, amending certain terms of its revolving credit facility. The purpose of the amendment is to relax certain financial covenants through the end of 2003 in light of the extended downturn in the plastics industries and to allow Milacron to execute its recently announced initiatives to return to profitability. In the newly amended agreement, the covenant specifying minimum levels of cumulative EBITDA (earnings before interest, taxes, depreciation and amortization - including adjustments as defined in the agreement) has been relaxed for the third and fourth quarters. In addition, the limit on restructuring expenses has been raised to allow Milacron to move forward with profit- improvement initiatives designed to save the company approximately $20 million annually. The facility is now capped at $65 million, of which $54 million is currently utilized. The availability of the remaining $11 million is subject to certain new restrictions based on the company's cash position. MIRANT CORP: Proposes Uniform Miscellaneous Asset Sale Protocol --------------------------------------------------------------- The Mirant Debtors comprise an expansive enterprise with numerous subsidiaries, facilities and items of personal property. In its sound business judgment, the Debtors identified various items of personal property that are no longer necessary for the continued operation of their business and should be sold. The Debtors anticipate that the types of miscellaneous assets that should be sold going forward include obsolete spare machinery parts, scrap metal from dismantled and unused facilities, worn-out furniture, obsolete equipment and various other miscellaneous assets. So as not be to burdened with numerous sale motions for assets with minimal value, the Debtors ask the Court to approve procedures by which they may sell miscellaneous assets with a sale price of not more than $150,000, free and clear of liens, claims, encumbrances and interests. According to Robin Phelan, Esq., at Haynes and Boone LLP, in Dallas, Texas, when a buyer is identified and believed to have the best bid for the asset, the Debtors propose these procedures for the sale of Miscellaneous Assets: (a) The Debtors will give written notice, by facsimile or overnight mail, of each proposed sale of Miscellaneous Assets to (i) the Office of the United States Trustee, (ii) counsel for the Committees, (iii) any entity that provides financing authorized by the Bankruptcy Court, (iv) any known holder of a lien, claim, encumbrance or interest against the specific Miscellaneous Assets to be sold, and (v) any party that has requested special notice; (b) The Sale Notice will specify (i) the asset or assets to be sold and the selling Debtor thereof, (ii) the identity of the proposed purchaser, (iii) the value as reflected on the Debtors' books, or if no value is available, an estimated value, (iv) the proposed sale price, and (v) and will have attached a copy of any of the sale agreements; (c) If none of the Notice Parties serves the Debtors with a written objection to the proposed transaction in a manner so that it is actually received by the Debtors within seven business days after the date the Debtors send the Sale Notice or any objection is resolved, counsel for the Debtors will submit to the Court a form of order, which contains findings that (i) the Notice Procedures have been satisfied, (ii) no objection to the Miscellaneous Assets sale was timely made or the objection has been resolved, and (iii) the Debtors may proceed with the proposed sale free and clear of all security interests, liens, claims, encumbrances, and interests; (d) If the Debtors receive a written objection prior to the expiration of the Notice Period, and the Debtors are unable to resolve the objection, the Debtors will not take any additional steps to consummate the sale of the particular asset, which is the subject of the objection without first obtaining the Court's approval for the sale of that specific asset with respect to which an objection was timely served; and (e) Upon Court approval of the order authorizing the Miscellaneous Assets sale, the Debtors may consummate the proposed sale transaction and take actions as are necessary to close the sale and obtain the sale proceeds without further notice or Court order. Mr. Phelan argues that the miscellaneous asset sale procedures should be authorized because: (a) the prompt and efficient sale of the de minimis assets will minimize administrative expenses attendant on retaining and restoring unnecessary property; (b) the Debtors will be able to generate proceeds from the unnecessary property for the benefit of the Debtors' estates; (c) with the unique nature of the types of miscellaneous assets the Debtors intend to sell, oftentimes, there is a short window of opportunity available to consummate advantageous sale transactions for the assets; (d) with the relatively low value of the miscellaneous assets, conducting auctions and conducting hearings for each proposed sale transaction will, in many cases, result in costs that are disproportionate to the anticipated sale proceeds; and (e) parties-in-interest have the opportunity to object to the proposed sale. (Mirant Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) MITSUBISHI: Weak Performance Spurs S&P to Cut Corp. Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Mitsubishi Motors Corp. to 'B+pi' from 'BB-pi', reflecting credit losses and deteriorating sales performance in North America. The rating action also takes into account the company's reduced financial flexibility, stemming from its weaker access to the ABS market and the challenges facing Chrysler Corp., the U.S. operations of DaimlerChrysler--the largest shareholder in Mitsubishi Motors. The rating could be lowered further if the credit-loss situation worsens or deterioration in Mitsubishi Motors' performance in the U.S. accelerates significantly in the near term. "The weaker earnings prospects for Mitsubishi Motors in North America are of particular concern, as this region accounts for a disproportionate share of the company's profitability, and it has continued to post operating losses in Japan and Europe," said Standard & Poor's credit analyst Chizuko Satsukawa. "Mitsubishi Motors will be increasingly dependent on earnings growth from other regions, including other parts of Asia, where its earnings have recovered in recent years," she added. Mitsubishi Motors has lowered its full-year net-income projections for fiscal 2003 (ending March 31, 2004) to �10 billion from �40 billion due to the challenges in North America, including soaring credit losses at its U.S. captive finance operations stemming from high-risk loans underwritten in recent years. The company expects to record extraordinary provisions totaling about �50 billion, based on a reassessment of its outstanding loan portfolio. The company has also implemented stricter underwriting policies and reduced origination of such high-risk loans. Mitsubishi Motors' U.S. light vehicle unit sales decreased by 21.5% during the first nine months of 2003, compared with the same period a year earlier, after intensifying competition coincided with the bottom of a product cycle. Even with upcoming product launches, uncertainties remain over future sales and earnings growth in North America, as the company faces intense competition from stronger industry peers and has been forced to take a more conservative stance toward automotive finance. Given an expected further deterioration in Mitsubishi Motors' profitability and cash flow, coupled with relatively high capital investment requirements over the next two to three years, the company's capital structure is likely to weaken, with total debt to capital climbing back to above 80% over the next few years. Mitsubishi Motors' cash flow protection measures are likely to remain weak, with funds from operations to total debt below 10%. The company's access to the ABS market has also come under pressure since a number of ABS transactions issued by its U.S. captive finance subsidiary have shown poor performance. Mitsubishi Motors has benefited from an alliance with DaimlerChrysler (BBB+/Negative/A-2), its largest shareholder, with a 37% stake. DaimlerChrysler has sent a team of managers to lead the Japanese automakers' turnaround efforts, and Mitsubishi Motors is also expected to enjoy cost reductions from using common platforms and components. However, given Chrysler's increasing losses and declining market share in North America, Standard & Poor's believes that Mitsubishi Motors cannot rely on additional support from DaimlerChrysler in the near term. MMCA AUTO OWNER: S&P Lowers 3 Note Class Ratings to Low-B Levels ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on various classes of MMCA Auto Owner Trust 2002-1 and MMCA Auto Owner Trust 2002-2. At the same time, the ratings on four classes from MMCA Auto Owner Trust 2002-3 are lowered and removed from CreditWatch, where they were placed Feb. 13, 2003. Concurrently, ratings on various classes from MMCA Auto Owner Trusts 2001-3, 2001-4, 2002-1, and 2002-2 are affirmed. Lastly, the rating assigned to the class A-2 certificates from MMCA Auto Owner Trust 2002-3 is affirmed and removed from CreditWatch. The lowered ratings reflect the continued adverse performance trends displayed by the underlying collateral pools and the deteriorating credit enhancement of the trusts. A primary factor adversely affecting the collateral performance of these transactions is the inclusion of balloon loans (receivables that provide for equal monthly payments and one substantially larger final balloon payment) and deferred payment loans (receivables that stipulate that the first payment is deferred for a specified period-between 50 and 450 days-and for equal monthly payments for the remainder of the term of the receivable) in the collateral pools, as each of these loan programs can result in higher loss severity upon default. Both MMCA Auto Owner Trust 2002-1 and MMCA Auto Owner Trust 2002-3 were initially structured with a large amount of deferred payment loans (49.46% and 42.75%, respectively) and a moderate amount of balloon loans (27.84% and 22.02%, respectively), while MMCA Auto Owner Trust 2002-2 included a large amount of balloon loans (59.79%) and a moderate amount of deferred loans (25.97%). Thus far, after only 18 months of performance, cumulative net losses from MMCA Auto Owner Trust 2002-1 (6.38% of the initial collateral pool balance) have exceeded Standard & Poor's initial lifetime expectation. After 15 months of performance, cumulative net losses from MMCA Auto Owner Trust 2002-2 (6.70% of the initial collateral pool balance) have also exceeded Standard & Poor's lifetime expectation. Also, after only 13 months of performance, MMCA Auto Owner Trust 2002-3 cumulative net losses are approaching their expected levels at 3.71% of the initial collateral pool balance. The majority of the losses experienced by these pools have been the result of defaults by obligors with balloon contracts. These loans have been extended to obligors with lower credit quality than Mitsubishi Motors Credit of America Inc.'s (MMCA) traditional level-pay obligors. Moreover, in order to keep monthly payments low, the amount of each balloon payment (similar to a residual payment in a lease) was set higher than the actual estimated value of the vehicle when the balloon payment comes due. As a result, early defaults on balloon contracts tend to cause higher loss severities, as a large portion of the loan is due toward the end of the loan term. In addition, a percentage of the obligors with balloon contracts have been granted the ability to return their vehicle to MMCA at the end of the level payment term without penalty. Thus, aside from the credit risk, there is also a level of residual risk associated with the balloon contracts. Given the high rebates and purchase incentives that currently exist in the market for new vehicles, coupled with the large number of obligors who have the right to return their vehicles, high return rates are expected at the end of the level payment terms for these transactions. High return rates, in conjunction with the potentially high severity of loss, may result in significant residual losses. Currently, principal is being paid pro rata in the 2001-3, 2001-4, and 2002-3 transactions, while performance triggers have been breached in the 2002-1 and 2002-2 deals, which have caused principal to be paid sequentially, with the subordinate noteholders locked out from receiving any principal payments until the senior notes pay off. The shift in payment priorities was triggered when the reserve accounts for these two transactions fell below 1% of the adjusted initial pool balance (defined as the initial pool balance less the yield supplement overcollateralization amount). After 23 and 20 months of performance, respectively, cumulative net loss rates for MMCA Auto Owner Trust 2001-3 (7.91% of the initial collateral pool balance) and MMCA Auto Owner Trust 2001-4 (6.03% of the initial collateral pool balance) have already exceeded Standard & Poor's initial lifetime expectations, yet the last few months have seen a stabilization in the default and recovery rates. In December 2002, MMCA added Systems & Servicing Technologies (SST), St. Joseph, Mo., as a subservicer on approximately 85,000 subprime accounts, or approximately 30% of the accounts included in the five transactions. SST has added 220 collectors who have been working exclusively on the MMCA loans. Yet despite the addition of SST as subservicer, the transactions have continued to experience adverse performance trends. Standard & Poor's previously lowered its ratings on 14 classes of notes and certificates from MMCA Auto Owner Trusts 2001-3, 2001-4, 2002-1, and 2002-2 in May 2003 after placing them on CreditWatch in February 2003. RATINGS LOWERED MMCA Auto Owner Trust 2002-1 Rating Class To From B BBB BBB+ C B+ BB+ MMCA Auto Owner Trust 2002-2 Rating Class To From B BB+ BBB- C B BB RATINGS LOWERED AND REMOVED FROM CREDITWATCH MMCA Auto Owner Trust 2002-3 Rating Class To From A-3 AA+ AAA/Watch Neg A-4 AA+ AAA/Watch Neg B A- A/Watch Neg C BBB- BBB/Watch Neg RATING AFFIRMED AND REMOVED FROM CREDITWATCH MMCA Auto Owner Trust 2002-3 Rating Class To From A-2 AAA AAA/Watch Neg RATINGS AFFIRMED MMCA Auto Owner Trust 2001-3 Class Rating A-3 A+ A-4 A+ B BBB MMCA Auto Owner Trust 2001-4 Class Rating A-4 AA B A- MMCA Auto Owner Trust 2002-1 Class Rating A-3 AA A-4 AA MMCA Auto Owner Trust 2002-2 Class Rating A-2 A+ A-3 A+ A-4 A+ NATIONSRENT: Enters Stipulating Reducing Kroll Consummation Fee --------------------------------------------------------------- To recall, on February 26, 2002, the Court approved the NationsRent Debtors' employment of Kroll Zolfo Cooper, LLC as their Bankruptcy Consultants and Management Advisors. On September 11, 2003, Kroll Zolfo filed its Final Fee Application for allowance and payment of Consummation Fee as Bankruptcy Consultants and Management Advisors to the Debtors for $2,500,000. Subsequently, the Debtors raised concerns regarding the Consummation Fee requested by Kroll Zolfo. To resolve the claims, objections and concerns and to avoid the additional time and expenses of further dispute, the Debtors, Kroll Zolfo and The Baupost Group LLC -- the Majority Bank Debt Holder -- stipulate and agree that Kroll Zolfo will reduce the request for allowance and payment of the Consummation Fee to $1,750,000. However, if the Bankruptcy Court does not approve the Stipulation in its entirety, the parties agree that: -- the terms and conditions will be null and void and will not be used by any party for any purpose; and -- Kroll will have the right to seek the full amount sought in the Consummation Fee Application. (NationsRent Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) NET PERCEPTIONS: Third-Quarter Net Loss Reaches $1.7 Million ------------------------------------------------------------ Net Perceptions, Inc. (Nasdaq:NETP) reported revenue of $438 thousand for the quarter ended September 30, 2003 and a loss of $1.7 million, or $0.06 per share. Included in these results was a $1.1 million restructuring charge ($406 thousand related to employee severance payments and $645 thousand related to the settlement of certain real estate obligations previously disclosed on September 12, 2003). In the same period last year the Company reported $1.6 million in revenue and a loss of $626 thousand, or $0.02 per share. At September 30, 2003, the Company had nine employees. Net Perceptions completed the quarter with approximately $12.2 million in cash. The Company is not providing financial guidance for the fourth quarter of 2003. Plan of Liquidation The Company also announced that its board of directors has unanimously adopted a plan of complete liquidation and dissolution, which will be submitted to the Company's stockholders for approval. The plan contemplates that the Company will sell, license or otherwise dispose of its intellectual property and other non-cash assets, and, after discharging or, through a contingency reserve, providing for, its liabilities (including contingent liabilities) and expenses, will distribute its net cash to its stockholders. The Company intends to hold a special meeting of stockholders as soon as practicable to approve and adopt the plan. A proxy statement describing the plan and the board's reasons for adopting it will be mailed to stockholders prior to the special meeting. Conference Call There will be a conference call to discuss Net Perceptions' financial results for the quarter ended September 30, 2003 today beginning at 4:00 pm (CST). The dial-in number for the call is (913) 981-5571 (Conference ID#559716). The call will also be available for replay beginning approximately two hours after the call is completed until October 31, 2003 by dialing (719) 457-0820 and entering code 559716. This press release and additional financial information is available on the Net Perceptions web site at http://www.netperceptions.comunder "News Releases." Net Perceptions (Nasdaq:NETP) is a software and services company that provides solutions for intelligent customer interaction that drive demand, grow revenue and increase profitability. Founded in 1996, Net Perceptions is headquartered in Minneapolis, Minnesota. Customers include market leaders such as 3M, Brylane, Great Universal Stores, J.C. Penney, J&L Industrial Supply and Half.com. For more information visit http://www.netperceptions.com * * * As reported in Troubled Company Reporter's August 8, 2003 edition, the Company is considering a plan of dissolution and liquidation as a possible course of action, while also seeking to settle or otherwise resolve, as soon and to the extent reasonably practicable, its existing obligations and liabilities, and continuing to explore asset dispositions and any other third party proposals which may be presented, with a view to resolving the Company's future and providing maximum additional value to stockholders as soon as possible. The Company also announced a reduction in its workforce of twelve positions, leaving the Company with ten full time employees, including certain senior management and administrative employees and, in an effort to preserve the value of the Company's technology and products, certain key engineers familiar with these assets. As part of the personnel reduction, Donald Peterson, the Company's President and Chief Executive Officer, will be leaving the Company and will receive certain severance benefits under his previously disclosed employment contract. Mr. Peterson will also resign as a director. Thomas Donnelly, the Company's Chief Operating Officer and Chief Financial Officer, will become President and will continue as Chief Financial Officer. In its SEC Form 10-Q filed for the quarter ended March 31, 2003, Net Perceptions reported: "We have sustained losses on a quarterly and annual basis since inception. As of March 31, 2003, we had an accumulated deficit of $219 million. Our net loss was $2.4 million in the first quarter of 2003 (including $1.2 million of restructuring related charges), compared to a net loss of $3.5 million in the first quarter of the prior year (including $367,000 of restructuring charges and $80,000 of amortization of goodwill and other intangibles and non- cash stock compensation expense). These losses resulted from significant costs incurred in the development and sale of our products and services as well as a decline in our product revenues since the third quarter of 2000 which, based upon current marked conditions and other factors, is likely to continue in 2003. We anticipate that our operating expenses will also continue to decline in 2003 and will continue to constitute a material use of our cash resources. We also expect to incur additional losses and continued negative cash flow from operations for the foreseeable future. We do not expect to achieve profitability in 2003. "In February 2003, in response to continued uncertainties in the marketplace and the difficulties we are likely to continue facing as a small public company, we engaged U.S. Bancorp Piper Jaffray, Inc. to assist us in the exploration of near-term strategic alternatives. Based on the outcome of this process, we expect to determine in the near term how best to proceed to maximize stockholder value. However, we cannot predict whether or when a transaction will result from this process, or otherwise. Accordingly, it is currently not feasible for management to make estimates as to our future operating results with any certainty." NEXTEL PARTNERS: Sept. 30 Balance Sheet Upside-Down by $95 Mill. ---------------------------------------------------------------- Nextel Partners, Inc. (Nasdaq:NXTP) reported strong financial and operating results for the third quarter of 2003, including $55.8 million of Adjusted EBITDA, a $47.9 million increase compared to Adjusted EBITDA of $7.9 million in the same period last year. For the first time in the company's history, operating activities provided net cash. Net cash provided by operating activities was $50.1 million in the third quarter of 2003 compared to net cash used by operating activities of $22.1 million in the same period last year. Service revenues for the period grew 49% over the prior year's third quarter to $260.7 million. Net loss decreased $42.9 million to $22.0 million in the third quarter of 2003 compared to $64.9 million in the prior year's third quarter. Partners added 91,100 subscribers during the third quarter to end the period with 1,144,700 digital subscribers, an increase of 46%, or 360,000, from the 784,700 subscribers at the end of the prior year's third quarter. Average monthly revenue per subscriber unit, or ARPU, increased $4 from $66 in the second quarter to $70 in the third quarter of 2003 and remained among the highest in the wireless industry. Including roaming revenues, ARPU was $80 for the period. The average monthly churn rate during the third quarter of 2003 improved to 1.5%, a record low for the company. "Our strong performance produced another outstanding quarter as we continued to attract some of the most valuable customers in the industry to achieve record revenue and Adjusted EBITDA," said John Chapple, Partners' Chairman, CEO and President. "We believe our differentiated product and targeted sales strategy, along with our relentless focus on customer satisfaction, continue to drive exceptional top line growth and first-rate operating and financial metrics. We look forward to generating positive free cash flow next year." "Nextel Partners achieved excellent results in the third quarter of 2003," said Barry Rowan, Partners' Chief Financial Officer and Treasurer. "We exceeded expectations on subscriber growth, ARPU and churn, and we reached lifetime revenue per subscriber (LRS) of $4,667 (implied by ARPU and churn), which is a company best and among the highest in the industry. We are encouraged by the continued scaling of our operations and expanding margins, and have accordingly accelerated our expectations for turning free cash flow positive. Based on our current trends, we now anticipate achieving positive free cash flow for the first quarter of 2004. Additionally, we have continued to opportunistically strengthen our balance sheet by reducing our overall cost of capital, further improving our future free cash flow and earnings potential." During the third quarter, Partners retired $50.2 million principal value of its senior notes, and issued convertible senior notes with total gross proceeds of $125 million to fund the company's debt retirements and for general corporate purposes. On a combined basis, the company's debt retirements of $557.1 million since the fourth quarter of 2002 and subsequent note issuances are anticipated to result in net annualized cash interest savings of $35.8 million. Additionally, Partners has provided notice to the holder of its 12% Series B redeemable preferred stock of its intent to redeem the stock in the fourth quarter. As of September 30, 2003, the redemption value of the Series B preferred stock was $38.3 million. The loss attributable to common stockholders for the third quarter of 2003 was $0.09 per share as compared to a loss of $0.27 per share in the third quarter of 2002. Net capital expenditures, excluding capitalized interest, were $40.5 million in the third quarter of 2003. At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $95 million. Nextel Partners, Inc., (Nasdaq:NXTP), based in Kirkland, Wash., has the exclusive right to provide digital wireless communications services using the Nextel brand name in 31 states where approximately 53 million people reside. Nextel Partners offers its customers the same fully integrated, digital wireless communications services available from Nextel Communications (Nextel) including digital cellular, text and numeric messaging, wireless Internet access and Nextel Direct Connect(SM) digital walkie-talkie, all in a single wireless phone. Nextel Partners customers can seamlessly access these services anywhere on Nextel's or Nextel Partners' all-digital wireless network, which currently covers 293 of the top 300 U.S. markets. To learn more about Nextel Partners, visit http://www.nextelpartners.com To learn more about Nextel's services, visit http://www.nextel.com NIMBUS GROUP: Taps Berkovitz to Replace Rachlin as Accountants -------------------------------------------------------------- Nimbus Group, Inc. has dismissed Rachlin, Cohen & Holtz, LLP as Nimbus Groups' independent accountant, effective October 15, 2003. The Company has replaced RCH with Berkovitz, Lago & Company, LLP, effective October 15, 2003. BLC served as the independent accountant for the Company prior to RCH. RCH was originally engaged due to its relationship with the Company's interim chief financial officer. As the Company's interim chief financial officer is no longer with Nimbus Group, the Company has decided to re-engage BLC. RCH served as the Company's independent accountant from August 6, 2003 through the dismissal date and had not provided any report on the financial statements of the Company. The decision to dismiss RCH was recommended by management of the Company and approved by its Audit Committee. Effective October 14, 2003, Nimbus Group engaged the accounting firm of BLC as its new independent accountants to audit the Company's financial statements for the proximate fiscal year end. The report of BLC on the financial statements of Nimbus Group for the past fiscal year contained an explanatory paragraph wherein BLC expressed substantial doubt about the Company's ability to continue as a going concern. NORTHERN BORDER: Declares Third Quarter 2003 Cash Distribution -------------------------------------------------------------- The Partnership Policy Committee of Northern Border Partners, L.P. (NYSE:NBP) declared the Partnership's quarterly cash distribution of $0.80 per common unit for the third quarter of 2003. The indicated annual rate is $3.20. The distribution is payable November 14, 2003 to unitholders of record October 31, 2003. Northern Border Partners, L.P. is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. The Partnership owns and manages natural gas pipelines and is engaged in the gathering and processing of natural gas. More information can be found at http://www.northernborderpartners.com As reported in Troubled Company Reporter's September 23, 2003 edition, Northern Plains Natural Gas Company and Pan Border Gas Company, subsidiaries of Enron Corp., are two of the general partners of Northern Border Partners, L.P. Also, NBP Services Corporation, a subsidiary of Enron, provides administrative and operating services to Northern Border Partners, L.P. and its subsidiaries. On June 25, 2003, Enron announced the organization of CrossCountry Energy Corp., a newly formed holding company that will hold, among other things, Enron's ownership interests in Northern Plains, Pan Border and NBP Services. Enron also announced it had filed a motion with the U.S. Bankruptcy Court for the Southern District of New York to approve the proposed transfer of those ownership interests to CrossCountry Energy Corp. The Bankruptcy Court has not issued an order on this motion. NRG ENERGY: Appoints David W. Crane as New Company President & CEO ------------------------------------------------------------------ David W. Crane has been appointed President and Chief Executive Officer of NRG Energy, Inc., effective December 1, 2003. Crane currently serves as Chief Executive Officer of London-based International Power. "David's extensive experience in the energy industry and strategic viewpoint make him extremely qualified to lead NRG," said Scott J. Davido, General Counsel, Secretary and Chairman of the Board. "He is the ideal leader to build on NRG's strengths." "We conducted an exhaustive search over several months and David was a clear standout," said James K. Schaeffer, Chairman of NRG's Official Creditors' Committee, who with NRG's Board of Directors led the search for a new CEO. "David has a strong record of solving business challenges and delivering effective strategies." Prior to joining International Power in 2000, Crane was a Senior Vice President in the Global Power Group at Lehman Brothers. From 1991 to 1996, he worked in various positions at ABB Energy Ventures, including serving as Vice President for the Asia-Pacific Region. Crane earned a Bachelor of Arts Degree from Princeton University's Woodrow Wilson School of Public and International Affairs and a Juris Doctor degree from Harvard Law School. The appointment is subject to bankruptcy court approval. John R. Boken, Senior Director of restructuring firm Kroll Zolfo Cooper LLC, who has served as NRG's Interim President and Chief Operating Officer since the company's Chapter 11 filing earlier this year, will continue with his Chief Operating Officer duties for a transitional period. NRG Energy, Inc. owns and operates a diverse portfolio of power- generating facilities, primarily in the United States. Its operations include competitive energy production and cogeneration facilities, thermal energy production and energy resource recovery facilities. OWENS & MINOR: Board Okays Payment of 4th Quarter Cash Dividend --------------------------------------------------------------- Owens & Minor (NYSE: OMI) announced that its board of directors approved the payment of the fourth quarter 2003 cash dividend in the amount of $0.09 per share. The cash dividend is payable on December 31, 2003 to shareholders of record as of December 16, 2003. The company currently has approximately 38,948,724 common shares outstanding. 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: Reports Deterioration in 3rd Quarter Performance ---------------------------------------------------------------- Owens-Illinois, Inc., (NYSE: OI) reported third quarter 2003 net earnings of $28.9 million, compared with net earnings for the third quarter 2002 of $97.9 million. Results for the third quarter of 2003 included charges of $37.4 million ($23.4 million after tax) for the estimated loss on the pending sale of the Company's specialty closures assets, and $28.5 million ($17.8 million after tax) for the permanent closure of the Company's Hayward, Calif., glass container factory, both of which are discussed below. Operating results in the third quarter of 2003 continued to be unfavorably impacted by higher energy costs, reduced pension income, modestly lower glass unit shipments in North America, and competitive pricing pressures in most of the Company's plastics businesses. Joseph H. Lemieux, Owens-Illinois Chairman and Chief Executive Officer said, "I am pleased that both our glass and plastic businesses reported higher sales for the third consecutive quarter. Another high point of the third quarter was increased EBIT from our glass businesses compared with prior year despite higher energy costs and lower pension income. As momentum continues to build across our operations, we are focused on enhancing liquidity, improving productivity, pursuing cost-saving opportunities and driving solid earnings performance going forward." Business Review Summary Third quarter 2003 net sales were $1.589 billion compared with $1.472 billion in the third quarter of 2002. On a consolidated basis, EBIT for the third quarter of 2003 was $159.3 million compared with $251.9 million for the third quarter of 2002. The following discussion of operations is presented on a segment reporting basis. The reconciliation of Segment EBIT to consolidated EBIT and to net earnings is presented in note (a) of the attached table entitled Consolidated Supplemental Financial Data. Glass Containers Segment The Glass Containers segment reported third quarter 2003 net sales of $1.111 billion, up 8.9% from $1.020 billion in the third quarter of 2002. Segment EBIT for the third quarter of 2003, exclusive of the $28.5 million charge for the Hayward plant closure, was $207.8 million compared with $205.5 million for the third quarter of 2002. Segment EBIT margins in the third quarter of 2003 were 18.7% compared with 20.2% in the third quarter of 2002. Pension income was approximately $10 million lower than the third quarter of 2002, contributing to the reduction in Segment EBIT margins. Within the segment, North American glass container operations reported lower sales and EBIT for the third quarter of 2003 compared with the third quarter of 2002. Higher energy costs, modestly lower unit sales volumes, reduced pension income, and unfavorable currency translation rates in Canada were partially offset by improved manufacturing performance and higher selling prices. A substantial portion of the reduction in pension income for the Glass Containers segment was in North America. European glass container operations reported improved sales and EBIT for the third quarter of 2003 compared with the third quarter of 2002 mainly due to the favorable effects of significantly higher production and shipment activity, a more favorable product mix, favorable currency translation rates, and cost reduction initiatives at the Company's operations in Italy. Asia Pacific glass container operations reported higher sales and EBIT for the third quarter of 2003 compared with the third quarter of 2002. Higher unit shipments, improved manufacturing performance, and favorable currency translation rates were the principal reasons for these improved EBIT results. In the South American glass container operations, third quarter 2003 sales and EBIT improved compared with third quarter 2002. Increased production activity and higher shipments, particularly in Brazil, coupled with higher selling prices and improved manufacturing performance were the main reasons for these improved results. Plastics Packaging Segment For the third quarter of 2003, the Plastics Packaging segment reported net sales of $477.2 million, compared with $452.3 million for the third quarter of 2002. Segment EBIT for the third quarter of 2003, exclusive of the $37.4 million charge for the estimated loss on the pending sale of the specialty closures assets, was $39.5 million compared with $64.9 million for the third quarter of 2002. Resin cost pass-through pricing to customers increased sales by $15 million in the quarter. The principal factors contributing to the decline in Segment EBIT were lower selling prices in most of the segment's businesses and an approximate $2.2 million reduction in pension income, partially offset by a 10% increase in unit shipments over the prior year period. Other Retained Items Other retained costs were $3.7 million higher in the third quarter of 2003 compared with the third quarter of 2002, principally due to lower pension income and higher information systems costs. Interest Expense Interest expense increased to $120.1 million in the third quarter of 2003 from $106.9 million in the third quarter of 2002. The higher interest in 2003 was mainly due to the issuance of $625 million of fixed rate notes during the fourth quarter of 2002 and $900 million of fixed rate notes in May 2003. The proceeds from the notes were used to repay lower-cost variable rate debt borrowed under the Company's previous bank credit agreement. Lower interest rates on the Company's remaining variable rate debt partially offset the increase. Liquidity Improvement Initiatives Sale of Specialty Closures Assets The Company has reached agreement in principle for the sale of its assets related to the production of plastic trigger sprayers and finger pump closures. The Company expects the transaction to close early in the fourth quarter. Expected net cash proceeds of approximately $50 million, including liquidation of related working capital, will be used to reduce debt. The Company's decision to sell these non-strategic assets is consistent with its objectives to improve liquidity and to focus on its core businesses. Closure of Hayward, Calif., Glass Factory In August, the Company announced the permanent closing of its Hayward, Calif., glass container factory. Production at the factory was suspended in June following a major leak in its only glass furnace. Most of Hayward's business has been transferred to other company factories. Capacity Utilization Review The Company is continuing its review of capacity utilization for its worldwide glass and plastics businesses. During the fourth quarter, the Company expects to announce further capacity curtailments and to pursue additional divestitures of non- strategic assets. These actions will result in pre-tax charges which could range from $85 million to $95 million. The Company believes these are important steps in its efforts to bring capacity and inventory levels in line with anticipated demand, and to improve capital spending efficiency. Nine-month Results For the first nine months of 2003, the Company reported net earnings of $80.3 million, or $0.44 per share (diluted), compared with a net loss of $510.5 million, or $3.60 per share, for the first nine months of 2002. Results for the first nine months of 2003 included: 1) a loss of $37.4 million ($37.4 million after tax) from the sale of long-term notes receivable, 2) additional interest charges of $16.8 million ($10.7 million after tax) for early retirement of debt, principally note repurchase premiums, 3) a charge of $37.4 million ($23.4 million after tax) for the estimated loss on the pending sale of the specialty closures assets, and 4) a charge of $28.5 million ($17.8 million after tax) for the permanent closure of the Hayward glass container factory. The combined after-tax effect of these charges is a reduction of $0.60 in earnings per share. Results for the first nine months of 2002 included: 1) a charge for future asbestos related costs of $475 million ($308.8 million after tax), and 2) additional charges of $10.9 million ($6.7 million after tax) for early retirement of debt. The combined after-tax effect of these charges is a reduction in earnings per share of $2.15. Also in the third quarter of 2002, the Company recorded a charge for the change in method of accounting for goodwill of $460 million ($460 million after tax), or $3.14 per share. Effective Tax Rate Excluding the effects of the loss on the sale of long-term notes receivable, the estimated loss on the sale of the specialty closures assets and the charge for the permanent closure of the Hayward glass container factory in 2003, the effects of the first quarter 2002 asbestos-related charge, and the additional interest charges for early retirement of debt in all periods, the Company's estimated effective tax rate for the first nine months of 2003 was 30.1% compared with an estimated rate of 31.6% for the first nine months of 2002 and an actual rate of 30.1% for the full year 2002. Asbestos Asbestos-related cash payments for the third quarter of 2003 were $57.3 million, an increase of $1.6 million, or 2.9%, from the third quarter of 2002. The higher payments resulted principally from increased trial activity and an acceleration of filings and settlements due to the possible enactment of asbestos reform legislation at the federal level and in certain key states such as Texas and Ohio. For the first nine months of 2003, cash payments were $157.2 million, a reduction of $10.2 million, or 6.1%, from the first nine months of 2002. However, cash payments for claim settlements were down 11.8% during this period. As of September 30, 2003, the number of asbestos-related claims pending against the Company was approximately 31,000, up from approximately 24,000 pending claims at December 31, 2002. In the second quarter, the Company received approximately 7,000 new filings in advance of the effective date of the recently-enacted Mississippi tort reform law. Approximately 60% of those filings are cases with exposure dates after the Company's 1958 exit from the business for which the Company takes the position that it has no liability. The Company anticipates that cash flows from operations and other sources will be sufficient to meet all asbestos-related obligations on a short-term and long-term basis. 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. PACIFIC GAS: Enters into Laguna Irrigation Settlement Agreement --------------------------------------------------------------- Pacific Gas and Electric Company sought and obtained the Court's authority to enter into and consummate a settlement agreement with Laguna Irrigation District with respect to civil actions asserted against PG&E and the withdrawal of all claims filed by Laguna in PG&E's Chapter 11 case. In particular, the Settlement Agreement resolves: (1) Laguna's antitrust action against PG&E, Laguna Irrigation District v. PG&E, United States District Court for the Eastern District of California Case No. CIVF-00 5967 AWI SMS; (2) Laguna's eminent domain action against PG&E, Laguna Irrigation District v. PG&E, Kings County Superior Court Case No. 99C0952; and (3) PG&E's breach or contract action against Laguna, PG&E v. Laguna Irrigation District, San Francisco Superior Court Case No. CGC-02-406259. Commencing in 1996, Laguna sought to become a public power enterprise by contracting with Power Exchange Corporation to utilize PXC's Control Area Transmission Service Agreement and installing service drops from PG&E's distribution lines to selected customers. PG&E questioned the legality of Laguna's Service Drop Plan, and refused to proceed with Laguna's interconnection request pending the resolution of the objections PG&E filed with the Federal Energy Regulatory Commission. Laguna subsequently sued PG&E for antitrust and tortious conduct. As an alternative means to becoming a public power enterprise, Laguna entered into an Energy Service Provider Service Agreement with PG&E in 1998 to permit Laguna to sell power to Direct Access customers and obtain a Scheduling Coordinator to schedule the Direct Access load with the Independent System Operator. In 2002, PG&E accused Laguna of breaching the contract by failing to pay for the power and schedule load with the ISO. Laguna also resolved to condemn certain PG&E electric distribution facilities within the District's borders. In 1999, Laguna filed an action in eminent domain against PG&E. Laguna amended the complaint in 2000 to include all PG&E distribution facilities within the District and some outside it. In 2002, PG&E and Laguna agreed to stay the Litigation while they negotiate a global settlement. All three cases remain stayed. Laguna, having spent more than five years and significant financial and other resources in attempting to become a public power enterprise, wants to restore its fiscal health, exit the electric business, and refocus its efforts on its water enterprise. Both parties want to eliminate the risk of potential liability associated with the Litigation and minimize the substantial legal and consulting costs that would be necessarily associated with litigation these cases. The Settlement Agreement provided for the dismissal of the Litigation and the withdrawal of all claims by Laguna. Laguna will also pay $1,000,000 to PG&E over the next 20 years by paying $50,000 per year. PG&E will forego the last ten scheduled payments provided that Laguna, among other things, timely makes the first ten payments totaling $500,000 and refrains from adopting a Resolution of Necessity to condemn any PG&E property -- except for the rights-of-way necessary for irrigation facilities -- during that time. (Pacific Gas Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 609/392-0900) PETROLEUM GEO-SERVICES: SDNY Court Confirms Reorganization Plan --------------------------------------------------------------- Petroleum Geo-Services ASA (debtor in possession) (OSE:PGS) (OTC:PGOGY) announced that the U.S. Bankruptcy Court for the Southern District of New York confirmed the Company's Modified First Amended Plan of Reorganization. The Company expects to consummate the Plan and emerge from Chapter 11 in early November. Under the Plan, the Company's existing bank debt and outstanding senior notes will be cancelled in exchange for a combination of new senior notes, new ordinary shares, cash and possibly interests in a new term loan facility. The Company's outstanding junior subordinated debentures and existing ordinary shares will be cancelled in exchange for new ordinary shares. Additionally, the rights offering contemplated under the Plan, which will allow holders of existing ordinary shares the right to purchase additional new ordinary shares of the reorganized Company, is expected to commence on October 22, 2003. Holders of existing ordinary shares must hold their ordinary shares through the effective date (now expected to be November 5, 2003) of the Plan to be eligible to exercise their rights under the rights offering. 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 (FPSO's). PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit http://www.pgs.com QUANTUM CORP: Look for Fiscal Second-Quarter Results Today ---------------------------------------------------------- Quantum Corp. (NYSE: DSS) will release earnings results for the second quarter of fiscal 2004, ended Sept. 28, 2003, today after the close of the market. Shortly after the news release is issued, Quantum will hold a conference call at 2 p.m. PDT. Press and industry analysts are invited to attend in listen-only mode. Conference Call: Thursday, Oct. 23, 2003, 2 p.m. PDT Dial-in Number: 212-329-1451 (US & International) Replay Numbers: 800-405-2236 (US) 303-590-3000 (International) Access Code: 552742 Replay Expiration: Thursday, Oct. 30, 2003, 11:59 p.m. PST Audio Webcast: Quantum will provide a live audio webcast of the conference call beginning Thursday, Oct. 23, 2003 at 2 p.m., PDT. A webcast archive will be available for one year. Webcast Site: http://www.quantum.com/investors Quantum Corp. (S&P, BB- Corporate Credit and B Subordinated Debt Ratings, Negative), founded in 1980, is a global leader in storage, delivering highly reliable backup, archive and recovery solutions that meet demanding requirements for data availability and integrity with superior price performance. Quantum is the world's largest supplier of half-inch cartridge tape drives, and its DLTtape technology is the industry standard for tape backup, archiving, and recovery of business-critical data for the midrange enterprise. Quantum is also a leader in the design, manufacture and service of autoloaders and automated tape libraries used to manage, store and transfer data. Over the past year, Quantum has been one of the pioneers in the emerging market of disk-based backup, offering a solution that emulates a tape library and is optimized for data protection. Quantum sales for the fiscal year ended March 31, 2003, were approximately $871 million. Quantum Corp., 1650 Technology Drive, Suite 800, San Jose, CA 95110, 408- 944-4000, http://www.quantum.com QUINTILES: Inks Peking Union Pact to Expand China Lab Services -------------------------------------------------------------- Quintiles Transnational Corp. announced an agreement with the Peking Union Medical College Hospital in Beijing to expand Quintiles' central laboratory services in China. The agreement permits Quintiles to use laboratory-testing services within PUMCH's extensive clinical laboratory. PUMCH is one of China's premier academic institutions and a leader in clinical research. Quintiles Laboratories will place staff within PUMCH to provide support services associated with the collection and management of clinical trial specimens for Quintiles' customers. Other laboratory services in support of investigators in China and project management will be provided by Quintiles' facilities in Singapore. China closely regulates the export of whole blood, including clinical trial samples. With access to the PUMCH laboratories, Quintiles can help customers save valuable time during the clinical trial process. Neil Ferguson, Managing Director, Quintiles, Greater China, said: "We are very excited about the expansion of our global services. China is an excellent country for clinical research, offering rapid patient recruitment, large patient populations and unique gene pools. We are delighted to be working with such a reputable laboratory and hospital in China. With this agreement, we intend to offer our customers access to a large number of new investigators and patients while effectively managing time requirements and maintaining our consistent high global standards." Founded in 1921, PUMCH has 1,200 beds, 2,480 employees and more than 400 professors. The hospital supports 3,500 outpatient visits a day and 25,000 inpatient visits a year. "We are very happy to cooperate with Quintiles, the leading global CRO," said Dr. Qi Kemin, PUMCH Director. "We hope to work together with Quintiles to expand clinical research in China." Dr. Ni Anping, director of clinical laboratories for PUMCH, said, "PUMCH already has experience working on global trials, and we hope that through our alliance with Quintiles we will have many more opportunities to participate in international clinical research." Quintiles Transnational (S&P, BB- Corporate Credit Rating, Stable) helps improve healthcare worldwide by providing a broad range of professional services, information and partnering solutions to the pharmaceutical, biotechnology and healthcare industries. Headquartered near Research Triangle Park, North Carolina, and with offices in more than 40 countries, Quintiles is a leading global pharmaceutical services organization and a member of the Fortune 1000. For more information visit the company's Web site at http://www.quintiles.com Quintiles Laboratories is a global, full-service organization that provides analytical testing and data management services to meet the needs of Phase I through Phase IV clinical trials. Quintiles Laboratories has central laboratory services in Atlanta, Ga.; Livingston, Scotland; Singapore and Pretoria, South Africa, and has a partner laboratory network in Australia and South America. QWEST: Provides High-Speed Network for Illinois Research Project ---------------------------------------------------------------- Qwest Communications International Inc. (NYSE: Q) announced that Argonne National Laboratory, one of the U.S. Department of Energy's largest research centers, has deployed Qwest's broadband fiber optic network for the Illinois Wired/Wireless Infrastructure for Research and Education (I-WIRE) project. The I-WIRE project provides ultra-high-speed interconnection to major research institutions and universities in Illinois. Under the contract, Qwest provides backbone capacity, site construction, engineering services and dense wavelength division multiplexing equipment, which is designed to maximize the capacity of each fiber strand. The I-WIRE project, run out of Argonne, located 25 miles southwest of Chicago, connects eight campuses -- Argonne National Laboratory, Fermi National Accelerator Laboratory, University of Illinois at Urbana-Champaign/NCSA, University of Illinois-Chicago, Northwestern University Chicago Campus, Illinois Institute of Technology, the University of Chicago and STARLIGHT in Chicago. "I-WIRE is just one more example of Qwest's commitment to the supercomputing efforts of our government and educational research institutions," said James F.X. Payne, senior vice president of Qwest's government services division. "I-WIRE set the pace for others to follow in taking control of their network destiny by owning their own metro fiber and managing their own equipment." The advanced optical network will accelerate research in collaborative and virtual environments. Through this network, people can work, study and create together as if they are in the same physical location. It will enable evaluation of advanced optical network architectures and technologies, providing a testing facility for next-generation ideas and applications. One example of I-WIRE's application is its use in the TeraGrid, a National Science Foundation project to build the world's largest distributed terescale infrastructure for open science research. I- WIRE is providing critical connectivity between computational resources at Argonne and the University of Illinois in Urbana- Champaign with a capacity that is three times that of the current national backbone. "Qwest's long, successful history of providing services for numerous research facilities throughout the country was a major impetus in our vendor selection process," said Linda Winkler of Argonne National Lab. "The solutions provided by Qwest enabled I- WIRE to build a flexible, high- performance information infrastructure to meet the demanding requirements of the research and education community for network capacity." Other Qwest GSD federal scientific and R&D networks include: * ESnet, a high bandwidth network that links the nation's top scientists, researchers and educators with the Department of Energy's unparalleled research facilities. * Abilene, an Internet2 backbone that connects more than 202 universities and research institutions worldwide. * NREN (NASA's Research and Engineering Network), a network that provides direct broadband local access and comprehensive network operations support. * TeraGrid (Distributed Terascale Facility project), an ultra- high-speed network that builds on the other research projects, including the Global Grid Forum, which envisions a platform for worldwide shared computing resources. Qwest Communications International Inc. (NYSE: Q) -- whose December 31, 2002 balance sheet shows a total shareholders' equity deficit of about $1 billion -- is a leading provider of voice, video and data services to more than 25 million customers. The company's 49,000 employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at http://www.qwest.com The nation's first national laboratory, Argonne National Laboratory conducts basic and applied scientific research across a wide spectrum of disciplines, ranging from high-energy physics to climatology and biotechnology. Since 1990, Argonne has worked with more than 600 companies and numerous federal agencies and other organizations to help advance America's scientific leadership and prepare the nation for the future. Argonne is operated by the University of Chicago as part of the U.S. Department of Energy's national laboratory system. RIVERSTONE NETWORKS: Appoints Roger A. Barnes as New CFO -------------------------------------------------------- Riverstone Networks (RSTN.PK) announced Roger A. Barnes has joined the company as its new Executive Vice President and Chief Financial Officer. Barnes, who has more than 25 years of corporate leadership and financial management experience, will assist Riverstone's executive team in implementing a globally focused market and business strategy. "Roger's experience in navigating the complexities of international finance, business operations, financial reporting, and turnaround management for a number of both publicly held and venture backed high-technology companies over the past 25 years will be absolutely crucial to Riverstone as we move forward," President and Chief Executive Officer Oscar Rodriguez said. "He and I look forward to working together as Riverstone enters a new phase in its history." Prior to joining Riverstone, Barnes was Senior Vice President and Chief Financial Officer at Solid Information Technology, an international distributed data management company based in Mountain View, CA. During his tenure there, he restructured the company's finance and operations organizations, secured venture financing, and was instrumental in the planning and implementation of that company's drive toward profitability. Previously, Barnes was Chief Financial Officer for Cylink Corporation, Santa Clara, CA (NASDAQ: CYLK), Senior Vice President and Chief Financial Officer at Evolving Systems, Inc., Englewood, CO (NASDAQ: EVOL), and President and Chief Executive Officer at Formida Software Corporation, San Jose, CA. Barnes began his career with KPMG Peat Marwick where he was a Certified Public Accountant in the firm's audit practice. "I am very pleased to be working with Oscar and the rest of the Riverstone executive management team," Barnes said. "The telecommunications and networking industries are facing new challenges both in terms of technology and in how companies such as ours conduct their global operations. I believe Riverstone has the best people in place to succeed on both counts, and I look forward to contributing to that success." Barnes holds a degree in Business Administration from the University of Nebraska. Riverstone Networks, Inc. (RSTN.PK) provides carrier class switches and routers for mission critical networks. From the metropolitan edge to the campus network, Riverstone's advanced technology delivers the control and reliability carriers, government organizations, educational institutions and large corporations require. Worldwide, operators of mission critical networks trust Riverstone. For more information, please visit http://www.riverstonenet.com As previously reported, the trustee for the Company's 3.75% convertible subordinated notes due 2006 asserted that an event of default had occurred under the Indenture and purported to declare all amounts owing on the notes and under the Indenture to be immediately due and payable. Riverstone disputed the trustee's position and had notified the trustee that the trustee failed to provide proper notice to commence the 60-day period, and that therefore an event of default had not occurred and the trustee is not entitled to declare any amounts to be immediately due and payable. STARBAND COMMUNICATIONS: Court Approves Disclosure Statement ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved StarBand Communications, Inc.'s Disclosure Statement as containing adequate information for creditors to decide whether to accept or reject the First Amended Plan of Reorganization. To consider confirmation of the Debtor's Plan, a hearing will be held on November 12, 2003 at $2:30 p.m. before the Honorable Judge Peter J. Walsh. All written objections to the confirmation of the Plan, if there's any, must be filed with the Court and received on or before 4:00 p.m. on October 31, 2003, so the Debtor can send its replies not later that November 7, 2003. StarBand Communications Inc., provides two-way, always-on, high- speed Internet access via satellite to residential and small office customers nationwide. The Company filed for chapter 11 protection on May 31, 2002 (Bankr. Del. Case No. 02-11572). Thomas G. Macauley, Esq., at Zuckerman and Spaeder LLP represents the Debtor in its restructuring efforts. When the Company filed for protection form its creditors, it listed $58,072,000 in assets and $229,537,000 in debts. T.A.C. GROUP: Clear Thinking Will Administer Reorganization Plan ---------------------------------------------------------------- Clear Thinking Group, a retail/consumer products manufacturing consultancy headquartered here, and Joseph Myers, its principal and managing director, have been named plan administrator in a Plan of Reorganization and Disclosure Statement filed Tuesday by Westwood, Mass.-based retailer T.A.C. Group Inc., d/b/a Frugal Fannie's Fashion Warehouse, and its unsecured creditors committee. The filing was executed in U.S. Bankruptcy Court, District of Massachusetts, and the appointment is effective immediately. In accordance with the plan, Mr. Myers and select staff from Clear Thinking's Creditors Rights Practice Group will assist and advise the debtor in the liquidation procedure and the disbursement of any remaining assets. As plan administrator, the firm will also assist and advise T.A.C. Group in investigating, enforcing, and prosecuting claims, as well as in exercising its rights and privileges, including, without limitation, any causes of action. Frugal Fannie's in its heyday operated nine off-price women's apparel and accessories stores and generated annual sales of $85 million. This past spring, the company shuttered its four remaining stores and filed for Chapter 11 bankruptcy protection. The company cited heightened competition, decreases in consumer spending and an ill-timed expansion just prior to the September 11, 2001 terrorist attacks as catalysts for its decline over a one-year period. In early September, Kathleen "Fannie" Doxer, who founded the business with her husband Orrin, announced plans to re-open Frugal Fannie's Westwood, Mass. store, using capital raised with the help of family members. About Clear Thinking Group Clear Thinking Group, Inc., a subsidiary of Liquidation World (TSX: LQW), Calgary, Alberta, provides a wide range of corporate turnaround, workout, and strategic consulting services to retail companies, consumer product manufacturers/distributors and industrial companies -- often on behalf of asset-based lenders that finance these entities. The national advisory organization specializes in assisting small- to mid-sized companies during times of strategic change, opportunity, growth, acquisition, and crisis. For further information, visit the firm's Web site at http://www.clearthinkinggrp.com TCW LINC: S&P Takes Actions on Four Low-B and Junk Note Classes --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A-1F, A-1, A-2L, and A-2 notes issued by TCW LINC III CBO Ltd. The ratings on the same issuer's class A-1L, A-3A, and A-3B notes are affirmed. At the same time, all the ratings are removed from CreditWatch negative, where they were placed Aug. 29, 2003. The lowered ratings reflect factors that have negatively affected the credit enhancement available to support the class A-1F, A-1, A-2L, and A-2 notes since the ratings were last reviewed April 11, 2003. Chief among these factors is a sharp increase in the number of defaults in the collateral pool securing the notes. Standard & Poor's noted that in the six months preceding the Sept. 17, 2003 monthly report, cumulative defaults of collateral securities increased to $166.5 million from $143.1 million. As a result of asset defaults and the sale of credit risk assets, the class A and B overcollateralization ratios have dropped significantly, and now stand at 91.0% and 81.0%, respectively. This places both ratios well below their corresponding minimum requirements of 110% and 103%. Including defaulted securities, $150.5 million (or approximately 36.2% of the collateral pool's par value) come from obligors now rated in the 'CCC' range or lower, and $17.3 million (or about 4.2% of the performing assets in the pool) correspond to obligors with ratings that are currently on CreditWatch with negative implications. RATINGS LOWERED AND OFF CREDITWATCH NEGATIVE TCW LINC III Ltd. Rating Balance (mil. $) Class To From Orig. Current A-1F A A+/Watch Neg 15.0 15.0 A-1 A A+/Watch Neg 96.0 96.0 A-2L B+ BB/Watch Neg 21.5 21.5 A-2 B+ BB/Watch Neg 82.0 82.0 RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH Rating Balance (mil. $) Class To From Orig. Current A-1L AAA AAA/Watch Neg 130.0 96.0 A-3A CCC- CCC-/Watch Neg 34.0 34.0 A-3B CCC- CCC-/Watch Neg 45.0 45.0 TECHNOLOGY VISIONS: Taps Kabani as New Independent Accountants -------------------------------------------------------------- On October 10, 2003, pursuant to the approval of the Board of Directors of Technology Visions Group, Inc., Technology Visions dismissed the accounting firm of McKennon, Wilson & Morgan LLP as its independent auditors. McKennon, Wilson & Morgan LLP previously issued on March 28, 2003, their report on Technology Visions' balance sheet as of December 31, 2002 and the related statements of operations, stockholders' deficit and cash flows for each of the years in the two-year period ended December 31, 2002, and from the period from inception, January 1, 1995 through December 31, 2002. Further, McKennon, Wilson & Morgan LLP previously issued on April 5, 2002, their report on Technology Visions' balance sheet as of December 31, 2001 and the related statements of operations, stockholders' deficiency and cash flows for each of the two years in the period ended December 31, 2001. McKennon, Wilson & Morgan LLP, in their report on Technology Visions' financial statements for the year ended December 31, 2002, stated that there was substantial doubt about Technology Visions' ability to continue as a going concern because it is a development-stage company with no revenues from its intended operations, has recurring losses, and had a working capital deficiency of $431,835 and stockholders' deficiency of $2,758,885 at December 31, 2002. In their report dated April 5, 2002, for the year ended December 31, 2001, McKennon, Wilson & Morgan LLP indicated that there was substantial doubt about Technology Visions' ability to continue as a going concern for the same reasons as listed above concerning being a development-stage company with no revenues from its intended operations, has recurring losses, and had a working capital deficiency and stockholders' deficiency at December 31, 2001. The financial statements did not include any adjustments from this uncertainty. On October 10, 2003, Technology Visions engaged the accounting firm of Kabani & Company, Inc., C.P.A.'s, located in Fountain Valley, CA, as its new independent accountants. Prior to that date, Technology Visions did not consult with Kabani & Company, Inc., C.P.A.'s regarding any accounting matters. THAXTON GROUP: Wants Nod to Hire BSI as Claims and Notice Agent --------------------------------------------------------------- The Thaxton Group, Inc., and its debtor-affiliates are asking for the U.S. Bankruptcy Court for the District of Delaware's approval of their application to appoint Bankruptcy Services LLC as claims, noticing and balloting agent. The number of creditors and other parties in interest in the Debtors' chapter 11 cases may impose administrative and other burdens upon the Court and the Clerk's Office. To relieve the Court and the Clerk's Office of these burdens, the Debtors seek to engage BSI as Claims, Noticing and Balloting Agent in these chapter 11 cases. In its capacity, BSI will: a. prepare and serve required notices in these chapter 11 cases, including, without limitation: (1) The Section 341(a) Notice; (2) The bar date notice; (3) Notice of hearings on a disclosure statement and confirmation of a plan of reorganization; and (4) Other miscellaneous notices to any entities, as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; b. within five business days after the mailing of a particular notice, file with the Clerk's Office a declaration of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was served and the date and manner of service; c. comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; d. promptly comply with such further conditions and requirements as the Clerk's Office or Court may at any time prescribe; e. provide claims recordation services and maintain the official claims register; f. provide balloting and solicitation services, including preparing ballots, producing personalized ballots and tabulating creditor ballots on a daily basis; g. provide such other noticing, and related administrative services as may be required from time to time by the Debtors; and h. provide assistance with, among other things, certain data processing and ministerial administrative functions, including: (a) the preparation of the Debtors' schedules, statements of financial affairs and master creditor lists, and any amendments thereto; and (b) if necessary, the reconciliation and resolution of claims. BSI's hourly professionals fees are: Kathy Gerber $210 per hour Senior Consultants $185 per hour Programmer $130 to $160 per hour Associate $135 per hour Data Entry/Clerical $40 to $60 per hour Schedule Preparation $225 per hour Headquartered in Lancaster, South Carolina, The Thaxton Group, Inc., is a diversified consumer financial services company. The Company filed for chapter 11 protection on October 17, 2003 (Bankr. Del. Case No. 03-13183). Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtor in their restructuring efforts. When the Company filed for protection from it creditors, it listed $206,000,000 in total assets and $242,000,000 in total debts. TOWER AUTOMOTIVE: Consolidates North American Product Groups ------------------------------------------------------------ Tower Automotive, Inc. (NYSE:TWR) announced a series of organizational changes in its North American operations, including consolidating its North American product groups, making changes to its leadership team and moving its enterprise headquarters. "Tower Automotive is at a crossroads of our company's evolution. In the next few years, we will enjoy tremendous revenue growth in all our regions. To deliver on the promise of profitable growth expected by our shareholders and operationally excellent performance demanded by our customers, we must better leverage our scale and facilitate our ability to share learning and experiences across the enterprise. These actions are designed to streamline our North American operations, strengthen the company's leadership team and enable us to more effectively serve our customers," said Kathleen Ligocki, President and Chief Executive Officer of Tower Automotive. North American Reorganization In order to present a unified presence to customers and foster sharing of best practices across its manufacturing operations, the company is consolidating its two North American product groups, Lower Vehicle Structures & Modules and Body & Suspension Structures into one unified regional team. The new North America team will be led by Tom Pitser, who formerly headed the company's Body & Suspension Structures Group. Pitser joined the company in 1996 when Tower Automotive acquired MascoTech Stamping & Technology. Previously, he was Vice President, Sales & Marketing for MascoTech, and also has held various management positions at Borg-Warner Corporation. He holds a bachelor of science degree in marketing from Ball State University and an MBA from Wayne State University. Enterprise Leadership Team Changes Kathy Johnston, previously Enterprise Leader for Planning, Governance & Business Development, has been named to a new position as Enterprise Leader for Global Purchasing & Manufacturing Strategy, with responsibility for all of the company's global purchasing activities, including materials and supplies, capital equipment and services. She also will be responsible for developing a global manufacturing strategy to improve capital resource allocations, sourcing and plant utilization. Johnston is currently serving as the company's interim Chief Financial Officer, and will assume her new position when a CFO is named. Johnston joined Tower Automotive in 2000. Prior to that she held various management positions at TRW Automotive. She holds a bachelor of science degree in management from Purdue University and an MBA from the University of Michigan. Thomas Werle, formerly Technology Leader for Tower Automotive in Europe, has been named to the new position of Enterprise Technology Leader. Thomas will champion global product and process development activities and oversee technology knowledge transfer within Tower Automotive. Werle joined Tower Automotive in 2000 when the company acquired the German firm, Dr. Meleghy GmbH. Previously, he held technical management positions at several other firms in Germany. He holds both an undergraduate degree and a Ph.D. in metal forming technology from the University of Stuttgart. "Both of these new positions will allow us, for the first time, to view two of our most critical assets - our technology and our manufacturing resources - from a truly global and strategic perspective," said Ligocki. Technical Centers Consolidated; Novi, Michigan, Named as Company Headquarters As part of its effort to build a single, unified North America team, Tower Automotive also announced today the consolidation of its technical center in Rochester Hills, Mich., into its Novi, Michigan technical center. Approximately 170 colleagues will be affected by this move. With the consolidation of the technical center staffs in Novi, Tower Automotive will also relocate the company headquarters from Grand Rapids to Novi, Michigan. This move is designed to better connect enterprise leadership with customers and products at the company's largest technical center in southeastern Michigan. Tower Automotive will maintain a shared services operation in Grand Rapids. Effective immediately, Tower Automotive's new headquarters address will be: 27175 Haggerty Road, Novi, Michigan 48377-3626. Tower Automotive, Inc. (S&P, BB- Corporate Credit Rating, Negative), is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including Ford, DaimlerChrysler, GM, Honda, Toyota, Nissan, Fiat, Hyundai/Kia, BMW, and Volkswagen Group. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The company is based in Grand Rapids, Michigan. Additional company information is available at http://www.towerautomotive.com TSI TELSYS: Completes Continuance to Delaware from Canada --------------------------------------------------------- TSI TelSys (TSX: TSI) Corporation has completed the change of its jurisdiction of incorporation from the Province of New Brunswick, Canada to the State of Delaware, United States. Jim Chesney, TSI TelSys' President and Chief Executive Officer, said: "We are extremely pleased that TSI TelSys Corporation has become a U.S. domestic corporation. Not only will we now be able to operate as a Delaware corporation with all the associated entitlements, but we believe that this corporate move also enhances our prospects for securing orders from U.S. customers." In conjunction with the continuance into Delaware, the Company also adopted new corporate by-laws consistent with Delaware corporate law, and also effected several changes to the authorized classes of shares, the par value of authorized capital and the number of authorized shares of certain classes of shares of the Company. The new bylaws and the proposed changes to the Company's authorized capital were approved by shareholders at the annual and special general meeting of shareholders that was held on August 14, 2003. The company will continue to trade on the TSX Venture Exchange under the symbol TSI, and will continue to operate through its wholly-owned Maryland subsidiary, TSI TelSys Inc. The Company filed new Articles of Incorporation in the State of Delaware on October 20, 2003. Headquartered in Columbia, Maryland, TSI TelSys is a leading developer and manufacturer of high performance, multi-mission satellite data processing systems for ground station operations and satellite test and integration. At June 27, 2003, the company's balance sheet discloses a working capital deficit of about $991,000 and net capital deficit of about $521,000. TWINLAB CORP: IdeaSphere Pitches Winning Bid to Acquire Assets -------------------------------------------------------------- Twinlab Corporation (OTC Bulletin Board: TWLBE), Twin Laboratories Inc. and Twin Laboratories (UK) Ltd., announced that the bid by IdeaSphere Inc. remains the highest and best bid for substantially all the assets of Twinlab, paving the way towards the Court approval hearing on October 27, 2003 to allow for the completion of the $65 million acquisition by IdeaSphere. On September 4th, Twinlab filed a voluntary petition for bankruptcy relief before the United States Bankruptcy Court for the Southern District of New York and simultaneously announced that following a rigorous sale process involving numerous suitors it had entered an asset purchase agreement for the sale of substantially all of Twinlab's assets with IdeaSphere Inc., of Grand Rapids, Michigan. Pursuant to bidding procedures approved by the Bankruptcy Court, the final deadline for additional qualified bidders to submit bids for Twinlab's assets was set for 4:00 p.m. EST on October 20, 2003. After the receipt of numerous bids in the pre-filing sale process, no additional bids were received in conjunction with the post-petition open bidding process approved by the Court. The transaction with IdeaSphere, which is subject to final review and approval by the Court, is scheduled to close in the next several weeks under the terms of the asset purchase agreement. IdeaSphere is an integrated provider of natural and organic supplements, foods, beverages, personal and home care products and health and wellness information. It is also an owner of Rebus LLC, a leading health and science publisher and creator and exclusive publisher of the renowned UC Berkeley Wellness Letter and the Johns Hopkins Health After 50 newsletter. "We're very excited about this match," said Ross Blechman, chairman and chief executive officer of Twinlab. "From our first discussions it was clear that IdeaSphere not only saw the inherent value of our people, our brands and our facilities, but also shared our passion for science, our respect for our retail partners and consumers, and our commitment to setting a new standard of excellence for our industry." IdeaSphere anticipates retaining all of Twinlab's employees at its New York headquarters and Utah manufacturing center and is evaluating the possible addition of jobs in New York and Utah. "In an industry in which acquisition-related layoffs are the unfortunate norm, we're even more thrilled to be able to provide Twinlab's workforce with a very bright future," said Mark A. Fox, IdeaSphere's president and chief operating officer. "Twinlab built a great brand and product portfolio, but lacked the depth of financial resources and global marketing capabilities needed to achieve the next level of growth; IdeaSphere provides that financial and marketing power, while at the same time gaining the world-class manufacturing platform and outstanding talent at all levels we need to realize our goals." Founded by the Blechman family in 1968, Twinlab has over 500 products in the vitamins, minerals, sports nutrition products, special formulas and amino acids categories. UNIGLOBE.COM INC: Files Plan of Arrangement Under CCAA in Canada ---------------------------------------------------------------- Online cruise specialist Uniglobe.com Inc. (TSX Venture: UTO.B) has filed a plan of arrangement in the Supreme Court of British Columbia pursuant to the Companies' Creditors Arrangement Act and obtained a court order of the same date. The Order also appoints Deloitte & Touche Inc. as monitor pending the approval of the Plan by creditors and the court. Pursuant to the filing, the Company proposes to reorganize its affairs to extinguish all unsecured liabilities of the Company and allow the Company to redeem its Class B shares. Uniglobe.com altered its business model in January 2003 when it outsourced its fulfillment activities for the http://www.uniglobe.comWeb site to OneTravel.com Inc. Uniglobe.com now receives a revenue share on business that OneTravel.com fulfills for Uniglobe.com customers rather than collecting the entire revenue related to a travel product sale. This revenue has amounted to between US$600 and US$3500 per month. Total assets of the Company at June 30, 2003, were US$175,092 and liabilities were US$3,473,311 resulting in a deficiency of US$3,298,219. The original intent was to use the revenues generated from the OneTravel.com outsource agreement to increase marketing activities to grow the business. However, with the negligible amounts generated from the outsource agreement, the Board of Directors of Uniglobe.com has concluded that the Company will not be able to meet any of its debt payments in the foreseeable future. This led to the decision to seek a restructuring pursuant to the CCAA. The Plan that was filed calls for most of the remaining assets of the Company to be split up primarily amongst its two principal creditors. Each of these creditors will receive a pro-rata share of the cash in the bank of C$25,000, possibly other assets, and a copy of the Uniglobe.com customer list and booking engine to do with as they please indefinitely. Uniglobe Travel (International) Inc. ("UTI"), a third creditor and shareholder in Uniglobe.com, will lend Uniglobe.com enough money to carry out the CCAA Plan. The amount to be lent will be in the C$70,000 to C$100,000 range. This is intended to pay for all legal, accounting, and monitoring costs associated with the restructuring. As security for its loan, UTI has been granted and has registered notice of a general security agreement which charges all of the assets of Uniglobe.com including: the www.uniglobe.com URL, the license agreement between Uniglobe.com and UTI (for the use of the Uniglobe trademark), and the outsource agreement between OneTravel.com and Uniglobe.com. As additional security for the loan, UTI was assigned all of Uniglobe.com's rights pursuant to the outsource agreement. A creditors' meeting has been set by court order for November 7, 2003 - at which time the creditors will vote on approving the Plan. The Plan also calls for an amendment to the articles of incorporation of Uniglobe.com to be ordered by the court so that the Company, if it so chooses, can redeem all of the issued and outstanding Class B shares of the Company following the final approval of the CCAA Plan. If the Company chooses to redeem the shares, it will do so at an amount of $0.00135 per share and UTI may lend Uniglobe.com enough money for this redemption. If the creditors vote in favor of the Plan on November 7, 2003, the Company will apply for court approval of the Plan shortly thereafter. If court approval is granted, then following the expiry of the 21-day appeal period, the Plan will be effective and implemented, assuming there are no appeals or applications pending. Uniglobe.com operates independently and has no operational or financial impact on Uniglobe Travel (International) Inc., the global travel agency franchisor, or any of its member franchises. UNITED AIRLINES: Court Approves Debt Workout Pact with Boeing ------------------------------------------------------------- United Air Lines wants to restructure its obligations and indebtedness to Boeing Capital Services Corporation, Boeing Capital Loan Corporation, Boeing Capital Corporation, 757UA, Inc., and Boeing Nevada, Inc. The terms and conditions are outlined in a Master Memorandum of Understanding, which is confidential and will be filed under seal, according to James H.M. Sprayregen, Esq., at Kirkland & Ellis. United has an extensive and critical aircraft financing relationship with the Boeing Entities. Prior to the Petition Date, the Boeing Entities financed 20 Aircraft in United's fleet. The Restructuring Transactions will replace or restructure the existing financing arrangements for all 20 of the Aircraft and reduce United's financing costs in exchange for concessions for the benefit of the Boeing Entities. The Parties have diligently and thoroughly negotiated the Master Memorandum of Understanding and Terms Sheets. The MOU contemplates settlement of the Parties' prepetition claims and the release of liens and security interests. The key aspects of the Restructuring Transactions are: -- Refinancing of all Mortgaged Aircraft under one Credit Agreement, one Trust Indenture and Mortgage with revised interest rates and extended maturity dates; -- Amending all financing arrangements for the 777 Aircraft to include a post-confirmation sale/lease-back of any or all 777 Aircraft at United's option; -- Amending the 757 Leases to a reduced rental schedule; -- Reducing the interest rate payable under the ITW Financing; -- Paying a maximum of $150,000 in fees and expenses to the Boeing Entities; -- Waiving certain payments due to the Boeing Entities under the Financing Documents; and -- Waiving certain prepetition claims against United. Mr. Sprayregen asserts that the restructuring of the Boeing obligations is beneficial and appropriate for the continued operation of the Debtors' businesses and the preservation of their estates. At the Debtors' behest, Judge Wedoff approves the Master MOU and the Term Sheets. (United Airlines Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) US AIRWAYS: Third-Quarter 2003 Net Loss Narrows to $90 Million -------------------------------------------------------------- US Airways Group, Inc. (Nasdaq: UAIR) reported a third quarter 2003 net loss of $90 million compared to a net loss of $335 million for the third quarter 2002, which is a $245 million improvement over the third quarter 2002. The third quarter 2003 pretax loss of $91 million compares to a pretax loss of $373 million for the third quarter of 2002, which is a $282 million improvement. Quarterly results for the prior year quarter included unusual items primarily related to the company's bankruptcy and are described in Note 4 below. Excluding the unusual items in the prior year, the pretax loss for the third quarter of 2002 was $262 million. "While we continue to make significant progress in an industry that is showing some signs of recovery, we simply cannot be satisfied with losing less money than before when the goal is to be profitable and successful," said US Airways President and Chief Executive Officer David N. Siegel. "The rapid growth of low-cost competitors coupled with dramatic and fundamental changes in corporate travel practices present even greater challenges going forward. Our plan must continue to evolve and adapt to the difficult environment we face." The third quarter 2003 US Airways mainline revenue per available seat mile (RASM) of 10.56 cents was up 7.8 percent compared to the third quarter of 2002. The US Airways system mainline passenger revenue per available seat mile (PRASM) of 9.41 cents was up 7.4 percent year-over-year for the quarter. Domestically, PRASM grew 10.1 percent. US Airways Senior Vice President of Marketing and Planning B. Ben Baldanza said that he was "encouraged by the PRASM improvement and with the addition of regional jets to the mix, year-over-year group system PRASM increased by 9.7 percent." This measure includes all the passenger revenue and ASMs generated by mainline and US Airways Express operated aircraft as well as third-party operated regional jets. Available seat miles (ASMs) declined 10.2 percent during the third quarter, while revenue passenger miles (RPMs) declined 3.8 percent. The passenger load factor of 76.9 percent was 5.1 percentage points higher than the same period last year. For the quarter, US Airways Inc.'s mainline operations carried 10.6 million passengers, a decline of 11.8 percent compared to the same period of 2002. The third quarter 2003 yield of 12.24 cents was up 0.2 percent from the same period in 2002. "Industry over-capacity and changes in business travel purchasing patterns reduced fares, diluting yields in an already depressed marketplace," said Baldanza. "While our revenue improvement is moving in the right direction, comparatively speaking, it is well below pre-September 11 levels, which is the base by which capacity and business travel levels should be measured." Baldanza added that summer hurricanes caused US Airways to reschedule thousands of flights in the Caribbean, Florida, and parts of the Mid-Atlantic and Northeast regions of the country. "We estimate that severe summer weather cost the company approximately $20 million in revenue this quarter." The mainline cost per available seat mile (CASM), excluding fuel and unusual items, of 9.52 cents for the quarter decreased 1.1 percent versus the same period in 2002. The third quarter of 2002 included certain benefits related to the implementation of the company's restructuring of approximately $59 million while the third quarter of 2003 includes stock-based compensation expenses of $24 million related to stock grants given to US Airways' organized labor groups. Absent these items, year-over-year CASM, excluding fuel and unusual items, declined 6.8 percent. Additionally, as a result of having substantially restructured aircraft obligations, aircraft-related interest expense declined 48 percent, resulting in a year-over-year improvement in unit cost including aircraft ownership of 8.5 percent. The cost of aviation fuel per gallon, including taxes, for the third quarter was 86.3 cents (81.1 cents excluding taxes), up 11.8 percent from the same period in 2002. US Airways' fuel position is 55 percent hedged for the fourth quarter of 2003 and 30 percent hedged for 2004. US Airways Group ended the quarter with total restricted and unrestricted cash of approximately $1.94 billion, including $1.38 billion in unrestricted cash, cash equivalents and short-term investments. "Although our performance for the quarter is disappointing, we are encouraged by the fact that unit revenue is improving while at the same time our unit costs continue to decline," said Neal S. Cohen, US Airways executive vice president of finance and chief financial officer. "We must remain focused on effectively controlling our costs and preserving liquidity." Additionally, the NASDAQ Stock Market, Inc. has approved the quotation of US Airways Group's common stock, which will begin trading today. US Airways Group, Inc. stock will trade on the NASDAQ National Market under the symbol UAIR. The common stock previously traded on the OTC Bulletin Board. Third and Fourth Quarter Highlights: * Expansion in the Caribbean and Latin America, with three new destinations. US Airways will begin Mexico City service in late October; San Jose, Costa Rica, in November; and La Romana, Dominican Republic, in December. With the GoCaribbean network, US Airways and US Airways Express now serve 35 destinations in the Caribbean. US Airways also begins seasonal weekend roundtrip service to Vail, Colo., Dec. 20, 2003, through April 4, 2004, and the company has filed an application with the U.S. Department of Transportation to begin nonstop service between Philadelphia and Glasgow, Scotland, beginning May 2004. * Launched a long-term strategic alliance and codeshare agreement with Lufthansa Airlines that will begin Oct. 26, including reciprocal frequent flyer benefits. Planning work continues for the formal inclusion in the Star alliance in early 2004. Through Star, customers will experience better service with each of the 16 member airlines through airport check-in and lounge access, reciprocal frequent flyer benefits, and codesharing relationships with certain of the carriers. * Increased United Airlines alliance to a combined 3,300 daily flights, to 100 cities, carrying approximately 20,000 passengers each day. * Completed a system upgrade of usairways.com, offering customers expanded features, improved reliability and the ability to check in for flights online up to 24 hours before departure. * Expanded cell phone usage policy allowing customers to turn on and use cellular phones, two-way pagers and PDAs onboard US Airways aircraft while taxiing to the gate, once advised by the flight crew. * Added more self-service electronic ticketing kiosks. Customers flying US Airways, US Airways Shuttle and US Airways Express now can check in at any of 443 kiosks located at 83 airports on the US Airways network. Today, almost 70 percent of eligible travelers use the US Airways kiosks and Web check in. * Completed a transaction with Farallon Capital Management, L.L.C., Oaktree Capital Management, LLC., and Goldman, Sachs & Company, whereby the three private investment groups shared participation in a private placement for approximately 5 million shares of US Airways Group stock in a transaction valued at approximately $35 million. VALCOM: Brings-In Tom Rooker as Consultant & Executive Producer --------------------------------------------------------------- Vince Vellardita, CEO and President of ValCom (OTCBB:VACM) (FWB:VAM), announced that Tom Rooker, a 15-year veteran of Malpaso Productions under the Warner Bros. umbrella and Executive Producer for such Clint Eastwood films as "Space Cowboys" and "Absolute Power," has joined the Company as a consultant to secure development partners and oversee the production of several of ValCom's projects. ValCom will increase its content output to include the television drama series "PCH" and a feature film based on legendary fighter Gabriel Ruelas' story, titled "Ghost in the Ring." These projects, as well as several others owned or optioned by ValCom, are currently slated for production during the 2004 season. Mr. Rooker is the CEO & President of Rock Creek Productions, an independent film and television production company. The Company is expected to benefit from Rock Creek's projects in development through the use of ValCom's production facilities and the newly created 3-D animation division. Mr. Rooker has served as Executive in Charge of Productions on numerous films, many starring Clint Eastwood, including "Space Cowboys" with Tommy Lee Jones, Donald Sutherland and James Garner; "Absolute Power" with Gene Hackman, Ed Harris and Judy Davis; "Midnight in the Garden of Good and Evil" with John Cusack, Kevin Spacey and Jude Law. Mr. Rooker has also worked on a variety of music videos, documentaries and other studio feature films including "Bird," "The Dead Pool," "Pink Cadillac," "The Rookie," "White Hunter, Black Heart," "In the Line of Fire," "A Perfect World," "True Crime," and "The Stars Fell on Henrietta." "I am very excited to have Tom Rooker on our team overseeing production, development, and finance for the Company's television and film division. With Mr. Rooker's expertise within the independent film realm, his contacts with television and studio executives, and strong relationships with both established celebrities and rising talent, the Company now has the right backing to fine tune and launch current and future production projects," stated Mr. Vellardita. "It is a pleasure to be a part of such a forward-thinking, fast- growing entertainment company with a strong team headed up by Vince Vellardita. ValCom has acquired some amazing properties. These key projects will give ValCom a strong base on which to expand and grow. That, coupled with the Company's reputation for providing excellent support and open communication throughout their many divisions, makes the task of developing these properties into leading brands much easier. I am excited to have this opportunity to work closely with Mr. Vellardita and his talented staff, so together, we can successfully reach ValCom's goals for the future," stated Mr. Rooker. Based in Valencia, California, ValCom, Inc. is a diversified and vertically integrated, independent entertainment company. ValCom, Inc., through its operating divisions and subsidiaries, plans to create and operate full-service facilities that accommodate film, television and commercial productions with its four divisions that comprise: studio, film and television, camera/equipment rentals, and broadcast television ownership. The Company owns/operates 12 acres of land and approximately 200,000 square feet of commercial building space with 12 film and television production sound stages. ValCom maintains long-term contracts with Paramount Pictures for their hit CBS series "JAG" and "NCIS." ValCom's equipment/camera and personnel rental business, Half-day Video, is a leading competitor in the Hollywood community. The Company and its partnership operate ValCom Broadcasting KVPS-TV Channel 8 in Palm Springs, CA. For additional information visit http://www.valcom.tv * * * Liquidity and Going Concern Uncertainty In its Form 10-QSB filed with the Securities and Exchange Commission, ValCom reported: "The Company's condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a net loss of $1,823,954 and a negative cash flow from operations of $405,019 for the nine months ended June 30, 2003, and a working capital deficiency of $8,602,508 and an accumulated deficit of $9,950,145 at June 30, 2003. These conditions raise substantial doubt about the Company's ability to continue as a going concern." WEIRTON STEEL: Calls PBGC Takeover 'Unfortunate Situation' ---------------------------------------------------------- Weirton Steel Corp.'s top executive said the takeover of the company's pension plan by the Pension Benefit Guaranty Corp. is a "very unfortunate situation," adding the action is indicative of the demise of pension plans at other domestic steel companies that have filed for bankruptcy protection. "It is very disappointing that we've reached this point. Both the company and the Independent Steelworkers Union have been aware that the plan was at risk and have explored every avenue available to save the pension plan. We know the PBGC's action is disturbing to our retirees and their dependents. Be assured we took every possible step during the past year to salvage the pension plan, especially in the last several months," said D. Leonard Wise, Weirton Steel chief executive officer. "Contrary to some news reports, we believe the PBGC's action will not affect the benefit levels for the majority of our current retirees. The PBGC exists to protect pension plans when a company is unable to properly fund them. Our bankruptcy has made it impossible to fund the plan. Unfortunately, the plan will not be as lucrative once the PBGC assumes the plan." Wise said efforts to save the plan during the past year include: receiving pension funding waivers from the federal government; freezing future pension benefits of active employees; holding numerous telephone and face-to-face meetings with PBGC officials; and utilizing the services of consultants specializing in such matters. "Despite our very best efforts, the magnitude of required contributions to the plan far exceeded our ability to fund them. This has become an unfortunate trend among U.S. manufacturers, steel and otherwise," Wise explained. The company said the pension crisis affecting companies nationally is the result of depressed asset performance in the stock market over the past three years and an increase in liabilities caused by low interest rates used to calculate these liabilities. Weirton Steel's pension funding requirements for the 2004-2005 plan years were projected to be $375 million. Weirton Steel has 9,173 individuals who are covered by its pension plan. Currently, 5,347 retirees and/or their dependents receive pension checks. The majority of the remaining 3,826 are active employees, not yet receiving a pension, as well as a small portion of deferred vested benefits. Employees and retirees can reach the PBGC through a link on Weirton Steel's Web site at http://www.weirton.com Earlier this year, the PBGC took control of National Steel Corp.'s pension plan. The move affected retirees of the former Weirton Steel Division of National Steel. Weirton Steel filed for bankruptcy protection on May 19. The company is the nation's fifth largest integrated steel company and second largest producer of tin mill products. WESTPOINT STEVENS: Court Okays KPMG as Debtors' H.R. Consultants ---------------------------------------------------------------- The WestPoint Stevens Debtors sought and obtained the Court's authority to employ KPMG LLP as human resource consultants to assist them in implementing and adopting a key executive retention program and a broad-based employee retention program. Lester D. Sears, WestPoint Stevens Senior Vice President and Chief Financial Officer, relates that, as a result of the Debtors' Chapter 11 cases, the morale of their employees suffered. To ensure that employees who are critical to the Debtors' reorganization efforts remain focused on the company's operations and are properly incentivized to remain within the Debtors' employ during the reorganization process, the Debtors found it critical to employ consultants and analyze the necessity of implementing various incentive and retention programs. KPMG has stated its desire and willingness to act as the Debtors' HR Consultants and render the necessary professional services the Debtors require. KPMG is a leading provider of financial, tax, and business advisory services. KPMG's human resources advisory services professionals have extensive experience in the fields of employee compensation and benefits, particularly in reorganization proceedings. Specifically, KPMG's practice helps clients design and implement employee compensation, retention, and benefit plans. KPMG will provide human resource advisory services, as deemed appropriate and necessary, in connection with: (i) the potential implementation of the KERP; and (ii) the potential implementation of a broad-based employee retention program, including, but not limited to: * assisting in the process of determining whether WestPoint should adopt a retention bonus program for key employees, and, if appropriate, assisting in the design and implementation of any such program; * comparing any proposed retention program to competitive practices; * reviewing and determining whether to enhance existing severance programs, if applicable; * assisting in devising an appropriate incentive plan; * assisting WestPoint Stevens in negotiating with the creditors the terms and conditions of the retention and severance programs and annual incentive plan; and * if necessary and requested, providing expert witness testimony with respect to WestPoint Stevens' proposed incentive and retention programs. Robert M. Siper, a principal of KPMG, attests that KPMG's managing directors, directors, vice presidents, associates, analysts and other professionals do not have any connection with, nor any interest adverse to, the Debtors, the creditors, or any other parties-in-interest or their attorneys and accountants. In addition, KPMG does not hold or represent any interest adverse to Debtors' estates and is a "disinterested person" as that phrase is defined in Section 101(14) of the Bankruptcy Code. KPMG will be compensated for its HR Services at its customary hourly rates and reimbursed for actual and necessary expenses incurred. KPMG estimates that professional fees for the HR Services incurred during the pendency of these Chapter 11 cases will range from $35,000 to $50,000, excluding expenses. The customary hourly rates, subject to periodic adjustments, charged by KPMG's personnel anticipated to be assigned to these cases are: Partners/Directors $575 - 625 Senior Managers/ Managers 450 - 575 Senior Consultants 250 - 350 Staff Consultants 175 - 225 (WestPoint Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) WILBRAHAM CBO: Junk Ratings on 2 Classes Put on Watch Negative -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-1, A-2, B-1, and B-2 notes issued by Wilbraham CBO Ltd., a high- yield arbitrage CBO transaction managed by David L. Babson Co. Inc., on CreditWatch with negative implications. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the notes since origination. Standard & Poor's noted that the results of Standard & Poor's Trading Model Test for the transaction, a measure of the overall credit quality within the portfolio and its ability to support the ratings initially assigned to the liability tranches issued by the CDO, had deteriorated since the last rating action and that the Trading Model Test has been out of compliance since Feb. 2, 2002. In addition, the rated overcollateralization ratios (ROCs) for the class A-1, B-1, and B-2 notes are currently below 100% (see transaction data below). The ROC is a measure of the effective rated overcollateralization available to support supporting a given CDO tranche at a given rating level. Standard & Poor's also noted that the transaction is overhedged in relation to the senior liabilities, and it has paid approximately $13.9 million to its swap counterparty in the past year alone. RATINGS PLACED ON CREDITWATCH NEGATIVE Wilbraham CBO Ltd. Rating Class To From A-1 A+/Watch Neg A+ A-2 BBB-/Watch Neg BBB- B-1 CCC-/Watch Neg CCC- B-2 CCC-/Watch Neg CCC- OTHER OUTSTANDING RATING Wilbraham CBO Ltd. Class Rating C CC WORLDCOM INC: Wants Go-Signal to Assume East Meadow, NY Lease ------------------------------------------------------------- Worldcom Inc., and its debtor-affiliates lease 28,976 square feet of space on the third floor and 8,229 square feet of space on the sixth floor of a building located at 90 Merrick Avenue in East Meadow, New York. MCI Telecommunications Corporation, now known as MCI WorldCom Network Services, Inc., lease the premises from Financial Center Associates, predecessor-in-interest to 90 Merrick LLC. The Lease commenced on October 1, 1986, and will expire by its terms on: -- June 30, 2004, with respect to the Third Floor Premises; and -- August 31, 2008, with respect to the Sixth Floor Premises. For the Third Floor Premises, the Lease provides for $670,552 total annual fixed rent, payable in monthly installments of $67,055, plus current estimated monthly real estate tax expense of $3,755. For the Sixth Floor Premises, the Lease provides for $219,797 total Annual Fixed Rent, payable in monthly installments of $18,316, plus current estimated monthly tax expense of $1,065. The Third Floor Premises is used as an administrative site while the Sixth Floor Premises is used as a long distance terminal. As part of their extensive real estate rationalization program, the Debtors determined that the Leased premises are critical to their ongoing business operations. Accordingly, the Debtors sought and obtained the Court's permission assume the East Meadow Lease. In connection with the Lease assumption, Stephen A. Youngman, Esq., at Weil, Gotshal & Manges, LLP, relates that the Debtors and their real estate consultant, Hilco Real Estate LLC, engaged in discussions with Financial Center with respect to the renegotiation of the Lease on terms more favorable to the Debtors. As a result of these negotiations, Financial Center and the Debtors executed an amendment to the Lease. The salient terms of the Amendment include: A. Extension of Term The term of the Lease, as it relates to the Third Floor Premises only, is extended through and including April 30, 2008. B. Rent Effective as of May 1, 2003, the Debtors will pay to Financial Center -- in addition to the Electric Energy Charge and other Additional Rent due for the Third Floor Premises -- Fixed Rent for the Third Floor Premises according to this schedule: Fixed Rent Annual Annual Fixed Term Per Month Fixed Rent Rent per RSF ---- ---------- ---------- ------------ May 1, 2003 - June 30, 2003 $64,496 $128,992 $27 July 1, 2003 - April 30, 2004 67,055 670,553 28 May 1, 2004 - April 30 2005 69,736 836,827 29 May 1, 2005 - April 30, 2006 72,536 870,439 30 May 1, 2006 - April 30, 2007 75,434 905,210 31 May 1, 2007 - April 30, 2008 78,452 941,430 32 The Debtors will continue to pay Fixed Rent for the Sixth Floor Premises in accordance with the rent schedule contained in the Lease. However, the Debtors will receive a Fixed Rent credit against the Fixed Rent due for the Premises, including the Third and Sixth Floor Premises, of: -- $82,812 for the month of May 2003; -- $88,779 for the month of May 2004; and -- $92,341 for the month of May 2005. C. Real Estate Taxes >From and after May 1, 2003, the Debtors' share of estimated increases in Taxes for the remainder of 2003 is reduced from $4,820 per month to $0 as a result of a change in Base Year County Taxes from 1998 to 2003. D. Waiver of Claim by Affiliate of Lessor Reckson Operating Partnership, LP, Financial Center's affiliate, are parties to a February 13, 1997 lease agreement with Brooks Fiber Communications of New York, Inc., an affiliated Debtor. Brooks leased the premises located at 245 Main Street in White Plains, New York. On November 30, 2001, Reckson and Brooks entered into a Termination Agreement to terminate the February 13 Lease effective December 31, 2002. However, Brooks rejected the Lease in its Chapter 11 Proceedings before the agreed upon termination date. On December 10, 2002, Reckson objected to Brooks' Lease rejection, and later filed a claim in the Debtors' cases with respect to the Termination Agreement. In consideration of and subject to the Debtors' assumption of the amended East Meadow Lease, Reckson and Brooks agree to waive any claims and causes of action each has on account of the February 13 Lease and the Termination Agreement. E. Lessor Alterations Financial Center will provide the Debtors with a tenant allowance not to exceed $144,880. The Tenant Allowance will be applied against the actual and documented expenses incurred by the Debtors in connection with the re-painting and re-carpeting of the Third Floor Premises. F. Cure Obligations The Debtors will pay by October 30, 2003, $8,380, plus any postpetition claims and other sums then due and payable to Financial Center in full and complete settlement and satisfaction of all claims and rights of Financial Center against the Debtors arising from, relating to, or in connection with the Lease, the Premises and the Lease assumption. Financial Center is forever barred from asserting any and all prepetition claims relating to the East Meadow Lease. (Worldcom Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) YPF S.A.: Fitch Upgrades Senior Unsecured FC & LC Ratings to BB --------------------------------------------------------------- Fitch Ratings upgrades the senior unsecured foreign currency rating of YPF S.A. to 'BB' from 'B+'. Fitch also upgrades YPF's senior unsecured local currency rating to 'BB' from 'B+'. Both ratings are assigned Stable Rating Outlooks. The rating actions reflect the continued strength of YPF's financial flexibility and liquidity position despite the difficult Argentine sovereign environment of the past 20 months. Credit indicators for the first-half of 2003 are at record levels, with EBITDA/interest coverage of 37 times, EBITDA-CAPEX/interest coverage of 29.6x, Total Debt/EBITDA of 0.4x and a Total Debt to Capitalization ratio of 15.2%. The assigned ratings also incorporate the benefits of YPF's ownership structure, solid operating performance and credit protection measures, and proven hard currency-generating ability. Although the company's credit indicators may suggest rating levels higher than those assigned, the Argentine sovereign's credit profile continues to constrain YPF's standalone credit ratings. Nonetheless, strong credit fundamentals, coupled with the company's cash flow and production diversification, mitigate exposure to transfer and convertibility risk, allowing YPF to be rated multiple notches above the Argentine sovereign's long-term foreign currency rating of 'DDD'. Even though YPF's debt is technically non-recourse to Repsol YPF, the assigned ratings assume a strong level of support by the parent company, reflecting YPF's importance in the overall group strategy. The acquisition of YPF resulted in a more balanced integrated business mix for Repsol YPF, correcting the historical bias towards downstream operations. As of year-end 2002, YPF accounted for close to half of Repsol YPF's earnings but only 13% of the group's consolidated leverage. Repsol YPF's incentive to support YPF is further underscored by the existence of cross- default clauses in its bond documentation, which can be triggered if a principal subsidiary (such as YPF) defaulted on more than US$20 million of obligations. Despite the underlying sovereign turbulence, YPF's credit profile remains strong. The strong international oil price environment, coupled with cost reduction initiatives, benefits from the ARP's devaluation and improved value-added downstream export flows, contributed to a 30% rise in first-half 2003 EBITDA to ARP5 billion. Net income during this period totaled ARP2.2 billion, compared to an ARP665 million loss in the comparable 2002 period. YPF's strong cash generation capacity was accompanied by a 34% reduction in total leverage levels in relation to fiscal year-end 2002, further strengthening credit protection measures. YPF S.A. is an integrated oil and gas company engaged in exploration, development and production of hydrocarbons as well as the refining, marketing, transportation and distribution of oil and a wide range of petroleum products, oil derivatives, petrochemicals and liquid petroleum gas. The company is a subsidiary of Spain's Repsol YPF (Fitch 'BBB', Outlook Stable). XCEL ENERGY: Closes Sale of Black Mountain Gas to Southwest Gas --------------------------------------------------------------- Xcel Energy (NYSE:XEL) on Monday completed the previously announced sale of its Arizona subsidiary Black Mountain Gas Company to Southwest Gas Corporation (NYSE:SWX) of Las Vegas, Nev. Black Mountain Gas is a natural gas and propane distribution company serving approximately 8,500 natural gas customers in Cave Creek, Carefree, North Phoenix and North Scottsdale, Ariz., and approximately 2,500 propane customers in the Page, Ariz., and Cave Creek areas. Xcel Energy is the fourth-largest combination natural gas and electricity company in the nation with regulated operations in 11 Western and Midwestern states. Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.3 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. Company headquarters are located in Minneapolis. More information is available at http://www.xcelenergy.com * Jay P. Lefkowitz Rejoins Kirkland & Ellis LLP as a Partner ------------------------------------------------------------ Jay P. Lefkowitz, a senior policy advisor to President George W. Bush and head of the White House's Domestic Policy Council, rejoined Kirkland & Ellis LLP as a Partner, where he will resume his litigation and counseling practice. This move was effective Monday, Oct. 20. "We are proud that Jay has served our country in such important positions with distinction, and we are delighted with his return to the partnership," said Thomas D. Yannucci, chair of the Firm's management committee. Lefkowitz left Kirkland in March 2001 when he was named General Counsel for the Office of Management and Budget. He was appointed Deputy Assistant to the President for Domestic Policy in January 2002. Over the past two and a half years, Lefkowitz has advised the President on a wide variety of issues, including health, education, and transportation policy, labor and veterans' affairs, environmental regulations, and international trade. Lefkowitz earlier served as Director of Cabinet Affairs and Deputy Executive Secretary to the Domestic Policy Council in the administration of President George H.W. Bush. Lefkowitz is a 1984 graduate of Columbia University and received his J.D. degree in 1987 from Columbia Law School, where he was a Harlan Fiske Stone Scholar. Kirkland & Ellis LLP is a 900-attorney law firm representing global clients in complex litigation, dispute resolution and arbitration, corporate and tax, workout, insolvency and bankruptcy, and intellectual property and technology matters. The Firm has offices in Washington, Chicago, London, Los Angeles, New York and San Francisco. * DebtTraders' Real-Time Bond Pricing ------------------------------------- Issuer Coupon Maturity Bid - Ask Weekly change ------ ------ -------- --------- ------------- Federal-Mogul 7.5% due 2004 14.5 - 16.5 0.0 Finova Group 7.5% due 2009 43.5 - 44.5 +0.5 Freeport-McMoran 7.5% due 2006 102.5 - 103.5 0.0 Global Crossing Hldgs 9.5% due 2009 4.5 - 5.0 +0.25 Globalstar 11.375% due 2004 3.0 - 3.5 -0.5 Lucent Technologies 6.45% due 2029 68.25 - 69.25 -0.75 Polaroid Corporation 6.75% due 2002 11.0 - 12.0 0.0 Westpoint Stevens 7.875% due 2005 20.0 - 22.0 0.0 Xerox Corporation 8.0% due 2027 84.0 - 86.0 -1.5 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 ********* 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., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland 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 ***