/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/031210.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, December 10, 2003, Vol. 7, No. 244 Headlines ADELPHIA BUS.: Court Clears Disclosure Statement Supplement ADELPHIA COMMS: Joins Committees in Objecting to the ABIZ Plan AHOLD: Inks Pact Selling Peruvian Unit to Grupo Interbank, et al. AIR CANADA: Societe Nationale Seeks CCAA Stay Lift to File Suit AIR CANADA: Judge Farley Okays Trinity & Deutsch Agreements AMERICAN PLUMBING: Committee Turns to FTI for Financial Advice AURORA FOODS: Files for Ch. 11 to Effect Restructuring & Merger AURORA FOODS: Case Summary & 20 Largest Unsecured Creditors BALDWIN CRANE: Holland & Knight Serves as Special Counsel BLUEBOOK INT'L: September Losses Raise Going Concern Uncertainty BOB'S STORES: Panel Taps Deloitte & Touche as Financial Advisors BULL RUN CORP: Seeks Review of Nasdaq's Delisting Determination CAMBRIDGE REAL: Case Summary & 6 Largest Unsecured Creditors CAMELOT PROPERTY MANAGEMENT: Voluntary Chapter 11 Case Summary CATELLUS: Discloses Results of Special E&P Distribution Election CHC INDUSTRIES: Employs Colliers as Ohio Real Estate Broker COLONIAL CBO: Fitch Further Junks Class B Notes Rating to CC CRYOLIFE INC: Ackerman and Bevevino Join Board of Directors DIVERSIFIED CORP: Enters into B4 Ventures Private Placement Pact DYNEGY: Fitch On-the-Alert for Closing of Unit's Sale to Ameren EAGLEPICHER INC: Commences Exchange Offer for Senior Sub. Notes EL PASO CORP: Sells Interest in Portland Natural Gas for $56 Mil. ENCOMPASS: Disbursing Agent Wants 25 Insured Claims Disallowed ENRON: Asks Court to Compel 3 Paper Cos. to Turnover Payments ENVOY COMMS: Retains Jefferies as Merger & Acquisitions Advisor FEDERAL-MOGUL: Hoskins Wants to Collect Amended MO Order on Bond FLEMING COS: Plan-Filing Exclusivity Extended to Jan. 30, 2004 GAUNTLET: Canadian Court Approves Plan; Commences Implementation GAUNTLET: Ketch Resources Closes Acquisition Pursuant to Plan GEORGETOWN STEEL: Nexsen Pruet Serves as Panel's Local Counsel GLOBAL CROSSING: Unveils New Board of Directors GLOBAL CROSSING: Files Annual Report on Form 10-K with SEC GLOBAL MOTORSPORT: S&P Rates $85 Mil. Senior Secured Notes at B- GLOBALSTAR: Thermo Closes Acquisition & Begins Funding Ops. HALLMARK HEALTH: S&P Ups Underlying Rating One Notch to BB HANOVER COMPRESSOR: S&P Assigns B Rating to $300-Mil. Sr. Notes HARRAH'S ENTERTAINMENT: Launches Sr. Debt Offering to Raise $500M HORIZON GROUP: Sells Sealy, Texas Outlet Center for $1.8 Million HORIZON GROUP PROPERTIES: Completes Odd Lot Share Program INTERSTATE BAKERIES: Issues Lower Preliminary Results for Q2 KAISER: Court Gives Go-Ahead to Burlington Settlement Agreement LINCOLN LOGS: Acquires Snake River Membership Interests for $1M LITFUNDING: Pursuing Steps Necessary to Maintain Operations MDC CORP: New Securities Offering Garners Gross Proceeds of $31M METRO MASONRY: Case Summary & 20 Largest Unsecured Creditors MIRANT: Unsecured Panel Retains Miller Buckfire as Fin'l Advisor NATIONAL STEEL: Earns Clearance for Ziegler Settlement Agreement OWENS CORNING: Reopens Tornado-Damaged Insulation Facility PARAGON STEAKHOUSE: Hot Brands Agrees to Acquire Eight Locations PG&E NAT'L: USGen Wants Approval for Providence Tax Settlements PORTLAND GENERAL: Parent Enron Inks Pact Selling Co. for $2.35BB POTOMAC ELECTRIC: Obtains Nod for Amended Mirant Settlement Pact PRIMEDIA: Appoints Peter Horan President & CEO for About, Inc. PRIMEDIA: Consumer Guides Acquires Portland, OR Apartment Guide MDC CORPORATION: Raises $34 Million From Securities Offering MEMC: Appoints Industry Veterans as Part of Exec Management Team MESABA AIRLINES: Pilots Decline Arbitration To Settle Contract OAKS CONDOMINIUM: Case Summary & 4 Largest Unsecured Creditors ROPER IND: Plans Stock Offering to Fund Neptune Acquisition RESPONSE BIOMEDICAL: Files for FDA Market Clearance for RAMP(R) SAFETY-KLEEN CORP: Court Settles Frontier Insurance Disputes SBA COMMUNICATIONS: Prices Senior Debt Offering SENSORY SYSTEMS: Case Summary & 20 Largest Unsecured Creditors SILICON VALLEY: S&P Assigns BB+ Subordinated Debt Ratings SIRIUS SATELLITE RADIO: Reaches 200,000 Subscribers SI TECHNOLOGIES: Annual Shareholders Meeting Convening Tomorrow SOUTH STREET CBO: Fitch Affirms Junk Ratings for 5 Note Classes SOUTHWALL TECH: Needham Further Extends Financing Agreement SPIEGEL: Unsecured Panel Clears Zuckerman's Retention as Counsel TENNECO AUTOMOTIVE: Prices $125 Million of Senior Secured Notes TERAYON COMMUNICATION: Reaffirms Fourth Quarter 2003 Guidance THAXTON GROUP: Continues Employing Ordinary Course Professionals TSI TELSYS: September Balance Sheet Upside Down by $871,000 UNITED AIRLINES: Inks 10-Year Reservation Contract with Galileo US AIRWAYS: Stipulation Allowing $20 Mill. of Undisputed Claims U.S. STEEL: Closing Straightline Unit by Year End WARNACO: Intimate Apparel Pres. John Wyatt Acquires 240,000 Shares WEIRTON STEEL: Judge Approves Plan Confirmation Hearing Delay WEIRTON STEEL: Will Impose Temporary Raw Materials Surcharge WEYERHAEUSER: Lauds Proposal to End Lumber Dispute with Canada WOODWORKERS WAREHOUSE: Employs Bayard Firm as Co-Counsel WORLD AIRWAYS: Special Shareholders' Meeting Set for December 15 WORLDCOM INC: Xerox Demands Payment for $1 Million Admin Expense WORLDCOM/MCI: Partners with Time Warner to Deliver IP Services WORLDWIDE HOLDINGS: Signs-Up Michael Johnson as New Auditor XCEL ENERGY: Board Declares Payment of Delayed Dividend * Meetings, Conferences and Seminars ********* ADELPHIA BUS.: Court Clears Disclosure Statement Supplement ----------------------------------------------------------- On November 26, 2003, the Adelphia Business Debtors, along with their Official Committee of Unsecured Creditors and an ad hoc committee of ABIZ 12-1/4% Senior Secured Noteholders, filed a Plan Supplement, which included: (1) a New Warrant Agreement, (2) a New Management Warrant Agreement, (3) Amended Certificate of Incorporation, (4) Amended By-laws, (5) Registration Rights Agreement, (6) Form of New Common Stock, and (7) the Terms of Employment of the Directors and Officers. The Plan Proponents inform the Court that the holder of each New Warrant will have the right to purchase in whole or, from time to time, in part from Reorganized ABIZ on and after the Exercise Date and on or prior to the Expiration Date, one fully paid and non-assessable share of New Common Stock, subject to adjustment in accordance with the New Warrant Agreement, at the exercise price for each New Warrant exercised equal to the amount determined in accordance with this formula: (1.25 x ($178,800,000- $8.94B)) + A E = ----------------------------------- C - B where: E = the exercise price; A = the cumulative amount of any ACC Adjustment on or prior to the Effective Date; B = the Cash Recovery Shares2 committed to be transferred to the treasury of ABIZ in connection with a Cash Recovery on or prior to the Effective Date; and C = Diluted Number of Shares The exercise price will be subject to adjustment from time to time as provided in the New Warrant Agreement like in the case of an adjustment for change in capital stock, an ACC Settlement and the forgiveness of ACC DIP Claims, among others. Assuming that the number of Cash Recovery Shares is equal to zero at the Effective Date and the ACC Adjustment is equal to zero at the Effective Date, the initial Exercise Price at the Effective Date will be $22.35. Ed Babcock, ABIZ Vice President and Chief Financial Officer, relates that the modification to the exercise price for the New Warrants differs from the New Warrant description set forth in the Disclosure Statement. The upward modifications to the exercise price to adjust for certain one-time increases in equity value include: (1) an upward modification to account for the number of shares of New Common Stock that will be transferred to the treasury of Reorganized ABIZ for those claimholders that elect the Cash Recovery; and (2) an upward modification in the event of a settlement with the ACOM Debtors, or if Reorganized ABIZ receives proceeds from its litigation against ACOM. The effect of these adjustments is to increase the exercise price of the New Warrants. The terms of the New Warrant Agreement amends and supercedes all prior descriptions of the New Warrants set forth in the Plan and the Disclosure Statement. In connection with confirmation of the Plan, the Plan will be amended accordingly. Certain Federal Income Tax Consequences The Plan Proponents were advised by tax counsel that as a result of post-issuance adjustments that may be made to the exercise price of the New Warrants, certain tax implications may arise. As previously disclosed in the Disclosure Statement, an adjustment to the number of shares of New Common Stock for which a New Warrant may be exercised or to the exercise price of the New Warrant may, under certain circumstances, result in constructive distributions for U.S. federal income tax purposes to the holders of the New Common Stock or the New Warrant. For example, based on the New Warrant Agreement included in the Plan Supplement, one of the circumstances in which the exercise price of the New Warrant will be reduced is if cash or other property distributions are made to the holders of New Common Stock. The reduction of the exercise price in this circumstance would be treated as a constructive distribution that could result in current taxable income to the then holders of the New Warrants for U.S. federal income tax purposes. Moreover, the additional provisions of the Warrant Agreement providing for an increase in the exercise price of the New Warrants if and when there occurs certain post-Effective Date events, present the risk of taxation to persons who hold New Common Stock at the time such adjustments occur. Under certain circumstances, depending, in general, on the capital structure of the company at the time, this increase in the exercise price could be treated as a constructive taxable distribution to the holders of New Common Stock for U.S. federal income tax purposes, due to the effective increase in the common stockholder's share of the equity of the company. Although the Debtors do not currently anticipate changes to the capital structure that could result in these facts and circumstances, nothing precludes these changes in the capital structure. Accordingly, holders of New Warrants and New Common Stock are urged to consult their tax advisors regarding the U.S. federal income tax consequences with respect to the adjustments, or lack thereof, to the exercise price of the New Warrants or number of shares of New Common Stock for which a New Warrant may be exercised. A free copy of the Plan Supplement is available at: http://bankrupt.com/misc/ABIZPlanSupplement.pdf * * * Judge Gerber approves the Plan Supplement and authorizes ABIZ to distribute it to its creditors. (Adelphia Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Joins Committees in Objecting to the ABIZ Plan -------------------------------------------------------------- The Adelphia Communications Debtors and the ACOM Creditors Committee ask the Court not to confirm the Plan jointly proposed by the ABIZ Debtors, their Official Committee of Unsecured Creditors and the Informal Committee of 12-1/4% Senior Secured Notes for two reasons: (1) The Plan improperly disallows and provides for no distribution on account of ACOM's superpriority secured claims in connection with its provision of DIP financing to the ABIZ Debtors, in contravention of the applicable loan documents and the Court's April 4, 2002 Order relating thereto, which require indefeasible and unconditional full payment of those claims; and (2) As conceded by the ABIZ Debtors themselves, they simply do not have the requisite financial wherewithal or access to capital to satisfy the ACOM Debtors' substantial administrative claims against them. "Therefore, the Plan is not feasible," Paul V. Shalhoub, Esq., at Willkie Farr & Gallagher LLP, in New York, remarks. Section 1129(a)(11) of the Bankruptcy Code requires, as a condition to confirmation of a plan, that: "Confirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan, unless the liquidation or reorganization is proposed in the plan." This confirmation requirement is generally referred to as one, which requires the plan proponent to show that its plan is "feasible." "To establish feasibility, for purposes of confirmation of a reorganization plan, [the] debtor must present proof through reasonable projections that there will be sufficient cash flow to fund [the] plan and maintain operations according to [the] plan, and such projections cannot be speculative, conjectural, or unrealistic," Mr. Shalhoub says. In addition, confirmation of a plan requires that it satisfy all of the elements of Section 1129(a) of the Bankruptcy Code. Section 1129(a)(9)(A) provides that holders of administrative claims against a Chapter 11 debtor must be paid in full. Thus, a condition to confirmation of the Plan is that the Plan provide for the payment in full of all administrative expense claims asserted against the ABIZ Debtors, including those of the ACOM Debtors, and that the Plan be feasible in order to make those payments. As will be evidenced by ACOM's Administrative Expense Claim, the ABIZ Debtors are indebted to the ACOM Debtors in an amount that greatly exceeds the ABIZ Debtors' proposed $1,000,000 cap for their provision of financing, goods and services to the ABIZ Debtors since the Petition Date. The ACOM Administrative Expense Claim includes the ABIZ Debtors' unpaid administrative obligations relating to, among other things, the ACOM DIP Claims, network asset usage, insurance and IT development services. The ACOM Equity Committee echoes and supports the ACOM Debtors' objection. Gregory A. Blue, Esq., at Bragar Wexler Eagel & Morgenstern, LLP, in New York, explains that ACOM's equity holders have a direct interest in maximizing the ACOM Debtors' legitimate claims against all third parties, including the ABIZ Debtors. Because ACOM is solvent, all the recoveries ultimately will inure to the benefit of ACOM's equity holders. (Adelphia Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000) AHOLD: Inks Pact Selling Peruvian Unit to Grupo Interbank, et al. ----------------------------------------------------------------- Ahold reached an agreement with Grupo Interbank and a group of investors led by Nexus Group on the sale of 100% of its shares in its Peruvian operation, Supermercados Santa Isabel S.A. The shares of Santa Isabel will be transferred through the Lima stock exchange. Santa Isabel listed its shares on the Lima stock exchange on December 5, 2003. The transaction is expected to close before year-end. The purchase price was not disclosed. Grupo Interbank is one of the largest financial groups of Peru, with investments in banking, mutual funds and insurance. Nexus Group is an active investor in Peru, with operations in entertainment and tourism. The divestment of Santa Isabel in Peru is part of Ahold's strategic plan to restructure its portfolio in order to focus on high-performing businesses and to concentrate on its mature and most stable markets. In this divestment process, Ahold sought a buyer willing to ensure business continuity, providing the best possible option for the customers, employees and suppliers of Santa Isabel and the stakeholders of Ahold. Ahold entered the Peruvian market in 1998. In terms of sales, Santa Isabel is the second largest food retailer in Peru, currently operating 35 stores, of which 8 hypermarkets, and employing approximately 5,000 associates. * * * As previously reported, Fitch Ratings, the international rating agency, assigned Netherlands-based food retailer Koninklijke Ahold NV a Stable Rating Outlook while removing it from Rating Watch Negative. At the same time, the agency has affirmed Ahold's Senior Unsecured rating at 'BB-' and its Short-term rating at 'B'. The Stable Outlook reflects the benefits from the shareholder approval, granted on Wednesday, for a fully underwritten EUR3billion rights issue. Ahold however continues to face financial and operational difficulties which have been reflected in the Q303 results. Ahold announced in early November its strategy for reducing debt through its EUR3bn rights issue and EUR2.5bn of asset disposals as well as improving the trading performance of its core retail and foodservice businesses. Whilst the approved rights issue addresses immediate liquidity concerns, operationally, the news is less positive with Ahold's core Dutch and US retail operations both suffering from increased competition, mainly from discounters, resulting in operating profit margin erosion. Ahold's European flagship operation, the Albert Heijn supermarket chain in the Netherlands, recently reported both declining sales and profits, as consumers turn to discount retailers. In reaction to this, Albert Heijn, has amended its pricing structure which in turn would suggest that it will be more challenging in the future to match historic operating margin levels. AIR CANADA: Societe Nationale Seeks CCAA Stay Lift to File Suit --------------------------------------------------------------- Societe Nationale D'Etude et de Construction de Moteurs D'Aviation asks Mr. Justice Farley to lift the CCAA stay so it can commence a lawsuit against Air Canada and Executive Vice President and Chief Financial Officer, Robert Peterson, for fraudulent misrepresentation and negligent misrepresentation. Societe Nationale is a guarantor of the obligations of Maple Leaf Funding Limited, which borrowed $100,000,000 from a group of European banks and in turn loaned that sum to Air Canada pursuant to a Loan Agreement dated December 13, 1993 for the purposes of purchasing four Airbus A320's. Mr. Peterson executed the Loan on Air Canada's behalf. The Loan was unsecured in favor of Maple Leaf. Among other things, the Loan Agreement provided that: (a) Air Canada's obligations under the Loan Agreement would rank pari passu with all of its other present and future indebtedness; (b) the sale of the Aircraft or the granting of security in them was a "deemed event of loss"; (c) upon a deemed event of loss, notice was required to be given to Maple Leaf; (d) Air Canada maintain a "coverage ratio" of 1.2:1 -- Aircraft appraised value on an owned basis to outstanding loan amount -- determined on an annual basis; (e) Air Canada provide Maple Leaf, the Bank Groups and Societe Nationale with financial information on a periodic basis including appraisals and a certificate signed by the Chief Financial Officer certifying that the loan was not in default. In the fall of 2001, Air Canada entered into a secured credit facility by way of a sale and leaseback arrangement with GE Capital Aircraft Services or other entities, involving, in part, the four Aircraft that were the subject of the loan agreement. The sale and leaseback arrangement placed the loan agreements in default since it gave GE Capital a preferred security position over that of Maple Leaf and reduced the coverage ratio to zero. Despite this, Air Canada and Mr. Peterson continued to issue certificates to Maple Leaf and Societe Nationale to the effect that no default had occurred. The issuance of the certificates lulled Maple Leaf and Societe Nationale into believing that the Aircraft were still in the ownership of Air Canada and that Air Canada was not in default of the loan agreements. J. Wigley, Esq., at Baker & McKenzie, in Toronto, Ontario, tells Mr. Justice Farley that, at all times, Air Canada and Mr. Peterson were aware of the guarantee as it was part of the overall financing. As Chief Financial Officer, Mr. Peterson was well aware of the negative pledge and the requirements of and obligations under the Loan Agreement. "The certificates issued by Air Canada were false and misleading, either knowingly and intentionally or with reckless disregard as to the truth of their contents knowing that they would be relied on. In the alternative, Air Canada and Mr. Peterson issued such certificates negligently in breach of their duty . . .," Mr. Wigley asserts. Had Societe Nationale been made aware of the default, it could have taken steps to enforce the loan. At the time, Air Canada was not insolvent and there existed a reasonable likelihood that the loans would have been repaid in full. In the circumstances, Air Canada and Mr. Peterson stood in a fiduciary relationship with Societe Nationale, Mr. Wigley says. Due to Air Canada's insolvency, Mr. Wigley continues, Societe Nationale is liable to honor its guarantee to the Bank Group for $51,071,212 as of April 1, 2003 plus interest thereafter. Mr. Wigley relates that Societe Nationale sold the Loan by way of its security interest in Maple Leaf's assets to avoid or minimize its losses. Societe Nationale also filed a proof of claim for $51,071,212 in Air Canada's CCAA proceedings. Societe Nationale manufactures and sells jet engines. It is incorporated pursuant to the laws of the Republic of France. (Air Canada Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Judge Farley Okays Trinity & Deutsch Agreements ----------------------------------------------------------- Air Canada provides the following update on the airline's restructuring under the Companies' Creditors Arrangement Act: Court Approves Trinity Investment Agreement and Deutsche Bank Standby Agreement Mr. Justice James Farley of the Ontario Superior Court of Justice approved the Trinity Investment Agreement and the Deutsche Bank Standby Agreement. As agreed by the parties, Trinity, Air Canada and Cerberus will abide by the provisions of Section 9(4) of the Agreement should a final investment proposal be submitted by Cerberus to Air Canada by December 12, 2003. AMERICAN PLUMBING: Committee Turns to FTI for Financial Advice -------------------------------------------------------------- The duly-appointed Official Unsecured Creditors' Committee of the chapter 11 cases of American Plumbing & Mechanical Inc., asks permission from the U.S. Bankruptcy Court for the Western District of Texas to employ and retain FTI Consulting, Inc., as its Financial Advisors. The Committee submits that it is familiar with the professional standing and reputation of FTI. The Committee recognizes that FTI has a wealth of experience in providing financial advisory services in restructurings and reorganizations and enjoys an excellent reputation for services it has rendered in large and complex chapter 11 cases on behalf of debtors and creditors throughout the United States. In this retention, the Committee expects FTI to provide: a) assistance to the Committee in the review of financial related disclosures required by the Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; b) assistance to the Committee with information and analyses required pursuant to the Debtors' Debtor-In- Possession financing including, but not limited to, preparation for hearings regarding the use of cash collateral and DIP financing; c) assistance with a review of the Debtors' short-term cash management procedures; d) assistance with a review of the Debtors' proposed key employee retention and other critical employee benefit programs; e) assistance and advice to the Committee with respect to the Debtors' identification of core business assets and the disposition of assets or liquidation of unprofitable operations; f) assistance with a review of the Debtors' performance of cost/benefit evaluations with respect to the affirmation or rejection of various executory contracts and leases; g) assistance regarding the valuation of the present level of operations and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; h) assistance in the review of financial information distributed by the Debtors to creditors and others, including, but not limited to, cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which Court approval is sought; i) attendance at meetings and assistance in discussions with the Debtors, potential investors, banks, other secured lenders, the Committee and any other Committees organized in these chapter 11 proceedings, the U.S. Trustee, other parties in interest and professionals hired by the same, as requested; j) assistance in the review and/or preparation of information and analysis necessary for the confirmation of a plan in these chapter 11 proceedings; k) assistance in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers; l) litigation advisory services with respect to accounting and tax matters, along with expert witness testimony on case related issues as required by the Committee; and m) such other general business consulting or such other assistance as the Committee or its counsel may deem necessary that are not duplicative of services provided by other professionals in these proceedings. Albert S. Conly reports that his team will bill the Debtors' estates in its current hourly rates of: Senior Managing Directors $550 to $625 per hour Directors/Managing Directors $395 to $550 per hour Associates/Consultants $195 to $365 per hour Administration/Paraprofessionals $80 to $160 per hour Headquartered in Round Rock, Texas, American Plumbing & Mechanical, Inc. and its affiliates provide plumbing, heating, ventilation and air conditioning contracting services to commercial industries and single family and multifamily housing markets. The Company filed for chapter 11 protection on October 13, 2003 (Bankr. W.D. Tex. Case No. 03-55789). Demetra L. Liggins, Esq., at Winstead Sechrest & Minick P.C., represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $282,456,000 in total assets and $256,696,000 in total debts. AURORA FOODS: Files for Ch. 11 to Effect Restructuring & Merger --------------------------------------------------------------- Aurora Foods Inc. (OTC Bulletin Board: AURF), a producer and marketer of leading food brands, announced that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code to implement its previously announced financial restructuring and take a significant step toward consummation of its pending merger with Pinnacle Foods. Aurora intends to continue to operate under Chapter 11 in the ordinary course and to conduct its business without interruption during the restructuring process, which the Company expects to complete by March 31, 2004. Aurora's reorganization plan, filed with the Delaware Bankruptcy Court, has been negotiated with the Company's senior lenders, an informal committee of Aurora's bondholders representing approximately 50% of Aurora's senior subordinated notes, and the Company's proposed new equity investors (J.P. Morgan Partners LLC, J.W. Childs Equity Partners III, L.P., and C. Dean Metropoulos and Co.). In conjunction with the filing, Aurora has secured $50 million of debtor-in-possession (DIP) financing, subject to Court approval. These funds, together with Aurora's cash on hand, provide the Company with liquidity to operate and meet its financial obligations in the normal course of business throughout the restructuring process. "Today's filing is an integral part of our planned merger with Pinnacle and our overall financial restructuring," said Dale F. Morrison, Aurora's Chairman and interim Chief Executive Officer. "It will be business as usual at Aurora during the restructuring process, and we intend to operate normally and deliver our products without interruption. Aurora's management team will remain in place during the reorganization." The Company contemplates the following during the Chapter 11 process: * The Company will continue to pay salaries to its employees in the normal course of business. * Under the plan, all vendors and trade creditors will be paid in full at the end of the bankruptcy case, if not sooner. * Under the plan, Aurora's senior lenders will be paid in full in cash in respect of principal and interest under the Company's existing credit facility and, assuming the credit facility is paid in full by March 31, 2004, will receive $15 million in cash in respect of certain leverage and asset sale fees under the credit facility. * Holders of Aurora's 12% senior unsecured notes due 2005 will be paid in full in cash in respect of principal and interest, but will not receive $1.9 million in respect of unamortized original issue discount. * Holders of Aurora's outstanding 8.75% and 9.875% senior subordinated notes due 2008 and 2007, respectively, will receive either (i) cash or (ii) equity in the combined company (held indirectly through a voting trust), plus certain subscription rights pursuant to which holders electing equity can increase their individual investments in the combined company (through the purchase of additional voting trust interests). Holders electing cash will receive a recovery of 50% on each dollar of principal amount of subordinated notes, or 46% after taking into account accrued interest. Holders electing equity will receive, subject to adjustment, a recovery of 53% on each dollar of principal amount of subordinated notes, subject to dilution, or 45% on each dollar after taking into account accrued interest and initial dilution from management equity. Upon consummation of the merger with Pinnacle, former holders of Aurora's senior subordinated notes will own up to approximately 41.9% of the equity of the combined company, subject to adjustment. * Existing common and preferred stockholders will not receive any distributions and the existing common and preferred shares will be cancelled. * Crunch Equity Holding, LLC (Purchaser), the parent of Pinnacle, which is owned by the new equity investors, will contribute the equity in Pinnacle, to which it will have contributed at least an additional $85 million, in exchange for the remaining equity in the combined company, subject to adjustment. * All other claims against Aurora will be unimpaired. Certain real estate leases will be rejected. Aurora has requested a prompt hearing from the Delaware Bankruptcy Court and hopes to complete its restructuring and merger with Pinnacle by March 31, 2004. The transaction is subject to a number of conditions, including receipt of financing, bankruptcy court approvals, and regulatory approvals. No assurance can be given that the conditions to closing the transaction will be satisfied, or that the transaction ultimately will be consummated. About Aurora Foods Inc. Aurora Foods Inc., based in St. Louis, Missouri, is a producer and marketer of leading food brands, including Duncan Hines(R) baking mixes; Log Cabin(R), Mrs. Butterworth's(R) and Country Kitchen(R) syrups; Lender's(R) bagels; Van de Kamp's(R) and Mrs. Paul's(R) frozen seafood; Aunt Jemima(R) frozen breakfast products; Celeste(R) frozen pizza; and Chef's Choice(R) skillet meals. More information about Aurora may be found on the Company's Web site at http://www.aurorafoods.com AURORA FOODS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Aurora Foods, Inc. 11432 Lackland Rd. St. Louis, Missouri 63146 Bankruptcy Case No.: 03-13744 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Sea Coast Foods, Inc. 03-13745 Type of Business: The debtor is a leading producer and marketer of premium branded food products. Chapter 11 Petition Date: December 8, 2003 Court: District of Delaware Judge: Mary F. Walrath Debtors' Counsel: Eric M. Davis, Esq. Skadden Arps Slate Meagher & Flom LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899 Tel: 302-651-3000 Fax: 302-651-3001 Total Assets: $1,227,912,000 Total Debts: $1,318,605,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wilmington Trust Company Trustee of 8 $216,715,842 Rodney Square North 3/4% Senior 1100 North Market Street Subordinated Wilmington, DE 19890 Notes due 2008 Wilmington Trust Company Trustee of 9 $108,161,413 Rodney Square North 7/8% Senior 1100 North Market Street Subordinated Wilmington, DE 19890 Notes due 2007 Wilmington Trust Company Trustee of 9 $108,161,413 Rodney Square North 7/8% Series C 1100 North Market Street Senior Subordinated Wilmington, DE 19890 Notes due 2007 Fenway Partners Senior Unsecured $17,639,514 152 W. 57th Street, Notes 59th Floor New York, NY 10019 McCown De Leeuw & Co. Senior Unsecured $11,956,986 525 Middlefield Rd. Notes Suite 210 Menlo Park, CA 94025 State of New Jersey Tax $225,000 Conagra Trade $157,453 News America Marketing Trade $120,602 Personal Care Insurance Trade $83,499 of Illinois Regal Construction Inc. Trade $56,874 Fleming Trade $54,822 AON Risk Trade $48,750 St. Louis Food Trade $42,510 Ingredients Collector of Revenue Tax $41,708 Americold Trade $40,960 Health Alliance Medical Trade $39,455 Plan Americold Logistics Trade $38,532 McNeil Nutritional Trade $34,921 Crescent Park Corp Trade $34,176 International Paper Trade $32,862 BALDWIN CRANE: Holland & Knight Serves as Special Counsel --------------------------------------------------------- Baldwin Crane & Equipment Corp., seeks permission from the U.S. Bankruptcy Court for the District of Massachusetts to employ Holland & Knight LLP as Special Counsel to represent it in connection with construction disputes, collection of construction receivables and other matters of construction law. As of the Petition Date, Holland & Knight had five open matters it was handling on behalf of the Debtor, including: a. advising the Debtor on security for accounts receivable on construction projects; b. advising the Debtor on a potential real estate transaction for its corporate offices; c. representing the Debtor in collection of $77,534.00 due from Boston Steel & Precast Erectors in connection with a project at Massachusetts General Hospital, Fruit Street, Boston; d. representing the Debtor in collection of $61,582.94 due from Construction Welding Services Corp., as well as from the prime contractor, Maron Construction Co., Inc., and its surety, St. Paul Fire & Marine Insurance Company, in connection with the John Eliot Elementary School project in Needham, Massachusetts; e. representing the Debtor in collection of $138,793 due from RMF Industrial Contracting, Inc. and its surety, American Industrial Assurancc Company, in connection with the Seward Re-Powering Project, a power plant project in New Florence, Pennsylvania; and f. representing the Debtor in defending a contract claim brought against the Debtor in the Circuit Court of the State of Oregon for the County of Marion, by Morrow Equipment Company, L.L.C., Case No. 03C 14288. Holland & Knight has become familiar with the Debtor's business and affairs and the potential legal issues that may arise in the context of the identified litigation matters. The Debtor wishes to preserve the continuity of Holland & Knight's representation and to avail itself of the expertise of the firm as construction attorneys in operating its business going forward, for the benefit of all parties in interest. The Debtor anticipates Holland & Knight will render professional services, including: a) continuing to represent the Debtor in the construction and real estate matters described in paragraph 9 above, that were pending at the Petition Date that involved pursuit of affirmative recovery; b) if appropriate, pursuit of one or more contested matters and/or adversary proceedings involving expertise in construction law; c) assistance to Debtor's bankruptcy counsel on matters of construction and real estate law relating to the negotiation, formulation and proposal of a plan of reorganization; and d) such further and additional services as may be reasonable and appropriate or otherwise necessary to assist the Debtor in carrying out its duties and responsibilities in connection with this Chapter 11 case, insofar as such services entail expertise in construction and real estate law. Holland & Knight's standard hourly rates range from: partners and senior counsel $255 to $565 per hour associates $205 to $370 per hour paraprofessionals $105 to $170 per hour Stanley A. Martin will lead the team in this engagement. His current hourly rate is $340. Headquartered in Wilmington, Massachusetts, Baldwin Crane and Equipment Corp., a crane-operating business, filed for chapter 11 protection on October 3, 2003 (Bankr. Mass. Case No. 03-18303). Nina M. Parker, Esq., at Parker & Associates represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $10 million each. BLUEBOOK INT'L: September Losses Raise Going Concern Uncertainty ---------------------------------------------------------------- Bluebook International Holding Company was incorporated in Delaware on December 18, 1997. Since the Company's exchange reorganization and merger, effective as of October 1, 2001, the principal business of the Company has been developing and selling THE BLUEBOOK and B.E.S.T. software solutions. THE BLUEBOOK is a book in the form of both a desk and pocket size book containing the information of the average unit costs attendant to the cleaning, reconstruction and repair industries. B.E.S.T. is a software format of THE BLUEBOOK which allows subscribers the option to retrieve THE BLUEBOOK data and calculate the cost to clean, reconstruct or repair, then file claims electronically. The Company's financial statements have been prepared in conformity with accounting principles generally accepted in the U.S., which contemplate continuation of the Company as a going concern. However, the Company has a net loss from operations of $1,337,746, a negative cash flow from operations of $1,019,258 and has a net working capital deficiency of $1,469,408 and net stockholders' deficiency of $2,330,287 as of September 30, 2003. These factors raise substantial doubt about the Company's ability to continue as a going concern. Without realization of additional capital or debt, it would be unlikely for the Company to continue as a going concern. The Company has incurred negative cash flow from operations in recent years. As of September 30, 2003 the Company had cash of $38,537 and an accumulated deficit of $2,929,897. The Company's 2003 negative operating cash flows were funded primarily through operations, loans from majority stockholders and cash existing at December 31, 2002. The Company believes it has sufficient cash to meet its immediate working capital requirements while additional operations and development funds are sought from loans from officers or principal stockholders of the company, third party financing and further reducing overhead relating to software solutions now in development. The Company has recently taken steps to improve liquidity, including obtaining additional funding, reduction of its workforce and deferment of a portion of its Chief Executive Officer's and Chief Operating Officer's salaries. If it is not successful in raising additional capital, it will further reduce operating expenses through headcount reductions in restructurings and modify its business model and strategy to accommodate licensing of its technology and databases. Further, the Company would continue sales of THE BLUEBOOK and B.E.S.T. software solutions and recently released InsureBase and Insured to Value software solutions. The Company does not expect any significant impact on its sales of THE BLUEBOOK, B.E.S.T.7 and InsureBase software solutions from such restructurings; however, they may adversely affect the development of any new software solutions. BOB'S STORES: Panel Taps Deloitte & Touche as Financial Advisors ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of Bob's Stores, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to approve its application to employ Deloitte & Touche LLP, nunc pro tunc to October 30, 2003. The Committee tells the Court that it needs to employ Deloitte & Touche as a Consultant and Advisor to help the Committee execute its duties efficiently. In this engagement, the Committee expects Deloitte & Touche to: i) assist and advise the Committee in the analysis of the current financial position of the Debtors; ii) assist and advise the Committee in its analysis of the Debtors' business plans, cash flow projections, restructuring programs, selling and general administrative structure and other reports or analyses prepared by the Debtors or their professionals in order to assist the Committee in its assessment of the business viability of the Debtors, the reasonableness of the Debtors' projections and underlying assumptions and the impact of market conditions on forecasted results of the Debtors; iii) assist and advise the Committee in its analysis of proposed transactions, and other matters for which Debtors may seek Bankruptcy Court approval including, but not limited to, DIP financing, assumption/rejection of leases and other executory contracts, management compensation and/or retention and severance plans; iv) assist and advise the Committee in its analysis of the Debtors' internally prepared statements and related documentation, in order to evaluate performance of the Debtors as compared to the Debtors' projected results; v) attend and advise at meetings with the Committee and its counsel and representatives of the Debtors and other parties; vi) assist and advise the Committee and its counsel in the development, evaluation and documentation of any plans) of reorganization or strategic transaction(s), including developing, structuring and negotiating the terms and conditions of potential plans(s) or strategic transactions) including the value of consideration that is to be provided; vii) assist and render expert testimony on behalf of the Committee (as may be agreed by Deloitte which may require a separate written engagement letter); viii) assist and advise the Committee in its analysis of the Debtors' hypothetical liquidation analyses under various scenarios; and ix) assist and advise the Committee in such other services, including but not limited to, tax services, valuation assistance, corporate finance/M&A advice, compensation and benefits consulting, or other specialized services as may be requested by the Committee and agreed to by Deloitte, which may require separate written engagement letters. Deloitte & Touche will bill the Debtors' estates at their hourly rates. Sheila T. Smith, a member of Deloitte & Touche reports that the firm's current hourly rates range from: Partner/Principal/Director $600 to $650 per hour Senior Manager/Managing Directors $350 to $575 per hour Manager $300 to $450 per hour Senior Consultant $250 to $350 per hour Consultant $180 to $275 per hour A retail clothing chain headquartered in Meriden, Connecticut, Bob's Stores, Inc., filed for chapter 11 protection on October 22, 2003 (Bankr. Del. Case No. 03-13254). Adam Hiller, Esq., at Pepper Hamilton and Michael J. Pappone, Esq., at Goodwin Procter, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed debts and assets of more than $100 million. BULL RUN CORP: Seeks Review of Nasdaq's Delisting Determination --------------------------------------------------------------- Bull Run Corporation (Nasdaq: BULL) announced it has received a Nasdaq Staff Determination indicating that the Company fails to comply with the minimum stockholders' equity requirement for continued listing set forth in Marketplace Rule 4310(c)(2)(B), and that its securities are therefore, subject to delisting from The Nasdaq SmallCap Market. The Company has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. There can be no assurance the Panel will grant the Company's request for continued listing. No delisting action will be taken by Nasdaq until such time as the Company's appeal can be heard. The Company expects that the hearing will be scheduled for a date within the next 45 days. If delisted from the Nasdaq SmallCap Market, the Company's securities may be immediately eligible for quotation on the OTC Bulletin Board. At August 31, 2003, Bull Run's balance sheet shows a working capital deficit of about $12 million, and a total shareholders' equity deficit of about $27 million. CAMBRIDGE REAL: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Cambridge Real Estate Investments, Inc. 1631 Dorchester Suite 174 Plano, Texas 75075 Bankruptcy Case No.: 03-45635 Type of Business: Commercial real estate investments and management firm. Chapter 11 Petition Date: December 1, 2003 Court: Eastern District of Texas (Sherman) Judge: Brenda T. Rhoades Debtor's Counsel: William L. Manchee, Esq. 12221 Merit Drive Suite 750 Dallas, TX 75251 Tel: 972-960-2240 Fax: 972-233-0713 Total Assets: $1,665,150 Total Debts: $1,156,500 Debtor's 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Citi Capital $34,000 HP Financial $30,000 Citicorp $38,000 Key Equipment Finance $28,000 HP Financial $30,000 Ohio Teachers Credit Union $22,500 CAMELOT PROPERTY MANAGEMENT: Voluntary Chapter 11 Case Summary -------------------------------------------------------------- Debtor: Camelot Property Management, LLC 1601 West Camelback Road Phoenix, Arizona 85015 Bankruptcy Case No.: 03-21252 Type of Business: Real estate Chapter 11 Petition Date: December 4, 2003 Court: District of Arizona (Phoenix) Judge: Sarah Sharer Curley Debtor's Counsel: Donald W. Powell, Esq. Carmichael & Powell, P.C. 7301 North 16th Street, #103 Phoenix, AZ 85020 Tel: 602-861-0777 Fax: 602-870-0296 Total Assets: $1 Million to $10 Million Total Debts: $1 Million to $10 Million CATELLUS: Discloses Results of Special E&P Distribution Election ---------------------------------------------------------------- Catellus Development Corporation (NYSE: CDX) announced results of the stockholders' elections regarding the special earnings and profits ("E&P") dividend, a one-time distribution of the company's accumulated E&P that is part of Catellus' pending conversion to a real estate investment trust scheduled for January 1, 2004. The E&P per share distribution, declared by the Board and announced in October, at $3.83 per share, is payable on December 18, 2003, to stockholders of record at the close of business November 4, 2003. Through December 1, stockholders had the opportunity to elect how they preferred to receive their dividend -- all stock, all cash, or a combination of 20 percent cash and 80 percent stock. For all shares outstanding, 31.64 percent elected all stock, 59.23 percent elected all cash, and 9.13 percent elected 20 percent cash and 80 percent stock. Based on the results of the elections, the distribution to be made on December 18 will be as follows: Cash Shares of Stock to be Received Election to be Received Per Share Per Share ------------------ ------------------------- ---------------- Stock 0.162206 shares per share N/A Cash 0.089361 shares per share $1.720 per share 20% Cash/80% Stock 0.129765 shares per share $0.766 per share As a result of the elections, the company anticipates the total stock portion of the E&P distribution to be approximately 10.666 million shares. The number of shares of stock to be distributed is calculated based on the average closing price of Catellus stock from December 2, 2003, through December 8, 2003, which was $23.612. The total cash payable in the distribution is limited to $100 million, plus any cash payments in lieu of fractional shares. Correspondingly, because the total cash elected in the combined all-cash and 20 percent cash/80 percent stock elections exceeded $100 million, the percentage of cash to be distributed to stockholders who elected an all-cash dividend has been adjusted on a pro rata basis. Stockholders who elected 20 percent cash and 80 percent stock were not affected by the pro rata adjustment. Catellus Development Corporation (S&P, BB Corporate Credit Rating, Positive) is a publicly traded real estate development company that owns and operates approximately 38.2 million square feet of predominantly industrial property in many of the country's major distribution centers and transportation corridors. The company's principal objective is sustainable, long-term growth in earnings, which it seeks to achieve by applying its strategic resources: a lower-risk/higher-return rental portfolio, a focus on expanding that portfolio through development, and the deployment of its proven land development skills to select opportunities where it can generate profits to recycle back into its business. More information on the company is available at http://www.catellus.com CHC INDUSTRIES: Employs Colliers as Ohio Real Estate Broker ----------------------------------------------------------- CHC Industries, Inc., asks the U.S. Bankruptcy Court for the Middle District of Florida for authority to employ OM Partners LLC, doing business as Colliers International, as its Real Estate Broker with respect to two parcels of property located in Ohio. CHC's assets include fee ownership interest in numerous parcels of real property upon which manufacturing plants are located. The Debtor has been attempting to sell all of its real property. The Debtor submits that it currently requires the services of a real estate firm to locate qualified purchasers and to negotiate a sale with such purchasers with respect to two parcels of real property located in Cleveland, Ohio and Valley City, Ohio. Joseph J. Martanovic reports that Colliers International was employed by the Debtor as a real estate broker prior to the Petition Date and will continue to represent it in this chapter 11 proceeding. For its services as a real estate broker, the Debtor desires to pay Colliers International a sales commission of 6% of the first $1 million of the purchase price and 4% of the gross consideration thereafter. Headquartered in Palm Harbor, Florida and formerly known as Cleaners Hanger Company, CHC Industries, Inc., manufactures and distributes steel wire coat hangers. The Company filed for chapter 11 protection on October 6, 2003 (Bankr. M.D. Fla. Case No. 03-20775). Scott A. Stichter, Esq., at Stichter, Riedel, Blain & Prosser, PA, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $25,000,000 in total assets and $20,000,000 in total debts. COLONIAL CBO: Fitch Further Junks Class B Notes Rating to CC ------------------------------------------------------------ Fitch Ratings has downgraded one class of notes and affirmed two classes of notes issued by Colonial Advisory Services CBO Ltd., a collateralized bond obligation backed by high yield bonds. The following class has been downgraded: -- $75,865,154 class B notes to 'CC' from 'CCC+'. The following classes have been affirmed: -- $148,557,988 class A notes 'AA-'; -- $83,077,751 class C notes 'C'. According to its Nov. 20, 2003 trustee report, the Colonial CBO portfolio collateral includes a par amount of $38.8 million (18.2%) of defaulted assets. The deal also contains 17.9% of assets rated 'CCC+' or below, excluding defaults. The class A and class B overcollateralization tests are failing at 135.5% and 94.7%, versus their triggers of 140% and 118%, respectively. In determining this rating action, a credit committee reviewed the results of cash flow model runs, incorporating several different default and interest rate stress scenarios. Also, Fitch discussed with Colonial Advisory Services Inc., the investment advisor, their expectations and opinions of the portfolio. CRYOLIFE INC: Ackerman and Bevevino Join Board of Directors ----------------------------------------------------------- CryoLife, Inc. (NYSE: CRY), announced that Thomas F. Ackerman and Dan Bevevino have been elected to the company's Board of Directors, effective immediately. These two, newly elected board members increase the number of directors to eight. Thomas F. Ackerman is Senior Vice President and Chief Financial Officer at Charles River Laboratories, a provider of critical research tools and integrated support services that accelerate drug discovery and research. He is responsible for overseeing the Accounting and Finance departments, as well as the Information Technology Group and Investor Relations. Mr. Ackerman joined Charles River Laboratories in 1988 and now has more than twenty- five years of combined accounting and international finance experience. He was named Controller, North America in 1992 and became Vice President and Chief Financial Officer in 1996. In 1999, he was named Senior Vice President. Dan Bevevino is Vice President and Chief Financial Officer at Respironics, a developer, manufacturer and marketer of medical devices and programs used for the treatment of patients with sleep and respiratory disorders. Mr. Bevevino joined Respironics in 1988 and has served in a variety of positions with increasing responsibility in finance and accounting. Additionally, during his tenure at Respironics, Mr. Bevevino has been responsible for certain operating, sales and marketing activities. He served as Controller from 1990-1994, Chief Financial Officer, Controller from 1994-1996 and was appointed Vice President, Chief Financial Officer in 1996. "Thomas Ackerman and Dan Bevevino will bring valuable business experience and financial expertise to our Board of Directors," said Steven G. Anderson, Chairman and Chief Executive Officer. "We welcome them to our Board and we look forward to the contributions they will make to CryoLife." CryoLife, Inc. is a leader in the processing and distribution of implantable living human tissues for use in cardiovascular and vascular surgeries throughout the United States and Canada. The Company's BioGlue(R) Surgical Adhesive is FDA approved as an adjunct to sutures and staples for use in adult patients in open surgical repair of large vessels and is CE marked in the European Community and approved in Canada for use in soft tissue repair and approved in Australia for use in vascular and pulmonary sealing and repair. The Company also manufactures the SynerGraft(R) Vascular Graft, which is CE marked for distribution within the European Community. For additional information about the company, visit CryoLife's Web site, http://www.cryolife.com/ * * * Liquidity and Capital Resources In its latest Form 10-Q filed with the Securities and Exchange Commission, CryoLife Inc., reported: Overall Trend in Liquidity and Capital Resources "The Company expects its liquidity to continue to decrease significantly over the next twelve months due to 1) the anticipated decrease in preservation revenues as compared to preservation revenues prior to the FDA Order as a result of reported tissue infections, the FDA Order, and associated adverse publicity, 2) the increase in cost of human tissue preservation services as a percent of revenue as a result of lower tissue processing volumes and changes in processing methods, which have increased the cost of processing human tissue and 3) an expected use of cash due to the increased costs relating to the defense and resolution of lawsuits and legal and professional costs relating to the ongoing FDA compliance and the anticipated required Term Loan pay off during 2003. The Company believes that anticipated revenue generation, expense management, savings resulting from the reduction in the number of employees in September 2002 necessitated by the reduction in revenues, and the Company's existing cash and marketable securities will enable the Company to meet its liquidity needs through at least June 30, 2004. In addition, the Company has recorded $9.0 million related to the potential expense of resolving current product liability claims in excess of insurance coverage. The $9.0 million accrual is reflective of settlement costs related to outstanding lawsuits, and does not reflect actual settlement arrangements or judgments, including punitive damages, which may be assessed by the courts. The $9.0 million accrual is not a cash reserve. Should expenses related to the accrual be incurred, the expenses would have to be paid from insurance proceeds and liquid assets, if available. The Company has called a meeting with the plaintiffs' attorneys to determine the feasibility of obtaining a global settlement on outstanding claims in order to substantially reduce the potential cash payout related to these accruals and is currently evaluating all of its alternatives in connection with resolving the dispute with its upper layer excess carrier concerning the restrictions on the matters it has excluded from coverage. If the Company is unsuccessful in arranging settlements of product liability claims for an amount substantially below the amount accrued, there may not be sufficient insurance coverage and liquid assets to meet these obligations, even if the Company satisfactorily resolves the restrictions on the upper layer excess insurance coverage. However, if the Company is unable to settle the outstanding claims for amounts within its ability to pay and one or more of the product liability lawsuits in which the Company is a defendant should be tried during this period with a substantial verdict rendered in favor of the plaintiff(s), there can be no assurance that such verdict(s) would not exceed the Company's available insurance coverage and liquid assets. The Company's product liability insurance policies do not include coverage for any punitive damages that may be assessed at trial. There is a possibility that significant punitive damages could be assessed in one or more lawsuits which would have to be paid out of the liquid assets of the Company, if available. "In addition, the Company has recorded $7.5 million for estimated costs of unreported product liability claims related to services performed and products sold prior to June 30, 2003. The $7.5 million accrual is not a cash reserve. The timing of the actual payment of the expense related to the accrual is dependent on when and if claims are asserted. Should expenses related to the accrual be incurred, the expenses would have to be paid from insurance proceeds and liquid assets, if available. Since amounts expensed are estimates, the actual amounts required could vary significantly. "The Company's long term liquidity and capital requirements will depend upon numerous factors, including the Company's ability to return to the level of demand for its tissue services that existed prior to the FDA Order, the outcome of litigation against the Company, the timing of and amount required to resolve the product liability claims, the resolution of the dispute with its upper excess product liability insurance carrier, the ability to arrange and fund a global settlement of outstanding claims for an amount substantially below the amount of the accrual, and the Company's ability to find suitable funding sources to replace the Term Loan. The Company may require additional financing or seek to raise additional funds through bank facilities, debt or equity offerings, or other sources of capital to meet liquidity and capital requirements beyond June 30, 2004. Additional funds may not be available when needed or on terms acceptable to the Company, which could have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows. These are factors that indicate that the Company may be unable to continue operations. "On August 4, 2003 the Company approved a buyback of employee stock options with an exercise price of $23 or greater. The option buyback was approved for an aggregate of up to $350,000 using a Black Scholes valuation model. The Company anticipates making the offer to employees in third quarter of 2003. Net Working Capital "At June 30, 2003 net working capital (current assets of $52.6 million less current liabilities of $31.8 million) was $20.8 million, with a current ratio (current assets divided by current liabilities) of 2 to 1, compared to net working capital of $37.6 million, with a current ratio of 3 to 1 at December 31, 2002. The Company's primary capital requirements historically arose from general working capital needs, capital expenditures for facilities and equipment, and funding of research and development projects. The Company has historically funded these requirements through bank credit facilities, cash generated by operations, and equity offerings. Based on the decrease in revenues resulting from the adverse publicity surrounding the FDA Order, FDA Warning Letter, and reported tissue infections, and the anticipated costs to be paid by the Company in resolving pending litigation, the Company expects that its cash used in operating activities will continue to be high and will increase to the extent funds are needed to defend and resolve litigation, and that net working capital will significantly decrease. "The Company's Term Loan, of which the principal balance was $4.5 million as of August 4, 2003, contains certain restrictive covenants including, but not limited to, maintenance of certain financial ratios and a minimum tangible net worth requirement, and the requirement that no materially adverse event has occurred. The lender has notified the Company that the FDA Order have had a material adverse effect on the Company that constitutes an event of default. Additionally, as of June 30, 2003, the Company is in violation of the debt coverage ratio and net worth financial covenants. Therefore, all amounts due under the Term Loan as of June 30, 2003 are reflected as a current liability on the Summary Consolidated Balance Sheets. The Company and the lender are currently in the process of negotiating specific terms of a forbearance agreement, which, if entered into, would increase the interest rate charged on the Term Loan effective August 1, 2003 to LIBOR plus 4% (5.32% at June 30, 2003), accelerate the principal payments on the Term Loan by requiring a balloon payment to pay off the outstanding balance by October 31, 2003, and cause the Company to pay a $12,000 modification fee and the lender's attorneys costs, which have yet to be determined. As of August 4, 2003 the Company has sufficient cash and cash equivalents to pay the remaining outstanding balance of the Term Loan. Since the lender is in the process of accelerating the payment of the debt, the above chart shows payment of the outstanding balance of the Term Loan during 2003. "In the quarter ended June 30, 2003 the Company entered into two agreements to finance $2.9 million in insurance premiums associated with the yearly renewal of certain of the Company's insurance policies. The amount financed accrues interest at a 3.75% rate and is payable in equal monthly payments through January 2004. As of August 4, 2003 the outstanding balance of the agreements was $1.3 million. "Due to cross default provisions included in the Company's debt agreements, as of June 30, 2003 the Company was in default of certain capital lease agreements maintained with the lender of the Term Loan. Therefore, all amounts due under these capital leases are reflected as a current liability on the Summary Consolidated Balance Sheets as of June 30, 2003." DIVERSIFIED CORP: Enters into B4 Ventures Private Placement Pact ---------------------------------------------------------------- Diversified Corporate Resources, Inc. (Amex: HIR) announces that it has entered into an agreement with B4 Ventures, a Dallas-based investment fund, whereby B4 Ventures and certain of its affiliates will purchase in a private-placement shares of a newly-issued series of voting convertible preferred stock and warrants. If consummated in its entirety, and subject to DCRI achieving certain net income thresholds for fiscal year 2004, the transaction could result in the purchase of the equivalent of approximately 2 million shares of DCRI common stock for approximately $2,250,000. It is intended that $1,650,000 of the proceeds will become available to DCRI in three installments on or before January 15, 2004. Completion of the transaction is subject to final documentation. J. Michael Moore, the Chairman and CEO of the Company, commented that "This transaction represents a turning point for DCRI as far as its return to the institutional capital markets and will strengthen the Company's balance sheet for future growth." * * * As reported in the Troubled Company Reporter's September 4, 2003 edition, Diversified Corporate Resources, Inc. dismissed Weaver and Tidwell, L.L.P. as its independent accountants, effective August 19, 2003, and appointed BDO Seidman, LLP as its independent accountants. The Weaver and Tidwell, L.L.P. reports on the Company's 2000, 2001 and 2002 consolidated financial statements were qualified as to uncertainty regarding Diversified Corporate Resources' ability to continue as a going concern. Diversified Corporate Resources, Inc. is an human capital services firm that provides a range of professional technology, engineering and technical personnel on a contract and permanent placement basis to high-end specialty employment markets, with a focus on the information technology, telecommunication and engineering industry niches. The Company currently operates a nationwide network of offices to support its Fortune 500 and other client companies. DYNEGY: Fitch On-the-Alert for Closing of Unit's Sale to Ameren --------------------------------------------------------------- Ameren Corp. announced it is engaged in exclusive discussions to potentially purchase Dynegy Inc.'s utility subsidiary Illinois Power company. Since no deal has been reached, there is no indication to what, if any, impact the potential acquisition might have on the credit quality of Ameren or its subsidiaries. If a deal is eventually structured, the potential credit impact will depend on the purchase price, financing plans and corporate structure of the new entity, according to Fitch Ratings. Previously, Exelon Corp. withdrew from an agreement with Dynegy to acquire Illinois Power due to the inability to garner support for legislation it deemed necessary to complete the acquisition. The proposed legislation would have given the Illinois Commerce Commission authority to expedite approval of the transaction and to address post 2006 rate issues, including purchased power contracts between Exelon's generation subsidiary and its Illinois distribution utilities following the acquisition. EAGLEPICHER INC: Commences Exchange Offer for Senior Sub. Notes --------------------------------------------------------------- EaglePicher Incorporated announced that it has commenced its offer to exchange up to $250,000,000 principal amount of newly issued 9- 3/4% Senior Subordinated Notes Due 2013 registered under the Securities Act of 1933, as amended, for a like amount of its outstanding privately placed 9-3/4% Senior Subordinated Notes Due 2013. Exchange offers of this kind are customary in transactions in which notes have been issued in a private placement under Rule 144A of the Securities Act, as were EaglePicher Incorporated's outstanding notes. The offer expires on January 9, 2004, at 5:00 p.m., New York time unless extended by EaglePicher Incorporated. EaglePicher Incorporated, founded in 1843 and headquartered in Phoenix, Arizona, is a diversified manufacturer and marketer of innovative, advanced technology and industrial products and services for space, defense, environmental, automotive, medical, filtration, pharmaceutical, nuclear power, semiconductor and commercial applications worldwide. The company has 4,000 employees and operates more than 30 plants in the United States, Canada, Mexico, the U.K. and Germany. Additional information is available on the Internet at http://www.eaglepicher.com/ * * * As reported in the Troubled Company Reporter's September 9, 2003 edition, Standard & Poor's Ratings Services lowered its rating on EaglePicher Holdings, Inc.'s $146 million 11.75% cumulative redeemable exchangeable preferred stock due 2008 to 'D' from 'CCC+'. All other outstanding ratings on EPH and EaglePicher Inc., a wholly owned subsidiary of EPH, were affirmed. "The rating action on the preferred stock is the result of the company's failure to make the dividend payment of $8.3 million due on Sept. 2, 2003," said Standard & Poor's credit analyst Linli Chee. EPI's senior secured credit facility prohibits the company from paying cash dividends unless total debt to EBITDA is less than 3x on a pro forma basis. If the company does not pay cash dividends, holders of the preferred stock are entitled to elect the majority of the company's board of directors. Granaria Holdings B.V., the majority owner of the company, also controls about 78% of the preferred stock. EL PASO CORP: Sells Interest in Portland Natural Gas for $56 Mil. ----------------------------------------------------------------- El Paso Corporation (NYSE: EP) announced that it closed on the sale of its interest in Portland Natural Gas Transmission System for approximately $56 million. Affiliates of TransCanada Corporation and Gaz Metro purchased the company's 29.64 percent interest in the partnership. The transaction was completed on December 3, 2003. This sale supports El Paso's previously announced 2003 five-point business plan, which includes exiting non-core businesses quickly but prudently, and strengthening and simplifying the balance sheet while maximizing liquidity. El Paso Corporation (S&P, B+ L-T Corporate Credit Rating, Negative) is the leading provider of natural gas services and the largest pipeline company in North America. The company has core businesses in pipelines, production, and midstream services. Rich in assets, El Paso is committed to developing and delivering new energy supplies and to meeting the growing demand for new energy infrastructure. For more information, visit http://www.elpaso.com ENCOMPASS: Disbursing Agent Wants 25 Insured Claims Disallowed -------------------------------------------------------------- Encompass Disbursing Agent, Todd A. Matherne, objects to 25 claims filed in the Encompass Services Corporation Debtors' bankruptcy cases. Marcy E. Kurtz, Esq., at Bracewell & Patterson, LLP, in Houston, Texas, contends that given all 25 Claims are valid obligations of the Debtors, the claims should be disallowed because they will be fully funded by the Debtors' insurance policies. The Claimants don't have a right to payment from the Debtors' estate because insurance contracts are in effect with the deductible already paid in full. The Claimants may demand payment from the Debtors' insurance carriers instead, assuming all other appropriate criteria, including liability, are established. The Debtors have already notified their insurance carriers of these known alleged Insurance-Funded Claims, Ms. Kurtz relates. Mr. Matherne asks the Court to disallow the 25 Insurance-Funded Claims. Ten of these Claims are: Claimants Claim No. Claim Amount --------- --------- ------------ GGP-Ivanhoe II, Inc. 3189 $880,000 Alderwood Mall 3208 240,000 Boulevard Associates 3209 180,000 Park Mall, LLC 3203 100,000 Tracy Mall Partnership 3196 100,000 Lee Morley 2629 400,000 Rhonda Valdez 3159 100,000 Doris Mayfield 3671 38,664 Robin Hauswitzer 4119 5,843 Patrick Graham 1558 5,000 (Encompass Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON: Asks Court to Compel 3 Paper Cos. to Turnover Payments ------------------------------------------------------------- Enron North America Corporation and Enron Energy Services, Inc., ask the Court to: (a) enforce the automatic stay on Expo Dying and Finishing, formerly known as Sees Color Textile, The Journal Inquirer, Inc., and Newtown Paper Company, Inc.; (b) compel Expo Dying to turn over immediately to EES a $656,894 matured debt -- $375,005 in prepetition accounts receivable and $281,889 in postpetition accounts receivable; (c) compel Journal Inquirer to turn over immediately to ENA a $446,586 matured debt -- $222,659 in prepetition accounts receivable and $223,926 in postpetition accounts receivable; (d) compel Newtown Paper to turn over immediately to ENA a $398,265 matured postpetition debt; and (e) impose on Expo Dying, Journal Inquirer and Newtown Paper civil contempt sanctions, including: -- reimbursement of the attorneys' fees ENA and EES incurred; -- $10,000 daily penalty if payment is not made within 48 hours after the Court compels them to make the payments; and -- $15,000 daily penalty if no turnover of funds is made within seven days after the Court's order. Barry J. Dichter, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates that ENA and EES entered into contracts with hundreds of counterparties, involving billions of dollars. Many of these contracts generated accounts receivable, representing compensation for performance under the contracts by the Debtors prior to termination. Many of the contracts also generated termination payments, representing the value of future performance under a terminated contract. In a significant number of instances, where the amount owed to a Debtor is less than $1,000,000, the counterparty effectively bet that the Debtors will not pursue the amounts in issue. These counterparties have, in essence, said, "I owe the money but you are bankrupt and out of business so why should I pay you." Expo Dying, Journal Inquirer and Newtown Paper are among these counterparties, Mr. Dichter tells the Court. "While these debts may be relatively small when viewed individually, they collectively constitute a material asset of the estates," Mr. Dichter says. The Debtors repeatedly asked Expo Dyeing, Journal Inquirer and Newtown Paper to make the payments, and warned them that contempt sanctions could be levied against them. However, Expo Dyeing, Journal Inquirer and Newtown Paper still refused to pay the debt they owed to the Debtors. Mr. Dichter argues that the Court should grant the Debtors' request because: (a) Expo Dyeing, Journal Inquirer and Newtown Paper violated the automatic stay under Section 362 of the Bankruptcy Code when they wrongfully exercised dominion and control over the debt that is property of the estate; (b) the refusal of Expo Dyeing, Journal Inquirer and Newtown Paper to turn over funds owed to the estate will adversely affect the Debtors' reorganization by diminishing the recoveries received by the estates' creditors; (c) the issuance of an injunction would be in the public's interest; and (d) Expo Dyeing, Journal Inquirer and Newtown Paper were provided with adequate notice of their contempt if they refuse to turn over the owed amounts, which they never contested. (Enron Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENVOY COMMS: Retains Jefferies as Merger & Acquisitions Advisor --------------------------------------------------------------- Envoy (NASDAQ: ECGI/TSX: ECG) engages Jefferies & Company of New York as its strategic merger and acquisitions advisor. This follows Envoy's previously released announcement of its intention to embark on a strategic M&A expansion plan to further enhance its leadership position in North America and Europe. "Our goal is to increase shareholder value through both profitable organic growth and a sound M&A program," said Geoff Genovese, CEO of Envoy Communications Group. "Jefferies & Company is a world- class partner, has a deep understanding of our industry and as a leading M&A advisor to middle market companies, will be a valuable asset to our M&A program." Envoy's results for its fiscal year ended September 31, 2003 will be released the week of January 19, 2004. "The re-engineering plan we implemented over the past year has had a positive impact on both our bottom and top lines. These financial improvements have made it possible for Envoy to embark on a M&A plan that we believe, when implemented, will be a significant driver of shareholder value." says Genovese. Envoy Communications Group Inc. (NASDAQ: ECGI/TSE:ECG) is an international consumer and retail branding company with offices throughout North America and Europe. For more information on Envoy visit http://www.envoy.to/ Jefferies & Company, Inc., the principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF), is a full-service investment bank and institutional securities firm focused on the middle market. Jefferies offers financial advisory, capital raising, mergers and acquisitions, and restructuring services to small and mid-cap companies. The firm provides outstanding trade execution in equity, high yield, convertible and international securities, as well as fundamental research and asset management capabilities, to institutional investors. Additional services include correspondent clearing, prime brokerage, private client services and securities lending. The firm's leadership in equity trading is recognized by numerous consulting and survey organizations, and Jefferies' affiliate, Helfant Group, Inc., executes approximately eleven percent of the daily reported volume of the NYSE. Through its subsidiaries, Jefferies Group, Inc. employs more than 1,400 people in offices worldwide, including Atlanta, Boston, Chicago, Dallas, London, Los Angeles, New York, Paris, San Francisco, Tokyo, Washington and Zurich. Further information about Jefferies, including a description of investment banking, trading, research and asset management services, can be found at http://www.jefco.com/ At June 30 2003, the company's balance sheet discloses a working capital deficit of about CDN$3 million. FEDERAL-MOGUL: Hoskins Wants to Collect Amended MO Order on Bond ---------------------------------------------------------------- Forest and Julia D. Hoskins sought relief from the automatic stay to permit them and the Federal-Mogul Corporation Debtors to continue to litigate an appeal filed by the Debtors in the Missouri Supreme Court for money judgment. The action was styled Hoskins v. Business Men's Assurance Co. The stay relief provided that in the event the appeal was unsuccessful, the Hoskins will be allowed to enforce the Missouri Judgment against an $8,916,392 supersedeas bond appertained to the Hoskins by the Debtors, as principals, and Travelers Casualty and Surety Company of America, as surety. Subsequently, the Bankruptcy Court entered a Stipulated Order among the Hoskins, the Debtors and the Official Committee of Unsecured Creditors, allowing the appeal of the Missouri Judgment to proceed in the Missouri Supreme Court. The Missouri Supreme Court resolved the sole issue, which provided it with subject matter jurisdiction over the Debtors' appeal. Without reaching the merits of the appeal, the Missouri Supreme Court transferred the case to the Western District of Missouri Court of Appeals for resolution of the remaining issues on appeal. On August 27, 2002, the Bankruptcy Court entered a second Stipulated Order, which allowed the parties to prosecute and exhaust the appeal of the Missouri Judgment. The Western District of Missouri Court of Appeals reversed the trial court decision on the allowance of prejudgment interest, but otherwise affirmed the Missouri Judgment. The Supreme Court of Missouri denied rehearing late October, so at this point, the Debtors have exhausted their right to appeal the Missouri Judgment through the Missouri state courts. The Hoskins understand that the Debtors have determined not to petition for a writ of certiorari from the United States Supreme Court. The Hoskins recently approached the Debtors through counsel about consenting to modify the August 27, 2002 Order and the automatic stay in these cases to allow them to collect on the Bond. As it turned out, the Debtors did not have any objection to the Hoskins' request. The Hoskins, therefore, ask the Court to approve their agreement with the Debtors, modifying the August 27, 2002 Order and the automatic stay, allowing them to collect the Missouri Judgment, as amended on appeal, on the Bond. According to Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, the agreement would not affect the impact of the automatic stay on any other collection efforts by the Hoskins against the Debtors' estates. The agreement should be approved because the Debtors have exhausted their right to appeal the Missouri Judgment and cannot ultimately prevent the Hoskins from collecting on the Bond. Moreover, because of the denial of prejudgment interest, the amount of the Bond still exceeds the amount of the Missouri Judgment at present, although it continues to accrue post- judgment interest on a daily basis and will eclipse the amount of the Bond in several months. Thus, by allowing the Hoskins to collect on the Bond at this point than at some later date, a portion of the Bond will not be necessary to satisfy the Missouri Judgment in full. Besides, Mr. Macauley points out that the Hoskins are determined to collect on the Bond whether or not there is an agreement to modify the August 27 Order and the automatic stay. Under the circumstances, there is "cause" to modify the stay and the August 27 Order, in view of Forest Hoskins' medical condition and the advanced stage of his illness. Once sufficient interest on the Missouri Judgment accrues so that it equals the amount of the Bond, the Debtors will no longer have any equity in the Bond, and it is not necessary for their effective reorganization. Therefore, the agreement between the Hoskins and the Debtors allows the estates to avoid unnecessary and unproductive litigation. Mr. Macauley assures the Court that the approval of the agreement will not prejudice the estates because it will keep the automatic stay in effect with respect to any other collection efforts by the Hoskins, that is, other than on the Bond. (Federal-Mogul Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING COS: Plan-Filing Exclusivity Extended to Jan. 30, 2004 -------------------------------------------------------------- Fleming Companies, Inc., along with its debtor-affiliates, and the Official Committee of Unsecured Creditors sought and obtained Court permission to extend: -- the Debtors' Exclusive Plan Proposal Period through and including January 30, 2004; and -- the Debtors' Exclusive Solicitation Period through and including March 30, 2004. The Debtors need the extensions to avoid premature formulation of a Chapter 11 plan and ensure that the formulated plan takes into account the interests of all the Debtors and their employees, creditors, and estates. The Debtors and the Committee also obtained the Court's approval on a stipulation setting forth the basis for the Committee's support of an exclusive periods extension. (Fleming Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945- 7000) GAUNTLET: Canadian Court Approves Plan; Commences Implementation ---------------------------------------------------------------- Gauntlet Energy Corporation provides the following update in respect of the process undertaken to maximize value for its various stakeholders. On November 6, 2003, Gauntlet obtained an order of the Court providing for the holding of meetings of creditors to be held on December 4, 2003, to vote upon Gauntlet's plan of compromise and arrangement and extending the stay of proceedings to December 5, 2003. The Plan was approved by each of the Secured Creditors at the Secured Creditors Meeting and the Unsecured Creditors at the Unsecured Creditors Meeting by a majority in numbers and amounts in excess of 85% of those attending such meetings. The Court approved the Plan on December 5, 2003, and extended the stay of proceedings until implementation of the Plan. On December 8, 2003, the Plan was implemented resulting in: - the compromise and settlement of all Secured Creditors, Unsecured Creditors and other Creditors in accordance with the Plan; - the retraction of all of the issued Common Shares of Gauntlet; and - Gauntlet becoming a wholly owned subsidiary of Ketch Resources Ltd. Gauntlet has instituted the process to delist its common shares from trading on the facilities of the Toronto Stock Exchange. GAUNTLET: Ketch Resources Closes Acquisition Pursuant to Plan ------------------------------------------------------------- Ketch Resources Ltd. completed the acquisition of Gauntlet Energy Corporation pursuant to a Plan of Arrangement under the Companies' Creditors Arrangement Act. The Plan was approved by the Secured and Unsecured Creditors of Gauntlet on December 4th and the Court of Queen's Bench of Alberta on December 5th. The assets acquired by Ketch add production of approximately 1,000 barrel of oil equivalent per day (96% natural gas) to Ketch's existing production, net of approximately 650 boe per day of production that Ketch is in the process of divesting. In addition, Ketch adds approximately 95,000 net acres of undeveloped land, 2D and 3D seismic data and approximately $65 million of quality tax pools. Mr. Grant B. Fagerheim, President and CEO of Ketch stated, "The acquisition of Gauntlet expands Ketch's growth potential while adding unhedged gas reserves at attractive acquisition parameters." Ketch also announces that it has expanded its 2004 capital budget to $55 million from $48 million as a result of the completion of this acquisition. Ketch's common shares are listed on the Toronto Stock Exchange under the symbol KER. Ketch is a Canadian growth oriented energy company engaged in the exploration, development and production of crude oil and natural gas. GEORGETOWN STEEL: Nexsen Pruet Serves as Panel's Local Counsel -------------------------------------------------------------- The Official Unsecured Creditors' Committee of Georgetown Steel Company, LLC's chapter 11 case wishes to employ Nexsen Pruet Jacobs & Pollard, LLC as Local Counsel. The Committee believes that Nexsen Pruet is a "disinterested person" as that term is defined in the Bankruptcy Code. Nexsen Pruet services include: a) advising the Committee of its rights, powers and duties; b) assisting in the investigation of the acts, conduct, assets, liabilities and financial condition of the Debtor, the operation of the Debtor's business and any other matters relevant to the case or to the formulation of a plan of reorganization or liquidation; c) preparing on behalf of the Committee all necessary and appropriate applications, motions, pleadings, proposed orders, notices, schedules, and other documents, and reviewing all financial and other reports to be filed in the Chapter 11 case; d) advising the Committee concerning, and preparing responses to, applications, motions, pleadings, notices and other papers that may be filed and served in the Chapter 11 case; e) appearing in Court and at statutory meetings of creditors to represent the interests of the Committee; f) assisting in the negotiation, formulation, drafting and confirmation of a plan or plans of reorganization and matters related thereto; and g) performing all other legal services for and on behalf of the Committee that may be necessary or appropriate in the administration of the Chapter 11 case. The Nexsen Pruet attorneys will bill at their customary rates for their services. The professionals who will be responsible in this retention are: Julio E. Mendoza, Jr. $285 per hour Suzanne Taylor Graham Grigg $145 per hour Janette P. Carter $95 per hour Headquartered in Georgetown, South Carolina, Georgetown Steel Company, LLC, manufactures high-carbon steel wire rod products using the Direct Reduced Iron (DRI) process. The Company filed for chapter 11 protection on October 21, 2003 (Bankr. S.C. Case No. 03-13156). Michael M. Beal, Esq., at McNair Law Firm P.A., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $50 million each. GLOBAL CROSSING: Unveils New Board of Directors ----------------------------------------------- Global Crossing and Singapore Technologies Telemedia (ST Telemedia) announced Global Crossing's new Board of Directors. * Lodewijk Christiaan van Wachem will serve as chairman of the board, and * Peter Seah will become the vice chairman. Additional new directors include: * E.C. "Pete" Aldridge, Jr., * Archie Clemins, * Donald L. Cromer, * Richard R. Erkeneff, * Lee Theng Kiat, * Charles Macaluso, * Michael Rescoe, and * Robert J. Sachs. ST Telemedia will become a 61.5 percent equity shareholder of Global Crossing upon consummation of the ST Telemedia-Global Crossing purchase agreement and Global Crossing's emergence from bankruptcy. Under Global Crossing's plan of reorganization, ST Telemedia appoints eight of the directors, while two members are appointed by Global Crossing's creditors committee to form the new ten-member board. All board appointments will become effective immediately upon Global Crossing's emergence from bankruptcy. The new board of directors intends to work closely with the current management team to build on the accomplishments that have been achieved during the past 22 months and to help Global Crossing become a global telecommunications leader. Biographical Data Chairman of the Board, Lodewijk van Wachem was president of the Royal Dutch Petroleum Company from 1982 to 1992 and chairman of its supervisory board from 1992 to 2002. He joined the Royal Dutch/Shell Group in 1953 and served in various capacities in Latin America, Africa, the Far East and Europe. In addition to his new role as chairman of the board of Global Crossing, Mr. van Wachem currently serves on the supervisory board of Royal Philips Electronics N.V., on the boards of ATCO (Canada) Ltd. and Zurich Financial Services, and on the executive board of Rand Europe. Vice chairman of Global Crossing's new board, Peter Seah, president and chief executive officer of Singapore Technologies Group, is also chairman of SembCorp Industries and Singapore Technologies Engineering. He serves on the boards of Singapore Technologies Group and its companies including CapitaLand Limited, Chartered Semiconductor Manufacturing Ltd., StarHub Pte. Ltd., and ST Assembly Test Services. Prior to joining Singapore Technologies Group, Mr. Seah was a banker for 33 years, and served as vice chairman and chief executive officer of Overseas Union Bank. In addition to the chairman and vice chairman, the other eight new board members include: * Pete Aldridge, former Under Secretary of Defense for Acquisition, Technology and Logistics. Mr. Aldridge will also serve as the head of the board's four-member security committee as outlined in the National Security Agreement signed by Global Crossing, ST Telemedia, and the U.S. Government. His past positions also include chief executive officer of the Aerospace Corporation, president of McDonnell Douglas Electronic Systems, Secretary of the Air Force, and numerous other senior posts within the Department of Defense. Mr. Aldridge is a current member of the Lockheed Martin board of directors; * Archie Clemins, owner and president of Caribou Technologies, Inc., and co-owner of TableRock International LLC. A veteran of the U.S. military, he concluded his career in Hawaii as an Admiral and the 28th Commander of the U.S. Pacific Fleet. Admiral Clemins will also serve on the security committee; * Donald Cromer, former president of the Hughes Space and Communications Company. A 32-year veteran of the U.S. Air Force, he concluded his career as a Lt. General and the Commander of Space and Missile Center. General Cromer will also serve on the security committee; * Richard Erkeneff, formerly the president and chief executive officer of United Industrial Corporation. He has also held senior posts with McDonnell Douglas Corporation. Mr. Erkeneff will also serve on the security committee; * Lee Theng Kiat, president and chief executive officer of ST Telemedia Pte. Ltd. Mr. Lee joined Singapore Technologies (ST) in 1985 and has held various senior positions in the company including directorships in legal and strategic business development. In 1993, recognizing the promise of the telecommunications sector, Mr. Lee spearheaded the creation of ST Telemedia as a new business area for ST. Since that time, Mr. Lee has led ST Telemedia's growth by investing in and managing information-communications businesses. * Charles Macaluso, founding principal and chief executive officer of Dorchester Capital Advisors (formerly East Ridge Consulting, Inc.), a management consulting and corporate advisory firm founded in 1996. Mr. Macaluso also currently serves as a director of Darling International; * Michael Rescoe, chief financial officer and executive vice president, financial services, of the Tennessee Valley Authority, a federal corporation that is the nation's largest public power company and a regional development agency that manages the fifth- largest river system in the United States; and * Robert Sachs, a communications attorney, who currently serves as president & CEO of the National Cable & Telecommunications Association (NCTA) since 1999. Prior to joining NCTA, Mr. Sachs was a co-founder and principal of the Continental Consulting Group, LLC, a consulting firm serving the cable television industry, and prior to that he served in various executive capacities with Continental Cablevision, Inc., and its successor MediaOne, Inc. In addition to the security committee, Global Crossing's board plans to create an executive committee composed of both directors and non-directors. Executive committee members are expected to include: Pete Aldridge, a Global Crossing director; Terry Clontz, president and chief executive officer of StarHub; Richard Erkeneff, a Global Crossing director; Lee Theng Kiat, a Global Crossing director and president and chief executive officer of ST Telemedia; Jeremiah Lambert, former co-chairman of Global Crossing's board; John Legere, chief executive officer of Global Crossing; Charles Macaluso, a Global Crossing director and founding principal and chief executive officer of Dorchester Capital Advisors; and Jean Mandeville, chief financial officer of ST Telemedia. ABOUT GLOBAL CROSSING Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. On January 28, 2002, Global Crossing Ltd. and certain of its subsidiaries (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) and coordinated proceedings in the Supreme Court of Bermuda (Bermuda Court). On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda-incorporated companies' businesses under the control of their boards of directors and under the supervision of the Bankruptcy Court and the Bermuda Court. Additional Global Crossing subsidiaries commenced Chapter 11 cases on April 23, August 4 and August 30, 2002, with the Bermuda incorporated subsidiaries filing coordinated insolvency proceedings in the Bermuda Court. The administration of all the cases filed subsequent to Global Crossing's initial filing on January 28, 2002 has been consolidated with that of the cases commenced on January 28, 2002. Global Crossing's Plan of Reorganization, which was confirmed by the Bankruptcy Court on December 26, 2002, does not include a capital structure in which existing common or preferred equity will retain any value. On November 18, 2002, Asia Global Crossing Ltd., a majority-owned subsidiary of Global Crossing, and its subsidiary, Asia Global Crossing Development Co., commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda, both of which are separate from the cases of Global Crossing. Asia Global Crossing has announced that no recovery is expected for Asia Global Crossing's shareholders. Asia Netcom, a company organized by China Netcom Corporation (Hong Kong) on behalf of a consortium of investors, has acquired substantially all of Asia Global Crossing's operating subsidiaries except Pacific Crossing Ltd., a majority-owned subsidiary of Asia Global Crossing that filed separate bankruptcy proceedings on July 19, 2002. Global Crossing no longer has control of or effective ownership in any of the assets formerly operated by Asia Global Crossing. Please visit http://www.globalcrossing.com/for more information about Global Crossing. ABOUT SINGAPORE TECHNOLOGIES TELEMEDIA Singapore Technologies Telemedia (ST Telemedia) is a leading information and communications company in the Asia-Pacific region. Incorporated in 1994, the company provides a wide range of communications and information services including fixed and mobile communications, Internet exchange and data communications, satellite, broadband and Pay TV. ST Telemedia also is a major shareholder in StarHub, Singapore's info-communications company providing a full range of information, communications and entertainment services over fixed, mobile and Internet platforms; in Indosat, Indonesia's second largest telecommunications service provider; and in Equinix, the largest global network-neutral data center and Internet exchange service company in the United States and the Asia-Pacific region. ST Telemedia is a subsidiary of the Singapore Technologies Group, a technology-based multinational with operations and interests in more than 20 countries, including the United States. The Group has U.S. investments in Alabama, Arizona, California, Massachusetts, North Carolina, Texas, and Virginia. Please visit http://www.sttelemedia.com/for more information about Singapore Technologies Telemedia. GLOBAL CROSSING: Files Annual Report on Form 10-K with SEC ---------------------------------------------------------- Global Crossing announced that it has filed with the Securities and Exchange Commission (SEC) its 2002 annual report on Form 10-K. The filing, which is available on the SEC and Global Crossing Web sites, includes financial statements for the 2000, 2001 and 2002 fiscal years. The Form 10-K is Global Crossing's first periodic report filed with the SEC since its Form 10-Q for the fiscal quarter ended September 30, 2001. The filing of periodic reports and the preparation of audited financial statements for 2001 and 2002 had been delayed due to the cessation of the audit practice of its prior auditor, Arthur Andersen, the demands of the bankruptcy process, and a then-pending investigation by a special independent committee of its board of directors into certain allegations relating to concurrent transactions for the purchase and sale of telecommunications capacity and services. In October 2002, Global Crossing announced that it would restate its accounting for the concurrent transactions recorded in certain filings previously made with the SEC. The financial statements included in the 2002 Form 10-K filing reflect these restatements, as well as certain additional restatements identified during the course of the audit of Global Crossing's 2001 and 2002 financial statements. A detailed description of the restatements and their impact on financial statements previously filed with the SEC may be found in the Form 10-K filing made today. In connection with the filing of the Form 10-K and Global Crossing's impending emergence from bankruptcy, Global Crossing also announced its intention to file the following reports with the SEC within fifteen days after its emergence: * Quarterly reports on Form 10-Q for the first, second and third fiscal quarters of 2003. * A current report on Form 8-K including a "fresh start" balance sheet establishing a "fair value" basis for the carrying value of the assets and liabilities of the reorganized company. As previously announced, Global Crossing's plan of reorganization provides for the cancellation of existing preferred and common stock. The holders of these previously publicly traded securities will receive no consideration under the plan of reorganization. GLOBAL MOTORSPORT: S&P Rates $85 Mil. Senior Secured Notes at B- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Global Motorsport Group Inc.'s privately placed, Rule 144A $85 million senior secured notes due 2008. At the same time, Standard & Poor's assigned its 'B-' corporate credit rating to the company. Morgan Hill, California-based Global Motorsport is the largest independent distributor of aftermarket parts and accessories for Harley-Davidson motorcycles. Pro forma total debt, including the $16.5 million in debt of parent Global Motorsport Holdings Inc., was $102 million as of Nov. 1, 2003. Issue proceeds will be used to refinance the company's existing credit facility and add to cash balances. The ratings outlook is negative. "The rating reflects the company's historically volatile operating performance and discretionary cash flow, as well as its high debt leverage," said Standard & Poor's credit analyst Hal Diamond. Global Motorsport's market share is only about one-third of the size of Harley-Davidson Inc.'s parts and accessories business. Harley-Davidson only sells parts and accessories through its network of exclusive dealers, thus leaving a market niche of independent dealers for Global Motorsport to exploit. EBITDA has been volatile over the past several years despite Harley-Davidson's ongoing growth in unit production, large installed base, and the desire of enthusiasts to customize their motorcycles. Profitability was negatively impacted in the fiscal year ended Feb. 1, 2003, due to prior management's strategies. Sales declined 7% due to the company's inability to fill orders because of insufficient inventory levels, while EBITDA fell 14% reflecting high operating and overhead expenses. During fiscal 2003, the company replaced almost its entire management team, following several quarters of poor operating performance and concerns raised with respect to the need to restate its fiscal 2001 financial statements. The new management team is implementing a strategic plan to improve profitability and rationalize operations. Sales were flat in the nine months ended Nov. 1, 2003, as increased pricing and an improvement in the merchandise fill rate were offset by lower volume. The company will need to continue to turn around its operating performance and generate positive discretionary cash flow in order to reduce its debt leverage. Additionally, the company is addressing concerns raised by its auditors. Failure to correct these material weaknesses could have a material adverse effect on its business and financial condition. GLOBALSTAR: Thermo Closes Acquisition & Begins Funding Ops. ----------------------------------------------------------- Globalstar, L.P. and Thermo Capital Partners LLC finalized their previously-announced acquisition plan. As a result, a new Globalstar company, controlled by Thermo, has been established, and Thermo will be providing funding for the new company's operations. Under the acquisition agreement, Globalstar's business assets will be transferred to the new company, which will operate under the Globalstar brand name. The transfer of certain assets has already occurred, and the entire process will be completed upon receipt of U.S. regulatory approval, which is expected to take place in the first quarter of 2004. In the meantime, Globalstar's regulated assets will remain with Globalstar, L.P. and will be operated by the new company pursuant to a management agreement. As a result of the transaction with Thermo, Globalstar service and customer support around the world will continue uninterrupted, and the new company is planning to introduce an accelerated business expansion plan later in 2004. "This is the beginning of a new, very encouraging chapter for Globalstar," said company president Tony Navarra. "Our working relationship with Thermo has already spanned many months, and as a result, we have been able to rapidly develop with them an outline for an aggressive business plan that will give Globalstar the opportunity to broaden our business and to introduce new products and services in the future." The announcement follows last month's approval by the U.S. Bankruptcy Court in Delaware of the acquisition of the Globalstar business by Thermo. The agreements completed late last week will give Thermo an 81.25% ownership of the new company that will eventually take control of substantially all of Globalstar's assets and operations, in exchange for a cash investment of up to $43 million. The remaining 18.75% of the equity interests in the new company will be retained by Globalstar for future distribution to its creditors under its bankruptcy plan. Additionally, Globalstar's creditors will have the right to purchase additional equity interests in the new company for an aggregate ownership interest of up to 36.37%. "Even in the midst of this challenging restructuring process, Globalstar has been able to achieve truly astounding growth, opening up many new markets and more than tripling our subscriber base since our restructuring work first began," Mr. Navarra added. "With this process now almost complete, we should be able to accelerate our business growth even further, reinforcing the company's leadership in the mobile satellite phone industry." Globalstar is the world's most widely-used handheld satellite phone service, offering both voice and data services from virtually anywhere in over 100 countries around the world. For more information, visit Globalstar's web site at http://www.globalstar.com/or Globalstar Canada at www.globalstar.ca/ Thermo Capital Partners LLC is part of the Thermo Companies, based in New Orleans, LA, and Denver, CO, a highly successful group of privately-held companies focused on opportunities in the telecommunications, power generation, natural resources and real estate industries. For more information, visit the Thermo Web site at http://www.thermocompanies.com/ HALLMARK HEALTH: S&P Ups Underlying Rating One Notch to BB ---------------------------------------------------------- Standard & Poor's Ratings Services raised its underlying rating (SPUR) to 'BB' from 'BB-' on $72.27 million of outstanding debt issued by Massachusetts Health and Educational Facilities Authority for Hallmark Health System. The outlook is positive. "The rating reflects substantial improvement in profitability over the past two years, adequate liquidity, and the closure of two of the system's four hospitals," said Standard & Poor's credit analyst Cynthia Macdonald. "The positive outlook indicates that a higher rating in the future is possible if the system can produce positive operating margins at the hospitals and maintain liquidity in the face of increasing capital requirements," she added. Hallmark Health Corporation, parent of Hallmark Health System, operates a system with two active acute-care hospitals, Melrose- Wakefield Hospital and Lawrence Memorial Hospital, an outpatient imaging and radiation therapy center (CHEM), visiting nurse association, and employed physician practices. The system will continue to focus on revenue enhancement as the key to fiscal improvement, with emphasis on increasing the specialty physician staff and services, continued renegotiation of managed-care contracts, and a commitment to building primary care referrals. The average age of plant is low at 8.6 years, and Hallmark has no major future capital needs or financing plans, so it should be possible to continue to build liquidity. The system will, however, need to finance its entire capital budget from operations going forward, and expects to spend $10 million in fiscal 2004. The system is actively marketing Malden Hospital for sale and any proceeds will also boost balance sheet liquidity. The rating has the potential to be raised over the next several years as management improves profitability at the hospitals and reduces reliance on CHEM and other profitable non-hospital affiliates for income. Standard & Poor's will also evaluate the facility's updated strategic plan under new management--expected next spring--to determine any potential effect on the rating. HANOVER COMPRESSOR: S&P Assigns B Rating to $300-Mil. Sr. Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to natural gas compression equipment provider Hanover Compressor Co.'s (BB-/Negative/--) proposed $200 million senior subordinated notes due 2010 and $100 million convertible senior notes due 2014. The convertible senior notes are rated two notches below the corporate credit rating to reflect the significant level of secured debt that subordinates unsecured debt holders. At the same time, Standard & Poor's affirmed its ratings on Hanover. The outlook remains negative. Houston, Texas-based Hanover has about $1.8 billion of debt outstanding as of Sept. 30, 2003. "The proceeds of the proposed $300 million financing are expected to refinance Hanover's $200 million (1999A) equipment lease notes that mature in 2004 and repay a portion of outstanding bank debt," said Standard & Poor's credit analyst Steven K. Nocar. "Hanover's liquidity will benefit from the extension of its debt maturities, the increased borrowing capacity under its revolver, and the replacement of its bank credit facility with one that has more flexible financial covenants," he continued. Hanover has received commitments for a new bank credit facility (totaling $345 million) that is contingent on the closing of at least $275 million of new financing by year-end 2003. The new financing completes this requirement. The negative outlook for Hanover reflects Standard & Poor's continued concerns regarding the company's ability to fortify its capital structure, as well as the uncertainty surrounding the outcome of the SEC's formal investigation into Hanover's financial restatements. Ratings could be lowered if Hanover runs significant free cash flow deficits and is required to seek external financing, such that the company's debt burden materially increases or if Hanover is unsuccessful with its new financings. HARRAH'S ENTERTAINMENT: Launches Sr. Debt Offering to Raise $500M ----------------------------------------------------------------- Harrah's Operating Company, Inc., a wholly owned subsidiary of Harrah's Entertainment, Inc. (NYSE: HET), intends to raise approximately $500 million through the sale of unsecured 5.375% Senior Notes, due 2013, in a private-placement transaction. The Senior Notes will be guaranteed by Harrah's Entertainment, Inc. Net proceeds from the offering will be used to retire or otherwise reduce outstanding debt and for general corporate purposes. The securities to be offered have not been registered under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This announcement shall not constitute an offer to sell or the solicitation of an offer to buy any security. Founded 65 years ago, Harrah's Entertainment, Inc. (Fitch, BB+ Senior Subordinated Rating, Stable Outlook) operates 26 casinos in the United States, primarily under the Harrah's brand name. Harrah's Entertainment is focused on building loyalty and value with its target customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. More information about Harrah's Entertainment is available on the company's Web site, http://www.harrahs.com HORIZON GROUP: Sells Sealy, Texas Outlet Center for $1.8 Million ---------------------------------------------------------------- Horizon Group Properties, Inc. (HGP) (Nasdaq: HGPI), an owner, operator and developer of factory outlet centers and land developer, announced that it had sold the 200,000 square foot Sealy Outlet Center in Sealy, Texas for $1.8 million. The shopping center is located 65 miles west of Houston and currently is 42% occupied. "We are very pleased to have sold the property," said Gary J. Skoien, Chairman, President and Chief Executive Officer of Horizon Group Properties. "The proceeds from the sale will be used to further our redevelopment activities within in our portfolio. The most immediate project is the repositioning of our center in Holland, Michigan. The proceeds may also be deployed in opportunistic acquisitions." Based in Chicago, Illinois, Horizon Group Properties, Inc. has 8 factory outlet centers in 6 states totaling approximately 1.6 million square feet and is the developer of a master planned community in suburban Chicago. As reported in the Troubled Company Reporter's December 8, 2003 issue, Horizon Group Properties, Inc. (Nasdaq: HGPI) completed the restructuring of the last of the three loans which had been in default since October 2001. The completed restructuring resulted in the reinstatement to current status of the loan secured by HGP's outlet center in Traverse City, Michigan. That loan has a current principal balance of approximately $4.9 million, bears interest at 8.46% and matures in August 2009. As previously announced, HGP paid off, at a discount, the loans secured by its outlet centers in Sealy, Texas and Gretna, Nebraska. Based in Chicago, Illinois, Horizon Group Properties, Inc. has 9 factory outlet centers in 7 states totaling more than 1.8 million square feet and a 650 acre mixed use land development in Huntley, Illinois. HORIZON GROUP PROPERTIES: Completes Odd Lot Share Program --------------------------------------------------------- Horizon Group Properties, Inc. (HGP) (Nasdaq: HGPI), an owner, operator and developer of factory outlet centers and land developer, announced that its odd lot share program for the purchase of all shares of its common stock held by persons owning 20 or fewer shares as of September 26, 2003 expired at 3:00 p.m., Eastern Standard Time, on Monday, December 8, 2003. HGP has accepted for purchase pursuant to the odd lot share repurchase offer 15,078 shares of its common stock from tendering shareholders. HGP will pay $5.00 for each share purchased. Resulting in large part from the shares purchased in this odd lot offer, HGP estimates that it now has fewer than 300 shareholders of record, which is required in order for HGP to de-register its common stock with the Securities and Exchange Commission and go private. Thus, HGP intends to de-register its common stock and cease being a reporting company of the Securities and Exchange Act of 1934, as amended. In addition, HGP will notify NASDAQ of this filing, and its common stock will cease to be listed on the NASDAQ SmallCap Market. Based in Chicago, Illinois, Horizon Group Properties, Inc. has 8 factory outlet centers in 6 states totaling approximately 1.6 million square feet and is the developer of a master planned community in suburban Chicago. INTERSTATE BAKERIES: Issues Lower Preliminary Results for Q2 ------------------------------------------------------------ Interstate Bakeries Corporation (NYSE:IBC) announced that based upon preliminary results for its fiscal second quarter ended November 15, 2003, net sales were down approximately one percent from the prior year and operating income is projected to be approximately 30 percent lower than the prior year. Fiscal 2004 operating income results for the quarter include restructuring charges of approximately $2 million associated with the announced closing of the Company's Grand Rapids, Michigan, bakery and restructuring activities initiated in the prior fiscal year. Additionally, the Company's anticipated results include a second quarter year-over-year interest expense reduction of approximately $1 million. These anticipated results reflect preliminary estimates. The Company is scheduled to release its quarterly results and hold its quarterly conference call on Thursday, December 18, 2003. Over the past year, the Company has initiated a series of changes designed to improve the efficiency and effectiveness of operations, with the long-term objective of building greater stockholder value. As a part of these efforts, the Company has strived to become even more aggressive in managing expenses in all areas. In response to the continued challenge of rising health care costs, the Company recently announced increases in retiree contribution levels relative to its nonunion retiree health care benefit plans effective January 1, 2004. This measure is projected to decrease pre-tax expense by approximately $6 million during the remainder of the Company's current fiscal year that ends May 29, 2004. In addition, the Board of Directors of the Company declared a quarterly dividend of $0.07 per share on the Company's common stock, payable February 2, 2004, to stockholders of record at the close of business on January 15, 2004. Interstate Bakeries Corporation (S&P, BB Corporate Credit and Senior Secured Bank Loan Ratings, Negative) is the nation's largest wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names including Wonder, Hostess, Dolly Madison, Merita and Drake's. The Company, with 58 bread and cake bakeries located in strategic markets from coast- to-coast, is headquartered in Kansas City, Missouri. KAISER: Court Gives Go-Ahead to Burlington Settlement Agreement --------------------------------------------------------------- As previously reported, The Burlington Northern and Santa Fe Railway Company owns an eight-acre parcel of property located in the Hillyard neighborhood of Spokane, Washington at East 3412 Wellesley Avenue. From 1954 through 1987, Burlington and its predecessor leased the Hillyard Site to various companies that used the property to conduct certain aluminum processing operations, including the processing of aluminum dross. Based on the relatively recent discovery of contaminants at the Hillyard Site and subsequent request by the Washington Department of Ecology that responsive actions be taken, Burlington undertook investigative and remedial actions at the Hillyard Site. For the most part, the Remedial Actions, which resulted in expenses to Burlington aggregating $3,000,000, have been completed. Because one or more of the Kaiser Aluminum Debtors' facilities had shipped aluminum materials to the Hillyard Site in the past, Burlington contends that the Debtors are among the several parties jointly and severally liable for the Remediation Costs. Accordingly, Burlington filed Claim No. 1607 for $3,328,070 against the Debtors. While the Debtors dispute the Burlington Claim and were not involved in the Remedial Actions taken, the Debtors and Burlington agreed to resolve the issues concerning the remediation measures taken at the Hillyard Site by entering into a settlement agreement. The Settlement Agreement reduces and allows the Burlington Claim for $511,875. The Settlement Agreement also provides both parties with mutual releases in respect of all liabilities and claims arising from any contamination of the Hillyard Site. Consequently, the debtors sought and obtained Court approval for the Burlington settlement. (Kaiser Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) LINCOLN LOGS: Acquires Snake River Membership Interests for $1M --------------------------------------------------------------- On November 17, 2003, Lincoln Logs Ltd., a New York corporation, completed the acquisition of all of the outstanding limited liability company membership interests of Snake River Log Homes, LLC, a privately-held limited liability company. Snake River is a company organized under the laws of Idaho. The acquisition of membership interests was effected pursuant to a Membership Interests Purchase Agreement, dated November 17, 2003, between the Company and the membership interest holders of Snake River. The Company purchased all of the outstanding membership interests of Snake River from the Members for consideration of approximately $1,260,000, subject to adjustments contained in the Membership Interests Purchase Agreement. The consideration paid by the Company to the Members consists of the following: cash payment, promissory notes issued by the Company to the Members, and common shares of the Company conveyed to select Members. The Membership Interests Purchase Agreement and the purchase price referenced therein were negotiated at arm's length between representatives of the Company and representatives of the Members. Except for the transactions described in the Membership Interests Purchase Agreement, Lincoln Logs indicates there is no material relationship between the Company, Snake River, their respective directors, officers, affiliates, or associates thereof. The source of funds is from general corporate funds and unregistered shares of the Company's common stock. (b) The primary business of Snake River is the designing, manufacturing, and marketing of a line of log homes targeted for purchase and assembly by custom builders and "do-it- yourself" consumers. Any plant assets, equipment or other physical property acquired as part of this transaction will continue to be used for those purposes. The company's July 31, 2003, balance sheet reports that current debts exceeds current assets by about $332K. LITFUNDING: Pursuing Steps Necessary to Maintain Operations ----------------------------------------------------------- On March 3, 2003, Litfunding Corp. changed its name from RP Entertainment, Inc. to LitFunding Corp. LitFunding Corp., formerly RP Entertainment, Inc., was incorporated in the State of California in July 1966 as a C corporation and in 1996 subsequently filed as a Nevada corporation. On February 25, 2003, the Company entered into an Agreement of Merger with California LitFunding, formerly LitFunding Corp. a California corporation. LFC became a subsidiary when the Articles of Merger between RP Acquisition Corp., the Company's wholly owned subsidiary that was formed to facilitate the merger, and LFC were filed with the Nevada Secretary of State. The charter documents of the Company are the charter documents of the surviving corporation. Pursuant to the Merger Agreement, 7,592,250 shares of common stock were to be issued to the LFC shareholders in exchange for all the issued and outstanding shares of LFC common stock. LitFunding Corp, a California corporation changed its name to California LitFunding on May 30, 2003. Pursuant to the Merger Agreement, the current officers of the Company resigned and the officers of LFC were appointed as officers of the merged company. Upon the closing of the merger, the current officers of the Company agreed to have their 4,500,000 shares of the Company's common stock cancelled. The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has an accumulated deficit of $16,727,732 on September 30, 2003, including a net loss of $6,244,399 during the nine month period ended September 30, 2003. The Company's total liabilities exceeded the total assets by $13,183,410 as of September 30, 2003. At September 30, 2003, the company's total shareholders' equity deficit is reported at about $13 million. Management plans to take the following steps that it believes will be sufficient to provide the Company with the ability to continue in existence. (i) Management intends to continue to raise additional financing through private equity or debt financing to pay down Company debt and/or reduce the cost of debt service. (ii) In that regard, the Company consummated a reverse acquisition on February 25, 2003. The Company's principal capital requirements during the year 2003 are to fund the internal operations, defend it self from litigation currently in process, and fund the increase in litigation advances activity. The Company plans to raise necessary funds by selling its own common shares or through the sale of interest bearing debentures to selected investors. The Company will also consider establishing relationships with selected business partners whose contributions include necessary cash. MDC CORP: New Securities Offering Garners Gross Proceeds of $31M ---------------------------------------------------------------- MDC Corporation Inc. operating as MDC Partners of Toronto announced that it has closed its previously announced offering of 3,903,451 Adjustable Rate Exchangeable Securities due December 31, 2028, including 503,451 Exchangeable Securities issued pursuant to the exercise of the over-allotment option, for total net proceeds to MDC of $31.7 million. The net proceeds of the offering will be used for general corporate purposes. The securities pay interest monthly at a rate equal to the actual distribution by Custom Direct Income Fund in that month and a holder of an Exchangeable Security will have the right to exchange the security for a unit of the Fund once MDC is entitled to effectively exchange its 20% ownership of Custom Direct, Inc. into units of the Fund. The offering has been underwritten by a syndicate led by CIBC World Markets Inc., which includes TD Securities Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc., National Bank Financial Inc. and Griffiths McBurney & Partners. MDC Partners (S&P, BB- Long-Term Corporate Credit Rating) is one of the world's leading marketing communications firms. Through its partnership of entrepreneurial firms, MDC provides creative, integrated and specialized communication services to leading brands throughout the United States, Canada and the United Kingdom. MDC Class A shares are publicly traded on the Toronto Stock Exchange under the symbol MDZ.A and on the NASDAQ under the symbol MDCA. METRO MASONRY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Metro Masonry Construction, Inc. 3900 Split Trail Road Plano, Texas 75074 Bankruptcy Case No.: 03-45718 Type of Business: The debtor specializes in commercial construction and high end residential masonry. Chapter 11 Petition Date: December 8, 2003 Court: Eastern District of Texas (Sherman) Debtor's Counsel: Eric A. Liepins, Esq. 12770 Coit Road Suite 950 Dallas, TX 75251 Tel: 972-991-5591 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ TNT Equipment $47,475 United Rentals $43,053 Texas Cut Stone $36,074 Advanced Cast Stone, Inc. $30,001 MCB Trust $15,186 MG Maher & Company $9,405 Blackson Brick Co. $8,635 Jackson Enterprises $7,684 DFW Acrylic & Plastering $7,650 Aztec Crane Corporation $7,307 Kenneth Maun $6,272 Curtain Wall Design & Consulting, Inc. $4,971 CISCO High-Lift $4,823 Cutler - Smith, P.C. $4,690 H&E Equipment Services, LLC $3,305 Montlake Ins. Holding Inc. $3,060 Bright & bright, L.L.P. $2,425 Builders Equipment & supply co. $2,054 North Texas Open Air MRI $1,475 United Masonry Contractors $1,526 MIRANT: Unsecured Panel Retains Miller Buckfire as Fin'l Advisor ---------------------------------------------------------------- Pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure, the Official Committee of Unsecured Creditors of Mirant Corporation, et al. seek the Court's authority to retain Miller Buckfire Lewis Ying & Co., LLC as its financial advisor and investment banker under the terms of the Engagement Letter dated as of August 5, 2003. Monica S. Blacker, Esq., at Andrews & Kurth LLP, in New York, reports that the Mirant Committee conducted two rounds of interviews with several investment banking candidates, in addition to receiving expressions of interest from several other professional. Ultimately, the Mirant Committee selected Miller Buckfire from a short list, which also includes Jefferies & Co., Huron Consulting Group, Greenhill & Co. and Lazard Freres & Co. LLC. In selecting Miller Buckfire, the Mirant Committee determined that, in addition to being the best candidate, the firm's proposed Fee Structure was not just competitive but favorable to the unsecured creditor body that the Mirant Committee represents. Miller Buckfire is an independent firm providing strategic and financial advisory services in large-scale corporate restructuring transactions. According to Kenneth A. Buckfire, the Managing Director and one of the founders of Miller Buckfire Lewis Ying & Co., his firm and its professionals have extensive experience in providing financial advisory and investment banking services to financially distressed companies and to creditors, equity constituencies and government agencies in reorganization proceedings and complex financial restructurings, both in and out of court. For instance, Miller Buckfire's professionals have provided financial advisory, investment banking and other services in connection with the restructuring of Acterna Corporation, Burlington Industries, Cajun Electric Power Corporation, Kmart Corporation, Loewen Group, Polaroid Corporation, and PSINet, among others. Ms. Blacker relates that the resources, capabilities and experience of Miller Buckfire are crucial to the Mirant Committee's duties and activities. Broadly speaking, Miller Buckfire will concentrate its efforts on formulating alternatives, evaluating any plan of reorganization proposed by the Debtors or any party-in-interest, and assisting the Mirant Committee in its efforts with regard to a restructuring. Under the terms of the Engagement Letter, Miller Buckfire will: (a) to the extent it deems necessary, appropriate and feasible, familiarize itself with the business, operations, properties, financial condition and prospects of the Company; (b) provide financial advice and assistance to the Mirant Committee in considering the alternatives available for a plan of reorganization for the Debtors, in evaluating any Plan that may be proposed by the Debtors or any other party-in-interest and the recoveries thereunder and to the extent the Mirant Committee is authorized to do so, in structuring, proposing and seeking confirmation of a Plan; (c) if requested by the Mirant Committee, assist the Mirant Committee and participate in negotiations with the Company and other entities or groups affected by the Plan; (d) if requested by the Committee, participate in hearings before the Bankruptcy Court with respect to the matters upon which Miller Buckfire has provided advice, including, as relevant, coordinating with the Committee's counsel with respect to testimony (including as to valuation) in connection therewith; and (e) as soon as reasonably practicable, deliver to the Mirant Committee a report summarizing its preliminary observations and analyses. With the Court's approval of fee applications, Miller Buckfire will be entitled to: (a) a $150,000 monthly fee; and (b) upon consummation of a Restructuring, a $2,500,000 Transaction Fee. In addition, Miller Buckfire reserves the right to seek further compensation after confirmation of a Plan, based on, among other things, recoveries to the unsecured creditors to Mirant Corp. and the timing of the Debtors' Chapter 11 cases. Miller Buckfire will also seek a reimbursement of travel costs and other reasonable out-of-pocket expenses incurred in connection with, or arising out of the firm's activities under or contemplated by the engagement. Mr. Buckfire explains that his firm does not charge for fees on an hourly basis. The proposed fees and expense reimbursement provisions are consistent with normal and customary billing practices for cases of this size and complexity, which requires the level and scope of services outline. The monthly flat fees plus "transaction fees" that are payable upon consummation of a restructuring. This is also the standard fee arrangement that is followed by other investment banking firms who provide restructuring services and it is consistent with the fee arrangements that have been authorized in other Chapter 11 cases in which Miller Buckfire and other leading investment banks have rendered services. Mr. Miller informs the Court that in researching for any relationship Miller Buckfire probably has with all parties-in- interest, he did not find any connection with the Debtors, their creditors, the U.S. Trustee or any other party with an actual or potential interest in these cases that are adverse to the proposed retention. Also, Miller Buckfire is not and has not been an investment banker for any outstanding securities of the Debtors and is not a creditor in these cases. Thus, Miller Buckfire is a "disinterested person" as defined by Section 101(14) of the Bankruptcy Code and as required by Section 327(a) of the Bankruptcy Code. * * * On an interim basis, the Court authorizes the retention of Miller Buckfire effective August 5, 2003. (Mirant Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL STEEL: Earns Clearance for Ziegler Settlement Agreement ---------------------------------------------------------------- Ziegler, Inc., filed a secured claim against National Steel Pellet Company for $1,873,964 for the sale of an industrial, specialized mining truck. Ziegler also asserts other claims, including a claim for reclamation and unsecured claims, related to its sale of the Truck to N.S. Pellet. Pursuant to an Interim Stipulation and Agreed Order, the National Steel Debtors were required to periodically escrow funds sufficient to provide Ziegler adequate protection for diminution in the Truck's value. William Choslovsky, Esq., at Piper Rudnick LLP, in Chicago, Illinois, reports that $500,000 was escrowed during the course of the bankruptcy cases to provide Ziegler adequate protection, all of which has remained in the Adequate Protection Escrow and not paid to Ziegler. As required by the U.S. Steel Sale Order, additional funds were escrowed to protect Ziegler's asserted Secured Claim. The Debtors have previously escrowed funds sufficient to fully satisfy Ziegler's Secured Claim. In conjunction with the sale of the Debtors' assets to U.S. Steel, professional appraisals were conducted. According to Mr. Choslovsky, the Truck was appraised at $1,800,000 using a "Fair Market Value Installed" analysis, and at $1,500,000 using a "Liquidation Value in Place" analysis. The Debtors dispute the amount, validity, or priority of the Secured Claim. In an effort to conserve their resources, as well as those of the Court, and to avoid the risk, uncertainty and delay associated with litigation, the Debtors agreed to resolve certain disputes over the Secured Claim on the terms set forth in a settlement agreement. The Settlement Agreement provides that, in full satisfaction of all its Claims, Ziegler will receive: * an allowed, secured claim against N.S. Pellet's estate for $1,250,000; * an allowed, general, unsecured claim against N.S. Pellet's estate for $606,549; and * an administrative claim against N.S. Pellet's estate for $10,301. In turn, Ziegler will release all liens it asserts against the Debtors' property. The Debtors believe that they are receiving a significant benefit from resolving the Secured Claims. Mr. Choslovsky asserts that the Settlement is justified because: (a) after careful investigation, the Debtors concluded that the underlying liens that support the Secured Claim is valid; (b) the prior appraisals of the Truck support the amount of the Secured Claim; (c) if the matter concerning the validity and priority of the Secured Claim is litigated, it would not only be costly, the likely result is unclear; (d) the Debtors believe that their major creditor constituencies will support the proposed settlement; and (e) the funds sufficient to satisfy the settlement have been previously escrowed. Thus, at the Debtors' request, the Court approves the Debtors' Settlement Agreement with Ziegler under Rule 9019 of the Federal Rules of Bankruptcy Procedure. (National Steel Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS CORNING: Reopens Tornado-Damaged Insulation Facility ---------------------------------------------------------- Owens Corning re-dedicated its Springfield, Tenn., fiberglass manufacturing facility Monday with a ribbon cutting ceremony to be held at 2 p.m. The facility was severely damaged by a tornado that hit the area May 5th. "We are very proud of our employees who have worked so hard to make this re-opening a reality, said Owens Corning CEO Dave Brown. "And we are thankful to our customers and the community for their continued support of Owens Corning and our people throughout." The facility manufactures acoustical and thermal insulation products for customers such as GM/Saturn and Electrolux. Owens Corning was able to continue serving its customers throughout this period by establishing a temporary facility in Portland, Tenn. "We are really happy to be up and running at capacity," said Michele Mazza, Springfield Plant Leader. "Now that we are fully operational, our goal is to continue to grow this business by finding even more ways to provide a customer experience second to none." Owens Corning is a world leader in building materials systems and composites systems. Founded in 1938, the company had sales of $4.9 billion in 2002. Additional information is available on Owens Corning's Web site at http://www.owenscorning.comor by calling the company's toll-free General Information line: 1-800- GETPINK. PARAGON STEAKHOUSE: Hot Brands Agrees to Acquire Eight Locations ---------------------------------------------------------------- Hot Brands, Inc., a Nevada corporation (OTC: HTBI) -- http://www.hotbrands.biz/-- announced that it has signed a letter of intent with Paragon Steakhouse Partners, Inc. as debtor-in- possession to acquire certain assets of 8 Paragon Steakhouse locations, including leasehold interests, liquor licenses, all improvements, including FF&E in the restaurants, which are located in Michigan, Indiana and Ohio. Hot Brands, Inc. will purchase 8 leasehold interests out of bankruptcy court in a bid of $565,000, all cash deal, and will operate the Paragon Steakhouse units under the existing Paragon name for a limited time. Consummation of the acquisition will occur only after execution of a purchase agreement, Bankruptcy court acceptance, and approval of the Hot Brands bid. Hot Brands Chairman and CEO William E. Curtis stated, "At current revenue levels, these high-quality Steakhouse units will add approximately $11 million in annual revenue to Hot Brands' bottom line. The Hot Brands management team has a long experience with turnaround projects, so we know we can substantially improve the revenue stream of these properties and bring them to profitability through the injection of new capital, by bringing in fresh management and improving overhead controls. These established units are prime destination restaurants, and are synergistic additions to our acquisition and management concept." More Information about Paragon Steakhouses The Paragon Steakhouses specialize in complete steak and prime rib meals, and also offer fresh fish and other lunch and dinner dishes. The average dinner check is approximately $26, including alcoholic beverages. Hot Brands management believes that Paragon's emphasis on quality service and the limited menu of its restaurants, with its concentration on high quality USDA choice- graded steaks and prime rib, distinguishes the Steakhouse restaurants from competitors. The Paragon Steakhouses average approximately $1.8 mil. each in annual revenues. More Information about Hot Brands Hot Brands, Inc. operates 43 Hot 'N Now fast food restaurants in Michigan, Wisconsin and Indiana, of which 23 are company owned and 21 are franchised. System-wide 2002 gross sales for the units were approximately $25 million annually. The rapidly growing Hot 'N Now Business currently has over 450 employees, all of which either work for the corporate office or at the operations of the corporate owned locations. In addition the franchise locations employ over 300 additional personnel. Each location has approximately 15 employees, including three Managers-in-training and one salaried General Manager. Hot Brands is launching an aggressive effort to acquire other restaurant assets that are synergistic with the Hot 'N Now Business. Any such acquisition may be structured as a merger, stock exchange or cash purchase. Hot Brands will favor companies with strong operating revenues that lend themselves to the establishment of a franchise program or similar means of rapid establishment of a distribution network. Hot Brands management have substantial experience in the turnaround of distressed restaurant and food properties and will be looking for sound assets that can be bought cheaply and quickly overhauled to profitability. PG&E NAT'L: USGen Wants Approval for Providence Tax Settlements --------------------------------------------------------------- USGen New England Inc.'s Manchester Street Station was the subject of a tax treaty or tax stabilization plan between USGen and the City of Providence, Rhode Island, which ran through June 2003. In a city-wide revaluation of real property as of December 31, 2000, Providence substantially increased the assessment for all Manchester Street property to $500,000,000, $475,000,000 of which related to treaty property -- essentially the power plant -- and $25,000,000 of which related to non-treaty property -- the remainder of the real property not covered by the original treaty. Due to a Tax Stabilization Agreement, the $475,000,000 increased assessment did not result in an increase in tax payments on treaty property, because the power plant was still subject to the tax treaty, but the $25,000,000 in assessed value that related to the non-treaty property resulted in an increase to $866,826 in taxes owed by USGen for the property to Providence for fiscal year 2001. However, USGen disagreed with the $500,000,000 assessment. Accordingly, USGen filed an Application for Abatement of Tax with the City Assessor on November 16, 2001, followed by a tax appeal petition before the Superior Court on December 7, 2001. In the fiscal year 2002, Providence again increased the assessment of the non-treaty property to $27,400,000, which increased USGen's tax burden to $984,592. Again, USGen disagreed with the increased assessment. USGen filed an Application or Abatement of Tax as well as a companion tax appeal petition before the Superior Court on September 11, 2002 and November 4, 2002. The 2001 Tax Appeal and 2002 Tax Appeal have been consolidated and are pending in an action entitled USGen New England, Inc. v. Thomas Rossi, in his Capacity as Tax Assessor for the City of Providence, P.C. No. 2001-6436 and P.C. No. 2002-6211. In connection with the Providence Litigation, USGen retained the services of PA Consulting to appraise the fair market value of Manchester Street. Based on its appraisal, PA Consulting valued Manchester Street at $149,000,000 as of December 31, 2000. Providence retained the services of George E. Sansoucy, P.E., LLC to appraise the fair market value of Manchester Street beyond the end of the current treaty. In a report issued on March 2003, Sansoucy valued Manchester Street at $256,000,000 as of December 31, 2002. To resolve the dispute, the parties negotiated a settlement, which is embodied in: (1) an amendment to the Tax Stabilization Agreement, which continues the tax treaty for an additional five years commencing July 1, 2003 and expiring June 30, 2008; and (b) a Settlement Agreement and Mutual Release. The Providence Settlement Agreement provides that: (a) with respect to the tax treaty, USGen will pay $6,600,000 in annual property tax for each of these fiscal years: Year Period Covered ---- -------------- 2004 July 1, 2003 to June 30, 2004 2005 July 1, 2004 to June 30, 2005 2006 July 1, 2005 to June 30, 2006 2007 July 1, 2006 to June 30, 2007 2008 July 1, 2007 to June 30, 2008 The annual property tax payments are payable quarterly when tax payments are ordinarily due; and (b) with respect to the Providence Litigation, USGen will dismiss the two pending tax appeals with prejudice, and in consideration, Providence will pay USGen $1,750,000: -- $1,000,000 payable 20 days before the first quarter tax payment for Tax Year 2004 is due under the tax treaty; -- $250,000 payable 20 days before the second quarter tax payment for the Tax Year 2004 is due under the tax treaty; -- $250,000 payable 20 days before the third quarter tax payment for Tax Year 2004 is due under the tax treaty; and -- $250,000 payable 20 days before the fourth quarter tax payment for Tax Year 2004 is due under the tax treaty. In addition, the Providence Settlement Agreement addresses the disposition of the tax treaty in the event of a future shutdown of the Manchester Street Station. John Lucian, Esq., at Blank Rome LLP, in Baltimore, Maryland, points out that the Providence Settlement Agreement: (a) reduces USGen's annual property tax payment to $6,600,000 for fiscal years 2004 through 2008; (b) results in the payment of $1,750,000 to USGen to dismiss the Providence Litigation; (c) provides USGen with future tax certainty; and (d) addresses the disposition of the tax treaty in the event of a future shutdown of Manchester Street Station. At the Debtors' behest, the Court approved the Providence Settlement Agreement. (PG&E National Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) PORTLAND GENERAL: Parent Enron Inks Pact Selling Co. for $2.35BB ---------------------------------------------------------------- On November 18, 2003, Enron Corp., an Oregon corporation, the sole owner of the common stock of Portland General Electric Company, announced a definitive agreement with Oregon Electric Utility Company, LLC, an Oregon limited liability company backed by investment funds managed by Texas Pacific Group, under which Enron will sell all of the issued and outstanding common stock of the Company to Oregon Electric. The transaction is valued at approximately $2.35 billion, including the assumption of debt. The final amount of consideration will be determined on the basis of PGE's financial performance between January 1,2003 and closing. Enron reported that the transaction has been approved by the Enron Board of Directors and is supported by the Official Unsecured Creditors' Committee in the Enron bankruptcy proceeding. The transaction, which requires approval of the bankruptcy court in Enron's chapter 11 bankruptcy proceeding, is subject to an "overbid" process to give other potential buyers an opportunity to submit superior bids. The transaction also will require approval of the Oregon Public Utility Commission and certain other regulatory agencies. Refunds on Wholesale Transactions - Pacific Northwest On November 10, 2003, the Federal Energy Regulatory Commission issued an order that denied requests for rehearing of its June 25, 2003 order terminating its proceeding and denying claims for refunds related to spot market sales of electricity in the Pacific Northwest from December 25, 2000 through June 20, 2001. Opposing parties have indicated their intent to appeal the FERC's order. * * * As previously reported, Fitch Ratings does not anticipate changes to Portland General Electric's ratings or its Positive Rating Outlook until further details regarding the proposed sale of PGE by Enron Corp. to Oregon Electric Utility Company, LLC are available and prospects for its completion become more certain. Fitch rates PGE's secured, unsecured debt and preferred securities 'BBB-', 'BB' and 'B+', respectively. POTOMAC ELECTRIC: Obtains Nod for Amended Mirant Settlement Pact ---------------------------------------------------------------- On October 24, 2003, Pepco Holdings, Inc., and Potomac Electric Power Company, its wholly owned subsidiary, entered into a Settlement Agreement and Release with Mirant Corporation and its affiliate Mirant Americas Energy Marketing, LP regarding Transition Power Agreements for the District of Columbia and Maryland between Mirant and Pepco, under which Mirant is obligated to supply Pepco with all of the capacity and energy needed to fulfill its standard offer service obligations in Maryland through June 2004 and its standard offer service obligations in the District of Columbia into January 2005. Under the Settlement Agreement, the Mirant Parties, which have filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas, have agreed that they will assume both of the TPAs in exchange for Pepco's agreement to amend the TPAs, effective October 1, 2003, to increase the purchase price of energy under the TPAs. On November 19, 2003, the Bankruptcy Court approved an Amended Settlement Agreement and Release, dated as of October 24, 2003, which supersedes the Settlement Agreement. PRIMEDIA: Appoints Peter Horan President & CEO for About, Inc. -------------------------------------------------------------- PRIMEDIA Inc. (NYSE: PRM) announced the appointment of Peter C. Horan as president and chief executive officer of About, Inc., one of the Internet's largest sources for original content. Mr. Horan (48) will be responsible for the strategic business development and management of About.com's unique network of 450 topic-specific GuideSites, with more than 34.6 million monthly visitors, making it one of the most visited sites on the Web. Mr. Horan will report directly to PRIMEDIA's CEO Kelly Conlin. He succeeds former CEO and President, Bill Day, who has left the company. Mr. Conlin stated: "Our goal was to find a successor who had built innovative web marketing programs, had managed editorially- driven products and had experience leading high performing teams. Peter brings all of this to the organization as well as a commitment to realizing About.com's potential for PRIMEDIA." Mr. Horan brings to About.com his extensive experience in both the advertising and publishing industries. Prior to joining PRIMEDIA, he served as president and chief executive office of DevX.Com, Inc, a web media company recently acquired by Jupitermedia Corporation. He spent more than fifteen years in a variety of senior account management roles at leading global advertising agencies including BBDO and Ogilvy & Mather in San Francisco, Seattle and Los Angeles. He created powerful advertising and branding strategies for Fortune 1000 financial services, travel, consumer services and technology businesses, including Microsoft. Mr. Horan spent ten years at International Data Group, the leading global technology media company, where he spearheaded relationships with top advertisers on a worldwide basis and also served as Senior Vice President and Publisher of Computerworld. In his three years at DevX, Mr. Horan guided the site to its position as the most respected resource for computer professionals developing software applications. He also created a solid financial foundation for DevX through the execution of innovative web marketing programs for major advertisers. "This is an exciting opportunity to develop more and better opportunities for About.com that will advance PRIMEDIA's overall strategy for delivering highly relevant content to focused audiences," said Mr. Horan. "The recent partnership formed with Google will accelerate the opportunity to be market leaders, demonstrating online media's unique value to both users and marketers. We want About.com to be the trusted source for the information people need to make decisions that influence their quality of life -- such as family, home, education and health -- and our unique editorial guides system allows us to fulfill that mission by tapping the best experts for each topic across the About.com network." Mr. Horan received a BA from Santa Clara University and earned an MBA from San Francisco State University where he was selected as one of "Fifty Distinguished Alumni". He continues to serve on the advisory boards for the School of Business and Center for Electronic Business at San Francisco State University. Mr. Conlin added: "As one of the founders of About.com, Bill Day has played an important role in the growth of its business. We want to thank him for his efforts to integrate About.com within PRIMEDIA and wish him well in the future." PRIMEDIA (S&P, B Corporate Credit Rating, Stable) is the leading targeted media company in the United States, with positions in consumer and business-to-business markets. Our properties deliver content via print as well as video, the Internet and live events and offer highly effective advertising and marketing solutions in some of the most sought after niche markets. With 2002 sales from continuing businesses of $1.5 billion, PRIMEDIA is the #1 special interest magazine publisher in the U.S. with more than 250 titles. Our well known brands include Motor Trend, Automobile, New York, Fly Fisherman, Power & Motoryacht, Creating Keepsakes, Ward's Auto World, and Registered Rep. The company is also the #1 publisher and distributor of free consumer guides, including Apartment Guides. PRIMEDIA Television's leading brand is the Channel One Network and About is one of the largest sources of original content on the Internet. PRIMEDIA's stock symbol is: NYSE: PRM. PRIMEDIA: Consumer Guides Acquires Portland, OR Apartment Guide --------------------------------------------------------------- PRIMEDIA's Consumer Guides Group, the nation's largest provider of apartment and new home directories, announced that it has acquired the leading apartment directory serving the Portland, OR market from Traditional Publishing LLC. Financial terms were not disclosed. "PRIMEDIA's Consumer Guides division is clearly the leader in apartment and new home guides and is continually looking for strategic opportunities to enter new markets across the country," said Bob Metz, Chief Executive Officer, Consumer Guides Division. "We believe Traditional Publishing has developed a product and strong presence in the Portland market that provides us with a unique foundation to immediately enter the market as the principal provider of apartment listings information." Metz continued, "The Consumer Guides Group already has a leading presence in the Northwest United States, including such major markets as Seattle, Washington. We are confident that we can capitalize on our Apartment Guide brand by leveraging Traditional Publishing's relationships and deep listings content while using our existing distribution network in the Northwest United States to cement our overall presence there." With the acquisition, the Consumer Guides Group will marry its Apartment Guide(R) brand publication and Apartmentguide.com Internet site with the Portland area apartment listing content of Traditional Publishing to become the leading provider of apartment listings in that region. In addition, it will be able to capitalize on PRIMEDIA's DistribuTech business, the largest distributor of free publications in the United States, which already has a dominant presence in the Portland market. DistribuTech maintains exclusive community rack programs with a significant portion of the nation's largest retail chains, including participating grocery, drug, convenience, video, fitness and other mass merchandiser locations. DistribuTech's total delivery network includes over 49,000 locations in 38 states. "This acquisition exemplifies our aggressive approach to expanding our Consumer Guide's division with strategic entrances into new markets through both start-ups and acquisitions and the development of new products all of which combined make this a very low risk, high margin business," added Metz. "We believe that there are numerous opportunities in front of us in the apartment, new homes and automobile publications areas and have the support of PRIMEDIA in helping us reach our full potential." The Apartment Publications group (http://www.primedia.com/divisions/cgg/apartmentpublications) consists of the most extensive group of apartment rental directories in the U.S. and is comprised of 80 publications in 38 states and Washington, D.C. (74 markets). For almost 30 years, the group has been anchored by the Apartment Guide(R), its flagship product, and is supplemented by the Apartment Shoppers Guide. Most of the guides are published monthly and provided free of charge to apartment shoppers. About PRIMEDIA Consumer Guides PRIMEDIA's Consumer Guides Group is the nation's largest provider of directories in both the apartment rental and new home buying industries. It publishes more than 100 consumer directories in 38 states and the District of Columbia, and owns and operates Internet properties that offer information on apartment renting and home buying. Its distribution division, DistribuTech, delivers a total of over 50 million books annually through its nationwide distribution network. These resources provide advertisers with a most direct and cost-effective channel to reach their targeted customers. About PRIMEDIA PRIMEDIA (S&P, B Corporate Credit Rating, Stable) is the leading targeted media company in the United States, with positions in consumer and business-to-business markets. Our properties deliver content via print as well as video, the Internet and live events and offer highly effective advertising and marketing solutions in some of the most sought after niche markets. With 2002 sales from continuing businesses of $1.5 billion, PRIMEDIA is the #1 special interest magazine publisher in the U.S. with more than 250 titles. Our well known brands include Motor Trend, Automobile, New York, Fly Fisherman, Power & Motoryacht, Creating Keepsakes, Ward's Auto World, and Registered Rep. The company is also the #1 publisher and distributor of free consumer guides, including Apartment Guides. PRIMEDIA Television's leading brand is the Channel One Network and About is one of the largest sources of original content on the Internet. PRIMEDIA's stock symbol is: NYSE: PRM. MDC CORPORATION: Raises $34 Million From Securities Offering ------------------------------------------------------------ MDC Corporation Inc. operating as MDC Partners of Toronto announced that it has closed its previously announced offering of 3,903,451 Adjustable Rate Exchangeable Securities due December 31, 2028, including 503,451 Exchangeable Securities issued pursuant to the exercise of the over-allotment option, for total net proceeds to MDC of $31.7 million. The net proceeds of the offering will be used for general corporate purposes. The securities pay interest monthly at a rate equal to the actual distribution by Custom Direct Income Fund in that month and a holder of an Exchangeable Security will have the right to exchange the security for a unit of the Fund once MDC is entitled to effectively exchange its 20% ownership of Custom Direct, Inc. into units of the Fund. The Exchangeable Securities and units of the Fund have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Exchangeable Securities in any State in which such offer, solicitation or sale would be unlawful. About MDC Partners MDC Partners is one of the world's leading marketing communications firms. Through its partnership of entrepreneurial firms, MDC provides creative, integrated and specialized communication services to leading brands throughout the United States, Canada and the United Kingdom. MDC Class A shares are publicly traded on the Toronto Stock Exchange under the symbol MDZ.A and on the NASDAQ under the symbol MDCA. MDC Corporation Inc. (S&P, BB- Long-Term Corporate Credit Rating) is the 17th largest marketing communications firm in the world, providing services in Canada, the United States, and the United Kingdom. Through its network of entrepreneurial firms, MDC services include advertising and media, customer relationship management, and marketing services. MDC also offers security- sensitive transaction products and services through its Secure Transactions Division. MDC Class A shares are publicly traded on the Toronto Stock Exchange under the symbol MDZ.A and on the NASDAQ under the symbol MDCA. MEMC: Appoints Industry Veterans as Part of Exec Management Team ---------------------------------------------------------------- MEMC Electronic Materials, Inc. (NYSE: WFR) announced the appointment of several seasoned semiconductor industry veterans to the MEMC executive management team. These new members will provide the Company with leadership and a customer-centric approach as MEMC furthers its growth strategy. Jim Stolze, the Company's Executive Vice President and Chief Financial Officer, will retire from the Company, effective January 31, 2004, as part of a previously planned process. The Company has recruited Tom Linnen as MEMC's Senior Vice President effective December 8, 2003. Jim will continue in the CFO role through the end of 2003, while transitioning with Tom. Effective January 1, Tom will take on the role of Chief Financial Officer, and Jim will step into a supporting role until his retirement at the end of January 2004. Tom and Jim will use the months of December and January to ensure a smooth transition. Tom has more than 30 years of financial management experience, serving most recently as the Senior Vice President and CFO of Trend Technologies, a privately-owned manufacturer of enclosures for electronic products such as computers, telecommunications equipment, and information appliances. He previously served as Chief Financial Officer and held senior finance positions at several public companies. In these roles, Tom also led several public securities offerings. The Company also announced that, effective December 15, 2003, Sylvia Roberts will assume the responsibilities of Senior Vice President of Human Resources. She replaces Tom Stiffler, who will retire at the end of his current employment contract on December 31, 2003. Sylvia, formerly Vice President of Human Resources at International Rectifier, joined MEMC in January 2003 in anticipation of Tom's retirement. MEMC also announced the appointment of Chandra Subramanian as Senior Vice President of Manufacturing, effective December 22, 2003. Chandra brings to the Company extensive experience in the semiconductor industry, having served most recently as the head of worldwide assembly operations at ON Semiconductor, where he was responsible for leading over 5,000 employees in achieving cost reductions, new product introductions, and quality systems improvements. As previously announced, David Somo joined MEMC in September 2003 as the Company's Senior Vice President of Sales and Service. David brings to MEMC over 12 years of semiconductor industry experience in sales and marketing with Advanced Micro Devices where his last role was as Vice President of Global Account Sales. "Although these transitions and the associated recruiting activities have been in process for some time, I am extremely pleased with how the results have converged so naturally. These appointments will significantly increase the semiconductor industry experience base of the executive management team. I believe that this will position MEMC extremely well, by having the next generation of leadership in place to execute our strategy for future growth and leadership, especially at this point of the semiconductor cycle," commented Nabeel Gareeb, MEMC's Chief Executive Officer. "The new team members will provide MEMC further momentum in understanding the needs of our customers and exceeding those expectations. I have every confidence that these individuals' proven track records will be instrumental in ensuring MEMC's continued success in the rapidly evolving marketplace." "I would also like to take this opportunity to personally thank Jim Stolze and Tom Stiffler for their years of dedicated service to MEMC. Jim and Tom played a pivotal role in the restructuring transaction in 2001 and have contributed significantly to our recent successes. In addition, they were extremely helpful in finding their successors and planning smooth transitions to ensure continued increase in our company's market momentum. We wish them and their families the best in their retirement," concluded Mr. Gareeb. MEMC, whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $3 million, is the world's largest public company solely devoted to the supply of wafers to semiconductor device manufacturers. MEMC has been a pioneer in the design and development of wafer technologies over the past four decades. With R&D and manufacturing facilities in the U.S., Europe and Asia, MEMC enables the next generation of high performance semiconductor devices. MESABA AIRLINES: Pilots Decline Arbitration To Settle Contract -------------------------------------------------------------- The pilot union leadership for Mesaba Airlines voted unanimously to decline arbitration to settle the pilot contract between Mesaba and the Air Line Pilots Association (ALPA). The Mesaba ALPA Master Executive Council (MEC) -- made up of 12 pilot-representatives -- made the following statement in the resolution declining the NMB offer: "[T]he Mesaba MEC does not view binding arbitration as an acceptable option to settle the contract, in accordance with the mandate of the Mesaba pilot group. . . ." The National Mediation Board (NMB) is expected to announce the exact strike deadline later this week. The deadline, which comes at the end of a 30-day cooling off period, would likely occur in the second week of January. Mesaba pilots voted 98 percent in favor of a work stoppage in October. A strike would impact 600 daily departures for Northwest Airlines that are operated by Mesaba pilots. The pilots' contract with Mesaba became amendable in June 2002, and the NMB offered binding arbitration last Friday after declaring negotiations at an impasse. Main contract issues at stake for ALPA include job security, compensation, retirement and work rules. "We provide Mesaba and Northwest with extraordinary operational performance, and an impeccably clean safety record. Yet half of our highly proficient and educated pilots are compensated less than taxi drivers," said Kris Pierson, pilot spokesman and member of the MEC. "Half of the Mesaba pilot group earns less than $33,000 a year, with starting salaries less than $17,000. Mesaba serves 114 cities in 30 states and Canada from Northwest's three major hubs: Detroit, Minneapolis/St. Paul and Memphis. Mesaba employs 844 professional airline pilots who operate an advanced fleet of 103 regional jet and jet-prop aircraft. Founded in 1931, ALPA is the world's largest pilot union representing 66,000 pilots at 42 airlines in the U.S. and Canada. Visit the ALPA Web site at http://www.alpa.org/ On April 11, 2003, the Troubled Company Reporter cited that Mesaba Aviation, Inc., a subsidiary company of Mesaba Holdings, Inc. (Nasdaq:MAIR), announced the elimination of 33 management positions as a result of declining flight activity from Fiscal Year 2003 to what is forecasted in Fiscal Year 2004. This decline reflects the current economic conditions in the airline industry and lower consumer demand. The positions affected include both staffed and open positions. The airline has reduced its management headcount to 312 from 345, a reduction of nearly 10 percent. All affected employees were assisted through a package of severance pay, benefits and outplacement services. Mesaba also plans to eliminate approximately 50 positions from its non-management workforce over the next six months, through a combination of furloughs and voluntary leaves. In addition, Mesaba is also freezing all management base pay in Fiscal Year 2004, which began on April 1, 2003. "We made these difficult choices based on our forecasted flight activity," said John Spanjers, Mesaba Aviation's president and chief operating officer. "The decisions are an acknowledgement of the challenges the industry faces and our need to survive amid a very difficult environment." OAKS CONDOMINIUM: Case Summary & 4 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Oaks Condominium Association c/o Palmer Property Management 3190 Whitney Avenue #4 Hamden, Connecticut 06518 Bankruptcy Case No.: 03-35757 Type of Business: Leasehold condominiums. Chapter 11 Petition Date: November 21, 2003 Court: District of Connecticut (New Haven) Judge: Albert S. Dabrowski Debtor's Counsel: Ira B. Charmoy, Esq. Law Offices of Ira B. Charmoy, LLC Heritage Square 1700 Post Road, Suite D-3, P.O. Box 745 Fairfield, CT 06824 Tel: 203-254-9393 Total Assets: $500,001 to $1 Million Total Debts: $1 Million to $10 Million Debtor's 4 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Vincent Celentano, Mary Judgment $900,000 est. Celentano, Marvin R. Leventhal, Richard A. Lo Ricco and Lawrence Levy c/o Atty. Paul Sabetta 216 Crown Street 5th Floor New Haven CT 06510-2705 Robinson & Cole services $12,254 KONE Inc. services $7,280 Regional Water Authority services $1,302 ROPER IND: Plans Stock Offering to Fund Neptune Acquisition ----------------------------------------------------------- Roper Industries, Inc. (NYSE: ROP) announced that it intends shortly to commence a public offering of 3.96 million shares of its common stock, plus up to an additional 0.6 million shares to cover over-allotments. The net proceeds of the common stock offering, together with a new senior secured bank facility, will be used to fund Roper's pending acquisition of Neptune Technology Group Holdings Inc. and to repay its existing credit facilities. Concurrently with the common stock offering, Roper intends to publicly offer senior subordinated convertible notes for gross proceeds of $150 million to redeem its existing senior notes. The shares of Roper common stock and the senior subordinated convertible notes to be sold in the offerings will be offered pursuant to preliminary prospectus supplements and the accompanying shelf registration statement previously filed with the Securities and Exchange Commission. Roper has appointed Merrill Lynch & Co. as the sole book-running manager, JPMorgan and Wachovia Securities as the joint lead managers, and Robert W. Baird & Co., JMP Securities, McDonald Investments, Inc. and SunTrust Robinson Humphrey as co- managers for the common stock offering. Roper has appointed Merrill Lynch & Co. as the sole book-running manager, and Banc One Capital Markets, Inc., Robert W. Baird & Co., McDonald Investments, Inc. and SunTrust Robinson Humphrey as co-managers for the senior subordinated convertible notes offering. This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The offerings of these securities may be made only by means of a prospectus and the related prospectus supplement. When available, copies of such documents may be obtained from Merrill Lynch, 4 World Financial Center, New York, New York 10281. About Roper Industries Roper Industries is a diversified industrial growth company providing engineered products and solutions for global niche markets. Additional information about Roper Industries, including a glossary for terms used by the Company and registration for Company's press releases via email, is available on the Company's website, http://www.roperind.com. * * * As reported in the Troubled Company Reporter's Nvember 19, 2003 edition, Standard & Poor's Ratings Services assigned its 'BB+' corporate credit rating to Duluth, Georgia-based Roper Industries Inc. In addition, Standard & Poor's assigned its 'BB+' senior secured bank loan rating to the company's proposed $625 million senior secured credit facilities, its preliminary 'BB-' rating to Roper's shelf filing of $450 million in debt securities (under Rule 415), and its 'BB-' rating to Roper's $150 million proceeds cash-to-zero convertible bond, which will be drawn under the shelf. Proceeds from the credit facilities and convertible bond, together with a planned $200 million common stock issue, will be used to finance the acquisition of unrated Neptune Technology Group Holdings Inc., a leading North American manufacturer of water meters and meter reading systems, including automatic meter reading and data collection for water utilities, and thereafter for general corporate purposes, including working capital. Roper is expected to have about $600 million in outstanding debt upon the close of the transaction at the end of 2003. "We believe that the Neptune acquisition, once integrated successfully, represents a good strategic fit with Roper's existing product portfolio and should provide the group with synergy opportunities," said Standard & Poor's credit analyst John Sico. RESPONSE BIOMEDICAL: Files for FDA Market Clearance for RAMP(R) --------------------------------------------------------------- Response Biomedical Corp. (RBM: TSX Venture Exchange; RBQ: Frankfurt), filed a regulatory submission with the US Food and Drug Administration seeking market clearance to commercially introduce its lead medical application in the United States. The regulatory submission follows positive results from the recently completed multi-center clinical trial of RAMP(R) tests for troponin I and CK-MB, two cardiac marker tests used with the RAMP Reader in the early diagnosis of heart attacks. Last year, the Company announced receipt of FDA 510(k) market clearance of the RAMP Reader for general clinical use, as well as its cardiac test for myoglobin. Subsequently, the Company also received CE Mark for the RAMP Reader and all three cardiac tests. "Given the exceptional performance of the troponin I assay, the promising clinical data has added significant impetus to the Company's formative negotiations with several potential marketing partners for the RAMP cardiac tests," states Bill Radvak, President and CEO. "As we continue to evaluate opportunities and enter into agreements with international marketing partners over the coming weeks and months, we anticipate a timely review by the US FDA in preparation for entering the US market expected early next year," adds Radvak. The RAMP System provides a quantitative result in less than 20 minutes, considerably faster than traditional laboratory testing often limited by turnaround times of up to 24 hours. In clinical applications, RAMP is designed to be used by healthcare professionals at the point-of-care, including physicians' offices, medical clinics, hospital emergency departments and laboratories worldwide. To demonstrate substantially equivalent performance of the RAMP System, the Company sponsored a dual-predicate clinical trial using an FDA-cleared POC device and a leading lab-analyzer. RAMP and the POC device tested whole blood samples from both normal subjects and patients with symptoms of suspected acute myocardial infarction. Both RAMP tests showed strong correlation with the lab-analyzer and the high sensitivity RAMP Troponin I Test showed significant performance improvement versus the market-leading POC device at low troponin I concentrations. The clinical results will be submitted for peer-review and publication in an industry journal over the coming weeks. Myoglobin, troponin I and CK-MB are the three commonly utilized cardiac markers measured to assist in the diagnosis of acute myocardial infarction (heart attack). Studies have determined that these cardiac markers are essential for diagnosis of heart attack, for assessing risk of adverse outcomes, and for guidance of therapy and intervention in suspected heart attack patients. The global POC market generated revenues worth $3.3 billion in 2002 and is expected to reach $5.5 billion in 2009. This market is growing faster than the total in vitro diagnostics market. The world cardiac rapid assay market is expected to achieve an average annual growth rate of 20% - 25% for the near future. Each year in the United States, more than six million Americans are admitted to emergency rooms for severe chest pain, according to the American College of Cardiology. Only approximately 10% of those hospitalized suffer a heart attack. The majority is eventually diagnosed with strained muscles, bruises or heartburn. The total cost of unnecessary admissions and misdiagnosis is over US$4 billion. Misdiagnosed heart attack cases also account for nearly 25% of malpractice claims against emergency room physicians. Response Biomedical develops, manufactures and markets rapid on- site RAMP tests for medical and environmental applications providing reliable information in minutes, anywhere, every time. RAMP represents an entirely new class of diagnostic, with the potential to be adapted to more than 250 medical and non-medical tests currently performed in laboratories. The RAMP System consists of a portable fluorescent Reader and single-use, disposable Test Cartridges. RAMP tests are commercially available for the early detection of heart attack, environmental detection of West Nile virus, and biodefense applications including the rapid on-site detection of anthrax, smallpox, ricin and botulinum toxin. Response Biomedical is a publicly traded company, listed on the TSX Venture Exchange under the trading symbol "RBM". The Company is also listed on Frankfurt Stock Exchange under the trading symbol "RBQ". For further information, please visit the Company's Web site at http://www.responsebio.com. Although the Company has filed a regulatory submission with the US FDA seeking 510(k) market clearance, RAMP tests for detecting troponin I and CK-MB are not currently available in the United States. The company's September 30, 2003, balance sheet reports a working capital deficit of about CDN$2.5 million. Net capital deficit for the same period tops CDN$2 million. SAFETY-KLEEN CORP: Court Settles Frontier Insurance Disputes ------------------------------------------------------------ Under the Resource Conservation and Recovery Act, the Toxic Substances Control Act, and analogous state statutes, owners and operators of waste management facilities must provide financial assurance of their corrective action obligations. Under applicable regulations, owners and operators of waste management facilities may provide financial assurance through a surety bond from an approved surety. Under federal regulations and in virtually all states, to qualify as an approved surety, a company must be listed on Circular 570, which is maintained and distributed by the United States Department of Treasury. In November 1997, Safety-Kleen Corporation's predecessor, Laidlaw Environmental Services, Inc., and LESI's then-parent corporation Laidlaw, Inc., entered into a Letter Agreement with Frontier pursuant to which Frontier ultimately provided LESI with more than $200,000,000 in surety bonds. Under the terms of the Letter Agreement, Laidlaw delivered to Frontier an Irrevocable Stand-By Letter of Credit dated November 6, 1997, to secure LESI's obligations to Frontier. The LOC was for $28,500,000 and issued by the Toronto Dominion Bank. On June 6, 2000, the Department of Treasury issued notification that Frontier no longer qualified as an acceptable surety on federal bonds and had been removed from Circular 570 as of May 31, 2000. Consequently, as of May 31, 2000, the Debtors no longer had compliant financial assurance for many of their facilities. In October 2000, Frontier filed proofs of claim against the Debtors' cases relating to the Frontier Bonds. Disputes have arisen relating to the Frontier Bonds, including, without limitation, the amount of premium, if any, that the Debtors owe Frontier on account of the Frontier Bonds. On June 7, 2002, Safety-Kleen filed a "Notice of Claim Against Frontier Insurance Company" in the New York Court for breach of contract for failure to remain an acceptable surety under federal regulations. Rather than litigate the matter, the Debtors and Frontier engaged in extensive discussions and negotiations in an effort to resolve the Proofs of Claim, the Notice of Claim and other disputes, including Frontier's demand for premium and interest with respect to the Bonds. These negotiations resulted in a successful resolution. The significant terms and conditions of the Settlement Agreement are: * The Debtors will pay Frontier $2,100,000 and deliver a form of Replacement Collateral to obtain release of the LOC and, along with other considerations, in full satisfaction of Frontier's Proofs of Claim and other demands on the Debtors. The cash payment will be delivered no later than one business day after the Effective Date. If the Effective Date occurs before the Final Approval Date, the Debtors will pay Frontier $2,100,000 no later than one business day after the Final Approval Date. * The Debtors will deliver to Frontier a form of Replacement Collateral acceptable to Frontier, in an amount equal to the aggregate face amount of the Bonds that have not yet been released on the date of the delivery. * Upon request by the Debtors, the Replacement Collateral will be adjusted so that its value is reduced to the aggregate face amount of the then-Remaining Frontier Bonds. * The Bonds pertaining to the Debtors' facility in Pinewood, South Carolina, will be deemed released on the date when, in accordance with the Pinewood Settlement Agreement, the South Carolina Department of Health and Environmental Control notifies Frontier in writing that the bonds have been released. * Any other Bond will be deemed released when the Debtors submit written evidence of the release to Frontier. * Beginning on the Final Approval Date, Safety-Kleen Systems, Inc., will pay premiums to Frontier for the Remaining Frontier Bonds when due. The premium will accrue at the same rate as applied during the calendar year 2000. * Frontier will deliver the original LOC with a statement canceling the Letter of Credit to TD, immediately upon the Debtors' delivery of (i) the $2,100,000 and (ii) the Replacement Collateral to Frontier. * Frontier will immediately deliver the Replacement Collateral to the Debtors -- or, if the Replacement Collateral is a letter of credit, to the issuing bank, with a statement canceling the letter of credit -- upon the release of the last Remaining Frontier Bonds. * The Proofs of Claim and the Notice of Claim will be deemed withdrawn as of the date the Debtors deliver the $2,100,000 and Replacement Collateral to Frontier. * Mutual general releases will be granted by the Debtors and Frontier. * As of the date the Debtors deliver the $2,100,000 and Replacement Collateral to Frontier, Frontier is deemed to hold a Class 7 General Unsecured Claim for $1,000,000 against Safety-Kleen Systems. Consequently, the Debtors sought and obtained Judge Walsh's approval for the Settlement. (Safety-Kleen Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) SBA COMMUNICATIONS: Prices Senior Debt Offering ----------------------------------------------- SBA Communications Corporation (Nasdaq: SBAC) announced that it has priced an offering of $402,023,273 aggregate principal amount at maturity ($275 million in gross proceeds) of 9-3/4% Senior Discount Notes due 2011. The co-issuer of the Notes is SBA Telecommunications, Inc., a wholly owned subsidiary of SBA. The Notes were priced at 68.404% of their principal at maturity plus accrued original issue discount, if any, from December 19, 2003. The Notes will accrete in value until December 15, 2007 at which time they will have an aggregate principal amount of $402,023,273. Thereafter, cash interest will be payable on the Notes on June 15 and December 15 of each year, beginning on June 15, 2008. SBA intends to use a portion of the proceeds from this offering to fund the repurchase of up to $153.3 million aggregate principal amount of its outstanding 12% Senior Discount Notes due 2008 pursuant to a tender offer and consent solicitation commenced on November 25, 2003. SBA intends to use the remaining proceeds to (a) repurchase and/or redeem outstanding 12% Senior Discount Notes and/or outstanding 10 1/4% Senior Notes due 2009 and/or (b) repay debt outstanding under the senior credit facility. SBA (S&P, CCC Corporate Credit Rating, Developing Outlook) is a leading independent owner and operator of wireless communications infrastructure in the United States. SBA generates revenue from two primary businesses -- site leasing and site development services. The primary focus of the company is the leasing of antenna space on its multi-tenant towers to a variety of wireless service providers under long-term lease contracts. Since it was founded in 1989, SBA has participated in the development of over 20,000 antenna sites in the United States. SENSORY SYSTEMS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Sensory Systems, A California Corporation 4370 La Jolla Village Drive Suite 960 San Diego, California 92122 Bankruptcy Case No.: 03-10768 Type of Business: Manufacturer and Distributor of specialty cosmetics. Chapter 11 Petition Date: December 1, 2003 Court: Southern District of California (San Diego) Judge: Peter W. Bowie Debtor's Counsel: James R. Selth, Esq. 12424 Wilshire Boulevard Suite 1120 Los Angeles, CA 90025 Tel: 310-207-1494 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Joseph D. Pike $1,289,000 4370 La Jolla Village Drive, Suite 960 San Diego, CA 92122 Access Pacific Group $1,058,092 4370 La Jolla Village Drive, Suite 960 San Diego, CA 92122 Cherokee Industries $1,000,000 702 Oberlin Rd # 100 Raleigh, NC 27605 Dura Pharmaceuticals $846,278 7475 Lusk Blvd. San Diego, CA 92121 Neostar Holding, Inc. $390,000 789 Jersey Avenue New Brunswick, NJ 08901 Fish & Richardson, P.C. Trade debt $201,867 Lyon & Lyon, LLP Trade debt $105,479 McGhan Medical Trade debt $40,100 c/o Inamed Medical Products Corp. Carrington Laboratories, Trade debt $29,356 Inc. Kirlin Securities Trade debt $26,752 Tristrata Technology, Inc. Trade debt $6,250 Dermazone Solutions Trade debt $3,690 Icreateyou Trade debt $2,950 Reed Exhibitions Trade debt $2,800 Aesthetic Expo, Inc. Trade debt $2,050 Covington & Burling Trade debt $1,180 Sentry Self Storage Trade debt $1,138 California State of Board of Trade debt $922 Equalization Show Management Inc. Trade debt $900 Right Face Ltd. Trade debt $773 SILICON VALLEY: S&P Assigns BB+ Subordinated Debt Ratings --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' long-term counterparty credit and 'BB+' subordinated debt ratings to Silicon Valley Bancshares (Silicon, NASD:SIVB). At the same time, Standard & Poor's assigned its 'BBB' counterparty credit rating to Silicon's principal operating subsidiary, Silicon Valley Bank. The outlook for both entities is stable. "Silicon's ratings reflect its concentrated business profile and relatively solid performance, especially given the recent economic and equity market downturns that its targeted markets experienced over the past several years," said Standard & Poor's credit analyst Michael Driscoll. Silicon operates with a unique credit risk loan profile due to its strong niche position of lending to technology, life science, and premium wineries, and its extensive counterparty relationships within the venture capital community. Silicon's credit profile includes its excellent deposit funding and liquidity, improving asset quality, weakened capital ratios from share buybacks, inconsistent earnings, and higher expense base. With the past several years' aggressive capital management offsetting the prospect for improving profitability, Silicon's outlook is stable. The outlook also incorporates Standard & Poor's belief that capital metrics have stabilized and that double leverage will continue to decrease. SIRIUS SATELLITE RADIO: Reaches 200,000 Subscribers --------------------------------------------------- SIRIUS Satellite Radio (Nasdaq: SIRI), known for delivering the very best in commercial-free music and premium audio entertainment to cars and homes across the country, announced a major subscriber milestone. SIRIUS surpassed 200,000 subscribers on its nationwide service of 60-commercial-free music streams and 40+ streams of news, sports and entertainment. "We achieved another important milestone for SIRIUS, which clearly demonstrates the growing interest in our premium service of nationwide satellite radio entertainment," said Joseph P. Clayton, President and CEO of SIRIUS. "More consumers are discovering the pleasures of our commercial-free music offering, and more are also recognizing the value of receiving such premium quality programming, such as play-by-play sports, for only $12.95 per month." SIRIUS currently has four "Plug & Play" products available at retail. The Kenwood Here2Anywhere(TM), two versions of the S.R.S. Satellite Radio Shuttle(TM) from Audiovox, plus the Streamer, which is primarily marketed to truckers. A home unit from Kenwood is also available, and a boombox from Audiovox is expected to be in retail stores in limited quantities in time for Christmas. "This is the first time that we are going into a busy holiday selling season with a full complement of products at retail, and we believe that this will help to drive subscriptions this year, as well as position us favorably as we transition into 2004," added Clayton. All of SIRIUS' "Plug & Play" products adapt to existing audio systems and can be easily installed by either the retailer or purchaser. Currently, SIRIUS-ready products can be found at Best Buy, Circuit City, Tweeter, Ultimate, the Good Guys, Sears and other mobile audio outlets, including Crutchfield. SIRIUS radios have been extensively featured in 2003 gift guides, including those published by Rolling Stone, Newsweek, Newsweek International, Good Housekeeping, New York Magazine, Time Out New York, XXL, Stuff, FHM, Maxim Goes To The Movies, Golf Magazine, Blender, The Advocate, American Way, Westways, Best, Estylo, Sea, Electronic House and Maximum PC Magazine. SIRIUS (S&P, CCC Corporate Credit Rating, Stable) is the only satellite radio service bringing listeners more than 100 streams of the best music and entertainment coast-to-coast. SIRIUS offers 60 music streams with no commercials, along with over 40 world- class sports, news and entertainment streams for a monthly subscription fee of only $12.95, with greater savings for upfront payments of multiple months or a year or more. Stream Jockeys create and deliver uncompromised music in virtually every genre to our listeners 24 hours a day. Satellite radio products bringing SIRIUS to listeners in the car, truck, home, RV and boat are manufactured by Kenwood, Panasonic, Clarion and Audiovox, and are available at major retailers including Circuit City, Best Buy, Car Toys, Good Guys, Tweeter, Ultimate Electronics, Sears and Crutchfield. SIRIUS is the leading OEM satellite radio provider, with exclusive partnerships with DaimlerChrysler, Ford and BMW. Automotive brands currently offering SIRIUS radios in select new car models include BMW, MINI, Chrysler, Dodge, Jeep(R), Nissan, Infiniti, Mazda and Audi. Automotive brands that have announced plans to offer SIRIUS in select models include Ford, Lincoln, Mercury, Mercedes-Benz, Jaguar, Volvo, Volkswagen, Land Rover and Aston Martin. SI TECHNOLOGIES: Annual Shareholders Meeting Convening Tomorrow --------------------------------------------------------------- The Annual Meeting of Shareholders of SI Technologies, Inc., a Delaware corporation, will be held on Thursday, December 11, 2003, at 2:00 p.m. local time, at 14192 Franklin Avenue, Tustin, California for the following purposes: 1. To elect a board of six directors. 2. To vote on proposal 2 "Approval of SI Technologies, Inc. 2003 Stock Option Plan". 3. To vote on proposal 3 "Ratification of the Sale of Common Stock and Warrants to Ralph E. Crump and Marjorie L. Crump". 4. To transact such other business as may properly come before the meeting or any adjournment thereof. Shareholders of record at the close of business on October 31, 2003 will be entitled to a vote at the annual meeting and at any adjournment thereof. * * * Consolidated Liquidity, Capital Resources and Financial Condition In its Form 10-K for the year ended July 31, 2003, SI Technologies reported: At July 31, 2003, the Company's cash position was $284,000 compared to $238,000 at July 31, 2002. Cash available in excess of that required for general corporate purposes is used to reduce borrowings under the Company's line of credit. Working capital increased to $1,624,000 from $1,125,000 at July 31, 2002. The Company's existing capital resources consist of cash balances and funds available under its line of credit, which are increased or decreased by cash provided by or used in operating activities. Cash used by operating activities in 2003 was $612,000. Operating income, reduction of trade receivables and the cash benefit of depreciation was used to reduce trade payables and increase inventories. Management anticipates generating cash from operating activities in 2004 by reducing inventories assuming revenues remain stable. The Company's cash requirements consist of its general working capital needs, capital expenditures, and obligations under its leases and notes payable. Working capital requirements include the salary costs of employees and related overhead and the purchase of material and components. The Company anticipates capital expenditures of approximately $280,000 in 2004 as compared to $270,000 in 2003. The Company expects to refinance its current lines of credit and has sufficient cash flow available to pay current maturities of long-term debt of $1,898,000. A portion of the current maturities represents a note which has been renewed in the past. As of July 31, 2003, the Company had $385,000 available under its lines of credit. In June 2002, the Company amended its principal credit agreement with its bank. The terms provide for a revolving line of credit up to a maximum of $6,500,000 with interest at prime plus 2.75%. Monthly payments on the line are interest only with principal due January 2, 2004. The credit agreement provides a term note for $1,500,000 with interest at prime plus 3.25%. Monthly payments on the new term note are $25,000 plus interest with principal due January 2, 2004. Monthly payments on the existing note payable are reduced to $56,058 plus interest at prime plus 1.75%, with the remaining terms of the existing note unchanged. The line and both notes are secured by substantially all of the Company's assets and are cross-collateralized and cross-defaulted. The Company is required to maintain certain levels of earnings before interest, taxes, depreciation and amortization, tangible net worth and fixed charge coverage and may not pay any cash dividends under terms of the agreement. The Company was in violation of one of these covenants at year end and has received a waiver from the bank. The Company believes that cash flow from operations and funds available under its bank facilities will be sufficient to meet the Company's working capital needs and principal payments on long- term debt. No assurances can be made that the debt can be refinanced or replaced at favorable rates. In the 4th Quarter the Company completed a private placement, as more fully described in Item 5, in which $750,000 of common stock was sold along with warrants. SOUTH STREET CBO: Fitch Affirms Junk Ratings for 5 Note Classes --------------------------------------------------------------- Fitch Ratings has affirmed nine classes of notes issued by South Street CBO 2000-1 Ltd., a collateralized bond obligation backed by high yield bonds. The following affirmations are effective immediately: -- $68,717,623 class A-1L notes 'AAA'; -- $95,000,000 class A-2L notes 'AAA'; -- $15,000,000 class A-3L notes 'BB+'; -- $30,000,000 class A-3 notes 'BB+'; -- $20,000,000 class A-4L notes 'CC'; -- $8,000,000 class A-4A notes 'CC'; -- $10,000,000 class A-4C notes 'CC'; -- $15,000,000 class B-1 notes 'C'; -- $4,779,240 class B-2 notes 'C'. According to its Oct. 17, 2003 trustee report, the South Street 2000 portfolio collateral includes a par amount of $13.2 million (5.3%) of defaulted assets. The deal also contains 22.0% of assets rated 'CCC+' or below, excluding defaults. The senior class A, the class A and class B overcollateralization tests are failing at 119.87%, 100.47% and 90.99%, versus their triggers of 120%, 110% and 103%, respectively. In determining this rating action, a credit committee reviewed the results of cash flow model runs, incorporating several different default and interest rate stress scenarios. Also, Fitch discussed with Colonial Advisory Services Inc., the investment advisor, their expectations and opinions of the portfolio. The investment advisor's ability to trade has been eliminated due to the class B OC test falling below 90% of the required ratio. Fitch maintains that South Street 2000's performance is commensurate with its assigned ratings. Fitch is concerned with the elimination of the investment advisor's ability to trade. Fitch will continue to monitor the performance of the transaction along with the status of the investment advisor's trading ability. SOUTHWALL TECH: Needham Further Extends Financing Agreement ----------------------------------------------------------- Southwall Technologies Inc. (Nasdaq:SWTX), a global developer, manufacturer and marketer of thin-film coatings for the automotive glass, electronic display and architectural markets, announced that it has entered into an extension of the letter agreement dated November 11, 2003 with Needham & Company, Inc. The letter agreement outlines the principal elements of a proposed bank guarantee and equity financing package with Needham or its affiliates of up to $5 million. The letter agreement, which was due to expire on November 30, 2003 if definitive agreements for the financing were not entered into by that date, and was previously extended to December 5, 2003, has been further extended to December 12, 2003, while the parties work to complete negotiation of the definitive agreements. About Southwall Technologies Inc. Southwall Technologies Inc. designs and produces thin-film coatings that selectively absorb, reflect or transmit light. Southwall products are used in a number of automotive, electronic display and architectural glass products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. Southwall is an ISO 9001:2000-certified manufacturer and exports advanced thin-film coatings to over 25 countries around the world. Southwall's customers include Audi, BMW, DaimlerChrysler, Hewlett-Packard, Mitsubishi Electric, Mitsui Chemicals, Peugeot-Citroen, Pilkington, Renault, Saint-Gobain SEKURIT, and Volvo. About Needham & Company Needham & Company, Inc., a leading U.S. investment banking, securities and asset management firm focused primarily on serving emerging growth industries and their investors. Further information is available at http://www.needhamco.com. * * * Liquidity and Going Concern Uncertainty In its most recent Form 10-Q filed with the Securities and Exchange Commission, Southwall Technologies reported: Liquidity: "Our cash and cash equivalents increased by $0.4 million from $2.0 million at December 31, 2002, to $2.4 million at June 29, 2003. Cash provided by operating activities for the first six months of 2003 increased by $1.7 million, from $0.07 million provided during the first six months of 2002, to $1.8 million provided during the first six months of 2003. The increase in cash provided by operating activities was primarily the result of a decrease in accounts receivable and inventory, and partially offset by a reduction in accounts payable and accrued liabilities. The cash used in investing activities decreased by $0.3 million, from $2.6 million during the first six months of 2002, to $2.4 million during the first six months of 2003. The decrease in cash used in investing activities was primarily the result of lower capital expenditures and a reduction in restricted cash. Cash generated from financing activities decreased by $0.5 million, from $1.6 million during the first six months of 2002, to $1.1 million during the first six months of 2003. The decrease was primarily attributable to significantly less cash received through the exercise of employee stock options, partially offset by additional borrowings from our lines of credit during the first six months of 2003. "We entered into an agreement with the Saxony government in May 1999 under which we receive investment grants. Since 1999 through June 29, 2003, we had received $6.4 million cumulatively of the grants and accounted for these grants by applying the proceeds received to reduce the cost of our fixed assets of our Dresden manufacturing facility. If we fail to meet certain requirements in connection with these grants, the Saxony government has the right to demand repayment of the grants (see Note 6 - Government Grants and Investment Allowances, in the notes to condensed consolidated financial statements included herewith). Since 1999 through June 29, 2003, we had also received $5.7 million in investment allowances, which are reimbursements for capital expenditures, from the Saxony government and those proceeds were also applied to reduce the cost of our fixed assets of our Dresden manufacturing facility. We expect to receive approximately $1.0 million in investment allowances in the second half of 2003, based on investments made during 2002. The funds received have been applied to reduce the cost of our fixed assets of our Dresden manufacturing facility. Additionally, we have received $0.5 million of Saxony government grants that as of June 29, 2003 were recorded as an advance until we earn the grant through future expenditures. The total annual amount of investment grants and investment allowances that we are entitled to seek varies from year to year based upon the amount of our capital expenditures that meet certain requirements of the Saxony government. Generally, we are not eligible to seek total investment grants and allowances for any year in excess of 33% of our eligible capital expenditures for that year. We expect to continue to finance a portion of our capital expenditures in Dresden with additional grants from the Saxony government and additional loans from German banks, some of which may be guaranteed by the Saxony government. However, we cannot guarantee that we will be eligible for or will receive additional grants in the future from the Saxony government. Under the terms of our grant agreement with the Saxony government, we are required to meet investment and hiring targets by June 30, 2006. If we fail to meet those targets, the Saxony government is permitted to require us to repay all grants and investment allowances previously received by us from the Saxony government. Borrowing arrangements: "On May 16, 2003, the Company entered into a $10.0 million receivable financing line of credit agreements with a financial institution that expires on May 16, 2004, subject to automatic one- year renewals unless terminated at any time by either party. The line of credit bears an annual interest rate of 7% above the financial institution's Base Rate (which was 4% at June 29, 2003), and is calculated based on the average daily accounts receivable against which the Company has borrowed. Half of the $10.0 million line of credit is represented by a $5.0 million credit line, guaranteed by the United States Export-Import Bank. Availability under the EXIM line is limited to 90% of eligible foreign receivables acceptable to the lender. The remaining $5.0 million portion of the $10.0 million credit line is supported by domestic receivables. Availability under the domestic line of credit is limited to 70% of eligible domestic receivable acceptable to the lender. The financial institution reserves the right to lower the 70% and 90% of eligible receivable standards for borrowings under the credit agreements. In connection with the line of credit, the Company granted to the bank a lien upon and security interest in, and right of set off with respect to all of the Company's right, title and interest in all personal property and other assets, but not certain of the Company Dresden assets and properties. The borrowing arrangements require the Company to maintain minimum net tangible net worth of $33.0 million, current ratio of at least 0.70, and revenues equal to or greater than 80% of revenues projected. As part of the agreements, the Company incurred and paid a one-time commitment fee of $0.1 million in the second quarter of 2003, which will be amortized over the life of the agreements. As of June 29, 2003, the Company had approximately $3.0 million of borrowings outstanding and $1.8 million of availability under the line of credit. The Company was in compliance with all financial covenants as of June 29, 2003. "At December 31, 2001 and 2002, we were not in compliance with certain of the covenants of the guarantee by Teijin of the Japanese bank loan. Teijin and the Japanese bank waived the defaults under Teijin's guarantee of the loan that may exist for any measurement period through and including September 30, 2003 arising out of our failure to comply with the minimum quick ratio, tangible net worth and maximum debt/tangible net worth covenants. The waiver was conditioned on our agreement to prepay $2.5 million of the debt out of the proceeds of our follow-on public offering, which prepayment of $2.5 million along with a scheduled principal payment of $1.25 million was made on November 6, 2002. On May 6, 2003, we made a scheduled payment of $1.25 million. Under the terms of the loan agreement, the remaining balance of $1.25 million outstanding under this loan at June 29, 2003 is due on November 6, 2003. Accordingly, we have classified it as current. "Our borrowing arrangements with various German banks as of June 29, 2003 are described in Note 5 - Term Debt in the condensed consolidated financial statements. We are in compliance with all of the covenants of the German bank loans, and we have classified $9.5 million outstanding under the German bank loans as a long- term liability at June 29, 2003. "We are in default under a master sale-leaseback agreement with respect to two of our production machines. We have withheld lease payments in connection with a dispute with the leasing company. An agent purporting to act on behalf of the leasing company has recently filed suit against us to recover the unpaid lease payments and the alleged residual value of the machines, totaling $6.5 million in the aggregate. The leasing company holds a security interest in the production machines and may be able to repossess them. As a result, we have classified all $3.3 million outstanding under those agreements as short-term capital lease liabilities as of June 29, 2003. Capital expenditures: "We anticipate spending approximately $4.0 million in capital expenditures in 2003, approximately $1.2 million of which will consist of progress payments for a production machine (PM 10) in Dresden, approximately $1.5 million of which will be used to install a new enterprise resource planning system, and approximately $1.3 million of which will be used to maintain and upgrade our production facilities in Palo Alto and Tempe. For the first six months of 2003, we incurred $2.2 million in capital expenditures, compared to $3.2 million in capital expenditures for the same period in 2002. Financing needs: "We have prepared our consolidated financial statements assuming we will continue as a going concern and meet our obligations as they become due. We incurred a net loss in the first six months of 2003, and expect to incur net losses through the remainder of 2003. These factors together with our working capital position and our significant debt service and other contractual obligations at June 29, 2003 raise substantial doubt about our ability to continue as a going concern. We will continue to look for additional financing to fund our operations. However, we cannot provide any assurance that alternative sources of financing will be available at all or on terms acceptable to us. If we are unable to obtain additional financing sources, we may be unable to satisfactorily meet all our cash commitments required to fully implement our business plans. "In December 2002, we restructured our operations to reduce our cost structure by reducing our work force in Palo Alto and vacating excess facilities after consolidating our operations in Palo Alto. These actions are expected to help improve our operating results in 2003 but will continue to impact our operating cash flows until our lease commitments for the excess facilities expire in December 2004." SPIEGEL: Unsecured Panel Clears Zuckerman's Retention as Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of the Spiegel Group Debtors is currently reviewing the claims and allegations set forth in the Examiner's Report, as well as other information available to the Committee, to determine what claims or causes of action are available to the Debtors' estates. There are certain professional firms named, and whose conduct is discussed, in the Examiner's Report whom the Committee's counsel, Chadbourne & Parke, LLP, cannot sue. To ensure that the Debtors' estates' rights are protected, the Committee requires a special conflicts counsel to assist and advise it in the review, investigation, and, if appropriate, pursuit of, claims against those firms. In this regard, the Committee selected Zuckerman Spaeder LLP as its special conflicts attorneys because of the firm's litigation and bankruptcy experience, including the firm's experience in conducting investigations into matters similar to those for which the Committee requires advice. In the event the investigations to be conducted by Zuckerman result in the Committee requiring Zuckerman to file adversary proceedings or other litigation, the Committee believes that Zuckerman has the ability and requisite experience to represent it. The Committee asks the Court for permission to retain Zuckerman Spaeder LLP, nunc pro tunc to October 2, 2003. Among other things, Zuckerman will: (a) review, investigate and, prosecute claims or causes of action against third parties, including KPMG LLP, White & Case LLP, and Kirkland & Ellis LLP with which Chadbourne has a conflict of interest or is otherwise unable to represent the Committee; (b) appear before the Court and any other court to protect the interests of the estate; (c) perform all other necessary legal services asked by the Committee; and (d) represent the Committee in matters where the Committee so directs. Zuckerman partner, Norman L. Eisen, Esq., attests that the firm's members: -- do not have any connection with the Debtors, their estates, or any other party-in-interest, or their attorneys and accountants, the United States Trustee or any employee; -- are "disinterested persons," as that term is defined in Section 101(14) of the Bankruptcy Code; and -- do not hold or represent any interest adverse to the Debtors' estates or their creditors. For its services, Zuckerman will be paid on an hourly basis in accordance with its customary rates. The Zuckerman attorneys presently designated to represent the Committee and their hourly rates are: Norman L. Eisen $375 Graeme W. Bush 475 Mark W. Foster 550 Zuckerman may also use one or more additional lawyers. The additional staff will be paid based on these hourly rates: Partners $325 to 550 Associate 180 to 290 The firm will also be reimbursed for actual, necessary expenses incurred. (Spiegel Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) TENNECO AUTOMOTIVE: Prices $125 Million of Senior Secured Notes --------------------------------------------------------------- Tenneco Automotive (NYSE: TEN) announced that it has priced a private offering of $125 million of 10.25% Senior Secured Notes due July 15, 2013. The notes will be sold to investors at a premium of 13 percent above the face value, resulting in expected net proceeds to the company from the transaction of approximately $136 million, plus accrued interest from June 19, 2003. The offering is one component of the company's proposed refinancing of its existing $964 million senior credit facility, which will be replaced by a new $800 million senior credit facility and the issuance of the notes. Tenneco Automotive is undertaking this refinancing transaction to ensure the company's access to a long-term source of liquidity, thereby improving its financial flexibility, and to extend nearly all of its debt maturities to 2009 and beyond. The notes will be senior secured obligations of Tenneco Automotive and will mature on July 15, 2013 with interest from June 19, 2003 payable semi-annually beginning on January 15, 2004. The notes will be guaranteed by each of Tenneco Automotive's material domestic wholly-owned subsidiaries who guarantee the senior credit facility. The notes and guarantees will be secured by a second priority lien, subject to certain exceptions, on substantially all the U.S. assets of Tenneco Automotive and of the subsidiary guarantors, respectively, that secure obligations under the senior credit facility. The closing of the senior credit facility and the proposed notes issuance are each conditioned on the closing of the other. Although there can be no assurance, the company currently expects to complete these transactions by mid-December. Tenneco Automotive is offering the notes in reliance upon an exemption from registration under the Securities Act of 1933 for an offer and sale of securities that does not involve a public offering. The notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. This news release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which it would be unlawful. As reported in the Troubled Company Reporter's December 8, 2003 edition, Standard & Poor's Ratings Services assigned its 'B' rating to the new $800 million senior secured credit facility of Tenneco Automotive Inc. (B/Stable/--). The facility is guaranteed by and secured by substantially all of the assets of each of the borrower's direct and indirect domestic subsidiaries and is also secured by 65% of the capital stock of the borrower's direct and first-tier foreign subsidiaries. Standard & Poor's also assigned its 'CCC+' rating to Lake Forest, Illinois-based Tenneco's $125 million 10.25% senior secured notes (second lien) due 2013, add-on to the firm's outstanding $350 million 10.25% senior secured notes (second lien) due 2013. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on the company. Consolidated debt at Sept. 30, 2003, stood at about $1.4 billion. The outlook is stable. Tenneco is a manufacturer of emissions control systems and ride- control products for the automotive original equipment market and aftermarket. TERAYON COMMUNICATION: Reaffirms Fourth Quarter 2003 Guidance ------------------------------------------------------------- Terayon Communication Systems, Inc. (Nasdaq: TERN), the leading innovator of intelligent broadband access, reaffirmed its fourth quarter financial guidance. For the fourth quarter ending December 31, 2003, the company expects revenue will be in the range of $40 million to $43 million, with a net loss in the range of $0.07 to $0.09 per share. The company also reconfirmed it expects to end the fourth quarter with a gross cash and short-term investments balance of approximately $136 million. "We are pleased to be on track for our third consecutive quarter of revenue growth. We believe this shows that cable operator acceptance of DOCSIS(R) 2.0 is growing steadily since we began shipping our Terayon BW 3000 DOCSIS 2.0-qualified CMTS line in volume, and that the BW 3000 CMTS line is taking an increasing share of the CMTS market," said Terayon CEO Zaki Rakib. "Complementing this success, we are seeing increasing sales of our digital video Terayon Network CherryPicker(TM) as operators expand their HDTV deployments. Our cable modem unit shipments are showing strong growth and we believe we are well positioned to take additional market share this quarter. We feel these successes, combined with our ongoing focus on improving operating efficiencies and cost containment, put us on track to achieve profitability in the second quarter of 2004." Market Trends Offer Further Evidence of Opportunity Market trends show that the demand for more and more bandwidth remains unabated, whether that is the one-directional bandwidth demand generated by the growing number of HDTV offerings or the bi-directional bandwidth demand resulting from the continuing increase in the number of households wanting broadband connections, coupled with growth of bandwidth-intensive services like on-line video gaming and peer-to-peer exchange. Terayon believes major U.S. cable operators will continue to increase the speeds of their cable broadband services in response to aggressive competition from the DSL offerings by telecom companies. In addition, recent announcements by cable operators demonstrate their intent to expedite their ubiquitous adoption of DOCSIS 2.0 into their networks. "We are encouraged by the continuing evidence of improving market conditions. Bandwidth continues to be king for consumers and enterprises alike because the services they want -- HDTV, high- speed Internet, interactive gaming and voice over the Internet -- require greater bandwidth to deliver," said Rakib. Further, Terayon is converting the need for bandwidth from the increased pace of HDTV rollouts into growing orders for the Terayon Network CherryPicker from both cable and satellite providers. HDTV is a vital new service but it requires substantial bandwidth and efficiencies to deliver. The rate shaping capabilities of the Network CherryPicker enables cable and satellite operators to deliver more revenue-generating HDTV content with optimum picture quality, while using less bandwidth, which can then be used to deliver additional broadband services. The company has made solid progress in its Subscriber business as evidenced by its continuing gains in North American cable modem market share, ending the third quarter in the number three vendor position as reported by Kinetic Strategies Inc. In addition to growth in unit shipments, Terayon has made progress in lowering its cable modem unit costs with the introduction of its new lower cost IM6130 silicon chip into production in the fourth quarter combined with other product cost and operating expense improvements. During the past three quarters Terayon has experienced growing acceptance of its DOCSIS 2.0 CMTSs, steadily rising sales of the Network CherryPicker and strong demand for the company's DOCSIS 2.0 modems, which, combined with tight cost controls, have led to sequential revenue growth and the reaffirmation of its fourth quarter guidance. Terayon will provide additional details on its business performance when it reports its fourth quarter financial results on Tuesday, January 27, 2004 after the market closes. Terayon Communication Systems, Inc. (S&P, B- Corporate Credit and CCC Subordinated Debt Ratings, Negative) provides innovative broadband systems and solutions for the delivery of advanced, carrier-class voice, data and video services that are deployed by the world's leading cable television operators. Terayon, headquartered in Santa Clara, California, has sales and support offices worldwide, and is traded on the NASDAQ under the symbol TERN. Terayon is on the Web at http://www.terayon.com THAXTON GROUP: Continues Employing Ordinary Course Professionals ---------------------------------------------------------------- The Thaxton Group, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to retain and employ the professionals they turn to in the ordinary course of business. In the ordinary course of their businesses, the Debtors employ various professionals to render services relating to numerous issues that arise in the Debtors' businesses. Many of these Ordinary Course Professionals are attorneys and other professionals used by the Debtors to collect outstanding consumer finance loans that are delinquent or in default. The Debtors have many ongoing collections actions and fully expect many more during the pendency of these chapter 11 cases. These collection actions serve a critical role in the Debtors' ordinary course operations. The Debtors obtained authority to pay, without formal application to the Court, 100% of the fees and disbursements to each of the Ordinary Course Professionals upon the submission to the Debtors of an appropriate invoice setting forth in reasonable detail the nature of the services rendered, provided that such fees and disbursements do not exceed a total of $50,000 per month per Ordinary Course Professional. 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. TSI TELSYS: September Balance Sheet Upside Down by $871,000 ----------------------------------------------------------- TSX Venture Exchange "TSI" - TSI TelSys Corporation announced today the results of operations for the third quarter and for the first nine months of FY2003. FY2003 third quarter revenues totaled $1.3 million, with a gross margin of 29% of revenues. This compares with revenues of $1.2 million and a gross margin of 19% in the same period in FY2002. Deliveries made during the quarter included the delivery of several TSI TelSys telemetry systems to support the U.S. Department of Defense's Space Based Infrared Systems (SBIRS) program, the delivery of twelve Functionally Distributed Processors (FDPs) to NASA's Marshall Space Flight Center for the International Space Station (ISS) Downlink Enhancement Architecture (IDEA) project, and the delivery of a high rate receiver and a programmable wideband modulator to a U.S. government agency. Orders received in the third quarter of FY2003, which ended September 26, 2003 equaled $1.2 million as compared with $0.1 million for the same period in FY2002. At the end of the third quarter of FY2003, orders backlog stood at $1.6 million, as compared with an orders backlog of $1.3 million at the end of the third quarter of FY2002. The third quarter order total included several additional orders for telemetry systems, spare parts and maintenance to support the SBIRS program. The total also included orders from an existing aerospace customer to provide transceiver development support, as well as the renewal of several maintenance contracts with existing customers to provide continued support for TSI TelSys systems that have already been deployed. Operating expenses were $0.7 million in the third quarter of FY2003 as compared with $0.6 million in the same period in FY2002. The increase in operating expenses was due to an increase in research and development expense and in sales, general and administrative costs. The Company recorded a net loss of $0.3 million (net loss of $0.04 per share - basic and diluted) in the third quarter of FY2003, as compared with a net loss of $0.4 million (net loss of $0.05 per share - basic and diluted) in the same period in FY2002. Current assets totaled $1.2 million at the end of the third quarter of FY2003. This compares with current assets at the end of the preceding year of $1.3 million. At the end of the third quarter of FY2003, total assets stood at $1.5 million, total liabilities stood at $2.3 million and stockholders' deficit was $0.9 million. At the end of the preceding year, total assets stood at $1.8 million, total liabilities at $2.1 million and stockholders' deficit was $0.3 million. The company's September 26, 2003, balance sheet reports a working capital deficit of about $1 million while total net capital deficit tops $871,000. Headquartered in Columbia, Maryland, TSI TelSys designs, manufactures and markets high-performance data acquisition, simulation and communication systems for the aerospace industry and provides related engineering services. The Company has been a pioneer in utilizing reconfigurable architectures (Adaptive Computing) for communications and data processing, and has incorporated this technology into its product line since 1996. The Company is a leader in providing multi-mission satellite communications systems adaptable to virtually any protocol format and that support data rates up to a gigabit per second (Gbps). UNITED AIRLINES: Inks 10-Year Reservation Contract with Galileo --------------------------------------------------------------- Galileo International, a leading global distribution services (GDS) company and subsidiary of Cendant Corporation (NYSE: CD), announced it has signed a 10-year contract with United Airlines (UAL) to provide reservations system technology and hosting services, network management and to develop a new Internet booking engine for the airline's Web site, United.com. United will participate in the Galileo GDS through the term of the agreement. "Working with Galileo, United can provide a state-of-the art Internet booking engine that will increase efficiency, maximize revenue and, most importantly, enhance customer service," said Bruce Weiner, a leader in United Airlines Strategic Sourcing organization. "We've had a long affiliation with Galileo that today extends beyond hosting services to include the use of Cendant-affiliate NEAT's industry leading packaging technology for UnitedEscapes." UnitedEscapes is the carrier's online travel packaging service which enables travelers to create personalized, value-priced packages by combining travel on United with car and/or hotel accommodations. United customers will also benefit from ongoing partnerships with Avis and Budget through a variety of programs including Mileage Plus, United.Com Rent a Car Page, Voice Call Transfer, Small Business and Meeting & Groups programs. Through a strategic alliance with Datalex, a leading provider of e-Business Information Technology (IT) solutions to the global travel industry, Galileo will provide United with one of the most advanced Internet booking technologies on the market today. The booking engine will serve as the primary platform for United's online distribution strategy and will closely integrate its consumer and other distribution channels. The flexibility, reliability, and scalability of this state-of-the-art technology solution will enable United to respond to changing requirements in a rapidly evolving travel environment. The carrier is expected to reduce costs while enhancing distribution efficiency inventory control yield management and customer service. United recently joined Galileo's Preferred Fares Select program, providing Galileo-connected travel agencies and their customers with complete access to all of United's published fares for a three-year term. This competitive content includes all fares the airline sells through any other GDS, third-party Web sites or their own Web site and reservation offices. In addition, United and Cendant are also expanding their relationship by implementing promotional opportunities within Cendant's Retail Travel Services group. "Galileo has had a long and mutually beneficial partnership with United Airlines and we are pleased to not only extend, but expand our strategic partnership with them," said Flo Lugli, senior vice president, Airline Solutions for Cendant's Travel Distribution Services division. Galileo also provides a number of leading technology solutions to other airline carriers for use in their internal reservation and ticket office environments. These include a next generation faring system, Galileo 360. Fares, which offers state-of-the-art server based fare display, quotation and shopping services to over 40 leading airlines around the world. In addition, a Reservation Sales Solution (RSS) allows airlines access to Galileo's direct computer-to-computer links for instant and secure reservations, seat assignment, and other special travel related services with nearly 300 carriers. About Galileo International Galileo International (http://www.galileo.com)is a global technology leader. Its core business is providing electronic global distribution services for the travel industry through its computerized reservation systems, leading-edge products and innovative, Internet-based solutions. Galileo is a value-added distributor of travel inventory dedicated to supporting its travel supplier, agency and corporate customers and, through them, expanding traveler choice. A subsidiary of Cendant Corporation (NYSE: CD) and part of Cendant's Travel Distribution Services Division, Galileo is headquartered in Parsippany, NJ, and has offices worldwide. About Cendant Travel Distribution Services Division Cendant's Travel Distribution Services Division is one of the world's largest and most geographically diverse collections of travel distribution businesses. The division, employing some 5,000 people in more than 115 countries, includes: Galileo, a leading global distribution services (GDS) company, serving more than 47,000 travel agencies and over 54,000 hotels; hotel distribution and services businesses (Trust, THOR, WizCom and Neat); leading travel agencies, including Cheap Tickets and Lodging.com; an airline market intelligence company; and Travelport, a provider of global corporate travel management solutions. About United United and United Express operate more than 3,300 flights a day on a route network that spans the globe. News releases and other information about United can be found at the company's web site at http://www.united.com. US AIRWAYS: Stipulation Allowing $20 Mill. of Undisputed Claims --------------------------------------------------------------- John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, reminds Judge Mitchell that, pursuant to the Plan, the Reorganized US Airways Debtors are authorized to settle claims upon the execution and filing of stipulations with the Court. Mr. Butler explains that numerous creditors filed Proofs of Claim in these bankruptcy cases. The Reorganized Debtors reviewed the Proofs of Claim and do not have any objection to their allowance. The Claims total $20,306,200. The Reorganized Debtors consent to the allowance of the Proofs of Claim. The ten largest allowed Proofs of Claim are: Claimant Claim No. Amount -------- --------- ------ Aviation Safeguards 154 $244,627 Sabena SA Receivers 363 2,185,849 Flightsafety Boeing 696 212,520 Flightsafety Int'l 1392 213,345 LSG SkyChefs 1506 5,600,712 Jacksonville Airport 1550 416,444 Orlando Aviation Auth. 1706 1,058,929 United Aviation Fuels 1750 550,255 Unical Aviation 2206 294,891 Central Property 5187 507,646 (US Airways Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) U.S. STEEL: Closing Straightline Unit by Year End ------------------------------------------------- United States Steel Corporation (NYSE: X) announced that it is closing its technology- enabled steel distribution unit Straightline Source effective December 31, 2003. As a result, U. S. Steel will record a fourth quarter pre-tax charge of approximately $25 million. U. S. Steel intends to fulfill current contractual commitments Straightline has with customers and suppliers. United States Steel Corporation (S&P, BB- Corporate Credit Rating, Negative) is engaged domestically in the production, sale and transportation of steel mill products, coke and taconite pellets (iron ore); steel mill products distribution; the management of mineral resources; the management and development of real estate; engineering and consulting services; and, through U. S. Steel Kosice in the Slovak Republic and U. S. Steel Balkan, d.o.o. in Serbia, in the production and sale of steel mill products and coke primarily for the central and western European markets. As mentioned in Note 5, effective June 30, 2003, U. S. Steel is no longer involved in the mining, processing and sale of coal. For more information about U.S. Steel visit http://www.ussteel.com WARNACO: Intimate Apparel Pres. John Wyatt Acquires 240,000 Shares ------------------------------------------------------------------ In a Securities and Exchange Commission filing, John Thomson Wyatt, Group President of The Warnaco Group's Intimate Apparel line, discloses his acquisition of 240,000 Warnaco Common Stock, par value $0.01 per share as of November 13, 2003. (Warnaco Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) WEIRTON STEEL: Judge Approves Plan Confirmation Hearing Delay ------------------------------------------------------------- Weirton Steel Corp. announced that a federal judge has approved its request to delay a hearing during which the court was scheduled to act on the company's reorganization plan to emerge from bankruptcy. The company sought the delay of a Dec. 16 hearing in Wheeling, W.Va., to provide it additional time to complete its reorganization plan. Bankruptcy Judge L. Edward Friend II was to decide whether or not to approve the company's reorganization plan which anticipated Weirton Steel's emergence from bankruptcy by Dec. 31. A date for another hearing has yet to be set. Weirton Steel reported making significant progress and/or completing the majority of the steps within its reorganization plan. "We've been attempting to accomplish a tremendous amount of work in a very short time span. The progress we've made in six months has been remarkable when comparing us to other recent steel company bankruptcies. But, we need additional time to ensure a steel mill remains in Weirton," said D. Leonard Wise, Weirton Steel chief executive officer. "The additional time provided by the judge will help us put all the pieces in place before we again approach the court." Weirton Steel had targeted Dec. 31 as its date to emerge from bankruptcy because the Emergency Steel Loan Guarantee (ESLG) Program expires that day. "If we were trying to complete our reorganization during any other month of the year, time wouldn't be an issue. However, it's been extremely difficult to finalize the reorganization plan with the holiday season beginning with Thanksgiving and extending through New Year's. Many of the parties we need to work with simply aren't available because of holidays and the vacations they have scheduled around them," noted Wise. In regard to the ESLG Program, the company recently received conditional approval to participate in the program which would guarantee 88 percent of a $145 million bankruptcy emergence loan the company anticipates receiving from several lending institutions. "We don't expect our ESLG Program participation to be jeopardized. An amendment to a budget bill that would extend the program for two years is pending before Congress. We've received favorable reports from Washington concerning the probability for the extension," explained Wise. Wise said Weirton Steel's bankruptcy attorney today conveyed to the court that the company is continuing to pursue a dual path of emerging from bankruptcy as a stand alone company or through selling the company's assets. Weirton Steel filed a voluntary petition for bankruptcy on May 19. The company, which employs 3,425, is the fifth largest U.S. integrated steelmaker and the nation's second largest producer of tin mill products. WEIRTON STEEL: Will Impose Temporary Raw Materials Surcharge ------------------------------------------------------------ Weirton Steel Corp. announced that unprecedented increases in raw material prices have compelled it to implement a $25 per ton surcharge on all steel shipments. The surcharge, which will apply to all products and customers, will commence Dec. 15 and continue through Jan. 31, 2004. Weirton Steel said the surcharge is necessary to offset dramatic cost increases on both scrap and raw materials. The company said it will contact its customers no later than Jan. 16 if a continuation of the surcharge through February is required. Weirton Steel is the fifth largest U.S. integrated steel company and the nation's second largest producer of tin mill products. WEYERHAEUSER: Lauds Proposal to End Lumber Dispute with Canada -------------------------------------------------------------- Steven R. Rogel, chairman, president and CEO of Weyerhaeuser Company (NYSE: WY) made the following statement regarding the proposal to end the softwood lumber dispute between the United States and Canada. "Weyerhaeuser, with mills in the U.S. and Canada, applauds the governments of both countries for staying at the negotiating table and for agreeing to compromises that we know will be difficult for both sides. "We'll work hard over the next few weeks to convey our strong support of this proposal to the Canadian and U.S. governments. Ratification is vital if we're to achieve free trade and stability in the North American lumber business. "The proposed resolution provides a framework for long-term policy change in Canada. Once the agreement is ratified, as a U.S.-based company, Weyerhaeuser will do all in its power to ensure a fair process that allows the provinces to adopt forestry policies that will lead to free trade. We must not let personalities or politics sidetrack what so many have worked so hard and so long to achieve." Weyerhaeuser Company (Fitch, BB+ Senior Unsecured Long-Term Ratings, Stable Outlook), one of the world's largest integrated forest products companies, was incorporated in 1900. In 2002, sales were $29.1 billion ($18.5 billion US). It has offices or operations in 18 countries, with customers worldwide. Weyerhaeuser is principally engaged in the growing and harvesting of timber; the manufacture, distribution and sale of forest products; and real estate construction, development and related activities. Weyerhaeuser Company Limited, a wholly owned subsidiary, has Exchangeable Shares listed on the Toronto Stock Exchange under the symbol WYL. Additional information about Weyerhaeuser's businesses, products and practices is available at http://www.weyerhaeuser.com. WOODWORKERS WAREHOUSE: Employs Bayard Firm as Co-Counsel -------------------------------------------------------- Woodworkers Warehouse, Inc., seeks to employ and retain The Bayard Firm as Co-Counsel in its on-going chapter 11 proceeding. The Debtor has also asked the Court's permission to retain Kronish Lieb Weiner & Hellman as lead counsel. The Debtor anticipates that The Bayard Firm will: a) provide legal advice with respect to the Debtor's powers and duties as a debtor in possession in the continued operation of its business and management of its properties; b) take necessary action to protect and preserve the Debtor's estate, including assisting in the prosecution of actions on behalf of the Debtor, the defense of any action commenced against the Debtor, negotiations concerning all litigation in which the Debtor is involved, and objecting to claims filed against the Debtor's estate; c) prepare, in conjunction with co-counsel, on the Debtor's all necessary applications, motions, responses, objections, orders, reports, and other legal papers; d) negotiate and draft any agreements for the sale or purchase of assets of the Debtor, if appropriate; e) assist in negotiating and drafting a plan of reorganization, consensual or otherwise, and all related documents, including, but not limited to, the disclosure statements and ballots for voting thereon; f) take the steps necessary to confirm and implement the Plan, including, if needed, modifications thereof and negotiating financing for the Plan; and g) render such other legal services for the Debtor as may be necessary and appropriate in these proceedings. Steven M. Yoder, Esq., a director of The Bayard Firm reports the firm's current standard hourly rates range from: Directors $350 and $510 per hour Associates $190 and $350 per hour Paralegals $ 75 and $150 per hour Headquartered in Lynn, Massachusetts, Woodworkers Warehouse, Inc., is a retailer of woodworking equipment and accessories. The Company filed for chapter 11 protection on December 2, 2003 (Bankr. Del. Case No. 03-13655). Christopher A. Ward, Esq., at The Bayard Firm represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $28,366,000 in total assets and $34,669,000 in total debts. WORLD AIRWAYS: Special Shareholders' Meeting Set for December 15 ---------------------------------------------------------------- World Airways, Inc. will hold a Special Meeting of Stockholders at 9:00 a.m., local time, on Monday, December 15, 2003, at its principal executive offices in The HLH Building, 101 World Drive, Peachtree City, Georgia 30269, for the following purposes: 1. To approve the issuance of $25,545,000 principal amount of six-year 8% Convertible Senior Subordinated Debentures in exchange for $22,545,000 principal amount of World's currently outstanding 8% Convertible Senior Subordinated Debentures Due 2004 and $3,000,000 in cash; 2. To approve the issuance of warrants to the Air Transportation Stabilization Board to purchase shares of Company common stock in connection with a federal guarantee of $27,000,000 to support a $30,000,000 term loan facility; and 3. To act upon such other matters as may properly come before the special meeting and any and all adjournments and postponements thereof. The record date for the special meeting is November 12, 2003, and only stockholders of record at the close of business on that date will be entitled to notice of, and to vote, at the special meeting. Utilizing a well-maintained fleet of international range, wide- body aircraft, World Airways, Inc., has an enviable record of safety, reliability and customer service spanning more than 55 years. The Company is a U.S. certificated air carrier providing customized transportation services for major international passenger and cargo carriers, the United States military and international leisure tour operators. Recognized for its modern aircraft, flexibility and ability to provide superior service, World Airways, Inc. meets the needs of businesses and governments around the globe. For more information, visit the Company's Web site at http://www.worldair.com. At September 30, 2003, the company's balance sheet is upside down by $13.7 million. WORLDCOM INC: Xerox Demands Payment for $1 Million Admin Expense ---------------------------------------------------------------- Before the Petition Date, Xerox Capital Services, LLP, entered into numerous contracts with the Worldcom Debtors whereby Xerox provided various document-related services for the Debtors in exchange for consideration. At the Debtors' request, Xerox continues to provide postpetition services to the Debtors under the terms of the contracts. As of November 6, 2003, the Debtors failed to make postpetition payments to satisfy unpaid invoices totaling $1,023,975. Gene R. Kazlow, Esq., at Kazlow & Kazlow, in New York, argues that Xerox is entitled to receive payment of all contractual obligations under the Contracts that have become due on or after the 60th day after the Petition Date, without the necessity of meeting the requirements of Section 503(b)(1)(A) of the Bankruptcy Code. Xerox is entitled to receive its monthly payments due under the Contracts as a matter of law since the Debtors have taken no action to assume or reject the Contracts. Mr. Kazlow asserts that under Section 363(e), Xerox is likewise entitled to adequate protection of its interests in the leased property, including payment for the leased property and compliance with the non-monetary terms of the Contracts. Given the Debtors' continued postpetition use of the leased property without the commensurate payment to Xerox pursuant to the terms of the Contracts, Mr. Kazlow argues that Xerox was not and currently is not, adequately protected. The Debtors continue to enjoy the benefits of the Contracts and the leased property without providing Xerox some form of protection, monetary or otherwise. In addition, the Debtors are in default of their postpetition contractual obligation to Xerox in violation of their document-related Contracts. Mr. Kazlow submits that the Court should require the Debtors to pay Xerox, in accordance with the terms of the Contracts, all due and unpaid rent for the postpetition use of the leased property, and should condition the Debtors' continued use of the leased property on the Debtors' continuing performance of its obligations set forth in the Contracts as they become due. Xerox, therefore, asks the Court to allow its $1,023,975 claim for amounts due under the Unpaid Invoices as an administrative expense, and to compel the Debtors to: (a) immediately pay the $1,023,975; and (b) provide adequate protection for the use of Xerox's property and services. (Worldcom Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM/MCI: Partners with Time Warner to Deliver IP Services -------------------------------------------------------------- MCI (WCOEQ, MCWEQ) announced that it has entered into a multi- year, multi-million dollar agreement with Time Warner Cable to provide consumers with next-generation voice-over-IP (VoIP) communications services utilizing MCI's global voice and data network. As a result of the services provided by MCI under the terms of the agreement, Time Warner Cable will be able to deploy its residential Internet protocol ("IP") voice service, Digital Phone, nationwide. In addition to providing local points of interconnection to terminate IP voice traffic to the public switched telephone network, MCI will also deliver enhanced 9-1-1 service, local number portability as well as manage network integration and electronic bonding of both companies' order entry systems. "The time has come for a new solution that delivers all of the simplicity, quality and value that customers want -- full service communications, high- speed Internet and video -- all in one package, on one bill, from a single provider," said Jonathan Crane, MCI executive vice president of Corporate Development and Strategy. "This relationship represents the next evolution in consumer communications -- leveraging the added capabilities of cable and the global reach of the MCI IP network to create services that leave the old public switched network behind." The agreement also enables the cost-efficient use of both companies' access facilities, simplifies pricing and offers new communications features that not only benefit consumers today but also pave a logical migration path toward new communications technologies in the future. About WorldCom WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business under the MCI brand name, is a leading global communications provider, delivering innovative, cost-effective, advanced communications connectivity to businesses, governments and consumers. With the industry's most expansive global IP backbone, based on the number of company-owned POPs, and wholly- owned data networks, WorldCom develops the converged communications products and services that are the foundation for commerce and communications in today's market. For more information, go to http://www.mci.com. WORLDWIDE HOLDINGS: Signs-Up Michael Johnson as New Auditor ----------------------------------------------------------- On September 4, 2003, Sellers & Anderson, LLC, resigned as Worldwide Holdings Delaware Corporation's auditor effective as of that date. The audit report of Sellers for the two most recent fiscal years of 2001 and 2002 was modified for uncertainty as to whether Worldwide Holdings Delaware would continue as a going concern. The decision to change accountants was approved by a unanimous consent to action by the Board of Directors of Worldwide. On September 19, 2003, Worldwide retained Michael Johnson & Co., LLC, of Denver, Colorado, to be its principal accountant, engaged to audit Worldwide's financial statements. This action was taken to replace the Utah firm of Sellers. Sellers and Worldwide have had no disagreements over management practices or accounting policies. The change to the new auditors became effective upon receipt, approval and execution of an engagement agreement. Worldwide's Board of Directors have approved the engagement of Johnson as the principal accountant. The company's March 31, 2003, balance sheet is upside-down by $1.28 million. XCEL ENERGY: Board Declares Payment of Delayed Dividend ------------------------------------------------------- Xcel Energy (NYSE:XEL) announced that its board of directors has declared payment of the delayed October common stock dividend. "The company had adequate cash on hand to pay the dividend in October but was prevented from doing so because of a provision in the Public Utility Holding Company Act," said Wayne Brunetti, Xcel Energy's chairman and chief executive officer. "That provision requires a company to have retained earnings at least equal to the dividend payment or receive a waiver of that requirement from the Securities and Exchange Commission (SEC)." Brunetti said that earnings from utility operations and the impact of NRG Energy's emergence from bankruptcy have boosted Xcel Energy's retained earnings. "We know dividends are important to our shareholders," Brunetti said. "This action by our board enables shareholders to receive their full 75-cents-per-share common dividend this calendar year. Following this dividend declaration, we expect to return to our normal dividend declaration and payment pattern." A dividend of 18.75-cents-per-share of common stock will be paid on December 31, 2003 to shareholders of record on December 15. Xcel Energy is a major U.S. electricity and natural gas company with operations in 11 Western and Midwestern states. Xcel Energy provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth-largest combination natural gas and electricity company in the nation. Company headquarters are located in Minneapolis. More information is available at http://www.xcelenergy.com. * Meetings, Conferences and Seminars ------------------------------------ February 5-7, 2004 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, CO Contact: 1-703-739-0800 or http://www.abiworld.org March 5, 2004 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West The Century Plaza, Los Angeles, CA Contact: 1-703-739-0800 or http://www.abiworld.org April 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org April 29-May 1, 2004 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Fairmont Hotel, New Orleans Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 3, 2004 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Millennium Broadway Conference Center, New York, NY Contact: 1-703-739-0800 or http://www.abiworld.org June 2-5, 2004 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, MI Contact: 1-703-739-0800 or http://www.abiworld.org June 24-26,2004 AMERICAN BANKRUPTCY INSTITUTE Hawaii Bankruptcy Workshop Hyatt Regency Kauai, Kauai, Hawaii Contact: 1-703-739-0800 or http://www.abiworld.org July 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE The Mount Washington Hotel Bretton Woods, NH Contact: 1-703-739-0800 or http://www.abiworld.org July 28-31, 2004 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Reynolds Plantation, Lake Oconee, GA Contact: 1-703-739-0800 or http://www.abiworld.org September 18-21, 2004 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference The Bellagio, Las Vegas, NV Contact: 1-703-739-0800 or http://www.abiworld.org October 10-13, 2004 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Seventh Annual Meeting Nashville, TN Contact: http://www.ncbj.org/ December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, DC Contact: 1-703-739-0800 or http://www.abiworld.org July 14 -17, 2005 AMERICAN BANKRUPTCY INSTITUTE Ocean Edge Resort, Brewster, MA Contact: 1-703-739-0800 or http://www.abiworld.org July 27- 30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, SC Contact: 1-703-739-0800 or http://www.abiworld.org November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, TX Contact: http://www.ncbj.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, CA Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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. 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 ***