/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/031223.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, December 23, 2003, Vol. 7, No. 253 Headlines AFFILIATED FOODS: First Creditors Meeting Convenes on Jan. 7 AHOLD: S&P Ups Rating to BB Due to Improving Liquidity Position AHOLD LEASE: S&P Raises Ratings on 2001-A Pass-Through Certs. AIR CANADA: Pilots Question Choice of Two Aircraft Types AIR CANADA: Jazz Pilots Support Order for Small Jets ALLEGHENY ENERGY: First-Half Consolidated Loss Reaches $290 Mil. AMAZON.COM INC: Fourth-Quarter Conference Call Set for Jan. 27 AMERCO: Plan Confirmation Hearing Date Slated for Feb. 2, 2004 AMERIKING: Cypress Completes Sale of 131 Burger King Restaurants AMKOR TECH.: New Options Granted Under NASDAQ Market Rule 4350 ARCTIC EXPRESS: Creditors Must File Claims by November 14, 2003 ARVINMERITOR INC: Will Sell 75% APA JV Equity Stake to Kayaba ASSET SECURITIZATION: Fitch Drops Series 1996-D3 Class B-3 to D ATA HOLDINGS: Extends Exchange Offers for Two Notes to January 2 ATS LIQUIDATING: Enters Pact to Sell Segenix Rights to RegeneMed AURORA FOODS: Hires Skadden Arps to Prosecute Chapter 11 Cases BANKAMERICA: Fitch Takes Various Actions on 22 RMBS Classes BUDGET GROUP: Chapter 7 Liquidation Inferior to Chapter 11 Plan CENTRAL PARK EAST: Case Summary & 20 Largest Unsecured Creditors CHASE FUNDING: Fitch Rates Class B-4 & B-5 Certificates at BB/B COMMUNICATE.COM: Liquidity Issues Raise Going Concern Doubt CONGOLEUM CORP: Extends Plan-Voting Deadline Until Tomorrow COVANTA ENERGY: Gets OK to Pay Closing Bonuses to Key Employees CROMPTON: Gets Conditional Amnesty in Nitrile Rubber Inquiry DAN RIVER: Obtains Waiver of Potential Loan Covenant Violations DELPHI CORP: Completes 1-For-1 Employee Option Exchange Offer DIRECT INSITE: Names Michael J. Beecher as Chief Fin'l Officer DIRECTV LATIN: 3rd Exclusivity Extension Hearing Set for Jan. 9 DRESSER: John T. McKenna Named President of Dresser Instruments DT INDUSTRIES: Receives $5MM Purchase Order from Sweetheart Cup EMERGENCY FILTRATION: Ability to Continue Operations Uncertain ENRON: Solicitation Exclusivity Hearing Continues on January 8 EXIDE TECH.: Wants Lease Decision Period Stretched to March 31 FLEMING: Provides Plan's Classification and Treatment of Claims FLEXTRONICS INT'L: Will Publish Third-Quarter Results on Jan. 27 GENESIS HEALTH: Neighborcare Converts Series A Preferred Shares GEORGIA-PACIFIC: Selling Three Railroads to Genesee & Wyoming GEORGIA-PACIFIC: Renews $900-Mil. Accounts Receivable Financing GERDAU AMERISTEEL: Commences Exchange Offer for Senior Notes GMACM MORTGAGE: Fitch Rates Class B-1 & B-2 Certificates at BB/B GRUPO IUSACELL: Consummates 20:1 Series A & Series V Stock Swap HEYDE HOSPITALITY: Case Summary & 20 Largest Unsecured Creditors INFINIA, INC: Case Summary & 20 Largest Unsecured Creditors INSITE VISION: Reaches Pact to Sell ISV-403 to Bausch & Lomb INTEGRATED HEALTH: Premiere Panel Wants Plan Provisions Enforced INTERPUBLIC: Will Redeem 1.8% Convertible Subordinated Notes J.H. WHITNEY: Fitch Affirms Classes C and D Ratings at BB/B JADE CBO: Fitch Affirms CC Second-Priority Senior Notes' Rating JEFFERSON SMURFIT: Fitch Assigns B/B- Senior & Sub. Note Ratings JP MORGAN: Fitch Cuts Ratings on Two Series 1998-C6 Classes to D KAISER ALUMINUM: Selling 90% Valco Interest to Republic of Ghana KAISER ALUMINUM: Agrees to Terminate Employees' Retirement Plan KLEAN EARTH: Case Summary & 20 Largest Unsecured Creditors LANDMARK III CDO: S&P Rates Class B-2L Notes at BB MEDICAL ASSURANCE: S&P Lowers and Withdraws Low-B Ratings MEMORIAL MEDICAL: Fitch Keeps B Debt Rating on Watch Negative METRO HOSPITALITY: Case Summary & 7 Largest Unsecured Creditors MIRANT CORP: Applauds FERC Settlement for Ancillary Services MIRANT CORP: Brings-In Novack & Macey as Special Counsel MORGAN STANLEY: S&P Ratings on 2 Classes Fall to Lower-B Levels MORGAN STANLEY: Fitch Ups BB/B Ser. 1998-XL1 Note Class Ratings NATIONAL CENTURY: Trusts to be Formed Under Second Amended Plan NDCHEALTH: Appoints Laurie Glimcher and Steven Shulman to Board NEW CENTURY FINANCIAL: Completes Equity Investment in NextAce NEW CENTURY FIN'L: Completes Q4 Secondary Marketing Transactions NHC COMMS: October 31 Net Capital Deficit Widens to C$6.5 Mill. NORTHWEST AIRLINES: Fitch Rates Class D Trust Certificates at B NUTRAQUEST: Panel Taps Nihill & Riedley as Forensic Accountants OLD COUNTRY: Case Summary & 20 Largest Unsecured Creditors OM GROUP: Files Form 10-Q and Amends Previously Reported Results OPTION ONE MORTGAGE: Fitch Keeps Watch on BB Class B Note Rating ORYX TECHNOLOGY: Discloses 43.3% Equity Stake in S2 Technologies P-COM INC: Raises Additional Equity and Eliminates $3MM in Debt PAC-WEST: Completes Financing Transaction with Deutsche Bank PACIFIC GAS: S&P Places 'D' Corporate Rating on Watch Positive PACIFIC GAS: Will Pay Up to Additional $4MM in Clean-Up Expenses PARMALAT: Board Meets Later This Afternoon to Determine Next Step PARMALAT: S&P Drops Rating to D on Missed Payment of Put Option PARMALAT: Fitch Watching 69 Vulnerable CDOs Exposed to Parmalat PARR CHEVROLET: Voluntary Chapter 11 Case Summary PARTNER COMMS: Moody's Ratchets Four Low-B Ratings Up a Notch PHYAMERICA: Obtains $8-Mill. Loan Facility from R.D. PhyAm Unit PHYAMERICA: Court Approves Dresnick-Resurgence $8-Mil. Financing PINNACLE CBO: Fitch Affirms Junk 2nd Priority Sr. Notes Rating PLAINS ALL AMERICAN: Prices 2.5 Million Common Unit Offering PORTOLA PACKAGING: Delays Filing Form 10-K for Fiscal 2003 POTLATCH CORP: Names William L. Driscoll to Board of Directors QWEST COMMS: Sets Annual Shareholders' Meeting for May 25, 2004 RAYOVAC CORP: Exchange Offer for 8.50% Senior Sub. Notes Expires REDBACK NETWORKS: Gets Nod to Hire Ordinary Course Professionals RELIANCE: Wants Plan-Filing Exclusivity Extended to March 30 RESOURCE AMERICA: Reports Improved Operating Results for FY 2003 ROYAL CARIBBEAN: Inks Pact to Develop Cruise Port In New Jersey SAFETY-KLEEN: Hoover Material Wants Approval to File Late Claim SALOMON BROS: Fitch Affirms 7 & Lowers 2 Classes from 2 Issues SDC INT'L: Considering Options, Including Bankruptcy Filing SEL-LEB MARKETING: Extends Loan Agreement Until April 30, 2003 SLATER STEEL: Union Rejects Changes to Collective Agreement SO. CALIFORNIA EDISON: Applauds Ninth Circuit Court Decision SO. CALIF. EDISON: Will Redeem All Outstanding 8-3/8% QUIDS SOLUTIA INC: Receives Court Approval of 'First Day' Motions SOLUTIA INC: Gets Go-Signal to Use Lenders' Cash Collateral SOLUTIA INC: Reports 10-15% Price Increase on Nylon Carpet Fiber STAGE TRANSPORTATION: Case Summary & Largest Unsecured Creditors STOLT OFFSHORE: Proposes Equity Capital Raising Initiatives THAXTON GROUP: Committee Signs-Up HGH Associates as Accountants TITANIUM: S&P Revises Outlook to Stable on Improved Performance TRI-UNION: Obtains Nod to Hire Haynes and Boone as Attorneys ULTRASTRIP SYSTEMS: BDO Seidman Resigns as Certifying Accountant UNITED AIRLINES: Proposes Uniform Claims Estimation Procedures VERESTAR INC: Case Summary & 20 Largest Unsecured Creditors W.R. GRACE: Sealed Air Inks New $350MM Revolving Credit Facility WEIRTON STEEL: Amends Cleveland-Cliffs Pellet Supply Agreement WILLIAMS: Gets Order for Pipeline Restoration in Washington State WORLD AIRWAYS: Shareholders Approve Proposed Debenture Exchange WORLDCOM INC: Secures Approval for Global Exchange Settlement * Large Companies with Insolvent Balance Sheets ********* AFFILIATED FOODS: First Creditors Meeting Convenes on Jan. 7 ------------------------------------------------------------ The United States Trustee will convene a meeting of Affiliated Foods Stores, Inc.'s creditors on January 7, 2004, at 1:30 p.m., in Room B04 at 224 South Boulder Avenue in Tulsa, Oklahoma. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Affiliated Food Stores, Inc., a retailer headquartered in Abilene, Texas, filed for chapter 11 protection on December 2, 2003 (Bankr. N.D. Okla. Case No. 03-07101). John E. Howland, Esq., at Rosenstein, Fist & Ringold represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $17,387,901 in total assets and $14,505,402 in total debts. AHOLD: S&P Ups Rating to BB Due to Improving Liquidity Position --------------------------------------------------------------- Standard & Poor's Ratings Services said it raised its long-term corporate credit rating on Netherlands-based food retailer and food service distributor Ahold Koninklijke N.V., to 'BB' from 'BB-'. The outlook is positive. At the same time, all long-term ratings on Ahold were removed from CreditWatch, where they were placed on Feb. 24, 2003, following the announcement of substantial accounting irregularities. In addition, Standard & Poor's affirmed its short-term 'B' corporate credit rating on the group. "The upgrade reflects Ahold's commitment to reduce debt--as demonstrated by its recent ?3 billion rights issue and stated objective of generating ?2.5 billion of proceeds from divestments by the end of 2005--and its much improved liquidity position," said Standard & Poor's credit analyst Hugues de la Presle. The proceeds from Ahold's recent rights issue will enable Ahold to improve its debt measures. In light of the decline in the group's profitability, these are, however, expected to remain weak for the ratings at the end of 2003, with projected debt (adjusted for operating leases, receivable securitizations, and unfunded postretirement liabilities) to EBITDAR in excess of 4x. Debt measures should benefit in 2004 from the expected recovery in the group's profitability, along with proceeds from disposals and free cash flow generation. The ratings on Ahold continue to be underpinned by the solid positions of its core operations, in particular Stop & Shop in the North Eastern U.S. Ahold's Dutch flagship chain Albert Heijn has, however, come under severe pressure this year and in response significantly lowered its prices in October 2003. The group is likely to have to reposition its pricing in the U.S. given soft consumer spending, the growth of discounters, and the high margins of Ahold's key U.S. operations in an industry in which it is crucial to strike the right balance between margin maximization and sales growth. The impact of any pricing repositioning on earnings should, however, be offset by cost cutting. In addition, Standard & Poor's expects that Ahold's new management, despite operating in a tougher competitive environment, will lift the group's operational performance and deliver on its disposal program, thus improving Ahold's debt measures. AHOLD LEASE: S&P Raises Ratings on 2001-A Pass-Through Certs. ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class A-1 and A-2 pass through certificates issued by Ahold Lease 2001-A Pass Through Trusts to 'BB' from 'BB-'. Concurrently, the ratings are removed from CreditWatch with positive implications, where they were placed Nov. 10, 2003. The outlook is positive. The rating actions follow the raised corporate credit rating on Ahold Koninklijke N.V., to 'BB' from 'BB-' on Dec. 19, 2003, at which time all of the ratings on Ahold were removed from CreditWatch positive. The outlook on Ahold is positive. The ratings on Ahold Lease 2001-A Pass Through Trusts are dependent on the corporate credit rating on Ahold, which guarantees the leases that serve as the source of payment on the rated securities. The leases, which are "bondable" triple-net, are on 46 properties including supermarkets and other retail stores, office buildings, warehouses, and distribution centers in 13 states. RATINGS RAISED AND OFF CREDITWATCH; OUTLOOK POSITIVE Ahold Lease 2001-A Pass Through Trusts Pass-thru trust certificates Rating Class To From A-1 BB/Positive BB-/Watch Pos A-2 BB/Positive BB-/Watch Pos AIR CANADA: Pilots Question Choice of Two Aircraft Types -------------------------------------------------------- The Air Canada Pilots Association (ACPA) commented on Air Canada's announcement of an agreement in principle to purchase 90 aircraft from Bombardier and Embraer. "We are pleased to see that Air Canada is now able to look ahead to its future and plan for the ongoing composition of its fleet," said Captain Don Johnson, President of the Air Canada Pilots Association. "We are, however, somewhat surprised at their choice of aircraft." The pilots group noted that the purchase announcement is really an agreement in principle, subject to a number of conditions including the approval of Air Canada's creditors, as well as the approval of the court overseeing the airline's restructuring under the Companies' Creditors Arrangement Act (CCAA). ACPA is questioning why Air Canada has chosen two aircraft types that have essentially a similar range and operational profile. "Adding a whole new type into the fleet adds complexity to the operation, and triggers additional start-up, training and infrastructure costs," noted Captain Johnson. The pilots expressed some surprise that part of the order did not go to the Airbus A318, which seats up to 129 passengers. This jet is a match for Air Canada's current Airbus fleet, providing familiarity, flexibility, economical operating costs and a common cockpit with the A319/320/321 series. The Air Canada Pilots Association noted that it has not been determined where these jets will fly within the Air Canada family. "Our collective agreement stipulates that Air Canada pilots fly the 50 seat jets, except for the 20 small jets that are flown by Air Canada Jazz. However, last spring Air Canada Jazz made promises to its pilots that conflict with our agreement; promises that breach our contract and set the stage for confusion and conflict," said Captain Johnson. The pilots at Air Canada Jazz are represented by another association. An attempt to resolve the conflicting labour agreements will go before an arbitration process that gets underway on January 17th, but may take some time to come to a conclusion. The Air Canada Pilots Association is the largest professional pilot group in Canada, representing the approximately 3100 pilots who operate Air Canada's mainline fleet. AIR CANADA: Jazz Pilots Support Order for Small Jets ---------------------------------------------------- The Air Line Pilots Association (ALPA), International's 1400 Air Canada Jazz pilots are pleased with the corporate announcement on the selection of the small jets that will form the core of Air Canada and Air Canada Jazz's North American fleet strategy as part of the global restructuring exercise. Jazz Air Inc., a wholly-owned subsidiary of Air Canada, is a current operator of small jets on behalf of Air Canada. "We are fully supportive of Air Canada's corporate vision to renew and expand the small jet fleet as part of the ongoing financial and operational restructuring of Air Canada and Air Canada Jazz," said Captain Nick DiCintio, chairman of the Air Canada Jazz pilots' unit of ALPA. "We are confident that Air Canada is responding appropriately to the rapidly evolving marketplace in announcing a combination of expansion to the existing Bombardier CRJ fleet, as well as the introduction of the new Embraer 190 aircraft," he added. The Air Canada Jazz pilots have been working cooperatively with Air Canada and Air Canada Jazz throughout the restructuring with a view to realigning fleet and costs to ensure Air Canada's continued success in the increasingly competitive North American market with the ultimate objective of maximizing shareholder value and economic return for all stakeholders. "We view the announcement of a renewed and expanded small jet fleet to be another positive step within CCAA which will certainly lead to the successful restructuring of Air Canada and Air Canada Jazz," emphasised Captain DiCintio. The next step in the restructuring process will be an arbitration concerning the allocation of these aircraft before Mr. Martin Teplitsky, the arbitrator agreed upon by the Jazz pilots and the Air Canada Pilots when earlier negotiations concerning this issue proved inconclusive. Such process is already underway and a final determination is expected in advance of Air Canada's exit from CCAA protection. ALPA, the world's oldest and largest union of airline pilots, represents 66,000 pilots at 43 carriers in Canada and the U.S. Air Canada Jazz provides service to over 70 destinations in Canada and the United States, and services more communities in Canada than any other airline. Visit the ALPA Web site at http://www.alpa.org/ ALLEGHENY ENERGY: First-Half Consolidated Loss Reaches $290 Mil. ---------------------------------------------------------------- Allegheny Energy, Inc. (NYSE:AYE) announced financial results for the first and second quarters of 2003 and stated that it has filed the related quarterly financial reports on Form 10-Q with the Securities and Exchange Commission (SEC). Allegheny expects to file its third quarter financial reports in January. Paul J. Evanson, Chairman and CEO, said, "As expected, results for the first six months of 2003 reflect major losses in Allegheny's trading activities in the Western United States energy markets, including the write-down from renegotiating the California contract. By selling that contract in September and closing out other positions, we are now largely out of Western financial trading. "We remain on track in rebuilding Allegheny. The year 2004 will be a time of transition for the Company as we focus on becoming timely with our SEC filings, refinancing our debt, and creating a high-performance culture that will improve both quality and cost. I am confident that we are taking the right steps for long-term success," concluded Mr. Evanson. Consolidated Financial Results First Six Months Allegheny reported a consolidated loss for the first six months of 2003 of $290.3 million ($2.29 per share) compared with a consolidated loss of $87.9 million ($0.70 per share) for the first six months of 2002. Before cumulative effect of accounting changes, the consolidated loss for the first six months of 2003 was $269.6 million ($2.13 per share) compared with consolidated income of $42.6 million ($0.34 per share) for the first six months of 2002. Major items in the first six months of 2003 which affected earnings include: -- A write-down in value of the renegotiated California Department of Water Resources power supply contract of $152.2 million ($89.8 million, net of income taxes). Allegheny sold the CDWR contract in September 2003 and has largely exited the Western energy markets; -- Other unrealized losses and net realized losses for the first six months of 2003 of $198.5 million ($117.1 million, net of income taxes) and $37.3 million ($22.4 million, net of income taxes), respectively, as compared with unrealized gains of $128.1 million ($76.9 million, net of income taxes) and realized losses of $21.7 million ($13.0 million, net of income taxes) in the first six months of 2002, from Allegheny's trading business; -- Recognition of a gain of $75.8 million ($56.7 million, net of income taxes) for the reapplication of Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of Regulation," because of the reapplication of regulatory treatment to certain assets in West Virginia; and -- Impairment charges of $28.5 million ($17.1 million, net of income taxes) for assets held for sale, including the Conemaugh Generating Station, which was sold in June 2003. Operation expenses for the first six months of 2003 increased by $80.8 million ($46.5 million, net of income taxes) as compared with the first six months of 2002, due, in part, to higher costs for employee benefits and outside services, as well as to the impairment charges described above. Interest charges for the first six months of 2003 increased $68.1 million ($39.2 million, net of income taxes) over the same period of 2002. The increase reflects both higher interest rates and the increase in average long-term debt outstanding, including debt incurred in connection with Allegheny's refinancing in February 2003. Second Quarter Allegheny reported a consolidated loss for the second quarter of 2003 of $231.5 million ($1.82 per share) compared with a consolidated loss of $33.5 million ($0.27 per share) for the second quarter of 2002. The increase in consolidated loss of $198.0 million was due primarily to reduced net revenues in the Generation and Marketing segment resulting from continuing losses in its trading business and the continued price volatility in energy markets in the Western United States. Reported results for the second quarter reflect the write-down in value of the CDWR power supply contract of $152.2 million as described above and unrealized losses on commodity contracts of $153.3 million ($88.9 million, net of income taxes) offset, in part, by realized gains of $19.7 million ($11.6 million, net of income taxes) on trading operations, primarily from the sale of power purchase hedge agreements. In addition, interest charges increased $38.1 million ($22.3 million, net of income taxes) over the second quarter of 2002 for the reasons described above. First Quarter Allegheny recorded a consolidated loss for the first quarter of 2003 of $58.8 million ($0.46 per share) compared with a consolidated loss of $54.4 million ($0.43 per share) for the first quarter of 2002. Results of operations for the first quarter were reduced by $12.1 million, net of income taxes, reflecting cumulative effect of an accounting change associated with the adoption of Emerging Issues Task Force (EITF) Issue No. 02-3, "Accounting for Contracts Involved in Energy Trading and Risk Management," and by $8.6 million, net of income taxes, reflecting cumulative effect of an accounting change associated with the adoption of SFAS No. 143, "Accounting for Asset Retirement Obligations." Before cumulative effect of accounting changes, the consolidated loss for the first quarter was $38.0 million ($0.30 per share) compared with consolidated income of $76.1 million ($0.61 per share) for the first quarter of 2002. The decrease in earnings (before cumulative effect of accounting changes) of $114.1 million was due primarily to reduced net revenues in the Generation and Marketing segment as a result of unrealized losses and realized losses on commodity contracts of $45.2 million ($27.6 million, net of income taxes) and of $72.6 million ($44.4 million, net of income taxes), respectively, in 2003 as described above in the results for the first six months. Earnings were also reduced by impairment charges on assets held for sale as described above. Interest charges increased $30.0 million ($15.3 million, net of income taxes) over the first quarter of 2002 for the reasons described above. These charges were offset, in part, by the recognition of a gain from the reapplication of SFAS No. 71 also as described above. Generation and Marketing Segment For the first six months of 2003, the segment reported a consolidated loss (before cumulative effect of accounting changes) of $315.6 million as compared with a consolidated loss (before the cumulative effect of accounting changes) of $19.4 million in the first six months of 2002. Wholesale revenues for the first six months of 2003 decreased $512.0 million over the comparable period in 2002 due primarily to the factors described above in the consolidated results, including both unrealized and realized losses in trading operations. For the second quarter of 2003, the segment reported a consolidated loss of $240.2 million compared to a consolidated loss of $62.0 million in the second quarter of 2002. Wholesale revenues for the second quarter of 2003 decreased $298.5 million due primarily to the factors described above in the consolidated results. In the prior comparable period, the segment had recorded unrealized gains associated with its trading portfolio. For the first quarter of 2003, the segment reported a consolidated loss of $95.0 million compared with consolidated income of $42.6 million in the first quarter of 2002. Before cumulative effect of accounting changes, the loss for the segment was $75.4 million compared with income before cumulative effect of accounting changes of $42.6 million for the second quarter of 2002. Wholesale revenues for the first quarter decreased $213.5 million due primarily to the factors discussed above in the consolidated results. The losses were offset, in part, by unrealized gains from the trading operations and the recognition of a gain of $61.7 million ($48.1 million, net of income taxes) from the reapplication of SFAS No. 71 as discussed above in the consolidated financial results. Delivery and Services Segment For the first six months of 2003, the segment reported consolidated income (before cumulative effect of accounting changes) of $53.7 million as compared with consolidated income of $65.1 million in the first six months of 2002. The segment's regulated electric revenues increased by $51.2 million and the segment's regulated natural gas revenues increased by $29.0 million over the same period in 2002. Both increases were due primarily to increased sales resulting from colder winter weather across Allegheny's service territories. During the first six months of 2003, the segment's unregulated services revenues decreased $258.0 million from the same period in 2002 due primarily to the sale of Alliance Energy Services on December 31, 2002. For the second quarter of 2003, the segment reported consolidated income of $4.3 million, compared with consolidated income of $25.9 million for the second quarter of 2002. The segment's regulated electric and natural gas revenues remained relatively consistent for the second quarter over the comparable period in 2002. During the second quarter of 2003, the segment's unregulated services revenues decreased $121.8 million from the same period in 2002 due primarily to the sale of Alliance Energy Services as described above. For the first quarter of 2003, the segment reported consolidated income (before cumulative effect of an accounting change) of $49.4 million compared with consolidated income of $39.2 million for the first quarter of 2002. The segment's regulated electric revenues increased $49.0 million and regulated natural gas revenues increased $29.6 million in 2003 compared with the first quarter 2002, resulting from colder winter weather as described above in the results for the first six months. The segment's unregulated revenues decreased $136.2 million to $14.1 million in the first quarter of 2003 due primarily to the sale of Alliance Energy Services as described above. In addition, the first quarter results of 2003 include a gain of $14.1 million ($8.6 million, net of income taxes) from the reapplication of SFAS No. 71 as discussed above in the consolidated financial results. Allegheny Energy is an integrated energy company with a portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities; and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about four million people in Pennsylvania, West Virginia, Maryland, Virginia, and Ohio. More information about the Company is available at http://www.alleghenyenergy.com/ * * * As reported in Troubled Company Reporter's October 3, 2003 edition, Fitch Ratings downgraded Allegheny Energy Inc., and its subsidiaries. In addition, the Rating Watch status for all related entities is revised to Negative from Evolving, with the exception of West Penn Funding LLC and insured bonds of Allegheny Energy Supply Co. LLC. Ratings downgraded and on Rating Watch Negative by Fitch: Allegheny Energy, Inc. --Senior unsecured debt to 'BB-' from 'BB'; --Bank credit facility maturing in 2005 to 'BB-' from 'BB'; --11 7/8% notes due 2008 lowered to 'B+' from 'BB-'. Allegheny Capital Trust I -- Mandatorily trust preferred stocks to 'B+' from 'BB-'. Allegheny Energy Supply Company LLC --Unsecured bank credit facilities to 'B-' from 'B'; --Senior unsecured notes lowered to 'B-' from 'B'. Allegheny Generating Company --Senior unsecured debentures lowered to 'B-' from 'B'. Rating Watch revised to Negative from Evolving for the following ratings: Allegheny Energy Supply Company LLC --Secured bank credit facilities with first priority lien 'BB-'; --Secured bank credit facilities with a second priority lien 'B+'. Allegheny Energy Statutory Trust 2001-A Notes --Senior secured notes 'B+'. West Penn Power Company --Medium-term notes 'BBB-'. Potomac Edison Company --First mortgage bonds 'BBB'; --Senior unsecured notes 'BBB-'. Monongahela Power Company --First mortgage bonds 'BBB'; --Medium-term notes/pollution control revenue bonds (unsecured) 'BBB-'; --Preferred stock 'BB+'. Ratings affirmed; Rating Outlook Stable: West Penn Funding LLC --Transition bonds 'AAA'. Allegheny Energy Supply Company LLC --Pollution control bonds (MBIA-insured) 'AAA'. AMAZON.COM INC: Fourth-Quarter Conference Call Set for Jan. 27 -------------------------------------------------------------- Amazon.com, Inc. (Nasdaq:AMZN) will webcast its fourth quarter 2003 financial results conference call on Tuesday, January 27, 2004, at 2:00 p.m. PT/5:00 p.m. ET. The audio of this event will be webcast live and will be archived at least through March 31, 2004, at http://www.amazon.com/ir/ At September 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $1.1 billion. Amazon.com, a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers list millions of unique new and used items in categories such as sporting goods, apparel and accessories, books, music, DVDs, electronics and office, kids and baby and home and garden. AMERCO: Plan Confirmation Hearing Date Slated for Feb. 2, 2004 -------------------------------------------------------------- U.S. Bankruptcy Court Justice Zive grants the AMERCO Debtors' request for approval of their Disclosure Statement and uniform Solicitation Procedures, Voting Procedures and Ballot Forms. The Court establishes: (a) December 12, 2003 as the Record Date for purposes of determining which creditors are entitled to vote on the Plan; (b) January 20, 2004 at 4:00 p.m. EST as the Voting Deadline; (c) February 2, 2004 at 9:30 a.m. PST as the Confirmation Hearing Date; (d) January 16, 2004 at 4:00 p.m. PST s the Confirmation Objection deadline; and (e) January 26, 2004 as the Confirmation Objection Response deadline. Judge Zive further authorizes the Debtors to employ Trumbull as their Voting Agent in these cases. (AMERCO Bankruptcy News, Issue No. 16 Bankruptcy Creditors' Service, Inc., 215/945-7000) AMERIKING: Cypress Completes Sale of 131 Burger King Restaurants ---------------------------------------------------------------- The Cypress Group, an investment bank and advisory services firm, completed the sale of AmeriKing's 131 Burger King restaurants located primarily in Illinois and Wisconsin and 15 restaurants in Chattanooga, Tennessee. Prior to entering bankruptcy in December 2002, AmeriKing was the second-largest independent Burger King franchisee. The Burger King operations in Illinois were sold to Heartland Food Corporation, an existing Burger King franchisee. The Tennessee restaurants were sold to HomeTown Folks, LLC, a local Tennessee restaurant operating company. Early this month, Cypress also completed the sale of AmeriKing's Texas and Colorado Burger King restaurants. AmeriKing anticipates completing the sale of its remaining restaurants in Virginia, North Carolina and Cincinnati by the end of January. All of AmeriKing's assets are being sold as part of their Chapter 11 bankruptcy proceedings. The Cypress Group acted as AmeriKing's exclusive financial advisor in negotiating and structuring the sale of AmeriKing's assets. The Cypress Group provides advisory and investment banking services to the multi-unit and retail and restaurant industries. AMKOR TECH.: New Options Granted Under NASDAQ Market Rule 4350 -------------------------------------------------------------- Amkor Technology, Inc. (Nasdaq: AMKR) announced that, in accordance with NASDAQ Marketplace Rule 4350, as amended October 14, 2003, twelve non-executive employees were granted inducement stock options covering an aggregate of 27,200 shares of common stock. These options were granted without stockholder approval pursuant to NASDAQ Marketplace Rule 4350 (i)(1)(A)(iv) with the following terms: each option has been classified as a non-qualified stock option, has an exercise price equal to the fair market value on the grant date, has a ten-year term, and vests as to 25% of the award on the anniversary of the employee's start date and as to 1/48th of the award each month thereafter, subject to continued employment through each relevant date. Amkor Technology, Inc. (S&P, B Corporate Credit and Senior Debt Ratings, Stable) is the world's largest provider of contract semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronic design and manufacturing services. More information on Amkor is available from the company's SEC filings and on Amkor's Web site at http://www.amkor.com/ ARCTIC EXPRESS: Creditors Must File Claims by November 14, 2003 --------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of Ohio, Eastern Division, set 4:00 p.m. on January 22, 2004, as the deadline for all creditors owed money on account of claims arising prior to October 31, 2003, against: * Arctic Express, Inc., and * D&A Associates, Ltd. Creditors must file written proofs of claim. All known creditors were supplied with customized claim forms reflecting how the Debtors scheduled their claims. Claim forms must be received on or before the Bar Date by: Clerk, United States bankruptcy Court for the Southern District of Ohio 170 North High Street Columbus, Ohio 43215 A copy of the Proof of Claim must also be mailed to the office of the Debtors' counsel: Ms. Diance Katsulis Spencer Fane Britt & Browne LLP 1000 Walnut, Suite 1400, Kansas City Missouri 64106 Creditors need not file a Proof of Claim its claim or interest has been properly scheduled as liquidated, non-contingent and undisputed and in the correct amount of Debtors' bankruptcy schedules. Headquartered in Hilliard, Ohio, Arctic Express Inc., is one of America's largest refrigerated transportation services. The Company filed for chapter 11 protection on October 31, 2003 (Bankr. S.D. Ohio, Case No. 03-66797). Daniel D. Doyle, Esq., at Spencer Fane Britt & Browne LLP and Guy R. Humphrey, Esq., at Chester, Willcox & Saxbe LLP represent the Debtor in its restructuring efforts. ARVINMERITOR INC: Will Sell 75% APA JV Equity Stake to Kayaba ------------------------------------------------------------- ArvinMeritor, Inc. (NYSE: ARM) has signed a definitive agreement to sell its 75 percent shareholdings in AP Amortiguadores, S.A., to joint venture partner Kayaba Industry Co., Ltd. In 1989 ArvinMeritor acquired shares in the joint venture company, which manufactures shock absorbers for the global automotive market. The sale is subject to regulatory approval, and terms of the transaction were not disclosed. "ArvinMeritor is steadfast in its pursuit of becoming a market leader of integrated suspension systems and modules for the light vehicle market," said Sidney Del Gaudio, ArvinMeritor Light Vehicle Systems vice president and general manager of Undercarriage. "By divesting the APA shares we solely focus our more than 100 years of ride control expertise and resources on designing and producing the next generation of ArvinMeritor suspension system technologies." AP Amortiguadores, S.A. has more than 780 employees in two locations: Pamplona (Ororbia), Spain and Curitiba (Fazenda do Rio Grande), Brazil. In October 2001, ArvinMeritor dissolved its North American joint venture with Kayaba Industry Co., Ltd. This announcement marks the company's final step to solely own and further develop ArvinMeritor's ride control technologies. ArvinMeritor, Inc. (S&P, BB+ Corporate Credit & Senior Unsecured Debt Ratings, Negative) is a premier $7-billion global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and related aftermarkets. In addition, ArvinMeritor is a leader in coil coating applications. The company is headquartered in Troy, Mich., and employs 32,000 people at more than 150 manufacturing facilities in 27 countries. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. For more information, visit the company's Web site at http://www.arvinmeritor.com/ ASSET SECURITIZATION: Fitch Drops Series 1996-D3 Class B-3 to D --------------------------------------------------------------- Fitch Ratings downgrades Asset Securitization Corp.'s commercial mortgage pass-through certificates, series 1996-D3, as follows: --$6.1 million class B-3 to 'D' from 'C'. In addition, Fitch affirms the following classes: --$308.3 million class A-1C 'AAA'; --$19.6 million class A-1D 'AAA'; --Interest-only class A-CS2 'AAA'; --$39.1 million class A-2 'AA'; --$35.2 million class A-3 'A'; --$39.1 million class A-4 'BBB'; --$43 million class B-1 'BB'; --$27.4 million class B-2 'CCC'. Fitch does not rate the $15.7 million class A-5 certificates. The downgrade is attributed to the liquidation of a hotel in Lubbock, Texas (0.8%). The total loss to the trust from the liquidation of this loan was approximately $2.4 million. ATA HOLDINGS: Extends Exchange Offers for Two Notes to January 2 ---------------------------------------------------------------- ATA Holdings Corp. (Nasdaq: ATAH), the parent company of ATA Airlines, Inc., announced the extension of its offers to exchange: - newly issued 11% Senior Notes due 2009 and cash consideration for any and all of the $175 million outstanding principal amount of its 10-1/2 percent Senior Notes due 2004; and - newly issued 10-1/8% Senior Notes due 2010 and cash consideration for any and all of the $125 million outstanding principal amount of its 9-5/8% Senior Notes due 2005. As part of the Exchange Offers, the Company is also seeking solicitations of consents to amend the indentures under which the Existing Notes were issued. The Company has extended the expiration date of the Exchange Offers until 5 p.m., New York City Time, on January 2, 2004, unless further extended by the Company. In addition, the Company has extended the deadline for holders of Existing Notes to deliver consents and receive the consent payment to January 2, 2004, unless further extended by the Company. As previously disclosed, the Company has been in discussions with a group of holders of the Existing Notes with respect to the terms of the pending Exchange Offers. The Company believes it has reached an agreement in principle with this group whereby these holders will agree to exchange their Existing Notes pursuant to amended offers to exchange reflecting this agreement. Upon reaching definitive agreement with this group and certain other bondholders with whom this group will be in contact regarding the terms of the amended offers, the Company expects to launch amended offers to exchange the Existing Notes, reflecting these newly agreed terms. There are, however, several conditions that remain to be satisfied prior to finalizing definitive agreements. Accordingly, the Company can offer no assurance that a definitive agreement with this bondholder group will be finalized or that the Company will launch these amended offers or that the exchange offers will ultimately be successful. The withdrawal deadline for the Exchange Offers has expired, and tenders with respect to any Existing Notes that have already been tendered or are subsequently tendered may not be withdrawn. The other terms of the Exchange Offers remain unchanged, and they are subject to a number of significant conditions, including but not limited to receiving valid tenders representing at least 85 percent in principal amount of each series of Existing Notes and receiving the consent of the Air Transportation Stabilization Board pursuant to the Company's government-guaranteed term loan. As of December 19, 2003, $11,510,000 principal amount of 2004 Notes and $29,550,000 principal amount of 2005 Notes had been tendered and not withdrawn in the Exchange Offers. The Exchange Offers are being made pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. The New Notes offered in the Exchange Offers have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws. Now celebrating its 30th year of operation, ATA (S&P, CCC Corporate Credit Rating, Developing) is the nation's 10th largest passenger carrier based on revenue passenger miles. ATA operates significant scheduled service from Chicago-Midway, Hawaii, Indianapolis, New York and San Francisco to more than 40 business and vacation destinations. To learn more about the company, visit the Web site at http://www.ata.com/ ATS LIQUIDATING: Enters Pact to Sell Segenix Rights to RegeneMed ---------------------------------------------------------------- The Trustee of the ATS Liquidating Trust (PinkSheets: ATISZ) has entered into an agreement to sell the Trust's Segenix(TM) intellectual property rights to RegeneMed, Inc., subject to bankruptcy court approval as part of the ATS Chapter 11 Liquidating Plan of Reorganization. The Trustee also filed a motion Friday with the bankruptcy court seeking an order approving the sale to RegeneMed, Inc., or a qualified overbidder. Under the agreement, RegeneMed will pay the ATS Liquidating Trust $100,000 at closing in addition to future milestone and royalty payments conditional on future product development. RegeneMed, or a successful overbidder, would acquire certain intellectual property related to engineered tissue for drug screening, drug development, and therapeutic applications in endocrine, including liver and pancreas. The intellectual property includes a sublicense of Patent 4,963,489. The buyer is aware that the United States Patent and Trademark Office has granted a request for ex parte reexamination of the 489 Patent and that the PTO has received a request (which it has neither granted nor denied) for reexamination of another patent that would also be sublicensed under the agreement. $25,000 of the purchase price would be held by the Trust pending resolution of any issues involving the two patents. Should either of the patents be found invalid, the $25,000 would be returned to the buyer. Further details of the transaction and information regarding the overbid process may be obtained from the motion filed with the bankruptcy court seeking approval of the above transaction. As a result of the Plan which was confirmed by the Bankruptcy Court by a final order dated March 21, 2003 and which became effective on March 31, 2003, the stock of ATS was cancelled and its former stockholders now hold non-trading interests in the ATS Liquidating Trust. According to the terms of the Plan, the Interests in the ATS Liquidating Trust are not to trade and the Liquidating Trustee will only recognize as beneficiaries of the Trust those equity holders of record as of the effective date of the Plan. Any trading that may be occurring after the effective date of the Plan under the symbol "atisz.pk" or otherwise is unauthorized by the Plan and will not be recognized by the Trustee. As a result of the terms of the Plan and the order of the bankruptcy court confirming the Plan, the Securities and Exchange Act of 1934 as amended and the rules promulgated thereunder no longer apply to the Company since it has no issued stock, no shareholders, and is no longer in business. However, to the extent applicable, the above cautionary statement is made by the Trust under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. AURORA FOODS: Hires Skadden Arps to Prosecute Chapter 11 Cases -------------------------------------------------------------- The Aurora Foods Debtors seek the Court's authority to employ Skadden, Arps, Slate, Meagher & Flom LLP, as their bankruptcy counsel, in connection with the filing of their Chapter 11 petitions and the prosecution of their Chapter 11 cases, nunc pro tunc to December 8, 2003. Aurora Chief Restructuring Officer and Assistant Secretary, Ronald B. Hutchison, relates that prior to May 2003, Skadden performed legal work for the Debtors in connection with certain restructuring matters. In particular, Skadden advised a special committee of disinterested directors in connection with Aurora's obtaining a loan from its affiliates in 2002. Skadden has advised the Debtors on the available strategic alternatives and has become familiar with many of the potential legal issues that may arise in the context of these Chapter 11 cases. To that end, Skadden successfully provided the Debtors assistance in: -- the negotiation, and subsequent execution of, an agreement and plan of reorganization and merger with Crunch Equity Holding, LLC; and -- the preparation of the Chapter 11 cases, as well as the various first day motions and other documents and pleadings necessary for the successful filing of the cases and reorganization of the Debtors' businesses. Mr. Hutchison believes that continued representation by Skadden is critical to the Debtors' efforts to restructure their businesses because Skadden has become extremely familiar with the Debtors' businesses and legal and financial affairs and, accordingly, is well suited to guide the Debtors through the Chapter 11 process. The Debtors believe that Skadden is well qualified and uniquely able to act on their behalf. As the Debtors' Bankruptcy Counsel, Skadden will: (a) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession, in the continued management and operation of their businesses and properties; (b) attend meetings and negotiate with representatives of creditors and other parties-in-interest and advise and consult on the conduct of the case, including all of the legal and administrative requirements of operating in Chapter 11; (c) take all necessary actions to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any actions commenced against those estates, negotiations concerning litigation in which the Debtors may be involved (other than matters with respect to which the Debtors have looked to other counsel), and objections to claims filed against the estates; (d) prepare, on the Debtors' behalf, motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; (e) negotiate and prepare on the Debtors' behalf plan(s) of reorganization, disclosure statement(s), and all related agreements or documents, and take any necessary action on the Debtors' behalf to obtain confirmation of the plan(s); (f) advise the Debtors in connection with any sale of assets; (g) appear before the Bankruptcy Court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtors' estates before the courts and the U.S. Trustee; (h) continue to assist the Debtors with their efforts to consummate the Merger Agreement, as well as any further negotiations or modifications thereto; and (i) perform other necessary legal services and provide other necessary legal advice to the Debtors in connection with these Chapter 11 cases. The Debtors intend to pay Skadden its fees based in part on its customary hourly rates, which are periodically adjusted. Skadden's Standard Bundled Hourly Time Charge Schedule reflects: Partners and Of-counsel $495 - 725 Associates and counsel 240 - 485 Legal Assistants and support staff 80 - 195 These hourly rates are subject to periodic increases in the normal course of the firm's business, often due to the increased experience of a particular professional. Particularly, Counsel and Associates will observe these levels and rates: Level Rate ----- ---- 10 $485 9 475 8 455 7 435 6 415 5 395 4 375 3 335 2 295 1 240* * Fee for First Year Associates has moved to $280 per hour from $240 per hour, effective April 1, 2003. The Debtors will also reimburse Skadden for all other services provided and for other charges and disbursements incurred in the rendition of services. These charges and disbursements include, among other things, costs for telephone charges, photocopying, travel, business meals, computerized research, messengers, couriers, postage, witness fees, and other fees related to trials and hearings. The Debtors will employ Skadden under a general retainer because of the extensive legal services that will be required in connection with these cases and the firm's familiarity with the Debtors' businesses. Pursuant to a June 10, 2003 Engagement Agreement, the Debtors paid Skadden a $400,000 retainer for professional services and expenses. Under the terms of the Engagement Agreement, the retainer was increased to $600,000 on October 22, 2003. Before the filing of the Debtors' Chapter 11 cases, Skadden submitted invoices to the Debtors on a regular, periodic basis, for professional fees and expenses, including estimated unposted professional fees and expenses through the Petition Date. With respect to these invoices, in the ordinary course of business, the Debtors paid $4,344,860 for services rendered and as reimbursement for charges and disbursements attributable to legal services performed and charges and disbursements incurred in contemplation of, or, in connection with these cases: Invoice Invoice Invoice Period Date Amount Payment Date ------- ------ ------- ------- ------------ First May 2003 06/20/2003 $306,456 07/10/2003 Second June 2003 07/15/2003 794,233 07/16/2003 Third July 2003 08/22/2003 1,066,370 09/12/2003 Fourth August 2003 09/30/2003 484,150 10/09/2003 Fifth Sept 2003 10/17/2003 541,764 10/22/2003 Sixth Oct 15 2003 10/23/2003 218,499 11/05/2003 Seventh Oct 30 2003 10/31/2003 262,345 11/26/2003 Eighth Nov 15 2003 12/03/2003 174,333 12/05/2003 Ninth Nov 30 2003 12/04/2003 496,711 12/05/2003 Skadden will issue a final billing statement for the actual fees, charges, and disbursements incurred for the period prior to the Petition Date. The Final Billed Amount -- net of payments received -- will be paid from amounts presently held by Skadden and the balance will be held as a postpetition retainer to be applied against any unpaid fees and expenses approved by the Court with respect to Skadden's final fee application in these cases. J. Gregory Milmoe, a member of the firm, assures the Court that Skadden is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, and does not represent any party-in-interest other than the Debtors in these Chapter 11 cases. Furthermore, Skadden does not hold or represent any interest adverse to the Debtors' estates. (Aurora Foods Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945- 7000) BANKAMERICA: Fitch Takes Various Actions on 22 RMBS Classes ----------------------------------------------------------- Fitch Ratings has performed a review of the BankAmerica Manufactured Housing Transactions. Based on the review, the following rating actions have been taken: Series 1995-BA1: --Class A-3 affirmed at 'AAA'; --Class A-4 affirmed at 'AA-'; --Class B-1 downgraded to 'B' from 'BBB'; --Class B-2 downgraded to 'C' from 'CCC'. Series 1996-1: --Classes A-5 - A-6 affirmed at 'AAA'; --Class A-7 affirmed at 'AA-'; --Class B-1 remains at 'C'; --Class B-2 remains at 'C'. Series 1997-1: --Classes A-7 - A-9 affirmed at 'AAA'; --Class M remains at 'CCC'; --Class B-1 remains at 'C'; --Class B-2 remains at 'C'. Series 1997-2: --Classes A-7 - A-9 affirmed at 'AAA'; --Class M remains at 'CCC'; --Class B-1 remains at 'C'; --Class B-2 remains at 'C'. Series 1998-1: --Class A-1 affirmed at 'AAA'; --Class M downgraded to 'BBB' from 'AA-' and removed from Rating Watch Negative; --Class B-1 downgraded to 'B' from 'BBB' and removed from Rating Watch Negative; --Class B-2 downgraded to 'C' from 'B'. Series 1998-2: --Classes A-6 - A-7 affirmed at 'AAA'; --Class M downgraded to 'B' from 'BBB'; --Class B-1 downgraded to 'CCC' from 'B'; --Class B-2 downgraded to 'C' from 'CCC'. BankAmerica Housing Services was purchased by Greenpoint Credit in 1998. Although Greenpoint exited the manufactured housing lending business in January 2002, the company continues to service its portfolio of manufactured housing loans. The transactions reviewed pay principal due to senior bonds prior to paying interest due to subordinate bonds. Higher than expected losses have caused significant interest shortfalls to various subordinate bonds in all of the transactions. The structures allow for interest to accrue on the shortfall amount and to be recovered in the future if there is sufficient available cash flow. Fitch's rating actions reflect the likelihood of future repayment of accrued interest shortfalls. Classes rated 'CCC', 'CC' and 'C' are unlikely to recover interest due at any point in the future. Class A-7 of series 1996-1 is affirmed based on a Letter of Credit issued by BankAmerica Corporation, currently rated 'AA' and on Rating Watch Negative as of Oct. 27, 2003, by Fitch. BUDGET GROUP: Chapter 7 Liquidation Inferior to Chapter 11 Plan --------------------------------------------------------------- Robert Aprati, Executive Vice President, General Counsel and Secretary of the BRAC Group, Inc., notes that substantially all of the Budget Group Debtors' assets were already liquidated pursuant to the North American Sale and the EMEA Sale. Therefore, the Debtors' estates consist of the remaining proceeds of those sales, other de minimis assets not included as part of the sales, and certain contingent recoveries potentially available through avoidance actions and litigation. Although the Plan's proposed liquidation and a Chapter 7 liquidation would have the same goal of liquidating the remainder of the Debtors' estates and distributing all of the proceeds to creditors, the Debtors believe that the Plan provides a more efficient vehicle to establish that goal. Liquidating the Debtors' estates pursuant to Chapter 7 would require a Chapter 7 trustee. The appointment of a Chapter 7 Trustee, as well as any professionals retained by the trustee, would increase the operating costs associated with the liquidation of the Debtors' estates. Further, like the Debtors, the Chapter 7 trustee would complete the liquidation of the Debtors' remaining assets, resolve any Disputed Claims and make distributions to creditors. A Chapter 7 Trustee, however, would not have the benefit of the institutional knowledge of the Debtors to resolve the Disputed Claims efficiently. The Debtors, therefore, believe that a Chapter 7 Trustee, on average, would not be able to achieve as favorable a resolution of Disputed Claims as the Debtors could. The Debtors also believe that distributions would occur in a shorter time period pursuant to the Plan than if the Debtors' estates were liquidated pursuant to a Chapter 7 liquidation. A conversion to Chapter 7 would require additional time, and a Chapter 7 Trustee and any professionals hired by the Chapter 7 Trustee would need time to gain familiarity with the Debtors and their creditors, thus delaying the initial distribution to creditors. In the likely event that litigation were necessary to resolve claims asserted in the Chapter 7 cases, the delay could be prolonged even further. In a Chapter 7 liquidation, Administrative Claims, Priority Tax Claims and classified Claims that are unimpaired under the Plan likely would receive identical treatment to that which they would receive under the Plan. However, the amounts available to unsecured creditors in a Chapter 7 liquidation would be less than would be available under the Plan for, among other reasons: (1) the additional costs of a Chapter 7 trustee and professionals retained by the trustee; (2) loss of the institutional knowledge of the Debtors and their professionals and less favorable resolution of Disputed Claims; and (3) a delay in distributions and other costs resulting from the delay in the winding up the Debtors' estates. Therefore, the unsecured creditors in the U.S. Debtor Group in Classes 3A, 4A and 5A and BRACII in Class 4B would receive less in a Chapter 7 liquidation than under the Plan. Finally, holders of Equity Interests would receive nothing under a Chapter 7 liquidation. The Debtors believe that the Plan satisfies the requirements of the "Best Interests Test" embodied in Section 1129(a)(7) of the Bankruptcy Code. Alternatives to the Plan If the Plan is not confirmed with respect to any of the Debtors, these alternatives are available: (1) confirmation of another Chapter 11 Plan; (2) conversion of the Chapter 11 cases to cases under Chapter 7 of the Bankruptcy Code; and (3) dismissal of the Chapter 11 cases leaving creditors and interest holders to pursue available non-bankruptcy remedies. Although the Debtors could theoretically file a new plan, the most likely result if the Plan is not confirmed is that these Chapter 11 cases will be converted to cases under Chapter 7 of the Bankruptcy Code. The Debtors believe that conversion of the Chapter 11 cases to Chapter 7 cases would result in: (1) significant delay in distributions to all creditors who would receive a distribution under the Plan; and (2) diminished recoveries for certain classes of creditors, particularly holders of claims in Classes 3A, 4A, 5A and 4B. If these Chapter 11 cases are dismissed, creditors would be free to pursue non-bankruptcy remedies in their attempts to satisfy claims against the Debtors. However, in that event, creditors would be faced with the costs and difficulties of attempting each on its own, to collect from a non-operating entity. (Budget Group Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTRAL PARK EAST: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Central Park East Estates Inc. 457 Poillon Avenue Staten Island, New York 10312 Bankruptcy Case No.: 1-03-26939 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Volpe DeSimone Inc. 02-13435 LRD Development Corp. 02-13463 Type of Business: Real Estate for homes, active communities and properties. Chapter 11 Petition Date: December 19, 2003 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: David J Doyaga, Esq. Doyaga & Schaefer 16 Court Street, Suite 2300 Brooklyn, NY 11241 Tel: 718-488-7500 Fax: 718-488-7505 Total Assets: $8,500,000 Total Debts: $5,318,515 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ John Discala $1,500,000 45 Wendy Drive SI NY 10312 Joanne Discala $600,000 45 Wendy Drive SI NY 10312 Tom Sagona $555,000 30 Sagona Court Staten Island NY 10309 Land Planning & Engineer $200,000 Anthony Discala $200,000 Nicole Cobos $175,000 Philomena Discala $150,000 Esther Divirgilio $139,000 Gregory Markow $125,000 Abe Reiss Esq. $80,000 Frank & Rosa Maisano $55,000 Scaramix Concrete $30,000 NYC Dept. Of Finance $26,328 NYC Dept. Of Finance $21,276 John Scaramella $17,500 Mitchell Excavating $17,000 Pasquale Corbo Esq. $10,000 Country Tree Care $9,000 Interstate $5,000 Normandeau Associates $3,411 CHASE FUNDING: Fitch Rates Class B-4 & B-5 Certificates at BB/B --------------------------------------------------------------- Chase Funding Loan Acquisition Trust's $280.5 million mortgage loan asset-backed certificates, series 2003-C2 classes IA, IA-X, IA-P, IIA, IIA-X, IIA-P and R (senior certificates) are rated 'AAA' by Fitch. The class B-1 certificates ($6.0 million) are rated 'AA', the class B-2 certificates ($4.5 million) are rated 'A', the class B-3 certificates ($3.9 million) are rated 'BBB', the privately offered class B-4 certificates ($2.1 million) are rated 'BB', and the privately offered class B-5 ($0.45 million) are rated 'B'. The privately offered class B-6 certificates ($2.6 million) are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 6.50% subordination provided by the 2.00% class B-1, the 1.50% class B-2, the 1.30% class B-3, the 0.70% privately offered class B-4, the 0.15% privately offered class B-5 and the 0.85% privately offered class B-6 certificate. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, the strength of the legal and financial structures, and the capabilities of Chase Manhattan Mortgage Corporation as servicer, which is rated 'RPS1-' by Fitch Ratings. The trust consists of two cross-collateralized groups of approximately 2,223 conventional, 15- and 30-year fixed rate, sub- prime mortgage loans secured by first liens on real properties with an aggregate principal balance of $300,000,333 as of the cut- off date, December 1, 2003. The average outstanding principal balance of the aggregate pool as of the cut-off date is $134,953. The weighted average original loan-to-value ratio is 71.54%. Group I consists of up to 15-year fixed rate mortgage loans with an aggregate principal balance of $98,309,998 as of the cut-off date. The weighted average OLTV is 68.01%, the average outstanding principal balance is $117,315, the weighted average coupon is 5.13%, the weighted average remaining term is 171 months, and the weighted average FICO score is 730. 83.55% of the Group I mortgage loans have prepayment penalties. The loans are geographically concentrated in CA (22.10%), NY (7.30%), and FL (6.40%). Group II consists of up to 30-year fixed rate mortgage loans with an aggregate principal balance of $201,690,335 as of the cut-off date. The weighted average OLTV is 73.27%, the average outstanding principal balance is $145,625, the weighted average coupon is 5.72%, the weighted average remaining term is 339 months, and the weighted average FICO score is 721. 84.88% of the Group II mortgage loans have prepayment penalties. The loans are geographically concentrated in CA (29.60%), MN (6.20%), and NY (5.90%). None of the mortgage loans are 'High Cost Loans' as defined under any local, state or federal laws. Wachovia Bank, N.A. will serve as trustee. Chase Funding, Inc. will deposit the mortgage loans in the trust fund. The depositor is a New York corporation and a wholly owned, indirect subsidiary of JPMorgan Chase Bank, one of the underwriters. COMMUNICATE.COM: Liquidity Issues Raise Going Concern Doubt ----------------------------------------------------------- At September 30, 2003 Communicate.com had current liabilities in excess of current assets resulting in a working capital deficit of $153,694. During the nine-month ended September 30, 2003 the Company had net income of $178,042 and an increase in cash of $196,539, compared to net loss of $1,324,129 and an increase in cash of $31,652 for the same period of last year. Operating activities generated cashflows of $250,897 from an increase in accounts payable and from net income generated during the nine-month period, offset by an increase in receivables and advances. The Company has accumulated a deficit of $1,768,548 since inception and has a stockholders' equity of $1,274,849 as at September 30, 2003. Due to the working capital deficit, there is substantial doubt about Communicate.com's ability to continue as a going concern. The Company will only be able to continue operations if it raises additional funds, either through profitable operations or outside funding. The Company indicates that it cannot predict whether it will be able to do so. In October 2003, Communicate.com became a 63% majority shareholder of frequentTraveller.com, a company focused as a travel agency business in general and more specifically assigned rescindable travel rights for Brazil.com, Indonesia.com, Malaysia.com and Vietnam.com. FrequentTraveller.com has three employees and is not expected to generate sufficient revenue to cover expenses for at least twelve months. The Registrant negotiated with the lender to refinance a term loan $375,000 due and payable on June 28, 2003 with otherwise similar terms but with a new due and payable date of June 28, 2005. As such, the note has been reclassified as a long-term liability. On November 3, 2003, Registrant received $200,000 from the sale of a domain name. Registrant has used a portion of the net proceeds, net of a commission payable of $20,000 paid into trust, to reduce the principal owing on a note payable by $75,000 to $300,000. Registrant plans to set aside a portion of net proceeds from the three remaining planned sales of domain names to pay down the note and use the balance of proceeds for operations. Registrant and its subsidiaries may not be able to satisfy its cash requirements for the next 12 months without having to raise additional funds. The Subsidiary’s expected cash requirement for the next 12 months is $400,000. Registrant expects to raise any additional funds not related to the term loan by way of equity and/or debt financing, and through the sale of non-strategic domain name assets. However, Registrant may not be able to raise the required funds from such financings, particularly in light of existing market conditions and the perception by investors of those companies that, like the Registrant, engage in e-commerce and related businesses. In that case Registrant will proceed by approaching current shareholders for loans or equity capital to cover operating costs. Although the foregoing actions are expected to cover Registrant’s anticipated cash needs for working capital and capital expenditures for at least the next twelve months, no assurance can be given that Registrant will be able to raise sufficient cash to meet these cash requirements. Registrant has no current plans to purchase any plant or significant equipment. CONGOLEUM CORP: Extends Plan-Voting Deadline Until Tomorrow ----------------------------------------------------------- Congoleum Corporation (AMEX:CGM) has extended the deadline for votes to be submitted on the approval of its pre-packaged Chapter 11 plan of reorganization until 5:00 p.m. Eastern Time on December 24, 2003. The parties entitled to vote on the plan are asbestos personal injury claimants, Congoleum's secured lender and its majority shareholder. The deadline for completing the voting process has been extended to allow Congoleum to clarify the plan based upon discussions with Congoleum's secured lender concerning its treatment under the plan. The voting extension should not affect Congoleum's plans to commence bankruptcy proceedings in late December and seek bankruptcy court confirmation of the plan as promptly as possible thereafter. As previously announced, under the terms of the plan, when confirmed, Congoleum will contribute certain insurance rights and a note for approximately $2.7 million (subject to a future revaluation) to a trust to be formed pursuant to the plan for the benefit of asbestos personal injury claimants, and all current and future asbestos claims against Congoleum will be channeled to the trust. Under the terms of the plan, Congoleum's other creditors will be paid in full and its shareholders will maintain their equity holdings in Congoleum. Copies of the plan and disclosure statement have previously been filed by Congoleum with the Securities and Exchange Commission. They can also be obtained by visiting Congoleum's Web site at http://www.congoleum.com/investor_relations/investor_1.shtml/ Congoleum Corporation is a leading manufacturer of resilient flooring, serving both residential and commercial markets. Its sheet and tile products are available in a wide variety of designs and colors, and are used in remodeling, manufactured housing, new construction and commercial applications. The Congoleum brand name is recognized and trusted by consumers as representing a company that has been supplying attractive and durable flooring products for over a century. COVANTA ENERGY: Gets OK to Pay Closing Bonuses to Key Employees --------------------------------------------------------------- The Covanta Energy Debtors obtained permission from the Bankruptcy Court to pay a maximum aggregate of $1 million as retention bonuses to approximately 15 key Geothermal Employees upon the Closing of the Proposed Sale or an Alternative Transaction. The Debtors estimate that the maximum amount any individual would receive would be approximately $325,000, with the average bonus approximately $67,000. (Covanta Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) CROMPTON: Gets Conditional Amnesty in Nitrile Rubber Inquiry ------------------------------------------------------------ Crompton Corporation (NYSE:CK) is cooperating with competition authorities in the U.S., Canada and the European Union that are investigating possible anticompetitive activities by manufacturers of nitrile rubber. Crompton Corporation and its relevant affiliates have received assurances of conditional amnesty from each of these authorities with regard to criminal prosecution and fines with respect to nitrile rubber. Amnesty is conditioned upon several factors, including the company's continued cooperation with the authorities. Crompton acquired its nitrile rubber business in 1996 when the company completed a merger with Uniroyal Chemical Corporation. In 1998, Crompton put its nitrile rubber business into a joint venture and subsequently sold its interest in the joint venture in December 2001. The joint venture had 2001 sales of approximately $30 million. Crompton Corporation (S&P, BB+ Corporate Credit Rating, Negative Outlook), with annual sales from continuing operations of approximately $2.2 billion, is a producer and marketer of specialty chemicals and polymer products providing the solutions, service and value its customers need to succeed. Additional information is available at http://www.cromptoncorp.com/ DAN RIVER: Obtains Waiver of Potential Loan Covenant Violations --------------------------------------------------------------- Dan River Inc. (NYSE: DRF) has entered into a second amendment and waiver agreement with its lending group related to its senior secured credit facility. The amendment provides for permanent waiver of anticipated violations of the minimum fixed charge coverage ratio and maximum leverage covenants for the fourth quarter of fiscal 2003. Among other things, the amendment provides monthly limitations on capital expenditures and specifies minimum levels of excess availability under the Company's revolving credit facility and monthly operating EBITDA during the first quarter of fiscal 2004. "We are pleased with the cooperation from our lending group in working with us to date," said Joseph L. Lanier, Jr., Chairman and CEO. "We will continue to work with them to negotiate such further amendments or waivers as will be necessary." At September 27, 2003, Dan River's (S&P, B+ Long-Term Corporate Credit Rating, Stable Outlook) balance sheet shows that its total current liabilities exceeded its total current assets by about $64 million, while net capitalization dropped over 50% to about $109 million. DELPHI CORP: Completes 1-For-1 Employee Option Exchange Offer ------------------------------------------------------------- Delphi Corp. (NYSE: DPH) (S&P, BB cumulative trust preferred securities, Negative) successfully completed its previously announced one-for-one exchange offer, which gave eligible employees the opportunity to exchange certain stock options for cash-settled stock appreciation rights (SARs). The exchange offer expired at 5:00 p.m. EST, December 17, 2003. Delphi has accepted options to purchase 8,359,476 shares of Delphi common stock and granted 8,359,476 SARs in exchange. Employees tendered approximately 43 percent of all options eligible to be exchanged in the offer. The cancellation of the tendered options and issuance of cash-settled SARs was effective on December 17, 2003. Employees who accepted the offer will receive a grant letter documenting their participation in the transaction. Each SAR has the same exercise price as the tendered option for which it was exchanged. Delphi's directors and top-ranking executive officers, including those named in the company's proxy, were not eligible to participate in the offer. The terms and conditions of the exchange program are specified in a Schedule TO on file with the Securities and Exchange Commission, which is available for free at the Securities and Exchange Commission's Web site at http://www.sec.gov/or through the Investor Relations page of Delphi's Web site at http://www.delphi.com/ DIRECT INSITE: Names Michael J. Beecher as Chief Fin'l Officer -------------------------------------------------------------- Direct Insite Corp. (OTCBB: DIRI) appointed Michael J. Beecher as Chief Financial Officer. James Cannavino, Chairman & CEO of Direct Insite said, "Direct Insite has successfully developed and continues to deploy our world-class Electronic Bill Presentment and Payment service offering which targets the Fortune 500 Business-to-Business market. This offering, termed "Invoices on Line", is presently available in the US, Canada, and the major European countries supporting EBP&P functions in the national language and currencies of these countries. I welcome Michael with his strong financial background to Direct Insite, and look forward to working with him as we continue to globally grow and expand our business". Previously, Mr. Beecher was Chief Financial Officer and Treasurer of FiberCore, Inc., a publicly held company in the fiber-optics industry. Previous to that Mr. Beecher was the Vice President Administration and Finance at the University of Bridgeport. Mr. Beecher began his career in public accounting working for over 6 years at Deloitte Haskins and Sells and is a Certified Public Accountant as well as being a member of the American Institute of Certified Public Accountants. Mr. George Aronson, former Chief Financial Officer is leaving Direct Insite to pursue other interests and opportunities. Mr. Aronson will, however, continue to work with the company as a consultant. Direct Insite Corp. is a leading provider of Electronic Invoice Presentment and Payment solutions targeted at large enterprise customers. The Company's offering improves the delivery and management of high volumes of invoice-related data while providing a customer workflow system that better manages the complexity of the presentation, analysis, dispute resolution, approval and payment process. This reduces the administrative and operating expenses for both "Biller" and "Payer" alike. Direct Insite also provides managed services using patented d.b.Express(TM) technology, a management information tool that allows users to visually data mine large volumes of transactional data via the Internet. A complete Internet Customer Care tool set integrated with the EIP&P product set is also available. Additionally, the Company offers an integrated order entry, workflow management, provisioning, and invoice verification solution for large enterprise clients, currently marketed under the trade name AMS (Asset Management System). Headquartered in Bohemia, NY, with offices in Dallas, TX, and Chicago, IL, Direct Insite Corp. employs a staff of 65. For more information about Direct Insite Corp., visit its Web site at http://www.directinsite.com/ Direct Insite's September 30, 2003 balance sheet shows a working capital deficit of about $2 million, and a total shareholders' equity deficit of about $740,000. DIRECTV LATIN: 3rd Exclusivity Extension Hearing Set for Jan. 9 --------------------------------------------------------------- In light of the filing of the proposed recovery plan and the disclosure statement, DirecTV Latin America LLC, the Official Committee of Unsecured Creditors and Hughes Electronics Corporation agree that the Debtor's Exclusive Proposal Period should be further extended to and including February 28, 2004 and its Exclusive Solicitation Period should be extended to and including April 29, 2004. The Parties agree that an extension of the Debtor's exclusive periods is necessary to enable them to complete the solicitation and confirmation process with respect to the Plan, unimpeded by any competing plan that might otherwise be filed. By this motion, the Parties ask the Court to approve the proposed extensions. Judge Walsh will convene a hearing on January 9, 2004 at 9:30 a.m. to consider the request. Pursuant to Del.Bankr.LR 9006-2, the Debtor's Plan Filing Period is automatically extended through the conclusion of that hearing. (DirecTV Latin America Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945- 7000) DRESSER: John T. McKenna Named President of Dresser Instruments --------------------------------------------------------------- Dresser, Inc. President Steve Lamb announced that John T. McKenna was appointed President of Dresser Instruments, a business unit of Dresser, Inc. Mr. McKenna was most recently President of the Worldwide Measurement and Instrument Division of Invensys, plc. He has over 25 years experience in manufacturing, most notably in automation and process industries. Mr. Lamb stated, "John is a strong addition to our operations management team. He has an excellent track record of growing businesses while implementing strategic changes similar to the lean manufacturing and efficiency improvement initiatives underway within Dresser." Prior to joining Dresser, Mr. McKenna served in a variety of positions in Invensys and predecessor companies starting in 1979. In addition to his last posting, he was President of Invensys' Systems Products Division and President and General Manager of Foxboro Canada among other general management positions. He began his career in 1977 with Brooklyn Union Gas Company. Mr. McKenna has a Bachelor of Arts degree in Physics from College of the Holy Cross in Worcester, Massachusetts (1977) and a Master of Business Administration degree from Northeastern University in Boston, Massachusetts (1983). Dresser Instruments, a business unit of Dresser, Inc., manufactures gauges, thermometers, switches, transducers, transmitters, calibration equipment and isolators for pressure measurement and control. Dresser Instruments products are marketed under the Ashcroft, Heise, Willy, Ebro and Weksler brands. Headquartered in Dallas, Texas, Dresser, Inc. (S&P, BB- Corporate Credit Rating) is a worldwide leader in the design, manufacture and marketing of highly engineered equipment and services sold primarily to customers in the flow control, measurement systems, and compression and power systems segments of the energy industry. Dresser has a widely distributed global presence, with over 7,500 employees and a sales presence in over 100 countries worldwide. The Company's Web site can be accessed at http://www.dresser.com/ DT INDUSTRIES: Receives $5MM Purchase Order from Sweetheart Cup --------------------------------------------------------------- DT Industries, Inc. (Nasdaq: DTII), a designer, manufacturer and integrator of automation systems and related equipment used to manufacture, assemble, test or package industrial and consumer products, announced that its Detroit Tool and Engineering Company subsidiary has received a $5.3 million purchase order from Sweetheart Cup Company to manufacture equipment to be used to produce Earthshell (Nasdaq: ERTH) Packaging(R) plates and bowls. Dennis Mehiel, CEO, Sweetheart, stated: "We are proud to award a Purchase Order to DTE for equipment to produce Earthshell plates and bowls. DTE's core competencies in equipment manufacturing and technical experience make them an ideal choice. Sweetheart's interest in Earthshell packaging is based on market interest in the quality and environmental profile these products offer and in maintaining our market leadership position. We look forward to working with DTE to provide our equipment needs, and to receiving this new equipment as an integral part of a successful plant start-up." Delivery and installation of the equipment for commercial production is expected during the fourth quarter (end of June 2004) of fiscal year 2004. Customer acceptance of and payment for the equipment is subject to the equipment meeting specified performance criteria. As previously reported, Standard & Poor's Ratings Services lowered its corporate credit rating on DT Industries Inc. to 'CCC+' from 'B-' and removed them from CreditWatch where they had been placed on Sept. 11, 2003. The outlook is negative. EMERGENCY FILTRATION: Ability to Continue Operations Uncertain -------------------------------------------------------------- Emergency Filtration Products Inc.'s financial statements are prepared using 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. The Company has incurred significant losses, which have resulted in an accumulated deficit of $7,970,938 at September 30, 2003. The Company has raised approximately $1,011,000 through the issuance of common shares pursuant to an SB-2 registration during the nine months ended September 30, 2003. These funds have been used to retire previously outstanding debt, to acquire additional molds and equipment to be used in operations, and for ongoing working capital. Nevertheless, the Company's ability to continue as a going concern may be dependent upon the success of management's ongoing business plans which include a) continued product development efforts, and b) continuing efforts to increase its product sales in the U.S. and internationally. For example, during April 2003, the Company entered into an agreement with a Taiwan-based company whereby the Contractor will manufacture, distribute, market and sell the Company's new environmental mask to the Asian markets. The Contractor has just recently begun production of the environmental masks discussed above and the Company expects sales to increase during the fourth quarter of 2003 as a result of the Contractor's marketing and sales in the Asian market. It is the intent of management to seek to create additional revenues through the development and sales of its emergency respiration equipment, sales of their environmental masks, and to rely upon additional equity financing if required to sustain operations until revenues are adequate to cover the costs. Management can offer no assurance with respect to its ability to create additional revenues, obtain additional equity financing or execute its long-term business plans. The Company's ability to continue as a going concern, however, may be dependent upon the success of those plans. ENRON: Solicitation Exclusivity Hearing Continues on January 8 -------------------------------------------------------------- The U.S. Bankruptcy Court adjourns the hearing on the Enron Debtors' request to extend their exclusive solicitation period to January 8, 2004 at 10:00 a.m. Accordingly, Judge Gonzalez extends the current deadline until the conclusion of that hearing. (Enron Bankruptcy News, Issue No. 90; Bankruptcy Creditors' Service, Inc., 215/945-7000) EXIDE TECH.: Wants Lease Decision Period Stretched to March 31 -------------------------------------------------------------- In connection with the Exide Technologies Debtors' Fourth Amended Joint Reorganization Plan, James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., in Wilmington, Delaware, informs the Court that the Debtors have substantially finalized their determinations whether to assume or reject their unexpired leases. In the event that the Plan is confirmed, the Debtors will not require additional time to make lease decisions. However, in an abundance of caution, in the event that confirmation is delayed or the Plan is not confirmed, the Debtors need an extension of their lease decision deadline to preserve their opportunity to re- evaluate their determinations with respect to the Unexpired Leases. For this reason, the Debtors ask the Court to extend the period of time to decide whether to reject, assume or assign their Unexpired Leases, through and including March 31, 2004. The Debtors are party to over 200 Unexpired Leases. The Unexpired Leases include office space throughout the country, regional distribution centers, and strategically located branch facilities. The Unexpired Leases are of great value to the Debtors' estates, and their treatment will potentially have a significant impact on their reorganization and ultimate business plan as they emerge from Chapter 11. Mr. O'Neill states that the Debtors' lessors will not be prejudiced by an extension. The extension is sought merely to preserve the status quo during the Court's deliberation on the Debtors' Plan. The Debtors have acted with all appropriate diligence in evaluating the Unexpired Leases, and have substantially finalized their determinations whether to assume or reject the Unexpired Leases in connection with the Plan. According to Mr. O'Neill, an extension will avert potential statutory forfeiture of essential assets, promote the Debtors' ability to maximize the value of their Chapter 11 estates and avoid the incurrence of needless administrative expenses. (Exide Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING: Provides Plan's Classification and Treatment of Claims --------------------------------------------------------------- The proposed Plan of Reorganization contains the Fleming Companies Debtors' proposed classification and treatment of claims against and interests in their estates. Any class of claims which is "unimpaired" by the Plan is not entitled to vote to accept or reject the plan, except for claims based on existing equity interests in the Debtors or intercompany claims which are not permitted by the Bankruptcy Code to vote in any case: No. Class Claims Status --- ------------ ------ 1 Other Priority Non-Tax Claims Unimpaired 2 Prepetition Lenders Unimpaired 3A Other Secured Claims Unimpaired 3B Approved Reclamation Unimpaired 3C DSD Trust Unimpaired 4 PACA & PASA Claims Unimpaired 5 Reclamation Claims Not Impaired in Class 3B 6 General Unsecured Claims Impaired 7 Convenience Claims Impaired 8 Equity Interests Impaired 9 Intercompany Claims Impaired Treatment of Claims and Interests Class 1 Other Priority Non-Tax Claims Holders of Claims in Class 1 are to be paid in full on the Plan's Effective Date or as soon as practicable after that. This Class is presumed by law to have accepted the Plan. Class 2 Prepetition Lenders Claims Holders of Claims in Class 2 are to be paid in full. The prepetition Lenders are then to assign their liens in the Debtors' assets to the lenders under the Exit Facility, or assign its liens to Core-Mark Newco, which liens when assigned will have the same validity and priority as the liens presently held by claimants in the Class. If the liens assigned to Core-Mark Newco, the liens may be further transferred to the Post- Confirmation Trust, as applicable. The Class is presumed by law to have accepted the Plan. Class 3A Other Secured Claims On the Effective Date, or as soon after that as practicable, each Holder of a Claim in the Class will receive one of three treatments, at the Debtors' option, so that the Holders will be unimpaired: (1) The payment of the Holder's Allowed Other Secured Claim in full, in Cash; (2) The sale or disposition proceeds of the property securing the Allowed Other Secured Claim to the extent of the value of the Holder's interests in the property; or (3) The surrender to the Holder of the property securing the Claim. The Class is presumed by law to have accepted the Plan. Class 3B Approved Reclamation Claims On the Effective Date, or as soon as practicable, Core-Mark Newco, or the Post-Confirmation Trust as applicable, will issue a promissory note in favor of the Holders of Allowed Approved Trade Creditor Reclamation Lien Claims in the estimated aggregate amount of the Allowed Claims, to be reissued as the Claims are Allowed by Final Order or settlement. The Debtors propose to grant a first-priority lien to the Holders on the proceeds of the Litigation Claims, entitling the Holder its Ratable Proportion of net Cash recoveries from Litigation Claims up to the total amount of each Holder's Allowed Claim in the Class. The distribution is, at the Debtors' option, subject to reduction for unpaid postpetition deductions, preference payments, and other applicable set-off rights. Since the Debtors deem the Class unimpaired by the Plan, its members are not entitled to vote to accept or reject the Plan. Class 3C DSD Trust Claims The Class includes DSD Trust Claims, which are those claims of certain vendors that arose from the direct shipment of goods to retailers, and which are the subject of ongoing litigation. In the event that the DSD Trust Claim Holders obtain a Final Order in their favor in the pending litigation allowing their Claims -- on the later of the Effective Date or the date the DSD Trust Claim Holders obtain a final order allowing their claims, or as soon as practicable after that -- each Holder of an Allowed DSD Trust Claim will be paid in full, in Cash. This distribution is, at the Debtors' option, subject to reduction for the unpaid postpetition deductions, preference payments, and other applicable set-off rights. In the event the DSD Trust Claim Holders do not prevail in their litigation, all Allowed DSD Trust Claims will be treated as Class 6 General Unsecured Claims. Since the Debtors deem the Class unimpaired by the Plan, its members are not entitled to vote to accept or reject the Plan. Class 4 PACA & PASA Claims On the Effective Date, or as soon as practicable after that, each Holder of an Allowed PACA or PASA Claim will be paid in full in Cash from the previously established PACA trust or from Core-Mark Newco to the extent the PACA trust is insufficient to satisfy all of the Allowed PACA and PASA Claims, with any remaining proceeds of the PACA trust to be distributed to Core-Mark Newco. Since the Debtors deem the Class unimpaired by the Plan, its members are not entitled to vote to accept or reject the Plan. Class 5 Reclamation Claims Not in Class 3B To the extent it is determined that the Debtors' inventory in which the Holders of Allowed Valid Reclamation Claims have asserted an interest has residual inventory value as of the Petition Date, on the Effective Date or as soon as practicable after that, Core-Mark Newco or the Post-Confirmation Trust, as applicable, will issue a promissory note in favor of the Holders of Allowed Valid Reclamation Claims that are not Class 3B Claims in the amount of the residual inventory value. The Debtors propose to grant a second-priority lien to the Holders on the proceeds of the Litigation Claims, entitling the Holder its Ratable Proportion of net Cash recoveries from Litigation Claims up to the total amount of each Holder's Allowed Claim in the Class -- but only after all Class 3B Claims are paid in full. In the event the residual inventory value is less than the Allowed Amount of Valid Reclamation Claims, the remainder of the Valid Reclamation Claims in excess of the residual inventory value will be treated as Class 6 General Unsecured Claims. Since the Debtors deem the Class impaired by the Plan, its members are entitled to vote to accept or reject the Plan. Class 6 General Unsecured Claims Holders of Class 6 Claims will be paid, on the Effective Date or as soon after that as practicable, at the Debtors' option, in one or a combination of: (i) a Ratable Proportion of New Common Stock, subject to dilution from the shares of New Common Stock issued on the conversion of Preferred stock issued under the Rights Offering and through the Management Incentive Plan; and (ii) in the event the Debtors, with the consent of the Creditors Committee, elect to sell some or all of their assets, a Ratable Proportion of Cash remaining from the sale of those assets after all of the Allowed Unclassified Claims and Claims in Classes 1 through 5 have been satisfied in full. As additional consideration, each Holder of a Class 6 Claim that is listed on a "Rights Participation Schedule" will be entitled to receive, in exchange for its claim, its Equity Subscription Rights for shares of Preferred Stock. Since the Debtors deem the Class impaired by the Plan, its members are entitled to vote to accept or reject the Plan. Class 7 Convenience Claims On or as soon as practicable after the Effective Date, each Holder of an Allowed Convenience Claim will receive a Cash distribution equal to 10% of the amount of its Claim. However, if the aggregate amount of Allowed Class 7 Claims exceeds $1,000,000, each Holder will receive only its ratable proportion of $1,000,000. Since the Debtors deem the Class impaired by the Plan, its members are entitled to vote to accept or reject the Plan. Class 8 Equity Interests No distribution. All shares are cancelled on the Effective Date. The Holders are deemed to reject the Plan, and are not entitled to vote. Class 9 Intercompany Claims No distribution. All shares are cancelled on the Effective Date. The Holders are deemed to reject the Plan, and are not entitled to vote. Unclassified Claims Under the Plan, three kinds of claims are "unclassified" and have no voting rights. A. Administrative Claims Each holder of an Allowed Administrative Claim, including holders of Allowed Approved Trade Creditor Lien Claims, but excluding claims for Professional Fees, will be paid the full unpaid amount of the Allowed Administrative Claim in Cash on the Effective Date, or as soon after that as practicable. If the Administrative Claim is allowed after the Effective Date, the Claim will be paid as soon as practicable after its allowance. Allowed Administrative Claims, which include Allowed Approved Trade Creditor Lien Claims representing obligations incurred in the ordinary course of business, or otherwise assumed by the Debtors or Reorganized Debtors, will be assumed on the Effective Date and paid or performed by the applicable Reorganized Debtor when due in accordance with the terms of the underlying agreement. Holders of Administrative Claims that arose on or before October 31, 2003, must file an Administrative Claim on or before January 15, 2003. Holders of Administrative Claims that arose after October 31, 2003 that have not been paid on the Effective Date must filed an Administrative Claim by the Second Administrative Bar Date, which will be 45 days after the Plan Effective Date. If these claims are not timely filed, they will be barred. B. Priority Tax Claims Each Holder of an Allowed Priority Tax Claim that is due and payable on or before the Effective Date will be paid, at the option of the Reorganized Debtor, either: (i) in Cash in full on the Effective Date or as soon after that date as practicable; or (ii) in deferred Cash payments over a period not to exceed six years after the date of the assessment under the Bankruptcy Code, with interest at a rate agreed to by the parties or set by the Court. C. DIP Claims On the Plan Effective Date, or as soon after it as practicable, each Holder of an Allowed DIP Claim will be paid in full in Cash, unless the Holder agrees to other payment or treatment. (Fleming Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEXTRONICS INT'L: Will Publish Third-Quarter Results on Jan. 27 ---------------------------------------------------------------- Flextronics (Nasdaq: FLEX) will report third quarter results on Tuesday, January 27, 2004. The conference call, hosted by Flextronics' senior management, will be held at 1:30 p.m. PST to discuss the financial results of the Company and its future outlook. This call will be broadcast via the Internet and may be accessed by logging on to the Company's Web site at http://www.flextronics.com/ A replay of the broadcast will remain available on the Company's Web site after the call. Headquartered in Singapore, Flextronics (S&P, BB+ Corporate Credit Rating, Stable) is the leading Electronics Manufacturing Services provider focused on delivering supply chain services to technology companies. Flextronics provides design, engineering, manufacturing, and logistics operations in 29 countries and five continents. This global presence allows for supply chain excellence through a network of facilities situated in key markets and geographies that provide customers with the resources, technology, and capacity to optimize their operations. Flextronics' ability to provide end-to-end services that include innovative product design, test solutions, manufacturing, IT expertise, network services, and logistics has established the Company as the leading EMS provider with revenues of $13.4 billion in its fiscal year ended March 31, 2003. For more information, visit http://www.flextronics.com/ GENESIS HEALTH: Neighborcare Converts Series A Preferred Shares --------------------------------------------------------------- NeighborCare, Inc. (f/k/a Genesis HealthCare Corporation, a former subsidiary of Genesis Health Ventures Inc.) is exercising its right to convert all of its outstanding Series A Preferred Stock into common stock. For each share of Preferred Stock held, shareholders will receive 8.9375 shares of NeighborCare common stock, rounded down to the nearest whole share with any fractional shares being paid in cash. Series A Preferred Stock shareholders will receive a letter within the next week explaining what actions to take to receive common stock certificates for their preferred shares. Preferred Shareholders should not send their certificates to the Company or the transfer agent before receiving this letter. As a result of NeighborCare's recent spin-off transaction, the conversion price of the Series A Participating Convertible Preferred Stock has been adjusted in accordance with its Amended and Restated Articles of Incorporation to $12.60 from $20.33. In addition, in accordance with NeighborCare's Amended and Restated Articles of Incorporation, the Mandatory Conversion trigger for the Convertible Preferred Stock has been reduced from $30.00 to $18.60 as a consequence of the spin-off. Because NeighborCare's stock price has remained above the trigger price for 20 days, the Company has the right to convert the stock by sending notice to preferred stock holders. The conversion is effective as of December 16, 2003. The conversion ratio is determined by dividing the Liquidation Preference by the conversion price. The Liquidation Preference is $100 plus dividends accrued but unpaid through the date of conversion. Currently that is $112.61, making the conversion ratio 8.9375:1. The Preferred Stock will be converted into approximately 3.6 million shares of common stock. NeighborCare's transfer agent contact information: StockTrans, Inc. 44 W Lancaster Avenue Ardmore, PA 19003 800-733-1121 NeighborCare, Inc. (Nasdaq: NCRX) is one of the nation's leading institutional pharmacy providers serving long term care and skilled nursing facilities, specialty hospitals, assisted and independent living communities, and other assorted group settings. NeighborCare also provides infusion therapy services, home medical equipment, respiratory therapy services, community-based retail pharmacies and group purchasing. In total, NeighborCare's operations span the nation, providing pharmaceutical services in 32 states and the District of Columbia. Visit http://www.neighborcare.com/for more information on the Company. GEORGIA-PACIFIC: Selling Three Railroads to Genesee & Wyoming ------------------------------------------------------------- Georgia-Pacific Corp. (NYSE: GP) and Genesee & Wyoming Inc., (NYSE: GWR) today announced they have signed an agreement for GWI to acquire three short-line railroads from Georgia-Pacific for $55.6 million. In conjunction with the acquisition, GWI has entered into a 20- year agreement to provide rail transportation service to Georgia- Pacific facilities currently served by these railroad operations. GWI will acquire the Chattahoochee Industrial Railroad (CIRR), the Arkansas Louisiana & Mississippi Railroad Company (ALM), and the Fordyce & Princeton Railroad Company (F&P). For the 12 months ended Sept. 30, 2003, these railroads reported a combined $18 million in revenues, of which Georgia-Pacific accounted for approximately 90 percent. "Consistent with our ongoing rationalization of non-strategic assets, this transaction is an excellent opportunity to sell assets that are more valuable to another company and use the proceeds to repay debt," said A.D. "Pete" Correll, Georgia-Pacific chairman and chief executive officer. "With GWI's expertise, we believe the key manufacturing facilities served by these railroads will continue to receive reliable service that meets their transportation needs." GWI said it plans to fund the acquisition under its $223 million revolving credit facility and, following the acquisition, expects to have approximately $120 million of additional availability. As of Sept. 30, 2003, pro forma for the Georgia-Pacific railroads, GWI's total debt to total capitalization is expected to be approximately 36 percent. GWI expects the acquisitions to be immediately accretive to its earnings. GWI has agreed to purchase the stock of CIRR, ALM, and F&P under Section 338 (h)(10) of the U.S. Tax Code and will therefore benefit from the stepped-up tax basis of the Georgia-Pacific assets. The boards of directors of both GWI and Georgia-Pacific have approved the transaction, which is subject to regulatory approval as well as other customary closing conditions. The acquisition is expected to be completed by Dec. 31, 2003. Mortimer B. Fuller III, chairman and chief executive officer of GWI, said, "We are excited to be operating railroads that serve some of Georgia-Pacific's most important manufacturing facilities. Genesee & Wyoming is committed to providing world-class rail service to Georgia-Pacific and our other on-line customers though the expertise of our Rail Link subsidiary. The heavy switching nature of the railroads and their geographic proximity to other Rail Link operations make this an excellent strategic fit, and we see significant opportunity to enhance the service and operating efficiency of the railroads." Descriptions of Railroads Based in Cedar Springs, Ga., CIRR operates more than 15 miles of track between Hilton and Saffold, Ga., and interconnects with CSX Corporation and Norfolk Southern. CIRR serves Georgia-Pacific's Cedar Springs containerboard mill, which is one of the company's largest and lowest-cost containerboard facilities. In 2002, CIRR hauled 19,561 carloads, including pulp and paper (73 percent), coal (13 percent), forest products (5 percent), metals (4 percent), and chemicals (4 percent). Based in Crossett, Ark., the ALM and F&P are composed of 109 miles of contiguous track between Monroe, La., and Fordyce, Ark., and interconnect with Union Pacific and Kansas City Southern. In Fordyce, the railroads serve one plywood plant and one oriented strand board plant for Georgia-Pacific. In Crossett, the railroads serve one plywood plant, one lumber mill, a paper mill complex producing tissue, paperboard and fine papers, and a chemical facility. At Crossett, the softwood plywood plant is the largest in the world while the paper mill is one of Georgia- Pacific's largest producers of tissue and other paper. In 2002, the ALM and F&P hauled 22,470 carloads, including forest products (67 percent), pulp and paper (14 percent), and chemicals (18 percent). The CIRR, ALM and F&P will be managed by James W. Benz, president of GWI's Rail Link subsidiary, headquartered in Jacksonville, Fla. Rail Link provides switching services to six facilities, including three paper mills, proximate to the ALM and F&P and to one paper mill near the CIRR. In Georgia, Rail Link also operates the railroads that serve the ports of Savannah and Brunswick and also provides industrial railroad switching for paper mills in Brunswick, Oglethorpe and Jesup. GWI is a leading operator of short line and regional freight railroads in the United States, Canada, Mexico, Australia and Bolivia. The company operates over 8,000 miles of owned and leased track and over an additional 3,000 miles under track access arrangements. Headquartered at Atlanta, Georgia-Pacific (S&P, BB+ Corporate Credit Rating, Negative) is one of the world's leading manufacturers of tissue, packaging, paper, building products, pulp and related chemicals. With 2002 annual sales of more than $23 billion, the company employs approximately 61,000 people at 400 locations in North America and Europe. Its familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So- Dri(R), Green Forest(R) and Vanity Fair(R), as well as the Dixie(R) brand of disposable cups, plates and cutlery. Georgia- Pacific's building products business has long been among the nation's leading suppliers of building products to lumber and building materials dealers and large do-it-yourself warehouse retailers. For more information, visit http://www.gp.com/ GEORGIA-PACIFIC: Renews $900-Mil. Accounts Receivable Financing --------------------------------------------------------------- Georgia-Pacific Corp. (NYSE: GP) has completed the annual renewal of its $900 million accounts receivable borrowing program, and also has elected to reduce bank loan commitments. The accounts receivable borrowing program has been extended through Dec. 13, 2004. This short-term financing program sells an interest in certain receivables of Georgia-Pacific's domestic businesses to banks and other entities. In addition, Georgia-Pacific has elected to reduce from $3 billion to $2.5 billion the amount available under its senior bank credit facility that matures in November 2005. The company uses this facility for general corporate borrowings and letters of credit. Of the reduction, $250 million is represented by repayment of the term loan that comprises part of this facility, and $250 million represents reduction of the available revolving credit amount. As a result, Georgia-Pacific has approximately $1.6 billion in unused availability under this facility. "We have made tremendous progress throughout 2003 in repaying and refinancing our debt, lengthening maturities and reducing refinancing risk," said Danny W. Huff, Georgia-Pacific executive vice president and chief financial officer. "Since the acquisition of Fort James Corp. in November 2000, we have dramatically reduced our overall debt and exposure to bank debt markets." The company also said it has completed the previously reported monetization of a portion of its asbestos insurance receivable. Proceeds of approximately $147 million from this action were used for repayment of debt. The monetization was made possible by an agreement the corporation reached in the third quarter to confirm the total amount of insurance to be paid by one of its insurers for Georgia-Pacific's asbestos liabilities over the next several years. This agreement, and a similar one with another company, allowed Georgia-Pacific to increase its asbestos insurance receivable by $118 million in the third quarter 2003. Headquartered at Atlanta, Georgia-Pacific (S&P, BB+ Corporate Credit Rating, Negative) is one of the world's leading manufacturers of tissue, packaging, paper, building products, pulp and related chemicals. With 2002 annual sales of more than $23 billion, the company employs approximately 61,000 people at 400 locations in North America and Europe. Its familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So- Dri(R), Green Forest(R) and Vanity Fair(R), as well as the Dixie(R) brand of disposable cups, plates and cutlery. Georgia- Pacific's building products business has long been among the nation's leading suppliers of building products to lumber and building materials dealers and large do-it-yourself warehouse retailers. For more information, visit http://www.gp.com/ GERDAU AMERISTEEL: Commences Exchange Offer for Senior Notes ------------------------------------------------------------ Gerdau Ameristeel Corporation (TSX:GNA.TO) announced the commencement of an exchange offer to exchange up to US$405,000,000 aggregate principal amount of registered 10-3/8% Senior Notes due 2011 of Gerdau Ameristeel Corporation and GUSAP Partners for the Issuers' outstanding Notes which were offered in a private placement in June 2003. The Issuers received receipts for the prospectus relating to the exchange offer from the Ontario Securities Commission dated December 18, 2003 and the U.S. registration statement became effective Friday. The exchange offer is as contemplated in the Registration Rights Agreement dated June 27, 2003, pursuant to which the Issuers agreed to register substantially identical Notes, including unconditional guarantees on the Notes from certain of Gerdau Ameristeel's subsidiaries, and offer to exchange the registered Exchange Notes for the Existing Notes. The Exchange Notes (including the subsidiary guarantees) will have substantially the same form and terms as the outstanding Existing Notes, except that the Exchange Notes will be issued under a prospectus in Ontario and the Exchange Notes and subsidiary guarantees have been registered under the U.S. Securities Act of 1933, as amended, and will not be subject to restrictions on transfer. The Exchange Notes will bear a different CUSIP number from the Existing Notes. Any Existing Note not exchanged will continue to have restrictions on transfer. The Issuers will accept for exchange any and all Existing Notes that are validly tendered and not withdrawn on or before 5:00 p.m., New York City time, January 23, 2004, unless extended. Copies of the prospectus and transmittal materials governing the exchange are in the process of being mailed to noteholders. Additional copies can be obtained from the Exchange Agent, SouthTrust Bank, by calling Woodie Alston at (205) 254-4131 or Candace Miller at (205) 254-5486. Gerdau Ameristeel (S&P, BB- Corporate Credit Rating, Stable) is the second largest minimill steel producer in North America with annual manufacturing capacity of over 6.8 million tons of mill finished steel products. Through its vertically integrated network of 11 minimills (including one 50%-owned minimill), 13 scrap recycling facilities and 26 downstream operations, Gerdau Ameristeel primarily serves customers in the eastern half of North America. The Company's products are generally sold to steel service centers, fabricators, or directly to original equipment manufacturers for use in a variety of industries, including construction, automotive, mining and equipment manufacturing. Gerdau Ameristeel's common shares are traded on the Toronto Stock Exchange under the symbol GNA.TO. GUSAP Partners is a partnership formed between Gerdau Ameristeel and its wholly- owned subsidiary, Gerdau Ameristeel MRM Special Sections Inc. that was created for the purpose of borrowing and providing funds to Gerdau Ameristeel and its subsidiaries. For additional financial and investor information, visit http://www.gerdauameristeel.com/ GMACM MORTGAGE: Fitch Rates Class B-1 & B-2 Certificates at BB/B ---------------------------------------------------------------- Fitch rates $449.1 million GMACM Mortgage pass-through certificates, 2003-J9 classes A, PO, IO, R-I, R-II and R-III certificates ($436.5 million) 'AAA'. In addition, the class M-1 certificates ($6,301,000) are rated 'AA', the class M-2 certificates ($2,700,000) are rated 'A', the class M-3 certificates ($1,800,000) are rated 'BBB', the privately offered class B-1 certificates ($900,000) are rated 'BB', and the privately offered class B-2 certificates ($900,000) are rated 'B' by Fitch. The privately offered class B-3 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 3.00% subordination provided by the 1.40% class M-1 certificate, the 0.60% class M-2 certificate, the 0.40% class M-3 certificate , the 0.20% privately offered class B-1 certificate, the 0.20% privately offered class B-2 certificate, and the 0.20% privately offered class B-3 certificate. The ratings on the class M-1, M-2, M-3, B- 1, and B-2 certificates are based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral and the strength of the legal and financial structures and GMAC Mortgage Corporation's servicing capabilities as servicer. Fitch currently rates GMAC Mortgage Corporation a 'RPS1' for Servicing. As of the cut-off date, December 1, 2003, the trust consists of one group of 1,017 conventional, fully amortizing 30-year fixed- rate, mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $450,041,566. The average unpaid principal balance as of the cut- off date is $442,519. The weighted average original loan-to-value ratio is 73.55%. The weighted average FICO score for the pool is 726. Rate/Term and Cash-out refinance loans represent 38.44% and 18.34% of the loan pool, respectively. The states that represent the largest portion of the mortgage loans are California (30.11%), Massachusetts (9.31%), New Jersey (9.19%), and Illinois (5.97%). All other states represent less than 5% concentration of the total mortgage pool. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. The loans were sold by GMAC to Residential Asset Mortgage Products, the depositor. The depositor, a special purpose corporation, deposited the loans in the trust, which then issued the certificates. For federal income tax purposes, election will be made to treat the trust fund as three real estate mortgage investment conduits. GRUPO IUSACELL: Consummates 20:1 Series A & Series V Stock Swap --------------------------------------------------------------- Grupo Iusacell, S.A. de C.V. (NYSE: CEL) (BMV: CEL) effected the exchange of its Series A and Series V shares for new common, ordinary, registered shares with no par value at a ratio of 20 Series A or Series V shares to 1 new share. The Company did not issue fractional shares. Accordingly, fractions of new shares were paid at a price equal to the opening market price quoted on the Mexican Stock Exchange on October 17, 2003, of Ps.0.88 for each of the Series A or Series V shares, as determined on the October 17, 2003 shareholders' meeting. The number of new shares issued and outstanding is 93,101,240 with a public float of approximately 25.4%. The Company's ticker on the Mexican Stock Exchange and the New York Stock Exchange remained unchanged. Grupo Iusacell, S.A. de C.V. (NYSE: CEL) (BMV: CEL) (Iusacell) is a wireless cellular and PCS service provider in seven of Mexico's nine regions, including Mexico City, Guadalajara, Monterrey, Tijuana, Acapulco, Puebla, Leon and Merida. The Company's service regions encompass a total of approximately 92 million POPs, representing approximately 90% of the country's total population. HEYDE HOSPITALITY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Heyde Hospitality Inc. 345 Frenette Drive Chippewa Falls, Wisconsin 54729 Bankruptcy Case No.: 1-03-19067 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- Dennis L. Heyde and Carol J. Heyde 1-03-19066 Type of Business: The Debtor owns, operates and manages restaurants, inns and hotels. See http://www.Heydehospitality.com/for more information on the Company. Chapter 11 Petition Date: December 16, 2003 Court: Western District of Wisconsin (Eau Claire) Judge: Thomas S. Utschig Debtor's Counsel: Michael L. Meyer, Esq. Ravich, Meyer, Kirkman, McGrath & Nauman, 4545 IDS Center 80 South Eighth Street Minneapolis, MN 55402 Tel: 612-332-8511 Total Assets: $3,748,022 Total Debts: $3,866,065 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Park Hospitality LLC Franchise Fees $631,881 P.O. Box 66 Chippewa Falls WI 54729 Northwest Lodging Inc. Goods and Services $124,771 City of Oshkosh Goods and Services $84,110 Park Inn & Suites Eau Claire Goods and Services $24,674 Sysco Food Baraboo Goods and Services $23,175 Shakopee Public Utilities Goods and Services $13,954 Rib Mountain Sanitary Dist. Utilities $12,256 Sysco Eastern Wisconsin Goods and Services $11,950 Oshkosh Water & Sewer Utilities $10,615 Sysco Minnesota Goods and Services $9,982 SVL Service Goods and Services $9,801 Centerpoint Energy - Utilities $9,389 Shakopee Ameritech Goods and Services $8,486 Rooney Printing Goods and Services $7,886 Guest Distribution Goods and Services $7,886 City of Eau Claire Utilities $6,936 Lamar Enterprises Goods and Services $6,160 Avalon Fortress Security Goods and Services $5,591 R&S Heating & A/C Goods and Services $5,198 Saratoga Liquor Goods and Services $4,685 INFINIA INC: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Infinia, Inc. 450 S. 400 E. Suite 200 Bountiful, Utah 84010 Bankruptcy Case No.: 03-41481 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Infinia at Arizona, Inc. 03-41482 Type of Business: Hospital/Nursing Home Chapter 11 Petition Date: December 18, 2003 Court: District of Utah (Salt Lake City) Judge: William T. Thurman Debtor's Counsel: R. David Grant, Esq. 450 South 400 East, Suite 200 Bountiful, UT 84010 Tel: 801-295-8000 Estimated Assets Estimated Debts ---------------- --------------- Infinia, Inc. $10 M to $50 M $1 M to $10 M Infinia at Arizona, Inc. $1 M to $10 M $1 M to $10 M A. Infinia, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Tax $3,495,920 50 South 200 East Salt Lake City, UT 84111 DHS Medical Care Surcharge Trade Debt $661,842 85 East 7th Place 300 Golden Rule Bldg. St. Paul, MN 55101 Achieve Training Corporation Trade Debt $272,604 P.O. Box 664230 Ohio Casualty Group $243,917 Harris Beach LLP Legal Fees $158,849 Kick Technologies Trade Debt $135,303 United States Treasury Trade Debt $128,000 Office of Public Correspondence Medline Industries, Inc. Trade Debt $107,962 Stagg & Associates, P.C. Accounting Debt $99,793 Health Trac Trade Debt $99,393 SRC Group Benefits Insurance $95,329 Compudata Health Corp Trade Debt $75,214 Maryland Capital LLC Rental Fees $68,601 Arent Fox Legal Fees $66,487 Parsons, Behle & Latimer Legal Fees $54,831 Ogden Associates, LLC Rental Fees $40,187 Blackburn & Stoll Legal Fees $39,249 Tim English & Associates Trade Debt $32,710 Minnesota Associates, LLC Rental Fees $27,279 Thrifty White Stores Trade Debt $26,153 B. Infinia at Arizona, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Tax $984,433 50 South 200 East Salt Lake City, UT 84111 Southern Desert Pharmacy Trade Debt $275,609 1833 W. Main St. Suite 120 Mesa, AZ 85201 Medline Industries, Inc. Trade Debt $233,150 Health Trac Trade Debt $121,572 Apex Healthcare Trade Debt $94,604 Registry, LTD MGA Healthcare Staffing Trade Debt $83,522 EnduraCare Therapy Trade Debt $74,358 Sacred Heart Nursing Trade Debt $61,853 Services Kick Technologies Trade Debt $44,925 Platinum Select Trade Debt $33,654 Salt River Project Trade Debt $28,809 Integrated Healthcare Trade Debt $28,530 Staffing RCS Management Corporation Trade Debt $24,880 Alternative Professional Trade Debt $24,665 Services Apparel Pro Trade Debt $23,946 KCI The Clinical Advantage Trade Debt $21,179 Maintenance Warehouse Trade Debt $19,752 Fern Office Supplies Trade Debt $19,177 RCS Management Trade Debt $18,561 Endura Care Trade Debt $18,175 INSITE VISION: Reaches Pact to Sell ISV-403 to Bausch & Lomb ------------------------------------------------------------ InSite Vision Incorporated (Amex: ISV), an ophthalmic therapeutics, diagnostics and drug-delivery company, and Bausch & Lomb (NYSE: BOL) have reached an agreement whereby InSite Vision will sell its drug candidate ISV-403 for the treatment of ocular infections to Bausch & Lomb. Under the terms of the proposed transaction, InSite Vision will receive a cash payment, reimbursement of certain ISV-403 product development expenses and a percentage of future ISV-403 product sales in all licensed countries. Bausch & Lomb will assume all future ISV-403 development and commercialization expenses and, following a transfer period, will be responsible for all development activities, with assistance from InSite Vision as appropriate. In addition, at the closing of the transaction, the August 2002 ISV-403 licensing agreement and the related Series A-1 Preferred Stock purchase agreement between Bausch & Lomb and InSite Vision will be terminated and Bausch & Lomb will return to InSite Vision for cancellation all shares of the Series A-1 Preferred Stock previously issued. No further financial terms were disclosed. The companies anticipate completing the transaction, which is contingent, among other things, on receipt of third-party consents and the completion of certain pre-closing items, before the end of 2003. "This strategic transaction will allow us to pursue development of other products in our portfolio," said S. Kumar Chandrasekaran, Ph.D., InSite Vision's president and chief executive officer. "It provides immediate value to our stockholders, while allowing InSite Vision to share in the potential future commercial success of ISV-403." Bausch & Lomb indicated it expects to expense a portion of the purchase price in the fourth quarter of 2003. The company also anticipates reversing a portion of previously recorded restructuring reserves, with the net impact of the two items resulting in no change to its previously issued guidance for the fourth quarter. ISV-403 combines a fourth-generation fluoroquinolone, SS734, licensed from Japan's SSP, Co., Ltd., with InSite Vision's patented drug delivery system, DuraSite(R). Preclinical studies with ISV-403 indicated that this drug candidate is effective against bacteria resistant to third generation fluoroquinolone products. In August 2002, InSite Vision and Bausch & Lomb entered a license agreement to develop and commercialize ISV-403 with InSite responsible for all development activities. In April 2003, InSite Vision initiated a Phase I clinical trial with ISV-403 to evaluate its systemic and ocular safety and tolerability in normal volunteers. The following month, InSite Vision received a notice of allowance from the U.S. Patent and Trademark Office (USPTO) related to ISV-403 for the treatment of ocular infections. InSite Vision -- whose September 30, 2003 balance sheet shows a total shareholders' equity deficit of about $4 million -- is an ophthalmic products company focused on glaucoma, ocular infections and retinal diseases. In the area of glaucoma, the Company conducts genomic research using TIGR and other genes. A portion of this research has been incorporated into the Company's OcuGene(R) glaucoma genetic test for disease management, as well as ISV-205, its novel glaucoma therapeutic. ISV-205 uses InSite Vision's proprietary DuraSite(R) drug-delivery technology, which also is incorporated into the ocular infection products ISV-401 and ISV-403, and InSite Vision's retinal disease program. Additional information can be found at http://www.insitevision.com/ Bausch & Lomb is the eye health company, dedicated to perfecting vision and enhancing life for consumers around the world. Its core businesses include soft and rigid gas permeable contact lenses and lens care products, and ophthalmic surgical and pharmaceutical products. The Bausch & Lomb name is one of the best known and most respected healthcare brands in the world. Celebrating its 150th anniversary in 2003, the Company is headquartered in Rochester, New York. Bausch & Lomb's 2002 revenues were $1.8 billion; it employs approximately 11,500 people worldwide and its products are available in more than 100 countries. More information about the Company can be found on the Bausch & Lomb Web site at http://www.bausch.com/ INTEGRATED HEALTH: Premiere Panel Wants Plan Provisions Enforced ---------------------------------------------------------------- Anthony M. Saccullo, Esq., at The Bayard Firm, in Wilmington, Delaware, reminds the Court that pursuant to Section 6.2(1) of the Amended Reorganization Plan, on the Effective Date, or as soon as practicable, the Integrated Health Services Debtors, through their Liquidating Manager, will: (1) pay to each holder of an Allowed Premiere Unsecured Claim an initial distribution as provided for under Section 4.7 of the Amended Plan; and (2) transfer to the Disputed Premiere Unsecured Claims Account the Cash equal to the difference between the total amounts paid and $1,770,000. The Amended Plan provides that each holder of an Allowed Premiere Unsecured Claim will receive a distribution in Cash equal to 6% of its Allowed Claim, provided that the aggregate amount of Allowed Premiere Unsecured Claims does not exceed $22,000,000. In no event will the amount distributed under the Amended Plan to holders of Allowed Premiere Unsecured Claims exceed $1,770,000. The Amended Plan also provides that the fees and expenses incurred by any Disbursing Agent after the Effective Date will not be paid out of the distribution to Class 7. The Official Committee of Unsecured Creditors of Premiere Associates, Inc. and its subsidiaries has repeatedly communicated to the Debtors its view that the Amended Plan provisions related to the Premiere Unsecured Claims must be implemented. However, as of December 2, 2003, the Debtors have not: -- designated Premiere Unsecured Claims; -- objected to any Premiere Unsecured Claim; nor -- made distributions to holders of Allowed Premiere Unsecured Claims or to the Disputed Premiere Unsecured Claims Account. By this motion, the Premiere Committee asks the Court to require the Debtors to: (a) file a motion designating all of the Premiere Unsecured Claims; and (b) make the corresponding distributions on account of the Premiere Unsecured Claims to: -- the Allowed Premiere Unsecured Claims, or -- the Disputed Premiere Unsecured Claims Account. Mr. Saccullo points out that more than 80 days have passed since the Effective Date but the Debtors have not taken steps necessary to accomplish a distribution under the Amended Plan on account of the Premiere Unsecured Claims. Any further delay will adversely impact the holders of Premiere Unsecured Claims, Mr. Saccullo asserts. Mr. Saccullo explains that the Premiere Committee simply seeks to set a more definite deadline by which the Debtors must designate the Premiere Unsecured Claims and make distributions to holders of Premiere Unsecured Claim or the proper reserve fund for disputed Premiere Unsecured Claims. The Premiere Unsecured Claims represent a discrete number of claims that will not exceed $22,000,000 in full amount and $1,770,000 in distributions. Mr. Saccullo assures the Court that a distribution of the discrete amount will not adversely or materially impact the Debtors' ability to satisfy their other obligations under the Amended Plan, but will advance the Debtors' implementation of the Amended Plan. (Integrated Health Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945- 7000) INTERPUBLIC: Will Redeem 1.8% Convertible Subordinated Notes ------------------------------------------------------------ The Interpublic Group of Companies, Inc. (NYSE: IPG) intends to redeem all of its outstanding 1.80% Convertible Subordinated Notes due 2004, with an aggregate principal amount of $249,960,000. The redemption price will equal 96.6813% of the principal amount of the notes plus original issue discount accrued to the redemption date, or $978.10 per $1,000 principal amount of the notes, plus accrued interest to the redemption date. The redemption date will be January 20, 2004. Holders of the notes may convert their notes into shares of Interpublic common stock at a conversion rate of 26.772 common shares per $1,000 principal amount of notes until the close of business on January 19, 2004. Interpublic (Fitch, BB+ Senior Unsecured Debt and BB- Convertible Subordinated Debt Ratings, Negative Outlook) is one of the world's leading organizations of advertising agencies and marketing services companies. Major global brands include Draft, Foote, Cone & Belding Worldwide, Golin/Harris International, Initiative Media, Lowe & Partners Worldwide, McCann-Erickson, Universal McCann and Weber Shandwick Worldwide. Leading domestic brands include Campbell-Ewald, Deutsch and Hill Holliday. J.H. WHITNEY: Fitch Affirms Classes C and D Ratings at BB/B ----------------------------------------------------------- Fitch Ratings upgrades one class and affirms three classes of J.H. Whitney Mezzanine Fund, L.P. The following rating actions are effective immediately: The following class has been upgraded: --$271,850,000 class A senior secured notes upgraded to 'AA' from 'A'; The following 3 classes have been affirmed: --$125,000,000 class B second senior secured notes affirmed at 'BBB'; --$60,000,000 class C subordinated secured notes affirmed at 'BB'; --$15,000,000 class D senior participating notes affirmed at 'B'. The fund is a collateralized debt obligation managed by J.H. Whitney & Co. The CDO was issued July 30, 1998 and is primarily comprised of mezzanine debt. Fitch has reviewed in detail the portfolio performance of the fund. In conjunction with this review, Fitch discussed the current state of the portfolio with the asset manager. JHW, founded in 1946, is the oldest U.S. private capital investment firm. The firm focuses on the growth capital niche and currently manages over $5 billion in assets. The fund ended its reinvestment period in October 2003 and will have its first payment date in the amortization period in January 2004. JHW has been successfully managing this portfolio and as a result, the issuer is currently passing all of its performance tests under Fitch guidelines. As of the November trustee report, the amount of the total outstanding portfolio collateral balance was $553 million, which was available to cover $471.9 million of rated debt. The resulting total overcollateralization ratio of 117.2% exceeds the minimum trigger level of 105%. The fund also benefits from a portfolio with a weighted average coupon of 12.7% compared to a minimum coupon of 10.6%. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that excess spread in conjunction with the end of the reinvestment period enhances the class A break even default rates, which translates into an upgrade of their rating. The original ratings assigned to the class B, class C and class D notes still reflect the current risk to noteholders. Fitch will continue to monitor and review this transaction for future rating adjustments. JADE CBO: Fitch Affirms CC Second-Priority Senior Notes' Rating --------------------------------------------------------------- Fitch Ratings has upgraded the rating on the following class of notes issued by Jade CBO Ltd., a collateralized bond obligation backed by US corporate and emerging market bonds and loans: -- $34,361,542 senior notes to 'AA-' from 'BBB+'. In conjunction with the upgrade, Fitch has removed the aforementioned notes from Rating Watch Positive and has affirmed the following class of notes: -- $23,556,369 second priority senior notes 'CC'. Having exited its revolving period in November 2002, Jade is currently de-levering in order of seniority. Additionally, the senior notes have further amortized with diverted interest due to breaches in the senior par value test and the second priority par value test. Consequently, the increased amount of credit enhancement available to the senior notes is, in Fitch's opinion, sufficient to warrant an upgrade. As of the last payment date, the second priority notes have deferred interest of approximately $1.26 million. The original note balance of the second priority notes was $22.3 million. According to its Nov. 20, 2003 trustee report, Jade's senior par value test was at 157.5% versus a 149% trigger, and its second priority par value test was at 93.5% versus a 120% trigger. As of the same date, the collateral pool included a par amount of $23.37 million (31.42%) of defaulted assets. In reaching its rating actions, Fitch had conversations with Morgan Stanley Asset Management, the collateral manager, regarding the portfolio. Furthermore, Fitch reviewed the results of its cash flow model runs after running several different default timing and interest rate stress scenarios. Fitch will continue to monitor this transaction. JEFFERSON SMURFIT: Fitch Assigns B/B- Senior & Sub. Note Ratings ---------------------------------------------------------------- Fitch Ratings, the international rating agency, assigned Jefferson Smurfit Group holding company JSG Funding Plc's EUR350 million 10.125% Senior Notes due 2012 and USD750 million 9.625% Senior Notes due 2012 a 'B' rating and assigned a 'B-' rating to its EUR107.9 million Subordinated Notes due 2013 and USD161.8 million Subordinated Notes due 2013 (together the "Junior Notes"). The agency also assigned JSG Acquisitions, a subsidiary of JSG Funding Plc, a Senior Unsecured rating of 'B+' and a Senior Secured rating of 'BB'. The Outlook is Stable. The three and four-notch differential between the 'B' and 'B-' ratings assigned to the Senior and Junior Notes respectively and the 'BB' rating assigned to the Senior Secured facilities reflects Fitch's view of the significant difference in potential recovery prospects between the different classes of debt in the event of any forced restructuring or distressed sale. The one-notch differential between the Senior and Junior Notes reflects the contractual subordination of the Junior Notes to the Senior Notes. JSG also has EUR637m of existing debt outstanding that ranks pari- passu with the Senior Secured facilities. As a consequence, the Senior Notes are rated one notch below the Senior Unsecured rating to reflect their subordination to the Senior Secured facilities, the existing Yankee Bonds, the existing foreign subsidiary debt and the unsecured creditors of JSG Acquisitions. "In JSG's structure we still see bondholders' recourse limited to an unsecured claim against the senior borrower's holding company, albeit directly through a subordinated guarantee, rather than solely through an indirect claim via an inter-company loan, which is more commonplace in traditional European high yield structures" said Marianela Gutierrez-Portillo of Fitch's Leveraged Finance Group. The net proceeds from the EUR350 million and original USD545m Senior Notes and the EUR252.7m equivalent Junior Notes were used to part-finance the EUR3.8 billion leveraged buyout of Jefferson Smurfit Group by Madison Dearborn Partners in September 2002. The USD205m Senior Notes issued by the group in February 2003 were used to fund the cash consideration of EUR185m, in addition to the exchange of the Group's 50% interest in Smurfit MBI Canada, for the acquisition of Smurfit Stone Container's European operations. The Senior Notes represent JSG Funding Plc's only senior unsecured obligations and the Junior Notes represent its only general unsecured obligations. The proceeds were down-streamed to an intermediate holding company JSG Acquisitions through a subordinated inter-company loan. This is contractually subordinated in right of payment to the Senior Secured credit facilities issued at the JSG Acquisition level. The Senior and Junior Notes benefit from second ranking upstream guarantees provided by the Subsidiary Guarantor. Within the group's capital structure, the Senior Secured credit facilities lent to JSG Acquisitions rank ahead of the Senior Notes in terms of priority. JSG Funding's status as a holding company with no tangible assets of its own means that it is entirely reliant on upstream payments from its subsidiaries in the form of dividends and distributions to make coupon payments on the Notes. Additionally, the claims of holders of the Senior Notes will be effectively subordinated to all existing and future third-party indebtedness and liabilities, including trade payables, of JSG Funding's subsidiaries. Additionally, given the potential release of the second ranking guarantees in the event of enforcement by senior lenders and sale of the business during the 179 days standstill period, Fitch believes that potential recoveries for the noteholders would be likely to be severely restricted. This view is further supported by the absence of a requirement that the senior secured lenders obtain a "Fair Value" opinion for any sale of the business or individual subsidiaries in the event that they enforce their security. Jefferson Smurfit is currently the largest European based integrated manufacturer of containerboard, corrugated containers and other paper-based packaging products, with operations in Europe, Latin America, the United States and Canada. During the first half of the fiscal year to June 30 2003 ("1H03"), the company generated EBITDA of EUR331m on net sales of EUR2,396m, compared with EBITDA and net sales of EUR288m and EUR2,363m during the same period the previous year. These ratings were initiated by Fitch as a service to users of its ratings and are based on public information. JP MORGAN: Fitch Cuts Ratings on Two Series 1998-C6 Classes to D ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on five classes of J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass-through certificates series 1998-C6, and removed three from CreditWatch with negative implications. At the same time, ratings are affirmed on six other classes from the same transaction. The 'D' ratings on the class G and H certificates reflect cumulative and ongoing interest shortfalls that are not expected to be paid back in the near term. The remaining lowered ratings reflect potential further interest shortfalls associated with several assets. The affirmed ratings are adequately supported at existing credit enhancement levels. According to the special servicer, CRIIMI MAE Services L.P., there are four specially serviced loans ($56.1 million, 8% of the loan pool). All four loans are over 90 days delinquent. The remaining loans in the pool are current. Details are as follows: -- The ninth-largest loan in the pool, at $25.8 million, secured by a 203,761-sq.-ft. retail property in Honolulu, Hawaii. The loan was transferred to special servicing in May 2003. Upon the expiration of the lease in May 2003, Costco (131,607 sq. ft., 65%) vacated. As of Sept. 30, 2003, occupancy was 27% with no prospective tenants. The loan is subject to a breach claim lawsuit between CRIIMI MAE, representing the trust, and JPMorganChase, the issuer, regarding the lease expiration for the property. The prospectus stated the Costco lease expired in 2008 as opposed to the actual lease expiration in 2003. An appraisal is expected in the first quarter of 2004. -- A 110,147-sq.-ft. office building in Reston, Va. secured by a loan for $14.3 million. The loan was transferred to special servicing in Jan. 2003. Upon lease expiration in August 2002, the sole tenant (U.S. General Services Administration) vacated. There are no prospective tenants. A note sale offer was accepted by CRIIMI MAE and is expected to fund by March 2004. -- A loan for $9.0 million secured by a 99-room hotel property in San Mateo, Calif. The loan was transferred to special servicing in August 2003. The hotel was 100% leased to United Airlines, which filed for bankruptcy and terminated its lease in July 2003. The borrower closed the hotel in August 2003. The borrower is currently negotiating a long-term lease with an area developer. An appraisal reduction amount estimated at $6.5 million is expected in the first quarter of 2004. -- A $7.0 million loan secured by a 1,080,260-sq.-ft. refrigerated warehouse in Dallas, Texas. The loan was transferred to special servicing in May 2001, and was subsequently deemed a nonrecoverable loan. The property suffers from environmental issues related to soil and groundwater contamination caused by various activities on the property. A Phase II environmental report is in process, with an expected completion in the first quarter of 2004. Current advances are $1.8 million and severe losses are expected on the loan depending on the extent of environmental damage. The master servicer, Midland Loan Services Inc., reported a watchlist of 17 loans, with an aggregate principal balance of $118.4 million (17%). The majority of the loans are on the watchlist due to occupancy issues, lease expirations or low net cash flow debt service coverage ratio levels. Of particular note, is the fifth-largest loan in the pool, at $33.4 million, which is secured by a portfolio of 11 multifamily properties, with 1,835 units in the greater Greensboro, N.C. area. The portfolio has performed poorly due to regional and macro economic factors. Specifically, there were significant industry layoffs in the immediate area as well as a favorable home-buying environment. Both factors contributed to a June 30, 2003 portfolio-level DSCR and occupancy of 0.89x and 76%. As of Dec. 15, 2003, Midland reported that the trust collateral consisted of 83 loans, with an outstanding principal balance of $699.1 million, down from 91 loans totaling $796.4 million at issuance. Midland reported financial information for 98% of the pool. Standard & Poor's calculated the DSCR for the current pool increased to 1.75x, up from 1.54x at issuance. The current top 10 loans have an aggregate outstanding balance of $388.4 million (56%). The weighted average DSCR for the top 10 loans increased to 1.97x, up from 1.66x at issuance. The pool is geographically diverse, with collateral in 25 states. Geographic concentrations are in Virginia (23%), California (15%), and New Jersey (10%). Property type concentrations are office (31%), multifamily (23%), retail (18%), and hotel (15%), with the balance of the loans secured by industrial and senior housing properties. Standard & Poor's stressed various loans in its analysis and the resultant credit enhancement levels adequately support the rating actions. RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE J.P. Morgan Commercial Mortgage Finance Corp. Mortgage pass-through certs series 1998-C6 Rating Class To From Credit Enhancement (%) F B- BB/Watch Neg 5.70 G D B/Watch Neg 2.85 H D CCC/Watch Neg 1.99 RATINGS LOWERED J.P. Morgan Commercial Mortgage Finance Corp. Mortgage pass-through certs series 1998-C6 Rating Class To From Credit Enhancement (%) D BBB- BBB+ 13.67 E BB+ BBB- 11.39 RATINGS AFFIRMED J.P. Morgan Commercial Finance Corp. Mortgage pass-through certs series 1998-C6 Class Rating Credit Enhancement (%) A-1 AAA 33.04 A-2 AAA 33.04 A-3 AAA 33.04 B AA+ 26.20 C A+ 20.51 X AAA N.A. KAISER ALUMINUM: Selling 90% Valco Interest to Republic of Ghana ---------------------------------------------------------------- Kaiser Aluminum executed a Memorandum of Understanding to sell its 90% interest in Volta Aluminium Company Limited (Valco), which owns and operates a primary aluminum smelter in Ghana, to the Republic of Ghana for consideration of between US$35 million and US$100 million, plus the assumption of all of Kaiser's related liabilities and obligations. The MOU contemplates that the transaction will close by April 30, 2004. The consideration will be paid in 2004 and beyond. During 2004, assuming the US$35 million minimum consideration, the Republic of Ghana would pay US$7 million in cash to Kaiser and US$18 million in cash to Valco, thereby reducing Kaiser's funding to Valco. The remainder of the consideration (a minimum of US$10 million) will be paid in cash to Kaiser over a five-year period from the closing date. The Republic of Ghana's obligations to Kaiser will be guaranteed by the Bank of Ghana. The transaction is subject to due diligence and a number of approvals, including by the President or Cabinet of the Republic of Ghana, the Parliament of Ghana, the Boards of Directors of Kaiser and of Valco, the U.S. Bankruptcy Court and the lenders under Kaiser's Post-Petition Credit Agreement. In addition, the purchase by the Republic of Ghana is subject to Alcoa's right of first refusal pursuant to Valco's corporate governance requirements. Under the terms of the MOU, upon the execution of the MOU and the payment by the Republic of Ghana of US$7 million into escrow, the parties will suspend the pending international arbitration. Upon the closing of the transaction, the parties will dismiss the arbitration with prejudice. "Kaiser and Ghana have been friends and business partners for 40 years. Ghana's industrialization in large part began with Kaiser's commitment to the building of the Akosombo power facility. Kaiser is pleased that the transaction provides the opportunity for Valco's majority ownership and economic potential to be transferred to the people of Ghana," said Kaiser President and Chief Executive Officer Jack A. Hockema. Kaiser Aluminum (OTCBB:KLUCQ) is a leading producer of fabricated aluminum products, alumina, and primary aluminum. KAISER ALUMINUM: Agrees to Terminate Employees' Retirement Plan --------------------------------------------------------------- Kaiser Aluminum said that it had been notified by the Pension Benefit Guaranty Corporation (PBGC) that the PBGC intends to assume responsibility for the Kaiser Aluminum Salaried Employees Retirement Plan (KRP) as of Dec. 17, 2003. After appropriate consultation with its advisors, the Unsecured Creditors' Committee, the Asbestos Claimants' Committee, and certain other constituents, the company has reluctantly agreed to the termination of the plan. The company has stated since the inception of its Chapter 11 reorganization proceedings that pension obligations were one of the significant legacy factors that would have to be addressed during the reorganization process. Further, the company has stated that it did not expect to make any pension contributions in respect of its domestic pension plans during the pendency of the cases because it believes that virtually all of such amounts are pre-petition obligations. In addition, the company also has previously stated that termination of the pension plans was a possibility. The PBGC action does not address seven other defined benefit plans sponsored by the company and thus does not resolve all the pertinent issues surrounding the company's material pension obligations. As previously disclosed, the company is discussing modification or termination of hourly retiree benefits pursuant to collective bargaining with the appropriate union representatives. Kaiser Aluminum (OTCBB:KLUCQ) is a leading producer of fabricated aluminum products, alumina and primary aluminum. KLEAN EARTH: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Klean Earth Environmental Company dba KEECO 12600 4th Ave W-11-I Everett, Washington 98204 Bankruptcy Case No.: 03-26025 Type of Business: The Debtor is a supplier of specialized chemical reagents and treatment systems "for the treatment of heavy metals". See http://www.keeco.com/for more information Chapter 11 Petition Date: December 16, 2003 Court: Western District of Washington (Seattle) Judge: Samuel J. Steiner Debtor's Counsel: Stuart P. Kastner, Esq. Montgomery, Purdue, Blankinship & Austin PLLC 701 5th Avenue #5800 Seattle, WA 98104 Tel: 206-682-7090 Total Assets: $2,017,983 Total Debts: $5,456,237 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ John Marble Consulting Services $1,883,000 PO Box 20141 Seattle, WA 98204 Jimmie Andrews Personal (non-bank) $1,061,450 12600 4th Ave., W-11-I Loan Everett, WA 98204 Marble Partnership Personal (non-bank) $312,071 727 3rd Ave. San Francisco, CA 94118 Universal Aerospace Co., Personal (non-bank) $220,000 Inc. Loan Interaction Alleged marketing $150,000 Assistance James Roma Personal (non-bank) $125,918 Loan Jimmie Andrews Back Wages $125,171 James Hensch Back wages $101,920 James Roma Personal (non-bank) $100,000 Loan Jimmie Andrews Personal (non-bank) $100,000 Loan Steve Breda Personal (non-bank) $100,000 Loan James Roma Personal (non-bank) $80,569 Loan Paul Pedersen Back wages $73,884 William Anderson Back wages $73,694 Paul Cullman Personal (non-bank) $64,653 Loan James Roma Back wages $53,709 Maret Partnership Personal (non-bank) $47,489 Loan Henry Ackermann Back wages $47,446 Sherman Leach Back wages $45,066 Susan Wiechmann Personal (non-bank) $38,528 Loan LANDMARK III CDO: S&P Rates Class B-2L Notes at BB -------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to Landmark III CDO Ltd./Landmark III CDO Corp.'s $295.1 million notes. Landmark III CDO is a CLO backed primarily by loans. The ratings are based on the following: -- Adequate credit support provided in the form of overcollateralization, subordination, and excess spread; -- Characteristics of the underlying collateral pool, consisting primarily of non-investment-grade senior secured loans; -- Scenario default rates of 32.4% for the class A-1L notes, 32.4% for the class A-1LA notes, 32.4% for the class A-1LB notes, 28.1% for the class A-2L notes, 24.0% for the class A-3L notes, 21.3% for the class B-1L notes, and 15.7% for the class B-2L notes; and break-even loss rates of 37.8% for the class A-1L notes, 37.8% for the class A-1LA notes, 37.8% for the class A-1LB notes, 34.3% for the class A-2L notes, 28.8% for the class A-3L notes, 24.5% for the class B-2L notes, and 22.6% for the class B-2L notes; -- Weighted average rating of 'BB-'; -- Weighted average maturity for the portfolio of 5.11 years; -- S&P default measure of 3.01%; -- S&P variability measure of 1.80%; and -- S&P correlation measure of 1.1918. Interest on the class B notes may be deferred up until the legal final maturity of January 2016 without causing a default under these obligations. The ratings on the notes, therefore, address the ultimate payment of interest and principal. RATINGS ASSIGNED Landmark III CDO Ltd./Landmark III CDO Corp. Class Rating Amount (mil. $) A-1L AAA 82.00 A-1LA AAA 124.00 A-1LB AAA 31.00 A-2L AA 16.50 A-3L A- 19.70 B-1L BBB 14.15 B-2L BB 7.75 MEDICAL ASSURANCE: S&P Lowers and Withdraws Low-B Ratings --------------------------------------------------------- Standard & Poor's Rating Services said that it lowered its counterparty credit and financial strength ratings on Medical Assurance of West Virginia Inc., to 'BB' from 'A-' and assigned a developing outlook. Standard & Poor's subsequently withdrew the ratings at the company's request. The ratings on ProAssurance group members Medical Assurance Co. and ProNational Insurance Co. (A-/Negative/--) are not affected by this rating action. "The rating action is in response to ProAssurance's announcement to terminate the 100% quota share arrangement with MAWV," said Standard & Poor's credit analyst Steve Ader. "Accordingly, Standard & Poor's now views MAWV as a stand-alone entity that is nonstrategic to the ProAssurance group." This differs from Standard & Poor's prior belief that the company was an integral or core member of the ProAssurance group and therefore assigned the group rating. The ratings on MAWV were based on a marginal business review, capital, and earnings profile. The ratings were placed on CreditWatch developing because of the uncertainties related to the undefined reinsurance program for 2004 and beyond. MEMORIAL MEDICAL: Fitch Keeps B Debt Rating on Watch Negative ------------------------------------------------------------- Fitch Ratings learned that Province Healthcare Company, based in Brentwood, TN, has agreed to lease Memorial Medical Center, Las Cruces NM, for a term of 40 years. The City and Dona Ana County elected officials voted last week to approve Province's proposal. Fitch currently rates the Medical Center's outstanding series 1996 and 1998 bonds 'B' in the principle amount of $13.5 million and $44.7 million, respectively. The Bonds are currently on Rating Watch Negative. Under the proposal, Province would fund its 40-year lease with an upfront payment of $150 million. The Medical Center's outstanding 1996 and 1998 bonds would be paid off. The City plans to put the remaining funds from the proceeds of the lease into a dedicated fund and use the interest generated for a variety of health- related projects. Management confirmed the City and County's approval of Province's lease proposal and stated that both parties are now in the due diligence phase. The parties expect to finalize the transaction by the end of February or early March. Until the transaction is finalized, Fitch maintains the 'B' rating on the Medical Center's outstanding bonds. The Rating Watch remains Negative. Should the transaction be finalized and the outstanding bonds paid off, the rating is likely to be withdrawn. METRO HOSPITALITY: Case Summary & 7 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Metro Hospitality Group, LLC 157 South Mountain Avenue Montclair, New Jersey 07042 Bankruptcy Case No.: 03-50910 Type of Business: The Debtor is engaged in Hotel and management services. It provides expertise exclusively to hotels and restaurants worldwide. Chapter 11 Petition Date: December 19, 2003 Court: District of New Jersey (Newark) Debtor's Counsel: Stuart Gold Mandelbaum Salsburg et. al. 155 Prospect Avenue West Orange, NJ 07052 Tel: 973-736-4600 Fax: 973-325-7467 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,000 to $500,000 Debtor's 7 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Thomas Soriero Loan $75,000 Dominick Pandolfo Loan $50,000 Catmandu Engineering Engineering services $23,873 Salans New York Legal Fees $9,587 Wiley Maehorn/Sirota Legal Fees $5,477 Morris Nathanson Design Design fees $3,754 True & Associates Insurance premiums $3,393 MIRANT CORP: Applauds FERC Settlement for Ancillary Services ------------------------------------------------------------ Mirant issued the following statement from Doug Miller, the company's senior vice president and general counsel, in response to the settlement announced today between Mirant and the Federal Energy Regulatory Commission (FERC) related to the sale of ancillary services in California: - "As we have clearly stated in the past, Mirant operates by the rules. We are confident our actions complied with the market rules set by the California Independent System Operator (Cal ISO) and by FERC. - "Mirant is settling [Fri]day to put this matter behind us and avoid the significant investment in time and money required to fight this suit. This settlement is not an admission of guilt. - "FERC Chairman Pat Wood asked that the parties try to settle these issues. Mirant continues working to comply." Ancillary services are various types of generation capacity held for contingency purposes, such as the loss of a critical generation or transmission facility. Ancillary services act as replacement reserves for the Cal ISO to operate its system reliably for the people of California. This settlement represents a prudent business decision for Mirant. Due to the time and expense involved in protracted litigation, Mirant determined that it would be expeditious to settle the matter and move on. Mirant settled with FERC for $3.66 million, which is a fraction of the approximately $28 million alleged by the California parties in the original claim made against the company. The settlement is subject to approval by the Bankruptcy Court. MIRANT CORP: Brings-In Novack & Macey as Special Counsel -------------------------------------------------------- Pursuant to Section 327(e) of the Bankruptcy Code, the Mirant Debtors sought and obtained the Court's authority to employ Novack & Macey as their special counsel, nunc pro tunc to July 14, 2003. Michelle C. Campbell, Esq., at White & Case LLP, in Miami, Florida, relates that Novack is currently one of the Debtors' ordinary course professionals. Based on Novack's increased involvement in certain of the Debtors' litigation matters, the firm's monthly billing may exceed the monthly cap applicable to ordinary course professionals. According to Ms. Campbell, since December 1, 2000, Novack has advised the Debtors with respect to a variety of legal issues. Specifically, Novack has: * represented State Line Energy, L.L.C. in various lawsuits regarding fraudulent conveyances against William B. Kelly, Midwest Financial Consulting, Family Christian Center, Inc. and Steve Munsey; * represented Southern Company Energy Marketing, L.P. in an arbitration claim against TenFold Corporation for breach of contract; * represented Mirant employees in response to subpoenas from the Securities and Exchange Commission relating to an investigation of TenFold Corporation; * represented Mirant Americas Energy Marketing, Inc. in a contract dispute with Washington Gas & Light; * represented Mirant Corporation, Mirant EcoElectrica Investments I, Ltd. and Mirant EcoElectrica Finance, Ltd. in defending a suit for breach of contract and fraud filed by Edison Mission Energy and EME del Caribe; * represented Mirant Americas, Inc. in an arbitration dispute with Wallula Generation, LLC; and * analyzed numerous power purchase agreements and tolling agreements for Mirant Americas Energy Marketing, L.P. More recently, Novack represented the Debtors in connection with the arbitration of the contract dispute with El Paso Merchant Energy LP. In the future, the Debtors may call on Novack to represent them in non-bankruptcy related matters similar to the arbitration of the contract dispute with El Paso. Novack intends to apply to the Court for allowances of compensation and reimbursement of actual expenses as permitted by and in accordance with applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Rules and Orders of the Court for all services performed and expenses incurred postpetition. Novack will charge the Debtors its customary hourly rates, which currently range from $103 to $450 per hour. These rates are subject to periodic changes in the ordinary course of business. Ms. Campbell asserts that it is crucial that Novack be employed in the Debtors' cases to ensure that they can draw on the firm's vast knowledge on the cases it is currently handling. The Debtors will require Novack to play a role in the Chapter 11 cases to ensure that the Debtors are receiving as much value as possible and that none of the professionals are "reinventing the wheel." Ms. Campbell is concerned that if the employment is not approved, the Debtors and all parties-in-interest will be prejudiced by the time and related expense for other counsel to familiarize themselves with the matters Novack is handling. Ms. Campbell tells the Court that Novack will not render any services typically performed by a bankruptcy counsel. Among other things, Novack will not ordinarily be involved in the interfacing with the Court nor will it render services in connection with the administration of the Debtors' Chapter 11 cases. Eric Macey, Esq., a partner of Novack & Macey, assures the Court that the members, counsel and associates of Novack do not have any connection with or any interest adverse to the Debtors, their creditors or any other party-in-interest, or their attorneys and accountants. (Mirant Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: S&P Ratings on 2 Classes Fall to Lower-B Levels --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on four classes of Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates from series 1999-FN1. At the same time, ratings on two classes are lowered, and ratings on five other classes are affirmed, all from the same transaction. The raised ratings reflect the improved operating performance of the loan pool (year-end 2002 debt service coverage 1.51x, up from 1.40x at issuance) and increased credit support levels. The lowered ratings reflect the concerns associated with two delinquent loans ($10.3 million, 1.7% of the loan pool) and the potential losses associated with three real estate owned properties ($15.28 million, 2.6% of the loan pool). In addition, as of November 2003, there were cumulative appraisal reductions that totaled $10.0 million and cumulative interest shortfalls to three classes (not rated by Standard & Poor's) that totaled approximately $1.5 million. As of November 2003, realized losses totaled $508,518. The largest REO loan is Magnolia Manors ($7.6 million, 1.3% of loan pool, with total exposure of $8.0 million), originally secured by eight health care facilities in Alabama. In February 2000, the loan was transferred to special servicing, and four facilities were liquidated (Andalusia, Jackson, Brewton, and Monroeville) for $3.23 million. The proceeds were used to pay special servicer fees, accrued advances, and interest. As of November 2003, there were four health care facilities remaining with 96 rooms located in Alabama. The special servicer, CRIIMI MAE Services L.P., commenced servicing the remaining four facilities in February 2002. To date, appraisal reductions total $5.8 million. In June 2003, the remaining four facilities (Jasper, Valley, Smiths, and Alexander City) were appraised for $3.0 million. The September 2003 average occupancy for the four facilities was 89%; however, DSC was below 1.0x. The facilities will be listed for sale in the near future. The second REO loan is Norcross Extended Stay (formerly Guest House Inn, $5.7 million, 1.58% of loan pool, total exposure $6.2 million), a 188-room hotel in Norcross, Ga. The property became REO in June 2003 due to a decline in the industry. To date, appraisal reductions total $4.2 million. In April 2003, the property was appraised "as is" for $2.0 million, and "stabilized" for $2.25 million. CRIIMI MAE is marketing the property for sale. The third REO property is Plantation Acres ($1.9 million, 0.33% of loan pool, total exposure $2.0 million), a 192-pad mobile home park in Augusta, Ga. The property transferred to special servicing in April 2003 due to a decline in operating performance. In June 2003, the property was appraised "as is" for $1.7 million, and "stabilized" for $2.0 million. CRIIMI MAE has placed a property manager on site and intends to market the property for sale in the near future. The ninth-largest loan (Governors Crossing Outlet Center) in the pool is the 90-plus days delinquent loan ($9.3 million, 1.6% of the loan pool). The 135,033-sq.-ft. outlet center, built in 1998, is located in Sevierville, Tenn. (25 miles northeast of Knoxville) and was transferred to CRIIMI MAE in March 2003 due to payment default. The property's submarket competition has increased since issuance, and several leases are scheduled to expire during the next year. Currently, a receiver is in place at the property collecting rent. September 2003 occupancy was 88%, down from 90% at issuance, and year-end DSC was 1.27x, down from 1.30x at issuance. CRIIMI MAE plans to stabilize the property's occupancy, and then market the property for sale. The 30-day delinquent loan, Fairborn Apartments, is now current, and CRIIMI MAE intends to return this loan to the master servicer, GMAC Commercial Mortgage Corp., in January 2004. In November 2003, the master servicer, GMACCM, placed 28 loans ($113.65 million, 19.2% of the loan pool) on its watchlist for various reasons. Twelve loans ($57.12 million) are on the watchlist because of DSC levels that are below 1.0x. Three top 10 loans are on the watchlist; the second- (Quail Oak Apartments, located in Tampa, Fla.) and eighth-largest (Ramada Plaza Hotel, located in San Diego, Calif.) loans are on the watchlist due to DSC levels that are below 1.0x. The third-largest loan (Crown Colony Office, located in Quincy, Mass.) is on the watchlist due to near-term lease expirations of its top three tenants; GMACCM recently advised Standard & Poor's that one of the three tenants did renew its lease. As of November 2003, the loan pool balance was $590.43 million with 164 loans, down from $632.09 million with 166 loans at issuance. The loan pool has nine different property types that exceed 10% concentration; retail (20%), office (18%), multifamily (15%), mobile home park (15%), and lodging (13%); and 33% of the properties are located in California. Standard & Poor's stressed the specially serviced loans and watchlist loans in its analysis, and the stressed credit enhancement levels adequately support the rating actions. RATINGS RAISED Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1999-FNV1 Rating Class To From Credit Support (%) B AAA AA 26.68 C AA A 22.13 D AA- A- 19.99 E BBB+ BBB 14.90 RATINGS LOWERED Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1999-FNV1 Rating Class To From Credit Support (%) K B B+ 4.73 L B- B 3.66 RATINGS AFFIRMED Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1999-FNV1 Class Rating Credit Support (%) A-1 AAA 32.30 A-2 AAA 32.30 G BB+ 9.01 H BB 7.68 X AAA N/A MORGAN STANLEY: Fitch Ups BB/B Ser. 1998-XL1 Note Class Ratings --------------------------------------------------------------- Fitch Ratings has upgraded Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates, series 1998-XL1, as follows: --$46.3 million class C to 'AAA' from 'AA+'; --$64.8 million class D to 'AA+' from 'A+'; --$46.3 million class E to 'A' from 'BBB'; --$11.7 million class F to 'BBB+' from 'BBB-'; --$30 million class G to 'BBB+' from 'BBB-'; --$27.8 million class H to 'BBB-' from 'BB'; --$13.9 million class J to 'B+' from 'B'. Fitch also affirms the following classes: --$60 million class A-1 'AAA'; --$102 million class A-2 'AAA'; --$393.2 million class A-3 'AAA'; --Interest-only class X 'AAA'; --$13.9 million class B 'AAA'. The upgrades are due to the repayment of the $59.5 million Glenborough portfolio loan (6.4% of the transaction's cut-off date balance) in December 2002, the defeasance of the Hotel Del Coronado loan (18.3% of the transaction's current principal balance) on Dec. 18, 2003, and the defeasance of the Wells Fargo Tower loan (16.1%) in July 2003. No loans are in special servicing. All but two of the ten loans are performing better than Fitch underwritten expectations. The certificates are currently collateralized by eight remaining mortgage loans (66.2%) on 70 properties, and the two defeased loans described above (34.4%) secured by U.S. government treasuries. The weighted-average stressed debt service coverage ratio for the 8 comparable mortgage loans has increased to 1.72 times from 1.42x at issuance. The Center America Pool loan, the largest in the pool (18.9%), is secured by 43 anchored neighborhood shopping centers located in Texas, with twelve different grocery chain anchors. The pool's stressed DSCR for year-end 2002 was 1.66x, compared to 1.60x for YE 2001 and 1.37x at issuance. The pool's average occupancy as of June 30, 2003 was 88.3%, compared with 92.3% at YE 2002, 89.6% at YE 2001 and 91.7% at issuance. Fitch has concerns with the retail concentration (45%), particularly with two loans in which the retail collateral performance has deteriorated since issuance. The Charlestowne Mall loan (5.9%), secured by a two-level, four-anchor regional mall located in St. Charles, IL, has in-line shop vacancy of 34%, a decline from 23% at issuance. The borrower projects a 20% decline in 2003 mall shop sales from YE 2002, which equates to a 25% decline from issuance. The loan's YE 2002 stressed DSCR was 1.34x, compared to 1.25x for YE 2001 and 1.49x at issuance. Fitch will be monitoring this loan to see whether the recent replacement of the vacant JC Penney store by Von Maur, a regional upscale fashion retailer, will have positive effects on the center's performance. The seven shopping centers collateralizing the Ramco-Gershenson loan (5.8%) are at 83% economic occupancy as of June 2003, but physical occupancy is only 73%, compared with 97% occupancy at origination. Four of the centers, in Wisconsin, Tennessee and South Carolina, have one or two vacant anchors, either due to financial difficulties or non-renewal of expiring leases. Of the nineteen anchor spaces in total for the seven centers, six are currently vacant. The loan's YE 2002 stressed DSCR was 1.49x compared to 1.76x for YE 2001 and 1.59x at issuance. In 2003, Wal- Mart completed or is nearing completion of expansions, at its own expense, in three properties in which their leases expire in 2008- 2009. The borrower built a new Wal-Mart at Troy Town Center, under a new lease to 2025, and replaced a vacant anchor at Northwest Crossing. The two other retail loans have performed well: West Town Mall loan (9.4%), secured by a five-anchor super-regional mall in Knoxville TN, generated a YE 2002 DSCR of 2.17x vs. 1.78x at issuance. In line occupancy at June 30, 2003 was 92%, the same as at issuance. The Quail Springs Mall loan (5.2%), secured by a three-level, four anchor super-regional mall in northern Oklahoma City, has a YE 2002 DSCR of 2.47x vs. 1.12x at issuance. In line occupancy at June 30, 2003 was 85%, compared to 80% at issuance. Overall occupancy is 95%. The remaining multifamily and office properties have also improved: the California Acacia pool (8.7% - formerly known as Magellan) consisting of 11 apartment properties in the Phoenix area and southern California, generated a YE 2002 DSCR of 1.46x vs. 1.17x at issuance; occupancy was 91.4% through June 30, 2003, down from 94% at issuance. For the same periods, the EQR Pool (6.2%), comprised of five apartment properties in Wisconsin, Minnesota, and Illinois, had a 1.92x DSCR vs. 1.63x; occupancy was 92.7%, vs. 94% at issuance. The Courthouse Plaza I loan (5.6%) secured by an office building in Arlington, VA, had a 1.34x DSCR vs. 1.22x; occupancy was 92.2%, compared to 97% at issuance. Fitch will continue to monitor the transaction, as surveillance is ongoing. NATIONAL CENTURY: Trusts to be Formed Under Second Amended Plan --------------------------------------------------------------- Under the National Century Financial Enterprises Debtors' Second Amended Plan of Liquidation, several trusts will be created: A. Formation of the CSFB Claims Trust As of the Effective Date, NPF XII will execute the CSFB Claims Trust Agreement, which will designate and identify the CSFB Claims Trustee. The CSFB Claims Trustee will be authorized to take all other steps necessary to complete the formation of the CSFB Claims Trust. The CSFB Claims Trust will have all duties, powers, standing and authority necessary to implement the Plan and to administer and liquidate the Assets of the CSFB Claims Trust for the benefit of the holders of beneficial interests in the CSFB Claims Trust. On the Effective Date, and in accordance with the Restructuring Transactions, NPF XII will assign and transfer to the CSFB Claims Trust all of its rights, title and interest in and to the CSFB Claims and the CSFB Claims Trust Restricted SPV Funds Holdback, for the benefit of holders of beneficial interests in the CSFB Claims Trust. The transfers of Assets to the CSFB Claims Trust will be free and clear of any liens, claims or encumbrances, and no other entity will otherwise have any interest, legal, beneficial or otherwise, in any Assets upon their assignment and transfer to the CSFB Claims Trust; provided, however, that all the Assets will be transferred to the CSFB Claims Trust subject to these liabilities and obligations, and the CSFB Claims Trust will be responsible for satisfying all the liabilities and fulfilling all the obligations, like: (1) any expenses incurred for the benefit or in connection with the operation of the CSFB Claims Trust; and (2) any other obligations of the CSFB Claims Trust expressly set forth in the Plan. B. Formation of the Litigation Trust As of the Effective Date, the Debtors will execute the Litigation Trust Agreement, which will designate and identify the Litigation Trustee. The Litigation Trustee will be authorized to take all other steps necessary to complete the formation of the Litigation Trust. The Litigation Trust will have all duties, powers, standing and authority necessary to implement the Plan and to administer and liquidate the Assets of the Litigation Trust for the benefit of the holders of beneficial interests in the Litigation Trust. On the Effective Date, and in accordance with the Restructuring Transactions, the Debtors will assign and transfer to the Litigation Trust all of their rights, title and interest in and to: (1) all Causes of Action other than the Excluded Claims and the CSFB Claims; and (2) the Litigation Trust Restricted SPV Funds Holdback, for the benefit of holders of beneficial interests in the Litigation Trust. The transfers of Assets to the Litigation Trust will be free and clear of any liens, claims or encumbrances, and no other entity will otherwise have any interest, legal, beneficial or otherwise, in any Assets upon their assignment and transfer to the Litigation Trust; provided, however, that all the Assets will be transferred to the Litigation Trust subject to the these liabilities and obligations and the Litigation Trust will be responsible for satisfying all the liabilities and fulfilling all the obligations, like: (1) any expenses incurred for the benefit or in connection with the operation of the Litigation Trust; and (2) any other obligations of the Litigation Trust expressly set forth in the Plan. C. Formation of the VI/XII Collateral Trust As of the Effective Date, NPF VI and NPF XII will execute the VI/XII Collateral Trust Agreement, which will designate and identify the VI/XII Collateral Trustee. The VI/XII Collateral Trustee will be authorized to take all other steps necessary to complete the formation of the VI/XII Collateral Trust. The VI/XII Collateral Trust will have all duties, powers, standing and authority necessary to implement the Plan and to administer and liquidate the Assets of the VI/XII Collateral Trust for the benefit of the holders of beneficial interests in the VI/XII Collateral Trust. On the Effective Date, and in accordance with the Restructuring Transactions, the Debtors will assign and transfer to the VI/XII Collateral Trust all of their rights, title and interest in and to any Assets of NPF VI and NPF XII encumbered by the liens of the Indenture Trustees. The transfers of Assets to the VI/XII Collateral Trust will be free and clear of any liens, claims or encumbrances, and no other entity will otherwise have any interest, legal, beneficial or otherwise, in any Assets upon their assignment and transfer to the VI/XII Collateral Trust; provided, however, that all the Assets will be transferred to the VI/XII Collateral Trust subject to these liabilities and obligations, and the VI/XII Collateral Trust will be responsible for satisfying all the liabilities and fulfilling all the obligations, like: (1) any Allowed Administrative Claims or Priority Claims that have not been paid; (2) except for expenses incurred in connection with the operation of the other trusts established by the Plan, any post-Effective Date expenses necessary or appropriate in respect of consummation of the Plan and winding up of the Debtors' Estates; (3) any expenses incurred for the benefit or in connection with the operation of the VI/XII Collateral Trust; and (4) any other obligations of the VI/XII Collateral Trust expressly set forth in the Plan. D. Formation of the Unencumbered Assets Trust As of the Effective Date, the Debtors will execute the Unencumbered Assets Trust Agreement, which will designate and identify the Unencumbered Assets Trustee. The Unencumbered Assets Trustee will be authorized to take all other steps necessary to complete the formation of the Unencumbered Assets Trust. The Unencumbered Assets Trust will have all duties, powers, standing and authority necessary to implement the Plan and to administer and liquidate the Assets of the Unencumbered Assets Trust for the benefit of the holders of beneficial interests in the Unencumbered Assets Trust. On the Effective Date, and in accordance with the Restructuring Transactions, the Debtors will assign and transfer to the Unencumbered Assets Trust all of their rights, title and interest in and to all of their remaining Assets other than: (1) any Cash and other Assets otherwise designated for use or distribution under the Plan; (2) the Assets to be transferred to the CSFB Claims Trust pursuant to the Plan; (3) the Assets to be transferred to the Litigation Trust pursuant to the Plan; (4) the Assets to be transferred to the VI/XII Collateral Trust pursuant to the Plan; and (5) any Assets that have been sold or otherwise disposed of prior to the Effective Date. Notwithstanding any other provision of the Plan, the Assets to be assigned and transferred to the Unencumbered Assets Trust will include the Debtors' claims and causes of action relating to the litigation captioned National Medical Care, Inc., et al. v. Home Medical of America, Inc., Homecare Concepts of America, Inc., NCFE, Kachina, Inc., Thor Capital Holdings, LLC, Chartwell Care Givers of New York, Lance K. Poulsen and Craig W. Porter, Civ. Act. 00-1225-J (Sup. Ct. Mass., Middlesex County). The transfers of Assets to the Unencumbered Assets Trust will be free and clear of any liens, claims or encumbrances other than liens and security interests on and in the Assets securing Allowed Secured Claims, and no other entity will otherwise have any interest, legal, beneficial or otherwise, in any Assets upon their assignment and transfer to the Unencumbered Assets Trust. All the Assets will be transferred to the Unencumbered Assets Trust subject to these liabilities and obligations, and the Unencumbered Assets Trust will be responsible for satisfying all the liabilities and fulfilling all obligations, like: (1) any Allowed Secured Claims that have not been paid to the extent the Claims are secured by liens and security interests on and in the Assets transferred to the Unencumbered Assets Trust; (2) any expenses incurred for the benefit or in connection with the operation of the Unencumbered Assets Trust; and (3) any other obligations of the Unencumbered Assets Trust expressly set forth in the Plan. The Trust Agreements The Trust Agreements generally will provide for, among other things: (1) the payment of reasonable compensation to the Trustees; (2) the payment of other expenses of the Trusts, including the cost of pursuing the claims assigned to the Trusts; (3) the retention of counsel, accountants, financial advisors or other professionals and provision for their compensation; (4) the valuation of all the Assets transferred to the Trusts on the Effective Date; (5) the investment of cash by the Trustees within certain limitations; (6) the preparation of tax returns and other reports of the Liquidation for the Trusts; (7) the orderly liquidation of the Trusts' assets; and (8) the prosecution of the Causes of Action assigned to the Trusts, which may include the litigation, settlement, abandonment or dismissal of any claims, rights or causes of action assigned to the Trusts. (National Century Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) NDCHEALTH: Appoints Laurie Glimcher and Steven Shulman to Board --------------------------------------------------------------- NDCHealth Corporation (NYSE: NDC) appointed Laurie H. Glimcher, M.D. and Steven J. Shulman to its Board of Directors effective December 18, 2003, increasing the number of Board members to nine. Laurie Glimcher is the Irene Heinz Given Professor of Medicine at the Harvard School of Public Health and Professor of Immunology at Harvard Medical School. Dr. Glimcher is board certified in Internal Medicine and Rheumatology and is an Associate Rheumatologist at the Brigham and Woman's Hospital. She is a Fellow at the American Academy of Arts and Sciences, a member of both the Institute of Medicine of the National Academy of Sciences and the National Academy of Sciences, and President of the American Association of Immunologists. Dr. Glimcher's numerous achievements include the Stohlman Memorial Scholar Award from the Leukemia Society, the FASEB Excellence in Science Award and the ASCI Outstanding Investigator Award. She is on the Board of Directors of Bristol-Myers Squibb and the Waters Corporation. Dr. Glimcher will serve as a member of NDCHealth's Compensation and Governance Committees. Steve Shulman is chairman-elect and chief executive officer of Magellan Health Services. Prior to joining Magellan, Mr. Shulman founded Internet HealthCare Group and served as its chairman and chief executive Officer from 2000 to 2002. He is also the former chairman, president and chief executive officer of Prudential HealthCare. Prior to joining Prudential in 1997, Mr. Shulman co-founded Value Health, Inc., a NYSE specialty managed care company, where he also served as president of its Pharmacy and Disease Management Group. From 1974 to 1986, Mr. Shulman held various senior positions with CIGNA Healthplans and Kaiser Permanente. He is a member of the Board of Directors of BenefitPoint, Digital Insurance, Lumenos and RealMed. Mr. Shulman will serve as a member of NDCHealth's Audit, Compensation and Governance Committees. "We are pleased to announce the appointments of Laurie Glimcher and Steve Shulman to NDCHealth's Board of Directors. Their diverse business experience will add a broader industry perspective as well as additional insight to ensure the disciplined execution of our strategic plan," said Walter Hoff, chairman and chief executive officer. "We believe that Laurie and Steve's collective knowledge will also provide a valuable contribution to enhancing our governance processes as we seek to expand our leadership position in healthcare information solutions." NDCHealth (S&P, BB- Corporate Credit Rating, Stable) is a leading provider of health information solutions to pharmacy, hospital, physician, pharmaceutical and payer business. NEW CENTURY FINANCIAL: Completes Equity Investment in NextAce ------------------------------------------------------------- New Century Financial Corporation (Nasdaq: NCEN) has closed a minority equity investment in NextAce Corporation, a company that has developed new optical title search technology. New Century expects to use the software and processes developed by NextAce to enable New Century and its customers to verify title information in minutes. "We are very excited about the technology," said Patrick Flanagan, President of New Century Mortgage Corporation. "It will improve the efficiency of our loan approval process and enhance credit quality," added Flanagan. "We are pleased to have New Century as part of our team," said Mike Armstrong, President of NextAce. "Their leadership position in developing and adopting technology for the mortgage industry will provide us with a depth of knowledge as we improve the integration of our solutions with mortgage and title insurance providers," added Armstrong. NextAce Corporation is a technology company that provides software and services primarily to the title insurance and mortgage lender industries. It's Title EDGE process was launched in 2003 to assist title companies in streamlining the production of preliminary title reports and commitments. Additional information on NextAce can be found at http://www.nextace.com/ New Century Financial Corporation (Nasdaq: NCEN) (S&P, BB- Long- Term Counterparty Credit and B+ Convertible Senior Notes Ratings) is one of the nation's largest specialty mortgage companies, providing first and second mortgage products to borrowers nationwide through its operating subsidiaries. New Century is committed to serving the communities in which it operates with fair and responsible lending practices. To find out more about New Century, visit http://www.ncen.com/ NEW CENTURY FIN'L: Completes Q4 Secondary Marketing Transactions ---------------------------------------------------------------- New Century Financial Corporation (Nasdaq: NCEN) announced that its secondary marketing subsidiaries have completed their fifth on-balance sheet asset-backed securitization transaction this year backed by $1.1 billion of adjustable-rate and fixed-rate mortgage loans originated by New Century. The completion of this security brings New Century's on-balance sheet portfolio total to $4.9 billion for 2003, which represents approximately 18% of New Century's total 2003 production, targeted at $27 billion. Banc of America Securities LLC was lead manager and, together with Morgan Stanley, Citigroup and UBS Investment Bank, underwrote the New Century Home Equity Loan Trust, Series 2003-6 securitization, which closed today, December 19, 2003. This security offered 10 rated classes of certificates with a face value of $1.1 billion. "Completing fiscal 2003 with almost $5.0 billion of portfolio assets financed by on-balance sheet securitizations will contribute significantly toward our 2004 EPS target of $7.00 or higher," said Robert K. Cole, Chairman and CEO. New Century Financial Corporation (Nasdaq: NCEN) (S&P, BB- Long- Term Counterparty Credit and B+ Convertible Senior Notes Ratings) is one of the nation's largest specialty mortgage companies, providing first and second mortgage products to borrowers nationwide through its operating subsidiaries. New Century is committed to serving the communities in which it operates with fair and responsible lending practices. To find out more about New Century, visit http://www.ncen.com/ NHC COMMS: October 31 Net Capital Deficit Widens to C$6.5 Mill. --------------------------------------------------------------- NHC Communications Inc. (TSE: NHC), a leading provider of automated mainframe and cross-connect solutions for the copper- based telecommunications market, reported its results for the first quarter of fiscal 2004, ended October 31st, 2003. (All amounts are expressed in Canadian dollars unless specified otherwise). Revenues in the first fiscal quarter of 2004 were $1.23 million compared to revenues in the fourth fiscal quarter of 2003 of $0.63 million, an increase of 95 percent. Compared to first fiscal quarter 2003 revenues of $3.06 million, the revenue decline was 60 percent. All of the revenues recognized in the first quarter of fiscal 2004 were related to shipments to the Company's US ILEC no. 1 customer. Most of fiscal 2003 and first quarter of fiscal 2004 shipments were not yet recognized as revenues as at October 31st, 2003, since a major customer had not completed the testing of the Company's new CMS Version 3 software, a UNIX(TM)/Oracle(TM) element management system which controls the ControlPoint(TM) robotic main distribution frame. The delivery of this new software, which was stipulated under the contract's terms, should be executed during fiscal 2004, at which time the short-term portion of the deferred revenue of $25.26 million on the Company's balance sheet will be recorded as revenues together with its related cost. All of ControlPoint(TM) solutions installed by this major customer will continue to be controlled by CMS 2.4, NHC's Windows(TM) based software which uses a LAN/WAN to remotely control the robotic main distribution frame (MDF), until the delivery of the CMS Version 3 software. During the first quarter of fiscal 2004, the Company completed shipments of $4.03 million to its US ILEC no. 2 customer and, accordingly, total deferred revenue included in the Company's balance sheet increased to $26.30 million as of October 31st, 2003, from $22.27 million as of August 1, 2003. The net loss totaled $1.41 million or a loss of four cents per share in the first fiscal quarter of 2004. This is an improvement from the fourth fiscal quarter of 2003, when the Company had a net loss of $2.47 million or a loss of 8 cents per share. The net loss in the first fiscal quarter of 2004 compares to a net loss of $1.86 million or a loss of six cents per share in the first fiscal quarter of 2003. Lower spending for all operating expenses in the first fiscal quarter of 2004 as a result of the implementation of cost-cutting measures effective April 7, 2003, contributed to a smaller sequential loss per share. At October 31, 2003, the Company's balance sheet shows a working capital deficit of about $7 million, and a total shareholders' equity deficit of about $6.5 million. Additional information, as well as the Management's Discussion and Analysis of the financial results, will be filed shortly with the relevant securities regulatory authorities and will be available on the NHC Web site at http://www.nhc.com/ NHC Communications Inc. is a leading provider of products and services enabling the management of voice and data communications for telecommunication service providers. NHC's ControlPoint(TM) solutions utilize a high-performance software driven Element Management System controlling an automated, true any-to-any copper cross-connect switch, to enable incumbent local exchange carriers and other service providers to remotely perform the four key tasks that historically have required manual on-site management. These four tasks fundamental to all operations are loop qualification, deployment and provisioning, fallback switching and service migration of Voice and Data services including DSL and T1/E1. Using ControlPoint(TM) NHC's customers avoid the risk of human error and dramatically reduce labour and operating costs. NHC maintains offices in Montreal, Quebec; Paris, France; and Manassas, Virginia. "ControlPoint(TM)" is a trademark of NHC Communications Inc. NHC may be contacted through its web site at http://www.nhc.com/ NORTHWEST AIRLINES: Fitch Rates Class D Trust Certificates at B --------------------------------------------------------------- Fitch rates Northwest Airlines class D Pass-Through Trust certificates, series 2003-1 as follows: --$551,822,000 class D 10.5% pass-through trust certificates 'B'. The class D certificates represent interests in the assets of the 2003-1 Pass-Through Trust, which has acquired a direct or indirect interest in $551.8 million aggregate principal amount of the notes secured directly or indirectly by 64 aircraft owned by Northwest Airlines, Inc. Fitch's expected rating primarily reflects Northwest Airlines Inc.'s credit quality, but also reflects the value of the aircraft securing the equipment notes underlying the class D certificates and the availability under Section 1110 of the U.S. Bankruptcy Code. NUTRAQUEST: Panel Taps Nihill & Riedley as Forensic Accountants --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Nutraquest, Inc.'s chapter 11 case, seeks permission from the U.S. Bankruptcy Court for the District of New Jersey to retain and employ Nihill & Riedley, P.C. as accountants. In its capacity, Nihill & Riedley will: a) conduct examinations of the Debtor's corporate financial, tax and accounting records to determine whether funds have been improperly accounted for and/or diverted away from creditors; b) identify assets of the Debtor and possible sources of recovery; c) calculate losses incurred by the Debtor; d) conduct investigations and interview witnesses regarding the existence and/or the misuse of corporate assets; e) trace funds and provide other services necessary to recover assets to maximize the estate for the benefit of the Debtor's creditors; f) assist counsel in the identification of preference payments and fraudulent transfers; g) provide reports and expert testimony and further assist counsel in the litigation to recover funds or damages as may appear appropriate to maximize the estate for the benefit of the Debtor's creditors; h) allocate and distribute remaining assets and proceeds from recovery efforts; i) conduct such review as may appear appropriate concerning the Debtor's Schedules, Statement of Financial Affairs, Operating Reports, the work and records of the Debtor and the work papers for the Debtor's tax returns and financial statements prepared by the Debtor's accountants, the acts, conduct, assets, liabilities, financial condition and solvency of the Debtor, the operation of the Debtor's businesses, any causes of action belonging to the Debtor's estate and its creditors, and any other matter of significance to the Creditors' Committee which may be relevant to the Chapter 11 case; j) perform such other accounting services as may be required by the Creditors' Committee in the Chapter 11 case and in any related litigation or proceedings. Nihill & Riedley Staff: Hourly Rates Principal $250 per hour Senior Associate $175 per hour Associate $130 per hour Junior Associate $90 per hour Data Specialist $75 per hour Administrative $35 per hour The team will be lead by Ricardo J. Zayas, C.P.A. whose hourly rate is $250. Headquartered in Manasquan, New Jersey, Nutraquest, Inc. markets the ephedra-based weight loss supplement, Xenadrine RFA-1. The Company filed for chapter 11 protection on October 16, 2003 (Bankr. N.J. Case No. 03-44147). Andrea Dobin, Esq., and Simon Kimmelman, Esq., at Sterns & Weinroth, P.C. represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $10 million and estimated debts of over $50 million. OLD COUNTRY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Old Country Masonry, Inc. P.O. Box 844 Stafford, Virginia 22555-0000 Bankruptcy Case No.: 03-15698 Type of Business: The Debtor is a masonry contractor for commercial, industrial or residential services. Chapter 11 Petition Date: December 19, 2003 Court: Eastern District of Virginia (Alexandria) Debtor's Counsel: Robert Easterling, Esq. Easterling & Goodall 2217 Princess Ann Street Suite 100-2 Frederickburg, VA 22401 Tel: 540-373-5030 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $ 10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Tax $357,662 Special Proceedings & Insolvency P.O. Box 10025 Richmond, VA 23240-0000 Virginia Dept of Labor OSHA claims $259,309 & Industry 13 South 13th Street Richmond, VA 23219-4101 Charleston Hospitality Inc. Hotel expense $87,372 American Home Assurance Co. Open account $72,489 Sunbelt Rentals Equipment rent $35,980 Airport Super 8 Hotel expense $27,554 Days Inn Hotel expense $21,922 Super 8 of Waldorf Hotel expense $20,039 Pacheco Manuel Loan $20,000 Best Western of Seaford Hotel expense $19,369 Suburban Lodge Hotel expense $19,247 Turf Motel Hotel expense $16,956 Commonwealth of Virginia $14,358 Days Inn of Crabtree Hotel expense $13,027 The Breakers Motel Hotel expense $12,594 Days Inn of Salisbury Hotel expense $12,422 Red Mill Inn Hotel expense $11,440 Terrace Motel $11,222 C&D Concrete Trade debt $11,213 Super 8 of Midlothian Hotel expense $11,209 OM GROUP: Files Form 10-Q and Amends Previously Reported Results ---------------------------------------------------------------- OM Group, Inc. (NYSE: OMG) filed its 2003 third quarter Form 10-Q with the Securities and Exchange Commission. In its Form 10-Q the Company made certain adjustments to the results previously reported in a press release on October 30, 2003, that increase third quarter diluted earnings per share to $2.19 per diluted share from the $1.14 per diluted share as previously announced. The adjustments include: -- The net gain on the sale of the Company's Precious Metals business has increased to $62.7 million after-tax versus the previously announced gain of $53.7 million after-tax due to lower-than-expected expenses associated with the transaction. In addition, certain charges previously deducted from the gain were reclassified to restructuring charges for continuing operations. -- The third quarter 2003 restructuring and other charges have been reduced to $23.5 million compared to $45.0 million. The Company determined that a portion of the charges are more appropriately related to the earlier quarters of 2003 and that inventory previously included in the charges has value that can be realized in future operations. -- Results from continuing operations now include the Company's U.S. Fidelity electroless nickel business, which has been reclassified from discontinued operations to continued operations. This business had an operating loss of $6.0 million in the 2003 third quarter, including restructuring and other charges of $5.9 million. The Company will this next week amended Form 10-Qs for the three- month periods ended March 31 and June 30, 2003. OM Group, Inc. (S&P, B+ Corporate Credit Rating, Stable) is a leading, vertically integrated international producer and marketer of value-added, metal-based specialty chemicals and related materials. Headquartered in Cleveland, Ohio, OM Group operates manufacturing facilities in the Americas, Europe, Asia, Africa and Australia. For more information on OM Group, visit the Company's Web site at http://www.omgi.com/ OPTION ONE MORTGAGE: Fitch Keeps Watch on BB Class B Note Rating ---------------------------------------------------------------- Fitch Ratings has taken rating actions on the following Option One Mortgage Corporation issues: Series MESA 2001-2: -- Class A affirmed at 'AAA'; -- Class M rated 'BBB' is placed on Rating Watch Negative; -- Class B rated 'BB' is placed on Rating Watch Negative. Series 2001-2: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'. Series 2001-3: -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'. The affirmations on these classes reflect credit enhancement consistent with future loss expectations. The rating action on Series MESA 2001-2, Classes M and B, is taken due to the level of losses incurred and the high delinquencies in relation to the applicable credit support levels as of the November 2003 distribution date. ORYX TECHNOLOGY: Discloses 43.3% Equity Stake in S2 Technologies ---------------------------------------------------------------- On September 30, 2003, Oryx Technology Corp. announced that its wholly-owned subsidiary, Oryx Ventures, LLC, made an additional equity investment of $125,000 in S2 Technologies, Inc., an early- stage middleware and software tools development company. This sale of Series B-1 Preferred Stock to the Company closed on September 15, 2003. The Company's voting ownership in S2 Technologies is now approximately 43.3% of all outstanding shares. * * * Liquidity and Going Concern Uncertainty In its Form 10-QSB filed with the Securities and Exchange Commission, Oryx Technology reported: "Our working capital increased $238,000 or 74% from $323,000 at February 28, 2003, to $561,000 at August 31, 2003. This increase is primarily attributed to proceeds of $625,000 from a private placement of our common stock in July 2003, partially offset by cash used for an investment of $200,000 into S2 Technologies by Oryx Ventures and a net loss from operations during the six months ended August 31, 2003. Our ratio of current assets to current liabilities was 3:1 at August 31, 2003 and 3.5:1 at February 28, 2003. "Net cash used by operations was $57,000 for the six months ended August 31, 2003 compared to net cash used in operations of $486,000 for the six months ended August 31, 2002. The decrease in net cash used in operations during the six months ended August 31, 2003 was primarily attributed to higher SurgX royalty revenue from IRISO and a decrease in operating expenses. Cash used in operations consisted primarily of operating losses adjusted for non-cash related items, which include loss on investments, depreciation. Net cash used in investing activities was $200,000 and $946,000 for the six month periods ended August 31, 2003 and 2002, respectively, consisting mainly of investments of $200,000 and $938,000, respectively, in S2 Technologies' Series Preferred Stock by Oryx Ventures. "We do not expect to have any material capital expenditures for the year ended February 29, 2004. "As of August 31, 2003 we had an accumulated deficit of approximately $26.3 million. We incurred net losses of approximately $2.1 million for the fiscal year ended February 28, 2003 and $1.5 million for fiscal 2002. We expect to continue to incur net losses and these losses may be substantial. We will need to generate substantially higher royalty fees to achieve and sustain profitability and positive cash flow. "In February 2003, as a result of the fact that the Company had insufficient capital to meet its working capital requirements through the next twelve months, the opinion of the Company's independent accountants with respect to the consolidated financial statements included in the form 10-KSB for the year ended February 28, 2003 includes an explanatory paragraph indicating that these matters raise substantial doubt about the Company's ability to continue as a going concern. "In July 2003, the Company successfully consummated the sale of 625,000 shares of its common stock and warrants to purchase up to an additional 156,250 shares of common stock, resulting in cash proceeds to the Company of $625,000. "Management believes that it has sufficient capital to continue is business operations through fiscal 2004. However, in the event the Company fails to meet its projecting operating plan for the period, it may need additional funding. If the Company requires additional capital, there can be no assurance that such transactions can be effected in time to meet its needs, if at all, or that any such transaction will be on terms acceptable to the Company or in the interest of its stockholders." P-COM INC: Raises Additional Equity and Eliminates $3MM in Debt --------------------------------------------------------------- P-Com, Inc. (OTC Bulletin Board: PCOM), a worldwide provider of wireless telecom products and services, announced a series of transactions that further strengthens the company's financial position. P-Com also announced that it has raised approximately $2.8 million through the issuance of additional Series C Convertible Preferred Stock and Warrants. In addition, the company said it has eliminated $3 million in debt in connection with the acquisition of the Wave Wireless Networking division of SPEEDCOM Wireless Corporation. Approximately $2 million in debt was exchanged for $2 million in Series D Convertible Preferred Stock of P-Com. The remaining $1 million in debt was retired by making a $750,000 cash payment to the noteholders. Complete details related to the terms of the Series C Convertible Preferred Stock are in P-Com's Form 8-K, filed with the Securities and Exchange Commission on October 7th, 2003, in connection with the October 2003 equity-based financing that resulted in gross proceeds to the company of $11 million. "We have removed a substantial portion of the debt from our balance sheet and essentially completed the restructuring process," said Sam Smookler, CEO of P-Com. "The restructuring actions, coupled with our recent success in raising additional working capital, will allow us to turn our full attention to growing our business in 2004." The financial transactions announced culminate a restructuring program that included the conversion of $21 million in debt into shares of Series B Convertible Preferred Stock, a substantial portion of which has recently been converted into shares of P-Com common stock. Burnham Hill Partners acted as exclusive placement agent in connection with Series C Preferred Stock financing and served as financial advisor to P-Com in connection with the debt reduction and issuance of Series D Preferred Stock. P-Com, Inc. -- whose September 30, 2003 balance sheet shows a total shareholders' equity deficit of about $20 million -- develops, manufactures, and markets point-to-point, spread spectrum and point-to-multipoint, wireless access systems to the worldwide telecommunications market. P-Com broadband wireless access systems are designed to satisfy the high-speed, integrated network requirements of Internet access associated with Business to Business and E-Commerce business processes. Cellular and personal communications service providers utilize P-Com point-to- point systems to provide backhaul between base stations and mobile switching centers. Government, utility, and business entities use P-Com systems in public and private network applications. For more information visit http://www.p-com.com/ Burnham Hill Partners, based in New York City, formed in August 2003, is a division of Pali Capital, Inc., a NASD registered broker dealer. The professionals at Burnham Hill Partners have extensive experience providing comprehensive financing and financial advisory services to publicly traded companies with market capitalizations of up to $250 million. Burnham Hill Partners' sector expertise includes telecommunications, electronics equipment and services, network security and software as well as medical devices and life sciences. For more information on Burnham Hill Partners, its professionals and deal history call 212-980-2200. PAC-WEST: Completes Financing Transaction with Deutsche Bank ------------------------------------------------------------ Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of integrated communications services to service providers and small and medium- sized enterprises in the western U.S., announced the successful settlement of its previously announced cash tender offer and consent solicitation and closing of its previously announced $40.0 million debt and equity private placement financing with Deutsche Bank AG -- London, acting through DB Advisors, LLC, as investment advisor. Ravi Brar, Pac-West's CFO, said, "We are very pleased to have successfully concluded these transactions which we believe have strengthened Pac-West's financial and competitive positions. We are also pleased to be partnering with Deutsche Bank, a world- class strategic partner who shares our vision and endorses our business model. These transactions are a continuation of the capital restructuring efforts undertaken over the past two years to reduce both our total amount and cost of debt. Pac-West has been at a competitive disadvantage to other telecom providers who have utilized bankruptcy proceedings to restructure debt loads. We are proud that we have been able to work with our bondholders and shareholders to achieve a more competitive capital structure, which in addition to the most comprehensive network in California, and industry leading In connection with the tender offer and consent solicitation, Pac-West purchased $59.0 million in aggregate principal amount of its Series B 13.5% Senior Notes due 2009. Following settlement of the tender offer and consent solicitation, Pac-West has been advised by the depositary for the tender offer and consent solicitation that it has remaining outstanding about $36.1 mil,oG2/jlts to effect certain proposed amendments to the indenture governing the Senior Notes. These amendments to the indenture governing the Senior Notes, which are now effective, eliminated most of the indenture's principal restrictive covenants and amended certain other provisions contained in the indenture. The financing transaction involved the purchase by Deutsche Bank of a floating rate, pay-in-kind senior secured note in the principal amount of $40.0 million, which will mature in 2006 but is extendable for up to an additional 18 months at the option of Deutsche Bank. The note, which is secured by Pac-West's assets, will accrue interest at a rate equal to LIBOR plus 50 basis points. In addition, in the connection with the financing, Pac- West has granted to Deutsche Bank 3-year warrants to purchase 26,666,667 million shares of Pac-West's common stock at an exercise price of $1.50 per share, the issuance of which were approved by Pac-West's shareholders at a special meeting of the shareholders held on December 18, 2003. If Deutsche Bank extends the maturity date of the senior secured note, the term of the warrant will be extended to the same date. In addition, Pac-West granted to Deutsche Bank certain registration rights in connection with the issuance of the warrants. UBS Securities LLC served as Dealer Manager in connection with the tender offer and consent solicitation and Georgeson Shareholder served as Information Agent in connection with the tender offer and consent solicitation and Solicitation Agent in connection with the proxy solicitation conducted with respect to the special meeting. The tender offer and consent solicitation were made solely by means of the Offer to Purchase and Consent Solicitation Statement, dated October 30, 2003, as supplemented by the Supplement to Offer to Purchase and Consent Solicitation Statement, dated November 17, 2003. With roughly EUR 851 billion in assets, and approximately 69,300 employees, Deutsche Bank offers its 13 million clients unparalleled financial services in 76 countries throughout the world. Deutsche Bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people. Deutsche Bank ranks among the global leaders in corporate banking and securities, transaction banking, asset management, and private wealth management, and has a significant private and banking franchise in Germany and other selected countries in Continental Europe. For more information, please visit Deutsche Bank's Web site at http://www.deutschebank.com/ Founded in 1980, Pac-West Telecomm, Inc. is one of the largest competitive local exchange carriers headquartered in California. Pac-West's network carries over 100 million minutes of voice and data traffic per day, and an estimated 20% of the dial-up Internet traffic in California. In addition to California, Pac-West has operations in Nevada, Washington, Arizona, and Oregon. For more information, visit Pac-West's Web site at http://www.pacwest.com/ * * * As reported in Troubled Company Reporter's May 1, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Pac-West Telecomm Inc. to 'D' from 'CC'. The rating on the 13.5% senior notes due 2009 was lowered to 'D' from 'C'. S&P explained, "Given the company's significant dependence on reciprocal compensation (the rates of which the company expects to further decline in 2003) and its limited liquidity, Pac-West will likely find the implementation of its business plan continue to be challenging." PACIFIC GAS: S&P Places 'D' Corporate Rating on Watch Positive -------------------------------------------------------------- Standard & Poor's Ratings Services placed the 'D' corporate credit rating on regulated electric and gas utility company Pacific Gas & Electric Co., on CreditWatch with positive implications. San Francisco, Calif.-based PG&E had $10.4 billion of debt as of Sept. 30, 2003. "The CreditWatch listing reflects the California Public Utilities Commission's (CPUC) December 18 decision to approve, with modifications, a compromise plan for the emergence of PG&E from bankruptcy," noted Standard & Poor's credit analyst David Bodek. "The reorganization plan reflects terms negotiated by PG&E, the CPUC's staff, and a consumer activist group, The Utility Reform Network (TURN). The bankruptcy court must approve the plan endorsed by the CPUC," he continued. Assuming that the bankruptcy court concurs with the CPUC, the commission's decision should pave the way toward strengthening the utility's credit profile and its emergence from bankruptcy. A key component of the reorganization plan is the creation of a $2.2 billion regulatory asset that will be deemed to supplement the utility's rate base for ratemaking purposes. The regulatory asset will have an equity component on which the utility will earn an equity return. The regulatory asset will be amortized over nine years. The use of a regulatory asset construct to augment the rate base will facilitate the CPUC's establishment of retail electric rates that can support the debt service on bonds to be issued to extinguish defaulted obligations. After the utility's emergence from bankruptcy, the CPUC, PG&E, and TURN may agree to substitute a bonded securitization for the regulatory asset. The securitization would provide cash to compensate the utility for the elimination of the regulatory asset. The substitution may only occur if it will not impair the utility's credit ratings and will require legislative action. Under the negotiated reorganization plan, the CPUC has committed to facilitate the achievement of investment-grade ratings and to maintain investment-grade ratings, once assigned. The CPUC has also pledged to provide the utility with an 11.22% ROE until certain credit ratings are achieved. The CPUC will retain ratemaking authority throughout the life of the agreement and has not relinquished its police powers to the bankruptcy court. The utility's credit ratings could rise appreciably on its emergence from bankruptcy. However, the assignment of investment- grade ratings on emergence is not a foregone conclusion for PG&E, and it is unlikely that ratings higher than marginally investment grade will be assigned. The negotiated reorganization plan provides that the assignment of investment-grade ratings is a precondition to the plan going into effect. If investment-grade credit quality cannot be achieved, the parties would need to waive this prerequisite. Waivers are contemplated by the agreement. Standard & Poor's must evaluate the CPUC's final decision on the reorganization plan and any resulting revisions to the utility's financial projections. Standard & Poor's assessment of the reorganization plan and its financial implications will not solely focus on the utility's direct debt obligations. The evaluation will also gauge the utility's ability to support the debt and administrative expenses of its parent, PG&E Corp., whose other principal subsidiary, National Energy & Gas Transmission Inc. (NEGT), is also in bankruptcy and is incapable of making contributions that support its parent's obligations. NEGT was formerly known as PG&E National Energy Group Inc. Standard & Poor's analysis will also assess debt and debt service to be imputed to the utility as a result of fixed obligations incurred through current and expected power supply contracts. In particular, PG&E will face heightened exposure to financial and operational risks, as it assumes increasing responsibility for securing generation and fuel resources to meet customers' electric needs as the California Department of Water Resources' electricity contracts expire. Because TURN has previously commenced legal actions by challenging the recovery of expenses incurred by PG&E and Southern California Edison Co. during California's energy crisis, its participation in the negotiation of the reorganization plan diminishes, but does not eliminate, the risk of judicial challenges to the CPUC's reorganization plan decision. PACIFIC GAS: Will Pay Up to Additional $4MM in Clean-Up Expenses ---------------------------------------------------------------- Pacific Gas and Electric Company sought and obtained the Court's authority to pay up to an additional $4,000,000 in environmental remediation-related expenditures in each of calendar years 2003 and 2004, for a total authorization of $26,000,000 per year. In June 2001, PG&E obtained permission to spend $22,000,000 per calendar year during its Chapter 11 administration for various environmental remediation-related activities and programs. Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, reiterates the basic purpose and significance of PG&E's environmental remediation programs. According to Mr. Schaffer, PG&E's operations include manufactured gas plant sites, natural gas gathering system sites, natural gas compressor station sites, electric transmission and distribution facilities, steam-electric power plant sites, hydroelectric power plant sites, nuclear power plant sties and service centers, in addition to numerous separate parcels of real property and is a tenant under more than 250 leases. As a necessary part of its business, PG&E uses a variety of different hazardous materials in a number of its sites. Mr. Shaffer notes that given the size and nature of PG&E's business operations, its long operating history, and the many properties PG&E owns and leases, the cleanup of sites containing hazardous substances is an ordinary and recurring part of PG&E's business and will be for many years to come. Mr. Schaffer represents that, for several reasons, the additional $4,000,000 for Environmental Remediation Expenditures is appropriate: -- California law is in many respects unclear, and may require PG&E to expend considerable resources and time defending itself against proceedings brought by governmental agencies seeking to force PG&E to investigate and clean up contaminated properties with an uncertain outcome of the proceedings; -- Because many of PG&E's cleanup programs are the subject of governmental orders and consent decrees, PG&E's non-compliance could result in fines the treatment of which in bankruptcy is uncertain; -- There is a benefit to the estate in avoiding a prolonged work stoppage at its cleanup sites, which could result in increased expenditures to the estate down the road; -- The amount of funds is relatively modest. An additional $4,000,000 annually in 2003 and 2004 is a mere fraction of the existing $22,000,000 annual authorization; and -- There are obvious social benefits in allowing PG&E's cleanup activities to continue, including the prevention of further dispersal of contaminants into the environment. Dr. Gordon C. Rausser, a Senior Consultant at Charles River Associates, a consulting company, has spent months reviewing historical date on site remediation and working with technical experts on site cleanups to develop the estimated future expenses of PG&E's environmental remediation program. Dr. Rausser prepared and filed with the Court a report on PG&E's anticipated annual spending on environmental remediation projects and cleanup-related claims for the years 2003 through 2007. The Rausser Report estimates are: Estimated Year Future Expenses ---- --------------- 2003 $27,500,000 2004 25,900,000 2005 21,800,000 2006 19,610,000 2007 30,700,000 The Rausser Report indicates that PG&E's original estimate of $22,000,000 per year for Environmental Remediation Expenditures was, on average, lower than the anticipated expenditures. (Pacific Gas Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT: Board Meets Later This Afternoon to Determine Next Step ----------------------------------------------------------------- Parmalat Finanziaria S.p.A. issued a statement yesterday relating that: (1) negotiations with the objective of delaying the execution of the acquisition of 18.18% of Parmalat Empreendimentos e Administra?ao Ltda are still in progress; (2) PricewaterhouseCoopers' investigations on the actual composition of the Group's financial assets and liabilities are still in progress; (3) the Board of Directors which met on December 19 mandated the Chairman to inform the judicial authorities of the occurrences, making clear to the same authorities the Board's commitment to draw up, as soon as possible, the plan of action most suited to the current situation, while in the meantime assuring the continuity of Parmalat's ongoing business. (4) The Boards of Directors of Parmalat Finanziaria S.p.A. and Parmalat S.p.A. have been called to meet in the late afternoon of December 23, 2003; (5) the Board of Directors of the controlled company Eurolat S.p.A. has been called to meet on December 27, 2003 to discuss the appointment of Enrico Bondi as Chairman of the company. Yesterday afternoon Parmalat CEO Enrico Bondi met with the Italian Industry Minister, Mr. Antonio Marzano. Mr. Marzano plans to meet with his cabinet today to discuss modifications of current corporate crisis procedures with the objective of preserving the continuity of Parmalat's business. Mr. Marzano's input is necessary for Parmalat to enter into a so-called Extraordinary Administration proceeding under Italian law before a court in Parma or Milan. Alessandro Pedrazzi, Esq., at Jones Day in Milan, relates that an Extraordinary Administration proceeding is kind of like a U.S. chapter 11 restructuring, imposes a moratorium on payment of old debts and would give the company a 14-month breathing spell in which to propose and negotiate a restructuring plan. PARMALAT: S&P Drops Rating to D on Missed Payment of Put Option --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on Parmalat Finanziaria SpA and Parmalat SpA to 'D', reflecting a default, from 'CC', following a missed payment on a put option due on Dec. 17, 2003. In addition, Standard & Poor's withdrew its ratings on Parmalat Finanziaria, Parmalat, and related entities. "The reliability of all key information supporting a credit opinion is now questioned," said Standard & Poor's credit analyst Hugues De La Presle, following Friday's press release by Parmalat indicating that Bank of America has denied the authenticity of a document used to certify the existence of about ?3.95 billion of securities and bank deposits, which represented almost all of the firm's liquidity. On Dec. 18, 2003, Parmalat announced that negotiations were still in progress over delaying the execution of an approximately $400 million put option to buy out the minority shareholders of its Brazilian subsidiary Parmalat Emprendimentos e Administracao Ltda. A portion of the total obligation fell due on Dec. 17, 2003, with the remainder coming due on Dec. 22, 2003. The missed payment on the due date--which was immediately followed by the confirmation that the company had hugely misrepresented its liquidity position, at least over the past year--constitutes a default under Standard & Poor's criteria. Parmalat announced that Bank of America denied the authenticity of a document certifying the existence of about Euro 3.95 billion of bank deposits and securities as of Dec. 31, 2002. The purported bank confirmation was used by Parmalat's local auditors, Grant Thornton, for the certification of the 2002 accounts of Bonlat Financing Corporation, a 100% owned and consolidated Cayman-based subsidiary of the Parmalat group. This information leaves Standard & Poor's with no way of substantiating an opinion that Parmalat could service any of its other financial obligations. This disclosure also clearly confirms Standard & Poor's previous opinion that the information provided by Parmalat's top management and its advisors up to Dec. 5, 2003, dramatically misrepresented the group's liquidity position. "This situation, compounded by a continued lack of access to reliable information on the group's exact financial position, has left Standard & Poor's with no other option than to withdraw all of its ratings on Parmalat and related entities," Mr. De La Presle said. PARMALAT: Fitch Watching 69 Vulnerable CDOs Exposed to Parmalat --------------------------------------------------------------- As part of its efforts to provide timely performance analytics to the CDO markets, Fitch has identified 29 tranches from 11 global public CDOs that may warrant placement of their ratings on Rating Watch Negative, should a credit event be called on Parmalat. Twenty-three private transactions are also vulnerable. Fitch has identified 69 CDOs with exposure to Parmalat. Total notional exposure to Parmalat within this universe of CDOs is greater than EUR700 million equivalent, constituting a mixture of cash and synthetic exposure, typically held in high yield cash CBOs and synthetic arbitrage CDOs. Exposure to Parmalat within the CDOs ranges between around 20 basis points and 5%, with the median around 1%. The transactions with exposure to Parmalat that have not been identified as vulnerable to downgrade have sufficient credit enhancement to absorb the loss assuming a 40% recovery rate. If the company were to default on its obligations or if it were to restructure its debt, Fitch anticipates that these actions, combined in most cases with the effects of further credit deterioration elsewhere in the portfolios, would result in a downgrade being warranted. The extent of any downgrade would depend on: the size of the exposure to Parmalat; the extent of any deterioration elsewhere in the reference portfolio; the position of the notes in the capital structure; and the final recovery amount. Any default of Parmalat would not in itself be expected to contribute more than one notch to the downgrade of any note rated single-A or higher. Where protection has been bought on Parmalat in the most recently rated synthetic CDOs, it would have been treated conservatively within the analysis based on the market information available to Fitch. This treatment in the original analysis would serve to mitigate the severity of any required rating action should credit events be called for Parmalat on these transactions. As outlined in a recent publication by Fitch, called a "Global Structured Finance: 2004 Outlook and 2003 Review," despite the positive impact on CDOs of an improving global credit climate, High yield CBOs and synthetic arbitrage CDOs continue to be vulnerable to isolated credit events; a default by Parmalat would be a clear illustration of this point. Ratings that may be placed on Rating Watch Negative should a credit event be called for Parmalat: ANTHEA plc --Class B secured floating-rate notes 'A-'; --Class C 'BB+'. BIFROST Investments Limited Series 13 --Class 5B secured floating-rate notes 'AA'; --Class 5C secured floating-rate notes 'A'; --Class 7A secured floating-rate notes 'AAA'; --Class 7B secured floating-rate notes 'AA'; --Class 7C secured floating-rate notes 'A'; --Class 7D secured floating-rate notes 'BBB'; --Class 10B secured floating-rate notes 'AA'; --Class 10C secured floating-rate notes 'A'; --Class 10D secured floating-rate notes 'BBB'. BIFROST Legolas 3 --Class F secured floating-rate notes 'AA'. BIFROST Investments Ltd Series 7 --Class B secured floating-rate notes 'AA'. CAESAR 2000 --Class B secured floating-rate notes 'BB+'. CDO Master Investments 2 --Class B - Series 1 secured floating-rate notes 'AA'; --Class C - Series 1 secured floating-rate notes 'BBB-'. CYGNUS 2001 --Class B secured floating-rate notes 'AA'; --Class C secured floating-rate notes 'A'. ILIAD 2 --Class B secured floating-rate notes 'AA'; --Class C secured floating-rate notes 'BBB-'. TAGUS 2 --Class A-1 secured floating-rate notes 'AAA'; --Class A-2 secured floating-rate notes 'AAA'; --Class B secured floating-rate notes 'AA'; --Class C secured floating-rate notes 'A'. VINTAGE CAPITAL --Class A-1 secured floating-rate notes 'AA+'; --Class A-2 secured floating-rate notes 'AA+'; --Class B secured floating-rate notes 'BB+'; --Class C secured floating-rate notes 'CCC'. EIRLES 4 Series 42 --Series 42 secured floating-rate notes 'A'. PARR CHEVROLET: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Parr Chevrolet-Pontiac-Oldsmobile, Inc. 801 N. Center P.O. Box 1164 Archer City, Texas 76351 Bankruptcy Case No.: 03-71083 Type of Business: Auto dealers and sales. Chapter 11 Petition Date: December 17, 2003 Court: Northern District of Texas (Wichita Falls) Judge: Harlin DeWayne Hale Debtor's Counsel: Ronald L. Yandell, Esq. Law Offices of Ron L. Yandell 705 Eighth Street, Suite 720 Wichita Falls, Texas 76301 940-761-3131 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million PARTNER COMMS: Moody's Ratchets Four Low-B Ratings Up a Notch ------------------------------------------------------------- Partner Communications Ltd., (NASDAQ, Tel Aviv: PTNR, London: PCCD) announces that Moody's Investors Service upgraded the ratings of Partner and changed the outlook for all ratings from stable to positive. The following ratings are affected: -- Senior implied rating upgraded from Ba3 to Ba2 -- Issuer rating upgraded from B2 to B1 -- $175 million senior subordinated notes upgraded from B2 to B1 -- Senior bank credit facilities from Ba3 to Ba2 Moody's commented that the upgrade reflects the Company's continued financial and operational progress since Moody's previous upgrade in June of 2002. Earlier this month, Standard & Poor's Ratings Services raised its long-term ratings for Partner to 'BB-' from 'B+'. At the same time, the senior unsecured subordinated debt rating was raised by Standard & Poor's to 'B' from 'B-'. In August 2003, Maalot, the Israel Securities Rating Company Ltd., strategic partner of Standard & Poor's, awarded Partner an "A" rating. Alan Gelman, Partner's CFO, said that the rating awarded the Company by Moody's, one week after Standard and Poor's raised the Company's rating, is further evidence of the confidence of the financial community in the Company's financial strength, its profitability, steady cash flow, and its debt service capabilities. Mr. Gelman added that the positive outlook reflects Moody's opinion that there is potential for further upward rating pressure over the next twelve-to-eighteen months, depending on the Company's ability to demonstrate continued financial progress during its Third Generation rollout and as penetration levels in the market further approach saturation levels. Partner Communications Company Ltd. is a leading Israeli mobile communications operator known for its GSM/GPRS based services and the development of wirefree applications under the orange(TM) brand. The Company commenced full commercial operations in January 1999 and, through its network, provides quality of service and a range of features to over two million subscribers in Israel. Partner subscribers can use roaming services in 125 destinations using 280 GSM networks. The Company was awarded a 3G license in 2002. Partner's ADSs are quoted on NASDAQ under the symbol PTNR and on the London Stock Exchange (LSE) under the symbol PCCD. Its shares are quoted on the Tel Aviv Stock Exchange (TASE) under the symbol PTNR. For further information please visit: http://www.investors.partner.co.il/. PHYAMERICA: Obtains $8-Mill. Loan Facility from R.D. PhyAm Unit --------------------------------------------------------------- PhyAmerica announced that federal bankruptcy court Judge E. Stephen Derby approved an $8 million loan facility for PhyAmerica and its affiliates. The loan was unanimously supported by PhyAmerica, the Official Committee of Unsecured Creditors and NCFE, its largest creditor. The loan was provided by an affiliate of R.D. PhyAm Acquisition Corporation, which is the court approved purchaser of the PhyAmerica business. Charles Goldstein, PhyAmerica's Chief Restructuring Officer, said, "We are very pleased with the support RDA is providing to PhyAmerica as it transitions to new ownership. This additional capital infusion will enable PhyAmerica to promptly close the sale transaction previously approved by the court." PHYAMERICA: Court Approves Dresnick-Resurgence $8-Mil. Financing ---------------------------------------------------------------- R.D. PhyAm Acquisition Corporation, a joint venture of Resurgence Asset Management, LLC and Stephen J. Dresnick, MD, FACEP, announced that Federal bankruptcy court Judge E. Stephen Derby signed an order approving its $8 million bridge financing for PhyAmerica Physician Group and certain of its affiliates. The loan assures PhyAmerica's financial and operational stability until the closing of RDA's acquisition of substantially all of the company's assets, which is expected to occur in mid January 2004. "The court's approval of this vitally needed bridge financing is a crucial step toward financial stability for the company. It means that the company's physicians and employees will be paid on time and in full," said Dr. Dresnick, who will serve as CEO of the company when the sale is finalized. "This loan is a demonstration of our commitment to this industry and to the future of this company. We believe that this also proves our willingness to use our substantial capital resources for solving short-term needs as well as funding future growth opportunities. Our physicians, who work on the frontlines each day providing medical care to patients, deserve to know that they will be paid on time, particularly with the holidays right around the corner. The company's hospital clients deserve the assurance that there will be no disruption of critically needed coverage of their facilities during the busy holiday season and beyond." Resurgence and Dr. Dresnick won the right to buy PhyAmerica on November 25, 2003, when Judge Derby recognized their offer as the highest and best bid. On December 15, 2003, the court confirmed the Dresnick-Resurgence venture's reorganization plan for the company. PhyAmerica provides emergency physician and allied health professional staffing and management to emergency departments at over 200 hospitals in 28 states. Founded as Coastal Healthcare Group, the company bought Sterling Healthcare Group in 1999 from FPA Medical Management Inc. of Miami, which had purchased Sterling from Dr. Dresnick in 1996. Resurgence Asset Management, LLC is an investment manager with $1.1 billion in capital under management. Resurgence specializes in investing in distressed companies and other special situations, and has been a leader in this field since 1989. Resurgence has a history of successful investments in the Healthcare Industry including physician practice management, ambulatory surgery centers and hospitals. In other industries, Resurgence is currently the majority shareholder of Levitz Home Furnishings, Inc. and Sterling Chemicals, Inc. both purchased out of Chapter 11 proceedings. Dr. Stephen Dresnick has extensive experience in the physician practice management industry. From 1987 through 1998, Dr. Dresnick served as President and Chief Executive Officer of Sterling Healthcare Group, Inc., a physician contract management company he founded in 1987. Sterling Healthcare Group, Inc. was acquired by FPA Medical Management, Inc. of San Diego, California in October of 1996. From 1996 to 1998 Dr. Dresnick continued to serve as President of Sterling and also served as Vice Chairman of the Board of Directors of FPA. In March 1998, Dr. Dresnick became the President and Chief Executive Officer of FPA, and led its successful restructuring including its ultimate sale to Coastal Physicians' Group and Humana Health Plan. Since 1999 Dr. Dresnick has been involved in numerous healthcare related investments. PINNACLE CBO: Fitch Affirms Junk 2nd Priority Sr. Notes Rating -------------------------------------------------------------- Fitch Ratings has downgraded the rating on the following class of notes issued by Pinnacle CBO Ltd., a collateralized bond obligation backed by US corporate and emerging market bonds and loans: --$74,326,461 senior notes to 'BBB' from 'A+'. In conjunction with the downgrade, Fitch has removed the aforementioned notes from Rating Watch Negative and has affirmed the following class of notes: --$72,828,540 second priority senior notes 'C'. Having exited its revolving period in November 2002, Pinnacle is currently de-levering in order of seniority. Additionally, the senior notes have further amortized with diverted interest due to a breaches in the senior par value test and the second priority par value test. However, interest proceeds generated from the performing portfolio alone are currently insufficient to service the senior note coupon. This is a result of an interest rate mismatch between Pinnacle's underlying collateral pool and its issued liabilities, having 32% floating-rate collateral versus 100% fixed-rate notes. Absent an interest rate hedge coupled with a low interest rate environment, Pinnacle continues to be negatively impacted. Consequently, principal is used to pay any unpaid interest due to the senior notes after interest proceeds are exhausted. This practice, using principal to pay interest to the senior notes, further erodes senior note overcollateralization. This erosion of principal accompanied by a decline in the credit quality of the portfolio has prompted the downgrade. As of the last payment date, the second priority notes have deferred interest of approximately $16.83 million. The original note balance of the second priority notes was $56 million. According to its Nov. 21, 2003 trustee report, Pinnacle's senior par value test was at 105.8% versus a 129% trigger, and its second priority par value test was at 60.1% versus a 107% trigger. In addition, its senior interest coverage test was at 99.1% versus a 142% trigger, and its second priority par value test was at 54.1% versus a trigger of 113%. As of the same date, the collateral pool included a par amount of $35.67 million (32.21%) of defaulted assets. In reaching its rating actions, Fitch had conversations with Morgan Stanley Asset Management, the collateral manager, regarding the portfolio. Furthermore, Fitch reviewed the results of its cash flow model runs after running several different default timing and interest rate stress scenarios. Fitch will continue to monitor this transaction. PLAINS ALL AMERICAN: Prices 2.5 Million Common Unit Offering ------------------------------------------------------------ Plains All American Pipeline, L.P. (NYSE: PAA) announced the issuance and sale by the Partnership of 2,500,000 Common Units at a public offering price of $31.94 per unit. UBS Securities LLC is serving as book-running lead manager of the offering. In addition, A.G. Edwards & Sons, Inc., Goldman, Sachs & Co. and Wachovia Capital Markets, LLC are serving as co-managing underwriters. Excluding the underwriters' over-allotment option, net proceeds from the offering, including the general partner's proportionate capital contribution and expenses associated with the offering, will be approximately $77.8 million. The Partnership intends to use the net proceeds from the offering to repay indebtedness under its revolving credit facilities and for general partnership purposes, including potential acquisitions. The underwriters were also granted an option to purchase up to an additional 375,000 Common Units. A copy of the prospectus supplement and related base prospectus relating to this offering may be obtained from UBS Securities LLC at 1285 Avenue of the Americas, New York, NY 10019, Telephone 1- 212-713-8802 or from any of the other underwriters. Plains All American Pipeline, L.P. (S&P, BB+ Senior Unsecured Rating, Positive) is engaged in interstate and intrastate crude oil transportation, terminalling and storage, as well as crude oil and LPG gathering and marketing activities, primarily in Texas, California, Oklahoma and Louisiana and the Canadian Provinces of Alberta and Saskatchewan. The Partnership's common units are traded on the New York Stock Exchange under the symbol "PAA". The Partnership is headquartered in Houston, Texas. PORTOLA PACKAGING: Delays Filing Form 10-K for Fiscal 2003 ---------------------------------------------------------- The management of Portola Packaging, Inc. is in the process of completing its financial statements for the fiscal year ended August 31, 2003. It is anticipated that the statements for the fiscal year ended August 31, 2003 will be filed within the time period permitted by an SEC extension. The additional time is required to incorporate recently compiled data necessary to complete the filing and to correlate the information to be presented in the financial statements with information to be included in additional forms and the pro forma information to be included in Form 8-K/A that will be filed at or about the same time. The Company's net loss for the fiscal year 2003 was approximately $1,731,000 compared to reported net income of $4,573,000 for fiscal year 2002. At August 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $26 million. Portola Packaging is a leading designer, manufacturer and marketer of tamper evident plastic closures used in dairy, fruit juice, bottled water, sports drinks, institutional food products and other non-carbonated beverage products. The Company also produces a wide variety of plastic bottles for use in the dairy, water and juice industries, including various sized high-density bottles, as well as five-gallon polycarbonate water bottles. In addition, the Company designs, manufactures and markets capping equipment for use in high-speed bottling, filling and packaging production lines as well as manufactures and markets customized five-gallon water capping and filling systems. The Company is also engaged in the manufacture and sale of tooling and molds used in the blow molding industry. For more information about Portola Packaging, visit the Company's Web site at http://www.portpack.com/ POTLATCH CORP: Names William L. Driscoll to Board of Directors -------------------------------------------------------------- Potlatch Corporation (NYSE:PCH) announced the election of William L. Driscoll, 41, to Potlatch's board of directors effective January 1, 2004. Mr. Driscoll is Vice President of Strategic Accounts for PACCESS, a $300 million Portland, Oregon, based provider of paper and packaging solutions to paper mills, converters and global brands. Prior to his current position, Mr. Driscoll served as Vice President, Global Packaging Solutions, for PACCESS from June 2001 to December 2002, and Managing Director, Asian Operations, from May 1998 to June 2001. Mr. Driscoll served in a variety of positions with the Weyerhaeuser Company from 1990 to 1998, including Sales and Marketing Manager for a joint venture packaging plant between Weyerhaeuser and SCA in Shanghai, China, and three years as Sales and Marketing Manager for Weyerhaeuser's bleached paperboard business. Prior to Mr. Driscoll's tenure with Weyerhaeuser Company, he served in the United States Marine Corps. Mr. Driscoll holds an MA in Management, with a concentration in Finance and Accounting, from Kellogg School of Management at Northwestern University and a BA in Economics from Bates College. Potlatch Corporation (Fitch, BB+ Senior Unsecured and BB Senior Subordinated Ratings, Negative) is an integrated forest products company with 1.5 million acres of timberland in Idaho, Minnesota and Arkansas. Products include lumber, panels, bleached pulp, paperboard and consumer tissue. QWEST COMMS: Sets Annual Shareholders' Meeting for May 25, 2004 --------------------------------------------------------------- Qwest Communications International Inc. (NYSE: Q) will hold its next annual stockholders' meeting on May 25, 2004, in Denver, Colorado. Qwest Communications International Inc. (NYSE: Q) -- whose December 31, 2002 balance sheet shows a total shareholders' equity deficit of about $1 billion -- is a leading provider of voice, video and data services to more than 25 million customers. The company's 47,000 employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, visit the Qwest Web site at http://www.qwest.com/ RAYOVAC CORP: Exchange Offer for 8.50% Senior Sub. Notes Expires ---------------------------------------------------------------- Rayovac Corporation (NYSE: ROV) announced that its offer to exchange up to $350,000,000 aggregate principal amount of its registered 8-1/2% Senior Subordinated Notes due 2013 for like principal amount of its unregistered 8-1/2% Senior Subordinated Notes due 2013, expired on December 18, 2003. At the time of the expiration, subject to confirmation of tenders sent via the Guaranteed Delivery Procedures, $349,790,000 aggregate principal amount of the old notes had been tendered in the exchange offer. Holders with questions about the exchange offer may contact the exchange agent at: U.S. Bank National Association 60 Livingston Avenue Saint Paul, Minnesota 55107 Telephone: (800) 934-6802 Rayovac Corporation has filed a registration statement on Form S-4/A and a prospectus relating to the exchange offer with the Securities and Exchange Commission (SEC) and has filed other documents with the SEC which contain important information, all of which the noteholders are urged to read. These and other documents relating to the exchange offer may be obtained for free at the SEC's Web site -- http://www.sec.gov-- or from Rayovac Corporation by directing such request in writing to: Rayovac Corporation, 601 Rayovac Drive, Madison, Wisconsin, 53711, Attention: John Daggett. Rayovac Corporation (S&P, B+ Corporate Credit Rating, Stable Outlook) is a global consumer products company with a diverse portfolio of world-class brands, including Rayovac, VARTA and Remington. The Company holds many leading market positions including: the world's leader in hearing aid batteries; the top selling rechargeable battery brand in North America and Europe; and the number one selling brand of men's and women's foil electric razors in North America. Rayovac markets its products in more than 100 countries and trades on the New York Stock Exchange under the ROV symbol. REDBACK NETWORKS: Gets Nod to Hire Ordinary Course Professionals ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave its nod of approval to Redback Networks, Inc.'s application to continue employing the professionals it utilized in the ordinary course of business. The Debtor reports that prior to the Petition Date, it retained the services of certain professionals to provide services in a variety of discrete matters not directly related to this chapter 11 case, including legal, accounting and consulting services. After due determination, the Court grants the Debtor an authority to continue the employment of the Ordinary Course Professionals postpetition without the necessity of filing formal applications for employment and compensation by each professional with the Court. The Debtor believes that it would be unduly burdensome on the Debtor, the Ordinary Course Professionals and this Court to require each Ordinary Course Professional to apply separately for approval of its employment and compensation. The Debtor wants to employ the Ordinary Course Professionals only to the extent necessary in connection with the ongoing operations and to preserve the value of the assets and its estate. The Debtor is likewise authorized to pay against invoices, on a monthly basis and without formal application to the Court by any Ordinary Course Professional, after submission to the an appropriate invoice setting forth in reasonable detail the nature of the services rendered after the Petition Date, provided that such fees does not exceed $254,500 for all Ordinary Course Professionals. Headquartered in San Jose, California, Redback Networks, Inc. is a leading provider of advanced telecommunications networking equipment. The Company filed for chapter 11 protection on November 3, 2003 (Bankr. Del. Case No. 03-13359). Bruce Grohsgal, Esq., Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., and G. Larry Engel, Esq., Jonathan N.P. Gilliland, Esq., at Morgan Lewis & Bockius, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $591,675,000 in total assets and $652,869,000 in total debts. RELIANCE: Wants Plan-Filing Exclusivity Extended to March 30 ------------------------------------------------------------ Reliance Group Holdings and Reliance Financial Services ask U.S. Bankruptcy Court Judge Gonzalez to further extend their exclusive periods to file and solicit acceptances of a plan. Steven R. Gross, Esq., at Debevoise & Plimpton, recounts that the Bankruptcy Court and the Commonwealth Court approved a Settlement and related side letter between the Committees and the Liquidator. The Settlement resolved the Trust Action, the Insurance Policy Action and the Bar Date Objection. The Parties are now able to devote full attention to the formulation of a plan for the Debtors, which will reflect the Settlement. However, Mr. Gross warns that it will take time to implement the Settlement due to its complexity. A major sticking point has been the $433,600,000 in priority claims for prepetition taxes submitted by the Internal Revenue Service and other taxing authorities. The Debtors have a tentative agreement with the IRS for a refund of about $12,600,000 for 1988-1999. The IRS obtained approval of the Settlement and the calculation of a refund, with interest, from the Joint Committee on Taxation. The Debtors are now reviewing the calculation. If the parties agree, the IRS will issue the refund and withdraw its proof of claim. Mr. Gross informs the Court that the Debtors are contesting the merits and priority status of various tax claims asserted by New York State and New York City and are negotiating with the relevant taxing authorities. Since these taxing authorities have not provided a full explanation of their claims, assessing the tax exposure and negotiating a compromise will require more time. The Debtors seek a 90-day extension of the Exclusive Periods. They want the Exclusive Filing Period extended through March 30, 2004, and the Exclusive Solicitation Period through June 1, 2004. Mr. Gross assures the Court that the extension will not prejudice the Debtors' creditors, as the Debtors are continuing to preserve the estate's assets through conservation and minimal administrative expenses. Termination of the Exclusive Periods at this juncture could harm and prejudice the Debtors' estates. In view of the litigious nature of the Debtors' Chapter 11 proceedings, the uncertainty from premature termination of the Exclusive Periods could have an adverse impact on the Debtors' Chapter 11 cases. The Debtors and the Committees are hopeful that a Plan for at least one of the Debtors will be filed early next year. High River Objects On behalf of High River Limited Partnership, Leslie H. Scharf, Esq., at Brown, Rudnick, Berlack & Israels, in New York City, reminds the Court that the Debtors have held exclusivity for almost two and a half years. The Debtors mention that the judicial approval of the Settlement, which was granted in July 2003, enabled them give "full attention" to a Plan. However, that "full attention" still has yielded no Plan. Instead, it has spawned two additional requests to extend the Exclusive Periods and the continued payment of administrative expenses. Based on the interim fee applications, the three sets of professionals are collectively billing about $300,000 per month as the proceedings languish without a Plan. "Simply put, these cases are stalled in their tracks," Mr. Scharf says. Mr. Scharf contends that, like its eight predecessors, the Debtors' latest extension request shows no progress toward a Plan, let alone progress that justifies a further extension of exclusivity. The current application makes the unsupported assertion that resolution of tax claims and the implementation of the Settlement will require "more time." However, it has been more than five months since the Settlement was approved. With these issues behind the Debtors, there is nothing to explain the total lack of progress in formulating a Plan. The Debtors assert, without supporting detail, that the resolution of IRS and New York City tax claims and the "complexity" of the Settlement are holding up a Plan. These conclusory and self-serving statements do not meet their burden of proof to establish "cause" to extend exclusivity again. The IRS's $433,600,000 claim has been resolved through a proposed $12,600,000 refund. The IRS has transmitted a calculation for the refund, which the Debtors purportedly are "reviewing." Mr. Scharf notes that the IRS Settlement is not a new development. The Court approved it on September 4, 2002, about 15 months now. Mr. Scharf asserts that none of the Debtors' excuses comes close to constituting the requisite "cause." It is impossible to understand how a $12,600,000 IRS Refund, when compared to $1,000,000,000 in assets available in the Debtors' estates -- that is, Cash, NOLs and Section 847 tax refunds -- precludes Plan formulation. The Debtors say that the various tax claims are being assessed and analyzed, but offer no hint as to how long this will take, or why a Plan cannot be formulated around the claims. The Court and other parties-in-interest should not have to guess why another extension of exclusivity is necessary. Mr. Scharf maintains that the Debtors are using the Settlement as an excuse to maintain exclusivity. First, the Debtors claimed that a Plan could not be formulated due to the outstanding litigation issues with the Liquidator. Now, the Debtors assert that an unspecified "complexity" is holding up the Plan process. These unsupported and conclusory suggestions of "cause" are insufficient. (Reliance Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) RESOURCE AMERICA: Reports Improved Operating Results for FY 2003 ---------------------------------------------------------------- Resource America, Inc. (NASDAQ:REXI) reported earnings from continuing operations of $1.4 million or $.08 per common share diluted and $9.7 million or $.55 per common share diluted for the fourth quarter and fiscal year ended September 30, 2003, respectively, as compared to $787,000 or $.04 and $8.4 million or $.47 for the fourth quarter and fiscal year ended September 30, 2002, respectively. The Company also reports record revenues for fiscal 2003 of $132.5 million. Included in net income from continuing operations in the fourth quarter and fiscal year ended September 30, 2003 was a charge of $543,000 resulting from the termination of the Company's proposed senior notes offering. Without this charge the Company would have reported net income of $1.7 million from continuing operations or $.10 per common share diluted and net income of $10.1 million from continuing operations or $.58 per common share diluted for the fourth quarter and fiscal year ended September 30, 2003. In connection with the Company's early adoption of Financial Accounting Standards Board's Interpretation 46 "Consolidation of Variable Interest Entities," ("FIN 46"). The Company has, for the first time, consolidated certain entities in its real estate loan business into its financial statements for the fiscal year and quarter ended September 30, 2003. FIN 46, intended to increase the transparency of off-balance sheet transactions and structures, applies to the Company's holding of real estate loans acquired at discount between 1991 and 1998. Since the Company controls certain important indicia relating to these loans, including cash flow and appointment of management, Fin 46 affects the Company's accounting for these holdings. Fin 46's consolidation criteria are based on analysis of risks and rewards, not formalities of ownership, and represent a significant and complex modification of previous accounting principles. The adoption of FIN 46 results in a non cash loss of $13.9 million net of income taxes ($.79 per common shares diluted) from a cumulative effect of a change in accounting principle in the fourth quarter and fiscal year ended September 30, 2003. The adoption of FIN 46 also requires the recording of FIN 46 assets of $300.9 million and liabilities of $186.6 million at September 30, 2003. For the fourth quarter and fiscal year ended September 30, 2003, the Company reported a net loss of $11.3 million and $2.9 million, respectively. Net loss per common share-diluted was $.64 and $.17 for the fourth quarter and fiscal year ended September 30, 2003. EBITDDA (earnings before interest, taxes, depreciation, depletion and amortization) for the fourth quarter and fiscal year ended September 30, 2003 was $8.5 million and $40.0 million, respectively, as compared to $6.9 million and $35.7 million for the fourth quarter and fiscal year ended September 30, 2002, respectively. Resource America Inc. (S&P, B Corporate Credit Rating, Negative) is a proprietary asset management company that uses industry specific expertise to generate and administer investment opportunities for its own account and for outside investors in the energy, real estate and equipment leasing industries. For more information please visit its Web site at http://www.resourceamerica.com/or contact Investor Relations at pschreiber@resourceamerica.com/ At September 30, 2003, the Company managed approximately $2.57 billion of assets in these sectors as follows: Energy assets $ .52 billion Real estate finance assets $ .68 billion Financial services assets $ 1.31 billion Equipment leasing assets $ .06 billion Overall Highlights for the Fourth Quarter and Fiscal Year Ended September 30, 2003 and Recent Developments: -- The Company has called the remaining $26.2 million of its $115.0 million issuance of 12% Senior Notes due 2004 for early redemption. This redemption will occur on or before January 20, 2004. Because of the Company's ability to redeem or repurchase this entire issue without the need for refinancing, the Company terminated its proposed senior notes offering and charged $543,000 to income during the fourth quarter. In addition, during the fiscal year ended September 30, 2003, the Company repurchased 519,950 shares of its common stock at an average price of $8.95 and at a range of $7.70 to $11.75. -- During fiscal 2003, the Company more than doubled assets under management. Managed assets increased from $1.2 billion in 2002 to $2.6 billion in 2003, an increase of 122% or $1.4 billion. The PV 10 value of energy assets under management increased from $332.3 million to $464.9 million, an increase of $132.5 million (40%). -- The PV-10 estimate of Company owned and managed proved energy reserves was $191.4 million at September 30, 2003 as compared to $132.5 million at September 30, 2003, an increase of $59.0 million (45%). -- The Company's energy division closed one Public and two private drilling programs raising a record $66.1 million in partnership subscriptions for the fiscal year ended 2003. For calendar year 2003, fund raising totaled $75.1 million as compared to $51.0 million in calendar year 2002. -- EBITDDA from the Company's energy operations was $10.4 million and $34.0 million for the fourth quarter and fiscal year ended September 30, 2003 as compared to $6.7 million and $26.4 million for the fourth quarter and fiscal year ended September 30, 2002, an increase of $3.7 million (55%) and $7.6 million (29%), respectively. -- The Company's financial services division grew explosively during the year. In fiscal 2003, the Company closed three secured CDO issuances collateralized by a pool of approximately $1.03 billion of diversified trust preferred securities. Subsequent to September 30, 2003, it closed two additional secured CDO issuances collateralized by an additional pool of approximately $700 million of diversified trust preferred securities. The Company is the co-general partner, co- collateral manager and an investor in all issuers. The Company is now preparing its sixth CDO offering. Closing is anticipated in early 2004 with approximately $400 million of additional trust preferred securities. -- The Company continues to realize cash from its real estate finance operations and to expand its real estate asset management business. During fiscal 2003, over $9.6 million in cash was received from the resolution of three real estate loans and in October 2003, more than $36.0 million in cash was received from the resolution of four additional loans. -- In December 2003, the Company entered into an agreement to recapitalize its investment in the National Press Building, a 478,000 square foot, landmark office and retail building located in Washington, DC. The sale is expected to close by March 31, 2004, subject to customary contractual conditions. After expenses, the Company expects to receive proceeds of approximately $17.5 million including a $3.5 million note, and will retain a 25% investment in the building. -- The Company closed its first real estate investment partnership, SR Real Estate Investors, LP, a joint venture with an unaffiliated partner focusing on the acquisition of multi- family properties. At September 30, 2003, the partnership had raised $20.0 million and acquired four properties with an estimated value of $82 million. In addition, the Company launched SR Real Estate Investors II, L.P., which is currently in the offering stage. ROYAL CARIBBEAN: Inks Pact to Develop Cruise Port In New Jersey --------------------------------------------------------------- Royal Caribbean Cruises Ltd. has signed a letter agreement with the Bayonne Local Redevelopment Authority to construct and operate a new cruise port facility at the former Bayonne Military Ocean Terminal in New Jersey. The new facility will serve as a seasonal homeport to two Royal Caribbean International ships, including one of the world's largest cruise ships, the 3,114-passenger Voyager of the Seas, which makes her New York metro area debut in May 2004. "We are extremely pleased to cement this new relationship as we expand our presence in the Northeast next year," said Adam Goldstein, executive vice president, for Royal Caribbean. "We've found an ideal site on New York Harbor, which provides the space to comfortably and efficiently handle one of our largest ships. It is also easily accessible and very convenient for guests coming in from throughout the New York metro area and the extended drive-market region, as well as for those arriving by air. All of this allows us to provide an outstanding embarkation experience for our guests." "We are thrilled that Royal Caribbean discovered what a great place Bayonne is to do business," said Bayonne Mayor Joseph V. Doria, Jr. "This marks another exciting milestone in the redevelopment of The Peninsula." The former Bayonne Military Ocean Terminal, now renamed The Peninsula at Bayonne Harbor, is a 430-acre, man-made peninsula that extends into New York Harbor. Future plans for The Peninsula at Bayonne Harbor call for a vibrant mixed-use waterfront development comprised of residential, light industrial and office space, film studios, a riverwalk and extensive recreational and park areas. The new cruise port will be located at the northeast corner of the peninsula, offering unobstructed views of the Statue of Liberty and the Manhattan skyline. Royal Caribbean will operate out of existing structures for the immediate future. Long-term plans call for construction of a new cruise terminal and supporting facilities. The cruise port will be named in early 2004. The peninsula is located just off the New Jersey Turnpike, approximately 15 minutes from the Newark airport. A nearby Light Rail service connects to both PATH and Amtrak train lines. In addition, Royal Caribbean is looking into offering ferry service from Manhattan to the cruise port. Royal Caribbean will base two ships from the Royal Caribbean International brand at the new port from May through October 2004. Voyager of the Seas offers an alternating schedule of five-night Canada and nine-night Caribbean cruises. Nordic Empress offers alternating six-night and eight-night Bermuda itineraries. The company's Celebrity Cruises brand also will return to the area, with two ships sailing from the New York City Passenger Ship Terminal in Manhattan. Bookings on all ships are open for sale. Royal Caribbean Cruises Ltd. (S&P, BB+ Corporate Credit Rating, Negative) is a global cruise vacation company that operates Royal Caribbean International and Celebrity Cruises, with a combined total of 25 ships in service and three under construction. The company also offers unique land-tour vacations in Alaska, Canada and Europe through its cruise-tour division. Additional information can be found on http://www.royalcaribbean.com/ http://www.celebrity.com/or http://www.rclinvestor.com/ SAFETY-KLEEN: Hoover Material Wants Approval to File Late Claim --------------------------------------------------------------- Hoover Material Handling Group, Inc. seeks U.S. Bankruptcy Court Judge Walsh's permission to assert an administrative and lease rejection claim against the Safety-Kleen Debtors' estates after the deadline for filing proofs of claim. From September 1993 through June 2003, Hoover leased several containers to the Debtors to be used to transport chemical agents for the Debtors and their customers. The term of the Leases is indefinite, terminating only when the Debtors return the containers to Hoover under the terms of the Leases. The rent under the Leases ranges from $1.15 to $1.50 per day per container. The Leases require the return of the containers to Hoover in "certifiably clean condition." The Debtors are responsible to pay cleaning fees at $350 per container for any container not returned in that condition. In the event of loss or destruction of the containers, the Debtors are to pay liquidated damages ranging from $933 to $1,135 per container. The total asset cost of the containers under the Leases is $910,559. Hoover believes that, notwithstanding what appears to be a rejection of the Leases, the Debtors continue to use the containers in the operation of their business. In fact, the Debtors signed new Leases after the Petition Date. The unpaid rent due under the postpetition Leases to date is $319,970, and rent continues to accrue. Hoover contends that the costs of cleaning any returned containers, or liquidated damages for any containers not returned, represents an unliquidated postpetition claim. These amounts accrue interest at the rate of 1-1/2% per month. To date, Hoover complains that the Debtors have not returned any containers, and indeed, refuse -- despite repeated requests -- even to tell where the containers are. The Confirmation Order established the deadline for filing administrative claims several months ago. Hoover admits receiving a copy of the Confirmation Order and the Administrative Claims Bar Date Notice. However, the Notice was not addressed to any individual at Hoover, but was instead sent to a lockbox address used only for the receipt of payments -- not general correspondence. Accordingly, Hoover did not discover the Bar Date information "for some time" after it was received in the lockbox. Additionally, the person who discovered the Notice was "a low- level employee with no experience in legal matters." At about the same time as the Notice arrived, Hoover was in the process of closing the sale of one of its subsidiaries. Hoover's employees "were understandably focused on that transaction at that time." Hoover also complains that the Notice was "drafted in legalese." In Few non-lawyers, and few non-bankruptcy lawyers, would be likely to understand its significance. Even if Hoover had, the process of preparing the administrative claim was not easy. There are at least six Leases involved, hundreds of containers at different rental and return values, and hundreds if not thousands of separate rental payments due. There is also an ongoing issue as to how many of the containers, if any, have been returned and the location of the containers. Even if Hoover had received the Bar Date Notice in a timely fashion, it would have been hard pressed to file its claim by the Bar Date. Every element of Hoover's claim is of a continuing nature and arose, at least in part, after the Plan confirmation. To that extent, Hoover believes that its claim is not subject to the Bar Date. Moreover, Hoover notes that the postpetition Leases are not "unexpired leases" within the meaning of the Bankruptcy Code and cannot be rejected. Therefore, the Plan confirmation did not result in the rejection of the postpetition Leases and the Debtors are responsible for all of their obligations under those Leases. For all of these reasons, Hoover should be permitted to file a late claim for its damages. (Safety-Kleen Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) SALOMON BROS: Fitch Affirms 7 & Lowers 2 Classes from 2 Issues -------------------------------------------------------------- Fitch Ratings has taken rating actions on the following Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through Certificates: Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass- Through Certificates, Series 1997-HUD1 --Class A affirmed at 'AAA'; --Class B-1 affirmed at 'AA'; --Class B-2 affirmed at 'A'; --Class B-3 affirmed at 'BBB'; --Class B-4 downgraded to 'CCC' from 'B'. Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass- Through Certificates, Series 1997-HUD2 --Class A affirmed at 'AAA'; --Class B-1 affirmed at 'AA'; --Class B-2 affirmed at 'A'; --Class B-3 downgraded to 'BB' from 'BBB-'. The rating actions reflect credit enhancement relative to future loss expectations and the affirmations on the above classes reflect credit enhancement consistent with future loss expectations. SDC INT'L: Considering Options, Including Bankruptcy Filing ----------------------------------------------------------- SDC International (OTC:SDCN) announced that its Board of Directors is considering what steps the company might take since its only operating unit, Czech heavy-duty truck manufacturer, TATRA a.s., has been sold to Terex Corporation (NYSE:TEX). SDC management is in discussions with its counsel and its auditors, to complete all accounting and legal matters required to satisfy and become current with respect to its public reporting obligations under the Securities Exchange Act. The company believes it will be necessary to file all quarterly and annual reports before any future activities can be engaged. These filings would take about 90 days to complete. Management is evaluating three different scenarios: to find an operating company with which to merge; to undergo liquidation to its shareholders; or, to undergo a bankruptcy reorganization. In the event of liquidation, it is unlikely that after all costs are considered, there would be any material funds remaining to be disbursed to shareholders. The Board plans to review management's proposals near the end of January 2004. SEL-LEB MARKETING: Extends Loan Agreement Until April 30, 2003 -------------------------------------------------------------- Sel-Leb Marketing, Inc., has signed an extension of its credit facility with its primary lender, Merrill Lynch Business Financial Services Inc. As previously announced, the Company has been in default under its Merrill Lynch loans, and the facility had terminated. With the extension, the facility will expire on April 30, 2004. Merrill Lynch has stated that it will not be renewing the facility beyond that date, and has entered into the extension to allow the company to locate an alternative financing arrangement. The Company is examining and considering all available options. If the Company is unable to obtain adequate alternative financing, and its available cash is insufficient to satisfy the Company's obligations to Merrill Lynch, Merrill Lynch would be entitled to exercise all remedies available to it as a secured lender. Any inability to find adequate financing would have a material adverse effect on the Company, including possibly requiring the Company to significantly curtail or cease its operations. Sel-Leb is a company primarily engaged in the distribution and marketing of consumer products through mass merchandisers, discount chain stores and food, drug and electronic retailers. The Company's business also includes marketing and selling products to be promoted by celebrity spokespersons and sold to mass merchandise retailers. SLATER STEEL: Union Rejects Changes to Collective Agreement ----------------------------------------------------------- Slater Steel Inc., announced that the production and maintenance union membership at Atlas Stainless Steels voted against changes to its collective agreement that would provide for labour savings that are integral to the Company's business plan. Slater had previously stated that its ability to give effect to its business plan was contingent on, among other things, achieving significant labour savings at both Atlas Stainless Steels and Hamilton Specialty Bar. The Company said that, due to the fact that such savings have not been achieved, a hearing before the Ontario Superior Court of Justice has been scheduled for January 9, 2004. It is expected that, in the absence of the required labour savings from both divisions, the Company will be obligated to seek the Court's approval of an orderly liquidation of both the Atlas Stainless Steels and Hamilton Specialty Bar facilities. Approximately 400 hourly and salaried positions at Atlas Stainless Steels and approximately 430 hourly and salaried positions at Hamilton Specialty Bar would be impacted. Slater said that it would work with customers to implement an orderly transition. The Company also stated that it would continue to operate Sorel Forge in the normal course of business as it seeks a going concern sale of that facility. The Company once again stated that it does not expect that shareholders will receive any value through this process. Slater Steel is a mini mill producer of specialty steel products. The Company's mini mills are located in Fort Wayne, Indiana; Lemont, Illinois; Hamilton and Welland, Ontario and Sorel-Tracy, Quebec. The Fort Wayne, Illinois and Welland, Ontario facilities are in the process of being idled. The Lemont, Illinois facility is in the process of being sold. Slater Steel U.S., Inc., filed for chapter 11 protection on June 2, 2003 (Bankr. Del. Case No. 03-11639). Daniel J. DeFranceschi, Esq., and Paul Noble Heath, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $10 million and debts of more than $100 million. SO. CALIFORNIA EDISON: Applauds Ninth Circuit Court Decision ------------------------------------------------------------ Friday, the Ninth Circuit Court of Appeals affirmed the Oct. 5, 2001, judgment by U.S. District Court Judge Ronald S.W. Lew approving the settlement agreement between Southern California Edison and the California Public Utilities Commission that allowed SCE to recover its procurement-related costs during California's energy crisis. The Utility Reform Network had appealed the judgment. This action followed an earlier decision by the Ninth Circuit Court of Appeals upholding the stipulated judgment on federal law grounds and a California Supreme Court decision finding that the settlement was consistent with state law. In response, SCE issued the following statement. "We are pleased the Ninth Circuit has affirmed U. S. District Court Judge Lew's stipulated judgment approving the settlement agreement." An Edison International (NYSE: EIX) (S&P, BB+ Corporate Credit Ratin, Stable) company, Southern California Edison (Fitch, BB Unsecured Debt and B+ Preferred Share Ratings, Positive) is one of the nation's largest electric utilities, serving a population of more than 12 million via 4.5 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California. SO. CALIF. EDISON: Will Redeem All Outstanding 8-3/8% QUIDS ----------------------------------------------------------- Southern California Edison intends to redeem all of its outstanding 8-3/8% Junior Subordinated Deferrable Interest Debentures, Series A, Due 2044 (the "QUIDS"), on Monday, Jan. 26, 2004, at a redemption price of 100% of the principal amount, plus accrued interest to the redemption date. Payment will be made on or after Jan. 26, 2004, upon surrender of the QUIDS at the offices of the trustee, as follows: By U. S. Mail By Overnight or Courier Delivery Bank One Trust Company, NA Bank One/CTO Corporate Trust Operations Suite 1-N (OH1-01840) P. O. Box 710184 1111 Polaris Parkway Columbus, OH 43271-0184 Columbus, OH 43240 The trustee's customer service telephone number is 1-800-346-5153. An Edison International (NYSE: EIX) (S&P, BB+ Corporate Credit Ratin, Stable) company, Southern California Edison (Fitch, BB Unsecured Debt and B+ Preferred Share Ratings, Positive) is one of the nation's largest electric utilities, serving a population of more than 12 million via 4.5 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California. SOLUTIA INC: Receives Court Approval of 'First Day' Motions ----------------------------------------------------------- Solutia Inc. (Pinksheets: SOLUQ) has received interim Court approval of a $500 million debtor-in-possession (DIP) credit facility, $350 million of which will replace Solutia's current senior credit facility. The Company has also received approval of a number of "first day motions" from the U.S. Bankruptcy Court for the Southern District of New York, including authorization to continue paying employee wages, employee business expenses and obligations under the Company's self-insured and third-party insured benefit plans, as well as certain Company-sponsored benefit programs, without interruption. "We are pleased with the prompt approval by the Bankruptcy Court of our 'first day motions,' which, taken together, will enable the Company to operate without interruption and meet normal business obligations," said John C. Hunter, chairman, president and chief executive officer of Solutia. "Moreover, these accomplishments will allow us to remain focused on serving customers, which is our top priority." Hunter said that Solutia's operations worldwide have continued without interruption and customer needs have been met. "Our operations in the U.S. and around the world continue to function normally and we are maintaining our commitment to provide quality goods and services to our customers," he said. Additional information on Solutia's Chapter 11 reorganization is available from the Company's web site, www.Solutia.com , or the toll free Reorganization Information Line at 1-800-298-2303. The case has been assigned to the Honorable Prudence C. Beatty under case number 03-17949 (PCB). Information on the case can also be obtained on the Bankruptcy Court's Web site with Pacer registration: http://www.nysb.uscourts.gov/ Solutia -- http://www.Solutia.com/-- uses world-class skills in applied chemistry to create value-added solutions for customers, whose products improve the lives of consumers every day. Solutia is a world leader in performance films for laminated safety glass and after-market applications; process development and scale-up services for pharmaceutical fine chemicals; specialties such as water treatment chemicals, heat transfer fluids and aviation hydraulic fluid and an integrated family of nylon products including high-performance polymers and fibers. SOLUTIA INC: Gets Go-Signal to Use Lenders' Cash Collateral ----------------------------------------------------------- The Solutia Debtors are parties to several prepetition financing arrangements: Financing Arrangement Amount Maturity --------------------- ------ -------- Financing Agreement dated as of October 8, 2003 $350,000,000 10/08/2006 6.72% Debentures under an Indenture, dated October 1, 1997 $150,000,000 10/15/2037 11.25% Senior Secured Debentures under an Indenture, dated July 9, 2002 $223,000,000 07/05/2009 7.375% Debentures under an Indenture, dated October 1, 1997 $300,000,000 10/15/2027 In addition, the Debtors are guarantors of 6.25% Notes due February 14, 2005, EUR200,000,000 outstanding, issued by Solutia Europe SA/NV under a Fiscal Agency Agreement, dated February 11, 2000. On October 8, 2003, the Debtors entered into a financing agreement for a three-year, $350,000,000 revolving credit facility led by Ableco Finance LLC, a unit of Cerberus Capital Management, L.P., Wells Fargo Foothill, Inc., Congress Financial Corporation, and other syndicate lenders. The proceeds of the Existing Credit Facility were partially used to retire the Debtors' former bank credit facility. Debtors Solutia Systems, CPFilms, Monchem International, Solutia Investments and Monchem are guarantors of the Existing Credit Facility. The Existing Credit Facility is secured by perfected, first priority liens on most of the Debtors' working capital assets and some, but not all, property, plant and equipment assets. The collateral securing the Existing Credit Facility does not include certain assets included among the collateral that had been pledged to the Debtors' former bank lending group. The release of the security interests in certain assets that had once been pledged to the former bank lenders, combined with the release of liens pursuant to an amendment to the credit agreement of Astaris LLC, Debtors' 50/50 joint venture with FMC Corporation, had the effect of releasing collateral securing the 2037 Debentures, the Euro Notes and the 2027 Debentures, and causing such debt instruments to revert from secured debt to unsecured debt. The debt instruments had been unsecured when issued, but, as a result of "equal and ratable" clauses in their indentures, became secured in 2002 when liens on certain assets were granted to the Debtors' former bank lending group and to the Astaris lenders. When the consummation of the Existing Credit Facility resulted in the release of those liens, the originally unsecured debt instruments reverted to their previous unsecured status. In addition, the Lien Release had the effect of requiring the release by the indenture trustee of some, but not all, of the liens securing the 2009 Debentures. As of the Petition Date, revolving amounts outstanding under the Existing Credit Facility totaled $350,000,000, with $150,000,000 available as a subfacility for letters of credit. As security for all obligations under the Existing Credit Facility, the Borrowers granted the Existing Lenders a security interest in substantially all of their significant real property holdings and personal property assets, including the stock of certain subsidiaries, intercompany loans, accounts receivable, domestic inventories, general intangibles and the proceeds thereof, as well as the Debtors' facilities and properties located in Martinsville, Virginia, Springfield, Massachusetts, Trenton, Michigan and Alvin, Texas and other properties located in St. Louis, Missouri, Columbia, Tennessee and Foley, Alabama, provided that the amount of debt secured by liens on the "Four Principal Properties" and the stock and intercompany loans of certain subsidiaries are subject to certain limitations. The Debtors believe that the Existing Lenders have perfected, first priority liens in substantially all of the Debtors' assets, subject to permitted liens under the Existing Credit Facility. The 2009 Debentures were issued under that certain Indenture, dated as of July 9, 2002, among SOI Funding Corp., as issuer, and HSBC Bank, US, as Indenture Trustee. The claims of the holders of the 2009 Debentures are secured by junior liens upon and security interests in all of the Existing Collateral, except the Principal Properties. The 2009 Debentures are thus secured by junior liens in the Cash Collateral as well. By this Motion, the Debtors sought and obtained interim authority to continue using the Lenders' Cash Collateral to finance their day-to-day operations until a debtor-in-possession financing facility can be put in place on a final basis. To adequately protect the Lenders, the Court grants the Existing Lenders and Existing Agents superpriority administrative expense claims and senior replacement liens and grants the 2009 Note Holders and 2009 Note Trustee superpriority administrative expense claims and junior replacement liens, subject to the terms of the Amended Restated and Novated Junior Intercreditor Agreement dated as of October 8, 2003, which remains in full force and effect pursuant to section 510(a) of the Bankruptcy Code. The Debtors' use of the Lenders Cash Collateral will be limited to amounts set forth in a 13-Week Budget for the period from December 19, 2003 through March 5, 2004. A free copy of that 13- Week Budget is available at: http://bankrupt.com/misc/SolutiaBudget.pdf/ (Solutia Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Reports 10-15% Price Increase on Nylon Carpet Fiber ---------------------------------------------------------------- Solutia Inc. (Pinksheets: SOLUQ) has announced a price increase on nylon carpet fiber for the residential carpet market segment. An increase of ten to fifteen percent will become effective for shipments on or after February 1, 2004 on unbranded residential nylon staple and bulk continuous filament. "Due to geopolitical factors impacting oil and the regional factors impacting natural gas in the United States, our costs to produce nylon fiber have soared this year. While we have worked hard to improve productivity and reduce costs, we have not been able to overcome the raw material and energy cost increases we have experienced. Increased prices will help alleviate some, but not all of the burden of these higher costs," said Brad Hill, Vice President of Marketing and Business Management for Solutia's Integrated Nylon Platform. Solutia -- http://www.solutia.com/-- nylon carpet fiber products include Ultron(R) Contract Fibers and Wear-Dated(R) products. STAGE TRANSPORTATION: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Stage Transportation Corp. 3167 Atlantic Avenue Brooklyn, New York 11208 Bankruptcy Case No.: 1-03-26747 Type of Business: Travel Transportation and Driver Services. Chapter 11 Petition Date: December 16, 2003 Court: Eastern District of New York (Brooklyn) Judge: Dennis E. Milton Debtor's Counsel: John E. Oliva, Esq. Platzer, Swergold, Karlin, Levine, Goldberg & Jaslow LLP 1065 Avenue of the Americas New York, NY 10018 Tel: 212-593-3000 Fax: 212-593-0353 Total Assets: $479,570 Total Debts: $1,845,223 Debtor's 4 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Washington Mutual Note $775,000 Board of Education, Trade Unknown City of New York NYC Department of Trade Unknown Transportation NYC Dept. of Health & Mental Trade Unknown Hygiene STOLT OFFSHORE: Proposes Equity Capital Raising Initiatives ----------------------------------------------------------- Stolt Offshore S.A. (Nasdaq: SOSA; Oslo Stock Exchange: STO) announced: * a Private Placement of 34.1m ordinary shares to institutional investors which is fully subscribed; * an additional 11.4m ordinary shares issued to Stolt-Nielsen S.A. in consideration for conversion of $25m of subordinated debt; * a Subsequent Issue of up to 13.0m ordinary shares to shareholders as of December 18, 2003 who were not given the opportunity to participate in this Private Placement; * subscription price for all the issues to be $2.20 per share; * gross proceeds are expected to be $75m from the Private Placement and up to $28.6m from the Subsequent Issue; * book equity to increase by a minimum of $100m and up to a maximum of $128.6m; * the Stolt Offshore Board will be calling an extraordinary general meeting of shareholders to approve the Private Placement and Subsequent Issue; The Stolt Offshore Board has proposed an equity capital raising in this form in order to: * accelerate the financial restructuring of the company; * enhance working capital to satisfy Stolt Offshore's commercial needs; * establish a capital structure from which to reap the full advantages of the strategic and organisational changes under the Blueprint. The closing of the Private Placement will be subject to various conditions being met by January 20, 2004 including, among others: * approval by the Stolt Offshore shareholders; * Stolt Offshore having entered into a new bonding facility in an amount not less than $150 million; * Stolt Offshore having amended certain terms of its existing revolving credit facilities, including extending the maturity date; and * Stolt-Nielsen Board approval for the conversion of subordinated debt. These measures provide a basis for concluding negotiations with Stolt Offshore lenders. The Stolt Offshore shares will be traded exclusive of rights from December 19, 2003. It is anticipated that the Subsequent Issue will take place before the end of the second quarter 2004. The subscription rights for the Subsequent Issue will not be tradeable or transferable. Shareholders of record as of December 18, 2003 who have not had the opportunity to participate in the Private Placement, will have the right to subscribe for 0.6 new shares per existing share held in the Company. Tom Ehret, Stolt Offshore CEO, said, "This fully subscribed equity raising is a vote of confidence in the progress Stolt Offshore has made in recent months, in our strategy and in the commercial opportunity before us. Raising equity in this fashion should allow us to complete our financial restructuring well ahead of schedule, and will brings us swiftly back to our full competitive potential in our market place." Stolt Offshore is a leading offshore contractor to the oil and gas industry, specialising in technologically sophisticated deepwater engineering, flowline and pipeline lay, construction, inspection and maintenance services. The Company operates in Europe, the Middle East, West Africa, Asia Pacific, and the Americas. THAXTON GROUP: Committee Signs-Up HGH Associates as Accountants --------------------------------------------------------------- The Official Committee of Unsecured Creditors of The Thaxton Group, Inc.'s chapter 11 cases, asks the U.S. Bankruptcy Court for the District of Delaware to employ HGH Associates LLP as Accountants. HGH Associates will assist the Committee and its counsel in the investigation of the Debtors' financial affairs and provide other accounting, financial advisory and valuation services. Specifically, HGH Associates will: a) assist and advise the Committee in its analysis of the books and records of the Debtors and the control and disposition of its assets; b) assist the Committee in its investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of Debtors' business, and the desirability of the continuation of such business, and any other matters relevant to the case or to the formulation of a Plan; c) assist and advise the Committee in its analysis of the Debtors' Statements and Schedules; d) assist the Committee in its investigation and analysis of the Debtors' financial operations, related-party transactions and accounts, asset recovery potential, preference and fraudulent conveyance issues, and other relevant issues which affect the maximization of recovery for the creditors of the Debtors pursuant to Sections 542, 550 and 553 of the Bankruptcy Code; e) analysis of financial information prepared by the Debtors or its accountants as requested by the Committee including, an analysis of the Debtors' financial statements as of the date of filing of the petition and assessment on behalf of the Committee of the Debtors' monthly operating reports and of the numerous reorganization issues involved; f) analysis of transactions with the Debtors' financing institutions and affiliates of the Debtors; g) attendance at meetings of the Committee and participation in telephonic conferences with members of the Committee and/or the Committee's counsel; h) review Debtors' proposed Plan and Disclosure Statement; i) assist the Committee or Debtors in the formation or modification of a Plan; j) assist the Committee in the evaluation of a proposed sale, if any, and related procedures under Section 363 of the Bankruptcy Code, including identification of potential buyers; k) provide litigation support and forensic accounting services if requested and required; and l) perform such other accounting, consulting and financial advisory services as may be required and in the interest of creditors as requested by the Committee or counsel to the Committee which are in the best interest of the creditors. The professionals primarily engaged in this retention and their current hourly rates are: Peter A. Hoffman $350 per hour David N. Vannort $275 per hour Dean Sellers $225 per hour Lewis A. Weinfeld $225 per hour Gary Gerhards $200 per hour Other Staff $150 per hour Headquartered in Lancaster, South Carolina, The Thaxton Group, Inc., is a diversified consumer financial services company. The Company filed for chapter 11 protection on October 17, 2003 (Bankr. Del. Case No. 03-13183). Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtor in their restructuring efforts. When the Company filed for protection from it creditors, it listed $206,000,000 in total assets and $242,000,000 in total debts. TITANIUM: S&P Revises Outlook to Stable on Improved Performance --------------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on Titanium Metals Corporation to stable from negative. In addition, Standard & Poor's affirmed all of its ratings on Titanium Metals. The outlook revision reflects the company's improved operating performance because of stabilization in the company's key end market, commercial aerospace, and benefits from its increased market share. "The ratings reflect Denver, Colo.-based Titanium Metals Corp.'s position as an integrated producer of titanium sponge and mill products and soft end market conditions, partially tempered by adequate liquidity and very low debt levels," said Standard & Poor's credit analyst Dominick D'Ascoli. TIMET, with last-12-months' sales of $370 million, primarily sells its titanium products to the highly cyclical and mature aerospace markets. Aerospace industry sales accounted for 67% of TIMET's 2002 revenue, with commercial and military aerospace volumes of 85% and 15% respectively. Commercial aviation has been severely affected by the Sept. 11, 2001, terrorist attacks, a sluggish global economy, the Iraq war, and SARS, which has caused deep losses at many airlines. As a consequence, airplane orders declined over this period. Standard & Poor's believes aircraft build rates have reached trough levels and will linger at these levels in 2004, growing slowly thereafter. The company also slightly benefits from its low exposure to the improving military aerospace sector. * * * In December of last year, Standard & Poor's Ratings Services lowered its preferred stock rating on Titanium Metals Corp. to 'D' from 'C' after the company deferred dividend payments on its preferred securities. Standard & Poor's affirmed its 'B-' corporate credit rating on the company and said the outlook remains negative. Meanwhile, Moody's rates the 6-5/8% Convertible Preferred Securities issued by Timet Capital Trust I at Caa2. TRI-UNION: Obtains Nod to Hire Haynes and Boone as Attorneys ------------------------------------------------------------ Tri-Union Development Corporation, together with Tri-Union Operating Company, sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of Texas to retain Haynes and Boone, LLP as Bankruptcy and Corporate Counsel. Haynes and Boone will: a. advise the Debtors of their rights, powers and duties as debtors-in-possession continuing to operate their businesses and manage their properties and assets; b. advise the Debtors with regard to the operation, maintenance, and development of their oil and gas producing properties; c. advise the Debtors concerning, and assist in, the negotiation and documentation of financing agreements, purchase/sale agreements, and possible debt restructurings; d. review the nature and validity of agreements relating to the Debtors' interests in real and personal property and advise the Debtors with respect thereto; e. review the nature and validity of liens or claims asserted against the Debtors' property and assets and advise the Debtors concerning the enforceability of those liens or claims; f. advise the Debtors with regard to any governmental investigations and any compliance matters; g. advise the Debtors concerning preference, avoidance, fraudulent conveyance, recovery, or other actions that they may have to bring for the benefit of the bankruptcy estates, whether arising under chapter 5 of the Bankruptcy Code or other applicable law; h. prepare on behalf of the Debtors all necessary and appropriate applications, motions, pleadings, draft orders, notices, schedules, and other documents and review all financial and other reports to be filed in these bankruptcy cases; i. advise the Debtors concerning, and prepare responses to applications, motions, complaints, pleadings, notices, and other papers that may be filed and served in these bankruptcy cases; j. perform all other legal services for and on behalf of the Debtors that may be necessary or appropriate in the administration of these bankruptcy cases and operation of the Debtors' businesses; and k. work with and coordinate efforts among other professionals, including special counsels retained by the Debtors, to attempt to preclude any duplication of effort among those professionals and to guide those efforts in the overall framework of the reorganization of the Debtors. The range of current hourly rates charged by Haynes and Boone for attorneys and other professionals is: Partners $300 to $550 per hour Of Counsel and Special $235 to $450 per hour Associates $165 to $360 per hour Legal Assistants $70 to $170 per hour The primary attorneys and other professionals who will provide services to the Debtors and their standard hourly rates are: Charles A. Beckham, Jr. $490 per hour Patrick L. Hughes $450 per hour JoAnn Lippman $310 per hour Eric Terry $340 per hour J. Greg McEldowney $295 per hour Catherine Devorel $175 per hour Kenneth J. Rusinko $170 per hour Headquartered in Houston, Texas, Tri-Union Development Corporation is an independent oil and natural gas company engaged in the acquisition, development, exploration and production of oil and natural gas properties. The Company filed for chapter 11 protection on October 20, 2003 (Bankr. S.D. Tex. Case No. 03- 44908). Charles A Beckham, Jr., Esq., Eric B. Terry, Esq., JoAnn Lippman, Esq., and Patrick Lamont Hughes, Esq., at Haynes & Boone represent the Debtors in their restructuring efforts. As of March 31, 2003, the Debtors listed $117,620,142 in total assets and $167,519,109 in total debts. ULTRASTRIP SYSTEMS: BDO Seidman Resigns as Certifying Accountant ---------------------------------------------------------------- On November 14, 2003, Ultrastrip Systems Inc., was advised by its certifying accountant for the fiscal years ended December 31, 2002 and December 31, 2001, BDO Seidman, LLP, that they were resigning as the certifying accountant. The Company's audit committee is presently preparing to interview other accounting firms to audit its financial statements for the fiscal year ended December 31, 2003. The accountants' reports on the financial statements of Ultrastrip Systems for both of the last two fiscal years contained an explanatory paragraph in which BDO expressed substantial doubt as to Ultrastrip Systems' ability to continue as a going concern. The Company indicates that BDO made the decision to resign and the Company's Audit Committee and Board of Directors did not participate in their decision. During the period of BDO's engagement and through November 14, 2003, BDO issued two management letters to Ultrastrip Systems advising the Company that it noted several matters involving internal control that it considered to be material weaknesses, including the lack of a member in the Company's accounting department with professional certification in accounting experience and background, the need for a staff person who is capable of maintaining internal accounting controls and preparing the Company's financial statements, and the lack of written policies to set forth accounting policies, internal controls and safeguarding of corporate assets. In connection with the issuance of the management letter BDO reviewed the findings with both the Audit Committee of the Board of Directors and with the CEO. The company will authorize BDO to review the findings with the new certifying accountant if so requested by that new accountant. UNITED AIRLINES: Proposes Uniform Claims Estimation Procedures -------------------------------------------------------------- James H.M. Sprayregen, Esq., at Kirkland & Ellis, informs U.S. Bankruptcy Court Judge Wedoff that thousands of claims have been filed against the United Airlines Debtors' estates totaling billions of dollars. The Debtors and their professionals have established a detailed strategy to address the large number of improperly filed and groundless claims. The Debtors are in the midst of their claims analysis, reconciliation and objection process. As a result of the Omnibus Objections to Claims, many duplicative claims, redundant claims, superseded claims and other objectionable claims have been eliminated. However, a significant number of contingent, unliquidated or heavily disputed claims remain. There are about 1,000 claims outstanding alleging billions of dollars in liability based on litigation, including 60 claims filed in excess of $1,000,000 each. There are at least 1,000 more claims that allege liability for trade payables that are unliquidated and heavily disputed. According to Mr. Sprayregen, adjudicating or liquidating these claims will require an overwhelming number of hours of the Court's time to prepare for, conduct and rule on potentially hundreds of claims-objection trials. It will also drain critical resources from the Debtors, their Professionals, the Creditors Committee and the claimholders. This process could delay the Debtors' efforts to emerge from bankruptcy. As a result, Mr. Sprayregen says the Debtors must estimate certain claims pursuant to Section 502(c) of the Bankruptcy Code. Mr. Sprayregen relates that the Debtors and their Professionals have worked diligently to formulate a procedure to estimate the Claims for all purposes, including voting and distribution. The Procedures envision four different tracks, which address the varying levels of legal and factual complexity of the Claims. The tracks provide guidelines ranging from simple appeals with documents and oral argument, to complex matters in which the parties will submit documents and affidavits from up to five witnesses, cross examine opposing witnesses and present oral argument for up to three hours. There are certain claims that are too factually or legally complex, rendering the proposed Estimation Procedures insufficient. In these cases, the Debtors will utilize alternative Claims Estimation Procedures that enhance the ability of the Parties to present their positions. Mr. Sprayregen warns that unless and until certain contingent, unliquidated and heavily disputed claims are adjudicated, the Debtors will be restricted from making meaningful distributions under any Plan. Otherwise the Debtors will have to fully resolve the Claims or establish a reserve, which will surely reduce distributions to claimholders. By this motion, the Debtors ask the Court to approve the Claims Estimation Procedures. The Proposed Procedures Pursuant to the Estimation Procedures, the Debtors will ask the Court to estimate a Proof of Claim. The Clerk will set an Estimation Hearing. Each Claim will be assigned a Track for purposes of preparation and appearance at the Hearing. Track 1 -- Litigation on Appeal Claims suitable for Track 1 have already been decided by a trial court. -- If appellate briefs have been filed, they will be submitted to the Court. The Court will hold a hearing with the Claimants and the Debtors, each given 15 minutes to argue their side. The Court will then estimate the Claim. -- If appellate briefs have not been filed, the Claimant will file the brief as a response to the Debtors' Notice of Intent to Estimate. The Debtors will file their brief as their Reply. The Court will hold a hearing with the Claimants and the Debtors given 15 minutes to argue their side. The Court will then estimate the Claim. Track 2 -- Litigation at Trial (Simple) The Debtors will file a Notice of Intent to Estimate, which will describe their estimate of the Claim's value with supporting reasoning. The Claimant will file a Response, which may include an affidavit from one witness setting forth the basis and evidence and any other documentary evidence the Court should consider in estimating the Claim. The Debtors and the Creditors Committee will respond. The Response may include an affidavit from one witness setting forth the basis and evidence and any other documentary evidence the Court should consider in estimating the Claim. If the Claimant files a Response, the Court will hold a hearing where each side has 15 minutes to argue their side. The Court will then decide the claim. Track 3 -- Litigation at Trial (Moderate) The Debtors will file a Notice of Intent to Estimate, which will describe their estimate of the Claim's value and supporting reasoning. The Claimant will file a Response, which may include an affidavit from two witnesses setting forth the basis and evidence and any other documentary evidence the Court should consider in estimating the Claim. The witnesses will attend the Estimation Hearing. The Claimant will not be able to elicit direct testimony from the witnesses. Rather, the affidavit will serve as their testimony. The Debtors will cross-examine the witnesses. The Debtors and the Claimants may request that the other party produce documents relevant to the Claim. The Debtors may take the deposition upon oral examination of each witness -- to last not longer than three hours -- whose affidavit was proffered in support of the Response. The Debtors and the Creditors Committee will respond to the Claimants, which may include affidavits from two witnesses. The witnesses will attend the Estimation Hearing. The Debtors will not be able to elicit direct testimony from the witnesses. Rather, the affidavit will serve as their testimony. The Claimants will cross-examine the witnesses at the hearing. The Debtors and the Claimants may request that the other party produce documents relevant to the Claim. The Claimants may take the deposition upon oral examination of each witness -- to last not longer than three hours -- whose affidavit was proffered in support of the Response. If the Claimant files a Response, the Court will hold a hearing where each side will have 90 minutes to present their case, inclusive of cross-examination. The Court will then estimate the Claim. Track 4 -- Litigation at Trial (Complex) The Debtors will file a Notice of Intent to Estimate, which will describe their estimate of the Claim's value and supporting reasoning. The Claimant will file a response, which may include an affidavit from five witnesses setting forth the basis and evidence and any other documentary evidence the Court should consider in estimating the Claim. The witnesses will attend the Estimation Hearing. The Claimant will not be able to elicit direct testimony from the witnesses. Rather, the affidavit will serve as their testimony. The Debtors will cross-examine the witnesses at the hearing. The Debtors and the Claimant may request that the other party produce documents relevant to the Claim. The Debtors may take the deposition upon oral examination of each witness -- to last not longer than three hours -- whose affidavit was proffered in support of the Response. After the Claimant submits its Response, the Debtors and the Claimant may both request: (a) documents relevant to the Claim; (b) responses to no more than five interrogatories including discrete subparts; and (c) responses to no more than 15 requests for admission within four days of service of the interrogatories. The Court will hold a hearing where each Party will have three hours to present their case, inclusive of the time cross- examining their opponent's witnesses and making arguments to the Court. The Court will then estimate the Claim. Creditors' Committee Balks The Official Committee of Unsecured Creditors has interposed a formal objection arguing against the estimation procedures and urging Judge Wedoff to decline approving the protcol. (United Airlines Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) VERESTAR INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Verestar, Inc. 3040 Williams Drive Suite 100 Fairfax, Virginia 22031 Bankruptcy Case No.: 03-18077 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Verestar International, Inc. 03-18079 Verestar Networks, Inc. 03-18081 Type of Business: The Debtor is a provider of satellite and terrestrial-based network communication services. See http://www.verestar.com/for more information on the Debtors. Chapter 11 Petition Date: December 22, 2003 Court: Southern District of New York (Manhattan) Judge: Allan L. Gropper Debtor's Counsel: Matthew Allen Feldman, Esq. Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, NY 10019-6099 Tel: 212-728-8000 Fax: 212-728-8111 Estimated Assets: more than $100 Million Estimated Debts: more than $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Intelsat Services Trade Debt $5,089,701 Corporation 3400 International Drive, N.W. Washington D.C. 20008 PanAmSat Corporation Trade Debt $4,256,889 20 Westport Road Wilton, Connecticut 06897 Loral Skynet Trade Debt $3,199,990 500 Hills Drive Bedminister, New Jersey 07921 Universal Service Governmental Fee $1,269,668 Administrative Company 2000 L Street, N.W., Suite 200 Washington, D.C. 20036 MCI Trade Debt $935,048 2400 North Glenville Drive Richardson, Texas 75082 BT North America, Inc. Trade Debt $856,344 Broadcast Services 2025 M Street, N.W. Suite 450 Washington, D.C. 20036 SES Americom Trade Debt $790,343 Four Research Way Princeton, New Jersey 08540 iDirect Technologies, Inc. Trade Debt $512,548 10803 Parkridge Boulevard Reston, Virginia 20191 Verizon Federal Network Trade Debt $511,329 Systems 1300 North 17th Street, Suite 1200 Arlington, Virginia 22209 Internap Trade Debt $390,552 8180 Greensboro Drive, Suite 300 McLean, Virginia 22102 Wiltel Communications LLC Trade Debt $387,841 111 East First Street Tulsa, Oklahoma 74103 UUNet Trade Debt $377,950 2400 North Glenville Drive Richardson, Texas 75082 Satellite Mexicanos, Trade Debt $244,785 S.A. DE C.V TracStar Systems Trade Debt $221,360 New Skies Trade Debt $198,549 Orbit CT & T, Inc. Trade Debt $196,957 Telephone Systems Trade Debt $191,920 International, Inc. Cable & Wireless USA, Inc. Trade Debt $166,874 Level 3 Communications LLC Trade Debt $138,554 Verizon Services Trade Debt $126,663 Organization, Inc. W.R. GRACE: Sealed Air Inks New $350MM Revolving Credit Facility --------------------------------------------------------------- Sealed Air Corporation (NYSE:SEE) has completed a new $350 million senior unsecured multi-currency revolving credit facility due 2006. The facility is available for general corporate purposes including payment of cash amounts required to be paid pursuant to the settlement agreement with the Committee of Asbestos Personal Injury Claimants and the Committee of Asbestos Property Damage Claimants in the W. R. Grace bankruptcy proceeding. Sealed Air did not draw funds under the facility at closing. Sealed Air also announced that it has retired a portion of its outstanding long-term debt through repurchases in the open market. The Company repurchased approximately $122.5 million face amount of its 8.75% senior notes due July 1, 2008 and $50 million face amount of its 6.95% senior notes due May 15, 2009. Sealed Air made these repurchases, funded with available cash, at a premium to the face amount of the notes, which will result in a net after-tax charge to the Company's earnings of approximately $0.22 per share in the fourth quarter of 2003. The annual interest expense on the face amount of the repurchased debt was approximately $14 million. Sealed Air is a leading global manufacturer of a wide range of food, protective and specialty packaging materials and systems, including such widely recognized brands as Bubble Wrap(R) cushioning, Jiffy(R) protective mailers and Cryovac(R) food packaging products. For more information about Sealed Air Corporation, please visit the Company's Web site at http://www.sealedair.com/ WEIRTON STEEL: Amends Cleveland-Cliffs Pellet Supply Agreement -------------------------------------------------------------- Weirton Steel Corporation has determined to continue its blast furnace operations. The Debtor's Chapter 11 Plan of Reorganization contemplates ongoing blast furnace operations and increased sales volumes. Thus, the Debtor believes that it is proper and necessary at this time to enter into supply agreements for the two major ingredients in its blast furnace operations, Coke and Pellets. The Emergency Steel Guaranty Loan Board financing application filed by the Debtor on June 30, 2003 includes financial projections that require significant annual cost savings of approximately $200,000,000 compared to the cost structure of current operations. The financial model incorporated into the ESGLB application projects total annual supply contract savings of approximately $21,000,000 per year. The financing application was conditionally approved by the ESLGB on November 13, 2003. Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, relates that as a condition precedent to closing on the ESGLB financing, the Debtor is required to demonstrate that it has achieved the aggregate of the projected cost savings. The Debtor's financial model incorporated into the ESGLB application contemplates total annual supply contract savings of $17,000,000 per year, including approximately $7,000,000 per year in savings from one or more pellet supply agreements. To satisfy the cost savings contemplated in its bankruptcy emergence financial model, the Debtor negotiated a revised pellet supply agreement with Cleveland Cliffs containing terms and conditions sufficient to satisfy the emergence model cost savings. By this motion, the Debtor asks the Court to approve an amended pellet supply agreement negotiated with The Cleveland-Cliffs Iron Company. The Debtor's Blast Furnace Operations The purpose of a blast furnace is to chemically reduce and physically convert iron oxides into liquid iron called "hot metal". A blast furnace is a large steel stack lined with refractory brick, where iron ore, Coke and limestone are combined at the top and preheated air is blown into the bottom. The combined iron ore, Coke and limestone take several hours to descend to the bottom of the blast furnace where they become liquid slag and liquid iron. Most iron oxides come into the blast furnace in the form of raw ore, Pellets or sinter. Raw ore is removed from the earth and sized into pieces. The raw ore generally has iron content ranges of 50% to 70%, and can be charged directly into a blast furnace without further processing. Iron ore containing lower iron content must be processed to increase iron content. Pellets are produced from lower iron content ore by crushing the ore into a very fine granular form, with waste product then removed, and the remaining iron-rich granules rolled into balls and fired in a furnace to produce strong marble-sized pellets containing approximately 60% to 65% iron content. When placed in a blast furnace, iron ore pellets are heated, which causes a series of purifying chemical reactions. As a result of these chemical reactions, the Pellets begin to soften and melt, and finally trickle as liquid iron through the Coke to the bottom of the blast furnace. Coke is produced from a mixture of coals. Coal is crushed and ground into a granular form and then charged into an oven. As the oven is heated, the coal is cooked so that most of the volatile matter, like oil and tar, are removed. The cooked coal, or Coke, is removed from the oven following almost one day of reaction time, and then cooled and screened into pieces. Compared to raw coal, Coke is very strong, with a high energy value, providing permeability, for the heat and gases which are required to reduce and melt Pellets in the blast furnace. Coke, ignited by the hot blast that is blown into the bottom of the furnace, immediately reacts to create heat. The ensuing series of chemical reactions that occur by subjecting Coke to the hot blast in the furnace begins with the creation of carbon monoxide and ends with the transformation of Pellets into liquid iron. The Debtor's Current Pellet Agreement The Debtor's operations do not internally provide a source of Coke or Pellets for operations as the Debtor does not own, lease or hold an interest in coal mines, ore mines, pellet making facilities, or coke batteries. Consequently, the Debtor is required to obtain 100% of its Coke and Pellet requirements from third party suppliers. On an annualized basis, assuming production by the Debtor of 2.9 gross tons of raw steel, the Debtor is typically required to purchase approximately 1,200,000 tons of Coke and approximately 3,500,000 tons of Pellets. Mr. Freedlander states that the Debtor is a party to a Pellet Sale and Purchase Agreement with Cleveland-Cliffs originally dated as of September 30, 1991, as amended from time to time. There are eight formal amendments to the Cliffs Pellet Supply Agreement. Recently, a memorandum of understanding effective as of April 1, 2003 served to further modify the Cliffs Pellet Supply Agreement. The Cliffs Pellet Supply Agreement requires Cleveland-Cliffs to supply to the Debtor and the Debtor to purchase from Cleveland- Cliffs 100% of its annual Pellet requirements through the date of payment and satisfaction of the Debtor's obligations to MABCO Steam Company LLC, but in no event later than 2015. Pricing for the Pellets under the Cliffs Pellet Supply Agreement is tiered based on the location from which the Pellets are shipped, and a combination of mine operating costs and world pellet pricing. FW Holdings, Inc. and MABCO Steam Company On October 26, 2001, the Debtor sold its Foster Wheeler Steam Generating Facility and related assets to its wholly owned subsidiary, FW Holdings, Inc. In turn, FW Holdings sold the FW Facility to MABCO Steam Company LLC, which then leased the FW Facility back to FW Holdings. Cleveland-Cliffs is one of at least 50 business entities, which are members of MABCO and are among the Debtor's largest vendors. Pursuant to the lease agreement between MABCO, as lessor, and FW Holdings, as lessee, rent is payable quarterly for $1,242,000 less certain offsets allowed to MABCO under the Sale/Leaseback Transaction. The Debtor is a guarantor of FW Holdings' obligations under the lease. The term of the lease expires on December 31, 2012, at which time FW Holdings or its designee is required to purchase the FW Facility for $10. FW Holdings also has the option to purchase the FW Facility at any time prior to December 12, 2012, for the outstanding rent due for the remainder of the term of the lease, subject to certain adjustments. In addition, the Debtor and FW Holdings are parties to a supply agreement, whereby the Debtor agrees to purchase from FW Holdings high and low pressure steam and electricity generated by the FW Facility in exchange for a fee in an amount equal to the rent payments due and payable by FW Holdings to MABCO under the lease. The Amended Pellet Supply Agreement The salient terms of the Amended Pellet Supply Agreement between the Debtor and Cleveland-Cliffs are: (a) Cleveland-Cliffs will supply 100% of the Debtor's Pellet requirements through December 31, 2003, and the greater of 67% of the Debtor's Pellet requirements or 2,100,000 net tons per year, for calendar years 2004 and 2005. The agreement will renew automatically beyond 2005, subject to a nine-month advance written cancellation notice by either party. Cleveland-Cliffs will have the option for each year after 2005, to require the Debtor to purchase 100% of its Pellet requirements from Cleveland- Cliffs, provided that Cleveland-Cliffs gives notice of the election on or before September 1 of the immediately preceding year; (b) Cleveland-Cliffs will sell the Pellets FOB Weirton's plant and the Debtor will make payments by wire transfer for each calendar week on the second Wednesday following shipment. Specific pricing details are to remain confidential, but will be submitted to the Bankruptcy Court under seal and provided to the professionals of Fleet, J.P. Morgan, the Official Committee of Unsecured Creditors, and the Ad Hoc Noteholders Committee; (c) On Plan confirmation, and on the first anniversary thereof, Cleveland-Cliffs will supply the Debtor $5,000,000 and $4,100,000, of Pellets at the existing contract price, with payments amortized in equal payments over five years; (d) The credit participation provided by Cleveland-Cliffs to the Debtor will be secured by a second priority security interest in the assets of FW Holdings. This arrangement will have no other effect on the MABCO Transaction, and the Debtor will continue to guarantee the obligations of FW Holdings to MABCO; and (e) Cleveland-Cliffs will waive any claims that it may otherwise assert under the Cliffs Pellet Supply Agreement for the period of the Petition Date through the date on which the Amended Pellet Supply Agreement is terminated. The Debtor will waive all claims against Cleveland-Cliffs under or related to the Cliffs Pellet Supply Agreement or otherwise which exist or may be asserted as of approval of the Amended Pellet Supply Agreement, however, the Debtor will retain the right to assume or reject the Cliffs Pellet Supply Agreement. Mr. Freedlander notes that the Amended Supply Agreement with Cleveland Cliffs: (a) assures the Debtor 67% of its pellet requirements for calendar years 2004 and 2005; (b) fixes pellet prices at approximately $7,000,000 per year less than the Debtor currently pays; and (c) assuming that the Debtor emerges from Chapter 11 protection prior to December 31, 2003, will provide $9,100,000 in additional post-confirmation credit. The Debtor asserts that the Amended Pellet Supply Agreement with Cleveland-Cliffs is supported by sound business justification, considering the price, quantity, and credit terms. (Weirton Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) WILLIAMS: Gets Order for Pipeline Restoration in Washington State ----------------------------------------------------------------- A unit of Williams (NYSE: WMB) has received an order from the U.S. Department of Transportation Office of Pipeline Safety regarding restoration of transportation service on a segment of a natural gas pipeline in western Washington. The Office of Pipeline Safety has issued an amendment to a previous Corrective Action Order stipulating the actions Northwest Pipeline must take to restore the pipeline to full service. Williams' Northwest Pipeline received a Corrective Action Order on May 2 following a pipeline rupture near Lake Tapps, Wash. That order directed Northwest to lower pressure by 20 percent and perform a comprehensive integrity assessment on a 268-mile segment of 26-inch pipeline in western Washington. The pipeline experienced a second rupture in the same segment on Dec. 13 near Toledo, Wash. There were no injuries or property damage associated with the incident. Northwest took action on Wednesday to idle the pipeline segment between Sumas and Washougal, Wash., until the integrity on that section could be assured. Since the May 1 incident, Northwest has commenced an extensive inspection program to ensure the safety and reliability of its 26- inch pipeline in western Washington and continues to work closely with the Office of Pipeline Safety and the Washington Utilities and Transportation Commission. "Issues specific to this pipeline segment -- including environmental factors, such as soil acidity and moisture, operating conditions, age and the type of coating -- can play a role in creating these type of problems. We are bringing all the necessary resources to bear to ensure the integrity of our facilities and keep our commitment to operate a safe and reliable pipeline," said Doug Whisenant, senior vice president of Williams' gas pipeline business. "The order received [Fri]day is consistent with the inspection program already in progress and gives us a timetable for completing the necessary work." The decision to idle the 26-inch pipeline has had no immediate impact on the company's ability to meet current market demand, primarily because Northwest has a parallel 30-inch pipeline in the same pipeline corridor. In addition, the recent completion of the Evergreen expansion project, typical wintertime flows and the current sourcing of gas supplies between Sumas and the Rockies mitigate the potential impact on service during this winter heating season. With the 26-inch pipeline idled, capacity at the pipeline's northernmost receipt point at Sumas is estimated to be approximately 950,000 dekatherms per day. "As we take steps to comply with the requirement to develop a plan for replacement of this idled pipeline segment, we are evaluating alternative ways to replace that pipeline's transportation capacity. Our preliminary analysis shows that we could replace the 376,000 dekatherms of daily capacity associated with the idled 26-inch Sumas to Washougal segment with about 100 miles of new 36- inch pipeline," Whisenant said. "Williams has and expects to have adequate financial resources to comply with the order and replace the capacity, if required. Costs associated with the capacity replacement are expected to be capitalized and recoverable through future rates in a way that preserves Northwest's ability to be competitive in its market," he said. Williams' Northwest Pipeline, based in Salt Lake City, Utah operates a 4,000-mile natural gas transmission pipeline. The pipeline provides natural gas service to the states of Washington, Oregon, Idaho, Wyoming, Utah and Colorado. Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com/ As reported in Troubled Company Reporter's October 16, 2003 edition, Fitch Ratings affirmed The Williams Companies, Inc.'s outstanding senior unsecured notes and debentures at 'B+'. Also affirmed are outstanding credit ratings for WMB's wholly-owned subsidiaries Northwest Pipeline Corp., Transcontinental Gas Pipe Line Corp., and Williams Production RMT Co. The Rating Outlook for each entity has been revised to Positive from Stable. Details of the securities affected are listed below. The following is a summary of outstanding ratings affected by the action: The Williams Companies, Inc. -- Senior unsecured notes and debentures 'B+'; -- Feline PACs 'B+'; -- Senior secured debt 'BB'; -- Junior subordinated convertible debentures. 'B-'. Williams Production RMT Co. -- Senior secured term loan B 'BB+'. Northwest Pipeline Corp. -- Senior unsecured notes and debentures 'BB'. Transcontinental Gas Pipe Line Corp. -- Senior unsecured notes and debentures 'BB'. WORLD AIRWAYS: Shareholders Approve Proposed Debenture Exchange --------------------------------------------------------------- World Airways, Inc. (Nasdaq: WLDA) announced that at the special meeting reconvened Friday last week, its stockholders approved: * The proposed issuance of $25,545,000 principal amount of six-year 8% Convertible Senior Subordinated Debentures in exchange for $22,545,000 principal amount of the Company's currently outstanding 8% Convertible Senior Subordinated Debentures Due 2004 and $3 million in cash; and * The proposed issuance to the Air Transportation Stabilization Board of warrants to purchase shares of common stock in connection with a federal guarantee of $27 million to support a $30 million term loan facility. The special meeting, originally scheduled for December 15, 2003, had been adjourned until today because of lack of a quorum. Hollis Harris, chairman and CEO of World Airways, said, "More than 90% of the voting shareholders supported these proposals, giving us the green light to proceed with our plans to restructure our debentures and secure approval for the federal loan guarantee from the Air Transportation Stabilization Board. Our stockholders' action today removes one of the major contingencies to the closing of the federally guaranteed loan and represents very positive news for our Company." The Company received conditional approval from the Air Transportation Stabilization Board on April 23, 2003, for a federal loan guarantee of $27 million, representing 90% of a new $30 million term loan facility. The Company entered into agreements dated November 10, 2003, with three institutional holders of existing debentures providing for the issuance of $25,545,000 principal amount of new debentures in exchange for $22,545,000 principal amount of existing debentures and $3 million in cash. Upon the closing of the ATSB guaranteed loan, the Company will call the entire principal amount of existing debentures. Based on the redemption provisions of the indenture governing the existing debentures, the redemption price of the existing debentures will be 101.143% of their principal amount. The ATSB approval remains subject to a number of additional conditions, including the satisfaction of all the terms and conditions proposed in the Company's application. The Company's current goal is to complete the debenture restructuring, receive final ATSB approval, and close the ATSB guaranteed loan by the end of this year. Utilizing a well-maintained fleet of international range, widebody aircraft, World Airways 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 meets the needs of businesses and governments around the globe. For more information, visit the Company's Web site at http://www.worldairways.com/ At September 30, 2003, the company's balance sheet is upside down by $13.7 million. WORLDCOM INC: Secures Approval for Global Exchange Settlement ------------------------------------------------------------- WorldCom Technologies, Inc., predecessor-in-interest to MCI WorldCom Communications, Inc., entered into a Telecommunications Network Services Agreement with Global Exchange Services, Inc., formerly known as GE Information Services, Inc. on May 1, 1998. Under the TNS Agreement, Global outsourced its telecommunications network to MCI and MCI or its affiliates agreed to provide ongoing communications and network management and transition- related services to Global. After May 1, 1998, Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, relates that Global began taking deductions from MCI's invoices for services provided under the TNS Agreement. These deductions were taken for, among other things, amounts paid by Global on behalf of MCI to third-party service providers and credits to which Global claimed it was entitled under the TNS Agreement. MCI disputed whether certain deductions taken through December 31, 2001 were proper under the TNS Agreement and whether, if proper, Global had appropriate documentation for the deductions as required by the TNS Agreement. Moreover, MCI asserted that Global had taken deductions on invoices for amounts paid by Global on MCI's behalf to third-party service providers that had not been included in MCI's invoices. Global disputed the rates and charges invoiced by MCI, including, among other things, rates and charges related to Termination Assistance Services under the TNS Agreement. In connection with these disputes, MCI and Global entered into an Audit Agreement, dated February 5, 2002 pursuant to which PricewaterhouseCoopers was engaged to perform an audit of certain of these disputed amounts for services rendered under the TNS Agreement. Upon PwC's completion of the agreed audit, PwC issued a report finding, among other things, that Global owed MCI an "immediate payment" equal to $13,226,000. Additionally, the PwC report indicated that MCI should adjust its invoices to include certain charges from third-party service providers, and that Global would be permitted to take deductions for amounts paid to third-party service providers that had not yet been taken. Nevertheless, MCI and Global continue to have ongoing disputes regarding their rights and obligations under the TNS Agreement, which were not addressed by PwC in its audit report. Moreover, Global and MCI have repeatedly extended certain deadlines to perform obligations and exercise rights under the Audit Agreement. Global filed Claim Nos. 29532 and 33014 against MCI for $9,170,000 and $274,828. The Global Claims allege that MCI overbilled Global for prepetition services provided pursuant to the TNS Agreement. Prior to September 27, 2002, Global was a wholly owned subsidiary of General Electric Company. As of September 27, 2002, GE effectively sold 90% of its equity interest in Global to Global Acquisition Company, an affiliate of Francisco Partners. After the sale, Global continued its operations as the same corporate entity doing business under a new name. In connection with the sale of GE's equity interest, GE agreed to indemnify Global Acquisition for any liabilities related to the Global dispute with MCI. Nevertheless, the TNS Agreement continued in full force and effect with respect to MCI and Global. GE and MCI also have certain disputes that are separate and distinct from those involving Global. One separate and distinct dispute is wherein GE challenged certain charges that MCI billed to it under that certain Master Wide Area Network Services Agreement pursuant to which MCI provides communications services to GE and certain of its affiliates. Accordingly, GE filed Claim No. 31732 against MCI for $4,830,000, alleging improper prepetition charges under the MSA or its predecessor agreements, as the case may be. To resolve their disputes, the parties entered into a settlement agreement, which provides that: (a) GE will pay MCI $4,000,000 in full satisfaction of all obligations that Global, GE, and any of their predecessors, successors, affiliates or assigns have or may in the future have to MCI under the TNS Agreement in connection with services provided to Global prior to September 30, 2002; (b) Global deductions for payments made to third-party service providers will be discontinued, except in certain limited instances; (c) Effective as of January 1, 2003, the monthly Managed Network Fee as defined in the TNS Agreement, payable by Global to MCI under the TNS Agreement is fixed at a new rate. The Settlement Agreement provides for reductions in the event that Global ceases to use certain MCI services; (d) MCI will continue to provide Global with Termination Assistance Services under the terms and at the rates provided in the Settlement Agreement. MCI will have no further obligation to apply Productivity Credits for the period after December 31, 2002. Other credits, however, relative to charges that Global claimed should have been invoiced to GE rather than Global, or charges which Global claimed should have been waived by MCI, are provided for in the Settlement Agreement; (e) Any equipment for which Global may demand transfer under the TNS Agreement will be transferred to Global after payment of an amount equal to the net book value of the equipment. The equipment will be transferred to Global "as is" and without warranties, whether express or implied; (f) MCI releases GE and Global from all liabilities, claims and obligations arising out of or related to the TNS Agreement, the MSA or its predecessor agreement, for services rendered by MCI to Global on or before December 31, 2002. This release includes certain amounts determined to be owed to MCI as a result of the audit conducted by PwC. MCI does not release other claims or rights to payment under the TNS Agreement, the MSA or its predecessor agreement for services provided to GE or any GE affiliate other than Global; (g) Global releases MCI from all liabilities, claims and obligations arising out of or related to the TNS Agreement, the MSA or its predecessor agreement, for services rendered by MCI to Global on or before December 31, 2002. In addition, Global agrees to withdraw any and all claims or proofs of claim it has asserted or could assert against MCI in its Chapter 11 case; (h) Although GE and MCI will resolve certain specifically identified disputes between them apart from the Settlement Agreement, the Settlement Agreement provides that GE releases MCI from all liabilities, claims and obligations arising out of or related to the TNS Agreement, the MSA or its predecessor agreement, for services rendered by MCI to GE on or before December 31, 2002. Further, upon resolving any remaining disputes between GE and MCI, GE agrees to withdraw or amend, as appropriate, the proofs of claim that it has filed against MCI in MCI's Chapter 11 case; (i) MCI releases GE from all liabilities, claims and obligations arising out of or related to the TNS Agreement, the MSA or its predecessor agreement, for services rendered by MCI to GE on or before December 31, 2002. This release does not apply to those disputes that are expressly reserved for resolution outside the context of the Settlement Agreement; and (j) The Settlement Agreement reaffirms and provides for continuing business transactions between GE and MCI. In connection with these provisions, the Settlement Agreement provides that MCI will seek approval from the Bankruptcy Court to assume the TNS Agreement under Section 365 of the Bankruptcy Code, subject to certain amendments. GE and MCI expect to resolve certain specifically identified billing disputes in the ordinary course of business, rather than through the settlement being contemplated. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure and Section 365 of the Bankruptcy Code, MCI asks the Court to: (i) approve the Settlement Agreement in its entirety; and (ii) authorize it to assume the TNS Agreement as amended by the terms of the Settlement Agreement. * * * Accordingly, the Court approves MCI's settlement agreement with Global Exchange Services Inc. Judge Gonzalez further declares that Global's Claim Nos. 29532 and 33014, and GE's Claim No. 31732, are expunged without the necessity of further action by the parties. (Worldcom Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Alliance Imaging AIQ (39) 683 43 Akamai Technologies AKAM (168) 230 60 Alaris Medical AMI (32) 586 173 Amazon.com AMZN (1,353) 1,990 550 Aphton Corp APHT (11) 16 (5) Arbitron Inc. ARB (100) 156 (2) Alliance Resource ARLP (46) 288 (16) Atari Inc. ATAR (97) 232 (92) Actuant Corp ATU (7) 361 31 Avon Products AVP (91) 3,327 73 Saul Centers Inc. BFS (13) 389 N.A. Blount International BLT (369) 428 91 Cincinnati Bell CBB (2,104) 1,467 (327) Cubist Pharmaceuticals CBST (7) 221 131 Choice Hotels CHH (114) 314 (37) Columbia Laboratories COB (8) 13 5 Caraco Pharm Labs CPD (20) 20 (2) Centennial Comm CYCL (579) 1,447 (98) Echostar Comm DISH (1,206) 6,210 1,674 D&B Corp DNB (19) 1,528 (104) Education Lending Group EDLG (26) 1,481 N.A. Graftech International GTI (351) 859 108 Hexcel Corp HXL (127) 708 (531) Integrated Alarm IASG (11) 46 (8) Imax Corporation IMAX (104) 243 31 Imclone Systems IMCL (186) 484 139 Inkine Pharm INKP (6) 14 5 Gartner Inc. IT (29) 827 1 Journal Register JRC (4) 702 (20) KCS Energy KCS (30) 268 (16) Kos Pharmaceuticals KOSP (75) 69 (55) Lodgenet Entertainment LNET (101) 298 (5) Lucent Technologies LU (3,371) 15,747 2,818 Level 3 Comm Inc. LVLT (240) 8,963 581 Memberworks Inc. MBRS (21) 281 (100) Moody's Corp. MCO (327) 631 (190) McDermott International MDR (417) 1,278 154 McMoRan Exploration MMR (31) 72 5 Maguire Properti MPG (159) 622 N.A. Microstrategy MSTR (34) 80 (7) Nuvelo Inc. NUVO (4) 27 21 Northwest Airlines NWAC (1,483) 13,289 (762) ON Semiconductor ONNN (525) 1,243 195 Petco Animal PETC (11) 555 113 Primus Telecomm PRTL (168) 724 65 Per-Se Tech Inc. PSTI (39) 209 32 Qwest Communications Q (2,830) 29,345 (475) Quality Distribution QLTY (126) 387 19 Rite Aid Corp RAD (93) 6,133 1,676 Ribapharm Inc RNA (363) 199 92 Sepracor Inc SEPR (392) 727 413 Sigmatel Inc. SGTL (4) 18 (1) St. John Knits Int'l SJKI (76) 236 86 I-Stat Corporation STAT 0 64 33 Syntroleum Corp. SYNM (1) 47 14 Town and Country Trust TCT (2) 504 N.A. Tenneco Automotive TEN (75) 2,504 (50) Thermadyne Holdings THMD (665) 297 139 TiVo Inc. TIVO (25) 82 1 Triton PCS Holdings TPC (60) 1,618 173 Tessera Technologies TSRA (74) 24 20 UnitedGlobalCom UCOMA (3,040) 5,931 (6,287) United Defense I UDI (30) 1,454 (27) Ultimate Software ULTI (7) 31 (10) UST Inc. UST (47) 2,765 829 Valassis Comm. VCI (33) 386 80 Valence Tech VLNC (17) 36 4 Ventas Inc. VTR (54) 895 N.A. Warnaco Group WRNC (1,856) 948 471 Western Wireless WWCA (464) 2,399 (120) Xoma Ltd. XOMA (11) 72 30 ********* 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. 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