T R O U B L E D C O M P A N Y R E P O R T E R Friday, January 9, 2004, Vol. 8, No. 6 Headlines ADEPT TECHNOLOGY: Will Host Q2 2004 Conference Call on Jan. 21 AGCO CORP: S&P Rates New Senior Secured Bank Loan at BB+ AKAMAI: 1.0% Senior Noteholders Exercise Option to Purchase AMES: Court Approves Stipulation Settling Guaranty's Admin Claim ANC RENTAL: Fried Franks Wants Role as Counsel Clarified ASTROPOWER INC: Lays Off 45 Employees, Cutting Workforce by 10% ATLANTIC COAST: Reports 5.7% Increase in December 2003 Traffic AURORA FOODS: US Trustee Appoints Official Creditors' Committee BANC OF AMERICA: Fitch Rates 3 Note Classes at Low-B Level BARCODE SYSTEMS: Case Summary & 20 Largest Unsecured Creditors BAYOU STEEL: Creditors' Ballots are Due on Jan. 29 BUDGET GROUP: Disclosure Statement Hearing to Convene on Monday CASCADES INC: Acquires Scierie P.H. Lemay Ltd. Sawmill in Quebec CHESAPEAKE ENERGY: Plans Public Offering of 20 Million Shares COEUR D'ALENE MINES: Caps Price of $160MM Convertible Sr. Notes COMDISCO: Sells Participation Interest in Certain Lease Payments COMMUNICATIONS & POWER: S&P Assigns B+ Corporate Credit Rating CONSOL ENERGY: Will Sell Stake in Australian Mine to JV Partner CUMULUS MEDIA: Inks Pact to Acquire 7 Stations in Blacksburg, Va. DESTINY RESOURCE: Arranges New Operating & Term Debt Facilities DII INDUSTRIES: First Creditors' Meeting Slated for January 22 DIRECT INSITE: CEO James Cannavino's Engagement Extended to 2007 DRESSER INC: Unit Plans to Restructure Burlington Operations DT INDUSTRIES: S&P Drops Rating to D After Missed $2.7MM Payment ENRON: Pushing for Approval of Foster Wheeler Settlement Pact EXIDE: Wants More Time to Move Pending Actions to Delaware Court FEDERAL-MOGUL: Gets Nod to Expand Ernst & Young Engagement FLEMING COMPANIES: Hires Watson Wyatt for Actuarial Services FRIEDMAN'S INC: December Quarter Sales Reflect Slight Growth GARDEN HILL, INC: Case Summary & 6 Largest Unsecured Creditors GOLDEN NORTHWEST: Brings-In Stoel Rives as Bankruptcy Attorneys GREAT LAKES: S&P Affirms Low-B Ratings Following Acquisition HAWK CORP: Implementing Strategic Repositioning Action Plan HAWK: Christopher DiSantis Will Lead Precision Components Group INAMED CORP: Will Publish Financial Guidance for 2004 on Monday INDIANAPOLIS POWER: Fitch Affirms BB+ Preferred Share Rating INTEGRATED HEALTH: Seeks Court Clearance for Reliance Settlement IRON MOUNTAIN: Proposes GBP125M Sr. Subordinated Notes Offering IT GROUP: Details Plan Administrator's Duties Under Plan ITS NETWORKS: Special Shareholders' Meeting Slated for Feb. 27 KAISER ALUMINUM: Court Fixes Parcels 2A & 2B Bidding Procedures LNR PROPERTY: Fourth Quarter 2003 Results Reflect Steep Decline LTV STEEL: Court Allows Payment of $2.4MM Admin Severance Claims MAGELLAN HEALTH: Clarifies and Corrects Certain Info re Workout MCCLENDON TRUCKING: Case Summary & 20 Largest Unsecured Creditors MCLEMORE DEV'T: Pursuing Litigation Filed by "Duped" Home Buyer MCMORAN EXPLORATION: Provides Gulf of Mexico Activity Updates MIRANT CORP: Brazos Has Until March 31 to File Proof of Claim NAT'L CENTURY: Board Finds Disclosure Statement Info. Inadequate NAVIGATOR GAS: Court Clears Dickinson Cruickshank's Engagement NDCHEALTH: Reports Drop in Q2 Results after Restructuring Charge NORTHWEST AIRLINES: Initiates Mesaba Re-Accommodation Policy NOVA CHEMICALS: S&P Affirms BB+ L-T Corporate Credit Rating OXFORD INDUSTRIES: Second Quarter 2004 Results Show Improvement PAPER WAREHOUSE: Court Grants OK for Grant Thornton's Engagement PARMALAT: CONSOB Wants Company's 2002 Annual Report Annulled PEMSTAR: Lenders Relax Financial Covenants Under Credit Facility PERKINELMER: Will Publish Fourth Quarter 2003 Results on Jan. 28 PHYAMERICA: Executes Definitive Asset Purchase Agreements PHILIP SERVICES: Successfully Emerges from Chapter 11 Process PILLOWTEX CORP: Wants Approval of Account Settlement Procedures PRIMUS TELECOMMS: Proposes $200 Million Senior Debt Offering REDBACK NETWORKS: Brings-In Wilson Sonsini as Corporate Counsel RIGHT ON CASUALS: Case Summary & 21 Largest Unsecured Creditors SEABROOK SEAFOOD: Voluntary Chapter 11 Case Summary SHILOH INDUSTRIES: Fourth-Quarter Results Enter Positive Zone SK GLOBAL: Wants to Pay $1.2MM Severance Benefits to Employees SLATER STEEL: Winding Down Atlas Stainless & Hamilton Operations SLATER STEEL: Steelworkers to Demonstrate at Court Appearance SOLUTIA INC: Court to Convene Final DIP Financing Hearing Today SPECTRUM SIGNAL: Provides Strategic Alternatives Review Results STARWOOD HOTELS: S&P Places Low-B Ratings on Watch Negative THAXTON GROUP: Wants to Hire Nelson Mullins as Special Counsel TRI-UNION: Signs-Up Liskow & Lewis to Represent Two Employees TV AZTECA: Special Committee Taps Munger Tolles as Legal Counsel UNIVERSAL GUARDIAN: Default on Notes Raises Going Concern Doubt US AIRWAYS: Paladini Named Vice President of Customer Service US ONCOLOGY: Will Present at JP Morgan Conference on Tuesday USI HLDGS.: Closes Acquisition of Diversified Insurance Services VENTAS INC: Offering 2% Discount on DRIP Purchases WABASH NATIONAL: Reports Conversion of Series B 6% Preferreds WARNACO: Non-Executive Chairman Stuart D. Buchalter Dies at 66 WEIRTON STEEL: MABCO Steam Asks Court to Allow $33 Million Claim WESTPOINT STEVENS: Court Clears 1185 Sixth Lease Settlement Pact WILD RIVER DUCTS: Case Summary & 17 Largest Unsecured Creditors WORLD HEART CORP: OTCBB Stock Trading Symbol Reverts to "WHTOF" WORLDCOM INC: GSA Removes Company from Excluded Parties List WORLDCOM INC: MCI Reinstated as Federal Government Contractor W.R. GRACE: Amends ART Loan and DIP Financing Agreement Terms * Neal Gerber Expands Health Law Group with Two New Attorneys * T. Zander Joins Sheppard Mullin as Partner at San Diego Office * BOOK REVIEW: Competitive Strategy for Health Care Organizations: Techniques for Strategic Action ********* ADEPT TECHNOLOGY: Will Host Q2 2004 Conference Call on Jan. 21 -------------------------------------------------------------- Adept Technology, Inc. (OTCBB:ADTK.OB), a leading designer and manufacturer of intelligent automation products, will hold its quarterly conference call to discuss fourth quarter results and the company's outlook on January 21, 2004, at 5:00 p.m. Eastern Time (2 p.m. Pacific Time). The call will be hosted by Robert Bucher, chairman and chief executive officer; and Michael Overby, vice president and chief financial officer. The live webcast and replay may be accessed for one month through the investor relations section of the Company's Web site at http://www.adept.com http://www.streetevents.comor http://www.fulldisclosure.com A replay of the call will also be available for five business days following the call's conclusion by dialing 800.428.6051 and entering PIN# 325023. Adept Technology -- whose September 30, 2003 balance sheet shows a total shareholders' equity deficit of about $13 million -- designs, manufactures and markets factory automation components and systems for the fiber optic, telecommunications, semiconductor, automotive, food and durable goods industries throughout the world. Adept's robots, controllers, and software products are used for small parts assembly, material handling and ultra precision process applications. Our intelligent automation product lines include industrial robots, configurable linear modules, flexible feeders, semiconductor process components, nanopositioners, machine controllers for robot mechanisms and other flexible automation equipment, machine vision, systems and software, application software and simulation software. Founded in 1983, Adept is America's largest manufacturer of industrial robots. More information is available at http://www.adept.com/ AGCO CORP: S&P Rates New Senior Secured Bank Loan at BB+ -------------------------------------------------------- Standard & Poor's Rating Services assigned its 'BB+' senior secured bank loan rating, the same level as the corporate credit rating, to AGCO Corp.'s $750 million senior secured bank credit facility and placed the new rating on CreditWatch with negative implications. At the same time, Standard & Poor's assigned its recovery rating of '2' to the bank credit facility, indicating substantial recovery of principal (80%-100%) in the event of a default. The 'BBB-' rating on the previous bank credit facility was withdrawn. At the same time, Standard & Poor's said that the 'BB+' corporate credit and all other ratings on AGCO will remain on CreditWatch with negative implications, where they were placed on Sept. 10, 2003. "The corporate credit rating will be affirmed following completion of the company's plan to issue at least $250 million of common equity, with proceeds to be used to fund a portion of the just- completed ?600 million acquisition of unrated Finland-based Valtra Corp.," said Standard & Poor's credit analyst Daniel DiSenso. AGCO, the world's third-largest manufacturer of agricultural equipment, based in Duluth, Ga., has a satisfactory competitive position. It has about $1.5 billion of outstanding debt. The combination with Valtra, the market leader for tractors in the Nordic region of Europe and solidly positioned in Latin America, will strengthen AGCO's business profile. AGCO will benefit from Valtra's technology, its efficient manufacturing operations, and the cross-selling opportunities provided by the Valtra distribution network. The bank credit facility consists of a $450 million term facility maturing in July 2009 and a $300 million revolving credit facility maturing in January 2009. The collateral package includes a perfected first-priority security interest in substantially all of the tangible and intangible assets of AGCO's material direct and indirect U.S., Canadian, Finnish, and U.K. subsidiaries; and a pledge of outstanding capital stock, with certain exceptions, of the company's material direct and indirect subsidiaries. The bank facility is guaranteed by each of AGCO's present and future material direct and indirect domestic subsidiaries. Guarantees of foreign subsidiaries are confined to their individual borrowings. The revolving credit facility has a borrowing base consisting of an 85% advance on the book value of accounts receivables and a 60% advance on the book value of inventories as reflected on AGCO's consolidated balance sheet. The term loan is subject to 1% annual amortization with the remaining principal balance due at maturity. AKAMAI: 1.0% Senior Noteholders Exercise Option to Purchase ----------------------------------------------------------- Akamai Technologies, Inc. (NASDAQ: AKAM) announced that the initial purchaser of its $175 million in principal amount of 1.0% Senior Convertible Notes due December 15, 2033 has exercised its option to purchase an additional $25 million aggregate principal amount of the convertible notes. The Company expects the closing of the sale of the additional convertible notes to occur on January 9, 2004. The convertible notes were offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended, and outside the United States pursuant to Regulation S of the Securities Act. The convertible notes and the common stock issuable upon conversion of the notes have not been registered under the Securities Act, or any state securities laws. Unless so registered, the convertible notes and the common stock issuable upon conversion of the notes may not be offered or sold in the United States or any state or to any U.S. person except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. Akamai(R) - The Business Internet, is the world's largest on demand distributed computing platform for conducting profitable e- business. Overcoming the inherent limitations of the Internet, Akamai's services ensure a high-performing, scalable, and secure environment for organizations to cost effectively extend and control their e-business infrastructure. Headquartered in Cambridge, Massachusetts, Akamai's industry-leading services, matched with world-class customer care, are used by hundreds of today's most successful enterprises and government agencies around the globe. For more information, visit http://www.akamai.com/ Akamai Technologies' September 30, 2003 balance sheet shows a total shareholders' equity deficit of about $182 million. AMES: Court Approves Stipulation Settling Guaranty's Admin Claim ---------------------------------------------------------------- Ames Transportation Systems, Inc. and American Finance Group, Inc. -- doing business as Guaranty Capital Corp. -- were parties to a Master Lease Agreement dated April 25, 2000. Under the Agreement, ATS leased more than 700 trailers and related equipment pursuant to four rental schedules. By a stipulation between the Ames Department Stores Debtors and Guaranty Capital, which was approved by the Court on November 4, 2002, the Master Lease and the Rental Schedules were deemed rejected. Pursuant to the Rejection Order: * Guaranty Capital was granted a $348,369 allowed administrative expense claim, under Section 503(b) of the Bankruptcy Code, for unpaid rent due for September and October 2002 under the Master Lease; * The automatic stay was modified to permit Guaranty Capital to retrieve the Trailers and sell them; and * All rights and defenses of the parties were reserved with respect to any missing or damaged Trailers; After the Debtors and Guaranty Capital's efforts, all but 16 of the Trailers were recovered and later sold. Guaranty Capital filed: (i) a general unsecured proof of claim against the Debtors on March 22, 2002 for $12,756,186 asserting liability on Ame's part pursuant to a guaranty of the Master Lease and the Rental Schedules; and (ii) a general unsecured proof of claim against ATS on December 30, 2002 for $10,779,505 for damages under the Master Lease and the Rental Schedules; On July 22, 2003, Guaranty Capital sought: (i) allowance of an additional administrative expense claim amounting to $235,456 for the alleged value of the Missing Trailers; and (ii) payment of such claim and the Allowed Administrative Claim. The Debtors and Guaranty Capital have agreed to resolve the issues raised, and to fix and finally allow all the claims held by Guaranty Capital on account of the Master Lease, the Rental Schedules, the Missing Trailers and damage to the recovered trailers. In a Court-approved stipulation, the parties agree that: (1) Allowed Claims (a) Guaranty Capital will have an additional allowed administrative expense claim against the Debtors pursuant to Section 503(b)(1)(A) of the Bankruptcy Code for $145,000 on account of 11 Missing Trailers and damage to the recovered trailers, and the Allowed Administrative Claim will be deemed amended and increased in amount to $493,369 to incorporate the additional allowed administrative expense claim. (b) The Ames Unsecured Claim relating to the Master Lease and the Rental Schedules will be reduced and finally allowed as a general unsecured claim for $2,346,237, determined as: Rejection Damage and TRAC Claims -------------------------------- Stipulated return value of 704 trailers $2,989,061 for lessor's account at and of lease, based on 25% of original cost Less actual resale proceeds received (7,276,500) by lessor on disposition of 693 recovered trailers at an average price of $10,500 per trailer Credit toward rejection damages ($4,287,438) Rejection Damages ----------------- Lease Payments: 44 months from 11/01/2002 to 6/30/2006 11 months at $174,415/month $1,951,563 33 months at $213,174/month 7,034,735 --------- Total Lease Payments 8,986,298 Present value of future lease payments 6,633,676 As of 09/01/2001 discounted monthly at 10.0% per annum Net Unsecured Claim 2,346,237 (c) The Amended Allowed Administrative Claim and the Allowed Unsecured Claim will not be subject to disallowance, reductions or offsets on account of any claims by the Debtors or their estates, including any defenses or objections under Section 502(d) of the Bankruptcy Code. (2) Disallowed Claim The ATS Unsecured Claim will be disallowed in its entirety and will be expunged from the official claims register maintained in the Debtors' cases. (3) Missing Trailers In the event any of the Missing Trailers are located, Guaranty Capital will be entitled to retain them and any value recovered. (4) Survival of Rejection Order The Rejection Order, as may be modified by stipulation, remains in full force and effect. (5) Payment of the Allowed Claims Any payment or other treatment on account of the Amended Allowed Administrative Claim and the allowed Unsecured Claim will be subject to further order or orders of the Bankruptcy Court. Headquartered in Rocky Hill, Connecticut, Ames Department Stores, Inc., is a regional discount retailer that, through its subsidiaries, currently operates 452 stores in nineteen states and the District of Columbia. The Company filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANC RENTAL: Fried Franks Wants Role as Counsel Clarified -------------------------------------------------------- Fried Frank Harris Shriver & Jacobson asks the Court to clarify whether it may continue in its capacity as counsel to the ANC Rental Debtors' estates pursuant to Sections 105(a) and 327(a) of the Bankruptcy Code, in light of a preference action the Debtors filed against it. Fried Frank attorney, Janice McAvoy, recounts that, without any prior notice, the Debtors commenced the Preference Action to recover certain attorneys' fees paid during the 90-day period before the Petition Date. The filing of the Preference Action creates a clear conflict of interest between the Debtors' estate and Fried Frank, which jeopardizes the firm's ability to continue as the Debtors' counsel. Fried Frank believes that the Preference Action is baseless, as even a cursory review of the Debtors' files would show that the supposed preference payments were made in the ordinary course and were not made for or on account of an antecedent debt. The payment, therefore, cannot constitute a preference. Before the Petition Date, Fried Frank rendered legal advice to the Debtors with respect to restructuring alternatives. Among other motions filed on the Petition Date, Fried Frank filed an employment application pursuant to Sections 327 and 328 on November 13, 2001. In the Application, Fried Frank clarified that it represented the Debtors before the Petition Date, but that during the one-year period prepetition, it received from the Debtors payments amounting to $4,027,010. Fried Frank also informed the United States Trustee of the payments. In addition, the information is found in the Declaration of Matthew Gluck filed in conjunction with the Application. The Court approved the Application on January 9, 2002. According to Ms. McAvoy, the Court determined that Fried Frank did not hold or represent an interest adverse to the Debtors' estates. However, as a result of the Preference Action, Fried Frank now holds an interest adverse to the Debtors' estates. Among other things, the Preference Action alleges that $2,185,099 in preferential and fraudulent transfers were made to Fried Frank. The Debtors demand that Fried Frank pay the Avoidable Amounts, plus interest, to the Debtors' estate and that pursuant to Section 502(d), any claims by Fried Frank against the Debtors must be disallowed until it pays the Avoidable Amounts. While the Sale of the Debtors' businesses is complete, Fried Frank continues to represent the Debtors' estate. Among other things, Fried Frank continues to assist the Debtors in transferring assets to Cerberus Capital Management and Vanguard, and be involved with the approval of the Debtors' disclosure statement and the confirmation of the Liquidating Plan. Fried Frank believes that ending its representation of the Debtors' estate at this time will cause significant hardship on the Debtors' estates as they wind down. Debtors Still Need Fried Frank The Debtors want to continue the services of Fried Frank Harris Shriver & Jacobson as they near the end of their bankruptcy cases. In this regard, the Debtors seek the Court's authority to employ the firm as special counsel to perform certain post- closing services, nunc pro tunc to November 10, 2003. Despite the existence of the Preference Action, John Chapman, the Debtors' President, tells Judge Walrath that the Debtors need Fried Frank as special counsel to represent them in connection with certain post-closing matters. Because of the firm's previous experience representing the Debtors and their estates, the professionals and paraprofessionals at Fried Frank have a wealth of both historical and current institutional knowledge with respect to, inter alia, the Debtors' assets, contractual relationships, tax, corporate, environmental and intellectual property issues, which cannot be matched by any other law firm. As is common with most major sale transactions, there are significant post-closing matters that remain to be completed in order to satisfy all of the terms and conditions of the Asset Purchase Agreement with the Purchasers. As special counsel, the Debtors want Fried Frank to: (1) file appropriate documentation with the SEC to deregister the ANC common stock; (2) analyze and resolve various tax issues that arise in connection with the Debtors' plan of reorganization and the sale to the Purchasers, including, the dual consolidated loss issues, issues with regard to a tax indemnification agreement and side letter with AutoNation with respect to dual consolidated losses, cancellation of indebtedness issues in the United States and Germany, IRS audit issues, and various state tax issues; (3) finalize ongoing negotiations with various parties in connection with lease rejections, with Fifth Third Bank in connection with the return of a $482,000 security deposit, the completion and documentation of a final agreement in connection with assuming and assigning numerous leases for a substantial number of buses, address ongoing issues with respect to numerous contracts to be rejected or assumed, and ensure the completion of the assumption and assignment of hundreds of contracts for which assumption and assignment notices were already sent to counterparties; (4) analyze and determine various matters with respect to their wind down and liquidation as well as their non-debtor foreign subsidiaries; (5) finalize the transfer of intellectual property to the Purchasers in accordance with the terms of the Asset Purchase Agreement; (6) timely satisfy all the terms and conditions of their Transition Services Agreement with the Purchasers; (7) analyze and interpret various matters that arise under the Asset Purchase Agreement, as amended; and (8) advise on various environmental issues that may remain obligations of their estates. According to Mr. Chapman, Fried Frank was directly involved with and had primary responsibility for all of these matters and many more, has had discussions and negotiations with counterparties to hundreds of contracts, worked closely with the Debtors' special counsel on environmental issues, conducted negotiations with all of the secured lenders concerning the use of cash collateral and other financing issues, has a working knowledge of the Asset Purchase Agreement, the Transition Services Agreement, and all of the post-closing matters to be completed by the Debtors, as well as the status and resolution of numerous issues that remain to be addressed by the Debtors to complete the wind down of the estates. Fried Frank currently has three partners and six associates as well as paraprofessionals working on the Debtors' Chapter 11 cases. The Debtors acknowledge that, due to the Preference Action, Fried Frank has an actual conflict of interest with their estates with respect to the Preference Action. However, the Preference Action is being transferred to the Creditors Committee. The Debtors believe that the transfer removes any conflict. Headquartered in Fort Lauderdale, Florida, ANC Rental Corporation, is the world's third-largest publicly traded car rental company. The Company filed for chapter 11 protection on November 13, 2001 (Bankr. Del. Case No. 01-11200). Brad Eric Scheler, Esq., and Matthew Gluck, Esq., at Fried, Frank, Harris, Shriver & Jacobson represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $6,497,541,000 in assets and $5,953,612,000 in liabilities. (ANC Rental Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASTROPOWER INC: Lays Off 45 Employees, Cutting Workforce by 10% --------------------------------------------------------------- AstroPower, Inc. (OTC: APWR.PK) reduced its workforce by approximately 10% through a layoff of 45 employees. This reduction in force is a direct result of the company's continued efforts to control costs and improve manufacturing efficiency. AstroPower continues to manufacture solar electric power products to meet the needs of its customers. Interim Chief Executive Officer Carl H. Young III and Interim Chief Financial Officer Eric I. Glassman have been assessing AstroPower's operating expenses, revenues, and strategic direction since their organization, Bridge Associates, LLC, was engaged to stabilize the company's financial position and manage operations in July. This reduction in force is part of an ongoing effort to bring AstroPower's costs in line with its revenues and follows a similar measure in August 2003. The differentiating factor between the two reductions in force is the fact that this layoff encompasses manufacturing positions as well as salaried, professional positions. "This reduction in force is a necessary step in controlling AstroPower's costs. Even more so, however, it is a natural result of the enhanced technologies, redeployed manufacturing assets, and improved processes implemented throughout module operations over the last six months," Mr. Young said. "These measures have enabled AstroPower to greatly improve manufacturing efficiencies, streamline operations, and better compete within a highly competitive global marketplace." In the last six months, AstroPower has also refined its module product line - now offering customers a core range of high-quality modules that generate solar electric power for a variety of applications. Automation implemented during this period is enabling AstroPower to produce these modules more efficiently and cost effectively. "Production capacity has not and will not be impacted by these job cuts," Mr. Young added. "AstroPower continues to produce solar electric power products as it navigates through its restructuring. The company remains committed to serving its customers despite these challenges." "Furthermore, this careful and staged reduction in AstroPower's workforce, although unfortunate, was necessary to the restructuring and to avoid a need for more urgent measures later in the restructuring." Headquartered in Newark, Delaware, AstroPower manufactures solar electric power products, and is a leading provider of solar electric power systems for the mainstream residential market. AstroPower develops, manufactures, markets and sells a range of solar electric power generation products, including solar cells, modules and panels, as well as its SunChoice(TM) pre-packaged systems for the global marketplace. Solar electric power systems provide a clean, renewable source of electricity in both off-grid and on-grid applications. For more information, please visit http://www.astropower.com/ * * * As previously reported, AstroPower, Inc., engaged SSG Capital Advisors, L.P., a nationally recognized specialty investment banking firm focusing on special situation mergers and acquisitions, capital raising, financial recapitalizations, and restructurings, as its investment bankers. On July 25, 2003, AstroPower engaged Bridge Associates LLC, a nationally recognized restructuring, turnaround management and expanded capabilities firm, to take charge of the day-to-day operations of the company and to stabilize its financial position. Bridge Associates' Carl H. Young III is serving as AstroPower's interim Chief Executive Officer and Eric I. Glassman, CPA, is serving as the company's interim Chief Financial Officer. After evaluating the totality of AstroPower's overhead expenses, the new interim management focused on reducing those expenses throughout the company's operations and, on August 6, 2003, reduced the workforce by approximately 10% through a layoff of approximately 55 employees. The company is continuing to take steps to "rightsize" the organization so as to better align it with its current operations. The company continues to operate and has orders for more product than it can produce due to cash constraints. The company continues to have negative cash flow due largely to lower sales than normal resulting from its inability to purchase sufficient raw materials as well as expenses related to the company's current financial difficulties. The company has not yet filed its Annual Report on Form 10-K for 2002 or its Quarterly Reports on Form 10-Q for the first and second quarters of 2003 due to the lack of audited financial statements for Fiscal Year Ending 2002. The company is unable to predict when the audit will be completed. After evaluating the company's cash needs, interim management and AstroPower's Board of Directors have decided to retain SSG Capital Advisors to help manage the process of raising cash by, but not limited to, an infusion of new equity, a strategic alliance or alliances, or a sale of part or all of the company's business. ATLANTIC COAST: Reports 5.7% Increase in December 2003 Traffic -------------------------------------------------------------- Atlantic Coast Airlines (Nasdaq: ACAI) reported preliminary consolidated passenger traffic results for December 2003. Systemwide, the company generated 277.4 million revenue passenger miles (RPMs), a 5.7% increase over the same month last year, while available seat miles (ASMs) rose to 406.7 million, a 7.4% increase. Load factor was 68.2% versus 69.3 percent in December 2002. For the month, 688,826 passengers were carried, a 1.2% decrease over the same month last year. For the twelve months ended December 31, 2003, compared to the same period in 2002, RPMs grew to 3.3 billion, an increase of 17.4%, while ASMs were 4.6 billion, a 6.8% increase. The company carried 8,415,824 passengers during the twelve months ended December 31, 2003, compared to 7,160,480 in 2002, an increase of 17.5% on a year-over-year basis. ACA (S&P, B- Corporate Credit Rating, Developing) currently operates as United Express and Delta Connection in the Eastern and Midwestern United States as well as Canada. On July 28, 2003, ACA announced plans to establish a new, independent low-fare airline to be based at Washington Dulles International Airport -- to be called Independence Air. The company has a fleet of 145 aircraft - - including a total of 120 regional jets -- and offers over 840 daily departures, serving 84 destinations. ACA employs approximately 4,600 aviation professionals. The common stock of parent company Atlantic Coast Airlines Holdings, Inc. is traded on the Nasdaq National Market under the symbol ACAI. For more information about ACA, visit our website at http://www.atlanticcoast.com/ For more information about Independence Air, visit its "preview" site at http://www.flyi.com/ AURORA FOODS: US Trustee Appoints Official Creditors' Committee --------------------------------------------------------------- Roberta A. DeAngelis, U.S. Trustee for Region 3, appoints these five unsecured claimants to the Official Committee of Unsecured Creditors, in Aurora Foods's Chapter 11 cases: (1) Oz Management, LLC Attn: Daniel S. Och 9 West 57th Street, 39th Floor, New York, NY 10019 Phone: (212) 790-0165 Fax: (212) 790-0065 (2) Lehman Brothers, Inc. Attn: Frank Turner, 745 7th Avenue, New York, NY 10019 Phone: (212) 526-1463 Fax: (646) 758-1986 (3) OCM Opportunities Fund III, L.P. c/o Oaktree Capital Management Attn: Kenneth Liang 333 S. Grand Avenue, 28th Floor, Los Angeles, CA 90071 Phone: (213) 830-6422 Fax: (213) 830-8522 (4) Wilmington Trust Company, as Indenture Trustee Attn: Sandra R. Ortiz 1100 North Market Street, Wilmington, DE 19890-1615 Phone: (302) 636-6056 Fax: (302) 636-4143 (5) Pequot Special Opportunities Fund, L.P. c/o Pequot Capital Management, Inc. Attn: Robert B. Webster 11111 Santa Monica Blvd., Suite 1210, Los Angeles, CA 90025 Phone: (310) 689-5100 Fax: (310) 689-5199 Headquartered in St. Louis, Missouri, Aurora Foods, Inc., produces and markets premium brand food products to retail customers, the food service industry, and a variety of other distribution channels, including club stores and the military. The Company filed for chapter 11 protection on December 8, 2003 (Bankr. Del. Case No. 03-13744). Eric M. Davis, Esq., and Robert A. Weber, Esq., at Skadden Arps Slate Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,227,912,000 in assets and $1,318,605,000 in liabilities. JPMorgan Chase Bank has arranged to extend up to $50 million of post-bankruptcy financing to Aurora and Sea Coast. (Aurora Foods Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) BANC OF AMERICA: Fitch Rates 3 Note Classes at Low-B Level ---------------------------------------------------------- Banc of America Alternative Loan Trust's (BoAALT) mortgage pass- through certificates, series 2003-11, are rated by Fitch Ratings as follows: Groups 1, 2, and 3 certificates: -- $219,502,000 classes 1-A-1, 2-A-1, CB-IO, 3-A-1 and 3-IO 'AAA'; -- $100 classes 1-A-R, 1-A-LR 'AAA'; -- $5,742,000 class 30-B-1 'AA'; -- $2,631,000 class 30-B-2 'A'; -- $1,197,000 class 30-B-3 'BBB'; -- $1,555,000 class 30-B-4 'BB'; -- $956,000 class 30-B-5 'B'. Groups 4 and 5 certificates: -- $95,043,000 classes 4-A-1, 4-A-2, 5-A-1, 5-A-2 and 15-IO 'AAA'; -- $1,276,000 class 15-B-1 'AA'; -- $490,000 class 15-B-2 'A'; -- $343,000 class 15-B-3 'BBB'; -- $196,000 class 15-B-4 'BB'; -- $99,000 class 15-B-5 'B'. and certificates of all groups: -- $7,017,645 class PO 'AAA'. The 'AAA' ratings on the Groups 1, 2 and 3 senior certificates reflect the 5.50% subordination provided by the 2.40% class 30-B- 1, 1.10% class 30-B-2, 0.50% class 30-B-3, 0.65% privately offered class 30-B-4, 0.40% privately offered class 30-B-5 and 0.45% privately offered class 30-B-6. Classes 30-B-1, 30-B-2, 30-B-3, and the privately offered classes 30-B-4, and 30-B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their respective subordination. The 'AAA' ratings on the Groups 4 and 5 senior certificates reflect the 2.65% subordination provided by the 1.30% class 15-B- 1, 0.50% class 15-B-2, 0.35% class 15-B-3, 0.20% privately offered class 15-B-4, 0.10% privately offered class 15-B-5 and 0.20% privately offered class 15-B-6. Classes 15-B-1, 15-B-2, 15-B-3, and the privately offered classes 15-B-4, and 15-B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their respective subordination. The ratings also reflect the quality of the underlying collateral, the capabilities of Bank of America Mortgage, Inc. as servicer (rated 'RPS1' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The transaction is secured by five pools of mortgage loans. The class 1-A, 2-A and 3-A certificates correspond to loan groups 1, 2, and 3 respectively. Loan groups 1, 2, and 3, are cross- collateralized and share one set of subordinate certificates. The class 4-A and 5-A certificates correspond to loan groups 4 and 5, respectively. Loan groups 4 and 5 are cross-collateralized with each other and share one set of subordinate certificates. Approximately 5.86%, 67.09%, 86.59%, 19.19%, and 18.48% of the mortgage loans in group 1, 2, 3, 4 and 5, respectively, were underwritten using Bank of America's 'Alternative A' guidelines. These guidelines are less stringent than Bank of America's general underwriting guidelines and could include limited documentation or higher maximum loan-to-value ratios. Mortgage loans underwritten to 'Alternative A' guidelines could experience higher rates of default and losses than loans underwritten using Bank of America's general underwriting guidelines. The group 1 collateral consists of recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans, with original terms to stated maturity ranging from 240 to 360 months. The aggregate outstanding balance of the pool as of the cut-off date is $148,295,564, with an average balance of $120,077 and a weighted average coupon of 6.239%. The weighted average original loan-to- value ratio for the mortgage loans in the pool is approximately 67.86%%. The weighted average FICO credit score for the group is 731. The states that represent the largest geographic concentration of mortgaged properties are California (37.65%) and Florida (14.73%). All other states represent less than 5% of the pool 1 mortgage loans. The group 2 collateral consists of recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans, with original terms to stated maturity ranging from 240 to 360 months. The aggregate outstanding balance of the pool as of the cut-off date is $74,149,005, with an average balance of $152,885 and a WAC of 6.237%. The weighted average OLTV for the mortgage loans in the pool is approximately 81.58%. The weighted average FICO credit score for the group is 727. The states that represent the largest geographic concentration of mortgaged properties are California (25.75%), Florida (10.98%), Texas (9.48%), Maryland (5.21%), and Virginia (5.19%). All other states represent less than 5% of the pool 2 mortgage loans. The group 3 collateral consists of recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans, with original term to stated maturity of 360 months. The aggregate outstanding balance of the pool as of the cut-off date is $16,791,718, with an average balance of $453,830 and a WAC of 6.296%. The weighted average OLTV for the mortgage loans in the pool is approximately 70.42%. The weighted average FICO credit score for the group is 730. The states that represent the largest geographic concentration of mortgaged properties are California (60.76%), Georgia (5.51%), and Virginia (5.07%). All other states represent less than 5% of the pool 3 mortgage loans. The group 4 collateral consists of recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to two-family residential mortgage loans with original terms to stated maturity ranging from 120 to 180 months. The aggregate outstanding balance of the pool as of the cut-off date is $51,317,885, with an average balance of $108,724 and a WAC of 5.290%. The weighted average OLTV for the mortgage loans in the pool is approximately 58.37%. The weighted average FICO credit score for the group is 731. The states that represent the largest geographic concentration of mortgaged properties are California (41.85%), Florida (9.81%), and Texas (5.03%). All other states represent less than 5% of the pool 4 mortgage loans. The group 5 collateral consists of recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans, with original terms to stated maturity ranging from 120 to 180 months. The aggregate outstanding balance of the pool as of the cut-off date is $46,767,376, with an average balance of $98,251 and a WAC of 5.963%. The weighted average OLTV for the mortgage loans in the pool is approximately 63.03%. The weighted average FICO credit score for the group is 733. The states that represent the largest geographic concentration of mortgaged properties are California (33.76%) and Florida (15.63%). All other states represent less than 5% of the pool 5 mortgage loans. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Banc of America Mortgage Securities, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as two separate real estate mortgage investment conduits (REMICs). Wells Fargo Bank Minnesota, National Association will act as trustee. BARCODE SYSTEMS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Barcode Systems Inc. 13400 20th Street Northeast Bellevue, Washington 98005 Bankruptcy Case No.: 04-10113 Type of Business: The Debtor is the one source for all bar code solutions, offering a full selection of Application Software and Data Collection Equipment with experienced and knowledgeable local service and support. For more information, see http://www.bsidirect.com/ Chapter 11 Petition Date: January 7, 2004 Court: Western District of Washington (Seattle) Judge: Samuel J. Steiner Debtor's Counsel: Douglas W. Harris, Esq. 11120 North East 2nd Suite #220 Bellevue, WA 98004 Tel: 425-456-1832 Fax: 425-456-1835 Estimated Assets: $100,000 to $500,000 Total Debts: $ 2,992,188 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Royal Bank $1,550,000 c/o Williams Kastner & Gibbs PLLC PO Box 21926 Seattle WA 98111-3926 Barcode Systems Vancouver $535,071 5250 Grimmer Street Suite 4 Burnaby BC V5H 2H2 Canada Barcode Systems Inc T $420,336 2560 Matheson Blvd E #219 Mississauga ON L4W 4Y9 Canada Business Development Bank of Canada $180,000 Manitoba Capital Fund $135,000 Connect $85,586 EMJ Data Systems Ltd $35,000 Telpar Inc. $14,199 Barcode Systems Winnipeg $10,236 Denso ID $4,612 Ryzex Re-Marketing $3,565 eBarcodesDirect $2,945 ScanSource $2,484 AT & T $2,250 Zebra Technologies Corp $2,184 Intermac PSG Services $1,496 Bands Marketing $1,300 Xerox Corporation $1,300 Bar Code Labels & Equipment $707 Dex Media West LLC $543 BAYOU STEEL: Creditors' Ballots are Due on Jan. 29 -------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division ruled on the adequacy of the Disclosure Statement prepared by Bayou Steel Corporation and its debtor-affiliates to explain their First Amended Joint Chapter 11 Plan. The Court found that the Disclosure Statement contains the right kind and amount of information to enable creditors to make informed decisions about whether to accept or reject the Plan. The Plan is already in creditors' hands and they are making those decisions. January 29, 2004, is the deadline for creditors to submit written acceptances or rejections of the Plan. Creditors' ballots must be returned to: Bayou Steel Plan Balloting Agent Neligan Tarpley Andrews & Foley LLP 1700 Pacific Avenue, Suite 2600 Dallas, TX 75201 Attn: Carolyn Perkins The Honorable Barbara J. Houser will convene a hearing to consider the confirmation of the Plan on February 5, 2004, at 11:00 a.m. Central Time. Objections, if any, to the confirmation of the Debtors' Plan must be filed on or before January 29, with the Clerk of the Bankruptcy Court. Copies must also be sent to: 1. Counsel for the Debtors Neligan Tarpley Andrews & Foley LLP 1700 Pacific Avenue, #2600 Dallas, TX 75201 Attn: Patrick J. Neligan, Jr., Esq. 2. the Office of the United States Trustee Northern District of Texas 1100 Commerce Street Room 976 Dallas, TX 75242 Attn: Mary Fran E. Durham 3. Counsel for the Creditors' Committee Warner, Stevens & Doby, LLP 1700 City Center Tower II 301 Commerce Street Fort Worth, TX 76102 Attn: Michael Warner, Esq. 5. Counsel for the Noteholders' Committee Strook & Strook & Lavan LLP 180 Maiden Lane New York, NY 10038 Attn: Lawrence Handelsman, Esq. 6. Counsel for Congress Financial Corporation Patton Boggs 2001 Ross Avenue Suite 3000 Dallas, TX 75201 Attn: Bruce White, Esq. Bayou Steel Corp., a producer of light structural shapes and merchant bar steel products, filed for Chapter 11 protection on January 22, 2003 (Bankr. N.D. Tex. 03-30816). Patrick J. Neligan, Jr., Esq., at Neligan, Tarpley, Andrews & Foley, LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $176,113,143 in total assets and $163,402,260 in total debts. BUDGET GROUP: Disclosure Statement Hearing to Convene on Monday --------------------------------------------------------------- The Budget Group Debtors intend to present the Disclosure Statement they filed on December 5, 2003, and any modifications and changes thereto, for approval at a hearing before Judge Charles G. Case, II, beginning at 2:00 p.m. prevailing Eastern time on January 12, 2004 in the Unites States Bankruptcy Court for the District of Delaware, 824 Market Street, 6th Floor, in Wilmington, Delaware, 19801. If Budget's Disclosure Statement is approved, the Plan that document describes will be sent to creditors for a vote. Once the voting results are in, the Company will return to Court asking that the Plan be confirmed. Headquartered in Daytona Beach, Florida, Budget Group, Inc., operates under the Budget Rent a Car and Ryder names -- is the world's third largest car and truck rental company. The Company filed for chapter 11 protection on July 29, 2002 (Bankr. Del. Case No. 02-12152). Lawrence J. Nyhan, Esq., and James F. Conlan, Esq., at Sidley Austin Brown & Wood and Robert S. Brady, Esq., and Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $4,047,207,133 in assets and $4,333,611,997 in liabilities. (Budget Group Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) CASCADES INC: Acquires Scierie P.H. Lemay Ltd. Sawmill in Quebec ---------------------------------------------------------------- Cascades Inc. (CAS-TSX) has announced its acquisition of all shares in the Scierie P.H. Lemay Ltd., a sawing and planing plant operating in the Saguenay-Lac-St-Jean region of Quebec. Prior to this transaction, Cascades had a 50% holding in the company. Its initial investment dates back to March 1996. According to Eric Laflamme, President and COO, North America, Cascades Boxboard Group, "This sawmill is using state of the art technology and has a workforce of 160 employees. Additionally, with an annual wood processing capacity of 400 000 cubic meters, it provides a regular supply of wood chips to our pulp and boxboard facilities in Jonquiere." Cascades Inc., (S&P, BB+, LT Corporate Credit Rating) is a leader in the manufacturing of packaging products, tissue paper and specialized fine papers. Internationally, Cascades employs 14,000 people and operates close to 150 modern and versatile operating units located in Canada, the United States, France, England, Germany and Sweden. Cascades recycles more than two million tons of paper and board annually, supplying the majority of its fiber requirements. Cascades' common shares are traded on the Toronto Stock Exchange under the ticker symbol CAS. CHESAPEAKE ENERGY: Plans Public Offering of 20 Million Shares ------------------------------------------------------------- Chesapeake Energy Corporation (NYSE: CHK) intends to commence a public offering of 20.0 million shares of its common stock. Chesapeake intends to use the net proceeds of the offering to pay a portion of the aggregate $510 million purchase price of three recently announced acquisitions. The largest of these, a pending acquisition for $420 million of Concho Resources Inc., is expected to close by January 31, 2004, subject to satisfaction of customary closing conditions. If this acquisition does not close, excess net proceeds of the offering will be used for general corporate purposes, including repayment of debt or possible future acquisitions. The offering will be made under the company's existing shelf registration statement. The company has also granted the underwriters an option to purchase a maximum of 3.0 million additional shares of its common stock to cover over-allotments. Lehman Brothers, Banc of America Securities LLC, Citigroup and Morgan Stanley will be joint book-running managers for the offering. Copies of the preliminary prospectus relating to the offering may be obtained from the offices of Lehman Brothers Inc., c/o ADP Financial Services, Integrated Distribution Services, 1155 Long Island Avenue, Edgewood, NY 11717, 631-254-7106; Banc of America Securities LLC, 100 West 33rd Street, New York, NY 10001, 646-733-4166; Citigroup Global Markets Inc., Brooklyn Army Terminal, 140 58th Street, 8th Floor, Brooklyn, New York 11220, Attn: Prospectus Department, 718-765-6732; or Morgan Stanley, Prospectus Department, 1585 Broadway, New York, NY 10036, 212-761- 4000. Chesapeake Energy Corporation (Fitch, BB- Senior Note and B Preferred Share Ratings, Positive) is one of the six largest independent natural gas producers in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and producing property acquisitions in the Mid-Continent region of the United States. COEUR D'ALENE MINES: Caps Price of $160MM Convertible Sr. Notes --------------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE), the world's largest primary silver producer, announced the pricing of its offering of $160 million Convertible Senior Notes due 2024. In addition, Coeur has granted the underwriters in this offering a 30-day option to purchase up to an additional $20 million principal amount of Notes to cover over-allotments. The Notes will be convertible into shares of Coeur common stock at a conversion rate of approximately 131.5789 shares of Coeur common stock per $1,000 principal amount of Notes, representing a conversion price of $7.60 per share. Interest on the notes will be payable in cash at the rate of 1.25% per annum beginning July 15, 2004. Coeur intends to use the proceeds of the Notes for general corporate purposes, which may include the development of its Kensington gold project and its San Bartolome silver project, each of which are pending the completion of updated feasibility studies and final construction decisions. The Notes will be general unsecured obligations, senior in right of payment to Coeur's other indebtedness. The offering is being made through an underwriting led by Deutsche Bank Securities. Offering of the Notes will be made only by means of a prospectus under Coeur's existing shelf registration statement, including the accompanying prospectus supplement relating to the Notes. Copies of a prospectus and the accompanying prospectus supplement included will be available from Deutsche Bank Securities Inc., 60 Wall Street, New York, New York 10005. Coeur d'Alene Mines Corporation (S&P, CCC Corporate Credit Rating, Positive) is the world's largest primary silver producer, as well as a significant, low-cost producer of gold, with anticipated 2003 production of 14.6 million ounces of silver and 112,000 ounces of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. COMDISCO: Sells Participation Interest in Certain Lease Payments ---------------------------------------------------------------- Comdisco Holding Company, Inc. (OTC:CDCO) announced the sale to Marathon Structured Finance Fund, Ltd., of Comdisco's participation interest in certain Agere Systems, Inc., lease payments. The aggregate purchase price was approximately $18 million. Approximately $15 million was received in cash and the remaining $3 million was placed in escrow pending the resolution of post- closing adjustments, if any, to be made over the next year. The participation interest was included in Comdisco's September 30, 2003 balance sheet in receivables at the present value of the minimum payments, or approximately $24 million, and, in a like amount, in deferred income. Prior to the transaction announced today, and since September 30, 2003, Comdisco received approximately $9 million in payments with respect to the participation interest. All proceeds related to the participation interest will be reflected in Comdisco's earnings when received. Comdisco emerged from chapter 11 bankruptcy proceedings on August 12, 2002. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money in an orderly manner the remaining assets of the corporation. Pursuant to Comdisco's plan of reorganization and restrictions contained in its certificate of incorporation, Comdisco is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Accordingly, within the next few years, it is anticipated that Comdisco will have reduced all of its assets to cash and made distributions of all available cash to holders of its common stock and contingent distribution rights in the manner and priorities set forth in the Plan. At that point, the company will cease operations and no further distributions will be made. COMMUNICATIONS & POWER: S&P Assigns B+ Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Communications & Power Industries Inc. The outlook is stable. At the same time, Standard & Poor's assigned its 'B+' rating to the company's proposed $130 million secured credit facility due 2010 and assigned a recovery rating of '2', indicating a substantial (more than 80%) recovery of principal in the event of default. Standard & Poor's assigned its 'B-' rating to the proposed $125 million senior subordinated notes due 2012, which will be sold under rule 144A with registration rights. "The ratings reflect the CPI's highly leveraged capital structure after its acquisition by the Cypress Group and modest scope of operations, offset somewhat by leading positions in niche markets," said Standard & Poor's credit analyst Christopher DeNicolo. CPI is to be acquired by the Cypress Group for a total consideration of $315 million (including fees), which is to be financed by a $90 million term loan, $125 million subordinated notes, and $100 million of sponsor and management equity. Leverage will be high, with debt to capital over 70% and debt to EBITDA of around 4.4x. CPI is a leading provider of vacuum electron devices used in commercial and defense applications requiring high-power and/or high-frequency power generation. VEDs are used in radar, electronic warfare, satellite communications, and certain medical, industrial, and scientific applications. CPI is first or second in all of the markets in which it competes. Revenues related to satellite communications have been negatively affected by the weakness in the worldwide satellite market, but have benefited recently from sales to direct-to-home video providers. Military sales have benefited from increased defense spending, especially for electronics. Program diversity is good with no one program accounting for more than 3.7% of revenue. A significant portion of CPI's products are consumable, resulting in a steady stream of generally higher-margin aftermarket sales, which account for over 50% of total revenue. CPI's $130 million secured credit facility is rated 'B+', the same as the corporate credit rating (with a '2' recovery rating, substantial recovery of principal). The facility consists of a $40 million revolver (initially undrawn) and a $90 million term loan, both due 2010. Security is provided by a perfected first-priority security interest in all of the company's tangible and intangible domestic assets, as well as 66% of the capital stock of its foreign subsidiaries. Financial covenants have not been set but are likely to include minimum interest coverage, maximum total leverage, and minimum fixed-charge coverage. The company's bankers expect that covenants will provide a 15%-20% cushion to management's forecast. Amortization of the term loan is also to be determined, but is expected to be minimal. Funded secured bank debt will comprise around 40% of total debt. CPI's leading niche market positions and the positive outlook for defense spending are likely to offset the company's high leverage and continued weakness in the satellite communications market, resulting in a credit profile consistent with current ratings. CONSOL ENERGY: Will Sell Stake in Australian Mine to JV Partner --------------------------------------------------------------- CONSOL Energy Inc. (NYSE: CNX), a producer of high-Btu coal and coalbed methane gas, has agreed to sell its 50% interest in the Glennies Creek Mine in New South Wales, Australia, to its joint venture partner, AMCI Inc., a privately-held company based in Greenwich, Connecticut, for a total of US$27.5 million and the assumption of CONSOL Energy's 50% share of debt in the Glennies Creek Mine. "Although Glennies Creek was a good long-term investment, it will require additional time and capital to reach its full potential," said J. Brett Harvey, president and chief executive officer. "Even with world coking coal fundamentals currently are favorable, our domestic coal and gas opportunities are even stronger, provide better rates of return, and have lower risk." CONSOL Energy purchased its interest in the Glennies Creek Mine in December 2001 as the underground mine was being expanded to add a longwall mining system. The mine produces a high-fluidity coking coal sold primarily to steel makers in the Asia-Pacific region. In 2003, the mine produced 1.1 million tons of coal, of which CONSOL Energy's share was 50 percent. "Our immediate objective is to improve the performance of our core mining business in the United States and to grow our domestic gas business," said Harvey. "Shareholders' capital and management's time need to be focused in that direction." The transaction is expected to close in the first quarter of 2004. CONSOL Energy also sold its 50% interest in its Universal Aggregates joint venture to its joint venture partner, SynAggs, a privately held Pittsburgh- based company, in December 2003. Universal Aggregates is constructing a commercial facility in Virginia that will convert coal-fired power plant fly ash waste into a synthetic aggregate. CONSOL Energy developed the technology for producing the aggregate material. "Our goal for Universal Aggregates was to launch a commercially- viable company that could help coal users such as power plants to turn a waste stream into a valuable product," Harvey explained. "We have succeeded with our goal and it is an appropriate time to allow Universal Aggregate to move ahead on its own." He said CONSOL Energy received cash at closing and also will receive various royalty payments as new plants are built and aggregate is produced. "As we announced last year, we will continue to review the sale of non-core assets as a means of enhancing our financial flexibility," Harvey concluded. CONSOL Energy Inc. (S&P, BB- Corporate Credit Rating, Negative) is the largest producer of high-Btu bituminous coal in the United States. CONSOL Energy has 20 bituminous coal mining complexes in seven states and in Australia. In addition, the company is one of the largest U.S. producers of coalbed methane with daily gas production of approximately 135 million cubic feet from wells in Pennsylvania, Virginia and West Virginia. The company also has a joint-venture company to produce natural gas in Virginia and Tennessee, and the company produces electricity from coalbed methane at a joint-venture generating facility in Virginia. CONSOL Energy Inc. has annual revenues of $2.2 billion. It received the U.S. Department of the Interior's Office of Surface Mining National Award for Excellence in Surface Mining for the company's innovative reclamation practices in 2002 and 2003. Also in 2003, the company was recognized as a leader in innovation in business technology and IT operations by its addition to Information Week magazine's "Information Week 500," one of only 28 energy and utility companies being honored. In 2002, the company received a U.S. Environmental Protection Agency Climate Protection Award. Additional information about the company can be found at its Web site at http://www.consolenergy.com/ CUMULUS MEDIA: Inks Pact to Acquire 7 Stations in Blacksburg, Va. ----------------------------------------------------------------- Cumulus Media Inc. (NASDAQ: CMLS) signed an Asset Purchase Agreement to purchase WFNR-FM, WWBU-FM, WBRW-FM, WPSK-FM, WBWR-FM, WFNR-AM and WRAD-AM, serving Blacksburg, Virginia (metro rank 221), from New River Valley Radio Partners, L.L.C. and Bedford Radio Partners, L.L.C. The purchase price for the stations is $7.0 million and is payable, at the option of Cumulus, in cash or shares of Cumulus Media Inc. Class A common stock. In addition to the operating assets and broadcast licenses of the stations, Cumulus will also receive $0.3 million in working capital as part of the transaction. The closing of this transaction is expected to occur in the first half of 2004. Cumulus' Chairman and CEO, Lew Dickey, commented, "In this transaction, we are acquiring a very strong and completed cluster with significant upside potential." This transaction was brokered by Larry Patrick of Patrick Communications. Cumulus Media Inc. (S&P, B+ Corporate Credit Rating, Stable Outlook) is the second largest radio company in the United States based on station count. Giving effect to the completion of all announced pending acquisitions and divestitures, Cumulus Media Inc. will own and operate 272 radio stations in 56 mid-size and smaller U.S. media markets. The Company's headquarters are in Atlanta, Georgia, and its Web site is http://www.cumulus.com/ Cumulus Media Inc. shares are traded on the NASDAQ National Market under the symbol: CMLS. DESTINY RESOURCE: Arranges New Operating & Term Debt Facilities --------------------------------------------------------------- Destiny Resource Services Corp. announced new operating and term debt facilities and the partial repayment and extension of maturity of the outstanding debenture: - the Company has entered into an agreement for operating banking facilities with HSBC Bank Canada under which it will have an operating line of up to $5mm, subject to margin against accounts receivable. This facility is expected to be in place on February 9, 2004 to match the expiry of Destiny's existing operating line relationship with GMAC Canada. The facility will be secured by a first charge on accounts receivable and a floating charge on other assets of the Company. - the Company has entered into an agreement with RoyNat Inc. for the borrowing of $3.55mm. This term loan will be repayable over 3 years. The proceeds will be used to retire outstanding equipment loans (including Destiny's present obligations to RoyNat), to reduce other indebtedness and to supplement working capital. This loan will be secured by a first charge on Destiny's fixed assets and a floating charge on other assets of the Company. The Company expects to draw down this facility in January. - the Company has reached agreement with Destiny Resource Investment L.P., Destiny's majority shareholder and the holder of the outstanding subordinated secured debenture due July 2, 2004 for: - payment on the debenture of $2mm from the RoyNat term loan - payment on the debenture of $3mm from the proceeds of sale ($3.8mm) of the heavy equipment of the former Battle River Oilfield Construction division of Destiny, expected to occur on January 31, 2004 - the extension of the maturity of the balance of the principal ($4.83mm) to July 2, 2008 - semi-annual principal payments on the debentures of excess cash flow (being cash flow in excess of the sum of principal payments on other debt and capital expenditures). The consent of HSBC will be required for any such payments with respect to 2004 and for any optional pre-payments of principal. All matters are subject to the execution of definitive documentation. "These steps, together with the 3 divisional dispositions previously announced, the successful sale of the assets of the Team Pipeline division on December 4, 2003 and the January 31, 2004 scheduled closing referred to above, complete the restructuring of Destiny and its balance sheet" said Bruce Libin, Executive Chairman and CEO of Destiny. "We are now well positioned and adequately capitalized to move forward focused on our Front- End Seismic Service businesses and the opportunities afforded in the markets for those businesses. We are encouraged by the current level of activity in this sector and by what we presently see for 2004. We believe the current economic environment is conducive to the Company's efforts to add value for our shareholders." Destiny provides Seismic Front-End Services comprised of seismic survey and mapping (Wolf Survey & Mapping), seismic line clearing (Destiny Resources) and shot-hole drilling (Double R Drilling) to energy explorers and producers and to seismic acquisition companies. At September 30, 2003, the Company's balance sheet shows that its total current liabilities exceeded its total current assets by about $4.5 million, while net capitalization entered positive zone at $278,000 from a deficit of about $574,000. DII INDUSTRIES: First Creditors' Meeting Slated for January 22 -------------------------------------------------------------- Joseph S. Sisca, Assistant United States Trustee for Region 3, has called for a meeting of the DII Industries, and Kellogg, Brown & Root Debtors' creditors pursuant to Section 341(a) of the Bankruptcy Code on January 22, 2004 at 1:30 p.m. at 1001 Liberty Avenue, Suite 970, in Pittsburgh, Pennsylvania. All creditors are invited, but not required, to attend. The Official Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath. Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged in the engineering and construction business, providing a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. The Company filed for chapter 11 protection on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP represent the Debtors in their restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIRECT INSITE: CEO James Cannavino's Engagement Extended to 2007 ---------------------------------------------------------------- In December, 2003, Direct Insite Corporation extended its Services Agreement with its Chief Executive Officer, James A. Cannavino, for a term ending on August 24, 2007. The agreement calls for compensation of $15,000 per month and 360,000 options, vesting 7,500 per month for the term of the agreement (48 months), to purchase the Company's common stock at an exercise price of $1.16, the closing price of the Company's common stock on the date the agreement was effective. The agreement provides for reimbursement of reasonable out-of-pocket expenses and further provides for living and travel expenses not to exceed $11,000 per month. In August, 2003, the Company executed an Employment Agreement with its President, Robert L. Carberry for an employment term ending on August 15, 2004 and thereafter a consulting period ending on February 15, 2007. Compensation while serving as president will be $240,000 per annum. Additionally, he was granted options to purchase 200,000 shares of the Company's common stock, 150,000 vesting upon execution of the agreement with the balance fully vesting by January 1, 2004. These options have an exercise price of $1.16 per share. Further, in addition to reimbursement of reasonable out of pocket business expenses, during his term as President he will be entitled to living and travel expenses not to exceed $3,100 per month. During the consulting period (August 16, 2004 through February 15, 2007) he will be required to consult with the Company and its senior executive officers regarding its respective businesses and operations. Such consulting services shall not require more than 48 days in any calendar year, nor more than four days in any month. The Company will pay $12,000 per month. 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. DRESSER INC: Unit Plans to Restructure Burlington Operations ------------------------------------------------------------ Dresser Flow Solutions, a unit of Dresser, Inc., intends to restructure its industrial valve manufacturing operations in Burlington, Ontario, Canada. Burlington operations, which currently employs 96 manufacturing, sales and service personnel, will be converted to a Nuclear Power Sales Support Center as all manufacturing functions will be consolidated into other Dresser facilities. As a result of the restructuring there will be a significant decrease in the number of Dresser employees in Burlington. The planned restructuring is expected to be complete by May 1, 2004. Andrew Norman, VP and General Manager, Control Valves, stated, "Ongoing reduced demand in the process industries and current economic conditions require that Dresser Masoneilan adjust manufacturing capacity in the United States and Canada. We remain committed to the Canadian market and will maintain the same high standards of support and service that customers have come to expect from Masoneilan. We will manage the restructuring in a manner that recognizes the needs of our customers, channel partners and employees through this period of transition." Dresser Flow Solutions is a worldwide leader in the design, manufacturing and supply of valves, meters, actuators and control solutions for the energy and process industries. 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: S&P Drops Rating to D After Missed $2.7MM Payment ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured credit facility ratings on DT Industries Inc., to 'D' from 'CCC+'. The rating actions followed the Dayton, Ohio-based company's announcement that it has failed to make a mandatory principal prepayment totaling $2.7 million, due on Dec. 31, 2003, and is negotiating a forbearance agreement with its senior lenders. In addition, DTII has entered into an agreement to sell its Converting Technologies division, with net proceeds from the sale, which is expected to close in mid-January, to be used to reduce debt and satisfy the principal payment. DTII makes equipment used to manufacture, test, or package a variety of industrial and consumer products. "We will review DTII's ratings if the company is successful in curing the recent default," said Standard & Poor's credit analyst Nancy Messer. "However, even if the asset sale is completed, the company will continue to be challenged to refinance its existing credit facility that matures in July 2004." ENRON: Pushing for Approval of Foster Wheeler Settlement Pact ------------------------------------------------------------- Before EPC Estate Services, Inc., formerly known as National Energy Production Company, filed for Chapter 11 protection, it was engaged in the business of designing and constructing gas- fired electricity generating facilities. In this connection, EPC and Foster Wheeler Energy Corporation entered into Purchase Order No. FR0114003, pursuant to which Foster Wheeler was to design, fabricate and deliver a heat recovery steam generator and other related equipment for EPC's use on a power plant construction project in Linden, New Jersey. Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, reports that EPC alleged that Foster Wheeler delivered the Generator late and in a defective condition. As a result, EPC withheld payment of Foster Wheeler's invoices and retainage amounting to $2,862,963. On September 4, 2001, Foster Wheeler initiated arbitration under the administration of the American Arbitration Association, seeking payment of its invoices and retainage totaling $3,440,263. Subsequently, EPC asserted counterclaims in the Arbitration totaling $4,113,613, for breach of warranty and liquidated damages due to the late delivery. The Arbitration is stayed with EPC's bankruptcy filing. Ms. Gray notes that in December 2001, as the Project was nearing completion, EPC became unable to pay its sub-contractors and suppliers. Thus, on December 7, 2001, Foster Wheeler filed a lien for $2,493,963 against the owner of the Project property. On December 20, 2001, Foster Wheeler increased the Lien amount to $2,862,963. Foster Wheeler was one of the 14 lien claimants against the Project Property. The liens against the Project Property total $18,000,000. However, under the New Jersey law, the Project owner's liability is limited to the amount of the unpaid contract balance owing to EPC, approximately $10,000,000, which constitute the "lien pool" from which all lien claimants are entitled to their pro rata share. Since EPC disputed Foster Wheeler's claims, a dispute arose between Foster Wheeler and the other claimants regarding Foster Wheeler's share of the lien pool funds. By a January 14, 2003 Order, the Supreme Court of New Jersey, Chancery Division, Union County, ruled that Foster Wheeler's share of the lien pool funds, calculated to be $1,361,476, would be paid to Foster Wheeler only if EPC did not recommence the Arbitration on or before February 1, 2003. On January 31, 2003, Ms. Gray reports that Foster Wheeler and EPC entered into a Standstill Agreement wherein EPC agreed not to recommence the Arbitration and Foster Wheeler agreed to place its share of the lien pool funds into escrow for the settlement of its disputes with EPC, net of a $50,000 payment each to EPC and Foster Wheeler. As a result, Foster Wheeler placed $1,261,476 with JPMorgan Chase Bank as Escrow Agent on January 31, 2003. According to Ms. Gray, Foster Wheeler claimed that EPC is liable for: (i) breach of contract by failing to pay Foster Wheeler for invoices and retainage; (ii) failure to cause other subcontractors to timely complete their work, which caused a delay in the completion of Foster Wheeler's portion of the work; (iii) failing to timely unload the Generator; and (iv) failing to properly coordinate deliveries. Foster Wheeler further disputes EPC's claim that the delivery schedule was not extended. On November 27, 2002, Foster Wheeler filed an unsecured claim against EPC for $3,440,263. Conversely, EPC asserted that it is entitled to liquidated damages in accordance with the Purchase Order as a result of Foster Wheeler's late delivery of the Generator as well as additional field rework costs. EPC's total claim against Foster Wheeler, net of withheld contract balance, is estimated to be $1,249,651. The Parties wish to resolve all claims and issues relating to the Purchase Order, the Project, the Lien and the Arbitration and to release each other from all claims, obligations, liabilities and liens through a Settlement Agreement. EPC and Foster Wheeler agree that: (a) EPC's share of the Escrow Funds will be $471,476; (b) Foster Wheeler's share of the Escrow Funds will be $790,000; (c) Accrued interest on the Escrow Funds will be credited to Foster Wheeler; (d) Applicable escrow fees will be assessed in accordance with the Escrow Agreement, with unpaid fees, if any, to be deducted from each party's share of the Escrow Funds; (e) Foster Wheeler will file an amended unsecured claim against the EPC estate reducing the portion of the claim relating to the Project from $3,440,263 to $886,671; and (f) The Parties will mutually waive, release and forever discharge one another for all claims related to the Purchase Order, the Project, the Lien, the Arbitration and any other agreement for the design, engineering, construction, start-up and testing of the Project, provided that Foster Wheeler's right to file the Amended Claim and its rights in the New Jersey Action are preserved. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, Ms. Gray asserts that the Settlement Agreement should be approved because: (a) it resolves the parties' dispute without further litigation; (b) EPC saves additional and unnecessary expenses of future litigation; (c) it provides a mechanism for the prompt payment of a signification portion of the amount EPC asserts it is owed by Foster Wheeler; (d) it provides a significant reduction of the unsecured claim amount Foster Wheeler filed against EPC's estate; and (e) it results in the final resolution of the Arbitration. Accordingly, EPC asks the Court to approve the Settlement Agreement with Foster Wheeler in all respects. (Enron Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service, Inc., 215/945- 7000) EXIDE: Wants More Time to Move Pending Actions to Delaware Court ---------------------------------------------------------------- James E. O'Neill, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub P.C., in Wilmington, Delaware, tells the Court that since the beginning of their Chapter 11 cases, the Exide Technologies Debtors have been evaluating actions in which they are plaintiffs, to determine which ones might be suitable for removal. Subsequently, the Debtors developed a consolidated database of all litigation matters. Because they are not yet through with the evaluation, the Debtors ask the Court to further extend the period within which they may file notices of removal with respect to civil actions pending as of the Petition Date, through and including March 31, 2004. The Debtors also request that the March 31, 2004 deadline to remove actions also apply to all matters specified in Rules 9027(a)(2)(A), (B) and (C) of the Federal Rules of Bankruptcy Procedure. Mr. O'Neill relates that the extension will preserve the status quo and allow the Debtors to continue to address possible issues regarding actions suitable for removal. Moreover, Mr. O'Neill assures the Court that the Debtors' adversaries will not be prejudiced by the extension since any party to a prepetition action that is removed may seek to have it remanded to the state court from which the action was removed. The Court will convene a hearing on January 22, 2004 to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Debtors' deadline to remove actions is automatically extended through the conclusion of that hearing. Headquartered in Princeton, New Jersey, Exide Technologies is the world-wide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis represent the Debtors in their restructuring efforts. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Gets Nod to Expand Ernst & Young Engagement ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware, overseeing the Federal-Mogul Debtors' bankruptcy proceedings, approves Ernst & Young's modified scope of employment. The have employed Ernst & Young LLP as Independent Auditors and as Accounting, Tax, Valuation and Actuarial Advisors. With the Court's approval, Ernst & Young will perform certain services that are continuations or, at most, modest expansions of previously approved services. Also, the Court approves to extend the time- period for services that Ernst & Young has previously performed. The Court, thus, grants the Debtors' request to: (a) expand the Retention Orders to include the services rendered to Federal-Mogul Corporation, Federal-Mogul Piston Ring, Federal-Mogul Products, Federal-Mogul Ignition Company, and Federal-Mogul Powertrain, for the year ending December 31, 2003; and (b) extend the services rendered to Federal-Mogul Corporation Bentley to include the year ended March 31, 2003. Additionally, Ernst & Young's proposed actuarial services will assist Federal-Mogul with respect to valuations of Federal- Mogul's liability for post-retirement benefits under Federal Accounting Standards or FAS 106 and merely continues actuarial work previously performed on the Debtors' on behalf by Ernst & Young. Specifically, the modified scope of Ernst & Young's continued employment encompasses these additional services: -- Auditing and reporting services with respect to the Debtors' consolidated financial statements for the year ending December 31, 2003; -- Auditing and reporting services with respect to financial statements of F-M piston Rings for the year ending December 31, 2003, and reporting services with respect to the consolidated financial statements of F-M Products, F-M Ignition and F-M Powertrain for the year ending December 31, 2003; -- Auditing and reporting services with respect to the financial statements of the Bentley 401(k) Plan for the year ended March 31, 2003; and -- Assisting the Debtors in identifying a news FAS 106 actuary by: (i) assisting with the clean-up of employee/retiree census data utilized in FAS 106 valuation; and (ii) assisting in the preparation of a request for proposal for FAS 106 actuarial services. The Debtors will pay Ernst & Young $1,400,000, for auditing and reporting on the consolidated financial statements of Federal- Mogul Corporation for the year ended December 31, 2003, including out-of-pocket expenses, with the exception of up to $30,000 of travel expenses related to work to be performed in St. Louis, Missouri, which will be reimbursed as incurred. With respect the other Federal-Mogul subsidiaries, the Debtors will pay Ernst & Young's fees for auditing and reporting on the financial statements for the year ended December 31, 2003, as: Subsidiary Fee ---------- --- Federal-Mogul Products, Inc., and Federal-Mogul Ignition Company, Inc. $75,000 Federal-Mogul Powertrain, Inc. 53,000 Federal-Mogul Piston Ring, Inc. 45,000 Bentley 401(k) Plan 8,500 The Debtors will likewise reimburse Ernst & Young's out-of-pocket expenses. With respect to the FAS 106 actuarial services, the Debtors will pay $28,000 plus expenses. Ernst & Young fees are consistent with the fees charged by Ernst & Young in the prior performance period. The total fixed fee for the Additional Services is $1,611,500, while the total for the fixed fee for the prior performance period was $1,523,833. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING COMPANIES: Hires Watson Wyatt for Actuarial Services ------------------------------------------------------------ The Fleming Debtors seek the Court's authority to employ Watson Wyatt Worldwide to provide actuarial services, nunc pro tunc to October 20, 2003. Christopher J. Lhulier, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub PC, in Wilmington, Delaware, explains that the Debtors are currently preparing a request seeking relief in connection with the Fleming Companies, Inc. Pension Plan, the Pension Plan of S. M. Flickinger Co., Inc., the Godfrey Company Subsidiaries' Pension Plan, the Retirement Plan for Arizona Warehouse and Distribution Employees, and certain other pension plans. There are 17,000 participants in the Fleming Pension Plans. Except for the Fleming Companies Inc. Plan, each of the Fleming Pension Plans is currently frozen. Watson Wyatt has provided general plan administration and actuarial services for the Fleming Pension Plans since 1997. The Debtors want to continue that employment and have Watson Wyatt assist in the preparation and prosecution of the Fleming Pension Plans Motion. Watson Wyatt will assist the Debtors in the: (a) preparation of pension plan minimum funding projections; (b) preparation of plan termination liability reports; (c) preparation of affidavits in support of the Fleming Pension Plans Motion; (d) performance of services in connection with appearance as an expert witness in connection with the Fleming Pension Plans Motion, if necessary; and (e) performance of other actuarial services deemed by the the Debtors and Watson Wyatt to be necessary and required in connection with the Fleming Pension Plans Motion. Watson Wyatt's customary hourly rates, subject to periodic adjustments, are: Senior Actuary $430 - 605 Mid-level Actuary 300 - 430 Junior Actuary/Analyst 150 - 300 Administrative Support 100 - 150 James Sincovec, an actuary in Watson Wyatt, attests that the firm has no connection with the Debtors or other parties-in-interest except for its prior actuarial services to the Debtors. It does not hold any interest adverse to the Debtors or their estates in the matters for which it is to be employed. The firm is a "disinterested person" within the meaning of the Bankruptcy Code. Mr. Sincovec, however, discloses that Watson Wyatt has performed, performs, and will continue to perform services for various parties-in-interest in unrelated matters, including Kmart Corporation, Kraft Foods, London Drugs Limited, Malt-O-Meal, Mizuho Trust Company, Mutual of Omaha Insurance Co., Nash Finch, Nationwide Advertising Services, Nestle USA, Northwestern Mutual Life, Pepsico, Pfizer Inc., Phillips Petroleum, Playtex Products, Procter & Gamble, Quaker Oats Company, Royal & Sun Alliance, Royal Bank of Canada, Sara Lee, State Street Corporation, Supervalu, Swire Pacific Holdings, Target Stores/Dayton-Hudson, Transamerica Life Insurance, Unified Western Grocers, Unilever, Wellington Management Co., Wells Fargo Bank, and Zurich American Insurance Co. In addition, Mr. Sincovec reports that the Debtors owe Watson Wyatt $33,567 for prepetition fees and expenses. During the 90-day period before the Petition Date, Watson Wyatt received $471,616 from the Debtors in compensation for its services and expenses. Since April 1, 2003, Watson Wyatt has been paid $578,915 by the Debtors for its services in connection with the general administration of the Fleming Pension Plans. Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- is the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. (Fleming Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) FRIEDMAN'S INC: December Quarter Sales Reflect Slight Growth ------------------------------------------------------------ Friedman's Inc. (NYSE: FRM) announced sales results for its first fiscal quarter ended December 27, 2003. Net sales for the quarter increased 6.3%, to $210.6 million compared to $198.1 million during the comparable period last year. Comparable store sales increased 2.7% during the quarter. At December 27, 2003, the Company had 710 stores in operation, an increase of 7.3% compared to the first fiscal quarter of last year. As announced in November 2003, the Company is currently working with Ernst & Young to complete the restatement of its financial statements for at least the last three fiscal years. In connection with the announced restatement, Ernst & Young withdrew its audit opinions on the previously-filed annual financial statements for the fiscal years 2000, 2001 and 2002. The principal reason for the restatement is concern over the accounting for the allowance for doubtful accounts. Until the Audit Committee completes its previously announced internal investigation and Ernst & Young is able to complete its audits, the total impact on the Company's financial statements cannot be known. Based on the current status of these matters, Friedman's expects to file its Form 10-K by the end of February 2004 and to provide preliminary financial information for the restated periods and the year ended September 27, 2003 prior to that date. In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, Consolidation of Variable Interest Entities, which introduced a new consolidation model, the "variable interests model", which determines control (and consolidation) based on who receives the benefits or bears the risk of gains and losses, respectively, of the entity being evaluated for consolidation. In April 2003, the Company announced that the Interpretation would result in the consolidation of Crescent's financial statements with those of Friedman's for financial reporting purposes with the reporting of its fiscal year ending September 27, 2003, effective as of the beginning of fiscal 2003 (September 29, 2002). In December 2003, the FASB issued a revised Interpretation which, among other matters, delayed the required implementation of the Interpretation to reporting periods ending after March 15, 2004. Accordingly, Friedman's will delay consolidation of Crescent's financial statements with those of Friedman's for financial reporting purposes until the reporting of the Company's second fiscal quarter ending March 27, 2004. The Company has previously provided unaudited sales and other pro- forma financial data for the consolidation of Crescent in advance of the required implementation date of the Interpretation. The Company has decided to discontinue that practice pending the completion of the independent audits of Friedman's and Crescent. Friedman's Inc. is a leading specialty retailer of fine jewelry based in Savannah, Georgia. The Company is the leading operator of fine jewelry stores located in power strip centers. At December 27, 2003, Friedman's Inc. operated a total of 710 stores in 20 states, of which 482 were located in power strip centers and 228 were located in regional malls. Friedman's Class A Common Stock is traded on the New York Stock Exchange (NYSE Symbol, FRM). As reported in Troubled Company Reporter's January 2, 2003 edition, the Company was notified by its lenders that it is in default under certain provisions of its credit agreement. As the preliminary financial information becomes available, the Company will be in discussions with its lenders regarding these matters in an attempt to resolve them prior to the filing of its annual report. At present, the Company's lenders continue to provide the Company with the benefits of its credit agreement, with certain limited exceptions, although they have the right to terminate their support at any time. GARDEN HILL, INC: Case Summary & 6 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Garden Hill, Inc. dba Garden Hill Apartments 2119 N. Veterans Blvd. Eagle Pass, Texas 78852 Bankruptcy Case No.: 04-50129 Type of Business: The Debtor is an operator of apartment complex. Chapter 11 Petition Date: January 5, 2004 Court: Western District of Texas (San Antonio) Judge: Ronald B. King Debtor's Counsel: Dean William Greer, Esq. Law Offices of Dean W. Greer 2929 Mossrock, Suite 105 San Antonio, TX 78230 Tel: 210-342-7100 Total Assets: $3,044,131 Total Debts: $3,585,138 Debtor's 6 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Pedro & Esther Garcia Loan $1,000,000 2119 N. Veterans Blvd #1202 Eagle Pass, TX 78852 Chase Automotive Financial Puchase Money $35,055 Value: $35,000 Bob Jaffer Loan $15,360 South Texas National Bank Parking Lot repairs $13,185 Southwestern Bell Yellow Advertising $459 Pages Eagle Pass Chamber of Loan $150 GOLDEN NORTHWEST: Brings-In Stoel Rives as Bankruptcy Attorneys --------------------------------------------------------------- Golden Northwest Aluminum, Inc., and its debtor-affiliates seek permission from the U.S. Bankrutpcy Court for the District of Oregon to hire the services of Stoel Rives LLP as Counsel in these chapter 11 cases. The Debtors submit that Stoel Rives is familiar with their structure and operations due to its ongoing representation as general counsel. Stoel Rives is also one of the largest law firms in the Pacific Northwest with a substantial national practice. Under this engagement, Stoel Rives will: a) advise Debtors with respect to its powers and duties as debtor-in-possession in the continued management and operation of its business; b) attend meetings and negotiate with representatives of creditors and other parties in interest; c) take all necessary action to protect and preserve Debtors' estates, including: the prosecution of actions on Debto