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/raid1/www/Hosts/bankrupt/TCR_Public/040303.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 3, 2004, Vol. 8, No. 44 Headlines AAIPHARMA INC: S&P Changes Outlook to Negative over Sales Concerns ADELPHIA: Inks Stipulation Reserving Prepetition Agents' Rights AES GENER: Fitch Assigns Prelim. BB Rating to Proposed $300M Bond AHOLD: Sells Two Brazilian Businesses to Wal-Mart & Unibanco AINSWORTH: Sets Q4 & Year-End 2003 Conference Call for Friday AMERICAN ACHIEVEMENT: S&P Assigns $195-Mil. Bank Loan Rating at B+ ARCHIBALD CANDY: Former Employees' Union Accept Settlement Offer ARCH WIRELESS: Reorganized Company Issues Full Year 2003 Results AVADO BRANDS: Turns to Miller Buckfire for Financial Advice AURORA FOODS: Court Approves Skadden Arps' Retention as Counsel AVITAR: Shareholders Okay Financing Proposals at Special Meeting AVNET: Fitch Rates $270 Million Convertible Debt Offering at BB BEAL FIN'L: S&P Assigns BB Long-Term Counterparty Credit Rating BUDGET GROUP: Wants to Stretch Plan-Filing Exclusivity to Apr. 7 CELERITY CLO: S&P Assigns BB Preliminary Rating to Class E Notes COMPUTER DATA: IntraDyn Acquires Liquidating Software Firm COPPERWELD: Names Dennis McGlone As New Chief Executive Officer CROWN CASTLE: Will Record Charge Related to Tendered Sr. Notes DELACO COMPANY: Retaining McCarter & English as Special Counsel DOBSON: S&P Watches Ratings Citing Potential Covenant Violations DOMAN IND: CCAA Monitor KPMG Files March Restructuring Report ECHOSTAR COMMS: Massachusetts Financial Reports 5.95% Equity Stake EDISON INTERNATIONAL: Amends Shareholder Rights Plan ENERGY WEST: Applies to Modify Existing $23 Mil. Credit Facility ENRON CORP: Asks Court Nod for Swiss Reinsurance Settlement FALCONBRIDGE LTD: S&P Rates C$78 Million Series 3 Preferreds at BB FLEXTRONICS: Schedules Mid-Quarter Conference Call for March 4 GARDEN RIDGE: Delaware Court Approves $70 Million DIP Financing GLOBAL AXCESS: Raises $3.5 Million Through Private Placement HALSEY DRUG: Closes $12.3 Million Securities Private Offering HAWAIIAN HOLDINGS: Outlines Preliminary Reorg. Plan for Airline HAYES LEMMERZ: Deutsche Bank Discloses 6.59% Equity Stake HAYNES: Interest Nonpayment Spurs S&P to Cut Credit Rating to D HOLLINGER: Fails to Make Debt Interest Payment Due March 1, 2004 HOLLINGER INC: Press Holdings Withdraws Stock Acquisition Offers HOME INTERIORS: S&P Cuts Rating to B over Increased Debt Leverage IMPATH INC: Genzyme Named Lead Bidder for Cancer Testing Unit KEYSTONE CONSOLIDATED: Case Summary & Largest Unsecured Creditors KNOX COUNTY: Wants to Tap McBrayer McGinnis as Special Counsel L-3 COMMUNICATIONS: Will Present at Bear Stearns' Conference Today LA QUINTA: Board Declares Dividend on 9% Preferred Stock LA VOZ COMM: Case Summary & 20 Largest Unsecured Creditors LIBERTY MEDIA: Providing Q4 Supplemental Fin'l Info on March 15 LITFIBER INC: Forms New Board and Restructures to Create Value MADISON PARTNERS: Voluntary Chapter 11 Case Summary MAJESTIC STAR: Schedules Q4 & FY 2003 Conference Call Today MCDERMOTT INTL: Will Release Q4 and FY 2003 Results on March 11 MEDIA 100: Optibase to Acquire Assets in Prepackaged Bankruptcy MEDMIRA: Closes First Round of Debenture Financing with Channel METROCALL: Redeeming $20 Million of Preferred Stock on Mar. 31 MILLENNIUM CHEMICALS: Ups Prices for Titanium Dioxide Products MIRANT CORP: US Trustee Amends Equity Security Holders' Committee MTS INCORPORATED: Signs-Up O'Melveny & Myers as Co-Counsel NATIONAL CENTURY: Asks Court to Expunge Donald Ayers' Claim NORTEL NETWORKS: Launches New Set of Wireless Network Solutions NRG ENERGY: Remaining Debtors Have Until May 8 to File a Plan ONEIDA: Obtains Further Waiver Extensions & Deferrals from Lenders OWENS: Sues to Recover Avoidable Transfers to Robles, et al. PARMALAT GROUP: Industry Ministry to Appoint Creditors Committee PG&E NATIONAL: Inks Stipulation Settling JPMorgan Credit Dispute PILLOWTEX CORP: Urges Court to Approve Season Release Agreement PLAINS RESOURCES: Kayne Anderson & EnCap Opt for the Vulcan Offer QUINTILES: Discloses New Board of Directors Members RCN: May Pursue Debt Restructuring Under Chapter 11 Protection RELIANCE GROUP: Settles Insurance Disputes with Integrated Health ROYAL OLYMPIA: Greek Court Appoints Administrator for 6 Months SANDISK CORP: S&P Ups Credit Rating to B+ & Assigns Stable Outlook SATCON: Says Funds Are Sufficient to Fund Ops. Until Sept. 2004 SEALY CORP: November 2003 Equity Deficit Narrows to $76 Million SEPRACOR: S&P Revises Ratings' Outlook to Positive on Estorra News SHAW COMMS: Declares Interest Distribution on 8.875% Preferreds SOLUTIA INC: Quimica Asks Go-Signal to Set-Off Mutual Obligations SOUTHERN CALIFORNIA EDISON: Acquires New Power Plant Project SOUTHWEST RECREATIONAL: Official Creditors' Committee Named STELCO: Posts Added Info on Finances & CCAA Dev't. in Co. Web Site TELETECH HOLDINGS: Appoints Mark C. Thompson to Board of Directors TRINITY: S&P Assigns BB+ Sr. Sec. Loan Rating on $250MM Facility UNITED AIRLINES: Obtains Court Nod to Assume Agreement with Pratt VERITAS DGC: Fitch Affirms Senior Unsecured Debt Rating at BB VISTEON: $400M Senior Unsecured Debt Issue Gets S&P's BB+ Rating WARNACO GROUP: Hotchkis and Wiley Discloses 7.5% Equity Stake WORLDCOM: Judge Gonzales Clears Settlement of Mpower Dispute * A.M. Best Publishes First Long-Term Impairment Rate Study * Justice Ernst H. Rosenberger Joins Stroock as Of Counsel * Kamakura Sees Little Change in U.S. Corporate Credit Quality * Mintz Levin Records Two Largest Trial Verdicts in Mass. in 2003 * Upcoming Meetings, Conferences and Seminars ********* AAIPHARMA INC: S&P Changes Outlook to Negative over Sales Concerns ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on aaiPharma Inc. to negative from stable. At the same time, Standard & Poor's affirmed its 'B+' corporate credit, 'BB-' senior secured debt, and 'B-' subordinated debt ratings on the specialty pharmaceutical manufacturer. The outlook revision follows aaiPharma's announcement that it is conducting an internal investigation into sales abnormalities related to two of its main products, Darvocet and Brethine. The company also withdrew its 2004 earnings guidance, stating that these adverse developments will have a material effect on previously announced figures. "The low-speculative-grade ratings on Wilmington, N.C.-based aaiPharma Inc. reflect the limited growth potential of its niche pharmaceutical portfolio, its aggressive use of debt to fund product acquisitions, and expectations that the company will make additional debt-financed acquisitions," said Standard & Poor's credit analyst Arthur Wong. "These negative factors are somewhat mitigated by management's commitment to deleveraging the company's balance sheet following each purchase." aaiPharma is a specialty pharmaceutical company that focuses on pain management. The company typically acquires branded products with expired patents, items that already have strong name recognition and that may be improved by the company's drug- delivery technologies. aaiPharma has acquired a series of products in the past three years, spending approximately $390 million, and these higher margin treatments have accounted for an increasing portion of the company's revenues and cash flows. Product sales contributed roughly 65% of total revenues in 2003 (versus only roughly 20% in 2001) while the balance of revenues have been provided by the company's service businesses, in which it conducts R&D work for outside companies. Still, while cash flow diversity has improved somewhat, the company's business remains vulnerable to product concentration risks and generic threats. Indeed, several company products are expected to face generic competition in the near term. Sales and cash flow generation prospects are now even more uncertain since the company revealed its Darvocet and Brethine investigation. aaiPharma acquired its main pharmaceutical product, Darvon/Darvocet, in 2002 for roughly $211 million. The combined treatment is used for mild to moderate pain and has been a stable performer for the company, despite generic competition. Possible excess wholesaler inventory levels of Darvocet, however, will hurt future sales prospects. Brethine may also face generic competition in the near term, and the possible excess wholesale inventory of the drug will lead to an accelerated sales decline. ADELPHIA: Inks Stipulation Reserving Prepetition Agents' Rights --------------------------------------------------------------- Pursuant to an August 23, 2002, Court order, as amended, modified or supplemented from time to time, the Court, inter alia: (1) authorized the Adelphia Communications Debtors to obtain postpetition financing; (2) authorized the ACOM Debtors to use the Prepetition Secured Lenders' cash collateral; and (3) granted adequate protection to the Prepetition Secured Lenders with respect to the ACOM Debtors' use of their cash collateral and the Prepetition Collateral in an amount equal to the aggregate diminution in value of the Prepetition Secured Lenders' interest in the Prepetition Collateral. Under the DIP Credit Agreement, the various ACOM Debtors with ability to borrow funds under the DIP Financing were divided into nine Borrowing Groups. Each Borrowing Group is subject to a Borrowing Cap. The composition of six of the nine Borrowing Groups under the DIP Facility was designed to mirror as closely as practicable the composition of the borrowing groups under the ACOM Debtors' six prepetition credit facilities. The remaining three Borrowing Groups under the DIP Facility are comprised of entities whose assets were not encumbered under any Prepetition Facility. The Final DIP Order required the implementation of a Cash Management Protocol to govern the treatment of Postpetition Intercompany Advances and Intercompany Claims among the Borrowing Groups, as additional adequate protection of the interests of the Prepetition Secured Lenders in the Prepetition Collateral. Over the course of these Chapter 11 cases, the ACOM Debtors incurred, and will continue to incur, substantial costs, including case management and operating costs not otherwise specifically allocable to each Borrowing Group, fees and expenses related to the general administration of the Chapter 11 cases and other, non-recurring expenses, including expenses relating to the re-audit of the ACOM Debtors' financial statements, and the various investigations of the Rigas family being conducted by the special committee of the Board of Directors of the ultimate parent Debtor, ACOM. The ACOM Debtors currently allocate the Reorganization Expenses and the Non-Recurring Expenses utilizing certain allocation methodologies. In allocating the Reorganization Expenses, the ACOM Debtors' Methodology, in general terms, is a three-step process in which the first step is to categorize the service providers into cost pools. The expenses per cost pool are then allocated to the Borrowing Groups based on a function of prepetition debt. The expense by the Borrowing Group is then allocated within each Borrowing Group to allocable cost centers based on operating revenues. In allocating the Non-Recurring Expenses, the ACOM Debtors' Methodology, in general terms, is a two-step process in which the first step is to categorize service providers into cost pools. The expenses per cost pool then are allocated to allocable cost centers based on operating revenues. Because some of the ACOM Debtor entities have no operations and therefore little or no revenue, and either have no ability to borrow funds under the DIP Facility or are placed in the Borrowing Groups that are subject to minimal Borrowing Caps under the DIP Facility, these entities have a limited ability to pay for any Reorganization Expenses or Non-Recurring Expenses. Accordingly, the Prepetition Agents contend that ACOM's operating subsidiaries, which generate revenue and which generally belong to one of the Prepetition Borrowing Groups, pay a disproportionate percentage, 90%, of the Reorganization Expenses and Non-Recurring Expenses that are incurred by the various constituents in these cases, including the fees and expenses incurred by the Equity Committee and Creditors Committee. The Prepetition Agents, through their advisor, FTI Consulting, Inc., informed the ACOM Debtors that they disagree with the ACOM Debtors' Methodology. The Prepetition Agents believe, inter alia, that: (1) a substantial portion of the Reorganization Expenses and nearly all of the Non-Recurring Expenses are not properly allocable to the members of the Prepetition Borrowing Groups; (2) any allocation of Reorganization Expenses or Non-Recurring Expenses to the Prepetition Borrowing Groups actually constitutes a loan by the Prepetition Borrowing Group member to the ACOM Debtor to which the Reorganization Expenses or Non-Recurring Expenses should be properly and equitably allocated; and (3) a more equitable methodology for charging costs, fees and expenses incurred in these cases would be to allocate the Reorganization Expenses and Non-Recurring Expenses among the ACOM Debtor or ACOM Debtors that incurred them, irrespective of each Debtor's ability to pay the expenses. The ACOM Debtors contend that: (1) their Methodology is fair and equitable given the prevailing circumstances; (2) changing their Methodology would create potential litigable issues in these cases; and (3) because the Prepetition Secured Lenders are oversecured, the current allocation methodology has no negative impact on the Prepetition Secured Lenders' rights as creditors. Without prejudice to the rights of any party to seek further or different relief, the ACOM Debtors and the Prepetition Agents agree to enter into a stipulation for the purpose of insuring that all the Prepetition Secured Lenders' rights are preserved pending a resolution of the dispute, either consensually or judicially. The salient terms of the Stipulation are: (1) The allocation of expenses pursuant to the ACOM Debtors' Methodology will be without prejudice to the Prepetition Agents' rights to seek, at any time, any relief they deem appropriate in their sole discretion including, without limitation, an order: (a) changing or modifying the manner in which the Reorganization Expenses and the Non-Recurring Expenses will be allocated among the ACOM Debtors; (b) requiring that Reorganization Expenses and the Non- Recurring Expenses allocated to an ACOM Debtor pursuant to the ACOM Debtors' Methodology, or otherwise, be reimbursed in cash and in full by the ACOM Debtor or ACOM Debtors to which proper allocation should have been made; and (c) requiring the reversal of any allocations of Reorganization Expenses or Non-Recurring Expenses to an ACOM Debtor pursuant to the ACOM Debtors' Methodology, or otherwise; (2) The Stipulation is without prejudice to any and all rights, claims and defenses that the ACOM Debtors may have with respect to any request. The obligation, if any, of an ACOM Debtor to effect reimbursement to another ACOM Debtor pursuant to any order will constitute an Intercompany Claim that would be entitled to the priority set forth for Intercompany Claims in the Final DIP Order; and (3) The ACOM Debtors will provide FTI with the data they used in allocating the Reorganization Expenses and Non- Recurring Expenses pursuant to the ACOM Debtors' Methodology on a monthly basis, including: (a) data of the scope and substance that is contained in the ACOM Debtors' "allocation workbook," a copy of which was provided to FTI on November 7, 2003; (b) a reconciliation of the Reorganization Expenses and Non-Recurring Expenses and fees under the ACOM Debtors' Methodology to the amounts reported in the financial statement for each Borrowing Group, ACOM, and non-debtors; and (c) other information that may be agreed to by the ACOM Debtors and FTI. (Adelphia Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 215/945-7000) AES GENER: Fitch Assigns Prelim. BB Rating to Proposed $300M Bond ----------------------------------------------------------------- Fitch Ratings assigned a preliminary 'BB' rating to AES Gener S.A.'s proposed long-term US$300 million 144A bond issuance. The bond will be interest only and have a bullet maturity. Proceeds from the issuance will be used to partially finance the repurchase of outstanding debt through a tender offer. The company's 'BB-' international foreign and local currency ratings and 'chl BBB-' national scale rating remain on Rating Watch Positive and will be finalized upon completion of the transactions. The assigned rating to the proposed issuance is based on Gener's pro forma capitalization, leverage and interest coverage ratios following the completion of the company's recapitalization plan. The underlying credit rating also reflects Gener's position as the largest thermal generator in Chile, its competitive dispatch position, its operating strategy to optimize contract electricity sales, a constructive regulatory environment, an economically sound and growing service area, and experienced management. The operating fundamentals of Gener continue to reflect the company's sound position in the Chilean electricity market. Electricity demand growth in Chile has been almost 6% over the last twelve months and regulated prices have continued their upward trend, increasing approximately 9% in U.S. dollar terms in the October 2003 tariff reset. Gener further benefits from its project-like structural characteristics, including long-dated power purchase agreements with financially strong customers and fuel supply contracts that reduce business risk. The rating also considers exposure to variations in hydrology and the impact on electricity generation, commodity price risks, currency risks and ongoing competitive pressures. The international bond offering is part of Gener's announced recapitalization plan to address approximately US$700 million of debt maturing in 2005 and 2006 and reduce total debt by US$300 million. Sources of funds to repay and refinance existing debt include the new US$300 million international bond, the US$298 million repayment to Gener of a mercantile account (intercompany loan) from Gener's direct holding company, Inversiones Cachagua, a new US$75 million unsecured term loan, a capital increase for up to US$125 million to be effected by Cachagua and cash on hand at Gener. The company has also announced its intention to pay a US$100 million dividend following completion of the debt refinancing/repayment. The company has tendered for the US$200 million of outstanding Yankee bonds due in 2006 and the US$500 million of Chilean and US convertible bonds due in 2005. Approximately US$145 million of Yankee bonds have been tendered and are expected to be paid with proceeds from the mercantile account promptly. The tender for the convertible bonds has been extended until the end of March, however it is expected that Gener will call any convertible bonds not tendered. The convertible bonds will be paid with proceeds from the new bond and term loan, cash on hand, and proceeds from the capital increase. Existing Yankee bonds that are not tendered will be repaid by their scheduled maturity of January 2006. The US$300 million debt repayment and new bond will reduce leverage, increase interest coverage ratios and significantly extend the average debt maturity profile of the company improving the company's financial flexibility. Following the recapitalization transactions, consolidated EBITDA-to-interest (excluding Chivor, Gener's Colombian generating company) is expected to increase to 3.2x for 2004 from 2.1x through 2003. Debt-to-EBITDA should remain stable at 4.1x for 2004, though Gener's liquidity position is expected to include increased cash related to the completed contract negotiation with one of its largest customers, Minera Escondida resulting in a lower net debt to EBITDA ratio. Although Gener continues to consolidate Chivor in its reported financial statements, the company has excluded Chivor from its financial projections given the prohibition of dividends and the limited guaranteed support for the company. In addition to the recapitalization of Gener, the company has also renegotiated US$151 million of consolidated debt associated with the TermoAndes and InterAndes projects to extend maturities and improve the amortization schedule. The projects have accrued restricted cash of approximately US$36 million as of end of February 2004, which was used to partially repay the existing debt. The underlying credit quality of Gener also benefits from certain structural protections. Gener's stand-alone creditworthiness is supported by: the company being domiciled in Chile, limitations on dividends or intercompany loans, the inclusion of independent directors on the company's board of directors and strengthened corporate governance, which also affords it a high degree of isolation from its parent company, The AES Corporation (AES, Fitch-rated 'B' senior unsecured rating). Gener is the second largest electricity generation group in Chile in terms of operating revenue and generating capacity (22% market share) with an installed capacity of 1,804 MW. The company currently participates in electricity generation in Colombia, Argentina and the Dominican Republic, as well as natural gas transportation in Chile and Argentina. Gener is 98.65% owned by AES. AHOLD: Sells Two Brazilian Businesses to Wal-Mart & Unibanco ------------------------------------------------------------ Ahold sold its Brazilian retail chain Bompreco to Wal-Mart Stores Inc. Simultaneously, Ahold sold its Brazilian credit card operation Hipercard to Unibanco S.A. The combined enterprise value of these operations amounts to approximately USD 500 million. The assets consist of Bompreco (a food retailer with 118 hypermarkets and supermarkets with a leading position in Northeastern Brazil) and Hipercard (the leading credit card in Northeastern Brazil with over 2 million cardholders). G. Barbosa, Ahold's other Brazilian retail operation with 32 stores that was acquired by Ahold in January 2002, is not included in the transaction. Wal-Mart Stores, Inc., started operations in Brazil in May 1995. Operating under different banners, the company's stores and clubs are located in the states of Sao Paulo, Parana, Rio de Janeiro and Minais Gerais. With sales of BRL1.9 billion in 2003, Wal-Mart Brazil has approximately 7,000 employees. Unibanco, the third largest private-sector Brazilian financial group, focuses on retail and wholesale banking, and insurance and pensions and wealth management. Commenting on the agreements, Theo de Raad, the Ahold Corporate Executive Board member responsible for Latin America and Asia, said: "We are delighted to have found buyers of such quality as Wal-Mart and Unibanco. They offer an excellent fit for Bompreco and Hipercard and we are confident that this will prove great for customers, associates, suppliers and others involved." The divestment of Ahold's activities in Brazil is part of Ahold's strategy to optimize its portfolio and to strengthen its financial position by reducing debt. Ahold first entered the Brazilian market in 1996 through an agreement with the owner of Bompreco. In October 2001, Bompreco became a wholly-owned subsidiary of Ahold. Unaudited 2003 net sales for Bompreco amounted to approximately BRL 2.9 billion (approximately Euro 843 million). Bompreco and Hipercard employ more than 20,000 people. * * * As previously reported, Fitch Ratings, the international rating agency, assigned Netherlands-based food retailer Koninklijke Ahold NV a Stable Rating Outlook while removing it from Rating Watch Negative. At the same time, the agency has affirmed Ahold's Senior Unsecured rating at 'BB-' and its Short-term rating at 'B'. The Stable Outlook reflects the benefits from the shareholder approval, granted on Wednesday, for a fully underwritten EUR3billion rights issue. Ahold however continues to face financial and operational difficulties which have been reflected in the Q303 results. Ahold announced in early November its strategy for reducing debt through its EUR3bn rights issue and EUR2.5bn of asset disposals as well as improving the trading performance of its core retail and foodservice businesses. Whilst the approved rights issue addresses immediate liquidity concerns, operationally, the news is less positive with Ahold's core Dutch and US retail operations both suffering from increased competition, mainly from discounters, resulting in operating profit margin erosion. Ahold's European flagship operation, the Albert Heijn supermarket chain in the Netherlands, recently reported both declining sales and profits, as consumers turn to discount retailers. In reaction to this, Albert Heijn, has amended its pricing structure which in turn would suggest that it will be more challenging in the future to match historic operating margin levels. AINSWORTH: Sets Q4 & Year-End 2003 Conference Call for Friday ------------------------------------------------------------- Ainsworth Lumber Co. Ltd. (TSX: ANS) management will host a conference call on Friday, March 5th at 8:00 a.m. Pacific time to review fourth quarter and year-end 2003 earnings. Call participants may dial 1-800-428-5596 and reference conference ID number 21186949. Replay of the conference call will be available until March 12 by calling PostView 1-800-558-5253 and using conference ID number 21186949. Ainsworth Lumber Co. Ltd. has operated as a forest products company in Western Canada for over 50 years. The company's facilities have a total annual capacity of 1.5 billion square feet (3/8" basis) of oriented strand board (OSB), 155 million square feet of specialty overlaid plywood, and 55 million board feet of lumber. In Alberta, its operations include an OSB plant at Grande Prairie and a one-half interest in the Footner OSB plant at High Level. In B.C., its operations include an OSB plant at 100 Mile House, a veneer plant at Lillooet, a plywood plant at Savona and finger-joined lumber plant at Abbotsford. * * * Standard & Poor's Ratings Services raised its long-term corporate credit rating on wood products producer Ainsworth Lumber Co. Ltd. to 'B+' from 'B-' due to a strong financial performance and a strengthened balance sheet following completion of the company's proposed refinancing. At the same time, Standard & Poor's assigned its 'B+' senior unsecured debt rating to Ainsworth's proposed US$200 million notes maturing in 2014. The outlook is stable. "The upgrade stems from Ainsworth's strengthened balance sheet following strong profitability and cash generation in a year of record demand and pricing for oriented strandboard (OSB)," said Standard & Poor's credit analyst Clement Ma. Using a combination of approximately C$194 million cash and the new senior unsecured notes, Ainsworth is expected to retire its US$281.5 million in existing secured debt through a public tender offer. Following the refinancing, the company's total debt to capitalization should eventually decrease to less than 45% from approximately 67% at Dec. 31, 2003. The ratings on Ainsworth reflect the company's narrow product concentration in the production of OSB, and its mid-size market position. These risks are partially offset by the company's strong cost position stemming from its modern asset base, and its high fiber integration. AMERICAN ACHIEVEMENT: S&P Assigns $195-Mil. Bank Loan Rating at B+ ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and its '3' recovery rating to school-related affinity products manufacturer American Achievement Corp.'s proposed $195 million senior secured credit facilities due 2011. The 'B+' bank loan rating is the same as AAC's corporate credit rating. Along with the '3' recovery rating, this indicates that lenders can expect meaningful recovery of principal (50%-80%) in the event of a default. In addition, Standard & Poor's assigned its 'B-' senior subordinated debt rating to AAC's proposed $150 million senior subordinated notes due 2011. These ratings are based on preliminary offering statements and are subject to review upon final documentation. Standard & Poor's also affirmed all its outstanding ratings on AAC and wholly owned operating subsidiary Commemorative Brands Inc., including the two companies' 'B+' corporate credit ratings. All ratings have been removed from CreditWatch, where they were placed Oct. 3, 2003. The outlooks for both AAC and CBI are stable. Proceeds from the new credit facilities and the notes offering will be used partly to finance the proposed acquisition of AAC by Fenway Partners Capital Fund II LP. They will also be used to repay outstanding indebtedness of about $230 million currently residing at AAC and CBI. (The senior secured bank loan rating on AAC's existing bank loan and the senior unsecured debt rating on AAC's senior notes will be withdrawn upon the closing of the proposed purchase, as will CBI's corporate credit rating and the subordinated debt rating on CBI's existing senior subordinated notes.) The proposed transaction will add about $83 million of incremental debt and increase AAC's debt leverage. However, the ratings affirmation reflects Standard & Poor's expectation that AAC will continue to generate modest free cash flows for the repayment of term bank debt and, thus, be able to rapidly delever. This expectation is further supported by the initial 75% excess cash flow sweep provision under the proposed credit agreement. "The ratings on AAC, as well as its operating subsidiary CBI, reflect the company's high debt leverage, somewhat narrow business focus, and the seasonal nature of demand for its products," said Standard & Poor's credit analyst David Kang. "Somewhat mitigating these factors are the company's solid market position, broad distribution network, and the non-deferrable nature of demand in the mature school-related affinity products industry." Austin, Texas-based AAC, through CBI, is a leading manufacturer of class rings, yearbooks, graduation products, and affinity jewelry. The estimated $1.5 billion North American scholastic products industry is competitive, with three companies dominating a significant portion of the class ring and yearbook segments. American Achievement is the No. 2 player in the estimated $495 million North American high school and college class ring market, with a share of about 35%, behind market leader Jostens Inc. (B+/Stable/--) and its 45% share. In the $685 million North American high school and college yearbook market, American Achievement has a share of about 20%, the same as Herff Jones Inc. (unrated), yet behind market leader Jostens, which has a 40% share. ARCHIBALD CANDY: Former Employees' Union Accept Settlement Offer ---------------------------------------------------------------- Members of Teamsters Local 781 overwhelmingly ratified a settlement offer from Archibald Candy Corporation in connection with the closure of the company's manufacturing and distribution facilities. The vote was 297 to 26. With the vote, settlement offers have been approved by unions representing 97 percent of union employees affected by the recent closings of Archibald's Chicago manufacturing plant and 238 Fannie May and Fanny Farmer stores. The Company filed for Chapter 11 bankruptcy on January 28, 2004. On February 19, the Bankruptcy Court approved settlement agreements entered into between Archibald and SEIU Local 1 and International Union of Operating Engineers Local 399. Union and company attorneys hope to file a motion shortly in Bankruptcy Court to approve the Local 781 settlement. Jim Ross, Chief Restructuring Officer for Archibald, said, "We are very pleased with the results of the vote. This means that, if approved by the Court, nearly 900 union employees will receive settlements negotiated for their benefit. Our financial stakeholders have agreed to make expedited payments on claims that might not otherwise receive any payments under the Bankruptcy Code." ARCH WIRELESS: Reorganized Company Issues Full Year 2003 Results ---------------------------------------------------------------- Arch Wireless, Inc. (Nasdaq: AWIN, BSE: AWL), a leading wireless messaging and mobile information company, announced net income of $16 million for 2003, compared to net income of $1.7 billion for 2002. Net income for 2002 included various bankruptcy-related items, including a $1.6 billion gain from the discharge and termination of debt upon Arch's emergence from Chapter 11 on May 29, 2002. For the quarter ended December 31, 2003, Arch reported a net loss of $1.4 million, or $0.07 per share, compared to a net loss of $8.3 million, or $0.42 per share, for the fourth quarter of 2002. Revenues for 2003 totaled $597 million while revenues for the fourth quarter of 2003 totaled $135 million. For the twelve and three-month periods ended December 31, 2003, the company reported net cash provided by operating activities of $181.2 million and $34.4 million, respectively. "Fourth quarter and full-year operating results met our expectations and were consistent with the financial guidance we provided in early 2003," said C. Edward Baker, Jr., chairman and chief executive officer. "Although the wireless messaging industry remains competitive, we continued to make steady improvements to network operations, business processes and customer service in 2003 while increasing our operating margins." Baker also noted that Arch's disconnect rate for units in service improved steadily during 2003, attributing the slowing pace of decline to a higher concentration of messaging units with large customers. "With an increasing percentage of our units in service held by large commercial enterprises," he said, "we've seen an improving trend." J. Roy Pottle, executive vice president and chief financial officer, said Arch continued to strengthen its financial position during 2003 through the successful reduction of operating and capital expenses as well as the repayment of debt. "Total operating expenses declined by 29% during the year," he said, "while capital expenditures decreased to $25 million in 2003 from $84 million a year earlier." Pottle noted that a large part of the year- over-year reduction in capital costs was the result of improved pricing from new equipment manufacturers. Pottle also noted that Arch repaid $161.9 million of its outstanding debt in 2003. Pottle said "Arch continued to reduce debt during the fourth quarter, well ahead of stated maturities." He said the company's wholly owned subsidiary Arch Wireless Holdings, Inc. (AWHI) completed optional and mandatory redemptions of its 12% Subordinated Secured Compounding Notes due 2009 during the fourth quarter. "Through January 30, 2004," he added, "AWHI has redeemed $60 million compounded value of the 12% Notes and had $50 million in aggregate compounded value outstanding with cash on hand exceeding $27 million." Pottle said that during the quarter ended December 31, 2003, Arch determined, based on operating income and cash flows for the past two years and anticipated operating income and cash flows for future periods, that it was appropriate to recognize certain of its deferred tax assets. Accordingly, during the quarter Arch released the valuation allowance against its deferred tax assets totaling $219.6 million, which also resulted in a $217 million increase to stockholders' equity. Arch's messaging units in service decreased by 280,000 during the fourth quarter and 1,452,000 for the year, compared to 503,000 and 2,584,000 for the fourth quarter and year ended December 31, 2002, respectively. Total units in service at December 31, 2003 were 4,437,000, including 3,674,000 direct units in service and 763,000 indirect units in service. The decrease in units in service for the quarter and year above do not include the addition of 249,000 units which resulted from the reversal of the remaining portion of the one- time, 1,000,000 unit reduction recorded in the fourth quarter of 2000 for definitional differences and potential unit reductions associated with the conversion and cleanup of accounts acquired in the PageNet acquisition. Since Arch has completed the conversion and final review of these accounts, the remainder of this prior unit reduction was recorded as a one-time increase in the fourth quarter, which increased Arch's units in service at December 31, 2003. Arch's financial results include separate results and cash flows prior to its emergence from bankruptcy on May 29, 2002 (the Predecessor Company), as well as operating results and cash flows after its emergence from bankruptcy (the Reorganized Company), reflecting the application of "fresh-start" accounting that resulted from Arch's chapter 11 reorganization. Consequently, and due to other reorganization-related events and adjustments, the financial statements of the Predecessor Company and Reorganized Company for the twelve- month period ended December 31, 2002 are not comparable to the financial statements of the Reorganized Company for the twelve-month period ended December 31, 2003. About Arch Arch Wireless, Inc., headquartered in Westborough, Mass., is a leading wireless messaging and mobile information company with operations throughout the United States. It offers a full range of wireless messaging and wireless e-mail services, including mobile data solutions for the enterprise, to business and retail customers nationwide. Arch provides services to customers in all 50 states, the District of Columbia, Puerto Rico, Canada, Mexico and in the Caribbean principally through a nationwide direct sales force, as well as through indirect resellers, retailers and other strategic partners. Additional information on Arch is available on the Internet at http://www.arch.com/ AVADO BRANDS: Turns to Miller Buckfire for Financial Advice ----------------------------------------------------------- Avado Brands, Inc., and its debtor-affiliates seek approval from the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, to hire Miller Buckfire Lewis Ying & Co., LLC as their financial advisor and investment banker. The Debtors relate that Miller Buckfire was hired on July 16, 2002, to provide Avado with strategic and financial advisory services in corporate restructuring transactions. Miller Buckfire's professionals have extensive experience in providing financial advisory and investment banking services to financially distressed companies and to creditors, equity constituencies and government agencies in reorganization proceedings and complex financial restructurings, both in and out of court. Prior to the Petition Date, Miller Buckfire: 1) familiarized itself with the Debtors' business; 2) participated in initial discussions between the Debtors and significant creditor constituencies; and 3) assisted the Debtors in final negotiations with lenders under its proposed debtor-in-possession facility. For the duration of these chapter 11 cases, the Debtors expects Miller Buckfire to: a) familiarize itself with the business, operations, properties, financial condition and prospects of the Debtors; b) provide financial advice and assistance to the Debtors in developing and seeking approval of a Restructuring Plan; c) assist the Debtors and/or participate in negotiations with entities or groups affected by the Plan; and d) provide financial advice and assistance as needed to the Debtors in structuring and effecting a financing or sale including assisting the Debtors in developing and preparing a memorandum to be used in soliciting potential investors or acquirers. Miller Buckfire will be paid: a) a $150,000 monthly Financial Advisory Fee; b) a $1,500,000 Restructuring Transaction Fee; c) a Sale Transaction Fee equal to: i) 2.0% of the Aggregate Consideration up to $50,000,000, plus ii) 1.50% of the Aggregate Consideration, if any, between $50,000,001 and $150,000,000, plus iii) 1.25% of the Aggregate Consideration, if any, in excess of $150,000,001, contingent and payable upon the consummation of a Sale; and d) a financing fee(s) equal to: i) 1.0% of the gross proceeds of any indebtedness issued that is secured by a first lien; ii) 3.0% of the gross proceeds of any indebtedness issued; and iii) 5.0% of the gross proceeds of any equity or equity linked securities or obligations issued. Miller Buckfire is owned and controlled by Henry S. Miller, Kenneth A. Buckfire, Martin F. Lewis and David Y. Ying. Miller Buckfire currently has 45 employees, many of whom were employees of the Financial Restructuring Group of Dresdner Kleinwort Wasserstein, Inc., prior to July 16, 2002. Headquartered in Madison, Georgia, Avado Brands, Inc. -- http://www.avado.com/-- is a restaurant brand group that grows innovative consumer-oriented dining concepts into national and international brands. The Company filed for chapter 11 protection on February 4, 2004 (Bankr. N.D. Tex. Case No. 04-31555). Deborah D. Williamson, Esq., and Thomas Rice, Esq., at Cox & Smith Incorporated represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $228,032,000 in total assets and $263,497,000 in total debts. AURORA FOODS: Court Approves Skadden Arps' Retention as Counsel --------------------------------------------------------------- The Aurora Foods Debtors sought and obtained the Court's authority to employ Skadden, Arps, Slate, Meagher & Flom LLP, as their bankruptcy counsel, in connection with the filing of their Chapter 11 petitions and the prosecution of their Chapter 11 cases, nunc pro tunc to December 8, 2003. As the Debtors' Bankruptcy Counsel, Skadden will: (a) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession, in the continued management and operation of their businesses and properties; (b) attend meetings and negotiate with representatives of creditors and other parties-in-interest and advise and consult on the conduct of the case, including all of the legal and administrative requirements of operating in Chapter 11; (c) take all necessary actions to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any actions commenced against those estates, negotiations concerning litigation in which the Debtors may be involved (other than matters with respect to which the Debtors have looked to other counsel), and objections to claims filed against the estates; (d) prepare, on the Debtors' behalf, motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; (e) negotiate and prepare on the Debtors' behalf plan(s) of reorganization, disclosure statement(s), and all related agreements or documents, and take any necessary action on the Debtors' behalf to obtain confirmation of the plan(s); (f) advise the Debtors in connection with any sale of assets; (g) appear before the Bankruptcy Court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtors' estates before the courts and the U.S. Trustee; (h) continue to assist the Debtors with their efforts to consummate the Merger Agreement, as well as any further negotiations or modifications thereto; and (i) perform other necessary legal services and provide other necessary legal advice to the Debtors in connection with these Chapter 11 cases. The Debtors will pay Skadden its fees based in part on its customary hourly rates, which are periodically adjusted. Skadden's Standard Bundled Hourly Time Charge Schedule reflects: Partners and Of-counsel $495 - 725 Associates and counsel 240 - 485 Legal Assistants and support staff 80 - 195 These hourly rates are subject to periodic increases in the normal course of the firm's business, often due to the increased experience of a particular professional. Particularly, Counsel and Associates will observe these levels and rates: Level Rate ----- ---- 10 $485 9 475 8 455 7 435 6 415 5 395 4 375 3 335 2 295 1 280 The Debtors will also reimburse Skadden for all other services provided and for other charges and disbursements incurred in the rendition of services. These charges and disbursements include, among other things, costs for telephone charges, photocopying, travel, business meals, computerized research, messengers, couriers, postage, witness fees, and other fees related to trials and hearings. The Debtors will employ Skadden under a general retainer because of the extensive legal services that will be required in connection with these cases and the firm's familiarity with the Debtors' businesses. Pursuant to a June 10, 2003 Engagement Agreement, the Debtors paid Skadden a $400,000 retainer for professional services and expenses. Under the terms of the Engagement Agreement, the retainer was increased to $600,000 on October 22, 2003. Skadden will issue a final billing statement for the actual fees, charges, and disbursements incurred for the period prior to the Petition Date. The Final Billed Amount -- net of payments received -- will be paid from amounts presently held by Skadden and the balance will be held as a postpetition retainer to be applied against any unpaid fees and expenses approved by the Court with respect to Skadden's final fee application in these cases. Aurora Foods Inc. -- http://www.aurorafoods.com/-- based in St. Louis, Missouri, produces and markets leading food brands, including Duncan Hines(R) baking mixes; Log Cabin(R), Mrs. Butterworth's(R) and Country Kitchen(R) syrups; Lender's(R) bagels; Van de Kamp's(R) and Mrs. Paul's(R) frozen seafood; Aunt Jemima(R) frozen breakfast products; Celeste(R) frozen pizza; and Chef's Choice(R) skillet meals. With $1.2 billion in reported assets, Aurora Foods, Inc., and Sea Coast Foods, Inc., filed for chapter 11 protection on December 8, 2003 (Bankr. D. Del. Case No. 03-13744), to complete a pre-negotiated sale of the company to J.P. Morgan Partners LLC, J.W. Childs Equity Partners III, L.P., and C. Dean Metropoulos and Co. Judge Walrath confirmed the Debtors' pre-packaged plan on Feb. 20, 2004. Sally McDonald Henry, Esq., and J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP provide Aurora with legal counsel, and David Y. Ying at Miller Buckfire Lewis Ying & Co., LLP provides financial advisory services. (Aurora Foods Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) AVITAR: Shareholders Okay Financing Proposals at Special Meeting ---------------------------------------------------------------- Avitar, Inc.'s (Amex: AVR) shareholders approved the three proposals presented at the Special Meeting held on February 27, 2004. The proposals all related to capital raising, including the first closing of the September 2003 Private Placement with Gryphon Master Fund, L.P. that raised $1 million gross proceeds, the second closing that is expected to be held with Gryphon for an additional $1 million gross proceeds and another proposal for New Financing, all as described in the Proxy Statement sent to the shareholders for the Special Meeting. Separately, in response to a recently adopted rule of the American Stock Exchange, Avitar announced that, as reported in its Annual Report on Form 10KSB filed with the SEC on January 13, 2004, the Company had received an audit opinion that contained a going concern qualification. This audit opinion (which was dated December 5, 2003, except for Note 17 for which the date is December 16, 2003) related to financial statements for the fiscal year ended September 30, 2003. The Company had received the same type of audit opinion for the fiscal years ended in 2000, 2001 and 2002. Avitar, Inc. develops, manufactures and markets innovative and proprietary products in the oral fluid diagnostic market, disease and clinical testing market, and customized polyurethane applications used in the wound dressing industry. Oral fluid diagnostics includes the estimated $1.5 billion drugs-of-abuse testing market, which encompasses the corporate workplace and criminal justice markets. Avitar's products include ORALscreen(TM), the world's first non-invasive, rapid, onsite oral fluid test for drugs-of-abuse. Additionally, Avitar manufactures and markets HYDRASORB(TM) an absorbent topical dressing for moderate to heavy exudating wounds. In the estimated $25 billion in vitro diagnostics market, Avitar is developing diagnostic strategies for disease and clinical testing. Some examples include influenza, diabetes and pregnancy. For more information, see Avitar's website at http://www.avitarinc.com/ * * * The Troubled Company Reporter's February 10, 2004 edition reported that, as a result of the Company's recurring losses from operations and working capital deficit, the report of its independent certified public accountants relating to the financial statements for Fiscal 2003 contains an explanatory paragraph stating substantial doubt about the Company's ability to continue as a going concern. Such report states that the ultimate outcome of this matter could not be determined as the date of such report The Company plans to address the situation, however, there are no assurances that these endeavors will be successful or sufficient. AVNET: Fitch Rates $270 Million Convertible Debt Offering at BB --------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Avnet, Inc.'s proposed offering of $270 million of 30-year senior convertible debentures. Proceeds from the offering are expected to be used to repurchase a portion of the company's $360 million 7.875 percent notes maturing Feb. 15, 2005, as the company has announced a cash tender offer for the notes. The Rating Outlook is Stable. Fitch views the announced transaction positively as the company will be using lower interest bearing debt to replace existing, higher cost debt, as well as improving its debt maturity schedule, as the debentures are not puttable until 2009. Overall, the rating continues to reflect concerns regarding Avnet's strained credit protection measures, high debt levels, lower but improved capacity utilization levels along with the pricing pressures, demand variability and lower growth characteristics of the technology distribution industry. Positively, Fitch recognizes the adequate liquidity and leading industry position. Profitability expansion is possible from on- going cost cutting initiatives and the anticipated growth for semiconductors. The Stable Outlook reflects Avnet's current revenue growth and cash flow trends in an improving but still challenging demand environment. While Avnet's operations had been negatively affected by the economic downturn and the low levels of IT spending over the past couple of years, revenue and EBITDA have stabilized. Total revenue for the second quarter ending Jan. 3, 2004 was $2.6 billion, versus $2.4 billion in the first quarter of fiscal-year (FY) 2004 and $2.3 billion in the second quarter of FY 2003. Revenue levels have been stable for the past ten quarters in the $2.1-$2.6 billion range but with EBITDA margins at historically low levels in the 2%-2.5% range. However, for the quarter ended Jan. 3, 2004, the company reported a 2.9% EBITDA margin, as the company has been able to rationalize its cost structure. Fitch believes the demand environment for IT still remains challenging but a moderate industry recovery is expected. Avnet's credit protection metrics have improved in recent quarters from lows in FY 2002. Fitch estimates interest coverage (measured by EBITDA/interest incurred) was 2.3 times (x) on an LTM (latest twelve months) basis as of Jan. 3, 2004, compared to 2.1x on an LTM basis for the first quarter of FY 2004 and 2.0x on an LTM basis for the fourth quarter of FY 2003. Positively, Avnet's interest coverage should improve further as the debt profile improved as a result of this transaction. Total debt has remained consistent at the $1.4 billion level for the last few quarters, compared to $1.6 billion at FY 2002 and $2.2 billion in 2001. As of Jan. 3, 2004 leverage (measured by total debt/EBITDA) was 5.7x on an LTM basis, an improvement from 7.0x at the end of FY 2003. EBITDA has improved over the last few quarters as the company began to see the benefits of its cost cutting initiatives. Fitch anticipates the company may choose to implement additional cost cutting measures as it continues to rationalize expenses. As a result, Fitch expects leverage to improve to approximately 5.0x by the end of FY 2004. Fitch believes Avnet's liquidity is adequate and is supported by approximately $480 million in cash and equivalents as of Jan. 4, 2004, and a $350 million undrawn accounts receivable securitization program. The current offering will be issued under Avnet's $1.5 billion universal shelf registration that was filed in 2003. Fitch believes the company's current resources are sufficient to meet its near-term debt obligations which include the announced tender offer (potentially $360 million) and an additional $100 million due in March 2004. This rating is based on existing public information and is provided as a service to investors. BEAL FIN'L: S&P Assigns BB Long-Term Counterparty Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' long-term counterparty credit rating to Beal Financial Corp. Concurrently, Standard & Poor's assigned its 'BB-' rating to Beal's $500 million senior secured notes due 2014. The outlook is stable. "The ratings on Beal reflect the risk nature of its business strategy, which involves substantial credit and operational risks, as well as concerns over interest rate risk. Commensurate with its higher risk profile, Beal maintains considerably lower capital leverage than most banks, and has historically strong operating performance," said Standard & Poor's credit analyst Robert B. Hoban, Jr. Beal Financial is a $6 billion Subchapter S corporation and thrift holding company based in Plano, Texas. Its main business is to buy loans both in pools and individually at a discount, and service them for the life of the loan. These portfolios often contain loans in distress or are to stressed business sectors. More recent and smaller business lines include buying discounted ABS, originating commercial loans directly, and purchasing other banks' syndications. These loans are mostly to higher-risk borrowers and therefore carry higher yields. Whether purchased or originated, almost all loans are secured, mostly by real estate. Management's demonstrated discipline and the collateralized nature of almost all of its loans somewhat mitigates concerns over credit risk and exposure to the real estate sector. Loans and ABS are bought at a discount, which provides a built in loss reserve. The high-risk nature of Beal's niche business and strong track record of realizing value has also generated high returns, albeit with considerable volatility risk. ROA for the first three quarters of 2003 was a very strong 7.58%. Earnings are aided by increased loan yield caused by booking the loans at the discounted purchase price. The company's financial performance is subject to the competitive environment in purchasing discounted assets and making loans, as well as prevailing economic and credit conditions. Continuation of Beal's track record of strong operating performance along with conservative capital measures and low credit losses leave it well positioned to continue to perform in the face of significant credit, business, and interest rate risk. BUDGET GROUP: Wants to Stretch Plan-Filing Exclusivity to Apr. 7 ---------------------------------------------------------------- Pursuant to Section 1121(d) of the Bankruptcy Code, the Budget Group Inc. Debtors ask the Court to extend their exclusive right to solicit votes for their Chapter 11 Plan through and including April 7, 2004. Recently, the Debtors, with the assistance of their professionals: (1) continued to implement their cooperative plan with the Official Committee of Unsecured Creditors for the reconciliation and resolution of the $5,000,000,000 in scheduled and filed claims made against the Debtors' estates; (2) continued to facilitate discussions between the Committee and the U.K. Administrator regarding the resolution of allocation and other intercompany issues and determining the best strategy in effectively consummating a plan in light of these complex issues; (3) set a supplemental bar date by which requests for the allowance of certain administrative expense claims against BRACII must be received; and (4) continued to attend to the various post-closing issues involved with the North American Sale and the EMEA Sale, including proceeding with the litigation against Cherokee, Cendant and Jaeban (U.K.) Limited and continuing to administer the Debtors' estates. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, reports that the Debtors, the Committee and the U.K. Administrator worked together to develop a consensual plan. The Court's February 5, 2004 Order approving the Disclosure Statement sets April 7, 2004 as the Confirmation Hearing Date and votes are currently being solicited for the Debtors' Second Amended Liquidating Plan. In light of the Disclosure Order and the fact that the Committee and all other parties agreed to the hearing date, the Debtors need an extension to preserve their rights until the Confirmation Hearing Date. Mr. Brady assures the Court that an extension will not prejudice the legitimate interests of any creditor. The Debtors, the Committee and the U.K. Administrator continue to work cooperatively through the myriad issues remaining in these cases. In addition, the Debtors continue to make timely payments of all of their postpetition obligations. The Court will convene a hearing on April 7, 2004 to consider the Debtors' request. By application of Rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedures of the United States Bankruptcy Court for the District of Delaware, the Debtors' exclusive solicitation period is automatically extended through the conclusion of that hearing. 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. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) CELERITY CLO: S&P Assigns BB Preliminary Rating to Class E Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Celerity CLO Ltd./Celerity CLO Inc.'s floating-rate notes. The preliminary ratings are based on information as of March 1, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes and by the preferred shares and overcollateralization; -- The cash flow structure, which is subject to various stresses requested by Standard & Poor's; -- The experience of the collateral manager; and -- The legal structure of the transaction, which includes the bankruptcy-remoteness of the issuer. Celerity CLO is the fifth cash flow arbitrage CLO brought to market by TCW Advisors Inc.'s leverage finance group. PRELIMINARY RATINGS ASSIGNED Celerity CLO Ltd./Celerity CLO Inc. Class Rating Amount (mil. $) A AAA* 199.0 B AAA 22.0 C A** 29.0 D BBB** 16.0 E BB** 8.0 Preferred shares N.R. 26.7 * The class A notes will be split between term and revolving floating-rate notes. ** The class C, D, and E notes will be deferrable-interest notes. COMPUTER DATA: IntraDyn Acquires Liquidating Software Firm ---------------------------------------------------------- IntraDyn Inc. and Computer Data Strategies Inc. completed an agreement under which IntraDyn has acquired key assets of CDS. The acquisition adds CDS' well-established data backup software -- Back Again II -- to IntraDyn's existing product line for small to midsized businesses (SMBs). The CDS software will now be marketed by IntraDyn as a stand-alone offering, and also integrated into IntraDyn's RocketVault data backup and archiving appliances. Most significantly, CDS' Microsoft Exchange Server and SQL Server data protection capabilities will further enhance IntraDyn's products, extending the market for them. "The acquisition of CDS by IntraDyn seems nicely synergistic," said Mike Karp, Boston-based senior analyst with Enterprise Management Associates. "IntraDyn already has excellent appliance solutions for small/medium businesses and remote offices. This acquisition helps fill out their product portfolio so they can now offer a software-only solution where that is appropriate. I fully expect additional, co-developed software from the firm in the near future," he added. "We're very excited about CDS joining us, and providing powerful technology to complement our own," said Gary Doan, IntraDyn's CEO. "We also gain a number of highly talented individuals and a global presence. The mission of both IntraDyn and CDS is to help smaller businesses and branch offices protect their most strategic information -- their data. We now intend to release advanced versions of the Back Again ll software with best-of- class features targeting businesses with 10 to 500 users." Brent Bowlby, CDS president, added: "I'm pleased to have found such a great fit for CDS' technology and people. With combined, powerful technology and a stellar management team, we'll be able to maximize and enhance our technology to further meet the needs of the company, our customers, and our worldwide marketplace. Existing CDS customers will benefit from the strength and synergies of this combination. Our longstanding commitment to providing superior data protection solutions is significantly enhanced through this acquisition." CDS will wind down its business in accordance with applicable law following the closing of the asset sale, and thereafter effect a complete liquidation and dissolution. IntraDyn will add four to six CDS employees and an equal number of additional employees in March. The combined firm will move into new corporate headquarters in May. About IntraDyn IntraDyn Inc. (founded in 2001) released the RocketVault family of enterprise-class network backup and archiving appliances for small businesses and remote offices in June 2003. The RocketVault(TM) is a disk-based backup and archiving appliance that includes a fully integrated hardware and software backup and archive solution in a single unit. It allows data on a company's local area network (LAN) to be automatically backed up and stored both locally and remotely. On February 23, 2004, Network World (an IDG publication) announced that the RocketVault(TM) appliance had won its "Best Product, Best- of-the-Tests 2003" award. For more information, see http://www.intradyn.com/ About Computer Data Strategies (CDS) Founded in 1994, CDS Inc. -- http://www.cds-inc.com/-- introduced Back Again/2 for the OS/2 operating system in November 1994. The product line was later expanded with offerings for both the small/home office user and the large corporate customer. In 1998, CDS launched the Back Again II family of data protection software products for systems running Microsoft's Windows NT operating system. Back Again II(TM) version 4.5 offers mature, robust backup applications for Microsoft Windows NT/2000/2003/XP, Microsoft Small Business Server, Microsoft Exchange Server, and Microsoft SQL Server. COPPERWELD: Names Dennis McGlone As New Chief Executive Officer --------------------------------------------------------------- Copperweld Corporation announced the promotion of Dennis McGlone to president and chief executive officer of the steel tubing, automotive, and bimetallic products firm. Mr. McGlone had been president and chief operating officer. Mr. McGlone joined Copperweld in 2001 as vice president of sales, tubular products group. He was named president and chief operating officer in October 2002 and worked in that capacity through the restructuring process which enabled the firm to successfully emerge from bankruptcy as a stand-alone company. Prior to joining Copperweld, he had been vice president - commercial and a corporate officer of AK Steel, heading the national and international sales of its specialty products. Mr. McGlone holds a BS degree in metallurigical and materials engineering from the University of Pittsburgh. The company also announced that Pat J. Meneely has joined the company's senior staff as vice president of business services, a newly-created position. Mr. Meneely's responsibilities will include the corporation's human resources and information technology areas. "We were very fortunate to be able to hire someone with Pat Meneely's broad-based background and expertise," said Mr. McGlone. "He is a proven, results-oriented executive who has developed and successfully implemented business process improvements for several major domestic and international companies." The corporation's board of directors elected James A. Loveland as chairman of the board and named two other board members as committee chairmen. Andrew P. Hines will serve as audit committee chairman and W. Allan Hopkins as chairman of the board's compensation committee. Pat J. Meneely has extensive experience in the human resources and information technology areas in several industries including manufacturing, consumer products, and consulting. Before joining Copperweld, Mr. Meneely held executive positions with Covansys, Armco, and Wheeling-Pittsburgh Steel. Mr. Meneely earned a BS degree from Indiana University of Pennsylvania, an MBA from the University of Pittsburgh and an MS degree in human resource management from Houston Baptist University. James A. Loveland has diversified experience in executive management, international operations, strategic planning, sales and manufacturing. He recently served as Copperweld's chief restructuring officer, helping the firm develop the reorganization plan that enabled it to emerge from bankruptcy. Prior to joining Copperweld, Mr. Loveland worked as a management consultant, focusing on business restructuring assignments. He also served for nine years as president and CEO of WorldSource Coil Coating and for five years as president and COO of Continental Copper & Steel, Inc. He holds a BS degree in economics and an MBA from the University of California, Berkeley. Andrew P. Hines has nearly 30 years of experience as a senior- level executive in operations, finance, acquisitions and divestitures, bank relations and capital financing. He has worked in the consumer, industrial, retail and e-net industries, with both Fortune 100 companies, such as RJR Nabisco, Adidas and F.W. Woolworth, as well as with a number of entrepreneurial companies. He holds a BBA degree from Saint John's University and attended Harvard University. He is a member of the American Institute of Certified Public Accountants and the Financial Executives Institute. W. Allan Hopkins has served in executive-level positions in the steel industry for more than 20 years, including executive positions in operations and sales for Stelco, Inc., as president and chief executive officer with Algoma Steel, as chairman of the board of Empire Specialty Steel Inc., and as president and chief executive officer of Atlas Steels, Inc. He currently works as a consultant and serves on the board of directors of several corporations, including Copperweld. Mr. Hopkins earned a BS degree in civil engineering from the University of North Dakota. Copperweld Corporation was founded in 1915 to produce copper clad steel wire and strand. It expanded into the mechanical and structural tubing business in the 1950s and into the automotive components business in the 1990s. In late 1999, it was acquired by LTV and combined with another acquisition, Welded Tube Company of America and LTV's existing tubular products business, became the largest producer of steel tubular products in North America and the largest producer of bimetallic products in the world. The Pittsburgh-based company entered bankruptcy when its parent company, LTV Corporation, filed for Chapter 11 protection in December 2000. It emerged from bankruptcy as a stand-alone company on December 18, 2003. CROWN CASTLE: Will Record Charge Related to Tendered Sr. Notes -------------------------------------------------------------- Crown Castle International Corp. (NYSE: CCI) will recognize the loss related to the extinguishment of the tendered 9% and 9.5% Senior Notes in the first quarter of 2004, which will decrease its previously reported fourth quarter and full year 2003 net loss. The changes have no effect on site rental and broadcast transmission revenue, total revenue, adjusted EBITDA, net cash from operating activities, free cash flow (defined as cash from operating activities less capital expenditures) and 2004 outlook reported on February 18, 2004. The revision will move the recognition of a loss on the extinguishment of tendered Senior Notes from the fourth quarter of 2003 to the first quarter of 2004. On December 5, 2003, Crown Castle announced cash tender offers for its Senior Notes. The tender offers for these notes expired on January 6, 2004 and Crown Castle paid for these notes on January 7, 2004. In its February 18, 2004 press release reporting fourth quarter and full year 2003 results, Crown Castle reported a loss of $122.8 million for the extinguishment of certain debt and preferred securities in the fourth quarter, inclusive of $22.5 million related to the extinguishment of the Senior Notes that had been irrevocably tendered as of December 31, 2003. Crown Castle's determination to record the loss of $22.5 million in the fourth quarter of 2003 was made in consultation and with the concurrence of KPMG LLP, its external auditor. In conjunction with the preparation of Crown Castle's Form 10-K, Crown Castle, together with KPMG LLP, determined that it is appropriate to recognize the loss of $22.5 million on the extinguishment of such tendered Senior Notes in the first quarter of 2004. The effect of recognizing the loss on the extinguishment of such tendered Senior Notes in the first quarter of 2004 will decrease the previously reported net loss by $22.5 million and the net loss per share by $0.10 per share in the fourth quarter of 2003. The Senior Notes tendered at December 31, 2003 remain classified as current maturities of long- term debt at year-end. The revised net loss and net loss per share for fourth quarter and full year 2003 follows: Net loss was $148.8 million for the fourth quarter of 2003, inclusive of $100.3 million in losses from the retirement of debt and preferred securities, compared to a net loss of $34.9 million for the same period in 2002, inclusive of $49.1 million of gains from the retirement of debt. Net loss after deduction of dividends on preferred stock was $158.8 million in the fourth quarter of 2003, inclusive of $100.3 million in losses from the retirement of debt and preferred securities, compared to a loss of $4.2 million for the same period last year, inclusive of $98.8 million in gains from the retirement of debt and preferred securities. Fourth quarter net loss per share was $(0.73) compared to a loss per share of $(0.02) in last year's fourth quarter of 2002. Prior to July 1, 2003, gains and losses from purchases of our 12 3/4% Senior Exchangeable Preferred Stock were presented as part of dividends on preferred stock in our consolidated statement of operations. Since that date, such gains and losses are presented as part of interest and other income (expense) due to the adoption of a new accounting standard for mandatorily redeemable financial instruments. Net loss for full year 2003 was $398.4 million, inclusive of $137.8 million in losses from the retirement of debt and preferred securities, compared to a net loss of $272.5 million for the same period in 2002, inclusive of $79.1 million of gains from the retirement of debt. Net loss after deduction of dividends on preferred stock was $452.3 million for the full year 2003, inclusive of $137.5 million in losses from the retirement of debt and preferred securities, compared to a loss of $252.9 million for the same period last year, inclusive of $178.6 million in gains from the retirement of debt and preferred securities. Full year 2003 net loss per share was $(2.09) compared to a loss per share of $(1.16) for full year 2002. Crown Castle's outlook for first quarter and full year 2004 remains unchanged from the prior press release. Crown Castle International Corp. (S&P, B- Corporate Credit Rating, Stable Outlook) engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers and rooftop sites as well as analog and digital audio and television broadcast transmission systems. Crown Castle offers near-universal broadcast coverage in the United Kingdom and significant wireless communications coverage in the United States, United Kingdom and Australia. The company owns, operates and manages over 15,500 wireless communication sites internationally. For more information on Crown Castle visit: http://www.crowncastle.com/ Crown Castle's December 31, 2003 balance sheet shows a working capital deficit of $20,074,000 DELACO COMPANY: Retaining McCarter & English as Special Counsel --------------------------------------------------------------- The Delaco Company asks the U.S. Bankruptcy Court for the Southern District of New York for permission to employ McCarter & English, LLP as its special counsel. The services of attorneys are necessary to enable the Debtor to execute faithfully its duties as a debtor-in-possession. In this engagement, McCarter & English will be required to render various services to the Debtor including, among others, handling all aspects of negotiation and/or litigation in connection with the Debtor's claim for insurance coverage for claims asserting loss arising from the alleged ingestion of Dexatrim. The Debtor relates that because the insurance carriers had failed to defend or indemnify Delaco in the underlying personal injury litigation, the Company initiated coverage litigation against its insurers. The Debtor has sought to settle its disputes with the insurers. Recently, Delaco has reached an agreement with one insurer, under which the insurer will contribute a negotiated contribution to the Debtor's reorganization to be used to pay personal injury claims and certain defense costs. In exchange for the contribution, the insurer is expected to receive the protection of a channeling injunction. Andrew T. Berry reports that for the professional services, McCarter & English's fees are based on its guideline hourly rates: Position Billing Rate -------- ------------ partners $280 to $510 per hour counsel $260 to $500 per hour associates $165 to $300 per hour legal assistants and support staff $35 to $165 per hour Headquartered in New York, New York, The Delaco Company is a leading over-the-counter pharmaceutical drug company whose major products have included SlimFast and Dexatrim. The Company filed for chapter 11 protection on February 12, 2004 (Bankr. S.D.N.Y. Case No. 04-10899). Laura Engelhardt, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of more than $100 million. DOBSON: S&P Watches Ratings Citing Potential Covenant Violations ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings for Dobson Communications Corp., American Cellular Corp., and related entities (including the 'B-' corporate credit rating) on CreditWatch with negative implications. "The CreditWatch placement reflects the potential violation of bank covenants before year-end 2004 resulting from the company's revised EBITDA guidance, as well as increased pressure on roaming revenue due to the pending merger between AT&T Wireless Services Inc. (AWE) and Cingular Wireless LLC," explained Standard & Poor's credit analyst Rosemarie Kalinowski. Dobson Communications is a rural cellular services provider based in Oklahoma City, Okla. With a total of about 1.6 million subscribers, Dobson is one of the largest rural wireless providers. As of Dec. 31, 2003, total debt was about $2.4 billion; including preferred stock, the total is $2.8 billion. In the fourth quarter of 2003, Dobson Communications' roaming revenue, which comprises a high approximate 25% of total revenue, was lower than anticipated due to the slower growth in roaming minutes of use (MOUs), particularly from its largest roaming partner, AWE. AWE has been moving more of its traffic onto its cost-efficient global system for mobile communications (GSM) network, and also has been roaming on Cingular's network as its preferred roaming partner. In addition, AWE was not including free roaming into Dobson's markets in its GSM rate plans. As a result of the aforementioned factors, the company's EBITDA margin declined to 38% in the fourth quarter of 2003, compared with 43% in the fourth quarter of 2002. Additional risk to the higher-margin roaming revenue segment could occur upon the merger of AWE and Cingular, which is anticipated by year-end 2004 dependent upon regulatory approvals. Presently, Cingular's markets overlap 20% of the markets served by Dobson. Furthermore, the roaming yield, which averaged $0.20 in 2003, is expected to decline significantly in 2004 due to step-downs in the existing five-year roaming contracts. Because of anticipated lower roaming revenue, Dobson reduced EBITDA guidance for 2004 to the $390 million-$425 million range. This could result in a breach of the consolidated debt leverage covenant of 6.0x under the secured bank facility before year-end 2004. Based on the lower range of the EBITDA guidance for 2004, net debt to EBITDA would still be tight at about 5.7x. DOMAN IND: CCAA Monitor KPMG Files March Restructuring Report ------------------------------------------------------------- Doman Industries Limited announces that KPMG Inc., the Monitor appointed by the Supreme Court of British Columbia under the Companies Creditors Arrangement Act has filed with the Court its report for the period ended March 1, 2004. The Monitor's report -- a copy of which may be obtained by accessing the Company's Web site at http://www.domans.com/or the Monitor's Web site at http://www.kpmg.ca/doman/-- contains selected unaudited financial information. ECHOSTAR COMMS: Massachusetts Financial Reports 5.95% Equity Stake ------------------------------------------------------------------ Massachusetts Financial Services Company beneficially owns 14,654,973 shares of the common stock of EchoStar Communications Corporation, representing 5.95% of the outstanding common stock shares of the Corporation. MFS holds sole voting power over 14,278,333 shares and sole dispostive powers over the entire 14,654,973 shares. The 14,654,973 include 46,200 shares of common stock which may be acquired through conversion of convertible bonds. EchoStar Communications Corporation (NASDAQ: DISH) (S&P, BB- Corporate Credit Rating, Stable) serves over 9 million satellite TV customers through its DISH Network(TM), and is a leading U.S. provider of advanced digital television services. DISH Network's services include hundreds of video and audio channels, Interactive TV, HDTV, sports and international programming, together with professional installation and 24-hour customer service. DISH Network is the leader in the sale of digital video recorders (DVRs). EchoStar has been a leader for 23 years in satellite TV equipment sales and support worldwide. EchoStar is included in the Nasdaq-100 Index (NDX) and is a Fortune 500 company. Visit EchoStar's Web site at http://www.echostar.com/ EDISON INTERNATIONAL: Amends Shareholder Rights Plan ---------------------------------------------------- Edison International's Board of Directors, acting through its Executive Committee, has approved an amendment to the Company's shareholder rights plan. The amendment provides that the Board will not trigger the rights plan to make the rights exercisable without prior approval by the Company's shareholders. The Board also adopted a policy that Edison International's existing rights plan, which will expire by its terms in November 2006, will not be extended, and that the Board would seek shareholder approval before adopting any future shareholder rights plan unless, due to timing constraints or other reasons consistent with the Board's fiduciary duties, a committee consisting solely of independent directors determines that it would be in the best interests of shareholders to adopt the plan before obtaining shareholder approval. Any rights plan adopted by the Board without such prior shareholder approval would automatically terminate on the first anniversary of the adoption of the plan unless the plan is approved by Edison International's shareholders before it terminates. Shareholders approved a non-binding proposal on this issue at Edison International's annual meeting last year. Based in Rosemead, California, Edison International (NYSE: EIX) (S&P, BB+ Corporate Credit and Senior Unsecured Debt Ratings, Stable) is the parent company of Southern California Edison, Edison Mission Energy and Edison Capital. ENERGY WEST: Applies to Modify Existing $23 Mil. Credit Facility ---------------------------------------------------------------- Energy West, Incorporated (Nasdaq: EWST) has filed applications with the Montana Public Service Commission and the Wyoming Public Service Commission seeking approval of proposed modifications to its current $23 million secured revolving credit facility with LaSalle Bank National Association. The proposed modifications would involve replacing the current $23 million credit facility with a $15 million, short-term revolving credit facility, a $6 million, five-year term note, and a $2 million, 180-day bridge loan. The $2 million loan must be repaid within 180 days with the proceeds of a new placement of equity securities by the Company. The $6 million, five-year term loan would bear interest (at the Company's option) at either the LaSalle Bank prime rate plus 150 basis points or the London Interbank Offered Rate ("LIBOR") plus 350 basis points. The $2 million 180-day bridge loan would bear interest for the first 90 days at LaSalle's prime rate plus 100 basis points, and for the 91st day through maturity at LaSalle's prime rate plus 200 basis points. Interest rates on the $15 million short-term revolving credit facility would be the same as provided under the Company's current facility with LaSalle Bank. The new credit facilities would be secured on an equal and ratable basis with the Company's existing long-term debt, eliminating the requirement under the present credit facility to restructure the existing long-term debt by March 31, 2004. The new facilities would retain generally the same covenants, including financial covenants, as the current revolving credit facility. In addition, the new credit facilities would permit the Company to declare dividends subject to certain restrictions. Any decision with respect to the timing and amount of future dividends will be made by the Board of Directors of the Company. The completion of the modifications to the existing credit facility is subject to satisfaction of a number of conditions, including agreement by the Company and LaSalle Bank on the definitive terms of a new credit agreement, satisfaction of closing conditions, and regulatory approval from the Montana and Wyoming public service commissions. The Company's target for completion of the modifications to the current credit facility is March 31, 2004. Energy West's Interim President and CEO John C. Allen stated, "The proposed modifications to our credit facility with LaSalle will represent a further enhancement of our financial strength and an important step in our effort to reinstate a cash dividend. The modifications would allow us to fund our seasonal cash flow requirements, and establish a more logical long-term capital structure. We continue to be very pleased with our relationship with LaSalle." * * * In its latest Form 10Q filed with the Securities and Exchange Commission, Energy West, Inc. reports: LIQUIDITY AND CAPITAL RESOURCES "The Company's operating capital needs and capital expenditures are generally funded through cash flow from operating activities and short term borrowing. Historically, to the extent cash flow has not been sufficient to fund capital expenditures, the Company has borrowed short-term funds. When the short-term debt balance significantly exceeds working capital requirements, the Company has issued long-term debt or equity securities to pay down short- term debt. The Company has greater need for short-term borrowing during periods when internally generated funds are not sufficient to cover all capital and operating requirements, including costs of gas purchased and capital expenditures. In general, the Company's short-term borrowing needs for purchases of gas inventory and capital expenditures are greatest during the summer and fall months and the Company's short-term borrowing needs for financing customer accounts receivable are greatest during the winter months. "On September 30, 2003, the Company established a $23,000,000 revolving credit facility with LaSalle Bank National Association, as Agent for certain banks. The LaSalle Facility replaced the Company's previous credit facility with Wells Fargo Bank Montana, National Association and the amount due under the Wells Fargo Facility was paid in full out of the proceeds of the LaSalle Facility. Borrowings under the LaSalle Facility are secured by liens on substantially all of the assets of the Company and its subsidiaries. As required under the terms of the Company's outstanding long-term notes and bonds, the Company's obligations under the Long Term Debt are secured on an equal and ratable basis with the Lender in the collateral granted to secure the LaSalle Facility with the exception of the first $1,000,000 of debt under the LaSalle Facility. "Under applicable law, the Company obtained required approvals from the MPSC and the Wyoming Public Service Commission ("WPSC") to enter into the LaSalle Facility. The MPSC order granting approval imposed several requirements on the Company including restrictions on the use of the proceeds of the LaSalle Facility for anything other than utility purposes, and requirements that the Company provide ongoing reports to the MPSC with respect to the financial condition of the Company and its non-regulated subsidiaries, and certain other matters. The MPSC order provided that the Company could fund the remaining $2,200,000 settlement payment owed by EWR to PPLM. The settlement payment was made on September 30, 2003, ending the litigation between the two parties. "The LaSalle Facility provides that the maximum availability under the facility will be reduced from $23,000,000 to $15,000,000 no later than March 31, 2004. In addition, the LaSalle Facility requires that the Company provide a first priority security interest in certain assets to the Lender no later than March 31, 2004, which would require either restructuring or refinancing of the Company's Long Term Debt. The Company is presently working on refinancing in order to satisfy the Lender's requirements. The Company believes that it will be able to implement such refinancing by March 31, 2004. Failure to complete such refinancing would result in a default under the terms of the LaSalle Facility." ENRON CORP: Asks Court Nod for Swiss Reinsurance Settlement ----------------------------------------------------------- Prior to the commencement of its Chapter 11 case, Enron Corporation, through direct and indirect subsidiaries, was involved in, among other things, investments to develop, finance, construct, own, operate and maintain electricity and gas generation and distribution facilities and other infrastructure investments internationally. Enron obtained political risk insurance in respect of the Investments. The insurance Enron obtained provided that the insured under the Policies could be Enron and subsidiary, affiliated, associated or allied companies, corporations, firms or organizations as specified on each Declaration of the Master Cover policies, provided that Enron had majority ownership and management control of those entities. At Enron's request, certain insurers have issued policies in respect of the Investments under Policy Numbers LP9802345, LP9902981 and LP0003319. Swiss Reinsurance Company and the Enron Parties -- Debtors Enron Corp., Enron International, Enron Asia/Pacific/Africa/China LLC, Enron South America LLC, Enron Caribbean Basin LLC and Atlantic Commercial Finance, Inc., and non-debtors Ponderosa Assets LP and Whitewing Associates LP -- dispute both: (a) whether Swiss Reinsurance participated as a direct insurer in the Policies; and (b) the rights and obligations of the parties that would have arisen had Swiss Reinsurance participated as a direct insurer in the Policies. The Enron Parties and Swiss Reinsurance have been involved in ongoing discussions to resolve the Dispute. On December 2, 2003, the Enron Parties and Swiss Reinsurance entered into a Comprehensive Settlement Agreement to resolve the Dispute. The Comprehensive Settlement Agreement provides, inter alia, that, upon the Closing Date: (a) Swiss Reinsurance will pay to Enron, acting on behalf of the Enron Parties, $2,139,592 representing return of the JLT Payments with interest thereon and on amounts returned to JLT Risk Solutions Limited; (b) Swiss Reinsurance's alleged participation in the Policies will be confirmed as void ab initio due to a mutual mistake; (c) The payments to Enron by Swiss Reinsurance under the Comprehensive Settlement Agreement will be accepted by the Enron Parties in consideration of the Enron Released Matters and in full and final settlement thereof; and (d) The parties thereto will exchange releases. Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court that the Settlement will resolve in an expeditious and cost effective manner the Dispute and any other claims and disputes related to the Policies. The Debtors are also able to avoid the costs and delay incident to an adversary proceeding. Mr. Sosland assures the Court that the Settlement is the product of arm's-length bargaining between the Enron Parties and Swiss Reinsurance. Accordingly, pursuant to Sections 105(a) and 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to approve the Comprehensive Settlement Agreement and authorize the Debtors to consummate the contemplated transaction. (Enron Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) FALCONBRIDGE LTD: S&P Rates C$78 Million Series 3 Preferreds at BB ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB' global scale and 'P-3' Canadian national scale ratings to diversified metal and mining company Falconbridge Ltd.'s C$78 million par value cumulative preferred shares series 3. At the same time, all other ratings on Falconbridge, including the 'BBB-' corporate credit rating, were affirmed. The outlook is negative. The ratings on Falconbridge reflect its good business position as the third-largest nickel producer in the world, combined with a strong presence in copper production and a solid financial profile. The ratings on Falconbridge are capped by the ratings on Noranda Inc. (BBB-/Negative/A-3), which has a 59.5% ownership interest in Falconbridge. "Falconbridge's ability to maintain the current ratings depends on Noranda's success in meeting cash flow targets, including achieving planned cash flows from operations and asset sales, and its ability to refinance ongoing debenture maturities," said Standard & Poor's credit analyst Donald Marleau. If Noranda is unable to achieve these objectives, the ratings on both companies could be lowered. Falconbridge's financial results are good for the ratings, although they are cyclical, given the volatile pricing of its core base metals products. Strong base metals prices in late 2003 and early 2004 have resulted in continued improvement in the company's profitability and cash flow protection, with EBIT interest coverage of 5.1x and EBITDA interest coverage of 9.1x for the year ended Dec. 31, 2003. Although the company's first-quarter 2004 results are expected to moderate somewhat because of the three- week strike and subsequent ramp-up at its significant Sudbury, Ont., operations, credit metrics should remain in line with the ratings. FLEXTRONICS: Schedules Mid-Quarter Conference Call for March 4 -------------------------------------------------------------- Flextronics (Nasdaq: FLEX) will host its regular mid-quarter conference call on Thursday, March 4. The conference call, hosted by Flextronics' senior management, will be held at 1:30 p.m. PST and will provide a general update on the Company and its future outlook. This call will be broadcast via the Internet and may be accessed by logging on to the Company's Web site at http://www.flextronics.com/ A replay of the broadcast will remain available on the Company's Web site after the call. One minimum requirement to listen to the broadcast is Microsoft Windows Media Player software. Free download at: http://www.microsoft.com/windows/windowsmedia/download/default.asp Another minimum requirement is at least a 28.8 Kbps bandwidth connection to the Internet. About Flextronics Headquartered in Singapore, Flextronics is the leading Electronics Manufacturing Services (EMS) provider focused on delivering operational services to technology companies. With fiscal year 2003 revenues of $13.4 billion, Flextronics is a major global operating company with design, engineering, manufacturing and logistics operations in 29 countries and five continents. This global presence allows for manufacturing excellence through a network of facilities situated in key markets and geographies that provide its customers with the resources, technology and capacity to optimize their operations. Flextronics' ability to provide end- to-end operational services that include innovative product design, test solutions, manufacturing, IT expertise, network services, and logistics has established the Company as the leading EMS provider. Web site is at http://www.flextronics.com/ * * * As reported in the Troubled Company Reporter's February 27, 2004 edition, Fitch Ratings has initiated coverage of Flextronics International Ltd. The company's senior subordinated notes are rated 'BB+'. The Rating Outlook is Stable. Approximately $1.1 billion of debt is affected by Fitch's action. The ratings reflect Flextronics' leading position in the electronics manufacturing services industry, relatively stable operating metrics through the recent information technology downturn, financial flexibility related to its conservative capital structure and solid liquidity, and a strong and consistent management team. Also considered is Flextronics' consistent operating and free cash flow from continued reductions in industry-leading cash conversion days and restrained capital spending. The Stable Outlook reflects sound prospects for improving operating profitability, driven by a better pricing environment, continued cost benefits from past restructurings, higher capacity utilization rates from expected volume increases, and some operating leverage from its printed circuit board fabrication operations, which has experienced improved demand and stabilized pricing the past few quarters. Ratings concerns center on Flextronics' heavy reliance on lower margin end-markets, risks associated with diversifying and expanding service offerings, the company's historically acquisitive nature, and weak pricing for its lower mix products. Additionally, Flextronics' recently announced transaction with Nortel, if consummated, would add approximately $2 billion of higher-margin annual revenues, one of the largest EMS contracts ever awarded. However, the deal also would involve significant operating and execution risks, and could cause cash conversion days to increase. GARDEN RIDGE: Delaware Court Approves $70 Million DIP Financing --------------------------------------------------------------- Garden Ridge Corporation received approval for its $70 million in debtor-in-possession financing from Bank of America as part of its reorganization plan filed Feb. 2, 2004. The approval was given by the U.S. Bankruptcy Court for the District of Delaware. The DIP financing was arranged by Garden Ridge to continue normal operations and enhance its growth. The primary stockholder in the company, Three Cities Research, is also considering an additional equity investment as well. Reaction from the supplier and vendor community has been strong providing the services, shipments and depth of merchandise for Garden Ridge shoppers. In addition, vendors are being very supportive and responsive to Garden Ridge buyers seeking more and unique products in support of their strategy to focus on new, seasonal and promotional merchandise. Garden Ridge continues to see improving results with same store sales in February increasing by 4.4 percent and pacing for March showing positive comps. The momentum started in December 2003, the largest sales month of the year for Garden Ridge, with same store sales increasing by 5.4 percent. In January 2004, the company recorded a 2.6 percent increase. "Our sales momentum is being driven right now by new spring merchandise and promotional buys in multiple categories including 'silk' florals, domestics, patio furniture and new Easter arrivals," said Jack Lewis, president and Chief Merchandising Officer for Garden Ridge. "We truly appreciate the vote of confidence from our vendors and this partnership will be rewarding for us all." Garden Ridge is a privately held home decor retailer with 36 stores in 13 midwest and southeast states. For more information, visit http://www.gardenridge.com/ GLOBAL AXCESS: Raises $3.5 Million Through Private Placement ------------------------------------------------------------ January 29, 2004, Global Axcess Corp., a Nevada corporation, raised $3,500,000 in connection with the sale of 14,000,000 shares of common stock for $.25 per share to two institutional investors. The investors, upon the purchase of every two shares of common stock, also received four common stock purchase warrants, which resulted in the issuance of 28,000,000 common stock purchase warrants. The Company issued four types of warrants (F Warrants, G Warrants, H Warrants and I Warrants), which are exercisable for a period of five years or for 18 months after the effective date of a registration statement covering the shares of common stock underlying the warrants, whichever is longer. The four warrants terms are as follows: * The F Warrants are exercisable at $.35 per share and are not callable by the Company. * The G Warrants are exercisable at $.35 per share and are callable by the Company if the market price of the Company's common stock is equal to, or in excess of, $0.70 for a period of twenty consecutive days and there is an effective Registration Statement covering the shares common stock underlying the G Warrant. * The H Warrants are exercisable at $.50 per share and are callable by the Company if the market price of the Company's common stock is equal to, or in excess of, $1.00 for a period of twenty consecutive days and there is an effective Registration Statement covering the shares common stock underlying the H Warrant. * The I Warrants are exercisable at $1.00 per share and are callable by the Company if the market price of the Company's common stock is equal to, or in excess of, $1.25 for a period of twenty consecutive days and there is an effective Registration Statement covering the shares common stock underlying the I Warrant. All common shares associated with this private placement are restricted securities in accordance with Rule 144 as promulgated under the of the Securities Act of 1933. However, the Company is required to file a registration statement covering the shares of common stock and the shares underlying the common stock purchase warrants by April 24, 2004 and it is required to go effective by July 29, 2004. * * * LIQUIDITY AND CAPITAL RESOURCES In a Form 10-QSB filed with the Securities and Exchange Commission, Global Axcess reported: "Working Capital Deficit. As of September 30, 2003, the Company had current assets of $997,338 and current liabilities of $1,174,915, which results in a working capital deficit of $177,577, as compared to current assets of $732,206 and current liabilities of $2,144,841 resulting in a working capital deficit of $1,412,635 as of December 31, 2002. The ratio of current assets to current liabilities increased to .85 at September 30, 2003 from .34 at December 31, 2002. Thus, the overall working capital deficit decreased by $1,235,058. The decrease in the deficit during the nine month period ended September 30, 2003 resulted mainly from the reduction of Accounts Payable and Accrued Expenses by $331,933, a pay-off of various current leases amounting to $116,152, a reduction of Notes Payable to related parties of $364,698, Notes Payable in the amount of $47,753 and a reduction of amounts Due to Related Parties of $140,795. Additional Funding Sources "We have funded our operations and capital expenditures from cash flow generated by operations, capital leases, from the settlement of various issues with third parties and from the sale of securities. Net cash provided by operating activities during the nine month period ending September 30, 2003 and 2002 was $134,302 and $786,218, respectively. Net cash provided by operating activities in the nine month period ending September 30, 2003 consisted primarily of a net income of $265,353 and depreciation and amortization of $593,734 and an increase in prepaid expenses of 34,175 and decrease of other assets by $42,185; offset by an increase in accounts receivable of $100,839 and a reduction of accounts payable and accrued expenses of $331,933. The cash provided by operating activities allowed us to pay off or pay-down $116,152 for various lease obligations, $30,711 on notes payable and $140,795 on amounts due to related parties. The sale of our common stock for $610,500 less fees, netted $589,249 in proceeds for issuance of common stock, allowed us to pay down amounts on notes to related parties of $100,000 and amounts due to related parties of $50,000 and purchase fixed assets of $234,957. "In order to fulfill its business plan and expand its business, the Company must have access to funding sources that are prepared to make equity or debt investments in the Company's securities. "In order to address this potential for growth, the Company has taken steps to raise additional funds to finance its operations, including the potential for making strategic acquisitions, which could better position the Company for growth. Historically, the Company has relied primarily upon institutional investors for this purpose. There can be no guarantee that institutional funding will be available to the Company in the near future. The Company has conducted a private placement offering and closed the offering on July 28, 2003 with gross proceeds of approximately $610,500, with fees of $21,251, through the sale of 12,210,000 shares of common stock together with common stock purchase warrants to a limited number of accredited investors. The Company's ability to attract investors depends upon a number of factors, some of which are beyond the Company's control. The key factors in this regard include general economic conditions, the condition of ATM markets, the availability of alternative investment opportunities, the Company's past financial performance affecting the Company's current reputation in the financial community. "The Company is continuing its efforts to raise additional capital through equity or debt financings. The Company estimates to continue its current business plan and acquisition strategy, it will require approximately $5,000,000 in additional working capital to meet its needs for the next 12 months for such items as new ATM leases, software development and acquisitions. "The Company will require significant additional financing in the future in order to satisfy its acquisition plan. To fund its continued growth the Company intends to raise additional capital through debt and equity financings, however, the Company cannot guarantee that it will be able to raise funding through these types of financings. The need for additional capital to finance operations and growth will be greater should, among other things, revenue or expense estimates prove to be incorrect, particularly if additional sources of capital are not raised in sufficient amounts or on acceptable terms when needed. Consequently, the Company may be required to reduce the scope of its business activities until other financing can be obtained. "The Company does not use its own funds for vault cash, but rather relies upon third party sources. The Company in general rents the vault cash from financial institutions and pays a negotiated interest rate for the use of the money. The vault cash is never in the possession of, controlled or directed by the Company but rather cycles from the bank, to the armored car carrier, and to the ATM. Each days withdrawals are settled back to the owner of the vault cash on the next business day. Both Nationwide Money and its customers (the merchants) sign a document stating that the vault cash belongs to the financial institution and that neither party has any legal rights to the funds. "As a result of certain factors, our working capital has increased from the same period a year ago. We had negative working capital of $1,608,116 on September 30, 2002 and this has been reduced to a negative working capital of $177,577 at September 30, 2003. This increase in working capital is partially due to the occurrence of one-time events in 2003 that resulted from cancellation of debt that totaled $261,023. As of September 30, 2003 we also received from the Private Placement Offering in the amount of $589,249 net proceeds. There was an exchange of $50,000 from an amount due to a related party for stock. The cash portion was used to payoff short-term debt in the form of notes payable and lease obligations on ATM equipment. In 2002 we also issued $141,899 in stock in lieu of cash for various current expenses and received several loans totaling $229,675 from Cardservice International, Inc. the proceeds of which were used to payoff various short term lease obligations on ATM obligations. In addition, we have incurred additional demands on our available capital in connection with the settlement of various disputes with former officers and employees and the start-up expenses associated with our expansion of the Food Lion and Kash and Karry account of additional ATMs." HALSEY DRUG: Closes $12.3 Million Securities Private Offering ------------------------------------------------------------- On February 6, 2004, Halsey Drug Co., Inc. consummated a private offering of securities for an aggregate purchase price of approximately $12.3 million. The securities issued in the Offering consisted of convertible senior secured debentures. The Debentures were issued by the Company pursuant to a Debenture Purchase Agreement dated February 6, 2004, between the Company, Care Capital Investments II, LP, Essex Woodlands Health Ventures V, L.P., Galen Partners III, L.P. and each of the Purchasers listed on the signature page. Of the approximate $12.3 million in Debentures issued in the Offering, approximately $2 million of Debentures were issued in exchange for the surrender of like amount of principal plus accrued interest outstanding under Company's 5% convertible senior secured debentures issued pursuant to working capital bridge loan transactions with Care Capital, Essex Woodlands and Galen Partners III, L.P., Galen International III, L.P., and Galen Employee Fund III, L.P. during November and December, 2003. The Debentures, issued at par, bear interest at the rate of 1.62% per annum, the short-term Applicable Federal Rate on the date of issuance. The Debentures (including the principal amount plus interest accrued at the date of conversion) will convert automatically into the Company's Series A convertible preferred stock immediately following the Company's receipt of shareholder approval at its next shareholder's meeting to restate the Company's Certificate of Incorporation to authorize the Series A Shares and the Junior Preferred Shares and the filing of the Charter Amendment with the Office of the New York Department of State, as provided in the Purchase Agreement. The Debentures will convert into Series A Shares at a price per share of $0.6425, representing the average of the closing bid and asked prices of the Company's common stock for the twenty (20) trading days ending two days immediately prior to the date of the Purchase Agreement, as reported by the Over- the-Counter ("OTC") Bulletin Board. The Conversion Price is subject to adjustment, from time to time, to equal the consideration per share received by the Company for its common stock, or the conversion/exercise price per share of the Company's common stock issuable under rights or options for the purchase of, or stock or other securities convertible into, common stock, if lower than the then applicable Conversion Price. Based on the $0.6425 Conversion Price of the Series A Shares and estimating the interest accrual under the Debentures prior to the Charter Amendment Filing Date, the Debentures with an aggregate principal amount of $14 million would be convertible into an aggregate of approximately 22 million Series A Shares. The Purchase Agreement provides that the holders of the Series A Shares shall have the right to vote as part of a single class with all holders of the Company's voting securities on all matters to be voted on by such security holders. Each holder of Series A Shares shall have such number of votes as shall equal the number of votes he would have had if such holder converted all Series A Shares held by such holder into shares of common stock immediately prior to the record date relating to such vote. The Purchase Agreement also provided for the execution of an Investor Rights Agreement providing the holders of the Series A Shares with veto rights relating to certain material Company transactions. The Purchase Agreement provides that each of Care Capital, Essex and Galen has the right to designate for nomination a member of the Company's Board of Directors, and that the Lead Investors collectively may designate one additional member of the Board. The Purchase Agreement further provides that the Designees shall be, if so requested by such Designee in his sole discretion, appointed to the Company's Executive Committee, Compensation Committee and any other Committee of the Board of Directors. The Designees of Care Capital, Essex and Galen are Messrs. Karabelas, Thangjaraj and Wesson, respectively, each of whom are current Board members. Effective as of the closing of the Purchase Agreement, the Lead Investors may collectively nominate one additional Designee to the Board. The Company has agreed to nominate and appoint to the Board of Directors, subject to shareholder approval, one designee of each of Care Capital, Essex and Galen, and one collective designee of the Lead Investors, for so long as each holds a minimum of 50% of the Series A Shares initially issued to such party (or at least 50% of the shares of common stock issuable upon conversion of the Series A Shares). The Purchase Agreement further provides that the Company may issue additional Debentures in the principal amount of up to approximately $1.23 million within 120 days of the date of the Purchase Agreement, provided that the aggregate principal amount of Debentures issued pursuant to the Purchase Agreement shall not exceed $14 million without the consent of the holders of 60% of the principal amount of the Debentures then held by Care Capital, Essex and Galen. Simultaneous with the execution of the Purchase Agreement, and as a condition to the initial closing of the Purchase Agreement, the Company, the 2004 Debenture Investor Group and each of the holders of the Company's outstanding 5% convertible senior secured debentures maturing March 31, 2006 executed a certain Debenture Conversion Agreement, dated February 6, 2004. In accordance with the terms of the Conversion Agreement, each holder of the Outstanding Debentures agreed to convert the Outstanding Debentures held by such holder into the Company's Series B convertible preferred stock and/or Series C-1, C-2 and/or C-3 convertible preferred stock. The Series C Shares together with the Series B Shares are herein referred to as, the "Junior Preferred Shares", and the Junior Preferred Shares together with the Series A Shares, are collectively, the "Preferred Shares". The Conversion Agreement provides, among other things, for the automatic conversion of the Outstanding Debentures into the appropriate class of Junior Preferred Shares immediately following the Company's receipt of shareholder approval to the Charter Amendment authorizing the creation of the Series B Shares and Series C Shares and the filing of the Charter Amendment with the Office of the New York Department of State. Halsey Drug Company, Inc. was a party to a certain Loan Agreement with Watson Pharmaceuticals, Inc. under which Watson has made term loans to the Company in the aggregate principal amount of approximately $21.4 million as evidence by two (2) promissory notes. It was a condition to the completion of the Debenture Offering that simultaneous with closing of the Purchase Agreement, the Company shall have paid to Watson the sum of approximately $4.3 million (which amount was funded by the Company from the proceeds of the Debenture Offering) and conveyed to Watson certain Company assets in consideration for Watson's forgiveness of approximately $16.4 million of indebtedness under the Watson Notes. In addition, the Watson Notes were amended to, among other things, extend the maturity date of the Watson Notes from March 31, 2006 to June 30, 2007 and to provide for the satisfaction of interest under the Watson Notes in the form of the Company's common stock. Following such amendments, the Watson Notes were purchased from Watson by Care Capital, Essex, Galen and certain other investors in consideration for a $1 million payment to Watson. The company's Sept. 30, 2004, issue of the Troubled Company Reporter discloses a net capital deficit of about $39 million. HAWAIIAN HOLDINGS: Outlines Preliminary Reorg. Plan for Airline --------------------------------------------------------------- Hawaiian Holdings Inc., the parent company of Hawaiian Airlines announced its preliminary plan for the reorganization of the Airline, and a vision for the future that includes expansion of the airline's routes. Presented by Holdings Chairman John Adams, the plan provides for resolution of all outstanding claims against and interests in HAL, and proposes: * infusing at least $30 million in new capital in return for 50% of the newly reorganized company * 40% of the company remains with existing shareholders. * $160 million dollar unsecured note plus 10% of new stock (at no cost) to the unsecured creditors * accepting lease terms offered by Boeing in the plan offered by CRG/Boeing * a mechanism to deal with the underfunding of the Pilots Pension Plan subject to disclosure of necessary information from the trustee * emerging from bankruptcy by Fall 2004 * negotiate 3 year extension of contracts with Hawaiian's unions, asking for no wage givebacks from Hawaiian's employees. "Our plan supports Hawaiian's employees--the folks whose dedication and hard work have turned our Airline around" Adams said. HAL employees have already given enough with previous wage concessions, he stated, and, "they continue to contribute to the Airline's financial success every day by their professionalism and aloha spirit. Asking them to dig deeper will kill morale and cut the heart out of what's making Hawaiian a success today-its people." Adams noted that plans created prior to his departure from HAL last year have steered it to 10 consecutive months of profits, enabled it to become the industry leader in on-time performance, and resulted in a strong cash balance. "Hawaiian's success isn't a flash in the pan. It is hard, consistent evidence that, by streamlining operations and refocusing priorities, Hawaiian's talented management team, led by Mark Dunkerly, has been able to achieve remarkable results. What Hawaiian needs now is continuity, not change," he said. Consequently, the Holdings Preliminary Reorganization Plan will keep the current HAL management team intact with the exception of moving President Mark Dunkerley into the position of Chief Executive Officer. "The right person for the job of leading Hawaiian Airlines is already on the job," said Adams. Presenting with Adams was GCW Consulting President Mo Garfinkle, a Hawaiian Holdings advisor and renowned industry analyst. Garfinkle stated that the Airline's recent track record and operational performance illustrates a strong value for existing shareholders. He emphasized that the company has an enterprise value that far exceeds the claims, had 2003 profits of $75 million, and with record profits in January Hawaiian is off to an even better start in 2004. "Any reorganization plan that does not recognize that this airline made impressive profits last year, and has substantial cash and real momentum going into 2004, is a plan to steal Hawaiian Airlines, not reorganize it. The CRG/Boeing Plan brings new meaning to the term 'bottom fishing.' There is real value, significant value, in the equity in this airline and the Hawaiian Airlines franchise," Garfinkle stated. Other key elements of the preliminary plan include: * no topping fee (bonus) for preparation of the Reorganization Plan * creation of a litigation trust with an independent committee that will oversee the lawsuit against John Adams and AIP LLC with 65% of proceeds going to unsecured creditors and 35% to the reorganized HAL * plans to expand HAL's reach far into Asia and non- traditional Mainland markets "Our vision will benefit the Airline, its employees, and the economy of the State of Hawaii," said Adams. "We want to give Hawaii residents more access to the rest of the world ... . and provide the means by which we can bring thousands of new visitors to Hawaii." Adams said that the plan filed is preliminary because neither Holdings, nor any bidder have been given access to the Airlines' financial and traffic information, or to the lease terms offered by Boeing. "All bidders should have access to all company records and data, as well as the Boeing aircraft lease terms," Adams said. "For this bidding process to have any credibility, it must be open, transparent, and on a level playing field." Adams said that once they have access to such information he expects Holdings to file an enhanced and detailed plan of reorganization. Within the next two weeks, Hawaiian Holdings will file a motion asking the bankruptcy court to ensure such information is widely available to all bidders. HAYES LEMMERZ: Deutsche Bank Discloses 6.59% Equity Stake --------------------------------------------------------- Jeffrey A. Ruiz, Vice President of Deutsche Bank AG, London Branch, reports in a regulatory filing with the Securities and Exchange Commission, that Deutsche Bank beneficially owns 1,978,004 shares in Hayes Lemmerz International, Inc.'s Common Stock with par value at $0.001. The shares represent 6.59% in Hayes' outstanding common stock. In accordance with Securities Exchange Act Release No. 39538 dated January 12, 1998, the filing discloses the securities beneficially owned by the Corporate and Investment Banking business group and the Corporate Investments business group of Deutsche Bank AG and its subsidiaries and affiliates. Mr. Ruiz attests that the filing does not reflect securities, if any, beneficially owned by any other business group of Deutsche Bank. Furthermore, the CIB disclaims beneficial ownership of the securities beneficially owned by: (a) any client accounts with respect to which the CIB or its employees have voting or investment discretion, or both; and (b) certain investment entities, of which the CIB is the general partner, managing general partner, or other manager, to the extent interests in the entities are held by persons other than the CIB. (Hayes Lemmerz Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) HAYNES: Interest Nonpayment Spurs S&P to Cut Credit Rating to D --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Kokomo, Indiana-based Haynes International Inc. to 'D' from 'CC/Negative/--'. The senior unsecured rating also was lowered to 'D' from 'CC'. "The rating action followed the company's missed March 1, 2004, $8.1 million interest payment on its 11.625% senior notes due September 2004," said Standard & Poor's credit analyst Dominick D'Ascoli. The ratings previously were lowered to 'CC' with a negative outlook on Jan. 6, 2004, following the company's announcement that it retained an outside entity to assist it in restructuring its balance sheet. Standard & Poor's views a restructuring as highly probable and does not expect lenders to receive full principal repayment. Haynes International is a manufacturer of high performance alloys serving the aerospace and chemical processing industries. HOLLINGER: Fails to Make Debt Interest Payment Due March 1, 2004 ---------------------------------------------------------------- Hollinger Inc. (TSX: HLG.C; HLG.PR.B; HLG.PR.C) has not made the interest payment due March 1, 2004, on its outstanding US$120.0 million aggregate principal amount of 11.875% senior secured notes due 2011. The non-payment of interest does not constitute an event of default under the indenture governing the Senior Secured Notes unless such non-payment continues for a period of 30 days from the date such interest is due. Hollinger, together with its advisors, are continuing to actively examine Hollinger's available options in order to satisfy its obligations under the Senior Secured Note indenture in a timely manner. Hollinger's principal asset is its approximately 72.4% voting and 30.0% equity interest in Hollinger International Inc. Hollinger International is a global newspaper publisher with English-language newspapers in the United States, Great Britain, and Israel. Its assets include The Daily Telegraph, The Sunday Telegraph and The Spectator and Apollo magazines in Great Britain, the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. On June 30, 2003, the company's net capital deficit tops $442 million while working capital deficit is at $398.8 million. HOLLINGER INC: Press Holdings Withdraws Stock Acquisition Offers ---------------------------------------------------------------- Press Holdings International Limited announced that Press Acquisition Inc., a wholly-owned Canadian subsidiary of PHIL, has withdrawn its offers to acquire all of the issued and outstanding retractable common and preference shares of Hollinger Inc. (TSX: "HLG.C", "HLG.PR.B" and "HLG.PR.C"). The offers, which were announced by PHIL on January 18, 2004 and mailed to Hollinger Inc. shareholders and optionholders on January 27, 2004, were made pursuant to the terms of a Tender and Shareholder Support and Acquisition Agreement, by and among PHIL, The Ravelston Corporation Limited and Lord Black of Crossharbour. The offers were scheduled to expire at 8:00 a.m., Eastern Standard Time, on March 3, 2004. No Hollinger Inc. shares were purchased by PAI pursuant to the offers. PHIL has instructed Computershare Investor Services Inc., the depositary for the offers, to return all Hollinger Inc. shares tendered to date pursuant to the offers as soon as practicable. PHIL, Ravelston and Lord Black have also mutually agreed to terminate the Tender and Shareholder Support and Acquisition Agreement. In connection with the withdrawal of the offers, PHIL's agreement to fund the aggregate consideration being offered by Hollinger Inc. for any and all of its outstanding 11.875% Senior Secured Notes due 2011 under the debt tender offer for US$1,250 per US$1,000 principal amount of Notes has been terminated. Hollinger's principal asset is its approximately 72.4% voting and 30.0% equity interest in Hollinger International Inc. Hollinger International is a global newspaper publisher with English- language newspapers in the United States, Great Britain, and Israel. Its assets include The Daily Telegraph, The Sunday Telegraph and The Spectator and Apollo magazines in Great Britain, the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. On June 30, 2003, the company's net capital deficit tops $442 million while working capital deficit is at $398.8 million. HOME INTERIORS: S&P Cuts Rating to B over Increased Debt Leverage ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Home Interiors & Gifts Inc. to 'B' from 'B+'. Standard & Poor's also assigned its 'B' bank loan rating and a recovery rating of '2' to Home Interiors' proposed $370 million senior secured credit facility, issued as part of a proposed refinancing. The '2' recovery rating indicates an expectation of substantial recovery of principal in the event of a default. In addition, Standard & Poor's lowered its subordinated debt rating on Home Interiors to 'CCC+' from 'B-'. The outlook is stable. Total debt outstanding pro forma for the refinancing is expected to be about $475 million. "The downgrade reflects Home Interiors' increased debt leverage as a result of the proposed refinancing, in which the company will retire $147 million in preferred stock and accrued dividends," said credit analyst Martin S. Kounitz. The ratings are based on the high level of business risk associated with Home Interiors' direct-sales business model as well as the company's aggressive debt leverage. Carrolton, Texas-based Home Interiors sells decorative accessories such as framed art, mirrors, and candles to more than 98,000 independent sales representatives. These representatives, known as displayers, resell the products using a party-plan method. The company's sales are vulnerable to changes in incentives for its sales personnel; slight disruptions in the fulfillment of orders; the training and experience level of the displayers; and competition for the recruitment of experienced personnel. IMPATH INC: Genzyme Named Lead Bidder for Cancer Testing Unit ------------------------------------------------------------- Genzyme Corporation (Nasdaq: GENZ) and IMPATH Inc. (OTC: INPHQ.PK) entered into a definitive agreement under which Genzyme will become the lead bidder to purchase the assets of IMPATH Inc.'s Physician Services business unit, a leader in the growing market for oncology testing. Under the agreement, Genzyme will purchase IMPATH's Physician Services unit for approximately $215 million in cash, and combine it with the Genzyme Genetics business unit. IMPATH Inc. filed for Chapter 11 bankruptcy protection on September 28, 2003. IMPATH Physician Services will proceed through a competitive auction process, pursuant to Section 363 of the Bankruptcy Code. The definitive agreement, subject to Bankruptcy Court approval, gives Genzyme so-called "stalking horse" status. This status confers certain rights to Genzyme, including a break- up fee should these assets be sold to another party through the auction. It is expected that the sale of these assets will be completed in the second quarter of 2004. The potential addition of IMPATH's cancer diagnostic business - together with Genzyme's planned acquisition of ILEX Oncology announced last week - would significantly expand the company's presence across the entire continuum of oncology patient care, from diagnosis to treatment. Through the IMPATH acquisition, Genzyme would obtain a leading array of oncology diagnostics in solid-tumor and blood-based cancers, testing laboratories in New York City, Phoenix and Los Angeles, and a strong team of board- certified anatomic and clinical pathologists with extensive experience in oncology testing. Genzyme plans to maintain operations at IMPATH's facilities and hire substantially all of IMPATH Physician Services' employees. "Genzyme Genetics is very pleased to have the opportunity to combine with IMPATH Physician Services, which has earned and maintained strong customer loyalty by delivering high quality testing services with a focus on patient care," said Mara Aspinall, president, Genzyme Genetics. "We believe the market for oncology testing will continue to grow, fueled by the development of new sophisticated tests and treatments for cancer. While we increase our involvement in cancer testing, we will maintain and strengthen our core commitment to prenatal testing." Carter H. Eckert, chairman and chief executive officer of IMPATH Inc., said, "We are delighted to announce this transaction especially in light of the quality reputation that Genzyme and its talented management team have earned over the years. Genzyme's focus made the synergies between our companies very clear. The opportunity for our IMPATH Physician Services business to go forward under the Genzyme umbrella, while enabling us to deliver value to our economic stakeholders, was a key factor in our selection. Our team of dedicated professionals is extremely pleased to be joining one of the world's leading global biotechnology companies." About Genzyme Genzyme Genetics is a leading, nationwide provider of high-quality genetic testing and genetic counseling services for physicians and their patients. With six laboratories across the U.S., Genzyme Genetics offers extensive reproductive and cancer testing services, supported by innovative technology and a commitment to quality service and trusted information. Genzyme Genetics is a business unit of Genzyme Corporation. Genzyme Corporation is a global biotechnology company dedicated to making a major positive impact on the lives of people with serious diseases. The company's broad product portfolio is focused on rare genetic disorders, renal disease, osteoarthritis and immune- mediated diseases, and includes an industry-leading array of diagnostic products and services. Genzyme's commitment to innovation continues today with research into novel approaches to cancer, heart disease, and other areas of unmet medical need. More than 5,300 Genzyme employees in offices around the globe serve patients in over 80 countries. About IMPATH IMPATH is in the business of improving outcomes for cancer patients. IMPATH Physician Services uses sophisticated technologies to provide patient- specific cancer diagnostic and prognostic services to more than 9,000 pathologists and oncologists in over 2,400 hospitals and oncology practices. IMPATH helps physicians accurately diagnose and treat more than 150,000 cancer cases each year. KEYSTONE CONSOLIDATED: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------------- Lead Debtor: Keystone Consolidated Industries, Inc. 5430 LBJ Freeway, Suite 1740 Three Lincoln Center Dallas, Texas 75240-2697 Bankruptcy Case No.: 04-22422 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- FV Steel and Wire Company 04-22421 DeSoto Environmental Management, Inc. 04-22423 J.L. Prescott Company 04-22424 Sherman Wire Company 04-22425 Sherman Wire of Caldwell, Inc. 04-22426 Type of Business: The Debtor makes carbon steel rod and fabricated wire products including fencing, barbed wire, welded wire and woven wire mesh for the agricultural, construction and do-it-yourself markets. Chapter 11 Petition Date: February 26, 2004 Court: Eastern District of Wisconsin (Milwaukee) Judge: Susan V. Kelley Debtor's Counsels: Daryl L. Diesing, Esq. Whyte Hirschboeck Dudek S.C. 555 East Mason Street, Suite 1900 Milwaukee, WI 53202 Tel: 414-273-2100 David L. Eaton, Esq. Kirkland & Ellis LLP 200 East Randolph Drive Chicago, IL 60601 Tel: 312-861-2000 Total Assets: $196,953,000 Total Debts: $365,312,000 Debtors' Consolidated 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Philip Metal Corporation Trade $7,421,915 85 West Algonquin Rd, Ste 210 Arlington Heights, IL 60005 Triumph Capital CBO I, Ltd. 6% Subordinated $6,650,000 c/o JP Morgan Chase Unsecured Notes due Attn: Trust Income 2011 Processing P.O. Box 200547 Houston, TX 77216 The Bank of New York 9 5/8% Senior $6,150,000 Unsecured Notes due 2007 Ameren Cilco Trade $3,018,264 P.O. Box 66788 St. Louis, MO 63166-6788 Sigler & Co. 6% Subordinated $3,000,000 c/o JP Morgan Chase Bank Unsecured Notes due Chase International Plaza 2011 Attn: Gilbert Ruiz 14201 Dallas Parkway, 13th Fl Dallas, TX 75240 OBIE & Co. 6% Subordinated $3,000,000 c/o JP Morgan Chase Unsecured Notes due Attn: Trust Income 2011 Processing P.O. Box 200547 Houston, TX 77216 Embassy & Co. 6% Subordinated $1,825,000 U.S. Bank N.A. Unsecured Notes due P.O. Box 1787 2011 Mail Code: MW WI-5210 Milwaukee, WI 53201 WHP Health Initiativese Trade $1,009,480 22536 Network Place Chicago, IL 60673-1225 Peoria Disposal Co. Trade $535,609 P.O. Box 9071 Peoria, IL 61614 Motion Industries Inc. Trade $324,585 3113 North Main P.O. Box 2128 East Peoria, IL 61611 B&Z Galvanized Ind., Inc. Trade $298,212 308 E. San Bernandino Road Covina, CA 91723 Midwest Mill Service Trade $267,860 Baker Refractories/LWB Refr. Trade $262,001 6365 Paysphere Circle Chicago, IL 60674 Sintermet LLC Trade $254,187 P.O. Box 7247-6758 Philadelphia, PA 19170-6758 Peoria & Pekin Union Railway Trade $204,576 John Ramsey Grayson County Trade $190,031 Baosteel America Inc. Trade $161,627 Aramark Service Trade $150,990 IMS Trade $131,966 Orind USA Inc. Trade $118,164 KNOX COUNTY: Wants to Tap McBrayer McGinnis as Special Counsel -------------------------------------------------------------- Knox County Hospital Operating Corporation seeks permission from the U.S. Bankruptcy Court for the Eastern Division of Kentucky, London Division, to employ McBrayer, McGinnis, Leslie & Kirkland, PLLC, as special counsel in its Chapter 11 cases. McBrayer McGinnis will render necessary general legal advice and services, including but not limited to general corporate management, employment relations, risk management, health care issues and certain defense work to assist the Debtor in operating its business and carrying out its duties. The Debtor reports that McBrayer McGinnis served as general counsel to the Debtor prior to the filing of the chapter 11 petition. The firm provided general corporate, governmental affairs, risk management and employment advice. In addition, McBrayer McGinnis represented the Debtor in defense of the actions styled: i) Remesta Medical Corporation v. Knox County Hospital Operating Corporation, Knox Circuit Court Action No. 0300200; which is now stayed; and ii) Knox County Hospital Operating Corporation v. Charles Brent Barton, M.D. Knox Circuit Court Action No. 03-00487. The Remesta Medical action was a collection against and an agreed judgment was reached and is being held in trust by plaintiff's counsel. The Barton Action is an action fro breach of contract and unjust enrichment against an individual who agreed to practice medicine in Knox County, Kentucky in exchange for a loan from the Debtor. Except with respect to the Barton Action, McBrayer McGinnis will be retained at customary hourly rates, which range from $205 to $235 per hour. For the Barton Action, McBrayer McGinnis bills at $85 per hour and a contingency fee of 33-1/3% of the gross recovery. Headquartered in Barbourville, Kentucky, Knox County Hospital Operating Corporation, owns a hospital and provides medical services. The Company filed for chapter 11 protection on January 26, 2004 (Bankr. E.D. Ky. Case No. 04-60083). Dean A. Langdon, Esq., and Tracey N. Wise, Esq., at Wise DelCotto PLLC represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $10 million. L-3 COMMUNICATIONS: Will Present at Bear Stearns' Conference Today ------------------------------------------------------------------ Frank C. Lanza, chairman and chief executive officer of L-3 Communications (NYSE: LLL), will be presenting at the Bear Stearns 11th Annual Commercial Aerospace & Defense Conference on today. Mr. Lanza's presentation will begin at 1:40 PM EST. The audio portion of his presentation will be webcast live, and an audio replay will be available. To access the webcast, please visit: http://customer.nvglb.com/BEAR002/030204a_cy/default.asp?entity=l3communicat ions Headquartered in New York City, L-3 Communications (S&P, BB+ Corporate Credit Rating, Positive Outlook) is a leading provider of Intelligence, Surveillance and Reconnaissance (ISR) systems, secure communications systems, aircraft modernization, training and government services and is a merchant supplier of a broad array of high technology products. Its customers include the Department of Defense, Department of Homeland Security, selected U.S. Government intelligence agencies and aerospace prime contractors. To learn more about L-3 Communications, please visit the company's Web site at http://www.L-3Com.com/ LA QUINTA: Board Declares Dividend on 9% Preferred Stock -------------------------------------------------------- La Quinta Properties, Inc.'s Board of Directors declared a dividend of $0.5625 per depositary share on its 9% Series A Cumulative Redeemable Preferred Stock for the period from January 1, 2004 to March 31, 2004. Shareholders of record on March 15, 2004 will be paid the dividend of $0.5625 per depositary share of Preferred Stock on March 31, 2004. Dividends on the Series A Preferred Stock are cumulative from the date of original issuance and are payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (or, if not a business date, on the next succeeding business day) at the rate of 9% of the liquidation preference per annum (equivalent to an annual rate of $2.25 per depositary share). About La Quinta Corporation (NYSE: LQI) Dallas based La Quinta Corporation and its controlled subsidiary, La Quinta Properties, Inc., a leading limited service lodging company, owns, operates or franchises more than 370 La Quinta Inns and La Quinta Inn & Suites in 33 states. Today's news release, as well as other information about La Quinta, is available on the Internet at http://www.LQ.com/ * * * As reported in the Troubled Company Reporter's December 22, 2003 edition, Fitch Ratings affirmed the senior unsecured ratings La Quinta at 'BB-', and has revised the Rating Outlook to Stable from Negative. The ratings reflect La Quinta's sizable and geographically diverse asset base of owned hotel properties, healthy liquidity, improved capital structure, and strong track record in a challenging environment. Risks include significant debt levels, minimal free cash flow generation, potential acquisitions and limited brand recognition. The change in Outlook reflects LQI's improved capital structure, stronger business profile, and recent strengthening of lodging fundamentals. Overhang to the rating and Outlook is LQI's stated priority of making a strategic acquisition with net proceeds of a recent equity issuance. In the event proceeds are used to further improve its capital structure, Fitch would likely review the rating and/or outlook for possible upgrade. LA VOZ COMM: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: La Voz Communications, Inc. dba La Nacion USA 2615-A Shirlington Road Arlington, Virginia 22206 Bankruptcy Case No.: 04-10842 Type of Business: The Debtor is a daily Spanish-language newspaper that covers news from the U.S. Capitol, White House, FBI, CIA, Supreme Court, International, National, Local, Immigration, Hispanic Vote, Culture, and Sports. See http://www.lanacionusa.com/ Chapter 11 Petition Date: February 27, 2004 Court: Eastern District of Virginia (Alexandria) Debtor's Counsel: Kermit A. Rosenberg, Esq. Tighe Patton Armstrong Teasdale, PLLC 1747 Pennsylvania Avenue North West, Suite 300 Washington, DC 20006-4604 Tel: 202-293-0398 Fax: 202-393-0363 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Jesus C. Sanchez-Canete Wages $660,000 5672 Independence Circle Alexandria, VA 22312 Rose M. Sanchez-Canete Wages $266,600 12938 Freestone Court Woodbridge, VA 22192 Hanover Publishing Trade $96,000 Gannett Offset/Springfield Trade $60,000 Journal Newspaper, Inc. Trade $50,000 Ridge Paper Company Trade $23,212 Columbia Real Estate Rent - Arlington $18,824 Investment Group, LLC Information Leasing Trade $14,060 Corporation McGrann Paper Corp. Trade $10,806 Konica Minolta Graphic Trade $9,854 Superior Lithoplate of Trade $5,810 Indiana, Inc. Agence France Presse Trade $5,600 Deutsche Trade $5,600 Presse-Agentur (DPA) U.S. Ink Trade $5,559 Kansa Technology LLC Trade $4,608 XPEDX Trade $4,000 AGGREKO, LLC Trade $2,784 Nomitex, S.A. de C.V. Trade $2,700 Cintas Corp. Trade $2,520 Capital One Services Trade $842 LIBERTY MEDIA: Providing Q4 Supplemental Fin'l Info on March 15 --------------------------------------------------------------- Liberty Media Corporation (NYSE: L, LMC.B) will release Fourth Quarter 2003 Supplemental Financial Information on Monday, March 15, 2004. You are invited to participate in Liberty Media's conference call, which will begin at 4:00 p.m. (ET). Robert Bennett, Liberty Media's President and CEO, will host the call. Please call Premiere Conferencing at (719) 457-2666 at least 10 minutes prior to the call so that we can start promptly at 4:00 p.m. (ET). You will need to be on a touch-tone telephone to ask questions. The conference administrator will give you instructions on how to use the polling feature. Questions will be registered automatically and queued in the proper sequence. Replays of the conference call can be accessed from 7:00 p.m. (ET) on March 15, 2004 through 5:00 p.m. (ET) March 22, 2004, by dialing (719) 457-0820 plus the pass code 566114#. In addition, the Fourth Quarter Supplemental Financial Information conference call will be broadcast live via the Internet. To register for the web cast, all interested persons should visit the Liberty Media web site at: http://www.libertymedia.com/investor_relations/default.htm Links to the press release and replays of the call will also be available on the Liberty Media web site. The conference call and related materials will be archived on the web site for one year. * * * As reported in the Troubled Company reporter's February 9, 2004 edition, Liberty Media Corporation's auditors, KPMG PLC, of London, England, on May 26, 2003, issued a "going concern" notice in its Auditors Report of that date. KPMG cited recurring losses, a net shareholders deficit and financial restructuring as contributing causes. LITFIBER INC: Forms New Board and Restructures to Create Value -------------------------------------------------------------- Litfiber Inc. (OTC: LTBI) has formulated a new board of directors that consists of John D. Jarvis Jr. Chairman / CEO and new Secretary David Tabb as well Dallas Jones staying on as a Director in an advisory capacity to the board. A complete board position listing as well as bios will be made public on the company's web site http://www.litfiber.comas soon as possible. Chairman and Chief Executive Officer John D. Jarvis stated, "It is our number one goal to bring shareholder value back to this company while providing a new technology direction for the company as well as its shareholders." Litfiber will continue to be an exceptional provider of business solutions and Project Management services. Litfiber plans to be the leading growth company in the wireless and IT professional services industry as well as P2P VOIP in 2004. This growth will be fueled by relentless innovation, focused on exceeding client expectations and creating extraordinary opportunities for all parties involved. Jarvis concluded, "Over the next few quarters we will be completing key acquisitions in the United Sates Security sector as well as key acquisitions in the Homeland Security sector." These acquisitions have been in the works at Litfiber since 4th quarter 2003. The company has scheduled to have its yearly shareholders meeting in Houston, Texas, in late August. For more information, please contact the company with information provided on its website. MADISON PARTNERS: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Madison Partners I, Inc. 301 Madison Avenue, 2nd Floor New York, New York 10017 Bankruptcy Case No.: 04-11315 Type of Business: The Debtor is a holding and real estate investment company. Chapter 11 Petition Date: March 2, 2004 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtor's Counsel: Lawrence Morrison, Esq. 225 East 36th Street New York, NY 10016 Tel: 212-252-1990 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-largest creditors. MAJESTIC STAR: Schedules Q4 & FY 2003 Conference Call Today ----------------------------------------------------------- The Majestic Star Casino, LLC will hold a conference call today at 10:00 a.m. (Eastern Time) to discuss its fourth quarter and year end 2003 financial results. The participant dial-in number is 1-800-391-2548. Please provide pass code number VB852247 to the operator. The conference call moderator will be Michael E. Kelly, Executive Vice President and Chief Operating Officer. A re-play number will also be available after the conference call, and may be accessed on March 3, 2004 through March 12, 2004. The replay number is 1-800-355- 2355; pass code number 852247#. The Majestic Star Casino, LLC is a multi-jurisdictional gaming company that directly owns and operates one dockside gaming facility located in Gary, Indiana and, pursuant to a 2001 acquisition through its restricted subsidiary, Majestic Investor Holdings, LLC, owns and operates two Fitzgeralds brand casinos located in Tunica, Mississippi and Black Hawk, Colorado. For more information about the Company, visit http://www.majesticstar.com/ or http://www.fitzgeralds.com/ At September 30, 2003, Majestic Star's balance sheet shows a total shareholders' equity deficit of about $29 million. MCDERMOTT INTL: Will Release Q4 and FY 2003 Results on March 11 --------------------------------------------------------------- McDermott International, Inc. (NYSE:MDR) provided a preview on major items expected in its fourth quarter 2003 earnings release based upon management's unaudited review. In addition, the Company provided an outlook for its consolidated businesses for the full year 2004. The Company plans to release its financial results for the fourth quarter and full year 2003 during the evening of March 11, 2004, with a conference call to occur March 12, 2004 at 10:00 a.m. (EST). The Company invites investors to listen to the call live or to the replay, both available at http://www.mcdermott.com/in the investor relations section. As a matter of practice, Company management does not engage in private conversations with investors from the end of a quarterly period until earnings are actually released. Major items of note expected in fourth quarter 2003 earnings include: B&W Revaluation: McDermott expects the non-cash, after-tax revaluation associated with The Babcock & Wilcox Company's ("B&W") Chapter 11 settlement to be an expense of approximately $10 million in the fourth quarter. The increase in the settlement expense during the fourth quarter was primarily due to the improvement in McDermott's stock price from $5.71 per share at September 30, 2003 to the year-end closing price of $11.95 per share. This revaluation expense will continue to fluctuate on a quarterly basis until the B&W bankruptcy is resolved, and management does not consider it reflective of its business operations. J. Ray: The marine construction services segment, consisting of J. Ray McDermott, S.A., is expected to report fourth quarter 2003 revenues of approximately $430 million and an operating loss in the range of $55-$60 million. Certain projects previously disclosed by management are expected to be included in J. Ray's fourth quarter 2003 operating loss, including anticipated losses on the Front Runner spar, the Carina Aries project in Argentina and the Belanak FPSO project in Batam Island, aggregating approximately $59 million. In addition, J. Ray and its insurers resolved certain claims by a customer, which resulted in a charge to J. Ray of approximately $5 million. Although the following items do not meet the criteria for recording in J. Ray's December 31, 2003 financial statements, J. Ray believes it has an opportunity to recover up to $25 million of the losses incurred during 2003 ("Potential Recoveries") through customer change orders, negotiated settlements or legal proceedings. The timing of any such recovery is uncertain. Although McDermott can provide no assurance that it will recover any of the Potential Recoveries, any such recovery would positively impact J. Ray's operating income in the period in which it is received. BWXT: The government operations segment, consisting of BWX Technologies, Inc. ("BWXT"), is expected to report fourth quarter 2003 revenues of approximately $150 million and operating income in the range of $19-$21 million, including a reimbursement of corporate expense of approximately $4.5 million and equity income from investees of approximately $9 million. Corporate: Unallocated corporate expenses are expected to be approximately $24 million, including nearly $19 million in non- cash pension expense. Other: Consolidated net interest expense is expected to be approximately $7 million, due to increased borrowings and interest expense associated with J. Ray's 11 percent, 10-year senior secured note offering completed in early December and low interest rates earned on the Company's cash investments. The Company's provision for income taxes is expected to be approximately $2-$4 million. Consolidated: On a consolidated basis, McDermott International, Inc. expects to record a net loss from continuing operations for the fourth quarter in a range of $77-$84 million. 2004 Operational Outlook McDermott's management expects that its 2004 financial results will continue to reflect J. Ray's turnaround process. Management is continuing its practice of not providing specific earnings per share guidance but is providing this operational update on its consolidated businesses and major categories. J. Ray: J. Ray's current backlog of signed contracts at December 31, 2003 was approximately $1.4 billion. This backlog is anticipated to produce 2004 revenues of approximately $0.9 billion, not including any additional contracts that may be awarded and performed during the year. Approximately $0.2 billion of this amount is revenue from contracts currently, and expected to remain, in a loss position. J. Ray has bids for new contracts outstanding in the $1.9 billion range, and it expects to book additional work during 2004, which would contribute to revenue and operating income. However, the timing and certainty of these potential contracts are not known. Without awards of additional contracts or the benefit of Potential Recoveries, the current backlog of work for 2004 alone would be insufficient to produce meaningful operating income at J. Ray. Several contracts expected to be signed in the fourth quarter 2003 experienced delays, which will impact our 2004 results. The delay of these awards is expected to have a greater impact on the first and second quarters of this year. As previously announced, excluding asset sales, J. Ray anticipates incurring negative cash flows for three of the four quarters in 2004. Although J. Ray completed a $200 million senior secured note offering in early-December, it has yet to complete the anticipated letter of credit facility. As a result, J. Ray's liquidity has been, and will continue, to be strained due to its cash losses and lack of a letter of credit capacity. J. Ray intends to improve its liquidity position through a new letter of credit facility, and sales of non-strategic assets. BWXT: BWXT is expected to continue producing strong financial results. Its year-end 2003 backlog of approximately $1.8 billion is expected to produce 2004 revenues of approximately $515 million, not including any new contracts that may be awarded during the year. BWXT's strong commitment to cost containment, in addition to the potential for new service contract awards, leads management to believe operating margins should remain consistent with 2003 levels, on a comparable basis. Corporate: The Company expects to incur 2004 unallocated corporate expenses in the range of $75-$80 million, with non-cash pension expense representing approximately $63 million of that range. Other items: Consolidated interest expense is expected to increase in 2004 to approximately $35 million, largely due to the December 2003 issuance of J. Ray's $200 million, 11 percent 10-year senior secured notes and the fees associated with BWXT's three-year $135 million revolving credit facility. The Company does not expect to receive a tax benefit from the interest expense incurred by J. Ray. Interest income is expected to be roughly the same as 2003. The Company and its subsidiaries pay various forms of tax in numerous different jurisdictions. It is extremely difficult to accurately forecast a tax rate or tax amount for the full year. About the Company McDermott International Inc. (S&P, CCC+ Corporate Credit Rating, Positive), is a leading worldwide energy services company. The Company's subsidiaries provide engineering, fabrication, installation, procurement, research, manufacturing, environmental systems, project management and facility management services to a variety of customers in the energy and power industries, including the U.S. Department of Energy. MEDIA 100: Optibase to Acquire Assets in Prepackaged Bankruptcy --------------------------------------------------------------- Media 100 Inc. (OTCBB: MDEA.OB) has executed a non-binding term sheet providing for the sale of substantially all of the assets of the Company to Optibase Ltd. This transaction will allow Media 100 to continue to develop, sell and support its 844/X editing- compositing systems, newly-introduced Media 100 HD system, Media 100 i, and other content design products. "Media 100 has created differentiated and valuable technology that we believe can flourish with the right backing," said Tom Wyler, Chief Executive Officer and Chairman of the Board of Optibase. "The advanced products that Media 100 has developed represent a growth opportunity for Optibase." "With an extremely strong balance sheet, Optibase gives Media 100 the financial wherewithal to continue engineering and marketing 844/X and Media 100 HD and compete aggressively in the market," said John Molinari, president and chief executive officer of Media 100. "The deal is timed well to support us just as we begin first shipments of our new 844/X Version 3 release and prepare to deliver our first implementation of 844/X technology on the Apple Power Mac G5 platform--Media 100 HD." This transaction is anticipated to be effected as part of a prepackaged bankruptcy. The term sheet specifies that Optibase intends to provide up to $1 million in a debtor-in-possession loan, and buy substantially all the assets of the Company for $2.5 million (less the amount of any debtor-in-possession funding advanced). It is anticipated that substantially all of the proceeds will be used to pay operating expenses and creditors, and it is unlikely that stockholders would receive any payment. The acquisition is subject to a number of contingencies, including negotiation and completion of final documentation and approval by the bankruptcy court. In the event the transaction is not completed, the Company may be required to cease operations. About Media 100 Media 100 develops award-winning advanced media systems for content design, enabling creative professionals to design highly evocative effects-intensive work on a personal computer. Creative artists and content design teams around the world use Media 100's Emmy Award-winning solutions. The Company is headquartered in Marlboro, Massachusetts. For more information, please visit http://www.media100.com/ About Optibase Optibase, Ltd. (Nasdaq:OBAS) provides professional encoding, decoding, video server upload and streaming solutions for telecom operators, service providers, broadcasters and content creators. The company's platforms enable the creation, broadband streaming and playback of high quality digital video. Optibase's breadth of product offerings are used in applications, such as: video over DSL/Fiber networks, post production for the broadcast and cables industries, archiving; high end surveillance, distance learning; and business television. Headquartered in Israel, Optibase operates through its fully-owned subsidiary in Mountain View, California and offices in Europe, Japan and China. Optibase products are marketed in over 40 countries through a combination of direct sales, independent distributors, system integrators and OEM partners. For more information, visit http://www.optibase.com/ MEDMIRA: Closes First Round of Debenture Financing with Channel --------------------------------------------------------------- MedMira Inc. (TSX Venture: MIR) closed $500,000 of the previously announced $3 million debenture financing from 5 private investors. The investment comes from a "President's List", provided by MedMira under the terms of the agreement announced on February 17th with Channel Financial Group Ltd of Montreal. The debentures feature a 15% interest rate with a royalty on sales bringing the total return to 25%. The debentures have a 1-year term and are convertible, up to maturity, into common shares of MedMira at $0.85 per share. Stephen Sham, MedMira Chairman and CEO, said, "We're very pleased to be able to close the first round of our financing so quickly. This clearly displays the support of our investors for the company. We remain confident that we will complete the debenture financing by the end of March, as originally planned." MedMira -- http://www.medmira.com/-- is a commercial biotechnology company that develops, manufactures and markets qualitative, in vitro diagnostic tests for the detection of antibodies to certain diseases, such as HIV, in human serum, plasma or whole blood. The United States FDA and the SFDA in the People's Republic of China have approved MedMira's Reveal(TM) and MiraWell(TM) Rapid HIV Tests, respectively. All of MedMira's diagnostic tests are based on the same flow- through technology platform, thus facilitating the development of future products. MedMira's technology provides a quick (under 3 minutes), accurate, portable, safe and cost-effective alternative to conventional laboratory testing. At October 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about C$3 million. METROCALL: Redeeming $20 Million of Preferred Stock on Mar. 31 -------------------------------------------------------------- Metrocall Holdings, Inc. (NASDAQ: MTOH), a leading provider of paging and two-way wireless messaging, will make a $20 million redemption of 1,797,103 shares, representing approximately 75%, of its outstanding series A preferred stock (series A preferred) on March 31, 2004. The per share redemption price will be $11.129028. Following this redemption, the Company will have redeemed approximately 5.4 million shares, or approximately 90%, of the aggregate 6 million series A preferred shares issued in connection with its October 2002 reorganization. This voluntary redemption of shares will be completed using $20 million in cash balances generated from operations. Shares will be redeemed on a pro-rata basis from all holders of record on March 1, 2004. After the redemption, Metrocall will have approximately 605,000 shares of its series A preferred stock outstanding with an aggregate liquidation preference of approximately $6.7 million. This payment follows a $20 million redemption of series A preferred completed on September 30, 2003, a subsequent $20 million redemption on January 6, 2004 and the retirement in full of approximately $81.5 million aggregate principal amount of Metrocall's long-term debt securities completed on June 30, 2003. Additionally, Metrocall's board of directors has declared a dividend on the series A preferred stock of approximately $0.42 per share, payable March 31, 2004, to holders of record on March 15, 2004. The dividend will be paid on all issued and outstanding shares prior to March 31, 2004. Please refer to the Company's most recent report on Form 10-Q, annual report on Form 10-K and proxy statement for details on these securities. "Metrocall continues to make progress in executing our cash flow- focused business plan," stated Vincent D. Kelly, Metrocall President & CEO. "Upon the completion of this redemption, Metrocall will have retired $141.5 million, or 96% of the aggregate debt and preferred stock obligations associated with our October 8, 2002 plan of reorganization using cash generated from operations." About Metrocall Wireless, Inc. Metrocall Wireless, Inc., headquartered in Alexandria, Virginia, is a leading provider of paging products and other wireless services to business and individual subscribers. In addition to its reliable, nationwide one-way networks, Metrocall's two-way network has the largest high-powered terrestrial ReFLEX footprint in the United States with roaming partners in Canada, Mexico, the Caribbean, Central and South America. Metrocall Wireless is the preferred ReFLEX wireless data network provider for many of the largest telecommunication companies in the United States that source virtual network services and resell under their own brand names. In addition to traditional numeric, one-way text and two- way paging, Metrocall also offers wireless e-mail solutions, as well as mobile voice and data services through AT&T Wireless and Nextel. Also, Metrocall offers Integrated Resource Management Systems with wireless connectivity solutions for medical, business, government and other campus environments. Metrocall focuses on the business-to-business marketplace and supports organizations of all sizes, with a special emphasis on the medical and government sectors. For more information on Metrocall visit its Web site and on-line store at http://www.metrocall.com/ The Company filed for chapter 11 protection on June 3, 2002 (Bankr. DE. Case No. 02-11579). Laura Davis Jones, Esq. at Pachulski Stang Ziehl Young Jones & Weintraub, PC represented the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $189,297,000 in total assets and $936,980,000 in total debts. As previously reported, Metrocall, Inc., and its debtor-affiliates sought and obtained an extension from the U.S. Bankruptcy Court for the District of Delaware of their time to file final reports and to delay automatic entry of a final decree. This was the Debtors' second request to delay entry of a final decree. As reported in the Troubled Company Reporter on September 27, 2002, the Court confirmed the Company's Chapter 11 Plan. Since then, the Debtors have devoted their time to reviewing and reconciling approximately 4,300 claims. The Debtors told the Court that process is taking longer than expected. Consequently, the Court extended the deadline for entry of the final decree in these Chapter 11 Cases, to December 31, 2003. MILLENNIUM CHEMICALS: Ups Prices for Titanium Dioxide Products -------------------------------------------------------------- Millennium Chemicals (NYSE:MCH) announced price increases on the sale of all Tiona(r) titanium dioxide (TiO2) products sold to all end use markets in Asia, Central & South America and in the Middle East & Africa effective April 1, 2004. Prices will increase US $100 per metric ton (pmt) in Central & South America, US $150 pmt in Asia and US $150 pmt or Euros 120 pmt in the Middle East and Africa or as contracts allow. TiO2 demand has significantly increased worldwide. These price increases are needed to improve margins and to justify future investments in this business. Millennium Chemicals (website: www.millenniumchem.com) is a major international chemicals company, with leading market positions in a broad range of commodity, industrial, performance and specialty chemicals. Millennium Chemicals is: -- The second-largest producer of TiO2 in the world, the largest merchant seller of titanium tetrachloride and a major producer of zirconia, silica gel and cadmium/based pigments; -- The second-largest producer of acetic acid and vinyl acetate monomer in North America; -- A leading producer of terpene-based fragrance and flavor chemicals; and, -- Through its 29.5% interest in Equistar Chemicals, LP, a partner in the second-largest producer of ethylene and third- largest producer of polyethylene in North America, and a leading producer of performance polymers, oxygenated chemicals, aromatics and specialty petrochemicals. * * * As previously reported, Standard & Poor's Ratings Services assigned its 'BB-' rating to Millennium Chemicals Inc.'s $125 million convertible debentures due 2023, based on preliminary terms and conditions. At the same time, Standard & Poor's affirmed its 'BB-/Stable/--' corporate credit rating on Millennium Chemicals Inc. and raised the ratings on the existing $150 million revolving credit facility to 'BB' from 'BB-', to recognize the benefits of a pending amendment (subject to the successful sale of at least $110 million of long-term notes) that will improve lenders prospects for full recovery in the event of a default. Hunt Valley, Maryland-based Millennium, with about $1.6 billion of annual sales and approximately $1.3 billion of outstanding debt (excluding adjustments to capitalize operating leases), is primarily engaged in the production of commodity chemicals. The outlook is stable. MIRANT CORP: US Trustee Amends Equity Security Holders' Committee ----------------------------------------------------------------- Pursuant to Section 1102(a) of the Bankruptcy Code, the U.S. Trustee for Region 17, William T. Neary, amends the membership of the Official Committee of Equity Security Holders appointed in the Chapter 11 cases of Mirant Corp. and its debtor-affiliates, to reflect that as of February 10, 2004, Aria Partners and L. Matt Wilson are no longer members of the Equity Committee: (1) Joann McNiff, Co-Chair Phaeton International/Phoenix Partners 33 S. Franklin Avenue Bergenfield, NJ 07621 (201) 385-2933 Fax: (201) 385-2933 jmcniff@optonline.net (2) Morris Weiss, Co-Chair John Gorman Tejas Securities Group, Inc. 112 E. Pecan, Suite 1510 San Antonio, Texas 78205 (210) 226-1555 Fax: (210) 226-7571 mdweiss@tejassec.com (3) Roger B. Smith 301 Kemp Road Suwanee, GA 30024-1607 (700) 418-1818 Fax: (404) 842-4523 rbsmith@bear.com (4) Andres Forero 705 E, 43rd Street Austin, TX 78751 (512) 380-7057 Fax: (512) 380-7057 aforero@mail.utexas.edu (5) Michael Willingham 9202 Meaux Drive Houston, TX 77031 (713) 270-8740 Fax: (866) 876-5362 mwillingham1@yahoo.com (Mirant Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) MTS INCORPORATED: Signs-Up O'Melveny & Myers as Co-Counsel ---------------------------------------------------------- MTS Incorporated and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware of its application to employ O'Melveny & Myers LLP as their co-counsel in their chapter 11 proceedings. O'Melveny & Myers has represented the Debtors in a broad range of matters, including the extensive negotiations with each of the Debtors' major creditor groups and its interest holders. O'Melveny & Myers has also acted as the Debtors' restructuring counsel over the last year. During the course of this representation, the firm has acquired knowledge of the Debtors' businesses, financial affairs and capital structure. In this engagement, O'Melveny & Myers is expected to: a. advise the Debtors generally regarding matters of bankruptcy law in connection with their chapter 11 cases; b. advise the Debtors of the requirements of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, applicable local bankruptcy rules pertaining to the administration of their cases and U.S. Trustee Guidelines related to the daily operation of their- business and the administration of the estates; c. prepare motions, applications, answers, proposed orders, reports and papers in connection with the administration of the estates; d. negotiate with creditors, prepare and seek confirmation of a plan of reorganization and related documents, and assist the Debtors with implementation of the plan; e. assist the Debtors in the analysis, negotiation and disposition of certain estate assets for the benefit of the estates and their creditors; f. advise the Debtors regarding general corporate and securities matters as well as bankruptcy related employment and litigation issues; and g. render such other necessary advice and services as the Debtors may require in connection with their cases. The Debtors have also retained Richards, Layton & Finger as co- counsel in Delaware. Richards Layton will provide additional, necessary legal services to the Debtors, and will advise the Debtors in connection with the Local Rules and local practice in Delaware in connection with the prosecution of these cases. O'Melveny & Myers, the Debtors and Richards Layton have conferred and will continue to confer to ensure that there will be no undue duplication of effort or overlap of work between and among the co- counsel, and that the estates receive the best possible value. O'Melveny & Myers' attorneys that are expected to be principally responsible for this matter and their respective hourly rates are: Professional Name Billing Rate ----------------- ------------ Ben H. Logan $650 per hour Stephen Warren $580 per hour Austin K. Barren $400 per hour Christopher Morris $380 per hour Emily R. Culler $300 per hour Headquartered in West Sacramento, California, MTS, Incorporated -- http://www.towerrecords.com/-- is the owner of Tower Records and is one ofthe largest specialty retailers of music in the US, with nearly 100 company-owned music, book, and video stores. The Company, together with its debtor-affiliates, filed for chapter 11 protection on February 9, 2004 (Bankr. Del. Case No. 04-10394). Mark D. Collins, Esq., and Michael Joseph Merchant, Esq., at Richards Layton & Finger represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed its estimated debts of over $10 million and estimated debts of over $50 million. NATIONAL CENTURY: Asks Court to Expunge Donald Ayers' Claim ----------------------------------------------------------- Joseph M. Witalec, Esq., at Jones, Day, Reavis & Pogue, in Columbus, Ohio, tells Judge Calhoun that Donald H. Ayers was one of the original founders of the National Century Debtors and served as a director of National Century Financial Enterprises, Inc. from its founding in 1991 until his retirement in June 2001. In May 2003, the NCFE shareholders re-elected Mr. Ayers to the NCFE board. NCFE loaned Mr. Ayers $1,000,000 on March 29, 2001. On August 13, 2001, Mr. Ayers borrowed an additional $1,550,000 from NCFE. The loans were secured by pledges of 206 shares of NCFE common stock. No payments were ever made on either of these loans. On October 25, 2002, Mr. Ayers executed a Non-Recourse Secured Promissory Note. The October 2002 Note purportedly was made effective as of August 1, 2001, and provided that the two loans, totaling $2,550,000 plus interest, were to be repaid on January 1, 2003. The security for the October 2002 Note is Mr. Ayers' pledged NCFE stock. No payment was ever made on the October 2002 Note. On April 22, 2003, Mr. Ayers filed a claim against NCFE, asserting an unsecured, priority claim for wages, salaries and contributions to an employee benefit plan. The Claim also seeks $54,074,400 based on an employment agreement, dated September 1, 2000. Pursuant to Section 502 of the Bankruptcy Code and Rules 3001 and 3007 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to disallow the Ayers Claim. Mr. Witalec argues that Mr. Ayers failed to carry his initial burden establishing the prima facie validity of his claim. Mr. Ayers asserted that the basis for his claim is the Employment Agreement dated September 1, 2000. The Employment Agreement states that if Mr. Ayers terminates his employment with NCFE by retiring, Mr. Ayers would receive his base salary for a period of two years and any bonuses under the Agreement for 18 months. Mr. Ayers retired from NCFE in June 2001. Under the Employment Agreement, Mr. Ayers' annual base salary was $715,000. Even if he did have a valid proof of claim, Mr. Ayers does not indicate any basis for the $54,074,400 priority claim asserted in his proof of claim. Even if Mr. Ayers met his prima facie burden, Mr. Witalec continues, the Ayers Claim should be disallowed on the basis that it is subject to valid defenses. Mr. Ayers was a founder and director of the very entity against which he asserts his claim. His actions as a founder and director may have related to the series of events resulting in the filing of the Debtors' cases. Therefore, any claims asserted by Mr. Ayers would be subject to the defenses of set-off and recoupment. Thus, the Debtors could overcome the prima facie raised by Mr. Ayers in his claims even if he had complied with Bankruptcy Rule 3001(c). Mr. Witalec states that once the Debtors have overcome the prima facie case, "the ultimate burden of persuasion will be on the claimant to prove the validity of the claim." Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader in healthcare finance focused on providing medical accounts receivable financing to middle market healthcare providers. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones, Day, Reavis & Pogue represents the Debtors in their restructuring efforts. (National Century Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTEL NETWORKS: Launches New Set of Wireless Network Solutions --------------------------------------------------------------- Nortel Networks (NYSE:NT) (TSX:NT) announced a new set of wireless local area network solutions that further deliver on the company's vision of secure, adaptive and scalable wireless communications. The announcement is the next step in realizing Nortel Networks' vision for mobility. It introduces a Wireless IP Telephony portfolio and an adaptive WLAN solution that can meet the most demanding and sophisticated customer needs. Together these solutions are tailored to meet the current and future communications requirements of businesses, regardless of their existing network infrastructure. "As our customers introduce wireless LANs into their networks, we are giving them choices in how to securely configure their networks," said Malcolm Collins, president, Enterprise Networks, Nortel Networks. "They've told us that they want to run voice and multimedia applications over the wireless local area network, and we're delivering on these needs. Our new solutions actually respond to changing conditions in the numbers of users, availability of wireless spectrum, and application priority to deliver a consistently superior experience to our customers." The new products and solutions complement Nortel Networks award-winning WLAN 2200 Series, introduced in March 2003 and Wireless 7200 series introduced in October 2003. With the announcement, Nortel Networks is providing the widest range of WLAN options in the market supporting converged applications such as IP Telephony over the WLAN. Additionally, the adaptive WLAN products offer new levels of wireless monitoring, control and responsiveness in case of changing traffic and load. The new WLAN offerings give customers a range of choices best-suited to their business requirements and stage of network evolution. Nortel Networks is tapping into the WLAN expertise of Airespace and SpectraLink Corporation to help supply leading-edge technologies that bring these offerings to life. "Fidelity Investments has a history of leveraging emerging technologies to enhance its operations and more effectively service its customers," said Larry Jarvis, vice president of engineering, Fidelity Investments Service Company. "With Nortel Networks, we are able to advance our use of next generation wireless LAN technology, while satisfying our functional and support requirements. Nortel Networks, working with Airespace, provides a new level of global wireless systems to meet corporate demands for capabilities, including dynamic power and channel control, roaming, and security." As well as increasing employee productivity and reducing operational expenses, these solutions help simplify infrastructure administration and deliver a connection security comparable to a wired environment: Adaptive Solution is the newest addition to the award-winning WLAN 2200 Series portfolio, offering the greatest control, flexibility and security for WLAN deployments using radio frequency monitoring and control. It is ideal for new WLAN deployments, and supports IP Telephony over WLAN. It enables enterprises to combine the cost benefits of using IP voice with the mobility advantages of secure wireless. This solution is based on the new Nortel Networks WLAN Security Switch 2270 and the WLAN Access Ports 2230 and 2231 and is complemented by the WLAN Handsets 2210 and 2211, WLAN IP Telephony Manager 2245 and WLAN Application Gateway 2246. Hybrid Solution is ideal for companies needing to extend the coverage of their existing WLAN. Nortel Networks access points and WLAN Security Switch 2250 provide robust functionality, such as visitor-based networking capabilities and security features, including unauthorized access point detection. This solution also supports legacy access points and a heterogeneous mix of equipment and provides quality of service for superior IP voice performance. Stand Alone Solution enables the deployment of isolated WLANs within the enterprise infrastructure, with security implemented at each discrete WLAN Access Point. With the addition of the WLAN Security Switch 2250, this solution can be easily migrated to support the Hybrid Solution when enterprises want to increase the management and security capabilities of their WLAN infrastructure. Wireless Mesh Architecture is for wireless deployments in open areas or where no LAN infrastructure exists, such as warehouse and university campus environments. This solution replaces the wired backhaul or transit link with a wireless link, eliminating the need to install additional LAN cabling and other infrastructure to extend WLAN service beyond the reach of the existing LAN. Nortel Networks (S&P, B Corporate Credit Rating, Stable) is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com/ Nortel Networks, the Nortel Networks logo, the Globemark and Business Without Boundaries are trademarks of Nortel Networks. NRG ENERGY: Remaining Debtors Have Until May 8 to File a Plan ------------------------------------------------------------- Pursuant to Section 1121(d) of the Bankruptcy Code, Debtors: * LSP-Nelson Energy, LLC, * NRG Nelson Turbines LLC and * NRG McClain LLC sought and obtained Court approval to extend their exclusive period to file a plan of reorganization through and including May 8, 2004, and their exclusive period to solicit and obtain acceptances of that plan through and including July 8, 2004. (NRG Energy Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) ONEIDA: Obtains Further Waiver Extensions & Deferrals from Lenders ------------------------------------------------------------------ Oneida Ltd. (NYSE:OCQ) obtained further waiver extensions through March 15, 2004 from its lenders in regard to the company's financial covenants and in respect to certain payments that are due. Previously announced waivers were effective through March 1, 2004. Oneida's bank lenders agreed to further postpone, until March 15, 2004, reductions of $5 million, $10 million and $20 million in the company's credit availability that originally were scheduled to take effect on November 3, 2003, January 30 , 2004 and February 7, 2004, respectively, under the company's revolving credit agreement. Oneida's senior note holders also agreed to further defer until March 15, 2004 a $3.9 million payment from the company that was originally due on October 31, 2003. As was indicated during the previous waiver announcements, Oneida is working with its lenders to make appropriate modifications to its credit facilities, and continues to provide lenders with updated financial information regarding the company's operations and restructuring plans. The company expects there will be a further deferral of the above credit availability reductions and principal payment until such modifications have been agreed upon. Oneida Ltd. is a leading source of flatware, dinnerware, crystal, glassware and metal serveware for both the consumer and foodservice industries worldwide. OWENS: Sues to Recover Avoidable Transfers to Robles, et al. ------------------------------------------------------------ Owens Corning, Fibreboard Corporation, and Integrex made certain payments to claimants to settle asbestos claims under their "National Settlement Program." The Claimants are represented by: (1) Louis S. Robles, P.A., (2) Robles & Gonzalez, P.A., (3) Louis S. Robles, Esq., (4) Osvaldo N. Soto, Esq., and (5) unknown number of John Does. At the Official Committee of Unsecured Creditors' request, the Debtors seek to recover these payments made to the Defendant Law Firms within the preferential period: Debtor Payor Amount Paid Month Paid ------------ ----------- ---------- Owens Corning $4,264,000 August 1999 Owens Corning 867,000 September 1999 Owens Corning 2,155,000 October 1999 Owens Corning 11,000 November 1999 Owens Corning 628,000 December 1999 Owens Corning 610,000 January 2000 Owens Corning 204,000 February 2000 Owens Corning 176,000 March 2000 Owens Corning 296,000 April 2000 Owens Corning (1,000) May 2000 Owens Corning 821,000 September 2000 Fibreboard 2,978,000 January 2000 The Committee contends that these payments are avoidable and recoverable as fraudulent transfers. The Commercial Creditors Committee alleged, inter alia, that payments made under the NSP were made with the actual intent to hinder, delay and defraud the Debtors' non-asbestos creditors. However, the Debtors maintain that the Commercial Creditors Committee's allegations are reckless and are unsubstantiated by any facts. Accordingly, the Debtors ask the Court to determine that the NSP payments made to the Defendant Law Firms are not avoidable. The Debtors ask the Court for declaratory relief determining that: (1) the NSP agreement with the Defendant Law Firms was a valid agreement enforceable in accordance with its terms, subject to applicable bankruptcy law, including without limitation to Section 365 of the Bankruptcy Code; and (2) the NSP payments made to the Defendant Law Firms, to the extent disbursed to its clients after the clients' satisfaction of the conditions precedent to payment, are not avoidable or recoverable as fraudulent transfers under Sections 544, 548 and 550 or any applicable state law. In the event that the Court does not grant their request, or to the extent that funds were disbursed to the Defendant Law Firms or its clients even though the clients did not satisfy the conditions precedent to payment, then the Debtors have one or more claims against the Defendant Law Firms to avoid and recover NSP payments made to it as attorneys' fees and costs, or those portions of any NSP payment made to an individual asbestos claimant or group of asbestos claimants for payment to the Defendant Law Firms in compensation of attorneys' fees and costs. The Debtors do not assert any claim to recover any NSP payments made to and for the benefit of any individual asbestos claimants, exclusive of the Defendant Law Firms' attorneys' fees and costs. Thus, the Debtors ask the Court to enter a judgment: (1) avoiding some or all of the Payments as fraudulent transfers or obligations; and (2) recovering some or all of the Payments, under Section 550; and (3) entering a money judgment against the Defendant Law Firms in the appropriate amount, plus interest and costs. (Owens Corning Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT GROUP: Industry Ministry to Appoint Creditors Committee ---------------------------------------------------------------- The Minister of Productive Activities, Antonio Marzano, and Dr. Enrico Bondi, Parmalat CEO and Extraordinary Commissioner, will appoint a nine-member unofficial committee of creditors. Bloomberg News says the committee will consist of eight banks and one bondholder representative. Parmalat and the Industry Ministry will invite four foreign banks and four Italian banks to join the committee. Press reports suggest four likely Committee members: * Parmalat's foreign lenders include Bank of America Corp. and Citigroup, Inc. At a conference call on December 31, 2003, Bank of America announced writing off $200,000,000 in loans and derivative losses as a result of Parmalat's collapse. BofA currently holds $274,000,000 in Parmalat loans and securities. * In the fourth quarter of 2004, Citigroup, Inc., also wrote off $242,000,000 in Parmalat loans and securities. Parmalat currently owes more than $300,000,000 in loans to Citigroup. * Of the Italian banks, Parmalat owes EUR400,000,000 in debt to Capitalia, and EUR360,000,000 to Banca Intesa SpA. Bondholders Disappointed On February 20, 2004, two institutional investors commenced a lawsuit against the Italian government to secure better representation in the Parmalat restructuring, the Financial Times reports. Societe Moderne des Terrassements Parisiens and Solotrat filed the lawsuit before an administrative court in Rome, Italy. Societe and Solotrat are privately held construction companies, which bought EUR1,900,000 in Parmalat bonds. The lawsuit demonstrates the growing dissatisfaction among Parmalat bondholders in the case. The Bondholders are disappointed with the limited representation they'd get. Parmalat bondholders are owed EUR8 billion or $10.2 billion in Parmalat bonds -- twice the amount owed to the banks. According to reports, the Bondholders may recover 25% to 30% of their investments. Parmalat assets will be distributed to creditors in the form of equity of Parmalat Finanziaria. Limited Access to Documents Minister Marzano did not indicate whether Parmalat creditors would have access to internal documents and have a role in shaping any restructuring plan or whether the creditors would only advise the management. According to Evan Flaschen, Esq., at Bingham McCutchen LLP, "The committee should have a say because creditors own this company." Bingham McCutchen, a U.S. law firm, and Houlihan Lokey, a U.S. financial advisory firm, represent international bondholders who own $3.5 billion in Parmalat debt. "Whether the Italian government will make it run that way or whether it will just be window dressing remains to be seen," Mr. Flaschen says. (Parmalat Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) PG&E NATIONAL: Inks Stipulation Settling JPMorgan Credit Dispute ---------------------------------------------------------------- The National Energy & Gas (formerly the PG&E National Energy Debtors) Debtors ask the Court to approve a stipulation with JPMorgan Chase Bank, in its capacity as: (i) agent pursuant to a credit agreement dated as of September 1, 1998, as amended, with USGen New England, Inc., and a consortium of other lenders; and (ii) agent pursuant to a credit agreement dated August 22, 2001, as amended, with National Energy & Gas Transmission, Inc., and a consortium of other lenders. The stipulation resolves disputes about prepetition payments made by NEGT to JPMorgan, as agent, in respect of certain asserted reimbursement obligations owed by USGen under the Credit Agreement. On July 7, 2003, in connection with its asserted reimbursement obligations, USGen entered into two expense deposit letter agreements with JPMorgan. Pursuant to the Expense Deposit Letters, and to facilitate JPMorgan's continued participation with respect to formulating and negotiating a Chapter 11 reorganization plan, NEGT remitted $2,450,000 to JPMorgan on account of USGen's obligations. After the Petition Date, the United States Trustee questioned the propriety of the payment of the Funds and asked NEG to seek the return of the Funds from JPMorgan. In turn, NEG asked JPMorgan to return the Funds to the NEG estate. JPMorgan, however, denied that it has or had any obligation to return the Funds. The Stipulation provides for: (a) the termination of the Expense Deposit Letters; (b) JPMorgan's retention of the Funds; (c) an agreement by JPMorgan, on behalf of the lenders under the NEG Credit Agreement, to reduce the cash distribution from the NEG estates to the lenders under the NEG Credit Agreement by $2,450,000 -- the total amount of the Funds -- pursuant to the NEG Plan; and (d) all persons and entities to be forever barred from asserting any claims against NEG, its estate or any other party-in-interest on account of the withholding of distributions otherwise payable on account of the Expense Deposit Credit. Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, LLP, in Baltimore, Maryland, tells the Court that if for any reason the cash distributions on account of the Claims arising under the NEG Credit Agreement are not reduced by $2,450,000 on account of the Funds, all claims of NEG and its estate against any entity on account of the Funds will survive Plan confirmation. According to Mr. Fletcher, the settlement reflects an adjustment that rectifies the issue of the Funds having been advanced by NEG to JPMorgan rather than by USGen. The compromise is made in furtherance of the Debtors' reorganization and avoids the cost and distraction of potential litigation regarding the Expense Deposit Letters. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) PILLOWTEX CORP: Urges Court to Approve Season Release Agreement --------------------------------------------------------------- Season Spirit, Inc. and Debtor Pillowtex Corporation are parties to a certain supply agreement dated December 17, 2001. Pursuant to the Supply Agreement, Season has in its possession certain goods amounting to approximately $5,309,133. According to Gilbert R. Saydah, Jr., Esq., at Morris Nichols Arsht & Tunnel, in Wilmington, Delaware, Season has received payment for the goods from the Debtors prior to the Petition Date. The Debtors have demanded the release of the Paid Goods but Season refused. Season insists that it has a possessory lien on the Paid Goods, securing the Debtors' obligation to pay storage costs: (a) $427,223 as of the Petition Date, consisting of $70,828 of accrued and unpaid storage costs and $356,395 of unpaid invoices for goods delivered; (b) $30,810 for postpetition storage costs through December 31, 2003; and (c) additional storage charges for the period from and after January 1, 2004, at the rate of $6,162 per month. Thus, Season asserted that it is entitled to withhold delivery of the Paid Goods unless and until the Debtors pay the Obligation. Mr. Saydah tells the Court that in connection with the orderly liquidation of their estate, the Debtors intend to sell or otherwise dispose of the Paid Goods free and clear of any liens, claims, encumbrances and interests of Season. According to Mr. Saydah, the parties are willing to compromise on these terms: A. Season will release the Paid Goods to Pillowtex or a shipper or other designated agent as soon as practicable. Due to the volume of goods, at least two weeks will be required for all the Paid Goods to be prepared for shipping and removal from Season's warehouse. The Paid Goods will be shipped in multiple shipments, provided, that if Season has received the payment before March 23, 2004, then shipments of the Paid Goods will commence not later than March 23, 2004. The parties will effect an orderly release and delivery of the Paid Goods to Pillowtex's possession or its designated agent, in accordance with these procedures: (a) For each shipment, Season will set aside, in an area in its facility, cartons containing the Paid Goods to be shipped, and permit a Pillowtex representative or designee access to the area to inspect the cartons. Season will also permit the Pillowtex representative or designee to monitor the packing and loading of the cartons to Pillowtex's designated shipper; (b) Prior to dispatch of the shipment, Pillowtex will confirm receipt by providing written acknowledgement of receipt and if a commercial shipper is used, the parties will cooperate to obtain from the shipper a signed bill of lading; and (c) The parties will also take other actions that are necessary for the orderly release and delivery of the Paid Goods, provided that neither party will be required to take any action that is not standard in the industry. B. Pillowtex or its designated shipper will supply pallets necessary to load the cartons containing the Paid Goods. Season will bundle and wrap the Paid Goods to prepare for shipping, provided Pillowtex will pay $36,100 for the service in advance of the first shipment. Season will not be entitled to any other payments in respect of the costs associated with the packing, loading, bundling, wrapping and shipment of the Paid Goods. Season will use its reasonable best efforts to ensure that no fewer than two shipments of the Paid Goods are available to be actually shipped per business day. C. The release of the Paid Goods will be without prejudice to any and all rights, remedies, claims, actions of whatever nature and that all the rights are preserved and have the same validity and effect as though the Paid Goods were not released. Without limiting any of the prior provisions of the Stipulation: (a) Pillowtex will not assert in any action or proceeding Season's release of the Paid Goods or the fact that Season does not have possession of the Paid Goods as a defense or element of a defense to Season's contention that it was entitled to withhold delivery of the Paid Goods pending payment of the Obligation, or seek to admit the foregoing into evidence for the purpose of, or assert that the foregoing have probative value with respect to, a determination of whether Season had the right to withhold delivery of the Paid Goods pending payment of the Obligation. Any attempt by Pillowtex to assert that defense will be void and of no force and effect; and (b) Season will not assert in any action or proceeding Pillowtex's entry into the Stipulation as a defense or element of a defense to Pillowtex's contention that it was entitled to take delivery of the Paid Goods prior to payment of the Obligation, or seek to admit the foregoing into evidence for the purpose of, or assert that the foregoing have probative value with respect to, a determination of whether Pillowtex had the right to take delivery of the Paid Goods prior to payment of the obligation. Any attempt by Season to assert that defense will be void and of no force and effect. D. Subject to any necessary approvals of the Bankruptcy Court, Pillowtex may take possession of the Paid Goods, and may sell the Paid Goods free and clear of any claims, encumbrances, or interests of Season, provided that Pillowtex will, upon closing of any one or more transactions for the sale of the Paid Goods, cause the lesser of the proceeds of all sales and an amount equal to the Obligation to be deposited at closing into a segregated, interest bearing escrow account, pending a final determination of the Bankruptcy Court as to the parties' rights. The claims, encumbrances, and interests of Season, if any, with respect to the Paid Goods that were in existence immediately before the release of the Paid Goods will attach to the Deposit, and will be senior and superior to the claims, encumbrances and interests of any third party, except to the extent, at all, any party had any claim, encumbrance or interest in or to the Paid Goods senior and superior to Season's rights, claims, encumbrances or interests in the Paid Goods prior to its release. As promptly as practicable after a final judicial determination of the parties' rights, the funds in the Deposit will be paid as provided in the final determination. Each party will not object to a motion by the other party seeking the determination of rights on the grounds that the matter must be initiated by the filing of a complaint or determined pursuant to an adversary proceeding or on similar procedural grounds. Mr. Saydah informs Judge Walsh that the Official Committee of Unsecured Creditors has no objection to the Stipulation. Accordingly, the Debtors ask the Court to approve the Stipulation. (Pillowtex Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLAINS RESOURCES: Kayne Anderson & EnCap Opt for the Vulcan Offer ----------------------------------------------------------------- The Special Committee of the Board of Directors of Plains Resources Inc. (NYSE: PLX) has been informed by each of Kayne Anderson Capital Advisors, LP, which beneficially owns 1,755,916 (or 7.4%) of the outstanding shares of Plains Resources common stock, and EnCap Investments, LP, which through its institutional equity funds controls 1,174,219 (or 4.9%) of the shares of Plains Resources common stock, that each has considered the proposals to acquire control of PLX, including the recommendation of the Special Committee, and has determined that it will vote in favor of the offer proposed by Vulcan Capital. Plains Resources previously announced that it has entered into a merger agreement with an affiliate of Vulcan Capital and has declined to pursue a proposal to acquire Plains Resources described in a Schedule 13-D filed by Pershing Square, LP and Leucadia National Corporation. In declining to pursue the Pershing Proposal, the Special Committee considered, among other things: -- That only approximately $3.00 of the consideration would be in cash and the remainder in securities of Plains Resources itself with an uncertain trading value; -- The fact that the form of new security was uncertain and the lack of trading history or public market for a security of that type; -- The fact that after tax distributions to new security holders would likely be less than after tax distributions to holders of Plains All American Pipeline, LP. common units; -- The overall complexity and conditionality of the Pershing Proposal compared to the all cash Vulcan Transaction. Plains Resources intends to file a proxy statement for the special meeting of stockholders to vote on the proposed transaction, and the Vulcan Group will file other relevant documents, with the SEC concerning the proposed transaction. Stockholders are urged to read the proxy statement when it becomes available and any other relevant documents filed with the SEC because they will contain important information about the merger and the interests of the participants in the solicitation of proxies. You will be able to obtain the documents free of charge at the Web site maintained by the SEC at http://www.sec.gov/ In addition, you may obtain documents filed with the SEC by Plains Resources free of charge by requesting them in writing from PLX at 700 Milam, Suite 3100, Houston, Texas 77002, Attention: Joanna Pankey, or by telephone at 832-239-6000. Plains Resources, James C. Flores, John T. Raymond, Paul G. Allen and the affiliate of Vulcan Capital (which together with Mr. Flores, Mr. Raymond and Mr. Allen form the "Vulcan Group"), and the directors and executive officers of Plains Resources and the affiliate of Vulcan Capital, may be deemed to be participants in the solicitation of proxies from stockholders of Plains Resources in connection with the merger. Information about the direct and indirect interests, by security holdings or otherwise, of these persons is set forth in the company's proxy statement for its 2003 annual meeting and in the schedule 13D filed with the SEC by the Vulcan Group on December 1, 2003, as amended on February 26, 2004, and will also be contained in the proxy statement for the special meeting of stockholders when it is filed. Plains Resources is an independent energy company engaged in the acquisition, development and exploitation of crude oil and natural gas. Through its ownership in Plains All American Pipeline, L.P., Plains Resources has interests in the midstream activities of marketing, gathering, transportation, terminalling and storage of crude oil. Plains Resources is headquartered in Houston, Texas. At Sept. 30, 2003, the company's balance sheet reports a working capital deficit of about $20 million. QUINTILES: Discloses New Board of Directors Members --------------------------------------------------- Quintiles Transnational Corp. announced members of its new Board of Directors, which was formed following completion of the company's privatization transaction last year. As previously announced, on Sept. 25, 2003, Quintiles shareholders approved the company's acquisition by Pharma Services Holding, Inc., the company created for the acquisition of Quintiles by Dennis Gillings, Ph.D., Chairman, Chief Executive Officer and founder of Quintiles, and One Equity Partners LLC, the private equity arm of Bank One Corporation. Other equity investors in Pharma Services include Temasek Holdings, Texas Pacific Group, Perseus-Soros BioPharmaceutical Fund and Mitsui & Co. "I believe that our new Board of Directors is extremely strong and well-suited to help guide Quintiles forward as a private company," Gillings said. "Each member has shown extraordinary leadership skills at the highest levels of business and each brings unique and diverse experience to our board. I'm very pleased that we've attracted board members of this caliber." Members of the Quintiles Transnational Board of Directors are: * Dennis Gillings, Chairman of the Board and CEO, Quintiles Transnational Corp. Gillings founded Quintiles in 1982 after serving as a consultant to pharmaceutical clients during his tenure as a biostatistics professor at The University of North Carolina at Chapel Hill. Under his leadership, Quintiles grew from one office and 10 employees to become the world's leading pharmaceutical services company, with gross revenue of $2.0 billion in 2003, offices in 50 countries and more than 16,000 employees. Gillings earned a degree in mathematical statistics from Cambridge University and bachelor and doctoral degrees in mathematics from the University of Exeter. Gillings serves on several boards and councils, including the UNC School of Public Health Dean's Advisory Council; the Graduate Education Advancement Board of the Graduate School of UNC- Chapel Hill; the North Carolina Institute of Medicine; and the Board of ICAgen, Inc. In 2003 Gillings received the Consul General's Award from the British American Business Council of North Carolina for his contributions to promoting bilateral trade between the U.S. and U.K. * Richard M. Cashin, Chairman, One Equity Partners. One Equity manages $3.5 billion of investments and commitments for Bank One. Prior to his appointment as Chairman in 2001, Cashin had been President of Citicorp Venture Capital, which he joined in 1980. He earned a degree in East Asian Studies and a master's degree in business administration from Harvard University. Cashin was a member of the 1976 and 1980 Olympic rowing teams, and was a 1974 World Champion. He serves on the boards of DelcoRemy, Fairchild Semiconductor and Titan Wheel. * Clateo Castellini, Director Emeritus, BD (Becton, Dickinson and Company). Castellini's career at BD, a global medical technology company, included serving as Chairman, President and CEO from 1994 to 1999 and as Board Chairman from 1999 to 2003. From 1989 to 1994, Castellini served as BD's Medical Sector President, responsible for worldwide operations of medical supplies and devices. He earned a degree in economics from the Bocconi University and completed an Advanced Management Program at Harvard. Castellini serves on the Health Advisory Board of the Johns Hopkins Bloomberg School of Public Health. * Jonathan J. Coslet, Senior Partner, Texas Pacific Group. Responsible for Texas Pacific Group's healthcare investment activities, Coslet also is a member of the firm's Investment and Management committees. Prior to joining Texas Pacific, Coslet was with Donaldson, Lufkin & Jenrette, specializing in leveraged acquisitions and high- yield finance. He received a bachelor's degree in economics from the University of Pennsylvania Wharton School and a master's in business administration from Harvard. Coslet serves on the boards of Magellan Health Services, Oxford Health Plans, Burger King, and J. Crew, among others. * Jack M. Greenberg, Chairman and CEO (retired), McDonald's Corporation. Greenberg was a member of McDonald's Board from 1982, when he joined the company as Executive Vice President and Chief Financial Officer, until his retirement in 2002. He was named Vice Chairman in 1992, Chairman of McDonald's USA in 1996 and CEO in 1997. A graduate of DePaul University School of Commerce, he also earned a juris doctor degree from the university's School of Law. He serves on several boards, including Abbott Laboratories, Allstate, Hasbro, The Field Museum and Ronald McDonald House Charities. * Robert A. Ingram, Vice Chairman of Pharmaceuticals, GlaxoSmithKline. At GSK, Ingram served in numerous positions, including President, CEO and Chairman, retiring as Chief Operating Officer and President, Pharmaceutical Operations, in 2002. He joined GSK in 1990 after working in sales management and government and public affairs positions with Merrell Dow and Merck. Ingram now represents GSK on the Board of the Pharmaceutical Research and Manufacturers Association. He also serves on the boards of Lowe's, Nortel and Wachovia, and as Chairman, OSI Pharmaceuticals. Ingram graduated from Eastern Illinois University with a degree in Business Administration. * S. Iswaran, Managing Director, Temasek Holdings (Private) Limited. Iswaran is responsible for private equity investments (in particular the healthcare, pharmaceutical, biotechnology and technology sectors) for Temasek, an investment holding company of the Singapore government with assets exceeding $70 billion. Prior to his current position, Iswaran held senior positions in the Singapore government, the most recent of these being responsible for multilateral trade negotiations/agreements in the context of the World Trade Organization and Asia-Pacific Economic Cooperation. He serves on the boards of several public companies in Singapore and the region, including SembCorp Industries, Hyflux and Sunningdale Precision Industries. He was elected a Member of Parliament in Singapore in 1997 and re-elected in 2001. Iswaran earned a degree in economics from the University of Adelaide and a master's in public administration from Harvard. * Jacques Nasser, Senior Partner, One Equity Partners. Prior to joining One Equity, Nasser had a 35-year career with Ford Motor Co., which culminated in his serving as Ford's president and CEO from 1998 to 2001. A citizen of Australia, Nasser joined Ford there as a financial analyst after graduating with a business degree from the Royal Melbourne Institute of Technology. During his career with Ford he held a variety of senior leadership positions in Europe, Japan, South Africa, Latin America and many other countries and regions. Nasser is Chairman of Polaroid and serves on the board of News Corp.'s British Sky Broadcasting. * James S. Rubin, Partner, One Equity Partners. Prior to joining One Equity, Rubin was a Vice President with Allen & Company, a New York investment bank specializing in media and entertainment transactions and advisory work. From 1996 to 1998, he held a number of senior policy positions with the Federal Communication Commission under Chairman Reed Hundt, including the Executive Director of the Education Technology Task Force and General Counsel to the Chief of the Wireless Bureau. Rubin received a bachelor's degree in history from Harvard and his juris doctor degree from Yale Law School. * James L. Bierman, Executive Vice President and Chief Financial Officer, Quintiles Transnational Corp. Prior to joining Quintiles in 1998, Bierman spent 22 years with Arthur Andersen. As a partner of this international professional service organization, he worked with numerous companies in solving business problems. His experience ranges from applying knowledge of complex business processes to improve operational efficiency and effectiveness while reducing risk, to researching and developing leading-edge accounting issues. Bierman received a bachelor's degree in economics and history from Dickinson College and a master's degree in business administration from Cornell University's Johnson Graduate School of Management. Bierman has announced his intention to retire from the company later this year and a search is now under way for his replacement. Quintiles (S&P, BB- Corporate Credit Rating, Stable) helps improve healthcare worldwide by providing a broad range of professional services, information and partnering solutions to the pharmaceutical, biotechnology and healthcare industries. Headquartered near Research Triangle Park, North Carolina, and with offices in 50 countries, Quintiles is a leading global pharmaceutical services organization and a member of the Fortune 1000. For more information visit the company's Web site at http://www.quintiles.com/ RCN: May Pursue Debt Restructuring Under Chapter 11 Protection -------------------------------------------------------------- RCN Corporation (Nasdaq: RCNC) announced that negotiations with its senior secured lenders, members of an ad hoc committee of holders of its Senior Notes and others on a consensual financial restructuring of its balance sheet are continuing. In connection with the continuing negotiations, the Company, the Lenders and members of the Noteholders' Committee have agreed to extend expiration of their previously announced forbearance agreements until March 15, 2004. RCN remains hopeful that these negotiations will lead to agreement on a consensual financial restructuring plan in the near term, although there is no assurance this will occur. Under the forbearance agreements, the Lenders and members of the Noteholders' Committee have agreed not to declare any Events of Default, which they would be entitled but not required to do, under RCN's senior credit facilities or RCN's senior notes, respectively, as a result of RCN not making an interest payment on its 10 1/8% Senior Notes due 2010. RCN has said that it expects any financial restructuring to be implemented through a reorganization of RCN Corporation under chapter 11. RCN believes that a consensual financial restructuring pursuant to a chapter 11 reorganization would achieve the most successful financial outcome for the company and its constituents. RCN does not intend that its market operating subsidiaries be included in such a chapter 11 filing, although there is no assurance this will occur. Additionally, it is anticipated that a filing at the holding company level would not have any adverse effect on customers and vendors. Since financial restructuring negotiations are ongoing, the treatment of existing creditor and stockholder interests in the company is uncertain at this time. However, RCN has said that the restructuring will likely result in a conversion of a substantial portion of its outstanding Senior Notes into equity and an extremely significant, if not complete, dilution of current equity. RCN's objective is to reach agreement on a consensual financial restructuring plan during the current forbearance period. If financial restructuring negotiations were to proceed beyond that period or were to end, however, additional forbearance, waiver and/or amendment agreements would be needed to support RCN's continuing operations. In addition, in the absence of an agreement on a consensual financial restructuring upon expiration of the forbearance agreements, the Lenders and members of the Noteholders' Committee who hold 10 1/8% Senior Notes would be entitled, but not required, to declare RCN's senior credit facilities and the outstanding 10 1/8% Senior Notes, respectively, immediately due and payable. Any acceleration of amounts due under RCN's senior credit facilities or the 10 1/8% Senior Notes would, due to cross default provisions in the Company's indentures governing its other senior notes, entitle, but not require, the holders of other senior notes to declare the Company's other senior notes immediately due and payable if they so choose. Holders of 10 1/8% Senior Notes that are not members of the Noteholders' Committee are not subject to the terms of the forbearance agreements. If acceleration of the Company's senior credit facilities and 10 1/8% Senior Notes were to occur, RCN would not, based on current and expected liquidity, have sufficient cash to pay the amounts that would be payable. Although RCN is actively pursuing discussions towards a final agreement on a consensual financial restructuring, there can be no assurance that such an agreement will ultimately be reached, that RCN would be able to obtain further extensions of its forbearance agreements with the Lenders and members of the Noteholders' Committee, or that holders of 10 1/8% Senior Notes that are not members of the Noteholders' Committee will not declare an Event of Default under the 10 1/8% Senior Notes (which would terminate the forbearance agreement with Lenders), or seek other remedies available under applicable law or the terms of the 10 1/8% Senior Notes, prior to such time. RCN will continue to apply substantial effort and resources to reaching a formal agreement on a consensual financial restructuring while also continuing to evaluate the best alternatives for RCN under current circumstances and as discussions and events unfold. RCN also noted that, as previously announced, it had deferred the interest payment that was scheduled to be made on February 15, 2004, of approximately $14.2 million with respect to its 9.80% Senior Discount Notes Due 2008. In the event that RCN does not make this interest payment within 30 days beginning February 15, 2004, an Event of Default would arise with respect to the 9.80% Senior Notes and entitle, but not require, holders thereof to declare the outstanding 9.80% Senior Notes immediately due and payable. Absent final agreement on a consensual restructuring prior to March 15, 2004, unless the holders of the 9.80% Senior Notes exercise forbearance along with the Lenders and holders of the 10 1/8% Senior Notes, the information above regarding RCN's senior credit facilities and 10 1/8% Senior Notes would be applicable to the 9.80% Senior Notes as well. For additional information about the restructuring process, visit http://www.rcntomorrow.com/ ABOUT RCN CORPORATION RCN Corporation (Nasdaq: RCNC) is the nation's first and largest facilities-based competitive provider of bundled phone, cable and high speed Internet services delivered over its own fiber-optic local network to consumers in the most densely populated markets in the U.S. RCN has more than one million customer connections and provides service in Boston, New York, Philadelphia/Lehigh Valley, Chicago, San Francisco, Los Angeles and Washington, D.C. metropolitan markets. RELIANCE GROUP: Settles Insurance Disputes with Integrated Health ----------------------------------------------------------------- Judge Mary Walrath of the United States Bankruptcy Court for the District of Delaware approved a settlement agreement between M. Diane Koken, the Insurance Commissioner of the Commonwealth of Pennsylvania, in her official capacity as Liquidator of Reliance Insurance Company, and IHS Liquidating LLC, as successor to Integrated Health Services, in Integrated's Chapter 11 cases. Over a course of several years, up to and including 1999, RIC issued various insurance policies to IHS. Under the terms of the Policies, RIC is obligated to pay claims falling within the coverage of the Policies, subject to IHS' obligation to reimburse RIC for payments made on claims up to the deductible amount provided in the Policies and their endorsements. The PL/GL Policy One of the Policies issued by RIC is a Health Care Medical Professional Liability and General Liability Insurance Policy, NGB0151564-00 for the 1999 Policy Year. The PL/GL Policy is a matching deductible policy in that the limits of coverage are equal to IHS' deductible obligations under the policy. The PL/GL Policy provides professional liability coverage of $2,000,000 per incident, with an initial aggregate coverage limit of $4,500,000. IHS believes that, upon exhaustion of the initial aggregate limit, the PL/GL Policy is subject to "reinstatement" for an additional $4,500,000 of aggregate professional liability coverage. Pursuant to an Insurance Program Agreement with RIC, IHS was required to post collateral to secure its payment obligations for all deductible amounts under the Policies. As of the Petition Date, RIC held collateral, in the form of cash, letters of credit and bonds totaling $17,000,000. As of December 5, 2003, the collateral consisted entirely of cash totaling $10,474,128. The RIC Proof of Claim On August 23, 2000, RIC filed Claim No. 07812 against IHS in IHS' bankruptcy cases for $27,964,041. RIC alleges that it holds collateral, in the form of cash, letters of credit and surety bonds, totaling $17,135,000, leaving an unsecured balance of $10,800,000. The Complaint On September 20, 2002, IHS filed a Complaint for Declaratory Judgment against M. Diane Koken in the Commonwealth Court. In Count I of the Complaint, IHS sought a declaration confirming that RIC was obligated to pay claims under the PL/GL Policy. Counts II and III assert claims pertaining to the use and application of the collateral, presently consisting of cash totaling $10,474,128, posted by IHS to secure its payment obligations to RIC for deductible amounts under the Policies. In the alternative, IHS seeks declarations either requiring the Liquidator to apply the collateral to the payment of claims covered by the PL/GL Policy or to return the collateral to IHS. Counts IV and V seek judgment declaring that the $4,500,000 coverage limit under the PL/GL Policy for professional liability claims is subject to reinstatement to provide IHS with an additional $4,500,000 coverage, for a combined policy limit of $9,000,000. Count IV alleges that the documents comprising the PL/GL Policy reflect the parties' agreement that the policy is subject to reinstatement and if the policy documents are not sufficient, the PL/GL Policy must be reformed to provide for reinstatement. On October 10, 2002, the Liquidator asserted that the Complaint violates and circumvents the mandatory proof of claim procedure set forth in the Pennsylvania Insurance Department Act and is otherwise legally insufficient. Since that time, the Liquidator's and IHS' professionals engaged in extensive arm's- length negotiations to resolve the issues raised in the Action. In addition, the parties engaged in negotiations with the objective of fixing the amount and classification of the claims which IHS would have against the RIC liquidation estate, on behalf of the PL/GL Claimants, and the claims which the RIC estate would have against IHS with respect to the IHS' unsatisfied deductible obligations under the Policies. The IHS Proof of Claim Pursuant to IHS' Reorganization Plan, the IHS Liquidating Trust is authorized to file a single claim in the RIC liquidation proceeding to seek recovery of all insurance proceeds available under the PL/GL Policy on account of the PL/GL Claims. Subsequently, IHS Liquidating filed its proof of claim in the RIC liquidation proceeding: (a) on behalf of all holders of PL/GL Claims for all insurance proceeds available as coverage for the PL/GL Claims under the PL/GL Policy; and (b) to resolve the issue raised in Counts IV and V of the Complaint as to whether the $4,500,000 aggregate limit of professional liability coverage under the PL/GL Policy is reinstated to provide IHS with an additional $4,500,000 of coverage for a combined professional liability coverage limit of $9,000,000. The aggregate limit of coverage under the PL/GL Policy for PL Claims has been partially exhausted by payments made by RIC and by IHS for losses covered under the PL/GL Policy, including payments of judgments, settlements and defense costs in the aggregate amount of $3,650,000. To facilitate the Liquidator's evaluation of the Proceeds Claim, IHS and IHS Liquidating produced to the Liquidator extensive documentation concerning the PL/GL Claims and concerning the judgments and settlements entered into aggregating in excess of $12,000,000 with respect to PL/GL Claims. The Liquidator's professionals also had extensive discussions with IHS' representatives with regard to the nature and extent of the PL/GL Claims and with regard to the judgments and settlements through which numerous PL/GL Claims have been liquidated in amount. The Settlement Agreement IHS Liquidating and the Liquidator want to settle their disputes relating to the claims asserted in the Complaint and in the Action, and with regard to the RIC Proof of Claim and the IHS Proof of Claim. Pursuant to the Settlement Agreement, the parties agree that: (a) IHS Liquidating will dismiss with prejudice Counts I, II and III of the Complaint; (b) The RIC Claim will be fixed in this manner: -- the Liquidator will have a secured claim against IHS Liquidating for $10,474,128, which will be deemed satisfied by application of the cash collateral held by the Liquidator; -- the Liquidator will have an unsecured claim for $4,654,291; and -- when the Policy Limit Claims are resolved, the Liquidator will have an additional unsecured claim in the amount by which the aggregate limit of coverage available under the PL/GL Policy for claims of professional liability is determined to be in excess of $4,500,000; (c) The RIC Unsecured Claim and the Additional RIC Unsecured Claim will receive the same treatment as Class 6 General Unsecured Claims against the IHS' bankruptcy estates; (d) The Liquidator may exercise all rights in and to the Collateral, without restriction, and the RIC Secured Claim will be deemed satisfied in full, provided that the Collateral will be administered in the RIC liquidation proceeding in a manner consistent with the Insurance Program Agreement and PL/GL Policy, applicable provisions of the Act, and orders of the Commonwealth Court; (e) RIC will provide coverage to IHS Liquidating, as the agent for all claims determined to be covered under the PL/GL Policy; (f) IHS Liquidating will have an allowed Proceeds Claim for: -- $778,906, relating to coverage under the PL/GL Policy for general liability claims; plus -- the limits of liability under the PL/GL Policy for professional liability claims, less the Aggregate Loss Payment Amount; (g) IHS Liquidating, solely on behalf of the PL/GL Claimants, will participate in the same pro rata distribution of the assets of the RIC liquidation estate as all other Class B claimants as defined in 40 P S 221 44(b), without set-off, recoupment or diminution on account of the deficiency of the Collateral or the inability of IHS or IHS Liquidating to satisfy the outstanding deductible amounts; (h) Claims for coverage under the PL/GL Policy will only be asserted against RIC or the Liquidator by way of the procedure provided in the IHS Plan and the Settlement Agreement, and no claim under the defined PL/GL Policy may be independently asserted against RIC or the Liquidator by any PL/GL Claimant; (i) IHS and IHS Liquidating will dismiss Counts IV and V of the Complaint and agree to pursue these claims and any claims to determine the policy limit under the PL/GL Policy exclusively through the IHS Proof of Claim. The IHS and IHS Liquidating will dismiss the adversary proceeding presently pending against RIC in the Bankruptcy Court; and (j) In exchange for the agreement of IHS and IHS Liquidating to pursue Counts IV and V and the Policy Limits Claim solely in the proof of claim procedure, the Liquidator will expedite her review of the Policy Limits Claim. (Reliance Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) ROYAL OLYMPIA: Greek Court Appoints Administrator for 6 Months -------------------------------------------------------------- Royal Olympia Cruises (Nasdaq: ROCLF) announced that the Greek Maritime Court of appeal of Piraeus administering the proceeding under section 45 of Law 1892/1990 regarding its subsidiaries "ELLINIKI ETAIRIA DIIPEIROTIKON GRAMMON A.E.", "VALENTINE OCEANIC TRADING INC", "FREEWIND SHIPPING COMPANY" and "OCEAN QUEST SEACARRIERS LIMITED", which are the owning companies of the vessels ODYSSEUS, TRITON, WORLD RENAISSANCE and OLYMPIA I, and "ROYAL OLYMPIC CRUISES LTD" (the Management Company), gave its consent for their inclusion in the above section (similar to Chapter 11 in the United States). The Court also appointed an administrator (mediator) for a period of six months in order to try and find a compromise agreement with the creditors. The above decision provides a legal framework which allows the Company to operate for a period of six months, with the possibility of a further three month extension subject to court approval, in order to allow the administrator (mediator) to reach agreements with the Company's creditors. However the Company will have to secure a sufficient amount of working capital in order to be operational. This amount has not yet been secured. SANDISK CORP: S&P Ups Credit Rating to B+ & Assigns Stable Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating on SanDisk Corp. to 'B+' from 'B' and its subordinated debt rating to 'B-' from 'CCC+'. The outlook is stable. Sunnyvale, California-based SanDisk is a leading manufacturer of various formats of flash memory cards for use in consumer electronics, including digital cameras, as well as industrial and telecommunications applications. SanDisk has total debt outstanding of $150 million. "The action reflects SanDisk's sustained growth in profitability, despite substantial business risk," said Standard & Poor's credit analyst Joshua Davis. "The presence of substantial balance-sheet liquidity offsets anticipated capital expenditures and contingent liabilities stemming from SanDisk's flash memory fabrication joint venture, FlashVision," with Toshiba Corp. (BBB-/Negative/A-3). Potential exists for supply/demand imbalances resulting from excessive industry investment in NAND flash capacity, which could lead to acceleration in price declines and accumulation of unwanted inventory. While current demand is outpacing supply growth, which is expected to continue for least the next year, significant industry investment in NAND capacity could pose a risk starting in 2005. SATCON: Says Funds Are Sufficient to Fund Ops. Until Sept. 2004 --------------------------------------------------------------- SatCon Technology Corporation has incurred significant costs to develop its technologies and products. These costs have exceeded total revenue. As a result, the Company has incurred losses in each of the past five years. As of December 27, 2003, it had an accumulated deficit of $117,623,182. During the three months ended December 27, 2003, the Company incurred a loss of $921,659. In addition, the Company's business plan envisions a significant increase in revenue and significant reductions in the cost structure and the cash burn rate from the results experienced in the recent past. If, however, the Company is unable to realize its plan, it may not be in compliance with loan covenants which may cause a default, as defined in the loan agreement, and may be forced to raise additional funds by selling stock, restructuring its borrowing, selling assets, or taking other actions to conserve its cash position. In addition, the Company's stock is listed on the Nasdaq National Market which requires it to comply with Nasdaq's Maketplace Rules. These rules require that the Company maintain a market value of at least $50 million or have total assets of at least $50 million and at least $50 million of total revenue and that the stock price stay above $1.00, among others. If the Company fails to maintain these rules and the Company' common stock is delisted from the Nasdaq National Market, there could be greater difficulty in obtaining financing. The Company believes that the combination of existing cash on hand, together with the ability to borrow under the Amended Loan will be sufficient to fund its operations through September 30, 2004. This assumes that the Company will achieve its business plan. However, this business plan envisions a significant increase in revenue and significant reductions in the cost structure and the cash burn rate from the results experienced in the recent past. SatCon Technology Corporation manufactures and sells power control systems for critical military systems, alternative energy and high-reliability industrial automation applications. Products include inverter electronics from 5 kilowatts to 5 megawatts, power switches, and hybrid microcircuits for industrial, medical, military and aerospace applications. SatCon also develops and builds digital power electronics, high-efficiency machines and control systems for a variety of defense applications with the strategy of transitioning those technologies into multiyear production programs. For further information, please visit the SatCon Web site at http://www.satcon.com/ SEALY CORP: November 2003 Equity Deficit Narrows to $76 Million --------------------------------------------------------------- Sealy Corporation, the world's largest manufacturer of bedding products, announced results for the fiscal fourth quarter and full year ending November 30, 2003. For the quarter, Sealy reported sales of $306.8 million, an increase of 8.0% from $284.0 million for the same period a year ago. Net income was $1.5 million, compared with $8.5 million a year earlier. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $32.3 million, compared with $28.5 million a year earlier. Adjusted EBITDA was $45.3 million, compared with $35.1 million for the same period a year ago. EBITDA and Adjusted EBITDA were both positively impacted by the new product introduction in the second half of the year. For the full year, net sales reached a record $1.2 billion in 2003, up slightly from 2002. Reported net sales for the fourth quarter of 2003 and 2002 reflect Sealy's adoption of Financial Accounting Standards Board Emerging Issues Task Force (EITF) 01-09, "Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor's Product." Under EITF 01-09, cash consideration is a reduction of revenue, unless specific criteria are met regarding goods or services that the vendor may receive in return for this consideration. Historically, Sealy classified costs such as volume rebates and promotional money as marketing and selling expenses. These costs are now classified as a reduction of revenue. This had the effect of reducing net sales and selling, general and administrative (SG&A) expenses each by $13.5 million for the fourth quarter of 2003 and by $11.5 million for the fourth quarter of 2002 and by $50.3 million for the year end 2003 and by $51.5 million for the year ended 2002. These changes did not affect the Company's financial position or results of operations. Net income for the year was $18.3 million compared with $16.9 million for 2002. EBITDA was $129.9 million for the year, compared with $119.2 million in 2002. Adjusted EBITDA was $161.8 for the year, compared with $168.9 in the prior year. "In spite of the challenging economic environment faced during 2003 we were able to record a record level of sales and experienced strong sales momentum during the fourth quarter as a result of the successful launch of our innovative UniCased Posturepedic product line. In January 2004 we launched our new Stearns & Foster TripLCased mattress. Initial response from our retailers has been extremely positive." said David J. McIlquham, Sealy's president and chief executive officer. "In addition to the successful UniCased launch we were able to effectively resolve our affiliate and accounts receivable issues while aggressively reducing our working capital levels. As a result we were able to reduce our net debt by nearly $80 million during 2003," said McIlquham. Sealy Corporation's November 30, 2003 balance sheet shows a stockholders' equity deficit of $76,162,000 compared to $115,740,000 at December 1, 2002. Sealy is the largest bedding manufacturer in the world with sales of $1.2 billion in 2003. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy, Sealy Posturepedic, Sealy Posturepedic Crown Jewel, Stearns & Foster, and Bassett brands. Sealy has the largest market share and highest consumer awareness of any bedding brand in North America. Sealy employs more than 6,000 individuals, has 31 plants, and sells its products to 3,200 customers with more than 7,400 retail outlets worldwide. Sealy is also a leading supplier to the hospitality industry. For more information, please visit http://www.sealy.com/ SEPRACOR: S&P Revises Ratings' Outlook to Positive on Estorra News ------------------------------------------------------------------ Standard & Poor's Ratings Services revised the outlook on Sepracor Inc. to positive from stable. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating and 'CCC+' subordinated debt rating on the emerging specialty pharmaceutical company. The action reflects the company's receipt of an "approvable" letter from the U.S. Food and Drug Administration for its insomnia treatment Estorra. Estorra has the potential to be a best-in-class therapy for the treatment of insomnia and it could significantly diversify Sepracor's revenue stream. Indeed, if the labeling is approved by the FDA, Estorra may be differentiated by its longer duration of action and by its use to treat sleep maintenance as well as for difficulty falling asleep. The strong prospective cash flows the product would generate could also help offset Sepracor's significant R&D and marketing spending and could improve its ability to repay debt. Sepracor has roughly $1.2 billion of debt outstanding. "The speculative-grade ratings on Sepracor reflect the company's significant cash requirements to fund ongoing R&D expenditures and its increasing marketing costs," said Standard & Poor's credit analyst Arthur Wong. "The ratings also reflect Sepracor's heavy debt burden and the risks of drug development. These negative factors are only minimally offset by the growing sales of Sepracor's asthma drug Xopenex, the promise of the company's sleep disorder medication Estorra, and the adequate liquidity provided by substantial cash balances." Marlborough, Massachusetts-based Sepracor specializes in the development and marketing of improved single-isomer versions of existing drugs that may have fewer side effects or increased potency. SHAW COMMS: Declares Interest Distribution on 8.875% Preferreds --------------------------------------------------------------- Notice is hereby given that an interest distribution of 55.469 cents per security on Shaw Communications Inc. 8.875% Canadian preferred securities due September 28, 2049, will be paid March 31, 2004, to holders of record at the close of business on March 15, 2004. The interest distribution on the preferred securities will be treated as interest income for tax purposes. Shaw Communications Inc. (S&P, BB+ Corporate Credit Rating, Stable) is a diversified Canadian communications company whose core business is providing broadband cable television, Internet and satellite direct-to-home services to approximately 2.9 million customers. Shaw is traded on the Toronto and New York stock exchanges. SOLUTIA INC: Quimica Asks Go-Signal to Set-Off Mutual Obligations ----------------------------------------------------------------- Quimica M., S.A. de C.V. is a joint venture of Solutia, Inc. and Vitro Plan, S.A. de C.V., a Mexican Corporation. Robin E. Keller, Esq., at Stroock & Stroock & Lavan LLP, in New York, recalls that before the Petition Date, Quimica entered into a long-term contract with Monsanto Company, a predecessor to the Debtors. The Contract requires Quimica to purchase a polyvinyl butyral resin and plasticizer from Monsanto. The Debtors are now a party to the contract. Quimica also contracted to deliver PVB film to Solutia, which film is used in the automotive and construction laminated glass industries. As of December 17, 2003, the Debtors owed Quimica $1,884,689. At the same time, Quimica had outstanding prepetition invoices with the Debtors totaling $4,824,854 -- $510,770 of which was payable. Following the Petition Date, Quimica entered into discussions with the Debtors regarding the outstanding amount owed to it. The parties agreed that given both their desire to continue performing under the agreements and given the Debtors' equity at stake and interest in the continued viability of Quimica, it was appropriate to allow Quimica to set off the prepetition amounts owed to the Debtors against the prepetition amounts owed to Quimica. Since the Petition Date, Quimica has remitted to the Debtors $518,039 for amounts owed as of the Petition Date, and has agreed to remit other amounts that may become due and owing to the Debtors in excess of the amount owed by the Debtors to Quimica, which Quimica is holding to effectuate set-off. Accordingly, Quimica asks the Court to lift the automatic stay for it to exercise its set-off rights. (Solutia Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOUTHERN CALIFORNIA EDISON: Acquires New Power Plant Project ------------------------------------------------------------ Southern California Edison (SCE) has notified Sequoia Generating LLC, a subsidiary of InterGen, that SCE is exercising its option to purchase the Mountainview Power Company LLC, the owner of a new state-of-the-art power plant currently being developed in Redlands, California. The utility hopes to close the acquisition this month and bring the plant on-line by the summer of 2006. "The California Public Utilities Commission and the Federal Energy Regulatory Commission both have determined that the Mountainview Project will benefit our customers," said John E. Bryson, chairman of SCE. "We commend both commissions for their timely action on this project, which is essential to avoid potential power shortages as soon as 2006." Construction of the Mountainview Project was begun by AES, a prior owner, in September, 2001, but later stalled due to continuing market uncertainties in California. Upon closing the purchase, construction of the plant, now 15% complete, will immediately resume. The project will employ up to 500 local workers during the construction phase and a standard operating crew upon completion. Mountainview, located in the fastest growing area in SCE's 11-county service territory -- the Inland Empire -- will generate 1,054 megawatts of electricity, enough power to serve approximately one million homes. An Edison International (NYSE: EIX) (S&P, BB+ Corporate Credit Ratin, Stable) company, Southern California Edison (Fitch, BB Unsecured Debt and B+ Preferred Share Ratings, Positive) is one of the nation's largest electric utilities, serving a population of more than 12 million via 4.5 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California. SOUTHWEST RECREATIONAL: Official Creditors' Committee Named ----------------------------------------------------------- The United States Trustee for Region 21 appointed 6 creditors to serve on an Official Committee of Unsecured Creditors in Southwest Recreational Industries, Inc.'s Chapter 11 cases: 1. Blackstone Mezzanine Partners, L. P. 345 Park Avenue, 29th Floor New York, N. Y. 10154 Attn.: Salvatore Gentile Tel: 212-583-5443 Fax: 212-583-5482 2. Specialized Construction, Inc. 711 Harvard Avenue Cuyahoga Heights, OH 44105 Attn.: John Galik Vice President/Treasurer Tel: 216-271-3363 Fax: 216-271-5310 3. BASF Nederland, B. V. c/o Schafer and Weiner, PLLC 40950 Woodward Avenue Suite 100 Bloomfield Hills, MI 48304 Attn.: Michael E. Baum, Esq. Tel: 248-540-3340 Fax: 248-642-2127 4. Nexcel Synthetics 6076 Southern Industrial Drive Birmingham, AL 35235 Attn.: Rom Reddy Scott Womack Tel: 205-655-8817 Fax: 205-655-0897 5. Solutia, Inc. 575 Maryville Centre Drive St. Louis, MO 63141 Attn.: Frank Riddick Beth Perniciaro Tel: 314-674-6097 314-674-2388 Fax: 314-674-3398 6. ACT Technologies, Inc. P. O. Box 279 Dalton, GA 30722 Attn.: James C. Barbre, President Tel: 706-226-6038 Fax: 706-217-2805 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Leander, Texas, Southwest Recreational Industries, Inc. -- http://www.srisports.com/-- designs, manufactures, builds and installs stadium and arena running tracks for schools, colleges, universities, and sport centers. The company filed for chapter 11 protection on February 13, 2004 (Bankr. N.D. Ga. Case No. 04-40656). Jennifer Meir Meyerowitz, Esq., Mark I. Duedall, Esq., and Matthew W. Levin, Esq., at Alston & Bird, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed $101,919,000 in total assets and $88,052,000 in total debts. STELCO: Posts Added Info on Finances & CCAA Dev't. in Co. Web Site ------------------------------------------------------------------ Stelco (TSX:STE) announced that additional financial information has been posted to its Web site relating to its financial condition and proceedings before the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act. Preliminary financial information for the year ended December 31, 2003 includes: - A consolidated net loss of $192 million before asset write-offs, revaluations and other adjustments which are expected to be substantial. - Consolidated cash usage of $114 million financed by a reduction in cash balances from the beginning of the year of $44 million and an increase in bank indebtedness of $70 million. Stelco cautioned that this information is preliminary and subject to audit. With respect to completion of its debtor-in-possession financing, Stelco reported that the commitment from its operating lenders for $75 million debtor-in-possession financing has been extended to March 12, 2004. Stelco expects to complete the necessary documentation and satisfy the conditions for draws under the debtor-in-possession financing in the near future. Stelco Inc. is Canada's largest and most diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Stelco has a presence in six Canadian provinces and two states of the United States. Consolidated net sales in 2002 were $2.8 billion. To learn more about Stelco and its businesses, refer to the company's Web site at http://www.stelco.ca/ TELETECH HOLDINGS: Appoints Mark C. Thompson to Board of Directors ------------------------------------------------------------------ TeleTech Holdings, Inc. (Nasdaq: TTEC), a global provider of customer solutions, announced the appointment of Mark C. Thompson to its board of directors. Mr. Thompson is chairman of Executive Powertools, a leadership development firm, and is the former chairman of Integration Associates, Inc. and Rioport. A veteran of Wall Street, Mr. Thompson was recruited by Charles Schwab for the company's 1987 initial public offering and recently was ranked among America's Top 100 venture capitalists on the Forbes 2004 Midas list. Mr. Thompson is the author of 22 leadership programs and has conducted more than 180 CEO interviews, including the "Leaders of the New Century" series with Korn/Ferry International. He was an executive producer for National Public Radio's Peabody Award- winning Sonic Memorial Project. Additionally, Mr. Thompson was co- founder of Sentium and founder of the International Institute for Strategic Information, Inc., a nonprofit public benefit corporation. He also serves on the board of directors for Integration Associates and Best Buy Enterprises. "We welcome Mark to TeleTech's board of directors," said Kenneth Tuchman, TeleTech's chairman and chief executive officer. "Mark's leadership and financial services expertise will enhance a team that continues to provide strong strategic direction for TeleTech." Mr. Thompson said, "TeleTech is a proven leader in the customer management industry, with a focus on improving its clients' business processes and providing world-class customer experiences. I look forward to working with a talented team of board members to help TeleTech continue to grow and capitalize on the emerging opportunities in the global marketplace." Mr. Thompson holds B.A., M.A. and M.B.A. degrees and currently is a visiting scholar at Stanford University's School of Humanities and Sciences. ABOUT TELETECH TeleTech is a global leader of integrated customer solutions designed to help clients acquire, grow and retain profitable relationships with their customers. TeleTech has built a worldwide capability supported by more than 31,000 professionals in North America, Latin America, Asia-Pacific and Europe. For additional information, visit http://www.teletech.com/ * * * LIQUIDITY AND CAPITAL RESOURCES Historically, capital expenditures have been, and future capital expenditures are anticipated to be, primarily for the development of customer interaction centers, technology deployment and systems integrations. The level of capital expenditures incurred in 2003 will be dependent upon new client contracts obtained by the Company and the corresponding need for additional capacity. In addition, if the Company's future growth is generated through facilities management contracts, the anticipated level of capital expenditures could be reduced. The Company currently expects total capital expenditures in 2003 to be approximately $40.0 million to $50.0 million, excluding the purchase of its corporate headquarters building. The Company expects its capital expenditures will be used primarily to open several new non-U.S. customer interaction centers, maintenance capital for existing centers and internal technology projects. Such expenditures are expected to be financed with internally generated funds, existing cash balances and borrowings under the Revolver. The Company's Revolver is with a syndicate of five banks. Under the terms of the Revolver, the Company may borrow up to $85.0 million with the ability to increase the borrowing limit by an additional $50.0 million (subject to bank approval) within three years from the closing date of the Revolver (October 2002). The Revolver matures on December 28, 2006 at which time a balloon payment for the principal amount is due, however, there is no penalty for early prepayment. The Revolver bears interest at a variable rate based on LIBOR. The interest rate will also vary based on the Company leverage ratios (as defined in the agreement). At June 30, 2003 the interest rate was 2.5% per annum. The Revolver is unsecured but is guaranteed by all of the Company's domestic subsidiaries. At June 30, 2003, $39.0 million was drawn under the Revolver. A significant restrictive covenant under the Revolver requires the Company to maintain a minimum fixed charge coverage ratio as defined in the agreement. The Company also has $75 million of Senior Notes which bear interest at rates ranging from 7.0% to 7.4% per annum. Interest on the Senior Notes is payable semi-annually and principal payments commence in October 2004 with final maturity in October 2011. A significant restrictive covenant under the Senior Notes requires the Company to maintain a minimum fixed charge coverage ratio. Additionally, in the event the Senior Notes were to be repaid in full prior to maturity, the Company would have to remit a "make whole" payment to the holders of the Senior Notes. As of June 30, 2003, the make whole payment is approximately $11.9 million. During the second quarter of 2003, the Company was not in compliance with the minimum fixed charge coverage ratio and minimum consolidated net worth covenants under the Revolver and the fixed charge coverage ratio and consolidated adjusted net worth covenants under the Senior Notes. The Company has worked with the lenders to successfully amend both agreements bringing the Company back into compliance. While the Revolver and Senior Notes had subsidiary guarantees, they were not secured by the Company's assets. In connection with obtaining the amendments, the Company has agreed to securitize the Revolver and Senior Notes with a majority of the Company's domestic assets. As part of the securitization process, the two lending groups need to execute an intercreditor agreement. If an intercreditor agreement is not in place by September 30, 2003, the lenders could declare the Revolver and Senior Notes in default. The lenders and the Company believe they will be able to execute the intercreditor agreement by September 30, 2003. However, no assurance can be given that the parties will be successful in these efforts. Additionally, the interest rates that the Company pays under the Revolver and Senior Notes will increase as well under the amended agreements. The Company believes that annual interest expense will increase by approximately $2.0 million a year from current levels under the Revolver and Senior Notes as amended. The Company believes that based on the amended agreements it will be able to maintain compliance with the financial covenants. However, there is no assurance that the Company will maintain compliance with financial covenants in the future and, in the event of a default, no assurance that the Company will be successful in obtaining waivers or future amendments. From time to time, the Company engages in discussions regarding restructurings, dispositions, mergers, acquisitions and other similar transactions. Any such transaction could include, among other things, the transfer, sale or acquisition of significant assets, businesses or interests, including joint ventures, or the incurrence, assumption or refinancing of indebtedness, and could be material to the financial condition and results of operations of the Company. There is no assurance that any such discussions will result in the consummation of any such transaction. Any transaction that results in the Company entering into a sales leaseback transaction on its corporate headquarters building would result in the Company recognizing a loss on the sale of the property (as management believes that the current fair market value is less than book value) and would result in the settlement of the related interest rate swap agreement (which would require a cash payment and charge to operations of $5.4 million). TRINITY: S&P Assigns BB+ Sr. Sec. Loan Rating on $250MM Facility ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' senior secured bank loan rating and its '1' recovery rating, indicating a high expectation of full recovery of principal, to Dallas, Texas- based Trinity Industries Inc.'s $250 million senior secured revolving credit facility due 2007. At the same time, Standard & Poor's assigned its 'BB-' senior unsecured debt rating to the company's proposed $300 million senior unsecured notes due 2014, which is being issued under SEC Rule 144A with registration rights. Proceeds from the notes issuance will be used to refinance existing debt and for general corporate purposes. Standard & Poor's also affirmed its 'BB' corporate credit rating on the company. The outlook remains stable. The revolving credit facility is secured by a first-priority interest in all accounts receivable and inventory of the company, and all capital stock of the company's material subsidiaries. The collateral granted to the secured lenders has a springing lien that is released should the corporate credit rating be rated 'BBB-' by Standard & Poor's or Baa3 by Moody's Investors Service. The senior unsecured notes are rated one notch below the corporate credit rating, because of their structural subordination to priority liabilities and secured debt (including all operating leases and Standard & Poor's expectations of usage under the company's new $250 million senior secured revolver) relative to total assets. "Leading market positions and the expectation that the railcar market has bottomed limit downside ratings risk," said Standard & Poor's credit analyst Linli Chee. "However, volatile end-markets, an aggressive approach to developing the capital-intensive leasing unit, and greater exposure to raw material price increases restrain upside ratings potential." Trinity manufactures a wide range of high-volume, metal-bending goods for the following markets: railcar (43% of sales for full- year 2003), highway construction (29%), barge (10%), and general industrial (7%). UNITED AIRLINES: Obtains Court Nod to Assume Agreement with Pratt ---------------------------------------------------------------- The United Airlines Debtors sought and obtained the Court's permission to assume a V2500 Engine Fleet Management Agreement with Pratt & Whitney CES, and its parent company, United Technologies Corporation. On October 18, 2001, the Debtors entered into a services agreement with P&W. P&W's obligations include repairing and maintaining the Debtors' V2500 gas turbine aviation engines at a Columbus, Georgia facility. To reduce costs, the Debtors have evaluated their existing contracts and conducted a head-to-head competition between P&W and another provider of V2500 engine maintenance services. After extensive discussions, the Debtors determined to continue to contract with P&W under the Services Agreement on improved terms and conditions. P&W agreed to amendments that provide the Debtors with a net present value of about $70,000,000 of incremental price and other financial concessions. The salient terms of the Amended Services Agreement include: (a) A reduction to the cost per engine flight hour; (b) Price protection and other concessions on spare parts for PW2000 and PW4000 engines for up to five and a half years; (c) An economic -- but not equitable interest -- in CES, based on a percentage of profits generated from related V2500 engine repair and overhaul business; (d) An option to acquire an incremental economic interest in CES with a limited right to convert it to credits for P&W goods and services; (e) Greater flexibility to adjust its V2500 engine fleet size, without penalty; and (f) CES will waive its prepetition claims under the Services Agreement and will not seek payment under a Reorganization Plan. Upon assumption, P&W will provide additional customer service support and assistance through the issuance of credit for the purchase of P&W parts and services, as well as the mitigation of engine testing and inspection procedures. In a separate request, the Debtors sought and obtained the Court's permission to file the Agreement and related documents under seal. (United Airlines Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000) VERITAS DGC: Fitch Affirms Senior Unsecured Debt Rating at BB ------------------------------------------------------------- Fitch Ratings has affirmed the senior secured debt rating of Veritas DGC Inc. at 'BB' and assigned a 'BB-' rating to the new senior unsecured convertible notes due 2024. The Rating Outlook remains Negative due to the weak outlook for the seismic sector and the concern that the company's reduction in multi-client expenditures and capital improvements may hinder future opportunities. Proceeds from the recently priced $125 million floating rate senior unsecured convertible notes due 2024 will be used to repay a portion of Veritas' senior unsecured credit facility and repurchase $20 million of its common stock. Veritas also granted the initial purchaser of the convertible notes an option to acquire an additional $30 million of convertible notes in connection with the offering. The convertible notes were priced at three month LIBOR less a spread of 0.75%, which will translate into lower annual interest expense given the existing interest rate environment. Additionally, the transaction will extend debt maturities by at least one year to 2009. The rating is based on Veritas' lease adjusted credit profile, the company's commitment to generating positive free cash flow and its geographically diversified operations. The anticipated improvement in Veritas' credit profile has not materialized despite four years of stronger than average prices for oil and natural gas. During the latest twelve months, EBITDA was $56.2 million, providing lease adjusted coverage of 1.4 times and adjusted debt-to-EBITDA of 5.9x. Notably, Fitch Ratings treats amortization of the multi- client library as a cash expense. The recent change in Veritas' amortization policy to the greater of straight-line or sales forecast method has resulted in 'catch up' adjustments, which have negatively impacted the EBITDA calculation. Demand for Veritas' services has been slow to grow in recent years as exploration and production (E&P) companies evaluated seismic data obtained through numerous acquisitions rather than obtain new seismic data. Furthermore, E&P companies have used excess cash to reduce debt, repurchase stock and drill low-risk prospects rather than increase exploration spending. Also affecting Veritas' credit profile has been an excess supply of marine seismic vessels, which has hampered margins and will likely continue to do so until capacity is reduced. Historically, Veritas invested heavily in its multi-client library, research and development, and technology development, which also negatively affected its credit profile. Recently, however, Veritas has focused on growing the business through internally generated cash flow. Veritas generated $19.5 million of positive free cash flow (cash provided by operating activities less capital expenditures less multi-client expenditures) in the latest twelve months. Veritas DGC Inc., headquartered in Houston, Texas is a leading provider of seismic data acquisition, seismic data processing and multi-client data to the petroleum industry in selected markets worldwide. The company acquires seismic data in land, marsh, swamp, tidal (transition zone) and marine environments. Veritas processes the data acquired by its own crews and crews of other operators. Veritas also acquires seismic data both on an exclusive contractual basis for its customer and on its own behalf for licensing to multiple customers on a non-exclusive basis. VISTEON: $400M Senior Unsecured Debt Issue Gets S&P's BB+ Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' senior unsecured rating to Visteon Corp.'s proposed $400 million senior unsecured notes due 2014. At the same time, Standard & Poor's affirmed its 'BB+' corporate credit rating on the Dearborn, Michigan-based company, which has total debt of about $2 billion, including securitized accounts receivable and capitalized operating leases. Proceeds from the new debt issue will be used to refinance existing debt and for general corporate purposes. The rating outlook is stable. The proposed debt offering will reduce near-term debt maturities, which currently total $350 million during 2004 and $538 million during 2005. "We expect Visteon to make gradual improvements to its competitive position and financial profile, reaching a level consistent with the ratings in the next few years," said Standard & Poor's credit analyst Martin King. "Upside potential is limited by the company's continued dependence on Ford Motor Co. and the cyclical and highly competitive nature of the industry." Visteon and Ford have signed agreements to restructure their relationship that are designed to improve Visteon's competitiveness. Although the new agreements with Ford are positive for Visteon, Standard & Poor's has reassessed Visteon's business profile in light of the agreements, which highlight the challenges Visteon faces to be a competitive and viable stand- alone automotive supplier. The benefits of the Ford agreements, the establishment of the Tier 1 wage structure for new hires, new business additions, and ongoing productivity initiatives should result in improved earnings and cash flow generation for Visteon in 2004. In addition, the completion of spending associated with construction of a new headquarters complex and computer systems work should further improve cash flow in 2005. Still, Visteon's operating results are expected to remain subpar for several years. WARNACO GROUP: Hotchkis and Wiley Discloses 7.5% Equity Stake ------------------------------------------------------------- Anna Marie Lopez, Chief Compliance Officer of Hotchkis and Wiley Capital Management LLC, informs the Securities and Exchange Commission that Hotchkis and Wiley owns, as of December 31, 2003, 3,388,800 shares of Warnaco Group, Inc. common stock -- this represents 7.5% of the total outstanding shares issued. (Warnaco Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM: Judge Gonzales Clears Settlement of Mpower Dispute ------------------------------------------------------------ Judge Gonzalez approves the Worldcom Inc. Debtors' stipulation to resolve contract disputes with Mpower Communications, Inc. Mpower owes the Debtors $1,033,517 in outstanding prepetition balance under certain service agreements. Likewise, the Debtors owe Mpower $2,418,687 in outstanding prepetition balance. Although Mpower has not yet filed a proof of claim against the Debtors, Mpower's claims were scheduled by the Debtors in an aggregate amount exceeding their $2,418,687 balance. The Debtors and Mpower negotiated a settlement agreement and release, dated December 22, 2003, resolving certain disputes, as well as the treatment of the outstanding prepetition balances. Since the Settlement Agreement contains proprietary and confidential information, the Debtors cannot disclose its terms. Basically, the parties agree that: (1) Mpower will be entitled to set off $1,033,517 against the the Debtors' $2,418,687 Balance. The automatic stay is modified to allow Mpower to effectuate the set-off; (2) After the set-off, the Debtors will owe Mpower $1,385,170 in remaining prepetition balance, while Mpower will have $0 as its remaining prepetition balance owing to the Debtors; (3) Mpower will file a proof of claim, which will be deemed as an Allowed Class 6 General Unsecured Claim for $1,385,170, in full and complete satisfaction of all prepetition claims against the Debtors; and (4) The parties will continue to provide services to each other under the Contracts, and will continue to pay for services rendered under the Contracts. (Worldcom Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) * A.M. Best Publishes First Long-Term Impairment Rate Study ----------------------------------------------------------- A.M. Best Co. has published its first long-term impairment rate study, "Best's Impairment Rate and Rating Transition Study - 1977 to 2002." Financial impairment encompasses a wider array of events than the traditional concept of issuer default. A financially impaired company may still be able to meet its policyholder obligations even though an insurance regulator has become sufficiently concerned about its future viability to intervene in some fashion. "Best's Impairment Rate and Transition Study - 1977 to 2002" calculates one-year to 15-year cumulative average impairment rates by applying the static pool methodology commonly employed by the credit-rating industry in issuer default studies. This study establishes the impairment rates associated with each Best's Rating level. The study covers the 25 one-year periods from December 31, 1977 to December 31, 2002. Of the 4,936 U.S. life/health and property/casualty operating insurance companies that carried a Best's Financial Strength Rating over this period, 583 companies became financially impaired. "Best's Impairment Rate and Rating Transition Study - 1977 to 2002" demonstrates that impairment rates are inversely related to ratings--the lower the rating, the higher the impairment rate; the higher the rating, the lower the impairment rate. The average annual impairment rate for Secure companies (those companies with Financial Strength Ratings of "B+" and above), Vulnerable companies (those companies with Financial Strength Ratings of "B" and below) and all rated companies were 0.23%, 3.44%, and 0.71%, respectively. The 15-year cumulative average impairment rates for Secure, Vulnerable and all rated companies were 8.01%, 34.63%, and 12.08%, respectively. Among the significant tables in the study are the following: Best's Cumulative Average Impairment Rates (for 15 years), Best's Implied Rates of Holding Company Senior Unsecured Debt (for 15 years) and Best's One-Year Rating Transition Matrix. A.M. Best applies the impairment rates in this study in rating insurance-related structured transactions. These include the securitization of trust preferred securities and surplus notes, life settlements, reinsurance recoverables, among others. To download a copy of the report, "Best's Impairment Rate and Rating Transition Study - 1977 to 2002," visit http://www.ambest.com/ratings/impairment.pdf. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com/ * Justice Ernst H. Rosenberger Joins Stroock as Of Counsel ---------------------------------------------------------- Stroock & Stroock & Lavan LLP announced that the Hon. Ernst H. Rosenberger, an Associate Justice of the New York Supreme Court Appellate Division, First Department, has joined the firm's Litigation Group as Of Counsel. His practice will focus on arbitration, alternative and international dispute resolution and mediation. Before his retirement in January 2004, Justice Rosenberger had served in the Appellate Division since his appointment by Governor Mario Cuomo in 1985 and subsequent reappointment by Governor George E. Pataki. He sat on over 15,000 criminal and civil appeals from the highest trial courts of New York. Prior to the Appellate Division, Justice Rosenberger served as Justice of the New York Supreme Court (1977-1985). During this period, he was the Presiding Justice of the Court's Extraordinary Special and Trial Term for investigation of corruption in the criminal justice system. Justice Rosenberger also served as an Acting Justice of the New York Supreme Court (1973-1976) and a Judge in the Criminal Court of the City of New York (1972 -1976). In addition to his service on the bench, Justice Rosenberger's distinguished career in the law is also marked by an avowed concern for the rights of the disenfranchised. He volunteered his services in the defense of the "Freedom Riders" arrested in 1961 in Jackson, Mississippi, and he worked on public accommodation and voting rights cases throughout the South in the 1960s. His international experience includes being one of two U.S. judges to examine West Germany's legal system during an official visit to the country in the 1970s. Justice Rosenberger, who has also served on the New York Law School faculty since 1976, has been named by New York Magazine and the Village Voice as being one of New York's best judges. "Justice Rosenberger is a tremendous addition to our practice," said Charles G. Moerdler, who chairs Stroock's Litigation Group, "Our clients will benefit from his invaluable experience from over 30 years on the bench." Stroock & Stroock & Lavan LLP is a law firm providing transactional and litigation guidance to leading investment banks, venture capital firms, multinational corporations and entrepreneurial businesses in the U.S. and abroad. Stroock's practice areas concentrate in corporate finance, legal service to financial institutions, energy, financial restructuring, intellectual property and real estate. * Kamakura Sees Little Change in U.S. Corporate Credit Quality -------------------------------------------------------------- Kamakura Corporation reported the number of troubled companies in the United States remained essentially unchanged in February compared to January, ending a steady 18-month trend of improving credit quality. Kamakura rated 11.5% of public companies in the "high risk" category at the end of February, down only 0.2% from a month earlier. Kamakura defines a company as "high risk" if its default probability over the next year is more than one percent. Kamakura's analysis showed that 5.6% of the North American universe of public companies had an annual probability of default between 1% and 5% on February 29, unchanged from January. Companies with default probabilities between 5% and 10% were 1.7% of the North American universe, and companies in the 10% to 20% range were another 1.2% of the universe, also unchanged compared to January. Kamakura's analysis showed that 3.0% of North American corporations were in the very high risk category, defined as companies with default probabilities between 20% and 100%. This is a decrease of 0.2% over the month-earlier figure. "This is the first significant pause we have had in improving corporate credit quality in the last 18 months," said Dr. Donald R. van Deventer, Kamakura Chairman and Chief Executive Officer. "Over the next few months, it will become clear whether we have reached the peak in corporate credit quality with this month's figures. Clearly, a cautious approach to credit extension looks prudent if this is indeed a plateau in corporate credit quality." Kamakura's default probability estimates have proven highly accurate in forecasting defaults over the 1989-2004 period through every stage of the credit cycle. The correlation of default probabilities between companies both within the same industry and in different industries can be very high due to the common macro- economic factors which drive credit risk. Kamakura's results are consistent in this regard with Bank for International Settlements working paper 126 by Linda Allen and Tony Saunders (available on www.bis.org). Successfully analyzing and hedging the credit cycle is important in meeting the requirements of the New Capital Accords ("Basel II") from the Basel Committee on Banking Supervision. For more information on Kamakura's public firm and private firm default probability models, see the Kamakura Corporation web site http://www.kamakuraco.com/and Credit Risk Models and the Basel Accords (John Wiley & Sons, 2003) by Kamakura's van Deventer and Kenji Imai and available on http://www.amazon.com/ About Kamakura Corporation Kamakura Corporation is a leading provider of risk management information, processing and software. Kamakura has been a provider of daily default probabilities for listed companies since November, 2002. Kamakura launched its private firm modeling product in January 2004. Kamakura is also the first company in the world to develop and install a fully integrated credit risk, market risk, asset and liability management, and transfer pricing system. Kamakura has more than 45 clients ranging in size from $3 billion in assets to $1 trillion in assets. Kamakura's risk management software is currently used in the United States, Germany, Canada, the United Kingdom, Australia and many countries in Asia. Kamakura's research effort is led by Professor Robert Jarrow, who was named Financial Engineer of the Year in 1997 by the International Association of Financial Engineers. Professor. Jarrow and Dr. van Deventer were both named to the 50 member RISK Hall of Fame in December 2002. Kamakura management has published twenty-one books and more than 100 publications on credit risk, market risk, and asset and liability management. Kamakura has world-wide distribution alliances with IPS-Sendero -- http://www.ips-sendero.com/-- and Unisys -- http://www.unisys.com/-- making Kamakura products available in almost every major city around the globe. * Mintz Levin Records Two Largest Trial Verdicts in Mass. in 2003 ----------------------------------------------------------------- Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, recorded the two largest trial verdicts in the Commonwealth of Massachusetts in 2003, as reported in the "Top Jury Verdicts of 2003" edition of Massachusetts Lawyers Weekly. After an eight week trial, R. Robert Popeo, Chairman of Mintz Levin and Elizabeth B. Burnett, Chair of the firm's Litigation Section, secured a jury verdict of approximately $100,000,000 in favor of the plaintiffs in a lawsuit filed against the Commonwealth of Massachusetts to recover attorneys fees due to the law firms who represented the Commonwealth in its highly successful lawsuit against the tobacco industry. In the second case, Michael S. Gardener, who specializes in complex civil and criminal litigation, secured an $18 million judgment in favor of more than 100 chain and independent pharmacies that challenged the legality of the Commonwealth's prescription tax. "With more than 125 experienced litigators in six offices across the country, Mintz Levin has the expertise, experience and depth to represent our clients aggressively, creatively and successfully. Our recognition by Massachusetts Lawyer Weekly for these particular successes on behalf of clients reflects the unique value that we bring to all of our litigation clients on a daily basis," said Ms. Burnett. About Mintz Levin Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC is a multidisciplinary law firm with over 450 attorneys and senior professionals in Boston, Washington D.C., Reston, VA, New York, New Haven, CT, Los Angeles and London. Mintz Levin is distinguished by its reputation for responsive client service and expertise in the areas of bankruptcy; business and finance; communications; employment; environmental; federal; health care; immigration; intellectual property; litigation; public finance; real estate; tax; and trusts and estates. Mintz Levin's international clientele range from privately held start- ups to Fortune 100 companies in a wide array of industries including biotechnology, venture capital, telecommunications, health care and high technology. Mintz Levin was one of the first law firms to develop complementary consulting capabilities to provide complete solutions to clients' problems, including investment/wealth management, government and public affairs and transactional insurance. More information is available at http://www.mintz.com/ * Upcoming Meetings, Conferences and Seminars --------------------------------------------- March 5, 2004 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West The Century Plaza, Los Angeles, CA Contact: 1-703-739-0800 or http://www.abiworld.org March 18-19, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Fifth Annual Conference Healthcare Transactions 2004 Successful Strategies for Mergers, Acquisitions, Divestitures, and Restructurings The Millennium Knickerbocker Hotel, Chicago Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com April 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org April 18-20, 2004 INTERNATIONAL BAR ASSOCIATION Insolvency is Changing Globally - How and Why? Seville, Spain Contact: www.ibanet.org April 29-May 1, 2004 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Fairmont Hotel, New Orleans Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 3, 2004 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Millennium Broadway Conference Center, New York, NY Contact: 1-703-739-0800 or http://www.abiworld.org May 13-14, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The First Annual Conference on Distressed Investing - Europe: Maximizing Profits in the European Distressed Debt Market Le Meridien Piccadilly Hotel - London, UK Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com May 20-22, 2004 ALI-ABA Fundamentals of Bankruptcy Law Astor Crowne Plaza, New Orleans Contact: 1-800-CLE-NEWS; http://www.ali-aba.org June 2-5, 2004 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, MI Contact: 1-703-739-0800 or http://www.abiworld.org June 10-12, 2004 ALI-ABA Chapter 11 Business Reorganizations Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org June 17-18, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Seventh Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel - Chicago Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com June 24-26,2004 AMERICAN BANKRUPTCY INSTITUTE Hawaii Bankruptcy Workshop Hyatt Regency Kauai, Kauai, Hawaii Contact: 1-703-739-0800 or http://www.abiworld.org July 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE The Mount Washington Hotel Bretton Woods, NH Contact: 1-703-739-0800 or http://www.abiworld.org July 28-31, 2004 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Reynolds Plantation, Lake Oconee, GA Contact: 1-703-739-0800 or http://www.abiworld.org September 18-21, 2004 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference The Bellagio, Las Vegas, NV Contact: 1-703-739-0800 or http://www.abiworld.org October 10-13, 2004 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Seventh Annual Meeting Nashville, TN Contact: http://www.ncbj.org/ November 29-30, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Eleventh Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Plaza Hotel - New York City Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, DC Contact: 1-703-739-0800 or http://www.abiworld.org June 2-4, 2005 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities and Bankruptcy Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org July 14 -17, 2005 AMERICAN BANKRUPTCY INSTITUTE Ocean Edge Resort, Brewster, MA Contact: 1-703-739-0800 or http://www.abiworld.org July 27- 30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, SC Contact: 1-703-739-0800 or http://www.abiworld.org November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, TX Contact: http://www.ncbj.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, CA Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Aileen M. Quijano and Peter A. Chapman, Editors. Copyright 2004. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***