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/raid1/www/Hosts/bankrupt/TCR_Public/040429.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, April 29, 2004, Vol. 8, No. 84 Headlines AAIPHARMA INC: S&P Removes Junk Ratings from Credit Watch ADELPHIA COMMS: Circle Asserts $25MM Claim and Demands Payment AESP INC.: Bendes Investment Extends $631,000 One-Year Term Loan AIR CANADA: Revises Deutsche Bank Pact for $850M Rights Offering AMERICAN TOWER: First Quarter Revenues Increase by 15% to $186MM APPLIED EXTRUSION: 2004 Second Quarter Net Loss Doubles to $6 Mil. BANC OF AMERICA: Fitch Affirms Low Ratings on 6 20010-1 Classes BAY VIEW CAPITAL: First Quarter 2004 Net Loss Climbs to $1.1 Mil. BIOGAN INTERNATIONAL: Section 341(a) Meeting Slated for May 20 BM USA INCORPORATED: Case Summary & 54 Unsecured Creditors BRISTOL CDO: S&P Lowers Class C Rating to BB- & Removes Watch BROADBAND: Debtor Settles Last Remaining Claim Out-of-Court CAPCO AMERICA: Fitch Downgrades Class B-4 to B- & Class B-5 to CC CASCADES INC: Vice President & CFO Andre Belzile Says Goodbye CHASE MORTGAGE: Fitch Rates 2 Classes at Low-B Levels COVANTA: Liquidating Trustee Issues First Post-Confirmation Report CWMBS: Fitch Takes Various Rating Actions on RMB Securitizations DELTA FINANCIAL: Files Shelf Registration on Form S-2 with SEC DEUTSCHE MORTGAGE: Fitch Affirms Low-B Ratings on 4 1999-1 Classes DIVERSIFIED ASSET: Fitch Downgrades $18M Class B-1L Notes to BB+ DOMAN INDUSTRIES: Agrees with Unsecured Noteholders on CCAA Plan DYNEGY: Sells 16% Interest in Indian Basin Plant for $48 Million ENRON: Portland General Retirees Want Separate Creditors' Panel FA PROPERTIES CORP: Voluntary Chapter 11 Case Summary FEATHERLITE INC: First Quarter Results Enter Positive Zone FEDERAL-MOGUL: First Quarter 2004 Net Loss Tops $20 Million FIBERMARK: Obtains Final Court Nod on $30 Million DIP Financing FINOVA GROUP: Reports $1.2 Billion Asset Shortfall FIRST NATIONWIDE: Fitch Takes Various Rating Actions on RMB Notes FLEMING COS: Disclosure Statement Hearing Continued to May 4, 2004 FLEXTRONICS: Delivers Improved Fourth Quarter Results GENESIS: Reports on Haskell Litigation Status in Del. Bankr. Court GREENWICH CAPITAL: S&P Assigns Low-B Prelim Ratings to 7 Classes JAG MEDIA HOLDINGS: Needs More Funds to Sustain Operations KINDERCARE LEARNING: S&P Places B+/B- Ratings on Watch Negative HEALTHSOUTH: Judge to Issue Scheduling Order for Bond Litigation I2 TECH: Q Investments Provides $100 Million Equity Investment INTEGRATED: Rotech Incurs $41M Interest Expense on Long Term Debt JAZZ GOLF: Equity Deficit Narrows to $666,536 at February 29, 2004 MCWATTERS MINING: Gets Until May 28 to File Bankruptcy Plan MIRANT CORPORATION: Proposes Learjet Sale Overbid Procedures NESCO: May File for Bankruptcy if Unable to Meet Financing Needs NRG ENERGY: Will Hold 1st Quarter 2004 Conference Call on May 11 OMEGA HEALTHCARE: Posts $53.7 Million Net Loss for First Quarter OXFORD HEALTH: Signs Acquisition Agreement with UnitedHealth Group OXFORD: S&P Likely to Raise Ratings After UnitedHealth Acquisition PARMALAT: Commissioner Bondi Administers 3 Concessionary Companies PEGASUS COMMUNICATIONS: S&P Lowers Corp. Credit Rating to CCC PG&E CORPORATION: Schedules First Quarter Report for May 4 REGAL CINEMAS: S&P Rates Proposed $1.75 Bil. Bank Facility at BB- REGAL ENTERTAINMENT: Completes 9-3/8% Sr. Noteholder Solicitation REVLON CONSUMER: S&P Upgrades Corporate Credit Rating to B- SORBEE INTERNATIONAL: Case Summary & Largest Unsecured Creditors STRUCTURED ASSET: S&P Cuts Class B-3 Series 1998-6 Rating to D TAE BO RETAIL: U.S. Trustee to Meet with Creditors on May 17 TECNET: Court Extends Schedule-Filing Deadline through May 17 TRICO MARINE: Explores Strategic Options to Address Financial Woes TRI-LETT INDUSTRIES: Case Summary & Largest Unsecured Creditors TRITON AVIATION: Fitch Assigns Low Ratings to Classes A, B & C UAL: Fitch Speculates about Bankruptcy Impact on Airport Debt UNITED AIRLINES: Wants to Extend Bain & Co. Consulting Agreement US AIRWAYS: Records $177 Million Net Loss for First Quarter US AIRWAYS: S&P Maintains Negative Watch on B- Rating U.S. STEEL: Turns Profitable in First Quarter 2004 WILSONS THE LEATHER: Lenders Agree to Amend Credit Facility W.R. GRACE: Asks Court To Determine Suitable Future Claims Rep * Counsel Dennis R. Dumas Joins Chadbourne & Parke LLP ********* AAIPHARMA INC: S&P Removes Junk Ratings from Credit Watch --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC' corporate credit and 'CC' subordinated debt ratings on aaiPharma Inc. At the same time, Standard & Poor's removed the ratings on the Wilmington, North Carolina-based specialty pharmaceutical company from CreditWatch. Standard & Poor's originally placed the ratings on CreditWatch on March 19, 2004, because of its concerns about aaiPharma's liquidity and cash flow generation. Since then, however, aaiPharma has improved its liquidity position by divesting $105 million in assets and securing a $140 million senior secured credit facility. The company will use the proceeds from the new bank facility and asset sales to replace and refinance roughly $154 million outstanding under its existing $260 million credit facility and to make an interest payment due on its subordinated notes. The 'CCC+' senior secured rating on the $260 million credit facility was withdrawn after the company's refinancing. The new senior secured facility is not rated. The outlook on aaiPharma is negative. "The low speculative-grade ratings reflect the company's improved but still limited liquidity given the lack of visibility of aaiPharma's profitability and cash flow generation," said Standard & Poor's credit analyst Arthur Wong. The company has completed an independent inquiry into its aggressive sales practices, which have led to excess inventory of several key products at the wholesale level. Currently, the company is expected to make material adjustments to its 2003 financial results. As a result, its cash flows for the first half of 2004, and possibly beyond, are likely to be negative. Standard & Poor's cannot currently estimate how much of the losses will have to be covered by the new senior secured credit facility. ADELPHIA COMMS: Circle Asserts $25MM Claim and Demands Payment -------------------------------------------------------------- Circle Security Systems, Inc., and Circle Acquisitions, Inc., operate as a full-service alarm and security service provider. Over the course of 26 years, Circle obtained a large customer base among affluent and middle-income residential and commercial customers in the Miami and Tampa areas. Jay L. Silverberg, Esq., at Silverberg, Stonehill & Goldsmith, PC, in New York, relates that Circle depends on four sources of revenue: (a) new alarm and security system installations; (b) service of existing systems; (c) alarm system monitoring; and (d) design, sales and installation of high-end audiovisual home theater systems. Mr. Silverberg explains that in early 1999, Circle began investigating the possibility of assigning a portion of one of its revenue streams to a larger regional or national alarm company -- ACOM Debtor Starpoint Limited Partnership. Starpoint is also engaged in the home security business. In December 1999, Circle entered into an Asset Purchase Agreement pursuant to which Starpoint purchased and assumed a large portion of Circle's customer alarm monitoring contracts. A material aspect of the transaction was that Circle was to continue to have the exclusive rights to sell alarm and security systems to customers whose monitoring contracts were assigned, and to service the alarm systems of those customers. Mr. Silverberg contends that Starpoint, acting through various agents and affiliates: (a) defrauded Circle inasmuch as it never intended to fulfill its obligations under the Purchase Agreement and in fact used the transaction as a means to pirate and convert Circle's sales and service business; (b) materially breached the Purchase Agreement and its related documents and instruments; and (c) committed or conspired to commit various fraudulent and wrongful acts with the intent and result of crippling Circle's business while enriching itself, its partners, agents and affiliates. Circle estimates that it suffered actual damages of over $15,000,000. Circle believes that it is also entitled to both substantial consequential and punitive damages, adding $10,000,000 or more to its claim. In January 2001, Circle commenced arbitration against Starpoint before the American Arbitration Association in Miami, Florida. Circle anticipates that pursuant to a Stipulation and Order with the ACOM Debtors dated March 24, 2003, its prepetition claims will be liquidated pursuant to the continuation of the Arbitration. By this motion, Circle asks the Court to allow its postpetition administrative expense priority claim, in an amount to be determined, and to direct the Adelphia Communications Debtors to immediately pay its claim. (Adelphia Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) AESP INC.: Bendes Investment Extends $631,000 One-Year Term Loan ---------------------------------------------------------------- AESP, Inc. (Nasdaq: AESP) announced that it has closed on a $631,000 one-year term loan from Bendes Investment Limited. The proceeds of the loan were used to retire the Company's outstanding debt due to Commercebank, N.A. The new loan, which bears interest at the rate of prime plus 8% (currently 12%), is secured by a lien on the Company's U.S. assets and is personally guaranteed by the Company's principal stockholders. Slav Stein, President and CEO, commented, "Over the last two years, our business has been adversely affected by the short-term nature and imminent maturity of our obligation to Commercebank. With the completion of the KBK financing arrangement in November 2003 and the funding of this new loan, this pressure has been relieved. This will allow us to concentrate fully on our major objective for 2004; delivering a meaningful improvement in our operating results through increasing our sales and market share, continuing our efforts to expand our product line, taking steps to improve our cash flow and continuing our ongoing efforts to reduce our costs." The Company also commented further on its results of operations for fiscal 2003. The Company reported that in their audit report on the Company's 2003 financial statements, the Company's auditors had included an explanatory paragraph in their report with respect to the Company's ability to continue as a going concern. AESP, Inc. designs, manufactures, markets and distributes network connectivity products under the brand name Signamax Connectivity Systems as well as customized solutions for original equipment manufacturers worldwide. For additional Company information, visit http://www.aesp.com/and http://www.Signamax.com/ AIR CANADA: Revises Deutsche Bank Pact for $850M Rights Offering ---------------------------------------------------------------- Air Canada announced that it has reached an agreement in principle with Deutsche Bank AG to amend the Stand-By Purchase Agreement to extend and increase the rights offering available to creditors from $450 million to $850 million. The $850 million rights offering is greater than the $700 million originally sought by the Company at the start of the equity solicitation process in July 2003. The agreement is subject to completion of appropriate documentation and Court approval. "Air Canada's restructuring regains its momentum with a vote of confidence in our restructuring business plan from a major global financial institution," said Air Canada CEO Robert Milton. "The agreement with Deutsche Bank will provide a solid foundation for Air Canada's restructuring and the flexibility to pursue an equity partner as we work towards a successful completion of the restructuring in the coming months. "Air Canada is well positioned to carry on business effectively and it is business as usual for our customers. We have made significant progress in revenue, fleet and cost restructuring over the past year and our 2004 revenues are tracking in line with what we projected in our business plan. We are now entering our strongest travel period of the year, with positive cash flow and approximately $1 billion in cash on hand as of the close of business last week in addition to $500 million in available credit lines unchanged from the most recent update. "Our stakeholders, including our largest creditors, have reaffirmed their support in ensuring the airline's successful restructuring and will continue to work with us to ensure Air Canada emerges from CCAA protection a much stronger airline," said Mr. Milton. Under the proposed amendments, the previously announced $450 million rights offering to creditors will be expanded to $850 million at the same $925 million pre-investment valuation of Air Canada as had been provided in the Trinity Agreement thus preserving and expanding a key element of potential creditor recovery in Air Canada's restructuring plan. Deutsche Bank as Stand-by Purchaser will acquire any equity not purchased by creditors at a premium price of 107.5% thus ensuring that AC will have the full $850 million available to fund its restructuring plan. Air Canada will pursue an equity solicitation process. However, as a result of the funding that the proposed amendments will secure, Air Canada will be seeking only $250 million instead of the $650 million provided for in the Trinity Agreement. This equity will be used in part to retire the GE convertible notes and warrants if appropriate arrangements can be negotiated with GE similar to those formerly negotiated by Trinity. However, successful completion of the proposed equity investment will no longer be a condition precedent to Air Canada's successful emergence from CCAA. In addition to documentation and Court approval, the proposed amendments contain two significant conditions regarding labour and pension matters which must be satisfied by May 15, 2004. The labour condition requires that Air Canada obtain $200 million in annual cost reductions to realize the labour cost savings of approximately $1.1 billion agreed to by the various Air Canada unions last year. In addition, the agreement requires that Air Canada's labour unions provide "clean slate" assurances that all material disputes or claims will be compromised or waived upon emergence. The pension conditions require Air Canada to reach satisfactory arrangements with the Office of the Superintendent of Financial Institutions (OSFI) to implement the February 18, 2004 agreement between Air Canada and its pension beneficiaries regarding funding over 10 years of the solvency deficit in Air Canada's pension plans. The proposed amendments do not require pension design changes as had previously been required by equity plan sponsors. In addition, the agreement requires satisfactory assurances from the Government of Canada that, upon emergence, Air Canada will be able to compete on a level playing field with all Canadian carriers in regards to the regulatory environment. The timeline for the equity solicitation process remains under discussion and will be subject to approval by the Court. However, the amended agreement will provide for Air Canada to emerge from CCAA protection no later than September 30, 2004. Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and Section 304 petition with the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. AMERICAN TOWER: First Quarter Revenues Increase by 15% to $186MM ---------------------------------------------------------------- American Tower Corporation (NYSE: AMT) reported financial results for the quarter ended March 31, 2004. Total revenues increased 15% to $186.2 million for the three months ended March 31, 2004, from $161.5 million for the three months ended March 31, 2003. Income from operations increased to $21.8 million for the three months ended March 31, 2004 from $2.1 million for the same period in 2003. Loss from continuing operations decreased to $42.6 million, or $(0.19) per share, for the three months ended March 31, 2004 from $80.2 million, or $(0.41) per share, for the same period in 2003. Net loss decreased to $42.9 million, or $(0.19) per share, for the three months ended March 31, 2004 from $91.6 million, or $(0.47) per share, for the same period in 2003. Adjusted EBITDA ("income from operations before depreciation and amortization and impairments, net loss on sale of long-lived assets and restructuring expense, plus interest income, TV Azteca, net") increased 20% to $106.4 million for the three months ended March 31, 2004 from $88.9 million for the same period in 2003. Adjusted EBITDA margin increased to 57% for the three months ended March 31, 2004 from 55% for the three months ended March 31, 2003. Net cash provided by operating activities increased to $31.7 million during the first quarter of 2004, compared to $7.1 million for the same period in 2003. Payments for purchase of property and equipment and construction activities during the first quarter of 2004 decreased to $10.8 million from $18.8 million for the same period in 2003. Jim Taiclet, American Tower's Chairman and Chief Executive Officer, stated, "The wireless industry continues to grow and become an increasingly important part of the telecommunications marketplace. The major carriers are adding subscribers at a brisk pace and their financial and operating performance is also improving. These trends are driving further investment in network quality and we're also starting to see the deployment of advanced 3G networks. "The continued demand for tower space plus our ongoing focus on operational execution contributed to our strong first quarter performance of 20% growth in Adjusted EBITDA. In addition, our strong operating performance and control of capital expenditures enabled us to deliver our highest level of free cash flow to date, over $26 million for the quarter. "From a balance sheet perspective, we successfully raised $225 million of attractively priced long-term financing in the first quarter and recently launched a refinancing of our bank facility. Our proposed new credit facilities will extend our maturities and substantially increase our financial flexibility. As a result, you will see us taking meaningful steps to reduce our interest costs, further accelerating our free cash flow growth." Operating Highlights Organic same tower revenue and same tower cash flow growth on the approximately 13,200 towers owned as of the beginning of the first quarter 2003 and the end of the first quarter 2004 were 9% and 13%, respectively, for the three months ended March 31, 2004, compared to the three months ended March 31, 2003. For the three months ended March 31, 2004, rental and management segment revenues increased 12% to $164.6 million from $146.5 million, and rental and management segment operating profit increased 18% to $112.5 million from $95.3 million, for the same period in 2003. Rental and management segment operating profit margins increased to 68% for the three months ended March 31, 2004, from 65% for the same period in 2003. Free cash flow ("Adjusted EBITDA less interest expense and payments for purchase of property and equipment and construction activities") was $26.4 million for the three months ended March 31, 2004. This free cash flow amount reflects deductions of approximately $20.3 million for non-cash interest expense relating to the accretion of our 12.25% senior subordinated discount notes due 2008 and to the amortization of deferred financing fees (excluding the $20.3 million would result in free cash flow of $46.7 million). Asset Transactions During the first quarter of 2004, the Company continued to incrementally execute its strategy of divesting non-core portions of its business and acquiring complementary core tower assets. During the first quarter of 2004, the Company closed on $11.5 million of divestitures within its rental and management segment, including 47 non-strategic towers and a building. In March 2004, the Company received approximately $4.0 million for substantially all of the net assets of Kline Iron & Steel. The Company may receive up to an additional $2.0 million in cash payable in 2006 based on future revenues generated by Kline. Kline was previously included in the network development services segment and was designated a discontinued operation as of June 2003. The Company expects to sell the remaining assets of Kline, primarily real estate, by the end of the second quarter 2004. During the first quarter 2004, the Company continued to invest in its core rental and management segment by re-deploying a portion of its proceeds from asset sales and acquired a total of 100 towers for $13.1 million. During the first quarter the Company acquired 4 towers for $0.6 million from NII Holdings, 46 towers for $9.7 million from Iusacell Celular in Mexico, and 50 towers for $2.8 million in the United States. The Company currently expects to acquire an additional 26 towers for approximately $3.9 million from NII Holdings and 63 towers for $13.7 million from Iusacell Celular during the remainder of 2004. However, certain creditors of Iusacell are seeking to enjoin Iusacell from transferring certain of its assets, including the additional towers we expect to acquire. Although we are not a party to this litigation nor do we expect it to have any material adverse effect on our operating results or financial condition, it could delay the acquisition of additional tower assets from Iusacell. Financing Highlights The Company has continued to strengthen its financial position through a combination of strong operational execution and thoughtfully accessing the capital markets. The Company's principal operating subsidiaries are seeking to refinance their existing $961 million senior secured credit facilities with the proposed new $1.1 billion senior secured credit facilities, consisting of an unfunded $400 million revolving credit facility, a $300.0 Term Loan A and a $400 million Term Loan B. The new senior secured credit facilities would be guaranteed by American Tower Corporation and its subsidiaries and would be secured by a pledge of substantially all the Company's assets. The Company has received commitments from a group of lenders for the full amount of the new facilities, in advance of their efforts to syndicate the facilities to a larger group of financial institutions. These commitments are subject to negotiation, execution and delivery of definitive loan documentation and other customary conditions. Borrowings under the new facilities would be used to repay the Company's existing senior secured credit facilities, which currently have outstanding borrowings of approximately $665.8 million, and for general corporate purposes, including refinancing other existing indebtedness. The Company is seeking to have the proposed credit facilities in place during the second quarter and expects that they will provide the Company with greater liquidity and improve its operating and financial flexibility. Upon closing the refinancing with final terms, the Company may be required to record a write-off of deferred financing fees associated with its existing credit facilities of approximately $12.0 million (the loss will be recorded within "loss on retirement of long-term obligations" in the Company's statement of operations). The combination of strong operating performance and proceeds from financial and strategic activities reduced the Company's Net Leverage Ratio two full turns ("total debt less cash and cash equivalents and restricted cash and investments on hand divided by first quarter annualized Adjusted EBITDA") as of March 31, 2004 to 7.2 from 9.2 for the same period in 2003. 2004 Outlook The Company maintains its rental and management outlook for the remainder of 2004 and refines its anticipated annual revenue growth to 9% to 11% from 8% to 11%. The Company also maintains its outlook for 2004 rental and management expenses, and continues to anticipate converting approximately 90% of its incremental revenues into operating profit. The Company's has not adjusted its services revenue and segment operating profit and corporate expense outlook for the remainder of 2004. Without giving effect to potential refinancings, the Company maintains its outlook for interest expense of $270 million to $279 million, including $84 million of non-cash interest. The Company has modestly reduced its full year 2004 outlook for capital expenditures to a range between $50 million to $63 million due to slightly lower than anticipated new tower construction in the first quarter. The Company expects to construct 120 to 150 new towers in 2004, down from its previous range of 120 to 160 towers. American Tower is the leading independent owner, operator and developer of broadcast and wireless communications sites in North America. American Tower operates approximately 15,000 sites in the United States, Mexico, and Brazil, including approximately 300 broadcast tower sites. For more information about American Tower Corporation, visit http://www.americantower.com/ * * * As reported in the February 6, 2004 edition of the Troubled Company Reporter, Standard & Poor's Ratings Services assigned its 'CCC' rating to the $225 million 7.5% senior notes due 2012 issued under Rule 144A with registration rights by Boston, Massachussets- based wireless tower operator American Tower Corp. Simultaneously, Standard & Poor's affirmed its existing ratings on American Tower, including the 'B-' corporate credit rating. The outlook remains positive. "The ratings reflect significant financial risk associated with American Tower's high leverage, which stemmed from its aggressive debt-financed tower acquisition activities during the 1999-2001 time frame," said Standard & Poor's credit analyst Michael Tsao. Net of restricted cash, debt to annualized EBITDA was high at 7.9x, including about $14 million of annual interest income from the company's Mexican subsidiary (8.1x after adjustment for operating leases) for the quarter ended in September 2003. American Tower incurred over $3 billion of debt during 1999-2001 to finance the acquisition and building of about 13,000 towers, based on the company's expectations that growth in wireless services would strongly bolster demand for limited tower space. However, largely in response to capital market conditions, wireless carriers scaled back their capital spending plans starting in 2001, preventing American Tower from reducing its acquisition-related debt. APPLIED EXTRUSION: 2004 Second Quarter Net Loss Doubles to $6 Mil. ------------------------------------------------------------------ Applied Extrusion Technologies, Inc. (NASDAQ NMS - AETC) announced financial results for its second fiscal quarter ended March 31, 2004. Second Quarter 2004 Results Sales for the second quarter of fiscal 2004 of $70.3 million were $7.4 million, or 12 percent, higher compared with the second quarter of fiscal 2003. A 17 percent increase in unit volume was driven by the Company's inventory reduction initiatives, which contributed to a 4 percent decrease in average selling price. The decline in average selling price principally reflects a significant increase in the volume of lower price films. Exclusive of the sale of lower priced commodity goods to reduce inventories, volume and price were up by 2 percent each, as compared to the prior year. Gross profit for the second quarter of $9.9 million was $2.8 million, or 22 percent, lower than the second quarter of fiscal 2003. The $2.8 million reduction was due to an increase in raw material costs of approximately $4.2 million and a $1 million increase in depreciation expense, partially offset by the gross profit contribution from the increased sales volume. Gross margin was 14.1 percent versus 20.2 percent in fiscal 2003. Operating expenses of $7.5 million were $0.6 million, or 7 percent, lower as compared with the same period of the prior year. Operating profit of $2.4 million for the second quarter was $2.2 million lower than the same period in fiscal 2003. Excluding the $1 million increase in depreciation expense, operating profit was $1.2 million lower than the prior year. Interest expense of $8.4 million was $0.7 million higher than the second quarter of fiscal 2003. This is due to a higher average debt balance and lower capitalized interest. The net loss for the second quarter of fiscal 2004 was $6 million, or $.47 per share, compared with a net loss of $3.1 million, or $.24 per share, for the second quarter of fiscal 2003. The $2.9 million increase in the net loss is principally due to a large increase in raw material costs, as well as increases in depreciation, and interest expense. For the three months ended March 31, 2004, the Company generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $9.2 million compared with EBITDA of $10.4 million for the second quarter of fiscal 2003. Six Months 2004 Results Sales for the first six months of fiscal 2004 of $127.8 million were $5.6 million, or 4.6 percent, higher compared with the first six months of fiscal 2003. A 5 percent increase in unit volume was partially offset by a 1 percent decrease in average selling prices. The decline in average selling price principally reflects a significant increase in the volume of lower price films. Exclusive of the sale of lower priced commodity goods to reduce inventories, volume was 2 percent lower and prices were approximately 2 percent higher, as compared to the prior year. Gross profit for the first six months of $19.4 million was $5.5 million, or 22 percent, lower than the first six months of fiscal 2003. The $5.5 million reduction was due to an approximate increase of $7.2 million in raw material costs and a $2 million increase in depreciation expense, partially offset by the gross profit contribution from the increased sales volume. Gross margin was 15.2 percent versus 20.4 percent in fiscal 2003. Operating expenses of $14.7 million were $1.6 million, or 10 percent, lower as compared with the same period of the prior year. Operating profit of $4.8 million was $3.8 million lower than the same period in fiscal 2003. Excluding the $2 million increase in depreciation expense, operating profit was $1.8 million lower than the prior year. Interest expense of $19 million was $4 million higher than the first six months of fiscal 2003. This increase reflects approximately $2.2 million of nonrecurring expenses, principally the write-off of deferred financing charges associated with the Company's prior credit facility, which was refinanced with GE Commercial Finance on October 3, 2003. The remaining increase of $1.8 million is due to a higher average debt balance and lower capitalized interest. The net loss for the first six months of fiscal 2004 was $14.3 million, or $1.11 per share, compared with a net loss of $6.4 million, or $.50 per share, for the same period of fiscal 2003. The $7.9 million increase in the net loss is principally due to increased depreciation and amortization, and interest expense of $2.2 million and $4 million, respectively. For the six months ended March 31, 2004, the Company generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $18.4 million compared with EBITDA of $20.2 million for the same period of fiscal 2003. Balance Sheet, Cash Flow And Liquidity The Company used approximately $20 million of cash in the first six months. This was principally due to a $10 million increase in accounts receivable as a result of the significant increase in sales during the second quarter. Inventories increased by $8.1 million for the first six months. Finished goods and raw materials inventories increased by $4.6 million and $3.5 million, respectively, due primarily to increased resin costs and a unit increase in raw material inventories. During the second quarter, the unit volume of finished goods was reduced by approximately 7 million lbs. and is expected to decline further throughout the year. However, the reduction in the unit volume of finished goods was partially offset by a $3.5 million increase in the average cost of finished goods due principally to increased raw material costs. Additionally, raw material inventories increased by approximately $2.2 million due to the purchase of materials in advance of higher resin costs. As a result, total inventories were reduced by approximately $0.8 million during the quarter. As previously announced, the Company amended its credit facility with GE Commercial Finance on March 23, 2004. This amendment increased the Company's revolving line of credit by $10 million to $60 million, and reduces the EBITDA covenant through the third quarter of fiscal 2005. The additional liquidity and flexibility, provided by this amendment, supports the Company's continued implementation of its high-value proprietary products strategy, during a period of rapidly increasing material costs. At March 31, 2004, the Company had borrowings of $43.3 million pursuant to its revolving line of credit. Unused availability under the revolving credit facility at quarter end was approximately $12 million. Net Debt (total debt less cash) at March 31, 2004 was $361 million, representing 94 percent of total capitalization. Company Comments Commenting on the results, Amin J. Khoury, Chairman and Chief Executive Officer, said: "Our recently implemented sales initiatives provided substantial volume and revenue growth during the quarter. Nevertheless, principally, as a result of our inability to pass the $4.2 million in resin increases through to customers, during the quarter, the Company lost $6 million. We expect top line growth to accelerate in the third quarter with the anticipated seasonal demand increase, and the continued implementation of our inventory reduction initiatives. Additionally, in response to the unprecedented increase in resin costs during the second quarter, industry wide price increases have recently been announced, and as a result gross profit is expected to improve during the second half." Mr. Khoury further remarked, "We remain encouraged by the commercial prospects for our high-value proprietary products. We will continue to carefully control capital expenditures; additionally management is currently reviewing its cost structure with a view to further decreases in cost. We remain focused on executing a successful turnaround in a difficult business environment. Our objective is to generate positive free cash flow in 2004 and to achieve acceptable levels of profitability over time through continuous improvement in product mix and capacity utilization." Applied Extrusion Technologies, Inc. is a leading North American developer and manufacturer of specialized oriented polypropylene (OPP) films used primarily in consumer products labeling and flexible packaging applications. * * * As reported in the Troubled Company Reporter's March 4, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on New Castle, Delaware-based Applied Extrusion Technologies Inc. to 'B-' from 'B'. At the same time, Standard & Poor's lowered its senior unsecured debt rating to 'CCC' from 'B-'. "The downgrade reflects Applied Extrusion's extended poor operating and financial performance, weak liquidity position, very aggressive debt leverage, and negative cash flows," said Standard & Poor's credit analyst Paul Blake. The company may be challenged to remain in compliance with minimum EBITDA levels required in its bank credit agreement, should operating profitability fail to improve. Additionally, the company's ability to make a $15 million semi-annual coupon payment in July 2004 appears uncertain based on current operating trends. The ratings could be lowered soon if operating profitability and cash generation do not substantially improve beyond current levels, or if other issues, including a potential breach of financial covenants or pending debt maturities, result in further weakness to the company's already-strained liquidity position. BANC OF AMERICA: Fitch Affirms Low Ratings on 6 20010-1 Classes --------------------------------------------------------------- Fitch Ratings upgrades Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates, series 2001-1 as follows: --$35.6 million class B to 'AA+' from 'AA'; --$21.3 million class C to 'AA-' from 'A+'. In addition, Fitch affirms the following certificates: --$125.8 million class A-1 'AAA'; --$527.8 million class A-2 'AAA'; --$50 million class A-2F 'AAA'; --Interest-only class X 'AAA'; --$19 million class D 'A'; --$9.5 million class E 'A-'; --$9.5 million class F 'BBB+'; --$19 million class G 'BBB'; --$14.2 million class H 'BBB-'; --$13.3 million class J 'BB+'; --$23.5 million class K 'BB'; --$2.1 million class L 'BB-'; --$5.5 million class M 'B+'; --$6.8 million class N 'B'; --$5.9 million class O 'B-'. Fitch does not rate the $22.1 million class P certificates. The ratings upgrade of classes B and C are the result of the transaction scheduled amortization and ongoing stable performance. As of the April 2004 distribution date, the pool's aggregate balance has paid down by 3.9% to $910.9 million from $948.1 million at issuance. Currently, eleven loans (6.7%) are in special servicing, two (1.1%) of which are real estate owned (REO). The largest loan in special servicing is a multi-family property located in Grapevine, Texas. Occupancy at this property has declined as a result of softening of the multifamily market in and around Fort Worth, Texas. The Special Servicer is investigating mold contamination at the property. Fitch reviewed the 315 Park Avenue loan (9.6%), the only credit assessed loan in the transaction. The loan is secured by a 319,776 square feet (sf) office building located in Manhattan, New York. As of year end (YE) 2003 the collateral's net operating income decreased approximately 25% from issuance. The decrease is attributed to approximately $1 million increase in repair and maintenance related to a one-time new tenant turnover expense, and an additional $200,000 increase in professional fees. The largest tenant, Credit Suisse First Boston's (CSFB), currently occupying 62.2% of net rentable area (NRA) is required to lease an additional 30,200 sf at its current rent of $46 per sf. As a result CSFB will occupy 71.1% NRA in 2004. Based on the one-time new tenant expense, and the upcoming contractual lease expansion of the building's largest tenant, Fitch maintains an investment grade credit assessment. Various stress scenarios were applied to account for potentially problematic loans as well as shifts in loan and property type concentrations. Even under these stress scenarios subordination levels were sufficient to affirm the ratings. BAY VIEW CAPITAL: First Quarter 2004 Net Loss Climbs to $1.1 Mil. ----------------------------------------------------------------- Bay View Capital Corporation (NYSE: BVC) reported its results for the first quarter of 2004. As previously announced, during the fourth quarter of 2003, the Company's Board of Directors amended the Plan of Dissolution and Stockholder Liquidity, which the Company adopted in October 2002, to become a plan of partial liquidation. As a result, the Company discontinued its use of the liquidation basis of accounting and re-adopted the going concern basis of accounting effective October 1, 2003. The Company reported its results under the liquidation basis of accounting from September 30, 2002 through September 30, 2003. First Quarter Results The Company reported a first quarter 2004 net loss of $1.1 million, or $0.02 per diluted share, compared to a fourth quarter 2003 net loss of $0.9 million, or $0.01 per diluted share. Net interest income increased to $2.6 million for the first quarter of 2004 from $1.0 million for the prior quarter. The increase in net interest income was primarily due to lower interest expense resulting from the redemption of $63.5 million, or approximately 74%, of the 9.76% Cumulative Capital Securities (NYSE: BVS) in December 2003. At March 31, 2004, the Company's total assets were $368 million compared to $364 million at December 31, 2003. The Company continues to make progress in resolving the remaining assets and liabilities from discontinued banking activities. During the quarter, the Company's investment in operating lease assets was reduced by $21.6 million primarily as a result of repayments. Also during the quarter, the Company sold approximately $5.1 million of its mortgage-backed securities and received approximately $5.5 million of loan repayments from its liquidating loan portfolio. At March 31, 2004, the net carrying value of the Company's remaining investment in loans to be liquidated totaled $6.8 million compared to $12.1 million at December 31, 2003. The Company's total nonperforming assets, net of mark-to-market valuation adjustments, declined to $5.8 million at March 31, 2004 from $7.1 million at December 31, 2003. The decrease in nonperforming assets was primarily due to a decline in nonaccruing asset-based loans and the sale of real estate owned and other repossessed assets. Total loans delinquent 60 days or more declined to $652 thousand at March 31, 2004 from $748 thousand at December 31, 2003. At March 31, 2004, the Company had deferred tax assets of approximately $16.5 million, consisting of net deferred tax assets of $38.0 million less a valuation allowance of $21.5 million. On March 31, 2004, the Company paid the quarterly dividend due on the remaining Bay View Capital I Trust, 9.76% Cumulative Capital Securities outstanding as of March 30, 2004 totaling $0.61 per Capital Security. In connection with the liquidation of the assets and satisfaction of the liabilities of Bay View Bank, N.A., remaining after the Bank's September 30, 2003 dissolution, the Company anticipates making a cash distribution of $0.25 per share to common stockholders at the end of the second quarter of 2004 as previously indicated. The Company further anticipates continuing to redeem the Capital Securities through a series of one or more additional partial redemptions beginning in June 2004. The Company's Board of Directors has authorized the Company to seek stockholder approval to authorize an amendment to the Company's Certificate of Incorporation to effect a 1-for-10 reverse stock split of the issued and outstanding shares of the Company's common stock in the second quarter of 2004. If approved by the Company's stockholders, a reverse stock split would affect all shares of common stock, including those shares underlying stock options and warrants, outstanding immediately prior to the effective time of the reverse stock split. The Company intends to file a preliminary proxy statement regarding the reverse stock split proposal with the Securities and Exchange Commission and mail a definitive proxy statement regarding this proposal to its stockholders. Bay View Acceptance Corporation BVAC, a wholly-owned subsidiary of the Company, is a Southern California-based auto finance company engaged in the indirect financing of automobile purchases by individuals. BVAC currently acquires auto installment contracts from over 7,000 manufacturer- franchised and independent auto dealers in 24 states and has positioned itself in the market as a premium priced lender for well-qualified borrowers seeking extended financing terms and higher advances than those generally offered by traditional lenders. This strategy has enabled BVAC to establish a loyal dealership network by satisfying a unique niche within the indirect auto finance arena, which is not dominated by large commercial banks and captive finance companies. BVAC's first quarter 2004 net income was $412 thousand compared to net income of $586 thousand for the fourth quarter of 2003. The decrease was primarily the result of higher noninterest expense and lower noninterest income partially offset by an increase in net interest income. During the quarter, BVAC sold $5.3 million of auto installment contracts and received repayments of $22.8 million. BVAC purchased $69.3 million of auto installment contracts during the first quarter of 2004, compared to $67.4 million for the prior quarter. Purchase volume for the first quarter of 2004 consisted of 2,289 contracts with a weighted-average contract rate of 7.90% and a weighted-average FICO score of 734; purchase volume for the fourth quarter of 2003 consisted of 2,292 contracts with a weighted-average contract rate of 8.03% and a weighted-average FICO score of 735. At March 31, 2004, BVAC was servicing 29,824 installment contracts representing $560 million compared to 30,800 installment contracts representing $563 million at December 31, 2003. Bay View Capital Corporation is a financial services company headquartered in San Mateo, California and is listed on the NYSE: BVC. For more information, visit http://www.bayviewcapital.com/ BIOGAN INTERNATIONAL: Section 341(a) Meeting Slated for May 20 -------------------------------------------------------------- The United States Trustee will convene a meeting of Biogan International, Inc.'s creditors at 11:00 a.m., on May 20, 2004 in Room 2112, 2nd Floor, J. Caleb Boggs Federal Building, 844 North King Street, Wilmington, Delaware. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Toronto, Ontario, Canada, Biogan International, Inc., explores, selects, smelts and sells mineral products and by- products. The Company filed for chapter 11 protection on April 15, 2004 (Bankr. Del. Case No. 04-11156). Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $9,038,612 in total assets and $8,280,792 in total debts. BM USA INCORPORATED: Case Summary & 54 Unsecured Creditors ---------------------------------------------------------- Lead Debtor: BM USA Incorporated aka Madison Shoe Corporation aka Madison Shoe Company LLC 75 Triangle Boulevard Carlstadt, New Jersey 07072 Bankruptcy Case No.: 04-41816 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Donna Magli Texas Inc. 04-41814 Uomo Magli Texas Inc. 04-41815 Type of Business: The Debtor is engaged in the business of crafting shoes that began in Bologna, Italy, in the 1930's in a family-owned and operated basement workshop. Chapter 11 Petition Date: April 14, 2004 Court: Eastern District of Texas (Sherman) Judge: Brenda T. Rhoades Debtors' Counsels: J. Mark Chevallier, Esq. David L. Woods, Esq. McGuire, Craddock & Strother 3550 Lincoln Plaza 500 North Akard Dallas, TX 75201 Tel: 214-954-6800 Fax: 214-954-6868 - and - Adam Schaeffer, Esq. John Delnero, Esq. Bell & Boyd & Lloyd, LLC 70 West Madison Street, Suite 1700 Chicago, IL 60602 Estimated Assets Estimated Debts ---------------- --------------- BM USA Incorporated $1 M to $10 M $50 M to $100 M Donna Magli Texas Inc. $1 M to $10 M $10 M to $50 M Uomo Magli Texas Inc. $10 M to $50 M $10 M to $50 M A. BM USA Incorporated's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Peter Grueterich Debt/Employment $2,000,000 84 Lower Cross Road Claim Greenwich, CT 06831 Arredoquattro Industries USA $464,246 Inc. 181 Hudson St., #Id New York, NY 10013 Lawrence Friedland and Lease $106,683 Melvin Friedland 677 Fifth Ave Corp. Lease $91,667 Tisca Tischhauser & Co. $49,730 Sawicki Tarella $46,464 South Coast Plaza Lease $33,113 Short Hills Assocs. Lease $18,511 Bal Harbour Shops Lease $17,864 Jackson Lewis LLP Services Rendered $10,554 Otis Elevator Company Services Rendered $6,310 Dominick D. Riley Det Services Rendered $5,719 Ms. Arredamenti Snc Services Rendered $5,382 Champion Transportation Services Rendered $2,964 Services United Parcel Service Services Rendered $2,564 Amalgamated Retail Ins Services Rendered $2,462 Staples Business Advantage Debt $917 Coastal Cleaning Management Services Rendered $689 United Parcel Service Services Rendered $659 Bell South Services Rendered $583 B. Donna Magli Texas Inc.'s 14 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Monte Dei Paschi Di Siena Debt $500,000 55 East 59th Street New York, NY 10022 Banca Nazionale Del Lavoro Debt $200,000 (HFGA) Interdeco Global Advertising $96,793 Advertising Hearst Magazine Advertising $68,000 Advance Magazine Group Advertising $62,966 In Style Magazine Advertising $50,000 Albatrans Inc. Transoceanic Shipping $40,652 C & M Media Advertising $11,729 Vitesse Couriers, Ltd. $285 Coffee Distributing Corp. $196 Kabak Enterprises, Inc. $189 Snowbird Corp. $166 All State Private Car And $107 Limo Inc. At&T $72 C. Uomo Magli Texas Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Calzaturificio Tiemmeci Srl Trade $415,037 Via Risorgimento, 289 I-51015 Monsummano Terme(Pistoia) Italy Calzaturificio Rorrut Trade $363,769 Via Delle Tontanelle, 13 I-63014 Montegranaro Ap, Italy Calzaturificio Foreste Trade $203,943 Calz Magrini Trade $200,358 Manifattura Morandi Trade $167,365 Pellemoda Trade $148,544 Calz Callegan Trade $144,983 I Fiorentini Srl Trade $135,451 Albatrans Inc. Ocean Carrier $106,366 Calzaturificio Nipmar Trade $83,531 Calzaturificio Mac Barens Trade $67,518 F Lh Vanni Trade $54,310 Calzaturificio Walles Trade $50,769 Si Ge Di Gelh Simone Trade $48,388 Calzaturificio Sern Td Srl Trade $42,906 Hearst Magazine Advertising $34,000 Calz La Trento Di Trade $23,100 Beltrami Emore Snc Trade $22,000 Emar Group Inc. Insurance Broker $21,295 Hzolet And Associates, Inc. Services Rendered $20,588 BRISTOL CDO: S&P Lowers Class C Rating to BB- & Removes Watch ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B and C notes issued by Bristol CDO I Ltd., a cashflow arbitrage CDO of ABS/RMBS, and removed them from CreditWatch with negative implications, where they were placed March 29, 2004. At the same time, the ratings on the class A-1 and A-2 notes are affirmed based on the credit enhancement available to support the notes. The lowered ratings reflect factors that have negatively affected the credit enhancement available to support the notes since the transaction closed in October 2002, primarily a negative migration in the credit quality of the assets within the collateral pool (see transaction data). Standard & Poor's reviewed the results of the current cash flow runs generated for Bristol CDO I Ltd. to determine the level of future defaults the rated classes can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. When the results of these cash flow runs were compared with the projected default performance of the performing assets in the collateral pool it was determined that the ratings assigned to the class B and C notes were no longer consistent with the credit enhancement available. Ratings Lowered And Removed Creditwatch Negative Bristol CDO I Ltd. Rating Class To From B A+ AA/Watch Neg C BB- BBB/Watch Neg Ratings Affirmed Bristol CDO I Ltd. Class Rating A-1 AAA A-2 AAA BROADBAND: Debtor Settles Last Remaining Claim Out-of-Court ----------------------------------------------------------- Broadband Wireless International Corporation (OTC Bulletin Board: BBAN) announced the out-of-court settlement of the adversarial proceeding it had brought against William Miertschin. Timothy Kline of Kline, Kline, Elliott and Bryant represented Broadband. This was the last remaining issue before the United States Bankruptcy Court of the Western District of Oklahoma in the Chapter 11 styled case. Company Executives called the settlement a further example of the positive manner in which Broadband is emerging from its bankruptcy proceedings and moving on to profitability. About Broadband Wireless International Corporation Broadband Wireless International Corporation is a diversified holdings company moving into a wide variety of investments that are intended to generate positive cash flow for the corporation and dividends for the shareholders. The company currently holds interest in the timber and music industries. CAPCO AMERICA: Fitch Downgrades Class B-4 to B- & Class B-5 to CC ----------------------------------------------------------------- Fitch Ratings downgrades CAPCO America Securitization Corp.'s commercial mortgage pass-through certificates, series 1998-D7 as follows: --$24.9 million class B-4 to 'B-' from 'B'; --$15.6 million class B-5 to 'CC' from 'CCC'. Fitch also upgrades the following class: --$62.3 million class A-2 to 'AAA' from 'AA+'. Additionally, the following classes are affirmed by Fitch: --$126.9 million class A-1A 'AAA'; --$632.3 million class A-1B 'AAA'; --Interest-only class PS-1 'AAA'; --$68.5 million class A-3 'A+'; --$59.2 million class A-4 'BBB'; --$21.8 million class A-5 'BBB-'; --$31.1 million class B-1 'BB+'; --$28.0 million class B-2 'BB'; --$15.6 million class B-3 'BB-'. The $13.7 million class B-6 and $628 class B-6H certificates are not rated by Fitch. The downgrades to classes B-4 and B-5 are attributed to the anticipated losses on several specially serviced loans. The upgrade to class A-2 reflects increases in subordination levels due to loan amortization, payoffs, and defeasance. Eight loans (4.4%) are currently being specially serviced by Lennar Partners, Inc., seven (4.1%) of which Fitch expects to result in losses to the certificates leaving minimal credit support to class B-4, and may possibly affect class B-5. The largest specially serviced loan (1.1%), 6400 Shafer Court, is secured by an office property located in Rosemont, IL. The property is 52% occupied. The second largest specially serviced loan (0.9%), Pointe West, is secured by a 48% occupied office property located in Dayton, OH. The special servicer is currently working with the borrowers for both loans to determine workout options. As of the April 2004 distribution date, the pool's aggregate certificate balance has been reduced by 11.7% to $1.10 billion from $1.25 billion at issuance. Nine loans (4.7%) have been defeased, including The Banyan Pool I loan (3.0%). CASCADES INC: Vice President & CFO Andre Belzile Says Goodbye ------------------------------------------------------------- Cascades Inc. announces that Mr. Andre Belzile, Vice President and Chief Financial Officer, will be leaving the company in the coming weeks. The exact date of Mr. Belzile's departure has not yet been determined. In commenting on this event, Mr. Alain Lemaire, President and Chief Executive Officer stated: "After 17 years with our company, and the last eleven years as CFO, Mr. Belzile has decided to seek new opportunites elsewhere. We wish to thank Mr. Belzile for his valuable contribution to Cascades over the years and we wish him every success in his new endeavours." The search for Mr. Belzile's replacement will begin immediately and an announcement will be made as soon as his successor has been chosen. Cascades is a leader in the manufacturing of packaging products, tissue paper and specialized fine papers. Internationally, Cascades employs 15,000 people and operates close to 150 modern and versatile operating units located in Canada, the United States, France, England, Germany and Sweden. Cascades recycles more than two million tons of paper and board annually, supplying the majority of its fibre requirements. Leading edge de-inking technology, sustained research and development, and 40 years in recycling are all distinctive strengths that enable Cascades to manufacture innovative value-added products. Cascades' common shares are traded on the Toronto Stock Exchange under the ticker symbol CAS. * * * As previously reported, Standard & Poor's Ratings Services revised its outlook on diversified paper and packaging producer Cascades Inc. to negative from stable. At the same time, the 'BB+' long- term corporate credit rating and 'BBB-' senior secured bank loan rating were affirmed. "The outlook revision stems from concerns that Cascades is unlikely to improve its credit profile in the near term and remains vulnerable to further weakening if challenging conditions persist," said Standard & Poor's credit analyst Clement Ma. CHASE MORTGAGE: Fitch Rates 2 Classes at Low-B Levels ----------------------------------------------------- Chase Mortgage Finance Trust's $291.5 million mortgage pass- through certificates, series 2004-S4 classes A-1 through A-7, A-P, A-X and A-R (senior certificates) are rated 'AAA' by Fitch. In addition, the class M certificates ($4.1 million) are rated 'AA', the class B-1 certificates ($1.8 million) are rated 'A', the class B-2 certificates ($1.1 million) are rated 'BBB', the privately offered class B-3 certificates ($0.6 million) are rated 'BB', the privately offered class B-4 certificates ($0.5 million) are rated 'B' and the privately offered class B-5 ($0.6 million) certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 2.85% subordination provided by the 1.35% class M, the 0.60% class B-1, the 0.35% class B-2, the 0.20% privately offered class B-3, the 0.15% privately offered class B-4 and the 0.20% privately offered class B-5 certificate. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the primary servicing capabilities of Chase Manhattan Mortgage Corporation (Chase) (rated 'RPS1' by Fitch). The trust consists of 612 one- to four-family first-lien residential mortgage loans with stated maturity of not more than 30 years with an aggregate principal balance of $300,007,002, as of the cut-off date, April 1, 2004. The mortgage pool has a weighted average OLTV of 68.96% with a weighted average mortgage rate of 5.904%. The weighted-average FICO score of the loans is 723. Loans originated under a reduced loan documentation program account for approximately 5.4% of the pool, cash-out refinance loans 22.3%, purchase loans 41.5%, condominium properties are 5.6%, co-ops are 4.5%, and second homes 4.2%. The average loan balance is $490,208 and the loans are primarily concentrated in California (39.7%), New York (16.3%) and Florida (7.3%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Wachovia Bank, N.A. will serve as trustee. Chase Mortgage Finance Corporation, a special purpose corporation, deposited the loans in the trust which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits (REMICs). COVANTA: Liquidating Trustee Issues First Post-Confirmation Report ------------------------------------------------------------------ James N. Lawlor, a partner at Wollmuth Maher & Deutsch, LLP, in Newark, New Jersey, is the trustee of the Ogden Liquidating Trust. On April 19, 2004, Mr. Lawlor delivered to Judge Blackshear his first post-confirmation report for the Liquidating Trust. Since March 5, 2004, in connection with the consummation of the Second Liquidation Plan, Mr. Lawlor has: (a) obtained a bond and filed proof of bond with the Court; (b) retained counsel and accountants to assist in the liquidation and dissolution of the Liquidating Debtors, as required in the Second Liquidation Plan; (c) met with personnel for the Reorganized Debtors to obtain records, documents and other information regarding, inter alia, the location, value and status of all residual assets; (d) authorized the release of funds to Credit Suisse First Boston of amounts due and owing pursuant to the Nederlander Exclusive Booking Agreement and the Court- approved Anaheim Arena Termination Agreement; and (e) reviewed, together with his counsel, and responded to written and telephonic inquiries regarding pending litigation involving one or more of the Liquidating Debtors and undertook various administrative matters Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) CWMBS: Fitch Takes Various Rating Actions on RMB Securitizations ---------------------------------------------------------------- Fitch Ratings has upgraded five, affirmed twelve, downgraded five and placed one class on Rating Watch Negative from the following CWMBS (Countrywide Home Loans), Inc. residential mortgage-backed certificates: Series 2000-4 (Alt 2000-1) --Class A affirmed at 'AAA'; --Class M affirmed at 'AAA'; --Class B1 upgraded to 'AA' from 'A'; --Class B2 rated 'BBB,' placed on Rating Watch Negative; --Class B3 downgraded to 'CCC' from 'B-.' Series 2001-3 (Alt 2001-2) --Class A affirmed at 'AAA'; --Class M upgraded to 'AAA' from 'AA+'; --Class B1 upgraded to 'AA-' from 'A'; --Class B2 affirmed at 'BBB'; --Class B3 downgraded to 'B' from 'BB' and removed from Rating Watch Negative; --Class B4 downgraded to 'C' from 'B' and removed from Rating Watch Negative. Series 2001-8 (Alt 2001-5) --Class A affirmed at 'AAA'; --Class M affirmed at 'AAA'; --Class B1 upgraded to 'AA' from 'A+'; --Class B2 affirmed at 'BBB'; --Class B3 downgraded to 'B' from 'BB' and removed from Rating Watch Negative; --Class B4 downgraded to 'C' from 'CC'. Series 2001-27 (Alt 2001-12) --Class A affirmed at 'AAA'; --Class M affirmed at 'AAA'; --Class B1 upgraded to 'AA+' from 'AA-'; --Class B2 affirmed at 'BBB'; --Class B3 affirmed at 'BB'; --Class B4 affirmed at 'B' and removed from Rating Watch Negative. The upgrades reflect an increase in credit enhancement relative to future loss expectations, while the affirmations reflect credit enhancement consistent with future loss expectations. The negative rating actions are the result of a review of the level of losses incurred to date as well as Fitch's future loss expectations on the delinquent loans in the pipeline relative to the applicable credit support levels as of the March 25, 2004 distribution. DELTA FINANCIAL: Files Shelf Registration on Form S-2 with SEC -------------------------------------------------------------- Delta Financial Corporation (Amex: DFC) announced that it has filed a shelf registration on Form S-2 with the Securities and Exchange Commission. The Company previously announced, in March 2004, that it intended to file a registration statement. The shelf registration contemplates the sale of the Company's Common Stock, par value $.01 per share, in one or more underwritten offerings. The terms of any such future offerings would be determined at the time of the offering. A registration statement relating to these securities has been filed with the Securities and Exchange Commission, but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. About Delta Financial Founded in 1982, Delta Financial Corporation is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells non-conforming residential mortgage loans. Delta's loans are primarily secured by first mortgages on one-to- four family properties. Delta originates home equity loans primarily in 26 states. Loans are originated through a network of approximately 1,700 independent brokers and the Company's retail offices. Since 1991, Delta has sold approximately $9.8 billion of its mortgage loans through 39 securitizations. * * * In its Form 10-Q filed with the Securities & Exchange Commission, Delta Financial corporation reports: LIQUIDITY AND CAPITAL RESOURCES "We require substantial amounts of cash to fund our loan originations, securitization activities and operations. We have organically increased our working capital over the last eight quarters. In the past, however, we operated generally on a negative cash flow basis. Embedded in our current cost structure are many fixed costs, which are not likely to be significantly affected by a relatively substantial increase in loan originations. If we can continue to originate a sufficient amount of mortgage loans and generate sufficient cash revenues from our securitizations and sales of whole loans to offset our current cost structure and cash uses, we believe we can continue to generate positive cash flow in the next several fiscal quarters. However, there can be no assurance that we will be successful in this regard. "Historically, we have financed our operations utilizing various secured credit financing facilities, issuance of corporate debt (i.e., Senior Notes), issuances of equity, and the sale of interest-only certificates and/or NIM notes and mortgage servicing rights sold in conjunction with each of our securitizations to offset our negative operating cash flow and support our originations, securitizations, and general operating expenses. "To accumulate loans for securitization or sale, we borrow money on a short-term basis through warehouse lines of credit. We have relied upon a few lenders to provide the primary credit facilities for our loan originations and at September 30, 2003, we had two warehouse facilities for this purpose. Both credit facilities have a variable rate of interest and, as of September 30, 2003, were due to expire in May 2004. In October 2003, our warehouse financing providers each increased their commitment amounts to $250.0 million, from $200 million and lowered the financing rate. In addition, we extended the maturity date for one of the facilities to October 2004. "There can be no assurance that we will be able to either renew or replace these warehouse facilities at their maturities at terms satisfactory to us or at all. If we are not able to obtain financing, we will not be able to originate new loans and our business and results of operations will be materially and adversely affected." DEUTSCHE MORTGAGE: Fitch Affirms Low-B Ratings on 4 1999-1 Classes ------------------------------------------------------------------ Deutsche Mortgage & Asset Receiving Corp.'s commercial mortgage pass-through certificates, COMM 1999-1, are upgraded by Fitch Ratings as follows: --$62.3 million class B to 'AAA' from 'AA'; --$22.9 million class C to 'AAA' from AA; --$62.3 million class D to 'AA-' from 'A'; --$81.9 million class E to 'BBB+' from 'BBB'. In addition, Fitch affirms the following classes: --$76.6 million class A-1 at 'AAA'; --$723.2 million class A-2 at 'AAA'; --Interest-only class X at 'AAA'; --$19.7 million class F at 'BBB-'; --$68.8 million class G at 'BB'; --$13.1 million class H at 'BB-'; --$26.2 million class J at 'B'; --$19.7 million class K at 'B-'. Fitch does not rate the $28.9 million class L certificates. The upgrades are due to an increase in credit enhancement since issuance and levels which are in line with the subordination levels of deals issued on April 27, 2004 have similar characteristics. As of the April 2004 distribution date, the pool's aggregate certificate balance has been reduced by approximately 8%, to $1.21 billion from $1.31 billion at issuance. There are currently nine loans (5.9%) in special servicing. Of the loans in special servicing, three are real estate owned (REO), one is 90+ days delinquent, one is 60 days delinquent and four are current. The largest specially serviced loan is the Prime Care Six portfolio (2.3%) of healthcare properties located in Missouri. Per the special servicer, the decreased debt-service coverage ratio (DSCR) has triggered a clause in the Loan Documents allowing the Lender to capture the property's cash flow through a lock-box. The special servicer has not initiated the lock-box but threatened to do so and the borrower offered the keys to the property if it was initiated. In addition, the borrower has been unable to renew their existing liability insurance policy or obtain a new one. The second largest specially serviced loan is the Grand Tri-State Corporate Center (1.3%) located in Gurnee, Illinois. Two of the four office buildings securing the loan are vacant. In February 2004 a receiver was put in place at the property and foreclosure is imminent. Losses are expected. Fitch applied various hypothetical stress scenarios taking into consideration all of the above concerns. Even under these stress scenarios, the resulting subordination levels were sufficient to upgrade the designated classes. DIVERSIFIED ASSET: Fitch Downgrades $18M Class B-1L Notes to BB+ ---------------------------------------------------------------- Fitch Ratings downgrades four classes of notes issued by Diversified Asset Securitization Holdings III, L.P. (DASH III). The following rating actions are effective immediately: --$211,241,765 Class A-1L Notes downgraded to 'AA+' from 'AAA'; --$68,776,389 Class A-2 Notes downgraded to 'AA+' from 'AAA'; --$30,000,000 Class A-3L Notes downgraded to 'A-' from 'AA'; --$18,500,000 Class B-1L Notes downgraded to 'BB+' from 'BBB'. The ratings of the class A-1L, class A-2, and class A-3L notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class B-1L notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. DASH III is a collateralized debt obligation (CDO) that was originated and managed by Asset Allocation & Management, LLC (AAMCO) in June 2001. TCW Asset Management Co. (TCW) became the substitute asset manager for AAMCO in October 2002. DASH III is composed of approximately 56% RMBS, 18% CMBS, 25% ABS and 1% CDOs. Included in this review, Fitch Ratings discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch Ratings conducted cash flow modeling utilizing various default timing and interest rate scenarios. Since TCW became the asset manager for the transaction in October 2002 the class A overcollateralization ratio and class B overcollateralization ratio have increased from 110.46% and 104.24% as of October 28, 2002 to 110.98% and 104.65% as of March 29, 2004. The weighted average coupon and weighted average spread have increased from 7.50% and 2.08% on October 28, 2002 to 7.78% and 2.99% currently. Conversely, the weighted average rating factor has increased from 22 (BBB-/BB+) to 28 (BBB-/BB+). Assets rated 'BB+' or lower represented approximately 28.0% as of October 28, 2002, and increased to 37.2% as of the most recent trustee report. Defaulted assets represented 3.16% of the $342.4 million of total collateral excluding eligible investments for reinvestment. DASH III continues to fail its Additional Collateral Deposit Requirement as measured by the trustee. Failure of this requirement diverts excess spread from paying the subordinate manager fee and equity holders to reinvestment in additional collateral during the reinvestment period. DASH III will remain in its reinvestment period through its July 2005 payment date. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that the current ratings assigned to the class A-1L, A-2, A-3L and B-1L notes no longer reflect the current risk to noteholders. Fitch will continue to monitor and review this transaction for future rating adjustments. DOMAN INDUSTRIES: Agrees with Unsecured Noteholders on CCAA Plan ---------------------------------------------------------------- Doman Industries Limited announced that the Company has reached an agreement in principle with certain unsecured noteholders to support the plan of compromise and arrangement, submitted to the Court in connection with proceedings under the Companies' Creditors Arrangement Act by the Unsecured Noteholder Group, subject to certain modifications, including the provision of equity participation for existing shareholders in the form of warrants. As previously announced, on April 6, 2004 the Court adjourned the application made by the Unsecured Noteholder Group to move forward with the Unsecured Noteholder Plan until April 30, 2004. Under that order the Company has until April 30, 2004 to file its own plan. Since then the Company and its advisors have reviewed the letter of intent received from Ableco Finance LLC and the proposal submitted by The Catalyst Capital Group Inc. and have discussed these proposals with the Unsecured Noteholder Group. The Company has been advised that the Unsecured Noteholder Group have considered the two proposals and that they and a significant number of other unsecured noteholders have rejected them in favour of the Unsecured Noteholder Plan. Accordingly, the Board has concluded that there is no support from the Unsecured Noteholder Group and insufficient support from the unsecured creditors to pursue any restructuring alternatives other than the Unsecured Noteholder Plan. A copy of the Unsecured Noteholder Plan submitted to the Court is available on the Company's website at http://www.domans.com/under the 19th Monitor's Report. As noted above, the Unsecured Noteholder Plan would be modified to make provision for the issuance to existing shareholders of Doman three tranches of warrants of Lumberco (the post restructured entity that would operate the solid wood business of Doman and operate indirectly through a wholly owned subsidiary the pulp assets of Doman other than Port Alice). These warrants would be non-transferable and have a five year term. They would be exercisable for 10% of the fully-diluted shares of Lumberco on the following basis: Tranche 1 Warrants ------------------ - 2% of the fully-diluted shares of Lumberco - exercisable at enterprise value (long-term debt and market value of equity) of $700 million Tranche 2 Warrants ------------------ - 3% of the fully-diluted shares of Lumberco - exercisable at enterprise value of $950 million Tranche 3 Warrants ------------------ - 5% of fully-diluted shares of Lumberco - exercisable at enterprise value of $1.15 billion Lumberco will also be entitled to give a 30-day notice of termination with respect to any tranche of warrants if, during a 20-day trading period ending prior to the fifth business day prior to the date of such notice, the shares of Lumberco trade at a weighted average price per share that is more than 125% of the exercise price of such tranche. In addition, the warrants will expire upon any amalgamation or similar business combination that results in the shareholders of Lumberco owning less than 80% of the issued and outstanding equity shares of the continuing entity. The modified Unsecured Noteholder Plan will provide for 55% of the warrants to be allocated to holders of the Class A Preferred Shares and 45% of the warrants to be allocated to holders of the Class A Common Shares and Class B Non-Voting Shares (with each share of each Class A Common Shares and Class B Non-Voting Shares having the same pro rata entitlement to the warrants). The provision of the warrants to the shareholders will be subject to obtaining a Court order to the effect that any disputes relating to the warrants, including, without limitation, disputes as to the allocation of the warrants as between the three classes of shareholders, will have no effect upon the sanctioning of the Unsecured Noteholder Plan and will not be permitted to interfere or delay the timetable for approval, sanctioning and implementation of the Unsecured Noteholder Plan. As previously announced, the April 6, 2004 Court order does not preclude the Company from seeking purchasers for Port Alice and the Company's efforts to identify a purchaser for Port Alice are continuing. However, as part of the agreement in principle, the Company has agreed not to seek a Court order extending the May 11, 2004 shut down date of the Port Alice Mill without the concurrence of the Unsecured Noteholder Group. About Doman Doman is an integrated Canadian forest products company and the second largest coastal woodland operator in British Columbia. Principal activities include timber harvesting, reforestation, sawmilling logs into lumber and wood chips, value-added remanufacturing and producing dissolving sulphite pulp and NBSK pulp. All the Company's operations, employees and corporate facilities are located in the coastal region of British Columbia and its products are sold in 30 countries worldwide. DYNEGY: Sells 16% Interest in Indian Basin Plant for $48 Million ---------------------------------------------------------------- Dynegy Inc. (NYSE:DYN)announced that it has sold its 16 percent interest in the Indian Basin Gas Processing Plant in Eddy County, New Mexico, to a private investor. Proceeds generated by the sale are approximately $48 million, which will result in a pre-tax gain of approximately $36 million. "Our strategy is to take advantage of opportunities like this to help the company further reduce outstanding debt and sharpen our focus on our core operations," said Bruce A. Williamson, president and chief executive officer of Dynegy Inc. "The sale of Indian Basin is consistent with our previously announced plans to divest non-strategic assets in which we own a minority interest. In addition, this transaction reflects the value strategic investors see in natural gas midstream assets." Williamson said Dynegy remains committed to its natural gas liquids business, which is engaged in the gathering and processing of natural gas and the fractionation, storage, transportation and marketing of natural gas liquids. Key business hubs include the high-growth gas exploration and production areas of North Texas and the Louisiana Gulf Coast and the mature Permian Basin of West Texas and Southeast New Mexico. Natural gas liquids' fractionation and storage assets are located in Mont Belvieu, Texas, and Lake Charles, Louisiana. Dynegy Inc. (S&P, B Corporate Credit Rating, Negative) provides electricity, natural gas and natural gas liquids to customers throughout the United States. Through its energy businesses, the company owns and operates a diverse portfolio of assets, including power plants totaling more than 12,700 megawatts of net generating capacity, gas processing plants that process approximately 1.8 billion cubic feet of natural gas per day and nearly 38,000 miles of electric transmission and distribution lines. ENRON: Portland General Retirees Want Separate Creditors' Panel --------------------------------------------------------------- Grieg Anderson, Donald F. Kielblock and Alvin Alexanderson, on behalf of 56 other retirees of Portland General Holdings, Inc., ask Judge Gonzalez to: (i) determine that the PGH creditors are not adequately represented and require the U.S. Trustee to name a separate PGH Official Committee of Unsecured Creditors; (ii) authorize the newly established PGH Committee to commence appropriate proceedings to recharacterize or subordinate the insider claims by Enron Corporation, or in the alternative, authorize them to challenge the insider claims; (iii) require the Debtors to provide information and documentation the PGH Retirees sought for months, examination to take place in Portland, Oregon, and to include PGH former accounting staff and management knowledgeable about the insider claims, the reason for the PGH petition and other pertinent subject matter; and (iv) grant extensions to procedural deadlines for filing a complaint to deny discharge and subordination or reclassification proceedings against insider claims. The PGH Retirees inform the Court that they have claims for retirement benefits against PGH, arising from non-qualified benefit plans. The claims total between $17 million and $34 million depending on whether the benefit plans are assumed or rejected, whether the claims are dischargeable in bankruptcy, and whether the plan obligations are performed over time or in a lump sum. The PGH Retirees have no representative status as to other creditors and appear to the Court separately and individually solely to protect their own claims. According to the PGH Retirees, they have spent hundreds of hours working on PGH issues since PGH's Petition Date. The effort includes extensive communications and meetings with the Debtors and the Creditors Committee's counsel, who likewise have devoted considerable resources to these discussions. Though significant progress has been made, agreement is not finalized and the talks may be overtaken by various procedural deadlines. In case negotiations fail or are incomplete, or if negotiated preconditions do not occur, the PGH Retirees want to insure that they can still seek an adjudication that their claims must be honored in full, ahead of Enron's insider claims. PGH Retirees want to ensure that they will not be prejudiced by continuing to devote time and effort to the settlement. The PGH Retirees relate that extensive research has not disclosed another case where the creditors are insiders and retirement plan beneficiaries. This unusual circumstance co-exists with another rare situation and it will be seen that one explains the other. The retirement obligations are backed by an overfunded trust held by a third party. The terms of the trust do not permit PGH to access the funds until after all the retirees are paid in full, many years from now. In the Debtors' terminology, they want to see the trust "broken" so they can gain early access to the funds. Currently, the trustee has stopped paying benefits and awaits instructions from the Court. The facts raise these issues: -- Whether the Enron claim is a valid debt at all, or arose out of a capital advance that should be recharterized as equity; -- Whether the insider claims should be equitably subordinated to the retirement accounts; -- Whether the Debtors' conduct makes the debts non- dischargeable; and -- Whether the Debtors have met the good faith standard for obtaining any relief. The PGH Retirees explain that just prior to PGH's Petition Date, Enron, while in control of PGH, suddenly emerged as its largest single claimant. Until its filing in June 2003, PGH was able to pay its non-insider debts on time. The third party trustee was paying some Retiree benefits on time and was retaining some scheduled payments in the trust. Except for unliquidated claims by taxing authorities and the PBGC, the only scheduled claims against PGH are those of Retirees and insiders. There are no secured creditors. All the then-current employees and contractors had been paid and no trade or other supplier, professional, insurer or any other creditor is scheduled as unsatisfied. Days prior to its Chapter 11 filing, PGH terminated its long-term employees and contractors and substituted Enron personnel. A wall of secrecy was erected around the insider claims including confidential order obtained from the Oregon PUC and instructions from Enron and its counsel to persons familiar with the insider transactions to not reveal their knowledge. The PGH Retirees will try to pry out the rest of the facts. The PGH Retirees point out that pursuant to their substantive rights under bankruptcy law, they must be adequately represented, have access to the Debtors' full disclosure and have a full and fair opportunity to assert and prove that their Claims should be honored ahead of insider claims. The PGH Retirees have asked the U.S. Trustee several times to appoint a separate PGH creditors committee. On September 4, 2003, through its Third Amendment, the U.S. Trustee formally appointed the Enron Corp. Committee to represent PGH creditors along with creditors of all other Debtors. On September 10, 2003, the U.S. Trustee declined the PGH Retirees' request for a separate committee, explaining that the existing committees were adequate. The PGH Retirees again wrote on October 13, 2003, supplying new information about the insider claims. The U.S. Trustee has not acted on the second letter yet. The PGH Retirees contend that it is only fair that a separate PGH creditors committee be formed because: (a) no person on the Enron Creditors Committee is a creditor of PGH and each has a pecuniary interest in defeating claims of the PGH creditors because they want to maximize the Enron estate, which stands, as equity owner, to inherit the remains of PGH after the Retirees are paid; (b) since the Debtors' Plan of Reorganization does not substantially consolidate the Debtors and expressly excludes PGH from the "hypothetical" substantive consolidation compromise, the Enron Creditors Committee lacks qualifying interest in a successful PGH reorganization and, therefore, cannot serve as the PGH committee; (c) representation is not available from the Employee-Related Issues Committee as its limited charter Order does not authorize it to represent Retirees' claims or those of PGH creditors generally; (d) there is no effective alternative means to challenge Enron's control over PGH, the placement of new purported debt on its books or the validity of Enron's huge new claims; and (e) there will be an utter failure of due process if Retirees' claims are diluted. Authority to Challenge the Insider Claims If the Court determines that a separate committee is not warranted, the PGH Retirees assert that they should be allowed to act in place of the Debtors and the Enron Creditors Committee. In re: Exide Tech, Inc., 299 B.R. 732, a "debtor will not sue its own parent and would not even be a proper plaintiff in such a case." Thus, the conflicts and legal disabilities borne by PGH and its counsel compel their disqualification and replacement by representatives not so controlled or disabled. The PGH Retirees does not ask the Court to determine the merits of re-characterizing or subordinating Enron's insider claims. The PGH Retirees do not have all the facts and are seeking an order requiring the Debtors to respond to questions about the claim. However, the PGH Retirees do have information that approximately $27 million of the claim arose from a classic capital advance, one that was not intended or contemporaneously documented as a loan. The advance could not have been repaid at the time and there was no contemporaneous intention on either side that there would ever be any repayment. The advance was in the form of life insurance policies that were immediately placed in trust for Retirees, where they were not available to pay general creditors. There was no fixed term or payment schedule and no repayments were ever made. The purported loan did not appear on PGH books in April 2002 but was recorded as a PGH obligation to Enron by early 2003. Enron paid nothing for the right to assert the claim. Rather, Enron acquired a "receivable" in the form of a July 2002 dividend from Portland General Electric Company several years after the capital advance. The "receivable" came to the attention of PGE's auditors because there had been no progress payments and there was no apparent ability or intent to pay on the part of the Debtor. What the auditors were saying is: "This so called loan is not a good asset; therefore a reserve should be taken." Furthermore, prior to 2003, the payable appears to have been recorded on the books of PGH II, a non-debtor subsidiary of PGH. The facts also support subordination under Section 510(c) of the Bankruptcy Code. There is no basis in equity to place Enron's claim, arising from a 1997 capital advance, on a par with the hard-earned deferred compensation and retirement savings of the PGH Retirees. This is especially true where Enron acquired the claim for nothing and, by pressing it against PGH, created the purported insolvency behind PGH's bankruptcy petition. "The petition, of course, was filed at Enron's direction," the PGH Retirees state. Providing Information on the Insider Claims A fundamental equitable principle of bankruptcy, long predating the Code, is that protection from creditors requires the debtor to explain why it cannot pay its debts. PGH must have clean hands and be open and complete in documenting and explaining its predicament to creditors, usually through the Section 341 meeting or the Debtors' examination. The PGH Retirees note that this has not occurred. Instead, there is a history of actions by the Debtors to prevent Retirees from learning or documenting the facts. One of the PGH Retirees attended PGH's examination and was allowed to ask a few questions. Unfortunately, the questioner had to travel from Portland, Oregon, where the answers and records are located, to New York where the person chosen to speak for PGH was new to the company and had neither records nor answers to most of the questions. The 341 meeting, on the other hand, was adjourned and has not been reconvened. The notice of the 341 meeting invited questions by e-mail. Thus, after the initial meeting on November 24, 2003, the PGH Retirees put their detailed questions in writing and e- mailed them to PGH's counsel. There has been no reply. The questions seek the most basic information about the origin of the insider debt, what documentation exists, when the entries were made, in what amounts, on the books of what company, etc. The PGH Retirees have been diligent, even persistent, and are yet to receive the requested disclosure required in the PGH examination. The scope of the requested examination is defined subject matter addressed in the written questions submitted on November 24, 2003, the place of examination is Portland, Oregon, and the persons to be examined are Jim Piro, former PGH CFO; and accounting personnel James Lobdel, Kirk Stevens and Joe Feltz. Procedural Deadlines Pursuant to Rule 4004(b) of the Federal Rules of Bankruptcy Procedure, the PGH Retirees ask the Court to extend the time for filing a complaint objecting to discharge to July 19, 2004. The current deadline is April 20, 2004. The extension is needed since the PGH Retirees are not currently prepared to file a timely complaint even though they now believe there is good cause for it since: (a) the Debtors have not voluntarily disclosed information related to their insider claims; and (b) both the Debtors and the PGH Retirees have been engaged in productive discussions. (Enron Bankruptcy News, Issue No. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) FA PROPERTIES CORP: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: F.A. Properties Corporation P.O. Box 3802 Philadelphia, Pennsylvania 19146 Bankruptcy Case No.: 04-15577 Chapter 11 Petition Date: April 20, 2004 Court: Eastern District of Pennsylvania (Philadelphia) Judge: Diane W. Sigmund Debtor's Counsel: Jerome H. Lacheen, Esq. Lacheen & Lacheen 4006 Kensington Avenue Philadelphia, PA 19124 Tel: 215-535-5800 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,000 to $500,000 The Debtor did not file a list of its 20-largest creditors. FEATHERLITE INC: First Quarter Results Enter Positive Zone ---------------------------------------------------------- Featherlite, Inc. (Nasdaq:FTHR), a leading manufacturer and marketer of specialty aluminum trailers, transporters and luxury motorcoaches, reported net income of $1.2 million, or $0.16 cents per diluted share, on sales of $56.4 million for the first quarter ended March 31, 2004. This compares with a net loss of $677,000, or $(0.10) cents per diluted share, on sales of $41.7 million in the first quarter last year. The consolidated net sales for the first quarter of 2004 represent a 35 percent increase over the same period last year. Sales increased in both the specialty trailer and transporter segment and the coach segment by 32% and 39%, respectively, over the same period last year. "We are pleased with Featherlite, Inc.'s strong performance in the 1st quarter," Conrad Clement, Featherlite President and CEO, said. "The improved results were due primarily to higher gross margins we realized both from increased unit sales volume and average gross margins per unit sold. The results also reflect improved efficiencies because of the increased volume. "Also, I am pleased to report that Featherlite has made significant progress financially during the past two years. Because of this, our lenders have amended certain of our financial debt covenants providing the Company with greater operating flexibility. As a result of the Company's improved operating results and the amended financial debt covenants, the 'going concern' paragraph included in the independent auditors' report on our financial statements for the fiscal years ended December 31, 2001 and 2002 has been eliminated as of December 31, 2003. Our auditors, Deloitte and Touche LLP, expressed an unqualified opinion on the Company's December 31, 2003 financial statements. We feel this is very important to Featherlite, as well as its dealers, customers, vendors and shareholders," Clement said. At March 31, 2004, confirmed consolidated order backlog levels were 36% greater than at March 31, 2003. According to Clement, the Company remains optimistic about the rate of sales growth in 2004, expecting continuing revenue gains as the national economy and consumer confidence improves. About Featherlite Featherlite, Inc., is an innovative leader in designing, manufacturing and marketing high quality aluminum specialty trailers, transporters and luxury motorcoaches. With more that 75 percent of its business in the leisure, recreation and entertainment categories, Featherlite has highly diversified product lines offering hundreds of standard model and custom- designed aluminum specialty trailers, specialized transporters, mobile marketing trailers and luxury motorcoaches. FEDERAL-MOGUL: First Quarter 2004 Net Loss Tops $20 Million ----------------------------------------------------------- Federal-Mogul Corporation (OTC Bulletin Board: FDMLQ) reported its financial results for the three months ended March 31, 2004. Financial Results for the Three Months Ended March 31, 2004 Federal-Mogul reported first quarter 2004 sales from continuing operations of $1,553 million, an increase of $186 million when compared to sales from continuing operations of $1,367 million for the same period in 2003. Sales from continuing operations were favorably impacted by $100 million of foreign currency translation, higher Original Equipment volumes reflecting vehicle production in both North America and Europe and market share performance in both the Original Equipment and Aftermarket channels. Customer price reductions and business interruption resulting from a fire at the Company's Smithville, TN aftermarket distribution facility partially offset favorable sales volumes. During this same period, gross margin increased by $24 million or 9%. Gross margin was favorably impacted by $17 million of foreign currency translation, increased sales volumes and continued net productivity resulting from the Company's cost reduction and restructuring activities. Customer price reductions and the adverse impact of the business interruption resulting from a fire at the Company's Smithville, TN aftermarket distribution facility offset these positive factors. The Company reported a net loss from continuing operations of $20 million during the first quarter of 2004, an improvement of $17 million when compared to a net loss from continuing operations of $37 million for the same period in 2003. Including the favorable impact of increased gross margin, this improvement reflects increased equity earnings performance of the Company's affiliates and lower Chapter 11 and interest expenses. Selling, general and administrative costs, while remaining consistent as a percentage of sales, increased by $18 million primarily due to foreign currency translation. The Company continued to generate positive cash from operating activities during the first quarter of 2004, providing $119 million for the period. Included within this amount is $35 million of advance insurance proceeds related to the Smithville, TN fire. "We continue to focus on improving our operating performance through achieving greater efficiencies in our manufacturing operations while providing our customers with industry leading service," said Chip McClure, chief executive officer and president. "We believe this focus, combined with our product leadership and technical capabilities, positions us well for the future." Smithville, TN Distribution Center Fire On March 5, 2004, a fire at the Company's Smithville, TN aftermarket distribution facility resulted in the loss of substantially all of the facility's equipment and inventory. In addition to other coverage, the Company's insurance policies provide for replacement of damaged property, sales value of destroyed inventory, reimbursement for losses due to interruption of business operations, and reimbursement of expenditures incurred to restore operations. The Company expects costs incurred as a result of this fire to be covered by such insurance policies. Accordingly, the results of operations have not and should not be adversely affected by this event. The 244,000 square foot Smithville facility was the principal distribution center for Moog and TRW chassis aftermarket products in the United States. The distribution operations at the Smithville facility were temporarily suspended until operations commenced at an alternate facility in Smyrna, TN on March 12, 2004. "We are thankful that no employees were injured as a result of the Smithville fire and are pleased with our efforts to restore operations and to continue delivery of superior quality and customer satisfaction despite these unfortunate circumstances," said Chip McClure. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $ 10.15 billion in assets and $ 8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIBERMARK: Obtains Final Court Nod on $30 Million DIP Financing --------------------------------------------------------------- FiberMark, Inc. (OTC Bulletin Board: FMKIQ) announced that Judge Colleen A. Brown of the U.S. Bankruptcy Court for the District of Vermont has given final approval for its $30 million debtor-in- possession (DIP) credit facility through GE Commercial Finance and for all of the company's first-day motions in connection with its previously announced chapter 11 filing on March 30, 2004. The first-day orders issued by Judge Brown will enable FiberMark to continue normal operations during the reorganization process. The company currently has no cash drawn under the DIP facility. "The granting of final approval of our first-day motions by Judge Brown is a vital step in our financial reorganization progress," said Alex Kwader, chairman and chief executive officer. "With final approval of the DIP and of our first-day motions, we can continue to provide our employees with pay and benefits, meet our post-petition commitments to vendors and operate normally as we have since the restructuring announcement. This DIP facility, together with our cash flow from operations, provides important reassurance to our customers and vendors throughout the reorganization process." The company expects to report its financial results and to file its Form 10Q for the first quarter of 2004 no later than May 15. The company does not plan a conference call, but will be providing monthly reports to the court as part of the restructuring process, beginning May 30. FiberMark, headquartered in Brattleboro, Vt., is a leading producer of specialty fiber-based materials meeting industrial and consumer needs worldwide, operating 11 facilities in the eastern United States and Europe. Products include filter media for transportation and vacuum cleaner bags; base materials for specialty tapes, electrical and graphic arts applications; wallpaper, building materials and sandpaper; and cover/decorative materials for office and school supplies, publishing, printing and premium packaging. FINOVA GROUP: Reports $1.2 Billion Asset Shortfall -------------------------------------------------- With the repayment of the Berkadia loan, The FINOVA Group, Inc., is left with about $3,000,000,000 in debt owed to the holders of 7.5% Senior Secured Notes Due 2009 with Contingent Interest Due 2016. However, FINOVA's assets are well below that amount. At December 31, 2003, FINOVA had over $3,500,000,000 in senior debt, including $525,000,000 owed to Berkadia, and $2,300,000,000 in total assets -- $800,000,000 cash and about $1,500,000,000 net financial assets. As a result, FINOVA has approximately $1,200,000,000 shortfall of assets to senior debt. ASSET SHORTFALL (Taken From 2003 Annual Report) Cash and Other Assets $813,020 Total Financial Assets 1,531,156 ----------- Total Assets 2,344,176 Berkadia Loan 525,000 Senior Notes (principal amount due) 2,967,949 Accrued Interest on Senior Debt 30,765 ----------- Total Senior Debt Obligations 3,523,714 ----------- Asset Shortfall ($1,179,538) =========== Required Recovery Rate on Remaining Total Financial Assets to Eliminate Shortfall 177% =========== According to Richard Lieberman, FINOVA Senior Vice President, General Counsel & Secretary, the shortfall is a huge and impossible hole to fill. With only $1,500,000,000 remaining net financial assets, FINOVA needs to liquidate those assets substantially in excess of their carrying values to generate sufficient funds to fully repay the Senior Notes, even if there were no additional operating expenses. "FINOVA reduced the size of the hole in 2003, generating net income of $256 million. Absent a miracle, however, we do not have sufficient assets, nor the right kind and quality of assets, to enable us to eliminate the shortfall," Mr. Lieberman disclosed in a regulatory filing with the Securities and Exchange Commission dated April 12, 2004. Picking the Flowers, Watering the Weeds In 2003, FINOVA continued to make significant progress in the orderly collection and liquidation of its asset portfolio. The Company collected about $1,800,000,000 of cash, reducing the size of the portfolio by over 50%. FINOVA used that cash to reduce its debt and pay operating costs and interest expenses. "One of our largest shareholders insightfully characterized FINOVA's operations in the fall of 2001 as 'picking the flowers and watering the weeds.' His words continue to ring true, as we have sold many of our more marketable assets," Mr. Lieberman continues. "FINOVA is now left with a greater percentage of less attractive assets and a much smaller asset pool. We anticipate being able to collect on some assets in excess of their carrying values, but the large recoveries and income achieved in 2003 will be virtually impossible to duplicate." FINOVA is restricted from doing new business by the Indenture governing its Senior Notes, with very few exceptions. The holders of those Notes hold the senior security interest in virtually all of FINOVA's assets, restricting the Company's ability to obtain other financing. Thus, FINOVA does not anticipate being able to grow its way out of the deficit. Remaining Assets FINOVA's portfolio consists of four principal groups of assets: * resort, * specialty real estate, * transportation, and * all other portfolios (1) Resort -- $526,000,000 year-end carrying value The resort portfolio is expected to experience substantial run off due to scheduled maturities and anticipated prepayments during 2004. Moreover, the resort portfolio is generally recorded at higher carrying values relative to contractual amounts due. Thus, the ability of this portfolio to generate substantial returns in excess of its carrying value is more limited than in the past. (2) Specialty Real Estate -- $331,000,000 year-end carrying value The specialty real estate portfolio may take somewhat longer to liquidate. The Company has classified the real estate leveraged lease portfolio as held for sale. The specialty real estate portfolio is also recorded at fairly high carrying values, so it bears a similar limitation on generating substantial excess returns. (3) Other Portfolios ---- $500,000,000 year-end carrying value The portfolio other than resort, specialty real estate and transportation consists mainly of the various loans, leases and investments generated by FINOVA's other lines of business that for one reason or another have not been sold or collected. This portfolio is generally more work intensive to liquidate, and a substantial portion of it is impaired. Many of the borrowers have missed payments, including final maturity dates, or are otherwise in default. FINOVA has been in difficult workouts for several years on many of these transactions. The Company anticipates that some of those efforts will begin coming to fruition. A significant runoff within this portfolio is anticipated during 2004. Because this portfolio has been marked down more heavily, a greater potential exists for recoveries above current carrying values. Those recoveries may occur sporadically and not in sufficient degree to eliminate the deficit. (4) Transportation -- $449,000,000 year-end carrying value Many of the assets under the transportation portfolio are older-vintage aircraft, which often have outdated equipment and lower fuel efficiency, and consequently are not favored by commercial airlines. FINOVA currently markets the aircraft, either in whole or in part to carriers and repair facilities throughout the world. The potential for substantial recoveries on those assets continues to be hampered by the prolonged downturn in the airline industry. A market for many of those aircraft may never return, but FINOVA's best hope for recoveries is to patiently work on those assets and wait for opportune moments to sell or lease them. Nevertheless, FINOVA does not see the potential in the transportation, or any other of its portfolios, to eliminate its deficit. Payment of Noteholder Claims According to Mr. Lieberman, FINOVA's payment of the Berkadia loan enables the Company to begin repaying the Noteholders earlier than anticipated -- in May 2004 if excess cash is available. As permitted, FINOVA will retain sufficient cash to fund operating expenses and certain other items like interest payments and existing customer commitments. The remainder, or "excess cash," will go to satisfy principal obligations to the Noteholders. Mr. Lieberman believes that shareholders are already out of the money. "Shareholders should not expect any payments or return on their common stock," Mr. Lieberman says. (Finova Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRST NATIONWIDE: Fitch Takes Various Rating Actions on RMB Notes ----------------------------------------------------------------- Fitch Ratings has taken rating actions on the following First Nationwide Trust (FNT), residential mortgage-backed certificates: First Nationwide Trust, mortgage pass-through certificates, series 1998-3 Groups I & II --Class IP-A, IIP-A affirmed at 'AAA'; --Class C-B-1 affirmed at 'AAA'; --Class C-B-2 affirmed at 'AAA'; --Class C-B-3 affirmed at 'AAA'; --Class C-B-4 affirmed at 'A+'; --Class C-B-5 affirmed at 'BBB+'., First Nationwide Trust, mortgage pass-through certificates, series 1999-4 Groups I, II, III & IV --Class IPP-A, IIPP-A, IIIPP-A, IVPP-A affirmed at 'AAA'; --Class C-B-1 upgraded to 'AAA' from 'AA'; --Class C-B-2 upgraded to 'AA' from 'A'; --Class C-B-3 affirmed at 'AA'; --Class C-B-4 affirmed at 'AA'; --Class C-B-5 upgraded to 'BBB-' from 'BB'; --Class C-B-6 affirmed at 'B'. First Nationwide Trust, mortgage pass-through certificates, series 1999-5 Groups I & III --Classes IPP-A, IIIPP-A affirmed at 'AAA'; --Class C-B-1 affirmed at 'AAA'; --Class C-B-2 upgraded to 'AAA' from 'AA'; --Class C-B-3 upgraded to 'A' from 'A-'; --Class C-B-4 upgraded to 'BBB-' from 'BB+'; --Class C-B-5 upgraded to 'BB' from 'B'. First Nationwide Trust, mortgage pass-through certificates, series 2000-1 Group II --Class II-A, affirmed at 'AAA'; --Class II-B-1 affirmed at 'AAA'; --Class II-B-2 upgraded to 'AAA' from 'AA'; --Class II-B-3 affirmed at 'BBB'; --Class II-B-4 affirmed at 'BB'; --Class II-B-5 downgraded to 'CCC' from 'B'. First Nationwide Trust, mortgage pass-through certificates, series 2000-2 Group I --Class I-A, affirmed at 'AAA'; --Class I-B-1 upgraded to 'AAA' from 'AA'; --Class I-B-2 upgraded to 'AAA' from 'A'; --Class I-B-3 upgraded to 'AA' from 'BBB'; --Class I-B-4 upgraded to 'BBB' from 'BB'; --Class I-B-5 upgraded to 'BB' from 'B'. First Nationwide Trust, mortgage pass-through certificates, series 2001-1 --Class A affirmed at 'AAA'; --Class M-1 affirmed at 'AAA'; --Class M-2 affirmed at 'AAA'; --Class B-1 affirmed at 'BBB'; --Class B-2 affirmed at 'B'. First Nationwide Trust, mortgage pass-through certificates, series 2001-4 Groups I & II --Classes I-A, II-A affirmed at 'AAA'; --Class C-B-1 upgraded to 'AAA' from 'AA'; --Class C-B-2 upgraded to 'AA' from 'A'; --Class C-B-3 upgraded to 'A' from 'BBB'; --Class B-4 upgraded to 'BB+' from 'BB'; --Class B-5 upgraded to 'B+' from 'B'. First Nationwide Trust, mortgage pass-through certificates, series 2001-4 Groups III, IV & V --Class III-A, IV-A, V-A affirmed at 'AAA'; --Class D-B-1 affirmed at 'AA'; --Class D-B-2 affirmed at 'A'; --Class D-B-3 downgraded to 'BB' from 'BBB'; --Class D-B-4 downgraded to 'CCC' from 'BB'; --Class D-B-5 downgraded to 'C' from 'B'. The upgrades are being taken as a result of low delinquencies and losses, as well as increased credit support. The affirmations reflect credit enhancement consistent with future loss expectations. The downgrades are the result of a review of the level of losses incurred to date as well as Fitch's future loss expectations on the current severely delinquent loans in the pipeline relative to the applicable credit support. FNT 1999-4 classes C-B-3 and C-B-4 consist of guarantees initially provided by Commercial Guaranty Assurance, Ltd. (CGA). Although CGA no longer underwrites new business, its runoff is being managed by ACE Financial Solutions, a division of ACE Ltd whose financial strength is rated 'AA' by Fitch. CGA's claims-paying resources consist of two reinsurance policies provided by subsidiaries of ACE Ltd. covering up to $400 million of potential future losses. FLEMING COS: Disclosure Statement Hearing Continued to May 4, 2004 ------------------------------------------------------------------ On April 19, Judge Walrath agreed to defer consideration of the Fleming Companies, Inc. Debtors' Disclosure Statement. James Sprayregen, Esq., at Kirkland & Ellis reported that Fleming has negotiated a settlement with the Official Committee of Reclamation Claimants to, hopefully, resolve reclamation claimants' objections. The compromise proposal will be incorporated into a new Third Amended Plan and Disclosure Statement. Fleming is hopeful that all reclamation claimants will support the settlement their committee's negotiated. The Debtors will bring their Third Amended Disclosure Statement to the Court for approval on May 4, 2004. Scotta McFarland Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., advises the May 4 Disclosure Statement hearing will convene at 3:00 p.m. Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- is the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. (Fleming Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEXTRONICS: Delivers Improved Fourth Quarter Results ----------------------------------------------------- Flextronics (Nasdaq: FLEX) announced results for its fourth quarter and fiscal year ended March 31, 2004. Fourth Quarter and Fiscal 2004 Results Net sales for the fourth quarter were a record $3.8 billion, which represents an increase of $708.6 million, or 23% over the March 2003 quarter. Net sales for the fiscal year reached a record $14.5 billion, which represents an increase of $1.2 billion, or 9% over fiscal 2003. Proforma net income was $72.8 million, or $0.13 per diluted share for the fourth quarter, which represents an increase of $47.4 million, or 187% over the March 2003 quarter. Including after-tax amortization expense of $8.8 million and previously announced restructuring costs of $48.0 million, GAAP net income in the fourth quarter was $16.0 million, or $0.03 per diluted share, as compared to GAAP net income of $19.5 million, or $0.04 per diluted share in the March 2003 quarter. The quarterly results reflect continued industry-leading working capital management, with a cash conversion cycle of 16 days and inventory turns of 12 times. "Our financial results continue to improve as we realize the earnings leverage embedded in our business. Quarterly revenues grew 23% on a year-over-year basis, while proforma profits nearly tripled. Both operating margin and revenues were stronger than expected, as the quarter ended less seasonal than expected for handsets and other consumer related products. While we executed well in the quarter, delivering improved operating performance and maintaining industry-leading working capital management, we remain focused on continually improving operating results going forward. Our pipeline is solid and we are winning business from new and existing customers across many end markets. The combination of improving demand, better pricing trends, and strength in higher value-add supply chain services, including our ODM business, should continue to drive momentum in our operating leverage, leading to increased margins and profits," said Michael E. Marks, Chief Executive Officer of Flextronics. Increasing Outlook The Company's management has increased its sales expectations for the June 2004 quarter by approximately $150 million and increased its proforma EPS expectations by $0.02. In addition, the Company indicated that each of the other three remaining quarters in fiscal 2005 are also expected to exceed the existing First Call consensus by approximately $100 million in sales per quarter and $0.01 in proforma EPS per quarter. This represents an annual increase in expectations of $450 million in sales and $0.05 in proforma EPS for the Company's fiscal year ending on March 31, 2005. Quarterly GAAP earnings are expected to be lower than proforma earnings by approximately $0.02 per diluted share reflecting amortization expense. Conversion of Notes Flextronics also announced that it intends to convert all of the outstanding 0% Convertible Junior Subordinated Notes issued in March 2003 into approximately 19 million shares of common stock. The Company plans to file a Registration Statement on Form S-3 to register the shares, and the conversion will be completed after the Securities and Exchange Commission declares the Form S-3 effective. The conversion will not impact Flextronics' diluted EPS, as the stock equivalents have always been included in the diluted EPS calculation. "We have been working with the Company for the last 18 months and believe that there are numerous ways that we can continue to help the Company realize its growth and profit potential. Flextronics has performed exceptionally well since early 2003, and we fully expect that the Company will build on its industry-leading position both in the near-term and the longer-term. Although the forced conversion of our investment provides us liquid common stock, we have no intention to sell or distribute our position at this time," said Jim Davidson, Managing Director, Silver Lake Partners. 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 2004 revenues of $14.5 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. Visit http://www.flextronics.com/for more information. * * * 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. GENESIS: Reports on Haskell Litigation Status in Del. Bankr. Court ------------------------------------------------------------------ On January 27, 2004, 275 former investors led by Richard Haskell commenced a lawsuit before the United States Supreme Court of New York, County of New York, alleging fraud and grossly negligent misrepresentation by the Genesis Health Ventures, Inc. Debtors in connection with the Bankruptcy Court's approval of their plan of reorganization. The former investors collectively held over $205,000,000 in Genesis subordinated debentures before the Petition Date. The Plan, which was confirmed by the Bankruptcy Court in 2001, canceled these subordinated debentures. The defendants include Goldman Sachs & Co., Mellon Bank, N.A., Highland Capital Management, LP, and George V. Hager, former Genesis chief financial officer. The plaintiffs seek to recover $200,000,000 plus interest costs and fees. At the Bankruptcy Court's request, Russell C. Silberglied, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, apprises Judge Wizmur of the current status of the Haskell Complaint. Mr. Silberglied relates that on February 17, 2004, the Defendants filed a Notice of Removal to remove the litigation to the U.S. District Court for the Southern District of New York. The parties subsequently agreed that the case should be transferred to the District of Delaware and referred to the U.S. Bankruptcy Court for the District of Delaware. The New York District Court transferred the litigation on March 4 to the U.S. District Court for the District of Delaware. The litigation is assigned to Chief Judge Robinson of the Delaware District Court. Thereafter, the Debtors drafted a proposed Stipulation and Order referring the litigation to the Bankruptcy Court. R. Bruce McNew, Esq., at Taylor McNew, LLP, in Wilmington, Delaware, local counsel for the Haskell Plaintiffs, advised Mr. Silberglied that he intends to sign the stipulation. On April 9, the parties filed with the District Court a stipulation and order to extend the Defendants' time to answer the Complaint. The April 9 Stipulation permits the Defendants to answer or make submissions by April 23. The Plaintiffs will have 54 days to respond to the Defendants' filing. The Defendants have another 20 days, thereafter, to submit a reply brief. A free copy of the Complaint is available at: http://bankrupt.com/misc/Richard_Haskell_complaint.pdf A free copy of the April 9 Stipulation is available at: http://bankrupt.com/misc/proposed_stipulation_and_order.pdf (Genesis/Multicare Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) GREENWICH CAPITAL: S&P Assigns Low-B Prelim Ratings to 7 Classes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Greenwich Capital Commercial Funding Corp.'s $2.6 billion commercial mortgage pass-through certificates series 2004-GG1. The preliminary ratings are based on information as of April 27, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the fiscal agent, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-4, A-5, A-6, A-7, B, C, D, and E are currently being offered publicly. The remaining classes will be offered privately. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.75x, a beginning LTV of 86.8%, and an ending LTV of 76.8%. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/.Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned Greenwich Capital Commercial Funding Corp. Class Rating Amount ($) A-1 AAA 23,421,000 A-2 AAA 150,541,000 A-3 AAA 274,000,000 A-4 AAA 296,000,000 A-5 AAA 382,000,000 A-6 AAA 108,970,000 A-7 AAA 1,007,391,000 B AA 62,106,000 C AA- 26,149,000 D A 52,299,000 E A- 32,687,000 F BBB+ 32,687,000 G BBB 26,150,000 H BBB- 39,224,000 J BB+ 6,537,000 K BB 13,075,000 L BB- 13,075,000 M B+ 9,806,000 N B 9,806,000 O B- 6,538,000 P N.R. 42,493,095 XP AAA N/A XC AAA 2,614,955,095 OEA-B1* BBB- 10,500,000 OEA-B2* BB+ 14,500,000 *Interest-only class. N.R.-Not rated. N/A-Not applicable. JAG MEDIA HOLDINGS: Needs More Funds to Sustain Operations ---------------------------------------------------------- Jag Media Holdings Inc. incurred cash flow deficiencies from operating activities of approximately $456,000 and $1,363,000 for the six months ended January 31, 2004 and 2003, respectively. The Company had a cash balance of only $131,000, a working capital deficiency of $362,000 and a stockholders' deficiency of approximately $345,000 as of January 31, 2004. These matters raise substantial doubt about its ability to continue as a going concern. Although its net losses included net noncash charges of approximately $345,000 and $624,000 for the six months ended January 31, 2004 and 2003, respectively, primarily for the amortization of unearned compensation and the issuance of common stock and stock options in exchange for services, management believes that, in the absence of a substantial increase in subscription revenues, it is probable that the Company will continue to incur losses and negative cash flows from operating activities through at least January 31, 2005 and that the Company will need to obtain additional equity or debt financing to sustain its operations until it can market its services, expand its customer base and achieve profitability. Management believes that the Company will be able to generate sufficient revenues from its remaining facsimile transmission and web site operations and obtain sufficient financing from its 2002 Equity Line Agreement before it expires in August 2004 or through other financing agreements to enable Jag Media to continue as a going concern through at least January 31, 2005. However, if it cannot generate sufficient revenues and/or obtain sufficient additional financing, if necessary, by that date, Jag Media Holdings may be forced thereafter to restructure its operations, file for bankruptcy or entirely cease operations. KINDERCARE LEARNING: S&P Places B+/B- Ratings on Watch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on preschool education and child-care services provider KinderCare Learning Center Inc. on CreditWatch with negative implications. This includes the company's 'B+' corporate credit rating, its 'B+' senior secured rating, and its 'B-' subordinated debt rating. CreditWatch with negative implications means that the ratings could be lowered or affirmed following the completion of Standard & Poor's review. The CreditWatch placement follows KinderCare's recent S-1 filing to register income deposit securities (IDSs), which comprise class A common stock and senior subordinated notes due in 2014. KinderCare is also expected to issue class B common stock and additional senior subordinated notes independent of the IDSs. In connection with this offering, KinderCare is expected to tender for all of its $179 million outstanding 9.5% senior subordinated notes due in 2009, and offer its existing equity holders cash, income deposit securities, or class B common stock. "Based on a preliminary review, Standard & Poor's believes that the IDS structure exhibits a more aggressive financial policy for KinderCare," said Standard & Poor's credit analyst Jesse Juliano. In addition to an expected high dividend payout rate to the IDS holders, KinderCare could have significantly more debt after the transaction. The proceeds will be used to repay current security owners, including financial sponsor KKR-KLC L.L.C., an affiliate of Kohlberg Kravis Roberts & Co. L.P. Furthermore, the IDS product is marketed as offering a high yield, and this could potentially increase the commitment of KinderCare to distribute a large proportion of its operating cash flows. Standard & Poor's remains concerned about the declining occupancy rates at KinderCare's child-care centers. While the company has greatly reduced the number of new facilities it opened in the 40 weeks ended March 5, 2004, compared with the previous year, Standard & Poor's also remains concerned about the company's future capital spending to open new centers. It is somewhat uncertain if the debt portion of the IDS will be treated as debt by the U.S. Internal Revenue Service. However, the continuing refinement of this product has mitigated much of Standard & Poor's concerns regarding a company's ability to deduct interest expense related to the debt portion of the security for tax purposes. Standard & Poor's will meet with management to discuss the financial and business impact of this proposed transaction and evaluate its effect on credit quality before taking further rating action. Portland, Oregon-based KinderCare is the largest provider of proprietary center-based preschool education and child-care services in the U.S., with 1,245 facilities in 39 states. The company provides services to children up to 12 years of age, and offers child care that emphasizes education and social interaction. HEALTHSOUTH: Judge to Issue Scheduling Order for Bond Litigation ---------------------------------------------------------------- A status conference was held on Friday, April 23, 2004, in Alabama circuit court before Judge Allwin Horn, III in the litigation brought by HealthSouth against its bondholders. As has been previously reported, on April 14, 2004, Judge Horn denied HealthSouth's request for a preliminary injunction prohibiting the bondholders from exercising their rights and remedies under the indentures for the Company's bonds and dissolved the temporary restraining order that had previously been issued by the Court. Pursuant to Friday's status conference, the Judge will be issuing a scheduling order to address the remaining issues in the litigation. It is anticipated that the scheduling order will provide that motions for summary judgment must be filed by June 11, 2004, and a hearing on the motions for summary judgment will be held on June 30, 2004. The Judge did not set a trial date and it appears that no trial date will be set until the Court hears all motions for summary judgment. The Unofficial Committee of Bondholders is currently in discussions with the Company in an effort to reach a consensual resolution on the compensation necessary to resolve all existing defaults under the Company's indentures and to amend the indentures to, among other things, avoid any future defaults and permit the Company to incur additional secured debt. Brad Eric Scheler of Fried, Frank, Harris, Shriver and Jacobson LLP, counsel to the Unofficial Committee of Bondholders, commented that, "The schedule set by Judge Horn is a reasonable one and it allows these important issues to be determined at an appropriate time. The Unofficial Committee is dissatisfied with the compensation being offered by the Company to the bondholders in the consent solicitation that was commenced on March 16, 2004, and believes that bondholders should not provide their consent unless the Company increases the compensation for bondholders. The Unofficial Committee is cautiously optimistic that its negotiations with the Company will result in a consensual arrangement that will provide the bondholders with reasonable compensation for the increased credit risk due to the Company's current circumstances and for the material amendments to the indentures that will, among other things, permit the Company to incur additional secured debt." HealthSouth has been in default under its indentures since March 2003, when it announced that the public could no longer rely upon HealthSouth's financial statements. I2 TECH: Q Investments Provides $100 Million Equity Investment -------------------------------------------------------------- i2 Technologies, Inc. (OTC:ITWO), a leading provider of closed- loop supply chain management solutions, announced that Q Investments, a private investment firm and one of i2's significant investors, has agreed to make a $100 million equity investment in i2. Q Investments currently holds approximately 32 million shares of common stock and $9 million of the convertible debt of i2. This investment will expand Q Investment's equity holdings in i2 to approximately 140 million shares, representing a 26 percent ownership of the company on an as converted basis. The $100 million investment will increase i2's cash position to approximately $390 million based on the ending cash position of $290 million as of March 31, 2004. As a part of the investment agreement, i2 has agreed to expand its current board of directors to seven members, of which two of the board members will represent Q Investments. Equity Investment The investment of $100 million by Q Investments will be in the form of a mandatorily convertible preferred stock, which is convertible into common stock of i2 at $.926 per share, representing 105 percent of the volume weighted average price of the common stock for the two trading days of April 23 and April 26, 2004. The preferred stock is mandatorily convertible into common stock after ten years, and, during the term, bears an annual 2 1/2 percent dividend which is payable semi-annually, in cash or in kind, at the company's discretion. Terms also stipulate that if i2 common stock is trading at the equivalent of more than $2.50 per share any time after twenty-four months from the date of investment, i2 can require that Q's preferred stock be converted to common stock. In addition, after four years, the company can force redemption by buying out the preferred stock for cash at 104% of the liquidation value of the security. The closing is expected to occur in the second quarter subject to satisfying the conditions to closing, including HSR approval. "We believe that this investment significantly strengthens i2, and will benefit our customers and our shareholders. Q Investments has a successful track record in investing in companies in transition," said Katy Murray, i2's CFO. "This investment strengthens our financial position by increasing our total cash position and by putting the company in a net positive cash position. Customers can purchase i2 solutions and services with the confidence that i2 is a long-term partner. The investment also gives us a solid platform to pursue other strategies to further strengthen our balance sheet, should we decide to do so in the future." "Q has been a significant investor in i2 for the past four years, and as this new investment demonstrates, we continue to believe strongly in the company's products, its strong management team and its leadership position in the industry. The company will use this new capital to increase its cash position. This investment will provide the company with additional liquidity to fund and expand its business profitably," said Pranav Parikh of Q Investments. i2 designs and delivers an extensive breadth of industry-leading supply chain software to help companies integrate between planning and execution by constantly adapting their planning models for changing business conditions. i2's global customer base consists of some of the world's market leaders -- including seven of the Fortune global top 10 -- and spans a variety of industries including automotive, high technology, retail and consumer product goods with additional resources put towards metals, aerospace and defense, and transportation companies. About i2 i2 -- whose December 31, 2003 balance sheet shows a total shareholders' equity deficit of about $255 million -- is a leading provider of closed-loop supply chain management solutions. The company designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. i2's worldwide customer base consists of some of the world's market leaders -- including seven of the Fortune global top 10. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at http://www.i2.com/ INTEGRATED: Rotech Incurs $41M Interest Expense on Long Term Debt ---------------------------------------------------------------- Upon emergence from bankruptcy, Rotech Healthcare entered into: (i) a five-year $75 million senior secured revolving credit facility; and (ii) a six-year $200 million senior secured term loan. In a regulatory filing with the Securities and Exchange Commission, Rotech Chief Executive Officer and President, Philip L. Carter, reports that Rotech's earnings may be affected by changes in interest rates relating to these debt facilities. Variable interest rates may rise, which could increase the amount of interest expense. In March 2002, Rotech borrowed the entire amount of the $200 million term loan and transferred the proceeds of that loan to Rotech Medical Corporation to fund a portion of the cash distributions Rotech Medical made in connection with its plan of reorganization. On October 1, 2003, Rotech drew down $5 million under the revolving credit facility and repaid the amount in full on October 17, 2003. As of March 29, 2004, the $75 million senior secured revolving credit facility had not been drawn upon, although standby letters of credit totaling $10 million have been issued under this credit facility. For the year ended December 31, 2003, Rotech incurred $41.3 million of interest expense on their long-term debt. Assuming a hypothetical increase of one percentage point for the variable interest rate applicable to the $200 million term loan, of which $68 million is outstanding as of December 31, 2003, according to Mr. Carter, Rotech would incur approximately $700,000 in additional interest expense for the period January 1, 2004 through December 31, 2004. Rotech Healthcare Inc., formerly known as Rotech Medical Corp. is a wholly - owned subsidiary of Integrated Health Services Inc. Rotech Medical Corp. is one of the nation's largest providers of oxygen and other respiratory therapy services to patients in the home. Rotech offers its services to over 100,000 patients in 47 states through over 600 operating centers, mainly in non-urban areas. Headquartered in Owings Mills, Maryland, Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the Debtors in their restructuring efforts. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) JAZZ GOLF: Equity Deficit Narrows to $666,536 at February 29, 2004 ------------------------------------------------------------------ Jazz Golf (TSX VENTURE:JZZ.A) reports net sales of $585,107 for the three months ended February 29, 2004 as compared to $1,039,238 for the comparable period last year. Sales for the six months amounted to $1,348,618 as compared to $1,990,507 last year. The decrease in the second quarter is attributable to a later start to the selling season compared to last year, and to the aggressive program of inventory reduction that occurred in 2003 but was not required in the current year. The golf industry is a very seasonal business. Sales in the Company's first two quarters are traditionally its weakest - accounting for less than 30% of annual sales. The majority of the fiscal year's sales are generated in the last half of the year, from March through August. The net loss for the three months ended February 29, 2004 was $432,756, or $0.02 per share, compared to a loss of $433,799, or $0.07 per share, last year. For the six month period in the current year, the net loss amounted to $990,629, or $0.04 per share, compared to a loss of $762,450, or $0.13 per share, reported last year. Last year's six month loss figure includes a recovery of future income taxes; such a recovery was not recognized this year. During the quarter, in the absence of aggressive inventory reduction selling, the company realized an improvement in gross profit percentage. It also achieved reductions in operating and financing costs compared to the prior year. Management is pleased with the market acceptance of its new product introductions, the Sandra Post signature SP PRO and OAKVILLE series clubs, as well as the new OMNI series. At February 29, 2004, Jazz Golf's balance sheet shows a shareholders' equity deficit of $666,536 compared to $1,737,499 at August 31, 2003. During the quarter, the Company completed its previously announced restructuring plan. The successful execution of this plan resulted in the issuance of 430,423 new shares at $.10 per share from the Rights Offering; plus the conversion of $2,038,442 in debt, deferred interest and amounts owing to directors and officers into 20,814,844 new shares; and the issuance of $1,500,000 in the form of new subordinated, convertible debt to the ENSIS Growth Fund Inc. The net result of this restructuring has been a reduction in overall debt and the monthly debt service requirements, improvement in the Company's working capital position, and an increase in the number of shares outstanding to approximately 27 million. At the Annual General Meeting held in Winnipeg on February 19, 2004, the following members were elected to the Board of Directors by the shareholders: J. Robert Lavery, Robert Kennedy, James Oborne, Patrick Matthews, Jeffrey Thompson, William Watchorn and Harold Heide. Mr. Lavery, the former President and CEO of Winpak Ltd. who recently retired December 31, 2003, was elected to serve as Chairman. Jazz Golf is the leading Canadian designer and manufacturer of golf clubs and other related products, which are marketed primarily through golf pro shops and golf specialty retailers throughout Canada. Jazz Golf common shares are listed on the TSX Venture Exchange (JZZ.A). MCWATTERS MINING: Gets Until May 28 to File Bankruptcy Plan ----------------------------------------------------------- McWatters Mining Inc. announces that it has obtained from the Quebec Superior Court, a time extension, until May 28, 2004, to submit a proposal to its creditors under the Bankruptcy and Insolvency Act. This extension will allow the Company to continue the sale process of a partial or total interest in its Sigma-Lamaque Mining Complex. McWatters will also examine all other possible alternatives that could lead to a resumption of the Sigma-Lamaque Complex. MIRANT CORPORATION: Proposes Learjet Sale Overbid Procedures ------------------------------------------------------------ To strike a balance between the desire to maximize the value of the property to the Mirant Corp. Debtors' estates and to enter into a sale of the property in a prompt and cost-effective manner, the Debtors propose to implement overbid procedures. A Qualified Overbidder is any party, other than Flexjet, that: (a) submits to the Debtors a valid, irrevocable offer to purchase the Learjet Interest and take an assignment of the Governing Agreements on terms acceptable to the Debtors, including a purchase price of at least $2,639,798, no later than two days prior to the Sale hearing; (b) provides a $200,000 deposit to the Debtors no later than one day prior to the Sale hearing; (c) executes all necessary and appropriate documents, in form and substance acceptable to the Debtors, to memorialize the sale of the Learjet Interest and is able to close the transaction not later than one day following the Sale hearing; (d) satisfies the Debtors, and the Court, that it is a bona fide purchaser who will, among other things, satisfy the requirements of registration of the Learjet Interest with the Federal Aviation Administration; and (e) is willing and able to cover its own attorneys' fees and costs associated with the sale transaction. In the event of multiple Qualified Overbidders, any overbids must exceed the bid of the first Qualified Overbidder by at least $25,000. At all times, Flexjet's obligation to purchase the Learjet Interest will be treated as a backup bid. According to Michelle A. Campbell, Esq., at White & Case, LLP, in Miami, Florida, any sale of the Learjet Interest to a Qualified Overbidder is subject to these additional conditions: (i) appropriate documentation, acceptable to the Debtors, is executed concurrently with the sale of the Learjet Interest; and (ii) the Qualified Overbidder is approved by the FAA. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. The Company filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590). Thomas E. Lauria, Esq., at White & Case LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945-7000) NESCO: May File for Bankruptcy if Unable to Meet Financing Needs ---------------------------------------------------------------- At January 31, 2004, NESCO Industries, Inc. had a shareholders' deficit of $1,769,894, negative working capital of $1,601,466 and incurred a net loss of $1,659,944 for the nine months then ended. If the Company is unable to meet its financing requirements on an as needed basis or consummate the Hydrogel transaction described in the following two paragraphs and conduct successful business operations, the Company may have to explore options such as bankruptcy or discontinue its existence. These matters raise substantial doubt about the Company's ability to continue as a going concern. In pursuance of its plan to engage in successful business operations, on January 12, 2004, the Company entered into an agreement to make term loans of up to $125,000 to Hydrogel Systems, Inc., a company engaged in the manufacture, marketing, selling and distribution of hydrogel, an aqueous polymer-based radiation ionized consumer/medical product. The term loans mature January 1, 2005 and bear interest at 8% per annum. If the Company does not enter into an agreement with Hydrogel shareholders to purchase a minimum of 50.1 % and up to all of the capital stock of Hydrogel in exchange for the Company's securities by July 1, 2004, or fails to purchase such securities by July 1, 2004, the Company at its election may convert the terms loans into Hydrogel Series B Convertible Preferred Stock or accelerate the maturity of the term loans to August 1, 2004. The Company advanced $75,000 of the term loan on January 12, 2004 and an additional $50,000 on February 27, 2004. The Company, Hydrogel and certain Hydrogel shareholders reached an agreement in principle in March 2004 providing for the transfer of a controlling interest in the Company to Hydrogel shareholders. The agreement is subject to various conditions, including the resolution of certain business and financial conditions affecting the Company and Hydrogel. There can be no assurance that the various conditions will be satisfied or that the transaction will be consummated. It is contemplated that the transaction would be accounted for as a reverse acquisition, if consummated. NRG ENERGY: Will Hold 1st Quarter 2004 Conference Call on May 11 ---------------------------------------------------------------- NRG Energy, Inc. (NYSE: NRG) will host a conference call and webcast to review first quarter 2004 financial results and longer- term business strategy. The call will be held on Tuesday, May 11, beginning at 9:00 a.m. Eastern. To access the live webcast and presentation materials, log on to NRG's website at http://www.nrgenergy.comand click on "Investors." To participate in the call, dial 877.407.0727 approximately five minutes prior to the scheduled start time. International callers should dial 201.689.8035. The call will be available for replay from the "Investors" section of the NRG website. (NRG Energy Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) OMEGA HEALTHCARE: Posts $53.7 Million Net Loss for First Quarter ---------------------------------------------------------------- Omega Healthcare Investors, Inc. (NYSE:OHI) announced its results of operations for the quarter ended March 31, 2004. The Company also reported Funds From Operations (FFO) on a diluted basis for the three months ended March 31, 2004 of ($48.2) million or ($1.16) per common share. The ($48.2) million of FFO for the quarter includes the impact of $51.5 million of non-cash refinancing-related charges, $6.4 million of exit fees associated with the termination of the Company's old credit facility and $0.3 million to adjust derivatives to its fair value and is presented in accordance with the guidelines for the calculation and reporting of FFO issued by the National Association of Real Estate Investment Trusts ("NAREIT"). Adjusted FFO, which excludes the impact of these charges, was $0.22 per share. GAAP Net Income After adjusting for the loss from discontinued operations of $353 thousand for the three months ended March 31, 2004, the Company reported net loss available to common stockholders of $53.7 million or ($1.30) per fully diluted common share on revenues of $21.3 million. This compares to net income available to common of $956 thousand or $0.03 per fully diluted common share for the same period in 2003. A breakout of discontinued operations is included in a schedule attached to this Press Release. First Quarter 2004 Highlights and Other Recent Developments -- Issued $118.5 million of 8.375% Series D preferred stock. -- Completed an 18.1 million share secondary offering and the sale of 2.7 million common shares, which resulted in significant shareholder diversification and a large increase in institutional investors. -- Issued $200 million 7% 10-year senior unsecured notes. -- Closed on a new $125 million revolving credit facility. -- Received rating agency upgrades from both Moody's and S&P. -- Completed the restructuring of the Company's Sun portfolio. -- Re-leased the Company's last owned and operated facility. -- Scheduled the April 30, 2004 redemption of the 9.25% Series A preferred stock. -- Increased common dividends 5.9% to $0.18 per common share. Financing Activities And Borrowing Arrangements On February 5, 2004, the Company announced that Explorer Holdings L.P., its then largest stockholder, granted the Company an option to repurchase up to 700,000 of the Company's 10% Convertible Series C preferred stock (which were convertible into the Company's common shares) held by Explorer at a negotiated purchase price of $145.92 per Series C preferred stock (or $9.12 per common share on an as converted basis). Explorer further agreed to convert any remaining Series C preferred stock into common stock. On February 10, 2004, the Company announced the closing of the sale of 4,739,500 8.375% shares of Series D cumulative redeemable preferred stock. The preferred stock was issued at $25 per share and trades on the NYSE under the symbol "OHI PrD." The Company used approximately $102.1 million of the net proceeds from the Series D preferred stock offering to repurchase 700,000 shares of the Company's Series C preferred stock from Explorer. In connection with the closing of the repurchase, Explorer converted its remaining 348,420 Series C preferred stock into approximately 5.6 million shares of the Company's common stock. Following the repurchase and conversion, approximately 43.8 million shares of Omega common stock were outstanding, of which Explorer held approximately 18.1 million common shares. The combined repurchase and conversion of the Series C preferred stock reduced the Company's preferred dividend requirements, increased its market capitalization and facilitated future financings by simplifying the Company's capital structure. Under FASB-EITF Issue D-42, "The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock," the repurchase of the Series C preferred stock resulted in a non-cash charge to net income available to common shareholders of approximately $38.7 million. This non-cash charge did not have any effect on the Company's net worth. On March 8, 2004, the Company announced the closing of the underwritten public offering of 18.1 million shares of Omega common stock at $9.85 per share owned by Explorer. As a result of the offering, Explorer no longer owns any of Omega's common stock. The Company did not receive any proceeds from the sale of the shares sold by Explorer. In connection with the 18.1 million common stock offering, the Company issued approximately 2.7 million additional shares of Omega common stock at a price of $9.85 per share, less underwriting discounts, to cover over-allotments in connection with the 18.1 million secondary offering. The Company received net proceeds of approximately $24.5 million from this offering. Effective March 22, 2004, the Company closed on a private offering of $200 million of 7% senior unsecured notes due 2014 and a $125 million revolving senior secured credit facility provided by Bank of America, N.A., Deutsche Bank AG, UBS Loan Finance, LLC and GE Healthcare Financial Services. The Company used proceeds from the Notes offering to replace its previous $225 million senior secured credit facility and $50 million acquisition credit facility, which have been terminated. The remaining proceeds will be used for working capital and general corporate purposes. The New Credit Facility will be used for acquisitions and general corporate purposes. In connection with the termination of the $225 million senior secured credit facility and $50 million acquisition credit facility, the Company recorded a charge of approximately $12.6 million, of which $6.3 million consisted of non-cash charges relating to deferred financing costs of the previous credit facilities. The Notes are unsecured senior obligations of Omega, which have been guaranteed by Omega's subsidiaries. The Notes were issued in a private placement contemplating resales in accordance with Rule 144A under the Securities Act of 1933, as amended. The Notes have not been registered under the Act. In connection with the Company's repayment and termination of the $225 million senior secured credit facility, the Company sold its $200 million interest rate cap on March 31, 2004. Net proceeds from the sale totaled approximately $3.5 million and resulted in a loss of approximately $6.5 million, which was recorded during the first quarter of 2004 and included in the $19.1 million of interest expense associated with refinancing activities. During the first quarter of 2004, the Company's preferred stock and senior unsecured debt received upgrades from Moody's and Standard & Poors. First Quarter 2004 Results Revenues for the three months ended March 31, 2004 were $21.3 million. Expenses for the three months ended March 31, 2004 totaled $31.2 million, including $5.2 million of depreciation and amortization expense, $5.1 million of interest expense and $2.0 million of general, administrative and legal expenses. In addition, $19.1 million of interest expense associated with refinancing activities was recorded. During the three-month period ended March 31, 2004, the Company sold two closed facilities in two separate transactions. The Company realized proceeds of approximately $85 thousand, net of closing costs and other expenses, resulting in a loss of approximately $351 thousand. FFO Results For the three months ended March 31, 2004, reportable diluted FFO was ($48.2) million or ($1.16) per share compared to $8.9 million or $0.17 per share for the same period in 2003 due to the factors mentioned above. The ($48.2) million of FFO includes the impact of $51.5 million of non-cash refinancing-related charges, $6.4 million of exit fees associated with a credit facility and a $0.3 million adjustment to derivatives to its fair value and is presented in accordance with the guidelines for the calculation and reporting of FFO issued by NAREIT. However, when excluding the $57.6 million financing-related charges and exit fees described above, adjusted FFO was $9.4 million or $0.22 per share compared to $8.1 million or $0.15 per share for the same period in 2003. Portfolio Developments Sun Healthcare Group, Inc. Effective January 1, 2004, the Company re-leased five skilled nursing facilities (SNFs) to an existing operator under a new Master Lease, which has a five-year term and an initial annual lease rate of $0.75 million. Four former Sun SNFs, three located in Illinois and one located in Indiana, representing an aggregate of 449 beds, were part of the transaction. The fifth SNF in the transaction, located in Illinois and representing 128 beds, was the last remaining owned and operated facility in the Company's portfolio. On March 1, 2004, the Company entered into an agreement with Sun regarding 51 properties that are leased to various affiliates of Sun. Under the terms of a master lease agreement, Sun will continue to operate and occupy 23 long-term care facilities, five behavioral properties and two hospital properties through December 31, 2013. One property, located in Washington and formerly operated by a Sun affiliate, has already been closed and the lease relating to that property has been terminated. With respect to the remaining 20 facilities, 17 have already been transitioned to new operators and three are in the process of being transferred to new operators. Effective March 1, 2004, the Company re-leased two SNFs formerly leased by Sun located in California and representing 117 beds, to a new operator under a Master Lease, which has a ten-year term. The commencement date of the first re-lease is March 1, 2004 and has an initial annual lease rate of approximately $0.12 million. The commencement date of the second re-lease is expected to be May 1, 2004, subject to licensing, and has an initial annual lease rate of approximately $0.1 million. Claremont Healthcare Holdings, Inc. Effective March 8, 2004, the Company re-leased three SNFs formerly leased by Claremont Health Care Holdings, Inc., located in Florida and representing 360 beds, to an existing operator at an initial annual lease rate of $2.5 million. These facilities were added to an existing Master Lease, the initial term of which has been extended ten years to February, 2014. The aggregate annual lease rate under this Master Lease, inclusive of the $2.5 million, is $3.9 million. Haven Healthcare Effective April 1, 2004, the Company purchased three SNFs, representing 399 beds for a total investment of $26.0 million. Two of the facilities are located in Vermont, with the third located in Connecticut. The facilities were combined into an existing Master Lease with a current operator. Rent under the Master Lease was increased by approximately $2.7 million for the first lease year commencing April 1, 2004, with annual increases thereafter. The term of the Master Lease had been increased to ten years on January 1, 2004 and runs through December 31, 2013, followed by two ten-year renewal options. The Company received a security deposit equivalent to three months of the incremental rent. Tiffany Care Centers, Inc. On April 6, 2004, the Company received approximately $4.6 million in proceeds on a mortgage loan payoff. The Company held mortgages on five facilities located in Missouri, representing 319 beds, which produced approximately $0.5 million of annual interest revenue in 2003. Other Assets Closed Facilities In March 2004, the Company sold two closed facilities, one located in Iowa and the other located in Florida, realizing proceeds of approximately $85 thousand, net of closing costs and other expenses, resulting in a loss of approximately $351 thousand. At the time of this press release, the Company has four remaining closed facilities with a total net book value of approximately $2.0 million. Sun Healthcare Group, Inc. Common Stock Under the Company's restructuring agreement with Sun, previously announced on January 26, 2004, the Company received the right to convert deferred base rent owed to the Company, totaling approximately $7.8 million, into 800,000 shares of Sun's common stock, subject to certain non-dilution provisions and the right of Sun to pay cash in an amount equal to the value of that stock in lieu of issuing stock to the Company. On March 30, 2004, the Company notified Sun of its intention to exercise its right to convert the deferred base rent into fully paid and non-assessable shares of Sun's common stock. On April 16, 2004, the Company received a stock certificate for 760,000 shares of Sun's common stock and cash in the amount of approximately $0.5 million in exchange for the remaining 40,000 shares of Sun's common stock. Dividends On April 20, 2004, the Company's Board of Directors announced a common stock dividend of $0.18 per share, which is a $0.01 per share, or 5.9%, increase over the previous quarter's dividend. The common stock dividend will be paid May 17, 2004 to common stockholders of record on April 30, 2004. At the date of this release, the Company had approximately 46.3 million common shares outstanding. On March 29, 2004, the Company's Board of Directors declared its regular quarterly dividends for all classes of preferred stock, payable May 17, 2004 to preferred stockholders of record on April 30, 2004. Series B and Series D preferred stockholders of record on April 30, 2004 will be paid dividends in the amount of $0.53906 and $0.47109, per preferred share, respectively, on May 17, 2004. The liquidation preference for each of the Company's Series B and D preferred stock is $25.00. Regular quarterly preferred dividends represent dividends for the period February 1, 2004 through April 30, 2004 for the Series B preferred stock and February 10, 2004 through April 30, 2004 for the Series D preferred stock. The Company's Board of Directors also authorized the redemption of all shares outstanding of its 9.25% Series A preferred stock (NYSE:OHI PrA; CUSIP: 681936209). The Company expects the shares to be redeemed on April 30, 2004 for $25.00 per share, plus $0.57813 per share in accrued and unpaid dividends through the redemption date, for an aggregate redemption price of $25.57813 per share. Dividends on the shares of Series A preferred stock will cease to accrue from and after the redemption date, after which the Series A preferred stock will no longer be outstanding and holders of the Series A preferred stock will have only the right to receive the redemption price. A notice of redemption and related materials was mailed to holders of Series A preferred stock on March 29, 2004. EquiServe Trust Company, located at 66 Brooks Drive, Braintree, MA 02184, will act as the Company's redemption agent. Requests for copies of the materials or questions relating to the notice of redemption and related materials should be directed to EquiServe at 800-251-4215 or to Bob Stephenson, the Company's Chief Financial Officer, at 410-427-1700. On or before the redemption date, the Company will deposit with EquiServe the aggregate redemption price, to be held in trust for the benefit of the holders of the Series A preferred stock. Holders of the Series A preferred stock who hold shares through the Depository Trust Company will be redeemed in accordance with the Depository Trust Company's procedures. 2004 And 2005 Adjusted Ffo Guidance The Company currently expects its 2004 adjusted FFO to be between $0.88 and $0.90 per diluted share. The 2005 adjusted FFO is expected to be between $0.96 and $0.98 per diluted share. The Company's FFO guidance (and related GAAP earnings projections) for 2004 and 2005 excludes gains and losses on the sales of assets and the impact of acquisitions, additional divestitures, one-time revenue and expense items and capital transactions. Reconciliation of the FFO guidance to the Company's projected GAAP earnings is provided on a schedule attached to this Press Release. The Company may, from time to time, update its publicly announced FFO guidance, but it is not obligated to do so. The Company's FFO guidance is based on a number of assumptions, which are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that the Company will achieve these results. Omega is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At March 31, 2004, the Company owned or held mortgages on 209 skilled nursing and assisted living facilities with approximately 21,400 beds located in 28 states and operated by 40 third-party healthcare operating companies. Standard & Poor's Ratings Services assigned its 'BB-' rating to Omega Healthcare Investors Inc.'s issued $200 million 7% senior notes due April 2014. Concurrently, the senior unsecured debt rating is raised to 'BB-' from 'B' and removed from CreditWatch positive, where it was placed March 5, 2004. Additionally, the rating on the preferred stock is raised to 'B' from 'B-' and removed from CreditWatch positive, where it was also placed March 5, 2004. The rating actions affect $526 million of rated securities. The outlook is stable. OXFORD HEALTH: Signs Acquisition Agreement with UnitedHealth Group ------------------------------------------------------------------ UnitedHealth Group (NYSE:UNH) and Oxford Health Plans, Inc. (Oxford) (NYSE:OHP) announced that they have signed a definitive agreement under which UnitedHealthcare, a wholly owned subsidiary, will merge with Oxford. Oxford serves and provides health care and benefit services for approximately 1.5 million people, principally in New York City, northern New Jersey and southern Connecticut. Completion of the acquisition, subject to regulatory approvals, approval by Oxford shareholders and other customary conditions, is expected during the fourth quarter of 2004. Under the terms of the agreement, Oxford shareholders will receive UnitedHealth Group stock at a fixed exchange ratio of 0.6357 shares for each Oxford share, plus $16.17 in cash per Oxford share. The total consideration for the transaction is a combination of approximately 54.7 million shares and $1.4 billion in cash, not including the effective benefit of Oxford's cash of approximately $200 million in excess of debt and capital requirements. This mix of equity and cash preserves the current balanced capital structure of UnitedHealth Group. UnitedHealth Group Chairman and CEO William W. McGuire, MD, commented that "this business combination provides the basis for significantly advancing the breadth and quality of health care services available to people in the tri-state region, and seeks to enhance our ability to work effectively and efficiently with key physicians and care providers within this large and diverse community. Those advances should produce greater access and affordability." McGuire added that "this merger with Oxford brings together their exceptionally focused local capabilities and UnitedHealth Group's national access, specialized centers of excellence Premium Networks, market-leading technologies and data sources, diverse specialized products and services, and unique offerings to seniors. The combined companies will have the scale and resources to more fully advance services on behalf of the broad client base within the tri-state area, as well as their related business affiliates across the country." "This merger will enhance our capabilities, strengthen our product offerings and build on the leadership of the Oxford brand in the tri-state region, said Charles Berg, president and CEO of Oxford. "The joining together of our two highly complementary organizations will provide important benefits to the people and communities we serve and allow us to leverage important new business opportunities. The combination will diversify our customer portfolio and enable us to better address the needs of consumers, our care providers and other key constituencies by offering enhanced flexibility, efficiencies and service. The key to Oxford's success has always been our exceptional people and relationships, and we are excited about expanding our ability to deliver quality and affordable health care in the tri-state area." Robert Sheehy, UnitedHealthcare CEO, stated, "Oxford's brand and reputation will significantly expand our presence in the northeastern markets. We will retain the Oxford brand and operations, and the combined tri-state business will continue under the leadership of Chuck Berg. We have immense respect for Oxford management and employees, the company they have become, and the quality of services they provide to this important marketplace. All of us look toward a future built around growth through superior products, high quality services and greater affordability." Tracy Bahl, CEO of Uniprise, UnitedHealth Group's business dedicated to serving large, multisite employers, added that "we look forward to bringing the unique health system access that Oxford offers to the 43 large, multisite, employers based in the tri-state area that we currently serve, as well as the opportunity to present our joint capabilities to the nearly 50 Fortune 500 employers headquartered in the region and with whom we have no current relationship. In addition, we are excited about presenting our combined resources and capabilities to the many large employers that are headquartered elsewhere and have significant employment bases in the tri-state area." UnitedHealth Group anticipates the acquisition will be immediately accretive to earnings per share upon closing, adding earnings at an annual rate of $0.16 per share, excluding first year operational synergies of at least $80 million to $100 million. The earnings from accretion and operational synergy will be additive to the UnitedHealth Group current expectation of 15 percent or greater growth in earnings per share in 2005 and will be included in the Company's forward financial projections after the transaction is closed. About UnitedHealth Group UnitedHealth Group -- http://www.unitedhealthgroup.com/-- is a diversified Fortune 100 company that provides a broad spectrum of resources and services to help people achieve improved health and well-being through all stages of life. UnitedHealth Group offers products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix. Through its family of businesses, UnitedHealth Group serves more than 55 million individuals nationwide. About Oxford Health Plans, Inc. Founded in 1984, Oxford Health Plans, Inc. provides health plans to employers and individuals primarily in New York, New Jersey and Connecticut, through its direct sales force, independent insurance agents and brokers. Oxford's commercial insured products and services include traditional health maintenance organizations, preferred and exclusive provider organizations, point-of-service plans and consumer-directed health plans. The Company also offers Medicare plans and third-party administration of employer-funded benefits plans. More information about Oxford Health Plans, Inc. is available at http://www.oxfordhealth.com/ As previously reported, Standard & Poor's affirmed the 'BB+' counterparty credit rating on Oxford and its 'BBB+' counterparty credit and financial strength ratings on Oxford Health Plans (NY) Inc. OXFORD: S&P Likely to Raise Ratings After UnitedHealth Acquisition ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'A' counterparty credit rating on UnitedHealth Group Inc. (NYSE:UNH) after UNH announced that it plans to acquire Oxford Health Plans Inc. (Oxford) (NYSE:OHP). The outlook on UNH remains stable. Standard & Poor's also said that it placed its 'BB+' counterparty credit rating on Oxford and its 'BBB+' counterparty credit and financial strength ratings on Oxford Health Plans (NY) Inc. on CreditWatch with positive implications. "UNH's plan to acquire Oxford, a transaction valued at $5 billion, will not affect the ratings on UNH but does have a degree of acquisition risk because of increasing goodwill and operations integration," noted Standard & Poor's credit analyst Shellie Stoddard. The extremely strong operating performance of both companies and their greatly enhanced competitive position in the greater New York area are expected to offset the typical business-integration risks associated with an acquisition of this magnitude. The risks are also partially mitigated by the nature of the acquired business being core to UNH's business as well as UNH's successful experience to date with acquisitions and back- office integration. Standard & Poor's anticipates that the enhanced provider network of the combined organization will have more negotiating influence with hospitals and doctors in the New York market. Standard & Poor's also expects Oxford's key management to remain in place following the transaction. Standard & Poor's views the premium price paid for the Oxford acquisition as an increased appetite for acquisitions. However, UNH's strategy for acquisitions is disciplined and is focused on filling in underrepresented geographic areas or adding omplementary skills or business platforms. The transaction, which is subject to numerous regulatory approvals, is expected to close in the forth quarter of 2004. Upon closing, Standard & Poor's will likely raise the ratings on Oxford Health Plans (NY) Inc., the primary operating subsidiary of Oxford, to 'A' from 'BBB+'. Standard & Poor's maintains its nonstandard notching of UNH (i.e., one notch between the holding company rating and operating company financial strength rating instead of three notches) because of the organization's diversified sources of revenue, both unregulated and regulated, by geographic region, business segment, and legal entity. In addition, the company is growing the portion of information and administration-based businesses that are not related to the same commercial customer base to which it supplies medical benefits and administration. PARMALAT: Commissioner Bondi Administers 3 Concessionary Companies ------------------------------------------------------------------ Parmalat Finanziaria SpA in | Parmalat Finanziaria SpA in Extraordinary Administration | Amministrazione Straordinaria communicates that on 8 April | comunica che l'8 aprile 2004 2004 Extraordinary | il Commissario Straordinario, Commissioner, Dr. Enrico Bondi, | Dr. Enrico Bondi, ha richiesto requested and obtained | e ottenuto dal Ministro delle permission from the Minister | Attivita Produttive, ai sensi for Production Activities, in | dell'art. 3 comma 3 del accordance with article 3, | Decreto Legge n. 347 del subsection 3 of Legislative | 23 dicembre 2003, l'ammissione Decree no. 347 of 23 December | alla procedura di 2003, for the admission into | Amministrazione Straordinaria, Extraordinary Administration of | in quanto imprese soggette a the following Italian | direzione comune, delle registered companies, given | seguenti societa di diritto their common management: | italiano: * Taurolat Srl, * G.F.A. Srl, and * S.A.F. Srl Dr. Enrico Bondi has been | Il Dr. Enrico Bondi e appointed Extraordinary | stato nominato Commissario Commissioner of the above | Straordinario delle suddette companies which control a group | societa che controllano un of Italian concessionary | gruppo di concessionarie businesses involved in the | italiane adibite alla distribution of Parmalat | distribuzione dei prodotti products. | Parmalat. | Parmalat Finanziaria SpA | Parmalat Finanziaria SpA in Extraordinary Administration | in Amministrazione further communicates that on | Straordinaria comunica inoltre 13 April 2004 the Civil Court | che il 13 aprile 2004 il of Parma confirmed the | Tribunale Civile di Parma insolvency of the same Taurolat | ha dichiarato lo stato di Srl, G.F.A. Srl and S.A.F. Srl. | insolvenza delle medesime | societa Taurolat Srl, G.F.A. | Srl e S.A.F. Srl. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04- 11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEGASUS COMMUNICATIONS: S&P Lowers Corp. Credit Rating to CCC ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Pegasus Communications Corp. and subsidiaries, Pegasus Satellite Communications Inc. and Pegasus Media & Communications Inc., to 'CCC' from 'CCC+'. These companies are analyzed on a consolidated basis. The outlook remains negative. The Bala Cynwyd, Pennsylvania-based DirecTV franchisee had about $1.5 billion in consolidated debt and debt-like preferred stock at Dec. 31, 2003. "The rating action reflects heightened concern about the company's business prospects, shrinking subscriber base, limited liquidity, overburdened debt and maturity structure, and increasingly acrimonious relationship with DirecTV," according to Standard & Poor's credit analyst Steve Wilkinson. He continued, "Pegasus remains in litigation with DirecTV over various matters, including a crucial disagreement regarding the life of Pegasus' rights as a distributor of the DirecTV satellite television service. Pegasus recently lost one of its lawsuits with DirecTV that now requires the company to pay $51.5 million to DirecTV related to a marketing dispute. A decision on more than $11 million in related interest claims against Pegasus is pending. These judgments may significantly strain Pegasus' already thin liquidity and increase its operating costs." Pegasus is vulnerable to a near-term default if its already insufficient liquidity deteriorates further or if it is unable to defer a substantial amount of its 2005 debt maturities. PG&E CORPORATION: Schedules First Quarter Report for May 4 ---------------------------------------------------------- PG&E Corporation (NYSE: PCG) will announce first quarter 2004 financial results on Tuesday, May 4, 2004. A conference call with the financial community will be held that morning at 9:00 a.m. EDT (6:00 a.m. PDT) to discuss the results. The company's earnings conference call will be open to the public on a listen-only basis via webcast. PG&E Corporation advised that its earnings from operations and consolidated net income will not include the impact of a final decision pending at the California Public Utilities Commission (CPUC) in Pacific Gas and Electric Company's 2003 General Rate Case (GRC) or an authorized attrition revenue increase for 2004 to cover the costs of new investment in energy infrastructure and inflation. A decision on these items is anticipated in the second quarter. PG&E Corporation is reaffirming its previously announced earnings guidance for 2004, which assumes the issuance of a final GRC decision affirming the settlement reached by the parties. In 2003, the earnings-from-operations impact of the delayed GRC decision was primarily offset by income resulting from generation- related revenues that exceeded generation-related costs (referred to as headroom). However, as of January 1, 2004, Pacific Gas and Electric Company's revenues are based on the utility's authorized cost-of-service rates rather than frozen rates. As a result, the utility no longer receives headroom, and 2004 results will not include the impact of final GRC and attrition revenue decisions until they are received. When the decision in the GRC is received, the effects will be retroactive to the beginning of 2003. A decision authorizing a 2004 attrition revenue increase would be retroactive to the beginning of 2004. The company expects to book the full effect of a final decision in these matters once it is received. The Corporation also advised that its first quarter results will reflect the one-time, non-cash accounting effects of two regulatory assets added to Pacific Gas and Electric Company's balance sheet. The expected accounting impacts were discussed previously when the Corporation issued its fourth-quarter and year-end 2003 earnings report. The regulatory assets were authorized by the CPUC and reflected in the settlement agreement reached to resolve the financial challenges created by the energy crisis, when the company accumulated approximately $11.8 billion in undercollected costs, including costs incurred to buy power for customers, and other claims. In accordance with generally accepted accounting principles (GAAP), the after-tax value of the regulatory assets must be shown as a one-time entry on the company's income statement, even though it does not reflect actual cash received. Instead, cash will be received over the life of the regulatory assets. The effect on reported income will be approximately $3 billion after-tax. Visit the company's Web site at http://www.pgecorp.com/for more information and instructions for accessing the conference call webcast. The call will be archived at http://www.pgecorp.com/ Alternatively, a toll-free replay of the conference call may be accessed shortly after the live call through 9:00 p.m. EDT, May 10, 2004, by dialing 877-690-2095. International callers may dial 402-220-0642. REGAL CINEMAS: S&P Rates Proposed $1.75 Bil. Bank Facility at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB-' bank loan rating to Knoxville, Tenn.-based Regal Cinemas Inc.'s proposed $1.75 billion senior secured bank facility. At the same time, a recovery rating of '4' was assigned to the bank loan, indicating that the lenders may only recover a marginal proportion of principal (25%-50%) in a default scenario, because of Regal's reliance on secured debt and because the banks will have direct liens on theaters representing only about one-half of theater- level cash flow. In addition, Standard & Poor's affirmed its 'BB-' corporate credit rating on the company and its parent, Regal Entertainment Group, which are analyzed on a consolidated basis. The outlook is negative. The movie theater chain will have slightly more than $2 billion in consolidated pro forma debt. The bank loan will be used to refinance Regal's existing bank debt and bonds, and to fund the extraordinary $710 million debt- financed dividend that was announced on April 15, 2004. This is a slight change from its previously announced mixture of bank and subordinated debt, but it does not materially affect the company's financial profile. The company also announced its plans to acquire 37 theaters with 384 screens for $226 million in cash. "The outlook remains negative because the transactions consume Regal's debt capacity at the current rating level and leave the rating vulnerable to additional aggressive financial moves that further increase the company's leverage or meaningfully diminish its discretionary cash flow potential," said Standard & Poor's credit analyst Steve Wilkinson. The special dividends, which are in addition to the company's regular quarterly dividend, highlight the equity return orientation of majority shareholder, the Denver, Colorado-based Anschutz Company, which owns about 57% of the company and holds an even larger voting interest. The transaction will increase consolidated lease-adjusted debt about 30%, and push lease-adjusted debt to EBITDA, adjusted to exclude an extra week from the trailing 12-month period (resulting from a quirk in its fiscal year), to the mid-5x area from the low-4x area. Lease- adjusted coverage of interest expenses will drop to the low- to mid-2x area from the high-2x area. Higher interest expenses will also limit discretionary cash flow somewhat, although the percentage of EBITDA that flows through to discretionary cash flow should remain solid in the 15%-20% range. REGAL ENTERTAINMENT: Completes 9-3/8% Sr. Noteholder Solicitation ----------------------------------------------------------------- Regal Entertainment Group (NYSE:RGC), announced that it, along with its wholly owned subsidiary, Regal Cinemas Bonds Corporation (RCBC), has successfully completed its consent solicitation with respect to the outstanding 9 3/8% Senior Subordinated Notes due 2012 (CUSIP No. 758753AB3) issued by Regal Cinemas Corporation (RCC), a wholly owned subsidiary. As of 5:00 p.m., New York City time, on April 27, 2004, consents had been received from holders of approximately 84% of the outstanding principal amount of the Notes to the proposed amendments to the indenture relating to the Notes, as described in the Offer to Purchase and Consent Solicitation Statement, dated April 15, 2004, copies of which may be obtained by contacting MacKenzie Partners, Inc., the Information Agent, at (800) 322- 2885. This consent solicitation is part of Regal and RCBC's offer to purchase the Notes described in the Offer to Purchase and Consent Solicitation Statement. RCC and the trustee under the indenture entered in a Sixth Supplemental Indenture to implement the amendments to the indenture. The amendments to the indenture eliminate substantially all of the restrictive covenants and certain default provisions contained in the indenture. The amendments will not become operative, however, unless and until Regal and RCBC accept the tendered Notes for purchase pursuant to the Offer to Purchase and Consent Solicitation Statement. Holders who validly tendered and did not validly withdraw their Notes on or prior to the Consent Date will receive a consent payment of $20.00 per $1,000 principal amount of Notes tendered and accepted for purchase, in addition to the Tender Offer Consideration. The "Tender Offer Consideration" is an amount for each $1,000 principal amount tendered equal to the present value on the assumed initial payment date of the principal and interest that would accrue until February 1, 2007, determined by reference to a fixed spread of 100 basis points over the yield to maturity of the 2.25% United States Treasury Note due February 15, 2007, minus the Consent Payment described above. The pricing of the tender offer is expected to occur on April 28, 2004 at 10:00 a.m., New York City time. Following the Consent Date, holders of tendered Notes no longer have the right to withdraw their tender. Holders who tender their Notes after the Consent Date but on or prior to 12:00 midnight New York City time on May 12, 2004, will receive the Tender Offer Consideration, but not the Consent Payment. In each case, holders who tender their Notes will receive the accrued and unpaid interest on such Notes through, but not including, the applicable payment date in connection with the tender offer. The obligation to accept for purchase and pay for Notes tendered is subject to the satisfaction of certain conditions, including the consummation of certain refinancing transactions as set forth in the Offer to Purchase and Consent Solicitation Statement. The complete terms and conditions of the offer and consent solicitation are described in the Offer to Purchase and Consent Solicitation Statement, copies of which may be obtained by contacting MacKenzie Partners, Inc., the Information Agent, at (800) 322-2885 Regal and RCBC have retained Credit Suisse First Boston to serve as the Dealer Manager and Solicitation Agent for the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation may be directed to Credit Suisse First Boston at (800) 820-1653 (toll-free). The depositary for the tender offer is U.S. Bank National Association. * * * As reported in the Troubled Company Reporter's April 21, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Regal Entertainment Group and subsidiary Regal Cinemas Inc., which are analyzed on a consolidated basis, to negative from stable. The action follows the company's announcement that it plans to pay an extraordinary $710 million debt-financed dividend, its second significant, special shareholder payout in the past year. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on the company. The Knoxville, Tennessee-based movie theater chain is expected to have slightly more than $2 billion in pro forma debt. Ratings on the company's proposed $1.35 billion bank facility and $400 million in notes will be assigned based on further disclosure and analysis of the expected terms. REVLON CONSUMER: S&P Upgrades Corporate Credit Rating to B- ----------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its ratings on cosmetics manufacturer Revlon Consumer Products Corp., including the company's corporate credit rating, which it raised to 'B-' from 'CCC+', and removed the ratings from CreditWatch, where they were placed Feb. 13, 2004. The upgrade reflects an anticipated improvement in the company's capital structure following a proposed recapitalization, and also takes into account improving company operating trends following performance initiatives implemented in the past two years. Standard & Poor's has assigned a 'B' senior secured bank loan and '1' recovery rating to Revlon's planned $680 million senior secured bank facility. The bank loan is rated one notch higher than the corporate credit rating, indicating a high expectation of full recovery of principal (100%) in the event of default. In addition, Standard & Poor's assigned a 'CCC' senior unsecured debt rating to Revlon's planned $400 million senior unsecured note offering due in 2011, which will be issued under Rule 144A with registration rights. This issue is rated two notches below the corporate credit rating because of the high level of priority secured debt ahead of it in the capital structure. Proceeds from the planned offerings and the conversion of a significant amount of debt to equity by the principal shareholders will be used to recapitalize Revlon, and this will lead to significantly reduced leverage and enhanced liquidity. In March 2004, MacAndrews & Forbes, Fidelity Management and Research Co., and public bondholders agreed to exchange approximately $800 million of debt for equity as part of this transaction. MacAndrews & Forbes has also agreed to backstop an equity offering of about $110 million to be completed by March 2006. Proceeds from the transaction will be used to reduce debt. The outlook on Revlon is positive. Leverage and liquidity are expected to improve significantly as a result of these transactions, as total debt to EBITDA would fall to the mid-6x area in 2004 from more than 12x in 2003. Revlon would also have significant borrowing capacity under its revolving credit facility and no significant debt maturities until 2008. Moreover, Revlon demonstrated significant operating improvement in the fourth quarter of 2003 with sales and earnings increases from the comparable period the year before. This improvement resulted from increased investments in promotional spending, better in- store displays and merchandising, improved pricing, and better supply chain management. "An even higher rating could be considered in the intermediate term if Revlon continues to demonstrate improved operating performance, further reduces leverage, and begins to generate positive free cash flow," said Standard & Poor's credit analyst Patrick Jeffrey. The ratings on New York, New York-based Revlon Consumer Products Corp. reflect its participation in the highly competitive mass- market cosmetics industry, its high leverage, and an inconsistent operating history. These risks are mitigated somewhat by the company's leading position in the sector, its expected operating performance improvement, and its improved capital structure. Revlon competes against significantly larger competitors L'Oreal (Maybelline) and Procter & Gamble Co. (Cover Girl, Max Factor), which have leading market positions. SORBEE INTERNATIONAL: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Sorbee International Ltd. 9990 Global Road Philadelphia, Pennsylvania 19115 Bankruptcy Case No.: 04-15255 Type of Business: The Debtor makes and distributes sugar-free products, including chocolate bars, cookies, and candies. The debtor's Global Brands division is a private label importer of chocolate bars, cereals, and other items; its DreamCandy division markets low-fat, low-calorie chocolate bars. See http://www.sorbee.com/ Chapter 11 Petition Date: April 13, 2004 Court: Eastern District of Pennsylvania (Philadelphia) Judge: Kevin J. Carey Debtor's Counsel: John E. Kaskey, Esq. Braverman Daniels Kaskey Ltd. 1650 Market Street, 21st Floor Philadelphia, PA 19103 Tel: 215-575-3910 Total Assets: $2,655,522 Total Debts: $3,057,720 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Gidasa Sabanci Gida Sanayi Trade $534,100 VE Ticaret A.S. Ozan Abay CAD # 74 Bayrakli-Izmir, Turkey Palatinit of America, Inc. Trade $391,125 101 Gibraltar Dr., Ste 2B Morris Plains, NJ 07950 Mass Food Trade $362,982 56 Street NO 261 New Maadi Cairo, Egypt Future Enterprises Pte Ltd. Trade $122,420 Imperial Tea Exports Ltd. Trade $118,080 Primrose Candy Company Trade $111,916 Mieszko, S.A. Trade $103,181 Exel Transportation Services Trade $77,893 Central Transport Intl. Inc. Trade $69,580 Lio Yag San. Ve Tic. A.S Trade $61,448 Land O Lakes Trade $56,409 Overnite Transportation Co. Trade $56,303 Tarsmak Trade $35,668 ZWC Millano Zpehr K. Kotas Trade $34,000 Necco Trade $28,386 Lehman Sugarfree Confections Trade $24,074 Brouse-whited Trade $20,777 Uria & Menendez Trade $20,644 Spi Polyols, Inc. Trade $20,124 General Electric Capital Loan Undetermined Corporation STRUCTURED ASSET: S&P Cuts Class B-3 Series 1998-6 Rating to D -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class B-3 from Structured Asset Securities Corp.'s series 1998-6 to 'D' from 'CCC'. Concurrently, ratings are affirmed on five other classes from the same transaction (see list). The rating on class B-3 is lowered to 'D' due to the $32,246.82 principal write-down of the class' principal balance and the complete erosion of its credit support, as of the April 25, 2004 reporting period. The write-down and credit support erosion occurred because the collateral incurred approximately 6.85% in cumulative realized losses with monthly net losses averaging approximately $66,800 over the past 12 months. During the same period, total delinquencies increased to 26.48% from 22.11%. Additionally, serious delinquencies (90-plus days, foreclosure, and real estate owned) increased to 21.79% from 15.74% over the same period. The mortgage pool has paid down to approximately 15.08% of its original balance, with approximately 4.29% of the senior certificates outstanding. Standard & Poor's expects continued poor performance of this transaction based on the delinquency profile and will continue to monitor it closely. The B-2 class, however, has adequate credit support at this time to maintain its 'A' rating. The affirmed ratings reflect adequate actual and projected credit support percentages, despite relatively high delinquency percentages and cumulative losses. The collateral consists of conventional, fixed-rate, fully amortizing and balloon mortgage loans with original terms to maturity of not more than 30 years. All of the mortgage loans are secured by first or second liens on one-to four-family residential properties. Credit support is provided by the shifting interest subordination structure. RATING LOWERED Structured Asset Securities Corp. Mortgage pass-thru certs series 1998-6 Rating Class To From B-3 D CCC RATINGS AFFIRMED Structured Asset Securities Corp. Mortgage pass-thru certs series 1998-6 Class Rating A-1, A-2, AX1 AAA B-1 AA B-2 A TAE BO RETAIL: U.S. Trustee to Meet with Creditors on May 17 ------------------------------------------------------------ The United States Trustee will convene a meeting of Tae Bo Retail Marketing, Inc.'s creditors at 3:00 p.m., on May 17, 2004 in Room 2110 at 300 Booth Street, Reno, Nevada 89509. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in North West Canton, Ohio, Tae Bo Retail Marketing, Inc., is an infomercial producer and global marketer of the platinum award-winning original Billy Blanks' Tae-Bo Video Library. The Company field for chapter 11 protection on April 13, 2004 (Bankr. D. Nev. Case No. 04-51073). Jennifer A. Smith, Esq., at Lionel Sawyer & Collins represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $1 million and estimated debts of more than $10 million. TECNET: Court Extends Schedule-Filing Deadline through May 17 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, gave TECNET, Inc., an extension to file its schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtor has until May 17, 2004 to file its Schedules of Assets and Liabilities and Statement of Financial Affairs. Headquartered in Garland, Texas, TECNET, Inc., provides telecommunication services, filed for chapter 11 protection on April 8, 2004 (Bankr. N.D. Tex. Case No. 04-34162). Mark A. Weisbart, Esq., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts of over $10 million and estimated debts of over $100 million. TRICO MARINE: Explores Strategic Options to Address Financial Woes ------------------------------------------------------------------ Accelerating its strategic goal of reducing its total amount of outstanding indebtedness, Trico Marine Services, Inc. (Nasdaq: TMAR) announced the appointment of Joseph Compofelice as non- executive Chairman of the Board and the retention of Lazard Freres & Co. LLC as financial advisor and Kirkland & Ellis LLP as legal advisor. This team will assist the Company's management in exploring various alternatives including selling assets, raising additional financing and restructuring the Company's debt, including its $250 million Senior Notes due 2012. Mr. Compofelice, a director of Trico since 2003, is chairman of the Company's Audit Committee and has served as an executive of several public companies including CEO of CompX International and CFO of Titanium Metals Corporation, Baroid Corporation, NL Industries and Tremont LLC. Mr. Compofelice formerly held management positions with Smith International, Inc. Ronald Palmer, formerly Trico's executive Chairman, has decided to step down as an officer and director of the Company, but will continue to provide services to Trico. Lazard Freres & Co. LLC is the largest independent investment banking partnership specializing in complex strategic and financial advisory assignments. Services provided by Lazard Freres include merger and acquisition advisory services, capital raising activities, valuation, debt and capital structure analysis and restructuring plan formulation and negotiation. Kirkland & Ellis' restructuring practice group provides a broad range of business advisory services with extensive experience in U.S., U.K and international insolvency matters. Mr. Palmer stated, "We are clearly accelerating our efforts to meet Trico's financial challenges. Joe Compofelice brings outstanding financial management expertise and credibility to the Chairman's seat. His job will be to work with all parties involved in the financial alternatives analysis while I will continue to focus on meeting Trico's business objectives." Trico Marine provides a broad range of marine support services to the oil and gas industry, primarily in the Gulf of Mexico, the North Sea, Latin America, and West Africa. The services provided by the Company's diversified fleet of vessels include the marine transportation of drilling materials, supplies and crews, and support for the construction, installation, maintenance and removal of offshore facilities. Trico has principal offices in Houma, Louisiana, and Houston, Texas. Company Web site is at http://www.tricomarine.com/ TRI-LETT INDUSTRIES: Case Summary & Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Tri-Lett Industries, Inc. P.O. Box 580 Oregon City, Oregon 97045 Bankruptcy Case No.: 04-33733 Type of Business: The Debtor fabricates and manufactures high custom steel systems and products for a broad spectrum of industries. Chapter 11 Petition Date: April 19, 2004 Court: District of Oregon (Portland) Judge: Randall L. Dunn Debtor's Counsel: Gary U. Scharff, Esq. 621 South West Morrison Street #1300 Portland, OR 97205 Tel: 503-493-4353 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 ------ --------------- ------------ Comerica Bank Bank Loan SBA $1,033,000 P.O. Box 2249 San Jose, CA 95109-2249 Wimsco Trade debt, lease $188,800 Commercial Equipment Leasing Lease $85,000 Farwest Steel Corporation Trade debt $75,220 American Steel LLC Trade debt $30,342 G. O. Carlson, Inc. Trade debt $27,786 Rolled Alloys Trade debt $22,381 Clackamas County Tax Property taxes $21,750 Collector Vancouver Welding Supply Co. Trade debt $19,903 Alinabal Inc. Trade debt $17,452 First Hawaiian Bank Credit cards $15,167 Alaskan Copper & Brass Co. Trade debt $12,244 IDG Inc. Trade debt $12,225 Specialty Finishes, Inc. Trade debt $12,199 Sandmeyer Steel Company Trade debt $12,113 Connor Manufacturing Services Trade debt $11,735 American Machine & Gear, Inc Trade debt $10,692 Laser Cutting Services, Inc. Trade debt $9,260 Cube Management Trade debt $9,125 Pacific States Galvanizing Trade debt $8,625 TRITON AVIATION: Fitch Assigns Low Ratings to Classes A, B & C -------------------------------------------------------------- Fitch Ratings downgrades Triton Aviation Finance (Triton) notes as listed below. The downgrades reflect Triton's inability in March 2004 and April 2004 to generate lease cash flows that were sufficient to provide for class B and C note interest and class A note principal, as well as Fitch's expectation that these conditions will continue for the foreseeable future. --Class A-1 notes to 'BB+' from 'BBB-'; --Class A-2 notes to 'BB' from 'BBB-'; --Class B-1 notes to 'CC' from 'BB-'; --Class B-2 notes to 'CC' from 'BB-'; --Class C-1 notes affirmed at 'C'; --Class C-2 notes affirmed at 'C'; --All classes are removed from Rating Watch Negative. During 2003, Triton's collections less expenses (cash flow) averaged about $5 million per month compared to March 2004 and April 2004 cash flow of negative $3.5 million and positive $1.7 million, respectively. The lower 2004 results primarily reflect the effects of having three 747-200F aircraft and six 737-200 aircraft on the ground as well as higher maintenance provisions. The 747-200F aircraft were previously leased to Polar Air Cargo (Polar) and the 737-200 aircraft to Air Canada. Although April 2004 cash flows are improved compared to March 2004, Fitch remains concerned that re-leasing the 747-200F and 737-200 aircraft will be challenging and may require further maintenance expense outlays. Polar Air Cargo (Polar) is a U.S. based freight carrier whose parent is Atlas Air Worldwide Holdings Inc. (Atlas). Both Polar and Atlas filed for bankruptcy on Jan. 30, 2004. At the time of its bankruptcy, Polar leased two 747-200F freighter aircraft from Triton. Polar rejected the leases early on in the bankruptcy proceedings and both aircraft have been returned to Triton. A third 747-200F, which had been leased to Polar, was returned to Triton in January 2004 in accordance with the terms of the lease. The Polar lease payments are guaranteed for six months following a default (including a bankruptcy filing) by a subsidiary of a highly rated entity that is not honoring the guarantee. Even if the 737-200s are re-leased, the Polar guaranteed cash flow does resume and/or the three B747-200F freighters are re-leased, it may be some time before the class B and class C again pay interest due to Triton's payment priorities. Accrued class A principal is ahead of class B interest in the waterfall. In addition, although the secondary liquidity repayment is behind the class B interest (accrued and current) in the waterfall, it is ahead of class C interest. Triton is a Delaware business trust formed to conduct limited activities, including the issuance of debt, and the buying, owning, leasing and selling of commercial jet aircraft. Triton originally issued $720 million of rated notes in June 2000, while as of March 2004 it had about $510 million of notes outstanding. Primary servicing on 23 aircraft and back-up servicing is being performed by International Lease Finance Corporation ('AA-/F1+' by Fitch), while Triton Aviation Services Limited services the remaining 28 aircraft. UAL: Fitch Speculates about Bankruptcy Impact on Airport Debt ------------------------------------------------------------- Fitch Ratings believes the U.S. bankruptcy court's recent ruling in the UAL Corp. case regarding the lease structures involved in several of United Airlines' special facility bond transactions, focuses attention on weaker provisions behind certain municipal leased-backed bonds. At the same time, the ruling may bolster other lease structures and give guidance to the municipal market on how these transactions should be structured in the future. With financially troubled organizations becoming increasingly creative in their use of the bankruptcy process to reduce their liabilities, the attention drawn to the possible recharacterization of leases by this case may provide an incentive at the margin for debtors with such obligations to enter bankruptcy proceedings, according to a recent special report published by Fitch Ratings. "All municipal bond investors should be aware of the potential for a challenge to lease-backed debt in a bankruptcy setting," said Peter Stettler, Director, Fitch Ratings. "Our fear is that this decision may increase the potential for additional bankruptcies in the nontraditional sectors of the municipal market," Stettler said. Stettler expects the market to demand greater disclosure regarding the potential recharacterization of leases in a bankruptcy setting, as well as changes in the structure of such obligations, such as the issuer of a lease-backed transaction maintaining substantial economic interest in the property being financed, as a means of protecting their investment. The report, "Undisguised: Impact of UAL Bankruptcy on Airport Special Facility Debt," can be found on Fitch Ratings web site at http://www.fitchratings.com/by going to "U.S. Public Finance" sector page under "Airports" in the "Special Reports" section. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. the Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNITED AIRLINES: Wants to Extend Bain & Co. Consulting Agreement ---------------------------------------------------------------- United Airlines Inc. wants to extend the employment of Bain & Company as strategic consultants and negotiating agents for the Express Carrier Agreements. In addition, the Debtors want to engage Bain to provide ongoing business operation services that do not involve administration of the Chapter 11 Cases. Bain was retained to work on specific projects, namely negotiations with the United Express Carriers. Now, the Debtors want to expand Bain's services under a New Letter of Proposal through July 2004. With Bain's assistance, the Debtors have made significant progress with all Express partners, except Atlantic Coast Airlines. As a result, Bain has helped develop an ACA transition plan. The Debtors want Bain to continue to support the implementation of the ACA transition plan. Bain will charge $423,000 per month, plus expenses. Bain will continue to file monthly and quarterly fee applications consistent with present practice. James H.M. Sprayregen, Esq., at Kirkland & Ellis, tells the Court that the Retention Order could be interpreted to require the Debtors to obtain Court approval for Bain's services, regardless of whether they are ordinary course or Bain is acting as a professional under Section 327 of the Bankruptcy Code. The Debtors want to avoid seeking Court approval for Bain's services that are ordinary course. Creditors Committee Objects The Official Committee of Unsecured Creditors disagrees with the Debtors' characterization. Daphnee Surpris, Esq., at Sonnenschein, Nath & Rosenthal, reminds the Court that the Debtors made a similar request with McKinsey & Co.'s retention. The Committee agreed to revise McKinsey's terms only after the Debtors provided requisite information on the services to be provided. The Debtors have not provided the same level of information for Bain. Given the cost and competitive nature of the work Bain is to perform, the Committee wants to review the proposal and to receive periodic updates on Bain's findings. This will allow the Committee to evaluate Bain's services and to discharge its duties as outlined in 11 U.S.C. Section 1103. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. the Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: Records $177 Million Net Loss for First Quarter ----------------------------------------------------------- US Airways Group, Inc. (Nasdaq: UAIR) reported a first quarter 2004 net loss of $177 million, which is a $105 million or 37 percent improvement over the first quarter of 2003, excluding reorganization items associated with the company's emergence from bankruptcy. Reported earnings of $1.63 billion for the first quarter of 2003 included unusual gains recognized in connection with the company's emergence from bankruptcy. Operating revenue for the first quarter improved to $1.70 billion from $1.53 billion for the first three months of 2003, which is a 10.9 percent improvement year-over-year. "Our results underscore the need for further changes. While we are seeing year-over-year improvement, we clearly have more to do to ensure long-term success, and we must implement a new cost structure and a revenue plan that allows us to return to profitability," said Bruce R. Lakefield, US Airways president and chief executive officer. "My immediate priority is to communicate with labor leaders and other key stakeholders about our next steps, and then quickly follow that up with negotiations and implementation. With our dedicated employees, strong customer base, and sizeable presence on the East Coast, US Airways has the tools to successfully complete its transformation plan." System passenger revenue per available seat mile (PRASM) for the first quarter 2004 was 10.24 cents, up 2.4 percent compared to the first quarter of 2003. Domestically, system PRASM grew 1.4 percent. System statistics encompass mainline, wholly owned airline subsidiaries of US Airways Group, Inc., as well as capacity purchases from third parties operating regional jets as US Airways Express. For US Airways mainline operations only, the PRASM of 9.32 cents was up 1.5 percent. System available seat miles (ASMs) were up 8.8 percent, while mainline ASMs increased 6.8 percent during the first quarter. Revenue passenger miles (RPMs) increased 12.5 percent for the full US Airways system, while mainline RPMs increased 10.8 percent. The mainline passenger load factor of 70.2 percent, which was the highest first quarter load factor in company history, was 2.5 percentage points higher than the same period last year and system load factor was up 2.2 percentage points to 68.2 percent. For the quarter, US Airways, Inc.'s mainline operations carried 9.9 million passengers, an increase of 4.5 percent compared to the same period of 2003, while system passengers of 12.7 million were up 7.7 percent. The first quarter 2004 yield for mainline operations of 13.27 cents was down 2.1 percent from the same period in 2003, while system yield was down 1.0 percent to 15.01 cents. "Our efforts to add regional jets and strengthen our network are resulting in increased revenues," said B. Ben Baldanza, US Airways senior vice president of marketing and planning. "However, customers increasingly have more options for low, simplified fares, resulting in strong traffic and lower yields. Our transformation plan will capitalize on this market trend by allowing us to profitably offer consistently low fares to our customers." The mainline cost per available seat mile (CASM), excluding fuel, of 10.02 cents for the quarter, declined 3.4 percent versus the same period in 2003 (for a reconciliation, see Note 2 to the Selected Airline Operating and Financial Statistics). The first quarter of 2004 included $8 million of non- cash, stock-based compensation related to stock grants given to employees of US Airways' organized labor groups during the restructuring process and $4 million related to the startup of MidAtlantic Airways regional jet operations. During the Chapter 11 restructuring process, the company also substantially restructured its aircraft obligations. As a result of these items, taking aircraft ownership into account and excluding the stock-based compensation and MidAtlantic expenses, CASM excluding fuel improved 6.0 percent for the quarter. The cost of aviation fuel per gallon, including taxes, for the first quarter, was 99.40 cents (93.82 cents excluding taxes), up 5.0 percent from the same period in 2003. US Airways' fuel position is 32.5 percent hedged for the second half of 2004 and 5 percent hedged for 2005. Hedges for the second quarter were sold recently to lock-in a gain of $19 million. US Airways Group ended the quarter with total restricted and unrestricted cash of approximately $1.64 billion, including $978 million in unrestricted cash, cash equivalents and short-term investments. The company's cash position reflects the impact of the $250 million prepayment of the Air Transportation Stabilization Board (ATSB) loan in March 2004, which reduced the outstanding loan balance to $726 million. Excluding the $250 million ATSB loan prepayment and other seasonal changes in restricted cash, US Airways achieved breakeven cash performance during the first quarter. "The company continues to make progress in reducing losses and improving cash flow. However, our long-term success will be driven by our ability to achieve competitive costs and implement our transformation plan," said Neal S. Cohen, US Airways executive vice president of finance and chief financial officer. "It is simply stating the obvious, that no business can sustain itself, compete and survive over the long-term if it is not profitable, and our preference is to complete our restructuring on a consensual basis." Other Highlights * Completed all requirements to formally join the Star Alliance on May 4, 2004. Through the Star Alliance, business and leisure customers will be provided a unique and easier travel experience on fifteen of the world's finest airlines with unparalleled access to the most extensive airline network in the world. With the addition of US Airways, the Star Alliance will serve over 750 airports in over 130 different countries. * Accepted delivery and began operating the first 72-seat Embraer 170 aircraft, paving the way for the launch of US Airways' new regional jet division MidAtlantic Airways, with first flights from Philadelphia and Pittsburgh on April 4, 2004. The Embraer 170 regional jet is the first aircraft to offer full jet passenger comfort at regional jet costs. * Improved operational reliability, completing 98.9 percent of all scheduled flights, which was a company best. * Continued to employ new technology to enhance customer service: -- Increased revenue on usairways.com by 32 percent compared to the first quarter 2003. -- Enabled multilingual and large party kiosk capabilities. Customers also can now use kiosks for international check-in. -- Continued to roll out installation of self-service kiosks. By the end of the year, 565 kiosks will be operational at 87 airports. * Enhanced onboard services: -- Upgraded Envoy Class service for all transatlantic flights. -- Initiated the ability to purchase in flight meals online. Expect full roll out to Dividend Miles members by mid-summer. * Expanded international reach by adding new nonstop service between Philadelphia and Glasgow, Scotland, beginning May 2004. US AIRWAYS: S&P Maintains Negative Watch on B- Rating ----------------------------------------------------- US Airways Group Inc. (B-/Watch Neg/--) reported a first-quarter 2004 net loss of $177 million. This compares to first-quarter 2003 net income of $1.63 billion, which included a large extraordinary gain related to the company's emergence from bankruptcy. Excluding that gain, the 2003 first-quarter result was a net loss of $282 million. The narrower 2004 loss benefited from cost reductions achieved in bankruptcy and some recovery in revenues, but was nevertheless burdened by the still-weak pricing and high fuel prices. Standard & Poor's Ratings Services' ratings on US Airways Group Inc. and its US Airways Inc. subsidiary (both B-/Watch Neg/--), which were lowered to current levels Jan. 9, 2004, remain on CreditWatch with negative implications, where they were placed on Dec. 10, 2003. Standard & Poor's plans to conclude its review of the company over the next several weeks. "US Airways' principal upcoming challenge remains convincing its labor groups to accept another round of concessions as part of management's plan to lower costs in the face of rising low-cost competition," said Standard & Poor's credit analyst Philip Baggaley. "The company has adequate near-term liquidity, with $978 million of unrestricted cash, but will likely need to conclude cost-saving agreements over the next several quarters to stabilize its finances," the credit analyst continued. On April 19, 2004, president and CEO David Siegel resigned and was succeeded by a member of the company's board of directors, Bruce Lakefield. Siegel's resignation was apparently due in part to unwillingness of the airline's unions to consider further labor cost concessions without a change in senior management. Bruce Lakefield, a retired Lehman Brothers executive, has been chairman of the board's finance and strategy, and human resources committees and actively involved in the company's efforts to restore its financial health. The cost-cutting plan being pursued by the new CEO appears to be substantially similar to that sought by his predecessor, and includes also nonlabor cost reductions. In response to a question during the company's first-quarter earnings teleconference, Lakefield said that sacrifices would be sought from all stakeholders, and he did not exclude the possibility of seeking to restructure debt agreements, including the company's aircraft- backed public debt. However, based on the experience of other airlines that sought to restructure debt outside of bankruptcy, it would be very difficult to renegotiate public debt obligations, and US Airways may have to focus its efforts instead on lessors and private lenders. Long-term prospects for US Airways remain difficult, given the company's limited route network and increasing exposure to low- cost competition. Accordingly, acquisition by another airline or some other form of close integration into a broader alliance remains the best ultimate solution for US Airways. U.S. STEEL: Turns Profitable in First Quarter 2004 -------------------------------------------------- United States Steel Corporation (NYSE: X) reported first quarter 2004 net income of $58 million, or 47 cents per diluted share, compared to a net loss of $22 million, or 26 cents per diluted share, in last year's fourth quarter and a net loss of $38 million, or 40 cents per diluted share, in the first quarter of 2003. Reported first quarter 2004 diluted earnings per share reflects the assumed conversion of the company's convertible preferred shares into approximately 16 million common shares, and net income available to common shareholders was not adjusted for preferred dividends. The company reported first quarter 2004 income from operations of $151 million, sharply improved from losses from operations of $34 million and $44 million in the fourth and first quarters of 2003, respectively. Commenting on the quarter's results, U. S. Steel Chairman and CEO Thomas J. Usher said, "Results for our domestic flat-rolled business improved significantly as the quarter progressed due to strengthening demand and rising prices, with March prices ending significantly higher than the first quarter average. The business further benefited from operational synergies and cost reductions we achieved in connection with the National acquisition and our administrative process changes. These improvements were partially offset by increasing costs for purchased raw materials." As noted in an earlier press release, under an agreement resolving a dispute between the Slovak government and the European Commission, U. S. Steel Kosice retains a potential tax benefit of $430 million over a ten-year period ending in 2009, and is required to make income tax payments of $16 million in each of 2004 and 2005. As a result, U. S. Steel recorded a $32 million income tax charge in the first quarter of 2004. Other items not allocated to segments (which related to income from the sale of certain real estate assets and compensation expense for stock appreciation rights) and the $32 million income tax charge discussed above had an unfavorable effect on first quarter 2004 net income of $10 million, or 8 cents per diluted share. Other items not allocated to segments had unfavorable net income effects of $23 million, or 23 cents per share, on fourth quarter 2003 results and $16 million, or 16 cents per share, on first quarter 2003 results. Reportable Segments and Other Businesses Management uses segment income from operations to evaluate company performance because it believes this to be a key measure of ongoing operating results. U. S. Steel's reportable segments and Other Businesses reported segment income from operations of $162 million, or $29 per ton, in the first quarter of 2004, compared with $49 million, or $9 per ton, in fourth quarter 2003 and $2 million, or $1 per ton, in 2003's first quarter. Segment results for the first quarter of 2004 improved by $113 million from the fourth quarter of 2003. Domestic results benefited from higher prices, greater shipments of value-added products, the absence of costs for major scheduled repair outages and the absence of $18 million in operating losses incurred at Straightline. Partially offsetting these positives were increased costs for purchased raw materials and natural gas. In Europe, results improved by $3 million from the fourth quarter of 2003 as increases in realized prices were substantially offset by increased raw material costs, primarily coke, and the effects of operational difficulties with a blast furnace in Slovakia. Effective with the first quarter of 2004, U. S. Steel has four reportable segments: Flat-rolled Products (Flat-rolled), U. S. Steel Europe (USSE), Tubular Products (Tubular) and Real Estate. As of January 1, 2004, the residual results of Straightline are included in the Flat-rolled segment. The application of Financial Accounting Standards Board Interpretation No. 46, "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51," required U. S. Steel to consolidate the Clairton 1314B Partnership, L.P. (1314B Partnership) effective January 1, 2004, and resulted in a favorable $14 million cumulative effect, net of tax. The results of the 1314B Partnership, which are included in the Flat-rolled segment, were previously accounted for under the equity method. All other businesses not included in the reportable segments, including taconite pellet operations and rail and barge transportation services, are reflected in Other Businesses. Strengthening the Balance Sheet On March 9, 2004, the company issued 8 million shares of common stock for net proceeds of $294 million. The proceeds from the offering were used to exercise optional redemption provisions under the company's senior notes indentures. On April 19, 2004, the company redeemed $187 million principal amount of its 10-3/4% Senior Notes due August 1, 2008 at a premium of 10.75 percent, and $72 million principal amount of its 9-3/4% Senior Notes due May 15, 2010 at a premium of 9.75 percent. The redemptions will result in a $33 million charge to second quarter 2004 net interest and other financial costs for the redemption premium and unamortized issuance and discount costs. Ongoing annual interest and amortization expense will be reduced by approximately $28 million as a result of the redemptions. Outlook for 2004 Second Quarter Looking ahead, Usher stated, "The recent significant increases in domestic pricing will have a greater impact in the second quarter and contribute to improved profitability. We are seeing strong steel demand as virtually all domestic steel consumers continue to benefit from a stronger economy. In Europe, prices also continue to move higher as supply is tight and steel producers look to cover increasing raw material costs." U. S. Steel anticipates that these favorable market conditions will continue to positively impact the results of the Flat-rolled segment in the second quarter, with prices increasing well in excess of March levels. Average second quarter realized prices are expected to improve significantly more than the $52 per ton average improvement in the first quarter. These favorable effects will be partially offset by expected further increases in costs for purchased coke and other raw materials. Supply disruptions from several of U. S. Steel's coal suppliers continue to affect coke operations and reduced coke production to 92 percent of capacity in the first quarter. In the second quarter, U. S. Steel expects to purchase approximately 240,000 tons of coke for domestic operations at significantly higher prices than those in the first quarter and will accelerate a blast furnace outage, which was scheduled for later in the year. Flat-rolled shipments in the second quarter are expected to decline by approximately 200,000 tons compared to the first quarter as a result of slightly lower steel production and reduced residual shipments from Straightline; however, for full-year 2004, Flat-rolled shipments are expected to increase from the previous estimate of 15.5 million tons to approximately 15.9 million tons. For USSE, second quarter 2004 profit margins will continue to be affected by raw material cost pressures, particularly in Serbia where new raw material positions are being established. Realized prices are expected to be significantly higher than in the first quarter as the company implements an announced increase of a minimum of 40 euros per metric ton, effective April 1, 2004. Shipments for the quarter are expected to improve by about 10 percent. Shipments for full-year 2004 are currently estimated at 5.0 million net tons. In the second quarter of 2004, the Tubular segment is expected to benefit from significantly higher prices, although shipments could be affected by shortages of rounds from outside suppliers. The Tubular segment continues to expect annual shipments of 1.0 million tons, which reflects a year over year improvement of about 18 percent. For the second quarter of 2004, the company expects improved seasonal results from taconite pellet operations. Additionally, with improving profitability, U. S. Steel expects higher costs related to profit-based payments under the labor agreement with the United Steelworkers of America. U.S. Steel, through its domestic operations, is engaged in the production, sale and transportation of steel mill products, coke, and iron- bearing taconite pellets; the management of mineral resources; real estate development; and engineering and consulting services and, through its European operations, which include U. S. Steel Kosice, located in Slovakia, and U. S. Steel Balkan located in Serbia, in the production and sale of steel mill products. Certain business activities are conducted through joint ventures and partially owned companies. United States Steel Corporation is a Delaware corporation. * * * As reported in the Troubled Company Reporter's February 4, 2004 edition, Standard & Poor's Ratings Services assigned its preliminary 'BB-' senior unsecured and preliminary 'B' subordinated debt ratings to United States Steel Corp.'s $600 million universal shelf. The company may also issue preferred stock under the shelf. At the same time, Standard & Poor's affirmed all its existing ratings, including the 'BB-' corporate credit rating on U.S. Steel and revised its outlook on the company to stable from negative. Total debt for the Pittsburgh, Pennsylvania-based company was $2.2 billion (including operating leases) for the December 2003 quarter. "The outlook revision reflects the anticipated improvements in the company's financial profile owing to its ongoing cost-reduction initiatives, as well as benefits from management's actions to moderate potentially high cash outlays for its pension obligations in the next few years," said Standard & Poor's credit analyst Paul Vastola. The ratings reflect the company's aggressive financial leverage-- including its underfunded postretirement benefit obligations--and challenging market conditions, which overshadow its good liquidity and its improved market share and cost position following its May 20, 2003, acquisition of National Steel Corp. The company also benefits from a product mix that is more diverse than its competitors. Following its acquisition of the assets of National, U.S. Steel's domestic steel production capability increased to 19.4 million tons, making it the largest integrated steel producer in North America. WILSONS THE LEATHER: Lenders Agree to Amend Credit Facility ----------------------------------------------------------- Wilsons The Leather Experts Inc. (Nasdaq:WLSN) announced that it entered into an agreement to amend its revolving credit facility and Term B Promissory Note. The revolving credit facility, which is provided by GE Capital, CIT, Wells Fargo, and LaSalle, has also been amended to approve Wilsons Leather's previously announced private placement of 17,948,718 shares of newly issued Common Stock to Peninsula Investment Partners, L.P. and Quaker Capital Partners I, L.P. and Quaker Capital Partners II, L.P. at a purchase price of $1.95 per share. This transaction, when completed, will provide the Company with $35.0 million in new equity before expenses. The closing of the transaction is subject to certain closing conditions, the primary condition being the approval of the Company's shareholders. Wilsons Leather intends to use the proceeds from the issuance of the Common Stock to repay its 11 1/4% Senior Notes due August 15, 2004, and for general working capital purposes. Receipt of such funds will enable the Company to borrow under its revolving credit facility, which the Company expects it will not need to access until the middle of July. The credit facility caps the amount that can be paid to landlords as a result of the previously announced liquidation of 111 stores. Due to a smaller store base and lower inventory requirements, the amendment to the credit facility reduces the size of the revolving credit facility from $180.0 million to $125.0 million and, effective upon repayment of the Senior Notes, extends the term of the revolving credit facility and Term B Promissory Note to June 2008. Commenting on these agreements, Joel Waller, Chief Executive Officer said, "We are extremely pleased with both of these agreements. The equity placement, led by one of our long-term investors--Peninsula Investment Partners, L.P.--will enable us to operate under a favorable and improved financial structure. Likewise, the credit facility, underwritten by a very supportive bank syndicate, will provide us with the necessary flexibility in working capital to optimize our business as we focus our efforts on returning to profitability. We are excited to have made positive progress with respect to our re-financing and look forward to continuing our efforts to drive our business forward." About Wilsons Leather Wilsons Leather is the leading specialty retailer of leather outerwear, accessories and apparel in the United States. As of April 3, 2004, Wilsons Leather operated 460 stores located in 45 states and the District of Columbia, including 336 mall stores, 107 outlet stores and 17 airport stores. During the month of January 2004, the Company engaged an independent liquidator to operate 111 stores that are expected to close within the next few days. The Company, which regularly supplements its permanent mall stores with seasonal stores during its peak selling season from October through January, operated 229 seasonal stores in 2003. W.R. GRACE: Asks Court To Determine Suitable Future Claims Rep -------------------------------------------------------------- The W.R. Grace Debtors try again to appoint a legal representative for future asbestos claimants. "Due to a lack of consensus among the official committees in these cases," the Debtors ask the Court to determine the most appropriate individual from among the three candidates they identified to act as the Futures' Representative. Throughout the course of these bankruptcy cases, the Debtors have consistently sought to appoint a Futures' Representative who was supported by every affected constituency. Unfortunately, the Debtors' efforts to identify a consensus candidate have failed. Of the three candidates currently identified by the Debtors for consideration, no one has a consensus. The Committees have diverging opinions with respect to these candidates and, as a result, the Debtors have not been able to obtain unanimous support for any of the candidates. The three candidates are: (1) David T. Austern (2) Professor Eric D. Green (3) Dean M. Trafelet The Committees' opinions on the candidates, including that of yet another "new" candidate, are: Unsecured Equity Creditors PI PD Committee Committee Committee Committee --------- --------- --------- --------- David Austern Strongly Strongly Oppose Oppose support support Eric Green Slightly Oppose Support Oppose oppose Dean Trafelet Somewhat Somewhat Oppose Oppose oppose oppose "New" Candidate Oppose Oppose Oppose Oppose The PD Committee favors the appointment of a candidate who has never served in a similar capacity. The Debtors invited the PD Committee to suggest candidates, but to date none has been named. The Debtors considered seeking out such a candidate themselves, but ultimately decided that the interests of efficiency and fairness would not be well served through the appointment of a novice as Futures' Representative. Of the three candidates suggested, Mr. Austern is the only candidate that is not presently a futures' representative in any of the active asbestos Chapter 11 cases pending in the District of Delaware. As a result, the Debtors believe that Mr. Austern may be the most appropriate candidate with the most time available to devote to the role as Futures' Representative in these Chapter 11 cases. To the best of the Debtors' knowledge, each of the three candidates are disinterested persons within the meaning of the Bankruptcy Code and neither hold nor represent any adverse interest. Mr. Trafelet is the Futures' Representative in the Chapter 11 cases of Armstrong World Industries, Inc., and USG Corporation. Professor Green is the Futures' Representative in the cases of Fuller-Austin Insulation Co., Babcock and Wilcox Co., and Federal-Mogul Global, Inc. Mr. Austern presently serves as the Futures' Representative in Combustion Engineering, Inc. However, his role in that case is almost over as the Chapter 11 plan in that case has been confirmed. (W.R. Grace Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Counsel Dennis R. Dumas Joins Chadbourne & Parke LLP ------------------------------------------------------ The international law firm of Chadbourne & Parke LLP announced that corporate attorney Dennis R. Dumas, 45, has joined the Firm as counsel, resident in New York. Mr. Dumas was most recently managing counsel heading the global securities and capital markets practice group in The Bank of New York's legal division. "We are pleased to welcome Dennis to Chadbourne," said Charles K. O'Neill, the Firm's Managing Partner. "His considerable capital markets and securities transactional and regulatory experience, particularly on the bank and broker- dealer sides of the table, will be of great value both to the Firm and our clients." Mr. Dumas comes to Chadbourne with nearly 20 years of securities industry and corporate experience. At The Bank of New York, Mr. Dumas represented the bank and its broker-dealer subsidiaries and affiliates on a wide range of matters, including securities, capital markets, contracts, corporate governance, rules, regulations, policies, procedures, regulatory developments, inquiries and other matters. He also provided advice on bank regulatory matters related to broker-dealer affiliates, and advised the marketing, compliance, internal audit and global risk management departments. In addition, he managed business-side dispute resolution with broker-dealer clients and third parties. Previously, Mr. Dumas was senior counsel at The Bank of New York. In that capacity, he structured BNY Capital Markets, Inc., the first major broker- dealer affiliated with The Bank of New York, as a start-up underwriting and dealing broker-dealer. Mr. Dumas also served as Chief Legal Officer of BNY Capital Markets, Inc. Mr. Dumas was appointed Receiver by the Federal District Court (Southern District of New York), upon the recommendation of the Securities and Exchange Commission (SEC) Division of Enforcement, on three separate occasions. As Receiver, he administered and distributed millions of dollars of Receivership funds to qualified claimants allegedly damaged by wrongdoing specified in SEC lawsuits that recovered those funds both during and before his tenure at The Bank of New York. Prior to joining The Bank of New York, Mr. Dumas was a senior associate at Winthrop, Stimson, Putnam & Roberts in the business and securities law and complex litigation practices. At Winthrop, he advised broker-dealers, public companies and other organizations and individuals on securities, corporate and other applicable laws. Among other representative matters, Mr. Dumas assisted Japan's Ministry of Finance in drafting that country's securities laws, and acted as primary outside counsel to broker- dealer First Albany Corporation. He also represented banks, broker-dealers and others before multiple government agencies in securities and complex litigation. Mr. Dumas's previous experience also includes serving as an attorney- advisor in the SEC's Division of Enforcement, where he investigated federal securities law violations by issuers, broker- dealers, auditors and others. At the SEC, he focused on trading, market manipulation, accounting, auditing and financial fraud cases. During his time at the SEC, Mr. Dumas also served as a Special Assistant U.S. Attorney. Mr. Dumas received his B.S. from Duke University, Trinity College, and his J.D. from the Duke University School of Law. About Chadbourne & Parke LLP Chadbourne & Parke LLP, an international law firm headquartered in New York City, provides a full range of legal services, including mergers and acquisitions, securities, project finance, corporate finance, energy, telecommunications, commercial and products liability litigation, securities litigation and regulatory enforcement, white collar defense, intellectual property, antitrust, domestic and international tax, reinsurance and insurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. The Firm has offices in New York, Washington, D.C., Los Angeles, Houston, Moscow, Kyiv, Warsaw (through a Polish partnership), Beijing and a multinational partnership, Chadbourne & Parke, in London. For additional information, visit chadbourne.com. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. 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, Rizande B. Delos Santos, Paulo Jose A. Solana, 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 ***