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/raid1/www/Hosts/bankrupt/TCR_Public/040504.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, May 4, 2004, Vol. 8, No. 87 Headlines ADELPHIA BUSINESS: Inks Stipulation Resolving Qwest Claim Disputes AIR CANADA: Monitor Provides Update on Efforts to Raise Equity AIRNET COMMS: Obtains $3MM in Purchase Orders from TECORE Wireless AMERICAL CORP: Hires Beane Associates as Turnaround Managers AMERICAN UNITED: Says Unable to Pay Possible NY Med. Liabilities ANITA TERRACE: Chapter 11 Trustee Taps Keen Realty for Auction AONIA DEVELOPMENT: U.S. Trustee to Meet with Creditors on May 11 ARMSTRONG HOLDINGS: Reports on Insurance Recovery Proceedings AVAYA: S&P Revises Outlook to Positive on Improved Profitability BECKMAN: Fitch Downgrades Rating on Net Lease Certificates to BB- COEUR D'ALENE: Improved Liquidity Spurs S&P's Rating Upgrade to B- CONSECO: Expects to Report $46-$50MM Net Income for First Quarter CONSOL ENERGY: S&P Affirms BB- Corp. & Sr. Unsecured Debt Ratings COVANTA: Court OKs Stipulation Resolving Federal Insurance Dispute CWMBS INC: Fitch Assigns Low-B Ratings to 4 Series 2004-J4 Classes DAN RIVER: Gets Nod to Employ Lamberth Cifelli as Attorneys DII INDUSTRIES: Enters into Settlement Pact with Liberty Mutual DIRECTV: OpenTV Wants $483,959 License & Support Fees Payment DOLE FOOD: Wood Merger Prompts S&P's Neg. Watch on Low-B Ratings DOMAN INDUSTRIES: Unsecured Creditors' Meeting Set for June 7 DPL INC: Audit Committee Review Delays 2003 Annual Report Filing ENRON CORP: Asks Court to Approve Rawhide Deals Settlement Pact ETEAM OF PA: Case Summary & 20 Largest Unsecured Creditors FAIRFAX FINANCIAL: A.M. Best Assigns BB+ Rating to 7.75% Sr. Notes FARMLAND IND: CHS Completes Purchase of 50% Agriliance Stake FINOVA GROUP: Faces Securities Fraud Lawsuits Over Thaxton Notes GAS TRANSMISSION: S&P Places Junk Ratings On CreditWatch Positive FIRST VIRTUAL: Audit Committee Reviews Irregular Sale Transactions FLEMING COMPANIES: Benenson Presses for Rent & Tax Payments FLEMING: Texas-Based Exec. Group Offers $315MM Cash for Core-Mark FLINTKOTE COMPANY: Case Summary & 20 Largest Unsecured Creditors GENTEK: Amends Shelf Registration Statement Filed with SEC GLOBAL CROSSING: Ernst & Young Replaces Grant Thornton as Auditor IMMUNE RESPONSE: Obtains $12 Mil. in Private Placement Financing KAISER ALUMINUM: Discusses Sale Proceeds Allocation With Committee KMART HOLDING: Responds to PepsiCo Regarding Notice by SEC Staff LIBERATE TECHNOLOGIES: Case Summary & Largest Unsecured Creditors LOEWEN: Alderwoods to Host Q1 Conference Call Webcast Tomorrow MANTA HOLDING CORP: Voluntary Chapter 11 Case Summary MARK IV INDUSTRIES: S&P Assigns BB- Rating to $865M Sr. Bank Loan MATRIA HEALTHCARE: S&P Rates Convertible Subordinated Notes at B- MEADOWS OPERATIONS: Section 341(a) Meeting Slated for May 6 MID OCEAN: Fitch Downgrades 4 Classes of Series 2000-1 Notes MIRANT CORP: Wants Approval of Econnergy Settlement Agreement MORTGAGE ASSET: Fitch Rates Ser. 2004-5 Classes B-4 & B-5 at BB/B MEDIAWORX INC: Gary L. Cain Discloses 89% Equity Stake NEW HEIGHTS RECOVERY: Case Summary & Largest Unsecured Creditors NEWTECH BRAKE: Ex-Auditor Mark Cohen Expresses Going Concern Doubt NOVA CDO: S&P Places Class C & D Notes on CreditWatch Negative ONEIDA LTD: Lenders Agree to Forbear Until June 15, 2004 OWENS CORNING: Wants Lease Decision Deadline Extended to Dec. 4 PARMALAT: Portola Tightens Credit Controls to Minimize Exposure PEREGRINE SYSTEMS: Files Delayed 2003 Annual Report with SEC POLAROID: Distributes Additional 3MM Shares to Unsecured Creditors RELIANCE FINANCIAL: Summary & Overview of Bank Committee's Plan REEVES COUNTY: S&P Removes Affirmed BB Rating from Credit Watch RIGGS NATIONAL: Fitch Maintains Negative Watch on BB/D Ratings SAMSONITE: Offering to Buy 10-3/4% Senior Notes Until May 27 SEQUOIA MORTGAGE: Fitch Rates $2MM Class B-5 Notes at B SHELBOURNE II: Transfers Remaining Assets to Liquidating Trust SIERRA PACIFIC: S&P Rates Proposed $50MM Synthetic Bank Loan at BB SOLUTIA: Equity Panel Wants to Hire Pillsbury Winthrop as Counsel SOLUTIA INC: Plans to Increase Adipic Acid Price on May 15 SOLUTIA: Nylon Industrial Fiber Price to Increase by 10% on May 15 SR TELECOM: Streamlines Operations to Reduce Costs STEAKHOUSE PARTNERS: Reorganized Company Trades Under STKP Symbol SHURGARD STORAGE: Fitch Monitors 10K Filing & Liquidity Status TANDUS GROUP: Talking with Lenders to Amend Debt Covenants TENNECO AUTOMOTIVE: Launches Sr. Debt Offer & Consent Solicitation UNITED AIRLINES: Wants to Assume San Francisco Airport Lease UTEX INDUSTRIES: Employs Bracewell & Patterson as Attorneys WINSTAR: Trustee Agrees to Resolve Marconi Adversary Proceeding WOMEN FIRST: Case Summary & 20 Largest Unsecured Creditors YOUTHSTREAM MEDIA: Joseph Corso, Jr. Discloses 9.4% Equity Stake * FindProfit.com Initiates Coverage on Troubled Telecom Companies * Large Companies with Insolvent Balance Sheets ********* ADELPHIA BUSINESS: Inks Stipulation Resolving Qwest Claim Disputes ------------------------------------------------------------------ Qwest Communications Corporation asserts that it currently holds general unsecured claims for $22,449,866 and unpaid administrative claims for $3,413,945 against the Adelphia Business Solutions, Inc. (ABIZ) Debtors. Qwest !nterprise America, Inc., asserts that it currently holds general unsecured claims for $1,984,723 against the ABIZ Debtors. The Qwest Communications Agreements Judy G.Z. Liu, Esq., at Weil, Gotshal & Manges, LLP, in New York, informs the Court that Qwest Communications and one or more of the ABIZ Entities entered into these agreements: (a) June 30, 1998 IRU Agreement (b) November 3, 2000 IRU Agreement (c) June 29, 2001 IRU Agreement (d) June 29, 2001 Columbus Conduit Sale (e) September 18, 2000 ICG Re-Bill Letter Agreement (f) September 18, 2000 Brooks Fiber Re-Bill Letter Agreement (g) September 29, 1999 Access Service Agreement The June 1998 IRU ----------------- On June 30, 1998, ABIZ and Qwest Communications entered into the June 1998 IRU, which granted ABIZ an indefeasible right of use in various long haul fiber segments throughout the eastern United States. Pursuant to the June 1998 IRU, Qwest Communications provided ABIZ with as-built drawings of the telecommunications fiber routes. Based on the Drawings, ABIZ contends that the actual fiber mileage delivered to and accepted by ABIZ from Qwest Communications was less than the 4,750 miles that Qwest Communications initially estimated in the June 1998 IRU. As a result, the IRU fee and maintenance obligations due to Qwest Communications under the June 1998 IRU should be reduced by $1,000,000. Qwest Communications disputes ABIZ's interpretation of the number of miles delivered to and accepted by ABIZ pursuant to the June 1998 IRU, and contends that an accurate true-up would indicate that the actual number of miles delivered to and accepted by ABIZ was 4,774.56, and, therefore, the IRU fee and maintenance obligations under the June 1998 IRU would actually be greater than the amount that was invoiced by Qwest Communications. ABIZ argues that it assigned to Adelphia Communications Corporation its rights in and to the segment of the June 1998 IRU Fiber Route from Cleveland, Ohio to Pittsburgh, Pennsylvania. Qwest Communications asserts that it holds against the ABIZ Debtors a general unsecured claim for $631,680 and administrative expense claims for $3,264,832, against the ABIZ Debtors arising from the June 1998 IRU. November 2000 IRU ----------------- Pursuant to the November 2000 IRU, Qwest Communications granted ABIZ an IRU for an aggregate purchase price of $8,728,000. ABIZ paid the $2,182,000 initial purchase installment but did not pay the final installment and other related prepetition charges, which Qwest Communications asserts as $7,192,746. Qwest Communications avers that ABIZ owes it $149,113 in the aggregate for unpaid administrative expenses relating to the November 2000 IRU. In June 2002, ABIZ rejected the November 2000 IRU. Qwest Communications requested that ABIZ abandon all of its rights and interests arising from, or related to, the November 2000 IRU. June 2001 IRU ------------- ABIZ granted Qwest Communications an IRU along routes to be constructed by ABIZ in the Detroit metropolitan area for a $10,335,000 purchase price. Qwest Communications paid the purchase price in full. Construction of the June 2001 IRU was never completed, and ABIZ rejected the June 2001 IRU in February 2003. Qwest Communications asserts that ABIZ owes it $10,335,000 as a prepetition rejection damage claim. ICG Re-Bill Agreement --------------------- Qwest Communications and ABIZ agreed that, pursuant to the ICG Re-Bill Agreement, ABIZ would pay invoices received from ICG Communications, Inc., on Qwest Communications' behalf, and re- bill Qwest Communications at a 10% discount. Qwest Communications believes that it holds a prepetition damage claim relating to the ICG Re-Bill Agreement for $795,792, which consists of: (1) $245,213 paid to ABIZ by Qwest Communications for ICG invoices, which ABIZ did not remit to ICG; and (2) $61,980 in taxes and $488,599 in primary rate interface charges which Qwest Communications asserts were improperly billed by ABIZ to Qwest Communications. Brooks Re-Bill Agreement ------------------------ Qwest Communications and ABIZ agreed, pursuant to the Brooks Re-Bill Agreement, that ABIZ would pay invoices received from Brooks Fiber on Qwest Communications' behalf, and re-bill Qwest Communications at a 10% discount. Qwest Communications believes that it holds a prepetition damage claim relating to the Brooks Re-Bill Agreement for $3,472,554, which consists of: (1) $233,046 paid to ABIZ by Qwest Communications for Brooks' invoices, where ABIZ did not pay Brooks on those same invoices; and (2) $3,239,509 for late payment, installation and tax charges under the Brooks Re-Bill Agreement, which Qwest Communications asserts were improperly billed by ABIZ to Qwest Communications. Unpaid Facility Costs --------------------- Qwest Communications asserts a prepetition damage claim against the ABIZ Debtors amounting to $22,094 for unpaid facility costs. The Qwest !nterprise Agreements On December 29, 2000, ABIZ and Qwest !nterprise entered into a Network Services Agreement. Pursuant to the Agreement, Qwest !nterprise purchased PRI services from ABIZ to meet Qwest !nterprise's commitments under a separate agreement with Genuity Solutions, Inc. In addition, ABIZ and Qwest !nterprise entered into a collocation agreement dated October 12, 1998. A dispute arose under the Qwest !nterprise Agreements related to the payment of right-of-way fees to the City of Houston, Texas. The Houston Payments relate to circuits provisioned for Qwest !nterprise by one or more of the ABIZ Entities, which circuits are then resold by Qwest !nterprise to Genuity. Qwest !nterprise admits that it owes one or more of the ABIZ Entities $1,436,053 relating to prepetition charges for PRI Services rendered, and asserts that one or more of the ABIZ Debtors owes Qwest !nterprise $1,984,723 for improperly billed subscriber line charges that Qwest !nterprise paid to the ABIZ Entities. Qwest !nterprise further contends it has a right to set off the amount allegedly owed by the ABIZ Entities for the SLC Charges and the amount owed by Qwest !nterprise for the PRI Services, which would result in a $548,670 net prepetition unsecured claim for Qwest !nterprise. As of May 31, 2003, Qwest !nterprise discontinued all the services that it ordered under the Qwest !nterprise Agreements. ABIZ Debtors' Claims Against the Qwest Entities The ABIZ Debtors assert that they currently hold claims against either Qwest Communications or Qwest !nterprise for $15,499,555. The NSA ------- ABIZ asserts that Qwest !nterprise breached the NSA and that ABIZ is therefore entitled to $12,450,000 in damages. Qwest !nterprise admits it owes one or more of the ABIZ Entities $1,436,053 for prepetition PRI Services. Access Service Agreement ------------------------ On September 29, 1999, ABIZ and Qwest Communications entered into the Access Service Agreement wherein ABIZ agreed to provide telecommunications services to Qwest Communications. ABIZ asserts that, notwithstanding that Qwest !nterprise was not a party to the Access Service Agreement, Qwest !nterprise purchased services from ABIZ under the Access Service Agreement, which services were later cancelled by Qwest !nterprise. ABIZ asserts that Qwest !nterprise owes ABIZ $600,000 for early termination charges under the Access Service Agreement. Qwest Communications believes that, as of the Petition Date, it owes ABIZ, $202,993 for access service charges arising under the Access Service Agreement. Qwest Communications further asserts that it has the right to set off the $202,993 against Qwest Communications' aggregate prepetition general unsecured claim for $22,449,866. ABIZ contends that Qwest Communications owes $260,510 for postpetition services provided under the Access Service Agreement through December 31, 2003. The Collocation Agreement ------------------------- ABIZ asserts that Qwest !nterprise owes ABIZ $300,000 for early termination charges due to Qwest !nterprise's discontinuance of services under the Collocation Agreement. Columbus Conduit Sale Agreement ------------------------------- On June 29, 2001, Qwest Communications and Adelphia Business Solutions Long Haul, L.P., entered into the Columbus Conduit Sale Agreement wherein Qwest Communications sold to Long Haul all rights, title, and interests in and to two conduits on a multiple conduit system being constructed by Qwest Communications in the Columbus, Ohio metropolitan area. Certain matters with respect to the Columbus Conduit Sale Agreement were recently settled by way of an Amendment to the Sale Agreement, which the Court approved on February 18, 2004. The Amendment provides that Long Haul is entitled to a $250,000 offset against future maintenance and operation fees otherwise due to Qwest Communications under the June 1998 IRU. Summary of the Claims The claims asserted by the Qwest Entities against the ABIZ Debtors are: Unsecured Admin Description Qwest Entity Claim Claim ----------- ------------ --------- ----- June 1998 IRU Communications $631,680 $3,264,832 November 2000 IRU Communications 7,192,746 149,113 June 2001 IRU Communications 10,335,000 0 ICG Re-Bill Communications 795,792 0 Brooks Fiber Re-Bill Communications 3,472,554 0 Facility Costs Communications 22,094 0 SLC Charges !nterprise $1,984,723 0 ----------- ---------- TOTAL $24,434,589 $3,413,945 The ABIZ Debtors assert these claims against either Qwest Communications or Qwest !nterprise: Description Against Amount ----------- ------- ------ NSA - Damage Claim Qwest !nterprise $12,450,000 NSA - Pre-Petition PRI Services Qwest !nterprise 1,436,053 Access Service Agreement - Postpetition Early Termination Charges Qwest !nterprise 600,000 Access Service Agreement - Prepetition Access Service Charges Qwest Communications 202,993 Access Service Agreement - Postpetition Access Service Charges Qwest Communications 260,509 Collocation Agreement - Postpetition Early Termination Charges Qwest !nterprise 300,000 Columbus Credit Qwest Communications 250,000 ----------- TOTAL $15,499,555 Stipulation To resolve their dispute, the Parties stipulate that: (1) Long Haul will be deemed to have used the Columbus Credit to offset the amount otherwise due to Qwest Communications for the first quarter 2004 recurring operations and maintenance obligations under the June 1998 IRU. The recurring operations and maintenance obligations total $470,683; (2) Long Haul will pay Qwest Communications $220,683, which represents the net balance due to Qwest Communications for the first quarter 2004 recurring operations and maintenance obligations under the June 1998 IRU after application of the Columbus Credit. Long Haul will also pay Qwest Communications for any non-recurring operations and maintenance obligations for the first quarter 2004, which may be due; (3) Commencing April 1, 2004, the ABIZ Debtors will be responsible and liable for and will timely pay all recurring and non-recurring operations and maintenance obligations due to Qwest Communications under the June 1998 IRU; (4) Qwest Communications will pay ABIZ the Unpaid Access Service Charges amounting to $260,510; (5) The Parties value the remaining Qwest Claims and the ABIZ Debtors Claims equally and these Claims will be deemed set off and satisfied in full. The Parties expressly consent to and acknowledge the validity of the set-offs without the mutuality of the entities subject to the set- offs; (6) ABIZ will be deemed to assume the June 1998 IRU and Qwest Communications consents to the assumption and waives all defaults that arose before December 31, 2003; (7) The June 1998 IRU Mileage Dispute is resolved and the agreed mileage delivered by Qwest Communications to the ABIZ Debtors pursuant to the June 1998 IRU is 4,774.56 miles for all purposes, including for the calculation of future maintenance and operating obligations; (8) Qwest Communications will exercise its commercially reasonable, good faith efforts to separate the June 1998 IRU into two separate IRUs on the same terms as is currently contained in the June 1998 IRU, one with ACOM specific to the ACOM Segment, and the other with the ABIZ Debtors specific to all other route segments under the June 1998 IRU; (9) The ABIZ Debtors' interests in the November 2000 IRU and the capacity acquired pursuant to the November 2000 IRU will be deemed immediately abandoned to Qwest Communications; and (10) Qwest !nterprise and the ABIZ Debtors agree to jointly submit to the City of Houston: (a) a check from Qwest !nterprise for $129,318, representing the total amount due to the City of Houston with respect to the Genuity Dispute; (b) a written request from the ABIZ Debtors to withdraw its refund claim dated April 23, 2003 with the City of Houston; and (c) a cover letter to explain the resolution of the matter and the reservation of rights for future claims that will jointly be prepared by Qwest !nterprise and ABIZ. No action under the Stipulation will be considered as an admission by the Parties as to the proper apportionment of the payment of fees to the City of Houston with respect to the Genuity Dispute, or the validity of the claim. Headquartered in Coudersport, Pennsylvania, Adelphia Business Solutions, Inc., now known as TelCove -- http://www.adelphia- abs.com/ -- is a leading provider of facilities-based integrated communications services to businesses, governmental customers, educational end users and other communications services providers throughout the United States. The Company filed for Chapter 11 protection on March March 27, 2002 (Bankr. S.D.N.Y. Case No. 02- 11389) and emerged under a chapter 11 plan on April 7, 2004. Harvey R. Miller, Esq., Judy G.Z. Liu, Esq., Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $ 2,126,334,000 in assets and $1,654,343,000 in debts. (Adelphia Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Monitor Provides Update on Efforts to Raise Equity -------------------------------------------------------------- Air Canada provides the following update on the airline's restructuring under the Companies' Creditors Arrangement Act: Twenty-Fifth Report of the Monitor Now Available The Twenty-Fifth Report of the Monitor has been completed by Ernst and Young Inc. The report includes an update on the following: 1) An update on efforts to raise the equity required by Air Canada to successfully emerge from CCAA protection; 2) A summary of an expanded creditor rights offering and the terms of the amended and restated Deutsche Bank standby purchase agreement. The Rights Offering and the $850 million Deutsche Bank Standby Agreement will become cornerstone of the Equity Process, subject to the Court's approval. 3) An outline of a private equity solicitation process to be commenced on May 5, 2004 to raise a possible additional $250 million, subject to approval by the Court. 4) Details on the extension of the Global Restructuring Agreement with GE Capital Aviation Services (GECAS); and 5) Details of an agreement with the Greater Toronto Airport Authority(GTAA). In the report, the Monitor states that the amended agreement with Deutsche Bank will provide immediate certainty to stakeholders that Air Canada will have the equity financing required by the business plan in order to emerge from CCAA on an accelerated timeline. Furthermore, the agreement provides immediate stability to Air Canada and assurance to the traveling public prior to the peak travel season. The Monitor notes that certain key conditions to the amended Deutsche Bank Agreement must be met by May 15,2004 and that five milestone s must also be achieved to ensure the continued availability of the GECAS Global Restructuring Agreement. The Monitor recommends that the Court approve both the amended Deutsche Bank agreement and the Private Equity Process. 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. AIRNET COMMS: Obtains $3MM in Purchase Orders from TECORE Wireless ------------------------------------------------------------------ AirNet Communications Corporation (Nasdaq:ANCC), the technology leader in software defined base station products for wireless communications, announced that it has received approximately $3M in purchase orders from TECORE Wireless Systems for three new international deployments in the Middle East and Africa. These orders include the purchase of AirNet's AdaptaCell BTS 4000 together with the "Triple Capacity" AirSite Backhaul Free base station, and related common equipment. A portion of these orders have shipped in the first quarter and the remainder is scheduled to ship in the second quarter of this year. The AdaptaCell BTS 4000 product line is AirNet's latest broadband, software defined base station and it represents the state of the art in GSM 2.5G communications. These orders mark the first shipment of this product line into offshore markets. In addition to being more compact and reliable, the BTS 4000 has the capability of easily upgrading to adaptive array and high-speed data applications. "TECORE's full range of GSM network solutions have been well received by our customers in the Middle East and Africa markets," said Jay Salkini, Chairman and CEO of TECORE. "We continue to grow our presence throughout the region by offering cost-effective solutions for a variety of GSM applications capable of providing service in a wide range of environmental operating conditions. TECORE's stated goal is to bring affordable and reliable wireless communications to everyone in these emerging markets." "TECORE has done a tremendous job of developing new markets in the Middle East and Africa," said Glenn Ehley, President & CEO of AirNet Communications. "Our AdaptaCell 4000 product line offers our customers all the advantages of our broadband, software- defined radio technology at reduced price points with improved functionality." About TECORE TECORE Wireless Systems is a global supplier of turn-key wireless mobility networks for regional and country-wide deployments and solutions for migrating existing networks to advanced digital wireless technologies while expanding coverage and capacity. The company's turn-key solutions include its AirCorer Mobile Switching System at the core of the network in conjunction with GSM/GPRS, CDMA and TDMA base station solutions to deliver fully-integrated feature-rich services. About AirNet AirNet Communications Corporation is a leader in wireless base stations and other telecommunications equipment that allow service operators to cost-effectively and simultaneously offer high-speed wireless data and voice services to mobile subscribers. AirNet's patented broadband, software-defined AdaptaCell SuperCapacity adaptive array base station solution provides a high-capacity base station with a software upgrade path to high-speed data. The Company's AirSite Backhaul Free base station carries wireless voice and data signals back to the wireline network, eliminating the need for a physical backhaul link, thus reducing operating costs. The Company's RapidCell base station provides government and military communications users with up to 96 voice and data channels in a compact, rapidly deployable design capable of processing multiple GSM protocols simultaneously. AirNet has 69 patents issued or filed and has received the coveted World Award for Best Technical Innovation from the GSM Association, representing over 400 operators around the world. More information about AirNet may be obtained at http://www.airnetcom.com/ * * * As reported in the Troubled Company Reporter's March 10, 2004 edition, AirNet Communications Corporation announced that its auditors, Deloitte & Touche LLP, had informed the Company that its independent auditors' report issued with the Company's financial statements as of and for the year ended December 31, 2003 will include a paragraph that describes conditions that give rise to substantial doubt about the Company's ability to continue as a going concern. This paragraph is consistent with the going-concern paragraph received by the Company in fiscal years 2001 and 2002. Such conditions and management's plans concerning those matters will be disclosed in the annual financial statements included in Form 10-K. AMERICAL CORP: Hires Beane Associates as Turnaround Managers ------------------------------------------------------------ Americal Corporation is asking permission from the U.S. Bankruptcy Court for the Eastern District of North Carolina, Raleigh Division, to employ Beane Associates, Inc., as its turnaround managers. Beane Associates has a depth of experience in turnaround situations, including Bankruptcy proceedings. Beane is a turnaround and crisis management consulting firm with offices in Wilmington, Delaware. Thoms J. Beane reports that his firm will bill the Debtor its current hourly rates of: Staff Designation Billing Rate ----------------- ------------ senior consultants $235 to $250 per hour consultants $200 to $225 per hour Beane Associates will: a) give advice and assistance in the preparation of reports or filings as required by the Bankruptcy Court or the Office of the Bankruptcy Administrator, including any monthly operating reports and Schedules of Assets and Liabilities or Statements of Financial Affairs and Executory Contracts; b) work with the Debtor and its professionals, as requested and to the extent not duplicative of other efforts, with various analyses necessary for formulation of a plan of reorganization including analyses relevant to creditor claims, preference or other avoidance actions, and structuring a plan of reorganization; c) give advice and assistance in the preparation of financial information and documents necessary for confirmation of this chapter 11 case including information contained in the disclosure statement; d) attend meetings of the Debtor's management and counsel focused on the coordination of resources related to the ongoing bankruptcy reorganization effort, as requested; and e) give advice and assistance to the Debtor in the identification of and, to the extent requested, consultation related to the implementation of internal cost reduction and cash management plans. Headquartered in Henderson, North Carolina, Americal Corporation manufactures Peds brand socks and hosiery. The Company filed for chapter 11 protection on April 7, 2004 (Bankr. E.D.N.C. Case No. 04-01333). J. William Porter, Esq., at Parker Poe Adams & Bernstein, LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $18,753,485 in total assets and $25,825,055 in total debts. AMERICAN UNITED: Says Unable to Pay Possible NY Med. Liabilities ---------------------------------------------------------------- On June 16, 2003, American United Global, Inc., a Delaware corporation, Lifetime Acquisition Corp., a Delaware corporation and wholly owned subsidiary of the Company ("Merger Sub"), and Lifetime Healthcare Services, Inc., a Delaware corporation, entered into an Amended and Restated Agreement and Plan of Merger. The Merger Agreement was approved by the Board of Directors of each of the companies, on June 13, 2003 and by the stockholders of Lifetime and Merger Sub on June 13, 2003. Prior to the Merger, the Rubin Family Irrevocable Stock Trust owned approximately 77.6% of the shares of the common stock, par value $.01 per share, of the Company. On June 17, 2003, the Company, through Merger Sub, acquired 100% of the capital stock of Lifetime. Pursuant to the Merger Agreement, Merger Sub was merged with and into Lifetime, with Lifetime continuing as the surviving corporation of the Merger and a wholly-owned subsidiary of the Company. At the time of the Merger, Lifetime was a holding company whose only asset consisted of its ownership of 55% of the outstanding capital stock of NY Medical, Inc., a New York corporation, acquired by Lifetime immediately prior to the consummation of the Merger. In connection with the Merger, the Company issued an aggregate of 467,500 shares of its newly authorized and designated B-2 Preferred to the former Lifetime stockholders. Each share of the B-2 Preferred was convertible, on or after December 17, 2003 (or earlier upon the occurrence of certain specified events), into 20 shares of Company common stock, or an aggregate of 9,350,000 shares of Company common stock if all shares of B-2 Preferred were converted. In contemplation of the Merger Agreement, the Company declared a stock dividend on the Company common stock with a record date of June 10, 2003. The stock dividend took the form of the issuance of 232,500 shares of the Company's newly authorized and designated Series B-3 Convertible Preferred Stock to the holders of the Company common stock on the record date on a pro rata basis. Each share of the B-3 Preferred is convertible, on or after December 17, 2003 (or earlier upon the occurrence of certain specified events), into 20 shares of Company common stock. The shares of B-3 Preferred are convertible at the option of the holder of such share or pursuant to a resolution in favor thereof by the Board of Directors of the Company. Accordingly, an aggregate of 4,650,000 shares of Company common stock would be issued to the Company's record holders of the B-3 Preferred if all shares of B-3 Preferred are converted. Immediately prior to the consummation of the Merger and the Company's acquisition of Lifetime, Lifetime acquired 5% of the capital stock of NY Medical pursuant to a Stock Purchase Agreement, dated March 21, 2003, as amended. NY Medical provides facilities and management services for various medical practices which specialize in areas of neurology, orthopedics, psychiatry and internal medicine. The selling NY Medical stockholder was Redwood Investment Associates, L.P., an affiliate of Dr. Jonathan Landow, the President and Chief Executive Officer of NY Medical. Under the terms of the NY Medical Stock Purchase Agreement, Lifetime issued to Redwood a $5,500,000 principal amount 6% convertible note, of which $2,000,000 is due and payable on or before March 22, 2004. In connection with the Merger, the Company unconditionally guaranteed the Lifetime Note. The balance of the Lifetime Note is payable in seven quarterly installments of $500,000 each, commencing July 1, 2004 and is convertible at the option of the holder into shares of Company common stock at a conversion price of $4.00 per share. Each principal installment due under the Lifetime Note is also subject to mandatory conversion in the event that the closing price of the Company common stock equals or exceeds $4.80 per shares for the 30 consecutive trading days ending the last trading day prior to the subject installment payment date. In addition to the Lifetime Note, the Company also guaranteed payment by NY Medical of a separate $4,662,830 principal amount 6% Amended and Restated Senior Subordinated Term Loan Promissory Note of NY Medical, dated as of June 16, 2003 and payable to Tracy Landow, as assignee of Dr. Jonathan Landow. Under the terms of a certain Closing Agreement dated June 16, 2003, between the Company, Lifetime, Dr. Jonathan Landow, Tracy Landow, certain former stockholders of Lifetime, the Rubin Family Irrevocable Stock Trust (the record owner of approximately 77.6% of the outstanding Company common stock at the time of the Merger) and Robert M. Rubin, the Company agreed to pay at least $3,662,830 of principal and all accrued interest due under the Landow Note by October 17, 2003. The Closing Agreement also provides that if, for any reason, the Company and/or Lifetime is unable to pay at least $3,662,830 of principal and all accrued interest due under the Landow Note by October 17, 2003 (subject only to the potential deferral of $500,000 of such amount for up to six months) and/or pay the Landow Note in full and an aggregate of $2,000,000 in principal amount of the Lifetime Note by March 22, 2004, a "Default Event" will be deemed to have occurred. In such event, Dr. Landow has the right to cause the Company to engage the services of an investment banker to sell NY Medical at the highest available price and (subject to the Company's receipt of an opinion from such banker that the terms of sale are fair, from a financial point of view, to the Company, Lifetime and the Company's stockholders, giving effect to the NY Medical Stock Purchase Agreement and the Closing Agreement) may compel the Company to consummate such sale. Pending consummation of the Payment Events or forced sale of NY Medical, the parties to the Closing Agreement agreed -- upon certain mutual covenants in respect of the activities of the Company and the operation and control of the NY Medical business, -- that Redwood would have the right to nominate two persons to constitute a majority of the Board of Directors of each of NY Medical and Lifetime, and -- that the Board of Directors of the Company would be reconstituted to consist of five persons; Robert M. Rubin and another person acceptable to him, two nominees of Redwood, and a fifth independent director to be mutually acceptable to each of Mr. Rubin and Redwood. Mr. Rubin remained on the Company Board of Directors and designated C. Dean McLain as his additional designee on the Company's Board of Directors and Messrs. David Barnes, Michael Metter and Howard Katz were asked to tender their resignations as directors, and Messrs. Barnes and Metter tendered their resignations. In addition, Dr. Jonathan Landow, Stuart B. Fause and John F. Good were nominated and elected to the Company Board of Directors with the approval of Messrs. Rubin and McLain. The Closing Agreement also provided that in the event a forced sale of NY Medical were to occur, the proceeds of such sale would be applied in the following order of priority: -- to pay transaction costs (other than the fairness opinion, which is to be paid by the Company); -- to pay all indebtedness of NY Medical (other than approximately $1,500,000 of NY Medical indebtedness owed to the Company); -- to pay all obligations under the Landow Note and the Lifetime Note; -- to pay the costs of the fairness opinion; and -- to the Company, to the extent of any remaining net proceeds. To the extent that all obligations under the Landow Note and the Lifetime Note are not paid in full out of the proceeds of the NY Medical forced sale, the Company was to be liable for any unpaid balance due within six months following such sale. The Company will, however, have the right to demand and receive payment from NY Medical on any unpaid amount due on the Company's loans to NY Medical in the principal aggregate amount of $1,500,000. The Company, as the parent company of Lifetime, also entered into a shares exchange agreement to acquire the remaining 45% of the outstanding capital stock of NY Medical from the New York Medical Employee Stock Ownership Plan and Trust in exchange for approximately $4,500,000 of the Company's convertible preferred stock. During 2003, the Company loaned Lifetime (which, in turn, loaned such funds to NY Medical) and NY Medical an aggregate of $1,500,000, which NY Medical has used primarily for working capital purposes and to reduce NY Medical's indebtedness to DVI. The $1,500,000 of Company loans were consolidated and are now evidenced by NY Medical's 6% note to the Company due as to principal and interest on January 2, 2004 and secured by a lien and security interest on all of the assets and properties of NY Medical, which lien and security interest is secondary only to the liens held by DVI or any substitute senior secured lender. On June 17, 2003, the Company received an aggregate of $1,350,000 (net of selling commissions) in connection with the sale of $1,500,000 in aggregate principal amount of 10% convertible notes due March 2004 (the "Bridge Notes") through Vertical Capital Partners, a member of the NASD. Robert DePalo, a former officer of Lifetime and affiliate of a former Lifetime stockholder, is also affiliated with Vertical Capital Partners. The principal and interest due under the Bridge Notes are convertible into Company common stock at any time at $1.00 per share. In addition, the purchasers of the Bridge Notes received five year warrants to purchase an aggregate of 1,000,000 shares of Company common stock; provided, that if the principal and interest due under Bridge Notes have not been paid in full by October 17, 2003, the number of shares issuable upon exercise of the warrants will increase to 1,250,000 shares, and increase further to an aggregate of 1,500,000 shares in the event that, for any reason, the Bridge Notes have not been paid in full by January 17, 2005. The warrants are exercisable at the price of $0.75 per share. The Company utilized an aggregate of approximately $650,000 of the net proceeds from the sale of the Bridge Notes to increase its outstanding loans to Lifetime and NY Medical from $850,000 to $1,500,000. The Company secured the Bridge Notes by assigning to the holders its lien and security interest on the assets of NY Medical. Subsequent Events; Rescission of Lifetime Merger and NY Medical Acquisition and Related Transactions Following its June 2003 acquisitions of Lifetime and 55% of the capital stock of NY Medical, the Company attempted to consummate a private placement of its securities in order to raise approximately $5.7 million to pay $2.0 million principal amount of the Lifetime Note and retire the Landow Note in order to satisfy both of the October 17, 2003 "Payment Events" under the Closing Agreement with the former principal owner of NY Medical and its affiliates. In October 2003, Dr. Landow, acting on behalf of NY Medical, Tracy Landow and Redwood, extended the due date to satisfy the Payment Events to November 17, 2003, in consideration for the Company's agreement to extend the due date of the $1,500,000 NY Medical Note payable to the Company to January 2, 2005. Notwithstanding the extension, the Company was unable to consummate the requisite financing by the extended date, and in November 2003, Dr. Landow declared a Default Event. On December 5, 2003, written notice of a special telephonic meeting of the Board of Directors to be held on Monday, December 8, 2003 was transmitted by Messrs. Landow, Fause and Good to Messrs. Rubin and McLain; the purpose of which special meeting, among other things, was to consider a possible rescission of the acquisition of 55% of the capital stock of NY Medical by the Company and the transactions relating thereto. On December 8, 2003, a telephonic meeting of the Board was convened. As a result of such Board Meeting, minutes were prepared and executed by Messrs. Landow, Fause and Good, and on December 9, 2003, a rescission agreement among the Company, Lifetime Acquisition Corp., Lifetime, NY Medical, Redwood and the ESOP, dated as of December 9, 2003 was entered into and delivered to counsel to the Company and Messrs. Rubin and McLain. Under the terms of such Rescission Agreement: -- the Merger, Lifetime Merger Agreement and all related Merger Documents were cancelled and rescinded and rendered null and void, ab initio, for all purposes, including for tax purposes; -- the NY Medical Stock Purchase Agreement, the acquisition of capital stock of NY Medical and all transactions relating thereto were cancelled and rescinded and rendered null and void, ab initio, for all purposes, including for tax purposes; -- the Share Exchange Agreement between the Company and the ESOP and all transactions relating thereto were cancelled and rescinded and rendered null and void, ab initio, for all purposes, including for tax purposes; and -- in order to enable the Company to repay the $1.5 million of Bridge Notes owed to certain investors in March 2004, NY Medical agreed under the terms of the Rescission Agreement that "the NY Medical Note shall be modified such that all principal and interest thereunder shall be due from NY Medical to AUGI on March 30, 2004." In consideration of such modification, the Rescission Agreement permits NY Medical or its representatives to communicate directly with the holders of the Bridge Notes for the purpose of, among other things, negotiating an alternative mechanism for the payment of the Bridge Notes. Subsequent to December 9, 2003, Mr. Rubin objected to the December 8, 2003 Company Board of Directors meeting and the Rescission Agreement for a variety of reasons, including, the alleged failure to properly convene such meeting or have a valid quorum of directors present. On December 12, 2003, counsel for NY Medical and Redwood commenced a lawsuit against the Company, Lifetime, Robert M. Rubin, Kenneth Orr and Robert DePalo in the New York State Supreme Court seeking, among other things to declare the Rescission Agreement as valid and effective and also seeking monetary damages against the defendants for fraudulent inducement, unjust enrichment and breach of fiduciary duties and breach of contract. The Company and its counsel believe that the suit is totally without merit and that the Company has a number of valid defenses and counterclaims against Dr. Landow and NY Medical. Since late December 2003, the parties have been holding discussions with a view toward settling the dispute, and the defendants in the above litigation have been granted extensions to answer or otherwise plead. On March 8, 2004, corporate counsel to the Company advised counsel to NY Medical, Redwood and its affiliates that each of the Company and Messrs. Rubin and McLain, as members of the Board of Directors of the Company have reconsidered their position and that they agree with NY Medical, Redwood, Dr. Landow, Tracy Landow and the ESOP that: -- effective as of December 9, 2003, the Merger, Lifetime Merger Agreement and all related Merger Documents are null and void, ab initio, for all purposes, including, without limitation, for tax purposes; -- effective as of December 9, 2003, the NY Medical Stock Purchase Agreement, the acquisition of capital stock of NY Medical and all transactions contemplated thereby are null and void, ab initio, for all purposes, including, without limitation, for tax purposes; and -- effective as of December 9, 2003, the Share Exchange Agreement between the Company and the ESOP and all transactions contemplated thereby are null and void, ab initio, for all purposes, including, without limitation, for tax purposes; and -- all principal amount of and accrued interest on the NY Medical Note is, in fact, due and payable on March 30, 2004, and NY Medical shall have the right to communicate directly with the holders of the Bridge Notes for the purpose of, among other things, negotiating an alternative mechanism for the payment of the Bridge Notes. The Company's counsel's letter did not condition acceptance of the above arrangements upon a dismissal or voluntary settlement of the pending litigation, but rather requested that NY Medical or its counsel advise as to mechanisms for NY Medical to (a) communicate with the holders of the Bridge Notes, (b) effect full payment on March 30, 2004 of the NY Medical Note, and (c) return the stock certificates and other documents to effect the transactions contemplated by the Rescission Agreements. As of March 22, 2004, neither the Company nor its counsel have been formally contacted by NY Medical or its counsel concerning such matters. As a result of the consummation of the transactions contemplated by the Rescission Agreement: -- 55% of the capital stock of NY Medical will be returned to Redwood and the proposed Share Exchange with the ESOP will be cancelled; -- the Lifetime Merger is cancelled and rescinded, and all shares of Company Series B-2 Preferred Stock issued to the former stockholders of Lifetime are rendered null and void, without any further value or rights, and returned to the treasury of the Company for cancellation; -- all stock options issued to Dr. Landow, Joseph Ciavarella, directors designated by Dr. Landow and other employees of NY Medical are cancelled; and -- effective as of December 9, 2003 each of Dr. Landow, Stuart Fause and John Good is deemed to have resigned as a member of the Board of Directors of the Company or otherwise removed as a member of such Board of Directors by The Rubin Family Irrevocable Stock Trust, as the principal stockholder of the Company. -- the Company cancelled options to purchase an aggregate of approximately 2,100,000 shares of Company common stock; -- the Company cancelled the 467,500 shares of B-2 Preferred Stock convertible into an aggregate of 9,350,000 shares of Company common stock which were issued to the former stockholders of Lifetime; and -- the Company cancelled the $5,500,000 Landow Note. Effect of the Rescission of the NY Medical and Related Transactions As of March 22, 2004, the Company is in default in payment of the $1.5 million of Bridge Notes that were due and payable on March 17, 2004. On March 30, 2004, the $1.5 million of NY Medical Notes are due and payable; which notes and the Company's subordinated security interest in the assets of NY Medical have been assigned to the holders of the Bridge Notes. It is expected that representatives of the Company and NY Medical will attempt to negotiate extensions of such obligations or otherwise enter into compromise arrangements with the holders of the Bridge Notes. The Company has been advised that NY Medical is currently negotiating to refinance its indebtedness owed to DVI Business Credit Corp., the senior secured lender to NY Medical, that holds a first priority lien and security interest on all of the assets of NY Medical. In the event that NY Medical does not successfully refinance its obligations to DVI, or should either the Company or the holders of the Bridge Notes demand payment of the NY Medical Note and seek to foreclose on the assets of NY Medical, it may be expected that DVI will foreclose on its priority lien on such NY Medical assets. In such event it is probable that neither the holders of the Bridge Notes nor the Company will receive significant net proceeds, if any, from the liquidation of the collateral. The Company's cash position as at March 15, 2004 is less than $300,000. Inasmuch as the Company no longer owns NY Medical or any other operating business, in the event that any of the holders of the Bridge Notes seek to sue the Company to collect the same, the Company will be unable to pay such Bridge Notes. Accordingly, the Company would not be able to continue as a going concern, and may be required to seek protection from its creditors under Chapter 11 of the Federal Bankruptcy Act. ANITA TERRACE: Chapter 11 Trustee Taps Keen Realty for Auction -------------------------------------------------------------- On Tuesday, April 27, Zachary B. Kass, the Chapter 11 Trustee of Anita Terrace Owners, Inc., Debtor, obtained approval from Judge Carla Craig in the U.S. Bankruptcy Court for the Eastern District of New York of various applications which set in motion the resolution of the three year old bankruptcy of the Anita Terrace Owners, Inc. Anita Terrace Apartments is a 560+/- unit cooperative housing corporation consisting of three 14 story buildings located at 99-40 63rd Road, 99-60 63rd Road and 99-05 63rd Drive, Rego Park, NY 11374. At the bankruptcy court hearing, the Trustee obtained, among other things: (i) The approval of a settlement with the secured lender, RB Asset (a successor to River Bank) and a settlement with the sponsor, ViSutton Associates; (ii) The approval of a "stalking horse" contract to sell the real estate to Anita Rescue LLC, an entity controlled by Laurence Gluck, principal of Stellar Management, subject to higher and better offers in accordance with bidding procedures approved by the Bankruptcy Court; (iii) The approval of the retention of Keen Realty, LLC to market the Stalking Horse contract for higher and better offers and to conduct an auction on Monday, May 24; and (iv) The approval of the Trustee's disclosure statement, subject to minor clarifications. The sales process approved by the Bankruptcy Court requires the submission of bids along with a $5,000,000 deposit to the Trustee by May 18. A party that, among other things, submits a $5,000,000 deposit will be deemed a "Qualified Bidder". Qualified Bidders will be invited to participate in an auction on Monday, May 24, and the Court will review and approve a transaction on Tuesday, May 25. All transactions are required to close prior to June 30, 2004. The stalking horse contract is predicated upon a sale of the premises that would result in the de-conversion of the co-op structure: the buyer will become the new landlord and the former co-op owners will become tenants, subject to rent stabilization regulations. The stalking horse contract is for a price of $52,750,000, and provides for no break-up fee or expense reimbursement. Anyone seeking to outbid the stalking horse contract is required to submit a bid of at least $53,250,000. An alternative deal structure is also authorized by the bidding procedures. In this alternative, a bidder must raise at least $40,150,000, refinance the existing mortgage, pay other claims and expenses, in return the bidder will obtain title to some or all of the 238 sponsor units, and preserve Anita Terraces' cooperative structure. Keen Realty has been retained by the Trustee to market the stalking horse contract. Craig Fox, Vice President of Keen, states, "The Anita Terrace apartments are located in a vibrant Queens' neighborhood and, based on our recent experiences with the sale of multi-family portfolios, we anticipate that this opportunity will attract a significant amount of interest. Given the limited time frame and the rapidly approaching bid deadline and auction, we encourage interested parties to contact us and/or visit our website at KeenConsultants.com as soon as possible." Since 1982, Keen Realty has had extensive experience solving complex problems and evaluating and selling real estate, leases and businesses. Keen is a leader in identifying strategic investors and partners for businesses, has consulted with hundreds of clients nationwide, and has evaluated and disposed of over 250,000,000 square feet of properties. Recent clients include: Arthur Andersen, Cable & Wireless, Fila, Spiegel/Eddie Bauer, Tommy Hilfiger Retail, Warnaco, and financial advisory work for CIBC World Markets and JP Morgan Chase. For more information regarding the Anita Terrace transaction, please contact Keen Realty, LLC, 60 Cutter Mill Road, Suite 407, Great Neck, NY 11021, Telephone: 516-482-2700, Fax: 516-482-5764, e-mail: krc@keenconsultants.com, Attn: Craig Fox. AONIA DEVELOPMENT: U.S. Trustee to Meet with Creditors on May 11 ---------------------------------------------------------------- The United States Trustee will convene a meeting of Aonia Development, LLC's creditors at 2:30 p.m., on May 11, 2004 in the U.S. Trustee Meeting Room at 2929 N. Central Ave., Suite 820, Phoenix, Arizona. 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 Scottsdale, Arizona, Aonia Development, LLC filed for chapter 11 protection on March 31, 2004 (Bankr. D. Ariz. Case No. 04-05474). Richard M. Lorenzen, Esq., at Brown & Bain P.A., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $15,100,001 in asset and $13,777,195 in debts. ARMSTRONG HOLDINGS: Reports on Insurance Recovery Proceedings ------------------------------------------------------------- A substantial portion of Armstrong World Industries, Inc.'s primary and remaining excess insurance asset is non-products (general liability) insurance for personal injury claims, according to Leonard A. Campanaro, Senior Vice-President and Chief Financial Officer of Armstrong Holdings, Inc. and AWI. AWI has entered into settlements with a number of the carriers resolving its coverage issues. However, an alternative dispute resolution procedure was commenced against certain carriers to determine the percentage of resolved and unresolved claims that are non-products claims, to establish the entitlement to that coverage and to determine whether and how much reinstatement of prematurely exhausted products hazard insurance is warranted. The non- products coverage potentially available is substantial and includes defense costs in addition to limits, Mr. Campanaro says. During 1999, AWI received preliminary decisions in the initial phases of the trial proceeding of the ADR, which were generally favorable to AWI on a number of issues related to insurance coverage. However, during the first quarter of 2001, a new trial judge was selected for the ADR. The new trial judge conducted hearings in 2001 and determined not to rehear matters decided by the previous judge. In the first quarter of 2002, the trial judge concluded the ADR trial proceeding with findings in favor of AWI on substantially all key issues. Liberty Mutual, the only insurer that is still a party to the ADR, appealed that final judgment. Appellate argument was held on March 11, 2003. On July 30, 2003, the appellate arbitrators ruled that AWI's claims against certain Liberty Mutual policies were barred by the statute of limitations. Mr. Campanaro notes that the ruling did not address the merits of any of the other issues Liberty Mutual raised in its appeal. Based on that unfavorable ruling, AWI concluded that insurance assets of $73 million were no longer probable of recovery. AWI was also ordered to reimburse Liberty Mutual for certain costs and administration fees that Liberty Mutual incurred during the ADR. The amount of these costs and fees is unknown and AWI is currently unable to estimate the amount. Based upon an AWI request, the appellate panel held a rehearing on November 21, 2003. In January 2004, the appellate panel upheld its initial ruling. On February 4, 2004, AWI filed a motion in the U.S. District Court for the Eastern District of Pennsylvania to vacate the rulings of the appellate panel. In July 2002, AWI filed a lawsuit against Liberty Mutual in the U.S. District Court for the Eastern District of Pennsylvania seeking, among other things, a declaratory judgment with respect to certain policy issues not subject to binding ADR. The U.S. District Court has not yet set a schedule to hear this matter. Home Insurance Liquidation On June 13, 2003, the New Hampshire Insurance Department placed The Home Insurance Company under an order of liquidation. Less than $10 million of AWI's recorded insurance asset is based on policies with Home, which management believes is probable of recovery. AWI intends to file a proof of claim against Home by the June 2004 deadline. It is uncertain when AWI will receive proceeds from Home under these insurance policies. Insurance Asset An insurance asset in respect of asbestos claims amounting to $103.1 million was recorded as of March 31, 2004 and December 31, 2003. Approximately $14 million of the $103.1 million asset represents partial settlement for previous claims that will be paid in a fixed and determinable flow and is reported at its net present value discounted at 6.50%. Mr. Campanaro relates that the total amount recorded reflects AWI's belief that insurance proceeds will be recovered in this amount, based on AWI's success in insurance recoveries, settlement agreements that provide coverage, the non-products recoveries by other companies and the opinion of outside counsel. That insurance is either available through settlement or probable of recovery through negotiation or litigation in management's opinion. Depending on further progress of the ADR, activities like settlement discussions with insurance carriers, the final determination of coverage shared with ACandS - - the former AWI insulation contracting subsidiary that was sold in August 1969 and which filed for protection under Chapter 11 of the Bankruptcy Code in September 2002 -- and the financial condition of the insurers, AWI may revise its estimate of probable insurance recoveries. Approximately $79 million of the $103.1 million asset is determined from agreed coverage in place. Of the $103.1 million, Mr. Campanaro says, $8.0 million has been recorded as a current asset as of March 31, 2004 reflecting management's estimate of the minimum insurance payments to be received in the next 12 months. Many uncertainties remain in the insurance recovery process, therefore, AWI did not increase the estimated insurance recovery asset in the first quarters of 2004 and 2003. Cash Flow Impact As a result of the Chapter 11 Filing, AWI did not make any payments for asbestos-related personal injury claims in the first quarters of 2004 and 2003. Additionally, AWI did not receive any asbestos-related insurance recoveries during the first quarters of 2004 and 2003. During the pendency of the Chapter 11 Case, AWI does not expect to make any further cash payments for asbestos- related claims, but AWI expects to continue to receive insurance proceeds under the terms of various settlement agreements. Management estimates that the timing of future cash recoveries of the recorded asset may extend beyond 10 years. Potential Legislation On April 6, 2004, S.2290 (Fairness in Asbestos Injury Resolution Act of 2004) was introduced in the Senate. On April 22, proponents of the bill failed to obtain sufficient votes to pass a cloture motion to bring the bill to the Senate floor, which effectively stopped the bill from being considered. Since April 22, the Senate leadership has agreed to a series of mediated negotiations to explore whether a compromise on the merits of the bill can be reached. "There is uncertainty as to whether the current or any other proposal will become law, and what impact there might be on AWI's asbestos liability and/or AWI's Chapter 11 Case. Prior efforts to enact asbestos legislation have not been successful," Mr. Campanaro notes. An Uncertain Future Many uncertainties continue to exist about the matters impacting AWI's asbestos-related liability and insurance asset. These uncertainties include when and if the Plan of Reorganization will be confirmed by the U.S. District Court, the impact of any potential legislation, and the financial condition of AWI's insurance carriers. Additionally, if the Plan is confirmed, AWI is unable to predict when it will be implemented. Therefore, the timing and terms of resolution of the Chapter 11 Case remain uncertain. "As long as this uncertainty exists, future changes to the recorded liability and insurance asset are possible and could be material to AWI's financial position and the results of its operations. Management will continue to review the recorded liability and insurance asset in light of future developments in the Chapter 11 Case and make changes to the recorded amounts if and when it is appropriate," Mr. Campanaro says. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., Weil, Gotshal & Manges LLP and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) AVAYA: S&P Revises Outlook to Positive on Improved Profitability ---------------------------------------------------------------- Standard & Poor's Rating's Services revised its outlook on the rating of Avaya Inc. to positive from stable. The 'B+' corporate credit and senior secured debt and 'B' senior unsecured debt ratings were affirmed. The outlook revision reflects improved profitability in recent quarters combined with reduced debt, improving debt protection metrics and increased balance sheet liquidity. Avaya, a leading provider of enterprise telephony systems and services, is based in Basking Ridge, New Jersey. The company had $729 million of funded debt outstanding as of March 31, 2004. "Avaya's rating reflects the company's position in the competitive and weakened--although recovering--enterprise telephony market and a leveraged financial profile, offset in part by stabilized operating performance and improvements in liquidity and leverage," said Standard & Poor's credit analyst Joshua Davis. Standard & Poor's continues to view Avaya's business profile as challenged by a three-year downturn in enterprise investment in telephony products and systems. However, indications of a modest recovery in market conditions, combined with improved EBITDA profitability, have helped to stabilize Avaya's business. At the same time, improved balance sheet liquidity and deleveraging provide support at the current rating level. Avaya reported revenues for the March 2004 quarter of $1.0 billion, up 6% year-over-year, a modest acceleration from the 3% year-over-year growth generated in the December 2003 quarter. EBITDA margins improved to an estimated 10% in the March 2004 quarter from 6% in the same period one year earlier, reflecting top-line improvements combined with restructuring actions taken in earlier periods that have reduced the company's operating cost base. Standard & Poor's believes market conditions likely will continue to recover off a depressed base, in conjunction with strengthening in the economy and a return to more normalized customer investment activity. This should help Avaya meet its margin expansion goals. Still, the recovery is in the early stages and is fragile, with pricing pressure and other factors as potential retardants to improved operating metrics. BECKMAN: Fitch Downgrades Rating on Net Lease Certificates to BB- ----------------------------------------------------------------- Fitch Ratings downgrades and places on Rating Watch Negative Beckman Coulter, Inc., 7.4975% net lease pass-through certificates, $109.7 million series BC 2000-A to 'BB-' from 'BBB'. The rating of this transaction depends upon the ratings of Beckman Coulter's senior debt obligations and Financial Structures Limited's (FSL) insurer financial strength. The downgrade and Rating Watch Negative placement is the result of the FSL's rating being lowered to 'BB-' and placed on Rating Watch Negative. Beckman Coulter's senior debt obligations are currently rated 'BBB' by Fitch. The Rating Outlook for the company is Positive. A residual value insurance policy was issued by FSL to cover the combined balloon balance, $53 million, at maturity (2018). FSL and the reinsurer, Royal Indemnity Company, were rated 'AA-' at issuance. If the loans cannot be refinanced or paid off on the maturity date, the FSL policy will pay the balloon amounts. As FSL's claims paying ability deteriorates, the balloon risk increases. The loans are secured by two of Beckman Coulter's office/research and development facilities, located in Brea, CA and Miami, FL. Each property is subject to a NNN lease in which Beckman Coulter is obligated to pay rental payments with no setoff, abatement or reduction. Recent inspections by the servicer, Bank of New York, revealed the properties to be in good condition with no deferred maintenance. COEUR D'ALENE: Improved Liquidity Spurs S&P's Rating Upgrade to B- ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit and senior unsecured debt ratings on Coeur D'Alene Mines Corp. to 'B-' from 'CCC'. The outlook is stable. The Coeur D'Alene, Idaho-based silver and gold mining company currently has about $180 million in total debt. "The ratings upgrade reflects the improvement in industry conditions and in the company's liquidity and financial profile, which have provided Coeur with the capital necessary to develop its low-cost mining projects so that it can increase its limited reserve base and improve profitability and diversity," said Standard & Poor's credit analyst Paul Vastola. The ratings on Coeur reflect its high business risk as a cyclical, capital-intensive commodity-based company with a modest scope of operations, limited reserve base (averaging about 3.5 years) and its very weak financial performance. Ratings also incorporate the challenges and uncertainties regarding the company's ability to successfully develop new lower-cost mining operations. Challenges include volatile prices, governmental regulation, environmental issues, permitting, and adverse geological conditions. These factors are somewhat mitigated by Coeur's good liquidity levels. Coeur's comparatively small position as a precious metals company has resulted in volatile earnings and cash flows. Given its high cost position and relatively low gold and silver prices in the past few years, the company has consistently incurred net losses. Indeed, with an average realized silver and gold price of $4.87 and $344 per ounce, respectively, in 2003, and low production of 14.2 million ounces of silver and 119,500 ounces of gold, Coeur generated relatively modest revenues of approximately $108 million and incurred a loss on an adjusted EBIT basis of $3.6 million. The significant rise in silver and gold prices in the first quarter of 2004 should enable the company to generate positive net earnings. Although silver and gold prices have recently retreated from their first-quarter highs, using Standard & Poor's base case prices for silver and gold of $5 and $350 per ounce, respectively, the company is expected to remain profitable in 2004. CONSECO: Expects to Report $46-$50MM Net Income for First Quarter ----------------------------------------------------------------- Conseco, Inc. (NYSE:CNO) announced that it expects to report net income (after dividends on convertible exchangeable preferred stock) for the quarter ended March 31, 2004 of between $46 million and $50 million, or between 46 cents and 50 cents per diluted common share. Results for the quarter are expected to include net after-tax gains of approximately $13 million from realized investment gains and severance and credit agreement charges totaling approximately $4 million after tax. First quarter results were affected by lower interest rates, which caused a compression in the spread earned during the quarter, and by higher mortality. Given our current expectations, we anticipate that our net income applicable to common stock for the 12 months ending September 30, 2004 will be at the lower end of our previously reported guidance of $175 million to $200 million. Our earnings guidance is based on numerous assumptions and factors. If they prove incorrect, our actual earnings could differ materially from our estimates (see note on forward-looking statements below). Our guidance excludes any impact from realized gains (losses) and the proposed refinancing of our current capital structure described in our Form S-1 Registration Statement initially filed on January 29, 2004. The foregoing first quarter results are preliminary and subject to revision based upon completion of our first quarter financial statements. No assurance can be given that, upon completion of our financial statements, we will not report materially different results from those set forth above. The company will report results for the first quarter of 2004 before the market opens on Thursday, May 6 and will host a conference call to discuss results later that morning. The earnings conference call will begin at 10:00 a.m. Eastern Time on Thursday, May 6. A webcast of the conference call can be accessed through the Investors section of the company's website as follows: http://www.conseco.com/csp/about_conseco/investors_webcast.htm Listeners should go to the website at least 15 minutes before the event to register, download and install any necessary audio software. Conseco expects to file its Form 10-Q for the quarter ended March 31, 2004 on Monday, May 10. Conseco, Inc.'s insurance companies help protect working American families and seniors from financial adversity: Medicare supplement, long-term care, cancer, heart/stroke and accident policies protect people against major unplanned expenses; annuities and life insurance products help people plan for their financial future. For more information, visit Conseco's web site at http://www.conseco.com/ * * * As reported in the Troubled Company Reporter's April 21, 2004 edition, Standard & Poor's Ratings Services placed its 'B-' counterparty credit, 'B-' senior debt, and 'CCC-' preferred stock ratings on Conseco Inc. on CreditWatch with positive implications. At the same time, Standard & Poor's placed its 'BB-' counterparty credit ratings and financial strength ratings on Bankers Life & Casualty Co., Colonial Penn Life Insurance Co., Conseco Insurance Co., Conseco Health Insurance Co., Conseco Life Insurance Co., and Conseco Life Insurance Co. of NY on CreditWatch with positive implications. "The CreditWatch reflects the expected issuance by Conseco Inc. of $1 billion of new common equity by early May 2004," said Standard & Poor's credit analyst Jon Reichert. Not affected by this CreditWatch action are the ratings on Conseco Senior Health Insurance Co., which remain on CreditWatch negative where they were placed Nov. 19, 2003. "Proceeds from the common equity issuance, in conjunction with proceeds from an expected $500 million issuance of mandatory convertible preferred stock and $900 million of new bank debt, are expected to be used to refinance the existing $1.3 billion of outstanding bank debt, redeem the outstanding $900 million of convertible exchangeable preferred stock, and make a capital contribution to the insurance subsidiaries," Mr. Reichert added. "Because of this recapitalization, Conseco Inc. is expected to have a capital structure with less onerous debt service payments than currently exists, allowing for greater fixed-charge coverage that should be supportive of higher ratings at the holding company as well as at the insurance subsidiaries." If the ratings are upgraded, it is expected that the senior debt rating on Conseco Inc. will go no higher than 'BB-', the preferred stock rating will go no higher than 'B-', and the financial strength will go no higher than 'BB+'. CONSOL ENERGY: S&P Affirms BB- Corp. & Sr. Unsecured Debt Ratings ----------------------------------------------------------------- Standard & Poor's Rating Services affirmed its 'BB-' corporate credit and Senior unsecured debt ratings on Consol Energy Inc., and removed them from CreditWatch where they were placed on Dec. 5, 2003, with negative implications. The outlook is stable. "The rating action reflects the resolution of investigations into allegations of fraud and malfeasance, which allowed the company to address liquidity concerns, and an expected improvement in the company's financial profile due to improved coal industry conditions and increasing production," said Standard & Poor's credit analyst Dominick D'Ascoli. In addition, Standard & Poor's assigned its 'BB' bank loan rating and its recovery rating of '1' to the company's proposed $600 million secured credit facility composed of a $450 million revolving credit facility maturing in 2009 and a $150 million term loan maturing in 2010. The 'BB' rating is one notch higher than the corporate credit rating; this and the '1' recovery rating indicate a high expectation of full recovery of principal in the event of a default. Proceeds from the offering will be used to retire debt, including the current credit facility, and for general corporate purposes. The facility will also be used for letters of credit to cover assurance requirements. At the same time, Standard & Poor's placed its rating on Consol's 7.875% unsecured notes maturing in 2012 on CreditWatch with positive implications. Upon the closure of the credit facility, these notes will be secured by all assets (including the company's sizable reserve base but excluding accounts receivables and inventory), on a pari passu basis with the credit facility and the 8.25% notes maturing in 2007. Upon closing of the credit facility, these notes will be removed from CreditWatch and upgraded to 'BB' from 'BB-', one notch above the corporate credit rating, reflecting a high expectation of full recovery of principal in the event of a default. The ratings on Pittsburgh, Pa.-based Consol reflect the company's high degree of financial leverage, which includes meaningful debt and postretirement obligations, significant capital expenditures, and execution risk in increasing coal production. Somewhat offsetting these negative factors are Consol's strength as an efficient producer of underground coal, its significant reserve position, energy diversification strategy, and favorable coal industry conditions. Standard & Poor's has a favorable near-term outlook for the coal industry because the factors responsible for the surge in spot coal prices remain in place and likely will persist in 2004. COVANTA: Court OKs Stipulation Resolving Federal Insurance Dispute ------------------------------------------------------------------ Federal Insurance Company issued Bond No. 8182-92-13, guaranteeing the performance of the Covanta Energy Corporation Debtors' obligations relating to an engineering, procurement and construction contract between Tampa Bay Water and Debtor Covanta Tampa Construction, Inc. On March 26, 2004, Federal paid under the Bond, certain subcontractors and materialmen for services or invoices aggregating $282,362. Federal filed Claim No. 4336, against the Debtors for amounts previously paid under the Bond as well as the potential claims to be paid under it. Federal filed a limited objection to the Debtors' request for approval of the Tampa Bay Water Settlement: -- asserting an equitable right of subrogation in and to the funds the Debtors received in the settlement; and -- seeking to reserve its rights with respect to the validity of certain claims filed against the sureties. To avoid the uncertainties and costs of protracted litigation, the Debtors and Federal stipulate that: (a) Federal will retain its subrogation and equitable lien rights on account of the Paid Bonded Claims; (b) Federal will be paid in full for the Paid Bonded Claims from the Final Settlement Payment from Tampa Bay Water; (c) To the extent that Federal pays additional claims on account of obligations which may be due and owing under the Bond, Federal reserves its rights to assert claims for subrogation or an equitable lien, and the Debtors reserve their rights to contest the claims; and (d) Federal's rights with respect to the validity of certain claims filed against the sureties, are reserved. The Court approves the Stipulation. 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 INC: Fitch Assigns Low-B Ratings to 4 Series 2004-J4 Classes ------------------------------------------------------------------ CWMBS, Inc.'s CHL mortgage pass-through trust 2004-J4 mortgage pass-through certificates, series 2004-J4, are rated by Fitch Ratings as follows: --$194.2 million classes 1-A-1, 1-X, 2-A-1, 2-X, 1-PO, and A-R 'AAA' (Group C senior certificates); --$100.5 million classes 3-A-1, 3-A-2, 3-X, and 3-PO 'AAA' (Group 3 senior certificates); --$1,378,000 class C-M 'AA'; --$393,700 class C-B-1 'A'; --$295,500 class C-B-2 'BBB'; --$197,000 privately offered class C-B-3 'BB'; --$197,000 privately offered class C-B-4 'B'; --$1,504,900 class 3-M 'AA'; --$726,600 class 3-B-1 'A'; --$415,200 class 3-B-2 'BBB'; --$207,600 privately offered class 3-B-3 'BB'; --$207,600 privately offered class 3-B-4 'B'. The 'AAA' rating on the Group C senior certificates reflects the 1.35% subordination provided by the 0.70% class C-M, 0.20% class C-B-1, 0.15% class C-B-2, 0.10% class C-B-3, 0.10% class C-B-4 and 0.10% class C-B-5 (not rated by Fitch). The 'AAA' rating on the Group 3 senior certificates reflects the 3.20% subordination provided by the 1.45% class 3-M, 0.70% class 3-B-1, 0.40% class 3- B-2, 0.20% class 3-B-3, 0.20% class 3-B-4 and 0.25% class 3-B-5 (not rated by Fitch). 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 master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing), a direct wholly owned subsidiary of Countrywide Home Loans, Inc. (CHL). Countrywide Servicing is rated an 'RMS2+' for master servicing and 'RPS1' for primary servicing by Fitch. The Group C senior certificates are cross-collateralized by two pools (loan groups 1 and 2) of conventional, fully amortizing, mostly fifteen-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. In loan group 1, as of the cut-off date (April 1, 2004), the aggregate pool balance totaled $131,797,132. The weighted-average original loan-to-value ratio (OLTV) was 62.33%. Cash-out and rate/term refinance loans represent 13.73% and 58.68% of the mortgage pool, respectively. Second homes account for 5.68% of the pool. The average loan balance is $563,236. The weighted average FICO credit score is approximately 745. The three states that represent the largest portion of mortgage loans are California (39.31 %), Florida (5.54%) and Illinois (5.14%). In loan group 2, as of April 1, 2004, the aggregate pool balance totaled $65,051,645. The weighted-average OLTV was 61%. Cash-out and rate/term refinance loans represent 21.81% and 54.69% of the mortgage pool, respectively. Second homes account for 11.26% of the pool. The average loan balance is $537,617. The weighted- average FICO credit score is approximately 737. The three states that represent the largest portion of mortgage loans are California (49.94%), Florida (11.82%) and Colorado (4.26%). The Group 3 senior certificates are collateralized primarily by a pool (loan group 3) of conventional, fully amortizing, mostly 30- year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties. As of the cut-off date, the aggregate pool balance totaled $103,786,101. The weighted-average OLTV was 68.58%. Cash-out and rate/term refinance loans represent 13.93% and 40.90% of the mortgage pool. Second homes account for 8.55% of the pool. The average loan balance is $498,972. The weighted-average FICO credit score is approximately 741. The three states that represent the largest portion of mortgage loans are California (49.99%), Virginia (8.15%) and Maryland (4.42%). Although there is cross-collateralization between loan group 1 and loan group 2, there is no cross-collateralization between loan group 3 and any other loan group. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. It is expected that Countrywide Home Loans Servicing LP (Countrywide Servicing), Bank United, FSB (Bank United), HSBC Bank (HSBC), and Wachovia Mortgage Corporation (Wachovia), will direct service approximately 94.55%, 1.64%, 0.40%, and 3.41%, respectively, of the mortgage loans in Group C. It is expected that Countrywide Servicing, Bank United, HSBC, and Wachovia, will direct service approximately 86.40%, 7.14%, 3.49%, and 2.97%, respectively, of the mortgage loans in Group 3. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits (REMICs). The Bank of New York will act as trustee. DAN RIVER: Gets Nod to Employ Lamberth Cifelli as Attorneys ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District Of Georgia, Newnan Division, gave its stamp of approval to Dan River Inc., and its debtor-affiliates to retain Lamberth, Cifelli, Stokes & Stout, P.A., as its counsel. Lamberth Cifelli will: a) advise and represent the Debtors in matters arising out of and relating to the Debtors' bankruptcy cases; b) advise and represent the Debtors in specified and discreet legal matters, including litigation, in which the Debtors' general counsel, King & Spalding LLP, may have a conflict or is otherwise unable to represent the Debtors; and c) advise and represent the Debtors in the performance of such other legal services, including litigation, as may be requested by the Debtors and that is appropriate and necessary. James C. Cifelli, Esq., a partner of Lamberth Cifelli, reports that the firm will bill the Debtors its current hourly rates or: Staff Designation Billing Rate ----------------- ------------ junior attorneys $150 per hour senior partners $335 per hour legal assistants and document clerks $60 to $110 per hour Headquartered in Danville, Virginia, Dan River Inc. -- http://www.danriver.com/-- is a designer, manufacturer and and marketer of textile products for the home fashions, apparel fabrics and industrial markets. The Company filed for chapter 11 protection on March 31, 2004 (Bankr. N.D. Ga. Case No. 04-10990). James A. Pardo, Jr., Esq., at King & Spalding represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $441,800,000 in total assets and $371,800,000 in total debts. DII INDUSTRIES: Enters into Settlement Pact with Liberty Mutual --------------------------------------------------------------- The DII Industries, LLC Debtors seek the Court's authority to enter into a Settlement Agreement and Mutual Release, dated April 1, 2004, between DII Industries, LLC, and Liberty Mutual Insurance Company. The Debtors also ask the Court to approve certain technical amendments to their Plan pursuant to the Liberty Mutual Settlement. Michael G. Zanic, Esq., at Kirkpatrick & Lockhart, LLP, in Pittsburgh, Pennsylvania relates that Liberty Mutual has issued or is alleged to have issued certain general liability insurance policies to various entities, including Dresser Industries, Inc. -- now known as DII Industries. DII Industries asserts that it has rights to obtain a reimbursement of indemnity and defense costs incurred in connection with environmental claims and asbestos and silica-related claims from Liberty Mutual under the Subject Insurance Policies. Harbison-Walker Refractories Company, which Dresser Industries, Inc., acquired in 1967 and operated as an unincorporated division until 1992, does not claim any rights under the particular insurance policies that are the subject of the Settlement Agreement. Mr. Zanic tells the Court that effective as of July 15, 1992, Liberty Mutual entered into an Interim Agreement for Defense and Indemnification of Certain of Dresser Industries' Asbestos and Silica-Related Bodily Injury Claims with DII Industries to resolve certain potential insurance coverage disputes between the parties. The Lawsuits According to Mr. Zanic, two lawsuits are currently pending involving DII Industries and Liberty Mutual relating to certain of the Subject Insurance Policies and the DII Industries CIP, which are captioned as: * DII Industries, LLC, v. Underwriters at Lloyd's, London, et al., Adv. No. 03-3072 (Bankr. W.D. Pa.); and * Harbison-Walker Refractories Company v. DII Industries, LLC, et al., Adv. No. 02-2151 (Bankr. W.D. Pa.). Liberty Mutual has not yet responded to the allegations of DII Industries in the Coverage Lawsuits, but has indicated that it contests DII Industries' allegations and intends to assert various counterclaims and affirmative defenses. The Debtors determined that the issues raised in the Coverage Lawsuits are complex and continued litigation would be extremely costly to DII Industries and its estate and creditors. While DII Industries believes that it ultimately would prevail in the Coverage Lawsuits, as in any litigation, the outcome remains uncertain. Accordingly, to mitigate the risks and avoid the expense associated with continued litigation, DII Industries and Liberty Mutual entered into the Settlement Agreement for the purpose of effectuating a full and final settlement that releases and terminates any and all rights, obligations, and liabilities that Liberty Mutual may owe to DII Industries with respect to Asbestos Claims, Silica Claims and Environmental Claims under both the Subject Insurance Policies and the DII Industries CIP in consideration for certain monetary payments, among others. The Settlement Agreement The salient terms of the Settlement Agreement are: (a) Liberty Mutual Settlement Payment Within 10 days of the satisfaction or waiver of the conditions precedent, Liberty Mutual will pay to DII Industries $500,000. (b) Conditions Precedent to Payment of the Settlement Amount The Settlement Agreement conditions the obligation of Liberty Mutual to pay the Settlement Amount on the satisfaction or waiver of, among other conditions: * entry of a final order approving the Settlement Agreement, including decretive provisions amending the Plan; * entry of a final order confirming the Plan as modified pursuant to the Settlement Agreement; and * that no "asbestos reform" legislation is passed prior to January 3, 2005 that concerns, relates to, regulates, limits, or controls the prosecution of asbestos claims in the state or federal courts or in any other forum. (c) Release in Favor of Liberty Mutual Upon payment to DII Industries of the Settlement Amount, and except for obligations created by the Settlement Agreement, DII Industries will be deemed to release and forever discharge Liberty Mutual from and against: * all manner of claims arising under or related to the Subject Insurance Policies; * liability to DII Industries arising under or related to the Coverage Lawsuits and the DII Industries CIP; and * any event, transaction, act, error, omission, or any other misfeasance or nonfeasance relating in any way to the Subject Insurance Policies or the Coverage Lawsuits and the DII Industries CIP. (d) Release in Favor of DII Industries At the same time the release in its favor becomes effective, Liberty Mutual will be deemed to release and forever discharge DII Industries from and against: * all manner of claims arising under or related to the Subject Insurance Policies; * liability to arising under or related to the DII Industries CIP and the Coverage Lawsuits; and * any event, transaction, act, error, omission, or any other misfeasance or nonfeasance relating in any way to the Subject Insurance Policies or the Coverage Lawsuits and the DII Industries CIP. (e) Reservation of Rights by DII Industries DII Industries will reserve any and all rights and benefits it may have under the Subject Insurance Policies with respect to any and all past, present or future claims that are not specifically released. (f) Amendments to Plan Documents Subject to satisfaction or waiver of the conditions precedent in the Settlement Agreement: * the Settlement Agreement will constitute an "Asbestos/Silica Insurance Settlement Agreement" for purposes of the Plan; * Liberty Mutual will be a "Settling Asbestos/Silica Insurance Company" entitled to the protection of the "Asbestos/Silica Insurance Company Injunction;" * Exhibit 1 to the Plan will be amended to include all of the Subject Insurance Policies; and * Exhibit 2 to the Plan will be amended to add the Settlement Agreement as an "Asbestos/Silica Insurance Settlement Agreement" and to add Liberty Mutual as a "Settling Asbestos/Silica Insurance Company." (g) Dismissal of Coverage Lawsuits and Standstill Agreement The Settlement Agreement provides for a dismissal of the parties' claims and counterclaims against one another in the Coverage Lawsuits and a standstill with respect to the prosecution of the Coverage Lawsuits pending fulfillment of the conditions precedent in the Settlement Agreement. The Debtors assert that the Settlement Agreement is the product of extensive and intensive arm's-length negotiations between DII Industries and Liberty Mutual. Mr. Zanic adds that as a result of the Settlement Agreement, DII Industries will recover insurance proceeds for $500,000, which will enhance the liquidity of DII Industries, and increase the feasibility of the Plan. The Debtors maintain that the immaterial modifications of the Plan are entirely consistent with their expressed intention in the Disclosure Statement to attempt to reach pre-confirmation settlement agreements with their insurers. Mr. Zanic notes that the Disclosure Statement specifically discloses and provides for the possibility that the Debtors might enter into one or more Asbestos/Silica Insurance Settlement Agreement prior to the Confirmation Date. Furthermore, the Plan provides that the Asbestos/Silica Insurance Company Injunction may be extended to any insurer that becomes a party to an Asbestos/Silica Insurance Settlement Agreement by adding the insurer and settlement agreement to Exhibit 2 of the Plan and by filing the amended exhibit of record. Thus, all impaired Claimants were adequately informed regarding the Debtors' intention to seek to enter into settlement agreements with their insurers, and that, to the extent these settlements were consummated, that the settling insurers would be entitled to the benefit of certain injunctive protection under the Plan. Accordingly, because the Debtors' intention to seek pre- confirmation settlements with its insurers was fully disclosed in the Disclosure Statement and the modifications to the Plan required by the Settlement Agreement will not have any adverse financial impact on any creditor impaired under the Plan, there is no need to resolicit acceptances of the Plan. Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged in the engineering and construction business, providing a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. The Company filed for chapter 11 protection on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIRECTV: OpenTV Wants $483,959 License & Support Fees Payment ------------------------------------------------------------- Before DirecTV Latin America, LLC's Bankruptcy Petition Date, OpenTV, Inc., and DirecTV, entered into: (a) a Network Solutions Agreement; (b) an e-mail Application Development and License Agreement; and (c) a number of license agreements for software development kits. All of the contracts involve the licensing of intellectual property to DirecTV. The OpenTV Contracts remained executory as of the February 24, 2004 Effective Date of the Debtor's Reorganization Plan. Under the Plan, DirecTV assumed all non- programming agreements that were not listed on a separate motion to reject. Richard B. Levin, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Los Angeles, California, relates that OpenTV has not received any notices and it is not aware that DirecTV has rejected any of the OpenTV Contracts. Accordingly, OpenTV believes that DirecTV must cure all defaults under those Contracts in accordance with the cure provision of the confirmed Plan. According to Mr. Levin, OpenTV's records do not reflect any amount owing under the Network Solutions Agreement. However, the Network Solutions Agreement requires DirecTV to provide certain data to OpenTV that may indicate that additional amounts are due and owing. DirecTV has not yet reported that information, and so OpenTV reserves the right to assert as part of the claim any amount owing once it becomes known. Mr. Levin informs the Court that the contract for e-mail application generally obligated DirecTV to pay quarterly license fees based on the number of its subscribers capable of using the e-mail application. For the period during which DirecTV remained in bankruptcy, the contract required minimum fees of $100,000 per quarter. Thus, DirecTV owes OpenTV at least $375,890 in e-mail license fees for the 343 days it spent in bankruptcy. DirecTV has not yet reported the number of subscribers and other information required to calculate the precise amount of fees owed, so the exact amount may be higher. Mr. Levin further states that the e-mail application contract obligated DirecTV to pay $100,000 a year for maintenance and support, if it elected this feature for a particular year under the contract. Thus, DirecTV owes $93,973 for maintenance and support during bankruptcy. DirecTV also purchased 10 software development kits, half of which required it to pay $2,000 a year for maintenance and support. The other five required a $1,000 payment. DirecTV owes $14,096 under these contracts. OpenTV asks the Court to allow its request for payment of administrative expenses aggregating at least $483,959. OpenTV reserves the right to assert additional amounts owing, including re-calculations performed after DirecTV supplies the data that it is required to report under the OpenTV contracts. Mr. Levin asserts that DirecTV has continued to use the intellectual property and other consideration available under the OpenTV Contracts. That use has benefited the estate because DirecTV has continued to generate revenue from its subscribers by offering them a variety of services, including the e-mail application and other applications maintained or improved by the OpenTV Contracts. Mr. Levin contends that the license fees and maintenance support fees are administrative expenses that must be paid by DirecTV under Sections 503(b)(1) and 507(a)(1) of the Bankruptcy Code. (DirecTV Latin America Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) DOLE FOOD: Wood Merger Prompts S&P's Neg. Watch on Low-B Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on fresh fruit and vegetable producer and marketer Dole Food Co. on CreditWatch with negative implications after the company announced that it had entered into a definitive merger agreement to acquire Wood Holdings Inc. Wood is the parent of J.R. Wood Inc., a grower, processor, and wholesaler of frozen fruit products. The ratings on CreditWatch include Dole's 'BB' corporate credit rating, its 'BB+' senior secured note rating, and its 'BB-' senior unsecured debt rating. CreditWatch with negative implications means that the ratings could be affirmed or lowered following the completion of Standard & Poor's review. The Westlake Village, California-based Dole had about $2.2 billion of lease-adjusted total debt outstanding at March 27, 2004. Dole will acquire Wood Holdings free of debt, for $162.5 million in cash plus certain transaction costs. J.R. Wood has about $140 million in revenue and EBITDA of about $22 million. It is Standard & Poor's expectation that the transaction will be debt financed using an add-on to Dole's existing senior secured credit facility. The transaction is expected to close within Dole's second quarter of 2004. "Standard & Poor's will continue to monitor developments and will meet with management to discuss the company's future capital structure and financial policies before resolving the CreditWatch listing," said Standard & Poor's credit analyst Ronald Neysmith. Dole is a leading worldwide marketer, distributor, processor, and grower of branded fresh fruit, vegetables, and processed fruits. The company also markets a growing line of value-added precut salads, vegetables, and fresh-cut flowers. In addition, Dole is one of the world's largest producers of bananas and pineapples, and is also a major marketer of citrus fruits, table grapes, iceberg lettuce, celery, cauliflower, and broccoli, as well as value-added, precut salads and vegetables. Produce is grown on company-owned or leased land and is also sourced globally through arrangements with independent growers. DOMAN INDUSTRIES: Unsecured Creditors' Meeting Set for June 7 ------------------------------------------------------------- Doman Industries Limited announced that the Supreme Court of British Columbia issued an order, in connection with proceedings under the Companies Creditors' Arrangement Act, authorizing the filing of a Plan of Compromise and Arrangement and directing the Company to hold a meeting of its unsecured creditors on June 7, 2004. The Meeting Order also directs the manner in which the Meeting Order, the Plan, the Information Circular and other related material is to be disseminated to the Company's affected creditors and others. The Meeting Material is to be sent to affected creditors no later than May 11, 2004. It is expected that if the affected creditors approve the Plan, the application for the Sanction Order approving the Plan will be heard on June 11, 2004. As announced on April 26, 2003, the Plan resulted from negotiations with certain unsecured noteholders. The essential features of the Plan include: - The pulp and solid wood assets of Doman would be separated into two new corporate groups; Lumberco, which would hold the lumber assets of Doman, and Pulpco, a wholly owned subsidiary of Lumberco, which would hold the pulp assets (other than Port Alice) of Doman. Lumberco will take over from Doman as the public parent company. - The unsecured indebtedness of Doman and its subsidiaries, including its pre-filing trade debt, will be compromised and converted to 75% of the equity of Lumberco, subject to cash elections. - The indebtedness of Doman held by secured noteholders will be refinanced in full through a combination of an offering of warrants to the unsecured creditors and a private placement to Tricap, certain funds for which Merrill Lynch Investment Managers or its affiliate acts as investment adviser, Quadrangle and Amaranth in consideration for the issuance of new secured bonds and the remaining 25% of Lumberco equity to the Standby Purchasers and those creditors who exercise the warrants. - Post restructuring, Lumberco is expected to have no debt other than the new secured bonds, a working capital facility of up to $100 million and certain intercorporate debt. - Existing Shareholders of Doman will not be entitled to any distributions or other compensation under the Plan and will have no entitlement to vote on the Plan, except that they will be granted three tranches of non-transferable warrants to purchase up to 10% of the shares of Lumberco on the terms described in our press release issued on April 26, 2004. As noted in that press release, the warrants would have a five year term. However, the term requiring the warrants to 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 has been amended to apply on or after the first anniversary of the Plan implementation. In addition to Creditor and Court Approval, there are several conditions precedent to implementation of the Plan related to regulatory and governmental approvals or enactments. The Board of Directors of Doman has approved the Plan. A copy of the Meeting Order, Plan and related documents may be obtained by accessing the Company's website at http://www.Domans.com/ As previously announced, the April 6, 2004 Court order does not preclude the Company from seeking purchasers for Port Alice. The Company's efforts to identify a purchaser for Port Alice are continuing. 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. DPL INC: Audit Committee Review Delays 2003 Annual Report Filing ---------------------------------------------------------------- DPL Inc. (NYSE:DPL) said that the Audit Committee of the Company's Board of Directors is continuing its review of the previously disclosed matters raised by a company employee. The Audit Committee expects to complete its review in the near future. The Company's independent auditors have not certified the Company's financial statements pending the outcome of the Audit Committee's review. As a result, the Company has not filed its annual report on Form 10-K for the year ending December 31, 2003. "We expect the Audit Committee will complete its review as soon as practicable," said Stephen F. Koziar, Jr., Chief Executive Officer of DPL. "In the meantime, all of our customers and the public at large can be assured that we will continue to deliver the highest level of service and responsiveness to our customers needs." The Company emphasized that it has the liquidity to meet its near- term operating requirements. The Company has $100 million in cash and $70 million in public securities available to meet its liquidity needs as of April 30, 2004. Earlier this month, the Company redeemed $500 million of debt by using $175 million of private placement notes, $202 million from the Financial Asset Portfolio and $123 million from core operations. On March 30, 2004, the Company announced that the delay in obtaining certified financial statements had resulted in non- compliance with the reporting requirements under certain of the Company's debt agreements. The delay has resulted in additional non-compliance with the reporting requirements under certain of the Company's other indentures and material debt agreements. The delay, however, does not result in an automatic event of default and acceleration of the long-term debt of the Company. If the trustee under the related indenture or the holders of the requisite percentage of the outstanding principal amount of any relevant series of debt securities provides notice of such non- compliance to the Company and the Company fails to file and deliver the 2003 Form 10-K within a specified number of days (at least 60 days) after such notice is provided, then either the trustee under the indenture or such holders will have the right to declare an event of default and accelerate the maturity of the relevant series of debt securities. To date, the Company has not received any such notice. In addition, if the related trustee or the required percentage of holders under one series of debt securities were to give such a notice and, after the relevant cure period expired, were to accelerate the maturity of such debt securities, then the principal amount of certain other series of debt securities could be accelerated without the lapse of an additional cure period. The Company had previously obtained waivers from its lenders under its term loan and revolving credit facilities. No amounts are outstanding under such facilities and no amounts may be drawn prior to the filing of certified financials. The Company also said that it does not intend to pay its regular quarterly dividend until the Audit Committee completes its review and the Company obtains certified financial statements. About DPL DPL Inc. is a diversified, regional energy company. DPL's principal subsidiaries include The Dayton Power & Light Company (DP&L) and DPL Energy. DP&L provides electric services to over 500,000 retail customers in West Central Ohio. DPL Energy markets over 4,600 megawatts of generation capacity throughout the eastern United States. DPL Inc., through its subsidiaries, ranks among the top energy companies in generation efficiency and productivity. Further information on DPL Inc. can be found at http://www.dplinc.com/ ENRON CORP: Asks Court to Approve Rawhide Deals Settlement Pact --------------------------------------------------------------- Enron Corporation, Enron North America Corporation, Enron Development Funding, Ltd., Enron Global Power & Pipelines, LLC, Atlantic Commercial Finance, Inc., Enron Reserve Acquisition Corporation, Enron Ventures Corporation, Enron Transportation Services, LLC, Enron South America, LLC, Enron Commercial Finance, Ltd., Enron Caribbean Basin, LLC, and Enron Expat Services, Inc., ask the Court, pursuant to Section 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, to approve: (i) a Settlement Agreement and Mutual Release, dated March 12, 2004, by and among: (a) Enron, (b) ENA, (c) Enron Ponderosa Management Holdings, Inc., (d) the Ponderosa Limited Partners, (e) Ponderosa Assets, LP, (f) Sundance Assets, LP, (g) Rawhide Investors, LLC, (h) the Rawhide Parties: -- Citibank, N.A., in its capacity as Ponderosa Portfolio Manager and Sundance Portfolio Manager; -- Citicorp North America, Inc.; -- CXC, LLC, and -- the APA Purchasers; (i) Wilmington Trust Company, as collateral agent for the lender under the Ponderosa Loan Agreement, and (j) the Official Committee of Unsecured Creditors; and (ii) in connection with the settlement: (a) the transfer of certain assets; and (b) the release and discharge, or other settlement, of certain inter-structure debt obligations. According to Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in New York, the Rawhide Transactions are part of a project that was consummated in December 1998. The Financing Structure Ponderosa and Sundance were created to hold approximately $2,400,000,000 in contributed value of equity and debt interests primarily in power and energy-related assets in the Americas, Europe and the Philippines that were contributed by the Debtors and other affiliates. These asset interests initially were contributed to Ponderosa. In this regard, Enron and certain of its affiliates were issued the limited partner interests in Ponderosa pursuant to the terms of the Amended and Restated Limited Partnership Agreement of Ponderosa, dated as of December 18, 1998, as amended, modified or supplemented from time to time. EPMH, a wholly owned Enron subsidiary, was issued the general partner interest in Ponderosa in consideration for its cash capital contribution of $250,000. Ponderosa then contributed approximately $858,000,000 of contributed asset interests to Sundance in consideration for the general partner interest in Sundance pursuant to the terms of the Amended and Restated Limited Partnership Agreement of Sundance, dated as of December 18, 1998, as amended, modified or supplemented from time to time. The sole limited partner interest in Sundance was issued to Rawhide through a series of transactions wherein Rawhide: (i) was capitalized with an aggregate $22,500,000 equity investment by two third-party institutional investors; (ii) incurred $727,500,000 of secured indebtedness -- the Rawhide Loan -- to CXC, Incorporated, a commercial paper conduit affiliated with CNAI, under the terms of a Credit and Security Agreement, dated as of December 18, 1998; and (iii) used the resulting $750,000,000 of aggregate proceeds to make a capital contribution to Sundance in consideration for being issued the sole limited partner interest in Sundance. Under the Sundance Partnership Agreement, the Sundance limited partner is entitled to receive a "preferred payment," which provided Rawhide with the cash necessary to service the debt on the Rawhide Loan. Sundance then made a $750,000,000 secured loan to Ponderosa pursuant to the terms of that certain Ponderosa Loan Agreement, dated as of December 18, 1998, among Sundance, Ponderosa and the Ponderosa Collateral Agent. The Ponderosa Loan Agreement and the Ponderosa Partnership Agreement provided, among other things, that amounts held in each of a debt service reserve and an operating account established in connection therewith could be loaned as permitted investments to Enron or an affiliate of Enron pursuant to notes requiring payment upon demand. According to Mr. Sosland, the $750,000,000 in proceeds from the Ponderosa Loan were then advanced by Ponderosa to ENA pursuant to the terms of a Promissory Note, dated December 23, 1998 -- the Proceeds Loan Note. Under a Guaranty Agreement, dated as of December 18, 1998, Enron guaranteed to Ponderosa the payment of principal, interest, fees and other expenses by ENA under the Proceeds Loan Note and by its other affiliates receiving Enron Demand Loans. Furthermore, under an Enron Agreement, dated as of December 18, 1998, Enron guaranteed in favor of Rawhide and related beneficiaries certain payment and performance obligations of its subsidiaries, including those of EPMH and the Ponderosa Limited Partners, excluding the obligation of Ponderosa to pay principal and interest on the Ponderosa Loan, in respect of Project Rawhide. Mr. Sosland relates that since December 1998, approximately $60,000,000 of the principal amount of the Proceeds Loan Note was repaid. The Ponderosa Loan and the Rawhide Loan were correspondingly repaid by the same amount, and the capital account of Rawhide in Sundance was correspondingly decreased by the same amount. Since December 1998, Ponderosa has also made Enron Demand Loans to Enron, the outstanding unpaid principal balance of which, as of the Petition Date, was approximately $698,000,000. Significant Assets and Liabilities Structure A. Enron and ENA Indebtedness Ponderosa holds the Proceeds Loan Note, as well as Enron Demand Loans of Enron and ENA in outstanding principal amounts as of the Petition Date of approximately $698,000,000 and $50,000,000. Ponderosa also retains its rights under the Enron Guaranty with respect to: (a) ENA's obligations relating to the Proceeds Loan Note; and (b) the obligations of Enron's affiliates relating to the Enron Demand Loans, and Rawhide and its related beneficiaries retain their rights under the Enron Agreement with respect to certain obligations of Enron's subsidiaries in respect of Project Rawhide. B. CIESA/TGS One Project Interest of Ponderosa -- the CIESA/TGS -- relates to Ponderosa's indirect ownership interest in Compania de Inversiones de Energia S.A. CIESA is the controlling shareholder of Transportadora de Gas del Sur S.A., which engages in the business of transporting natural gas throughout Argentina and processing natural gas and marketing liquid petroleum gases. In connection with its investment in TGS, Enron agreed to certain management and financial obligations with respect to CIESA and TGS and, prompting the formation of the "Enron Economic Group," of which it was considered the "Controlling Company." In January 2002, in response to the Argentine economic crisis, the Argentine government enacted legislation that adversely and significantly impacted TGS's financial condition and, consequently, CIESA's investment in TGS. As a result of the Government Actions, TGS and CIESA are each in the process of undertaking a financial restructuring that may include, among other alternatives, a renegotiation of its obligations with third party lenders. In this regard, the Debtors have contemplated a Master Settlement and Mutual Release Agreement among Petrobas, Petrobas Hispano Argentina S.A., Enron Argentina CIESA Holdings S.A., Enron Pipeline Company Argentina S.A. and Ponderosa, and, with respect to certain provisions thereof, Enron and Petroleo Brasileiro S.A., and acknowledged by Transwestern Pipeline Company, setting forth, among other things, that, upon receipt of the consent of Ente Nacional Regulador de Gas, a regulatory agency of the Argentine government, control of CIESA and TGS would generally be transferred from Enron to Petrobras and Enron and Transwestern would be released from their obligations as members of the Enron Economic Group. In response to the Government Actions, Enron and Ponderosa (i) jointly brought arbitral claims before the International Centre for Settlement of Investment Disputes against the Republic of Argentina, and (ii) asserted certain claims with respect to political risk insurance policies with both commercial insurers and the Overseas Private Investment Corporation. Enron negotiated settlement agreements with the Commercial Insurers, which agreements are set forth in a (i) Comprehensive Settlement Agreement and Release of Claims, dated as of December 1, 2003 -- the Master Cover Settlement -- by and among Enron, Ponderosa, the Named Subsidiaries, Steadfast Insurance Company and each of the insurers on the Commercial PRI Policies, and (ii) Comprehensive Settlement Agreement and Release of Claims, dated as of December 2, 2003 -- the Swiss Re PRI Settlement -- by and among Enron, Ponderosa, the Named Subsidiaries, and Swiss Reinsurance Company. The Court approved the settlement agreements on January 29, 2004. Enron has agreed, as part of the negotiation of the settlement of the Rawhide Transactions, that 80% of the proceeds from the settlements with the Commercial Insurers will be paid to Ponderosa. Enron and Ponderosa have not reached resolution of the claims made with respect to OPIC. C. CEG/CEG-Rio Ponderosa indirectly holds equity interests in natural gas distribution companies serving the Rio de Janeiro area of Brazil, Companhia Distribuidora de Gas do Rio de Janeiro S.A. and CEG Rio S.A. Enron International Brazil Gas Holdings, LLC, an indirect subsidiary of Ponderosa, entered into a Share Purchase Agreement, dated as of November 26, 2003, to sell all of its interests in CEG and CEG Rio to Gas Natural Internacional SDG S.A. -- whose obligations are guaranteed by Gas Natural SDG S.A. -- for about $158,500,000. To date, the completion of EIBGH's sale of the interests remains subject to certain conditions, primary of which are Brazilian state authorizations for the sale. In connection with the execution of the sale agreement, Enron, Ponderosa, CNAI and the Portfolio Manager agreed to escrow any proceeds received in respect thereof if the settlement with respect to the Rawhide Transactions will not have been consummated at that time, with the disbursement from the escrow to be only as provided in a final order of the Court. D. Gaspart Ponderosa also indirectly holds ownership interests in seven other natural gas distribution companies in Brazil through its indirect ownership of Gas Participacoes Ltda. Gaspart generally participates in the ownership of those companies with Petrobras and the applicable state authorities for the state in which the applicable company is located. E. EGPP Debt Ponderosa owns promissory notes made by EGPP in an original principal amount of $137,500,000. F. Centragas Ponderosa indirectly holds an approximate 50% ownership interest in Centragas -- Transportadora de Gas de la Region Central de Enron Development & Cia., S.C.A., a Colombian natural gas pipeline company. G. Sundance Assets Sundance holds (i) 2,710,000 limited partnership units of Northern Border Partners, L.P., and (ii) a Certificate, dated December 30, 1997, representing an interest in Bammel Gas Trust. H. Liabilities Relating to the Project Rawhide Structure In addition to the Ponderosa Loan and the Rawhide Loan, which remain outstanding in approximate unpaid principal amounts of $690,000,000 and $667,500,000, the Ponderosa Limited Partners may be required to make capital contributions to Ponderosa with respect to certain liabilities, including, without limitation: (a) payments with respect to certain indemnification obligations of Ponderosa and Sundance; (b) certain contribution obligations required with respect to assets contributed to Ponderosa, including those contributed by Ponderosa to Sundance; (c) payments for certain deficiencies between sales proceeds from the disposition of contributed assets and the value at which they were contributed to Ponderosa; and (d) payments of certain Ponderosa obligations, including, without limitation, obligations in respect of certain expenses, liabilities, settlements, claims, losses and costs thereof. Furthermore, Enron has guarantee obligations (i) to Ponderosa under the Enron Guaranty with respect to (a) ENA's obligations relating to the Proceeds Loan Note and (b) the obligations of Enron's affiliates relating to the Enron Demand Loans, and (ii) to Ponderosa, Sundance and other parties under the Enron Agreement with respect to certain obligations of its subsidiaries in respect of Project Rawhide. Alleged Defaults and Claims On November 12, 2001, Standard & Poor's downgraded the rating of Enron's long-term unsecured debt to a level of BBB-. As a result of the S&P Event, the Rawhide Parties asserted that the Enron Demand Loans ceased to be "Permitted Investments" of Ponderosa pursuant to the Ponderosa Partnership Agreement and the Ponderosa Loan Agreement, and under the terms of the Enron Demand Loans the entire outstanding principal amount thereof became immediately due and payable without demand. On November 29, 2001, Mr. Sosland reports that the Rawhide Collateral Agent delivered notice of its appointment of Citibank, N.A., as "Sundance Portfolio Manager" and as "Ponderosa Portfolio Manager," and asserted among other things, that the occurrence of certain events, including without limitation, downgrades of Enron's long-term unsecured debt ratings and non-payment of the Enron Demand Loans to Ponderosa, empowered the Rawhide Collateral Agent to appoint the "Sundance Portfolio Manager" and the "Ponderosa Portfolio Manager," each of which has certain rights with respect to the winding up and liquidation of Sundance and Ponderosa. Enron disputes the validity, effectiveness and scope of those asserted rights and has continued to exercise management control over Ponderosa, Sundance and the Project Interests. On April 19, 2002, CNAI, as collateral agent under the Rawhide Credit Agreement, delivered notice to Rawhide of the default of Rawhide for, among other things, failure to pay interest when due under the Rawhide Credit Agreement. In connection with the Cases: (i) Ponderosa filed the Ponderosa Proofs of Claim; (ii) Sundance filed the Sundance Proof of Claim; (iii) CNAI, as agent on behalf of Rawhide, CXC and the APA Purchasers, filed the CNAI Proofs of Claim; (iv) Citibank, in its capacity as agent and Sundance Portfolio Manager, filed the Citibank Proofs of Claim; (v) Credit Lyonnais, S.A. filed the Credit Lyonnais Proofs of Claim; (vi) National Westminster Bank Plc and The Royal Bank of Scotland plc, among others, filed the RBS Proofs of Claim; and (vii) Enron and ENA filed Adversary Proceeding No. 03-09266 against, among other persons, Citibank, CNAI, CXC, Ponderosa and Sundance. The Settlement Agreement The Parties desire to compromise and settle issues regarding the Rawhide Transactions under these terms and conditions: A. Transfer of Assets On the Closing Date, Ponderosa, Sundance and the applicable Enron Parties will transfer, or will cause the transfer of, the interests. After giving effect to the transfers, Ponderosa and Sundance will each retain all of its right, title and interest in its assets, including those assets transferred to it, to be held pending liquidation and disposition as contemplated by the Settlement Agreement and the other Transaction Documents. B. Release by Rawhide Releasing Parties On the Closing Date, each Rawhide Releasing Party will waive and release, acquit and forever discharge any and all claims, demands and causes of actions of every type or nature that they may have or claim or assert to have against any of the Enron Releasing Parties or the Committee in any way, arising from, relating to or in any way in connection with the Rawhide Transaction or any of the Transaction Documents, whether directly or indirectly relating thereto. C. Release by Enron Releasing Parties Each Enron Releasing Party will waive and release, acquit and forever discharge any and all claims, demands and causes of action of every type or nature that they may have or claim or assert to have against any of the Rawhide Releasing Parties in any way, arising from, relating to or in any way in connection with the Rawhide Transaction or any of the Transaction Documents. D. Additional Release by Rawhide Releasing Parties In addition, each Rawhide Releasing Party further agree that it will not commence, assert, maintain, continue or pursue any claim, demand or cause of action that any of them may have, claim to have or assert to have, against any Person not a party to the Settlement Agreement that seeks damages, contribution, indemnity, right of set off or any other economic benefit or recovery that (i) in any way relates to, arises from or is in any way related to the Rawhide Transaction, or (ii) in any way relates to, arises from or is in any way related to the Transaction Documents, if the claim, demand or cause of action would result in any liability or an indemnity or any payment obligation of any type or nature on the part of any of the Enron Releasing Parties, except as specifically provided in the Settlement Agreement. E. Additional Release by Enron Releasing Parties Each Enron Releasing Party further agrees that none of them will commence, assert, maintain, continue or pursue any claim, demand or cause of action that any of the Enron Releasing Parties may have, claim to have or assert to have, against any Person not a party to the Settlement Agreement that seeks damages, contribution, indemnity, right of set off or any other economic benefit or recovery that in any way relates to, arises from or is in any way related to the Rawhide Transaction or the Transaction Documents, if the claim, demand or cause of action would result in any liability or an indemnity or any payment obligation of any type or nature on the part of any of the Rawhide Releasing Parties except for the Course of Conduct Claims which are expressly reserved. F. Limited Most Favored Status After the Closing Date, if after February 13, 2004, Enron executes or will have executed a Future Settlement settling the type of issues addressed in Section 3.1 of the Settlement Agreement with respect to any of the Specified Transactions and the settlement agreement for Future Settlement specifically grants to any named defendant in the Adversary Proceeding rights with respect to a Course of Conduct Claim that are more favorable to that defendant than provided in the Settlement Agreement, the Rawhide Releasing Parties will have the same rights with respect to the Course of Conduct Claims as they relate to the Rawhide Transaction and the Transaction Documents as the settling Course of Conduct defendant received in the applicable Future Settlement. G. Proofs of Claim On the Closing Date, each of (a) the proofs of claim and (b) the counterclaims with respect to (i) the Adversary Proceeding and (ii) any other actions initiated by any Enron Party or any of its Subsidiary or affiliate in connection with the Rawhide Transaction, in each case filed with the Bankruptcy Court on or before the Closing Date by or on behalf of the Ponderosa Collateral Agent, Ponderosa, Sundance or any Rawhide Party against any Enron Party or any Subsidiary or affiliate of an Enron Party in connection with the Rawhide Transaction, including the Proofs of Claim, will be deemed irrevocably withdrawn, with prejudice, and to the extent applicable expunged and all claims set forth therein disallowed in their entirety; provided, however, that with respect to the Credit Lyonnais Proofs of Claim and the RBS Proofs of Claim, only the portion of each Proof of Claim that pertains to the Rawhide Transaction will be deemed irrevocably withdrawn, with prejudice, and to that extent expunged and all claims set forth therein in connection with the Rawhide Transaction disallowed in their entirety. H. Indirect Claims The Parties agree that, from and after the Closing Date: (a) none of the Ponderosa Collateral Agent, Ponderosa, Sundance or any Rawhide Party will direct, cause or encourage, cooperate, assist or participate with any Subsidiary or affiliate of Ponderosa or Sundance, any assignee or participant of an APA Purchaser under the Asset Purchase Agreement, any direct or indirect member of Rawhide or any other Person in pursuing any claim or cause of action relating to the Rawhide Transaction that the Ponderosa Collateral Agent, Ponderosa, Sundance or any Rawhide Party could not take directly, and in the event that the Ponderosa Collateral Agent, Ponderosa, Sundance or any Rawhide Party receives any monies, property or other benefit as a result of any claim or cause of action asserted directly or indirectly by any direct or indirect member of Rawhide, then the Ponderosa Collateral Agent, Ponderosa, Sundance or that Rawhide Party, as the case may be, will pay that amount to Enron and each party unconditionally assigns to Enron any right to those payments and amounts; and (b) no Enron Party will direct, cause or encourage, nor will it, except as otherwise required by any law, judgment or regulation applicable to it, cooperate, assist or participate with any other Enron Party, any Subsidiary, affiliate, assignee or subrogee of the rights of an Enron Party or any other Person in pursuing any claim or cause of action relating to the Rawhide Transaction that the Enron Party could not take directly, and in the event that any Enron Party receives any monies, property or other benefit as a result of any claim or cause of action, then the Enron Party will pay the amount to the Ponderosa Collateral Agent on behalf of Ponderosa and each Enron Party unconditionally assigns to the Ponderosa Collateral Agent, on behalf of Ponderosa, any right to those payments and amounts. I. Amendment of Transaction Documents Prior to the ENARGAS Consent Date, the Transaction Documents will not be amended without the consent of Enron. After the ENARGAS Consent Date, amendments to the Transaction Documents will not require the consent of Enron; provided that, if any amendment would affect the rights or obligations of any Enron Party with respect to that Transaction Document, then the consent of the Enron Party will be required. J. Release of Inter-Structural Claims On the Closing Date, each of Ponderosa and Sundance, on the one hand, and each Enron Party, on the other hand, will release, acquit and forever discharge each other solely from any and all claims which the Person may have or claim to have against each other to the extent arising under, relating to or in connection with the accounts receivable, accounts payable, loans and all other amounts due and owing under any agreement, in each case between Ponderosa or Sundance or a Subsidiary thereof or other Person controlled by Ponderosa or Sundance, on the one hand, and an Enron Party or a Subsidiary or other Person controlled by an Enron Party, on the other hand. K. Termination of Contracts; Non-Recourse of Ponderosa Loan The Parties agree that on the Closing Date (i) the agreements and instruments set forth on the Settlement Agreement will be terminated and that no party thereto will have any further obligations thereunder, and (ii) the Ponderosa Loan will be non-recourse to Enron, any other Enron Party or any of their affiliates and Subsidiaries, and the Ponderosa Collateral Agent, Sundance and the Rawhide Parties will look solely to the proceeds of the assets of Ponderosa for any repayment thereof. L. Conditions to Effectiveness Certain conditions must be satisfied for the "Closing Date" under the Settlement Agreement to occur, including: * Each of the Master Cover Settlement and the Swiss Re PRI Settlement will be in full force and effect pursuant to its terms; * The CIESA Settlement Agreement is in full force and effect; * The Counsel Letter Agreements are in full force and effect; * Ponderosa and Sundance have caused their Subsidiaries to, transfer free and clear of any liens, and have executed and delivered instruments and documents necessary to complete the transfer of each of the assets set forth in the Settlement Agreement; * The Enron Parties have caused their Subsidiaries and affiliates to transfer, free and clear of any liens, and have executed and delivered instruments and documents necessary to complete the transfer of each of the assets set forth in the Settlement Agreement; and * Enron has, with respect to the PQPC Note and the Batangas/Subic Notes, (i) paid $54,800,000 plus any and all interest paid to the holders of the notes on and after November 1, 2003, in cash in immediately available funds to the Ponderosa Collateral Agent on behalf of Ponderosa, (ii) caused Enron Power Operating Company to assign to Ponderosa its interest in a promissory note made by Subic Power Corp., dated June 19, 1996, the outstanding principal balance of which is around $3,500,000 and (iii) caused Enron CTS International Corp. to assign to Ponderosa all of its right, title and interest in those certain 9-1/2% Senior Secured Notes, Series A due 2008 made by Subic pursuant to the Subscription Agreement dated December 20, 1993 among Subic, the guarantors named therein and Bear, Stearns International Limited, the outstanding principal balance of which is about $2,600,000. M. Transfers; Asset Disposition Orders As of the Closing Date: (a) At Ponderosa or Sundance's cost and expense, each Enron Party will agree to, and will agree to cause its Subsidiaries and affiliates to, upon the request of the Portfolio Manager, (i) take commercially reasonable actions as may be reasonably requested to assist Sundance and Ponderosa in securing governmental approvals in connection with the disposition of any Project Interest and (ii) request further Court orders as may be reasonably necessary to satisfy conditions precedent to the disposition of each Project Interest; (b) Each Enron Party will agree to, and will agree to cause ETS to, assist Miss Kitty, L.L.C., and the Portfolio Manager with the transfer of the one share of EPCA owned by ETS to Miss Kitty on the books and records of EPCA; and (c) Each Enron Party will agree to transfer, or to cause to the transfer of, all of the limited partnership interests in Ponderosa owned by it to Rawhide or its designee on the first Business Day after the Closing. N. Management of Ponderosa Pursuant to the Ponderosa Partnership Agreement, on or after the Closing Date, the Portfolio Manager may in its sole discretion appoint a general manager of Ponderosa. If so appointed, the General Manager will have responsibility for management of all of the assets of Ponderosa, except with respect to the CIESA/TGS Project Interest. Enron agrees to continue to own 100% of the outstanding voting interests of EPMH, EGPP and Enron EPI, Inc., and the Enron Parties agree to preserve and maintain the corporate existence of each entity until the date that is five days after the ENARGAS Consent Date, at which time the limited partnership interests of EGPP and Enron EPI, Inc., in Ponderosa will immediately be transferred to Rawhide or its designee. O. Management of CIESA/TGS Until the ENARGAS Consent Date, the CIESA/TGS Project Interest will be administrated by the CIESA/TGS Manager, who will be appointed by Enron and confirmed by the Portfolio Manager and who will have the exclusive right and power to conserve, manage and protect and deal with the CIESA/TGS Project Interest, including with respect to the ICSID Claims. Pursuant to the Settlement Agreement, Enron appoints itself as the initial CIESA/TGS Manager, and the Portfolio Manager confirms the appointment. Each of Enron and the Portfolio Manager will be entitled to replace the CIESA/TGS Manager in its sole discretion. Enron, as the initial CIESA/TGS Manager, and any Party acting to replace the CIESA/TGS Manager will assume all duties and liabilities with respect to the CIESA/TGS Manager until a replacement is appointed by Enron and confirmed by the Portfolio Manager and the replacement CIESA/TGS Manager will have entered into a management agreement. The Person acting as CIESA/TGS Manager from time to time will act as directed by the Portfolio Manager absent written direction by Enron suspending the right of direction. Absent written direction by Enron suspending the right of direction of the Portfolio Manager, the replacement of the CIESA/TGS Manager by Enron without the confirmation of the Portfolio Manager or Enron's acting as CIESA/TGS Manager, no Enron Party will have any direct liability with respect to the actions or failure to act of the CIESA/TGS Manager, nor for any other liability arising out of the CIESA/TGS Manager Agreement or the engagement of the CIESA/TGS Manager. The CIESA/TGS Manager's duties will be to manage the CIESA/TGS Project Interest in the best interests of Enron, Ponderosa and Ponderosa's creditors, without prejudice of, and in addition to, the CIESA/TGS Manager's duty to the CIESA/TGS Project Interest itself. On the ENARGAS Consent Date, Section 6.5 of the Settlement Agreement will automatically terminate and will be of no further force and effect, and management of the CIESA/TGS Project Interest will be vested in the General Manager pursuant to Section 6.3 of the Settlement Agreement or, if no General Manager will be serving in that position at that time, then in the Portfolio Manager. As of the Closing Date, each Enron Party agrees to, and agrees to cause its Subsidiaries and affiliates to, cooperate with the Portfolio Manager to obtain approvals or to restructure the holdings of the CIESA/TGS Project Interest or to take other action as the Portfolio Manager may reasonably request so that the approval of ENARGAS to a change of management is no longer required and, on and after the ENARGAS Consent Date, to comply with its obligations under the CIESA Settlement Agreement and to cooperate with the Portfolio Manager to complete the transactions contemplated by the CIESA Settlement Agreement and any other document related thereto. P. Certain CIESA/TGS Matters; ICSID Claims On the Closing Date, each of Ponderosa, Sundance, Rawhide, the Rawhide Collateral Agent and the Portfolio Manager will agree to, and each of Ponderosa and Sundance will agree to cause its affiliates and Subsidiaries to, use commercially reasonable best efforts to promptly assist Enron and its affiliates and Subsidiaries as may be reasonably necessary to obtain the ENARGAS Release. On the Closing Date, Enron will assign all of its right, title and interest in any and all proceeds of the ICSID Claims to Ponderosa up to the full amount of Ponderosa's claimed losses with respect thereto. If Enron or any other Enron Party receives any proceeds with respect to any of the ICSID Claims, Enron will agree that it will, and will cause any other Enron Party to, immediately pay over those proceeds to the Ponderosa Collateral Agent on behalf of Ponderosa until the amount of Ponderosa's claimed losses with respect to the ICSID Claims has been paid in full. Upon receipt by Ponderosa or the Ponderosa Collateral Agent of payment in full of the amount of Ponderosa's claimed losses with respect to the ICSID Claims, any additional proceeds of the ICSID Claims will be retained by and payable to Enron, and any amounts received by Ponderosa or the Ponderosa Collateral Agent with respect to the ICSID Claims in excess of Ponderosa's claimed losses will be immediately paid over and transferred to Enron or its designee. Enron agrees that it will not otherwise transfer any of its right, title or interest in the ICSID Claims to any other Person. On the Closing Date, Enron agrees that it will, at the reasonable request of the Portfolio Manager or the CIESA/TGS Manager and at the expense of Ponderosa, assist Ponderosa in the pursuit of the ICSID Claims. Additionally, Ponderosa agrees to reimburse Enron for any costs and expenses that Enron may incur due to its continued participation in the ICSID Claims after the Closing Date. Q. Settlement of PRI Claims Subject to Sections 6.7(b) and (c) of the Settlement Agreement, in the event that any claim under any PRI Policy is not finally settled prior to the Closing Date, on the Closing Date the Enron Parties will agree to, and to cause their Subsidiaries and affiliates to, use commercially reasonably efforts to cooperate, at the reasonable request of the Portfolio Manager and at the expense of Ponderosa, in pursuing all unsettled claims, including, without limitation, by providing information and access to files, accounting and other records and personnel in respect thereof. On the Closing Date, the Enron Parties will agree to cooperate with Ponderosa and the Rawhide Parties in seeking a settlement of or other arrangement for the dissolution or cancellation of the OPIC PRI Policies pursuant to which OPIC would return the premiums on the OPIC PRI Policies, and in the event of any settlement or arrangement, which will be in form and substance mutually agreeable to Enron and the Rawhide Collateral Agent, all OPIC PRI Settlement Proceeds will be paid (A) to the Ponderosa Collateral Agent on behalf of Ponderosa in an amount equal to 60% of the OPIC PRI Settlement Proceeds and (B) to Enron in an amount equal to 40% of the OPIC PRI Settlement Proceeds at the account that Enron may direct. On the Closing Date, Ponderosa will agree to indemnify and hold Enron harmless to the same extent that Enron is required to indemnify and hold harmless the Underwriters with respect to Enron Indemnified Claims but only to the extent that those Enron Indemnified Claims are also Ponderosa Indemnified Claims under the Master Cover Settlement. Ponderosa's indemnification of Enron will be subject to all limitations, exclusions, and qualifications available to Enron in connection with Enron's indemnification of the Underwriters. R. Northern Border On the Closing Date, Sundance will have ceased to be an affiliate of Enron, Northern Border and Northern Plains Natural Gas Company and each of the Parties will agree that, after the date that the conditions precedent set forth in Section 4.2(a) have been satisfied, it will not take any action that could (i) cause Sundance to be an Affiliate of Northern Border, Enron, Northern Plains Natural Gas Company or any of their Affiliates or (ii) until Sundance no longer owns any of the LP Units, cause Ponderosa to control Sundance. S. Services Agreements Except with respect to publicly available information, on the Closing Date, Enron will agree to provide access to files and other records and to provide personnel with expertise in operational, accounting and tax matters related to Ponderosa, Sundance and the Project Interests, at the expense of Ponderosa, to the extent requested by the Portfolio Manager, the General Manager or the CIESA/TGS Manager for the pursuit or settlement of the liquidation of the assets of Ponderosa and Sundance and their Subsidiaries and Project Interests that continue to be owned by Ponderosa or Sundance after the Closing Date. As of the Closing Date, Enron agrees (A) to cause the preparation and filing of required U.S. federal income tax returns and any comparable, required state forms of Sundance and Ponderosa for the 2003 tax year, (B) to cause the preparation and closing of the year-end accounting with respect to Ponderosa, Sundance, their Subsidiaries and the Project Interests for the 2003 accounting year and (C) promptly after completion of the services set forth in subsections (A) and (B), to transfer or cause the transfer of a full and complete index of all books and records with respect to Ponderosa, Sundance, their Subsidiaries and the Project Interests to the Portfolio Manager, General Manager or the CIESA/TGS Manager, as applicable. Notwithstanding, Enron also agrees to continue to keep and prepare the accounting books and records for Ponderosa and the CIESA/TGS Project Interest until the ENARGAS Consent Date, upon the occurrence of which Enron agrees to promptly transfer or cause the transfer of a full and complete index of all accounting books and records with respect to Ponderosa and the CIESA/TGS Project Interest to the CIESA/TGS Manager, General Manager or Portfolio Manager, as applicable. Upon fulfillment of these obligations, Enron will have no further obligation to prepare tax returns or forms or accounts of Ponderosa, Sundance, their Subsidiaries or any of the Project Interests. On the Closing Date, Enron will agree to provide personnel with expertise in operational and other matters, at the request of the Portfolio Manager, as may be reasonably necessary for the completion of the Bahia Gas Litigation. In each case under the Settlement Agreement in which any Enron Party or any Subsidiary or affiliate thereof will provide information or access to files, accounting and other records and the services of personnel, (A) after the Closing Date, that Enron Party, Subsidiary or affiliate will be entitled to reimbursement for the time and out-of-pocket costs and expenses related to providing the information, files, records and services on a commercially reasonable basis upon receipt by Ponderosa of a written invoice and (B) the information, access and services will only be provided upon reasonable prior notice of any request and that access or services of personnel will only be provided during normal business hours and otherwise in a manner as to avoid any unreasonable disruption of the normal business and operations of Enron and the other Enron Parties and their Subsidiaries and affiliates. T. Sundance General Partner On the Closing Date, Ponderosa will confirm, and each other Party will acknowledge, that due to the commencement of Ponderosa's dissolution and winding-up pursuant to the Ponderosa Partnership Agreement, Ponderosa has ceased, as of the Closing Date, to be the Sundance General Partner in accordance with Section 17-402 of the Delaware Revised Uniform Limited Partnership Act, as amended. U. Appointment of Portfolio Manager Notwithstanding the dispute between the Rawhide Parties and the Enron Parties concerning the validity, effectiveness and scope of the asserted rights of the Portfolio Manager and the claims of each thereof relating to actions taken by or on behalf of Ponderosa and Sundance by each thereof from the time of delivery of the Portfolio Management Letter, effective on the Closing Date, the Enron Parties and the Committee acknowledge and consent to the appointment of Citibank as Ponderosa Portfolio Manager and Sundance Portfolio Manager, and the Parties agree that the Portfolio Manager will have the full rights and authority as provided in the Sundance Partnership Agreement and the Ponderosa Partnership Agreement. V. Covenants with respect to Philippine Amounts On the Closing Date: (a) EGPP will agree to pay or will cause to be paid in cash in immediately available funds to the Ponderosa Collateral Agent, on behalf of Ponderosa, upon receipt thereof, an aggregate amount equal to 80% of all amounts -- net of withholding Tax -- collected or received from time to time in respect of the approximately $9,000,000 of disputed receivables of Batangas; (b) Upon receipt by the Ponderosa Collateral Agent of the cash amount set forth in Section 4.2(a)(ix) of the Settlement Agreement, $8,260,000 will be deposited into a newly created escrow account held with the Ponderosa Collateral Agent pursuant to an escrow agreement satisfactory to Enron and the Rawhide Collateral Agent in their mutual discretion. Pursuant to the escrow agreement, (i) upon the receipt by EPPC or Batangas of cash with respect to (A) the final Batangas invoice to be collected from National Power Corp. or (B) future amounts to come from dividends or other distributions on capital by Subic, an amount equal to the Batangas Collection will be immediately released from the escrow account to the Ponderosa Collateral Agent on behalf of Ponderosa and (ii) on March 31, 2005, any amounts remaining in the escrow account that are not payable to Ponderosa as the result of any Batangas Collection not having been received prior to March 31, 2005 will be immediately transferred to Enron or its designee. W. Foreclosure by Rawhide Collateral Agent On the Closing Date, the Parties will agree that the Rawhide Collateral Agent will promptly take certain steps to foreclose upon the collateral securing the Rawhide Note. Upon completion of the Foreclosure Sale, the Rawhide Collateral Agent will not transfer any rights in the collateral securing the Rawhide Note to any other party, except for the payment of the proceeds of the Foreclosure Sale to the parties entitled thereto. The Rawhide Collateral Agent may accept a deed in lieu of foreclosure or quitclaim of all right, title and interest of Rawhide in the collateral securing the Rawhide Note on terms and conditions reasonably satisfactory to Enron and the Committee. X. Representations and Warranties with Respect to Liabilities As of the Closing Date, and subject to the exclusions and exceptions set forth in Section 6.21 of the Settlement Agreement, Enron represents and warrants to Ponderosa, Sundance and the Rawhide Parties that, to the knowledge of Enron, as of the Closing Date the Intermediate Companies do not have any material liabilities that would properly be reflected or reserved against in a balance sheet prepared in conformity with United States generally accepted accounting principles other than: (a) liabilities that have been previously disclosed in writing to the Portfolio Manager or representatives or agents thereof; and (b) liabilities that may derivatively arise solely from any Intermediate Company's investment or holdings in an applicable Underlying Project. Y. Transwestern Action Reimbursement If, prior to the earlier of (i) the ENARGAS Consent Date and (ii) the date on which Enron and the Portfolio Manager reasonably agree it is no longer commercially reasonable to seek to obtain the ENARGAS Release, Enron takes, or causes to be taken, any affirmative action that causes Transwestern to cease to be a member of the "Enron Economic Group" (Conjunto Economico de Enron) that bid for the privatization of Gas del Estado S.E., Enron agrees to reimburse Ponderosa or its Subsidiaries and affiliates that are part of the CIESA/TGS Project Interest for any costs, expenses, fines or penalties that the Person may incur solely arising out of or incurred in connection with, and that would not have been incurred but for, the taking of the Transwestern Action; provided, however, that (x) no Person will be reimbursed for any costs, expenses, fines or penalties to the extent those costs, expenses, fines or penalties are caused by or result from the actual fraud, willful misconduct, bad faith or gross negligence of that Person, (y) for the avoidance of doubt, no Person will be reimbursed for any loss in value of all or any portion of the CIESA/TGS Project Interest and (z) notwithstanding any of the foregoing, in no event will Enron's aggregate reimbursement obligation in respect of that provision exceed $5,000,000. A free copy of the Rawhide Settlement Agreement is available at: http://bankrupt.com/misc/16904RawhideSettlementAgreement.pdf Inter-structure Claims In addition to the Proceeds Loan Note and the Enron Demand Loans, Mr. Rosen reports that there are accounts receivable, accounts payable, loans and other amounts due and owing by Ponderosa or Sundance, on one hand, and an Enron Party, on the other hand, that are required to be released, acquitted and forever discharged as of the Closing Date under the Settlement Agreement. Generally, the Inter-Structure Claims involve obligations to or from Enron or these subsidiaries and controlled Persons of Enron -- the Debt Forgiveness Entities: (i) EDF, (ii) ESA, (iii) Enron Pipeline Columbia Limited Partnership, (iv) Enron Columbia Investments Limited Partnership, (v) ECF, (vi) Global Expat Services, LLC, (vii) ECB, (viii) Enron America do Sul Ltda., (ix) Generacion Mediterranea S.A., and (x) Enron International, Inc. In connection with the consummation of the transactions under the Settlement Agreement, except where the applicable Debt Forgiveness Entity in respect of a Debt Obligation is a Ponderosa Limited Partner, Enron or the other Debtors will enter into agreements or other arrangements to provide the Debt Forgiveness Entities with reasonably equivalent consideration for their release, acquittal and discharge of the Debt Obligations owed to it. The Debt Forgiveness Arrangements will generally provide for a reduction of claims by Enron against the applicable Debt Forgiveness Entity, but may also provide that Enron or another Debtor pays the Debt Forgiveness Entity the reasonable equivalent value if sufficient claims do not exist for Enron to reduce against that entity. However, Mr. Rosen clarifies that in one instance, it is contemplated that the Debt Obligation of a Ponderosa subsidiary will be purchased by EGPP at its fair value from the applicable Debt Forgiveness Entities under the terms of a Purchase Agreement. Upon purchase, EGPP will release, acquit and forever discharge the applicable Ponderosa subsidiary from the Debt Obligation as a contribution to capital for that subsidiary. The Purchase Agreement further provides that, in that instance, the purchase price to be paid to the applicable Debt Forgiveness Entities by EGPP will constitute an administrative claim of EGPP in its Chapter 11 case. Furthermore, Mr. Rosen says that to induce EPOC to assign to Ponderosa EPOC's interest in the Subic note, as required pursuant to the terms of the Settlement Agreement, Enron and EPOC will enter into a Debt Forgiveness Arrangement pursuant to which EPOC will agree to assign the Subic Note to Ponderosa in exchange for Enron's agreement to forgive indebtedness of EPOC in an amount equal to the principal and unpaid interest on the Subic Note. Mr. Rosen contends that the contemplated settlement of the Rawhide Transactions should be approved and authorized as the Settlement Agreement and the Debt Forgiveness Arrangements constitute the exchange of reasonably equivalent value between the Parties to settle the matters among them. The Debtors believe that the Settlement Agreement and the Debt Forgiveness Arrangements are a very favorable development for the cases as it resolves numerous complicated issues arising from the Rawhide Transactions and the Inter-Structure Claims. In addition to the dismissal of a significant amount of claims that have been made or that may exist against the Debtors in respect of the Rawhide Transactions, the Debtors believe that the consummation of the transactions under the Settlement Agreement will significantly reduce the costs, expenses, time and effort that have been and continue to be incurred in managing the Project Interests. Moreover, the terms of the Settlement Agreement and the ultimate resolution of issues relating to the management of Ponderosa and Sundance will enable the Debtors to: (i) remove substantial bases for contingent liability relating to their capital contribution obligations to Ponderosa and Sundance; (ii) in certain instances, significantly lessen potential liabilities relating to further proceedings with foreign governments on ownership rights and restrictions regarding highly regulated businesses; and (iii) return, directly or indirectly, to the Debtors certain assets that will provide value for their estates. The Debtors also believe the Debt Forgiveness Arrangements will generally benefit each of the Debt Forgiveness Entities because (i) the discharge will facilitate the transactions contemplated by the Settlement Agreement, (ii) the Debt Forgiveness Entities will receive equivalent value for their Inter-Structure Claims, and (iii) that equivalent value will be received in a timely fashion in connection with the consummation of the transactions under the Settlement Agreement and the general reorganization of Enron and the other Debtors as part of the Cases, instead of each applicable Debt Forgiveness Entity's having to rely on the creditworthiness of the applicable obligors on the Debt Obligations at unspecified or long-term maturity dates. Each of the Settlement Agreement and the Debt Forgiveness Arrangements are the product of arm's-length bargaining by the Parties and the Debt Forgiveness Entities, as applicable. (Enron Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) ETEAM OF PA: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: ETeam of Philadelphia LLC aka ExecuTrain of Philadelphia 1 Tower Bridge, Suite 520 100 Front Street West Conshohocken, Pennsylvania 19428 Bankruptcy Case No.: 04-11303 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- ETeam USA LLC 04-11302 Type of Business: The Debtor offers training in computer application and technical development, project management, sales performance, team building, leadership development, and customer service skills. See http://www.executrain.com/ Chapter 11 Petition Date: May 2, 2004 Court: District of Delaware Debtor's Counsel: Joseph A. Malfitano, Esq. Young, Conaway, Stargatt & Taylor The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, DE 19899-0391 Tel: 302-571-6600 Fax: 302-571-1253 Estimated Assets Estimated Debts ---------------- --------------- ETeam of Philadelphia LLC $100,000-$500,000 $1 M to $10 M ETeam USA LLC $0 to $50,000 $0 to $50,000 ETeam of Philadelphia's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Platinum Plus for Business Credit card $71,325 Techno Training, Inc. Trade $55,686 Meta 4 Consulting Trade $45,000 US Bank Credit Card $25,136 ET3, LLC Trade $22,972 Advanta Credit Card $22,336 Public Affairs Management Trade $17,000 Grubb & Ellis Management Trade $12,821 Service, Inc. Skillramp Trade $11,606 American Express Business Trade $8,500 Finance ExecuTrain of Georgia Trade $7,925 Element K Online Trade $7,000 Keystone Health Plan East Trade $4,822 Independence Blue Cross Trade $4,488 Cale/Canterbury ExecuTrain Trade $4,253 ExecuTrain of San Juan Trade $4,050 Neoware Systems, Inc. Trade $4,000 Red Hat, Inc. Trade $3,120 WebEx Communications, Inc. Trade $3,100 Quench, Inc. Trade $2,895 FAIRFAX FINANCIAL: A.M. Best Assigns BB+ Rating to 7.75% Sr. Notes ------------------------------------------------------------------ A.M. Best Co. has assigned a debt rating of "bb+" to Fairfax Financial Holdings Limited's (Fairfax) (NYSE: FFH, Toronto: FFH) 7.75% senior unsecured notes due 2012 issued as part of its debt exchange offer. The outlook for all debt ratings remains negative. Fairfax has exchanged a portion of the company's existing $275 million of 7.38% notes due 2006, $170 million of 6.88% notes due 2008 and wholly owned TIG Holdings, Inc. $97.7 million 8.125% notes due 2005 for a combination of cash and a specific amount of the new notes. The new notes have terms and covenants substantially similar to the existing securities. Fairfax has also announced that it intends to file a $750 million shelf registration that will allow the new 2012 notes exchanged for the TIG Holdings notes to be re-exchanged for similar 2012 notes that will be registered with the U.S. Securities and Exchange Commission. In addition, the shelf registration will allow Fairfax the opportunity to issue additional debt or equity over the next two years. A.M. Best views Fairfax's exchange offer as a long-term positive move given management's attempt to proactively de-lever the holding company and provide additional short-term financial flexibility over the next few years as the maturity profile of the company's debt is lengthened. The immediate negative impact will be the need to utilize existing holding company cash. However, despite this use of cash, Fairfax's liquidity is sufficient to meet its cash needs in 2004. The company's debt ratings reflect, in part, management's consistent proactive efforts to maintain sufficient holding company liquid assets to meet holding company obligations, as well as flexibility to provide capital support to subsidiaries if needed. A.M. Best believes that tax-sharing payments and stock dividends derived from quality earnings at Fairfax's investments in Odyssey Re and Northbridge, combined with dividend payments allowed by earnings at its wholly owned Crum & Forster operation, should provide sufficient cash flow to the holding company to meet its obligations. In addition, the expected release of Fairfax's shares of Odyssey Re currently held in trust will provide added financial flexibility in the second quarter. The trust was established with the California Department of Insurance to effect the restructuring of the TIG companies. The negative outlook reflects A.M. Best's concerns regarding continued negative loss reserve development at Fairfax's run-off operations, which could result in significant earnings volatility and potential disruption of dividends from wholly owned subsidiaries. In 2003, reserve development was offset by sizable realized gains. Despite a history to the contrary, expectations in 2004 are for a more modest level of realized gains. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com/ FARMLAND IND: CHS Completes Purchase of 50% Agriliance Stake ------------------------------------------------------------ CHS Inc. (Nasdaq: CHSCP) has completed the purchase of all of Farmland Industries' ownership share of Agriliance, LLC, a leading supplier of agronomic inputs in North America. The purchase was approved April 20, 2004, by the U.S. District Court overseeing Farmland's bankruptcy process and was finalized on April 30. The CHS Board of Directors approved the purchase March 11. The purchase consists of Farmland's entire interest in Agriliance, LLC. CHS now owns 50 percent of the economic and governance interests of Agriliance, LLC, with the remaining 50 percent owned by Land O'Lakes, Inc. of Arden Hills, Minn. CHS purchased Wilbur Ellis Company's interest in Agriliance in May 2003. "We are pleased to complete this purchase and look forward to continuing to meet the agronomic inputs needs of producers across the U.S. and Canada through Agriliance," said John D. Johnson, CHS president and chief executive officer. "We expect a seamless transition for Agriliance customers and employees as we undertake a successful spring planting season." Agriliance -- http://www.agriliance.com/-- is a major supplier of crop production inputs and provider of industry-leading agronomic training for dealers across North America. A leading crop nutrients distributor, Agriliance also manufactures the AgriSolutions(TM) brand of crop protection products and is a contract formulator for major agricultural chemical companies. Agriliance was created in 2000. In 2003, it reported sales of $3.5 billion, including $1.3 billion in crop protection products, 10 million tons of crop nutrients, $809 million in retail sales and $54 million in agronomy equipment sales. CHS -- http://www.chsinc.com/-- is a diversified energy, grains and foods company committed to providing the essential resources that enrich lives. A Fortune 500 company, CHS is owned by farmers, ranchers and cooperatives from the Great Lakes to the Pacific Northwest and from the Canadian border to Texas, along with thousands of preferred stockholders. CHS provides products and services ranging from grain marketing to food processing to meet the needs of customers around the world. It also operates petroleum refineries/pipelines and, through a broad range of working partnerships, markets and distributes Cenex(R) brand energy products, along with agronomic inputs and feed to rural America. CHS is listed on the NASDAQ Exchange at CHSCP. FINOVA GROUP: Faces Securities Fraud Lawsuits Over Thaxton Notes ---------------------------------------------------------------- Between October 17, 2003 and January 13, 2004, FINOVA Capital Corporation was served with and named as a defendant, together with other parties, in five lawsuits that relate to its loan to The Thaxton Group, Inc., and several related entities. FINOVA has a senior secured loan to the Thaxton Entities of approximately $108,000,000 at December 31, 2003. The Thaxton Entities were declared in default under the loan agreement after they advised FINOVA that they would have to restate earnings for the first two fiscal quarters of 2003, and had suspended payments on their subordinated notes. As a result of the default, FINOVA exercised its rights under the loan agreement and accelerated the indebtedness. The Thaxton Entities then filed for Chapter 11 protection before the U.S. Bankruptcy Court for the District of Delaware on October 17. The first lawsuit, a complaint captioned Earle B. Gregory, et al., v. FINOVA Capital Corporation, James T. Garrett, et al., was filed in the Court of Common Pleas of Lancaster County, South Carolina, and served on FINOVA on October 17, 2003. An amended complaint was served on November 5, before the deadline for FINOVA to answer, plead, or otherwise respond to the original complaint. The Gregory Action was properly removed to the U.S. District Court for the District of South Carolina on November 17, pursuant to 28 U.S.C. Sections 1334 and 1452. The plaintiffs filed a request to remand the case to the state court, but the District Court denied that request on December 18. The second Thaxton-related complaint, captioned Tom Moore, Anna Nunnery, et al., v. FINOVA Capital Corporation, Moore & Van Allen PLLC, and Cherry, Bekaert & Holland, LLP, was filed in the U.S. District Court for the District of South Carolina on November 25, 2003 and served on FINOVA on December 2. The third complaint, captioned Sam Jones Wood and Kathy Annette Wood, et al., v. FINOVA Capital Corporation, Moore & Van Allen PLLC, and Cherry, Bekaert & Holland, LLP, was filed in the Superior Court for Gwinnett County, Georgia, and served on FINOVA on December 9, 2003. The fourth complaint, captioned Grant Hall and Ruth Ann Hall, et al., v. FINOVA Capital Corporation, Moore & Van Allen, PLLC, and Cherry, Bekaert & Holland, LLP, was filed in the Mecklenberg County, North Carolina, Superior Court, and served on FINOVA on December 9, 2003. The fifth complaint, captioned Charles Shope, et al., v. FINOVA Capital Corporation, Moore & Van Allen, PLLC, and Cherry, Bekaert & Holland, LLP, was filed in the U.S. District Court for the Southern District of Ohio, Eastern Division, and served on FINOVA on January 13, 2004. Each of the five Thaxton-related lawsuits are styled as class actions, purportedly brought on behalf of certain defined classes of people who had purchased subordinated notes from the Thaxton Entities. The complaints allege claims of fraud, securities fraud, and various other civil conspiracy and business torts in the sale of the subordinated notes. Each of the complaints seeks an unspecified amount of damages, among other remedies. In addition to FINOVA, the complaints each name as co-defendants Thaxton's accountants and attorneys, and in the Gregory case, several officers of the Thaxton Entities. There are approximately 6,800 holders of the subordinated notes issued in several states, with a total subordinated indebtedness of approximately $122,000,000. The unsecured creditors' committee has also filed an action in the Thaxton bankruptcy case against FINOVA, seeking to set aside FINOVA's liens and payments collected due to alleged securities fraud, violations of banking regulations, preference payments and similar claims. In a regulatory filing with the Securities and Exchange Commission, FINOVA Senior Vice President, General Counsel & Secretary, Richard Lieberman, asserts that all the claims against FINOVA are without merit. FINOVA intends to vigorously defend against the claims, and protect its senior secured position in the Thaxton bankruptcy proceedings. (Finova Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) GAS TRANSMISSION: S&P Places Junk Ratings On CreditWatch Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CC' ratings on Gas Transmission Northwest Corp. on CreditWatch with positive implications. The rating action reflects National Energy & Gas Transmission Inc.'s announcement on April 29, 2004, that TransCanada PipeLines Ltd. (TransCanada; A-/Negative/--) had won the auction to purchase GTN for $1.7 billion. While this is still subject to bankruptcy court approval (expected May 12, 2004), the bidding period for the asset has terminated. As a result, Standard & Poor's is fairly confident that the sale will be completed. Upon consummation of the sale, GTN's credit quality will be reflected in TransCanada's credit ratings. GTN was previously assessed by Standard & Poor's as having stand-alone credit quality in the 'A' category, reflecting its above-average business position and adequate financial profile. FIRST VIRTUAL: Audit Committee Reviews Irregular Sale Transactions ------------------------------------------------------------------ First Virtual Communications, Inc. (NASDAQ:FVCX) announced that its Audit Committee is in the process of reviewing certain irregular sales transactions. Most of the transactions currently under review involve its sales operations in China. The Company has made personnel changes in China as a result of these transactions. This investigation was initiated as a result of the Company becoming aware of several of these transactions, and subsequently notifying its Audit Committee and its independent auditors. The Audit Committee has engaged independent counsel to conduct the investigation which is in its early stages. The Company's auditors will not be able to complete their review of the financial results for the three months ended March 31, 2004 until the investigation is completed and the Company will not be able to release its first quarter financial results on May 4, as previously scheduled. The effect of the irregular sales transactions on the unaudited interim results for the quarter ended March 31, 2004 and on previously issued annual and quarterly financial statements, if any, has not been determined, and it is not known whether the Company will be required to restate prior period financial statements. Since the investigation will not be completed by the May 17, 2004 deadline for the filing of the Company's Quarterly Report on Form 10-Q, the Company will not be able to file this Form 10-Q on a timely basis. About First Virtual Communications First Virtual Communications is a premier provider of infrastructure and solutions for real time rich media communications. Headquartered in Redwood City, California, the Company also has operations in Europe and Asia. More information about First Virtual Communications can be found at http://www.fvc.com/or by calling 1-800-728-6337 or +1-650-801- 6500 outside North America. FLEMING COMPANIES: Benenson Presses for Rent & Tax Payments ----------------------------------------------------------- The Benenson Capital Company leases the property located at Admiral and Lewis Streets in Tulsa, Oklahoma, to the Fleming Companies, Inc. Debtors pursuant to a Retail Building Lease, dated June 9, 1986. The Debtors assumed the lease from Scrivner, Inc. Under the Lease, the Debtors are obligated to pay $272,846 in minimum annual rent in 12 equal monthly installments of $22,737. Each installment of the Minimum Rent is due and owing under the Lease on the first day of each month. Benenson is obligated to pay the real estate taxes on the Premises, and the Debtors are obligated to reimburse Benenson for these amounts. Before the Petition Date, the Debtors sublet their interest in the Premises to a third party, which operated the Premises under the name Marvin's Food Saver, formerly known as Admiral & Lewis St Mkt. In August 2003, the Debtors decided to reject the Lease and the Sublease. Benenson objected on the basis that the Debtors had not vacated the Premises. By agreement of the parties, the Court approved the Debtors' rejection of the Lease and the Sublease. Rent and Taxes Owed Thomas G. Macauley, Esq., at Zuckerman Spaeder, LLP, in Wilmington, Delaware, reports that the Debtors have not paid any Minimum Rent for any period after August 2003 and before the February 17, 2004 Rejection Date. As a result, six months of Minimum Rent -- September 2003 through February 2004 -- are presently due. On December 24, 2003, Benenson sent an invoice to the Debtors for $22,328 representing real estate taxes on the Premises for the full year 2003. Benenson paid the 2003 taxes as set forth in the Lease, but the Debtors have not reimbursed it for the taxes. Benenson asks the Court to direct the Debtors to pay: (a) the $136,422 unpaid Minimum Rent; and (b) the $22,328 unpaid reimbursement of the 2003 real estate taxes. Mr. Macauley asserts that the real estate taxes incurred during the postpetition, pre-rejection period are actual, necessary costs and expenses of preserving the estates. There is no reason why these administrative expenses should not be paid promptly since the Lease has been rejected. 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) FLEMING: Texas-Based Exec. Group Offers $315MM Cash for Core-Mark ----------------------------------------------------------------- A group of Dallas and Austin-based executives (CVCMA, LLC) have offered to purchase the assets of Core-Mark International and all related entities, for an unsolicited all cash bid of $315 Million, subject to due diligence, in a letter to Fleming, Inc. and their key financial and legal advisors. Core-Mark International is the last remaining key asset of Fleming Companies Inc. (OTC Pink Sheets: FLMIQ) -- Lewisville, TX, in connection with the company's voluntary petitions for reorganization under Chapter 11 of Title 11 of the United States Code. The CVCMA, LLC executive group is led by well known experts in the wholesale and retail industries including Mr. Bill Fields, former President and CEO of Wal-Mart Stores Division, acknowledged as one of the key leaders in building the Wal-Mart, Inc. business, Charles "Chuck" Jarvie, former Senior Executive of Procter & Gamble in charge of the global consumer and industrial food groups, and a current partner at Beta Capital Group in Dallas, David W. Hill, an experienced Austin-based investment banker/financial consultant serving the restaurant and convenience store sectors, and Dr. Tony Copp of Dallas-based Copp Ventures, LLC, a former executive at Hunt Oil Company and Salomon Brothers in New York. Core-Mark International currently is the nation's second largest wholesale distribution company. CVCMA, LLC's funding source, subject to due diligence, is Bank of America, and the company is in continued discussions with GMAC Commercial Finance as part of completing an overall capital structure. 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. FLINTKOTE COMPANY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: The Flintkote Company Three Embarcadero Center, Suite 1190 San Francisco, California 94111-4047 Bankruptcy Case No.: 04-11300 Type of Business: The Debtor is engaged in the business of manufacturing, processing and distributing building materials. Chapter 11 Petition Date: April 30, 2004 Court: District of Delaware Debtor's Counsels: James E. O'Neill, Esq. Laura Davis Jones, Esq. Sandra G. McLamb, Esq. Pachulski, Stang, Ziehl, Young & Jones 919 North Market Street, 16th Floor P.O. Box 8705 Wilmington, DE 19899-8705 Tel: 302-652-4100 Fax: 302-652-4400 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Randy Bono, Esq. Asbestos Personal $26,270,650 The Simmons Firm, LLC Injury 707 Berkshire Blvd. P.O. Box 521 East Alton, IL 62024 Charles A. Waters, Esq. Asbestos Personal $13,771,500 Waters & Kraus Injury 3219 McKinney Avenue Suite 3000 Dallas, TX 75204 Pam Wise, Esq. Asbestos Personal $7,977,500 Wise & Julian Injury 3555 College Avenue P.O. Box 1108 Alton, IL 62002 David M. McClain, Esq. Asbestos Personal $4,500,000 Kazan & McClain Injury 171 Twelfth Street 3rd Fl. Oakland, CA 94607 Mike Kaeske, Esq. Asbestos Personal $3,668,500 Kaeske Reeves LLP Injury 6301 Gaston Ave, Ste 735 Dallas, TX 75214 R. Dean Hartley, Esq. Asbestos Personal $3,514,500 Hartley & O'Brien Injury 827 Main Street Wheeling, WV 26003 Russell W. Budd, Esq. Asbestos Personal $2,930,400 Baron & Budd Injury 3102 Oak Lawn Ave, Ste 1100 Dallas, TX 75219-4281 Glen W. Morgan, Esq. Asbestos Personal $2,880,000 Reaud, Morgan & Quinn 801 Laurel Beaumont, TX 77701 Scott M. Hendler, Esq. Asbestos Personal $2,735,800 Hendler Law Firm Injury 816 Congress Ave, Ste 1230 Austin, TX 78701 James J. Bedortha, Esq. Asbestos Personal $2,490,650 Goldberg, Persky, Jennings Injury & White, PC 1030 Fifth Avenue, 3rd Fl. Pittsburgh, PA 15219-6295 John I. Kittel, Esq. Asbestos Personal $1,750,000 Mazor & Kittel Injury 30665 Northwestern Highway Farmington Hills, MI 48334 Denman H. Heard, Esq. Asbestos Personal $1,750,000 Watts & Heard LLP Injury Meilie Esperson Building 815 Walker Street, 16th Fl. Houston, TX 77002 John M. Deakle, Esq. Asbestos Personal $1,744,175 The Deakle Law Firm Injury 802 Main Street P.O. Box 2072 Hattlesburg, MS 39403 Alan R. Brayton, Esq. Asbestos Personal $1,719,748 Brayton Parcell Injury 222 Rush Landing P.O. Box 6169 Novato, CA 94948-6169 Joseph F. Rice, Esq. Asbestos Personal $1,632,900 Motley Rice LLC 28 Bridgeside Blvd. Mount Pleasant, SC 29464 Mark H. Iola, Esq. Asbestos Personal $1,525,000 Stanley Mandel & Iola LLP Injury 3000 Town Center, Ste 2130 Southfield, MI 48075 Tom B. Scott, Esq. Asbestos Personal $1,445,000 Scott & Scott Injury P.O. Box 2009 Jackson, MS 39215-2009 Doug McManany, Esq. Asbestos Personal $1,400,000 Mathis & Adams, PC Injury 622 Drayton Street P.O. Box 9790 Savannah, GA 31401 T. Roe Frazer II, Esq. Asbestos Personal $1,096,875 Frazer & Davidson, PA Injury 500 East Capitol Street Jackson, MS 39201 Brent Coon, Esq. Asbestos Personal $856,850 Brent Coon & Associates Injury 917 Franklin Ste 210 Houston, TX 77002 GENTEK: Amends Shelf Registration Statement Filed with SEC ---------------------------------------------------------- GenTek Inc. (OTC Bulletin Board: GETI) announced that it has filed a pre-effective amendment to its shelf registration statement with the Securities and Exchange Commission. A registration statement was required to be filed pursuant to the registration rights agreement entered into by GenTek and certain former creditors who received common stock in connection with the company's reorganization under Chapter 11. The amended shelf registration statement includes approximately 3.7 million shares of GenTek's issued and outstanding common stock held by former creditors. In order to provide future financing flexibility, the amended shelf registration statement also includes 2.5 million shares of common stock that GenTek may issue from time to time. Any company decision to issue primary shares will be based upon market conditions and the company's financing needs at the time of the proposed issuance. The shelf registration statement has not yet become effective. These securities may not be sold nor may offers to buy be accepted before the time the registration statement becomes effective absent an applicable exemption from the registration requirements of the Securities Act of 1933, as amended. About GenTek Inc. GenTek Inc. is a manufacturer of industrial components, performance chemicals and telecommunications products. Additional information about the company is available on GenTek's Web site at http://www.gentek-global.com/ GLOBAL CROSSING: Ernst & Young Replaces Grant Thornton as Auditor ----------------------------------------------------------------- On the Effective Date of the GX Debtors' Plan, a new Board of Directors was established for Global Crossing, Ltd., a Bermuda company. On April 1, 2004, the Board of Directors' newly established audit committee decided to engage Ernst & Young, LLP, and to dismiss Grant Thornton, LLP, as the Company's independent auditor for the year ending December 31, 2004, subject to the requirements of Bermuda corporate law. "Under Bermuda corporate law, the independent auditor may not be removed other than by the shareholders acting at a general meeting," Daniel O'Brien, Global Crossing Limited Executive Vice- President and Chief Financial Officer, disclosed to the Securities and Exchange Commission. Bermuda corporate law also provides that a new independent auditor may be appointed only by the shareholders acting at a general meeting, except in the event of a resignation of an existing auditor. Accordingly, to effectuate an orderly and expeditious transition pending the annual general meeting of shareholders in June 2004, the audit committee, acting with the support of Singapore Technologies Telemedia Pte, Ltd. -- the Company's controlling shareholder -- requested Grant Thornton to tender its resignation. Grant Thornton accommodated the request and tendered its resignation on April 2, 2004. According to Mr. O'Brien, Grant Thornton's reports on the consolidated balance sheet of the Company and its subsidiaries as of December 31, 2003 and of the Company's predecessor and its subsidiaries as of December 31, 2002, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity (deficit) and cash flows for the period from December 10, 2003 to December 31, 2003 (in the case of the Company) and for the period from January 1, 2003 to December 9, 2003 and the years ended December 31, 2002 and 2001 (in the case of the predecessor) did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. "During the fiscal years ended December 31, 2002 and 2003 and through April 1, 2004, there were no disagreements between the Company or its predecessor and Grant Thornton on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which, if not resolved to the satisfaction of Grant Thornton, would have caused Grant Thornton to make reference to the matter in connection with its reports," Mr. O'Brien says. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. (Global Crossing Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) IMMUNE RESPONSE: Obtains $12 Mil. in Private Placement Financing ---------------------------------------------------------------- The Immune Response Corporation (Nasdaq: IMNR), a biopharmaceutical company developing immune-based therapies for HIV and select other diseases, announced that it has entered into agreements to sell through a private placement approximately 6,857,000 shares of common stock at $1.75 per share to unaffiliated institutional investors, for approximately $12 million in gross proceeds. Investors will also receive five-year warrants to purchase an aggregate of approximately 2,057,000 shares of common stock at $2.75 per share. Proceeds from the financing will be used to fund the Company's ongoing clinical activities and for general corporate purposes. Rodman & Renshaw, Inc. served as the exclusive placement agent for the transaction. "The Immune Response team has worked very hard this year to make major strides towards commercialization, and this new capital will allow us to continue clinical work on our pipeline products," said John N. Bonfiglio Ph.D., Chief Executive Officer of The Immune Response Corporation. "With this new investment capital, we will continue to conduct clinical trials on our lead product, REMUNE(R), while continuing our exciting work on IR103 and NeuroVax(TM)." Company Highlights The Company is developing two immune-based therapies for the treatment of HIV, REMUNE(R) and IR103, and one for multiple sclerosis, NeuroVax(TM). The Company's lead product candidate, REMUNE(R), in Phase II clinical trials in Spain and Italy, is a gp120-depleted HIV-1 immunogen. A new study in Canada investigating REMUNE(R) to potentially delay rebound of plasma viremia during antiretroviral treatment interruption was announced early this year. Preclinical data on IR103, an immune-based therapy comprised of a gp120- depleted HIV-1 immunogen and a second-generation immunostimulatory oligonucleotide adjuvant (Amplivax(TM), developed by Hybridon, Inc. (Amex: HBY)), was presented earlier this month at the Keystone Symposium on HIV Vaccine Development. The data showed that IR103 demonstrated potent HIV-1 specific immunogenicity and warrants continued development as a potential therapy for individuals living with HIV. Both REMUNE(R) and IR103 continue to show promise as HIV therapies, and the new financing with provide ongoing support for clinical development. IR103 is the subject of three abstracts that have been accepted at two prestigious scientific conferences this summer. Two of the abstracts have been accepted to the XV International AIDS Conference to be held in Bangkok, Thailand from July 11-16. Both abstracts, accepted as posters, address new preclinical data on IR103. Additionally, preclinical data on IR103 will be presented as a poster at the 12th International Congress of Immunology to be held July 18-23 in Montreal, Canada. The Company recently announced that its investigational T-cell receptor (TCR) peptide vaccine, NeuroVax(TM), produced a peptide- specific immune response in 94 percent of the patients treated in a Phase I/II clinical trial in multiple sclerosis. Results of the three-armed, randomized trial, which was discontinued early when an interim analysis revealed the high rate of response, were presented this week at the 54th annual meeting of the American Academy of Neurology (AAN). A new study investigating the mechanisms of action of NeuroVax(TM) and seeking to establish additional endpoints for therapeutic efficacy has recently been initiated and is funded, in part, by the Immune Tolerance Network (ITN), an international research consortium. The securities have not been registered under the Securities Act of 1933 or any state securities laws and unless so registered may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933 and applicable state securities laws. In connection with the offering, the Company agreed, subject to certain terms and conditions, to file a registration statement under the Securities Act covering the resale of the shares issuable upon exercise of the warrants. About The Immune Response Corporation The Immune Response Corporation (Nasdaq: IMNR) is developing immune-based therapies (IBT) for HIV and select other diseases. The Company's HIV products are based on its patented whole-killed virus technology, co-invented by Company founder, Dr. Jonas Salk, to stimulate HIV immune responses. REMUNE(R), currently in Phase II, is being developed as a treatment for people with HIV. The Company has initiated development of a new IBT, IR103, which incorporates a second-generation immunostimulatory oligonucleotide adjuvant. The Immune Response Corporation is also developing an IBT for multiple sclerosis (MS), NeuroVax(TM), which is currently in Phase II and has shown potential therapeutic value for this difficult- to-treat disease. * * * As reported in the Troubled Company reporter's April 7, 2004 edition, Immune Response Corporation (Nasdaq: IMNR) announced that in its 2003 financial statements included in the Company's Form 10-K filed with the Securities and Exchange Commission, the audit opinion of BDO Seidman, LLP contained a going-concern qualification. KAISER ALUMINUM: Discusses Sale Proceeds Allocation With Committee ---------------------------------------------------------------- Kaiser Aluminum & Chemical Corporation is currently negotiating an intercompany settlement agreement with the Official Committee of Unsecured Creditors regarding the allocation of consideration from any sale or other disposition of Alpart Jamaica, Inc., Kaiser Jamaica Corporation, and Kaiser Alumina Australia Corporation, or their assets, to: -- KACC, on account of its intercompany claims against these subsidiaries; and -- these subsidiaries' claimholders. The Intercompany Agreement would release substantially all other intercompany claims between the Debtors. Alpart Jamaica, Kaiser Jamaica, and Kaiser Australia would pay $85 million to KACC with respect to its intercompany claims, plus any amounts up to $14.3 million, plus accrued and unpaid interest and fees paid by KACC to retire Alpart-related debt. This amount would be increased or decreased for: (a) any net cash flows collected by or funded by the Debtors between April 1, 2004 and the earlier of: (i) Alpart Jamaica's, Kaiser Jamaica's and Kaiser Australia's emergence from Chapter 11; or (ii) the sale of Alpart Jamaica's, Kaiser Jamaica's and Kaiser Australia's interests in and related to Alpart and Queensland Alumina Limited; and (b) any purchase price adjustments -- other than incremental amounts related to what, if any, alumina sales contracts are transferred -- pursuant to the Debtors' January 2004 agreement to sell its interests in Alpart, if consummated. The payments will be made at the earlier of the sale of their interests in Alpart and QAL, or the emergence of Alpart Jamaica, Kaiser Jamaica and Kaiser Australia from Chapter 11. All payments, other than the $28 million to be paid to KACC on the sale of Alpart and any amounts paid by KACC in respect of retiring the Alpart-related debt, are likely to be held in escrow for KACC's benefit until its emerges from the Chapter 11. In the interim, KACC's claims against these entities will be secured by liens. In a recent filing with the Securities and Exchange Commission, Jack A. Hockema, KACC President and CEO, notes that a number of issues with respect to the Intercompany Agreement must be satisfactorily resolved before the Intercompany Settlement is submitted for Bankruptcy Court approval. The Official Committee of Asbestos Claimants and Martin J. Murphy, the legal representative for future asbestos claimants, have not yet reviewed, commented on, or agreed to the proposed Intercompany Agreement terms. The Debtors expects the Court to consider the Intercompany Agreement at the regularly scheduled April or May 2004 omnibus hearing. Headquartered in Houston, Texas, Kaiser Aluminum Corporation operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART HOLDING: Responds to PepsiCo Regarding Notice by SEC Staff ---------------------------------------------------------------- Kmart Holding Corporation (Nasdaq: KMRT) stated, in response to a press release issued on April 30, 2004 by PepsiCo, that the improperly recorded vendor allowance transactions at Kmart which relate to the SEC's notification to PepsiCo were previously identified as part of the investigation and stewardship review that Kmart completed in early 2003 prior to emergence from bankruptcy. As part of that investigation, Kmart cooperated actively with the SEC and the U.S. Department of Justice, including the disclosure to these agencies of information regarding the improperly recorded vendor allowances. In response to the findings of the investigation, prior to emergence from bankruptcy, Kmart terminated all employees it determined were responsible for the improper recording of vendor allowances. Furthermore, financial statements for fiscal 2001 and prior years were restated to correct these improperly recorded allowances. The detailed discussion and results of the investigation and stewardship review are contained in the Disclosure Statement that Kmart filed as Exhibit 2.2 to its Current Report on Form 8-K dated March 7, 2003. Kmart Holding Corporation (Nasdaq: KMRT) and its subsidiaries is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Kathy Ireland, Martha Stewart Everyday, Route 66 and Sesame Street. Kmart operates more than 1,500 stores in 49 states and is one of the largest employers in the country with approximately 158,000 associates. For more information visit the Company's website at http://www.kmart.com/ LIBERATE TECHNOLOGIES: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Liberate Technologies 2655 Campus Drive, Suite 250 San Mateo, California 94403 Bankruptcy Case No.: 04-11299 Type of Business: The Debtor is a provider of software and services for digital cable systems. The Debtor's software enables cable operators to run multiple digital applications and services including interactive programming, high definition television, video on demand, personal video recorders and games, on multiple platforms. See http://www.liberate.com/ Chapter 11 Petition Date: April 30, 2004 Court: District of Delaware (Delaware) Debtor's Counsel: Daniel J. DeFranceschi, Esq. Richards, Layton & Finger One Rodney Square, P.O. Box 551 Wilmington, DE 19899 Tel: 302 651-7700 Fax: 302-651-7701 Total Assets: $257,000,000 Total Debts: More than $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Circle Star Center Circle Star lease $44,316,177 Associates, L.P. (secured by a c/o John Mozart $8,076,433 Letter The Mozart Development Co. of Credit) Attn: James Freitas 1068 East Meadow Circle Palo Alto, CA 94303 Lloyds TSB Guaranty of UK lease $1,283,402 Attn: David Morris (secured by a 19 Milk Street $523,743 Letter of London EC2V 8AN UK Credit) O'Melveny & Myers LLP Professional services $640,796 Attn: Mark Miller Embaraeadero Center West 275 Battery St. San Francisco, CA 94111 IRT (Institut fur Trade debt - license $177,630 Rundfunktechnik GmbH) fees for IRT technology Motorola Broadband Trade debt - Horizon $150,000 Communications developer program Irell & Manella LLP Professional services $103,177 Wilson Sonsini Goodrich & Professional services $64,181 Rosati Harry Pan Labor board claim for $60,000 Contractual bonus, wages and reimbursable expenses Capitol, LLC Trade debt - Printing $51,454 Services Moser Patterson & Sheridan Professional services $48,355 Protiviti Trade debt - internal $34,017 audit services Rabbit Office Automation Trade debt - office $29,505 equipment lease/ maintenance Howrey Attorneys Professional services $25,081 Perforce Software Trade debt - software $24,750 and license fees Screaming Media (Pinnacor) Trade debt - $23,750 maintenance and license fees Service Performance Corp. Trade debt - $20,885 Janitorial services N2 Broadband, Inc. Trade debt - $20,500 maintenance services Cor O Van Moving and Storage Trade debt - $19,291 equipment rental and storage Benjamin P. Hollin Labor board claim $18,602 for reimbursement of attorneys fees in connection with SEC investigation Compulit Trade debt - $13,238 bibliographic coding and database updates SBC Trade debt - phone $11,883 service Allan Jacobson/IP Law Professional service $10,246 Iron Mountain Trade debt - legal $9,710 files storage and tape back-up Weil Gotshal & Manges Professional services $9,450 Citicorp Vendor Finance, Inc Trade debt - $9,160 equipment lease Gunderson Dettmer Professional services $9,045 OpenTV, Inc. Litigation Unknown Plaintiffs: In re Liberate Litigation Unknown Technologies Inc. Securities Litigatione Plaintiffs: In re Liberate Litigation Unknown Technologies Derivative Litigation Plaintiffs: In re Initial Litigation Unknown Public Offering Securities Litigation LOEWEN: Alderwoods to Host Q1 Conference Call Webcast Tomorrow -------------------------------------------------------------- Alderwoods Group, Inc. (NASDAQ:AWGI) announced that it intends to release its first quarter financial results for 2004 before market open on Tuesday, May 4, 2004. Following the release, Alderwoods Group will host a conference call to be held on Wednesday, May 5, 2004 at 11:00 a.m. Eastern Time to review the first quarter operating results. To participate in the conference call, please dial in approximately 5 minutes ahead of time to one of the following numbers: -- Toll-free number for participants dialing from inside the United States or Canada is 1.800.774.7358; and -- The number for Toronto participants is 416.641.6662 The call will be available for replay until midnight on May 19, 2004 by calling 1.800.558.5253 and entering conference ID# 21193175. Annual Shareholders' Meeting Today Alderwoods Group, Inc., also announces that it will hold its second Annual Meeting of Shareholders today, May 4, 2004, at 10:00 a.m. at the Nasdaq MarketSite located at 4 Times Square, in New York. Those interested in attending should contact Ms. Tamara Malone at 416.498.2778. The purpose of the meeting is to: 1. elect nine directors to the Alderwoods Board; 2. consider and act on a proposal to ratify the selection of KPMG LLP as independent auditors for the 2004 fiscal year, which ends January 1, 2005; and 3. act on other business that may properly come before the Annual Meeting. Stockholders of record at the close of business on March 8, 2004 will be entitled to vote at the Annual Meeting. (Loewen Bankruptcy News, Issue No. 84; Bankruptcy Creditors' Service, Inc., 215/945- 7000) MANTA HOLDING CORP: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Manta Holding Corp. 237 Lafayette Street, Apartment 4 New York, New York 10012 Bankruptcy Case No.: 04-12973 Type of Business: Operation of the multi-family building of 1557 Lexington Avenue, New York, New York, and the collection of rents. Chapter 11 Petition Date: April 30, 2004 Court: Southern District of New York (Manhattan) Judge: Burton R. Lifland Debtor's Counsel: Lara P. Emouna, Esq. Gleich, Siegel & Farkas 36 South Station Plaza Great Neck, NY 11021 Tel: 516-482-4436 Fax: 516-482-8916 Total Assets: $1,500,000 Total Debts: $421,253 The Debtor did not file a list of its 20-largest creditors. MARK IV INDUSTRIES: S&P Assigns BB- Rating to $865M Sr. Bank Loan ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' senior secured bank loan rating to Mark IV Industries Inc.'s new $865 million senior secured bank credit facility and a recovery rating of '4', indicating the expectation of a mediocre recovery of principal (25%-50%) in the event of a default. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on the Amherst, New York-based manufacturer of power transmission and other products for automotive and transportation markets. However the outlook was revised to negative from stable. "The outlook revision reflects an increased debt burden and weakened credit statistics following a recapitalization," said Standard & Poor's credit analyst Dan DiSenso. "Pro forma for the recapitalization, credit statistics are stretched, as a portion of the proceeds will be used to repay a sizable amount of shareholder-related debt, previously viewed by Standard & Poor's as equity-like, as this loan is non-recourse to the company and is excluded from bank covenant calculations." The firm's $303 million equity asset sales bridge loan (ESAB) and related guarantee fees will be repaid from a portion of the new bank loan proceeds. Total debt of Mark IV stood at $1.44 billion on Nov. 30, 2003, including $690 million of shareholder-related debt. The $865 million senior secured bank credit facility consists of: (1) a six-year $100 million (Euro equivalent) term loan A to be lent to Mark IV's Italian subsidiaries; (2) seven-year $615 million term loan B; and (3) a six-year $150 million revolver, of which $50 million will be euro-denominated and made available to Mark IV's Italian subsidiaries. Borrowers include Dayco Products LLC, a U.S. operating subsidiary of Mark IV, and Dayco Europe SrL and Lombardini SrL, Italian operating subsidiaries of Mark IV. Mark IV and each of its direct and indirect U.S. subsidiaries and will guarantee the bank facility by certain of Mark IV's direct and indirect non-U.S. subsidiaries. The obligations will be secured by a perfected first security interest in substantially all domestic assets, plus a pledge of the stock of Mark IV and its U.S. direct and indirect subsidiaries, and 66% of the stock of foreign subsidiaries. MATRIA HEALTHCARE: S&P Rates Convertible Subordinated Notes at B- ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on disease-state management and fulfillment services provider Matria Healthcare Inc. Standard & Poor's also assigned its 'B-'subordinated debt rating to the company's proposed $75 million of 4.875% convertible senior subordinated notes due in 2024. At the same time, Standard & Poor's withdrew its 'BB-' senior secured bank loan rating on Matria's $35 million revolving credit facility and withdrew its 'B+' senior unsecured rating on the company's $122 million of senior notes. The outlook is stable. Standard & Poor's anticipates that the proceeds from the convertible notes, along with a new as-yet-unrated bank facility, will be used to repurchase all of the company's $122 million outstanding 11% senior notes due in 2008. "While Standard & Poor's believes that the total transaction will slightly increase the company's total debt, it should lower Matria's overall cost of capital and improve its cash flow. Therefore, we view this transaction as neutral for the company's credit quality," said Standard & Poor's credit analyst Jesse Juliano. The low-speculative-grade ratings on Matria Healthcare, a disease- state management and fulfillment services provider to patients, physicians, and health plans, reflect the company's limited scale of operations, its position as a small vendor supplying products for larger medical products manufacturers, and its aggressive capital structure. Partly offsetting these limitations, Matria has acquired businesses during the past few years that have broadened its clinical infrastructure and disease-state management platforms. Through more than 40 offices in the U.S. and around the world, Marietta, Georgia-based Matria manages chronic diseases and episodic conditions including: diabetes, cardiovascular diseases, respiratory disorders, high-risk obstetrics, cancer, chronic pain, and depression. The company also designs and develops medical products through its Facet Technologies business, and plans to expand into neonatal intensive-care case management in the near term. MEADOWS OPERATIONS: Section 341(a) Meeting Slated for May 6 ----------------------------------------------------------- The United States Trustee will convene a meeting of Meadows Operations, Inc.'s creditors at 10:00 a.m., on May 6, 2004 at #9 Exchange Place, Boston Building, Suite 101 (a or b), Salt Lake City, Utah 84111. 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 Beaver, Utah, Meadows Operations, Inc. -- http://www.elkmeadows.com/-- operates a ski resort in Utah with an expanded snowboard park and half pipe and offers uncrowded slopes and a variety of winter and summer activities. The Company filed for chapter 11 protection on March 29, 2004 (Bankr. D. Ut. Case No. 04-24934). Jeffrey N. Walker, Esq., at Holman & Walker represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed more than $10 million both in its estimated debts and assets. MID OCEAN: Fitch Downgrades 4 Classes of Series 2000-1 Notes ------------------------------------------------------------ Fitch Ratings downgrades four classes of notes issued by Mid Ocean CBO 2000-1 Ltd. The following rating actions are effective immediately: --$240,000,000 Class A-1L Notes downgraded to 'BBB' from 'AAA'; --$16,500,000 Class A-2 Notes downgraded to 'BB' from 'A-'; --$15,000,000 Class A-2L Notes downgraded to 'BB' from 'A-'; --$12,500,000 Class B-1 Notes downgraded to 'CCC' from 'B'. Furthermore, the ratings have been removed from Rating Watch Negative. The ratings of the class A-1L, class A-2, and class A-2L 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-1 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. Mid Ocean is a collateralized debt obligation (CDO) managed by Deerfield Capital Management LLC, which closed January 8, 2001. Mid Ocean is composed of roughly 50% RMBS, 18% CMBS, 20% ABS and 12% 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 the Fitch's rating action in December 2002, the collateral has continued to deteriorate. The weighted average rating factor has increased from 13 (BBB+/BBB) to 23 (BBB-/BB+). The class A overcollateralization ratio and class B overcollateralization ratio have increased from 106.3% and 101.6%, respectively as of December 2, 2002 to 106.6% and 101.8% as of the most recent trustee report dated April 2, 2004. As of the most recent trustee report available, defaulted assets represented 0.06% of the $290 million of total collateral. Assets rated 'BB+' or lower represented approximately 6.7% as of December 2, 2002, and increased to 20.8% as of the most recent trustee report. The weighted average coupon has decreased from 7.39% on December 2, 2002 to 6.95% as of the most recent trustee report. Mid Ocean continues to fail its Additional Coverage test as measured by the monthly trustee report. Failure of this test diverts excess spread from paying the subordinate manager fee and equity holders to reinvestment in additional collateral. The transaction's floating rate assets and interest rate swap, which pays a floating interest rate, total approximately $220 million while Mid Ocean's liabilities that pay a floating interest rate equal $255 million. Additionally, Mid Ocean's floating rate assets include $14.5 million (5% of portfolio) invested in inverse floaters. 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-2L and B-1 notes no longer reflect the current risk to noteholders. MIRANT CORP: Wants Approval of Econnergy Settlement Agreement ------------------------------------------------------------- The Mirant Corp. Debtors ask the Court to authorize Mirant Americas Energy Marketing, LP, and Mirant Americas, Inc., to enter into a Settlement Agreement with Econnergy Energy Company, Inc. MAEM and Econnergy were parties to a Master Aggregator Agreement, dated November 2, 2001, as modified on December 10, 2002. Pursuant to the Master Agreement, MAEM was the preferred supplier of natural gas and power to Econnergy. As additional consideration for entry into the Master Agreement, Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas, informs the Court that Econnergy delivered to Mirant Americas a Warrant, dated February 1, 2002, entitling Mirant Americas and its assigns to purchase, under certain circumstances, up to 300,095 shares of Econnergy's common stock for $3.79 per share. The Warrant expires on the earlier of: (a) April 18, 2010; or (b) the date Econnergy either dissolves or distributes all of its assets to its stockholders. In late 2002, MAEM and Econnergy entered into negotiations regarding the termination of their commercial relationship under the Master Agreement. Thus, on January 10, 2003, MAEM sold all of its Econnergy receivables to an outside party. As consideration for amounts owing under the Master Agreement, Econnergy issued a Promissory Note, dated January 10, 2003, to MAEM in the principal amount of $2,218,676. Pursuant to the terms of the Note, Econnergy promised to repay the principal amount and accrued interest of the Note in 18 equal monthly installments of $132,292 beginning on April 20, 2003 and ending on September 20, 2004. To date, the outstanding balance due and owing on the Note is $788,669. The Debtors are concerned with Econnergy's ability to fully repay the Note. According to Mr. Peck, on numerous occasions, Econnergy has failed to timely submit its monthly installment payment. Hence, the Debtors view Econnergy as a potential credit risk and have established a reserve on its books to cover potential exposure to losses under the Note. In November 2003, Econnergy approached the Debtors to discuss the possible surrender of the Warrant, which would facilitate Econnergy's pursuit of other transactions. To avoid further risks and uncertainties related to the repayment of the Note, the Debtors took advantage of this opportunity to negotiate the immediate monetization of the Note. After extensive negotiations, the parties reached a compromise memorialized by a settlement agreement. The salient terms of the Settlement Agreement are: * In full and final satisfaction of the Note, Econnergy will pay to MAEM all unpaid principal and accrued interest owing under the Note as of the date of that payment less $50,000; * Upon receipt in full of the Final Settlement Amount, Mirant Americas will automatically, and without further action by either party, completely, irrevocably and unequivocally surrender the Warrant to Econnergy; * The parties will mutually release each other from all claims and potential claims of any nature whatsoever in anyway related to or arising out of the Master Agreement, the Warrant or the Note; and * The Effectiveness of the Settlement Agreement is conditioned on the Debtors obtaining the Court's approval by May 15, 2004. The Debtors believe that the Warrant is of little or no value to their estates and creditors. Mr. Peck explains that neither the Warrant nor the common stock of Econnergy is registered pursuant to the Securities Act of 1933. The Debtors explored the possibility of selling the Warrant, but were unable to locate a viable purchaser. Thus, the Debtors believe that there is neither a readily available market nor any discernable market value for the Warrant. 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. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORTGAGE ASSET: Fitch Rates Ser. 2004-5 Classes B-4 & B-5 at BB/B ----------------------------------------------------------------- Mortgage Asset Securitization Transactions, Inc. (MASTR) Asset Securitization Trust 2004-5 $328.4 million mortgage pass-through certificates, series 2004-5, are rated by Fitch Ratings as follows: --$320.1 million class 1-A-1 - 1-A-6, 2-A-1, 15-PO, 30-PO, 15-A-X, 30-A-X, A-LR, and A-UR senior certificates 'AAA'; --$4,605,000 class B-1 'AA'; --$1,645,000 class B-2 'A'; --$987,000 class B-3 'BBB'; --$658,000 privately offered class B-4 'BB'; --$493,000 privately offered class B-5 'B'. The 'AAA' rating on the Group 1 and Group 2 senior certificates reflects the 2.70% subordination provided by the 1.40% class B-1, the 0.50% class B-2, the 0.30% class B-3, the 0.20% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.15% privately offered class B-6 (not rated by Fitch). Classes B- 1, B-2, B-3, B-4 and B-5 are rated 'AA', 'A', 'BBB', 'BB' and 'B' based on their respective subordination only. 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 master servicing capabilities of Wells Fargo Bank, N.A., which is rated 'RMS1' by Fitch. The trust will consist of two asset groups. The certificates whose class designations begin with 1 and 2 correspond to Groups 1 and 2, respectively. Additionally, the class 30-AX certificates represent interests in Group 1, and the class 15-AX, A-LR, and A- UR represent interests in Group 2. The class PO has components in Group 1 and Group 2. The subordinate certificates will be cross- collateralized and will receive interest and/or principal from available funds collected in the aggregate from the Group 1 and Group 2 mortgage pools. As of the cut-off date (April 1, 2004), the mortgage pool in aggregate for Group 1 and Group 2 consists of conventional, fully amortizing, fifteen-year and 30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with a principal balance of $328,956,537. The average principal balance is $502,224. The weighted-average FICO score is 734. The pool has a weighted-average original loan-to-value ratio (OLTV) of 66.22%. Approximately 17.23% of the loans were originated under a reduced (non-full/alternative) documentation program. The weighted-average remaining term to maturity is approximately 314 months. Cash-out and rate/term refinance loans represent 21.31% and 39.81% of the mortgage pool, respectively. Second homes account for 3.42% of the pool. The states that represent the largest portion of the mortgage loans are California (40.57%), New York (12.84%), and Virginia (5.24%). None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. MASTR, a special purpose corporation, deposited the loans into the trust, which issued the certificates. Wachovia Bank, National Association will act as trustee. For federal income tax purposes, elections will be made to treat the trust fund as multiple real estate mortgage investment conduits (REMICs). MEDIAWORX INC: Gary L. Cain Discloses 89% Equity Stake ------------------------------------------------------ For the purposes of voting power Gary L. Cain beneficially owns 21,869,098 shares of the common stock of MediaWorx, Inc. (formerly Advanced Gaming Technology, Inc.) The amount represents 89.0% of the outstanding common stock of the Company. Following a June 23, 2003, 100 to 1 reverse split and a merger between Media Worx Acquisition Company, LLC, a wholly owned subsidiary of MediaWorx, and Advanced Capital Services, L.L.C., pursuant to which MWAC was the surviving entity, control has been vested (whether through legal, beneficial and/or voting authority) in PowerHouse Investment Managment Group, Inc., Diamond Capital, L.L.C. and Quest Capital Resources, L.L.C. While each of PHIMG, Diamond, Quest each filed its respective Schedule 13D on or about July 1, since a control group might be deemed to exist, as permitted under Rule 13d-4 of the Securities Exchange Act of l934, all such Reporting Entities expressly declared that any such filings should not be construed as an admission that such person is or was, for purposes of Sections 13(d) or 13(g), the beneficial owner of any securities covered by the Schedule or a member of a group as defined for these purposes. Moreover, such Reporting Entities filed such Schedule only because it and/or its principals may be deemed to be part of a "group," the existence of which was disclaimed as outlined above. The report above (paragraph 1) was filed on behalf of Mr. Cain since he has sole authority to vote certain shares of the Company. Since "beneficial ownership" is defined for these purposes to include the power to vote or direct the voting of such security, the Schedule was filed by Mr. Cain. The reported Schedule relates to the 21,869,098 common shares of the Company over which Mr. Cain has voting control (namely, the 21,6119,097 shares held by the above named Reporting Entities and 250,000 held by Solar Satellite Communication, Inc.). Mediaworx is a media production and management business. It provides print, packaging, signage, audio/video, digital asset management, graphic design, production and fulfillment for traditional and web-based marketing and communications products and services. On December 31, 2003, the company had a cash balance of $101,807. The Company requires additional capital to continue operations. There is no assurance that capital will be available or will be available on terms that the company can afford. NEW HEIGHTS RECOVERY: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: New Heights Recovery & Power, LLC 1705 Cottage Grove Avenue Ford Heights, Illinois 60411 Bankruptcy Case No.: 04-11277 Type of Business: The Debtor is the owner and operator of the Tire Combustion Facility and other tire rubber processing facilities in Ford Heights, Illinois. The Debtor also operates other facilities including tire collection and recycling facilities in Dupo, Illinois and Elkhart, Indiana. See http://www.tires2power.com/ Chapter 11 Petition Date: April 29, 2004 Court: District of Delaware Judge: Mary F. Walrath Debtor's Counsel: Eric Lopez Schnabel, Esq. Klett Rooney Lieber & Schorling 1000 West Street, Suite 1410 Wilmington, DE 19801 Tel: 302-552-4200 Fax: 302-552-4295 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Commonwealth Edison Over-payment $368,701 P.O. Box 805376 Chicago, IL 60680-5376 Nicor Energy, LLC Trade Credit $264,406 1001 Warrenville Road Suite 550 Lisle, IL 60532-4306 Zurich American Insurance Co Insurance $186,260 Village of Ford Heights Water $74,843 Alstom Power Inc. Trade Credit $32,437 Milan's Machining & Mfg Co Trade Credit $30,642 Q1 Exchange, LLC Trade Credit $27,211 Great West Life & Annuity Insurance Policy $21,701 Ins Thoesen Tractor & Equipment Trade Credit $17,542 Co. Groen Waste Services- Trade Credit $11,892 Crestwood Weldstar Company Trade Credit $10,358 T.J. Adams Group, LLC Insurance Broker $10,062 Inc. Crowe Chizek and Company LLP Tax Preparation $9,425 SBC Global Services, Inc. Telephone maintenance $8,749 Illinois Environ. Protection Permit $7,581 Texas Encore Materials, Inc. Trade Credit $6,739 Fluid Power Services, Inc. Trade Credit $5,153 Advanced Recovery System, Trade Credit $4,768 Inc. Aim National Lease Trade Credit $4,485 Lasernet Trade Credit $4,462 NEWTECH BRAKE: Ex-Auditor Mark Cohen Expresses Going Concern Doubt ------------------------------------------------------------------ Effective March 22, 2004, NewTech Brake Corp., in order to meet the American Stock Exchange listing requirements, dismissed Mark Cohen, C.P.A. as its independent certified public accountants. Mark Cohen, C.P.A.'s report on the Company's financial statements for the past two fiscal years ended February 28, 2002 and 2003 was modified to include an explanatory paragraph wherein Mark Cohen, C.P.A. expressed substantial doubt about the Company's ability to continue as a going concern. The change of independent accountants was approved by the Company's Board of Directors on March 22, 2004. On March 22, 2004, NewTech Brake engaged Daszkal Bolton LLP as its principal accountant to audit its financial statements. NOVA CDO: S&P Places Class C & D Notes on CreditWatch Negative -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class C-1, C-2, D-1, and D-2 notes issued by NOVA CDO 2001 Ltd., an arbitrage high-yield CBO transaction, on CreditWatch with negative implications. At the same time, the rating on the class A notes is affirmed based on a financial guarantee insurance policy issued by Financial Security Assurance Inc. Additionally, the rating on the class B notes is affirmed based on the sufficient overcollateralization available. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the rated notes since the last rating action in October of 2003. These factors include deterioration in the credit quality of the performing assets within the pool and a reduction in the weighted average coupon generated by the performing assets within the pool. Standard & Poor's will be reviewing the results of current cash flow runs generated for NOVA CDO 2001 Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings assigned to the notes remain consistent with the credit enhancement available. Ratings Placed On Creditwatch Negative NOVA CDO 2001 Ltd. Rating Class To From Balance (Mil. $) C-1 B/Watch Neg B 4.223 C-2 B/Watch Neg B 10.920 D-1 CCC-/Watch Neg CCC- 11.584 D-2 CCC-/Watch Neg CCC- 4.143 Ratings Affirmed NOVA CDO 2001 Ltd. Class Rating Balance (Mil. $) A AAA 146.531 B BBB 17.139 ONEIDA LTD: Lenders Agree to Forbear Until June 15, 2004 -------------------------------------------------------- Oneida Ltd. (NYSE:OCQ) announced that it has obtained further waiver extensions as well as an additional waiver through June 15, 2004 from its lenders in regard to the company's financial covenants and in respect to certain payments that are due. Previously announced waivers were effective through April 30, 2004. Oneida's bank lenders agreed to further postpone, until June 15, 2004, reductions of $5 million, $10 million and $20 million in the company's credit availability that originally were scheduled to take effect on November 3, 2003, January 30, 2004 and February 7, 2004, respectively, under the company's revolving credit agreement. The company's bank lenders also approved an additional waiver in which they agreed to postpone, until June 15, 2004, a further reduction of $10 million in the company's credit availability that originally was scheduled to take effect on May 3, 2004. In addition, Oneida's senior note holders agreed to further defer until June 15, 2004 a $3.9 million payment from the company that was originally due on October 31, 2003. As was previously announced, Oneida is in discussions with its lenders and potential new financing sources to restructure its existing indebtedness and provide ongoing liquidity, and continues to provide lenders with updated financial information regarding its operations and restructuring plans. The company expects there will be further deferrals of the above credit availability reductions and principal payment until appropriate modifications to its credit facilities have been agreed upon. Oneida also announced that it has retained Carl Marks Consulting Group LLC as strategic advisor and chief restructuring officer to assist with Oneida's ongoing restructuring plans for its indebtedness and product sourcing. In addition, Oneida announced that it has retained Peter J. Solomon Company as strategic financial advisor. Also, Oneida reported that it has been notified by the New York Stock Exchange (NYSE) that the company currently is below the NYSE's continued listing requirements in regard to market capitalization and shareholders' equity. Oneida will be submitting to the NYSE a plan demonstrating how the company will return to compliance with the listing standards. The NYSE will either accept the plan, with Oneida then being subject to quarterly monitoring for compliance with the plan, or it will not accept the plan and the company's stock will be subject to suspension by the NYSE and delisting by the Securities and Exchange Commission. If the company's shares ceased to be traded on the NYSE, the company believes an alternative trading market would be available. Oneida Ltd. is a leading source of flatware, dinnerware, crystal, glassware and metal serveware for both the consumer and foodservice industries worldwide. OWENS CORNING: Wants Lease Decision Deadline Extended to Dec. 4 --------------------------------------------------------------- Jeremy Ryan, Esq., at Saul Ewing, LLP, in Wilmington, Delaware, relates that as of the Petition Date, the Owens Corning Debtors were party to 347 unexpired non-residential real property leases. The Debtors have made substantial and consistent progress in evaluating these leases. The Debtors rejected 74 leases and assumed, or assumed and assigned, 23 others. Taking into account the 81 leases that expired postpetition, the Debtors are currently party to 169 prepetition non-residential real property leases. Most of the Unexpired Leases are for space the Debtors use for conducting the production, warehousing, distribution, sales, sourcing, accounting and general administrative functions that comprise their businesses, and are important assets of their estates. According to Mr. Ryan, the Debtors had scheduled assets in excess of $6,000,000,000, employed around 20,000 employees and operated production and distribution facilities in locations throughout the country, many of which are located in the leased premises that are the subject of the Unexpired Leases. The Debtors' leased premises are vital to their reorganization efforts and thus constitute an integral component of their strategic business plan. Even if a particular location ultimately is slated for closure, the Unexpired Lease for the location may contain favorable terms that would allow the Debtors to assume and assign the lease for value. Mr. Ryan believes that given the size and complexity of their portfolio of Unexpired Leases, the Debtors should not at this time be compelled to assume substantial, long-term liabilities under the Unexpired Leases -- potentially creating administrative expense claims -- or forfeit benefits associated with some leases, to the detriment of the Debtors' ability to preserve the going concern value of their business. Mr. Ryan explains that addressing decisions to assume or reject prior to the confirmation of their Plan would compel the Debtors to make premature decisions as to their leases, and would cause them to run the risks in the assumption of substantial long-term liabilities or the forfeiture of favorable leases. More fundamentally, requiring the Debtors to assume or reject the Unexpired Leases at this point in their cases may foreclose them or other parties from pursuing plan modifications or alternative plan structures that rely on different dispositions of some or all of the Unexpired Leases than is presently contemplated. The Debtors maintain that a result like that would be inconsistent with the interests of creditors and inappropriate under the circumstances of their Chapter 11 cases. The Debtors' Chapter 11 cases additionally have complex inter- creditor issues, involving numerous competing creditor groups like bond holders, an unsecured bank group, trade creditors and those creditors holding "present" and "future" asbestos claims. The multiple issues between and among these creditor constituencies add layers of complexity to the Debtors' bankruptcy cases. Consequently, the Debtors ask the Court to extend their lease decision period through and including December 4, 2004, subject to the rights of each lessor under an Unexpired Lease to ask the Court to shorten the Extension Period and specify a period of time in which the Debtors must determine whether to assume or reject an Unexpired Lease. Mr. Ryan assures the Court that the Debtors will continue to be current on all of their postpetition rent obligations. Thus, an extension will not prejudice landlords under the Unexpired Leases. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. On Jun 30, 2001, the Debtors listed $6,875,000,000 in assets and $8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No. 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT: Portola Tightens Credit Controls to Minimize Exposure --------------------------------------------------------------- Portola Packaging, Inc., designs, manufactures and markets a full line of tamper-evident plastic closures for the dairy, fruit juice, bottled water, sports drinks, institutional food products and other non-carbonated beverage products, as well as bottles, filling and capping equipment for bottling lines. In a regulatory filing with the Securities and Exchange Commission dated April 9, 2004, Portola Packaging disclosed that one of its major accounts consists of the Canadian and U.S. subsidiaries of Parmalat SpA, which represents approximately $4.3 million in the company's sales for fiscal 2003. In view of Parmalat's insolvency, Dennis L. Berg, Portola Packaging's Vice- President, Finance and Chief Financial Officer, said that Portola Packaging is presently monitoring the situation and have instituted strict credit controls to manage its exposure in the event that Parmalat's insolvency has an adverse effect on its subsidiaries. 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) PEREGRINE SYSTEMS: Files Delayed 2003 Annual Report with SEC ------------------------------------------------------------ Peregrine Systems, Inc. (OTC: PRGN), a leading provider of information technology (IT) asset and service management solutions, filed its annual report on Form 10-K for the fiscal year ended March 31, 2003 with the Securities and Exchange Commission (SEC). The annual report includes the financial position of Peregrine on March 31, 2003, 2002 and 2001 and the results of its operations and cash flows for the four years ended March 31, 2003. Previously, on Feb. 28, 2003, the company filed audited annual financial statements with the SEC on Form 8-K for the three fiscal years ended March 31, 2002, which included restatements of the first three quarters of fiscal year 2002 and all of fiscal years 2001 and 2000 (i.e., the period from Apr. 1, 1999 through Dec. 31, 2001). The filing of Peregrine's fiscal 2003 Form 10-K was delayed due to the prior financial restatement, bankruptcy proceedings and restructuring activities. "Today's announcement marks a significant milestone for Peregrine as we are one step closer to becoming current in filing our periodic reports with the SEC," said John Mutch, Peregrine's president and CEO. "With our fiscal 2003 10-K complete, we can now focus our attention on the filing of our fiscal 2004 reports." The company intends to adopt fresh-start accounting treatment for the presentation of financial results for periods after Aug. 1, 2003, which will have a material impact on the fiscal 2004 financial statements. Peregrine is actively working on its fiscal 2004 periodic reports, which will include the quarterly reports on Form 10-Q for the quarters ended June 30, 2003, Sept. 30, 2003 and Dec. 31, 2003 and the Form 10-K for the fiscal year ended March 31, 2004, but does not know when it will be in a position to file these reports. Until the company's periodic reports are current, investors will not have current financial information. For this reason, and based on the other risk factors described in the fiscal year 2003 Form 10-K, the company believes that trading in its securities at this time is highly speculative and involves a high degree of risk. About Peregrine Founded in 1981, Peregrine Systems, Inc. develops and sells enterprise software that enables its worldwide customer base to manage IT for the business. The company's IT asset and service management offerings allow organizations to improve asset management and gain efficiencies in service delivery -- driving out costs, increasing productivity and accelerating return on investment. The company's flagship products -- ServiceCenter(R) and AssetCenter(R) -- are complemented by Automation, Business Intelligence/Reporting, Employee Self Service and Integration capabilities. Peregrine is headquartered in San Diego, Calif. and conducts business from offices in the Americas, Europe and Asia Pacific. For more information, visit http://www.peregrine.com/ POLAROID: Distributes Additional 3MM Shares to Unsecured Creditors ------------------------------------------------------------------ Primary PDC, Inc., formerly known as Polaroid Corporation, announced that 3,381,267 shares of Common Stock of Polaroid Holding Company have been distributed to the holders of allowed unsecured claims against Primary PDC in connection with its bankruptcy proceedings. Mark Stickel, President of Primary PDC, indicated that the shares were in addition to the 5,267,401 shares of Common Stock and 62,696 shares of Preferred Stock of Polaroid Holding Company that had previously been announced as having been distributed, and that, depending on the resolution of various disputed claims pending against Primary PDC and other issues, unsecured creditors may receive additional shares of stock of Polaroid Holding Company and/or cash in the future. As a result of this distribution, a total of 8,648,668 shares of Common Stock and 62,696 shares of Preferred Stock of Polaroid Holding Company have been distributed to the unsecured creditors of Primary PDC. Polaroid Holding Company acquired substantially all of the assets of Primary PDC on July 31, 2002. As consideration in the acquisition, Primary PDC received cash and a minority interest in the Common and Preferred Stock of Polaroid Holding Company. Polaroid Holding Company is not affiliated with Primary PDC. Stickel also stated that, while there is no current market for the new Polaroid Holding Company stock, it is possible that a market will develop and that the new Polaroid stock will trade publicly. RELIANCE FINANCIAL: Summary & Overview of Bank Committee's Plan --------------------------------------------------------------- On April 27, 2004, the Official Unsecured Bank Committee delivered to the Court a Chapter 11 plan of reorganization for Reliance Financial Services Corporation. The Bank Committee's Plan sets forth a restructuring of RFSC through the transfer of shares of common stock in Reorganized RFSC for certain outstanding claims against RFSC. The Plan also provides a vehicle to assist creditors in allocating the proceeds, if any, of potential litigation claims. RFSC is expected to emerge from Chapter 11 by December 31, 2004. The Bank Committee will file the Disclosure Statement to the Plan at a later date. The Disclosure Statement will provide a discussion of RFSC's history, business, properties, risk factors, a summary and analysis of the Plan, and certain related matters, including a description of the shares of New RFSC Common Stock to be issued under the Plan. The Bank Committee is a proponent of the Plan and is participating in the Plan within the meaning of the Bankruptcy Code. Classification and Treatment of Claims The RFSC Plan provides for the classification and treatment of claims against and interests in RFSC. Pursuant to Section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims and Priority Tax Claims are not classified for purposes of voting or receiving distributions under the Plan. Class Description Recovery Under the Plan ----- ----------- ----------------------- N/A Administrative Expense Paid in full, in Cash Claims N/A Professional Compensation Paid in full, in Cash and Reimbursement Claims Within 75 days of the Effective Date, Holders will file an application for final allowance of compensation and reimbursement of expenses with the Court, RFSC, the Bank Committee, the Unsecured Creditors Committee and the U.S. Trustee. N/A Other Administrative Paid in full, in Cash Claims Requests for allowance of Other Administrative Claims must be filed with the Court and served on RFSC, the Bank Committee, the Creditors Committee and the U.S. Trustee within 45 days of the Effective Date. If there are no objections, the Administrative Expense Claim will be allowed. If RFSC, the Bank Committee or the Creditors Committee objects, the Court will determine the allowed amount of the Claim. N/A Priority Tax Claims Paid in full, in Cash 1 Classified Priority Holders will receive full Claims satisfaction of the unpaid portion of their Claims, in Cash. Unimpaired, deemed to accept the Plan. 2 Bank Claims Bank Claims will be allowed in the aggregate under the Bank Credit Agreement for principal and accrued, but unpaid, interest through the Petition Date. Impaired. Holders are entitled to vote to accept or reject the Plan, and to make the Opt-Out Election on the Ballot. Allowed Claimholders will: (a) receive in complete satisfaction, * its Pro Rata share of New RFSC Common Stock; and * the right to a Pro Rata share -- provided the Holder is not an Opt-Out Creditor -- of the RFSC Litigation Proceeds; and (b) be deemed to have assigned its Litigation Claims to Reliance Group Holdings, Inc. However, any Holder of a Bank Claim who is an Opt-Out Creditor will not: * be deemed to have assigned its Litigation Claims to RGH; and * receive rights to a Pro Rata share of the RFSC Litigation Proceeds. If the Allowed Bank Class rejects the Plan, the Bank Committee will seek to confirm the Plan pursuant to Section 1129(b) of the Bankruptcy Code. 3 Other Secured Claims Unimpaired, deemed to accept the Plan. The Other Secured Claims will: (a) be reinstated and rendered Unimpaired; (b) receive full satisfaction in Cash, including interest required by Section 506(b); or (c) receive the Collateral securing its Claim and any interest required by Section 506(b). 4a General Unsecured Claims Impaired. Holders are entitled to vote and make the Opt-Out Election on the Ballot. Allowed Claimholders will: (a) receive, in full satisfaction of the allowed amount, a right to a Pro Rata share -- provided the Holder is not an Opt-Out Creditor -- of the RFSC Litigation Proceeds; and (b) assign its Litigation Claims to RGH. However, General Unsecured Claimholders who are Opt- Out Creditors will not: * be deemed to have assigned Litigation Claims to RGH; and * receive rights to a Pro Rata share of the RFSC Litigation Proceeds. If the Allowed General Unsecured Class rejects the Plan, the Bank Committee will seek to confirm the Plan pursuant to Section 1129(b). 4b D&O Unsecured Claims Impaired. No recovery. Deemed to reject the Plan. 4c Liquidator Claim The Liquidator Claim will be deemed allowed for $288,000,000. Impaired, entitled to vote. Under the Tax Sharing Agreement, the Liquidator will receive 50% of the Section 847 Refunds. Under the PA Settlement Agreement, the Liquidator will receive the D&O Litigation Proceeds. 5 Equity Interests Impaired. No recovery. Deemed to reject the Plan. Holders of Claims in each Impaired Class are entitled to vote to accept or reject the Plan. The Bank Committee or its agents will tabulate the votes with respect to the Plan. In accordance with Section 1126(c), an Impaired Class will have accepted the Plan if the Holders of at least two-thirds in dollar amount and more than one-half in number have voted to accept the Plan. Intercompany Obligations RGH, Reorganized RFSC and its subsidiaries will be permanently enjoined from taking any action on Intercompany Obligations, except as provided in: (1) the April 1, 2003 agreement among the Bank Committee, the Unsecured Creditors Committee and M. Diane Koken, the statutory liquidator of Reliance Insurance Company; (2) the settlement term sheet between the Bank Committee and the Unsecured Creditors' Committee; (3) a Senior Secured Credit Agreement to be entered into by Reorganized RFSC and RGH; (4) a Tax Sharing Agreement; or (5) the RFSC Plan. Treatment of Executory Contracts and Unexpired Leases Pursuant to Sections 365(a) and 1123(b)(2), all executory contracts and unexpired leases will be deemed rejected as of the Effective Date. Reorganized RFSC will cure all undisputed defaults under executory contracts or unexpired leases, 30 days after the Effective Date. Claims arising from the rejection of an executory contract or unexpired lease must be filed with the Court and served upon Reorganized RFSC 30 days of the Effective Date. Otherwise, the Claim is not enforceable against Reorganized RFSC. Claims arising from the rejection of executory contracts and unexpired leases will be treated as Allowed General Unsecured Claims. Reorganized RFSC Board of Directors On the Effective Date, the Board of Directors of Reorganized RFSC will be composed of one director. The initial Board Member will be appointed by the Bank Committee. The management, control and operation of Reorganized RFSC will become the general responsibility of the Board Member. The Board Member will serve in accordance with the Amended and Restated Articles of Incorporation and the Amended and Restated By-laws. The Bank Committee will select a new chief executive officer for Reorganized RFSC, who may be the Board Member, to serve on and after the Effective Date. Reorganized RFSC Advisory Committee The Bank Committee will appoint an RFSC Advisory Committee. The Board of Directors will consult with the RFSC Advisory Committee on corporate matters, provided, however, that ultimate decision- making authority will reside in the Board. By-laws and Articles of Incorporation On the Effective Date, the Reorganized Debtor will file its Amended and Restated Articles of Incorporation and Amended and Restated By-laws. The Articles and the By-laws will contain provisions to: (a) prohibit issuance of non-voting equity securities; and (b) effectuate the provisions of the Plan. Reorganized RFSC will indemnify the CEO and the members of the Advisory Committee to the extent permitted by Delaware law. RGH Contributions On the Effective Date, RGH will contribute $2,537,000 to the Primary Reserve. If the Primary Reserve Requirement exceeds the Primary Reserve balance, Reorganized RFSC will deposit sufficient RGH Contributions to satisfy RGH's obligations. RGH will contribute 50% of the Primary Reserve Requirement. RGH Loans On the Effective Date, Reorganized RFSC will borrow $2,537,000 from RGH through the RGH Term Loan. The funds will be deposited into the Primary Reserve. If, on any Distribution Date, the Primary Reserve Requirement exceeds the Primary Reserve balance, Reorganized RFSC will borrow funds from RGH through the RGH Revolving Loans to cover any shortfall. RFSC Available Funds RFSC will apply any Available Funds to: (1) satisfy the Reimbursement Obligations; (2) satisfy the obligation to fund 50% of the Primary Reserve Requirement; (3) satisfy the obligation to fund the Development Reserve; (4) reimburse the Indemnified Advisors for indemnification obligations; (5) fund the Discretionary Reserve; and (6) pay dividends to Holders of New RFSC Common Stock. Reorganized RFSC will satisfy the RGH/RFSC Settlement Term Sheet obligations before making any cash distributions to Claim Holders. Pursuant to the PA Settlement Agreement, all obligations of the Debtor to the Liquidator or RIC have first priority administrative status. On the Effective Date, RGH and Reorganized RFSC will each have a 50% undivided interest in the Net 847 Refunds. Issuance of New RFSC Common Stock On the Effective Date, the Old RFSC Common Stock and any options or warrants, will be cancelled. Pursuant to Section 1145, New RFSC Common Stock will be issued as of the Effective Date. The New RFSC Common Stock will not be listed on any securities exchange or quotation system. Litigation Proceeds & Cash/Opt-Out Election On the Effective Date, Litigation Claims held by the Litigation Proceeds Claimants will be assigned to RGH. RGH will obtain all rights of the Claimants to pursue the Litigation Claims. RGH will pay any proceeds from the Litigation Claims or any proceeds from the D&O Litigation to Reorganized RFSC. Litigation Claims held by Opt-Out Creditors will not be assigned and Holders of Claims in Classes 2 and 4a who are Opt-Out Creditors will not receive Litigation Proceeds Cash. The Claims of Classes 2 and 4a will not be counted in determining the amounts of the Litigation Distributions to Claim Holders. A Litigation Proceeds Claimant may transfer its undivided right to Litigation Proceeds by written notice to Reorganized RFSC. Distributions from RIC RGH will have a 20% interest in all cash distributions from RIC to Reorganized RFSC, excluding distributions attributable to Reorganized RFSC's share of the Section 847 Refunds or RGH Development. Reserves Three reserves will be established under the Plan: (a) Primary Reserve -- The Primary Reserve will contain Operating Funds. Both RGH, through an RGH Contribution, and Reorganized RFSC, from proceeds of the RGH Term Loan, will deposit $2,537,000 into the Primary Reserve. (b) Development Reserve -- Reorganized RFSC will fund the Development Reserve with RFSC Available Funds. The Development Reserve will be used to pay all Development Expenses in general and upon any Change of Control. (c) Discretionary Reserve -- Reorganized RFSC may deposit funds into the Discretionary Reserve to pay future expenses as long as other RGH and RFSC obligations are met. Reserves for Disputed Claims The Bank Committee, the Creditors Committee, RFSC, Reorganized RFSC and RGH may file and resolve objections to Claims. The objection must be filed by 90 days after the later of the Effective Date or the applicable Bar Date. On Distribution Date, RFSC or Reorganized RFSC will reserve an amount sufficient to pay distributions to Holders of Disputed Claims as if the Disputed Claims were allowed. Releases by RFSC On the Confirmation Date, RFSC and Reorganized RFSC, will release, waive and discharge: (a) the Bank Committee, the Creditors Committee, the Banks, and any affiliated entities; (b) their directors, officers and employees as well as those of RGH; (c) their former directors, officers and employees as well as those of RGH; and (d) their representatives, attorneys, financial advisors, accountants and agents as well as those of RGH. A full-text copy of the RFSC Plan is available for free at: http://bankrupt.com/misc/rfscplan.pdf Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Reliance Insurance Company. The Company filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403). When the Company filed for protection from their creditors, they listed $12,598,054,000 in assets and $12,877,472,000 in debts. (Reliance Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 215/945-7000) REEVES COUNTY: S&P Removes Affirmed BB Rating from Credit Watch --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' underlying rating (SPUR) on Reeves County, Texas' series 2001 and series 2001A lease-rental taxable additional revenue certificates of participation and removed it from CreditWatch, where it was placed Nov. 14, 2003. When the rating was previously placed on CreditWatch, it was also lowered to 'BB' SPUR. Standard & Poor's also assigned a developing outlook to the debt based on the possibility that given the minimum guaranteed inmate population, the rating could be raised if a restructuring of the debt service allows for adequate debt service coverage. The developing outlook also reflects the possibility that, given the uncertainty surrounding inmate population and the scheduled increase in debt service, the facility could experience financial difficulty severe enough to warrant a downgrade. Reeves County and the Federal Bureau of Prisons have finalized an agreement in which the bureau will continue to use only Reeves County Detention Center's R1 and R2 portions. The new per diem has been set at $48.25 for a minimum of 2,025 federal inmates. The new interlocal government agreement will extend to Jan. 31, 2007, with annual per diem adjustments; the previous agreement expired on Jan. 17, 2004, but it was subsequently extended for two separate two-week periods. Since the bureau will only use space available in R1 and R2, the county has negotiated with Arizona to house a minimum of 778 of the state's inmates in R3 at a per diem of $45.70. Either party can terminate the annual contract with 30 days notice. County management expects revenues generated by the interlocal government agreement for the minimum number of inmates to provide sufficient funds to cover the entire facility's operating and debt service costs for 2004, provided the county and GEO Corp. (formerly Wackenhut Corrections Corp.), the company responsible for managing the facility, forego the majority of their profits and fees. Even under a scenario that would increase the total inmate population to a maximum of 3,039 from 2,803 (the combined minimum under both contracts), revenues generated from both contracts will not be sufficient to cover all expenses plus GEO's management fee and the payment to the county. The county could forego its payment, which would result in positive financial operations in fiscal 2006, as long as Arizona continues to use R3. The county has roughly $50 million of certificates of participation debt outstanding. RIGGS NATIONAL: Fitch Maintains Negative Watch on BB/D Ratings -------------------------------------------------------------- Fitch Ratings has lowered the ratings for Riggs National Corporation (RIGS) and its rated subsidiaries. RIGS' long-term and individual ratings were lowered to 'BB' from 'BB+' and 'D' from 'C/D', respectively. Fitch also maintains the Rating Watch Negative status on RIGS. The rating actions reflect Fitch's concerns regarding implications tied to RIGS Bank N.A. being deemed a 'troubled condition' institution by the Office of the Comptroller of the Currency (OCC) and the sizeable $19 million restructuring charge related to exiting higher risk businesses (including the sale of the company airplane). Further, in the near term it is expected that the OCC and Financial Crimes Enforcement Network (FINCen) will levy monetary penalties, which will place additional pressure on capital and further reduce RIGS' financial flexibility. Additionally, the Federal Reserve advised RIGS that it will request RIGS and Riggs International Banking Corporation (its Edge Act Corporation) to enter into an enforcement order, which may include a requirement that RIGS obtain the prior approval of the Federal Reserve prior to declaring and paying dividends, including dividends on its trust preferred securities, and interest at the holding company level. The Negative Rating Watch remains in place due to the uncertainty as to the severity of the OCC and FINCen fines and due to the additional pressure placed on the company's future profitability and business mix flexibility which will come under the purview of the OCC. The designation of 'troubled condition' will bring with it a heightened level of oversight by the OCC. Although Fitch's concern with RIGS' ability to comply with regulatory requirements and the potential ramifications associated with this designation will lessen somewhat when the company runs-off the higher risk international businesses, there still remains some concern, especially as each could have near term negative implications on profitability, which for RIGS is already an area of comparative weakness. RIGS has yet to turn around its profitability short comings as it continues to be negatively impacted by the costs associated with performance and cost efficiency initiatives. Moreover, profitability suffers from a lack of significant earnings diversity, and cost levels are quite high relative to revenues. Additionally, the monetary fines will clearly hamper profitability while business restrictions would potentially cause a rise in costs. A 'troubled condition' designation places significant restrictions on RIGS. For example, RIGS would need prior consent from the OCC to perform such normal operating activities as approving new directors and executive officers, and prohibits certain actions such as making severance payments to employees, management and directors under FDIC's golden parachute rules. The following ratings have been downgraded and remain on Rating Watch Negative by Fitch: Riggs National Corporation --Long-term senior to 'BB' from 'BB+'; --Subordinated debt to 'BB-' from 'BB'; --Individual to 'D' from 'C/D'. Riggs Bank National Association --Long-term senior to 'BB' from 'BB+'; --Long-term deposits to 'BB+' from 'BBB-'; --Short-term deposits to 'B' from 'F3'; --Individual to 'D' from 'C/D'. Riggs Capital --Preferred stock to 'BB-' from 'BB'. Riggs Capital II --Preferred stock to 'BB-' from 'BB'. The following ratings remain on Rating Watch Negative by Fitch: Riggs National Corporation --Short-term debt 'B'; --Support '5'; Riggs Bank National Association --Short-term 'B'; --Support '5'; SAMSONITE: Offering to Buy 10-3/4% Senior Notes Until May 27 ------------------------------------------------------------ Samsonite Corporation (OTC Bulletin Board: SAMC) announced that it is commencing an offer to purchase and consent solicitation for any and all of its outstanding 10-3/4% senior subordinated notes due 2008. The current aggregate outstanding principal amount of the notes is $322,861,000. The offer to purchase will expire at 12:00 midnight, New York City time, on May 27, 2004, unless extended or earlier terminated. The consent solicitation will expire at 12:00 midnight, New York City time, on May 13, 2004, unless extended. Holders tendering their notes will be deemed to have delivered their consent to certain proposed amendments to the indenture governing the notes, which will eliminate certain covenants and certain provisions relating to events of default and amend certain other related provisions. The purchase price for each $1,000 principal amount of notes validly tendered and not revoked on or prior to the expiration date of the offer to purchase will be $1,022.33. Holders who validly tender notes will also be paid accrued and unpaid interest up to but not including the date of payment for the notes. If the requisite number of consents required to amend the indenture is received and the offer to purchase is consummated, the Company will make a consent payment of $20.00 per $1,000 principal amount of notes for which consents have been validly delivered and not revoked on or prior to the expiration date of the consent solicitation for aggregate consideration of $1,042.33. Holders who validly tender their notes after the expiration date of the consent solicitation will receive only the purchase price for the notes but not the consent payment. The purchase price for the notes and the consent payment for notes tendered on or before the expiration date of the consent solicitation are expected to be paid promptly following the expiration date of the consent solicitation. The purchase price for the notes tendered on or before the expiration date of the offer to purchase is expected to be paid promptly following the expiration date of the offer to purchase. The terms of the offer to purchase and consent solicitation, including the conditions to the Company's obligations to accept the notes tendered and consents delivered and pay the purchase price and consent payments, are set forth in the Company's offer to purchase and consent solicitation statement, dated April 30, 2004. One of the conditions is the Company having available funds to be raised from a private offering of new notes in an aggregate principal amount of approximately $325,000,000. The new notes to be offered have not been and may not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. The Company may amend, extend or terminate the offer to purchase and consent solicitation at any time in its sole discretion without making any payments with respect thereto. Deutsche Bank Securities Inc. and Merrill Lynch & Co. are the dealer managers for the offer to purchase and the solicitation agents for the consent solicitation. Questions or requests for assistance may be directed to Deutsche Bank Securities Inc. (telephone: (212) 250-4270 (collect)) or Merrill Lynch & Co. (telephone: (212) 449-4914 or toll-free at (888) 385-2663). Requests for documentation may be directed to D.F. King & Co., Inc., the information agent (telephone: (800) 669-5550). Samsonite (S&P, B Corporate Credit and CCC+ Subordinated Debt Ratings) is one of the world's largest manufacturers and distributors of luggage and markets luggage, casual bags, backpacks, business cases and travel-related products under brands such as SAMSONITE(R), AMERICAN TOURISTER SEQUOIA MORTGAGE: Fitch Rates $2MM Class B-5 Notes at B ------------------------------------------------------- Sequoia Mortgage Trust's mortgage pass-through certificates, series 2004-4, by rated by Fitch Ratings as follows: --$799,511,100 classes A, X-1, X-2, X-B and A-R 'AAA'; --$14,612,000 class B-1 'AA' --$8,350,000 class B-2 'A'; --$4,175,000 class B-3 'BBB'; --$2,509,000 class B-4 'BB'; --$2,088,000 class B-5 'B'. The class B-6 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 4.25% subordination provided by the 1.75% class B-1, 1% class B-2, 0.50% class B-3, 0.30% privately offered class B-4, 0.25% privately offered class B-5 and 0.45% privately offered class B-6 certificates. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. The ratings also reflect the quality of the mortgage collateral, the capabilities of Wells Fargo Bank, National Association (rated 'RMS1' by Fitch) as master servicer, and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The trust consists of mortgage loans originated by Greenpoint Mortgage Funding, Inc.,(69.45%), Morgan Stanley Dean Witter Credit Corporation (21.64%), and Bank of America, N.A (4.94%). The remainder of the mortgage loans were originated by various mortgage lending institutions. As of the cut-off date (April, 1 2004) these are the characteristics of the mortgage pool: The trust consists of a pool of conventional, adjustable-rate mortgage secured by first liens on one- to four-family residential properties, with original terms to maturity of either 25 or 30 years, having an aggregate principal balance of $834,998,848, and an average principal balance of $334,669. All of the loans have interest-only terms of either five or ten years, with principal and interest payments beginning thereafter. The borrowers' interest rates adjust monthly based on the one-month LIBOR rate plus a margin (13.29% of the loan group) or semi-annually based on the six-month LIBOR rate plus a margin (86.71% of the loan group). The mortgage loans have weighted average original loan-to-value ratio (OLTV) of 70.37%, and a weighted average FICO of 733. Second home and investor-occupied properties comprise 8.72% and 2.07% of the loans respectively. The states with the largest concentration of mortgage loans are California (32.59%), Florida (9.21%), Arizona (6.58%), and Colorado (6.38%). All other states represent less than 5% of the outstanding balance of the pool. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Sequoia Residential Funding, Inc., a Delaware corporation and indirect wholly-owned subsidiary of Redwood Trust, Inc., will assign all its interest in the mortgage loans to the trustee for the benefit of certificate holders. For federal income tax purposes, an election will be made to treat the trust as multiple real estate mortgage investment conduits (REMICs). HSBC Bank USA will act as trustee. SHELBOURNE II: Transfers Remaining Assets to Liquidating Trust -------------------------------------------------------------- Arthur N. Queler, the trustee of the Shelbourne II Liquidating Trust, announced that Shelbourne Properties II, Inc. (formerly Amex: HXE) transferred its remaining assets to (and its remaining liabilities were assumed by) the Liquidating Trust in accordance with the Company's Plan of Liquidation. April 23, 2004 was the last day of trading of the Company's common stock on the American Stock Exchange, and the Company's stock transfer books were closed as of the close of business on such date. The Trustee also announced that the Company filed a Form 15 with the Securities and Exchange Commission to terminate the registration of the Company's common stock under the Securities Exchange Act of 1934 and that the Company will cease filing reports under that act. However, the Trustee will issue to beneficiaries of the Liquidating Trust and file with the Commission annual reports on Form 10-K and current reports on Form 8-K. Under the terms of the Liquidating Trust Agreement, each stockholder of the Company on the Record Date (each, a "beneficiary") automatically became the holder of one unit of beneficial interest in the Liquidating Trust for each share of the Company's common stock then held of record by such stockholder. As provided in the Company's Plan of Liquidation, the holder of Class B Units in the Company's Operating Partnership is entitled to receive 15% of all distributions made by the Company and the Liquidating Trust after such time as aggregate distributions by the Company and the Liquidating Trust from and after August 19, 2002 exceed a specified per share amount. After giving effect to dividends paid since August 19, 2002, the remaining unpaid per share amount as of April 29, 2004 was $3.24. After the specified per share amount has been received by beneficiaries, the holder of Class B Units will receive 15% of all subsequent distributions by the Liquidating Trust. All outstanding shares of the Company's common stock were automatically deemed cancelled, and the rights of beneficiaries in their Units will not be represented by any form of certificate or other instrument. Stockholders of the Company on the Record Date will not be required to take any action to receive their Units. The Trustee will maintain a record of the name and address of each beneficiary and such beneficiary's aggregate Units in the Liquidating Trust. Subject to certain exceptions related to transfer by will, intestate succession or operation of law, the Units will not be transferable, nor will a beneficiary have authority or power to sell or in any other manner dispose of any Units. The Liquidating Trust was organized for the sole purpose of winding up the Company's affairs and the liquidation of its assets. It is expected that from time to time the Liquidating Trust will make distributions of its assets to beneficiaries, but only to the extent that such assets will not be needed to provide for the liabilities (including contingent liabilities) assumed by the Liquidating Trust. No assurances can be given as to the amount or timing of any distributions by the Liquidating Trust. For federal income tax purposes, each stockholder of the Company on the Record Date was deemed to have received a pro rata share of the assets of the Company that were transferred to the Liquidating Trust, subject to such stockholder's pro rata share of the liabilities of the Company assumed by the Liquidating Trust. Accordingly, each stockholder will recognize gain or loss (which generally should be a capital gain or a capital loss) in an amount equal to the difference between (x) the fair market value of such stockholder's pro rata share of the assets of the Company that were transferred to the Liquidating Trust, subject to such stockholder's pro rata share of the liabilities of the Company that were assumed by the Liquidating Trust, and (y) such stockholder's adjusted tax basis in the shares of the Company's common stock held by such stockholder on the Record Date. The Liquidating Trust is intended to qualify as a "liquidating trust" for federal income tax purposes. As such, the Liquidating Trust will be a pass-through entity for federal income tax purposes and, accordingly, will not itself be subject to federal income tax. Instead, each beneficiary will take into account in computing its taxable income, its pro rata share of each item of income, gain, loss and deduction of the Liquidating Trust, regardless of the amount or timing of distributions made by the Liquidating Trust to beneficiaries. Distributions by the Liquidating Trust to beneficiaries generally will not be taxable to such beneficiaries. The Trustee will furnish to beneficiaries of the Liquidating Trust a statement of their pro rata share of the assets transferred by the Company to the Liquidating Trust, less their pro rata share of the Company's liabilities assumed by the Liquidating Trust. On a yearly basis, the Trustee also will furnish to beneficiaries a statement of their pro rata share of the items of income, gain, loss, deduction and credit (if any) of the Liquidating Trust to be included on their tax returns. Stockholders of the Company are urged to consult with their tax advisers as to the tax consequences to them of the establishment and operation of, and distributions by, the Liquidating Trust. SIERRA PACIFIC: S&P Rates Proposed $50MM Synthetic Bank Loan at BB ------------------------------------------------------------------ Standard & Poor's ratings Services assigned its 'BB' rating to the proposed $50 million synthetic bank credit facility at Sierra Pacific Power Co. (B+/Negative/--). The facility will be secured by the company's general and refunding mortgage bonds and hence carry the same rating as the general and refunding bonds. Standard & Poor's also assigned its '1' recovery rating for the bank loan, denoting high expectation of full recovery of principal. The '1' rating reflects the overcollateralization of the general and refunding bonds, which secure the bank facility, by utility property at Sierra Pacific Power. Standard & Poor's is highly confident that bondholders will be able to recover their principal fully in a bankruptcy scenario. The facility will support the company's working capital needs and will be a boost to liquidity because sister company Nevada Power Co. currently has no access to bank lines and only a $75 million accounts receivables conduit, under which amounts that may be advanced depend on factors such as the time of year, weather conditions, and receivable delinquency rates. The synthetic bank facility provides for unconditional access to liquidity and Nevada Power is expected to retire the conduit this offering is complete. Ratings on Sierra Pacific Power reflect the weak consolidated business and financial profiles of parent Sierra Pacific Resources (SRP) and its utility subsidiaries. A troubled regulatory climate in Nevada and a short capacity position that creates exposure to the volatile wholesale power markets are the principal sources of business risk for SRP. Also, management has been held responsible for imprudent power procurement decisions made during the western wholesale power markets crisis in 2000 and 2001, resulting in a significant revision in power procurement policies and personnel over the past two years. Previous regulatory disallowances in purchased power costs decimated SRP's financial profile, with the utilities losing access to bank lines of credit and to the unsecured credit markets. These weaknesses are partly mitigated by recent more supportive regulatory actions and stronger cash flows as the utilities collect deferred power costs. SOLUTIA: Equity Panel Wants to Hire Pillsbury Winthrop as Counsel ----------------------------------------------------------------- The Official Committee of Equity Security Holders in Solutia, Inc.'s chapter 11 case seeks the Court's authority to retain Pillsbury Winthrop, LLP, nunc pro tunc to March 29, 2004, as its counsel. Richard Kuersteiner, Associate General Counsel for the Equity Committee, relates that on February 4, 2004, two separate groups of equity security holders, which in the aggregate represented approximately 11,000,000 shares of the publicly owned stock of the Debtors, submitted written requests to the United States Trustee for the appointment of an equity committee. One group consisted solely of the holdings in various managed accounts of Franklin Templeton, and this group was previously represented by Pillsbury Winthrop. Since the formation of the Equity Committee, this representation has ceased. The second shareholder group represented the holdings of Smith Management, LLC, Couchman Partners, LLC, and RCG Carpathia Master Fund, Ltd. Mr. Kuersteiner maintains that the members and associates of Pillsbury Winthrop have considerable expertise in the fields of bankruptcy, insolvency, reorganizations, liquidations, debtors' and creditors' rights, debt restructuring and corporate reorganizations, among others, as well as in the fields of environmental law and pension/ERISA law. Thus, the Equity Committee believes that Pillsbury Winthrop is well qualified to represent it in these Chapter 11 cases. Pillsbury Winthrop will be required to: (a) provide legal advice with respect to the Equity Committee's rights, powers and duties in these cases; (b) assist, advise and represent the Equity Committee in its consultation with the Debtors and the Creditors Committee relative to the administration of these Chapter 11 cases; (c) assist and represent the Equity Committee in analyzing the Debtors' assets and liabilities, investigating the extent and validity of liens, and participating in and reviewing any proposed asset sales or dispositions; (d) represent the Equity Committee in any and all matters involving disputes or issues with the Debtors, secured creditors, the Creditors Committee, and other parties; (e) assist and advise the Equity Committee in its examination and analysis of the conduct of the Debtors' affairs; (f) assist the Equity Committee in the review, analysis, negotiation, and formulation of any plans of reorganization that may be filed and to assist the Equity Committee in the review, analysis and negotiation of the disclosure statement accompanying any plan of reorganization; (g) take all necessary action to protect and preserve the interests of the equity security holders of the Debtors in these Chapter 11 cases; (h) generally prepare on behalf of the Equity Committee all necessary motions, applications, answers, orders, reports and papers in support of positions taken by the Equity Committee; (i) appear, as appropriate, before the Court, the appellate courts, and other courts in which matters may be heard and to protect the interests of the Equity Committee before those Courts and the United States Trustee; and (j) perform all other necessary and appropriate legal services in these Chapter 11 cases. The Equity Committee requests that all legal fees and related costs and expenses incurred by the Equity Committee on account of services rendered by Pillsbury Winthrop in these Chapter 11 cases be paid as administrative expenses of the estates pursuant to Sections 328, 330(a), 503(b) and 507(a)(1) of the Bankruptcy Code. Compensation will be payable to Pillsbury Winthrop on an hourly basis, plus reimbursement of actual, necessary expenses incurred by the law firm. The attorneys and paralegals presently designated to be primarily responsible for representing the Equity Committee, and their current standard hourly rates, are: Richard L. Epling partner $670 Craig A. Barbarosh partner 550 David A. Crichlow partner 510 Karen B. Dine partner 495 Harry E. Garner associate 340 Amanda Mallan associate 280 Margaret Segall paralegal 140 In addition, other attorneys and paralegals will be involved as necessary and appropriate to represent the Equity Committee. Mr. Barbarosh assures the Court that Pillsbury Winthrop is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code. Pillsbury Winthrop and its attorneys have no connection with and no interests adverse to the Equity Committee, the Debtors, the Debtors' creditors, the estates or any other party-in-interest or their attorneys or accountants in matters relating to the Debtors and their estates. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Company filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Plans to Increase Adipic Acid Price on May 15 ---------------------------------------------------------- Effective May 15, Solutia Inc. (OTC Bulletin Board: SOLUQ) will increase the price of Adipic Acid $0.05/lb. This increase follows the $0.05/lb price increase, which went into effect April 1, 2004, and applies to off-list prices of adipic acid. "The price increase is being driven by the demand for adipic acid in both the merchant and captive markets, as well as continued high raw material costs," stated Mike Berezo, director, Solutia Nylon Intermediates and Business Management. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Company filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. SOLUTIA: Nylon Industrial Fiber Price to Increase by 10% on May 15 ------------------------------------------------------------------ Effective May 15, 2004 Solutia Inc. (OTC Bulletin Board: SOLUQ) will implement an up to 10 percent price increase on all industrial and airbag grade fiber, from 420 denier through 1890 denier, as well as air jet textured products, from 500 to 2900 denier. "Sustained increases in both raw material and energy costs have made this price increase necessary," stated Michael Colella, commercial director, Solutia Nylon Industrial Fibers. "Aggressive cost reduction efforts over the past 18 months, the implementation of Lean Manufacturing principles, and stringent use of asset effectiveness management processes have allowed us to only partially offset rising manufacturing costs." Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Company filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. SR TELECOM: Streamlines Operations to Reduce Costs -------------------------------------------------- SR Telecom(TM) Inc. (TSX: SRX; Nasdaq: SRXA) announced that it has begun a comprehensive streamlining and restructuring initiative that will significantly reduce its cost base. The plan calls for a global adjustment to SR Telecom's sales, research and development, manufacturing and support staff. "We are taking actions to rationalize our operations in order to return the Company to profitability," said Pierre St-Arnaud, SR Telecom's President and Chief Executive Officer. "We are confident that we will see a significant increase in our revenues in the second half of 2004, and we remain committed to generating positive net income by the fourth quarter." Highlights of the streamlining plan include the closing of the Company's Redmond facility, concentrating R&D activities in Montreal, and focusing SR Telecom's operations in France on sales and customer support. A restructuring plan is currently being finalized with the workers' council in France. The key resources and technology currently located in Redmond will be transferred to Montreal. "By concentrating our R&D efforts in Montreal, we will be able to focus more efficiently on the continuing development of our angel(TM) and airstar(TM) products, which have generated considerable new opportunities for us," Mr. St-Arnaud stated. "We will also be able to make the best use of the technology and expertise we are bringing in from Redmond to further advance our ongoing WiMAX and SR500ip(TM) development programs. Finally, transferring our core resources from Redmond to Montreal will ensure the continuity of service to our customers." The restructuring charges associated with the plan will be recognized as they occur in the second and third quarters of fiscal 2004. Further details about the restructuring plan will be made available when the Company issues its first quarter results on May 12. About SR Telecom SR TELECOM (TSX: SRX, Nasdaq: SRXA) (S&P, B+ Corporate Credit and Senior Unsecured Debt Ratings) is a world leader and innovator in Fixed Wireless Access technology, which links end-users to networks using wireless transmissions. SR Telecom's solutions include equipment, network planning, project management, installation and maintenance services. The Company offers one of the industry's broadest portfolios of fixed wireless products, designed to enable carriers and service providers to rapidly deploy high-quality voice, high-speed data and broadband applications. These products, which are used in over 120 countries, are among the most advanced and reliable available today. STEAKHOUSE PARTNERS: Reorganized Company Trades Under STKP Symbol ----------------------------------------------------------------- Effective immediately, the new trading symbol for the common stock of Steakhouse Partners, Inc. on the Pink Sheets has changed from "SIZLQ.PK" to "STKP.PK". The purpose of the new symbol is to eliminate any inadvertent confusion in the marketplace between the Company's "old" common stock which was cancelled on December 31, 2003, and its "new" common stock issued as a result of the Company's emergence from bankruptcy proceedings. All attempted and/or consummated trades of the Company's cancelled "old" common stock traded under the symbol "SIZLQ.PK" are invalid. The Company emerged from bankruptcy on December 31, 2003 pursuant to a plan of reorganization approved by order of the United Stated Bankruptcy Court for the Central District in California -- Riverside Division. As a result of the Plan of Reorganization, all shares of the Company's common stock, preferred stock, stock options and warrants outstanding as of December 31, 2003 were cancelled and no longer exist. On March 22, 2004, 4,500,000 shares of the Company's "new" common stock were issued in connection with the Company's emergence from bankruptcy. As of the date hereof, the only validly issued and outstanding shares of the Company's common stock are those, which have been issued by the Company since March 22, 2004 and trade under the symbol "STKP.PK". The trading symbol and the CUSIP Number for the "new" common stock are STKP.PK and 857875207, respectively. Common stock certificates bearing CUSIP Number 857875108, which historically traded under the symbol SIZLQ.PK, are not representative of the "new" Common stock and are not tradable. SHURGARD STORAGE: Fitch Monitors 10K Filing & Liquidity Status -------------------------------------------------------------- Fitch Ratings continues to monitor Shurgard Storage Centers, Inc. closely in regards to the anticipated late filing of its 2003 10K along with the company's current liquidity and access to capital. Since late last year, Fitch has been in close contact with senior management of Shurgard to stay abreast of the situation surrounding the company's auditor, restatements and the filing of its 2003 10K. Fitch notes that the trustee of Shurgard's unsecured bonds has not given the company notice of a default for its failure to meet the filing requirements set forth in the Provision of Financial Information in Shurgard's indenture. That being said, the trustee or alternatively, bondholders holding at least 25% of the bonds outstanding may require the trustee to declare a default by sending a notice of default to Shurgard which then triggers a 60 day cure period. Fitch believes that, based on conversations with management, Shurgard will file the required documents well within the 60 day window if an event of default is declared and the cure period is triggered. Currently, Fitch does not anticipate any negative rating actions to arise from the contemplated restatements of the historical financials of Shurgard. The proposed restatements principally involve the consolidation of certain unconsolidated joint ventures which Fitch historically considered when analyzing the complete financial profile of Shurgard on a consolidated basis. Additionally, Fitch has historically consolidated the company's European venture as well. On April 16, 2004, Shurgard closed on a $100 million unsecured term loan, which is co-terminous with the company's revolving credit facility, with Banc of America LLC, Shurgard's lead bank, as well as several banks that participate in the Company's revolving credit facility. This loan together with availability under its line of credit affords Shurgard liquidity to meet near term financial commitments. Additionally, Shurgard also entered into an amendment to its revolving credit facility to accommodate the late filing of the company's 2003 Form 10-K. Subsequent events will be monitored and evaluated by Fitch to assess their impact on the company's access to capital and ultimately Fitch's ratings of the company. Fitch's ratings of Shurgard remain on Rating Watch Negative pending the outcome of these issues. On Nov. 19, 2003, Fitch Ratings placed Shurgard Storage Centers' 'BBB' senior unsecured notes and 'BBB-' cumulative preferred stock ratings on Rating Watch Negative. These actions followed the announced resignation of Shurgard's auditor, Deloitte & Touche, effective Nov. 13, 2003. Approximately $636 million of securities were impacted by Fitch's actions. Shurgard is a $2 billion equity real estate investment trust (REIT) that owns, manages and develops self storage centers in the US and Europe. As of Sept. 30, 2003, Shurgard's worldwide portfolio of open and operating properties consisted of 599 storage centers. As of year-end 2002, key concentrations by state included California (14.2% of annual revenue), Texas (11.9%), Washington (11.8%) and Virginia (7.0%). TANDUS GROUP: Talking with Lenders to Amend Debt Covenants ---------------------------------------------------------- Tandus Group, Inc., which includes Collins & Aikman Floorcoverings, Inc. and Subsidiaries, reports financial results for the fourth quarter and year ended January 31, 2004. Net sales for the year ended January 31, 2004 were $311.1 million, a 3.1% decrease from $321.2 million in the year ended January 25, 2003. Net sales of the Company's floorcovering segment decreased 5% to $283.0 million for fiscal 2003. The decrease in the floorcovering segment's net sales for fiscal 2003 was due to slow demand throughout the specified commercial market in the United States. The Company's extrusion segment's net sales increased 21.3% to $28.0 million due to the inclusion of a full year of the extrusion operation. The extrusion operation was acquired May 8, 2002. Selling, general and administrative expenses were $82.2 million for fiscal 2003 compared to $72.7 million for fiscal 2002. Included in the fiscal 2003 amount are a $2.6 million non-cash impairment charge related to a supply agreement of the extrusion segment, $1.5 million for a lawsuit judgment and related expenses, $1.0 million of costs associated with an unsuccessful acquisition and increased amortization of $0.8 million. The remaining difference was primarily due to an increase in salaries and benefits, sampling costs and marketing and promotional expenses were related to the Company's new selling strategy that was implemented beginning January 26, 2003. Net income for fiscal 2003 was $1.2 million; a $4.6 million or 78.7% decrease from $5.8 million in fiscal 2002 primarily due to the factors described above. Adjusted EBITDA was $42.7 million for fiscal 2003 compared to $53.8 million for fiscal 2002. This decline relates to the lower revenues of the floorcovering segment and the costs associated with the Company's selling strategy that was implemented beginning on January 26, 2003. As a percentage of net sales, Adjusted EBITDA was 13.7% for fiscal 2003 and 16.8% for fiscal 2002. Net sales for the fourth quarter ended January 31, 2004 were $71.4 million, a 1.2% increase from $70.6 million in the same quarter of fiscal 2002. Net sales for the Company's floorcovering segment increased 2.4% to $64.9 million for the fourth quarter of fiscal 2003. The Company's extrusion segment net sales decreased 9.7% to $6.5 million during the fourth quarter of fiscal 2003. Selling, general and administrative expenses for the fourth quarter of fiscal 2003 were $23.6 million, compared to $18.5 million for the same quarter of fiscal 2002. Included in the fiscal 2003 amount is a $2.6 million non-cash impairment charge related to a supply agreement of the extrusion segment, $1.0 million for a lawsuit judgment and related legal expenses, and $0.2 million of costs associated with an unsuccessful acquisition. The remaining difference was primarily related an increase in costs related to the Company's new selling strategy that was implemented beginning January 26, 2003. The net loss for the fourth quarter ended January 31, 2004 was $(3.8) million as compared to a net loss of $(0.9) million in the same quarter of fiscal 2002, primarily due to the factors mentioned above. Adjusted EBITDA for the fourth quarter of fiscal 2003 was $4.9 million, compared to $8.9 million for the same quarter of fiscal 2002. This decline relates to lower profitability of the extrusion segment, increased legal and professional fees and the lawsuit judgment, and costs associated with the Company's selling strategy that was implemented beginning January 26, 2003. At January 31, 2004, the Company had total debt of $209.3 million, of which $1.8 million was current. Total cash and cash equivalents were $11.0 million and revolver borrowing availability was $48.9 million as of January 31, 2004. The Company voluntarily prepaid $20.0 million of its term loans during fiscal 2003, leaving a balance of $31.0 million outstanding. For fiscal 2003, capital expenditures were $8.8 million, compared to $9.0 million for fiscal 2002. "Business conditions remained difficult during 2003, but we continued to pay down debt and are pleased with how we are positioned strategically," commented Mac Bridger, CEO of Tandus. "Interim 2004 results suggest strengthening across our business relative to prior year, with revenue ahead 11.3% and strong comparative backlog through March." The Company was in compliance with all covenants of the Senior Credit Facility as of January 31, 2004. Certain of the covenants become more restrictive in fiscal 2004, and it is likely that the Company will not be in compliance with at least one of these covenants during fiscal 2004,which may occur as early as the end of its first quarter. The Company is presently in discussions with its lenders to obtain revised covenants to allow it to remain in compliance in fiscal 2004, and expects, based on these discussions, that it will be able to obtain revised covenants. If management is unsuccessful in negotiating revised covenants and if the Company does not meet its fiscal 2004 covenants, the lenders will be able to exercise all of their remedies under the Senior Credit Facility, including declaring all outstanding borrowings immediately due and payable. The acceleration of the Company's borrowings under the Senior Credit Facility would constitute an event of default under the Company's 9 3/4% Senior Subordinated Notes. In addition, the Company will no longer be able to borrow any additional amounts under the Senior Credit Facility in the event it is not in compliance with any of the covenants in the Senior Credit Facility. "Given our strong credit statistics, including current senior leverage of less than 1.0x Adjusted EBITDA and interest coverage of approximately 2.0x, and positive momentum in our business, we are confident of our ability amend our senior credit facility on acceptable terms," stated Bridger. Because the Company was in compliance throughout fiscal 2003 and was in compliance at January 31, 2004, and expects to obtain revised covenants that will allow it to remain in compliance in fiscal 2004, the Company has classified the outstanding balance ($31.0 million) of the Senior Credit Facility as long term debt in its consolidated balance sheet. The Company is delaying the filing of its Annual Report on Form 10-K, as required by our indenture relating to our Senior Subordinated Notes, until such time as it has secured an amendment to its senior credit facility. About Tandus Reaching together to provide customized interiors solutions for its customers, Tandus unites three specialized commercial flooring brands -- C&A Floorcoverings, Crossley Carpet Mills and Monterey Carpets. Working in tandem with one another, Tandus draws upon each brand's individual strengths to offer its customers single- source product design and technology, comprehensive services, and environmental leadership. Based in Dalton, GA., Tandus is a global commercial floorcoverings company. More information can be found online at http://www.tandus.com/ TENNECO AUTOMOTIVE: Launches Sr. Debt Offer & Consent Solicitation ------------------------------------------------------------------ Tenneco Automotive (NYSE: TEN) announced that it has commenced a cash tender offer and consent solicitation for its $500,000,000 aggregate principal amount of 11-5/8% Senior Subordinated Notes due 2009. Tenneco Automotive is launching this tender offer and consent solicitation as part of its transaction announced on April 16, 2004, designed to reduce the company's leverage and annual interest expense. The offer will expire at 12:00 midnight, New York City time, on Thursday, May 27, 2004, unless extended or earlier terminated. Holders tendering their notes will be required to consent to certain proposed amendments to the indenture governing the notes, which will, among other things, eliminate substantially all of the restrictive covenants, amend the satisfaction and discharge provisions and eliminate certain events of default provisions in the indenture. The consent solicitation will expire at 5:00 p.m. New York City time, on Thursday, May 13, 2004, unless extended or earlier terminated. Note holders who validly tender their notes before the consent solicitation expires will receive the total consideration of $1,095.50 per $1,000 principal amount of notes. The total consideration includes a consent payment of $30.00 per $1,000 principal amount of notes. Note holders who validly tender their notes after the consent solicitation expires and before the offer expires will receive as payment for the notes $1,065.50 per $1,000 principal amount of notes, which is the total consideration less the $30.00 per $1,000 consent payment. In either case, note holders who validly tender their notes will be paid accrued and unpaid interest up to, but not including, the date of payment for the notes. The offer is subject to meeting certain conditions, including the company's receipt of tenders of notes representing a majority of the principal amount of the notes outstanding, execution of a supplemental indenture incorporating the proposed amendments, consent of the company's senior bank lenders to permit the consent solicitation on the terms proposed and the receipt of financing on terms acceptable to Tenneco Automotive in an amount sufficient to complete the offer. The terms of the offer are described in Tenneco Automotive's Offer to Purchase and Consent Solicitation Statement, dated April 30, 2004, which may be obtained from Global Bondholder Services, at (866) 873-7700 (US toll-free) or (212) 430-3774. Tenneco Automotive has engaged Banc of America Securities LLC and J.P. Morgan Securities Inc. to act as dealer managers in connection with the offer and solicitation agents in connection with the consent solicitation. Questions regarding the offer or consent solicitation may be directed to Banc of America Securities LLC, High Yield Special Products, at 888-292-0070 (US toll-free) or 212-847-5834 or J.P. Morgan Securities, High Yield Capital Markets, at 212-270-9153. Company Information Tenneco Automotive is a $3.8 billion manufacturing company with headquarters in Lake Forest, Illinois and approximately 19,200 employees worldwide. Tenneco Automotive is one of the world's largest designers, manufacturers and marketers of emission control and ride control products and systems for the automotive original equipment market and the aftermarket. Tenneco Automotive markets its products principally under the Monroe(R), Walker(R), Gillet(R) and Clevite(R)Elastomer brand names. Among its products are Sensa- Trac(R) and Monroe Reflex(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(R) mufflers, Dynomax(R) performance exhaust products, and Clevite(R)Elastomer noise, vibration and harshness control components. * * * As reported in the Troubled Company Reporter's April 21, 2004 edition, Standard & Poor's Ratings Services placed its ratings on Tenneco Automotive Inc., including its 'B' corporate credit rating, on CreditWatch with positive implications. The action followed Tenneco's announcement that it has filed a registration statement with the SEC related to its proposed public offering of approximately $150 million, or about 11.8 million shares of common stock. In addition, the company intends to grant the underwriters an option to purchase additional shares to cover allotments up to about $22.5 million. Net proceeds from the offering, along with proceeds from a planned $400 senior subordinated note offering will be used to purchase the company's $500 million 11 5/8% senior subordinated notes due 2009. Tenneco will also record a pretax charge of about $55 million for an early tender premium and existing deferred debt issuance costs. "While the equity offering and refinancing will only have a modest positive impact on Tenneco's balance sheet and credit statistics, these actions, along with the improvements the company has made over the past two years to its credit profile, could result in modest ratings upgrade potential," said Standard & Poor's credit analyst Dan DiSenso. "If improvements made to Tenneco's financial profile are determined to be sustainable, the corporate credit rating could be raised one notch to 'B+'," Mr. DiSenso said. UNITED AIRLINES: Wants to Assume San Francisco Airport Lease ------------------------------------------------------------ United Airlines Inc. seeks the Court's authority to assume certain unexpired non-residential real property leases and executory contracts with the San Francisco International Airport. The Debtors and the City and County of San Francisco are parties to 28 leases and other executory agreements. SFO is one of the Debtors' hubs and is an important component of the Debtors' operations network. In 2003, the Debtors boarded over 7,500,000 passengers on nearly 83,000 flights at SFO. SFO is the site of the Debtors' San Francisco Maintenance Operations Center. At 1,900,000 square feet, the MOC is the largest of its kind. The MOC houses the operations of Cogen, a producer of turbine- generated electricity with annual revenues of approximately $20,000,000. Cogen operates a plant at SFO that produces about 200,000,000 KWH of electricity annually, which is sold to Pacific Gas & Electric Company. As a result of extensive negotiations, SFO and the Debtors reached a Cure Stipulation Agreement that provides for: (1) the Debtors' assumption of the Leases curing all defaults; (2) the amortization of the Debtors' cure costs over three years at a "favorable rate of interest"; (3) the settlement of environmental clean-up obligations at SFO; (4) an option for the Debtors to extend the MOC Lease for 10 years; (5) a long-term lease of the "Superbay Hangar," which includes discounted overnight parking for six aircraft; and (6) the construction by SFO of a corridor between the domestic and international concourses, allowing the Debtors to eliminate a bus operation to be replaced with a fixed connector. Mr. Sprayregen states that SFO's economic concessions will provide financial and operational benefits to the Debtors. These benefits exceed the value of anything the Debtors are giving up. Initial rent will be $2,510,492 per year. The Debtors will pay a total of $9,945,393, with an initial payment of $937,000 to Swinerton Construction Company and the remaining $9,008,393 due to SFO. The SFO Payment will be amortized over 36 months at a 2.5% annual interest rate. The Debtors will replace the current cash deposit held by SFO with a $22,523,642 Letter of Credit. 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. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) UTEX INDUSTRIES: Employs Bracewell & Patterson as Attorneys ----------------------------------------------------------- Utex Industries, Inc., is asking permission from the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, to employ Bracewell & Patterson, L.L.P., as its counsel in its on-going chapter 11 restructuring. The Debtor believes that Bracewell & Patterson possesses extensive knowledge and expertise in the areas of law relevant to this case. The Debtor expects Bracewell & Patterson to: a) advise the Debtor with respect to its rights, duties and powers in this case; b) assist and advise the Debtor in its consultations relative to the administration of this case; c) assist the Debtor in analyzing the claims of the creditors and in negotiating with such creditors; d) assist the Debtor in its analysis of and negotiations with any third party concerning matters relating to, among other things, the terms of the proposed prepackaged plan of reorganization; e) represent the Debtor at all hearings and other proceedings; f) review and analyze all applications, orders, statements of operations and schedules filed with the Court and advise the Debtor as to its propriety; g) assist the Debtor in preparing pleadings and applications as may be necessary in furtherance of the Debtor's interests and objectives; and h) perform such other legal services as may be required and are deemed to be in the interests of the Debtor in accordance with the Debtor's powers and duties as set forth in the Bankruptcy Code. William A. (Trey) Wood, III, Esq., reports that the firm will charge the Debtor its current hourly rates of: Designation Billing Rate ----------- ------------ partners $300 - $600 per hour associates $125 - $325 per hour paralegals and clerks $100 - $145 per hour The current hourly rates for the bankruptcy attorneys and paralegals that may work on this matter are: Professional Billing Rate ------------ ------------ William A. (Trey) Wood, III $415 per hour Mark W. Wege $390 per hour Marcy E. Kurtz $425 per hour Stephanie S. Rosenberg $230 per hour Courtney A. Tippy $230 per hour Jeremy A. Mouton $190 per hour Toni Silva $145 per hour Jean Woods $145 per hour Headquartered in Houston, Texas, Utex Industries, Inc. -- http://www.utexind.com/-- has been in the fluid sealing industry since 1940. It has expanded its market base to include: oil and gas, petrochemical, pulp and paper, power generation, fossil and nuclear fuel, agriculture, municipalities and a variety of other industries. The Company filed for chapter 11 protection on March 26, 2004 (Bankr. S.D. Tex. Case No. 04-34427). William A. Wood III, Esq., at Bracewell & Patterson, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed over $10 million in estimated assets and over $100 million in estimated debts. WINSTAR: Trustee Agrees to Resolve Marconi Adversary Proceeding --------------------------------------------------------------- Winstar Communications, Inc.'s Chapter 7 Trustee Christine C. Shubert asks the Court to approve a settlement of a certain avoidance action with Marconi Communications, Inc., and its affiliate, Marconi Communications Optical Networks Corporation, pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. On April 16, 2003, the Trustee commenced an adversary proceeding against Marconi to recover certain preferential transfers pursuant to Sections 547 and 550 of the Bankruptcy Code. Marconi asserted various defenses against the Trustee's claim. To avoid the costs of protracted litigation, the Trustee and Marconi decided to settle their dispute. Pursuant to the Court's November 6, 2002 Order, the Trustee is permitted to settle certain avoidable preference recovery controversies pursuant to Rule 9091(b) and Sections 105(a) and 363(b), without seeking further Court approval. However the Avoidance action against Marconi falls outside the Ongoing Authority Order, and therefore requires the Court's approval. The Trustee's complaint against Marconi asserted a gross preference amount of $810,092. Marconi provided evidence of statutory new value and demonstrated that certain payments were made in the ordinary course of business. The salient terms of the Settlement Agreement are: (1) Marconi will pay $100,000 to the Trustee in full and final satisfaction of the Avoidance claim; (2) The Settlement amount will be paid by negotiable check to the Trustee and delivered to her counsel, Raymond H. Lemisch, Esq., Adelman Lavine Gold and Levin, PC, 919 N. Market Street, Suite 710, Wilmington, Delaware 19801; (3) The Trustee and Marconi will execute mutual releases; (4) In the event that Marconi fails to make the payment in good funds, the Trustee will be authorized to file an order, under certification of counsel, which grants judgment in favor of the Trustee and against Marconi for $810,092; (5) Marconi will be granted a general, prepetition unsecured claim for $100,000 against the Winstar Estates for the payment. This Settlement Agreement will not affect in anyway any proof of claim that will be filed by Marconi in these Bankruptcy Proceedings; and (7) The Trustee will dismiss the Adversary Proceeding. Mr. Lemisch assures the Court that the settlement of the Avoidance action against Marconi is in the best interest of the estate and all of the creditors, reasonable and within the Trustee's sound business judgment. The Settlement will eliminate the potentially high costs of litigation and the uncertainty of success in light of Marconi's asserted defenses. (Winstar Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) WOMEN FIRST: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Women First HealthCare, Inc. 5355 Mira Sorrento Place San Diego, California 92121 Bankruptcy Case No.: 04-11278 Type of Business: The Debtor is a specialty pharmaceutical company dedicated to improving the health and well-being of midlife women. See http://www.womenfirst.com/ Chapter 11 Petition Date: April 29, 2004 Court: District of Delaware Judge: Mary F. Walrath Debtor's Counsel: Michael R. Nestor, Esq. Sean Matthew Beach, Esq. Young Conaway Stargatt & Taylor The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, DE 19899 Tel: 302-571-6600 Fax: 302-571-1253 Total Assets: $49,089,000 Total Debts: $73,590,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Whitney & Co, LLC Loan $18,733,365 177 Broad Street Stamford, CT 06901 CIBC WMC Inc. Loan $18,701,117 425 Lexington Ave New York, NY 10017 Elan Pharmaceuticals Royalties Loan $12,943,753 Ireland Ltd. WIL House Shannon Business Park Shannon Co Clare Ireland McKesson Drug Co. Product Returns $5,812,535 One Post Street Rebates San Francisco, CA 94104 Wyeth Pharmaceuticals, Inc. Loan Trade debt $5,145,424 555 East Lancaster Ave St. Davids, PA 19087 Medco Rebate Contract $2,864,542 100 Parson Pond Dr. Franklin Lakes, NJ 07917 Bristol Meyers Squibb Trade debt $1,757,188 P.O. Box 400 Princeton, NJ 08543 AmeriSource Bergen Group Product Returns $1,228,556 1300 Morris Drive Chesterbrook, PA 19087 AdvancePCS, Inc. Rebate Contract $619,336 5701 Green Valley Dr. Minneapolis, MN 55437 QK HealthCare, Inc. Product Returns $589,626 2060 Ninth Ave Ronkonkoma, NY 11779 Hoffmann-La Roche, Inc. Trade Debt $581,683 340 Kingsland Street Nutley, NJ 07110 Laboratoires Fournier SA Trade Debt $328,593 50 rue de Dijon 21121 Daix, France Mallinckrodt, Inc. Trade Debt $264,258 171 Railroad Ave Hobart, NY 13788 Mutual Pharmaceutical Co., Trade Debt $239,617 Inc. Express-Scripts, Inc. Rebate Contract $182,841 CVS Pharmacy, Inc. Product Returns $154,655 Cardinal Health Product Returns $117,739 Pharmaceutics International Trade Debt $105,000 Inc. UPS Supply Chain Solutions Trade Debt $101,815 Caremark, Inc. Product Returns $84,365 Rebate Contract YOUTHSTREAM MEDIA: Joseph Corso, Jr. Discloses 9.4% Equity Stake ---------------------------------------------------------------- Joseph Corso Jr. beneficially owns 3,750,000 shares of the common stock of YouthStream Media Networks, Inc., representing 9.40% of the outstanding common stock shares of the Company. Mr. Corso holds sole voting power over the three million seven, hundred fifty thousand shares. YouthStream Media Networks, Inc. -- whose December 31, 2003 balance sheet shows a total stockholders' deficit of $11,364,000 -- operates a retail business, Beyond the Wallr (also known as Trent Graphics), which sells decorative wall posters and related items through a chain of retail stores and on-campus sales events. * FindProfit.com Initiates Coverage on Troubled Telecom Companies ----------------------------------------------------------------- FindProfit -- http://www.findprofit.com/-- an investment service that delivered a +67% audited return in 2003, announced that it has provided to trial and paid subscribers investment coverage of the telecommunications sector, including coverage of Global Crossing (Nasdaq:GLBC) and SBC Communications (NYSE:SBC). FindProfit's investment outlook examines the telecommunications in the wake of first quarter earnings report, the exit of MCI from bankruptcy and GLBC's recent announcements, including coverage of Verizon (NYSE:VZ) and BellSouth (NYSE:BLS). All paid and trial FindProfit subscribers can now receive immediate access to FindProfit's exclusive reports and ongoing commentary and analysis. As a trial or paid subscriber, you'll also gain access to our latest investment moves. Start your 30-day free trial today: http://www.findprofit.com/subscribe.php3?refer=zone125 FindProfit's outlook looks at the following questions: -- Will GLBC's recent disclosure that it needs to once again restate its financial results force the company to look outside of virtual parent Singapore Technologies Telemedia for more funding? -- Does GLBC need more than $100 million promised by STT now that it will have to undergo further restructuring? -- Will Mexican billionaire and SBC Director Carlos Slim continue to buy shares of GLBC on the open market? -- With large stakes in GLBC and MCI, a seat on SBC's board and a controlling stake in Telmex, is Carlos Slim planning a massive upheaval of the North American telecom sector? -- How does the reemergence from bankruptcy of MCI affect the telecom sector? -- Will VZ, BLS and SBC continue to see DSL gains as landline revenues fall? Or, will the cable companies begin to eat away at DSL momentum with increased service offerings such as voice- over-Internet-protocol? AND MORE Sign up now for a 30-day free trial to FindProfit and you'll gain instant access to FindProfit's in-depth coverage of the media, tech, telecom and energy sectors, as well as our full "as it happens" investment commentary and comprehensive model portfolios, by clicking here: http://www.findprofit.com/subscribe.php3?refer=zone125 About FindProfit.com FindProfit.com is a leading publisher and provider of lively, fun, and profitable investment commentary for individual investors who love the stock market. As a 100% independent investment service, FindProfit's only bias is towards making its subscribers money. FindProfit's real-time "as it happens" investment service gives individual investors the edge they need to consistently beat the market. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Airgate PCS Inc. PCSAD (292) 574 (363) Alliance Imaging AIQ (40) 683 44 Akamai Technologies AKAM (175) 280 140 Amazon.com AMZN (1,036) 2,162 568 Bally Total Fitness BFT (158) 1,453 (284) Blount International BLT (397) 400 83 Caraco Pharm Lab CPD (20) 20 (2) Cell Therapeutic CTIC (83) 146 72 Centennial Comm CYCL (579) 1,447 (99) Choice Hotels CHH (118) 267 (42) Cincinnati Bell CBB (640) 2,073 (47) Cubist Pharmaceuticals CBST (18) 223 91 Delta Air Lines DAL (384) 26,356 (1,657) Deluxe Corp DLX (298) 563 (309) Diagnostic Imag DIAM 0 20 (3) Echostar Comm DISH (1,033) 7,585 1,601 Education Lending Group EDLG (2) 3,584 N.A. Graftech International GTI (97) 967 94 Imax Corporation IMAX (104) 243 31 Imclone Systems IMCL (271) 382 (3) Kinetic Concepts KCI (246) 665 228 Lodgenet Entertainment LNET (129) 283 (6) Lucent Technologies LU (3,371) 15,765 2,818 Memberworks Inc. MBRS (20) 248 (89) Millennium Chem. MCH (46) 2,398 637 Moody's Corp. MCO (32) 941 137 McDermott International MDR (363) 1,249 (24) McMoRan Exploration MMR (31) 72 5 Maxxam Inc. MXM (582) 1,107 133 Northwest Airlines NWAC (1,775) 14,154 (297) Nextel Partner NXTP (13) 1,889 277 ON Semiconductor ONNN (498) 1,161 212 Pinnacle Airline PNCL (48) 128 13 Primus Telecomm PRTL (96) 751 (26) Per-Se Tech Inc. PSTI (21) 171 (1) Qwest Communications Q (1,016) 26,216 (1,132) Revlon Inc. REV (1,726) 892 (32) Sepracor Inc SEPR (619) 1,020 256 St. John Knits Int'l SJKI (65) 234 69 I-Stat Corporation STAT 0 64 33 Syntroleum Corp. SYNM (2) 47 14 Triton PCS Holdings TPC (180) 1,519 52 UST Inc. UST (115) 1,726 727 Valence Tech VLNC (17) 36 4 Vector Group Ltd. VGR (3) 628 142 Western Wireless WWCA (224) 2,522 15 ********* 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 ***