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/raid1/www/Hosts/bankrupt/TCR_Public/040505.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, May 5, 2004, Vol. 8, No. 88 Headlines ACTUANT CORP: S&P Rates $250M Sr. Revolving Credit Facility at BB ADELPHIA BUSINESS: Agrees With PECO to Buy Joint Venture ADVANCED GLASSFIBER: Emerged from Chapter 11 Bankruptcy on Apr. 2 AIR VEGAS AIRLINES: Case Summary & 18 Largest Unsecured Creditors AMERICAN REAL: S&P Assigns BB Rating to $300M Sr. Unsecured Notes ASTROPOWER INC: Court Fixes May 10 as the Last Date to File Claims CABLETEL COMMUNICATIONS: AMEX Accepts Continued Listing Plan CASCADES INC: Incurs $6 Million Net Loss in First Quarter 2004 CITRIX: S&P Affirms BB- Corporate Rating with Positive Outlook CKE RESTAURANTS: S&P Assigns B Rating to $380MM Senior Bank Loan COLLINS & AIKMAN: S&P Places Low-B Ratings on Watch Negative CONCENTRA OPERATING: Records Increased Revenues in First Quarter CUMMINS: Improved Operating Performance Spurs S&P's Stable Outlook DEUTSCHE MORTGAGE: Fitch Affirms Low Ratings on Class G & H Notes DEXTERITY SURGICAL: First Creditors' Meeting Fixed for May 20 DII INDUSTRIES: Asks Court to Approve RHI Holding Settlement Pact DIRECTV LATIN: Mayer Brown Law Firm Wants $3MM+ Final Fee Payment DISTRIBUTION DYNAMICS: Case Summary & 20 Unsecured Creditors DT INDUSTRIES: Ex-Auditor PwC Airs Doubt in Going Concern Ability DVI INC: Claims Bar Date Moved to May 10, 2004 ENRON CORPORATION: Taylor, et al., Retain Blank Rome as Counsel EPOCH 2001-1: S&P Affirms Ratings and Removes CreditWatch FALCON HOSPITALITY: Case Summary & 4 Largest Unsecured Creditors FEDERAL-MOGUL: Files Second Amended Reorganization Plan FEMONE INC: Former Auditors Express Going Concern Uncertainty FLEMING: Wants to Assume Sublease for Miami Warehouse Property GENERAL ROOFING: Case Summary & 20 Largest Unsecured Creditors GL ENERGY: SEM Declares Default & Terminates Joint Venture Pact GLOBAL CROSSING: Taps Deloitte for Independent Accounting Review GLOBAL CROSSING: Settling Securities & Pension Claims for $325MM GRAY TELEVISION: S&P Affirms Ratings & Revises Outlook to Positive GREAT LAKES: S&P Cuts Corporate & Senior Secured Debt Ratings to B GWE ENTERPRISES: Case Summary & 37 Largest Unsecured Creditors HEALTHSOUTH: Bondholder Talks Continue Pending Default Resolution HEALTHSOUTH: Names Jay Grinney as New President & CEO HT DEVELOPMENT LLC: Case Summary & 3 Largest Unsecured Creditors INTERNATIONAL BIOCHEMICAL: Sec. 341(a) Meeting Slated for May 20 IT GROUP: First Amended Reorganization Plan Declared Effective J/Z CBO: Fitch Downgrades 3 Note Classes to Low-B & Junk Levels KAISER ALUMINUM: Reaches Settlement with Hearing Loss Claimants KOSA B.V.: S&P Affirms Low-B Ratings and Removes Negative Watch LANDMARK MIDWEST: Case Summary & 10 Largest Unsecured Creditors LARSCOM INC: Posts $1.8 Million Net Loss for First Quarter 2004 MAGNESIUM CORP: Creditors' Meeting Scheduled for May 24 MEDICAL WIND: May 10 Deadline to Vote on Chapter 11 Plan MERRILL LYNCH: Fitch Upgrades $7.6MM Class F Certificates to BB+ NESS ENERGY: Rosenberg Replaces Weaver and Tidwell as Accountants NETEXIT INC: Files for Chapter 11 Protection in Delaware NETEXIT INC: Case Summary & 12 Largest Unsecured Creditors NEXTEL PARTNERS: S&P Puts B- Corp. Credit Rating on Watch Positive NATIONAL ENERGY: Bankruptcy Court Confirms Reorganization Plan NATIONSRENT INC: Creditor Trustee Wants July 13 Service Deadline NUCENTRIX: Exits Chapter 11 & Expects to Pay Creditors in Full OCUMED GROUP: First Creditors' Meeting Convenes on May 26 OMEGA: Secures $9.4MM New Investment & $50MM Credit Line Increase OWENS CORNING: Wants Court Approval of Syar Napa County Lease Pact PARMALAT: Banco Itau Says Fund Safe from Debtor's Credit Risk PREMCOR: Delaware Refinery Buyout Prompts Fitch's Ratings Upgrade RCN CORP: Lenders Agree to Extend Forbearance Pacts Until May 17 RECOTON CORPORATION: Plan Confirmation Hearing Today in Manhattan SALOMON BROS: Fitch Downgrades 3 Classes to Low-B & Junk Levels SANTA ROSA BAY: Fitch Affirms BB- Rating on $106MM Revenue Bonds SIERRA PACIFIC: S&P Rates Proposed $50MM Synthetic Bank Loan at BB SOLUTIA: Stay Lifted Allowing Eastman to Exercise Set-Off Rights SR TELECOM: S&P Further Junks Ratings with Negative Outlook TITAN CORPORATION: First Quarter Revenues Up by 21% to $459 Mil. TWODAYS: Has Until May 13 to Complete & File Bankruptcy Schedules TWODAYS: U.S. Trustee Meeting with Creditors on May 7 UNITED AIRLINES: Retiree Committee Wants to Retain PwC as Actuary US AIRWAYS: Dave Davis Named Chief Financial Officer US UNWIRED: Stockholders' Deficit Tops $239MM at March 31, 2004 * Gary Pemberton Joins Marshack Shulman as Litigation Partner * Brossman, Walters & Bein Join Saul Ewing's Harrisburg Office * Ropes & Gray Adds Bradford Badke to New York IP Litigation Group * Upcoming Meetings, Conferences and Seminars ********* ACTUANT CORP: S&P Rates $250M Sr. Revolving Credit Facility at BB ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to the $250 million senior revolving credit facility of Actuant Corp. (BB/Stable/--). Proceeds from the credit facility, maturing Feb. 19, 2009, were used to refinance the company's existing secured revolving credit facility. Actuant, based in Milwaukee, Wisconsin, manufactures a variety of standard and customized products for retail and industrial customers and original equipment manufacturers (OEMs). It had total balance sheet debt of about $231 million at Feb. 29, 2004. "The stable outlook reflects our expectation that Actuant's improved financial profile, which is the result of management's continued focus on cash flow generation and debt reduction, will be sustained," said Standard & Poor's credit analyst Nancy Messer. "It also incorporates the assumption that the company will maintain a disciplined approach to acquisitions. Upside ratings potential is limited by competitive and cyclical end-markets and the relatively modest size of the company, which limits debt capacity." Financial covenants on the new credit facility include minimum fixed-charge coverage and maximum leverage ratios. The new revolving facility is not secured by the company's assets, but provides for guaranties and stock pledges by certain of Actuant's significant subsidiaries. A security interest in the stock of the company's subsidiaries provides a claim against only the residual value after the direct claims against the subsidiaries are satisfied. While subsidiary guaranties may clarify the lender's standing versus other subsidiary creditors, ascertaining priority or equal claims at the point of bankruptcy would be highly speculative. ADELPHIA BUSINESS: Agrees With PECO to Buy Joint Venture -------------------------------------------------------- TelCove, formerly Adelphia Business Solutions, Inc., announced that it has reached agreement with Exelon Communications Company, LLC, PECO Energy Company, and their affiliates for the purchase of certain metropolitan fiber network assets and the transfer of all PECO TelCove joint venture partnership interests in markets served by their joint venture. Upon receipt of regulatory approvals, the transaction will result in TelCove's full ownership of these markets. PECO TelCove began as a joint venture between an Exelon Communications Company subsidiary and TelCove in 1995. Its service area encompasses the Pennsylvania counties of Philadelphia, Bucks, Chester, Montgomery, and Delaware, as well as the Pennsylvania cities of Allentown, Bethlehem, Easton, Reading, and Philadelphia. The purchase of this fiber network and partnership interest in these Pennsylvania markets represents the final "partnership roll-up" effort by TelCove, which throughout the 1990's had begun operations in local market partnership with other cable and utility providers, building large, dense metropolitan fiber networks. This purchase, coupled with those markets recently transferred to TelCove in a settlement with Adelphia Communications, and TelCove's other core markets, brings the number of markets served by TelCove to 50 cities throughout the eastern half of the United States. The southeastern PA network consists of more than 1,200 route miles of fiber and over 250 "lit" buildings. "For TelCove, this transaction represents a significant milestone in our continuing efforts to own and control the assets we use to serve our end user and carrier customers throughout the TelCove footprint", stated Bob Guth, TelCove President and Chief Executive Officer. "PECO Energy and Exelon Communications have been tremendous infrastructure partners for TelCove over the past eight years. The metropolitan fiber network in southeastern Pennsylvania is unquestionably among the most robust in the nation. Given the strategic significance of this area to our larger footprint throughout the eastern United States, we believe that this transaction further distinguishes TelCove as one of the nation's premier facilities based competitive telecommunications service providers." 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) ADVANCED GLASSFIBER: Emerged from Chapter 11 Bankruptcy on Apr. 2 ----------------------------------------------------------------- On March 8, 2004 the U.S. Bankruptcy Court for the District of Delaware entered an order by the Honorable Judith K. Fitzgerald confirming the First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code of Advanced Glassfiber Yarns LLC and AGY Capital Corporation. The Joint Plan of Reorganization took effect on April 2, 2004. The Debtors, affiliates of Owens Corning, are among the largest manufacturers and global suppliers of glass yarns. Prior to and including September 30, 1998, Aiken, SC-based Advanced Glassfiber Yarns was the glass yarns and specialty materials business of Owens Corning. Since September 30, 1998, Advanced Glassfiber Yarns has been a joint venture between Porcher Industries, S.A. and Owens Corning. The Debtors filed for chapter 11 protection (Bankr. Del. Lead Case No.: 02-13615) on December 10, 2002 before the Honorable Judith K. Fitzgerald. Mark E. Felger, Esq. of Cozen O'Connor and Alan B. Hyman, Esq. and Scott K. Rutsky, Esq. of Proskauer Rose LLP represent the Debtors in their restructuring efforts. AIR VEGAS AIRLINES: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: AVI, Inc. dba Air Vegas Airlines 2642 Airport Drive North Las Vegas, Nevada 89032 Bankruptcy Case No.: 04-14779 Type of Business: The Debtor is the oldest and most experienced continuous family-owned charter air tour operator in Las Vegas. See http://www.airvegas.com/ Chapter 11 Petition Date: April 30, 2004 Court: District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Gregory A. Miles, Esq. Woods Erickson Whitaker & Miles LLP 1349 Galleria Drive, Suite 200 Henderson, NV 89014 Tel: 702-433-9696 Fax: 702-434-0615 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 18 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Arizona Dept. of Trade credit $139,861 Transportation (landing fees) Aviall Services, Inc. Trade credit $9,811 Kansas Aviation of Trade credit $9,686 Independence Cintas Corp. Trade credit $6,342 Desser Tire & Rubber Trade credit $5,821 G.C.N.P. Trade credit-fees $3,050 Bankcard Center Credit card $2,615 L-3 Communications Avionics Trade credit $2,573 Future Aviation, Inc. Trade credit $2,464 AAR Distribution Trade credit $2,431 WF Payment Remittance Center Credit card $2,257 Canyon State Oil Co., Inc. Trade credit $2,201 Weco Aerospace Systems, Inc. Trade credit $2,164 Ikon Office Solutions Trade credit $1,964 Cingular Wireless Trade credit-cellular $1,365 Mpower Communications Trade credit $1,296 Aqua Perfect Trade credit $1,249 Otto Instrument Service Inc. Trade credit $1,235 AMERICAN REAL: S&P Assigns BB Rating to $300M Sr. Unsecured Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to the proposed $300 million senior unsecured notes issued by American Real Estate Partnership L.P. and American Real Estate Finance Corp. At the same time, Standard & Poor's assigned its 'BB' long- term counterparty credit rating to American Real Estate Holdings, L.P. a 100% owned subsidiary of AREP. AREP is a publicly traded master limited partnership that is 86.5% owned by Carl C. Icahn and his affiliates, and 13.5% held by public unit holders. AREP's General Partner is American Property Investors Inc., which is 100% owned by Beckton Corp., which is, in turn, 100% owned by Carl C. Icahn, and has a 1% general partnership interest in AREP. AREP Finance is a wholly owned subsidiary of AREP that was solely formed to serve as a coissuer of the above-mentioned debt issuance. The issue is guaranteed by AREH, an intermediate holding company with diversified operations that is a 100% owned subsidiary of AREP. American Property Investors Inc. also has a 1% general partnership interest in AREH. AREP's operations, through its intermediate holding company, AREH, consist of rental commercial real estate, commercial real estate development, hotel, resort and casinos, oil & gas operations, and various investments. The rating on the debt deal reflects the guarantee by AREH, the company's significant capital base of $1.6 billion, low leverage of 0.5x with this debt issuance, successful track record, and significant investment contacts of majority owner Carl C. Icahn. These factors are offset by the large investment exposure to just a handful of businesses, the company's dependence on one key principal, significant history of affiliate transactions and corporate governance issues, and the inability to predict the future make-up of AREP and its wholly-owned subsidiary AREH. The company has adopted Sarbanes-Oxley and is in compliance with NYSE listing requirements, which should mitigate concerns over intercompany and affiliate transactions. The ratings also assume that AREP continues to hold ample liquidity, which has historically run approximately $500 million. The senior notes are structurally subordinated to the $215 million of senior secured notes of American Casino & Entertainment Properties Corp. LLC and American Casino & Entertainment Properties Finance Corp. and mortgage debt at AREH. The company's business model is to purchase distressed assets and investments at a discount on an opportunistic basis, and therefore the future formation of the company is highly unpredictable. The stable outlook on AREP assumes that adequate liquidity and capitalization are maintained and the company's risk adjusted business model does not change drastically. Additionally, intercompany and affiliated transactions are expected to be immaterial. Uncertainty relating to the company's business mix remains and will be monitored by Standard & Poor's. ASTROPOWER INC: Court Fixes May 10 as the Last Date to File Claims ------------------------------------------------------------------ On March 31, 2004, the U.S. Bankruptcy Court for the District of Delaware established a claims bar date -- a deadline by which all creditors mist file proof of any prepetition claim against Astropower Inc. The Court fixed May 10, 2004 at 4:00 p.m. as the deadline to file proofs of claim with the Clerk of Court. Copies must be served on: By Special Delivery or By U.S. Mail: Overnight Mail: ------------- ---------------------- Donlin, Recano & Company, Inc. Donlin, Recano & Company, Inc. Re: AstroPower Inc. Re: AstroPower, Inc. P.O. Box 2074 419 Park Avenue South Murray Hill Station Suite 1206 New York, NY 10156 New York, NY 10016 Proof of Claim forms and copies of the Debtor's Schedules may be obtained at the Office of the Clerk or at the offices of the Debtor's Attorney: Derek C. Abbott, Esq. Morris, Nichols, Arsh & Tunnell 1201 N. Market Street, 18th Floor Wilmington, Delaware 19801 Astropower Inc. produces the world's largest solar electric (photovoltaic) cells and a full line of solar modules. The Company filed for chapter 11 protection (Bankr. Del. Case No.: 04-10322) on February 1, 2004. CABLETEL COMMUNICATIONS: AMEX Accepts Continued Listing Plan ------------------------------------------------------------ Cabletel Communications Corp. (AMEX:TTV)(TSX:TTV), announced that the American Stock Exchange (AMEX) has accepted the Company's plan to regain compliance with AMEX's continued listing standards and has granted the Company an extension until May 26, 2004 to regain compliance with these standards. In January 2004, the Company received notice from the AMEX staff indicating the Company was below certain continuous listing standards as set forth in Section 1003(a)(iv) of the AMEX Company Guide. More specifically, the Company had sustained losses which were substantial in relation to its overall operation and its existing financial resources and financial condition has become so impaired that it appears questionable, in the opinion of the AMEX, as to whether the Company will be able to continue operations and/or meet obligations as they mature. The Company was afforded an opportunity to submit its plan to AMEX and did so in March 2004. Upon accepting the plan, AMEX provided the Company with an extension until May 26, 2004 to regain compliance with the continued listing standards. Amex will allow the Company to maintain its AMEX listing through the plan period, subject to periodic review of the Company's progress by the AMEX staff. If the Company does not make progress consistent with the plan to regain compliance with the continued listing standards by the end of the extension period, the AMEX staff may initiate delisting procedures. Cabletel Communications offers a wide variety of products to the Canadian television and telecommunications industries required to construct, build, maintain and upgrade systems. The Company's engineering division offers technical advice and integration support to customers. Stirling Connectors, Cabletel's manufacturing division supplies national and international clients with proprietary products for deployment in cable, DBS and other wireless distribution systems. More information about Cabletel can be found at http://www.cabletelgroup.com/ Liquidity Issues In its latest Form 10-Q, filed for the quarter ended September 30, 2003 with the Securities and Exchange Commission, Cabletel Communications reports: "The Company is in negotiations with a number of its creditors regarding waivers of and / or the restructuring of certain of its obligations. Further, at September 30, 2003, the Company's current assets exceed its current liabilities by $871,870, creating short term liquidity issues for the Company. In order to address these liquidity issues, the Company is exploring a number of options, including (i) raising additional financing through the issuance of debt or equity securities, (ii) the restructuring of existing obligations and (iii) selling certain assets of the Company. If the Company is not successful with such plans, the Company may not be in a position to continue to operate as a going concern. In such event, the Company will be required to consider alternative courses of action, including, but not limited to, seeking protection under applicable bankruptcy laws." CASCADES INC: Incurs $6 Million Net Loss in First Quarter 2004 -------------------------------------------------------------- Cascades Inc. (Symbol: CAS-TSX) reports a net loss of $6 million ($0.08 per share) for the quarter ended March 31, 2004 compared to net earnings of $16 million ($0.19 per share) for the same period in 2003. The net loss for the quarter ended March 31, 2004 includes an after-tax foreign exchange loss on U.S. denominated debt of $5 million ($0.06 per share) and an after-tax unrealized gain on derivative financial instruments of $4 million (0.05 per share). Net earnings for the first quarter of 2003 included a foreign exchange gain on U.S. denominated debt and a loss on long- term debt refinancing. The first quarter results of last year also included Cascades' share of an adjustment to a gain realized by Boralex Inc., a significantly influenced company, related to the disposition of certain assets to the Boralex Income Fund created in early 2002. These items increased net earnings of the first quarter of 2003 by $5 million ($0.06 per share). Sales decreased by 3.2% during the first quarter of 2004, amounting to $870 million compared to $899 million for the same period last year. Operating income before depreciation amounted to $57 million for the period, compared to $71 million a year earlier. The operating income before depreciation for the quarter ended March 31, 2004 includes our share of an unrealized gain on derivative financial instruments of $5 million in a joint venture. Commenting on the results, Mr. Alain Lemaire, President and Chief Executive Officer stated: "The company has continued efforts to control costs to better respond to difficult market conditions and with the reality of an appreciated Canadian dollar. These initiatives and managerial skills are key factors which help Cascades' operations to generate positive cash-flow through these difficult and challenging times. As current economic indicators appear more favourable for paper and packaging companies, we are confident that these efforts will be complemented by the gradual implementation of recently announced price increases in most of our operating sectors." Dividend on Common Shares The Board of Cascades declared a quarterly dividend of $0.04 per share to be paid on June 14, 2004 to shareholders of record at the close of business on May 31, 2004. About the Company Cascades is a leader in the manufacturing of packaging products, tissue paper and specialized fine papers. Internationally, Cascades employs 15,000 people and operates close to 150 modern and versatile operating units located in Canada, the United States, France, England, Germany and Sweden. Cascades recycles more than two million tons of paper and board annually, supplying the majority of its fibre requirements. Leading edge de-inking technology, sustained research and development, and 40 years in recycling are all distinctive strengths that enable Cascades to manufacture innovative value-added products. Cascades' common shares are traded on the Toronto Stock Exchange under the ticker symbol CAS. * * * As previously reported, Standard & Poor's Ratings Services revised its outlook on diversified paper and packaging producer Cascades Inc. to negative from stable. At the same time, the 'BB+' long- term corporate credit rating and 'BBB-' senior secured bank loan rating were affirmed. "The outlook revision stems from concerns that Cascades is unlikely to improve its credit profile in the near term and remains vulnerable to further weakening if challenging conditions persist," said Standard & Poor's credit analyst Clement Ma. CITRIX: S&P Affirms BB- Corporate Rating with Positive Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Fort Lauderdale, Florida-based Citrix Systems Inc. and revised its outlook on the company to positive from stable. The outlook revision is based on the access infrastructure solutions provider's reduced debt burden following a recent bond redemption. "The ratings on Citrix reflect narrow product and revenue bases, very competitive industry conditions, and a moderately aggressive growth strategy," said Standard & Poor's credit analyst Philip Schrank. These factors are tempered by its good niche market position and adequate financial flexibility to support its growth initiatives. With 2003 revenues of $589 million, Citrix is a leading provider of system software to support the server-based deployment and management of enterprise-class Windows applications. Its Metaframe and Winframe products allow for application development on Windows servers in multi-platform environments. Although it operates in a fragmented and competitive industry, Citrix has been able to maintain good operating margins by focusing its R&D on a targeted product family and architecture, while providing value-added functionality. Although Citrix has a growing position in its selected niche, it remains vulnerable to competitors that are substantially larger and more entrenched. Operating margins could be pressured from current levels in the mid 20% area because of competitive pricing and product mix shifts. However, the earnings outlook is fueled by increased penetration within Citrix' existing client base, growth of electronic licensing (rather than packaged-product sales), and strategic alliances that could provide meaningful revenue opportunities over time. CKE RESTAURANTS: S&P Assigns B Rating to $380MM Senior Bank Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' bank loan rating and a '3' recovery rating to quick-service restaurant operator CKE Restaurants Inc.'s planned $380 million senior secured bank loan. Proceeds will be used to repay the company's senior subordinated notes, refinance the company's existing credit facility, and for a $20 million share repurchase. At the same time, Standard & Poor's raised its corporate credit rating on CKE to 'B' from 'B-'. The subordinated debt rating was raised to 'CCC+' from 'CCC'. The outlook is stable. "The upgrade is based on improving operating trends at the company's Hardee's brand and benefits from the refinancing," said Standard & Poor's credit analyst Robert Lichtenstein. "The transaction will lower the company's interest rate and improve financial flexibility by reducing amortization payments." Carpinteria, California-based CKE had $418 million of debt outstanding as of Jan. 31, 2004. The ratings reflect CKE's participation in the highly competitive quick-service sector of the restaurant industry, weak cash flow protection measures, a highly leveraged capital structure, and limited financial flexibility. The ratings also take into account the poor operating performance at the company's Hardee's restaurant concept, despite major efforts to improve the brand. These risks are somewhat mitigated by the strength of the company's established Carl's Jr. concept. CKE is an operator and franchisor of quick-service restaurants operating primarily under the Carl's Jr. and Hardee's brand names. The company has been experiencing weak operating performance since it acquired Hardee's in 1997. In order to improve results at Hardee's, management changed its focus to premium products from discount products. Initial results have been encouraging, especially over the past quarter. However, promotional pricing activity by larger competitors, such as McDonald's and Burger King, could challenge the company's strategy of focusing on premium products. Moreover, competitors could duplicate any success. Same-store sales at Hardee's gained 2.5% in 2003, following a 2.2% decline in 2002, while same-store sales at Carl's Jr. rose 2.9% in 2003 after increasing 0.7% the year before. However, operating margins in 2003 dropped to 14.3% from 15.2% in the prior year. The decline is attributed to higher beef prices and additional costs required for the menu conversion at Hardee's. COLLINS & AIKMAN: S&P Places Low-B Ratings on Watch Negative ------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on carpet manufacturer Collins & Aikman Floorcoverings Inc. on CreditWatch with negative implications, including the company's 'BB-' long- term corporate credit and senior secured debt ratings. The 'B' subordinated debt rating was also placed on CreditWatch. Collins & Aikman Floorcoverings' total debt outstanding at Jan. 31, 2004, was $209.3 million. "The CreditWatch placement follows the company's announcement that it is currently in discussions with its secured lenders to obtain a waiver and amendments to the covenants under its senior secured revolving credit facility for fiscal 2005 ending Jan. 31," said Standard & Poor's credit analyst Susan Ding. "Although the company expects to obtain these revisions, they have caused a delay in the company's 10-K filing with the SEC." Collins & Aikman Floorcoverings also reported weaker-than-expected financial results for the fiscal year due to slower demand in the corporate sector, as well as higher sales, general, and administration expenses. Standard & Poor's will meet with management in the near term to discuss its business and financial plans in light of these concerns. Collins & Aikman Floorcoverings is a manufacturer of vinyl-backed commercial carpet, modular carpet tile, and six-foot roll carpet for the corporate, health care, education, government, and retail sectors. CONCENTRA OPERATING: Records Increased Revenues in First Quarter ---------------------------------------------------------------- Concentra Operating Corporation announced results for the first quarter ended March 31, 2004. For the quarter, the Company reported revenue of $271,893,000 and Adjusted Earnings Before Interest Taxes Depreciation and Amortization of $39,004,000. This represented an increase of 8% in revenue and 14% in Adjusted EBITDA as compared to the $252,151,000 in revenue and $34,165,000 in Adjusted EBITDA reported for the first quarter of 2003. Concentra computes Adjusted EBITDA in the manner prescribed by its bond indentures. Operating income for the quarter grew 27% to $28,832,000 from $22,772,000 in the year-earlier period. Net income for the first quarter increased 19% to $8,173,000 from $6,873,000 in the first quarter of 2003. "We've begun 2004 with strong results," said Daniel Thomas, Concentra's Chief Executive Officer. "Our Health Services division performed particularly well during the first quarter. The positive patient visit trends we began to see last year have increased to even stronger levels in recent months. During the quarter, we achieved an 8.8% same center visit growth rate which compares to 0.7% during the first quarter of last year. We believe these trends are a result of the renewed national employment trends as well as a reflection of the excellent efforts of our sales and account management teams. These strong visit trends contributed to growth of 13% in revenue and 33% in gross profit for our Health Services segment during the quarter. We also achieved significant increases in the revenue of our Network Services segment. While we believe the growth in Network Services may moderate somewhat in coming quarters, we were pleased to have achieved an increase of 18% in revenue and 17% in gross profit, reflecting the benefits of higher comparative group health and worker's compensation bill review volumes. "As our financial results also show, we continue to experience declines in the revenue and contribution from our Care Management segment," said Thomas. "We feel these declines are due in part to the inherent lag that occurs between the date of injury and the point at which longer-term disability cases are referred for case management and independent medical exams. As nationwide employment continues to increase, we believe there will be a rebound in the demand for these later-stage workers' compensation services. Additionally, through a continued focus on expense management and performance improvement initiatives, we've been able to minimize the impact of this segment of our business on our results as a whole." Concentra completed the first quarter of 2004 with $33,130,000 in cash and investments and had no borrowings outstanding under its $100 million revolving credit facility. The Company also reported a reduction in its days sales outstanding ("DSO") to 60 days at March 31, 2004, from 62 days as of March 31, 2003. Concentra Operating Corporation (S&P, B+ Corporate Credit Rating, Negative), headquartered in Addison, Texas, the successor to and a wholly owned subsidiary of Concentra Inc., provides services designed to contain healthcare and disability costs and serves the occupational, auto and group healthcare markets. CUMMINS: Improved Operating Performance Spurs S&P's Stable Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Columbus, Indiana-based Cummins Inc. to stable from negative, based on improving operating performance and recovering industry fundamentals that should result in stronger earnings and cash generation. At the same time, Standard & Poor's affirmed its 'BB+' corporate credit rating on the company. "Although the firm still has large unfunded pension and other postretirement employee benefits (OPEBs) obligations, anticipated sizable free cash flow generation is expected to be largely earmarked for debt reduction, enabling the firm to reduce its overall debt and debt-like burden," said Standard & Poor's credit analyst Daniel DiSenso. As of March 28, 2004, Cummins had about $1.3 billion of debt outstanding. Cummins is a leading global manufacturer of diesel engines, natural gas engines and engine components, electric power- generation systems, and engine-filtration and exhaust systems. The company's principal markets are heavy- and medium-duty truck; bus; light commercial vehicle; and general industrial (including construction, mining, agricultural, marine, rail, and government, oil and gas, power generation and commercial marine). Cummins has good geographic diversity, with about 50% of sales generated outside the U.S. Cummins continues to focus on improving its cost structure by reducing overhead, consolidating facilities, and improving its global sourcing of components. Together with improved working capital management and market recoveries, cash flow generation should strengthen with free cash flow earmarked primarily for debt repayment. In addition, although Cummins' unfunded retiree obligations are of concern, cash funding requirements appear to be manageable relative to the company's cash flow generation. Cummins has adequate liquidity. At March 28, 2004, cash and marketable securities totaled $214 million, and Cummins had availability under its $385 million senior secured revolving credit facility that expires in November 2005. In addition, the company has full availability on its new $200 million three-year revolving accounts receivable securitization program. Cummins also has discrete business units that could be sold. In March 2005 Cummins' $225 million 6.45% notes mature. DEUTSCHE MORTGAGE: Fitch Affirms Low Ratings on Class G & H Notes ----------------------------------------------------------------- Fitch Ratings affirms and removes the following classes of Deutsche Mortgage & Asset Receiving Corp.'s (DMARC) commercial mortgage pass-through certificates, series 1998-C1, from Rating Watch Negative: --$45.4 million class G 'B'; --$18.2 million class H 'B-'. The removal of classes G and H from Rating Watch Negative is due to the full repayment of interest shortfalls. In April, the losses from liquidation of the Healthcare Capital portfolio (3.8%), a group of eight cross-collateralized, cross-defaulted health care loans, were passed through the trust, resulting in a 100% principal loss. However, a portion of the liquidation proceeds was used to repay the interest shortfalls on several classes. DEXTERITY SURGICAL: First Creditors' Meeting Fixed for May 20 ------------------------------------------------------------- The United States Trustee will convene a meeting of Dexterity Surgical, Inc.'s creditors at 10:00 a.m., on May 20, 2004 at Suite 3401, 515 Rusk Ave, Houston, Texas 77002. 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 Houston, Texas, Dexterity Surgical, Inc., is engaged in the distribution of instruments, equipment and surgical supplies, primarily used in hand-assisted laproscopic surgery. The Company filed for chapter 11 protection on April 19, 2004 (Bankr. S.D. Tex. Case No. 04-35817). Robert Andrew Black, Esq., at Fulbright & Jaworski represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $3,639,923 in total assets and $8,715,167 in total debts. DII INDUSTRIES: Asks Court to Approve RHI Holding Settlement Pact ----------------------------------------------------------------- Eric T. Moser, Esq., at Kirkpatrick & Lockhart, LLP, in Pittsburgh, Pennsylvania, relates that in 1967, Dresser Industries, Inc., merged with the company then known as Harbison- Walker Refractories Company. Dresser Industries operated the Harbison-Walker refractories business until July 31, 1992, when Dresser Industries contributed its Harbison-Walker refractories division and certain other assets to Indresco, Inc., and distributed the stock of Indresco to the Dresser Industries shareholders. In connection with the distribution, Indresco agreed to assume Dresser Industries' liability related to asbestos and silica claims filed on or after July 31, 1992. In October 1995, Indresco reorganized and changed its name to Harbison-Walker Refractories Company and created Global Industrial Technologies, Inc., to act as a holding company of Harbison-Walker. Harbison-Walker and DII Industries, an indirect subsidiary of Halliburton Company, continue to share insurance coverage for personal-injury and death claims related to alleged exposure to asbestos and silica contained in Harbison-Walker products or that of its predecessors, including Dresser Industries. On December 31, 1999, an indirect subsidiary of RHI AG merged with and into GIT, which at the time was a public company that owned Harbison-Walker along with other miscellaneous businesses and companies. After the merger, in September 2000, RHI Refractories Holding Company was created and became the sole shareholder of GIT. On February 14, 2002, Harbison-Walker, an indirect subsidiary of RHI Holding, and various of its affiliates sought bankruptcy protection before the Court to resolve escalating litigation related to personal injury claims allegedly arising from exposure to asbestos and silica. The February 14, 2002 Agreement (1) The RHI Holding Agreement Confronted with mounting asbestos and silica-related litigation, the Debtors and Halliburton began exploring options for a consensual resolution of tort liability issues in the first and second quarters of 2002. Initially, efforts to find a resolution focused on Harbison-Walker's Chapter 11 cases, Mr. Moser says. Before the commencement of the Harbison-Walker Bankruptcy Cases, and pursuant to a letter agreement dated February 14, 2002, DII Industries paid RHI Holding $40 million in connection with Harbison-Walker's bankruptcy filing. In addition, DII Industries agreed to pay RHI Holding $35 million under certain conditions relating to the establishment of a permanent channeling injunction under Sections 524(g) and 105 of the Bankruptcy Code in favor of DII Industries and its affiliates in Harbison- Walker's Chapter 11 cases. Pursuant to the RHI Holding Agreement, DII Industries also agreed to pay an additional $85 million if a plan including these provisions, acceptable to DII Industries in its sole discretion, was confirmed and became effective. On July 31, 2003, Harbison-Walker filed a reorganization plan. However, the Debtors contend that this plan was not acceptable to DII Industries and did not provide a permanent channeling injunction under Sections 524(g) and 105 of the Bankruptcy Code in favor of DII Industries and its affiliates as required by the RHI Holding Agreement. (2) The Texas Action As a result of the disputes related to the RHI Holding Agreement, on August 7, 2003, DII Industries filed a declaratory judgment lawsuit against RHI Holding in the 80th Judicial District Court of Harris County, Texas, styled: DII Industries, LLC v. RHI Refractories Holding Company, Cause No. 2003-43959. The Action sought a declaration from the District Court that DII Industries does not owe RHI Holding any amount under the RHI Holding Agreement. (3) The Pennsylvania Action On August 12, 2003, RHI Holding filed a lawsuit against DII Industries and its ultimate parent, Halliburton, in the Court of Common Pleas of Allegheny County, Pennsylvania, styled: RHI Refractories Holding Company v. Halliburton Company and DII Industries, LLC, Civil Action No. 03-15273. The Pennsylvania Action alleges breach of contract, anticipatory repudiation of contract, and misrepresentation. The Pennsylvania Action seeks damages against DII Industries and Halliburton in excess of $120 million. (4) Resolution of the RHI Litigation Since the filing of the Texas Action and the Pennsylvania Action, DII Industries and RHI Holding have negotiated on the litigation and have reached a global settlement regarding all claims and differences, including those in connection with the Texas Action, the Pennsylvania Action, the Disclosure Statement, the Plan, and the Reorganization Cases. The Settlement Agreement By this motion, the Debtors ask the Court to approve the Settlement Agreement between DII Industries and RHI Holding, which provides: (a) Payment to RHI Holding Subject to the approval of the Settlement Agreement, the confirmation of the Debtors' Plan, and the occurrence of the Plan Effective Date, DII Industries will pay $10,000,000 to RHI Holding. (b) Contributions to the Asbestos and the Silica PI Trusts At the same time as the DII Industries Payment, DII Industries will pay $950,000 to the Asbestos PI Trust and $50,000 to the Silica PI Trust on behalf of the RHI Entities. (c) Releases in Favor of DII Industries RHI Holding will dismiss with prejudice the Pennsylvania Action, and RHI Holding and RHI Finance ApS will release and discharge DII Industries and Halliburton from and against all manner of claims except for: (i) any trade receivables, ordinary-course contract claims, or claims arising in RHI Holding's ordinary course of business; and (ii) claims arising under the Settlement Agreement. (d) Releases in Favor of the RHI Entities DII Industries will dismiss with prejudice the Texas Action, and DII Industries will release and discharge RHI Holding, RHI Finance and RHI AG from and against all manner of claims, except for: (i) any trade receivables, ordinary-course contract claims, or claims arising in DII Industries' ordinary course of business; and (ii) claims arising under the Settlement Agreement. (e) Benefit of Permanent Channeling Injunction The Plan will be deemed modified to make the RHI Entities beneficiaries of the Permanent Channeling Injunction. This means that all claims against the RHI Entities that are based on the direct or indirect liability of a Halliburton Entity or a Harbison-Walker Entity for asbestos or silica-related personal injury claims will be channeled for treatment under the Asbestos PI Trust or the Silica PI Trust. (f) Amendments to Plan Documents The Plan and the Glossary will be deemed modified to provide that each of the RHI Entities will be included in the definitions of "GIT Affiliate" and "Harbison-Walker Protected Party" for purposes of the Permanent Channeling Injunction, notwithstanding any terms in the Plan, the Disclosure Statement, the Glossary, or any other Plan Document to the contrary; (g) Stay of RHI Litigation The Settlement Agreement provides for the stay of the RHI Litigation, including discovery with respect to the litigation, pending the Effective Date of the Plan that is consistent with the terms and provisions of the Settlement Agreement. (h) Termination If either: (1) an objection is filed against the Disclosure Statement or the Plan based on inclusion of the RHI Entities as beneficiaries of the Permanent Channeling Injunction or based on any term of the Settlement Agreement, which objection is not withdrawn or overruled after DII Industries and RHI Holding use their reasonable best efforts to accomplish a withdrawal or overruling of the objection; or (2) an appeal is taken from an order of the District Court confirming or affirming the Plan based on the inclusion of the RHI Entities as beneficiaries of the Permanent Channeling Injunction or based on any term of the Settlement Agreement, and that appeal is pending as of the 30th day after entry of the order approving the Settlement Agreement, notwithstanding the reasonable best efforts of DII Industries and RHI Holding to cause a withdrawal or dismissal of that appeal and the Effective Date has not yet occurred, either DII Industries or RHI Holding may terminate the Settlement Agreement upon a 15-day written notice. Mr. Moser contends that the terms of the Settlement Agreement are fair and reasonable because: * The Settlement Agreement resolves over $120 million in asserted claims against DII Industries through litigation that is sufficiently complex that it: (i) would be costly to all parties involved; (ii) could result in losses to DII Industries greater than the amount to be paid under the Settlement Agreement; and (iii) could potentially impact the price of Halliburton stock, which is a major component of the assets to be contributed under the Plan to the Asbestos PI Trust. * The Settlement Agreement will require DII Industries to make, on behalf of the RHI Entities, a $950,000 contribution to the Asbestos PI Trust and $50,000 to the Silica PI Trust, thus providing a direct benefit to Asbestos PI Trust Claimants and Silica PI Trust Claimants. * Approval of the Settlement Agreement will result in the full and final release of DII Industries from any existing or potential claim by RHI Holding. The resolution of the Pennsylvania Action will remove a potential cloud over the value of the 59.5 million shares of Halliburton stock to be contributed to the Asbestos PI Trust under the Plan, therefore providing an indirect benefit to Asbestos PI Trust Claimants. * The Settlement Agreement is the product of several months of intensive arm's-length negotiations between DII Industries and RHI Holding. The Debtors also ask the Court to approve the modification of the Plan as provided for in the Settlement Agreement. The Debtors point out that this would be a material modification, which would result in additional funds being made available to the Asbestos PI Trust and the Silica PI Trust, therefore benefiting the constituents of both trusts. According to Mr. Moser, resolicitation of votes on the Plan will be no longer be necessary to effect the non-material Plan modifications to be made pursuant to the Settlement Agreement. 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 LATIN: Mayer Brown Law Firm Wants $3MM+ Final Fee Payment ----------------------------------------------------------------- Mayer, Brown, Rowe & Maw, LLP, was employed by DirecTV Latin America, LLC, as its bankruptcy co-counsel. As bankruptcy co- counsel, Mayer Brown filed these prior fee applications: Fee Application Period Covered Fees Expenses Approved --------------- -------------- ---- -------- -------- First Interim March 2003 $78,654 $4,699 $67,622 Second Interim April 2003 234,342 18,115 205,589 Third Interim May 2003 267,362 19,323 233,213 Fourth Interim June 2003 212,437 31,450 201,399 Fifth Interim July 2003 341,759 26,511 299,918 Sixth Interim August 2003 386,089 61,419 370,290 Seventh Interim September 2003 268,166 55,055 269,587 Eighth Interim October 2003 282,177 35,886 261,627 Ninth Interim November 2003 304,261 25,467 268,875 Tenth Interim December 2003 153,915 17,157 140,258 Eleventh Interim January 2004 262,146 29,661 239,378 During the 12th fee period from February 1, 2004 through and including February 24, 2004, Mayer Brown advised and represented DirecTV in: * reviewing documents and related materials with respect to responding to discovery and related requests made by the Official Committee of Unsecured Creditors; * all matters relating to the administration of the complex Chapter 11 cases; * research negotiations with respect to the disposition and assumption of various unexpired North American and Latin American contracts; * miscellaneous claims matters including a review and analysis of claims filed; * all matters relating to the formulation and confirmation of the plan and disclosure statement; * participation in the February 13th hearing regarding the plan confirmation, approval of the settlement with Raven Media Investments, LLC, and related preparation; and * preparation of its fee applications, review and other professionals' fee applications. Mayer Brown spent 277.2 hours during the 12th fee period: Category Hours Total -------- ----- ----- Claims Administration 13.9 $8,022 Court Appearances 4.8 2,445 Corporate Matters 0.2 130 Leases and Executory Contracts 25.7 13,690 Plan and Disclosure Statement 105.5 52,815 Case Administration 4.6 2,068 Adversary Proceedings 82.1 38,119 Fee Applications 8.0 1,480 Non-working Travel Time 32.4 8,018 ------- --------- 277.2 $126,787 Mayer Brown incurred $15,369 in expenses during the 12th Fee Period: Disbursement Amount ------------ ------ Automated Practice Support $5,714 Business Meals 130 Document Delivery 39 Document Preparation 856 Duplicating 97 Facsimile Transmission 87 Lexis 92 Local Transportation 146 Other Disbursements 96 Outside Courier 11 Telephone 53 Transcripts 1,395 Travel - Airfare 3,593 Trawl - Other 2,204 Westlaw 857 In addition, for the final fee period from March 18, 2003 through and including February 24, 2004, Mayer Brown: * appeared on behalf of DirecTV at the First Day Hearings and related preparation; * provided advice on professional retention issues; * represented the Debtor in the establishment of the general bar date; * provided advice on various tax issues; * represented the Debtor in discussions and negotiations with the Creditors Committee addressing various creditor concerns; * provide advice on corporate matters and apprised the executive committee of pertinent case issues and developments; * represented the Debtor in negotiation and consummation of the DIP financing, including related amendments; * represented the Debtor in litigation and related matters regarding Raven issues; and * participated in hearings between March 18, 2003 and January 31, 2004, and related preparation. Mayer Brown worked a total of 8,421.8 hours during the Final Fee Period: Category Hours Total -------- ----- ----- Petition and 1st-Day Pleadings 27.5 $13,389 Corporate Matters and Schedules 57.6 30,890 Claims Administration 181.9 89,535 Court Appearances 36.9 20,049 Leases and Executory Contracts 456.5 211,034 Plan and Disclosure Statement 1,421.6 630,287 Case Administration 308.9 156,937 DIP Financing 172.6 85,385 Raven Document Review 1,051.4 326,728 Asset Disposition 20.2 8,395 Creditor Inquiries 26.8 14,340 Tax Matters 1.1 632 Adversary Proceedings 3,362.1 1,101,076 Fee Applications 136.1 29,034 Professional Retention 91.1 34,244 Non-working Travel Time 1,069.5 166,138 ------- --------- 8,421.8 $2,918,093 Mayer Brown's expenses for the Final Fee Period reached $340,112: Disbursement Amount ------------ ------ Automated Practice Support $72,836 Automated Research 811 Business Meals 19,428 Document Binding 8 Document Delivery 2,194 Document Preparation 9,544 Duplicating 2,902 Duplicating - Outside 3,882 Facsimile Transmission 1,123 Lexis 4,284 Local Transportation 736 Mailing Charges 32 Other Disbursements 1,087 Outside Courier 5,111 Professional Services 420 Proofreading 450 Supplies 7 Telephone 731 Transcripts 2,013 Travel - Airfare 82,776 Travel - Other 79,169 Westlaw 50,567 Accordingly, Mayer Brown asks the Court to grant it: (a) interim allowance for $126,787 as compensation for necessary professional services rendered to DirecTV during the 12th Fee Period; (b) interim allowance for $15,369 for reimbursement of actual necessary costs and expenses incurred during the 12th Fee Period; (c) final allowance for $2,918,093 as compensation for necessary professional services rendered to DirecTV during the Final Fee Period; and (d) final allowance for $340,112 as reimbursement of actual necessary costs and expenses incurred during the Final Fee Period. Mayer Brown further asks Judge Walsh to authorize and direct DirecTV to pay the remaining unpaid balance of fees and expense reimbursement for services rendered. (DirecTV Latin America Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) DISTRIBUTION DYNAMICS: Case Summary & 20 Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Distribution Dynamics, Inc. aka Beaver Bolt Inc. aka C-Tech aka Century Fasteners Acquisition Corporation aka Century Fasteners, Inc. 6450 Carlson Drive Eden Prairie, Minnesota 55346 Bankruptcy Case No.: 04-32489 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Distribution Dynamics Holdings Inc. 04-32490 Northwestern Company 04-32491 Pro Fasteners 04-32492 Rainbow Fastener Company 04-32493 Type of Business: The Debtor helps companies improve bottom-line results by providing fasteners and Class 'C' commodities. See http://www.distributiondynamics.com/ Chapter 11 Petition Date: April 26, 2004 Court: District of Minnesota (St. Paul) Judge: Dennis D. O'Brien Debtors' Counsel: Mark J. Kalla, Esq. Dorsey & Whitney LLP 50 South 6th Street, Suite 1500 Minneapolis, MN 55402-1498 Tel: 612-340-2600 Estimated Assets Estimated Debts ---------------- --------------- Distribution Dynamics, Inc. $10 M to $50 M $50 M to $100 M Distribution Dynamics $0 to $50,000 $10 M to $50 M Holdings Inc. Northwestern Company $0 to $50,000 $10 M to $50 M Pro Fasteners $0 to $50,000 $10 M to $50 M Rainbow Fastener Company $0 to $50,000 $10 M to $50 M Debtors' Consolidated List of 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Camcar/Textron Trade $587,014 P.O. Box 71191 Chicago, IL 60694 Porteous Fasteners Trade $577,303 1040 Watson Center Drive Carson, CA 90746 Manten Corp. Trade $379,188 869 Sandhill Ave Carson, CA 90746 Morris Anderson and Assoc. Services $166,982 Matenaer Corp. Trade $120,225 Eisner LLP Services $115,475 Safety Socket Screw Corp. Trade $109,196 Brighton Best Socket Mfg. Co Trade $107,862 Brynolf Mfg. Trade $103,447 SPS Technologies/Unbrako Trade $87,438 HTI Trade $84,913 Kanebridge Corporation Trade $84,265 Ellsworth Adhesive Systems Trade $81,256 Superior Washer & Gasket Trade $79,090 Corp. Advance Components, Inc. Trade $78,134 Brokerage Concepts, Inc. Trade $65,157 Miller Bearing Company, Inc. Trade $64,667 Lindstrom Metric, Inc. Trade $62,466 Rotor Clip Inc. Trade $59,996 Centerpoint Properties Trust Trade $57,736 DT INDUSTRIES: Ex-Auditor PwC Airs Doubt in Going Concern Ability ----------------------------------------------------------------- On March 22, 2004, the Audit Committee of the Board of Directors of DT Industries, Inc. dismissed PricewaterhouseCoopers LLP as the Company's independent public accountants and engaged Grant Thornton LLP to serve as the Company's independent public accountants for fiscal year 2004. The report issued by PwC in connection with the Company's financial statements for the fiscal year ended June 29, 2003 included (1) an explanatory paragraph that contained a reference to substantial doubt regarding the Company's ability to continue as a going concern and (2) an explanatory paragraph stating that the Company restated its consolidated financial statements for the fiscal year ended June 30, 2002. In connection with the fiscal years ended June 30, 2002 and June 29, 2003, and the period from June 30, 2003 through March 22, 2004, there were no "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K, except as follows: in connection with its audit for the fiscal year ended June 30, 2002, PwC informed the Company that "material weaknesses" (as that term is defined by the AICPA) in internal controls were identified at the Company's Erie, Pennsylvania operations. The weaknesses identified by PwC were primarily in the location's contract accounting processes, including not using actual operating data for certain projects to recognize revenues and costs in the financial statements, the lack of supporting documentation for reconciling items contained in account reconciliations and manufacturing variances not being appropriately captured, analyzed or recorded in the financial statements. PwC also identified that the control environment was weakened by the Erie controller also functioning as the general manager, and by staffing limitations at the corporate level, which hampered the effectiveness of corporate oversight. As a result of the above and as previously reported in its SEC filings, during fiscal 2002, the Company restated its previously reported audited consolidated financial results for fiscal 2001, 2000 and 1999, as well as its unaudited consolidated financial results for the first three quarters of fiscal 2002. The Company took actions to address these control deficiencies at its Erie operation, which was subsequently closed during fiscal 2003. In connection with their audit for the year ended June 30, 2003, PwC informed the Company that a "reportable condition" (as that term is defined by the AICPA) existed with respect to the accounting for the UK pension plan. The reportable condition resulted from the Company not using data or a curtailment loss contained in an actuarial report to record annual pension costs in the Company's audited consolidated financial statements for fiscal 2002. However, the notes to the Company's audited consolidated financial statements for fiscal 2002 reflected data and a curtailment loss contained in the actuarial report. As a result, during fiscal 2003 and as previously reported in its SEC filings, the Company made accounting adjustments to its previously reported audited consolidated financial results for fiscal 2002 to record pension expense in accordance with the 2002 actuarial report. In connection with their review for the fiscal quarter ended December 28, 2003, PwC informed the Company that the Company did not identify the need to separately test goodwill for impairment prior to classifying the Packaging Systems segment account balances as held for sale. As a result and as previously reported in its SEC filings, the Company restated its unaudited consolidated financial statements for the three and six months ended December 28, 2003. PwC informed the Company that the above noted issue with goodwill impairment testing, combined with the pension accounting issue that constituted a reportable condition, collectively constitute a material weakness. The Company's management and audit committee are assessing the technical expertise and resources in the Company's accounting and internal audit areas to address complex accounting issues and will take such steps as are appropriate to address any deficiencies. The audit committee was informed by PwC of the control deficiencies described above and discussed the Erie operations and pension accounting control deficiencies with PwC. The Company has authorized PwC to respond fully to the inquiries of Grant Thornton LLP concerning the control deficiencies described above. DVI INC: Claims Bar Date Moved to May 10, 2004 ---------------------------------------------- On April 1, 2004, the U.S. Bankruptcy Court for the District of Delaware entered an order extending the deadline for creditors to file proofs of claim against DVI, Inc., and its debtor-affiliates arising before August 25, 2003. The Court has set May 10, 2004 as the deadline. Proof of claim forms must be delivered to: By Special Delivery or By U.S. Mail: Overnight Mail: ------------- ---------------------- DVI Claims Processing DVI Claims Processing P.O. Box 5069 c/o Bankruptcy Services, LLC FDR Station 757 Third Avenue, 3rd Floor New York, NY 10150-5069 New York, NY 10017-2013 A copy of Official Bankruptcy Form No. 10 can be obtained at http://www.deb.uscourts.gov/Forms/b10.pdf You need not file a proof of claim if your claim is: (1) listed in the Debtor's Schedule (2) already filed with the Court (3) from a debtor having a claim against another debtor (4) an administrative expense claim (5) arising out of an equity interest in the Debtors Copies of the Debtor's Schedules are available at the Office of the Clerk of Court. DVI, Inc., the parent company of DVI Financial Services, Inc., DVI Business Credit Corp., and DVI Financial Services, Inc., provides lease or loan financing to healthcare providers for the acquisition or lease of sophisticated medical equipment. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. Del. Lead Case No.: 03-12656) on August 25, 2003 before the Honorable Mary F. Walrath. Bradford J. Sandler, Esq. of Adelman Lavine Gold and Levin, PC represents the debtors in their restructuring efforts. ENRON CORPORATION: Taylor, et al., Retain Blank Rome as Counsel --------------------------------------------------------------- As a result of Mitchell Taylor's, Steve Hirsch's and Jane Tholt's current or previous positions with the Enron Corporation Debtors, various governmental agencies have requested interviews to discuss certain issues related to the Debtors' practices. Mr. Taylor, et al., sought legal representation from Swidler Berlin Shereff Friedman, LLP, the Special Employees' counsel. However, Edward J. Lobello, Esq., at Blank Rome, LLP, in New York, informs the Court that Swidler indicated that it was unable to represent Mr. Taylor, et al., and recommended that they retain separate counsel. Mr. Taylor, et al., promptly sought the representation of Jane F. Barrett, Esq., a partner at Blank Rome, LLP, under the terms of the Engagement Agreements the employees individually entered into with Blank Rome. In accordance with the Engagement Agreements, Blank Rome will serve as the three Employees' counsel in all matters for which legal counsel is required in connection with the ongoing Investigations. Blank Rome's current customary hourly rates are: Partners and Counsel $225 - $625 Associates 185 - 380 Paraprofessionals 107 - 238 Blank Rome will also seek reimbursement of any out-of-pocket expenses incurred. According to Ms. Barrett, Blank Rome and its attorneys do not hold or represent an interest adverse to the Debtors or their estates with respect to the matters on which the firm is to be retained, except that certain attorneys may hold, or may have held, a relatively insignificant number of shares of common or preferred stock of Enron Corporation. To the extent that Blank Rome are also being retained by other creditors in the Debtors' cases, Ms. Barrett informs the Court that Blank Rome will "erect a screen" between (a) those attorneys representing the three Employees and (b) those attorneys representing creditors and other parties who have contractual relationships with the Debtors. Those attorneys who represent creditors and other parties-in- interest with the Debtors will have no exposure to any aspect of the representation of Mr. Taylor, et al. Accordingly, Mr. Taylor, Mr. Hirsch and Ms. Tholt ask the Court to authorize the Debtors to retain Blank Rome to represent them, nunc pro tunc to September 29, 2003 until the Investigations are completed. * * * Judge Gonzalez approves the retention of Blank Rome as counsel for Mitchell Taylor, nunc pro tunc to September 29, 2003. The Court will consider the Application as it pertains to Mr. Hirsch and Ms. Tholt at a later date. (Enron Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) EPOCH 2001-1: S&P Affirms Ratings and Removes CreditWatch --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on EPOCH 2001-1 Ltd.'s class I, II, and III tranches of secured floating- rate notes due Aug. 15, 2006, and removed them from CreditWatch where they were placed April 23, 2004. The ratings reflect the credit quality of the reference credits, the level of credit enhancement provided by subordination, and EPOCH 2001-1's ability to meet its payment obligations as issuer of the secured notes. Ratings Affirmed And Removed From Creditwatch EPOCH 2001-1 Ltd. Class Rating To From I A A/Watch Neg II BB BB/Watch Neg III CCC CCC/Watch Neg FALCON HOSPITALITY: Case Summary & 4 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Falcon Hospitality Development, LLC 24 Highland Creek Drive Henderson, Nevada 89051 Bankruptcy Case No.: 04-14601 Chapter 11 Petition Date: April 28, 2004 Court: District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Zachariah Larson, Esq. Larson Law Firm LLC 601 South Sixth Street Las Vegas, NV 89101 Tel: 702-385-7444 Total Assets: $11,108,000 Total Debts: $8,340,000 Debtor's 4 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Veslin Mortgage Secured claims $6,700,000 2901 El Camino Ave. Las Vegas, NV 89102 Abco Leasing Secured claims $500,000 Gothell, WA First Corp Secured claims $100,000 Black Mountain Community Secured claims $40,000 Bank FEDERAL-MOGUL: Files Second Amended Reorganization Plan ------------------------------------------------------- On April 22, 2004, Federal-Mogul Corporation, together with the Unsecured Creditors Committee, Asbestos Claimants Committee, Equity Security Holders Committee, the Legal Representative for Future Asbestos Related Claimants, and JPMorgan Chase Bank as Administrative Agent for the Debtors' prepetition lenders, delivered to the Court their Second Amended Joint Plan and Disclosure Statement. A free copy of Federal-Mogul's Second Amended Plan and Disclosure Statement is available at: http://bankrupt.com/misc/disclosure_statement_and_second_amended_plan.pdf Federal-Mogul's Second Amended Plan and Disclosure Statement includes these modifications: A. The DIP Facility In accordance with the adequate protection provisions in the Final Order approving the DIP Facility, the Debtors have made quarterly cash payments to the Collateral Trustee for $2,649,331, in satisfaction of the Cash Guaranteed Component. The Debtors have additionally elected to grant each quarter an administrative expense claim in the amount of one percent per annum of the Debtors' outstanding note debt on account of the Cash Optional Component, consistent with the Debtors' ability to so elect under the Final DIP Facility Order. The administrative expense claim each quarter is $5,298,662. The payment commenced on January 15, 2002 pursuant to Section 507(b) of the Bankruptcy Code. Thus, the cumulative amount of the Section 507(b) Claims as of April 15, 2004 is $52,986,625. Pursuant to the terms of the Plan, all adequate protection payments inured in favor of the Collateral Trustee for the benefit of the holders of the New Debt will be treated as administrative expense claims. Accordingly, if not challenged, the administrative expense claims will be paid in full in Cash on the Distribution Date. B. U.S. Debtors Environmental Obligations As of April 22, 2004, 100 Environmental Claims aggregating $252 million have been filed against the Debtors. The Debtors believe that $6 million of the $252 million in total Environmental Claims filed are On-Site Environmental Claims. Environmental Claims relate to sites currently owned by the Debtors and envisioned to be owned by the Debtors after the Plan confirmation. On-Site Environmental Claims are unimpaired under the Plan and will continue to be capable of being asserted against the Reorganized Debtors. On-Site Environmental Claims excludes Environmental Claims that relate to wastes shipped offsite prior to the date of petition for disposal from currently owned facilities because those Claims are not intended to be unimpaired under the Plan, but rather will be addressed under the Plan as Off-Site Environmental Claims. The Debtors also have other environmental liabilities relating to their currently-owned U.S. facilities which were not the subject of Claims filed in the Debtors' cases. The Debtors' current best estimate of known probable and estimable environmental liabilities relating to their currently owned U.S. sites, including those sites which are the subject of the $6 million of On-Site Environmental Claims, is $22 million. The remainder and vast majority of the Environmental Claims filed are Off-Site Environmental Claims, arising from alleged contamination at sites the Debtors formerly owned or sites owned by third parties at which the Debtors arranged for the disposal of waste materials. The Debtors believe that the number and Allowed Amount of Environmental Claims asserted against them will ultimately be significantly less than the asserted number and amount of the Claims for several reasons: (a) Environmental Claims amounting to $172 million appear to be duplicative or unsubstantiated, or have been withdrawn, amended or superseded by other claims. The Debtors expect that the Environmental Claims will be disallowed or resolved by stipulation or order, to the extent not otherwise withdrawn by the claimants; and (b) The Debtors have reached tentative agreements with parties asserting $20 million in face amount of Environmental Claims to reduce the Allowed Amount of those claims to $260,000 in the aggregate. Accordingly, the Debtors believe that objection or agreement in the Chapter 11 Cases will disallow $192 million of the Environmental Claims. Of the remainder, $6 million will be unimpaired under the Plan and hence will continue to be capable of assertion against the Reorganized Debtors. In addition, the Debtors' preliminary analyses indicate that $9 million in Environmental Claims are properly asserted against the Debtors and should be allowed. The Debtors are continuing to review and attempt to resolve the remaining $45 million in Environmental Claims. C. Schemes of Arrangement and Company Voluntary Arrangements Involving U.K. Debtors The U.K. Debtors are subject to simultaneous corresponding insolvency proceedings in each country. The U.K. Debtors intend to emerge from their Chapter 11 cases by means of the Plan. To facilitate the U.K. Debtors' emergence from their administration proceedings in the U.K., the Plan Proponents have prepared forms of Schemes of Arrangement and Company Voluntary Arrangements for certain of the U.K. Debtors. The Schemes and Voluntary Arrangements track the Plan in all material respects. Under English and Scottish law, however, the Administrators are the only persons with authority to recommend and submit Schemes of Arrangement or Voluntary Arrangements. The Administrators have not agreed to recommend the Schemes of Arrangement and Voluntary Arrangements that parallel the Plan. The Plan Proponents are working toward an agreement with the Administrators to recommend parallel Schemes of Arrangement and Voluntary Arrangements. In the event the Administrators propose the Schemes of Arrangement and Voluntary Arrangements, the Administrators and the Plan Proponents will seek approval of the Schemes of Arrangement in accordance with English or Scottish insolvency laws. Alternatively, if the Administrators do not propose, or in the opinion of the Plan Proponents are unlikely to propose, the Schemes, the Plan Proponents will work toward an agreement with the Administrators: -- to retain the businesses of those U.K. Debtors that are valuable to Federal-Mogul and its customers; and -- to jointly market those U.K. businesses that are not valuable to Federal-Mogul and its customers. This process is similar to what Federal-Mogul has been doing for several years now as it integrates the acquisitions that it has accomplished over the last several years. Only if neither agreement can be achieved will the Plan Proponents go forward with certain procedures to direct the Administrators to: (a) propose the Schemes of Arrangement and Voluntary Arrangements and summon meetings of creditors and members of the U.K. Debtors to consider and vote on the Schemes of Arrangement and Voluntary Arrangements; or (b) seek the discharge of the current U.K. administration orders so the Schemes of Arrangement or Voluntary Arrangements can be proposed by the U.K. Debtors. As part of this process, meetings of creditors will be convened under applicable English or Scottish insolvency law pursuant to the demands of creditors. Alternatively, the U.K. Debtors and the other Plan Proponents may ask the U.K. Court to approve the Plan with respect to the U.K. Debtors as a matter of comity. The Confirmation of the Plan is not conditioned by the sanctioning of the Schemes by the U.K. Court or the approval of each Voluntary Arrangement. However, the Plan will not be effective if the U.K. Court has not sanctioned the applicable Schemes and the conditions that relate to Voluntary Arrangements have not been fulfilled, subject to the Plan Proponents' right to waive this requirement as the Plan provides. Nothing in the Plan will prejudice or affect any U.K. Debtor's right to seek to have the administration order relating to that U.K. debtor discharged, or U.K. Debtor's right to have the Confirmation Order recognized as a matter of comity by the U.K. Court. D. Marketing Procedures for the U.K. Debtors If neither agreement to retain or to jointly market the U.K. Debtors' businesses can be achieved, the Plan Proponents will direct the Administrators to recommend and submit the Schemes of Arrangement and Voluntary Arrangements or discharge the U.K. Administration orders. If the directions are not effective, then Federal-Mogul will bid for the businesses of those U.K. Debtors that are valuable to Federal-Mogul and its customers. Any actual or deemed transfer of assets to Federal-Mogul in connection therewith will be entitled to the benefits of and protections of the Injunctions and other provisions of the Plan, including the injunction to be issued by the Bankruptcy Court pursuant to Section 524(g) of the Bankruptcy Code. If Federal-Mogul Corporation is not the successful bidder for the businesses, the Injunctions and other protective provisions of the Plan will not apply to the transfer of any assets to any entity other than Federal-Mogul Corporation or its designee. The Plan Proponents believe that Federal-Mogul Corporation will be the successful bidder for those assets that are valuable to the Debtors and their customers. Any remaining assets will be liquidated. The Plan Proponents believe that a non-consensual process with the Administrators is not in the best interest of the creditors of the U.K. Debtors, including pension creditors and employees of the U.K. Debtors, and that the Administrators' refusal to agree could be very damaging to the interests of the parties. E. Issuance of the Reorganized F-M Warrants Reorganized Federal-Mogul will issue 6,951,871 Warrants, representing the right to purchase 6,951,871 shares of Reorganized Federal-Mogul Class A Common Stock on the Effective Date if: -- the Classes of Noteholder Claims and Asbestos Personal Injury Claims have both accepted the Plan; and -- at least one of the Classes of preferred stock interests, Subordinated Securities Claims or common stock interests has also voted to accept the Plan. Concurrently with the issuance, Reorganized Federal-Mogul will distribute the warrants to the Disbursing Agent for distribution consistent with the terms and provisions of the Plan. The Disbursing Agent will not be entitled to exercise any of the Warrants. If the Bankruptcy Court or the District Court rules that the Plan is not confirmable due to the gifting, issuance or distribution of the Warrants, then no Warrants will be issued or distributed. The Classes of preferred stock interests, Subordinated Securities Claims and common stock interests will then receive no distribution under the Plan. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEMONE INC: Former Auditors Express Going Concern Uncertainty ------------------------------------------------------------- On February 17, 2004, the Board of Directors of FemOne, Inc., terminated Dohan and Company, CPA's P.A., as its independent auditors. The decision to terminate the Company's relationship with Dohan did not involve a dispute with the Company over accounting policies or practices. The independent auditors' reports provided by Dohan on the Company's financial statements for the years ended June 30, 2003 and June 30, 2002 contained an unqualified opinion; they were modified as to uncertainty regarding the Company's ability to continue as a going concern. On February 23, 2004, the Company engaged Amisano Hanson, Chartered Accountants, as independent accountants for the year ended December 31, 2003. On March 17, 2004, FemOne terminated the engagement with Amisano Hanson. The decision to terminate the Company's relationship with Amisano Hanson did not involve a dispute with the Company over accounting policies or practices. The decision was due to a notice provided to the Company by Amisano Hanson concerning their eligibility to render opinions on financial statements of U.S. companies. Amisano Hanson was engaged on February 23, 2004 and had not commenced the review of the Company's financial statements. On March 17, 2004, FemOne engaged Peterson & Co., LLP, Certified Public Accountants, as its new independent accountants for the year ended December 31, 2003. FLEMING: Wants to Assume Sublease for Miami Warehouse Property -------------------------------------------------------------- Fleming Companies, Inc. seeks the Court's authority to: (1) assume and assign a sublease agreement for a warehouse property located at 3555 North West 77th Avenue in Miami, Florida; and (2) reject the prime lease for a warehouse property located at 2400 North West 74th Avenue, in Miami. In July 1973, G. R. Warehouse Company, Ltd., as landlord, signed a lease agreement with The Grand Union Company, as tenant, for the 77th Avenue Warehouse. In November 1974, David Minkin purchased the 77th Avenue Warehouse and became the landlord under the Ground Lease. The fee titleholders of record are: * Patricia M. Lester, * Peter L. Briger, * Paul H. Briger, * The Elias Thall Family Partnership, a Florida general partnership, and * David Minkin, Trustee of the David Minkin Florida Realty Trust dated December 12, 1996 The Grand Union Company subsequently assigned its right, title, duties and interest as tenant under the Ground Lease to Malone and Hyde, Inc. Under the Malone Assignment, Grand Union did not retain any reversionary interest in the Miami Foodco Warehouse. The Malone Assignment released Grand Union from responsibility for any and all obligations owed by the tenant under the Ground Lease, including the payment of rent to the Minkin Group. In 1994, Malone merged into Fleming Companies, Inc. As a result, Fleming acquired Malone's tenancy interest under the Ground Lease. In June 2002, Fleming assigned its right, title, duties and interest as tenant in the Ground Lease to Miami Foodco Investors, LLC, and sublet the premises back. Fleming also sold the 74th Avenue Warehouse to Miami Foodco and leased the premises back. Subsequently, Miami Foodco assigned all its right, title, duties and interest as landlord under the 74th Avenue Lease to PRIM Fleming Warehouse, LLC. The Cross-Default The Miami Foodco Sublease includes a cross-default provision, which provides that "the term of this Sublease shall automatically expire upon the expiration or sooner termination of the [PRIM] Lease" and a provision incorporating the PRIM Lease by reference. The Debtors ask that the Court invalidate the cross-default and incorporation of the PRIM Lease by reference provisions in the Miami Foodco Sublease, and find that the rejection of the PRIM Lease neither constitutes a default under the Miami Foodco Sublease or the Ground Lease, nor terminates the Miami Foodco Sublease. $5,000,000 at Issue In connection with the C&S Purchase Agreement, the Purchase Agreement provides for the assumption and assignment of some, and the rejection of other, unexpired commercial property leases, including the Miami Foodco Sublease and the PRIM Lease. The assumption and assignment of the Miami Foodco Sublease is a material economic component of the Purchase Agreement with C&S Acquisition, LLC. In the event the Miami Foodco Sublease cannot be assumed and assigned, C&S is permitted to reduce the purchase price by $5,000,000. In connection with the Purchase Agreement, on August 21, 2003, the Debtors filed a Notice to assume and assign the Miami Foodco Sublease to Associated Grocers of Florida, C&S' designee. The Debtors believe that the Minkin Group has waived any objection to the proposed assumption and rejection by accepting rent. Nonetheless, given the Debtors' desire to couple the assumption and assignment of the Miami Foodco Sublease and the rejection of the PRIM Lease together, and out of an abundance of caution and to maintain maximum transparency, the Debtors seek the Court's authority to assume the Miami Foodco Sublease despite the prior Notice of Assumption and Assignment. Miami Foodco Objection Miami Foodco Investors, LLC, objected to the Debtors' request regarding the "cross-default" provisions in its Sublease with Fleming. The Court held an evidentiary hearing on October 2, 2003, with respect to the dispute. The Debtors later announced that they had settled the dispute with Miami Foodco. The Settlement The Debtors indicated that the proposed transaction had been changed in a fundamental way. The Debtors now propose to receive a postpetition assignment of the Ground Lease from Miami Foodco, on a date to be determined in the future, and to subsequently execute a further assignment of the ground lease to Associated Grocers: "At the closing of the transaction for the assumption and assignment, Miami Foodco will assign to the debtor its interest in the ground lease, and then the debtor will assign that interest to Associated Grocers of Florida. Thus, we [Fleming] are eliminating the aspect of the motion which is the assumption and assignment of the sublease, because we're now back in the ground lease tenant position." Minkin Group Disagrees The Minkin Group tells the Court that Miami Foodco is currently a tenant at will with respect to the Miami Foodco Warehouse because Grand Union's purported assignment of the lease violates the Florida Statute of Frauds, and is ineffective. William D. Sullivan, Esq., at Elzufon Austin Reardon Tarlov & Mondell, PA, in Wilmington, Delaware, explains that Miami Foodco must hold a proper and valid assignment of the lease before it can assign it to Fleming, or any other party. Unfortunately, by operation of Florida's statute of frauds, Miami Foodco did not receive a valid assignment of the Ground Lease from Fleming in June 2002. While the assignment agreement between Fleming and Miami Foodco complies with the statute of frauds, the prior attempted assignment between Grand Union and Malone & Hyde does not, in that Miami Foodco only received the interest in the property which Fleming acquired through its acquisition of Malone -- a tenancy at will. Grand Union purported to assign the ground lease to Malone in 1978. However, the purported assignment was not in recordable form, in violation of the Ground Lease and in violation of the Florida Statute of Frauds. The Florida Statute of Frauds requires that an instrument purporting to transfer an interest in land of greater than one-year duration must be in writing and attested by two witnesses, or alternatively, signed by an officer and affixed with the corporate seal. According to Mr. Sullivan, Grand Union's signature is only witnessed by one party. Moreover, the purported assignment neither indicates that it was signed by an officer nor is it affixed with the corporate seal. Likewise, the words "seal" or "corporate seal" do not appear after any signature. The failure to comply with the Florida Statute of Frauds prevents the proposed assignment from being used in Court, and it destroys privity of estate between the landlord and the purported assignee. Absent privity of estate, Mr. Sullivan tells Judge Walrath that the landlord is powerless to enforce any remedies against the subsequent assignees. Hence, each subsequent assignee would be treated as having a sublease or tenancy at will in any legal proceeding. Under these circumstances, the Minkin Group's only remedy is against Grand Union, the original tenant. Unfortunately, Grand Union rejected its obligations under the Ground Lease in October 2002. Thus, the Minkin Group has no remedy at law with respect to any lease violations, other than eviction of the sublessee or tenant at will for non-payment of rent. The violation of the Statute of Frauds mandates a finding that: (1) Miami Foodco presently has a tenancy at will with respect to the property, which cannot be assigned to Fleming or any other party; and (2) the ground lease was rejected by Grand Union in October 2002. Mr. Sullivan relates that in Florida First National Bank of Jacksonville v. Dent, 350 So. 2d 481, 483 (Fla. App. 1977), the bank sought to enforce the tenant obligations under a purported lease document with the bank as landlord. The defendants challenged the execution of the lease by the bank, thereby challenging the validity of the purported lease. The trial court excluded the document as inadmissible under Florida's statute of frauds, in that it was neither signed on behalf of the bank by an agent in the presence of two subscribing witnesses, nor signed by an officer. Without the lease document as evidence, the trial court granted a directed verdict in favor of the defendants. Florida's Appellate Court concurred in the inadmissibility of the lease document under the Florida Statute of Frauds. "Malone & Hyde occupied the premises as tenants at will, month to month, based on its monthly payment of rent due. When Fleming, as the successor to Malone & Hyde, assigned its interest in the property to Miami Foodco, Miami Foodco likewise became a month- to-month tenant at will," Mr. Sullivan says. Grand Union filed for bankruptcy in the U.S. Bankruptcy Court for District of New Jersey on October 3, 2000. On October 8, 2002, Grand Union's bankruptcy plan was confirmed with a provision that all executory contracts that had not specifically been assumed were deemed rejected. Mr. Sullivan relates that the Minkin Group received no notice from Grand Union concerning its bankruptcy or notice that Grand Union had assumed its obligations under the Ground Lease. Additionally, Fleming has not alleged that it took any action in the Grand Union bankruptcy to protect its interest in the Ground Lease. Accordingly, Grand Union rejected the Ground Lease effective October 8, 2002, rendering Miami Foodco's subtenancy and the Miami Foodco Sublease non-assignable. Even if the Grand Union rejection did not automatically give rise to a termination of the Ground Lease, the rejection amounts to a continuing breach of the Ground Lease, pursuant to Section 365(g) of the Bankruptcy Code. Section 365(g) plainly states that "the rejection of an executory contract or unexpired lease of the debtor constitutes a breach of such contract or lease." Mr. Sullivan asserts that the breach is incurable, since, even if Associated Grocers provides adequate assurance of future performance to justify an assignment governed by Section 365(b)(1)(C), Associated Grocers can only receive an assignment of the interest currently held by Miami Foodco. Since Miami Foodco does not have a valid assignment of the Ground Lease, the Minkin Group will have no privity of estate with Associated Grocers and no enforceable rights against Associated Grocers. Under these circumstances, the Minkin Group has no basis to enforce any of the lease provisions, other than to evict Associated Grocers for non-payment of rent. Moreover, given that its enforcement rights against Grand Union -- the original tenant and the only party in privity with the Minkin Group -- remain in breach, the assignment of the Ground Lease is prohibited pursuant to Section 365(b)(1)(A). Mr. Sullivan also contends that the Debtors cannot eliminate the Minkin Group's termination rights against Grand Union. The Minkin Group retains a specific right to terminate the Ground Lease even if Fleming or Miami Foodco's interest in the Ground Lease is assignable to Associated Grocers. Specifically, the Ground Lease provides that the Minkin Group may exercise its termination rights upon the filing of a petition in bankruptcy by or against Grand Union, or the adjudication of Grand Union as insolvent. The Section 365(e) provision relating to ipso facto clauses provides no help to the Debtors, Associated Grocers or Miami Foodco. Mr. Sullivan further argues that Miami Foodco's proposed assignment of its interest in the premises to the Debtors is not made pursuant to the provisions of Section 365, as Section 365 only applies to prepetition leases. Similarly, any further assignment of an interest acquired by Fleming is not governed by Section 365. Thus, the approval of the assignment of Miami Foodco's interest in the premises hinges simply on a review of the Debtors' exercise of their business judgment. Given that Section 365 does not apply to the proposed assignment from Miami Foodco to Fleming, or to Fleming's proposed subsequent assignment to Associated Grocers, the Court has no basis on which to review or comment on the existing defaults under the lease. The Minkin Group has identified various breaches of the lease, including: (a) Grand Union's rejection of the Ground Lease in its bankruptcy proceedings in October 2002; (b) Fleming's breach of the lease by assigning it to Miami Foodco as an additional guaranty for its obligations pursuant to its sale of the adjacent property, the Dry Goods Warehouse, in June 20024; and (c) Miami Foodco's or Fleming's breach of the lease by failing to provide insurance coverage as required under the Ground Lease. Each of these breaches is, or has been, a basis for termination of the lease, and the proposed assignment from Miami Foodco cannot operate as a cure of any existing defaults. The cure of defaults under the assignment of a lease interest is governed by Section 365(b)(1), which, in the context of the transaction proposed by Fleming, the Court has no power to invoke. The proposed assignment of the Ground Lease from Miami Foodco to Fleming is also not permissible, as it would constitute an immediate default under the lease. The Ground Lease contains the Minkin Group's remedies in the event of default, as it provides that the filing of a bankruptcy petition gives it an immediate right to give the appropriate notice of termination. Fleming's Chapter 11 bankruptcy is an act of default, which is not cured by any provisions of the Bankruptcy Code, including Section 365, as Section 365 is applicable only to prepetition leases. Even if Section 365(e)'s prohibition on the invocation of ipso facto clauses is held applicable to the Debtors' postpetition acquisition of Miami Foodco's interests in the lease -- so long as the Debtors retain the interest -- the subsequent assignment of Fleming's interest in the lease to Associated Grocers is not governed by Section 365. Unless Fleming remains liable for all of the obligations of Associated Grocers beyond the Chapter 11 process, the lease obligation requiring an assigning tenant to remain liable for the performance of all lease obligations will be irreparably breached. This may have the effect of temporarily staying the Minkin Group's default remedies under the lease, but does not eliminate them. For all these reasons, the Minkin Group asks the Court to deny the assignment of either the Miami Foodco Sublease or Miami Foodco's interest in the Ground Lease to the Debtors or Associated Grocers. 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) GENERAL ROOFING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: General Roofing Services, Inc. 3323 West Commercial Boulevard, Suite 200 Fort Lauderdale, Florida 33309 Bankruptcy Case No.: 04-35122 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- CEI Roofing, Inc. 04-35113 Anthony Roofing, Ltd. 04-35125 Avon Roof Services, Inc. 04-35130 B&R Roofing Company 04-35134 Blackmore and Buckner Roofing, Inc. 04-35139 C.E.I. Florida, Inc. 04-35142 CEI West Roofing Company, Inc. 04-35144 Cyclone Roofing Company 04-35145 Dakota Leasing, Inc. 04-35148 General Roofing Acquisition Corp. 04-35150 GeneralRoofing National Services, Inc. 04-35151 GRI of South Florida, Inc. 04-35152 GRI of West Florida, Inc. 04-35153 GRS Vendor Relations, Inc. 04-35156 Harrington-Scanlon Roofing Company, Inc. 04-35157 Roofers, Incorporated 04-35158 S&B Roofing Services, Inc. 04-35159 Specialty Associates, Inc. 04-35160 Therrel-Kizer Roofing, Inc. 04-35161 Tuckahoe Metal & Roofing, Inc. 04-35162 Top Concepts, Inc. 04-35163 United Roofing & Construction, Inc. 04-35164 Wright-Brown Roofing Company 04-35165 Register Contracting Company, Inc. 04-35166 RoofCare Construction Services, Inc. 04-35168 RoofCare, Inc. 04-35169 SAI Wholesale Distributors, Inc. 04-35170 Type of Business: The Debtor offers complete commercial roofing services, including new roof installation, inspection, maintenance, repair, restoration, and replacement. See http://www.generalroofing.com/ Chapter 11 Petition Date: May 3, 2004 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtors' Counsels: Charles R. Gibbs, Esq. Keith Miles Aurzada, Esq. Randell J. Gartin, Esq. Akin Gump Strauss Hauer & Feld, LLP 1700 Pacific Avenue, Suite 4100 Dallas, TX 75201 Tel: 214-969-2800 Fax: 214-969-4343 Estimated Assets: More than $100 Million Estimated Debts: $50 Million to $100 Million Debtor's Consolidated List of 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ GR Investment Holdings, LLC Secured Lender $46,200,914 3300 South Parker Road Suite 500 Aurora, CO 80014 CIVC Partners Fund, LLC Subordinated debt $8,000,000 231 South LaSalle Street Chicago, IL 60697 United Building Products Trade Debt $386,382 9101 Chancellor Row Dallas, TX 75247 Joel A. Thompson Subordinated debt $344,900 and Ann Thompson P.O. Box 576 Edwards, CO 81633 Richard M. Nugent Subordinated debt $293,970 29 Fox Glen Drive Stamford, CT 06903 James L. Nugent Subordinated debt $273,470 33 Hallock's Run Somers, NY 10589 Richard S. Pineau Subordinated debt $215,700 Firestone Building Products Trade debt $203,476 Co. Duro-Last Roofing, Inc. Trade debt $137,260 George J. Cook Subordinated debt $127,456 John C. Cook Subordinated debt $127,456 Herbert J. Kizer III Subordinated debt $116,200 Thomas E. Brown Subordinated debt $113,936 Energy Solutions Insulation Trade debt $107,333 Wimsatt Building Materials Trade debt $106,429 Bradco Supply, Inc. Trade debt $102,052 Oakland Metal Sales Trade debt $94,712 North Coast Detroit Trade debt $92,304 Soprema, Inc. Trade debt $86,752 Frederick E. Holland Subordinated debt $82,456 GL ENERGY: SEM Declares Default & Terminates Joint Venture Pact --------------------------------------------------------------- SEM Mining Corporation Ltd. served notice to GL Energy and Exploration Inc. (GEEX) that the Joint Venture Agreement (JVA) between the two corporations is in default as the result of non- payment of $200,000 US by GEEX to SEM as provided under the terms and conditions of the JVA. SEM have stipulated that in view of the default of the JVA, the Agreement is thereby terminated and they are unwilling to compromise further despite the fact that GEEX is proceeding to finalize a $20 million financing through Webster Financial Resources Inc. and is underway with a 10,000,000 Regulation S share offering in Europe. GEEX will pursue a satisfactory conclusion to the aforementioned or will review alternative acquisitions and or mergers. GLOBAL CROSSING: Taps Deloitte for Independent Accounting Review ---------------------------------------------------------------- Global Crossing (Nasdaq: GLBC) announced that its independent Audit Committee has retained Deloitte & Touche LLP to conduct an independent review of the company's cost of access liabilities and cost of access expenses and the related internal control environment and Grant Thornton LLP to evaluate the company's procedures and its determination regarding the potential restatement of its financial statements. Upon completion of its evaluation, Grant Thornton LLP will determine whether it can reissue its previously withdrawn audit reports. The Audit Committee is committed to resolving the issues presented by the company's previously disclosed review of these matters as soon as possible and returning Global Crossing to compliance with SEC reporting and Nasdaq listing requirements. The Audit Committee took this action in light of the company's public announcement on April 27, 2004 that its previously reported financial statements for the years ended December 31, 2003 and 2002 should be disregarded because of the company's review and the previously reported subsequent notification by Grant Thornton LLP that its audit reports dated March 8, 2004, December 23, 2003 and September 10, 2003 can no longer be relied upon. Global Crossing also announced that it received a Nasdaq Staff Determination on April 29, 2004 indicating that, in light of the matters referred to in the immediately preceding paragraph, the company's common stock is not in compliance with the filing requirements for continued listing on The Nasdaq National Market and will be de-listed unless the company requests a hearing with a Nasdaq Listing Qualifications Panel to review this determination. The company will request this hearing shortly. Pending the hearing and the Panel's determination, Global Crossing's common stock will continue to be listed on The Nasdaq National Market. While there can be no assurance that the Panel will grant the company's request for continued listing, the company is hopeful that it will have sufficient time to complete its review and return to compliance with Nasdaq filing requirements. The company's trading symbol will change from GLBC to GLBCE at the opening of business today due to the non-compliance with the filing requirements. 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: Settling Securities & Pension Claims for $325MM ---------------------------------------------------------------- Bloomberg News reports that Global Crossing Ltd., its ex-Chairman Gary Winnick and some of the company's former lawyers will pay $325 million to settle securities-fraud claims and pension claims. Approximately $245 million will go to investors while former employees will walk away with $80 million. 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) GRAY TELEVISION: S&P Affirms Ratings & Revises Outlook to Positive ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on TV station operator Gray Television Inc. to positive from stable. All ratings on the company, including the 'B+' corporate credit rating, were affirmed. The Atlanta, Georgia-based firm had $696 million in debt and debt-like preferred stock at Dec. 31, 2003. "The outlook revision reflects the expectation of improvements in Gray's financial profile over the intermediate term that may warrant an upgrade," according to Standard & Poor's credit analyst Steve Wilkinson. He added, "Profitability and cash flow should get a meaningful boost in 2004 from election year political ad spending and from continued strengthening of core local and national advertising. This should boost Gray's debt plus preferred stock to EBITDA leverage ratio to the low-5x area or lower. It will be critical that Gray demonstrate it can maintain a leverage ratio of below 6x during an off year in the political cycle to earn a higher rating. This will depend on limiting the decline in revenue and EBITDA typically experienced by TV broadcasters in odd numbered years. Similarly, the prepayment of bank debt with discretionary cash flow and a restrained pace of acquisitions could help keep leverage at an appropriate level. Conversely, large debt-financed acquisitions that do not include a significant equity component could postpone upgrade potential." GREAT LAKES: S&P Cuts Corporate & Senior Secured Debt Ratings to B ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on Oak Brook, Illinois-based Great Lakes Dredge & Dock Corp. to 'B' from 'B+'. Standard & Poor's also lowered its subordinated debt rating on Great Lakes to 'CCC+' from 'B-'. At the same time, Standard & Poor's affirmed its '3' recovery rating on Great Lakes' senior credit facility, indicating the expectation of a meaningful recovery (50%-80%) of principal in the event of a default. The outlook is stable. As of March 31, 2004, Great Lakes had approximately $336 million of debt (including the present value of operating leases) outstanding. "The ratings downgrade reflects declining earnings, high financial leverage and increasing price competition and margin erosion as a result of reductions in federal funding of dredging projects," said Standard & Poor's credit analyst Heather Henyon. Great Lakes' dredging backlog has fallen by almost one-third, to $189 million from $281 million a year ago because of the reduced bid market. While Standard & Poor's considers backlog of $200 million or greater as sufficient for short-term profitability and cash flow generation for Great Lakes, likely project delays resulting from the growing uncertainty over funding for U.S. Army Corps of Engineers projects and intensified pricing pressures will lead to financial performance in 2004 and probably in 2005 that will be weaker than previously expected. Great Lakes Dredge & Dock Corp. operates the largest fleet of dredging equipment in the U.S. and averaged a combined bid market share of more than 40% over the last three years. The company generates about 15% of its revenues from international operations. Financial flexibility is limited, although satisfactory for Great Lakes' current business plan, and maintenance of this liquidity profile is a key underpinning to the ratings and outlook GWE ENTERPRISES: Case Summary & 37 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: GWE Enterprises, LLC 558 Heritage Hill Road Oneonta, New York 13820 Bankruptcy Case No.: 04-63066 Debtor affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- GWE Enterprises II, LLC 04-63065 Type of Business: Rental Apartments. Chapter 11 Petition Date: April 29, 2004 Court: Northern District of New York (Utica) Judge: Stephen D. Gerling Debtors' Counsel: Leslie N. Reizes, Esq. 1177 George Bush Boulevard, Suite 308 Delray Beach, FL 33483 Tel: 561-276-2600 Total Assets Total Debts ------------ ----------- GWE Enterprises, LLC $521,086 $2,143,148 GWE Enterprises II, LLC $169,479 $1,156,782 A. GWE Enterprises, LLC's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Elmira Savings & Loan Second Mortgage $935,525 W. Water at College Ave. P.O. Box 327 Elmira, NY 14901-0327 Wells Fargo Bank, NA Mortgage $623,597 Fargo Bank Minnesota, NA Secured Value: 101 Phillips Ave. $400,000 Souix Falls, SD 57101-0543 Town of Owego Taxes $27,391 BMW Bank of North America Security Agreement $18,133 Secured Value: $63,000 NYSEG Electric $6,333 One Beacon Insurance Insurance $4,223 Home Depot Credit Services Repairs $4,209 BRT Realty Trust Insurance $3,500 Mirabito Gas & Electric Gas $3,019 Martin Plumbing & Heating Repairs $2,471 Kubota Credit Corporation, Security Agreement $2,000 USA Secured Value: $12,000 Kurt Franzenburg, Esq. Legal Services $1,465 Taylor Garbage Service Garbage service $815 Big R & J Exterminators Extermination services $539 Sprint Telephone $504 Press & Sun Bulletin Advertising $416 Agway Energy Products Supplies $403 Verizon Telephone service $328 Morris & Ronovech, CPAs Accounting services $300 Amazing Glass Repair $100 B. GWE Enterprises II, LLC's 17 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Elmira Savings & Loan Mortgage $795,000 W. Water at College Ave. Secured Value: P.O. Box 327 $140,000 Elmira, NY 14901-0327 Lansing Receiver of Taxes Taxes $72,605 NYSEG Electric service $49,762 Hinman, Howard & Kattell LLP Legal services $30,000 Lowe's Companies, Inc. Building supplies $12,494 Tompkins County Finance Dept Taxes $10,188 Colden Corporation Professional services $5,810 GMAC Payment Processing Security Agreement $3,000 Center Secured Value: $11,000 Town of Lansing Water Water service $2,841 Capital One F.S.B. Supplies $1,845 Dryden Mutual Insurance Co. Insurance $1,216 Superior Disposal Service Garbage service $989 Kirksway Farms Inc. Septic services $552 One Beacon Insurance $324 Bearsch, Compeau & Knudson Professional services $314 Morris & Ronovech, CPAs Accounting services $300 Ithaca Journal Advertising $37 HEALTHSOUTH: Bondholder Talks Continue Pending Default Resolution ----------------------------------------------------------------- The Unofficial Committee of holders of HealthSouth's notes announced that notwithstanding HealthSouth's announcement that the deadline with respect to the Company's consent solicitation for its various issues of notes has been extended through May 13, 2004, it remains in discussions with HealthSouth. In addition to extending the consent solicitation, the Company has announced that it has increased the consent fee from $10 in cash for each $1,000 principal amount of notes to $13.75 in cash for each $1000 principal amount of notes, and will be making additional substantial amendments to the indentures governing the notes. These additional amendments include, among other things, eliminating the right of noteholders to accelerate if other issues of notes accelerate and suspending the Company's obligation to file all financial reports until December 31, 2005. The Unofficial Committee remains committed to its effort to obtain, and reach a consensual resolution on, a further increased amount of compensation necessary to resolve all existing defaults under the Company's indentures. Brad Eric Scheler of Fried, Frank, Harris, Shriver & Jacobson LLP, counsel to the Unofficial Committee of Bondholders, commented that, "The Unofficial Committee is encouraged by HealthSouth's decision to increase the consideration being offered to bondholders in the consent solicitation; however, the Unofficial Committee remains convinced that the compensation is significantly less than what the Company should be offering, given: (i) the Company's continued substantial credit risk profile, (ii) the Company's continued failure to file financial reports and its acknowledgement that it may not be able to timely file such reports until the calendar year 2006, (iii) the costs that would otherwise be incurred by the Company in refinancing its bond debt, (iv) in the context of such a refinancing, the probable need for the Company to collateralize some of its now unsecured bond debt, and (v) the material nature of the newly proposed and previously proposed amendments to the indentures. The Unofficial Committee is troubled by the Company's continued pursuit of a coercive consent process and believes that bondholders should not provide their consent unless the Company increases the compensation for bondholders. In addition, the Unofficial Committee is concerned that although the Company materially changed the terms of the consent solicitation, the Company is not resoliciting consents from noteholders. It would be prudent and fair (and the Company may well have a legal obligation) to resolicit consents from those noteholders that have already delivered their consent." Mr. Scheler further noted that, "The Unofficial Committee nevertheless remains cautiously optimistic that its negotiations with the Company will result in a consensual arrangement that will provide all bondholders that have not otherwise accepted less compensation with fair and reasonable compensation for the increased credit risk due to the Company's current circumstances and for the material amendments to the indentures that will, among other things, permit the Company to incur additional secured debt." HealthSouth has been in default under its indentures since March 2003, when it announced that the public could no longer rely upon HealthSouth's financial statements. HEALTHSOUTH: Names Jay Grinney as New President & CEO ----------------------------------------------------- HealthSouth Corp. (OTC Pink Sheets: HLSH) announced that its Board of Directors has unanimously elected Jay Grinney, age 53, to the position of President and Chief Executive Officer, effective May 10, 2004. He also will serve as a member of HealthSouth's Board of Directors. Mr. Grinney, who most recently served as the President of the Eastern Group of HCA (NYSE: HCA), will replace Robert P. May, who has served as HealthSouth's Interim Chief Executive Officer since March 2003. Mr. May will remain with HealthSouth as a member of its Board of Directors and assist Mr. Grinney in the transition period. "We are delighted to welcome Jay as HealthSouth's new Chief Executive Officer," said Joel C. Gordon, Interim Chairman. "Jay has broad operating and financial experience and is recognized as one of today's outstanding leaders in the healthcare industry. He brings with him not only a wealth of practical know-how built over a 23-year career, but a real vision of the opportunities and challenges in today's healthcare industry." "I am honored to be leading HealthSouth into the next chapter of its growth," said Mr. Grinney. "HealthSouth has made an impressive turnaround over the past year and I am confident that it has a future of solid growth and profitability. I look forward to working together with the company's dedicated and talented employees to ensure that HealthSouth reaches its full potential as the nation's largest provider of healthcare services." "It has been a privilege for me to lead the organization as Interim CEO of HealthSouth over the past year and I look forward to helping Jay during the transition," said Mr. May. "The progress that has been made is nothing less than remarkable and I would like to thank all of HealthSouth's employees. It was because of their focus and hard work that we have been able to accomplish so much. I look forward to returning to my work on the Board of Directors, which is what originally attracted me to HealthSouth." Mr. Grinney has an extensive background in the healthcare industry. Since 1996, he has served as President of HCA's Eastern Group, which employs over 65,000 people and consists of approximately 100 hospitals located in 10 states with annual net revenues of $10.5 billion. Prior to that, he held a number of different positions at HCA, including President of the Greater Houston Division and Chief Operating Officer of the Houston Region. Before joining HCA, Grinney held several executive positions during his nine-year career at the Methodist Hospital System in Houston. Mr. Grinney is active on numerous industry boards and community organizations, including serving as Chairman of the Board of the Federation of American Hospitals (FHA), the national representative of privately owned and managed community hospitals and health systems throughout the United States. Mr. Grinney has a bachelor's degree from St. Olaf College in Northfield, Minnesota and both an MBA and an MHA from Washington University in St. Louis. About HealthSouth HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, with nearly 1,700 locations nationwide and abroad. HealthSouth can be found on the Web at http://www.healthsouth.com/ * * * As reported in Troubled Company Reporter's December 26, 2003 edition, Standard & Poor's Ratings Services withdrew its ratings on HEALTHSOUTH Corp. due to insufficient information about the company's operating performance, including a lack of audited financial statements. Standard & Poor's does not expect the company to be able to provide restated historical financial statements, or to be able to generate current-period financial statements, until at least the second half of 2004. The company has not filed audited financial statements since Sept. 30, 2002. On April 2, 2003, Standard & Poor's lowered its ratings on HEALTHSOUTH Corp. to 'D' after the company failed to make required principal and interest payments on a subordinated convertible bond issue that matured on April 1, 2003. HEALTHSOUTH is currently embroiled in extensive litigation over several years of allegedly fraudulent financial statements and is understood to be in discussions with its creditors about restructuring its debt. Nearly all members of senior management have left the company, and most of the important corporate functions have been assumed by professional advisors. Although HEALTHSOUTH continues to operate its business, neither its operations nor its financial performance can be assessed by Standard & Poor's with confidence until the company can generate audited financial statements. HT DEVELOPMENT LLC: Case Summary & 3 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: HT Development LLC 1660 Gateway Las Vegas, Nevada 89129 Bankruptcy Case No.: 04-14568 Chapter 11 Petition Date: April 28, 2004 Court: District of Nevada (Las Vegas) Judge: Lloyd King Debtor's Counsel: Gregory L. Wilde, Esq. Graham Wilde Harker & Boggers 208 South Jones Boulevard Las Vegas, NV 89107 Tel: 702-258-8200 Total Assets: $557,833 Total Debts: $1,386,118 Debtor's 3 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Daniel & Brook Las Vegas LLC 35 space Mobile $1,040,000 c/o Bernard & Leslie Chtd. Home Park located 3985 Howard Hughes Pkwy. At 1660 Gateway, #550 Las Vegas, NV 89129 Las Vegas, NV 89109 Secured: $500,000 David Huntington Advances to improve $192,507 property Patrick Tyll Advances to improve $153,611 property INTERNATIONAL BIOCHEMICAL: Sec. 341(a) Meeting Slated for May 20 ---------------------------------------------------------------- The United States Trustee will convene a meeting of International BioChemical Industries, Inc.'s creditors at 12:00 p.m., on May 20, 2004 in Room 365 at Russell Federal Building, 75 Spring Street SW, Atlanta, Georgia 30303. 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 Atlanta, Georgia, International BioChemical Industries, Inc. -- http://www.bioshield.com/-- is a maker of concentrated antiviral and antimicrobial products. The Company filed for chapter 11 protection on April 5, 2004 (Bankr. N.D. Ga. Case No. 04-92814). Jesse Blanco, Jr., Esq., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $114,500 in assets and $18,465,934 in debts. IT GROUP: First Amended Reorganization Plan Declared Effective -------------------------------------------------------------- In a notice filed with the Bankruptcy Court, Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meager & Flom LLP, in Wilmington, Delaware, advises the Court that IT Group, Inc., and its debtor- affiliates' First Amended Reorganization Plan became effective on April 30, 2004. As previously reported, Judge Walrath confirmed the Debtors' Plan on April 5, 2004. The Court overruled all objections to confirmation of the Plan that have not been withdrawn or otherwise resolved. The Plan Proponents proposed certain technical modifications to the Plan to address the issues raised in the objections. These modifications comply with Section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019, and do not materially or adversely change the treatment of any holder of any Claim or equity Interest. Headquartered in Monroeville, Pennsylvania, The IT Group, Inc. -- http://www.theitgroup.com-- together with its 92 direct and indirect subsidiaries, is a leading provider of diversified, value-added services in the areas of consulting, engineering and construction, remediation, and facilities management. The Company filed for chapter 11 protection on January 16, 2002 (Bankr. Del. Case No. 02-10118). David S. Kurtz, Esq., at Skadden Arps Slate Meagher & Flom, represents the Debtors in their restructuring efforts. On September 30, 2001, the Debtors listed $1,344,800,000 in assets and 1,086,500,000 in debts. (IT Group Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) J/Z CBO: Fitch Downgrades 3 Note Classes to Low-B & Junk Levels --------------------------------------------------------------- Fitch Ratings downgrades four classes of notes issued by J/Z CBO (Delaware), LLC (J/Z CBO). The following rating actions are effective immediately: --$105,213,726 Class A Floating Rate Notes downgraded to 'AA' from 'AAA'; --$21,775,000 Class B Fixed Rate Notes downgraded to 'BB' from 'A' and placed on 'Rating Watch Negative'; --$19,400,000 Class C Fixed Rate Notes downgraded to 'CCC' from 'BB'; --$19,400,000 Class D Fixed Rate Notes downgraded to 'C' from 'CC'. J/Z CBO is a collateralized bond obligation (CBO) managed by Jordan/Zalaznick Advisors, Inc. (Jordan/Zalaznick) consisting primarily of mezzanine debt and high yield bonds. Jordan/Zalaznick was established in August 1986 to invest in mezzanine debt and related equity securities. Due to the event of default caused by the failure to pay current class B interest and increased levels of defaults and deteriorating credit quality, Fitch has reviewed in detail the portfolio performance of J/Z CBO. In conjunction with this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. November 30, 2003, J/Z CBO failed to pay its class B current interest resulting in an event of default. As of this rating commentary, there is no cure to this default. The class B notes have been placed on Rating Watch Negative until the resolution of the default has been reached. Since June 2002, J/Z CBO has continuously failed its interest coverage (IC) test. Factors contributing to the reduced interest proceeds and declining IC ratio include: the large cash balance of approximately $53.5 million, par value of assets currently piking represent 26.5% of total debt securities plus cash, an out of the money interest rate swap, and the deferment of interest on the class B, class C and class D notes. The current IC ratio as calculated on the most recent trustee report dated March 15, 2004 is 23.67% with a trigger of 142%. In addition, J/Z CBO has been failing its class A overcollateralization (OC) test since September 2002. Due to the failure of the class A OC and IC tests a small portion of the class A notes were redeemed with excess interest proceeds. This principal paydown was not sufficient to cure the test failures. It is expected that the class C and class D notes will continue to defer current interest payments at rates of 10.09% and 14.59%. Despite the event of default due to the failure to pay class B interest, the class B investors should expect to receive 100% of deferred and compensating interest and principal payments under Fitch 'BB' stress scenarios by the legal final maturity of May 30, 2015. Therefore, Fitch will keep the class B on Rating Watch Negative until payments to the class resume on a continuous basis, even though Fitch anticipates this may not occur for several pay periods or years. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates the structure can withstand going forward relative to the minimum cumulative default rates for the rated liabilities. As a result of this analysis, Fitch has determined that the current ratings assigned to the class A, class B, class C and class D notes no longer reflect the current risk to noteholders. KAISER ALUMINUM: Reaches Settlement with Hearing Loss Claimants --------------------------------------------------------------- In February 2004, the Kaiser Aluminum Corporation Debtors reached a settlement with respect 400 claims asserted by former employees due to loss of hearing in connection with their employment at the Debtors' Gramercy, Louisiana facility. Under the terms of the settlement, the claimants will be allowed claims totaling $15.8 million. However, no cash payments by the Debtors are required in respect of these amounts. Rather the settlement agreement contemplates that, at emergence, these claims will be transferred to a separate trust along with certain rights against certain corresponding insurance policies of the Debtors and that the insurance policies will be the sole source of recourse to the claimants. The settlement is subject to Bankruptcy Court approval. In a regulatory filing with the Securities and Exchange Commission, Jack A. Hockema, Kaiser Aluminum and Chemical Corporation President and Chief Executive Officer, explains that while the Debtors believe that the insurance policies are of value, no amounts have been reflected in their financial statements at December 31, 2003, in respect of the policies. The Debtors could not, with the level of certainty necessary, determine the amount of recoveries that were probable. 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) KOSA B.V.: S&P Affirms Low-B Ratings and Removes Negative Watch --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' senior secured bank loan rating and recovery rating of '2' on KoSa B.V.'s $1.9 billion of bank credit facilities. The '2' recovery rating indicates a substantial (80%-100%) recovery of principal in the event of a default. At the same time, Standard & Poor's affirmed its 'B+' rating on the company's $675 million senior unsecured notes due 2012 issued under Rule 144a with registration rights. In addition, Standard & Poor's lowered its corporate credit rating to 'BB' from 'BB+' and removed all ratings from CreditWatch with negative implications. Ratings originally were placed on CreditWatch with developing implications on Aug. 12, 2003, following the announcement that KoSa's parent, Koch Industries Inc. had entered into exclusive negotiations with E.I. DuPont de Nemours & Co. regarding the possible purchase of INVISTA, formerly DuPont Textiles & Interiors. The CreditWatch was updated on Nov. 18, 2003, following the announcement that Koch had agreed to purchase INVISTA from DuPont. On March 9, 2004, Standard & Poor's revised its CreditWatch implications to negative from developing, as the financing plan came into greater focus. At that time, Standard & Poor's indicated that once the acquisition of INVISTA had been completed, the CreditWatch listing would be resolved, the corporate credit rating of KoSa would be lowered to 'BB' from 'BB+', and the new ratings that had been assigned in connection with the financing plan would be affirmed. The acquisition was completed as expected on April 30, 2004. Proceeds from the new bank credit facilities and the senior notes have been used to repay amounts outstanding under the company's existing credit facility and to finance the acquisition of INVISTA (along with over $2 billion of cash from Koch), which has been merged with KoSa. At some point, KoSa B.V. may be renamed INVISTA. "The overall creditworthiness of the new KoSa, now combined with INVISTA, reflects an aggressive financial profile resulting from high debt leverage at the outset of the acquisition, somewhat offset by the new KoSa's good business profile as the leading global manufacturer and marketer of fibers and intermediates," said Standard & Poor's credit analyst Peter Kelly. KoSa's credit quality reflects its position as a leading producer of fibers and intermediates, with pro forma revenues of more than $8 billion. Key fiber chains include nylon, polyester, and spandex. In nylon, KoSa is the largest manufacturer of nylon 6,6 polymer and its key intermediates and holds large positions in downstream applications such as nylon carpeting and nylon airbags. In polyester, KoSa maintains a top tier position in polyethylene terephthalate (PET) packaging resins, and is a large producer of polyester fiber and intermediate materials such as purified terephthalic acid (PTA) and dimethyl terephthalate (DMT). In spandex, KoSa is the largest manufacturer of branded spandex (Lycra) and holds a good position in generic spandex. LANDMARK MIDWEST: Case Summary & 10 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Landmark Midwest Ltd. 4737 County Road 101, Suite 237 Minnetonka, Minnesota 55345 Bankruptcy Case No.: 04-42238 Type of Business: The Debtor is a Real Estate Developer. Chapter 11 Petition Date: April 21, 2004 Court: District of Minnesota (Minneapolis) Judge: Robert J. Kressel Debtor's Counsel: Joseph W. Dicker, Esq. Joseph W. Dicker, P.A. 403A St. Anthony Main 219 SE Main Street Minneapolis, MN 55414 Total Assets: $1,000,000 Total Debts: $282,024 Debtor's 10 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Crosby and Associates Ltd. $165,000 Cal-Surv Inc. $52,131 Terra Firma $36,090 Meyers-Rohlin Inc. $17,568 Ellestad Land Services $3,820 LSA Associates Inc. $2,502 Miller Environmental $1,553 Pioneer Engineering $1,240 GME Consultants Inc. $1,126 Century Fence $995 LARSCOM INC: Posts $1.8 Million Net Loss for First Quarter 2004 --------------------------------------------------------------- Larscom Incorporated (Nasdaq: LARS), a leading provider of WAN connectivity and network access equipment, announced first-quarter financial results for the period ending March 31, 2004. The Company reported revenues of $5 million and a net loss of $(1.8) million or $(0.36) per share for the first quarter of 2004. For the first quarter of 2003, the Company had reported revenues of $4.2 million and a net loss of $(2.2) million or $(0.81) per share. First Quarter Business Review "Revenue for the quarter was up 18% over the prior year's first quarter and our net loss was reduced. However, I had higher expectations for the quarter given our Q4 2003 results. The lower than expected revenues for the quarter were primarily the result of lower IAD shipments to one of our major customers," said Daniel Scharre, president and chief executive officer of Larscom. "During the quarter we released a number of new products and enhancements that I believe will strengthen our competitive position and benefit the business going forward." "We remain on track with our Orion 7400 program and continue to make progress with trials taking place with several major customers. Some of these trials are expected to be concluded in the second quarter for future Ethernet service deployments using the Orion 7400," Scharre concluded. Recent product highlights include: -- Second release of the Orion 7400 Multi-service Access Platform that provides enhanced capabilities required by the carrier market, including the RBOCs. The new features include advanced Ethernet performance management, support for nested VLAN tags, STS-1 uplink capability, and dynamic bandwidth management. -- Introduction of new software releases for the eLink and Integrator IADs that provide enhanced operations and administration tools to simplify maintenance and diagnostics and, additionally, provide a sophisticated queuing mechanism for quality of service applications. -- Availability of the FT-1 and FXO capability for the eLink platform, which allows service providers to more easily integrate the eLink into a wider variety of enhanced service offerings. -- Launch of the enhanced Orion 4000 as an industry-first solution for the economical, high-density transport of multiple international (E1) data streams across U.S. T1 networks. About Larscom Larscom enables high-speed access by providing cost-effective, highly reliable (carrier-class), and easy-to-use network access equipment. In June 2003, Larscom merged with VINA Technologies to create a worldwide leader in enterprise WAN access for the delivery of high-speed data, and integrated voice and data services with the deployment of more than 350,000 systems worldwide. Larscom's customers include major carriers, Internet service providers, Fortune 500 companies, small and medium enterprises, and government agencies worldwide. Larscom's headquarters are in Newark, California. Additional information can be found at http://www.larscom.com/ * * * As reported in the Troubled Company Reporter's March 31, 2004 edition, Larscom Incorporated (Nasdaq: LARS), filed its Annual Report on Form 10-K for the year-ended 2003 in which its independent auditors, PricewaterhouseCoopers LLP, included an explanatory paragraph in its 2003 report on the Company's financial statements relating to the uncertainty of the Company's ability to continue as a going concern. MAGNESIUM CORP: Creditors' Meeting Scheduled for May 24 ------------------------------------------------------- Lee Buchwald, serving as the Chapter 11 Trustee for Magnesium Corporation of America and Renco Metals, Inc., prevailed in his bid to convert Magnesium Corporation of America's chapter 11 case to a chapter 7 liquidation, arguing that creditors' only reasonable path to a recovery on their claims is through prosecution of a lawsuit by the estate against The Renco Group, Inc., Chairman and CEO Ira Leon Rennert, various trusts, and others. As previously reported in the Troubled Company Reporter, Mr. Buchwald was appointed as the Chapter 11 Trustee to oversee the Debtors' estates at the behest of an Ad Hoc Committee of Senior Noteholders. The 11-1/2% MagCorp Noteholders argued that because Ira Rennert is a primary target of possible avoidance actions and other claims that debilitating conflict of interest made it certain the estate's valuable causes of actions would not be pursued absent an independent chapter 11 trustee. Janice Grubin, Esq., at Golenbock, Eseman, Assor, Bell & Peskoe, represents the Ad Hoc Committee of Senior Noteholders. Lee E. Buchwald is the President and sole owner of Buchwald Capital Advisors, LLC, an investment banking firm specializing in financial restructuring advisory services. Prior to founding his own company, Mr. Buchwald was a Managing Director of Chanin Capital Partners and Corporate Finance Managing Director at Rothschild Inc. Mr. Buchwald has 20 years experience as an investment banker and financial advisor in restructurings. Mr. Buchwald also serves as the Chapter 7 Trustee. Joseph H. Smolisky, Esq., at Chadbourne & Parke, LLP serves as counsel to the Trustee. The United States Trustee for Region II has called for a meeting of MagCorp creditors at 10:00 a.m. on May 24, 2004. The meeting will be held at the Office of the U.S. Trustee, located on the 2nd Floor at 80 Broad Street in Manhattan. Magnesium Corporation of America, a unit of Renco Group Inc., was the largest single producer of magnesium in the United States. The Company filed for chapter 11 protection on August 2, 2001 (Bankr. S.D.N.Y. Case No. 01-14312). The Debtors sold substantially all of their assets to U.S. Magnesium, LLC, in a Sec. 363 Asset Sale Transaction. Judge Gerber ordered the case converted to a chapter 7 liquidation on September 24, 2003. When the Company filed for protection from its creditors, it listed debts and assets of over $100 million in their petition. MEDICAL WIND: May 10 Deadline to Vote on Chapter 11 Plan -------------------------------------------------------- On April 2, 2004, the U.S. Bankruptcy Court for the District of Delaware approved the Disclosure Statement with respect to the First Amended Chapter 11 Plan of Medical Wind Down Holdings and its debtor-affiliates. Judge Walsh set May 10, 2004 at 4:00 p.m. as the deadline for creditors to vote to accept or reject the First Amended Chapter 11 Plan. Creditors must return their ballots to: Bankruptcy Services LLC 757 Third Avenue, Third Floor New York, NY 10017 Attn: Maxxim Balloting Center The deadline to file objections to confirmation of the Plan is May 10, 2004 at 4:00 p.m. Objections, if any, must be filed with the Clerk of Court and served on Counsel for the Debtors, Counsel for the Official Committee of Unsecured Creditors, Counsel for the Debtor's Pre-Petition Secured Lenders, Counsel for ACMI Corporation and the Office of the U.S. Trustee. Medical Wind Down Holdings, formerly known as Maxxim Medical Group Inc., are leading suppliers of custom- procedure trays, nonlatex examination gloves and other single-use products. The Debtor filed for chapter 11 protection (Bankr. Del. Case No.: 03-10438) on February 11, 2003. Brendan Linehan Shannon, Esq., Edward J. Kosmowski, Esq., and Matthew Barry Lunn, Esq. of Young, Conaway, Stargatt & Taylor and Myron Trepper, Esq. and Michael J. Kelly, Esq. of Willkie Farr & Gallagher represent the debtor in its restructuring efforts. MERRILL LYNCH: Fitch Upgrades $7.6MM Class F Certificates to BB+ ---------------------------------------------------------------- Fitch Ratings upgrades Merrill Lynch Mortgage Investors Inc.'s, mortgage pass-through certificates, series 1995-C1 as follows: --$7.6 million class F certificates to 'BB+' from 'B-'. The ratings on classes A, B, C, D, E and IO have been withdrawn because the certificates have been paid in full. Fitch does not rate class G. The upgrades reflect increases in subordination levels due to loan payoffs and amortization. As of the March 2004 distribution date, the pool's principal balance had been reduced by 93.44% to $10.8 million from $213.3 million. The certificates are currently collateralized by four mortgage loans, secured by multifamily (31%) and commercial (69%) properties. Currently, there are no delinquent or specially serviced loans. Fitch is concerned with two of the remaining loans. One loan (46%) is secured by an anchored retail property located in Durango, CO. The property lost its major tenant Kmart which occupied 39% of the Net Rentable Area (NRA). The borrower is actively marketing the property. One loan (23%) secured by an anchored retail center in Sugarland, TX, is also of concern to Fitch. The subject property's top three tenants (44%) have leases that are expiring in 2004 which could negatively affect occupancy. Approximately 30% of the remaining pool matures in the year 2004, 23% matures in the year 2005 and 46% matures in 2010. NESS ENERGY: Rosenberg Replaces Weaver and Tidwell as Accountants ----------------------------------------------------------------- Ness Energy International Inc. dismissed its accountants. The dismissal was the Company's determination, and part of its plan to appoint a new firm with both international abilities and that is located nearer to Wall Street as the replacement. The Company says that the dismissal was in no way due to dissatisfaction with their firm (prior accountants), which it found to be both experienced and professional in Company dealings and there was no dispute with the prior accountant. Management, however, believes, for this New Year of 2004, that Ness Energy International needs to work more closely with firms in the northeast, and a northeastern auditing firm with contacts overseas may be a better fit for the Company's current and future needs, hence the need to terminate the old firm and hire a new one. The dismissal was confirmed by letter received February 19, 2004 from the former accountants, the firm of Weaver and Tidwell, LLP, dated February 17, 2004, confirming the client-auditor relationship had ceased. A letter was supplied to Ness Energy dated March 11, 2004 from the Former Accountant, where the accountants stated they modified their reports for the years ended December 31, 2002 and 2001 regarding the Company's ability to continue as a going concern. The decision to change accountants was approved by the Company's Board of Directors. There were no disagreements with the Former Accountants, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the Former Accountant's satisfaction, would have caused them to make reference to the subject matter of the disagreement(s) in connection with their reports, except as follows: Though the Former Accountants never advised the Company that internal controls necessary to develop reliable financial statements did not exist and they did complete the audits and stated "In our opinion, the financial statements present fairly, in all material respects, the financial position of Ness Energy International, Inc. at December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended" in conformity with accounting principals generally accepted in the United States of America. They did advise Ness Energy of deficiencies. The Former Accountant's Response Letter states that in March, 2003 and 2002, they advised Ness Energy of certain reportable conditions and material weaknesses regarding the Company's ability to develop reliable financial statements. In March, 2002, they suggested the transfer agent be advised immediately when compensation for services was approved by the Company, and they also suggested that transactions entered into by Management or the Board be forwarded timely to the accounting department. In March, 2003, they suggested that bank statements from Israel be sent directly to Company offices in Texas, and they suggested that written agreements, not oral agreements, be used for transactions and the Board be involved in major acquisitions, and, also in summary, more accurate steps be taken in travel expense accounting, and Israeli operational expenses, and lease renewals be more specific as to expense responsibilities. No committee of the Board, nor the Board, discussed these matters with the accountants, Past President/CEO Hayseed Stephens died on May 15, 2003. Discussions between new President/CEO Sha Stephens, and the CFO were held concerning these deficiencies. An accounting person was hired to assist the CFO and plan to add another accounting person to also assist. The CEO and CFO meet twice weekly to discuss activities and assure compliance. Also, conversations are held daily with legal counsel, who also is present in the Ness office one week a month. On his first trip to Israel, the new CEO terminated the previous administrator and hired a new person with more business knowledge. The CEO transferred virtually all funds from the Israel Bank account to the U.S. and has taken steps to control the information from Israel. On February 19, 2004, the Company engaged the firm of Rosenberg Rich Baker Berman & Company, P.A., New Jersey , as independent auditors of the Company for the period ending December 31, 2003. The Rosenberg Firm has over 20 years experience in international financial statement matters, and over 25 years experience as auditors, and has a full staff of accountants and support personnel including persons who are available to travel overseas. NETEXIT INC: Files for Chapter 11 Protection in Delaware -------------------------------------------------------- NorthWestern Corporation (Pink Sheets: NTHWQ) announced that its subsidiary, Netexit, Inc., formerly known as Expanets, Inc., has filed for protection under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. On Nov. 25, 2003, Expanets sold substantially all of the assets and businesses of Expanets and its subsidiaries to Avaya, Inc., and retained certain specified liabilities. Thereafter, Expanets was renamed Netexit, Inc. This Chapter 11 filing is intended to facilitate the wind down of Netexit and its subsidiaries. NorthWestern said that Netexit's Chapter 11 filing will have no material affect on NorthWestern's Chapter 11 reorganization or its filed plan of reorganization and disclosure statement. About NorthWestern NorthWestern Corporation is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 608,000 customers in Montana, South Dakota and Nebraska. NETEXIT INC: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Netexit, Inc. aka Expanets, Inc. aka Communications Systems USA, Inc. 125 South Dakota Avenue Sioux Falls, South Dakota 57104 Bankruptcy Case No.: 04-11321 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- ATS Financial Services, Inc. 04-11323 Netexit of California Construction, Inc. 04-11325 Netexit of California, Inc. 04-11328 Netexit of Indiana, LLC 04-11329 Netexit of Indiana, Inc. 04-11331 Netexit of North America, LLC 04-11333 Netexit of Tennessee, Inc. 04-11335 Netexit of Pacific Northwest, Inc. 04-11336 Netexit of Oklahoma, Inc. 04-11337 Netexit of New York, Inc. 04-11338 Netexit of Mississippi, Inc. 04-11339 Netexit of Hawaii, Inc. 04-11340 Eagle, a Netexit Company, Inc. 04-11341 Type of Business: The Debtor is a nationwide provider of networked communications and data services to small and mid-sized businesses. Chapter 11 Petition Date: May 4, 2004 Court: District of Delaware Judge: Charles G. Case II Debtors' Counsel: William E. Chipman Jr., Esq. Greenberg Traurig, LLP 1000 West Street, Suite 1540 Wilmington, DE 19801 Tel: 302-661-7000 Fax: 302-661-7360 Estimated Assets: $10 Million to $50 Million Estimated Debts: More than $100 Million Debtors' Consolidated List of 12 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Trion Group, Inc. Medical Stop Loss $3,100,000 2300 Renaissance Blvd. King of Prussia, PA 19406-2772 Adarnes et al. Prevailing Wage Case $800,000 Robert J. Valli, Jr., Esq. Leeds Morelli & Brown, P.C. One Old Country Road Ste 347 Carle Place, NY 11514 Expanets, Inc. 401K Savings 401K Liability $465,026 Plan Interest and Penalty EOP - San Mateo Baycenter, Lease $459,461 LLC, c/o Equity Office Properties Trust 951 Mariners Island Blvd. Suite 200 San Mateo, CA 94404 John Andre Employment $200,000 KPMG 491K Audit Costs $111,191 Atlantic American Land Lease $106,781 Development Inc. State of South Dakota Sales and Use Tax $50,000 InternetConnect $49,000 Duke Weeks Realty Ltd. Lease $31,836 Second & Main Associates Lease $7,776 Oriole Holdings, L.P. Lease $3,700 NEXTEL PARTNERS: S&P Puts B- Corp. Credit Rating on Watch Positive ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B-' corporate credit rating for Kirkland, Washington-based wireless service provider Nextel Partners Inc. on CreditWatch with positive implications. "The CreditWatch placement is based on the company's continued good operating performance, which enabled a modest amount of free cash flow to be generated in first-quarter 2004," explained Standard & Poor's credit analyst Michael Tsao. "In resolving this CreditWatch listing, Standard & Poor's will assess Nextel Partners' ability to maintain good operating performance and its prospects for generating material and sustainable free cash flow." Separately, Standard & Poor's placed its 'B' bank loan rating for Nextel Partners Operating Corp. (a wholly owned subsidiary of Nextel Partners) and its 'CCC+' senior unsecured debt rating for Nextel Partners on CreditWatch with developing implications. These CreditWatch listings reflect Nextel Partners' announcement that it has commenced a cash tender offer for its $367 million 11% senior notes due 2010. Because Nextel Partners plans to finance the cash tender offer with proceeds from an incremental term loan and an offering of senior notes to be issued under Rule 144A, two sets of possibilities may develop with respect to resolving the CreditWatch listing for the bank loan rating and the senior unsecured debt rating. If the corporate credit rating is raised and Standard & Poor's determines that additional bank debt does not impair recovery prospects for the fully drawn bank loan in a hypothetical default scenario, the bank loan rating would also be raised. The senior unsecured debt rating would be raised if the additional bank debt does not cause priority obligations as a percentage of estimated asset value to exceed Standard & Poor's 30% threshold for a two-notch differential. If the corporate credit rating is affirmed and Standard & Poor's determines that additional bank debt would impair recovery prospects, the bank loan rating would be lowered to the same level as the corporate credit rating. The senior unsecured debt rating would be lowered to two notches below the corporate credit rating in the event the additional bank debt causes priority obligations to exceed the 30% threshold. NATIONAL ENERGY: Bankruptcy Court Confirms Reorganization Plan -------------------------------------------------------------- National Energy & Gas Transmission, Inc. (NEGT) announced that the U.S. Bankruptcy Court for the District of Maryland, Greenbelt Division, confirmed the company's Plan of Reorganization, paving the way for NEGT to emerge from bankruptcy. The company expects the plan to become effective by the end of May or early June. Under the plan, NEGT will issue to its unsecured creditors 100 percent of the equity of the reorganized company, $1 billion in notes, and cash. In addition, NEGT will become unaffiliated with PG&E Corporation, which will no longer have any equity interest in the company. NEGT's creditors, a diversified group of banks and bondholders, will become the new equity holders. "With [Mon]day's court approval, National Energy & Gas Transmission is on track to emerge expeditiously from bankruptcy," said Joseph Bondi, NEGT chief executive officer and chief restructuring officer. "Our restructuring efforts focused on maximizing the value of the company's strong-performing assets while facilitating an orderly negotiation among creditors. The consensus among NEGT's creditors is demonstrated by their overwhelming support for the Plan of Reorganization." Conditions that must be satisfied in order for the Plan of Reorganization to become effective include obtaining certain regulatory approvals and other consents needed from third parties. Upon emergence from bankruptcy, NEGT will have a new board of directors comprised of Bondi and Sanford L. Hartman, NEGT's vice president and general counsel, as well as William E. Redmond, Jr., Steven P. Chwiecko, James G. Ivey, Barry P. Simon and Randolph I. Thornton. These individuals were selected by the creditors. NEGT voluntarily filed for protection under Chapter 11 on July 8, 2003, along with its energy trading subsidiaries and USGen New England, Inc. NEGT's subsidiaries own more than 4,700 megawatts of electric generating facilities across the country and a 5.2 percent ownership in the Iroquois Gas Transmission System. The company announced on Thursday that it had accepted a $1.703 billion bid from TransCanada Corporation to buy NEGT's Gas Transmission Northwest Corporation, subject to bankruptcy court approval. NATIONSRENT INC: Creditor Trustee Wants July 13 Service Deadline ---------------------------------------------------------------- Pursuant to Rules 7004 and 9006(b) of the Federal Rules of Bankruptcy Procedure and Section 105(a) of the Bankruptcy Code, Perry Mandarino, the Creditor Trustee in NationsRent Inc.'s chapter 11 case, asks the Court to extend the deadline to effect service of process with respect to the preference actions commenced by the Trust, through and including July 13, 2004. Mr. Mandarino reserves his rights to seek additional extensions of time to effect service of the original process of other complaints and oppose any request to dismiss filed by a defendant that challenges the service of the complaint under the Bankruptcy Rules. Rule 4(m) of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by virtue of Bankruptcy Rule 7004(a), provides that: "If service of the summons and complaint is not made upon the defendant within 120 days of the filing of the complaint, the court, upon motion or its own initiative after notice to the plaintiff, shall dismiss the action without prejudice as to that defendant or direct that service be effected within a specified time; provided that if the plaintiff shows good cause for the failure, the court shall extend the time period." From December 11 to December 16, 2003, the Creditor Trust filed 465 complaints for the avoidance and recovery of preferential transfers. The 120-day period for service of the complaints thus falls between April 8 and April 14, 2004, depending on the date each particular adversary proceeding was commenced. Between December 11, 2003 and February 6, 2004, the counsel for the Creditor Trust served the preference complaints on the defendants by certified mail, return receipt requested. The complaints were served at the defendants' registered agent address, corporate headquarters or business address, based on information obtained from various sources. Between February 27, 2004 and March 3, 2004, the Creditor Trust again served the complaints by regular first class mail on those defendants that the Creditor Trust had not yet received return receipt or was otherwise unable to confirm service. The Creditor Trust also continued to research current service information for the defendants that the Creditor Trust received returned service. According to Mary E. Augustine, Esq., at The Bayard Firm, in Wilmington, Delaware, the Creditor Trust received and keeps on receiving returned service for certain defendants. The Creditor Trust also remains unable to confirm service of the original process on certain defendants. As of April 7, 2004, the Creditor Trust continues to research and obtain current service information for the defendants for which it has been unable to confirm service of original process. The Creditor Trust has been diligent in its efforts to effect service of the original process, and effective in serving many of the defendants, Ms. Augustine says. Despite its extensive efforts, however, the Creditor Trust has been unable to confirm that the original service has been made on all of the 465 defendants. The Court has the authority to appropriately exercise its discretion to extend the time by which the Creditor Trust must serve its complaints. In making the determination of whether to extend the time to serve a complaint under Civil Rule 4(m), the Third Circuit has a two-step inquiry: (1) Upon a showing of good cause for the delayed service, the Court must extend the time period. (2) If there is not good cause, the Court has the discretion to dismiss without prejudice or to extend the time period. Bankruptcy Rule 9006(b) does not define "good cause" but several courts have consistent interpretations: * In determining whether good cause exists, a court's "primary focus is on the plaintiff's reasons for not complying with the time limit in the first place." Boley v. Kaymarck, 123 F.3d at 758. * Good cause is measured against the plaintiff's recognizable efforts to effect service and the prejudice to the defendant from the delay. Sunniland Fruit Company, Inc. v. PMI Produce Corp., Inc., 2001 U.S. Dist. LEXIS 9247 at *5 (S.D.N.Y. July 9, 2001). * Courts will consider whether the plaintiff was conscientious about complying with the Rules, including, but not limited, to whether plaintiff moved under Civil Rule 6(b) or Bankruptcy Rule 9006(b), for an extension of time in which to serve the defendant. American Commercial Barge Line Company LLC v. Joan Salton, 2001 U.S. Dist. Lexis 2793 at *7 (S.D.N.Y. March 16, 2001). The Creditor Trustee believes that good cause exists to warrant the extension because: -- the Creditor Trust has been diligent in its efforts to serve the defendants and locate current service information for all of the defendants; -- the Trust's counsel has used numerous sources to locate and serve the defendants, including information provided by the Debtors, information obtained through corporate searches and Internet sites, and the proofs of claim docket, and continues to research the appropriate addresses for the service; and -- despite its efforts, the Creditor Trust has been unable to confirm service of original process on certain defendants. The Court will convene a hearing on May 10, 2004 to consider the Creditor Trustee's request. By application of Del.Bankr.LR 9006-2, the deadline to effect service of process with respect to commenced preference actions is automatically extended through the conclusion of that hearing. Ajaco Responds Ajaco Towing, Inc., does not object to the extension of time to effect service as it relates to those actions that have been commenced. However, Ajaco objects to the Debtors' reservation of rights to seek additional extensions to commence new actions. Vincent Cleffi, President of Ajaco, points out that sufficient time has lapsed for the Trust to pursue claims. According to Mr. Cleffi, it is now over five months since Traxi, LLC, the liquidating and disbursing agent, communicated with Ajaco. Furthermore, the Debtors owe Ajaco $25,000. Ajaco neither received a copy of the Plan of Reorganization as referenced in the Creditor Trustee's request nor a proof of claim. (NationsRent Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) NUCENTRIX: Exits Chapter 11 & Expects to Pay Creditors in Full -------------------------------------------------------------- Nucentrix Broadband Networks, Inc. (Pink Sheets:NCNXQ), announced that the U.S. Bankruptcy Court for the Northern District of Texas has confirmed the First Amended Joint Plan of Liquidation of the Company and its debtor subsidiaries. As a result, Nucentrix expects to close the sale of its Federal Communications Commission (FCC) licenses and related assets to Nextel Spectrum Acquisition Corp., a wholly-owned subsidiary of Nextel Communications Inc. (Nasdaq:NXTL) in June 2004. As previously reported, Nextel was the winning bidder at an auction for Nucentrix's assets in November 2003, with a bid of $51 million in cash, plus the assumption of certain liabilities. In April 2004, the FCC approved the sale of Nucentrix's FCC assets to Nextel. The sale remains subject to customary closing conditions, including the order of the FCC approving the sale becoming a final order. At the Bankruptcy Court hearing Monday, Nucentrix reported that, based on anticipated sale proceeds and the assignment of spectrum lease liabilities outside the Nextel sale, the Company expects to pay all creditors the full amount of their claims as allowed by the Bankruptcy Court. After payment to creditors, record holders of Nucentrix common stock on the effective date of the Plan will be entitled to receive distributions of remaining net proceeds pursuant to, and subject to the conditions of, the Plan. Nucentrix anticipates that the Plan will become effective within five business days after the date the Nextel sale closes. On the effective date of the Plan, all outstanding shares of Nucentrix common stock will be canceled and the transfer books for the common stock will be closed. The Company is not able to estimate with certainty the per share amount that may be received by record stockholders. This amount will be affected by (i) the outcome and allowed amount of disputed claims and claims that may yet be asserted, (ii) the amount of expenses necessary to wind down the Company's estate, including professional fees and expenses, (iii) proceeds received from the sale of other assets of the Company and (iv) the total amount of cure costs and administrative expenses required to be paid by Nucentrix for spectrum leases being assigned to third parties. About Nucentrix Nucentrix Broadband Networks, Inc. provides broadband wireless Internet services using radio spectrum licensed by the Federal Communications Commission (FCC). This spectrum commonly is referred to as MMDS (Multichannel Multipoint Distribution Service) and ITFS (Instructional Television Fixed Service). Nucentrix is the third largest holder of MMDS and ITFS spectrum in the U.S. Nucentrix holds the rights to an average of approximately 128 MHz of MMDS and ITFS spectrum, covering over 8 million households in over 90 primarily medium and small markets across Texas, Oklahoma and the Midwest. Nucentrix also holds licenses for 20 MHz of WCS (Wireless Communications Services) spectrum at 2.3 GHz covering over 2 million households, primarily in Texas. OCUMED GROUP: First Creditors' Meeting Convenes on May 26 --------------------------------------------------------- The United States Trustee will convene a meeting of Ocumed Group, Inc.'s creditors at 9:00 a.m., on May 26, 2004 in the Office of the U.S. Trustee at Raymond Boulevard, One Newark Center, Suite 1401, Newark, New Jersey 07102-5504. 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 Roseland, New Jersey, Ocumed Group Inc., produces, packages and sells ophthalmic and other products for pharmaceutical marketplace. The Company filed for chapter 11 protection on April 23, 2004 (Bankr. D. N.J. Case No. 04-24136). Seth D. Levine, Esq., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $7,313,086 in total asset and $5,008,122 in total debts. OMEGA: Secures $9.4MM New Investment & $50MM Credit Line Increase ----------------------------------------------------------------- Omega Healthcare Investors, Inc. (NYSE:OHI) announced it has closed on $9.4 million of new investments, as well as increased the Company's $125 million credit facility to $175 million. Also, the Company announced the sale of a closed facility in Illinois. New Investments The Company announced the closing of the purchase of two skilled nursing facilities on April 30, 2004, representing 477 beds for a total investment of $9.4 million. The purchase price includes funds for capital expenditures, additional bed licenses and transaction costs. Both facilities are located in Texas and were combined into an existing master lease with a current operator. Rent under the master lease was increased by approximately $1.0 million for the first lease year commencing May 1, 2004, with annual increases thereafter. The term of the master lease has been increased to 10 years, and is followed by two 10 year renewal options. During the first lease year, the operator will fund a security deposit equivalent to approximately four months of the incremental rent. Credit Facility Commitments Increased to $175 Million On April 30, 2004, the Company exercised its right to increase the revolving commitments under its existing $125 million credit facility by an additional $50 million, to $175 million. All other terms of the credit facility, which closed on March 22, 2004, remain the same. The increase of the credit facility's revolving commitments provides the Company with a current undrawn and unused balance of approximately $128 million. Bank of America, N.A. serves as Administrative Agent for the credit facility. 9.25% Series A Preferred Redemption On April 30, 2004, the Company fully redeemed its 9.25% Series A Cumulative Preferred Stock (NYSE:OHI PrA) ("Series A"). The Company redeemed the 2.3 million shares of Series A at a price of $25.57813, comprising the $25 liquidation value and accrued dividend. Sale of Closed Facility In addition, on April 30, 2004, the Company sold one closed skilled nursing facility located in Illinois for net proceeds of approximately $50,000, resulting in a loss of approximately $137,000. At the time of this press release, the Company has three remaining closed facilities with a total net book value of approximately $1.8 million. Omega is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At March 31, 2004, the Company owned or held mortgages on 209 skilled nursing and assisted living facilities with approximately 21,400 beds located in 28 states and operated by 40 third-party healthcare operating companies. Standard & Poor's Ratings Services assigned its 'BB-' rating to Omega Healthcare Investors Inc.'s issued $200 million 7% senior notes due April 2014. Concurrently, the senior unsecured debt rating is raised to 'BB-' from 'B' and removed from CreditWatch positive, where it was placed March 5, 2004. Additionally, the rating on the preferred stock is raised to 'B' from 'B-' and removed from CreditWatch positive, where it was also placed March 5, 2004. The rating actions affect $526 million of rated securities. The outlook is stable. OWENS CORNING: Wants Court Approval of Syar Napa County Lease Pact ------------------------------------------------------------------ The Owens Corning Debtors seek the Court's authority to execute and consummate a postpetition agreement between Owens Corning and Syar Industries, Inc., with respect to Owens Corning's lease and development of certain real property located in Napa County, California. Owens Corning currently operates a facility in Napa County, California at which it manufactures and sells "Cultured Stone." Cultured Stone is a manufactured stone veneer product used in the construction of homes and commercial buildings. To store the products, Owens Corning currently leases, on a month-to-month basis, off-site storage space located around two miles from the Napa Plant. Because of the distance between the Napa Plant and the current storage facility, Owens Corning incurs significant and duplicative transportation, labor and other costs associated with transporting the product between the two locations. J. Kate Stickles, Esq., at Saul Ewing, LLP, in Wilmington, Delaware, informs the Court that Owens Corning explored other options for its storage needs with respect to the Napa Plant. As a result of these efforts, Owens Corning negotiated the terms of an agreement for the lease of 11.75 acres of real property located directly adjacent to the Napa Plant, at 200 and 260 Tower Road in Napa County, California. The proximity between the Napa Plant and the Real Property will enable both manufacturing and storage to take place at the same location, thus eliminating half of the transportation, labor and other costs presently being incurred. Owens Corning's storage needs at the Napa Plant requires that certain construction improvements be made on the Real Property, including the construction of nine acres of concrete paving which Owens Corning will use as an outdoor warehouse. In addition to storing finished goods, Owens Corning will use the Real Property space for loading and shipping finished goods. The Real Property also contains two existing buildings, one of which will be used for maintaining forklifts and other vehicles and the other will be used for offices and employee facilities at the Napa Plant. The Lease Agreement Owens Corning negotiated the terms of the Agreement with Syar Industries for Owens Corning's lease of the Real Property and the Improvements from Syar. The Lease Agreement provides generally that on Syar's turnover of the Real Property to Owens Corning, Owens Corning will have the right to possession of the property and may commence construction of the Improvements, on Syar's approval of the construction plans. The Improvements consist primarily of: (1) demolishing two metal storage buildings and certain foundations; (2) constructing nine acres of concrete paving and four truck docks; and (3) installing a pad lighting system and necessary fencing on the Real Property. According to Ms. Stickles, the Lease Agreement contemplates that Owens Corning will construct and Syar will fund the Improvements, subject to Owens Corning's obligation to pay Syar certain "improvement rent." Pursuant to the terms of the Lease Agreement, upon delivery of the Real Property, Owens Corning is also obligated to deliver a Letter of Credit to Syar for $3,700,000, to ensure the repayment of the cost of constructing the Improvements, but not the "minimum annual fixed rent." The Lease Agreement provides that it will commence six months after Syar turns over the Real Property to Owens Corning. Under the provisions of the Lease Agreement, Owens Corning will lease the Real Property and the Improvements for a primary term of ten years from the Commencement Date, with two five-year renewal terms. The Lease Agreement further provides for Owens Corning to pay Syar a Minimum Annual Fixed Rent and an Improvement Rent, payable in monthly installments beginning on the Commencement Date. The Minimum Annual Fixed Rent will be $259,200 per year for the first two years of the Lease Agreement, with yearly adjustments over the remainder of its term. The Improvement Rent will be the total amount expended to construct the Improvements, estimated to be $3,700,000, and is payable over ten years. These rental obligations equate to Owens Corning's payment of $29,500 per month on account of the Minimum Annual Fixed Rent plus $33,000 per month for ten years on account of the Improvement Rent. In addition, the Lease Agreement grants Owens Corning a "right of first refusal" to purchase all or a portion of the Real Property should Syar desire to sell, subject to the terms and conditions described in the Agreement. Owens Corning believes that this right of first refusal is beneficial to the Debtors' interest. Ms. Stickles contends that the lease of the Real Property will not only permit Owens Corning to consolidate the storage and packaging of stone products manufactured at the Napa Plant in one location and eliminate or reduce unnecessary operating costs, resulting to a cost savings of $250,000 per year, but it will also enable Owens Corning to terminate its current agreement for the lease of the off-site storage facility. In addition, the Debtors believe that the Real Property contains sufficient space to accommodate the Debtors' projected future warehousing needs at the Napa Plant should an expansion of the Napa Plant be necessary as a result of an increase in demand of the stone product. The parties agree that the laws of the State of California will govern the Lease Agreement. 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: Banco Itau Says Fund Safe from Debtor's Credit Risk ------------------------------------------------------------- Banco Itau Holding Financeira S.A. operates as a universal bank and oversees the activities of Banco Itau and Banco Itau-BBA through the strategic coordination and centralization of their risk control, audit and treasury areas. With shareholders' equity of R$11,879 million, assets of R$118,738 million, and a market capitalization of R$30,453 million at the end of 2003, Itau is Latin America's largest financial institution by market value. Its shares are traded on the Sao Paulo, Buenos Aires and New York stock exchanges. In a Form 6-K filing with the Securities and Exchange Commission dated April 6, 2004, Itau disclosed that in 2003, Itau-BBA sponsored the Parmalat Fundo de Investimento em Direitos Creditorios, one of the first successful transactions of its kind in the market. In view of Parmalat's legal and financial troubles, the fund's shareholders elected to liquidate the R$112 million fund and reclaim their investments in full. Due to the way Itau-BBA structured the fund, however, it had sufficient receivables insulated from Parmalat's credit risk, providing the safety level necessary for Standard & Poor's to give it a AAA credit rating. 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) PREMCOR: Delaware Refinery Buyout Prompts Fitch's Ratings Upgrade ----------------------------------------------------------------- Fitch Ratings has raised the debt ratings of Premcor Refining Group (PRG) and Port Arthur Finance Corp. (PAFC) following the acquisition of the Delaware City, Delaware refinery from Motiva Enterprises LLC. The Rating Outlook is Stable. Fitch rates the debt of PRG and PAFC as follows: PRG --$1 billion secured credit facility 'BB+' from 'BB'; --Senior unsecured notes 'BB' from 'BB-'; --Senior subordinated notes 'B+' from 'B'. PAFC --Senior secured notes 'BB+' from 'BB'. On May 1, Premcor completed the acquisition of the 180,000 barrel per day (bpd) Delaware City heavy crude refinery in a transaction valued at approximately $800 million plus working capital estimated at $100 million. In addition to the refinery, the transaction also includes a two-train petroleum coke gasification unit and 180 megawatt cogeneration facility, which when fully operational is expected to generate approximately $50 million of EBITDA annually. The agreement also includes up to $125 million of additional payments to Motiva if certain refining margins are met or the gasification facility achieves certain performance measures. As expected, Premcor financed the Delaware City acquisition conservatively, using $490.5 million in proceeds from a public equity offering and the issuance of $400 million of senior unsecured notes by PRG. Delaware City reflects the growth story outlined by management beginning with the initial public offering in early 2002. Management has significantly improved both its capital structure and operating base over the past two years and, with Delaware City, has increased crude capacity to approximately 790,000 bpd. Under Fitch's view of more mid-cycle refining margins, PRG should generate EBITDA to interest coverage of at least 5.0 times (x) with leverage of debt to EBITDA of between 2.0x and 2.5x. Fitch, however, also continues to have concerns with the significant capital expenditures required by Premcor and other refiners to meet the low sulfur fuel specifications as well as other regulatory spending. Although Fitch continues to expect a sustained higher refining margin environment, Premcor would likely be free cash flow negative due to its significant capital program under a weaker margin environment. Fitch, however, would expect Premcor to adjust its capital program to manage cash flows through any prolonged trough in the industry cycle. RCN CORP: Lenders Agree to Extend Forbearance Pacts Until May 17 ---------------------------------------------------------------- RCN Corporation (Nasdaq: RCNC) announced that the negotiations with its senior secured lenders, members of an ad hoc committee of holders of its Senior Notes and others on a consensual financial restructuring of its balance sheet are continuing. In connection with the continuing negotiations, the Company, the Lenders and members of the Noteholders' Committee have agreed to extend expiration of their previously announced forbearance agreements until 11:59 p.m. on May 17, 2004. The Company remains hopeful that the continuing negotiations will lead to agreement on a consensual financial restructuring plan in the near term, although there is no assurance this will occur. Under the extended forbearance agreements, the Lenders and members of the Noteholders' Committee have agreed not to declare any Events of Default, which they would be entitled but not required to do, under the Company's senior credit facilities or the Company's senior notes, respectively, as a result of the Company not making an interest payment on its 10 1/8% Senior Notes due 2010, its 9.8% Senior Notes due 2008, its 10% Senior Notes due 2007, and its 11 1/8% Senior Discount Notes due 2007 and certain other defaults. The Company expects any financial restructuring to be implemented through a reorganization of the Company under Chapter 11, Title 11 of the United States Code ("Chapter 11"). Since financial restructuring negotiations are ongoing, the treatment of existing creditor and stockholder interests in the Company is uncertain at this time. However, the restructuring as currently contemplated will likely result in a conversion of a substantial portion of the Company's outstanding Senior Notes into equity and an extremely significant, if not complete, dilution of current equity. RCN's objective is to reach agreement on a consensual financial restructuring plan during the current forbearance period. If financial restructuring negotiations were to proceed beyond that period or were to end, however, additional forbearance, waiver and/or amendment agreements would be needed to support RCN's continuing operations. In addition, in the absence of an agreement on a consensual financial restructuring upon expiration of the forbearance agreements, the Lenders and members of the Noteholders' Committee who hold any of the Senior Notes would be entitled, but not required, to declare RCN's senior credit facilities and the outstanding Senior Notes, respectively, immediately due and payable. Any acceleration of amounts due under RCN's senior credit facilities or any of the Senior Notes would, due to cross default provisions in the Company's indentures governing its other senior notes, entitle, but not require, the holders of other senior notes to declare the Company's other senior notes immediately due and payable if they so choose. Holders of any of the Senior Notes that are not members of the Noteholders' Committee are not subject to the terms of the forbearance agreements. If acceleration of the Company's senior credit facilities and Senior Notes were to occur, RCN would not, based on current and expected liquidity, have sufficient cash to pay the amounts that would be payable. Although RCN is actively pursuing discussions towards a final agreement on a consensual financial restructuring, there can be no assurance that such an agreement will ultimately be reached, that RCN would be able to obtain further extensions of its forbearance agreements with the Lenders and members of the Noteholders' Committee, or that holders of any of the Senior Notes that are not members of the Noteholders' Committee will not declare an Event of Default under the Senior Notes (which would terminate the forbearance agreement with Lenders), or seek other remedies available under applicable law or the terms of any of the Senior Notes, prior to such time. RCN will continue to apply substantial effort and resources to reaching a formal agreement on a consensual financial restructuring while also continuing to evaluate the best alternatives for RCN under current circumstances and as discussions and events unfold. On March 31, 2004, the NASDAQ Stock Market notified RCN that the market value of its Common Stock closed below the required minimum of $35 million for the 10 consecutive business days leading up to March 26, 2004 and that RCN would be provided 30 days in which to regain compliance with this rule. RCN has not regained compliance during this time period and, as a result, on May 3, 2004, NASDAQ notified RCN that RCN's Common Stock will be delisted from the Nasdaq SmallCap Market at the opening of business on May 12, 2004. RCN does not intend to appeal this decision. Effective at the open of business on May 12, 2004, RCN's Common Stock may be immediately eligible for quotation on the OTC Bulletin Board with its present symbol of RCNC. The value of the RCN's securities is highly speculative. RCN urges that appropriate caution be exercised with respect to existing and future investments in any of its debt obligations and/or its Common stock. About RCN Corporation RCN Corporation (Nasdaq: RCNC) is the nation's first and largest facilities-based competitive provider of bundled phone, cable and high speed Internet services delivered over its own fiber-optic local network to consumers in the most densely populated markets in the U.S. RCN has more than one million customer connections and provides service in Boston, New York, Eastern Pennsylvania, Chicago, San Francisco, Los Angeles and Washington, D.C. metropolitan markets. RECOTON CORPORATION: Plan Confirmation Hearing Today in Manhattan ----------------------------------------------------------------- On March 30, 2004 the U.S. Bankruptcy Court for the Southern District of New York approved a Disclosure Statement explaining the Joint Liquidation Plan of Recoton Corporation and its debtor- affiliates. Following that hearing, the Debtors distributed copies of their Plan and Disclosure Statement to their creditors asking them to accept the Plan. The Honorable Allan Gropper will convene a hearing, today, May 5, 2004, at 11:00 a.m. in Manhattan to review whether the plan meets the 13 standards for confirmation articulated 11 U.S.C. Sec. 1129. To confirm the Plan, Judge Gropper must find that: (1) the Plan complies with the Bankruptcy Code; (2) the Debtors have complied with the Bankruptcy Code; (3) the Plan was proposed in good faith; (4) all plan-related cost and expense payments are reasonable; (5) the Plan identifies the individuals who will serve as officers and directors post-emergence; (6) all regulatory approvals that are necessary have been obtained or are respected; (7) creditors receive more under the plan than they would in a chapter 7 liquidation; (8) all impaired creditors have voted to accept the Plan, or, if they voted to reject, then the plan complies with the absolute priority rule; (9) the Plan provides for full payment of Priority Claims; (10) at least one non-insider impaired class voted to accept the Plan; (11) the Plan is feasible and confirmation is unlikely to be followed by a liquidation or need for further financial reorganization; (12) all amounts owed to the Clerk and the U.S. Trustee will be paid; and (13) the Plan provides for the continuation of all retiree benefits in compliance with 11 U.S.C. Sec. 1114. Recoton Corporation is a global leader in the development and marketing of consumer electronic accessories, audio products and gaming products. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No.: 03-12180) on April 8, 2003. Kristopher M. Hansen, Esq. and Lawrence M. Handelsman, Esq. of Stroock & Stroock & Lavan assist the debtors in their restructuring efforts. SALOMON BROS: Fitch Downgrades 3 Classes to Low-B & Junk Levels --------------------------------------------------------------- Fitch Ratings downgrades the following certificates from Salomon Brothers Mortgage Securities (SBMS) VII, Inc., series 2000-C2: --$5.9 million class L certificates to 'B' from 'B+'; --$8.8 million class M certificates to 'CCC' from 'B'; --$6.8 million class N certificates to 'CC' from 'CCC'. Classes L and M were also removed from Rating Watch Negative. Fitch also upgrades the following class: --$33.2 million class B certificates to 'AAA' from 'AA'. In addition, Fitch affirms the following classes: --$34.9 million class A-1 at 'AAA'; --$483.3 million class A-2 at 'AAA'; --Interest only class X at 'AAA'; --$33.2 million class C at 'A'; --$7.8 million class D at 'A-'; --$11.7 million class E at 'BBB+'; --$13.7 million class F at 'BBB'; --$9.8 million class G at 'BBB-'; --$21.5 million class H at 'BB+'; --$13.7 million class J at 'BB'; --$5.9 million class K at 'BB-'. Fitch does not rate the $11.7 million class P. The downgrade to class N reflects an increase in expected losses of several specially serviced loans. The upgrade to class B reflects increases in subordination levels due to loan amortization, payoffs, and defeasance. Interest shortfalls are currently affecting classes M, N, and P. As of the April 2004 distribution date, the pool's aggregate certificate balance has been reduced by 10.8% since issuance, to $697.4 million from $781.5 million. The certificates are collateralized by 182 fixed-rate mortgage loans, consisting primarily of office (36%), retail (28%), and industrial (18%) properties, with concentrations in California (16%), New York (9%) and Florida (8%). Nine loans (10.1%) are currently in special servicing, four of which (4%) are delinquent. The largest specially serviced loan (2.6%) is secured by a mixed use building located in Dublin, Ohio. Metatec International, a publicly traded technology solutions provider, was the sole tenant of the facility. The loan was transferred to the special servicer due to imminent default arising from the insolvency problems of Metatec International. This loan is currently in foreclosure and a receiver has been appointed. Fitch will continue to closely monitor the resolution of this loan. The second largest specially serviced loan (2.5%) is secured by a retail center located in Baltimore, MD. Sam's Club, which occupied 56% of net rentable area (NRA), is dark but continues to pay rent. The special servicer is reviewing the request by Sam's Club to buy out the remaining term of their lease. Ames, which occupied 31% of NRA, rejected their lease and has vacated their space. SANTA ROSA BAY: Fitch Affirms BB- Rating on $106MM Revenue Bonds ---------------------------------------------------------------- Fitch affirms the 'BB-' credit rating on the outstanding Santa Rosa Bay Bridge Authority's (the Authority), FL $106.1 million revenue bonds, series 1996. The Rating Outlook is Stable. The 'BB-' rating reflects the poor traffic and revenue performance and weak financial profile of the Garcon Point Bridge. It incorporates the protections provided from the large debt service reserve fund that offers the potential to bridge the gap between the facility's long-term economic viability, and the need to meet its near- to medium-term debt obligations. The rating also recognizes the narrow margins of protection to deal with any unanticipated negative events. The Stable Rating Outlook acknowledges the near- to medium-term protection offered by the debt service reserve fund and the operating and financial support provided by Florida Department of Transportation (FDOT). In 2002, Fitch had noted that the sizable debt service reserve provided bondholders adequate protection into the medium term from weak bridge traffic and revenue performance, and that in conjunction with economic factors could allow for continued bondholder protection. Evidence of that is being seen in 2004 and it is Fitch's expectation that if this trend continues the rate of depletion of the debt service reserve could slow. This offers the potential for strengthening ratemaking flexibility in the medium- to long-term to allow the project to shoulder its debt service obligations from net revenues on a current basis. The Authority's revenue generating asset is the bridge, which traverses the Pensacola Bay from Garcon Point on the mainland to the Gulf Breeze Peninsula to the south. Overall toll traffic over the bridge has been considerably lower than initially forecasted since its opening in May 1999. However, traffic volumes thus far in fiscal 2004 have shown marked improvement over prior years. Regardless, the authority will continue to rely on draws in the debt service reserve and support from the FDOT in the short- to medium-term for ongoing funding of debt service and operations, respectively. The Authority's initial 1996 forecast called for 3.2 million transactions in fiscal year 2003 versus actual performance of 1.3 million transactions, approximately 41% of originally forecasted levels and essentially unchanged from prior years. Toll revenues of $3.1 million in fiscal year 2003 are at 48% of the original forecast due to the higher toll rate increase implemented in July 2001. The authority has needed to use its debt service reserve fund, which was fully funded at the time of bond issuance at $9.2 million, to cover its debt service obligations in three of the last four fiscal years. Approximately $1.1 million was drawn down in fiscal years 2002 and 2003, and estimates call for a smaller $700,000-$900,000 drawdown in fiscal year 2004 due to the sudden spurt of traffic growth experienced this year. As required under the indenture, a traffic consultant was engaged by the Authority in 2001 following its failure to meet the 1.20 times (x) rate covenant on outstanding bonds. The Authority has thus far adopted the consultant's recommendation for successive toll increases every three years beginning in July 2001. Tolls were increased to $2.50 from $2.00 for each crossing in 2001 (versus $2.25 in the original finance plan), and are forecasted to increase by $0.50 in 2004 and 2007, and by $0.25 every three years thereafter. A fair amount of elasticity was demonstrated with the 2001 toll increase, when traffic levels fell by 8.8% in fiscal year 2002. However, revenues before discounts increased by nearly 14.0%. Under a lease purchase agreement with the Authority, FDOT pays operating and maintenance (O&M) expenses for the bridge and remits all tolls collected to the Authority as lease payments. The term of the lease runs through the life of the bonds and terminates in 2028, at which point FDOT will own the bridge. Though the current agreement states that FDOT is to be reimbursed annually from toll revenues for payment of O&M, these reimbursements are deeply subordinated to debt service and roll over the to the following year should sufficient revenues be unavailable. FDOT has paid O&M expenses since the project's inception and is expected to do so for the foreseeable future. The Authority's total liability to FDOT to date includes O&M advances of $4.2 million and $7.9 million from loans made to the Authority to cover initial bridge design costs. SIERRA PACIFIC: S&P Rates Proposed $50MM Synthetic Bank Loan at BB ------------------------------------------------------------------ Standard & Poor's Ratings Services said it 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 Sierra Pacific Power currently has 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 Sierra Pacific 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: Stay Lifted Allowing Eastman to Exercise Set-Off Rights ---------------------------------------------------------------- Eastman Chemical Company is the largest producer of polyester plastics for packaging and is a leading supplier of raw materials for paints, coatings, inks, graphic arts, adhesives, textile sizes, and other formulated products. Prior to the Bankruptcy Petition Date, Eastman and Solutia, Inc., were parties to a Master Sales Agreement, effective as of December 17, 1997, pursuant to which Solutia agreed to purchase various butyraldehyde products from Eastman. Solutia would also periodically ask Eastman to ship to it certain chemical products pursuant to the terms of a "blanket" purchase order agreement. One of the Blanket Orders provided for Eastman's periodic shipment to Solutia of various types of hydrocarbon resin dispersion, while another provided for the shipment of Eastman's DBP Plasticizer. Pursuant to the Master Agreement, Patrick L. Hayden, Esq., at McGuireWoods, LLP, in New York, relates that Eastman shipped certain goods to Solutia on November 25, 2003, of which Solutia accepted delivery prior to the Petition Date and for which Solutia was subsequently billed by Eastman for $48,421. Solutia also owes Eastman $27,754, pursuant to the Hydrocarbon Resin Blanket Order, wherein Eastman shipped certain goods to Solutia on December 1, 2003. Pursuant to the Plasticizer Blanket Order, Eastman delivered certain goods to Solutia on December 15, 2003. Solutia accepted the delivery and was billed for $119,791 by Eastman. According to Mr. Hayden, Solutia became obligated to make payment for the December 15 Shipment at Eastman's plant in Kingsport, Tennessee, on December 15, 2003. However, the December 15 Shipment did not reach its final destination at Solutia's plant facility in Cantonment, Florida, until December 24, 2003. On December 23, 2003, Eastman served Solutia with a written demand pursuant to Section 546(c) of the Bankruptcy Code and Section 2-702 of the Uniform Commercial Code for reclamation of the December 15 Shipment. Solutia concluded that the December 15 Shipment was a postpetition delivery for which it was obligated to pay Eastman. Accordingly, Solutia paid to Eastman $119,791 on January 16, 2004 for the December 15 Shipment. Prior to the Petition Date, Solutia provided certain goods to Eastman on open account trade credit. Solutia and Eastman agree that Eastman owed Solutia as of the Petition Date, $844,998. As of the Petition Date, Solutia had an outstanding balance due to Eastman for $195,967, which was reduced to $76,176 as a result of the January 16 Payment. Following the Petition Date, Eastman negotiated with Solutia and reached an agreement to resolve their competing claims and address the effect of the January 16 Payment: (a) On March 8, 2004, Eastman paid to Solutia $649,031 on account of the Eastman Prepetition Debt leaving a $195,967 outstanding prepetition balance with respect to the Solutia Shipments; and (b) Eastman agreed to ask the Court to lift the stay to set off the Solutia Prepetition Debt against Eastman's remaining obligations to Solutia. At Eastman's behest, the Court rules that: (a) The automatic stay is lifted to allow Eastman to exercise its right to set off the Solutia Prepetition Debt against Eastman's remaining obligation to Solutia relating to the Solutia Shipments; (b) Without further delay, Eastman will pay to Solutia $119,791, representing the return of Solutia's January 16 Payment; and (c) Without further delay, Eastman will promptly withdraw its Reclamation Claim and any and all other claims, demands, or proceedings relating to reclamation of the Eastman Shipments. 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) SR TELECOM: S&P Further Junks Ratings with Negative Outlook ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on SR Telecom Inc. to 'CCC' from 'CCC+'. The outlook is negative. "The ratings action reflects continued poor operating performance and material negative free operating cash flow in 2003, and follows the company's announcement that it plans to undertake additional restructuring of its operations," said Standard & Poor's credit analyst Michelle Aubin. The ratings on Montreal, Quebec-based SR Telecom reflect its challenging operating conditions and ongoing exposure to emerging markets, constrained financial flexibility, weak operating performance, and a leveraged financial profile. SR Telecom is a manufacturer of point-to-multipoint fixed wireless access telecommunication equipment. The company's systems have been primarily deployed in rural areas and developing markets with low teledensity where distance and terrain make traditional wire and cable systems uneconomical. Market conditions remain challenging as customers continue to defer spending. Revenues were down more than 35% from C$196.9 million in 2002. SR Telecom's credit profile is characterized by a very weak and constrained liquidity position. The company's liquidity is limited to cash on hand of C$11.7 million as of Dec. 31, 2003. Subsequent to year-end, the company raised C$50 million in a public and private warrants' offering. SR Telecom consumed C$50.3 million in free operating cash flow in 2003 and has debt maturities of more than C$80 million in the next 18 months. The recently announced restructuring program, once implemented, should reduce the company's cash consumption and improve operating performance. Nevertheless Standard & Poor's expects that SR Telecom will continue to generate negative free operating cash flow in the near term due to core operating requirements, and debt repayments in 2004. Financial flexibility is further constrained by the refinancing risk associated with C$71 million in senior unsecured notes outstanding that mature in 2005. The negative outlook reflects the possibility that the ratings on SR Telecom could be lowered further if the company's operating performance and liquidity position do not improve. TITAN CORPORATION: First Quarter Revenues Up by 21% to $459 Mil. ---------------------------------------------------------------- The Titan Corporation (NYSE: TTN) reported revenues of $459 million for the first quarter of 2004, a 21% increase over revenues of $378 million for the same period a year ago. The year- over-year organic growth rate in the first quarter was also 21%, reflecting new and expanded contract activity in Titan's National Security Solutions business. "This quarter marks the fourth quarter in a row where Titan's organic revenue growth has exceeded 20% over the comparable prior year period," said Gene Ray, Titan's chairman, president and CEO. "Our employees remained focused on providing and expanding the vital services we deliver to key national security customers. Compared with the first quarter of last year, we increased revenues and continued to build backlog, laying the foundation for strong future business growth." Net income for the first quarter of 2004 was $3.1 million, or $0.03 per diluted share, compared with net income of $7.0 million, or $0.09 per diluted share, for the first quarter of 2003. Net income for the first quarter of 2004 reflects merger-related costs of $17.6 million in connection with Titan's pending merger with Lockheed Martin. These costs include approximately $12 million of legal, accounting and other professional fees associated with the comprehensive internal review being conducted by Titan to evaluate whether payments made in foreign countries by consultants for Titan or its subsidiaries were made in violation of applicable law. The legal, accounting and other professional fees incurred also supported the company's related inquiry by the Department of Justice and the investigation by the Securities and Exchange Commission. No adjustment was made in the first quarter of 2004 to the company's $3 million provision established in the year ended December 31, 2003, for estimated potential liabilities relating to the governmental inquiries. Also included in merger-related costs are approximately $6 million in additional legal and administrative costs related to the merger transaction itself, including the exchange offer and consent solicitation for Titan's senior subordinated notes and the redemption of Titan's preferred stock, which are conditions to closing. The after-tax effect of the merger-related charges amounted to approximately $0.13 per diluted share. Net income was further reduced by approximately $1.4 million of unplanned legal and other professional fees, primarily associated with reaching a settlement to take control of substantially all of the assets of Titan's former subsidiary, SureBeam Corporation, which filed bankruptcy under a Chapter 7 liquidation proceeding in January 2004. Bookings in the first quarter of 2004 totaled approximately $640 million, building the company's backlog to a record $5.4 billion. Titan's book-to-bill ratio for the first quarter 2004 was 1.4 to 1. Significant new contract wins in the first quarter adding to the backlog and positive book-to-bill ratio included the following: * The Joint Analytical Support contract to provide analytical support services to the Joint Staff Force Structure, Resources, and Assessment Office and U.S. Combatant Commands; * The Defense Intelligence Information Systems Integration and Engineering Support Services contract to provide wide- ranging information technology products and services to the Defense Intelligence Agency and other intelligence agencies worldwide; * The NAVAIR Program Management Support Services contract to provide technical and management support for all acquisition phases of naval aircraft and aviation weapon systems; * The Department of the Army Information Management Support Center Desktop Support Services contract to provide information technology services to thousands of military and civilian employees in more than 90 agencies comprising the Headquarters Department of the Army; and * The Department of Defense Systems Integration, Design Development, Operations and Maintenance Services contract to provide information technology support to the Military Health System and the Department of Veterans Affairs. "Our solid bookings in the first quarter demonstrate strong continued demand for Titan's services and specialized systems integration capabilities. Moreover, we are off to a great start in bookings in the second quarter," Ray said. "I am particularly proud of the way our employees are collaborating throughout the company to combine their talents and win large procurements." First Quarter 2004 Operating Highlights Revenue growth for the quarter, as compared to the same quarter last year, largely reflected ongoing ramp-up of existing large contracts with the U.S. military and intelligence communities. The primary drivers of revenue increases were continued growth of Titan's linguist contract with the U.S. Army, the X-Craft development contract with the Office of Naval Research, the Enterprise and Architectural Decision Support contract with the National Security Agency, and several contracts across the Department of Defense for intelligence analysis and operations support services. Operating margins, excluding the merger-related costs, were 7.0% for the first quarter of 2004, compared to 5.5% for the same quarter a year ago. Operating margins, excluding the merger- related costs and the non-operational costs related to the SureBeam bankruptcy, were 7.4%. After these adjustments, the improvement in operating margins over the first quarter of the prior year was attributable to more efficient absorption of overhead cost from increased revenues, coupled with cost reduction measures initiated by the company in 2002 and 2003. Receivables growth during the quarter was largely the result of longer payment cycles on certain contracts and a customer-mandated temporary change from electronic billing to manual billing for Titan's largest contract. As a result, Days Sales Outstanding (DSO) grew to 84 days at March 31, 2004, from 72 days at December 31, 2003. Titan believes this DSO growth is temporary, and that more normalized payment cycles will be restored in the second and third quarters of 2004, thereby resulting in reductions of both DSO and outstanding bank debt. Titan's balance sheet continues to provide a strong financial foundation to support growth. Cash and cash equivalents at March 31, 2004 totaled $15.8 million, with $95 million available under Titan's senior credit facility. Borrowings under the company's senior credit facility at the end of the quarter rose to $375 million from $345 million at year-end 2003, reflecting the temporary effect of higher DSOs, cash of $12.5 million used to redeem the cumulative convertible preferred stock, and to a lesser extent the merger-related costs paid in the quarter. About Titan Headquartered in San Diego, The Titan Corporation is a leading provider of comprehensive information and communications systems solutions and services to the Department of Defense, intelligence agencies, and other federal government customers. A provider of national security solutions, the company has approximately 12,000 employees and annualized sales of approximately $2 billion. * * * As reported in the Troubled Company Reporter's March 11, 2004 edition, Standard & Poor's Ratings Services revised its CreditWatch listing of Sept. 16, 2003, on Titan Corp. to developing from positive, following a Justice Department probe into whether overseas consultants for Titan Corp. made illegal payments to foreign officials, which may jeopardize the completion of its acquisition by Lockheed Martin Corp. (BBB/Stable/A-2). Standard & Poor's also placed its 'BB-' corporate credit and senior secured debt ratings, and 'B' subordinated rating of Titan on CreditWatch with positive implications following the announced acquisition of Titan by Lockheed Martin. The transaction is valued at $2.4 billion, including the assumption of approximately $580 million of Titan's debt outstanding. Standard & Poor's will continue to monitor the situation. TWODAYS: Has Until May 13 to Complete & File Bankruptcy Schedules ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Kansas gave TwoDays Properties, LLC and its debtor-affiliates an extension to file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtors have until May 13, 2004 to file their Schedules of Assets and Liabilities and Statements of Financial Affairs. TwoDays Properties LLC is a Wichita, Kansas based management and real estate company, which owns the real estate under 12 restaurants, and in turn leases all 12 to the operating companies. The Company filed for chapter 11 protection on April 8, 2004 (Bankr. D. Kans. Case No. 04-11792). Edward J. Nazar, Esq., at Redmond & Nazar LLP and Douglas S. Draper, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed both estimated debts and assets of over $10 million. TWODAYS: U.S. Trustee Meeting with Creditors on May 7 ----------------------------------------------------- The United States Trustee will convene a meeting of TwoDays Properties, LLC's creditors at 11:00 a.m., on May 7, 2004 in Room B-56 at US Courthouse, 401 North Market, Wichita, Kansas 67202. 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. TwoDays Properties LLC is a Wichita, Kansas based management and real estate company, which owns the real estate under 12 restaurants, and in turn leases all 12 to the operating companies. The Company filed for chapter 11 protection on April 8, 2004 (Bankr. D. Kans. Case No. 04-11792). Edward J. Nazar, Esq., at Redmond & Nazar LLP and Douglas S. Draper, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed both estimated debts and assets of over $10 million. UNITED AIRLINES: Retiree Committee Wants to Retain PwC as Actuary ----------------------------------------------------------------- Pursuant to Sections 1103(a) and 1114(b)(2) of the Bankruptcy Code, the Retired Salaried & Management Employees' Committee in United Airlines Inc.'s chapter 11 case seeks the Court's permission to retain PricewaterhouseCoopers as actuarial consultants. Catherine Steege, Esq., at Jenner & Block, says that the Committee selected PwC based on its experience and expertise in actuarial advisory and employee benefit consulting services. PwC's experience includes working on retiree health and actuarial matters with Navistar, Converse, TWA and Allis Chalmers in bankruptcy situations. Ms. Steege anticipates that PwC's work will focus on valuation of proposed changes to the Debtors' retiree medical benefits. As actuary, PwC will: (a) analyze the accuracy and actuarial assumptions used by the Debtors to calculate their proposals; (b) analyze whether the proposals are fair based on benchmarking actuarial assumptions of similar organizations; (c) help create counterproposals or alternative plan changes; (d) provide expert testimony; and (e) examine the FAS 106 implications of the changes. Ms. Steege explains that the Retiree Committee needs an actuarial and benefits consultant. FTI Consulting, which is analyzing business plan issues, does not have this expertise. Because of the large number of retirees represented by each Committee and the expedited timetable set by the Court, the Retiree Committee cannot share the services of the actuarial firm hired by the UAL Pilots' Committee. In fact, no single firm could do all necessary work in these matters. PwC will seek compensation on an hourly basis, plus reimbursement of actual, necessary expenses and other charge incurred. PwC's customary hourly rates are typically between: Rates Professionals ----- ------------- $765 - 773 partners 660 - 694 directors 560 - 650 managers 250 - 486 senior associates 205 - 268 staff assistants and paraprofessionals According to Jack A. Abraham, principal at PwC's Human Resource Services Practice, PwC professionals are conducting a review of contacts with the Debtors, their affiliates and entities holding large claims that are reasonably known. The review consists of queries of an internal computer database with names of individuals and entities that are present or recent former clients of PwC. PwC will not provide services to any of the clients that are adverse to issues connected to the Debtors' bankruptcy. Mr. Abraham assures the Court that, currently, there are no relationships that will compromise in any way PwC's ability to serve as consultants to the Retiree Committee. 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) US AIRWAYS: Dave Davis Named Chief Financial Officer ---------------------------------------------------- US Airways announced that Dave Davis has been named chief financial officer, effective immediately. Davis, who previously was US Airways' senior vice president of finance, replaces Neal S. Cohen, who has chosen to leave the company. "Dave Davis has played an integral role in the company's restructuring and will assume an even greater role in the company's transformation plans," said Bruce R. Lakefield, US Airways president and chief executive officer. "Dave's intellect, strong leadership skills and financial acumen are critical talents," said Lakefield. Lakefield complimented Cohen's contributions to the company. "Neal helped lead the effort in restructuring the company's debt and reducing costs, which paved the way for US Airways to secure a federal loan guarantee, finance regional jets and emerge from Chapter 11, all feats that most experts considered impossible. I am pleased that Neal has agreed to continue to provide his professional advice to ensure a smooth transition," said Lakefield. Davis joined US Airways in April 2002 as vice president of financial planning and analysis and was responsible for operating and capital budgeting, divisional cost control, financial analysis, and transactions support. He has been a key participant in US Airways' restructuring, which resulted in over $1.9 billion in annual cost savings, precedent-setting labor agreements, and the raising of $1.24 billion in new financing. He also led the development of the business plan used to obtain a $1 billion federal loan guarantee and $240 million in new equity from the company's primary equity investor, the Retirement Systems of Alabama. Davis was promoted to senior vice president in January 2004 and took on additional responsibilities for purchasing and fleet planning. Prior to joining US Airways, Davis held the position of vice president - financial planning and analysis for Budget Group, Inc. Previously, he held key finance positions at both Delta Air Lines and Northwest Airlines. Davis holds an MBA in Finance and a bachelor of science degree in Aerospace Engineering, both from the University of Minnesota. US UNWIRED: Stockholders' Deficit Tops $239MM at March 31, 2004 --------------------------------------------------------------- US Unwired Inc. (OTCBB:UNWR), a PCS Affiliate of Sprint (NYSE:FON), reported revenues of $141.6 million for the three- month period ended March 31, 2004. The company posted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the consolidated operations of $28.0 million for first quarter of 2004. These results included $6.9 million of EBITDA generated from the company's wholly owned subsidiary, IWO Holdings, Inc. "These are extremely strong results," said Robert Piper, US Unwired's President and Chief Executive Officer, commenting on the first quarter of 2004's performance. "We accelerated the positive momentum generated last year from substantial changes in the policies, programs and procedures at every level of our company. As a result, we are more efficient and our metrics continue to improve." "Our churn rate fell to 3.1%, down 0.6% from a year ago and 0.3% from last quarter. The cost per gross addition fell by $28 from the first quarter of last year and by more than $100 from last quarter. Finally, our network performance has never been stronger. Even though we completed a record 1.7 billion minutes of use this quarter, our dropped and block call rates have never been lower. Collectively and individually, these results are exactly how we hoped to begin the year," Piper continued. During the first quarter, US Unwired sold certain non-core operating assets for net proceeds of approximately $41.6 million. The properties sold included US Unwired's cellular operations, eight of its thirteen 10 MHz PCS licenses, 81 communication towers, and its 25% interest in a rural cellular property. From the net proceeds, the Company paid its senior secured lenders approximately $11.0 million and retained the remaining $30.6 million cash. On a consolidated basis, US Unwired had unrestricted cash of approximately $144.3 million and restricted cash of $8.2 million at March 31, 2004. All of the restricted cash and $36.2 million of the unrestricted cash were held by IWO Holdings, Inc. At March 31, 2004, IWO was in payment and covenant defaults with its bank credit facility. US Unwired has not guaranteed or otherwise become responsible for IWO's debt. At March 31, 2004, US Unwired's balance sheet shows a total stockholders' deficit of $239,200,000 About US Unwired US Unwired Inc., headquartered in Lake Charles, La., holds direct or indirect ownership interests in five PCS Affiliates of Sprint: Louisiana Unwired, Texas Unwired, Georgia PCS, IWO Holdings and Gulf Coast Wireless. Through Louisiana Unwired, Texas Unwired, Georgia PCS and IWO Holdings, US Unwired is authorized to build, operate and manage wireless mobility communications network products and services under the Sprint brand name in 68 markets, currently serving over 650,000 PCS customers. US Unwired's PCS territory includes portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas, Massachusetts, New Hampshire, New York, Pennsylvania, and Vermont. For more information on US Unwired and its products and services, visit the company's web site at http://www.usunwired.com.US Unwired is traded on the OTC Bulletin Board under the symbol "UNWR". * Gary Pemberton Joins Marshack Shulman as Litigation Partner ------------------------------------------------------------- The law firm of Marshack Shulman Hodges & Bastian LLP (MSHB) announced that Gary Pemberton has joined the firm as a partner. Mr. Pemberton becomes MSHB's newest partner, having developed a strong practice in a variety of litigation matters throughout Southern California. "I believe that Marshack Shulman Hodges & Bastian has set the standard for providing litigation and bankruptcy services, and I look forward to expanding current relationships while developing new ones," Pemberton said. "We welcome Gary to the firm, and look forward to his high level of service for our clients," said Ronald S. Hodges, partner and head of litigation at MSHB. "Gary will contribute a diverse skill set to our clients and represent them well." Mr. Pemberton's experiences include disputes involving breach of contract, unfair competition, insurance litigation, real property litigation, securities litigation, intellectual property litigation, professional malpractice and environmental litigation. Mr. Pemberton was admitted to the California State Bar in 1986. He is a past member of the Board of Directors of the Orange County Bar Association, is a present member of the Board of Directors of the Orange County Chapter of the Federal Bar Association, and has held numerous positions with civil and local foundations. Additionally, he has spoken on a number of topics relating to litigation issues, and has taught continuing education courses on federal and state civil procedure, legal writing and insurance law. Before joining MSHB, Mr. Pemberton had been in private practice with notable law firms, including Irell & Manella and as a shareholder of Stradling Yocca Carlson & Rauth, specializing in business and bankruptcy litigation. Mr. Pemberton graduated from UCLA before attending the University of California, Berkeley where he earned his law degree in 1986. He is also a graduate of the Princeton Theological Society. He resides in Irvine, California, along with his wife and their three daughters. About Marshack Shulman Hodges & Bastian LLP The firm was founded in the early 1990s by Richard Marshack, now Of Counsel to the organization. By the mid to late 1990s, the firm had evolved into a full-service bankruptcy law firm whose growth rate outpaced that of the local economy. Leonard M. Shulman joined the firm in the mid '90s to expand the firm's bankruptcy trustee and litigation practice. Ronald S. Hodges joined the firm in 1995 and immediately contributed a depth and breadth to the firm's emerging litigation department, which continues to expand today. As the firm matured through the 1990s, new clients and partners were added, including James C. Bastian, who was named partner in 1999. Mr. Bastian specializes in a variety of insolvency and bankruptcy related matters, and successfully led trade vendors through the unprecedented County of Orange bankruptcy proceedings, in fact, recovering 100 cents on the dollar for this constituency. Throughout the firm's expansion, Marshack Shulman Hodges & Bastian has earned its reputation as one of the finest law firms of its kind, not only in Southern California, but throughout the region. The business community has recognized that the firm's team is bright, vibrant, quick-thinking and able to devise solutions to severe and complex problems. Practice areas currently handled by the firm include: committee representations, trustee representation, bankruptcy litigation, prosecution of D&O claims, business reorganizations, employment and labor law, complex personal injury, insurance, and bad faith (representing the plaintiff). For more information regarding Marshack Shulman Hodges & Bastian LLP, visit http://www.mshblaw.com/ * Brossman, Walters & Bein Join Saul Ewing's Harrisburg Office -------------------------------------------------------------- Saul Ewing LLP announces two new Partners, Eric L. Brossman and Catherine E. Walters, and one Associate, Robert Bein as members of the Business Department in the Firm's Harrisburg office. Brossman, Walters, and Bein previously worked in the Harrisburg office of Duane Morris LLP. Mr. Brossman, a corporate and bankruptcy attorney, brings more than 25 years of experience to Saul Ewing. Ms. Walters comes to Saul Ewing with more than 20 years of experience in labor and employment law. Mr. Brossman practices in the areas of corporate and bankruptcy law, business reorganization and counseling, loan documentation and transactions, mergers and acquisitions, commercial real estate, and venture capital financing. Ms. Walters represents employers in all facets of labor and employment law, including affirmative action and employment discrimination, wage and hour issues, drafting and enforcement of employment, non-competition and other restrictive agreements, management labor relations, contract negotiations and arbitrations, wrongful discharge defense, and other issues arising from the employer-employee relationship. Mr. Bein practices in both business and bankruptcy. "One component of Saul Ewing's strategic plan focuses on the unique legal needs of the communities surrounding each of our offices," said Stephen S. Aichele, Managing Partner of Saul Ewing. "The Harrisburg area has exhibited an increasing demand for business, bankruptcy and employment practitioners, and we are pleased to welcome this new team, in particular two new Partners, each with at least two decades of experience in these practice areas." "Our Harrisburg office has experienced significant growth over the last few months as we align to serve the growing demands of business and government in the state capital and its surrounding area," said Constance B. Foster, Managing Resident Partner of Saul Ewing's Harrisburg office. "As the business climate changes, the collective capability of Eric, Catherine and Robert will help to fulfill our clients' mounting needs for business, bankruptcy and employment legal services." "Saul Ewing has demonstrated a strong commitment to the business community in central Pennsylvania, which was pivotal in my decision to practice at Saul Ewing," said Mr. Brossman. "I am excited to join a Firm that clearly focuses not only on growth, but supports each of its regional offices." "Over the years, I have observed Saul Ewing establish a strong presence in the Harrisburg legal community by expanding the types of services it offers in response to client needs," said Ms. Walters. "While the Firm's growth and reputation in Central Pennsylvania offer excellent reasons for any new partner to consider Saul Ewing, I was particularly influenced by the collegial atmosphere and the support provided to new Partners." Mr. Brossman received his B.A. degree, summa cum laude, from Albright College, and his M.A., with highest honors, from the Pennsylvania State University. He received his law degree, cum laude, from The Dickinson School of Law, where he was Editor-in- Chief of the Dickinson Law Review. He is admitted to practice law in Pennsylvania. Ms. Walters received two B.A. degrees, magna cum laude, from C.W. Post College of Long Island University, and her law degree from The Dickinson School of Law. She is admitted to practice law in Pennsylvania. Saul Ewing LLP is a 250-attorney firm providing a full range of legal services from offices in seven locations throughout the mid- Atlantic region. Our clients include regional, national, and international businesses and not for profit institutions, individuals, and entrepreneurs. * Ropes & Gray Adds Bradford Badke to New York IP Litigation Group ------------------------------------------------------------------ Ropes & Gray bolstered its capabilities in Intellectual Property (IP) Litigation with the addition of Bradford J. (Jim) Badke to the New York office. Formerly with Dewey Ballantine LLP, Mr. Badke brings over 20 years of experience in IP litigation and will significantly expand the firm's work in that area. "This development is significant as it fills a key need for us," said Roscoe Trimmier, Jr., partner and chair of the Litigation Department. "Last year's combination with Reboul, MacMurray gave us added litigation depth in New York. Since then, we've been interested in growing the IP litigation area. We're thrilled that we found the right fit in Jim, and look forward to the service opportunities this brings for our clients." Ropes & Gray currently represents numerous pharmaceutical, biotechnology and technology clients in the tri-state area and across the country. Mr. Badke has represented a number of major corporations in patent litigation for the past two decades, including companies in the life sciences, chemical, pharmaceutical, biotechnology and medical device industries, with particular expertise in biotechnology and surgical device patents. His experience includes jury and bench trials. His courtroom experience in patent litigation also includes evidentiary hearings on patent enforceability, inventorship and the construction of patent claims. He has also acted as an expert witness in patent cases. He is admitted to practice in New York, the U.S. Court of Appeals for the Federal Circuit, and the Second and Third Circuits; U.S. District Courts for the Eastern, Southern, and Northern Districts of New York; the U.S. Supreme Court and is registered to practice before the U.S. Patent and Trademark Office. He is a member of the American Intellectual Property Law Association and the New York Intellectual Property Law Association. The Litigation Department at Ropes & Gray is the second largest department in the firm with a team of approximately 100 trial lawyers. The department has a nationwide litigation practice serving a broad range of clients, and handles a wide array of complex disputes in federal and state courts and before administrative bodies throughout the country. Ropes & Gray's Intellectual Property Group represents national consumer goods companies, leading manufacturing, computer, pharmaceutical and biotech companies, financial services firms, health care organizations, educational and charitable organizations, and retail businesses in securing and registering patents, copyrights and trademarks, protecting trade secrets, licensing, litigation, and financial transactions involving patents, copyrights, trademarks, and other forms of intellectual property. Ropes & Gray was one of only four national firms ranked among the top ten firms for "Quality of Biotech Patents" in a survey conducted by PatentRankings LLC, appearing in the January 2004 issue of American Lawyer's IP Law & Business. The firm's Intellectual Property Practice also holds top ten rankings in the Boston Business Journal and Mass High Tech. For more than a century, Ropes & Gray LLP has been a leading U.S. law firm serving the needs of businesses and individuals throughout the nation and the world. With nearly 600 lawyers, Ropes & Gray creates solutions to complex legal problems across a wide range of legal disciplines, including: antitrust, corporate, bankruptcy and business restructuring, employee benefits, environmental, health care, intellectual property and technology, international, labor and employment, life sciences, litigation, private client services, real estate and tax. The firm has offices in Boston, New York, San Francisco, and Washington, D.C. For further information, visit http://www.ropesgray.com/ * Upcoming Meetings, Conferences and Seminars --------------------------------------------- April 29-May 1, 2004 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Fairmont Hotel, New Orleans Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 3, 2004 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Millennium Broadway Conference Center, New York, NY Contact: 1-703-739-0800 or http://www.abiworld.org May 13-14, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The First Annual Conference on Distressed Investing - Europe: Maximizing Profits in the European Distressed Debt Market Le Meridien Piccadilly Hotel - London, UK Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com May 20-22, 2004 ALI-ABA Fundamentals of Bankruptcy Law Astor Crowne Plaza, New Orleans Contact: 1-800-CLE-NEWS; http://www.ali-aba.org June 2-5, 2004 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, MI Contact: 1-703-739-0800 or http://www.abiworld.org June 10-12, 2004 ALI-ABA Chapter 11 Business Reorganizations Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org June 14-15, 2004 TURNAROUND MANAGEMENT ASSOCIATION 2004 Advanced Education Workshop Toronto Univesity, Toronto Canada Contact: 312-578-6900 or www.turnaround.org June 24-25, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Seventh Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel - Chicago Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com June 24-26,2004 AMERICAN BANKRUPTCY INSTITUTE Hawaii Bankruptcy Workshop Hyatt Regency Kauai, Kauai, Hawaii Contact: 1-703-739-0800 or http://www.abiworld.org July 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE The Mount Washington Hotel Bretton Woods, NH Contact: 1-703-739-0800 or http://www.abiworld.org July 28-31, 2004 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Reynolds Plantation, Lake Oconee, GA Contact: 1-703-739-0800 or http://www.abiworld.org September 18-21, 2004 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference The Bellagio, Las Vegas, NV Contact: 1-703-739-0800 or http://www.abiworld.org October 9-10, 2004 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC Annual Fall Conference Nashville, TN Contact: 1-703-449-1316 or www.iwirc.com October 10-13, 2004 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Seventh Annual Meeting Nashville, TN Contact: http://www.ncbj.org/ October 15-18, 2004 TURNAROUND MANAGEMENT ASSOCIATION 2004 Annual Convention Marriott Marquis, New York City Contact: 312-578-6900 or www.turnaround.org November 29-30, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Eleventh Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Plaza Hotel - New York City Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org March 9-12, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Spring Conference JW Marriott Desert Ridge, Phoenix, AZ Contact: 312-578-6900 or www.turnaround.org April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, DC Contact: 1-703-739-0800 or http://www.abiworld.org June 2-4, 2005 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities and Bankruptcy Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org July 14 -17, 2005 AMERICAN BANKRUPTCY INSTITUTE Ocean Edge Resort, Brewster, MA Contact: 1-703-739-0800 or http://www.abiworld.org July 27- 30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, SC Contact: 1-703-739-0800 or http://www.abiworld.org October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or www.turnaround.org November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, TX Contact: http://www.ncbj.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, CA Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Bernadette C. de Roda, 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 ***