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/raid1/www/Hosts/bankrupt/TCR_Public/040611.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, June 11, 2004, Vol. 8, No. 116 Headlines ADELPHIA BUSINESS: Inks Stipulation To Assume Comcast Cable Pacts ALLIED DEVICES: Board Unanimously Approves Forward Stock Split AMERCO: S&P Rates Corp. Credit at B+ & Sr. Secured Notes at BB ARMOR HOLDINGS: Raises $141.5 Million From Share Offering AVAYA: Completes $111 Million Stock Contribution to Pension Plan BEAR STEARNS: Fitch Affirms Low-B Ratings on 5 1999-WF2 Classes BUSH INDUSTRIES: Has Until Plan Confirmation to Decide on Leases CALPINE CORPORATION: CPUC Approves Tolling Pact with San Diego Gas CHESAPEAKE ENERGY: Declares Increased Common Stock Dividend CHURCH & DWIGHT: S&P Affirms 'BB' Rating Following Refinancing CLAREMONT PROJECT: Section 341(a) Meeting Slated for June 14 COEUR: Wheaton Retorts Get Shareholder Support to Advance Bid COGNISTAR CORP: Case Summary & 20 Largest Unsecured Creditors COMM 2000-C1: Fitch Downgrades $4.5M Class N Rating To CC from CCC CSAM FUNDING IV: S&P Assigns 'BB' Rating to Classes D-1 & D-2 COURTNEY EXCAVATING: Case Summary & Largest Unsecured Creditors DELTA AIR: Names Greg Riggs as Senior VP - General Counsel DISCOVERY INVESTMENTS: Addresses Unauthorized Berlin Stock Listing DLJ COMMERCIAL: Fitch Rates 6 Series 2000-CF1 Classes at Low-Bs ELCOM INT'L: Laurence Mulhern Returns as Chief Financial Officer ENRON CORP: Wants Court Nod to Assume Oracle Executory Contracts ENRON CORP: Commences Actions to Recover 30 Preferential Payments ENRON CORP: Agrees to Settle Retail Disputes With 19 Parties FLEMING COS: Court Okays Andrew Head, et al., Claim Settlement GENERAL MARITIME: S&P Affirms Low-B Ratings & Removes Credit Watch GEO SPECIALTY: Hires Conway Del Genio as Restructuring Advisor GLOBAL INTERNET: ProUroCare Shareholders Gain Controlling Interest GOLD KIST: S&P Places B Corporate Credit Rating On Watch Positive GOOD HARBOR FILLET: Case Summary & 20 Largest Unsecured Creditors HAVENS STEEL: Turns to KPMG for Accounting Work & Financial Advice HOLLINGER INC: Catalyst Fund Asks Court to Investigate Company HYLSA S.A.: S&P Raises Local & Foreign Currency Rating To B I2 TECHNOLOGIES: Settles SEC Proceedings for $10 Million IMAGIS TECHNOLOGIES: Roy Trivett Now Holds 14.1% Equity Stake KAISER: Amending DIP Credit Pact to Facilitate Asset Dispositions KMART CORP: Jaynes Wants Court to Compel $2,677,393 Claim Payment LB-UBS COMMERCIAL: Fitch Affirms Junk Rating on 2001-2 Class P MEDICALCV INC: Perkins Capital Discloses 16.9% Equity Stake MESA AIR: Extends Stock Repurchase Program METALDYNE: Explores with Dongfeng Joint Venture in China MILACRON INC: Board OKs Stock Rights Offering of $2 Per Share MIRANT: Court Modifies Stay Allowing Kern River To Set Off Claim MJ RESEARCH: Gets Nod to Employ Ordinary Course Professionals MOONEY AEROSPACE: Case Summary & 20 Largest Unsecured Creditors NATIONAL CENTURY: Court Asked To Stay 3rd Round Discovery Order NATIONAL WASTE: Gets Nod to Hire Blank Rome as Special Counsel NEWPOWER: Wants to Make Interim Distributions to Shareholders NEW WORLD PASTA: Taps Lisa J. Donahue from AlixPartners as New CEO O'SULLIVAN IND: Rick A. Walters Succeeds Phillip J. Pacey as CFO OMI CORPORATION: S&P Removes All Ratings From CreditWatch OWENS CORNING: Committee Tells Why Trustee Should be Appointed PACIFIC GAS: Inks Stipulation Allowing Bank Of America's Claims PARMALAT: Utilities Say Debtors' Condition Continues to Worsen PARMALAT GROUP: Kmart Wants $500,000 Critical Vendor Payment Back PEGASUS: Court Agrees To Waive Investment & Deposit Guidelines PEGASUS: Court Finds DIRECTV in Violation of Automatic Stay PG&E NAT'L: Court Allows USGen Panel TO Pursue Claims Against NEG PRAXIS PHARMACEUTICALS: Patch Energy Continues Texas Well Testing PREFERRED RIVERWALK: Wants Until Oct. 31 to Make Lease Decisions RASCALS INTL: Looks for More Capital Sources to Sustain Operations RCN CORP: Asks Court to Authorize PwC's Retention as Auditors RELIANCE: Bank Committee Proposes Plan Solicitation Procedures SALOMON BROTHERS: Fitch Upgrades Class H & J Ratings to BB+/BB SAMSONITE: Completes Private Offering of Euro 100MM Senior Notes SAMSONITE CORP: 78% of 10-/4% Senior Debtholders Tender Notes SAMSONITE CORP: First Quarter Net Loss Tops $7.1 Million SENTAC INC: Voluntary Chapter 11 Case Summary SLMSOFT INC: Toronto Stock Exchange Reviews Listing Compliance SPEIZMAN INDUSTRIES: Looks for Schedules & Statements by June 22 SPIDERBOY INTERNATIONAL: Files Reorganization Plan with SEC SR TELECOM: Finalizes Restructuring Plan for French Operations TELESYSTEM INTERNATIONAL: S&P Places Ratings On Watch Positive TRADE PARTNERS: Case Summary & 5 Largest Unsecured Creditors UGS PLM: Keeps U.S. Corporate Headquarters in Dallas Area UNUMPROVIDENT: S&P Cuts Ratings on Various Related Transactions US AIRWAYS: Flight Attendants Still Undecided On Concessions USG CORP: Asks for Authority To Assume Current Headquarters Lease VIVENDI: Increases Price & Extends Consent Date of Tender Offer WEIRTON: Texaco Concedes to Pay $500,000 to Settle Damage Claims WORLDCOM INC: SEC Asks For Documents About KPMG's Independence W.R. GRACE: Applies To Employ Baker Donelson As Lobbyists * BOOK REVIEW: EPIDEMIC OF CARE - A Call For Safer, Better, and More Accountable Health Care ********* ADELPHIA BUSINESS: Inks Stipulation To Assume Comcast Cable Pacts ----------------------------------------------------------------- Comcast Cable Communications, LLC, licensed to Adelphia Business Solutions, Inc. (ABIZ), the exclusive indefeasible use of miles of fiber optic communications systems pursuant to certain agreements. Comcast filed 72 unsecured proofs of claim in connection with ABIZ's defaults in the Agreements. In a Court-approved Stipulation between the parties, ABIZ agrees to assume the Agreements subject to amendments and cure payments. The Amendments include: -- The term of each of the Agreements will expire on April 7, 2024; -- The Calculation of Payments provision for each of the Agreements will be the same as that reflected in the Agreement pertaining to the Jacksonville, Florida market, subject to any non-substantive conforming changes necessary to reflect the parties' current practice in the applicable market; and -- The Schedule of Maintenance, Acceptance, and Documentation for all Agreements will be the same as that reflected in the Jacksonville Agreement, subject to any non-substantive conforming changes necessary to reflect the parties' current practice in the applicable market. Comcast and the applicable Debtors will execute definitive documentation to evidence the amendments to each of the Agreements, and will work together to prepare As-Built drawings, as soon as reasonably practicable, to reflect the Debtors' existing fiber optic network in the Jacksonville, Florida market. The Debtors and Comcast agree that the Jacksonville Network consists of the Debtors' assets, properties and fiber capacity covered under the Jacksonville Agreement and all additional capacity acquired thereafter. In full satisfaction of (i) the cure obligations of the Debtors under the Agreements, and (ii) the Comcast Claims, the Debtors will pay to Comcast: -- $893,233; and -- 36 equal monthly installments of $40,574. Nothing in the Stipulation, however, will relieve the applicable Debtors of, or otherwise affect, any ordinary course of business postpetition obligations arising under the Agreements that may have accrued, but have not yet been invoiced or otherwise become due and payable, including, but not limited to, those amounts due as part of Comcast's annual maintenance charges under the Agreements. The parties will execute mutual releases. 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. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED DEVICES: Board Unanimously Approves Forward Stock Split -------------------------------------------------------------- On May 4, 2004, the Board of Directors of Allied Devices Corporation, now known as Deep Well Oil & Gas, Inc., unanimously approved a forward stock split of its common stock at a ratio of 3:1 -- three new shares for every one share held. The forward split became effective on May 14, 2004. After the split, the Company has 37,011,468 shares of common stock issued and outstanding. Prior to the effective date of the split, 12,337,156 shares of common stock were outstanding. In connection with the stock split Allied Devices increased its authorized common shares in proportion to the forward stock split. Its authorized common stock after the forward stock split consists of 300,000,000 shares of common stock. Prior to the split, the Company was authorized to issue 100,000,000 shares of common stock. In connection with the forward split, Allied Devices amended its Articles of Incorporation with the state of Nevada. The Company did not obtain a shareholder vote of the forward stock split and a shareholder vote was not required by Nevada law. Deep Well Oil & Gas, Inc. -- whose total stockholders' deficit tops $44,440 at March 31, 2004 -- and its former subsidiaries, were engaged in the manufacture and distribution of standard and custom precision mechanical assemblies and components throughout the United States. On February 19, 2003 the Company filed a petition for bankruptcy in the United States Bankruptcy Court under Chapter 11 in the Eastern District of New York titled "Allied Devices Corporation, Case No. 03-80962-511". The Company emerged from bankruptcy pursuant to a Bankruptcy Court Order entered on September 10, 2003 with no remaining assets or liabilities. The terms of the bankruptcy settlement included (1) a reverse common stock split of 30 shares of outstanding stock for one share (2) increasing the authorized common capital stock from 25,000,000 to 50,000,000 shares with a par value of $.001 (3) a change in the name of the Company from "Allied Devices Corporation" to "Deep Well Oil & Gas, Inc." (4) and the authorization for the issuance of 2,000,000 post split restricted common shares and 4,000,000 post split common shares in exchange for $50,000, which was paid into the bankruptcy court by the recipients of the shares. Restated and amended articles of incorporation completing the terms of the bankruptcy have been filed in the state of Nevada. Subsequent to the bankruptcy, on February 27, 2004, the Company completed a forward stock split of two shares for each outstanding share, with $.001 par value. AMERCO: S&P Rates Corp. Credit at B+ & Sr. Secured Notes at BB -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Reno, Nevada-based AMERCO. The outlook is stable. At the same time, Standard & Poor's assigned its 'BB' senior secured bank loan rating to the company's $550 million secured bank facility, due 2009, its 'B+' rating to the company's $80 million senior secured notes, due 2009, and its 'CCC+' rating to the company's preferred stock. The bank facility is rated two notches above the corporate credit rating, with a recovery rating of '1', indicating a high expectation of full recovery of principal in the event of default. Proceeds from the bank facility and senior secured notes were used to repay a portion of the company's debtor-in-possession financing obligations and payments to various creditors that allowed the company to emerge from Chapter 11 on March 15, 2004. "AMERCO's revenues and earnings are expected to improve modestly over the intermediate term," said Standard & Poor's credit analyst Kenneth Farer. "However, upside rating potential will be constrained by a heavy debt burden, constrained financial flexibility, and various ongoing investigations." AMERCO is a holding company for its principal subsidiary, unrated U-Haul International Inc., which represents approximately 80% of AMERCO's consolidated revenues. AMERCO is also the parent of Amerco Real Estate Company, which owns and manages most of AMERCO's real estate assets, and two insurance companies--Republic Western Insurance Co. and Oxford Life Insurance Co. With a rental fleet of approximately 93,500 trucks and 85,000 trailers operating out of more than 14,000 locations, U-Haul is the largest participant, by far, in consumer truck rentals in North America. U-Haul focuses on the do-it-yourself movers. Standard & Poor's expects internally generated cash and AMERCO's credit facilities will be tight, though sufficient, to meet operating, capital spending, and debt maturity needs. AMERCO's $550 million bank facility is rated two notches higher than the corporate credit rating on AMERCO, with a recovery rating of '1', because of limitations of the borrowing base and substantial asset coverage. The secured bank facility is comprised of a $200 million revolving credit facility, which matures in 2009, and a $350 million amortizing term loan A, which matures in 2009. Amortization of term loan A is at the rate of 1% per year, with the remaining balance due at maturity. The revolving credit facility and term loan A are secured by a first-priority, perfected lien on and security interest of substantially all tangible and intangible assets and capital stock of the company. The assets excluded from the collateral pool include the insurance subsidiaries, TRAC Lease equipment, property for sale, and proceeds in excess of $50 million from a lawsuit involving PricewaterhouseCoopers. ARMOR HOLDINGS: Raises $141.5 Million From Share Offering --------------------------------------------------------- Armor Holdings, Inc. (NYSE: AH) announced the successful pricing of 4,000,000 primary shares of common stock at a price of $37.50 per share, raising approximately $141.5 million of net proceeds for the Company. In addition, certain of Armor Holdings' directors and officers granted the underwriters a 30-day option to purchase up to 600,000 secondary shares. "Armor Holdings intends to use the net proceeds from the offering of the shares sold by it to fund future acquisitions, to take advantage of business development opportunities, and for general corporate and working capital purposes, including the funding of capital expenditures," said Robert Schiller, President and Chief Operating Officer, Armor Holdings, Inc. Armor Holdings will not receive any proceeds from the sale of shares by any of its directors or officers. Goldman, Sachs & Co. acted as sole book-runner and Merrill Lynch & Co., Wachovia Securities, J.P. Morgan Securities Inc., Friedman, Billings, Ramsey & Co., Inc., and Wm Smith Securities, Incorporated acted as co-managers for the offering. A copy of the final prospectus supplement relating to the offering may be obtained from Goldman, Sachs & Co. at 85 Broad Street, New York, N.Y. 10004 (telephone 212-902-1000). A registration statement relating to these securities has been filed with the Securities and Exchange Commission and has been declared effective. * * * As reported in the Troubled Company Reporter's June 4, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Armor Holdings Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings, including the 'BB' corporate credit rating, on the security products supplier. "The outlook revision reflects Armor's improved financial flexibility from a proposed common stock offering and solid operating performance," said Standard & Poor's credit analyst Christopher DeNicolo. AVAYA: Completes $111 Million Stock Contribution to Pension Plan ---------------------------------------------------------------- Avaya Inc., (NYSE: AV) a leading global provider of communications networks and services for businesses, said that it completed a voluntary contribution of approximately $111 million of its common stock to its pension plan. Earlier the Securities and Exchange Commission declared effective the Form S-3 registration statement filed on May 24, 2004 that registers the shares of common stock for resale by the pension plan. Avaya funded the contribution with a combination of 2,448,602 shares of treasury stock and a new issuance of 4,510,646 shares of common stock. The number of common shares Avaya contributed was based on the average of the opening and closing prices of Avaya common shares on June 9, 2004 or $15.95 per share. About Avaya Avaya Inc. designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol (IP) telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya website: http://www.avaya.com/ * * * As reported in the Troubled Company Reporter's May 4, 2004 edition, Standard & Poor's Rating's Services revised its outlook on the rating of Avaya Inc. to positive from stable. The 'B+' corporate credit and senior secured debt and 'B' senior unsecured debt ratings were affirmed. The outlook revision reflects improved profitability in recent quarters combined with reduced debt, improving debt protection metrics and increased balance sheet liquidity. BEAR STEARNS: Fitch Affirms Low-B Ratings on 5 1999-WF2 Classes --------------------------------------------------------------- Fitch upgrades Bear Stearns Commercial Mortgage Securities' commercial mortgage pass-through certificates, series 1999-WF2 as follows: --$43.2 million class B to 'AA+' from 'AA'. In addition, Fitch affirms the following classes: --$210 million class A-1 'AAA'; --$525.8 million class A-2 'AAA'; --Interest only class X 'AAA'; --$43.2 million class C 'A'; --$10.8 million class D 'A-'; --$27 million class E 'BBB'; --$10.8 million class F 'BBB-'; --$21.6 million class G 'BB+'; --$16.2 million class H 'BB'; --$8.1 million class I 'BB-'; --$9.5 million class J 'B+'; --$10.8 million class K 'B-'; --$4.1 million class L remains 'CCC'. Fitch does not rate the $5.1 million class M. The upgrade reflects stable loan performance since issuance, as well as an increase in credit enhancement as a result of loan payoffs and amortization. As of the May 2004 distribution date, the pool's aggregate balance has been reduced by 12.4%, to $946.3 million from $1.08 billion at issuance. Of concern in the transaction are the two loans (1.5%) in special servicing. Currently, there is one loan (0.49%) that is real estate owned (REO). The property is an industrial warehouse located in San Jose, CA. The property's occupancy level had declined following the expiration of the single tenant's lease. The tenant signed a new lease, but now only occupies 52% of the space. A loss is projected on this loan following its disposition from the trust. The largest loan (1.01%) in special servicing, currently 90+ days delinquent, is a retail center in Waterford Township, MI. The current occupancy at the property is 42% as a result of K-Mart rejecting their lease on their Builder's Square store. Fitch projects a loss will be incurred at the time of disposition from the trust. BUSH INDUSTRIES: Has Until Plan Confirmation to Decide on Leases ---------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Western District of New York, Bush Industries, Inc., obtained an extension of its lease decision period afforded under 11 U.S.C. Sec. 365(d)(4). The Court gives the Debtors an open-ended extension until the date on which its chapter 11 plan of reorganization is confirmed to assume, assume and assign, or reject the unexpired nonresidential real property leases. However, the Debtor must decide on the Fairmont Plaza Shopping Center lease by June 27, 2004. Headquartered in Jamestown, New York, Bush Industries, Inc., -- http://www.bushindustries.com/-- is engaged in the manufacture and sale of ready-to-assemble furniture under the Bush, Eric Morgan and Rohr trade names and production of after market accessories for cell phones. The Company filed for chapter 11 protection on March 31, 2004 (Bankr. W.D.N.Y. Case No. 04-12295). Garry M. Graber, Esq., at Hodgson, Russ represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $53,265,106 in total assets and $169,589,800 in total debts. CALPINE CORPORATION: CPUC Approves Tolling Pact with San Diego Gas ------------------------------------------------------------------ Calpine Corporation (NYSE: CPN) announced that the California Public Utilities Commission (CPUC) has approved a tolling agreement between Calpine and San Diego Gas and Electric (SDG&E) that provides for the delivery of up to 600 megawatts of capacity for ten years beginning in 2008. Power delivered under the contract will originate from Calpine's Otay Mesa Energy Center currently under construction in San Diego County. "[Wednes]day's CPUC decision marks an important milestone for California," said Curt Hildebrand, Calpine's Vice President of Marketing and Sales. "This was the first successful competitive bidding process employed by a California utility to provide for its customers' long term power and reliability needs. As a result, San Diego utility customers now have the security of knowing where their power will be coming from, the assurance that it will be environmentally superior compared to today's sources, and that it comes at a reasonable and predictable cost." Under the terms of the Calpine agreement, the natural gas-fired Otay Mesa Energy Center will be in commercial operation no later that January 1, 2008. SDG&E is responsible for fuel delivery and the facility must meet strict performance and environmental requirements under the contract. In return, Calpine will receive a $9.75 per kilowatt-month capacity fee as well as an operations and maintenance fee. The commercial terms of the Otay Mesa contract were voluntarily disclosed by Calpine, the only bidder in the SDG&E process to do so. "California needs an open, fair, and transparent electricity market where companies compete to drive down costs for the ratepayers. Calpine commends SDG&E for conducting this bid process to ensure that the public gets the most reliable power, at the very best price," Hildebrand added. "In revealing the financial terms of our successful bid, Calpine has provided the public another level of checks and balances to ensure that they are getting urgently needed new generation capacity at a reasonable cost." The CPUC decision validates the concept of fair and open competition in the electricity marketplace and proves that private investment in new power plants can succeed and reduce the cost of electricity for ratepayers while assuring a clean, reliable supply of power to meet California's growing needs. Moreover, a fair and open market shifts the financial risks of increased power costs and large capital investments away from ratepayers, and puts them where they are best positioned: on private investors. With CPUC approval of the agreement, the contract remains contingent upon Commission approval of needed regional transmission improvements proposed by SDG&E as well as a number of other matters currently before the CPUC. Calpine, California's Power Company Calpine has made an unprecedented $5 billion investment in California's energy infrastructure through the construction and operation of the State's newest, cleanest, and most efficient fleet of power projects and California's second-largest natural gas operation. As well, Calpine is the State's single largest producer of power from renewable resources, the first company to license and construct a major California power project in more than a decade, and is responsible for the first baseload generation built in the San Francisco Bay Area in more than 30 years. Since July 2001, Calpine has added almost 2,500 megawatts of new capacity in California -- an accomplishment unmatched by any other company in the energy industry. Three projects now under construction will bring Calpine's California portfolio to more than 5,800 megawatts, enough electricity to power almost 6 million homes. In addition, the company has permitted another six California projects in anticipation of the continued growth in demand for clean, cost- effective generation in the state as well as the implementation of sound state energy policy. About Calpine Calpine Corporation (S&P, CCC+ Senior Unsecured Convertible Note and B Second Priority Senior Secured Note Ratings, Negative Outlook), celebrating its 20th year in power in 2004, is a leading North American power company dedicated to providing electric power to customers from clean, efficient, natural gas- fired and geothermal power facilities. The company generates power at plants it owns or leases in 21 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world's largest producer of renewable geothermal energy, and owns or controls approximately one trillion cubic feet equivalent of proved natural gas reserves in the United States and Canada. For more information about Calpine, visit http://www.calpine.com/ CHESAPEAKE ENERGY: Declares Increased Common Stock Dividend ----------------------------------------------------------- Chesapeake Energy Corporation (NYSE: CHK) announced that its Board of Directors has declared a $0.045 per share quarterly dividend that will be paid on July 15, 2004 to common shareholders of record on July 1, 2004, an increase of $0.01 per share from the quarterly dividend paid on April 15, 2004. Chesapeake has approximately 242 million common shares outstanding. Chesapeake's Board has also declared a quarterly cash dividend on Chesapeake's 4.125% Cumulative Convertible Preferred Stock, par value $0.01. The dividend for the 4.125% preferred stock is payable on September 15, 2004 to preferred shareholders of record on September 1, 2004 at the quarterly rate of $10.3125 per share. Chesapeake has 313,250 shares of 4.125% preferred stock outstanding with a liquidation value of $313.3 million. Chesapeake's Board has also declared a quarterly cash dividend on Chesapeake's 6.75% Cumulative Convertible Preferred Stock, par value $0.01. The dividend for the 6.75% preferred stock is payable on August 16, 2004 to preferred shareholders of record on August 2, 2004 at the quarterly rate of $0.84375 per share. Chesapeake has 2.998 million shares of 6.75% preferred stock outstanding with a liquidation value of $150 million. Chesapeake's Board has also declared a quarterly cash dividend on Chesapeake's 5.0% Cumulative Convertible Preferred Stock, par value $0.01. The dividend for the 5.0% preferred stock is payable on August 16, 2004 to preferred shareholders of record on August 2, 2004 at the rate of $1.25 per share. Chesapeake has 1.725 million shares of 5.0% preferred stock outstanding with a liquidation value of $172.5 million. In addition, Chesapeake's Board has declared a quarterly cash dividend on Chesapeake's 6.0% Cumulative Convertible Preferred Stock, par value $0.01. The dividend for the 6.0% preferred stock is payable on September 15, 2004 to preferred shareholders of record on September 1, 2004 at the quarterly rate of $0.75 per share. Chesapeake has 4.6 million shares of 6% preferred stock outstanding with a liquidation value of $230 million. Chesapeake Energy Corporation is one of the six largest independent U.S. natural gas producers. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and producing property acquisitions in the Mid-Continent, Permian Basin, South Texas, Texas Gulf Coast and Ark-La-Tex regions of the United States. The company's Internet address is http://www.chkenergy.com/ * * * As reported in the Troubled Company Reporter's May 24, 2004 edition, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Chesapeake Energy Corp. and revised its outlook on the company to positive from stable. In addition, Standard & Poor's assigned its 'BB-' rating to Chesapeake's $300 million senior unsecured notes due 2014. Furthermore, Standard & Poor's lowered its rating on the company's senior secured bank loan facility due 2008 to 'BB+' from 'BBB-', and assigned a recovery rating of '1' to the credit facility. "The outlook revision reflects the company's extensive and increasing use of hedges to materially improve the stability of cash flows," said Standard & Poor's credit analyst Kimberly Stokes. "Chesapeake is able to lock in the benefits of the currently favorable commodity price environment, which should in turn lead to improving credit measures." "For the ratings to improve, it is essential that management consistently demonstrate both the ability and willingness to apply excess cash flow to meaningful debt reduction," continued Ms. Stokes. CHURCH & DWIGHT: S&P Affirms 'BB' Rating Following Refinancing -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on Church & Dwight following the closing of the company's new $640 million senior secured bank facility. The facility was used to refinance existing debt and to purchase the remaining 50% of Armkel LLC the company did not already own. Armkel's senior subordinated debt rating was raised to 'B+' from 'B', in line with Church & Dwight's ratings. Armkel's corporate credit rating was withdrawn, as the company is now 100% owned by Church & Dwight. All of Armkel's ratings are removed from CreditWatch, where they were placed May 6, 2004. Approximately $965 million of rated debt is affected by these actions. "The ratings on Princeton, New Jersey-based Church & Dwight Co. Inc. reflect its participation in the highly competitive personal care segment of the consumer products industry, its lack of geographic diversity, and its acquisitive nature," said Standard & Poor's credit analyst Patrick Jeffrey. Partially mitigating these factors are management's expected focus on reducing debt and the successful growth of the company's product portfolio through acquisitions. This strategy has expanded the Arm & Hammer brand name into several household and personal care product lines, such as detergents, toothpaste, cat litter, and deodorant. Church & Dwight participates in the highly competitive personal care sector of the consumer products industry. While it maintains leading brands such as Arm & Hammer and Trojan, it competes against much larger companies, such as Procter & Gamble Co. (AA- /Stable/A-1+) and Colgate-Palmolive Co. (AA-/Stable/A-1+), that have much greater resources to promote and market products. Church & Dwight's operations are also less diverse geographically than those of many of its competitors, as about 80% of its sales are in the U.S. The company has grown through acquisition. In 2003, it purchased Unilever plc's (A+/Stable/A-1) oral care business, and in 2001, it made its initial 50% investment in Armkel LLC. These acquisitions have been integrated well and have strengthened the firm's business position. However, this activity has also resulted in higher leverage, which is currently at 3.8x following the Armkel transaction, an increase from about 2.9x in 2001. Church & Dwight has already been managing Armkel since 2001, thus the integration risk is expected to be minimal. CLAREMONT PROJECT: Section 341(a) Meeting Slated for June 14 ------------------------------------------------------------ The United States Trustee will convene a meeting of Claremont Project LLC's creditors at 1:30 p.m., on June 14, 2004, in Room 1-159 at the Ronald Reagan Federal Bldg., 411 West Fourth St., Santa Ana, California 92701. 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 Newport Beach, California, Claremont Project LLC filed for chapter 11 protection on May 7, 2004 (Bankr. C.D. Calif. Case No. 04-13016). Michael J. Weiland, Esq., at Albert, Weiland & Golden represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. COEUR: Wheaton Retorts Get Shareholder Support to Advance Bid ------------------------------------------------------------- Wheaton River Minerals Ltd. (AMEX:WHT) (TSX:WRM) issued a response to the previous press release and statements made by Coeur d'Alene Mines Corporation. As reported in yesterday's edition of the Troubled Company Reporter, Coeur d'Alene Mines Corporation (NYSE: CDE) made this comment about the June 8 Special Meeting of Stockholders of Wheaton River Minerals Ltd. (TSX: WRM; Amex: WHT): Dennis E. Wheeler, Chairman and Chief Executive Officer of Coeur, said, "We are astounded -- as were Wheaton River stockholders present at the meeting -- that Wheaton River's Board unnecessarily proceeded with its Stockholder Meeting despite ruling by the Ontario Superior Court of Justice requiring IAMGOLD Corporation (TSX: IMG; Amex: IAG) to postpone its Stockholder Meeting. Wheaton River ignored the efforts of many stockholders to cast votes against the IAMGOLD transaction, including Wheaton River's largest institutional investor. Had those votes been counted, we believe the outcome of Tuesday's meeting would have been reversed. Wheaton River chose to accept the affirmative vote of only about one-third of its total shares as representative of the sentiment of all of its stockholders. "The decision by the Ontario Court provided Wheaton River an opportunity to give its stockholders three full weeks of additional time to consider our increased -- and superior -- proposal. The Wheaton River Board might also have used this time to more fully review our proposal, instead of relying on its previous token review and hasty rejection. We do not understand why Wheaton River failed to take advantage of this additional time to consider our superior proposal and further do not understand why the meeting was conducted in a manner that ultimately resulted in a vote that ignores the true sentiment of Wheaton River stockholders. "The effect of Wheaton River's vote, if allowed to stand, will be that IAMGOLD stockholders will have a 21-day option on the transaction, while Wheaton River stockholders will have no choice. We question the agenda of the Wheaton River Chairman and Board and their reasons for proceeding with Tuesday's stockholder vote. "In today's world of heightened corporate governance standards, we would be shocked to see a public company employ any procedures that would have the effect of disenfranchising stockholders. We call upon Wheaton River to immediately make available all of the voting records from Tuesday's meeting. "Coeur intends to continue to pursue its superior merger proposal. We are carefully considering all of our options," concluded Mr. Wheeler." * * * Ian Telfer, Chairman and Chief Executive Officer of Wheaton, said: "To date, our shareholders have not indicated any level of support for the Coeur proposal. If Coeur believes that its proposal is superior, Coeur can make an offer directly to our shareholders. There are no agreements in place that preclude Coeur from commencing a bid." About Coeur d'Alene Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. As reported in the Troubled Company Reporter's June 3, 2004 edition, Standard & Poor's Ratings Services placed its B-corporate credit and senior unsecured debt ratings on Coeur D'Alene Mines Corp. on CreditWatch with positive implications following the company's announcement that it intends to acquire precious metals mining company Wheaton River Minerals Ltd. in a stock and cash transaction valued at approximately $1.8 billion. "The CreditWatch action reflects what is likely to be a meaningful improvement in Coeur's business and financial profile upon the successful acquisition of lower-cost producer Wheaton," said Standard & Poor's credit analyst Paul Vastola. Standard & Poor's expects that its ratings on Coeur would likely be raised several notches. Standard & Poor's will continue to monitor the transaction for any potential revisions to the deal. The deal remains subject to several conditions and is expected to close by Sept. 30, 2004. COGNISTAR CORP: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Cognistar Corporation aka Kansas City Technology, Inc. 257 Turnpike Road, Suite 300 Southborough, Massachusetts 01532 Bankruptcy Case No.: 04-11718 Type of Business: The Debtor provides legal education and training online for executives, lawyers, and professionals. See http://www.cognistar.com/ Chapter 11 Petition Date: June 9, 2004 Court: District of Delaware Debtor's Counsels: Adam G. Landis, Esq. Kerri K Mumford, Esq. Landis Rath & Cobb LLP 919 Market Street, Suite 600 Wilmington, DE 19801 Tel: 302-467-4400 Fax: 302-467-4450 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ William Stark Back Pay to trebling, $323,000 490 Douglas Road exceeds $57,000 Whitinsville, MA 01588 other pay under contract exceeds $266,000 Gil Rodrigues Claim for failure to $177,083 provide severance and benefits Dearfoot LLC Rent $123,746 Dennis O'Leary Wages, salaries, and $109,500 commissions Gregory LeStage Claim for unpaid $42,344 wages and expenses Hale & Dorr, LLP Legal Fees $33,095 Zeeo Interactive AP Vendor $10,381 BlueCross BlueShield of Insurance $8,396 Massachusetts Alliance Consulting Group Consulting $5,558 Northwestern University Royalty Payment $4,837 AIPLA Royalty Payment $4,042 Schwartz Hannum Consulting $3,968 University of Miami Royalty Payment $3,620 UVA Panel Royalty Payments $3,332 Corban Financial Group Consulting $2,906 Georgetown University Royalty Payment $2,781 Henry P. Stimpson Public Relations $2,648 ETRade Business Solutions Consulting $2,620 Northern Business Machines AP Vendor $2,425 LeBoeuf Lamb Prepaid Fees $2,152 COMM 2000-C1: Fitch Downgrades $4.5M Class N Rating To CC from CCC ------------------------------------------------------------------ COMM's commercial mortgage pass-through certificate, series 2000- C1, is downgraded by Fitch Ratings as follows: --$4.5 million class N to 'CC' from 'CCC'. In addition, Fitch affirms the following classes: --$79.2 million class A-1 'AAA'; --$542.9 million class A-2 'AAA'; --Interest-only class X 'AAA'; --$38.2 million class B 'AA'; --$39.3 million class C 'A'; --$13.5 million class D 'A-'; --$25.8 million class E 'BBB'; --$11.2 million class F 'BBB-'; --$26.9 million class G 'BB'; --$6.7 million class H 'BB-'; --$6.7 million class J 'B+'; --$10.1 million class K 'B'; --$7.9 million class L 'B-'; --$6.7 million class M remains at 'CCC'. Fitch does not rate the $2.9 million class O certificates. The downgrade of class N is the result of anticipated losses expected upon liquidation of two loans currently in special servicing. The pool's collateral balance has paid down 8.4% since issuance to $823 million as of the May 2004 distribution date, from $924 million at issuance. Currently, there are three loans (1.3%) in special servicing. The largest loan in special servicing is 6350 Court Street Road (0.51%) in Dewitt, NY. The loan transferred to special servicing in January 2003 as a result of the property's single tenant, Intermedia Communications (whose parent company was MCI Worldcom), vacating the premises. The property remains 100% vacant. Foreclosure proceedings are expected to commence in the near future. Another specially serviced loan (0 44%) with expected losses is a retail center located in Warren, OH. The property's occupancy level has declined drastically from levels at issuance following the bankruptcy filing in 2003 of the largest tenant who occupied over 47% of the gross leasable area. A new tenant has since leased a portion of the vacant space, but is receiving three years of free rent, as the borrower hopes to attract additional tenants to the center. Fitch reviewed the credit assessments of the Crowne Plaza hotel (10.6%) and the Crystal Park One (4.9%) loans. The Crowne Plaza loan is the largest loan in the pool. It is secured by a 46-story, 770-room hotel located in the Times Square area of Manhattan. Although occupancy has remained stable since issuance, Revenue per Available Room and the Average Daily Rate have both declined. Based on data provided by Orix Capital Markets, LLC, the Master Servicer, YE 2003 RevPar and ADR have declined 10.9% and 12.8%, respectively. Fitch maintains a below investment grade rating on this loan. The Crystal Park loan is secured by an eleven-story office building in Arlington, VA. While occupancy levels have declined slightly since issuance as of YE 2003, the average rental rate has increased, causing the performance to be consistent since issuance. Fitch maintains an investment grade rating on this loan based on the data provided by the master servicer. CSAM FUNDING IV: S&P Assigns 'BB' Rating to Classes D-1 & D-2 ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to CSAM Funding IV/CSAM Funding IV Corp.'s $549.5 million notes. CSAM Funding IV/CSAM Funding IV Corp. is a CLO backed primarily by senior secured loans. The ratings are based on the following: -- Adequate credit support provided in the form of overcollateralization, subordination, and excess spread; -- Characteristics of the underlying collateral pool, consisting primarily of senior secured loans; -- Hedge agreements entered into with an appropriately rated counterparty to mitigate the interest rate risk created by having certain fixed-rate assets and certain floating-rate liabilities; -- Scenario default rates of 37.83% for classes A-1, A-1V, and A-1NV, 33.02% for class A-2, 29.54% for classes B-1 and B-2, 25.32% for classes C-1 and C-2, and 18.97% for classes D-1 and D-2; and break-even loss rates of 44.81% for classes A-1, A-1V, and A-1NV, 40.24% for class A-2, 30.62% for classes B-1 and B-2, 25.77% for classes C-1 and C-2, and 23.82% for classes D-1 and D-2; -- Weighted average rating of 'B+'; -- Weighted average maturity for the portfolio of 5.449 years; -- S&P default measure (DM) of 3.60%; -- S&P variability measure (VM) of 1.85%; -- S&P correlation measure (CM) of 1.32%; and -- Rated overcollateralization (ROC) of 113.97% for classes A-1, A-1V, and A-1NV, 109.57% for class A-2, 104.54% for class B-1, 104.42% for class B-2, 101.86% for class C-1, 101.77% for class C-2, 102.65% for class D-1, and 102.53% for class D-2. Interest on the class B-1, B-2, C-1, C-2, D-1, and D-2 notes may be deferred up until the legal final maturity of June 9, 2016, without causing a default under these obligations. The ratings on those notes, therefore, address the ultimate payment of interest and principal. Ratings Assigned CSAM Funding IV/CSAM Funding IV Corp. Class Rating Amount (mil. $) A-1 AAA 319.00 A-1V AAA 0.10 A-1NV AAA 129.90 A-2 AA 32.50 B-1 A 19.00 B-2 A 14.00 C-1 BBB 16.50 C-2 BBB 7.50 D-1 BB 6.75 D-2 BB 4.25 Subordinated notes N.R. 50.50 N.R.-Not rated. COURTNEY EXCAVATING: Case Summary & Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Courtney Excavating & Construction, Inc. aka Courtney Excavating aka Courtney Construction aka Rock Quarries, LLC 400 West 16th P.O. Box 587 Mountain Grove, Missouri 65711 Bankruptcy Case No.: 04-61485 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Rock Quarries, LLC 04-61488 Type of Business: The Debtor is an excavation contractor. Chapter 11 Petition Date: June 9, 2004 Court: Western District of Missouri (Springfield) Judge: Arthur B. Federman Debtor's Counsel: David E. Schroeder, Esq. David Schroeder Law Offices, PC 1524 East Primrose Street, Suite A Springfield, MO 65804-7915 Tel: 417-890-1000 Fax: 417-886-8563 Estimated Assets Estimated Debts ---------------- --------------- Courtney Excavating & $1 M to $10 M $1 M to $10 M Construction, Inc. Rock Quarries, LLC $1 M to $10 M $500,000 to $1 M A. Courtney Excavating's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ APAC-Missouri Inc. Lawsuit $317,556 D & E Plumbing and Heating Open account $82,725 Hertz Equipment Rental Open account $45,762 Scurlock Industries Open account $36,105 David Homer Concrete Open account $24,279 Coring and Open account $14,778 Cutting-Springfield Hunter Oil Lawsuit $13,884 Montgomery-Davidson Open account $10,395 Insurance Missouri Employers Mutual Open account $8,573 GW Van Keppel Company Open account $8,269 Road Builders Open account $6,470 Lazy Lees Open account $4,863 United Rentals Open account $3,991 Powerplan Open account $3,094 Dell Financial Services Open account $2,273 City Utilities Open account $1,963 FW Dodge Open account $1,904 Overhead Door Open account $1,559 Thompson Culvert Company Open account $1,351 Yellow Book USA Open account $946 B. Rock Quarries, LLC's 11 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Hunter Oil Open account/lawsuit $46,904 Buckley Powder Co. Open account $16,785 Coastal Energy Open account $9,615 Williams Scotsman Open account $6,070 Lazy Lees Open account $4,010 Powerplan Open account $3,338 Capital Sand Company Open account $3,031 DL Coates Transportation Open account $1,511 JWS Open account $1,407 Yellow Book USA Open account $152 Jim and Janet Strause & Lawsuit-disputed Unknown Glen and Virginia Kennedy DELTA AIR: Names Greg Riggs as Senior VP - General Counsel ---------------------------------------------------------- Delta Air Lines (NYSE: DAL) has announced the promotion of Greg Riggs to senior vice president - general counsel and chief corporate affairs officer for Delta Air Lines. He is one of seven top-level officers reporting directly to Jerry Grinstein, Delta's Chief Executive Officer. Riggs joined Delta as an attorney in 1979 and was appointed to several positions in Delta's Legal Division including assistant associate and deputy general counsel. He briefly served in Delta's operations area as director - airport customer service. He was later named vice president - deputy general counsel and assistant secretary in 1998 before being elevated to senior vice president - general counsel in 2003. Riggs will have responsibility for Delta's Legal, Government Affairs and Corporate Communications functions as chief corporate affairs officer. He received his undergraduate degree from the University of North Carolina at Chapel Hill in 1971 and was awarded a degree in Jurisprudence from Oxford University in 1976. He received his J.D. from Emory University School of Law in 1979. Riggs and his wife, Kaye, have two daughters and reside in Atlanta. Delta Air Lines is proud to celebrate its 75th anniversary in 2004. Delta is the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 494 destinations in 86 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam, Northwest Airlines, Continental Airlines and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please visit http://www.delta.com/ * * * As reported in the Troubled Company Reporter's May 13, 2004 edition, Standard & Poor's Ratings Services affirmed its ratings on Delta Air Lines Inc. (B-/Negative/--) and revised the long-term rating outlook to negative from stable. Delta disclosed in its first-quarter 2004 10Q filing with the SEC that failure to secure needed cost reductions, regain profitability, and maintain access to the capital markets could force the company to file for bankruptcy. "The warning makes explicit what previous company statements had hinted at, and may indicate that Delta believes it will have to move to the brink of bankruptcy to persuade its pilots to grant concessions," said Standard & Poor's credit analyst Philip Baggaley. DISCOVERY INVESTMENTS: Addresses Unauthorized Berlin Stock Listing ------------------------------------------------------------------ Donald Bell, President and CEO of Discovery Investments Inc. (OTCBB:DCIV), announced that the company recently became aware that it is one of several OTCBB companies whose stock has been listed on the Berlin/Bremen Stock Exchange without the company's prior knowledge, consent or authorization. The company has contacted officials at the Berlin/Bremen Stock exchange to demand its immediate de-listing from the exchange and has been informed by exchange officials that they have de-listed Discovery Investments Inc. (OTCBB:DCIV) from the Berlin/Bremen Stock Exchange. According to various accounts in the media, the listings appear to be part of an effort by domestic and foreign brokers to circumvent the recent NASD and SEC restrictions against "naked short selling." Short selling is a trading practice whereby investors borrow stock from a broker to sell with the hope that the stock price will decline before they have to return the shares back to cover their position. Naked shorting involves groups of people working together to manipulate the market by selling shares of stock in an effort to force a company's share price to go down. By listing the company's common stock on the Berlin/Bremen Stock Exchange, market manipulators may have sought the benefit of an "arbitrage" loophole that the current regulations are designed to close. The company believes that short selling and prearranged trading causes the appearance of an increase in the supply of shares in the market and would result in a depression in the price of DCIV's stock. At March 31, 2004, Discovery Investments Inc.'s balance sheet shows a stockholders' deficit of $86,281 compared to a deficit of $2,130,372 at March 31, 2003. DLJ COMMERCIAL: Fitch Rates 6 Series 2000-CF1 Classes at Low-Bs --------------------------------------------------------------- Fitch Ratings affirms DLJ Commercial Mortgage Corp.'s commercial mortgage pass-through certificates, series 2000-CF1, as follows: --$67.1 million class A-1A 'AAA'; --$566.4 million class A-1B 'AAA'; --Interest only class S 'AAA'; --$44.3 million class A-2 'AA'; --$37.7 million class A-3 'A'; --$13.3 million class A-4 'A-'; --$31 million class B-1 'BBB'; --$11.1 million class B-2 'BBB-'; --$31 million class B-3 'BB+'; --$8.9 million class B-4 'BB'; --$2.2 million class B-5 'BB-'; --$6.6 million class B-6 'B+'; --$8.9 million class B-7 'B'; --$8.9 million class B-8 'B-'. Fitch does not rate the $16 million class C or the $3.7 million class D certificates. The rating affirmations reflect the consistent overall loan performance. Midland Loan Services, Inc., the master servicer, collected year- end (YE) 2003 financials for 96% of the pool balance. Based on the information provided, the resulting YE 2003 weighted average debt service coverage ratio (DSCR) is 1.52 times (x), compared to 1.55x as of YE 2002 and 1.43x at issuance for the same loans. Currently, twelve loans (8%) are in special servicing. The largest specially serviced loan (2%) is secured by an office property in Sunnyvale, CA and is 60 days delinquent. The special servicer is working to correct a document deficiency with the debt service reserve and bring the loan current. The next largest specially serviced loan (2%) is secured by a multifamily property in St. Louis, MO and is current. The special servicer, GMAC Commercial Mortgage Corp., is currently determining a workout strategy. Nine loans (10.3%) reported YE 2003 DSCRs below 1.00x. One of the loans (3%), West Covina Village Shopping Center, located in West Covina, CA, suffered in 2003 due to a tenant (15% of NRA) vacating in October 2002. The borrower is actively marketing the space for lease. ELCOM INT'L: Laurence Mulhern Returns as Chief Financial Officer ---------------------------------------------------------------- Elcom International, Inc. (OTC Bulletin Board: ELCO and AIM: ELC and ELCS), announced that Laurence Mulhern has rejoined Elcom International, Inc. as its Chief Financial Officer, effective June 7, 2004. Mr. Mulhern retired from Elcom in 2000. Robert J. Crowell, Elcom's Chairman and CEO, said "Elcom has employed Larry as a financial consultant for the past several months and I am pleased to announce that he has rejoined the Company as CFO. Larry was instrumental in Elcom's previous growth stages and I look forward to his assistance as we begin to again grow the Company." Larry Mulhern stated, "I am impressed that Elcom was able to withstand the very harsh environment after 9/11. Since that time, raising capital has been very difficult. With Elcom's latest funding round and listing on the AIM exchange, I believe Elcom has the basic framework to successfully grow the Company and I look forward to contributing to that success." About Elcom International, Inc. Elcom International, Inc. (OTC Bulletin Board: ELCO and AIM: ELC and ELCS), operates elcom, inc. a global B2B Commerce Service Provider (CSP) offering affordable solutions for buyers, sellers and commerce communities to conduct business online. Elcom's flagship solution, PECOS, enables enterprises of all sizes to achieve the many benefits of B2B eCommerce without the burden of infrastructure investment and ongoing content and system management. Additional information on Elcom can be found at http://www.elcominternational.com/ At March 31, 2004, Elcom International, Inc.'s balance sheet shows a shareholders' deficit of $2,778,000 compared to a deficit of $2,722,000 at December 31, 2003. ENRON CORP: Wants Court Nod to Assume Oracle Executory Contracts ---------------------------------------------------------------- On May 11, 1989, Enron Corporation and Oracle Corporation entered into a Software License and Services Agreement wherein Oracle authorized the licensing of certain Oracle proprietary software to Enron and the provision of related technical support services. In addition to the Software License, Enron and Oracle entered into several Network License Order Forms and Ordering Documents whereby Enron ordered program licenses and related services from Oracle. The parties also entered into a Network User License Agreement dated May 21, 1993, which was amended by an amendment effective as of August 26, 1993. On December 31, 1997, the parties executed a Network License Order Form, amended on December 1, 1999, wherein Oracle licensed Employee Oracle8i Enterprise Edition database software to Enron for 15,254 licensed users. Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that on October 10, 2003, Oracle filed Claim No. 24461 for $602,722. Claim No. 24461 is for software license fees, product support and software updates, and education for the period May 2001 through December 2001. With respect to the postpetition period, Oracle contends, and Enron disputes, that Oracle is owed $604,800 for product support and software update services from January 1, 2002 through December 31, 2003. Mr. Sosland informs the Court that Enron desires to continue licensing the software and to obtain product support and software update under the Network License Order Form, for the period January 1, 2004 through December 31, 2004, for a reduced number of licensed users and to assign a certain number of its user licenses to its subsidiary, Portland General Electric Company. Oracle has informed Enron that product support and software update renewal fees for the period would total $302,400. Oracle, Enron and PGE engaged in discussions related to the Prepetition Claim, Enron's assumption of the Software License Agreement, NULA and Network License Order Form, Enron's payment of obligations arising from the assumption, Enron's postpetition use of Oracle's software, and Enron's assignment of a portion of its Oracle licenses to PGE. As a result of arm's-length negotiations, Oracle, Enron and PGE entered into a Settlement Agreement and Release wherein: * Enron will assume the Oracle Contracts and all product licenses granted thereunder; * The Network License Order Form will be modified to reduce the number of licenses granted to Enron from 15,254 to 5,400, and on the Effective Date, the remaining 9,854 licenses that are not assumed by Enron will terminate; * With respect to the 5,400 licenses to be assumed by Enron, Oracle consents to Enron's assignment of 3,000 licenses to PGE, subject to certain terms and conditions; * As a condition to assumption of the Oracle contracts, Enron will pay Oracle $220,959 in final resolution and satisfaction of the Prepetition Claim, and upon execution of the Settlement Agreement and PGE Assignment, $907,200 will be paid to Oracle by Enron and PGE. With respect to the $907,200 payment, Enron will pay $403,200 and PGE will pay $504,000, to be applied as: -- $604,800 as a payment for Oracle's product support and software updates for the period January 1, 2002 to December 31, 2003; and -- $302,400 as a payment for Oracle's provision of product support and software updates for the period January 1, 2004 to December 31, 2004; * Enron will have the right to assign, in the future, the remaining 2,400 licenses to its affiliates, CrossCountry Energy, LLC, and Prisma Energy International Services, LLC, and subject to Oracle's further approval, to the designees of these affiliated entities, on terms and conditions substantially similar to the PGE Assignment; and * Except as provided in the Settlement Agreement, the parties exchange mutual releases and waivers of claims. Mr. Sosland contends that pursuant to Section 365 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, the contemplated assumption should be authorized and the Settlement Agreement approved because: (i) the network information management support services provided under the Oracle Contracts are important to facilitate the "back office" operations of Enron, providing efficient operation of its businesses; (ii) Enron needs Oracle's consent in assigning the user licenses; (iii) the Settlement Agreement and the PGE Assignment provide a mechanism to achieving a consensual assignment and thus, reducing costs and expenses to Enron; (iv) by assuming the Oracle Contracts, Enron will be able to retain the favorable rates it has negotiated with Oracle for continued support and services, which inure to the benefit of its estates and creditors; (v) the Settlement Agreement settles Oracle's Prepetition Claim at a fraction of the asserted amount and fixes the postpetition fees and charges through December 31, 2004; (vi) the Settlement Agreement provides for a consensual mechanism of current and future assignment of Enron's user licenses to its subsidiaries, including PGE, CrossCountry and Prisma; (vii) the Settlement Agreement requires PGE to contribute to the Settlement Agreement in exchange for user license assignment; and (viii) Enron and its subsidiaries are ensured of continuing to receive information management support services from Oracle under the favorable terms of the Oracle Contracts and the Settlement Agreement. Accordingly, Enron asks the Court to: (a) authorize its assumption of the Oracle Contracts, as modified by the Settlement Agreement and the PGE Assignment; and (b) approve the terms of the Settlement Agreement. (Enron Bankruptcy News, Issue No. 110; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Commences Actions to Recover 30 Preferential Payments ----------------------------------------------------------------- On or within 90 days prior to the Petition Date, the Enron Corporation Debtors made, or caused to be made, Transfers to these creditors: Creditor Amount -------- ------ Brobeck Phleger & Harrison, LLP $2,483,735 B C Mastin Co. 25,002 Buchanan Ingersoll 179,073 Carrier Enterprises, LLC 98,800 Century Strategies, LLC 60,000 Clayton, Biltmore & Company, LLC 305,626 Complete Solutions, Technology Partners, LP 43,300 Computer Control Systems, Inc. 678,627 Continental Blower, LLC 84,994 Crosby, Heafey, Roach & May 178,610 Cummins Southern Plains, Inc. 52,031 Dell Receivables, LP 1,286,686 Economic Insight, Inc. 59,417 Environmental Effects, LP 134,956 Eric W. Tenhunfeld 115,410 Gene Tackett 43,781 Golden Associates, Inc. 241,359 Keith & Associates, Inc. 70,377 Loyens & Loeff 103,794 Mayer, Brown & Platt 143,387 McGrath & Company 69,399 McKinney & Stringer 55,892 Optimus Solutions, LLC 520,036 Law Offices of Paul B. Meltzer 74,380 Powell, Goldstein, Frazer & Murphy, LLP 90,578 Rivera, Tulla & Ferrer 693,890 SA&C Limited 78,495 Sullivan & Cromwell 206,287 Willkie Farr & Gallagher 22,653 Weir Int'l Mining Consultants 93,480 ------------- $8,294,055 Neil Berger, Esq., at Togut, Segal & Segal, LLP, in New York, relates that: (a) the Transfers constitute transfers of interest of the Debtors' property; (b) the Debtors made, or caused to be made, the Transfers to, or for the benefit of, the Creditors; (c) the Debtors made, or caused to be made, the Transfers for, or on account of, antecedent debts owed to the Creditors prior to the dates on which the Transfers were made; (d) the Debtors were insolvent when the Transfers were made; (e) the Transfers enabled the Creditors to receive more than it would have received if: -- these cases were administered under Chapter 7; -- the Transfers had not been made; and -- the Creditors had received payment of the debt to the extent provided by the Bankruptcy Code. Thus, Mr. Berger contends that the Transfers constitute avoidable preferential transfers pursuant to Section 547(b) of the Bankruptcy Code. In accordance with Section 550(a) of the Bankruptcy Code, the Debtors may recover from the Creditors the amount of the Transfers, plus interest. In the alternative, Mr. Berger asserts that the Transfers are avoidable fraudulent transfers under the purview of Section 548(a)(1)(B) of the Bankruptcy Code since: (a) the Transfers constitute transfers of interest in the Debtors' property; (b) the Transfers were to or for the benefit of the Creditors; (c) the Debtors received less than reasonable equivalent value in exchange for some or all of the Transfers; (d) upon information and belief, the Debtors were insolvent, or became insolvent, or had unreasonably small capital in relation to their businesses or their transactions at the time or as a result of the Transfers; and (e) the Transfers were made within one year prior to the Petition Date. Accordingly, the Debtors seek a Court judgment: (i) avoiding and setting aside the Transfers pursuant to Section 547(b); (ii) in the alternative, avoiding and setting aside the Transfers pursuant to Section 548(a)(1)(B); (iii) awarding them judgment in an amount equal to the Transfers and directing the Creditors to immediately pay the Debtors an amount equal to the Transfers pursuant to Section 550(a), together with interest from the date of the Transfers; and (iv) awarding them their attorneys' fees, costs and other expenses incurred. (Enron Bankruptcy News, Issue No. 110; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Agrees to Settle Retail Disputes With 19 Parties ------------------------------------------------------------ Pursuant to the Settlement Protocol of Retail Customer Contracts, the Enron Corporation Debtors inform the Court that they entered into Settlement Agreements with 19 Counterparties: A. INX International * Contract: Enovative Firm Natural Gas Services and Sales Agreement, dated September 28, 2001, between Enron Energy Services, Inc., and INX * Settlement Term: INX will pay EESI $8,254 B. Ades & Gish Nursery * Contract: Enovative Lite Energy Service Agreement, dated January 3, 1997, as amended, between EESI and Ades * Settlement Term: Ades will pay EESI $40,129 C. Neptune Bay Car Wash * Contract: Electric Energy Sales Agreement, dated September 10, 2001 between EESI and Neptune * Settlement Term: Neptune will pay EESI $9,185 D. Maple Lawn Homes * Contract: Accounts Receivable Agreement between EESI and Maple Lawn * Settlement Term: Maple Lawn will pay EESI $3,077 E. Corinthians Church of God * Contract: Enovative Lite Energy Service Agreement, dated August 12, 1997, as amended, between EESI and Corinthians * Settlement Term: Corinthians will pay EESI $6,850 F. Michael Angelo of Yonkers Restaurant * Contract: Accounts Receivable Agreement between EESI and Michael Angelo * Settlement Term: Michael Angelo will pay EESI $1,774 G. James L. Deckebach Building Account * Contract: Enovative Lite Energy Service Agreement, dated July 20, 1998, between EESI and James Deckebach * Settlement Term: James Deckebach will pay EESI $12,018 H. Lorber Industries of California * Contract: Enovative Lite Energy Service Agreement, dated August 21, 2001 between EESI and Lorber * Settlement Term: Lorber will pay EESI $110,000 I. Davidsons West * Contract: Enovative Lite Energy Service Agreement, dated March 4, 1997, as amended on March 26, 1999, between EESI and Davidsons * Settlement Term: Davidsons will pay EESI $1,092 J. Mary Fung * Contract: Enovative Lite Energy Service Agreement, dated October 30, 1996, as amended on April 20, 1999, between EESI and Mary Fung * Settlement Term: Mary Fung will pay EESI $3,242 K. North Country Associates, Inc. * Contract: Accounts Receivable Agreement between EESI and North Country * Settlement Term: North Country will pay EESI $5,320 L. Pircio Cleaners, Inc. * Contract: Electric Energy Sales Agreement, dated August 1, 2001, between EESI and Pircio * Settlement Term: Pircio will pay EESI $1,380 M. Vince's Spaghetti, Inc. and Frank Cuccia * Contract: Accounts Receivable Agreement between EESI, Vince's and Frank Cuccia * Settlement Term: Vince's and Frank Cuccia will pay EESI $12,838 N. Gainey Ceramics, Inc. * Contracts: Enovative Energy Service Agreement, dated May 25, 2001, between EESI and Gainey, and Endustrial Master Firm Sales Agreement, dated September 1, 1997, between EESI and Gainey * Settlement Term: Gainey will pay EESI $118,720 O. Ohio Metallurgical Services, Inc. * Contract: Enovative Energy Service Agreement, dated July 2001, between EESI and Ohio Metallurgical * Settlement Term: Ohio Metallurgical will pay EESI $190,000 P. Gilbert Martin Woodworking Co., Inc. * Contract: Electric Energy Sales Agreement, dated August 9, 2000, between EESI and Gilbert * Settlement Term: Gilbert will pay EESI $13,163 Q. Fast Food Enterprises of California, Inc. * Contract: Enovative Lite Energy Service Agreement, dated June 6, 2001, between EESI and Fast Food * Settlement Term: Fast Food will pay EESI $3,045 R. St. Adalbert Catholic Church * Contract: Enovative Lite Energy Service Agreements, dated March 19, 1997, as amended on April 25, 1998, June 18, 1997 and September 13, 2001, between EESI and St. Adalbert * Settlement Term: St. Adalbert will pay EESI $2,215 S. Jill Shwam * Contract: Accounts Receivable Agreement between EESI and Jill Shwam * Settlement Term: Jill Shwam will pay EESI $6,200 Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New York, adds that the parties will mutually release all claims related to their contracts. (Enron Bankruptcy News, Issue No. 110; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING COS: Court Okays Andrew Head, et al., Claim Settlement -------------------------------------------------------------- Fleming Companies, Inc., and its debtor-affiliates sought and obtained Court approval of a settlement agreement and mutual release with Andrew M. Head, John F. Head, III, Paul H. McInerny, and Jane S. Head, Trustee of the Andrew M. Head Grantor Retained Annuity Trust. Scotta E. McFarland, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, PC, in Wilmington, Delaware, explains that Fleming bought all of the capital stock of Head Distributing Company from the Shareholders under a stock purchase agreement in April 2002. Before the Closing, Andrew Head was the majority shareholder and the chairman and chief executive officer of Head Distributing. In that connection, Fleming employed Mr. Head to use his expertise and experience regarding Head Distributing, and to protect Fleming's continuing business interests in Head Distributing. The Stock Purchase Agreement provided for the payment of these fees to Mr. Andrew or the Shareholders: (1) Transaction Completion Fee: A $1,000,000 gross payment to be paid to Mr. Head in 24 equal monthly installments for Mr. Head's work, which began on May 1, 2002. To date, Mr. Head has received $750,000 in connection with this fee; (2) Contingent Additional Purchase Price. This $800,000 fee was in addition to the purchase price payable to the Shareholders. Mr. Head's pro rata share of this amount in the event that the Debtors terminated their consulting arrangement with Mr. Head without cause could equal $576,000. To date, neither the Shareholders nor Mr. Head have received any payments in connection with this contingent price; (3) Consulting Fees. One or more payments of up to $600,000 for the services provided by Mr. Head to Head Distributing before and after the Petition Date. To date, none of this amount has been paid to Mr. Head; and (4) Escrow Account. No amounts are due to the Shareholders in connection with the escrow account and no amount remains in that account for disbursement. The Shareholders timely filed proofs of claim to recover as unsecured claims, secured claims, and administrative expenses, the Transaction Completion Fee, the Contingent Additional Purchase Price, and the Consulting Fee. Mr. Head filed a $50,000 administrative claim regarding the Consulting Fees earned through October 31, 2003. Mr. Head also says he is owed substantial sums in connection with: -- postpetition consulting fees; -- valuable services rendered postpetition; and -- certain amounts payable under the Stock Purchase Plan, including amounts arising from the Debtors' purported termination of Mr. Head's consulting arrangement after the Petition Date, including the $25,000 unpaid portion of the Transaction Completion Fee and his prorate portion of the Contingent Additional Purchase Price. In total, these claims exceed $2 million. The Debtors dispute the validity and priority of all of these claims. The Debtors want to reject the Shareholders Agreement and settle all prospective disputes. The primary terms of the settlement are: (1) Mutual Releases. The parties release all claims against each other; (2) The Shareholders consent to the Debtors' rejection of the Agreements; and (3) The Debtors will pay Mr. Head $120,000. 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. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) GENERAL MARITIME: S&P Affirms Low-B Ratings & Removes Credit Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating and its other ratings on General Maritime Corp. and removed all the ratings from CreditWatch, where they were placed on March 26, 2004. The rating outlook is stable. Ratings were placed on CreditWatch after General Maritime's March 26, 2004, announcement that it had agreed to purchase unrated Soponata S.A., a Portugal-based operator of medium-size oil tankers, for $247 million, plus the assumption of $168 million of future vessel commitments. Pro forma for the acquisition, New York, New York-based General Maritime will have $766 million of lease-adjusted debt, with debt to capital of 52%. "General Maritime should be able to reduce its acquisition-related debt, given the current strong tanker market, restoring related credit measures," said Standard & Poor's credit analyst Ken Farer. "However, significant improvements are unlikely as other debt- financed acquisitions are expected." After all the Soponata vessels are integrated into General Maritime's fleet, General Maritime will operate 47 oceangoing vessels (26 Aframax tankers and 21 Suezmax vessels), with four vessels on order. The company's fleet size is substantial, and its fleet is approximately the same average age as the global fleet. The company has expanded mainly through acquiring vessels, rather than ordering new ships. Because of management's aggressive growth strategy, forecasts of the fleet size and balance sheet are subject to more-than-usual uncertainty. "We expect tanker rates to remain above average in 2004, with continued premiums paid for double-hulled tankers because of heightened environmental concerns and the acceleration of the phase-out of single-hull vessels, carrying heavy grades of oil, by the International Maritime Organization," Mr. Farer said. The IMO is a specialized agency of the United Nations responsible for improving international shipping safety and preventing marine pollution. As a result of the IMO rules, General Maritime took an $18.8 million non-cash charge in the fourth quarter of 2003 for five of its nine single-hull vessels and will increase its depreciation expense by $2.1 million per quarter through 2009. Over the intermediate term, the new regulations are not expected to materially affect General Maritime, as all of its non-double- hulled tankers are allowed to continue operating through 2010. Standard & Poor's expects internally generated cash and availability under credit facilities to meet operating and capital spending needs and debt maturities over the intermediate term. GEO SPECIALTY: Hires Conway Del Genio as Restructuring Advisor -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave its stamp of approval to GEO Specialty Chemicals, Inc., and its debtor-affiliate's application to employ Conway, Del Genio, Gries & Co. LLC as their chief restructuring advisor. As the Debtors' chief restructuring advisor, Conway Del Genio will: a. meet with the Company's management, professional advisors and other constituents of the Company and reviewing the Company's existing business plans, operations, capital structure, financial condition and prospects in order to evaluate how the Company's growth, financing and other strategic objectives can be achieved; b. review GEO's historical operating financial results, new DIP credit agreement, 2004 Plan progress to date, 13-week cash flow forecasts, 3-year forecast/business plan, and such other information, as required, to develop an understanding of the Company's operations and formulate a point of view as to what level of operating and financial performance is achievable; c. closely monitor the weekly and monthly operating performance of the Company to its operating plan in order to fully understand and articulate how GEO is tracking to its EBITDA and cash flow budgets and covenants under its DIP credit facility; d. work with the CFO, assess the needs of the financial organization to meet the requirements of the post petition bankruptcy process and provide the temporary support or recommend the support to do so; e. work with management to control spending at the appropriate levels required to successfully operate the business and maximize the cash flow and profitability of the Company; f. use reasonable commercial efforts to ensure that the cash forecast and operating budgets are adhered to, with adjustments as necessary to meet the overall obligations of the Company to the lenders and stakeholders; g. help management to develop and plan additional business improvements to restructure operations, improve profitability and longer term value, and with management, seek Board authority to implement major changes as required; h. assist management to implement recommendations and work with the CEO and CFO in the operational execution of these recommendations as required; i. assist advisors to the lender group and unsecured creditors' committee in their accumulation, review and analysis of financial data; j. work with management to improve the accuracy and timing of the Company's periodic reporting to the lenders and Board; k. make personnel and organization structure recommendations to the CEO and CFO as appropriate; l. assist management, the Board, and the Debtors' financial advisor in the development of the underlying business plan for the Plan of Reorganization; and m. perform other tasks as may be mutually agreed upon. Conway Del Genio will receive a $150,000 fixed Monthly Fee. Ronald F. Stengel, Senior Managing Director of Conway Del Genio assures that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Harrison, New Jersey, GEO Specialty Chemicals, Inc. -- http://www.geosc.com/-- develops, manufactures and markets a wide variety of specialty chemicals, including over 300 products sold to major industrial customers for various end-use applications including water treatment, wire and cable, industrial rubber, oil and gas production, coatings, construction, and electronics. The Company filed for chapter 11 protection on March 18, 2004 (Bankr. N.J. Case No. 04-19148). Alan Lepene, Esq., and Robert Folland, Esq., at Thompson Hine, LLP, and Howard S. Greenberg, Esq., Morris S. Bauer, Esq., and Stephen Ravin, Esq., at Ravin Greenberg, PC represent the Debtors in their restructuring efforts. On September 30, 2003, the Debtors listed total assets of $264,142,000 and total debts of $215,447,000 GLOBAL INTERNET: ProUroCare Shareholders Gain Controlling Interest ------------------------------------------------------------------ Pursuant to an Agreement and Plan of Merger and Reorganization dated April 5, 2004, between Global Internet Communications, Inc., GIC Acquisition Corp., a Minnesota corporation and wholly owned subsidiary of the Global Internet Communications, and ProUroCare Inc., a Minnesota corporation, Acquisition Co. merged with and into ProUroCare, with ProUroCare remaining as the surviving company and a wholly owned operating subsidiary of Global Internet Communications Inc. The Merger was effective as of April 5, 2004, upon the filing of Articles of Merger with the Minnesota Secretary of State. At the effective time of the Merger, the legal existence of Acquisition Co. ceased, and all 3,501,001 shares of common stock of ProUroCare that were outstanding immediately prior to the Merger and held by ProUroCare shareholders were cancelled, with one share of common stock of ProUroCare issued to Global Internet Communications. Simultaneously, the former shareholders of ProUroCare common stock received an aggregate of 9,603,003 shares of common stock of Global Internet Communications Inc., representing approximately 83.4% of the Company's common stock outstanding immediately after the Merger. The above-described transactions took place at the effective time of the Merger, April 5, 2004, and represent a change in control of Global Internet Communications Inc. inasmuch as greater than 50% of the issued and outstanding common stock of the Company after the Merger is now held by the former shareholders of ProUroCare. Global Internet Communications' common stock is the only class of capital stock outstanding, and the only class of capital stock entitled to vote on corporate matters, including the election of directors. GOLD KIST: S&P Places B Corporate Credit Rating On Watch Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit rating and other ratings on poultry cooperative Gold Kist Inc. on CreditWatch with positive implications. Positive implications means that the ratings could be raised or affirmed following completion of Standard & Poor's review. About $325 million of rated debt of Atlanta, Ga.-based Gold Kist is affected. The CreditWatch placement follows the company's recent announcement that it plans to convert to a for-profit corporation from a cooperative association. The conversion will occur by merging Gold Kist into a newly formed corporation, Gold Kist Holdings Inc. The conversion's completion is conditioned upon the approval of Gold Kist's members and the completion of an initial public offering of 18 million shares of Gold Kist Holdings' common stock. At present, the company is expecting net proceeds of about $248 million ($286 million if the underwriters exercise their over-allotment option) assuming a public offering price of $15.00 per share (the range for the IPO is between $14.00 to $16.00 per share). A portion of the proceeds (currently estimated at about $121 million) would be used for debt reduction, another $120 million would be used to redeem certain outstanding membership interests, and about $7.0 million would be used for general corporate purposes. "Standard & Poor's will monitor the situation and see whether the cooperative members approve the conversion. Standard & Poor's will also monitor whether the IPO is completed, and see how proceeds, if any, will be applied to permanent debt reduction," said credit analyst Jayne M. Ross. Gold Kist is a farmer-owned agricultural marketing cooperative with vertically integrated poultry operations principally located in the southeastern U.S., with about a 9% market share. The company markets a wide variety of poultry products under its own brands and private label. In addition, the cooperative has a small pork production operation in the Southeastern U.S. and has a joint venture arrangement with Land O'Lakes Inc. in the form of a limited liability hog sales and production company. GOOD HARBOR FILLET: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Good Harbor Fillet Company, Inc. 21 and 29 Great Republic Drive Gloucester, Massachusetts 01931 Bankruptcy Case No.: 04-14603 Type of Business: The Debtor specializes in the manufacture and distribution of a complete line of made-to-order seafood products and a variety of innovative specialty items. See http://www.goodharborfillet.com/ Chapter 11 Petition Date: June 1, 2004 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Taylor A. Greene, Esq. Craig and Macauley, P.C. Federal Reserve Plaza 600 Atlantic Avenue Boston, MA 02210 Tel: 617-367-9500 Total Assets: $1 Million to $10 Million Total Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ PACO-GP Ltd. $447,698 1 Lambousa Street Nicosia, Cyprus 01095-0000 Highland Fisheries Ltd. $174,347 The Hadley Company LLC $173,134 Daerim America Inc. $157,547 Eda Select Temporaries $144,055 Ocean Trawlers Asia Ltd. $115,141 Adrigel $92,640 Hub Folding Box Co. $91,467 ABO International Co. $88,704 General Seafoods Inc. $87,648 Northern Ocean Marine $85,962 Newly Weds Foods Inc. $83,884 Ocean Pacific Seafoods Ltd. $75,288 Massachusetts Electric $64,535 LCC New England $58,869 Icicle Seafoods Inc. $54,227 Mermaid Seafoods Inc. $50,452 Sleeping Giant Inc. $50,031 Seascape Seafood Inc. $49,052 Stone Container Corp. $48,267 HAVENS STEEL: Turns to KPMG for Accounting Work & Financial Advice ------------------------------------------------------------------ Havens Steel Company asks the U.S. Bankruptcy Court for the Western District of Missouri, Kansas City Division, to approve its application to employ KPMG LLP. The Debtor wants to hire KPMG as its accountants and financial advisors to provide: a. Financial Advisory Services (i) assistance in the preparation and review of reports or filings as required by the Bankruptcy Court or the Office of the United States Trustee, including, but not limited to, schedules of assets and liabilities, statement of financial affairs, mailing matrix and monthly operating reports; (ii) review of and assistance in the preparation of financial information for distribution to creditors and other parties-in-interest, including, but not limited to, analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Bankruptcy Court approval is sought; (iii) assistance with analysis, tracking and reporting regarding cash collateral and debtor-in-possession financing arrangements and budgets; (iv) assistance with implementation of bankruptcy accounting procedures as required by the Bankruptcy Code and generally accepted accounting principles, including, but not limited to, Statement of Position 90-7; (v) evaluation of potential employee retention and severance plans; (vi) assistance with identifying and implementing potential cost containment opportunities; (vii) assistance with identifying and implementing asset redeployment or disposition opportunities; (viii) analysis of assumption and rejection issues regarding executory contracts and leases; (ix) assistance in preparing business plans and analyzing the business and financial condition of the Debtor; (x) assistance in evaluating reorganization strategy and alternatives available to the Debtor, including refinancing or sale options; (xi) assistance with preparation of the Debtor's financial projections and review and critique of assumptions; (xii) analysis of enterprise, asset and liquidation values; (xiii) assistance in preparing documents necessary for confirmation, including, but not limited to, financial and other information contained in the plan of reorganization and disclosure statement; (xiv) advice and assistance to the Debtor in negotiations and meetings with secured lenders, unsecured creditors and any formal or informal committees; (xv) advice and assistance on the tax consequences of proposed plans of reorganization, including, but not limited to, assistance in the preparation of Internal Revenue Service ruling requests regarding the future tax consequences of alternative reorganization structures; (xvi) assistance with claims resolution procedures, including, but not limited to, analyses of creditors' claims by type and entity and maintenance of a claims database; (xvii) litigation consulting services and expert witness testimony regarding avoidance actions or other matters in this case; and (xviii) other such functions as requested by the Debtor or its counsel to assist the Debtor in its business and reorganization. b. Tax Advisory Assistance (i) assistance with tax compliance including preparation of federal, state and local income tax returns; (ii) consultation with respect to tax planning matters including but not limited to ad valorem taxes; and (iii) other tax matters as requested by the Debtor or its counsel to assist the Debtor in its business and reorganization. The Debtor selected KPMG as its accountants and financial advisors because of the firm's diverse experience and extensive knowledge in the fields of accounting, taxation and bankruptcy. Melissa Kibler Knoll reports that KPMG's normal hourly rates currently range from: Financial Advisory Services: Designation Billing Rate ----------- ------------ Partners $590 - $650 per hour Directors $480 - $570 per hour Managers $390 - $450 per hour Senior Associates $300 - $360 per hour Associates $190 - $270 per hour Paraprofessionals $140 per hour Tax Advisory Services: Designation Billing Rate ----------- ------------ Partners $325 per hour Managers $260 per hour Staff $175 - $200 per hour Headquartered in Kansas City, Missouri, Havens Steel Company -- http://www.havenssteel.com/-- provides design-build services from engineering to fabrication and erection to steel management systems and on-site project management. The company filed for chapter 11 protection on March 18, 2004 (Bankr. W.D. Mo. Case No. 04-41574). Jonathan A. Margolies, Esq., and R. Pete Smith, Esq., at McDowell, Rice, Smith & Buchanan represents the Debtors in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $10 million each. HOLLINGER INC: Catalyst Fund Asks Court to Investigate Company -------------------------------------------------------------- Hollinger Inc. (TSX:HLG.C) (TSX:HLG.PR.B) (TSX:HLG.PR.C) announces that it was served June 8 with an application to the Ontario Superior Court of Justice commenced by Catalyst Fund General Partner I Inc., a Hollinger shareholder, seeking an order directing an investigation of Hollinger under the Canada Business Corporations Act. Hollinger considers the application to be without merit and intends to vigorously oppose it. Peter G. White, Co-Chief Operating Officer of Hollinger, stated that, "It is interesting to note that this application is being brought on the heels of our shareholders' meeting of May 27th, where Catalyst was unable to vote its shares because it had failed to deliver its proxy on time." Hollinger's principal asset is its approximately 72.3% voting and 29.7% equity interest in Hollinger International Inc. Hollinger International is a global newspaper publisher with English- language newspapers in the United States, Great Britain and Israel. Its assets include The Daily Telegraph, The Sunday Telegraph and The Spectator and Apollo magazines in Great Britain, the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. * * * As reported in the Troubled Company Reporter's March 3, 2004 edition, Hollinger Inc. (TSX: HLG.C; HLG.PR.B; HLG.PR.C) did not make the interest payment due March 1, 2004, on its outstanding US$120 million aggregate principal amount of 11.875% senior secured notes due 2011. The non-payment of interest does not constitute an event of default under the indenture governing the Senior Secured Notes unless such non-payment continues for a period of 30 days from the date such interest is due. Hollinger, together with its advisors, are continuing to actively examine Hollinger's available options in order to satisfy its obligations under the Senior Secured Note indenture in a timely manner. HYLSA S.A.: S&P Raises Local & Foreign Currency Rating To B ----------------------------------------------------------- Standard & Poor's Ratings Services raised its local currency and foreign currency corporate credit ratings on Hylsa S.A. de C.V. to 'B' from 'CCC+.' The senior unsecured debt rating on Hylsa was also raised to 'CCC+' from 'CCC-'. The outlook is stable. "The rating action is based on the company's increasing revenues due to a better product mix and higher price environment, effective cost control, positive free cash flow generation, and significant debt reduction of 11.6% so far this year," said Standard & Poor's credit analyst Juan P. Becerra. The ratings on Mexican steel producer Hylsa reflect Hylsa's high leverage, the challenges posed by industry cyclicality, very competitive steel markets, and significant exposure to the automotive and construction industries. The ratings also reflect the company's position as one of the largest steel makers in Mexico, improved local market demand, improving cost position, and expected debt reduction with cash flows from the improved pricing environment in global steel markets. The stable outlook is supported by an improved financial profile as a result of Hylsa's debt prepayments and improving operating performance. The ratings could be raised over time if Hylsa continues to significantly reduce debt. The ratings could be lowered if the decrease in prices is steeper than anticipated or if debt levels are not reduced as expected. I2 TECHNOLOGIES: Settles SEC Proceedings for $10 Million -------------------------------------------------------- i2 Technologies, Inc. (OTC:ITWO) said that the Securities and Exchange Commission (SEC) announced the settlement of enforcement proceedings against the Company. The settlement concerns the investigation conducted by the SEC into alleged violations of federal securities laws relating to the previously announced restatement of i2's consolidated financial statements for the four years ended Dec. 31, 2001, and the first three quarters of 2002. The restatement of the Company's financial statements followed an internal inquiry into certain allegations of the Company's revenue recognition practices and financial reporting for those periods. Without admitting or denying the Commission's substantive findings against it, i2 settled the enforcement proceedings by consenting to a cease-and-desist order requiring future compliance with specific provisions of the Federal Securities laws, and agreed to pay a $10 million civil penalty. The entire penalty proceeds will be distributed to certain i2 shareholders. i2 established an accrual of $10 million relating to the possible settlement of the SEC complaint in the first quarter of 2004. About i2 A leading provider of closed-loop supply chain management solutions, i2 -- whose March 31, 2004 balance sheet shows a stockholders' deficit of $325,660,000 -- designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. i2's global customer base consists of some of the world's market leaders -- including seven of the Fortune global top 10. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at http://www.i2.com/ IMAGIS TECHNOLOGIES: Roy Trivett Now Holds 14.1% Equity Stake ------------------------------------------------------------- In a private placement of Units of Imagis Technologies Inc., Mr. Roy Trivett acquired 900,000 common shares and 900,000 warrants to purchase one common share. Mr. Trivett purchased these securities for investment purposes. Certain of the common shares beneficially owned by Mr. Trivett are subject to stock options that were granted to Mr. Trivett by Imagis as a result of his position with the Company. In a debt settlement transaction with Imagis Technologies that closed on April 29, 2004, Trivett Holdings Ltd., a corporation in which Mr. Trivett is the sole shareholder, officer and director, acquired 325,000 common shares. Such common shares were issued to Mr. Trivett in consideration for the satisfaction of the debts owed to Mr. Trivett by the Company that totaled Cdn$130,000, which represented Mr. Trivett's salary that was in arrears from July 15, 2003 until March 31, 2004. Mr. Trivett is the beneficial owner of 2,342,097 common shares, or 14.1% of the Company's outstanding common shares as of April 29, 2004, which includes (i) 217,037 common shares issuable pursuant to stock options granted under the Company's stock option plan that are vested and fully exercisable at an exercise price of Cdn$0.78 per share; (ii) 900,000 common shares underlying warrants that are immediately exercisable at an exercise price of Cdn$0.50 per share until April 28, 2005 and are exercisable from April 29, 2005 until April 28, 2006 at an exercise price of Cdn$0.75 per share; and (iii) 325,000 common shares held by Trivett Holdings Ltd., the corporation in which Mr. Trivett is the sole shareholder, officer and director. Mr. Trivett holds sole power to vote, or to direct the vote of, and sole power to dispose, or to direct the disposition of, the 2,342,097 common shares. About the Company Imagis Technologies Inc., a British Columbia corporation, develops and markets software that simplifies, accelerates, and economizes the process of connecting existing, disparate databases, enhanced as appropriate with biometric facial recognition technology. The combination of these technologies enables information owners to share data securely with external stakeholders and software systems using any combination of text or imagery. This includes searching disconnected data repositories for information about an individual using only a facial image. Liquidity and Capital Resources In its Form 10-QSB For the quarterly period ended March 31, 2004 filed with the Securities & Exchange Commission, Imagis Technologies reports: "The Company's cash on hand at the beginning of the period aggregated $86,227. During the period, the Company received additional net funds of $345,000 in share subscriptions for a private placement that was closed on April 28, 2004. "The Company used these funds primarily to finance its operating loss for the period. The impact on cash of the loss of $1,581,801, after adjustment for non-cash items and changes to other working capital accounts in the period, resulted in a negative cash flow from operations of $390,528. The Company also repaid capital leases of $5,753, and the Company's cash position declined by $51,281 to $34,946 at March 31, 2004. "The Company did not have sufficient cash flow from operations to fund its operations beyond March 31, 2004. Consequently the Company completed a private placement consisting of 4,007,875 Units at $0.40 per Unit. Each Unit consists of one common share and one common share purchase warrant. Each warrant entitles the holder to acquire one additional common share in the capital of Imagis at an exercise price of $0.50 until April 28, 2005 or at $0.75 from April 29, 2005 until April 28, 2006. The common shares and warrants are subject to a four month hold period that expires on August 28, 2004. Finders' fees of $69,000 in cash were paid on a portion of the private placement conducted outside the United States. The total net proceeds to Imagis are $1,534,150, of which $345,000 were recorded in share subscriptions as at March 31, 2004. "Concurrently with the private placement the Company settled $616,723 in debt included in accounts payable as at March 31, 2004 through the issuance of 1,541,809 common shares and 226,584 common share purchase warrants. Each warrant entitles the holder to acquire one additional common share in the capital of Imagis at an exercise price of $0.50 until April 29, 2005 or at $0.75 from April 30, 2005 until April 29, 2006. Debt settled with related parties and formerly related parties totaled $526,090 through the issuance of 1,315,225 common shares with no warrants. The common shares and warrants are subject to a four month hold period that expires on August 29, 2004. "Management of the Company believes that the funds received through the private placement combined with operating revenues and the reduction in liabilities achieved through the debt settlement will provide sufficient cash flow to fund the Company's operation for at least the next six months, even if no increases in revenue growth occur. "Should the operating revenues fail to increase enough to provide sufficient cash flow to fund operations the Company may require further financing. There is no assurance that the Company will be able to complete any financing or that any financing will be obtained on terms favourable to the Company. The failure to obtain adequate financing could result in a substantial curtailment of Imagis' operations." KAISER: Amending DIP Credit Pact to Facilitate Asset Dispositions ----------------------------------------------------------------- Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that the Kaiser Aluminum Corporation Debtors' February 12, 2002 credit agreement with Bank of America, N.A., and other financial institutions, as lenders, contains a number of provisions that directly address sales of the Debtors' assets or could be affected by those sales. In particular, the Credit Agreement contains provisions that: (a) expressly prohibit the sale of the Debtors' interests in Alumina Partners of Jamaica; and (b) prohibit asset dispositions exceeding $25 million in any one year. Accordingly, the Debtors cannot consummate sales of their bauxite mining, alumina refinery and smelting businesses without Lender approval and amendments to the Credit Agreement. To permit the Debtors to proceed with the sales of their Commodities Businesses, accommodate the consummation of the Intercompany Settlement Agreement and address certain other matters, the Debtors negotiated a seventh amendment to the Credit Agreement with Bank of America and the other Lenders. Terms of the Seventh Amendment According to Mr. DeFranceschi, the Seventh Amendment will enable the Debtors to accomplish three broad goals: (1) It will allow the Debtors to proceed with the disposition of their Commodities Businesses without the need for further amendments to the Credit Agreement; (2) It will facilitate the Debtors' entry into an intercompany settlement agreement with the Official Committee of Unsecured Creditors regarding the allocation of consideration from any sale or other disposition of Alpart Jamaica, Kaiser Jamaica Corporation, and Kaiser Alumina Australia Corporation, or their assets, to: -- Kaiser Aluminum & Chemical Corporation, on account of its intercompany claims against these subsidiaries; and -- these subsidiaries' claimholders; and (3) It will assure that the Debtors have adequate liquidity throughout the remainder of their Chapter 11 cases, notwithstanding the dispositions of the Commodities Businesses. The Debtors and Bank of America have negotiated a term sheet to the Seventh Amendment. The Term Sheet is still subject to approval by the Lenders holding 86% of the commitments under the Credit Agreement. The principal terms of the Term Sheet are: A. The Debtors will be permitted, subject to certain conditions, to proceed with the asset dispositions. These conditions will apply to dispositions of the Debtors' interests in Alpart or Queensland Alumina Limited: (a) Alpart Interests Upon the closing of the Alpart sale: -- The Debtors must deposit $48,000,000 into cash collateral accounts at Bank of America. The $48,000,000 consists of: (i) $28,000,000 in proceeds that KACC is expected to receive in respect of its assets that are included in the sale -- KACC Available Amount; and (ii) $20,000,000 of the proceeds that Alpart Jamaica and Kaiser Jamaica expect to receive; -- Certain letters of credit issued under the Credit Agreement to secure certain bond indebtedness incurred by Alpart and issued by the Caribbean Basin Project Financing Authority must be cancelled, cash collateralized, or otherwise supported by separate letters of credit; and -- The Debtors must be released from any further obligations to make investments with respect to Alpart or any contingent obligations with respect to Alpart other than those contingent obligations specified in the purchase agreement the Debtors entered into with RUAL Trade Limited, the successful bidder for Alpart. (b) QAL Interests Upon the closing of the QAL sale: -- The Debtors must deposit $40,000,000 of the proceeds into a Bank of America cash collateral account; and -- The Debtors must effectively be released from any further obligation to make investments with respect to QAL or any contingent liabilities with respect to QAL other than those liabilities or post-closing obligations that are customarily found in purchase agreements and agreed with the ultimate purchaser of the QAL Interests -- except that the aggregate amount of the liabilities and post-closing obligations will not exceed an amount that is reasonably acceptable to the Lenders. B. Bank of America and the Lenders will be granted perfected, first priority security interests in the proceeds from the sales of the Alpart Interests and the QAL Interests deposited at Bank of America. To the extent the cash proceeds of the Alpart Interests have been paid to KACC and deposited in a KACC-owned cash collateral account, Alpart Jamaica and Kaiser Jamaica will be granted a second-priority lien in the cash collateral, excluding the KACC Available Amount. To the extent that the QAL Interest proceeds are paid to KACC and deposited in a KACC-owned cash collateral account, Kaiser Australia will be granted a second-priority lien in the cash collateral. The aggregate amount of the cash collateral from sales of the Alpart Interests and QAL Interests cannot be less than $60,000,000, provided that if the Alpart Interests are sold before the QAL Interests, until the sale of the QAL Interests, the Minimum Aggregate Proceeds Collateral will consist of the cash collateral accounts established in connection with the Alpart sale -- excluding the KACC Available Amount -- and either the existing subsidiary guaranty of KACC or the QAL Guaranty Amount. As long as the conditions for borrowing under the Credit Agreement are satisfied, KACC will be able to withdraw and use the KACC Available Amount. C. In respect of the Alpart Interests, until the effective date of the Intercompany Settlement Agreement, Bank of America and the other Lenders will retain all of their rights with respect to: (a) the subsidiary guaranties issued by Kaiser Jamaica and Alpart Jamaica under the Credit Agreement; and (b) cash collateral from the Alpart Interests. After the Settlement Effective Date and until the occurrence of a sale, the Lenders' recourse under these guaranties will be capped at $45,000,000. After the occurrence of a sale, the Lenders' recourse under the guaranties will be limited to the cash collateral from the Alpart Interests capped at $48,000,000, subject to potential purchase price adjustments and possible adjustments based on Alpart Jamaica's and Kaiser Jamaica's net cash flow after the effective date of the Seventh Amendment -- whether or not the Settlement Effective Date has occurred. D. In respect of the QAL Interests, until the Settlement Effective Date, Bank of America and the other Lenders will retain all of their rights with respect to: (a) the subsidiary guaranty by Kaiser Australia under the Credit Agreement; and (b) the cash collateral from the QAL Interests. After the Settlement Effective Date and until the occurrence of a sale, the Lenders' recourse under the guaranty will be capped at $40,000,000. After the occurrence of a sale and the Settlement Effective Date, the Lenders' recourse under the guaranty will be limited to the cash collateral from the QAL Interests fixed at $40,000,000. E. The aggregate overall revolving commitment under the DIP Financing Facility will be reduced from $285,000,000 to $200,000,000. This reduction in the overall commitment will reduce certain costs of the facility. F. The amendment fees in connection with the Seventh Amendment are $2,250,000, which are payable at closing. G. The pricing under the Credit Agreement will remain the same except that the unused line fee will be increased from 50 basis points to 62.5 basis points. H. Certain components of the Borrowing Base, which determines the amount of financing available to the Debtors under the DIP Financing Facility, will be modified: (a) The PPE Subcomponent, which is primarily based on the value of the Debtors' fixed assets, will be adjusted to more accurately reflect the composition of the Debtors' fixed assets. With certain exceptions, the PPE Subcomponent will not be reduced by the amount of net proceeds from other dispositions of the Commodities Businesses. There also will exist certain contingent mechanisms that potentially would reduce the PPE Subcomponent if outstanding loans and letters of credit exceed 85% of the Borrowing Base attributable to Eligible Accounts and Eligible Inventory; (b) The maximum amount of Eligible Inventory included in the Inventory component of the Borrowing Base will be reduced to reflect the reduced aggregate revolving commitment under the DIP Financing Facility; and (c) The Seventh Amendment reduces the amount of the Availability Reserve, which is deducted from the Borrowing Base and reduces borrowing availability, to reflect the reduced aggregate revolving commitment under the DIP Financing Facility. I. Spring EBITDA Covenant. The EBITDA covenant will no longer be generally applicable and will only become applicable if the aggregate amount of the outstanding loans and letters of credit exceeds the Account/Inventory Threshold for any three consecutive business days or for any three business days in a calendar month. Also, the EBITDA covenant levels will be modified based on the Debtors' updated financial forecast. J. The Debtors' failure to deposit, maintain and protect the requisite cash collateral at Bank of America as required by the Seventh Amendment or the entry of a Court order authorizing the use of the cash collateral; the Debtors' failure to file a plan or plans of reorganization, which provides for the satisfaction of all obligations under the DIP Financing Facility, on or before October 31, 2004; and that plan or plans of reorganization are not confirmed and effective on or before December 31, 2004, will each constitute an Event of Default under the Postpetition Credit Agreement. K. Other provisions in the Seventh Amendment include: (a) An amendment to the Credit Agreement extending the prohibition on transactions with affiliates to cover certain transactions between any Obligor under the Credit Agreement and Alpart Jamaica, Kaiser Jamaica and Kaiser Australia occurring after the effective date of the Seventh Amendment; (b) A new covenant requiring that the Intercompany Settlement Agreement, as approved by the Court, will reflect certain modifications from the draft previously provided to Bank of America in order to conform the Intercompany Settlement Agreement to the Seventh Amendment; (c) A provision clarifying that Bank of America and the other Lenders will be under no obligation to marshal any of their collateral; and (d) A provision requiring Alpart Jamaica, Kaiser Jamaica and Kaiser Australia to be responsible for paying their own administrative expenses incurred in their bankruptcy cases after June 30, 2004, and excludes those expenses from the "Carve-Out" under the Credit Agreement. The Seventh Amendment also permits Alpart Jamaica, Kaiser Jamaica and Kaiser Australia to file standalone reorganization plans. Pursuant to those Plans, it is expected that KACC would be paid the proceeds that Alpart Jamaica, Kaiser Jamaica and Kaiser Australia would otherwise be required to deposit into Bank of America cash collateral accounts. If this were to occur, to comply with cash collateral requirements under the Seventh Amendment, KACC would be required to deposit the requisite proceeds in separate, KACC-owned accounts at Bank of America. By this motion, the Debtors seek the Court's authority to enter into the Seventh Amendment and pay related amendment fees. 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. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Jaynes Wants Court to Compel $2,677,393 Claim Payment ----------------------------------------------------------------- On October 24, 2001, Kmart Corporation and Jaynes Corporation entered into a contract for the construction of a new Super Kmart Store in Albuquerque, New Mexico. The construction contract was supplemented on November 2, 2001 to expand the scope of the work and adjust the contract price commensurately. Pursuant to the November 2 Supplement along with the October 24 Agreement, Kmart promised to pay Jaynes $6,933,759 for its work on the Project. Jaynes performed its obligations under the Contract. Kmart did not. David A. Newby, Esq., in Chicago, Illinois, relates that as of the Petition Date, Jaynes has a claim against Kmart for $2,677,393, plus accrued prepetition interest and costs, based on Kmart's breach of the Contract. The Claim was timely filed on July 22, 2002 and no objection to the Claim has ever been filed. Without sufficient explanation, Kmart described the Claim in its schedule of allowed claims as having a value of $0. In response to Jaynes' requests to have the Claim amount corrected, Kmart referred to a July 2003 Court order that provides that a lease rejection claim "is deemed an Allowed Claim in the amount" listed on an exhibit to the order and that Coors and Central Partners, LLC, the landlord asserting the rejection claim, "agrees to fully indemnify Kmart with respect to any payment or distribution made with respect to Proof of Claim No. 30937 and any related claims made by Jaynes Corporation with respect to this store." Mr. Newby asserts that no entity has made any payment to Jaynes on account of the Claim. Accordingly, Jaynes asks the Court to compel Kmart to pay its Claim as contemplated by the Plan. Mr. Newby contends that, because the Claim has not been the subject of any objection, the Claim is an allowed claim and Jaynes must receive its proper distribution on account of the Claim under the Plan. Kmart has made no distribution to Jaynes and is, thus, in violation of the Confirmation Order. Mr. Newby points out that the July 2003 Order, regardless of any third party obligation to indemnify Kmart, does not absolve Kmart from its immediate obligation to pay Jaynes on account of the Claim. Jaynes had no knowledge of any negotiations between Coors & Central and Kmart. Furthermore, it is axiomatic that an agreement between two parties cannot prejudice the rights of a third party. In essence, Kmart and Coors & Central have agreed, as solely between themselves, to disallow another creditor's claim. There can be no principal in law, in equity, or in the Bankruptcy Code that permits that unfairness. (Kmart Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service, Inc., 215/945- 7000) LB-UBS COMMERCIAL: Fitch Affirms Junk Rating on 2001-2 Class P -------------------------------------------------------------- Fitch Ratings affirms LB-UBS Commercial Mortgage Trust's commercial mortgage pass-through certificates, series 2001-C2 as follows: --$201.5 million class A-1 'AAA'; --$789.3 million class A-2 'AAA'; --Interest Only class X 'AAA'; --$49.5 million class B 'AA'; --$62.7 million class C 'A'; --$16.5 million class D 'A-'; --$13.2 million class E 'BBB+'; --$19.8 million class F 'BBB'; --$16.5 million class G 'BBB-'; --$23.1 million class H 'BB+'; --$14.8 million class J 'BB'; --$11.5 million class K 'BB-'; --$9.9 million class L 'B+'; --$13.2 million class M 'B'; --$6.6 million class N 'B-'; --$3.3 million class P 'CCC'. The $13.2 million class Q is not rated by Fitch. The affirmations are due to the continued stable pool performance and scheduled amortization. As of the May 2004 distribution date, the pool's aggregate certificate balance has decreased 4.1% to $1.26 billion from $1.32 billion at issuance. Currently, four loans (0.7%) are in special servicing, of which two (0.3%) are over 90 days delinquent. The largest specially serviced loan, Perimeter Point Warehouse (0.2%) is secured by a 78,000 square feet (sf) mixed-use complex located in Winston-Salem, NC. Revenue has decreased significantly due to a large tenant vacating its space prior to lease expiration. Current physical occupancy has dropped to 27.6%. The special servicer is currently analyzing possible workout scenarios. As part of its analysis, Fitch reviewed the six credit assessments. The debt service coverage ratios (DSCR) for each loan is calculated using servicer provided net operating income less reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. Westfield Shoppingtown Meriden (6.1%) is located in Merdien, CT and is anchored by Filene's, JC Penney, Sears, and Lord & Taylor. The collateral consists of 371,688 sf of in-line space in a 913,625 sf regional mall. As of YE 2003, the Fitch adjusted net cash flow (NCF) dropped 3.3% since issuance. The decrease is due to slightly lower in-place rents. Occupancy has remained stable since issuance at 97.0%. The A-note portion ($77.3 million) of the whole loan is held in the trust, while the B-note portion ($18.2 million) is held as collateral in the Westfield Shoppingtown Meriden, Series 2001-C2A transaction. Fitch maintains an investment grade credit assessment. NewPark Mall (5.8%) is secured by 425,217 sf of a 1.2 million sf regional mall located in Newark, CA. As of March 2004, occupancy has increased to 92.8% compared to 88.9% at issuance. The DSCR as of YE 2003 has increased to 1.53 times (x) compared to 1.44x at issuance. The property continues to be a stable performer and maintains an investment grade credit assessment. The Courtyard by Marriott (2.5%) is collateralized by a 449-room full-service hotel located in Philadelphia, PA. The revenue per available room (RevPar) remains below issuance levels. As of the twelve months ended January 2004 (TTM 1/2004), RevPar was $79.30 compared to $90.70 at issuance. The Fitch adjusted DSCR is 1.26x as of TTM 1/2004 compared to1.29x as of YE 2002 and 1.91x at issuance. While the property is master leased to Marriott, Fitch reviews the loan based on actual property operations with credit for amortization. The loan remains below investment grade. 10950 Tantau Avenue (2.1%) is secured by 104,249 sf class 'B' office building located in Cupertino, CA. The property is currently 100% occupied by a single tenant that is currently paying partial rent on the newly occupied space. Due to the partial rent payments the credit assessment remains below investment grade. Hartz Mountain Industries, also known as 400 Plaza Drive (1.7%), is secured by a four-story multi-tenanted class 'B' office building, located in Secaucus, NJ. As of YE 2003 the Fitch adjusted NCF decreased approximately 25.8% since issuance. The decrease is due to a decline in occupancy to 77.0% as of YE 2003 compared to 100% at issuance. According to the master servicer watch list, a new lease was signed which will bring occupancy to 97.0%. The loans remains investment grade. 529 Bryant Street (1.5%) is secured by a 45,161 sf office building located in downtown Palo Alto, CA. The building was originally occupied by two tenants, subsequently one tenant vacated. The remaining tenant took occupancy of the vacant space, but is currently only paying partial rent until January 2005, when full rent payments are due. The building remains 100% occupied as of a February 2004 rent roll. However, the rental income is substantially less than the income at issuance. The corresponding DSCR as of YE 2003 was 1.30x compared to 1.37x at YE 2002 and 1.42x at issuance. Fitch maintains a below investment grade credit assessment. Fitch is concerned that three (6.25%) of the six credit assessed loans, continue to maintain below investment grade credit assessments. Also of concern are the 7.1% of the transaction which have a DSCR below 1.0x. After applying various hypothetical stress scenarios taking into consideration all of the concerns, the resulting subordination levels warrant affirmations to the designated classes. MEDICALCV INC: Perkins Capital Discloses 16.9% Equity Stake ----------------------------------------------------------- Perkins Capital Management, Inc. of Minnesota, beneficially owns 1,660,000 shares of the common stock of MedicalCV, Inc., representing 16.9% of the outstanding common stock of MedicalCV. Perkins Capital Management holds sole voting power over 170,000 such shares and sold dispositive power over the entire 1,660,000 shares. MedicalCV, Inc. -- whose January 31, 2004 balance sheet shows a total shareholders' equity deficit of 2,877,971 -- is a Minnesota-based cardiothoracic surgery device manufacturer that launched its Omnicarbon(R) heart valve in the United States in early 2002. Led by a new management team, the company is focused on building a worldwide market in mechanical heart valves and other innovative products for the cardiothoracic surgical suite. The Omnicarbon heart valve has an established market position in a number of key regions of Europe, South Asia, the Middle East and the Far East. Although international markets will continue to play an important role in the company's results, the U.S. market offers tremendous growth potential for the Omnicarbon valve. In September 2003, the company acquired a technology platform for the treatment of atrial fibrillation, an exciting new growth opportunity. In addition, the company entered into an agreement with Segmed, Inc., to commercialize an annuloplasty product known as the Northrup Universal Heart Valve Repair System(TM). MedicalCV has a fully integrated manufacturing facility, where it designs, tests and manufactures its products. The company's securities are traded on the OTC Bulletin Board under the symbol "MDCVU". MESA AIR: Extends Stock Repurchase Program ------------------------------------------ Mesa Air Group, Inc. (Nasdaq: MESA), announced that its Board of Directors has extended its current stock repurchase program. In October 2002, the Board authorized the repurchase of two (2) million shares, of which 1,616,334 remain available for repurchase under the current program. The extension, which is open-ended, will allow the Company to purchase the remaining shares from time to time in the open market. The Company has bought approximately 4,805,927 million shares of common stock under its various repurchase programs since the Board first approved the program in December 1999, including 238,278 shares purchased in calendar year 2004. "With the difficult operating environment in the airline industry, we believe our recent stock price does not reflect the underlying long-term value of our Company," said Jonathan Ornstein, Mesa's Chairman and Chief Executive Officer. "Under the resolutions adopted, the Company will continue to monitor its stock price and purchase shares if and when market conditions create what we believe to be a buying opportunity." Mesa currently operates 172 aircraft with over 1,000 daily system departures to over 176 cities, 41 states, the District of Columbia, Canada, Mexico and the Bahamas. It operates in the West and Midwest as America West Express; the Midwest and East as US Airways Express; in Chicago, Denver and Los Angeles as United Express; in Kansas City with Midwest Airlines and in New Mexico and Texas as Mesa Airlines. The Company, which was founded in New Mexico in 1982, has approximately 4,500 employees. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. METALDYNE: Explores with Dongfeng Joint Venture in China -------------------------------------------------------- Metaldyne and Dongfeng Motor Co. Ltd. announce they have signed a memorandum of understanding to explore a joint venture in China. The potential joint venture would focus on the manufacturing and sales of powder metal-based products and assemblies for the local transportation market. "Metaldyne is pleased to announce this relationship with Dongfeng. The potential joint venture would position Metaldyne to play a larger role as a systems and module supplier in the Asia Pacific region," said Scott Ferriman, senior vice president, Metaldyne Asia Pacific. "We hope that the MOU with Dongfeng will be a catalyst for the Metaldyne footprint in China. Our manufacturing presence in Asia is a critical part of our growth strategy," adds Tim Leuliette, Metaldyne's chairman, president and CEO. "This project between Metaldyne and Dongfeng will benefit both sides and will potentially lead to a win-win joint venture for powder metal-based products. These products have a bright future in the ever-growing automotive market inside China and around the world," said Mr. Wengyunzhong, Deputy Executive General Manager of Parts & Components Business Unit, Dongfeng Co. Ltd. About Dongfeng Motor Co. Ltd. Dongfeng Motor Co. Ltd. is a joint venture between Nissan Motor Co Ltd and Dongfeng Motor Corporation, one of China's leading auto makers. Considered one of the largest JVs in the country's automotive industry, Dongfeng Motor Co. Ltd. has been registered in Wuhan, capital of Central China's Hubei Province, with a combined investment of over US $2 billion. With 70,000 employees, the joint venture produces automobiles ranging from cars, trucks and minivans to buses at three separate bases in Guangzhou, capital of South China's Guangdong Province, and Xiangfan and Shiyan cities, both in Hubei Province. About Metaldyne Metaldyne is a leading global designer and supplier of metal-based components, assemblies and modules for transportation-related powertrain and chassis applications including engine, transmission/transfer case, wheel-end and suspension, axle and driveline, and noise and vibration control products to the motor vehicle industry. The company serves the automotive segment through its Chassis, Driveline, and Engine Groups. As previously announced, the Company has been delayed in completing certain of its financial statements and is reviewing its previously issued financial statements due to an independent inquiry into certain accounting allegations. In general, the new extended waivers waive delivery of financial statements until the earlier of September 30, 2004 or the occurrence of certain adverse events, including a delivery of a notice of default under certain other agreements. During the waiver period, the Company expects to have access to its revolving credit facility and to its accounts receivable securitization, as typically required, subject to compliance with covenants and other applicable limitations. Copies of these waivers will be filed with the Securities and Exchange Commission as Exhibits to a Form 8-K. In the event that certain waivers expire or are not obtained or notices of default are delivered in respect of the Company's debt securities, the Company could be materially and adversely affected and lose access to its revolving credit and accounts receivable securitization facilities. MILACRON INC: Board OKs Stock Rights Offering of $2 Per Share ------------------------------------------------------------- Milacron Inc. (NYSE:MZ) said its board of directors has approved a stock rights offering in which holders of Milacron common stock will be granted the opportunity to purchase a limited number of new shares at a set offering price of $2.00 per share. At its annual meeting of shareholders earlier, the company received the shareholder approvals required to complete its recent refinancing transactions, enabling the rights offering. Within a matter of weeks, the company plans to submit a registration statement for the offering to the Securities and Exchange Commission (SEC). Once the registration statement clears SEC review, Milacron's board of directors intends to set a record date in the future, and shareholders will be entitled to purchase 0.452 shares for each share of Milacron common stock that they own on the record date at the $2.00 per-share price. Common shares received upon conversion of the company's newly issued 6% Series B convertible preferred stock are not eligible for participation in the rights offering. Full subscription would result in the issuance of up to 16 million new common shares. The company intends to use the net proceeds from the offering to redeem a portion of its Series B convertible preferred stock. At March 31, 2004, Milacron Inc.'s balance sheet reflects a stockholders' deficit of $43.4 million compared to a deficit of $33.9 million at December 31, 2003. MIRANT: Court Modifies Stay Allowing Kern River To Set Off Claim ---------------------------------------------------------------- On May 29, 2001, Kern River Gas Transmission Company and Mirant Americas Energy Marketing, LP, entered into a Firm Transportation Service Agreement, as amended on April 5, 2002. Pursuant to the Kern River Agreement and to Kern River's Federal Energy Regulatory Commission Gas Tariff, MAEM posted a letter of credit to secure its obligations under the Kern River Agreement. The Letter of Credit was scheduled to expire in November 2003. Pursuant to the terms of the Letter of Credit, Kern River had the right to draw on it if MAEM failed to obtain an extension of the letter of credit. As a result of the draw, Kern River currently holds $14,751,589 in cash security for MAEM's obligations under the Kern River Agreement. On December 18, 2003, the Court permitted the Debtors to reject Kern River Agreement. Kern River alleges that it has suffered damages far in excess of the cash security deposit as the result of MAEM's rejection of the Kern River Agreement. On January 13, 2004, Kern River filed a proof of claim for $210,210,543 based on the damages that allegedly resulted from the rejection. Kern River asserts that the cash security secures the proof of claim. MAEM disputes the amount of Kern River's alleged claim and contends that Kern River's damages are substantially less than $210,210,543. But MAEM acknowledges that Kern River's actual damages as a result of the rejection exceed the cash security deposit. At Kern River's request and the Debtors' agreement, the Court modifies the automatic stay of Section 362 of the Bankruptcy Code solely to permit Kern River to immediately apply 100% of the cash security deposit to its claim for damages arising from the rejection of the Kern River Agreement. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. The Company filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590). Thomas E. Lauria, Esq., at White & Case LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) MJ RESEARCH: Gets Nod to Employ Ordinary Course Professionals ------------------------------------------------------------- MJ Research, Incorporated sought and obtained approval from the U.S. Bankruptcy Court for the District of Nevada to continue employing professionals it turns to in the ordinary course of business. The Debtor customarily retains the services of various attorneys, accountants, consultants, appraisers, insurance advisors and other professionals to represent them in matters arising in the ordinary course of business. These professionals provide: (i) tax preparation and other tax advice; (ii) consulting regarding business development; (iii) legal advice with respect to routine litigation and real estate issues; (iv) employee relations; and (v) other matters requiring the expertise and assistance of professionals. In light of the number of Ordinary Course Professionals involved, it would be impractical and inefficient if the Debtor were forced to submit individual applications and proposed retention orders to the Court for each such Ordinary Course Professional. To minimize the disruption in its road to reorganization, the Court authorized the Debtors to pay any Ordinary Course Professional, 100% of the fees upon the submission of an appropriate invoice setting forth in reasonable detail the nature of the services rendered, provided that such fees do not exceed a total of $15,000 per month per Ordinary Course Professional. Headquartered in Reno, Nevada, MJ Research, Incorporated -- http://www.mjr.com/-- is a leading biotechnology company specializing in the instrument and reagent technology needed for modern biological research. The Company filed for chapter 11 protection on March 29, 2004 (Bankr. D. Nev. Case No. 04-50861). Jennifer A. Smith, Esq., at Lionel Sawyer & Collins represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. MOONEY AEROSPACE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Mooney Aerospace Group, Ltd. Louis Schreiner Field Kerrville, Texas 78028 Bankruptcy Case No.: 04-11733 Type of Business: The Debtor is a general aviation holding company that owns Mooney Airplane Co., located in Kerrville, Texas. See http://www.mooney.com/ Chapter 11 Petition Date: June 10, 2004 Court: District of Delaware Debtor's Counsel: Mark A. Frankel, Esq. Backenroth Frankel & Krinsky LLP 489 Fifth Avenue New York, NY 10017 Tel: 212-593-1100 Fax: 212-644-0544 Total Assets: $16,757,000 Total Debts: $69,802,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ The Abbey Company Lease $5,168,000 310 Golden Shore #300 Fax: 562-435-2109 Long Beach, CA 90802 Business Loan Express MAC Security $4,972,000 Independence Corp Park Fax: 864-751-4455 One Independence Pointe, Suite 102 Greenville, SC 29615 Stonestreet Ltd. Partnership Unsecured Debenture $1,800,000 c/o Canacord Capital Corp. Fax: 416-956-8989 320 Bay Street, Suite 1300 Toronto, Ontario Canada M5H 4A6 Stateland Ltd. Unsecured Debenture $1,000,000 160 Central Park South Fax: 212-772-0817 Suite 2602 New York, NY 10019 Endeavour Cap Invest Fund Unsecured Debenture $660,000 Cumberland House Fax: 284-494-3917 27 Cumberland Street Nassau New Providence, The Bahamas The Keshet Fund LP Unsecured Debenture $561,000 135 W. 50th Street Fax: Suite 1700 011-44-1624-661594 New York, NY 10020 Jenkens & Gilchrist et al Legal Fees $536,000 The Chrysler Bldg. Fax: 212-704-6288 405 Lexington Ave New York, NY 10174 Tradersbloom Unsecured Debenture $341,000 c/o Beacon Capital Mgmt. Fax: 011-284-494-4771 P.O. Box 972 Roadtown, Tortola, BBI Elias Dayan Unsecured Debenture $300,000 Blas Pascal #184-202 Fax: 5588-5212 CP. 11580 Col. Polanco Mexico City, Mexico LH Financials Note $300,000 160 Central Park S Fax: 212-586-8244 New York, NY 10019 Tayside Trading Ltd. Unsecured Debenture $281,000 50 Town Range Fax: Gibralter 011-972-2-500-2641 Esquire Trade & Finance Note - Fax: $220,000 011-41-41-760-1031 L Peter Larson Employee Comp $200,000 Fax: 818-995-7159 Dale Ruhmel Employee Comp $200,000 Fax: 818-995-7159 Ronald Whiteford Deposit $200,000 Fax: 574-234-0499 Mooney Airplane Co. Trade Payables $186,000 Fax: 830-792-2943 Carl Chen Note $150,000 Fax: 210-258-8610 Los Angeles Tax Collector Property Taxes $166,000 Fax: 213-626-1812 Luce Forward Hamilton Employee comp $150,000 Fax: 619-232-8311 Leader Financial Corp. Note $132,000 Fax: 972-661-5566 NATIONAL CENTURY: Court Asked To Stay 3rd Round Discovery Order --------------------------------------------------------------- JPMorgan Chase Bank, former Indenture Trustee, Seward & Kissel, LLP, Thomas G. Mendell, Harold W. Pote, Eric R. Wilkinson, Credit Suisse First Boston, LLC, Credit Suisse First Boston, New York Branch, Bank One, N.A., Deloitte & Touche, LLP, Purcell & Scott, Co., L.P.A., Squire, Sanders & Dempsey L.L.P., and PricewaterhouseCoopers, LLP, each a target of the National Century Financial Enterprises, Inc. Debtors' Rule 2004 discovery effort, ask the Court to stay the order authorizing the Debtors to conduct a third round of Rule 2004 Discovery until the appeal of that order is ruled upon by the United States District Court for the Southern District of Ohio, Eastern Division. William C. Wilkinson, Esq., at Thompson Hine, in Columbus, Ohio, asserts that the Court-approved post-confirmation substantive discovery is contrary to the purpose and scope of Rule 2004 of the Federal Rules of Bankruptcy Procedure. The Order also allows the Litigation Trusts created under the Debtors' Fourth Amended Liquidation Plan, to which certain of the Debtors' prepetition causes of action have been transferred, to circumvent the safeguards and limitations of the Federal Rules of Civil Procedure as well as the orderly administration of the NCFE multidistrict proceedings pending in the District Court. If a stay is not issued, Mr. Wilkinson explains, the Appellants will be forced to choose between possibly mooting their rights to appeal the Third Rule 2004 Discovery Order by complying with the subpoenas issued under its authority, or risking contempt and sanctions for non-compliance with those subpoenas. The Appellants will suffer irreparable injury without a stay because the subject discovery will go forward before the parties can brief the issues for the District Court's review. In contrast, a stay would not prejudice the Debtors or the Litigation Trusts because they have already created a Retained Actions Exhibit to their Plan aimed at identifying and preserving alleged litigation claims for the bankruptcy estate. Even if the Debtors were to discover additional claims through discovery under the Third Rule 2004 Discovery Order, the Debtors and the Liquidation Trusts are precluded as a matter of law from pursuing any claims discovered post-confirmation that were not adequately identified and retained at confirmation. In fact, Mr. Wilkinson continues, the Litigation Trusts will not suffer any prejudice if they could no longer use Rule 2004 examinations to obtain discovery from the Appellants because once the Litigation Trusts file complaints, they can request discovery under the applicable federal or state rules of civil procedure. Furthermore, Mr. Wilkinson maintains, the Appellants will likely prevail on the merits of their appeal because: (a) the purpose of Rule 2004 discovery is to identify potential claims of the bankruptcy estate and the Debtors have already created a Retained Actions Exhibit designed to identify and preserve the claims; (b) the Debtors' post-confirmation Rule 2004 discovery is improper and futile because the Sixth Circuit case of Browning v. Levy precludes the prosecution of additional claims not previously identified and retained prior to confirmation; (c) the Debtors lack standing to conduct Rule 2004 discovery after their Plan was confirmed and consummated; and (d) Rule 30(b)(6) of the Federal Rules of Civil Procedure and other civil depositions under the guise of Rule 2004 would be improper, unfair, and prejudicial to the Appellants. Mr. Wilkinson argues that the Debtors have no standing after April 2004 to pursue discovery because the Litigation Claims now belong to the Litigation Trusts. As a result of the transfer of Litigation Claims under the Plan, the Debtors lost their pre- confirmation standing to pursue discovery. Instead, the real parties-in-interest are the holders of claims against the estate, many of which are also plaintiffs in the MDL Cases. Rebecca S. Parett joins the request to stay the third round of the Debtors' Rule 2004 discovery. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader in healthcare finance focused on providing medical accounts receivable financing to middle market healthcare providers. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones, Day, Reavis & Pogue represents the Debtors in their restructuring efforts. (National Century Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL WASTE: Gets Nod to Hire Blank Rome as Special Counsel -------------------------------------------------------------- National Waste Services of Virginia, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to employ Blank Rome LLP as its special counsel. Blank Rome will a) investigate, prepare, file and prosecute claims in favor of the Debtor's estate against the Virginia Department of Environmental Quality, Page County, Virginia and other persons or entities for, among other claims, improperly and illegally revoking the Permit without affording NWS an opportunity to participate as a party to the revocation proceedings, violation of the automatic stay and trespass; b) handle all other work in connection with the DEQ Litigation, including but not limited to handling any settlement discussions and any appeals that may be required; and c. perform other specific services, as requested, to assist the Debtor in the administration of the Debtor's estate and the carrying out of its duties relating to the DEQ Litigation. Blank Rome's current standard billing rate range from: Designation Billing Rate ----------- ------------ partners $300 to $625 per hour associates $200 to $350 per hour paralegals $100 to $185 per hour Headquartered in Little Creek, Delaware, National Waste Services of Virginia, Inc. -- http://www.natwaste.com/-- collects, processes and disposes solid non-hazardous waste and recycling materials. The Company filed for chapter 11 protection on March 4, 2004 (Bankr. Del. Case No. 04-10709). Michael Gregory Wilson, Esq., at Hunton & Williams represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $10 million each. NEWPOWER: Wants to Make Interim Distributions to Shareholders ------------------------------------------------------------- As previously reported, on August 15, 2003, the United States Bankruptcy Court for the Northern District of Georgia, Newnan Division confirmed the Second Amended Chapter 11 Plan with respect to NewPower Holdings, Inc. and TNPC Holdings, Inc., a wholly owned subsidiary of the Company. As previously reported, on February 28, 2003, the Bankruptcy Court previously confirmed the Plan, and the Plan has been effective as of March 11, 2003, with respect to The New Power Company, a wholly owned subsidiary of the Company. The Plan became effective on October 9, 2003 with respect to the Company and TNPC. On May 7, 2004, the Company filed a motion with the Bankruptcy Court for an order permitting the Company, pursuant to section 5.20 of the Plan, to make interim distributions to and/or to establish reserves for certain remaining stakeholders under the Plan. The amount of the interim distribution allocable to shareholders eligible for receipt thereof would be forty cents ($0.40) per share of common stock of the Company. Any interim distribution is subject to approval by the Bankruptcy Court. The Company anticipates that it will make an additional, final distribution of liquidation proceeds to holders of allowed claims and interests in Classes 9 (common stock), 10 (Options) and 11 (Warrants) and to any remaining holders of allowed claims in Class 8 (Securities Claims), which will be paid in accordance with the terms of the Plan. The amount of any final distribution of liquidation proceeds will depend on the resolution of all remaining and any future claims by or against the Company. NEW WORLD PASTA: Taps Lisa J. Donahue from AlixPartners as New CEO ------------------------------------------------------------------ New World Pasta Company announced that it has appointed Lisa J. Donahue as Chief Executive Officer of the Company. Ms. Donahue is a principal at AlixPartners LLC, a consulting firm that specializes in financial restructuring and operational performance improvement. Prior to this appointment, Ms. Donahue had served in senior executive and leadership positions for multiple successful restructurings. Most recently, Ms. Donahue led the successful turnarounds at Exide Technologies, a $3 billion global electrical energy storage firm, and Regal Cinemas, Inc., the nation's largest theater circuit. Ms. Donahue has over thirteen years of experience in the restructuring field. She will also bring to the Company several of her associates at AlixPartners LLC who have specialized financial and operational expertise. "Lisa brings a wealth of restructuring and turnaround experience to our Company," said Paul S. Levy, the Chairman of New World Pasta Company's Board of Directors, "and has the unique combination of financial expertise, a background in operations and superior leadership experience in restructuring situations that the Company needs at this time. A turnaround situation requires a special skill set. Lisa has that special skill set, and is well recognized by the financial and business community for her prior success." "At its core, New World Pasta has dedicated employees, a collection of leading consumer brands and a great set of products that our customers and consumers want to have," said Ms. Donahue. "I am looking forward to the challenges ahead." Ms. Donahue replaces Wynn A. Willard as the Company's Chief Executive Officer. Mr. Willard, who joined the Company in May 2003, instituted sales, marketing and operational improvements, and restored U.S. branded sales growth at the Company in 2004. Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is the leading dry pasta manufacturer in the United States. The Company filed for chapter 11 protection on May 10, 2004 (Bankr. M.D. Pa. Case No. 04-02817). Eric L. Brossman, Esq., at Saul Ewing LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed both estimated debts and assets of over $100 million. O'SULLIVAN IND: Rick A. Walters Succeeds Phillip J. Pacey as CFO ---------------------------------------------------------------- O'Sullivan Industries Holdings, Inc. (Pinksheets: OSULP) announces the appointment of Rick A. Walters as its new Executive Vice President and Chief Financial Officer succeeding Phillip J. Pacey who resigned in April 2004. In addition to being a key member of the O'Sullivan Furniture executive management team, Mr. Walters will oversee the finance, treasury, credit, investor relations and information technology functions at O'Sullivan Furniture and will report directly to Bob Parker, O'Sullivan's President and Chief Executive Officer. Mr. Walters joins O'Sullivan Furniture from Newell Rubbermaid, a global manufacturer and marketer of name-brand consumer products, where he served as Group Vice President and CFO of the Sharpie/Calphalon Group since 2001. From 1998 through 2001, he was Vice President and Controller of Newell Rubbermaid's Sanford Corporation. From 1996 to 1998, he was Vice President and Controller of Newell Rubbermaid's Eldon Office Products. "We are delighted to welcome Rick to O'Sullivan Furniture," said Bob Parker, O'Sullivan's President and Chief Executive Officer. "Rick is an accomplished executive with extensive corporate finance, strategic planning and operations experience and is an excellent addition to the O'Sullivan Furniture executive team. He is the ideal person to step into the CFO role as we begin the process of transforming O'Sullivan Furniture into a stronger company for the future." About the Company O'Sullivan Industries Holdings, Inc. (OTC Bulletin Board: OSULP) -- whose March 31, 2004 balance sheet shows a shareholders' deficit of $154 million -- is a leading manufacturer of ready-to- assemble furniture. OMI CORPORATION: S&P Removes All Ratings From CreditWatch --------------------------------------------------------- Standard & Poor's Ratings Services it affirmed its 'BB' corporate credit and its other ratings on OMI Corporation and removed all the ratings from CreditWatch, where they were placed on May 28, 2004. The removal from CreditWatch followed OMI's announcement that it had withdrawn its offer to acquire unrated Stelmar Shipping Ltd. The outlook is stable. Stamford, Connecticut-based OMI has $613 million in lease-adjusted debt. "The improved tanker market, even if it weakens somewhat, should enable the company to maintain its credit profile," said Standard & Poor's credit analyst Kenneth Farer. "However, ratings upside potential is limited because of the ongoing fleet renewal program and participation in the competitive and cyclical tanker market." OMI is engaged primarily in ocean transportation of crude oil and refined petroleum products. Since 1998, the company has been an internationally focused owner and operator of oil tankers. Standard & Poor's expects that internally generated cash and the company's credit facilities will be sufficient to meet operating and capital spending needs and debt maturities over the intermediate term. OMI has a $245 million revolving credit facility, which matures on March 14, 2010, and a $348 million revolving credit facility, which matures on July 27, 2007. The amortizing credit facilities allow for up to $396 million in borrowing capacity. OWENS CORNING: Committee Tells Why Trustee Should be Appointed -------------------------------------------------------------- As directed by the Court at the May 18, 2004 omnibus hearing, the Official Committee of Unsecured Creditors, representing the prepetition bank lenders, bondholders, and trade creditors of Owens Corning, informs the Court of recent developments that make the appointment of a Chapter 11 Trustee all the more appropriate. Sean P. Haney, Esq., at Morris, Nichols, Arsht & Tunnel, in Wilmington, Delaware, relates that since the Trustee Motion was filed in October 2003, the Debtors' continuing conduct and the discovery of previously undisclosed facts confirmed the need for the appointment of a neutral trustee to honor and enforce Owens Corning's fiduciary duty to act for the benefit of all its creditors and to restore the integrity of the tarnished plan process in its Chapter 11 cases. According to Mr. Haney, the Debtors continue to support a reorganization plan containing a wildly inflated asbestos claim valuation of $16,000,000,000. The $16 billion amount is nearly three times the Debtors' own most recent estimates on file with the Securities and Exchange Commission and disclosed to the public only a few months before proposing the Plan. It is also nearly five times the estimates the Debtors filed with the SEC only months before that. The Debtors have tried to distance themselves from the indefensible $16,000,000,000 asbestos figure, suggesting at the May 18, 2004 omnibus hearing that it is "merely" a condition to confirmation and "not our number." By making that valuation a condition, the Debtors threaten the Court with failure of the Plan unless it blesses the tort claimants' outlandish demand. Mr. Haney elaborates that the course of events since October 2003 demonstrated not only that the Debtors would take no action that would meet with disapproval by the asbestos lawyers who have a stranglehold on the Debtors' Chapter 11 cases, but that they will work actively to: -- prevent any other party from challenging the tort lawyers' iron grip on the plan process; and -- block any inquiry into the mounting evidence of irregularity and improper conduct in the Debtors' cases. When the Commercial Committee sought discovery of the analyses underlying the Debtors' asbestos estimates filed with the SEC, Owens Corning refused to produce them, baselessly claiming that the analyses were irrelevant and covered by a work product privilege. On May 18, 2004, the Court recognized that the documents were relevant and that the Debtors had not established privilege, thus it directed the parties to negotiate a case management order to govern production of the documents and other discovery issues. Owens Corning's very stance of treating the matter as an adversarial dispute between it and the tort claimants on one hand and the commercial creditors on the other is further evidence that it is no longer acting as a neutral fiduciary for all creditors. Instead, it has become an advocate for tort claimant interests and has, therefore, forfeited any right to control the reorganization process. Mr. Haney notes that the Debtors continued to "obfuscate" and delay any attempt to set a realistic valuation of the asbestos claims. The evidence obtained in connection with the recent recusal proceedings and other evidence that has come to light has revealed serious improprieties in connection with the formulation of the current reorganization plan, which the Debtors and the tort lawyers plan to "cram down" on commercial creditors. The evidence suggests that the plan filed by the Debtors may be the result of extensive, improper ex parte communications among the asbestos lawyers, Judge Wolin, and his conflicted advisors. The Court of Appeals found the evidence of these improprieties so troubling that it took the unusual step of ordering Judge Wolin recused after nearly two years in the Owens Corning case. For their part, not only did the Debtors oppose recusal, but they also worked in concert with the tort interests to try to block discovery in the recusal proceedings and keep the evidence of impropriety hidden. Even in the face of the Third Circuit's recusal opinion, the catalog of improprieties it outlines, and the Third Circuit's identification of the players involved, the Debtors stubbornly insist that nothing is wrong and seek to block any inquiry or scrutiny. Mr. Haney avers that the Debtors' pattern of conduct has only one plausible explanation: they are firmly joined at the hip with the only constituency whose conduct has tarnished the integrity of the plan process and that, therefore, has any motivation to defend that conduct -- the tort firms that dominate every major asbestos case and exploited their ties to the Advisors and their improper access to Judge Wolin to attempt to tilt the Owens Corning plan process in their favor. The Debtors understand that the dramatically skewed creditor recoveries imposed under the current Plan, as well as the circumstances surrounding its genesis, cannot survive scrutiny by an impartial tribunal, and they have therefore gone to great lengths to avoid the scrutiny. The Debtors' continuing attempts to shield their stewardship of the plan process from open and impartial scrutiny, as well as their campaign to frustrate the Commercial Committee's efforts to challenge the inflated asbestos numbers on which the current Plan depends, underscore that the Debtors' existing management has abandoned the commercial creditors in an attempt to curry favor with the asbestos lawyers who will control Owens Corning on its emergence from Chapter 11. Mr. Haney asserts that a trustee is both warranted and necessary to cure the disregard of the Debtors' fiduciary role and to restore integrity, fairness, and balance to the plan process. The Commercial Committee is aware that Credit Suisse First Boston, as Agent, Kensington International, Springfield Associates, LLC, and Angelo Gordon sought the appointment of an examiner to investigate the alleged undue domination of the tort firms, and whether and to what extent the integrity of the plan process has been compromised in Owens Corning's cases. While the Commercial Committee has not yet taken any position with respect to the request for appointment of an examiner, in the event the Court ultimately appoints an examiner, it is prepared to hold the Trustee Motion in abeyance until the examiner has completed his or her investigation. If, however, the Court declines to appoint an examiner with broad powers, the Commercial Committee believes that the commercial creditors should be permitted to conduct appropriate discovery regarding both the recently revealed improprieties and the prior conduct that was cited in the Trustee Motion and that a Trustee should be appointed without further delay. 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. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC GAS: Inks Stipulation Allowing Bank Of America's Claims --------------------------------------------------------------- Pacific Gas and Electric Company and certain financial institutions entered into a $1,000,000,000 Credit Agreement dated as of December 1, 1997, with Bank of America, N.A., formerly known as Bank of America National Trust and Savings Association, as administrative and documentation agent. Pursuant to the $1B Credit Agreement, PG&E was indebted and liable for $939,724,065 to Bank of America and the $1B Credit Agreement Banks as of the Petition Date. As a result, on August 31, 2001, Bank of America filed Claim No. 7211 against PG&E's bankruptcy estate for: (a) $938,461,000 in principal amount; (b) $1,234,140 in accrued and unpaid interest; and (c) $28,925 in incurred and unpaid facility fees. In addition, Claim No. 7211 seeks payment, in an unspecified amount, of interest, expenses, fees and other charges incurred by Bank of America, which continue to accrue and be incurred after the Petition Date. Pursuant to a Court-approved settlement among PG&E's reorganization plan proponents and senior debtholders, PG&E paid: (a) all outstanding prepetition interest related to the Credit Agreement; (b) all outstanding prepetition facility fees related to the Credit Agreement; and (c) certain postpetition interest and fees through April 17, 2002, and certain continuing postpetition interest and fee obligations on a quarterly basis. Bank of America, in its capacity as $1B Credit Agreement Agent, has not received full payment with respect to accrued attorneys' fees and expenses, nor has it received full payment with respect to accrued postpetition interest, fees and other charges. Furthermore, Bank of America's counsel has prepared invoices with respect to attorneys' fees and expenses for services rendered before February 1, 2004, and has submitted the invoices to PG&E pursuant to the established procedures. Claim No. 7243 PG&E entered into an $850,000,000 Credit Agreement dated as of December 1, 2000, with certain financial institutions, and with Bank of America as administrative agent. On August 31, 2001, Bank of America filed Claim No. 7243 against PG&E's bankruptcy estate. In Claim No. 7243, Bank of America asserts a claim for fees arising out of or related to the $850M Credit Agreement on behalf of itself and the other $850M Credit Agreement Banks. PG&E did not draw any principal amounts pursuant to the $850M Credit Agreement, and the fees owing have been paid. Consequently, PG&E does not currently owe any amount under the $850M Credit Agreement. Administrative Expense Claim PG&E and Bank of America entered into a Reimbursement Agreement - - Series C -- dated as of May 1, 1996. On May 23, 1996, Bank of America -- in its capacity as letter of credit issuing bank -- issued an irrevocable, direct pay transferable letter of credit, No. LASB-228835, which provides credit and liquidity support for California Pollution Control Financing Authority Pollution Control Refunding Revenue Bonds (Pacific Gas and Electric Company) 1996 Series C. Bank of America has previously agreed to forbear from exercising its rights for a limited period of time with respect to the 96C Bonds documents, the Letter of Credit and the 96C Reimbursement Agreement, in exchange for PG&E's agreement to make certain payments, including the payment of increased letter of credit fees, and other concessions by PG&E. The Agreements have previously been approved by the Court through Orders approving PG&E's execution and performance under a Term Sheet -- including an amendment of the Term Sheet -- among the relevant parties. The terms of the agreements approved and embodied in the Term Sheet Orders have been incorporated into the Plan. Under the terms of the 96C Reimbursement Agreement and various other arrangements between PG&E and Bank of America as the Letter of Credit Issuing Bank, and pursuant to Court Orders, PG&E is obligated to reimburse Bank of America for all amounts drawn on the related letter of credit, as well as all other unpaid interest and unpaid fees, including, without limitation, commitment fees and letter of credit fees, all unpaid costs, charges, fees and expenses, including, without limitation, attorneys' fees and expenses, and other obligations in respect of indemnities. On January 21, 2004, Bank of America filed a timely request for allowance and payment of administrative expense claim against PG&E's bankruptcy estate on behalf of itself and in its capacity as the: (a) Credit Agreement Agent pursuant to the $1B Credit Agreement; (b) Credit Agreement Agent pursuant to the $850M Credit Agreement; and (c) Letter of Credit Issuing Bank pursuant to the 96C Reimbursement Agreement and various other documents between PG&E and the Letter of Credit Issuing Bank. In the Administrative Expense Claim, Bank of America asserts, among other things, postpetition claims for: (a) all interest, expenses, fees and other charges, including, without limitation, attorneys' fees and expenses incurred related to the $1B Credit Agreement, which continue to accrue and be incurred after the Petition Date, as provided pursuant to the $1B Credit Agreement, the Plan, various other Court orders and applicable law; and (b) allowance and payment of all amounts drawn under the Letter of Credit, as well as all other unpaid interest, fees, costs, charges, expenses, and other obligations in respect of indemnities, which continue to accrue and be incurred after the Petition Date, as provided pursuant to the 96C Reimbursement Agreement, the Letter of Credit, the terms of the agreements approved and embodied in the Term Sheet Orders, the Plan, various other Court orders and applicable law. With respect to the 96C Reimbursement Agreement and other documents executed in connection with the Letter of Credit, PG&E paid postpetition obligations pursuant to the authority granted in the Term Sheet Orders. Bank of America -- in its capacity as the Letter of Credit Issuing Bank -- has not received full payment with respect to accrued attorneys' fees and expenses, nor has it received full payment with respect to accrued postpetition reimbursements, fees and other charges. In addition, Bank of America's counsel has prepared invoices with respect to attorneys' fees and expenses for services rendered before February 1, 2004, and has submitted these invoices to PG&E pursuant to the established procedures. Settlement of the Claims On February 4, 2004, PG&E filed objections to Claim Nos. 7211 and 7243, and the Administrative Expense Claim. Accordingly, in a Court-approved stipulation, Bank of America and PG&E agree to resolve the claims without further litigation. In particular, the Stipulation provides that: (a) With respect to the principal portion of Claim No. 7211, Bank of America will be allowed a $938,461,000 general unsecured claim. The allowed general unsecured claim will be treated like other similar allowed general unsecured claims in PG&E's Chapter 11 cases; (b) With respect to the interest, fees and expense obligations portion of Claim No. 7243, Bank of America acknowledges that PG&E has paid all outstanding prepetition interest, fees and expense obligations, provided that Bank of America, on behalf of the $1B Credit Agreement Banks, reserves its right to assert claims for the interest, fees and expense obligations in the event that these are ever recharacterized as payments of principal. Bank of America, on behalf of the $1B Credit Agreement Banks, also reserves its right to seek payment for any unpaid interest, fees and expense obligations without the necessity of filing an administrative claim request; (c) With respect to the attorneys' fees and expense obligations arising under the $1B Credit Agreement, and as requested in the Administrative Expense Claim, Bank of America, on behalf of the $1B Credit Agreement Banks, reserves its right to seek payment for any additional unpaid attorneys' fees and expense obligations, without the necessity of filing an administrative claim request; (d) With respect to Claim No. 7243, Bank of America acknowledges that PG&E has paid all outstanding amounts due and owing pursuant to the $850M Credit Agreement, and that no additional amounts currently are owing by PG&E under the Agreement; (e) Bank of America represents that other than Claim Nos. 7211 and 7243, and the Administrative Expense Claim, it has neither filed nor asserted any other claim against PG&E or its bankruptcy estate in connection with the Credit Agreements, and agrees not to file or assert any other claim in the future; (f) With respect to the attorneys' fees and expense obligations arising under the 96C Reimbursement Agreement and other documents executed in connection with the Letter of Credit, and as requested in the Administrative Expense Claim, Bank of America, as Letter of Credit Issuing Bank, reserves its right to seek payment for any additional unpaid attorneys' fees and expense obligations, without the necessity of filing an administrative claim request. It is expressly understood that allowance and payment of all amounts drawn under the Letter of Credit, as well as all other unpaid interest and fees, including commitment and letter of credit fees, all unpaid costs, charges, fees and expenses, and other obligations in respect of indemnities, which continue to accrue and be incurred after the Petition Date, will be treated pursuant to the 96C Reimbursement Agreement, the Letter of Credit, the terms of the agreements approved and embodied in the Term Sheet Orders, the Plan, various other Court orders and applicable law, and the Stipulation will have no effect on the treatment of the claims; (g) Pursuant to applicable agreements and prior Court orders, Bank of America is entitled to reimbursement of the reasonable attorneys' fees and incurred expenses in connection with PG&E, including reasonable attorneys' fees and expenses for services rendered to Bank of America arising from the Credit Agreements and the Letter of Credit Reimbursement Agreements, including a reasonable allocable portion of the fees and expenses of outside counsel retained by Bank of America for services related to the Official Committee of Unsecured Creditors that at the same time are reasonably attributable to Bank of America's interests and responsibilities in its capacity as agent pursuant to the credit agreement or as letter of credit issuing bank. Accordingly, PG&E will remit to Claimant funds in an amount equal to the sum of the Outstanding Invoices arising from services rendered subsequent to the Petition Date. Upon and after May 1, 2004, Bank of America will disburse to its attorney the portion of the Invoice Amount held which is not the subject of a specific written objection by PG&E; and (h) Bank of America represents that it has neither assigned nor in any way transferred any part of the claims subject to the Stipulation to any person or entity, and that there are no liens on any of the claims. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly-owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. (Pacific Gas Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT: Utilities Say Debtors' Condition Continues to Worsen -------------------------------------------------------------- The Brooklyn Union Gas Company, doing business as KeySpan Energy Delivery New York, KeySpan Energy Services, Inc., Consolidated Edison Company, Public Service Electric & Gas Company, and Consumers Energy Company tell Judge Drain that recent events establish that the Parmalat U.S. Debtors' financial condition continues to worsen in that the Debtors' insistence that the Utilities are adequately assured pursuant to Section 366 of the Bankruptcy Code is without merit: (1) The Debtors' recent filing of their monthly operating reports for the period from February 22, 2004 through March 20, 2004 reveals that they continue to have significant operating and net losses; (2) It appears that the Debtors have failed to fulfill the original terms of their DIP financing agreement with General Electric Capital Corporation in which the Debtors agreed to: (i) provide fully executed documentation regarding the sale of substantially all of their assets to GE Capital by March 20, 2004; and (ii) file a request seeking approval of the bidding procedures for that sale by April 15, 2004. The delay in the sale of their assets raises the question of whether the Debtors can continue to operate as debtors- in-possession on an administratively solvent basis; and (3) Despite an $8,500,000 cash infusion by GE Capital, Debtor Farmland Dairies, LLC, only had $1,068,007 cash on hand as of March 20, 2004, further illustrating the extent to which the Debtors' are suffering operating losses during the pendency of these cases. 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. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT GROUP: Kmart Wants $500,000 Critical Vendor Payment Back ----------------------------------------------------------------- Kmart Corporation commenced an adversary complaint, in its own Chapter 11 case pending before the U.S. Bankruptcy Court for the Northern District of Illinois, to recover $500,000 of critical vendor payment made to Parmalat USA Corporation. According to William J. Barrett, Esq., at Barrack Ferrazzano Kirschbaum Perlman & Nagelberg, LLC, in Chicago, Illinois, the payment constitutes an unauthorized postpetition transfer of property of Kmart's estate. The payment is avoidable pursuant to Section 549 of the Bankruptcy Code. Mr. Barrett explains that on the first day of its bankruptcy, Kmart sought and obtained permission to immediately pay prepetition claims of all its critical vendors. Capital Factors, Inc., a factoring agent for a number of Kmart's apparel suppliers holding millions of dollars in unsecured claims against the Kmart bankruptcy estate, appealed the Critical Vendors Order to the U.S. District Court for the Northern District of Illinois. On April 10, 2003, after all of the critical vendors had been paid and as Kmart's reorganization plan was on the verge of approval, District Court Judge John F. Grady reversed the Critical Vendor Order. Judge Grady concluded that neither Section 105(a) nor a "doctrine of necessity" supported the Order. Kmart appealed the ruling to the Seventh Circuit Court of Appeals. Kmart insisted that by the time Judge Grady acted, it was too late. Money had changed hands and cannot be refunded. The Seventh Circuit, nonetheless, held that "it is not too late to order that the monies be returned." The Seventh Circuit, accordingly, affirmed the District Court's decision. Since the Critical Vendor Order has been reversed, Mr. Barrett contends that it would be contrary to the Bankruptcy Code, and inequitable for Parmalat USA to be permitted to retain the payment and thereby be paid in full on its prepetition claim when all other unsecured creditors were not paid in full. 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. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEGASUS: Court Agrees To Waive Investment & Deposit Guidelines -------------------------------------------------------------- The Pegasus Satellite Communications, Inc. Debtors use numerous bank depository and disbursement accounts, as well as certain investment accounts. The Debtors' investment of excess unrestricted cash has been dictated for the most part by the requirement of certain credit agreements. Pursuant to the Credit Agreements, the Debtors can invest excess cash in Cash Equivalents. Currently, Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, in Portland, Maine, relates that the Debtors' excess unrestricted cash is on deposit with Deutsche Bank Trust Company Americas in the Direct Broadcast Satellite Concentration Accounts and with Sovereign Bank in the Pegasus Broadcast Television, Inc., Concentration Account, or in a short-term money market account maintained by Pegasus Satellite Television, Inc., with Scudder Investments. If excess cash remains in the Direct Broadcast Satellite Concentration Account or the Pegasus Broadcast Concentration Account at the end of each business day, Deutsche Bank and Sovereign automatically transfer funds to overnight investment accounts at their financial institution. However, to obtain a better return on their investment, the Debtors can manually wire transfer funds from the Pegasus Satellite Concentration Account to the Scudder money market account, which is managed by Deutsche Bank. Deposits in the Deutsche Bank and Sovereign overnight accounts mature on the business day following the day of deposit and are then returned, with interest, to the Pegasus Satellite Concentration Account or the Pegasus Broadcast Concentration Account. The Debtors' depository and disbursement accounts with balances in excess of $5,000 are all held at financial institutions with a Moody's Ratings of "Baa" or better. The Debtors will monitor monthly the Moody's ratings of all Debtors' banks with account balances in excess of $5,000 and will advise the Court if any rating drops below a "Baa" rating by Moody's. Furthermore, the Debtors will insure that any new accounts that are opened postpetition will be with banks that have achieved ratings of "Baa" or better. Section 345(a) of the Bankruptcy Code provides that a debtor-in- possession "may make such deposit or investment of the money of the estate . . . as will yield the maximum reasonable net return on such money, taking into account the safety of such deposit or investment." Pursuant to Section 345(b), any deposit or other investment made by a debtor, except those insured or guaranteed by the United States or by a department, agency or instrumentality of the United States or backed by the full faith and credit of the United States, must be secured by a bond in favor of the United States or by the deposit of securities. Mr. Keach points out that the Debtors are large, complex and sophisticated organizations that are financially connected through a structured and efficient Cash Management System. The Debtors have ample ability to transfer funds between accounts as needed to ensure the safety of the funds. Furthermore, the Debtors' investment activities are made in accordance with the Credit Agreements among the Debtors and their prepetition lenders, whose interest is ensuring that the Debtors' assets are not dissipated. Consequently, Mr. Keach asserts that sufficient cause exists to waive the Section 345(b) requirements in these cases. Consistent with the objectives of Section 345 and the requirements of the Credit Agreements, the Debtors sought and obtained Court's authority, on an interim basis, to invest and deposit funds in a safe and prudent manner in accordance with the Credit Agreements and with the Debtors' prepetition practices, notwithstanding that the investments may not strictly comply in all respects with strictures of Section 345(b). The Court will convene the Final Hearing on the Debtors' request on June 24, 2004 at 10:30 a.m. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Me. Lead Case No. 04-20889) on June 2, 2004. Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEGASUS: Court Finds DIRECTV in Violation of Automatic Stay ----------------------------------------------------------- The Honorable James B. Haines, Jr. of the U.S. Bankruptcy Court for the District of Maine convened an emergency hearing yesterday afternoon to rule on Pegasus' complaints against DirecTV. Judge Haines says that some of DirecTV's actions to lure satellite television subscribers away from Pegasus since June 2 are improper. DirecTV has beamed ads to subscribers on the DBS system and sent mailings to Pegasus customers urging them to switch providers. To the extent that DirecTV's actions are inconsistent with unexpired contracts, those actions are prohibited by the automatic stay that protected Pegasus from the moment it filed its chapter 11 petition. DirecTV must not use information it has about Pegasus' subscribers to market DirecTV programming services directly. Judge Haines does not find that DirecTV's notice of termination sent on June 2 is void. The contracts are what they are and Pegasus' bankruptcy filing doesn't void DirecTV's termination notice or make it disappear. Judge Haines rejected any notion that the automatic stay protects Pegasus from competition while in bankruptcy. Ted Lodge, Pegasus' President, said, "We are gratified that Judge Haines has concluded that DIRECTV has violated the automatic stay. While we are disappointed that he did not also find that DIRECTV's other marketing activity in our exclusive territories is a violation of the automatic stay, we continue to believe that this is a breach of our fundamental rights. We intend to commence litigation on these matters shortly and will ask the Judge to enforce our exclusive rights. We will continue to fight vigorously for our rights so that we may preserve for our employees, customers, business partners, creditors and shareholders the value we have created over the last ten years at Pegasus." Case Background In 1994, DIRECTV, Inc., launched the first direct broadcast satellite service in the United States. DIRECTV, now controlled by News Corporation Limited, currently offers in excess of 800 entertainment channels of near laser disc quality video and compact disc quality audio programming to subscribers throughout the United States. Pursuant to a DBS Distribution Agreement entered into in 1992 and amended in 1994, between the National Rural Telecommunications Cooperative and DIRECTV, NRTC obtained the exclusive rights to distribute DIRECTV programming and services in certain territories in the rural United States for a period variously estimated to last until at least 2014 or 2016. In exchange for the exclusive distribution rights, the 252 members and affiliates of NRTC participating in the DBS project invested $110,000,000 to construct and launch the DIRECTV satellite system. The DBS Patrons also agreed to pay to DIRECTV, on a recurring basis, specified costs associated with providing DIRECTV service to their customers as well as a portion of the revenue collected from these customers. The Member Agreements The DBS Patrons and NRTC entered into identical NRTC/Member Agreements for Marketing and Distribution of DBS Services in 1992 and 1993, and executed identical amendments in 1994. Pegasus Satellite Television, Inc., acquired the largest exclusive distribution territory at the inception of the project, comprising the exclusive rights to distribute DIRECTV services in four New England states serving about 500,000 households. Through acquisitions of other DBS Patrons between 1996 and 2001, representing an additional $2,000,000,000 investment, Pegasus Satellite Television, together with its subsidiaries, is currently the largest DBS Patron, holding 160 Member Agreements, which provide the exclusive rights to distribute DIRECTV services to about 8,400,000 rural households in certain specific territories within 41 states. Pegasus Satellite Television serves about 1,100,000 subscribers in these territories. Termination of the DBS Agreement Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, in Portland, Maine, recalls that on June 2, 2004, the Debtors received notice from the NRTC that on June 1, 2004, NRTC and DIRECTV purported to terminate the DBS Distribution Agreement. The notice also purported to terminate the Debtors' Member Agreements effective August 31, 2004. The Debtors also received from DIRECTV an offer to acquire the Debtors' 1,100,000 subscribers, which the Debtors flatly rejected. Since the Petition Date, DIRECTV has engaged in activities that are in clear violation of the Debtors' exclusive distribution rights and Section 362 of the Bankruptcy Code. On June 3, 2004, Mr. Keach reports that the Debtors sent to DIRECTV a cease and desist letter demanding that DIRECTV stop its unlawful conduct. DIRECTV is conducting sales activities in the Debtors' exclusive territories in violation of the Debtors' exclusive distribution rights and the automatic stay, which include selling DIRECTV services directly to subscribers within the Debtors' exclusive territories. Mr. Keach contends that, in support of its sales efforts, DIRECTV launched at least three lines of attack on the subscribers through television broadcast, Internet and call center messages, each of which is aimed at destabilizing the Debtors' relationships with their subscribers and encroaching on their exclusive territories. First, DIRECTV contacted the Debtors' subscribers in the Debtors' exclusive territories through messaging on television stations broadcasted into homes. DIRECTV informs the viewer that the Debtors and DIRECTV are going to be ending their relationship with each other. DIRECTV has instructed the viewers to tune into the special channel by scrolling messages across television programs on other channels. Second, DIRECTV's Web site contains a similar message to that contained on the special broadcast channel and informs subscribers that its relationship with the Debtors is ending. Third, DIRECTV's customer service line contains a pre-recorded message informing subscribers that DIRECTV will be transitioning their accounts with the Debtors in the near future. DIRECTV has further instructed the subscribers who call in with respect to the broadcast or Internet messaging that they will deliver an information kit and e-mail explaining the transition to those subscribers. Mr. Keach adds that DIRECTV is also attempting to derail the Debtors' relationships with their dealers. The Debtors have a network of over 4,000 independent dealers who distribute the Debtors' satellite programming services. DIRECTV is contacting the dealers directly and through the use of so-called "blast fax" communications. The fax advises dealers that the agreements between the NRTC and its members and affiliates is ending and indicates that the NRTC's exclusive boundaries will be changing. Mr. Keach asserts that this infusion of negative messaging into the marketplace, if not stopped immediately, will cause a systematic breakdown of the Debtors' dealer network and customer relationships. The Debtors have the exclusive right to sell DIRECTV in their territories under the Member Agreements. DIRECTV is soliciting the Debtors' customers in their territories in flagrant violation of the automatic stay, particularly Section 362(a)(3) of the Bankruptcy Code. The Debtors' exclusive distribution rights under the Member Agreements are property of their estates pursuant to Section 541(a) of the Bankruptcy Code. Accordingly, the Debtors asked the Court to instruct DIRECTV to discontinue its interference with the Debtors' exclusive distribution rights under the Member Agreements. DIRECTV Responds George J. Marcus, Esq., at Marcus, Clegg & Mistretta, P.A., in Portland, Maine, contends that the Debtors seek to induce the Court to employ the automatic stay to stifle competition and commercial free speech and deprive over 1,000,000 rural consumers of choice. The only "property" interest identified by Pegasus as worthy of the automatic stay protection is an alleged contractual promise of "exclusivity" in a contract between the NRTC and DIRECTV that Pegasus is not a party to, is not a third party beneficiary of, and has no rights under, as determined by prior final rulings of the United States District Court for the Central District of California. Pegasus may not collaterally challenge the District Court's ruling in the Bankruptcy Court. Moreover, the contract between NRTC and DIRECTV containing the promise of exclusivity that Pegasus relies on was terminated prior to the bankruptcy filing -- June 1, 2004. Mr. Marcus asserts that Pegasus has no property interest in a terminated contract and there is no promise of "exclusivity" from DIRECTV to Pegasus that can be subject to the automatic stay provision. In effect, the Debtors' request does not seek to enforce the automatic stay, but a mandatory order reviving a contract that NRTC and DIRECTV terminated prior to bankruptcy. It is hornbook law that Section 362 cannot be used for these purposes. DIRECTV asserts that it has not violated any legal rights of Pegasus and has not affected any property of the estate. Cornerstone Litigation Larry J. Nyhan, Esq., at Sidley Austin Brown & Wood, LLP, representing Pegasus, makes it clear that the litigation isn't over. "The [parties'] relative rights . . . are in great dispute," Mr. Nyhan says, and the bankruptcy court will need resolve those disputes in what he calls "cornerstone litigation." Giving the Court a preview of that cornerstone litigation, Mr. Nyhan explains that DIRECTV will undoubtedly argue that Pegasus's rights under the Member Agreements have been modified or, in the case of exclusivity, terminated because (i) DIRECTV and NRTC have terminated the DBS Agreement, and (ii) PST's rights under the Member Agreements are "derivative" of NRTC's rights - which no longer exist - under the DBS Agreement. But, Pegasus tells Judge Haines, DIRECTV's conclusion is untenable for at least two separate reasons: * First, even if NRTC's and DIRECTV's actions did effect a termination of the DBS Agreement, the termination would not impair PST's rights under the Member Agreements. DIRECTV authorized NRTC to grant PST exclusivity without qualification until the Satellite Expiration Date pursuant to the express terms of the Member Agreements. DIRECTV committed to honor PST's rights under the Member Agreements even if the Distribution Agreement was terminated because of a default by NRTC. Against this backdrop, the contention that DIRECTV and NRTC could undermine PST's explicit rights under the Member Agreements by "agreeing" to terminate the Distribution Agreement is baseless. * Second, if termination of the DBS Agreement could impair PST's rights under the Member Agreements - which it cannot - NRTC's agreement to terminate the DBS Agreement would constitute both a breach by NRTC of the Member Agreements - since NRTC would thereby have disabled itself from performing the Member Agreements - and a breach of NRTC's fiduciary duty to PST. In either case, DIRECTV would be responsible for inducing the actionable conduct. Moreover, if NRTC is unable to respond in damages, as will likely be the case, its surrender of valuable rights under the DBS Agreement will be voidable as a fraudulent conveyance. In short, this Court will have the ability to fashion a remedy that protects PST's exclusivity rights by respecting the integrity of the Member Agreements even if, as PST disputes, a termination of the DBS Agreement impacts PST's rights under the Member Agreements. DirecTV Isn't Swayed Pegasus exaggerates its contract rights with the NRTC and won't succeed in holding DirecTV responsible for the NRTC's contract obligations, Richard P. Krasnow, Esq., at Weil, Gotshal & Manges, LLP, one of DirecTV's many lawyers, tells Judge Haines. NRTC Chimes In Andrew D. Gottfried, Esq., at Morgan, Lewis & Bockius, LLP, sees that the Debtors make reference in their pleadings to some fiduciary duty the NRTC owes to Pegasus. While that issue isn't before the Court at this time, the NRTC says it's certain it does not owe any fiduciary duty to Pegasus. The NRTC is also confident it didn't breach any other duty to Pegasus. The NRTC says that Pegasus entered into an arm's-length contract in 1993 that defines their relationship and delimits the duties owed. Through a series of sophisticated transactions and highly leveraged financings, Pegasus acquired rights under 159 identical contracts from other NRTC members -- serving about 80% of DirecTV subscribers in NRTC territories. Pegasus' business strategy was of its own choosing. The NRTC's obligations to Pegasus are purely contractual. August 31 Based on DirecTV's termination notice and Judge Haines' ruling yesterday, Pegasus retains its right to resell DirecTV programming to rural customers until August 31, 2004. After that date, as it stands now, DirecTV may compete with Pegasus in those rural markets after August 31, and sell its service directly. About Pegasus Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Me. Lead Case No. 04-20889) on June 2, 2004. Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue Nos. 3 and 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) PG&E NAT'L: Court Allows USGen Panel TO Pursue Claims Against NEG ----------------------------------------------------------------- An investigation conducted by the Official Committee of Unsecured Creditors for USGen New England, Inc., on intercompany transactions may show that USGen has substantial claims against National Energy and Gas Transmission, Inc., and other affiliates. The USGen Committee believes that there are potential avoidance actions available to USGen regarding certain intercompany transactions. To that end, given the commonality of the management of both USGen and NEG, and to avoid the appearance of any conflict, the USGen Committee and USGen agree that the USGen Committee is in the best position to investigate, assert, prosecute, and settle intercompany claims and causes of action on behalf of USGen's estate. At the USGen Committee's behest, Judge Mannes authorizes the USGen Committee to investigate, assert, prosecute, and settle on behalf of USGen, certain claims and causes of action related to intercompany transactions, including but not limited to: (a) preparing and filing a complaint or complaints commencing one or more adversary proceedings in USGen's case; and (b) preparing and filing proofs of claim against NEG and other affiliated debtors with respect to: -- any claim on behalf of USGen arising from Federal income taxes paid, losses incurred, use of any tax attribute, or any state or local taxes paid or losses incurred; -- any and all claims, including avoidance actions arising from the claims, of USGen to recover corporate dividends and distributions paid by USGen to affiliated entities before the Petition Date; -- any and all preference or other avoidance actions pursuant to the Bankruptcy Code or applicable state law; and -- any other claims or actions as may be agreed between USGen and the USGen Committee by stipulation approved or otherwise ordered by the Court. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) PRAXIS PHARMACEUTICALS: Patch Energy Continues Texas Well Testing ----------------------------------------------------------------- Praxis Pharmaceuticals Inc. (PRXX: OTCBB, PQG: Berlin Bremen Stock Exchange) through its wholly-owned subsidiary Patch Energy Inc. announces testing of the BB Gayle No. 1 well at the Manahuilla Creek prospect is continuing. Flat Rock Energy is preparing a summary and recommendations for further testing, which will probably include a recommendation to perforate some additional upper zones. This report is expected later this week and Praxis will then determine whether to participate further. The first well on the Manahuilla Creek Prospect, the BB Gayle No. 1 has been drilled, logged, with casing set from 7,000 ft to surface, and cemented from 5,000 ft. This test well will be located on approximately 1,265 acres of oil and gas leases covering the expanded Yegua trend. The Middle Eocene sands of the expanded Yegua trend of the onshore Gulf Coast basin has been a prolific over pressured gas-condensate producer with total gas production to date exceeding 800 billion cubic feet, with an estimated trend recovery close to 2 trillion cubic feet of gas. About Patch Energy Patch Energy was a private corporation acquired by publicly traded Praxis Pharmaceuticals (PRXX: OTCBB) early this year. Patch continues to trade under the Praxis symbol and has applied for a new trading symbol. It is also listed on the Berlin Bremen Stock Exchange and trades under the symbol PQG. Quotes can be accessed by going to http://www.Berlinerboerse.deand typing in the symbol. Besides its current activity in Texas, the company is also involved in Saskatchewan, and the East Corning area in Northern California. In addition, the company is involved globally in Ukraine where it is in the final stages of talks to develop several oil and gas wells in conjunction with the Ukrainian government. Its other investment interest is in Pharmaxis Ltd. (PXS: Australian Stock Exchange) where it is one of the largest shareholders, along with CIBC, HSBC, and the Rothschild Group. Patch's investment has a current share value of just over $6- million. * * * Liquidity And Capital Resources In the Form 10-QSB for the quarterly period ended February 29, 2004 filed with the Securities and Exchange Commission, Praxis Pharmaceuticals reports: "Since inception, the primary source of funding for Praxis' operations has been the private sale of its securities, as Praxis has yet to generate any revenues. "For the nine months ended February 29, 2004, cash used in operating activities was $2,065. Cash of $2,195 was provided by financing activities, consisting of advances from related parties, during this period. In comparison, in 2003, cash provided by financing activities, consisting primarily of share capital issued for cash, was $70,074, and cash provided by investing activities, consisting of proceeds on sale of investments, was $63,738. Cash used in operating activities was $179,937. "At February 29, 2004, the Company's working capital was a deficit of $175,317, as compared to a deficit of $77,839 at May 31, 2003. The decrease in working capital was due primarily to the increase in current liabilities, which reflect the operating expenses incurred during the nine-month period. "The Company will be dependent upon proceeds from the sale of securities until its operations generate revenues. Further, substantial funds will be equired before the Company is able to generate revenues sufficient to support its operations. There is no assurance that the Company will be able to obtain such additional funds on favorable terms, if at all. The Company's inability to raise sufficient funds could require it to delay, scale back or eliminate certain activities. "The report of the Company's independent auditors on the financial statements for the year ended May 31, 2003, includes an explanatory paragraph relating to the uncertainty of the Company's ability to continue as a going concern. Praxis has suffered losses from operations. The Company needs to generate revenues and successfully attain profitable operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. There can be no assurance that it will be able to reach a level of operations that would finance its day-to-day activities." PREFERRED RIVERWALK: Wants Until Oct. 31 to Make Lease Decisions ---------------------------------------------------------------- Preferred Riverwalk, L.P., asks the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division, for more time to decide what to do with their unexpired nonresidential real property leases. The Debtor reports that it has not yet been able to determine which executory contracts and unexpired leases will be necessary for future operations and the successful reorganization. Until such determination is made, the Debtor cannot determine which executory contracts and unexpired leases will be assumed for purposes of the ultimate plan of reorganization. In this regard, the Debtor will be needing until October 31, 2004 to determine whether to assume, assume and assign, or reject its unexpired nonresidential leases. Headquartered in San Antonio, Texas, Preferred Riverwalk, L.P., doing business as Sheraton Four Points, filed for chapter 11 protection on May 4, 2004 (Bankr. W.D. Tex. Case No. 04-52666). Keith M. Baker, Esq., represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. RASCALS INTL: Looks for More Capital Sources to Sustain Operations ------------------------------------------------------------------ Rascals International, Inc. is the successor to a business operation commenced in 1983. Rascals began with a comedy club and restaurant in West Orange, New Jersey. Until 2003 the West Orange "Rascals" and a sister club/restaurant of the same name in the New Jersey resort area of Ocean Township were the source of substantially all of Rascals' revenue. Nevertheless the success of those clubs in booking and promoting both headliners and rising stars in the field of stand-up comedy made Rascals a name known throughout the comedy industry. Most of today's stars of stand-up comedy made their way to fame appearing at a Rascals Comedy Club. In recent years Rascals has acquired new management, a new business plan, and a new determination to exploit the value of the "Rascals" name as leverage for the growth of the Company. Its first effort involved the establishment of a "Rascals Comedy Club" in the Miami area, which copied in essence the operations of the two New Jersey clubs. The expense, however, involved in outfitting a new facility and pushing traffic to a new site exceeded the capacity of the Company's financial resources, and the Miami club was closed in 2000. Spurred on by that experience, however, Rascals has formulated a business plan designed to give Rascals a nationwide presence with a minimum of capital investment. The plan contemplates that the Company will develop a network of "partners" who recognize the value of the "Rascals" name and its entertainment offerings in attracting consumers of comedy. In exchange for the opportunity to market to these consumers, the partners" will provide the other resources necessary to business success. The magnitude of Company losses in recent years has not been matched by reductions in cash, as Rascals has used stock grants to pay expenses whenever possible. Nevertheless, its operations during 2002 consumed $755,199 in cash, and the operations in 2003 used $136,418 in cash. Since Rascals began 2002 with virtually no cash, its continued operations for the past two years required that it borrow the funds needed by its operations. For this reason in November 2002 the Company borrowed $659,361 from Marod Holdings LLC and Rodmar Holdings LLC, two entities which are controlled by Rasca;s' executive officers. To secure the debt Rascals gave the two entities a secured interest in Rascals' restaurant/clubs in Ocean and West Orange, New Jersey. In May 2003 Rodmar Holdings and Marod Holdings agreed to accept 1,000,000 shares of Rascals common stock in satisfaction of $500,000 that Rascals owed to them. In December 2003 the remainder of that debt, accrued interest, and certain unpaid rent obligations were satisfied when Rascals issued 1,250,000 shares of its common stock to Rodmar Holdings and Marod Holdings. Both of those transactions served to reduce the Company's working capital deficit and increase its shareholders equity. In December 2002 the Company's subsidiary which operates the Rascals Comedy Club in Cherry Hill borrowed $200,000 for its operations from Stanley Chason. The loan to Rascals Cherry Hill was guaranteed by Rascals International as well as by Marod Holdings, Rodmar Holdings and the Company's two executive officers. When that loan went into default, Mr. Chason obtained a judgment lien on Company assets. Rascals has reached an agreement with Mr. Chason releasing the lien, which permits the Company to close the Ocean operation and sell its liquor license to pay some of its debts. In the agreement Mr. Chason agreed to accept 1,000,000 shares of Rascals common stock in partial satisfaction of the debt. That transaction likewise will increase shareholder's equity. The several consulting agreements that Rascals entered into in 2002 and 2003 resulted in a current asset of $1,078,715 on its balance sheet at December 31, 2003. This represents the amount prepaid (by issuance of stock) for services that will be rendered during 2004. That asset will be amortized over that period, and the recorded amount will be an addition to Rascals' expenses for that period. In the meantime, however, that current asset helped to reduce the Company's working capital deficit from $2,130,649 at December 31, 2002 to $1,333,184 at December 31, 2003. At the present time, Rascals' liquid assets are negligible, while the Company had over $2.3 million in accounts and notes payable on Decem ber 31, 2003. It also has plans to fund the build-out of three new clubs during 2003 (Palisades, Montclair, and Shreveport) in addition to funding a joint venture with JHF Properties. Its plan is to use the proceeds from its equity line of credit with Cornell Capital Partners to reduce its payables and to fund its building plans. Management is also actively seeking alternative sources of capital investment, as the Cornell Capital Partners equity line is not likely to be sufficient for all of Rascals' purposes. RCN CORP: Asks Court to Authorize PwC's Retention as Auditors ------------------------------------------------------------- The RCN Corp. Debtors engaged PricewaterhouseCoopers, LLP, before the Petition Date as their auditors. As a result, PwC has become familiar with the Debtors' business and financial affairs. Deborah M. Royster, RCN Corporation's General Counsel and Corporate Secretary, asserts that PwC has the necessary background and capability to deal effectively with the known and potential audit issues and related problems that may arise in the Debtors' Chapter 11 cases. The Debtors, therefore, seek the Court's authority to employ PwC as auditors in their bankruptcy cases. The Debtors require knowledgeable auditors to render essential professional services. PwC has substantial expertise in these areas, as well as valuable institutional knowledge of the Debtors' business and financial affairs as a result of its service as auditors for the Debtors prior to the Petition Date. Accordingly, PwC is well qualified to perform these services for the Debtors. Over the past seven years, Ms. Royster relates that the Debtors and PwC have worked closely to develop a comprehensive auditing strategy and have invested significant time and resources toward that goal. The ultimate implementation of this strategy is essential to ensure the uninterrupted operation of the Debtors' businesses and a successful emergence from these cases. As auditors, PwC will be: (a) assisting in compliance with the financial reporting requirements under the operating guidelines for Chapter 11 cases issued by the U.S. Trustee; (b) providing ordinary and customary auditing work, performing quarterly review procedures and preparing and planning for the annual audit; and (c) assisting with other matters as management or counsel to the Debtors may request from time to time. In exchange for its services, PwC will receive fees for auditing and quarterly review services based on hourly rates, and will receive reimbursement for reasonable and necessary out-of-pocket expenses, which expenses include travel, report preparation, delivery services and other necessary costs incurred in providing services to the Debtors. PwC's standard hourly rates for professional services are: Partners $743 - 900 Managers 517 - 662 Senior Associates 319 - 389 Associates 187 - 273 These rates are subject to change but will remain in line with market rates for comparable services. The Debtors and PwC have agreed that for auditing and quarterly review services to be provided, PwC will charge 80% of the scheduled rates, based on actual hours incurred, exclusive of out-of-pocket expenses. To the extent that the Debtors request PwC to perform professional services in addition to auditing and quarterly review services, PwC will calculate its fees for the additional services at 80% of the scheduled hourly rates. Robert C. Fell, a partner at PricewaterhouseCoopers, informs Judge Drain that the firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, and does not represent any party-in-interest other than the Debtors in these Chapter 11 cases. PwC also does not hold or represent any interest adverse to the Debtors' estates. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- is a provider of bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) RELIANCE: Bank Committee Proposes Plan Solicitation Procedures -------------------------------------------------------------- The Official Unsecured Bank Committee propose to establish procedures and deadlines to facilitate the solicitation and tabulation of votes to accept or reject the First Amended Plan of Reorganization for Reliance Financial Services Corporation. The Bank Committee also asks the Court to: (a) schedule and approve the form and manner of notice of a hearing to confirm the Plan; and (b) establish a deadline and procedures for objections to confirmation of the Plan. Voting Record Date The Bank Committee asks the Court set a Voting Record Date to determine which Holders of Claims are entitled to receive the Solicitation Materials and to vote on the Plan. The Voting Record Date should be the date an Order is entered approving the Disclosure Statement. Setting this date will help the Bank Committee and the Solicitation Agent prepare for the distribution of solicitation materials and prevent delays in mailing. Ballots and Non-voting Notices The Bank Committee asks the Court approve the ballots to be distributed to creditors entitled to vote on the Plan. The Ballots conform to the Official Forms, however, the Bank Committee has modified some Ballots to achieve particulars of the Debtor's restructuring. The Ballots for creditors in Classes 2 and 4a have been modified so creditors can elect to opt out of assigning their Litigation Claims to RGH. The Bank Committee proposes to mail Ballots only to creditors and equity security holders entitled to vote on the plan, i.e., Holders of Class 2, 4a, or 4b Claims. Thus, the Bank Committee will distribute a Notice to Holders of Claims and Equity Interests who are not entitled to vote on the Plan -- that is, the Holders of Class 1, 3 and 4c Claims and Class 5 Equity Interests. These creditors are unimpaired or are not receiving any property under the Plan. The Notice will provide: (1) notice of the Plan and Disclosure Statement; (2) instructions on viewing copies of the Plan and Disclosure Statement, including obtaining documents free of charge; (3) information on the Confirmation Hearing; and (4) instructions for objecting to the Plan. Andrew DeNatale, Esq., at White & Case, in New York, states that the Non-Voting Notices satisfy the requirements of Rule 3017(d) of the Federal Rules of Bankruptcy Procedure for the members of the non-voting classes under the Plan and, thus, should be approved. Solicitation Materials The Bank Committee will distribute solicitation materials to the United States Trustee and Claimholders who are entitled to vote on the Plan. The Bank Committee will not provide copies of the Disclosure Statement and the Plan to creditors who are not entitled to vote. There is no reason to distribute the Disclosure Statement, the Plan or a summary to Holders of Claims against, and Equity Interests in, RFSC who are not entitled to vote to accept or reject the Plan, especially since these parties may procure the documents on their own. The Bank Committee anticipates that several Disclosure Statement Notices will be returned as undeliverable. It would be costly and wasteful to mail solicitation packages to such undeliverable addresses. Therefore, the Bank Committee asks the Court to waive the strict notice rule, excusing the Bank Committee from mailing solicitation packages, Non-Voting Notices and the Confirmation Hearing Notice to entities listed at undeliverable addresses, unless accurate addresses are provided by July 7, 2004. Copies and Review of Documents Copies of the Plan and Disclosure Statement will be available for review at (a) the office of the Clerk, United States Bankruptcy Court for the Southern District of New York, One Bowling Green, in New York, and (b) the Bankruptcy Court's Web site at http://www.nysb.uscourts.gov(registration and a password are required). Copies of the Disclosure Statement, the Plan and exhibits, schedules or appendices, may be requested in writing to the entity indicated in the Holder's Ballot or Non-Voting Notice, as applicable. Voting Deadline The solicitation period will begin as soon as possible after the Disclosure Statement Order is entered by the Court. Pursuant to Bankruptcy Rule 3017(c), all Ballots must be properly executed, completed, delivered and received by 4:00 p.m. Eastern time, on August 12, 2004. The Ballots must be received by: (a) mail in the return envelope provided with each Ballot; (b) overnight delivery; or (c) hand delivery. Any Ballot submitted by facsimile or other electronic means will not be counted. Counsel to the Bank Committee, White & Case, will note on each Ballot the date and time of receipt and will review each Ballot to ensure that it satisfies the criteria specified in the Disclosure Statement for validity -- it was properly completed, executed and delivered before the Voting Deadline. Tabulation of Votes Only holders of Class 2 - Bank Claims, Class 4a - General Unsecured Claims and Class 4b - Liquidator Claim are impaired and entitled to vote to accept or reject the Plan. For voting purposes, each holder of a Voting Claim will have an allowed claim, for voting purposes, in an amount equal to the lesser of: (a) the amount of the claim as set forth in the schedules of liabilities filed by RFSC; or (b) the amount of the claim set forth in a timely filed proof of claim. Confirmation Hearing At the Disclosure Statement Hearing, the Bank Committee will ask the Court to schedule the Confirmation Hearing and establish a deadline for filing confirmation objections. The Bank Committee proposes that, subject to the Court's availability, the Confirmation Hearing be scheduled for a date approximately 12 days after the Voting Deadline. The Confirmation Hearing may be continued by an announcement in open court. The Bank Committee will issue a Confirmation Hearing Notice that will contain: (1) the date, time and place of the Confirmation Hearing; (2) the deadline for voting to accept or reject the Plan; and (3) the deadline for objections to the Plan. The Confirmation Hearing Notice will be distributed to the Voting Parties as part of the Solicitation Materials. In addition, the Confirmation Hearing Notice will also be distributed to (a) the Office of the U.S. Trustee; (b) counsel to the Creditors Committee; (c) counsel to RFSC; (d) counsel to the Liquidator; (e) the Internal Revenue Service; (f) the Securities and Exchange Commission; (g) the Office of the United States Attorney; (h) other governmental agencies required by the Bankruptcy Code and the Bankruptcy Rules; (i) all parties requesting notices pursuant to Bankruptcy Rule 2002; and (j) if not already included, equity security holders of RFSC, parties who have filed proofs of claim in the RFSC Chapter 11 Case and the RGH Chapter 11 Case, or whose claims are included in RFSC's and RGH's schedules, present and former directors and officers. The Bank Committee asks the Court to establish August 12, 2004, 4:00 p.m. Eastern time, as the Confirmation Objection Deadline. Objections to the Plan must be in writing, comply with the Bankruptcy Rules and the Local Rules of the U.S. Bankruptcy Court for the Southern District of New York, and state the name of the objector with the legal and factual ground. The objection and proof of service must be filed with the Bankruptcy Court and served on: -- Counsel to the Bank Committee White & Case LLP 1155 Avenue of the Americas New York, New York 10036 Attn: Andrew P. DeNatale, Esq. -- Counsel to the Debtor Debevoise & Plimpton LLP 919 Third Avenue New York, New York 10022 Attn: Steven R. Gross, Esq. -- Counsel to the Creditors' Committee Orrick, Herrington & Sutcliffe, LLP 666 Fifth Avenue New York, New York 10103 Attn: Arnold Gulkowitz, Esq. -- Counsel to the Liquidator Blank Rome LLP The Chrysler Building, 405 Lexington Avenue New York, New York 10174 Attn: Michael Z. Brownstein, Esq. -- The Office of the United States Trustee 33 Whitehall Street, Suite 2100 New York, New York 10004 Attn: Mary Tom, Esq. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Reliance Insurance Company. The Company filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403). When the Company filed for protection from their creditors, they listed $12,598,054,000 in assets and $12,877,472,000 in debts. (Reliance Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) SALOMON BROTHERS: Fitch Upgrades Class H & J Ratings to BB+/BB -------------------------------------------------------------- Fitch Ratings upgrades Salomon Brothers Mortgage Securities VII, Inc.'s commercial mortgage pass-through certificates, series 1999- C1 as follows: --$38.6 million class B to 'AAA' from 'AA'; --$38.6 million class C to 'AAA' from 'A'; --$11.0 million class D to 'AA+' from 'A-'; --$27.6 million class E to 'A+' from 'BBB'; --$11.0 million class F to 'A' from 'BBB-'; --$14.7 million class G to 'BBB' from 'BB+'; --$20.2 million class H to 'BB+' from 'BB'; --$9.2 million class J to 'BB' from 'BB-'. In addition, the following classes are affirmed by Fitch: --$89.1 million class A-1 'AAA'; --$355.7 million class A-2 'AAA'; --Interest-only class X 'AAA'; --$16.5 million class K 'B'; --$7.3 million class L 'B-'. Fitch does not rate the $16.5 million class M certificates. The upgrades reflect both the increased credit enhancement levels from loan payoffs and amortization and the subordination levels of deals with similar characteristics issued today. Currently, four loans (2.8%) are in special servicing, including two 90 days delinquent and one real estate owned (REO). The largest (1.1%) is currently 90 days delinquent. The loan is secured by a multifamily property in Houston, TX, which is 81% occupied. The property is mold and termite infested and the borrower is trying to refinance the loan. The second specially serviced loan (0.93%) is secured by a hotel in Altamonte Springs, FL. The loan is 90 days delinquent and the sale is scheduled to close shortly. Losses are expected. The third specially serviced loan (0.66%) is REO and is secured by a retail property in North Randall, OH. The property is currently 76% vacant; losses are expected. SAMSONITE: Completes Private Offering of Euro 100MM Senior Notes ---------------------------------------------------------------- Samsonite Corporation (OTC Bulletin Board: SAMC) announced that it has closed a private offering of euro 100 million in aggregate principal amount of its euro-denominated floating rate senior notes due 2010 and $205 million in aggregate principal amount of its 8 7/8% senior subordinated notes due 2011. The notes were offered in the United States only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, and outside the United States pursuant to Regulation S under the Securities Act of 1933. The notes have not been and may not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. The Company intends to use the net proceeds of these offerings, along with cash on hand and borrowings under its credit facility, to retire all of its outstanding 10 3/4% senior subordinated notes due 2008 and to pay related fees and expenses. The Company is one of the world's largest manufacturers and distributors of luggage and markets luggage, casual bags, backpacks, business cases and travel-related products under brands such as SAMSONITE(R), AMERICAN TOURISTER(R), LARK(R), HEDGREN(R) and SAMSONITE(R) black label. * * * As reported in the Troubled Company Reporter's May 6, 2004 edition, Standard & Poor's Ratings Services assigned its 'B+' senior unsecured debt and 'B-' subordinated debt ratings to Samsonite Corp.'s proposed $325 million offering of euro- denominated floating-rate senior notes due 2011 and dollar- denominated senior subordinated notes due 2012. At the same time, Standard & Poor's raised all its outstanding ratings on luggage and travel-related products manufacturer Samsonite, including the corporate credit rating, which was raised to 'B+' from 'B'. The outlook is stable. "Samsonite's upgrade reflects Standard & Poor's expectation that the proposed transaction will improve the company's financial profile, and also that Samsonite will sustain its improvement in operating results," said Standard & Poor's credit analyst David Kang. SAMSONITE CORP: 78% of 10-/4% Senior Debtholders Tender Notes ------------------------------------------------------------- Samsonite Corporation (OTC Bulletin Board: SAMC) announced that pursuant to the terms of its previously announced offer to purchase and consent solicitation for any and all of the $308,261,000 outstanding principal amount of its 10-3/4% senior subordinated notes due 2008, it has received valid tenders and consents representing a majority in principal amount of the Notes outstanding as of the expiration of the consent deadline at 12:00 midnight, New York City time, on June 8, 2004. The Company also announced that the supplemental indenture relating to the Notes has been executed by the Company and the trustee under the indenture. As of the Consent Date, $240,390,000 in aggregate principal amount, or approximately 78% of the outstanding Notes, have been validly tendered. The net proceeds from the Company's previously announced offering of 100 million euros in aggregate principal amount of its floating rate senior notes due 2010 and $205 million in aggregate principal amount of its 8-7/8% senior subordinated notes due 2011 together with cash on hand and borrowings under its credit facility, will be used to fund the consideration in respect of the tendered Notes and to retire any Notes which remain outstanding following the expiration of the offer to purchase and to pay related fees and expenses. Tender Offer Remains Open The offer to purchase is currently scheduled to expire at 12:00 midnight, New York City time, on June 22, 2004, although the related consent solicitation expired on the Consent Date. The terms of the offer to purchase, including the conditions to the Company's obligations to accept the Notes tendered and pay the purchase price, are set forth in the Company's offer to purchase and consent solicitation statement, dated May 25, 2004. Deutsche Bank Securities Inc. and Merrill Lynch & Co. are the dealer managers for the offer to purchase and the solicitation agents for the consent solicitation. Questions or requests for assistance may be directed to Deutsche Bank Securities Inc. (telephone: (212) 250-4270 (collect)) or Merrill Lynch & Co. (telephone: (212) 449-4914 or toll-free at (888) 385-2663). Requests for documentation may be directed to D.F. King & Co., Inc., the information agent (telephone: (800) 628-8532). About Samsonite Corp. The Company is one of the world's largest manufacturers and distributors of luggage and markets luggage, casual bags, backpacks, business cases and travel-related products under brands such as SAMSONITE(R), AMERICAN TOURISTER(R), LARK(R), HEDGREN(R) and SAMSONITE(R) black label. * * * As reported in the Troubled Company Reporter's May 6, 2004 edition, Standard & Poor's Ratings Services assigned its 'B+' senior unsecured debt and 'B-' subordinated debt ratings to Samsonite Corp.'s proposed $325 million offering of euro- denominated floating-rate senior notes due 2011 and dollar- denominated senior subordinated notes due 2012. At the same time, Standard & Poor's raised all its outstanding ratings on luggage and travel-related products manufacturer Samsonite, including the corporate credit rating, which was raised to 'B+' from 'B'. The outlook is stable. "Samsonite's upgrade reflects Standard & Poor's expectation that the proposed transaction will improve the company's financial profile, and also that Samsonite will sustain its improvement in operating results," said Standard & Poor's credit analyst David Kang. SAMSONITE CORP: First Quarter Net Loss Tops $7.1 Million -------------------------------------------------------- Samsonite Corporation (OTC Bulletin Board: SAMC) reported revenue of $198.2 million, operating income of $6.4 million and net loss to common stockholders of $7.1 million, or $0.03 per share, for the quarter ended April 30, 2004. These results compare to revenue of $161.9 million, operating income of $10.4 million and net loss to common stockholders of $15.6 million, or $0.79 per share, for the first quarter of the prior year. Operating income for the current year reflects a charge for restructuring manufacturing operations in Spain of $3.4 million and asset impairment charges of $0.7 million. The accrual of preferred stock dividends in arrears of $3.3 million for the quarter is also reflected in the net loss to common stockholders. Adjusted EBITDA (earnings before interest expense, taxes, depreciation, amortization, and minority interest, adjusted for certain items management believes should be excluded in order to reflect recurring operating performance including restructuring charges, executive severance, stock compensation expense, and asset impairment charges), a measure of core business cash flow, was $17.9 million for the first quarter compared to $14.8 million for the first quarter of the prior year. Chief Executive Officer, Marcello Bottoli, stated: "The improved financial results are the direct result of increased sales and the Company's cost structure improvement efforts. With the outstanding support of our major investors, the Company has taken another major step in recapitalizing he Company by completing the Senior Subordinated Notes refinancing. I look forward to focusing on business growth opportunities and to continued improvement in the Company's operations." Richard Wiley, Chief Financial Officer, commented: "The Company's first quarter sales and Adjusted EBITDA improved significantly from the prior year which was adversely affected by the beginning of the Iraq conflict and the SARS outbreak. Worldwide travel statistics are much improved and a substantial economic recovery is underway in the U.S. The Company's European operations are improved from the first quarter of last year but are still subject to a slow European economy. Asian operations seem to be fully recovering and resuming satisfactory growth rates." Samsonite is one of the world's largest manufacturers and distributors of luggage and markets luggage, casual bags, business cases and travel-related products under brands such as SAMSONITE(R), AMERICAN TOURISTER(R), LARK(R), HEDGREN(R), LACOSTE(R) and SAMSONITE(R) black label. * * * As reported in the Troubled Company Reporter's May 6, 2004 edition, Standard & Poor's Ratings Services assigned its 'B+' senior unsecured debt and 'B-' subordinated debt ratings to Samsonite Corp.'s proposed $325 million offering of euro- denominated floating-rate senior notes due 2011 and dollar- denominated senior subordinated notes due 2012. At the same time, Standard & Poor's raised all its outstanding ratings on luggage and travel-related products manufacturer Samsonite, including the corporate credit rating, which was raised to 'B+' from 'B'. The outlook is stable. "Samsonite's upgrade reflects Standard & Poor's expectation that the proposed transaction will improve the company's financial profile, and also that Samsonite will sustain its improvement in operating results," said Standard & Poor's credit analyst David Kang. SENTAC INC: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Sentac, Inc. 23 Washington Street Canton, Massachusetts 02021 Bankruptcy Case No.: 04-14669 Chapter 11 Petition Date: June 2, 2004 Court: District of Massachusetts (Boston) Judge: Carol J. Kenner Debtor's Counsel: David G. Baker, Esq. Baker Law Office 105 Union Wharf Boston, MA 02109 Tel: 617-367-4260 Fax: 617-507-8411 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-largest creditors. SLMSOFT INC: Toronto Stock Exchange Reviews Listing Compliance -------------------------------------------------------------- Toronto Stock Exchange is reviewing the Variable Multiple Voting Shares and the Limited Voting Shares of SLMsoft Inc. (ESP.A, ESP.B) with respect to meeting the requirements for continued listing. The company is being reviewed on an expedited basis. * * * SLMsoft Inc. filed for protection under the Companies' Creditor Arrangement Act on May 27, 2003. As a result of SLM's inability to meet ongoing obligations and its continuing losses after the CCAA filing, the CCAA proceedings were terminated and pursuant to an order of the Honorable Justice Ground of the Ontario Superior Court of Justice made on October 31, 2003, Richter & Partners Inc., was appointed Interim Receiver and Receiver and Manager over the assets, property and undertaking of SLMSoft Inc., and certain of its subsidiaries, SLM Networks Corporation, SLM Technologies Inc., GSA Consulting Group Inc. and FMR Systems Inc. SPEIZMAN INDUSTRIES: Looks for Schedules & Statements by June 22 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia, Newnan Division, gave Speizman Industries, Inc., and its debtor- affiliates more time 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 June 22, 2004 to file their Schedules of Assets and Liabilities and Statement of Financial Affairs. Headquartered in Charlotte, North Carolina, Speizman Industries, Inc. -- http://www.speizman.com/-- is a distributor of specialized Commercial industrial machinery parts and equipment operating primarily in textile and laundry. The Company filed for chapter 11 protection on May 20, 2004 (Bankr. N.D. Ga. Case No. 04-11540). Michael D. Langford, Esq., Kilpatrick Stockton LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $23,938,000 in total assets and $23,073,000 in total debts. SPIDERBOY INTERNATIONAL: Files Reorganization Plan with SEC ----------------------------------------------------------- Spiderboy International, Inc. (OTC Bulletin Board: SBYI.OB) announced a plan of reorganization (Form 14A) that has been filed and accepted by the Securities and Exchange Commission. The Proxy Statement requested, among other matters, a shareholder vote for a change of corporate domicile through a plan of merger with Charys Holding Company, Inc., a Delaware corporation. Charys is a recently formed corporation created for the purpose of changing the domicile of Spiderboy from Minnesota. Charys will be the surviving entity after the merger. "This filing and approval by our shareholders to move the company to Delaware is the first step toward executing on our strategy and reflects the sound vision of our management team," said Billy V. Ray, chairman and CEO, Charys Holding Company, Inc. "We are determined to provide the best operating environment for our young company." Under the terms of the merger, 10 common shares of SBYI.OB will be exchanged for one share of Charys and one preferred share of SBYI.OB shall be exchanged for one preferred share of Charys. As a result, the current shareholders of SBYI.OB will become shareholders of Charys. The merger plan is subject to several contingencies, including: * Shareholder approval; * Filing the Certificate of Merger with the Secretary of State of Delaware; * Filing the Articles of Merger with the Secretary of State of Minnesota. The new securities will not require registration under section 145 of the Securities Act of 1933. Accordingly, the new Charys shares may be resold by the former shareholders without restrictions -- to the same extent that such shares could be sold without restrictions before the change in domicile. About Charys Holding Company, Inc. Headquartered in Atlanta, Georgia, Charys Holding Company, Inc. is a publicly traded entity focusing on the fragmented and underserved segment referred to as Integrated Infrastructure Support Services. This segment varies widely in scope but is fundamentally focused on upgrading the underpinning and infrastructure of the telecommunication, cable, electric, and Internet industries serving consumers, businesses and government entities. Our principle strategy is to acquire through mergers and acquisitions companies that support this underserved segment. Charys Holding Company, Inc. serves as a vehicle to provide individual business owners a unique opportunity to participate in effectively "going public," without the time, energy and expense of the process. The mission of the company will continue to be the acquisition of multiple companies into the public entity to better serve the Integrated Infrastructure Support Services market. About Spiderboy Spiderboy International acted as a holding company for High Country Fashions, Inc., and, on April 29, 1997, abandoned its investment in High Country Fashions, Inc. and approved a transfer of High Country Fashions, Inc. to Continental Casuals, Ltd., a company owned by the Company's President and majority stockholder. The Company recorded a gain on this abandonment and resulting debt cancellation of $1,600,000 because the liabilities of High Country Fashions, Inc. exceeded its assets. The transaction left the Company with no assets and no business. The Company merged with Spiderboy.com, Inc. on October 12, 2000. Spiderboy.com, Inc. was in the business of creating and running the Spiderboy.com search portal on the world wide web. Spiderboy.com search portal acted as an information based web portal. Spiderboy.com was supported by web designing, hosting, banner advertisements, affiliate marketing and our own e-commerce sites. The main focus of the Spiderboy search portal was to create ad revenue by providing content information from local television guides, newspapers, government entities, hospitals, hotels and airports from around the world. Spiderboy.com owned various domain names and had numerous web portals. Spiderboy.com was to have offered web design and hosting facilities at very competitive prices to businesses and build on the relationships to create e- commerce sites for these companies. At January 31, 2004, Spiderboy International's balance sheet shows a stockholders' deficit of $37,996 compared to a deficit of $76,425 at April 30, 2004. SR TELECOM: Finalizes Restructuring Plan for French Operations -------------------------------------------------------------- SR Telecom(TM) Inc. (TSX: SRX; Nasdaq: SRXA) announced that the previously announced restructuring plan for its French operations has been finalized. The details of the plan and the implementation schedule have been confirmed, and the plan will take effect immediately. The plan includes the closing of its Research & Development facility in Lannion before the end of June. The total cost of the plan is within the Company's expectations. Further details will be made available when the Company issues its second quarter results. "The completion of this activity is an important milestone in the Company's overall restructuring process. We are now focussing our operations in France on sales, customer support and projects. We remain committed to providing ongoing support for product installations and expansion plans generated by our customers for our swing(TM) product," said David Adams, SR Telecom's Senior Vice-President, Finance and Chief Financial Officer. "The restructuring initiative that was announced on April 30 of the current fiscal year is well underway, and we are on track to achieve our stated targets." About SR Telecom SR TELECOM (TSX: SRX, Nasdaq: SRXA) is one of the world's leading providers of Broadband Fixed Wireless Access (BFWA) technology, which links end-users to networks using wireless transmissions. For over two decades, the Company's products and solutions have been used by carriers and service providers to deliver advanced, robust and efficient telecommunications services to both urban and remote areas around the globe. SR Telecom's products have been deployed in over 120 countries, connecting nearly two million people. The Company's unrivalled portfolio of BFWA products enables its growing customer base to offer carrier-class voice, broadband data and high-speed Internet services. Its turnkey solutions include equipment, network planning, project management, installation and maintenance. SR Telecom is an active member of WiMAX Forum, a cooperative ndustry initiative which promotes the deployment of broadband wireless access networks by using a global standard and certifying interoperability of products and technologies. * * * As reported in the Troubled Company Reporter's May 05, 2004 edition, 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 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. TELESYSTEM INTERNATIONAL: S&P Places Ratings On Watch Positive -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-' long-term corporate credit ratings on MobiFon Holdings B.V. and Telesystem International Wireless Inc. on CreditWatch with positive implications. TIW owns 99.8% of MobiFon Holdings, which in turn owns 63.5% of MobiFon S.A., Romania's largest cellular operator. "The CreditWatch placement follows TIW's announcement that it has entered into an agreement in principle, which will result in MobiFon Holdings increasing its ownership interest in MobiFon to up to 79% from the current 63.5%," said Standard & Poor's credit analyst Joe Morin. This is a materially relevant ownership threshold for this company, as the MobiFon statutes require a supermajority approval of shareholders (75%) for certain material financial change. At the current ownership level of 63.5%, MobiFon Holdings is not able to unilaterally control or access MobiFon, and the default risk of MobiFon Holdings is separate from that of MobiFon. MobiFon Holdings' current credit profile and the ratings on the company reflect its debt levels and the stability of its proportional share of MobiFon's dividends. Although unrated, the stand-alone credit quality of MobiFon is currently viewed as 'BB-'. Vodafone will continue to remain an influential minority shareholder, however, MobiFon Holdings will have substantive control over MobiFon. The default risk on both entities would be the same, and the credit profile would reflect that of the consolidated company including TIW. The consolidated entity has a better financial profile than MobiFon Holdings' stand-alone profile. The current long-term corporate credit rating on the consolidated entity would be 'B+'. If this pro forma rating remains unchanged by transaction close, the 'B-' ratings on the MobiFon Holdings notes would be unaffected by the transaction. They would be notched down to reflect the structural subordination to the priority debt at MobiFon. There is an immaterial amount of lease- adjusted debt and no external debt at the TIW level. TIW's only other holding, 27%-owned TIW Czech N.V., has a neutral effect on the ratings on MobiFon and TIW, as it is treated as an equity investment. MobiFon is the leading cellular operator in Romania, with a slight market share lead over the No. 2 competitor in the market: a subsidiary of Orange S.A. The other two competitors in Romania have combined market share of less than 5% and continue to be ineffective in the market. The effective duopoly has resulted in high (50%) EBITDA margins, and substantial free cash flow after debt servicing at the operating company level. The low level penetration and relative poor quality of land-line services in Romania have helped with rapid growth in wireless subscribers, resulting in MobiFon being one of the fastest growing cellular operators in Eastern Europe. TRADE PARTNERS: Case Summary & 5 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Trade Partners Gateway Center, LLC c/o Bruce S. Kramer Borod & Kramer PC 80 Monroe Suite G-1 Memphis, Tennessee 38103 Bankruptcy Case No.: 04-07121 Type of Business: The Debtor owns a single-family residential subdivision in Pinal County, Arizona containing vacant lots to be sold for development. Chapter 11 Petition Date: June 8, 2004 Court: Western District of Michigan (Grand Rapids) Judge: Jo Ann C. Stevenson Debtor's Counsel: Michael J. Quilling, Esq. Quilling Selander Cummiskey & Lownds PC 2001 Bryan Street, Suite 1800 Dallas, TX 75201 Tel: 214-871-2100 Total Assets: $6,000,000 Total Debts: $9,160,290 Debtor's 5 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Burt Hoehne Debts / Services $2,500,000 19708 North Jojobe Court Surprise, AZ 85734 Burt Hoehne Annuity Debts / Services $1,320,000 19708 North Jojoba Court Surprise, AZ 85734 InterGlobal Waste Management Debts / Services $1,300,000 Inc. Attn: Harold A. Katersky 824 Calte Plano Avenue Camarillo, CA 93012-8557 Music Valley Inn Debts / Services $0 Kaysee Okpaise Debts / Services $0 UGS PLM: Keeps U.S. Corporate Headquarters in Dallas Area --------------------------------------------------------- UGS, a leading global provider of product lifecycle management software and services, announced it will keep its U.S. corporate headquarters in the Dallas area. UGS announced on May 27 the closing of its acquisition by a private equity group of Bain Capital, Silver Lake Partners and Warburg Pincus. The transaction represents the largest private equity investment ever made in a technology company. The company also launched operations that day as an independent software business under a new corporate brand -- UGS. Most recently, UGS announced on Tuesday a definitive agreement to acquire D-Cubed, Ltd., a Cambridge, England-based supplier of embedded technology used by many of the world's leading computer- aided design application developers. For its new headquarters, UGS has signed a lease on office space in the Granite Park office park at the intersection of Highway 121 and the Dallas North Tollway in Plano, Texas. The company is currently based on the EDS campus in Plano, where an estimated 80 of its approximately 4,700 global employees work. UGS expects to complete its move to the new site during 2004. UGS also announced the additions of two senior leaders who will be based at its new headquarters site in Plano. Doug Barnett, senior vice president and Chief Financial Officer. Barnett, who formerly served as CFO at Unigraphics Solutions, returns to the company from Colfax Corp., a leading marketing and world-class manufacturer of pumps and power transmission equipment, where he served as CFO. In his new capacity, Barnett is responsible for all financial affairs of the company. Tom Lemberg, senior vice president and General Counsel. Lemberg joins UGS from Digitas, LLC, a leading marketing services firm for which he served as executive vice president, general counsel and head of Strategic Partnerships. He previously was general counsel of Lotus Development Corporation. In addition, Lemberg led the creation and growth of the Business Software Alliance, a Washington, D.C.-based organization responsible for the public policy and anti-piracy activities of the major companies in the software industry. In his new capacity, Lemberg is responsible for all legal affairs of the company. Barnett and Lemberg each report to Tony Affuso, chairman, CEO and president of UGS. About UGS UGS is a leading global provider of product lifecycle management software and services with more than 3 million licensed seats and 42,000 clients worldwide. The company promotes openness and standardization and works collaboratively with its clients in creating enterprise solutions enabling them to transform their process of innovation and thus begin to capture the value of PLM. For more information on UGS products and services, visit http://www.ugs.com/ * * * As previously reported in the Trouble Company reporter, May 3, 2004 issue, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Plano, Texas-based UGS PLM Solutions Inc., and a 'B-' subordinated debt rating to the company's $550 million senior subordinated notes due 2012. At the same time, Standard & Poor's assigned its 'B+' bank loan rating and a recovery rating of '3' to UGS PLM Solutions Inc.'s $625 million senior secured credit facility, reflecting expectations for meaningful (50%-80%) recovery of principal in a default or bankruptcy scenario. The secured credit facility consists of a $125 million revolving credit facility due 2010 and $500 million term loan facility due 2011. The outlook is stable. UNUMPROVIDENT: S&P Cuts Ratings on Various Related Transactions --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on various UnumProvident Corp.-related synthetic transactions. CorTS Trust for Unum Notes and PreferredPLUS Trust Series UPC-1 are synthetic transactions that are weak-linked to the rating on the underlying securities, UnumProvident Corp.'s 6.75% notes due Dec. 15, 2028. CorTS Trust For Provident Financing Trust I, CorTS Trust II for Provident Financing Trust I, and CorTS Trust III for Provident Financing Trust I are synthetic transactions that are weak-linked to the rating on the underlying securities, Provident Financing Trust I's 7.405% capital securities due March 15, 2038. Ratings Lowered CorTS Trust for Provident Financing Trust I $52 million corporate-backed trust securities certificates Rating Class To From Certs B+ BB CorTS Trust II for Provident Financing Trust I $87 million corporate-backed trust securities certificates Rating Class To From Certs B+ BB CorTS Trust III for Provident Financing Trust I $26 million corporate-backed trust securities certificates Rating Class To From Certs B+ BB CorTS Trust for Unum Notes $25 million corporate-backed trust securities certificates Rating Class To From Certs BB+ BBB- PreferredPLUS Trust Series UPC-1 $32 million PreferredPLUS trust series UPC-1 certificates Rating Class To From Certs BB+ BBB- US AIRWAYS: Flight Attendants Still Undecided On Concessions ------------------------------------------------------------ The US Airways Master Executive Council of the Association of Flight Attendants-CWA, AFL-CIO has not reached a decision on whether to engage in a third round of concessionary negotiations with the airline. That decision has been deferred while the union's outside financial advisors analyze US Airways' financial documents and transition plan. In April, AFA conducted a membership poll that showed that 83 percent of the US Airways flight attendants polled believed the union should not engage in negotiations until AFA has received a complete proposal from the company, along with a detailed business plan and management's level of participation in concessions. "AFA does not believe the majority of flight attendants at US Airways are of the same opinion as those based in Pittsburgh, and the overall poll results clearly show that to be the case," said AFA US Airways MEC President Perry Hayes. "The results of the poll posted on the Pittsburgh local council website are significantly different from the results in the other bases. By only looking at one segment of the numbers, it's easy to provide an inaccurate snapshot of the feelings of the US Airways flight attendants as a whole." Recent articles have incorrectly characterized information posted on the Pittsburgh local council's website as the official position of the MEC. Hayes is the spokesperson for AFA at US Airways and any comments made by another individual, including local presidents, are an expression of that individual's opinion and not necessarily reflective of the MEC's decisions. More than 45,000 flight attendants, including the 5,200 flight attendants at US Airways, join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. (US Airways Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) USG CORP: Asks for Authority To Assume Current Headquarters Lease ----------------------------------------------------------------- Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that the USG Corporation Debtors' new corporate headquarters lease provides that the building which will serve as the Debtors' new corporate headquarters will be constructed by the new landlord at 550 W. Adams Street in downtown Chicago, Illinois. The Debtors expect the New Headquarters Lease location to be constructed and fully ready for occupancy in the first half of 2007. In the meantime, the Debtors will remain at their current office lease location through essentially the end of its term, at which time they will be moving to their New Headquarters Lease location. The current headquarters landlord has asked the Debtors to assume the Current Headquarters Lease, and the Debtors are willing to do so. Accordingly, the Debtors seek the Court's authority to assume the Current Headquarters Lease with American National Bank and Trust Company of Chicago -- solely as Trustee under a Trust Agreement dated March 15, 1986. The Current Headquarters Lease covers the Debtors' worldwide corporate headquarters in Chicago, Illinois. The salient terms of the Current Headquarters Lease are: (a) Tenants: USG Corporation, United States Gypsum Company and L&W Supply Corporation; (b) Landlord: American National Bank and Trust Company of Chicago, not personally but solely as Trustee under Trust Agreement dated March 15, 1986 and known as Trust No. 66917; (c) Site: 125 S. Franklin Street in downtown Chicago, Illinois; (d) Leased Premises: Seven full floors and one partial floor of the Building. The rental space is approximately 263,000 square feet; (e) Commencement Date: July 1, 1992; (f) Term: 15 years, ending on June 30, 2007; (g) Base Rent: The rent for the Leased Premises for certain periods are: (i) approximately $814,000 per month for the period July 1, 2003 through June 30, 2004; (ii) approximately $852,000 per month for the period July 1, 2004 through June 30, 2005; (iii) approximately $890,000 per month for the period July 1, 2005 through June 30, 2006; and (iv) approximately $928,000 per month for the period July 1, 2006 through June 30, 2007; (h) Additional Rent: Taxes and operating expenses for the Building based on the Tenants' proportionate share of the Building premises; and (i) Option to Extend Term: The Tenants have two options to extend the Term, each option being for a five-year extension. The first option is exercisable prior to the commencement of the final lease year. The Debtors estimate that the amount required to cure prepetition arrearages under the Current Headquarters Lease is $2,380.70. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones, Day, Reavis & Pogue represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service, Inc., 215/945-7000) VIVENDI: Increases Price & Extends Consent Date of Tender Offer --------------------------------------------------------------- Vivendi Universal S.A. (Paris Bourse: EX FP; NYSE: V) (S&P, BB Long-Term and B Short-Term Corporate Credit Ratings, Positive) announced the amendment of its pending tender offer for aggregate cash consideration not to exceed Euro 1,000,000,000 for any and all of its outstanding 9.25% Senior Notes due 2010, U.S. dollar- denominated 6.25% Senior Notes due 2008, 9.50% Senior Notes due 2010 and euro-denominated 6.25% Senior Notes due 2008. Vivendi said that it has amended the Tender Offer to (1) increase the Purchase Price and Total Consideration for the 9.25% Notes, the 6.25% Dollar Notes and the 9.50% Notes and (2) extend the Consent Date for all the Notes to 5:00 p.m., New York City time, on Tuesday, June 15, 2004. Holders who tender their Notes at or prior to 5:00 p.m., New York City time, on Tuesday, June 15, 2004 will receive the applicable Total Consideration, subject to the terms and conditions set forth in the Offer to Purchase. Holders who tender their Notes after 5:00 p.m., New York City time, on the Consent Date and at or prior to 12:00 midnight, New York City time, on Thursday June 24, 2004 will receive the applicable Purchase Price, subject to the terms and conditions set forth in the Offer to Purchase. Capitalized terms used and not defined herein shall have the respective meanings assigned to them in the Offer to Purchase. Except for the amendments to the Purchase Prices and Total Consideration described above and the extension of the Consent Date described above, all other terms and conditions of the Tender Offer remain unchanged. Holders who have already tendered their Notes will receive the amended Purchase Price and Total Consideration for their 9.25% Notes, 6.25% Dollar Notes and 9.50% Notes and need not take any further action in response to this announcement. The aggregate cash consideration in the Offer is limited to Euro 1,000,000,000. Notes that are validly tendered on or prior to the Expiration Date may be subject to proration if the principal amount tendered exceeds the Maximum Tender Amount. The Notes will be purchased according to a priority of series as set forth in the table above. All Notes having a higher Acceptance Priority Level will be accepted for purchase before any tendered Notes having a lower Acceptance Priority Level are accepted. Accrued and unpaid interest on all tendered Notes accepted for payment will also be paid to, but not including, the settlement date for the Tender Offer, which will be promptly following the Expiration Date. The Offer is not conditioned on any minimum amount of Notes being tendered. Concurrently with the Tender Offer, the Company is soliciting consents from holders of the Notes to amendments to, and waivers under, the Indentures governing the 2010 Notes and the 2008 Notes, that will eliminate substantially all of the restrictive covenants, certain events of default and related provisions contained in the Indentures. The relevant Consent Payment is not conditioned upon the adoption of the Proposed Amendments with respect to a series of Notes, and the Tender Offer is not conditioned upon the receipt of the Requisite Consents. Adoption of the Proposed Amendments with respect to the 2010 Notes or the 2008 Notes requires the Consent of at least a majority in aggregate principal amount of the 2010 Notes, or the 2008 Notes, as the case may be, then outstanding; provided, that the Proposed Amendments with respect to the 2010 Notes, or the 2008 Notes, as the case may be, will not become operative if the Company does not have sufficient funds to purchase all such 2010 Notes or 2008 Notes that are validly tendered in and not withdrawn from the Tender Offer. The 9.25% Notes and the 9.50% Notes vote together as a class for purposes of adopting the Proposed Amendments. The 6.25% Dollar Notes and the 6.25% Euro Notes vote together as a class for purposes of adopting the Proposed Amendments. If the Proposed Amendments are adopted with respect to a series of notes and all Notes of such series that are validly tendered in and not withdrawn from the Tender Offer are accepted for purchase, the Notes of such series that are not purchased will remain outstanding, but will be subject to the terms of the applicable Indenture as modified by the applicable Supplemental Indenture. Holders who validly deliver Consents pursuant to the Offer may revoke such Consents prior to the time at which the Supplemental Indenture relating to the series of Notes to which those Consents relate becomes effective, which will be the date on which such Supplemental Indenture is executed. However, if a Consent is revoked, the Holder will not be eligible to receive the Consent Payment for those Notes. Withdrawal rights with respect to tendered Notes are not being extended. Accordingly, tendered Notes may no longer be withdrawn after 5:00 p.m., New York City time, on June 8, 2004. Notwithstanding any other provision of the Offer, the Company's obligation to accept for purchase, and to pay for, Notes validly tendered pursuant to the Offer is conditioned upon satisfaction or waiver of certain general conditions as set forth in the Offer to Purchase. The Company, in its sole discretion, may waive any of the conditions of the Offer in whole or in part, at any time or from time to time. The Offer is being made solely pursuant to an Offer to Purchase and Consent Solicitation dated May 25, 2004, as amended and supplemented to and including the date hereof, which more fully sets forth and governs the terms and conditions of the Offer. The Offer to Purchase can be obtained by contacting the information agent (Global Bondholder Services Corporation (Toll free: +1 (866) 470-4500; +44(0)20-7864-9136; or (banks and brokers) +1 (212) 430- 3774)) or the Dealer Managers (Banc of America Securities LLC (Toll free: +1 (888) 292-0070 or +1 (212) 847-5834) and J.P. Morgan Securities Inc. (Toll free: +1 (866) 834-4666; +1-212-834- 4802; or +44 (0)207-742-7506). The Bank of New York is acting as the Tender and Solicitation Agent and The Bank of New York (Luxembourg) S.A. is acting as the Luxembourg Tender Agent. All services in connection with the Offer as well as the Offer to Purchase are available free of charge at the office of the Luxembourg Tender Agent (The Bank of New York (Luxembourg) S.A., +44 (0)207-964-6386). Banc of America Securities LLC and J.P. Morgan Securities Inc. are acting as the Dealer Managers for the Offer. WEIRTON: Texaco Concedes to Pay $500,000 to Settle Damage Claims ---------------------------------------------------------------- The Weirton Steel Corporation Debtors ask the Court to approve a settlement with Texaco Natural Gas, Inc., and Fellon McCord & Associates, Inc., with respect to a complaint filed by the Debtors against Texaco in the Circuit Court of Hancock County, West Virginia, on June 25, 2001. According to Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, the complaint relates to a dispute among the Parties regarding the appropriate price for the sale of natural gas for the period from January to March 2001. The Debtors sought to recover $920,488 from Texaco, resulting from an alleged breach by Texaco of its obligation to the Debtors under a November 1, 2000 base contract for the short-term sale and purchase of natural gas. As a result of Texaco's alleged breach, the Debtors were required to pay $10 per MMBtu in January 2001, $7 per MMBtu in February 2001 and $5 per MMBtu in March 2001, for the same 4,000 MMBtu of natural gas for which, the Debtors alleged, Texaco was contractually obligated to provide at $4 per MMBtu. On August 17, 2001, Texaco denied any liability to the Debtors. On August 22, 2002, Texaco filed a request for leave to file a Third-Party Complaint against Fellon. Fellon was hired by the Debtors to secure contracts for the purchase of natural gas on the Debtors' behalf. Texaco contends that if any money is owed to the Debtors for any reason, that liability is solely the responsibility of Fellon, as the Debtors' agent. Fellon denied any liability with respect to the allegations in the Third Party Complaint. After extensive arm's-length negotiations, the Parties reached a settlement and compromise of the Complaints. Pursuant to a Mutual Release and Settlement Agreement: (a) Texaco will pay the Debtors $500,000, in full satisfaction of all damages directly or indirectly related to claims released in the Agreement; and (b) The Parties will release all claims against each other. Due to the uncertainty, additional costs and the length of time necessary to continue to litigate the matter, the Debtors believe that the compromise with Texaco and Fellon is fair and reasonable under the circumstances. (Weirton Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: SEC Asks For Documents About KPMG's Independence -------------------------------------------------------------- On June 1, 2004, Piper Rudnick, LLP, disclosed in a Bankruptcy Court filing that the Securities and Exchange Commission served a voluntary request for information relating to KPMG, LLP's retention as MCI's independent auditor. Piper Rudnick represents MCI in connection with this SEC inquiry. Jonathan Weil, a staff reporter at The Wall Street Journal, says the SEC inquiry stems from an aggressive tax-shelter strategy that KPMG sold MCI during the late 1990s, when MCI was known as WorldCom, Inc. At the time, Arthur Andersen, LLP, was WorldCom's outside auditor. KPMG replaced Andersen in 2002. The filing detailed Piper Rudnick's lawyer's work on this matter from April 1, 2004 through and including April 19, 2004: Auditor Matters Client Matter ID: 017753-000841 Invoice #1509484 For professional services rendered through April 19, 2004 Amount Date Attorney & Task Hours Billed ---- --------------- ----- ------ 03/25/04 K. Nelson SEC research. 1.50 $210.00 04/01/04 C. Scheeler Telephone conversation 1.90 855.00 with Ms. Whittemore, draft e-mail to client regarding same (.50); conference with Mr. Ingerman regarding in dependency issues, review law regarding same (.40); work on production issues (1.00). 04/01/04 B. Ingerman Review and revise 2.25 922.50 memo regarding auditor independence. 04/01/04 E. Scheideman III Review 6.00 1,980.00 documents in anticipation of producing same to SEC. 04/01/04 P. Fenn Review and analyze 6.10 1,769.00 document for privilege to be produced to the SEC. 04/01/04 R. Gaumont Research "adverse 10.25 2,665.00 interest" standard under Bankruptcy Code (3.00); research comments provided by Big Four accounting firms concerning SEC's proposed rules (3.50); revise and edit memorandum in accordance with Mr. Ingerman's changes (3.75). 04/01/04 F. Dajani Complete review of 5.60 2,380.00 initial electronic materials for SEC request (4.80); review and respond to e-mail messages regarding same (.20); telephone conference with Messrs. Scheeler and Jacobs regarding investigation (.30); telephone conferences with Mr. Scheeler regarding investigation and issues (.30). 04/02/04 C. Scheeler Telephone 2.00 900.00 conversation with Mr. Strochak regarding responsive documents (.20); edit memo regarding independence issues, draft e-mail to client regarding same (1.30); edit letter to SEC regarding voluntary request, draft, review, draft e-mails regarding SEC 04/02/04 B. Ingerman Review and revise 1.25 512.50 memo regarding auditor independence. 04/02/04 P. Fenn Review and analyze 4.40 1,276.00 documents for privilege to be produced to SEC. 04/02/04 R. Gaumont Revise and edit 6.25 1,625.00 memorandum regarding independent (1.60); audit and disinterestedness standard in accordance with revisions by Messrs. Scheeler and Ingerman (3.20); review additional SEC opinion relating to same (2.80); discussions with Messrs. Scheeler and Ingerman regarding additional research (.25). 04/05/04 C. Scheeler Edit letter to SEC 2.00 900.00 regarding production (.40); work on privilege, document production, independence issues (1.60). 04/05/04 P. Fenn Draft privilege log 5.30 1,537.00 analyze documents for production to the SEC (3.70). 04/05/04 R. Gaumont Research relating to 1.80 468.00 opposition to motion to disqualify. 04/05/04 F. Dajani Review SDS materials 8.40 3,570.00 for SEC request and prepare SEC production (7.10); review and edit privilege log (.60); discuss SDS materials with Messrs. Scheeler and Fenn (.50); telephone conference with Messrs. Scheeler and Jacobs regarding SEC investigation (.20). 04/06/04 C. Scheeler Edit letter to SEC 2.20 990.00 (.30); conference call with client regarding open issues (.90); draft e-mail to Ms. Kelly and Ms. Petren regarding status (1.00). 04/06/04 P. Fenn Review and analyze 7.20 2,088.00 privileged documents for potential production (4.10); research and analyze claims against SDS and BJE (1.10); draft privilege log (2.00). 04/06/04 F. Dajani Complete privilege 2.10 892.50 review of Board Minutes, edit production correspondence and produce first responsive wave to SEC (1.00); prepare for and participate in conference call with Messrs. Scheeler, Smorodin and Jacobs, and Ms. Petren regarding SEC investigation (.90); follow-up with Mr. Scheeler (.20). 04/07/04 C. Scheeler Telephone conversation 1.50 675.00 with Mr. Jacobs, review, draft e-mails with custodians, Ms. Petren, telephone conversation with Ms. Petren regarding document collection process. 04/07/04 R. Gaumont Research relating to 4.80 1,248.00 remedies for violations of SEC's independence rules. 04/07/04 F. Dajani Discuss SEC issues with .40 170.00 Messrs. Scheeler and Fenn. 04/08/04 P. Fenn Review and analyze e-mail 1.40 406.00 for privilege and draft privilege log regarding same. 04/08/04 R. Gaumont Review and analyze SEC 6.30 1,638.00 decisions relating to auditor independence (3.10); research related to remedies (3.20). 04/09/04 P. Fenn Review and analyze 4.20 1,218.00 documents for privilege and responsiveness; draft privilege log. 04/09/04 R. Gaumont Research and analyze 2.70 702.00 SEC administrative decisions relating to independence issues. 04/09/04 F. Dajani Telephone conference .20 85.00 with Mr. Jacobs regarding document collection issues. 04/11/04 R. Gaumont Prepare memoranda 5.75 1,495.00 regarding impact of violations of SEC's auditor independence rules on certification of company's financial statements. 04/12/04 C. Scheeler Telephone 3.50 1,575.00 conversation, e-mails with numerous witnesses, custodians regarding document production, fact development issues (3.00); telephone conversation with Mr. Jacobs regarding same (.50). 04/12/04 B. Ingerman Review and revise .60 246.00 memo regarding auditor independence. 04/12/04 R. Gaumont Revise and edit 9.70 2,522.00 memoranda in accordance with changes proposed by Mr. Ingerman (1.30); follow-up research relating to scholarly commentary relating to sanctions for violating independence rules (4.20). 04/12/04 F. Dajani Telephone conference .70 297.50 with Messrs. Scheeler and Jacobs regarding document and data collection (.50); begin review of audit committee materials for SEC request (.20). 04/13/04 C. Scheeler Telephone 3.70 1,665.00 conversation with Mr. Beresford (.80); telephone conversation with Ms. Whittemore regarding KPMG productions (.30); review law on non-independence consequences, conference with RAG regarding same (.60); telephone conversations, e-mails with SEC, FMD regarding responsive issues (.80); telephone conversations, e-mails with custodians, Mr. Jacobs regarding same, review documents (1.20). 04/13/04 P. Fenn Review documents for 2.30 667.00 privilege and production. 04/13/04 R. Gaumont Revise memorandum .50 130.00 analyzing consequences to company of unaudited statements with Mr. Scheeler. 04/13/04 F. Dajani Review Audit Committee .70 297.50 and Board materials for SEC and request and discuss same with Mr. Fenn. 04/14/04 C. Scheeler Prepare for hearing, 4.80 2,160.00 telephone conversation with Ms. Del Duca regarding same (2.40); telephone conversations with Mr. Jacobs, FMD regarding production issues (.40); review documents produced (.80); work on request response (1.20). 04/14/04 J. Berry Review and analyze 2.00 250.00 electronic data discovery in preparation for review for production (.50); coordinate with attorneys and the vendors with regard to instructions, search terms and priorities (1.75). 04/14/04 P. Fenn Conversation with Mr. 2.10 609.00 Dajani regarding document and electronic review (.20); review documents for privilege (1.90). 04/14/04 R. Gaumont Conference with Mr. 4.70 1,222.00 Dickson regarding research into SEC regulations (.25); prepare outline for preparation for hearing on motion to disqualify (1.25); review and analyze MCI and KPMG's oppositions to motion to disqualify (1.70); review authorities cited in same (1.20); discussions with Mr. Scheeler (.30). 04/14/04 M. Loker Research Fortune 10 2.70 459.00 10-K's for attorney use. 04/14/04 F. Dajani Discuss SEC request .40 170.00 issues with Mr. Fenn (.20); discuss electronic review with Messrs. Fenn and Berry (.20). 04/15/04 C. Scheeler Review 4.00 1,800.00 disqualification briefs, prepare outline of potential questions for hearing, draft e-mail to Mr. Benjet regarding same (2.30); hearing preparation with Mr. Benjet, Weil (1.70). 04/15/04 J. Berry Review and analyze .75 93.75 electronic data discovery in preparation for review for production (.25); coordinate with attorneys and the vendors with regard to instructions, search terms and priorities (.50). 04/15/04 P. Fenn Draft tracking log 2.30 667.00 for SEC productions (1.30); draft privilege log regarding same (1.00). 04/15/04 R. Gaumont Review and analyze 4.70 1,222.00 10Qs for discussions of auditor independence (2.00); discussion with Mr. Dickson regarding status of research (.20); prepare for mock hearing with Mr. Scheeler (.70); participate in mock hearing with Messrs. Benjet, Strochak, and Scheeler (1.80). 04/15/04 M. Loker Research and organize 2.00 340.00 10-K's for top 10 Fortune 500 companies for attorney review. 04/15/04 F. Dajani Review production .25 106.25 indices and KPMG index for responsiveness to SEC auditor request. 04/15/04 S. Dickson Research regarding 5.50 1,320.00 SEC enforcement actions against registrants for using non-independent auditors (3.40); review 10-K reports and proxy statements of Fortune 500 companies for descriptions of services provided by independent accountants (2.10). 04/16/04 C. Scheeler Work on matters 3.30 1,485.00 regarding Gonzales/KPMG disqualification hearing (1.50); review documents, telephone conversation with client, work on SEC response (1.80). 04/16/04 P. Fenn Review and analyze 6.60 1,914.00 documents for production to SEC. 04/16/04 R. Gaumont Review and analyze 3.90 1,014.00 Ernst & Young ruling for implications on independence (1.20); research relating to disqualification hearing (1.00); review and analyze SEC independence decisions (1.70). 04/16/04 F. Dajani Review MHS and other 8.10 3,442.50 electronic collections for SEC request (7.80); discuss same with Mr. Scheeler (.30). 04/17/04 C. Scheeler Draft e-mail to 2.00 900.00 Mr. Breeden summarizing KPMG disqualification issues, telephone conversations with Mr. Benjet, Ms. Petren regarding same. 04/17/04 R. Gaumont Assist Mr. Scheeler 1.30 338.00 in assembling documents requested for upcoming SEC meeting. 04/18/04 R. Gaumont Research 13(a), 3.30 858.00 10(a) issues (1.80); review and analyze schedules in Securities Act for references to independence (1.50). 04/18/04 F. Dajani Prepare custodian .75 318.75 summary for April 19 telephone conference with Messrs. Scheeler and Jacobs regarding SEC inquiry status. 04/19/04 C. Scheeler Telephone 3.40 1,530.00 conversations with SEC, team regarding status of response, draft e-mail to client regarding same (1.30); review prior submission (1.00); draft e-mail to Mr. Richards regarding privilege issue (.20); review potentially privileged document (.30); draft MHS interview memo (.60). 04/19/04 J. Berry Review and analyze 4.75 593.75 electronic data discovery in preparation for review for production (2.75); coordinate with attorneys and vendors with regard to instructions, search terms and priorities (2.00). 04/19/04 P. Fenn Conference call regarding 8.60 2,494.00 status of SEC productions (.60); review and analyze documents for production to SEC (8.00). 04/19/04 R. Gaumont Research 10(b)(5) 1.50 390.00 issues. 04/19/04 F. Dajani Review KH, LO and other 9.40 3,995.00 electronic custodians for SEC request (8.10); telephone conference with Messrs. Scheeler and Jacobs regarding SEC status (.40); telephone conference with Mr. Berry regarding electronic issues (.60); telephone conference with Mr. Fenn regarding witness binders (.30). On June 4, 2004, the Court sealed Piper Rudnick's documents from public viewing, at MCI's request according to the Journal. Pursuant to Rule 9018 of the Federal Rules of Bankruptcy Procedure, Judge Gonzalez ordered the removal of the documents from the Court's electronic filing system and the public access Web site. Judge Gonzalez barred any person who received or reviewed a copy of the documents from disseminating copies of the document. "According to people familiar with the inquiry, the SEC's request for documents came in a March 23 letter from the commission's enforcement division. These people said that MCI asked Judge Gonzalez to keep the SEC inquiry a secret, because the SEC's letter said the inquiry was confidential," Mr. Weil reports. Mr. Weil relates that the controversy over KPMG's tax work for MCI started in January 2004, when former U.S. Attorney General Richard Thornburgh, serving as MCI's bankruptcy examiner, recommended that MCI could have grounds to sue KPMG over its prior state-tax advice. "KPMG and MCI have defended the firm's tax work as proper. They say the accounting firm's independence wasn't impaired, and MCI has said it has no plans to sue KPMG," Mr. Weil continues. The State of Massachusetts and 13 other states have asked Judge Gonzalez to disqualify KPMG from performing any further work for MCI. The states argued that KPMG is conflicted to act as MCI's outside auditor or tax adviser. The states are seeking to collect more than $500 million in back taxes, penalties and interest, Mr. Weil says. On June 8, 2004, Judge Gonzalez vacated his Sealing Order. "It has come to the Court's attention that the Sealed Material has been widely and publicly disseminated, and it appears that the June 4 Order no longer serves its original purpose," Judge Gonzalez ruled. Judge Gonzalez ordered that the Piper Rudnick filings be placed back on the Court's docket and at the public access Web site. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. On April 20, the company (WCOEQ, MCWEQ) formally emerged from U.S. Chapter 11 protection as MCI, Inc. This emergence signifies that MCI's plan of reorganization, confirmed on October 31, 2003, by the U. S. Bankruptcy Court for the Southern District of New York is now effective and the company has begun to distribute securities and cash to its creditors. (Worldcom Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) W.R. GRACE: Applies To Employ Baker Donelson As Lobbyists --------------------------------------------------------- The W.R. Grace & Co. Debtors ask the Court for permission to employ Baker Donelson Bearman Caldwell & Berkowitz, PC, to perform lobbying that the Debtors will require during the course of these Chapter 11 cases. Specifically, the Debtors want Baker, their longtime legislative advisors, to continue to advise their senior management, corporate counsel, and Board of Directors with respect to the policy and legislative affairs affecting their business. Since January 2001, Baker and certain of its policy advisors provided legal services to the Debtors in connection with various legislative matters. Baker also assisted the Debtors in responding to legislation with respect to their business. James D. Range, one of Baker's senior public policy advisors at Baker's Washington, D.C., offices, also represented the Debtors on the very matters for which Baker is to be employed. Services Baker will advise the Debtors, their counsel and their Board of Directors with respect to legislative affairs and current, pending and future legislative affairs, and provide other related services as the Debtors may deem necessary or desirable. Compensation The Debtors will pay Baker a flat rate of $17,000 per month, in arrears. Disinterestedness Mr. Range says that, while Baker may have and will perform lobbying services for parties interested in Grace's cases, these are unrelated to the lobbying work for Grace. (W.R. Grace Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) * BOOK REVIEW: EPIDEMIC OF CARE - A Call For Safer, Better, and More Accountable Health Care ------------------------------------------------------------ Author: George C. Halvorson George J. Isham, M.D. Publisher: Jossey-Bass; 1st edition Hardcover: 271 pages List Price: $28.20 Order your personal copy today at http://www.amazon.com/exec/obidos/ASIN/0787968889/internetbankrupt Halvorson and Isham worked together as leaders of the Minneapolis health-care organization HealthPartners; Halvorson as chairman and CEO, and Isham as medical director and chief health officer. From their positions as leaders in the health-care field, they have gained a broad, thorough understanding of the structure, workings, and the problems of America's health-care system. Their "Epidemic of Care" written in a readable, lucid, jargon-free style is a timely work for anyone interested in the pressing matter of satisfactory health care in America. This includes government workers, politicians, executives of HMOs and hospitals, and critics of health care, to individuals making choices about their own health care. It is a notable work both practical and visionary that one hopes legislators and heads of HMOs will take in. For Halvorson and Isham make their way through the daunting complexities of today's health-care system to put their finger on its core problems and offer practicable solutions to these. The two main problematic issues of contemporary health care are health-care costs and quality of care. These two authors offer solutions taking into consideration both of these. They put forth balanced proposals instead of the many one-sided ones which stress cutting costs at the expense of care or favor care regardless of costs, costs usually born by government from tax revenues. In the authors' comprehensive, balanced proposals, corporations and businesses of all sizes, government agencies, health-care organizations of all types, state and local governments and health organizations, and also individuals work together cooperatively for the goal of affordable, effective, and widespread up-to-date health care. Before outlining their program for dealing with the problems in health care, which are only growing worse in the present system, the authors relate information on different parts of today's system most readers would not be aware of. Then they analyze it to focus in on what is causing the problems in the particular area of health care. In some cases, misconceptions held among the public are cleared up, paving the way toward agreement on what are the real problems and coming up with acceptable solutions for them. The percentage of the cost of HMO membership and insurance premiums going for administration is one such misconception. "People guess, in fact, that HMO and insurance administration costs are about 30 to 40 percent of premiums and that insurer profits add another 10 to 20 percent of the total cost." This means that anywhere from about 40 percent to 60 percent of payments for HMOs or insurance doesn't go for health care. The authors clear up this misconception giving rise to much confusion in trying to deal with the serious problems facing the health-care field, as well as a good deal of resentment against HMOs and insurance companies, by citing that "health plan administrative costs, including profits and marketing, average from 5 to 30 percent of total premium, depending on the plan." This leads to the conclusion that it is not a sudden rise in administrative costs or the greed of health-care providers that is mainly responsible for driving up the costs of health care and will continue to do so for the foreseeable future without effective change in the field. Rising costs of health care from new technologies, consumer expectations and demands, and also misuse of drugs and treatments making patients worse or prolonging their medical problems are the main reason for the rising costs. The frequent misuse of modern-day medicines and treatments cited by the authors is an issue that is starting to receive attention in the media. The price of prescription drugs is one health-care issue already receiving much attention that the authors address. In this discussion, they note that because of committees of physicians and pharmacologists set up by HMOs to identify which drugs were most effective for specific medical problems and set standards for prescribing these according to HMO policies, "all Americans benefited from the new focus on drugs that actually work." Before these committees, eighty-four percent of drugs developed by the pharmaceutical companies were what were know as "class C" drugs that were little better than placebos. As the authors note, in those days not so long ago, drugs were being developed and marketed more to generate sales than remedy medical conditions. The high cost Americans pay for prescription compared to buyers in other countries is another matter the two authors take up. In this, they take the position of American buyers of prescription drugs by making the point that they should not be singled out to bear the disproportionate share of the research and marketing costs going into the drug prices since numbers of persons in countries around the world gain health benefits from the drugs. The wasteful similarities between some prescription drugs, the misuse of some, and growing concerns over costs and use of the drugs with persons under sixty-five are other topics dealt with in the discussion and analysis of the issue of prescription drugs. Halvorson and Isham's fair-minded overview and critique of today's heath-care field should be read by anyone with an interest in and concern about this field central to the quality of life of Americans and the economy. While they recognize that the field's dysfunctions have such deep roots and thorny complexities that "there is no single villain responsible for our troubles and no silver bullet to cure them," undoubtedly some and likely a number of the two authors' approaches to resolving particular troubles or even their solutions to certain problems will be adopted. There is just no way out of the current health-care crisis other than the clear-sighted, comprehensive, cooperative way Halvorson and Isham present. George Halvorson is currently chairman and CEO of Kaiser Permanente, one of the U. S.'s largest health-care organizations. Isham continues as medical director and chief health officer of HealthPartners. ********* 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. Monthly Operating Reports are summarized in every Saturday edition of the TCR. 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, Jazel P. Laureno, 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. 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