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/raid1/www/Hosts/bankrupt/TCR_Public/040614.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, June 14, 2004, Vol. 8, No. 118 Headlines ADELPHIA COMMS: Court Okays Foley's Retention as Corporate Counsel ADEPT TECHNOLOGY: Gordon Deans Named Canada Unit's General Manager ADVANCED MEDICAL: Launches Offer to Purchase 9-1/4% Senior Notes AIR CANADA: Liquidity Solutions Offers 17% for Unsecured Claims AIR CANADA: Signs New Distribution Agreement With Sabre Travel AMERIQUEST MORTGAGE: Fitch Rates $7.7M Class M-5 Notes at BB+ ARROW AIR: Emerges From Bankruptcy Protection ASKEW BROTHERS: Case Summary & 6 Largest Unsecured Creditors ATLAS AIR: Court Approves Second Amended Disclosure Statement BUSH INDUSTRIES: Hiring FTI Consulting as Crisis Managers CELESTICA: Selling $500 Mil. of 7.875% Senior Subordinated Notes CHARTER COMMS: Extends $1.6B Sr. Notes Exchange Offer to June 17 COMM 2002-FL6: Fitch Downgrades $1M Class M-JP Rating to BB+ CRITICAL PATH: Expects to Adjourn Special Meeting to June 22, 2004 DIGITAL LIGHTWAVE: Pays Plaut Sigma $127K Plus To Resolve Disputes DIGITAL LIGHTWAVE: Retains Sterling for Interim Financial Services DIMON INC: Posts $32.9 Mil. Net Loss for FY Ended March 31, 2004 DIRECTED ELECTRONICS: S&P Assigns B+ Rating to Corporate Debt ENRON CORP: Employee Committee Reports Status Of Employee Matters ENRON CORP: Asks Court To Approve Enron Equity Settlement Pact FLEMING COMPANIES: Court Permits Payment Of Exit Facility Fees FORMICA CORPORATION: Exits Chapter 11 Bankruptcy FOSTER WHEELER: SEC Declares Registration Statement Effective GS MORTGAGE: S&P Downgrades Series 1998-C1 Class F Rating to BB- HABER INC: Voluntary Chapter 11 Case Summary HIGHWOODS PROPERTIES: Fitch Affirms BB+ Preferred Stock Rating INSILCO TECH: Retains Keen Realty To Market Hiddenite Facility JILLIAN'S ENT: U.S. Trustee to Meet with Creditors on June 24 KAISER ALUMINUM: Court Gives Go-Ahead for Mead Parcels 1 & 7 Sale LES BOUTIQUES: 2004 Fiscal Year Sees More Losses & Declining Sales LINREAL CORP: Case Summary & 2 Largest Unsecured Creditors LYNX ASSOCIATES: Case Summary & 5 Largest Unsecured Creditors MERISANT WORLD: Receives Consents to Amend 12-1/4% Senior Notes MILACRON INC: Completes Key Refinancing Transactions MIRANT CORP: Names Loyd Warnock As SVP For Governmental Affairs MJ RESEARCH: Committee Brings-In Winston & Strawn as Attorneys MOBILEPRO CORP: CEO Jay Wright Issues Letter to Shareholders NATIONWIDE ELECTRICAL: Case Summary & Largest Unsecured Creditors NATURADE INC: Appoints Zreik As EVP-Sales & Kasprisin As COO NEXMED: Plans Additional Financing Through Partnering Agreements ORBITAL SCIENCES CORP: S&P Raises Corporate Credit Rating to BB- OWENS CORNING: Court Approves Stipulations With Four Claimants PACIFIC GAS: Agrees to Resolve California State Dispute for $84MM PARMALAT GROUP: US Creditors Examine GE Capital & Citigroup Deals PEGASUS: Obtains Interim Nod to Prioritize Intercompany Claims PETCO: Leonard Green & Texas Pacific Put 5MM Shares Up for Sale PHILLIPS VAN HEUSEN: Reaffirms Earnings Guidance for FY 2004 POLYPORE INC: S&P Places Low-B Ratings on CreditWatch Positive RCN CORPORATION: Hiring AP Services as Crisis Managers REEVES COUNTY, TX: Fitch Upgrades $89MM Certificate Rating To B RELIANCE FINANCIAL: Disclosure Statement Hearing Set for July 7 RURAL/METRO: Stockholders Vote to Authorize 17MM New Common Stock ST. LOUIS CHARTER: Fitch Affirms $6.1M Revenue Bond Rating at BB SALTON: Lenders Agree to Extend Forbearance Pact Until Sept. 30 SEITEL INC.: S&P Rates Proposed $190 Million Senior Debt at B- SHAW GROUP: Agrees to Cooperate with Informal SEC Inquiry SPEIZMAN INDUSTRIES: Hires Kilpatrick Stockton as Attorneys STANDARD PARKING: S&P Affirms Corporate Credit Rating at B STATE STREET: First Creditors' Meeting Scheduled for June 30 STELCO: Comments On Legal Action Taken By General Motors TRW AUTOMOTIVE: Launches Safety Electronics Production in China UAL CORP: Reaches Agreement With Retirees on Medical Benefits ULTRA CAR WASH: Voluntary Chapter 11 Case Summary USG CORP: Court Grants Authority to Expand PwC's Employment US UNWIRED: Prices $360 Million Senior Debt Offering WEIRTON STEEL: Court Approves Lease Decision Period Extension WESTPOINT STEVENS: Court Gives Until Nov. 30 to Decide on Leases WEST SENECA READI-MIX: Case Summary & Largest Unsecured Creditors WORLDCOM INC: Agrees to Resolve Various Tax Claim Disputes W.R. GRACE: Judge Appoints David Austern as Futures Representative W. R. Grace: Sealed Air Files Motion to Vacate Court Opinion * BOND PRICING: For the week of June 14 - 18, 2004 ********* ADELPHIA COMMS: Court Okays Foley's Retention as Corporate Counsel ------------------------------------------------------------------ The Court allows Adelphia Communications (ACOM) to employ Foley & Lardner, L.L.P., nunc pro tunc to February 27, 2004, as their special corporate and securities law counsel. The ACOM Debtors encounter varied disclosure and compliance issues pursuant to corporate and securities laws and regulations. In this regard, the ACOM Debtors want to employ a special corporate and securities counsel to, among other things: -- assist them with these investigation and compliance issues, -- counsel them in respect of securities law matters that may arise during their Chapter 11 cases, and -- advise them with respect to discrete securities law issues arising from the implementation of a reorganization plan. The ACOM Debtors selected Foley & Lardner, L.L.P., to provide these services. The ACOM Debtors believe that the attorneys at Foley are well qualified to act as their special corporate and securities law counsel in their Chapter 11 cases. Foley is recognized nationwide for its extensive knowledge of securities litigation and extensive experience in securities enforcement. Foley's vast experience includes defending investigations by the Securities and Exchange Commission and other securities regulators, as well as a wide range of matters involving enforcement actions by the SEC Division of Enforcement, grand juries, state securities regulators, and self-regulatory organizations, like the National Association of Securities Dealers Regulation and the New York Stock Exchange. Since February 27, 2004, Foley represented the ACOM Debtors in connection with various corporate governance, securities, regulatory, and litigation matters. In particular, Foley assisted them in connection with discrete corporate governance and securities law issues relating to their proposed plan of reorganization. In addition to these services, Foley will assist the ACOM Debtors in responding to and communicating with the SEC as well as represent them in connection with SEC-related investigations and litigation. The ACOM Debtors point out that although they will solicit Foley's advice and counsel with respect to corporate and securities law issues relating to their Plan, they also expect Foley to provide services to them in connection with federal and state securities law matters that are not central to their reorganization. Foley's employment is for the discrete matters, and the firm will not be rendering services typically performed by a debtor's bankruptcy counsel. Among other things, Foley ordinarily will not be involved in interfacing with the Court and will not be responsible for any of the ACOM Debtors' general restructuring efforts except in certain limited circumstances. By delineating Foley's role, the ACOM Debtors intend to ensure that there will be no duplication of services. The ACOM Debtors will compensate Foley in accordance with its ordinary and customary hourly rates: Partners $385 - 775 Of Counsel 195 - 550 Special Counsel 245 - 460 Associates 220 - 435 Legal Assistants/Paralegals 85 - 205 In addition, the ACOM Debtors will reimburse Foley for all ancillary services incurred. Gregory S. Bruch, a partner at Foley, assures the Court that the firm does not have any connection with the ACOM Debtors, their creditors or any other party-in-interest, or their attorneys. Mr. Bruch informed the ACOM Debtors that Foley represents no interest adverse to their estates with respect to the matters on which the firm is to be employed. (Adelphia Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADEPT TECHNOLOGY: Gordon Deans Named Canada Unit's General Manager ------------------------------------------------------------------ Adept Technology, Inc. (OTCBB:ADTK), a leading manufacturer of robotic systems, motion control and machine vision technology for the telecommunications, electronics, semiconductor, automotive, lab automation, and biomedical industries, announced that Gordon Deans, has joined the Adept executive management team as vice president of business development and general manager of Adept Canada, formerly HexaVision Technologies, developer and provider of the advanced Vision product, HexSight. Mr. Deans' appointment reinforces Adept's business strategy to build on the company's leadership role in vision object location and recognition software and fully integrated vision-guided robot control by aggressively focusing on improving, modernizing and extending its vision- related software business. "We're delighted to have Gordon on board," said Rob Bucher, chairman and chief executive officer for Adept Technology, Inc. "Gordon's expertise and 20+ years of technical software marketing and business development will allow us to build depth in our current vision product toolset, offer products in the value-added robot application market segments including new approaches to vision guidance and inspection and extend Adept into new vision business." "I am excited about this new opportunity. Adept has an exceptional reputation for quality vision technology and I believe it is poised for continued growth. Our plan is to fully utilize and extend the skills and talent we have in Adept Canada to expand and grow our vision business," commented Gordon Deans. Adept believes that by focusing its resources in Adept Canada on its vision products and capabilities the company will be able to deliver greater customer value and expand on its established vision brand. Prior to joining Adept, Gordon Deans held the position of president of Telere Technologies, Inc. a consulting firm providing product marketing and business development services to high-tech organizations. Mr. Deans has also held a number of senior management and executive positions working for such companies as Nortel Networks and Norsat International Inc. Mr. Deans holds a Master of Electrical Engineering degree from Carlton University and a Bachelor of Science degree in electrical engineering from Queen's University. Adept Technology designs, manufactures and markets robotic systems, motion control and machine vision technology for the telecommunications, electronics, semiconductor, automotive, lab automation, and biomedical industries throughout the world. Adept's robots, controllers, and software products are used for small parts assembly, material handling and packaging. Adept's intelligent automation product lines include industrial robots, configurable linear modules, machine controllers for robot mechanisms and other flexible automation equipment, machine vision, systems and software, and application software. Founded in 1983, Adept Technology is America's largest manufacturer of industrial robots. More information is available at http://www.adept.com/ * * * Liquidity and Capital Resources In its Form 10-Q for the quarterly period ended March 27, 2004 filed with the Securities and Exchange Commission, Adept Technology reports: "We have experienced declining revenue in each of the last two fiscal years and incurred net losses in the first three quarters of fiscal 2004 and each of the last four fiscal years. During this period, we have consumed significant cash and other financial resources. In response to these conditions, we reduced operating costs and employee headcount, and restructured certain operating lease commitments in each of fiscal 2002 and fiscal 2003. We recorded additional restructuring charges in the third quarter of fiscal 2004 related to the departure of Messrs. Carlisle and Shimano, pursuant to the Severance Agreements entered into between Adept and each of them. These adjustments to our operations have significantly reduced our rate of cash consumption. We also completed an equity financing with net proceeds of approximately $9.4 million in November 2003. "As of March 27, 2004, we had working capital of approximately $12.7 million, including $5.7 million in cash, cash equivalents and short-term investments, and a short-term receivables financing credit facility of $1.75 million net, of which $0.5 million was outstanding and $1.3 million remained available under this facility. On April 22, 2004, this facility was amended and now permits us to borrow up to $4.0 million. We have limited cash resources, and because of certain regulatory restrictions on our ability to move certain cash reserves from our foreign operations to our U.S. operations, we may have limited access to a portion of our existing cash balances. In addition to the proceeds of our 2003 financing, we currently depend on funds generated from operating revenue and the funds available through our amended loan facility to meet our operating requirements. As a result, if any of our assumptions, some of which are described below, are incorrect, we may have difficulty satisfying our obligations in a timely manner. We expect our cash ending balance to be between approximately $5.0 and $5.5 million at June 30, 2004. Our ability to effectively operate and grow our business is predicated upon certain assumptions, including: (i) that our restructuring efforts effectively reduce operating costs as estimated by management and do not impair our ability to generate revenue, (ii) that we will not incur additional unplanned capital expenditures for the next twelve months, (iii) that we will continue to receive funds under our existing accounts receivable financing arrangement or a new credit facility, (iv) that we will receive continued timely receipt of payment of outstanding receivables, and not otherwise experience severe cyclical swings in our receipts resulting in a shortfall of cash available for our disbursements during any given quarter, and (v) that we will not incur unexpected significant cash outlays during any quarter." ADVANCED MEDICAL: Launches Offer to Purchase 9-1/4% Senior Notes ---------------------------------------------------------------- Advanced Medical Optics, Inc. (NYSE:AVO) announced that it has commenced an offer to purchase for cash any and all of its $70,000,000 outstanding principal amount of its 9-1/4% Senior Subordinated Notes due 2010 (CUSIP number 00763MAC2), and a solicitation of consents to certain proposed amendments to the indenture related to such Notes. The Offer will expire at 12:00 midnight, Eastern Daylight Time, on July 8, 2004, unless extended or earlier terminated. In conjunction with the Offer, AMO is soliciting consents to effect certain proposed amendments to the indenture governing the Notes. Among other things, these amendments would eliminate substantially all of the indenture's restrictive covenants and certain events of default contained in the indenture. Adoption of the proposed amendments requires the consent of at least a majority in aggregate principal amount of the Notes outstanding. Holders who tender their Notes will be required to consent to the proposed amendments, and holders may not deliver consents to the proposed amendments without tendering their Notes in the Offer. The Consent Solicitation will expire at 5:00 p.m., Eastern Daylight Time, on June 21, 2004, unless extended or earlier terminated. Subject to the terms and conditions of the Offer and Consent Solicitation, AMO will pay the "Total Consideration" to the holders who properly tender their Notes and deliver their consent to the proposed amendments at or prior to the Consent Date. Total Consideration will be determined by reference to the applicable fixed spread over the yield to maturity of the applicable U.S. Treasury reference security as listed in the table below, on June 22, 2004 at 2:00 p.m., Eastern Daylight Time. The Total Consideration includes a consent payment of $30.00 per $1,000 principal amount of Notes, and is payable on the applicable payment date. Subject to the terms and conditions of the Offer and Consent Solicitation, AMO expects to accept for payment and pay for all Notes that are validly tendered and not validly withdrawn on or prior to the Consent Date on or promptly following the first business day after the Consent Date. AMO will pay to Holders who properly tender their Notes after 5:00 p.m. on the Consent Date, but on or prior to the Expiration Date, the Total Consideration minus the Consent Payment. Subject to the terms and conditions of the Offer and Consent Solicitation, AMO expects to accept for payment and pay for all Notes that are validly tendered and not validly withdrawn after the Consent Date, but on or prior to the Expiration Date, on or promptly following the first business day after the Expiration Date. In addition, AMO may, at its option, elect to accept for payment, and pay for, Notes on interim payment dates after the Initial Payment Date and before the Final Payment Date. Holders will also be paid accrued and unpaid interest from the last interest payment date to, but not including, the applicable payment date. Security Description: 9-1/4% Senior Subordinated Notes due 2010 First Call Date: July 15, 2006 First Call Price: $1,046.25 Fixed Spread: +75 bps Outstanding Principal Amount: $70,000,000 Reference Security: 7% U.S. Treasury Note due July 15, 2006 Relevant Bloomberg Page: PX5 Consent Payment: $30 Holders may withdraw their tenders and revoke their consents at any time on or before the Consent Date but not thereafter. The Offer is conditioned upon, among other things, the receipt of consents necessary to adopt the proposed amendments and the completion by AMO of financing transactions to fund consummation of the Offer and Consent Solicitation. Lehman Brothers Inc. is acting as the exclusive dealer manager and solicitation agent, Mellon Investor Services LLC is acting as the information agent and The Bank of New York is acting as depositary in connection with the Offer and the Consent Solicitation. Copies of the Offer to Purchase and Consent Solicitation, the Letter of Transmittal and Consent, and other related documents may be obtained from the information agent at (877) 698-6865. Additional information concerning the terms of the Offer and Consent Solicitation may be obtained by contacting Lehman Brothers at (800) 438-3242 (toll free) and (212) 528-7581 (collect). About Advanced Medical Optics Advanced Medical Optics, Inc. is a global leader in the development, manufacturing and marketing of ophthalmic surgical and eye care products. The company focuses on developing a broad suite of innovative technologies and devices to address a wide range of eye disorders. Products in the ophthalmic surgical line include foldable intraocular lenses, phacoemulsification systems, viscoelastics and related products used in cataract surgery, and microkeratomes used in LASIK procedures for refractive error correction. AMO owns or has the rights to such well-known ophthalmic surgical product brands as PhacoFlex, Clariflex, Array and Sensar foldable intraocular lenses, the Sovereign phacoemulsification system with WhiteStar(TM) technology and the Amadeus(TM) microkeratome. Products in the contact lens care line include disinfecting solutions, daily cleaners, enzymatic cleaners and lens rewetting drops. Among the well-known contact lens care product brands the company possesses are COMPLETE, COMPLETE Blink- N-Clean, COMPLETE Moisture PLUS(TM), ConseptF, Consept 1 Step, Oxysept 1 Step, Ultracare, Ultrazyme, Total Care and blink(TM) branded products. Amadeus is a licensed product of, and a trademark of, SIS, Ltd. Advanced Medical Optics, Inc. is based in Santa Ana, California, and employs approximately 2,300 worldwide. The Company has direct operations in about 20 countries and markets products in approximately 60 countries. For more information, visit the Company's web site at http://www.amo-inc.com/ * * * As reported in the Troubled Company Reporter's June 9, 2004 edition, Fitch Ratings has affirmed Advanced Medical Optics, Inc.'s 'BB-' rated senior secured debt and 'B' rated senior subordinated debt. The ratings apply to approximately $235 million of outstanding debt at the end of the first quarter of 2004. The Rating Outlook is Stable. AIR CANADA: Liquidity Solutions Offers 17% for Unsecured Claims --------------------------------------------------------------- Liquidity Solutions, Inc., is offering 17 cents-on-the-dollar to buy claims against Air Canada from unsecured creditors caught-up in the carrier's CCAA restructuring. "Our firm represents investors who purchase receivables in bankruptcy [and] receivership situations," LSI says in a June 10 letter circulated to troubled company professionals, "and we would like to indicate our interest in your client's claim(s) against [Air Canada]." "This offer is subject to further due diligence and mutually agreeable documents of transfer," LSI says. LSI cautions that its "indication of interest is on a first come first serve basis" and that the "transfer may be rescinded for any reason whatsoever without further notice or obligation from either party." For additional information about LSI's offer and payment terms, contact: Michael Richards LIQUIDITY SOLUTIONS INC. One University Plaza, Suite 518 Hackensack, NJ 07601 Tel: (201) 968-0001, extension 117 Fax: (201) 968-0010 mrichards@liquiditysolutions.com Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed a CCAA petition on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and a Section 304 petition with the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. AIR CANADA: Signs New Distribution Agreement With Sabre Travel -------------------------------------------------------------- Sabre Travel Network, a Sabre Holdings company (NYSE:TSG), and Air Canada announced the signing of a new agreement through which the carrier agrees to a four-year term at the highest level of participation in the Sabre global distribution system, the Direct Connect Availability level, resulting in a new commercial agreement which includes reduced booking fee rates fixed for four years. Through the agreement Air Canada will provide all travel agency published fares to Sabre travel agent users in Canada. The agreement will be implemented on Monday, July 5th 2004. "Air Canada is pleased to introduce a new GDS Distribution Business Model with Sabre Travel Network," said Marc Rosenberg, Vice-President Sales and Product Distribution, Air Canada. "We expect that the evolution of the model over time will address one of the significant challenges faced by both network carriers and their GDS distribution partners. The agreement will provide Sabre Connected agencies in Canada with improved access to our published fares including Air Canada's popular web fares - Freedom, Latitude, Fun and Tango - consistent with our priority objective of providing travel agencies in Canada with choice, flexibility and efficiency when purchasing Air Canada product . In addition, the agreement allows us to further reduce distribution costs." In the Sabre GDS, airlines sign a participating carrier agreement enabling them to choose from one of several optional levels of connectivity to the system. DCA is the highest level and provides airlines with a wide range of services to market and sell their flight and fare information through the travel network of more than 53,000 travel agency locations worldwide, including 3,100 agency locations in Canada. Approximately 60 percent of the air travel bookings by travel agents in Canada through a GDS are made using the Sabre system. "This agreement clearly reinforces the value of the agency channel and the partnership between Air Canada and Sabre Travel Network," said Joe Herzog, divisional vice president and general manager-- Canada for Sabre Travel Network. "It is a win-win-win for Air Canada, Sabre Travel Network, Sabre Connected agencies and their customers. Air Canada improves customer loyalty and reduces distribution costs; Sabre Travel Network becomes the first-to- market GDS to ensure their agency network has access to all travel agency published fares; agencies are able to better serve their customers and their travelers gain confidence they can get the best fares through the channel of their choice." About Sabre Travel Network Sabre Travel Network, a Sabre Holdings company, provides access to the world's leading global distribution system enabling agents at more than 53,000 agency locations worldwide to be travel experts. The Sabre GDS, the first system to connect the buyers and sellers of travel, includes more than 400 airlines, approximately 60,000 hotels, 41 car rental companies, nine cruise lines, 35 railroads and 220 tour operators. Sabre Holdings Corporation (NYSE: TSG) is a world leader in travel commerce, retailing travel products and providing distribution and technology solutions for the travel industry. More information about Sabre Holdings is available at http://www.sabre-holdings.com. About Air Canada Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and Section 304 petition with the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. AMERIQUEST MORTGAGE: Fitch Rates $7.7M Class M-5 Notes at BB+ ------------------------------------------------------------- Ameriquest Mortgage Securities Inc. 2004-R6 $843.8 million class A-1, A-2, A-3 and A-4 certificates are rated 'AAA', $9.0 million class M-1 certificates are rated 'A-', $9.0 million class M-2 certificates are rated 'BBB+', $9.0 million class M-3 certificates are rated 'BBB', $8.1 million class M-4 certificates are rated 'BBB-', and $7.7 million non-offered class M-5 certificates are rated 'BB+' by Fitch Ratings. Credit enhancement for the 'AAA' rated class A certificates reflects the 4.75% subordination provided by classes M-1, M-2, M- 3, M-4, M-5, monthly excess interest and initial overcollateralization of 1.50%. In addition, the class A certificates have the benefit of a certificate guaranty insurance policy issued by XL Capital Assurance Inc., whose insurer financial strength is rated 'AAA' by Fitch. Credit enhancement for the 'A-' rated class M-1 certificates reflects the 3.75% subordination provided by classes M-2, M-3, M-4, M-5, monthly excess interest and initial OC. Credit enhancement for the 'BBB+' rated class M-2 certificates reflects the 2.75% subordination provided by classes M-3, M-4, M-5, monthly excess interest and initial OC. Credit enhancement for the 'BBB' rated class M-3 certificates reflects the 1.75% subordination provided by classes M-4 and M-5, monthly excess interest and initial OC. Credit enhancement for the 'BBB-' rated class M-4 certificates reflects the 0.85% subordination provided by class M-5, monthly excess interest and initial OC. Credit enhancement for the 'BB+' rated non-offered class M-5 certificates reflects monthly excess interest and initial OC. In addition, the ratings reflect the integrity of the transaction's legal structure as well as the capabilities of Ameriquest Mortgage Company as Master Servicer. Deutsche Bank National Trust Company will act as Trustee. As of the Cut-off date, the mortgage loans have an aggregate balance of $900,000,062. The weighted average loan rate is approximately 7.372%. The weighted average remaining term to maturity is 352 months. The average Cut-off date principal balance of the mortgage loans is approximately $161,551. The weighted average original loan-to-value ratio is 77.90% and the weighted average Fair, Isaac & Co. (FICO) score was 607. The properties are primarily located in California (23.70%), Florida (11.67%) and New York (8.02%). The mortgage loans were originated or acquired by Ameriquest Mortgage Company. Ameriquest Mortgage Company is a specialty finance company engaged in the business of originating, purchasing and selling retail and wholesale subprime mortgage loans. ARROW AIR: Emerges From Bankruptcy Protection --------------------------------------------- Arrow Air's consensual reorganization plan won the approval of Chief U.S. Bankruptcy Judge Emeritus A. Jay Cristol. Under the plan, the cargo airline will move forward without bankruptcy protection. "We are thrilled that the plan has been confirmed," said James J. Pinto, one of three principals at Arrow Air II LLC--the airline's new owner and only shareholder. "The plan allows us to maintain the airline's 520 employees and hopefully expand our employee base within the next 12 to 18 months. We are now poised to become an even stronger global competitor." The three principals of Arrow Air II LLC are Mr. Pinto, Michael T. Tokarz, and Phillip T. George, M.D. Mr. Pinto is president of the Private Finance Group Corp., an investment and merchant banking firm. He has served as a general partner for investment partnerships since 1985, and has served on the boards of numerous portfolio companies and publicly traded companies. Mr. Tokarz is managing member of The Tokarz Group, a limited liability company. He serves on numerous corporate boards of directors in the U.S. and abroad. Dr. George, a board-certified plastic and reconstructive surgeon with 17 years of clinical experience, is now actively involved in the organization and management of multiple investment partnerships and venture capital transactions. He is co-founder and former chairman of Trivest, Inc., a middle market leveraged buyout firm, which has sponsored acquisitions and recapitalizations totaling more than $1.3 billion over 14 years. The reorganization plan provides a favorable restructuring of the company and ensures strong future operations. Arrow Air's management team under the plan includes Executive Chairman and Director Guillermo Cabeza, and President Frank Visconti. The airline's emergence from bankruptcy took place in what is considered to be the shortest time for any international air cargo carrier. Immediately after confirming the plan Judge Cristol-- himself an avid aviator--recited a poem he wrote about the airline's new phase: "As of today I shot an Arrow into the air. The reorganization plan was very fair. Go fly your birds everywhere. Haul your cargo with a great deal of flare. Keep your planes on the runway and out of the muck. May you continue to operate with the best of luck." Arrow Air has been rooted in the South Florida community for nearly six decades, operating under the same name longer than any other all-cargo airline in the U.S. It is the only remaining U.S.- registered heavy freight carrier operating out of Miami International Airport, providing more comprehensive air cargo services between the U.S. and the Caribbean and South and Central America than any other carrier in the market. Arrow Air serves more than 3,500 customers worldwide, including international and domestic freight forwarders, integrated carriers, passenger and cargo airlines, the U.S. Department of Defense and the U.S. Postal Service. ASKEW BROTHERS: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Askew Brothers 157 Oakmont Road Plymouth, North Carolina 27962 Bankruptcy Case No.: 04-04595 Chapter 11 Petition Date: June 8, 2004 Court: Eastern District of North Carolina (Wilson) Judge: J. Rich Leonard Debtor's Counsel: Trawick H. Stubbs, Jr., Esq. Stubbs & Perdue, P.A. P.O. Drawer 1654 New Bern, NC 28563 Tel: 252-633-2700 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 6 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Tetterton Service Center Trade Debt $500,000 Attn: Managing Agent HWY 64 West Plymouth, NC 27962 Martin Supply Co. Trade Debt $160,975 Logan N. Womble, III Trade Debt $20,000 Owens Rental Trade Debt $10,000 Swain Estate Trade Debt $7,000 Farm Plan Trade Debt $5,000 ATLAS AIR: Court Approves Second Amended Disclosure Statement ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida has approved the second amended Disclosure Statement that was filed recently with the Court by Atlas Air Worldwide Holdings, Inc. (Pink Sheets: AAWHQ) and certain of its subsidiaries. The amended Disclosure Statement, along with a second amended Joint Plan of Reorganization, will be sent out to creditors next week for their review and approval. If approved by the various creditor groups, the second amended plan is expected by AAWH to be confirmed by the Bankruptcy Court during the week of July 12, paving the way for the Company to emerge from Chapter 11 no later than July 29, 2004. AAWH is the parent company of Atlas Air, Inc and Polar Air Cargo, Inc, which together operate the world's largest fleet of Boeing 747 freighter aircraft. Atlas Air, Inc. is the world's leading provider of ACMI (aircraft, crew, maintenance and insurance) freighter aircraft to major airlines around the globe. Polar Air Cargo, Inc. is among the world's leading providers of airport-to- airport freight carriage. Polar operates a global, scheduled- service network and serves substantially all major trade lanes of the world. Through both of its principal subsidiaries, AAWH also provides commercial and military charter services. BUSH INDUSTRIES: Hiring FTI Consulting as Crisis Managers --------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York gave its nod of approval to Bush Industries, Inc., to retain FTI Consulting as its crisis managers. The consulting and advisory services that FTI will render to the Debtor include: a) managing the "working group" professionals who are assisting the Debtor in the restructuring process or who are working for the Debtor's various stakeholders to improve coordination of their efforts and individual work product to be consistent with the Debtor's overall restructuring objectives; b) identifying and implementing liquidity generating initiatives; c) developing measures to reduce the Debtor's outstanding indebtedness or to modify the terms and conditions of such indebtedness, and lead the implementation of such measures; d) developing and implementing cash management strategies, tactics and processes, including the coordination of resources between and among various departments and other professionals/constituents, as necessary and appropriate; e) directing and developing the Debtor's revised business plan, and such other related forecasts as may be required by lenders in connection with negotiations or by the Debtor for other corporate purposes, including the evaluation of various strategic alternatives; e) structuring the terns and conditions of major divestitures and other measures to increase liquidity; f) communicating and/or negotiating with outside constituents including the lenders and their advisors; g) directing and leading temporary employees retained to assist in the preparation of financial documents, records and information deemed necessary as a result of chapter 11 bankruptcy; and h) providing such other similar services as may be requested by the Debtor. FTI's current hourly rates are: Designation Billing Rate ----------- ------------ Senior Managing Director $550 - $625 per hour Directors / Managing Directors $370 - $525 per hour Associates / Consultants $185 - $345 per hour Administration / Paraprofessionals $ 75 - $100 per hour 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. CELESTICA: Selling $500 Mil. of 7.875% Senior Subordinated Notes ---------------------------------------------------------------- Celestica Inc. (NYSE, TSX: CLS), a world leader in electronics manufacturing services, announced it has entered into an agreement to sell at par US$500 million principal amount of 7.875% senior subordinated notes due 2011. The sale is expected to close on June 16, 2004. The net proceeds from the sale are currently anticipated to be used for repurchase of Liquid Yield Option Notes, or LYONs, and general corporate purposes, including future acquisitions. Citigroup Global Markets Inc., Banc of America Securities LLC and Deutsche Bank Securities Inc. acted as joint book-running managers for Celestica's notes offering. Celestica is a world leader in the delivery of innovative electronics manufacturing services. Celestica operates a highly sophisticated global manufacturing network with operations in Asia, Europe and the Americas, providing a broad range of integrated services and solutions to leading OEMs. Celestica's expertise in quality, technology and supply chain management, enables the company to provide competitive advantage to its customers by improving time-to-market, scalability and manufacturing efficiency. * * * As reported in the Troubled Company Reporter's March 31, 2004 edition, Standard & Poor's Ratings Services lowered it long-term corporate credit rating and unsecured debt on Celestica Inc. to 'BB' from 'BB+'. At the same time, Standard & Poor's lowered its subordinated debt rating on the company to 'B+' from 'BB-'. The outlook is negative. "The ratings on Celestica reflect the continued difficult end- market conditions and sub par operating performance in the highly competitive electronic manufacturing services sector," said Standard & Poor's credit analyst Michelle Aubin. These factors are partially offset by the company's tier-one position in the EMS sector and longer-term trends favoring electronic manufacturing outsourcing. The negative outlook reflects Standard & Poor's expectation that revenues and operating performance will improve and that negative free operating cash flow will moderate in fiscal 2004. Any decline from expectations could result in the ratings being lowered. CHARTER COMMS: Extends $1.6B Sr. Notes Exchange Offer to June 17 ---------------------------------------------------------------- CCH II, LLC and CCH II Capital Corp., subsidiaries of Charter Communications, Inc. (NASDAQ: CHTR), announced an extension of their offer to exchange their outstanding $1,601,375,000 of 10.25% Senior Notes due 2010 for $1,601,375,000 of 10.25% Senior Notes due 2010. The original Exchange Offer was scheduled to expire at 5:00 p.m. Eastern Time, on June 10, 2004. As of June 10, approximately $950 million in aggregate principal amount of Old Notes have been confirmed as tendered in exchange for a like principal amount of New Notes. The new expiration date for the Exchange Offer is 5:00 p.m. Eastern Time, on June 17, 2004. The New Notes have been registered under the Securities Act of 1933, as amended. The Old Notes were sold to qualified institutional buyers in reliance on Rule 144A of the Securities Act on September 23, 2003. The Old Notes were not registered under the Securities Act and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there by any sale of the Old Notes or the New Notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. About Charter Charter Communications, Inc., a broadband communications company, provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform via Charter Digital(TM) and Charter High- Speed Internet Service(TM). Charter also provides business to business video, data and Internet protocol (IP) solutions through Charter Business Division. Advertising sales and production services are sold under the Charter Media(R) brand. More information about Charter can be found at http://www.charter.com/ * * * As reported in the Troubled Company Reporter's May 26, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Charter Communications Inc. and subsidiaries to positive from developing. All ratings, including the 'CCC+' corporate credit rating, were affirmed. "The outlook revision is based largely on the company's improved maturity profile following the April 2004 refinancing," explained Standard & Poor's credit analyst Eric Geil. "Operating improvement, including a slowing rate of basic subscriber loss, also factored into the outlook revision." Nevertheless, the ratings are still dominated by very high financial risk from elevated leverage, negative discretionary cash flow, and pressure from rising debt maturities, including $588 million in convertible debt due in 2005. Repayment of this debt could depend on access to external financing, which will hinge on Charter's demonstration of sustainable positive operating momentum. Performance could be challenged by intense competition for video customers from satellite TV companies, which have recently increased promotional spending. COMM 2002-FL6: Fitch Downgrades $1M Class M-JP Rating to BB+ ------------------------------------------------------------ Fitch Ratings upgrades the following classes of COMM 2002-FL6 commercial mortgage pass-through certificates: --$40.5 million class C to 'AAA' from 'AA'; --$38.7 million class D to 'AA' from 'AA-'; --$15.3 million class E to 'AA-' from 'A+'. Fitch also downgrades and removes from Rating Watch Negative the following classes: --$600,000 class K-JP to 'BBB-' from 'BBB'; --$1 million class M-JP to 'BB+' from 'BBB-'. Additionally, Fitch affirms and removes from Rating Watch Negative the following classes: --$800,000 class K-4M at 'BBB+'; --$1.5 million class L-4M at 'BBB'; --$3 million class M-4M at 'BBB-'. Fitch also affirms the following classes: --$280.6 million class A-2 'AAA'; --$20.5 million class B 'AAA'; --Interest only classes X-1 and X-2 'AAA'; --$15.4 million class F 'A'; --$15.2 million class G 'A-'; --$3.4 million class K-WP 'BBB+'; --$4 million class L-WP 'BBB'; --$9.4 million class M-WP 'BBB-'; --$2.3 million class L-DC 'BBB'; --$3.9 million class M-DC 'BBB-'; --$800,000 class L-FM 'BBB+'; --$1.9 million class M-FM 'BBB-'; --$1.5 million class L-LP 'BBB'; --$1.7 million class M-LP 'BBB-'. Classes A-1, L-FM, M-FM, K-CC, L-CC, and M-CC have been paid in full due to the repayment of the 540 Madison, New Roc City, Foothills Mall and Capitol at Chelsea loans. Fitch does not rate classes H-WM, K-FA, L-FA, and M-FA. The upgrades are due to the increased credit enhancement to the classes resulting from the repayment of the loans. The downgraded classes represent the B-note portion of the JP Morgan Industrial Portfolio loan (2.7%). The overall occupancy of the collateral is 91.9% as of March 2004. Although the occupancy in the Bollingbrook, IL property is currently 88.6%, Sony Corporation of America, currently occupies 284,000 square feet or 65.4% on three short-term leases. According to the master servicer, Sony is interested in leasing the entire building. However, another tenant currently leases 23% of the space pursuant to a long-term lease. In addition, market rents in Bollingbrook are currently lower than the average rent per sf at issuance, due to recent additions to market supply. The Fitch adjusted debt service coverage ratio for the year ended 2003 was 1.25 times (x) compared to 1.37x at issuance. However, with leases marked to market and adjustments for vacancy the stressed DSCR would be lower. The Westfield Portfolio (27.7%), the largest loan in the pool, is collateralized by two regional malls located in Clearwater, FL and N. Olmstead, OH. As of YE 2003, the overall occupancy for the portfolio was 90.5% compared to 91.3% at issuance. Based on YE 2003, Fitch adjusted net cash flow increased 7.9%, primarily due to increased base rent. The corresponding Fitch DSCR is 1.47x, compared to 1.36x at issuance. Although Fitch is concerned with the office building concentration (65%), the properties are generally well-located with sponsors who have significant experience. 500 West Monroe (23.1%) is collateralized by a 952,341 sf central business district office building in Chicago, IL. Occupancy as of YE 2003 declined to 93.4% compared to 100% at issuance. Fitch adjusted NCF for YE 2003 increased 2.3% over issuance. The corresponding Fitch DSCR is 1.72x compared to 1.68x at issuance. Fitch anticipates a decline in future NCF as in-place leases expire (9.8% in 2004) and current market lease rates are lower. 530 Fifth Avenue (14.6%) is collateralized by a 495,719 sf CBD office building in New York City. The property remains 100% occupied as of January 2004. Fitch adjusted YE 2003 NCF increased 5.2% and the corresponding Fitch DSCR is 1.53x compared to 1.46x at issuance. Dublin Corporate Center (12.2%) consists of three office buildings containing 414,408 sf in Dublin, CA. The occupancy has improved to 98% as of YE 2003 compared to 91.5% at issuance. Although actual NCF has improved by 14.9% since issuance, the in-place leases are above market. The corresponding YE 2003 DSCR is 1.84x compared to 1.60x at issuance. 400 Madison (7.7%) is collateralized by a 190,000 sf office building in the Grand Central submarket of New York City. The occupancy as of January 2004 fell to 85.7% from 96.6% at issuance. Expenses have increased since issuance, primarily due to increases in real estate taxes and insurance. Fitch adjusted YE 2003 NCF decreased 2.8% compared to issuance resulting in a corresponding 1.24x DSCR, compared to 1.27x at issuance. L'Enfant Plaza (6.2%), an office building in Washington, DC, is 100% leased as of September 2003 primarily to the Government Services Agency under leases expiring in 2005 and 2006. As of YE 2003, the Fitch adjusted DSCR improved to 1.61x compared to 1.59x at issuance. Generally, each first mortgage loan is split into an A, B and C note. Each A note and B note has been contributed to form the Trust Mortgage Asset. While the A notes are pooled, the B and C notes provide credit enhancement only to the loan to which it relates. As part of its review, Fitch analyzed the performance of each loan and the underlying collateral and compared each loan's DSCR at issuance to YE 2003. DSCRs are based on a Fitch adjusted NCF and a stressed debt service on the TMA loan balance. Fitch NCF is derived from the servicer's reported net operating income and an adjustment for capital items. On the four loans (50.5%) that have C notes, Fitch also considered in its analysis the additional stress of the C note. CRITICAL PATH: Expects to Adjourn Special Meeting to June 22, 2004 ------------------------------------------------------------------ Critical Path, Inc. (Nasdaq:CPTH) announced that as of the close of business on June 10, the Company had not yet received votes from a quorum of shareholders necessary to conduct business at the special meeting scheduled for June 11, 2004. Under the General Corporation Law of California and the Company's bylaws, the presence in person or by proxy of the holders of a majority of the shares entitled to vote is required to take any action at the special meeting. Due to the national day of mourning and the closing of public offices on June 11, 2004, the Company does not expect to receive additional proxies prior to the meeting. However, the Company intends to convene the meeting as scheduled. If a quorum is not present at that time, the meeting will be immediately adjourned to June 22, 2004, at 10:00 a.m., at Critical Path's principal offices located at 350 The Embarcadero, San Francisco, California. Company shareholders who have not yet voted are strongly encouraged to vote immediately. Shareholders may vote by completing and returning their proxy card in accordance with the instructions included in their proxy materials, or by attending the special meeting. Shares held in street name should be voted by contacting the shareholder's financial institution in whose name the shares are held. For further assistance, shareholders may also contact Georgeson Shareholder, the Company's solicitation agent, at 800-843-1451. If the shareholders meeting is adjourned as expected, the Company expects to extend the expiration of the rights offering until July 2, 2004. A post-effective amendment to the registration statement relating to these securities has been filed with the Securities and Exchange Commission, but it has not yet become effective. These securities may not be offered and offers may not be accepted prior to the time the registration statement becomes effective. The rights offering will only be made by means of a prospectus. This press release shall not constitute an offer to sell or a solicitation of an offer to buy any securities in the rights offering, nor shall there be any sale of any securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. About Critical Path, Inc. Critical Path, Inc. (Nasdaq:CPTH) is a global provider of digital communications software and services, headquartered in San Francisco. More information is available at http://www.criticalpath.net/ At March 31, 2004, Critical Path's balance sheet shows a stockholders' deficit of $90.6 million compared to a deficit of $77.2 million at December 31, 2003. DIGITAL LIGHTWAVE: Pays Plaut Sigma $127K Plus To Resolve Disputes ------------------------------------------------------------------ Digital Lightwave, Inc. (Nasdaq:DIGL), a pioneering leader in the field of lightwave management, announced that, on May 26, 2004, Digital Lightwave, Inc., Plaut Sigma Solutions, Inc. n/k/a IDS Scheer Small and Medium Enterprises Southeast, Inc., and Optel LLC and Optel Capital, LLC entered into a Settlement and Renewal Agreement. The Settlement Agreement resolves all disputes between the Company and Plaut/IDS, including claims of approximately $453,000 asserted by Plaut/IDS against the Company under several agreements between the parties. Pursuant to the terms of the Settlement Agreement, the Company made a lump sum payment in the amount of $126,880. In addition, the Company made a payment of $83,120 to be applied to the annual fee for software maintenance services to be provided by Plaut/IDS to the Company for calendar year 2004. Both payments constituted full and final satisfaction of all claims of Plaut/IDS against the Company. The Company's president and chief executive officer, James Green said: "We are happy to have settled all of our disputes with Plaut Sigma and are pleased that they will continue to provide our SAP software management service." About Digital Lightwave, Inc. Digital Lightwave, Inc. -- whose March 31, 2004 balance sheet shows a stockholders' deficit of $23,557,000 -- provides the global communications networking industry with products, technology and services that enable the efficient development, deployment and management of high-performance networks. Digital Lightwave's customers -- companies that deploy networks, develop networking equipment, and manage networks -- rely on its offerings to optimize network performance and ensure service reliability. DIGITAL LIGHTWAVE: Retains Sterling for Interim Financial Services ------------------------------------------------------------------ Digital Lightwave, Inc. (Nasdaq:DIGL), a pioneering leader in the field of lightwave management, announced that, on May 14, 2004, Sterling Management Resources, Inc., was retained to provide interim financial services while the Company undertakes a search to identify a professional to permanently fill the position of chief financial officer. Sterling Management Resources is a professional services firm that provides specialized business solutions and support to companies including providing seasoned senior executive professionals on an interim basis. On May 19, 2004 Patricia Hayes, the Company's chief accounting officer, resigned from her position to pursue other interests. The Company's president and chief executive officer, James Green said: "We thank Ms. Hayes for her efforts and significant contributions to our Company and wish her success in the future. At the same time, we welcome the Sterling Management Resources professional team. We are excited about access to their broad base of talent and the depth of experience they bring to Digital Lightwave." About Digital Lightwave, Inc. Digital Lightwave, Inc. -- whose March 31, 2004 balance sheet shows a stockholders' deficit of $23,557,000 -- provides the global communications networking industry with products, technology and services that enable the efficient development, deployment and management of high-performance networks. Digital Lightwave's customers -- companies that deploy networks, develop networking equipment, and manage networks -- rely on its offerings to optimize network performance and ensure service reliability. DIMON INC: Posts $32.9 Mil. Net Loss for FY Ended March 31, 2004 ---------------------------------------------------------------- DIMON Incorporated (NYSE: DMN) announced a net loss of $32.9 million, or $0.73 per basic share, for its shortened nine- month fiscal year ended March 31, 2004, compared to net income of $14 million, or $0.31 per basic share, for the year earlier period. The Company's underlying net loss for the shortened fiscal year, a non-GAAP measure that excludes market valuation adjustments for derivative financial instruments and charges for restructuring and impairment, was $14.1 million, or $0.31 per basic share, compared to underlying net income of $22.0 million, or $0.49 per basic share, on the same basis last year. DIMON's net loss for the third fiscal quarter ended March 31, 2004, was $35.3 million, or $0.79 per basic share, compared to net income of $2.7 million, or $0.06 per basic share, for the year earlier period. Underlying net loss for the third quarter, which excludes market valuation adjustments for derivative financial instruments and charges for restructuring and impairment, was $11.1 million, or $0.25 per basic share, compared to net income of $2.5 million, or $0.06 per basic share, on the same basis last year. The excluded market valuation adjustments result from interest rate swaps that must be marked-to-market each quarter, even though they are being held to maturity. In discussing the Company's forecast and actual operating performance, DIMON management consistently excludes these market valuation adjustments because they do not reflect the Company's operating activities, are non- cash in nature, and will reverse in their entirety (gains and losses will offset each other) during the remaining term of the associated interest rate swaps. Management also consistently excludes gains and charges resulting from unusual transactions or events that are not reflective of its underlying operations, and that are not expected to recur. Restructuring Plan and Charges In response to the ongoing transition of global sourcing for leaf tobacco, the Company initiated a restructuring plan during the third quarter to adjust its production capacity and organization to current requirements. That plan resulted in a charge of $29.5 million for the quarter, of which $27.8 million was related to non-cash asset impairment, that encompasses the United States, Europe, and Zimbabwe. In the United States, the Company announced the expected closure of its Danville-based production facility at the conclusion of the current year processing season in March 2005. The Company also recognized goodwill impairment in connection with an investment in a U.S.- based non-tobacco business. In Europe, the Company announced the expected disposal of certain non-strategic operations. In Zimbabwe, the Company recognized impairment charges relating to certain non-production assets. The actions in the United States and Europe are expected to result in an additional estimated cash charge of $7 million during fiscal year 2005. Brian J. Harker, Chairman and Chief Executive Officer, stated, "The decision to implement this restructuring plan, especially the closure of our Danville processing facility, has been a difficult one and we regret the dislocation it will inevitably cause our employees. However, we expect that the out-of-market pricing for U.S. grown tobacco will continue to diminish the volume of tobacco available to process in this country, and that consolidating our U.S. production into a single facility will enable DIMON to continue to compete effectively while serving its customers. In Europe, the expected reduction or elimination of EU subsidies to tobacco growers will make these markets extremely challenging, and we are exiting those that show insufficient growth and profitability opportunities. Finally, although we remain committed to Zimbabwe as a major source of good quality, reasonably priced leaf tobacco, diminished forecast cash flows have impaired the value of certain non- production assets there." Mr. Harker continued, "From the outset of our shortened fiscal year 2004, we understood that the ongoing transition of global sourcing for leaf tobacco would cause our financial results to be relatively weak. Specifically, we anticipated that fiscal 2004 would be negatively affected by ongoing crop declines in both the U.S. and Zimbabwe, without the offsetting benefits from much larger South American crops. As the year progressed, that situation was aggravated by weather related declines in prior year crops from both Brazil and Malawi. Our financial results also suffered from the effect of the profoundly weak U.S. dollar, which inflated our reported SG&A expenses and pressured gross profits on our largely U.S. dollar denominated global sales. These and other factors brought our underlying financial results to an unsatisfactory level for the period. " Outlook Mr. Harker concluded, "Looking forward, the picture is somewhat brighter as DIMON begins to recognize the anticipated benefits from the large South American crops, particularly from Brazil. However, our fiscal year 2005 results will be tempered by the carryover restructuring charges, the continuing effects of the weak U.S. dollar, an extremely competitive operating environment, and production inefficiencies in the diminished U.S. and Zimbabwe origins. Excluding estimated restructuring charges of $7 million and any effects from market valuation adjustments for derivatives, we expect the Company's underlying net income to be between $0.45 and $0.55 per basic share for the fiscal year ending March 31, 2005. "We are optimistic about the longer-term effects that we anticipate as a result of our restructuring actions. While it is too early at this point to quantify the benefits, we expect that facility consolidation and strategic sourcing discipline will benefit our cost structure. In short, we will continue to focus our management attention and resources on those origins that are growing in market importance, and on delivering outstanding customer service, exercising expense discipline, and maintaining our strong balance sheet." The timing and magnitude of fluctuations in the market valuation adjustments for derivative financial instruments (interest rate swaps) are driven primarily by often-volatile market expectations for changes in interest rates, and are inherently unpredictable. Because these adjustments are a component of net income prepared in accordance with generally accepted accounting principles, management is unable to provide forward looking earnings guidance on that basis. Performance Summary Sales and other operating revenues for the third quarter were $306.9 million, compared to $300.5 million for the year earlier quarter. Increased shipments from Asia and Europe during the current quarter served to offset reduced shipments from Zimbabwe. Shipments from Zimbabwe in the year earlier quarter benefited from carryover volumes delayed in earlier periods. Sales and other operating revenues for the shortened fiscal year ended March 31, 2004 were $835.3 million, compared to $875.6 million for the year earlier period. Gross profit for the third quarter declined to $30.7 million compared to $40.2 million for the year earlier quarter. In addition to the overall mix of products shipped, the decline in gross profit reflects $4.5 million of lower- of-cost-or-market (LCM) charges recognized against inventories during the quarter. The majority of those charges related to the Company's Italian operations, and resulted primarily from the build-up of Euro- denominated costs compared to U.S. dollar-denominated selling prices. For the shortened fiscal year ended March 31, 2004, gross profit was $103.2 million, compared to $138.5 million for the year earlier period. Selling, general and administrative expenses for the third quarter were $33.2 million, up $6.4 million or 24% in comparison to the year earlier quarter. The effect of the weaker U.S. dollar was a major contributing factor, as were additional legal and professional, employee benefit and insurance expenses. SG&A expenses for the shortened fiscal year ended March 31, 2004 were $90.3 million, up $12.5 million, or 16% in comparison to the year earlier period. Interest expense for the third quarter decreased by $0.7 million in comparison to the year earlier quarter despite overall increased borrowing, reflecting the benefits from the Company's May 2003 refinancing transaction. At March 31, 2004, total debt net of cash was $638 million, up $96 million, or 18%, in comparison to March 31, 2003. The increase primarily reflects a larger financing requirement for inventories and advances to suppliers, in part due to record sized Brazilian and Argentine crops. DIMON's uncommitted inventories remain at a comfortable level. Provision for income taxes for the shortened fiscal year ended March 31, 2004, represented a benefit of 2% compared to an effective rate of 23% for the year earlier period. The current benefit reflects the geographic distribution of global results, including losses, recognized in the shortened nine-month fiscal year, compared to those recognized during the prior twelve-month fiscal year. Effective July 1, 2003, DIMON changed its fiscal year to March 31 from June 30 to better match the financial reporting cycle with the natural global crop cycles for leaf tobacco. Transitioning to the new fiscal year requires DIMON to report one abbreviated fiscal year consisting of the nine-month period from July 1, 2003 to March 31, 2004. About the Company DIMON Incorporated is the world's second largest dealer of leaf tobacco with operations in more than 30 countries. For more information on DIMON, visit the Company's website at http://www.dimon.com/ * * * As reported in the Troubled Company Reporter's May 27,2004 edition, Standard & Poor's Ratings Services placed its 'BB' corporate credit rating and other ratings on independent leaf tobacco processor DIMON Inc. on CreditWatch with negative implications. Negative implications means that the ratings could be affirmed or lowered following completion of Standard & Poor's review. About $475 million of rated debt of Danville, Virginia-based DIMON is affected. "The CreditWatch placement follows the company's announcement that besides the original charge DIMON expected to take with regard to the restructuring its U.S. operations' production capacity, the restructuring charge will now be expanded to cover operations in other regions," said Standard & Poor's credit analyst Jayne M. Ross. In addition, the company also expects to incur a much larger net loss. "This loss will include the effects of the previously announced change in leaf tobacco sourcing and weakness in the U.S. dollar as well as the impact of inventory valuation issues and higher costs related to insurance and professional fees in the shorten fiscal year ended March 31, 2004." DIRECTED ELECTRONICS: S&P Assigns B+ Rating to Corporate Debt ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Vista, California-based Directed Electronics Inc. At the same time, Standard & Poor's assigned its 'B+' senior secured bank loan rating and '3' recovery rating to Directed Electronics' proposed $138 million of senior secured credit facilities. The debt rating and recovery rating indicate the likelihood of a meaningful recovery of principal (50%-80%) in the event of default or bankruptcy, based on an assessment of the company's enterprise value. Directed Electronics, the world's largest designer and marketer of consumer branded, professionally installed, electronic automotive vehicle security and convenience systems, will have pro forma total debt outstanding at the close of the transaction of about $188 million. The outlook is stable. The senior credit facilities consist of a $25 million revolving credit facility due 2009 and a $113 million U.S. term loan due 2010. Proceeds from the transaction will be used solely to refinance certain existing debt, pay a onetime dividend to the shareholders, and provide for working capital and general corporate requirements. "Upside rating potential is limited by Directed Electronics' modest size, which makes the company quite vulnerable to swings in demand, competitive industry pressures, and weak financial profile," said Standard & Poor's credit analyst Nancy Messer. "Downside risk is mitigated by management's proven ability to generate revenue and cash flow growth during periods of economic weakness, disciplined approach to expanding the company, and commitment to debt reduction." Privately held Directed Electronics is controlled by unrated Trivest Partners LP and does not file financial statements with the SEC. ENRON CORP: Employee Committee Reports Status Of Employee Matters ----------------------------------------------------------------- On April 19, 2004, the Employee Committee met with members of the legal team in New York City to review outstanding employee related matters in Enron Corporation's chapter 11 proceedings. Highlights of the meeting are: 1. EFS/CMS The Committee continues to negotiate severance payments for former EFS/CMS and Garden State Paper employees that were ineligible to participate in the Severance Settlement Agreement. Although these employees lost their jobs on December 3, 2001, EFS/CMS was not included in the initial bankruptcy filing and Garden State Paper employees fell under a minimal severance plan. Severed employees from both companies were unable to participate in the additional severance secured by the Employee Committee in August 2002. The Committee and the AFL-CIO continues to negotiate for additional severance on their behalf. 2. 11th Hour Bonus Litigation The 11th Hour Bonus Litigation was procedurally divided by the Court into two phases: the first dealing with legal rulings and the second for fact discovery and trial. The first phase is now nearing conclusion, and trial preparation will begin shortly. The Employee Committee believes the commencement of the second phase will accelerate additional settlements, since the 11th hour bonus recipients now have only two choices: to settle; or to go to court and defend the propriety of their absurdly large bonuses paid on the eve of Enron's bankruptcy filing. 3. Stock Options Many former Enron employees received stock options as part of their routine compensation. There has been a great deal of discussion concerning whether these options are considered equity claims and therefore fall outside of the bankruptcy process or if these claims are considered an employee benefit and as a result, should be included in the Enron bankruptcy. The Tittle litigation is currently addressing this issue which may have a significant impact on employee claims. The Employee Committee is scheduled to meet in Houston, Texas on June 17 and 18, 2004. If you have specific questions or issues that you want addressed, please e-mail info@employeecommittee.com The Committee will post the responses on the website. (Enron Bankruptcy News, Issue No. 110; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Asks Court To Approve Enron Equity Settlement Pact -------------------------------------------------------------- In December 1994, Enron Corporation formed Enron Equity Corporation to hold interests in certain international assets and to issue preferred stock through a private placement to third- party investors. Enron holds 100% of the common stock of Enron Equity. Sylvia Mayer Baker, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that Enron Equity sold 880 shares of 8.57% preferred stock for $88,000,000. John Hancock Mutual Life Insurance Company, now known as John Hancock Life Insurance Company, purchased 850 shares of the 8.57% Preferred stock for $85,000,000. American States Insurance Company purchased the remaining 30 shares for $3,000,000. Enron Equity used the sale proceeds to purchase investments, including: (i) $35,568,509 of 9.142% Perpetual Second Preferred Stock of Enron; (ii) an 8.645% 5-year, fixed rate senior unsecured note of Enron in the amount of $59,280,848; (iii) an 8.831% 30-year, fixed rate senior unsecured note of Enron in the amount of $22,651,212; and (iv) a 5-year warrant to purchase an additional $59,280,848 of 8.645% 5-year, fixed rate senior unsecured notes of Enron. In April 1996, Ms. Baker reports that Enron Equity sold 150 shares of 7.39% preferred stock to Hancock for $15,000,000. Enron Equity used these funds to purchase additional notes from Enron. The holders of the EEC Preferred Stock can demand redemption after Enron Equity fails to pay dividends for six consecutive quarters. The holders of at least 80% of the EEC Preferred Stock demanded redemption in May 2003. The Debtors now want to wind down Enron Equity's affairs. Preference Dispute Enron and Hancock, Signature 4 Limited, John Hancock Variable Life Insurance Company, and Mellon Bank, N.A., as trustee for the Bell Atlantic Master Trust were also involved in a dispute unrelated to Enron Equity regarding a transfer made from Enron to the Preference Settlement Parties in November 2001. In February 2003, Enron sent a demand letter to the Preference Settlement Parties seeking, pursuant to Sections 547 and 550 of the Bankruptcy Code, the return of about $42,900,000 transferred to the Preference Settlement Parties. Through two Stipulations, Enron and the Preference Settlement Parties agreed to toll the applicable statutes of limitation relating to the Preference Dispute until the earlier of June 30, 2004 and (b) 20 calendar days after counsel to any party to the stipulation sends written notice to counsel to the other parties stating that party's intent to terminate the tolled period. To date, the tolling period is still in effect and, therefore, Enron has not instituted formal litigation against the Preference Settlement Parties. Enron Equity's Claims Against Enron Due to Enron Equity's investments in Enron and due to the centralized cash management system, Ms. Baker states that Enron Equity holds a general unsecured claim against Enron for $137,600,000. In addition, pursuant to an assignment agreement, in exchange for the transfer of Enron Equity's 100% equity interest in ECT Columbia Pipeline Holdings I, Ltd., 1.8% equity interest in Enron Global Power & Pipelines, LLC, and 70.23% equity interest in Enron Holding Company, LLC, Enron Power 1 (Puerto Rico), Inc., will assign to Enron Equity an $89,700,000 unsecured prepetition claim against Enron. The Settlement Agreement Enron and Enron Equity, on the one hand, and Hancock, Hancock Variable, Signature 4, Bell Atlantic and American States, on the other hand, entered into arm's-length and good faith negotiations and discussions to resolve the EEC Preferred Stock and the Preference Dispute. The negotiation resulted in the parties' execution of a settlement agreement. The salient terms of the Settlement Agreement are: A. Allowed Claims Enron agrees to the allowance of the EEC/Enron Claims as non-subordinated, general unsecured prepetition claims against Enron under Section 502 of the Bankruptcy Code for $227,300,000 in the aggregate, which claims will be classified in Class 4 of the current Plan for all purposes. B. Repurchase of EEC Preferred Stock by Enron Equity Enron Equity, Hancock and American States have entered into an EEC Repurchase Agreement pursuant to which they have agreed to the repurchase of 100% of the 8.57% Preferred Stock, and Enron Equity and Hancock have agreed to the repurchase of 100% of the 7.39% Preferred Stock in exchange for certain payments and assignments and transfers of the EEC/Enron Claims. C. Resolution of Preference Dispute On the Effective Date, these transfers and deemed transfers will be made in full settlement of the Preference Dispute: (a) Hancock will be deemed to have assigned and transferred to Enron its right to receive $18,324,074 of the contemplated cash payment and Enron Equity will be deemed instructed to make the payment to Enron; (b) Hancock Variable will wire transfer to Enron $732,906; (c) Signature 4 will wire transfer to Enron $977,208; and (d) Bell Atlantic will wire transfer to Enron $1,465,812. Upon receipt of those assignments and transfers, (a) Enron will be deemed to have waived any and all of its rights to commence or pursue any litigation against the Preference Settlement Parties with regard to the Preference Dispute, and (b) the Preference Settlement Parties will not be entitled to assert any prepetition claim against any of the Debtors arising from or related to the Preference Dispute. D. Vote on the Plan Hancock is deemed to have cast a vote in favor of the Plan as a general unsecured claim against Enron in the allowed amount of $201,700,000, representing the allowed claims against Enron that are to be transferred to Hancock pursuant to the EEC Repurchase Agreement. Similarly, American States will be deemed to have cast a vote in favor of the Plan as a general unsecured claim against Enron in the allowed amount of $6,000,000, representing the allowed claims against Enron that are to be transferred to American States pursuant to the EEC Repurchase Agreement. E. Release of the Enron Parties Upon receipt of the cash payments and assignments of the EEC/Enron Claims specified in the EEC Repurchase Agreement, each of the Settlement Parties irrevocably and unconditionally forever release, acquit and discharge the Enron Parties, from any and all claims, demands, liabilities and causes of action they have or may have against any Enron Parties to the extent arising under or relating to the EEC Preferred Stock, the Preference Dispute, the Settled Issues or any act of commission or omission under or in respect of the EEC Preferred Stock, the Preference Dispute or the Settled Issues. F. Release of the Settlement Parties On the Effective Date: (a) each of the Enron Parties will be deemed to have agreed not to object to the validity, amount, classification and non-subordination of the EEC/Enron Claims; and (b) except as expressly provided in the Agreement, the Enron Parties irrevocably and unconditionally release, acquit and forever discharge the Settlement Parties from any and all claims, demands, liabilities and causes of action of any and every kind, character or nature, which they have or may have or claim to have, against any Claim Releasee to the extent arising under, relating to, or connected with the EEC Preferred Stock, the Preference Dispute, the Settled Issues or any act of commission or omission under or in respect of the EEC Preferred Stock, the Preference Dispute or the Settled Issues. G. Withdrawal of Claims On the Effective Date, Claim Nos. 10555, 12942 and 23721, filed by the Hancock Parties, and Claim No. 6128, filed by American States, will be deemed withdrawn with prejudice, and Claim No. 24489, filed by the Hancock Parties, will be deemed withdrawn with prejudice insofar as it relates to Enron Equity. The EEC Repurchase Agreement In connection with the Settlement Agreement, Hancock, American States and Enron Equity entered into the EEC Repurchase Agreement, which contains these terms: A. Hancock's Sale On the Transfer Date, Hancock will sell, assign, transfer and convey to Enron Equity without recourse, representation or warranty except as set forth in the EEC Repurchase Agreement, and Enron Equity will acquire and repurchase from Hancock, all right, title and interest of Hancock, in and to Hancock's EEC Preferred Stock in exchange for: (a) the assignment by Enron Equity to Hancock of all right, title and interest of Enron Equity in and to $201,700,000 (face value) of the allowed EEC/Enron Claims, including without limitation the right to vote and to receive distributions pursuant to the Plan with respect to those assigned EEC/Enron Claims; and (b) $27,300,000 in cash, with $18,324,074 of that cash consideration to be assigned to Enron in exchange for Enron's release of claims associated with the Preference Dispute pursuant to the Settlement Agreement and $8,975,926 to be paid promptly to Hancock via wire transfer. The Purchase Amounts are in full and final satisfaction of any and all claims arising from or relating to Hancock's EEC Preferred Stock and its rights under the EEC Preferred Documents. B. Cancellation of Hancock's EEC Preferred Stock Immediately upon assignment and payment of the Hancock Purchase Amount and without the need for the execution and delivery of additional documentation, the EEC Preferred Stock sold by Hancock to Enron Equity will be deemed cancelled and all rights and obligations with respect thereto will terminate. C. Delivery of Hancock's Certificates On the Transfer Date, Hancock will deliver to Enron Equity all stock certificates representing shares of Hancock's EEC Preferred Stock repurchased by Enron Equity, and all other documents and instruments reasonably necessary for the transfer of the shares, including the appropriate duly endorsed stock powers. D. American States' Sale On the Transfer Date, American States will sell, assign, transfer and convey to Enron Equity without recourse, representation or warranty except as set forth in the EEC Repurchase Agreement, and Enron Equity will repurchase and acquire from American States, all right, title and interest of American States, in and to American States' EEC Preferred Stock in exchange for: (a) the assignment by Enron Equity to American States of all right, title and interest of Enron Equity in and to $6,000,000 (face value) of the allowed EEC/Enron Claims, including without limitation the right to vote and receive distributions pursuant to the Plan with respect to those assigned EEC/Enron Claims; and (b) $800,000 in cash to be paid to American States via wire transfer. The Purchase Amounts are in full and final satisfaction of any and all claims arising from or relating to American States' EEC Preferred Stock and its rights under the EEC Preferred Documents. E. Cancellation of American States' EEC Preferred Stock Immediately upon payment of the American States Purchase Amount and without the need for the execution and delivery of additional documentation, the EEC Preferred Stock sold by American States to EEC will be deemed cancelled and all rights and obligations with respect thereto, and arising in connection therewith, will terminate. F. Delivery of American States' Certificates On the Transfer Date, American States will deliver to Enron Equity all stock certificates representing shares of American States' EEC Preferred Stock repurchased by Enron Equity, and all other documents and instruments reasonably necessary for the transfer of the shares, including the appropriate duly endorsed stock powers. G. Consent and Waiver with Respect to Certain Terms of the EEC Preferred Documents The Parties expressly consent to the sale contemplated by the EEC Repurchase Agreement, and expressly waive any requirement or restriction, including but not limited to Hancock's waiver of the Redemption Notice. H. Transfer Date The transfer date will occur on the business day immediately following the satisfaction of all of the conditions precedent. I. Resignation of Directors On the Transfer Date, any and all directors of Enron Equity appointed by Hancock or American States will be deemed to have resigned their position, without the need for the execution and delivery of additional documentation. In addition, Hancock and American States will each be deemed to have waived, released and discharged any claim, right or interest to assume control of the management of Enron Equity in accordance with the terms and provisions of the EEC Preferred Documents, without the need for the execution and delivery of additional documentation. By this motion, the Debtors ask the Court to approve and authorize the execution, delivery and performance of the Assignment Agreement, the Settlement Agreement and the Repurchase Agreement pursuant to Sections 105 and 363 of the Bankruptcy Code and Rules 2002, 6004, 9013 and 9019 of the Federal Rules of Bankruptcy Procedure. Ms. Baker tells Judge Gonzalez that the proposed Agreements, which are the result of good faith and arm's-length negotiations, are fair and equitable. The Assignment Agreement provides for transfers that are fair and reasonable and with adequate consideration to each of the entities involved. The Settlements also resolve the Preference Dispute on terms that are fair and that avoid the need for potentially time-consuming, expensive and uncertain litigation. In addition, the Settlements enable Enron Equity to wind down its affairs and consensually resolve potentially costly and protracted litigation arising in connection with the Preference Dispute and the EEC Preference Stock, the outcomes of which are currently uncertain, without the added expense of litigation and on terms that are favorable to the Debtors. (Enron Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING COMPANIES: Court Permits Payment Of Exit Facility Fees -------------------------------------------------------------- The Fleming Companies, Inc. recently obtained commitment from General Electric Capital Corporation to provide up to $250,000,000 in exit financing facility. The Debtors need the Exit Facility to pay amounts owing under their prepetition credit facility, and as working capital post-confirmation to fund the obligations of the Post-Confirmation Trust and the Reclamation Creditors Trust. The Court permits the Debtors to pay the Fees. The Debtors further note that the terms of the Exit Facility as set forth in the Letter Agreement will be approved in connection with the Plan. The Debtors want to start the process of finalizing the Exit Facility documents so that the effective date of their Third Amended Plan can occur shortly after confirmation. To proceed with the process and complete GE Capital's due diligence, GE Capital has required the Debtors to pay certain fees and expenses before it can proceed. In consideration of its commitment to provide the Exit Facility, GE Capital requires the Debtors to pay: -- a $1,125,000 commitment fee; -- a $125,000 arrangement fee; and -- a $375,000 Expense Deposit, which will be used to offset expenses GE Capital incurred or will incur in negotiating and drafting the Exit Facility and completing its due diligence. 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) FORMICA CORPORATION: Exits Chapter 11 Bankruptcy ------------------------------------------------ Formica Corporation announced that it has completed the necessary steps to implement its Plan of Reorganization and has successfully emerged from Chapter 11. "This achievement is attributable to the confidence that our sponsors have in our company and our future, the loyalty of our customers, the professionalism and dedication of our employees, the commitment and support of our creditor groups, and the recognition of the strength of the Formica(R) brand and its reputation for quality, durability and industry leading innovation," said Frank A. Riddick, III, President and Chief Executive Officer of Formica. "We accomplished what we set out to do at the outset of our Chapter 11 restructuring. We have substantially decreased our long-term debt, while we streamlined and improved our service and operations. With the Chapter 11 process behind us, we can now increase our focus on what continues to be our top priority -- providing our global customers with a portfolio of design coordinated, branded surfacing solutions and products," said Riddick. Formica exits Chapter 11 with a strengthened balance sheet, including consolidated debt of approximately $160 million in long term financing, down from more than $540 million in debt at the time of the filing in March 2002, lower interest expense and improved efficiencies arising from the consolidation of manufacturing and warehousing facilities. "We are grateful for the support of our lenders and the confidence they have displayed in Formica as we emerge from Chapter 11," Riddick stated. In conjunction with emergence, Formica has entered into an amended Term Loan Facility for $135 million with its existing secured lenders. General Electric Capital Corporation is the Term Loan Agent. Formica said that it had also closed on a $65 million revolving credit facility. Wells Fargo Foothill, Inc. is the Revolving Credit Agent. "This exit financing will provide the Company with sufficient liquidity to continue to meet our financial requirements and grow our business globally," said Riddick. As part of the Plan of Reorganization, a group of investors led by Cerberus Capital Management L.P. and Oaktree Capital Management LLC have purchased the common shares of the Successor Company for $175 million in cash. Substantially all of these proceeds will be used to repay existing secured lenders. Management will hold options to purchase approximately 10% of the common shares. About Formica Formica Corporation was founded in 1913, and is the preeminent worldwide manufacturer and marketer of decorative surfacing materials, including high-pressure laminate and solid surfacing materials. Formica has sales operations in approximately 100 countries. Additional information about the company is available on Formica's Web site at http://www.formica.com/ FOSTER WHEELER: SEC Declares Registration Statement Effective ------------------------------------------------------------- Foster Wheeler Ltd. (OTCBB: FWLRF) announced that its registration statement relating to its proposed equity for debt exchange offer has been declared effective by the Securities and Exchange Commission. Foster Wheeler intends to make a further announcement when the offer is launched. The dealer manager for the exchange offer and consent solicitation is Rothschild Inc., 1251 Avenue of the Americas, 51st floor, New York, New York 10020. Contact Stephen Ledoux or Daniel Gilligan of Rothschild at 212-403-3710 and 212-403-5222, respectively, with any questions on the exchange offer. Investors and security holders are urged to read the following documents filed with the SEC, as amended from time to time, relating to the proposed exchange offer because they contain important information: (1) the registration statement on Form S-4 (File No. 333-107054) and (2) the Schedule TO (File No. 005- 79124), when it is filed. These and any other documents relating to the proposed exchange offer, when they are filed with the SEC, may be obtained free at the SEC's Web site at http://www.sec.gov/ or from the information agent as noted above. About Foster Wheeler Foster Wheeler Ltd. -- whose December 26, 2003 balance sheet shows a total shareholders' deficit of $872,440,000 -- is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, oil and gas, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA. For more information about Foster Wheeler, visit http://www.fwc.com/ GS MORTGAGE: S&P Downgrades Series 1998-C1 Class F Rating to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes B and C of GS Mortgage Securities Corp. II's commercial mortgage pass-through certificates series 1998-C1. At the same time, the rating on class F is lowered, and the ratings on classes A-1, A-2, A-3, D, E, and X are affirmed. The raised and affirmed ratings reflect increased credit support levels that adequately support the ratings under various stress scenarios. The lowered rating stems from anticipated losses from the delinquent and specially serviced loans. As of May 2004, the trust collateral consisted of 295 commercial mortgages with an outstanding balance of $1.590 billion, down 14.6% from issuance. There have been cumulative principal losses of $27.87 million since issuance. The master servicer, GMAC Commercial Mortgage Corp., reported either full- or partial-year 2003 net cash flow debt service coverage ratios for 76.3% of the pool and full-year 2002 NCF DSCRs for 90.45% of the pool. Only one loan (0.6%) has been fully defeased. Excluding the defeased loan, Standard & Poor's calculated the current weighted average DSCR for the pool to be 1.64x for the 2003 data and 1.51x for the 2002 data, as compared to 1.53x at issuance. The current weighted average DSCR for the top 10 loans, which comprise 35.0% of pool, has remained steady at 1.69x, compared to 1.70x at issuance. This calculation excludes the 10th-largest loan, The Original Outlet Mall for $20.2 million, or 1.27% of the pool, which is REO. It will be discussed below. Two of the top 10 loans are on the watchlist. The eighth-largest loan, Factory Stores at Hershey, a retail property in Hershey, Penn., has reported a NCF DSCR of 1.10x for 2003, down from 1.32x at issuance. The ninth-largest loan, The WestCoast Benson Hotel, a full-service lodging property in Portland, Ore., is suffering from low occupancy and reported a year-end 2003 DSCR of 0.98x. At present, there are 16 loans with the special servicer, GMACCM, with a current combined balance of $82.4 million (5.18%). Nine loans totaling $65.6 million (4.13%) are secured by retail properties and seven loans totaling $16.8 million (1.05%) are secured by limited-service hotels. All but one are delinquent, and four loans are REO. Of the four REO loans, two are retail and two are limited-service hotels. Nine loans currently have appraisal reduction amounts totaling $30.13 million (1.89%). The ARA for The Original Outlet Mall loan accounts for 58% of this total. The three largest loans, each secured by a retail property, account for half of the balance in special servicing and are discussed below. -- The Original Outlet Mall, the 10th-largest loan in the pool and the largest specially serviced loan, has a current balance of $20.17 million (1.27%) and a total exposure of $20.73 million ($66 per sq. ft.). A 22 year-old, 310,994-sq.-ft. enclosed outlet mall in Bristol, Wisconsin secures the loan. The loan defaulted after the property lost two large tenants; current occupancy is 50%. An ARA of $17.4 million is in effect, based on an appraised value of $4.35 million. The property suffers from an obsolete design and layout, as well as nearby competition from Prime Outlets at Pleasant Prairie and the Gurnee Mills. A loss commensurate with the ARA is expected upon disposition. -- Sequoia Plaza Shopping Center has a current balance of $13.36 million (0.84%) and a total exposure of $13.43 million ($77 per sq. ft.). It is secured by a 176,535-sq.- ft. community shopping center built in 1991 and located in Visalia, California. The center is anchored by a Costco, which is not part of the collateral. The borrower remains in compliance with a forbearance agreement. GMACCM expects a full principal payoff by a refinance shortly. -- Kmart Valdosta has a current balance of $8.066 million (0.51%). It is secured by a 175,396-sq.-ft. retail property built in 1994 and located in Valdosta, Georgia. (12 miles north of Florida). It is 100% occupied by a Lowes home improvement store, which opened approximately three months ago. The loan is current and reports a 1.30x DSCR as of year-end 2003 but is in special servicing due to a dispute between the borrower and a Kimco entity over an assumption agreement. The current servicer's watchlist includes 74 loans totaling $274.9 million, or 17.3% of the loan pool. The largest loan on the watchlist, Factory Stores at Hershey, for $24.15 million (1.52%), is the eighth-largest loan in the pool. It is secured by a 242,932-sq.-ft. retail center built in 1994 and located in Hershey, Penn. and appears on the watchlist due to its low NCF DSCR of 1.10x. Occupancy as of March 5, 2004 was 90%. The other top 10 loan on the watchlist, due to a low DSCR of 0.98x, is The WestCoast Benson Hotel, a 287-room full-service lodging property located in downtown Portland, Ore. Occupancy has suffered from new competition in the market, but is slowly recovering. The borrower had higher-than-usual capital expenditures for 2003, as some of the furniture and fixtures were upgraded and the elevators were renovated. Net operating income DSCR for 2003 was higher than 2002 (1.21x vs. 1.14x, respectively). The average loan balance on the watchlist is $3.71 million. The pool has large geographic concentrations in California (15.8%), New York (8.9%), Texas (8.4%), and Virginia (7.4%). Significant collateral type concentrations include retail (29.5%), office (17.2%), multifamily (16.45%), lodging (15.0%), and industrial (13.7%). Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the specially serviced and watchlisted loans. The expected losses and resultant credit levels adequately support the current rating actions. Ratings Raised GS Mortgage Securities Corp. II Commercial mortgage pass-thru certs series 1998-C1 Rating Class To From Credit Enhancement (%) B AAA AA 27.51 C A+ A 21.07 Ratings Affirmed GS Mortgage Securities Corp. II Commercial mortgage pass-thru certs series 1998-C1 Class Rating Credit Enhancement (%) A-1 AAA 33.95 A-2 AAA 33.95 A-3 AAA 33.95 X AAA N.A. D BBB 14.34 E BBB- 12.29 Rating Lowered GS Mortgage Securities Corp. II Commercial mortgage pass-thru certs series 1998-C1 Rating Class To From Credit Enhancement (%) F BB- BB+ 7.03 HABER INC: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Haber, Inc. 454 Highway 200 East Circle, Montana 59215 Bankruptcy Case No.: 04-61802 Chapter 11 Petition Date: June 9, 2004 Court: District of Montana (Butte) Judge: Ralph B. Kirscher Debtors' Counsel: Gary S. Deschenes, Esq. Deschenes Law Office P.O. Box 3466 Great Falls, MT 59403-3466 Tel: 406 761-6112 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor did not file a list of its 20-largest creditors. HIGHWOODS PROPERTIES: Fitch Affirms BB+ Preferred Stock Rating -------------------------------------------------------------- Fitch Ratings affirms the 'BBB-' senior unsecured rating on Highwoods Properties, Inc.'s $810 million of outstanding senior unsecured notes due 2004 through 2018, and 'BB+' rating on $877 million of preferred stock. The Rating Outlook remains Negative. The ratings reflect the strength of HIW's unencumbered asset base as support for the company's unsecured borrowings, exceeding those of similarly-rated peers. The Fitch calculated book value of HIW's unencumbered assets exceeds unsecured borrowings by more than 2.7 times (x) (including land) and 2.45x (without land), as of first- quarter 2004 (1Q'04). Likewise, the net operating income generated by HIW's unencumbered assets is sufficient to cover its unsecured interest expense by 3.2x. It is this unencumbered asset base that remains the primary support for HIW's 'BBB-' senior unsecured rating. Additional support for the rating can be found in variety of defensive features present in HIW's broader portfolio including; a good quality asset base of primarily suburban office properties, a well diversified tenant base with its largest tenants being the US Government (3.6% of annual revenues) and AT&T (2.6%) as of 1Q'04, and modest development activity which currently represents less than 1% of undepreciated book. Further, HIW has adequate short- term liquidity with approximately $120 million available under its line of credit, and the company's debt maturity schedule is manageable with 10.1% maturing in 2005 (including prorata share of JV debt). HIW's leverage ratio is 44.6% of undepreciated book, and incorporating HIW's preferred stock, its debt plus preferred over undepreciated book is 54.1%, as of 1Q'04. Both ratios are considered adequate for its rating level. Fitch's Negative Outlook highlights HIW's continued, near-term operating and financing challenges. As outlined in Fitch's press release dated May 7, 2003, occupancy in HIW's portfolio stands at 82% and while the company has outperformed market conditions in many of its markets, these high-growth markets are generally characterized by low barriers to entry and have struggled to provide consistent earnings through periods of economic contraction. Further, Fitch is concerned about HIW's ability and willingness to demonstrate access to the unsecured debt capital markets. This concern is heightened by HIW's near-term refinancing of its $100 million XPOS bond expected June 15, 2004 at which time, the company will exercise its option to acquire the outstanding bond. HIW had initially signaled the market that it would fund this transaction through an unsecured note offering. However, the firm filed an 8-K on Monday, June 6, 2004 outlining an alternative funding plan which includes the initial use of its line to fund the bond acquisition, and then a subsequent reduction through a variety of smaller transactions including asset sales. Fitch has reviewed management's plans for refinancing the XPOS and while these plans contemplate the maintenance of its unencumbered asset base, the continued absence of demonstrated access to the long-term unsecured debt markets is concerning, particularly when the unsecured bond market has been so favorable to real estate investment trusts in recent quarters. Fitch views demonstrated access to the unsecured debt capital markets as an important component of HIW's investment grade rating. Fitch expects to resolve the Negative Outlook by year-end 2004, and will continue to monitor and evaluate HIW's portfolio operations, the support for its current rating through the maintenance of unencumbered assets, successful execution upon its near-term financing strategy, and improvement in coverage levels that are consists with a 'BBB-' rating. Results not consistent with Fitch's expectations may lead to a downgrade. Rating concerns include HIW's geographic exposure to southeastern US markets, which are characterized as low barrier to entry markets, including its largest geographic exposure, North Carolina, representing approximately 30% of its total revenue. Soft market fundamentals have contributed to weakened property fundamentals that have eroded Highwood's occupancy, currently at 82%, and pressured its rental rates. Property fundamentals have stabilized and are anticipated to improve - however, timing and magnitude remain uncertain. HIW's interest and fixed charge coverage ratios reflect pressured property fundamentals and are lower than comparable rated peers, with interest coverage at 2.3x and fixed charge coverage is 1.9x. Highwoods Properties is a $3.7 billion (total market capitalization at March 31, 2004) equity REIT focused on the acquisition, ownership, management, development and redevelopment of suburban office and industrial properties. Headquartered in Raleigh, North Carolina, HIW's portfolio exhibits a southeastern US geographic presence consisting of 529 in-service properties encompassing 41.7 million square feet, and a land bank of 1,255 acres. INSILCO TECH: Retains Keen Realty To Market Hiddenite Facility -------------------------------------------------------------- Insilco Technologies, Inc. has retained Keen Realty, LLC to market for higher and better offers their former cable manufacturing facility located in Hiddenite, NC. Insilco Technologies provides a comprehensive offering of capabilities for a broad range of markets including telecommunications, computer and peripherals, networking, automotive electronics, medical electronics, industrial controls, security systems, electrical equipment, and electronic components. Insilco filed for Chapter 11 protection in the United States Bankruptcy Court in the District of Delaware on December 16, 2002. Keen Realty is a real estate firm specializing in selling excess assets and restructuring real estate and lease portfolios. "Interested parties must act immediately with respect to this facility, as the deadline for submitting bids is July 8th" said Mike Matlat, Keen Realty's Vice President. "The minimum bid amount is $310,000. The property is an excellent opportunity for users, investors, and developers, and I expect there to be a tremendous amount of interest," Matlat added. Available to users and investors is a 42,000+/- sq. ft. manufacturing facility situated on an 8.66+/- acre parcel in Hiddenite, NC. The facility was constructed in two phases in 1972 and 1990, with renovations in 1980. Construction consists of concrete slab on grade foundation, brick and corrugated metal panel walls, and steel and masonry interior framing. For over 22 years, Keen Consultants has had extensive experience solving complex problems and evaluating and selling real estate, leases and businesses. Keen Consultants, a leader in identifying strategic investors and partners for businesses, has consulted with thousands of clients nationwide, evaluated and disposed of over 250,000,000 square feet of properties and repositioned nearly 13,000 properties across the country. Recent clients include: Spiegel/Eddie Bauer, Arthur Andersen, Service Merchandise, Warnaco, Cable & Wireless, Fleming, Graham-Field, FOL Liquidation Trust and JP Morgan Chase. For more information regarding the sale of this facility for Insilco Technologies, Inc., please contact Keen Realty, LLC, 60 Cutter Mill Road, Suite 407, Great Neck, NY 11021, Telephone: 516- 482-2700, Fax: 516-482-5764, e-mail: mmatlat@keenconsultants.com Attn: Mike Matlat. Insilco Technologies, Inc., a leading global manufacturer and developer of highly specialized electronic interconnection components and systems, serving the telecommunications, computer networking, electronics, automotive and medical markets, filed for chapter 11 petition on December 16, 2002 (Bankr. Del. Case No. 02-13672). Pauline K. Morgan, Esq., Sharon M. Zieg, Esq., Maureen D. Luke, Esq., at Young, Conaway, Stargatt & Taylor and Constance A. Fratianni, Esq., Scott C. Shelley, Esq., at Shearman & Sterling represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $144,263,000 in total assets and $611,329,000 in total debts. JILLIAN'S ENT: U.S. Trustee to Meet with Creditors on June 24 ------------------------------------------------------------- The United States Trustee will convene a meeting of Jillian's Entertainment Holdings, Inc.'s creditors at 10:30 a.m., on June 25, 2004 in Room 509 at United State Courthouse, 601 W. broadway, Louisville, Kentucky 40202. 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 Louisville, Kentucky, Jillian's Entertainment Holdings, Inc. -- http://www.jillians.com/-- operates more than 40 restaurant and entertainment complexes in about 20 US states. The Company filed for chapter 11 protection on May 23, 2004 (Bankr. W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at Frost Brown Todd LLC, represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed estimated assets of more than $100 million and estimated debts of over $50 million. KAISER ALUMINUM: Court Gives Go-Ahead for Mead Parcels 1 & 7 Sale ----------------------------------------------------------------- Judge Fitzgerald authorizes Kaiser Aluminum and Chemical Corporation, pursuant to Section 363 of the Bankruptcy Code, to enter and consummate the sale agreement with CDC Mead, LLC, an affiliate of Commercial Development Corporation, Inc. Furthermore, the Debtors are authorized to sell Parcels 1 and 7, in Mead, Washington and certain related assets and intellectual property to CDC Mead, free and clear of liens, claims, encumbrances and other interests, in accordance with Section 363(f). All liens, claims, encumbrances and other interests attach to the proceeds received for the sale of the Mead Properties with the same validity and priority as they attached to the Mead Properties. The Debtors will place $4,000,000 in escrow, which will constitute adequate protection for the amount of any allowed secured claim of HSBC Bank USA until the time as the amount of HSBC's allowed secured claim is established by the Court. Additionally, the Debtors are authorized to assume and assign the certain executory contracts and unexpired leases related to the sale. The Assumed Contracts will be transferred to, and remain in full force and effect for the benefit of CDC Mead, notwithstanding any provisions in the Assumed Contracts that purport to prohibit the assignment. The Debtors are also authorized to pay the prepetition taxes necessary to consummate the sale. 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) LES BOUTIQUES: 2004 Fiscal Year Sees More Losses & Declining Sales ------------------------------------------------------------------ Les Boutiques San Francisco Incorporees (TSX:SF.A) (TSX:SF.B) announced its results for fiscal 2003 and results for the first quarter of fiscal 2004. "These results are a reflection of the Company's restructuring context. It obtained a court order on December 17, 2003, from Superior Court placing it under the protection of the Companies' Creditors' Arrangement Act," stated Gaetan Frigon, Chief Restructuring Officer. "The measures adopted to date aim at permitting the Corporation to continue its activities with a fresh start taking into account the best interests of its creditors, employees, suppliers and shareholders. These measures include the sale of a portion of the assets, the reduction in square-footage of the Les Ailes de la Mode store in downtown Montreal and the acceptance of an offer by a group of investors to recapitalize the Corporation." "Despite the difficult situation that the Corporation has had to face over the past fiscal year and the first quarter of the current year, our 1500 employees have continued to provide the exemplary service for which we are known and I want to thank them sincerely," said Paul Delage Roberge, Chairman of the Board. "Our clients can be assured that our various teams will continue to take every measure necessary to constantly improve our ability to respond to their expectations." Fiscal Year Ended January 31, 2004 The Corporation's net sales from continuing operations came to $163.6 million for the year ended January 31, 2004, compared to $227.2 million for the previous fiscal year. Much of the decline in sales is attributable to the sale or discontinuance of the activities of certain banners and stores during the fiscal year. Comparable sales under the banners maintained by the Company were down 6.6% and those for the Les Ailes de la Mode stores fell 14.2%, for a total reduction of 12.1%. The loss before income taxes and non-controlling interest related to continuing operations was $49.4 million compared to a loss of $42.7 million for the corresponding period of the previous year. The variance was essentially due to increased restructuring efforts. The net loss related to continuing operations was $49.5 million, or $4.10 per share, compared to a net loss of $35.2 million, or $2.92 per share, for the previous year. The net loss for the 12-month period ended January 31, 2004, was $60.2 million, or $4.98 per share, compared to a net loss of $36.5 million, or $3.03 per share, for the previous year. During the fourth quarter of fiscal 2003 ended January 31, 2004, the Corporation recorded net sales on continuing operations of $46.4 million, compared to $74.1 million for the corresponding period of the previous year. The net loss for the quarter came to $16.4 million or $1.35 per share, compared to $35.1 million or $2.89 per share, for the corresponding quarter of the previous fiscal year. Quarter Ended May 1, 2004 The Corporation's sales from continuing operations came to $26.8 million during the three-month period ended May 1, 2004, compared to $42.6 million for the corresponding period of the previous year. The reduction in sales is largely attributable to the sale or discontinuance of activities under certain banners and stores during the first quarter of fiscal 2003. Comparable sales under the banners maintained by the Corporation were down 2.6%, and those for the Les Ailes de la Mode stores fell 12.0%, for a total reduction of 9.5%. The loss before income taxes and non-controlling interest related to discontinued operations was $5.4 million for the three-month period ended May 1, 2004, compared to a loss of $1.6 million for the corresponding period of the previous year. The net loss before discontinued operations for the three-month period ended May 1, 2004 was $5.4 million, or $0.47 per share, compared to a net loss of $1.9 million, or $0.16 per share, for the same period of the previous year. The net loss for the three-month period ended May 1, 2004 was $5.8 million, or $0.50 per share, compared to a net loss of $2.9 million, or $0.25 per share, for the same period of the previous year. In all three cases, the variance was essentially due to restructuring costs, which were $2.7 million during the quarter ended May 1, 2004. These costs were nil for the corresponding period of the previous year. Both sales and operating results were negatively affected by the variations in stock levels occasioned by the restructuring. On Monday, June 7, 2004, the Corporation tabled in Superior Court, an arrangement agreement for creditors that calls for a settlement of their claims and the recapitalization of the Corporation. This plan should be submitted to creditors no later than July 6, 2004, and, if accepted, it will have to be approved by the Court. The Court Orders issued by the Court under the Companies' Creditors Arrangement Act as well as the management reports of RSM Richter Inc., the Court appointed monitor, can be accessed on the Web site http://www.rsmrichter.com/.The financial statements for fiscal 2003 as well as those of the first quarter of 2004, including the notes, will be available on SEDAR, no later than Monday, June 14, 2004, at the following address : http://www.sedar.com/ As part of its restructuring process, the Corporation has sold its Boutiques San Francisco as well as two lingerie boutiques, Victoire Delage and Moments Intimes. The Corporation still operates four Les Ailes de la Mode stores and a network of bathing suit stores operating under the banners Bikini Village and San Francisco Maillots. LINREAL CORP: Case Summary & 2 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Linreal Corp. 1255 Delaware Avenue Buffalo, New York 14209 Bankruptcy Case No.: 04-14386 Type of Business: The Debtor is a Real Estate Holding Company. Chapter 11 Petition Date: June 10, 2004 Court: Western District of New York (Buffalo) Judge: Carl L. Bucki Debtor's Counsel: Daniel F. Brown, Esq. Damon & Morey 1000 Cathedral Place 298 Main Street Buffalo, NY 14202 Tel: 716-856-5500 Total Assets: $10,000,000 Total Debts: $8,000,000 Debtor's 2 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Pension Benefit Guaranty Pension Plan $1,000,000 Corp. Control Board Member Office of the General Counsel Attn: Margaret Drake, Esq. 1200 K Street, N.W., Suite 340 Washington, D.C. 20005-4026 Official Creditors Committee Pre-petition lawsuit Unliquidated Of BryLin Hospitals, Inc. c/o Robert J. Feldman, Esq. Gross, Shuman, Brizdle & Gilfillan, P.C. 465 Main Street, Suite 600 Buffalo, New York 14203 LYNX ASSOCIATES: Case Summary & 5 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Lynx Associates, L.P. c/o ML Onyx Properties, Corp. Attn: Joe Valenti 255 Liberty Street New York, New York 10080 Bankruptcy Case No.: 04-16441 Chapter 11 Petition Date: June 10, 2004 Court: District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtors' Counsel: William Noall, Esq. Gordon & Silver, Ltd. 3960 Howard Hughes Parkway 9th Floor Las Vegas, NV 89109 Tel: 702-796-5555 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 5 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ ML Leasing Equipment Corp. Deferred Acquisition $10,822,563 4 World Financial Center Fee Principal/ Attn: Joe Valenti Interest and New York, NY 19080 Administrative Fee JP Morgan Trust Company, NA Unsecured portion of $3,850,000 6525 W. Campus Oval Rd. mortgages. New Albany, OH 43054 (Value of Property: approx. $16,525,000) Clifford Chance US LLP Legal invoices $64,164 Kirkpatrick & Lockhart, LLP Legal invoices $15,534 RM 14FK Corp. Litigation Claims Unknown MERISANT WORLD: Receives Consents to Amend 12-1/4% Senior Notes --------------------------------------------------------------- Merisant Worldwide, Inc. announced that in connection with its previously announced cash tender offer for any and all of its outstanding 12-1/4% Senior Subordinated Discount Notes due 2014 (CUSIP Nos. 87336NAA9 and U81965AA0) and solicitation of consents to eliminate substantially all of the restrictive covenants and certain events of default and related provisions contained in the indenture governing the Notes, it has been informed by Wells Fargo Bank, National Association, the depositary for the tender offer and consent solicitation, that as of 5:00 p.m., New York City time, on June 9, 2004, 100%, or 136,040,000 aggregate principal amount at maturity, of the Notes outstanding have been validly tendered and not withdrawn with respect to the tender offer. Accordingly, Merisant Worldwide has received the requisite consents in order to effect the proposed amendments to the indenture governing the Notes, as provided in the Offer to Purchase and Consent Solicitation Statement dated May 20, 2004. These consents may not be revoked unless the tender offer and consent solicitation is terminated without any Notes being purchased. Upon completion of the tender offer and consent solicitation, holders who validly tendered Notes and validly delivered consents prior to 5:00 p.m., New York City time, on June 9, 2004 and who do not withdraw the tendered Notes during the additional withdrawal period that, as announced on June 3, 2004, will arise if Merisant Worldwide has not accepted Notes for payment pursuant to the terms of the tender offer prior to August 15, 2004, will receive the Total Consideration for such Notes. Holders who have delivered consents and tendered Notes prior to 5:00 p.m., New York City time, on June 9, 2004, but who withdraw tendered notes during the additional withdrawal period and do not retender their Notes prior to the Expiration Date, will receive the consent payment of $20.00 per $1,000 principal amount of Notes, but will not receive the Tender Offer Consideration. Consummation of the tender offer is subject to certain conditions, including a financing condition. Subject to applicable law, Merisant Worldwide may, in its sole discretion, waive or amend any condition to the tender offer or consent solicitation prior to the earlier of the first date on which Merisant Worldwide accepts Notes for payment and June 22, 2004, unless extended, or extend, terminate or otherwise amend the tender offer or consent solicitation. Credit Suisse First Boston LLC is the dealer manager for the tender offer and the solicitation agent for the consent solicitation. MacKenzie Partners, Inc. is the information agent and Wells Fargo Bank, National Association is the depositary in connection with the tender offer and consent solicitation. The tender offer and consent solicitation are being made pursuant to the Offer to Purchase and Consent Solicitation Statement, dated May 20, 2004, and the related Consent and Letter of Transmittal, which together set forth the complete terms of the tender offer and consent solicitation, as amended as announced on June 3, 2004 and June 7, 2004. Copies of the Offer to Purchase and Consent Solicitation Statement and related documents may be obtained from MacKenzie Partners, Inc. at 212-929-5500. Additional information concerning the terms of the tender offer and the consent solicitation may be obtained by contacting CSFB at 1-800-820-1653. * * * As reported in the Troubled Company Reporter's May 12, 2004 edition, Standard & Poor's Ratings Services placed its ratings on Merisant Worldwide Inc. and its wholly owned subsidiary Merisant Co. on CreditWatch with negative implications. This includes Merisant Worldwide's 'B+' corporate credit and its 'B-' senior subordinated debt ratings, and Merisant Co.'s 'B+' corporate credit, its 'B+' senior secured bank loan, and its 'B-' senior subordinated debt ratings. Negative implications mean that the ratings could be affirmed or lowered following the completion of Standard & Poor's review. The CreditWatch placement follows Merisant Worldwide's recent S-1 filing with the SEC for an initial public offering of income deposit securities, representing shares of its common stock and new senior subordinated notes. "Standard & Poor's believes that the IDS structure, in general, exhibits an extremely aggressive financial policy. Merisant Worldwide will have significantly reduced its financial flexibility given the anticipated high dividend payout rate," said Standard & Poor's credit analyst David Kang. As a result, the structure limits the company's ability to weather potential operating challenges and also reduces the likelihood for future deleveraging. MILACRON INC: Completes Key Refinancing Transactions ---------------------------------------------------- Milacron Inc. (NYSE: MZ), a leading supplier of plastics processing equipment and supplies, and industrial fluids, completed a number of key refinancing transactions to strengthen the company's balance sheet. These transactions were made possible by shareholder approval of several proposals at the company's annual meeting on June 9, 2004. In summary, Milacron: -- Received from escrow cash proceeds of a private placement of $225 million in 11-1/2% senior secured notes due 2011, issued at a discount to effectively yield 12%; -- Made an initial draw of approximately $23 million, including letters of credit, on a new four-year, $75 million senior secured revolving credit facility led by JPMorgan Chase; -- Paid off a bridge credit facility with Credit Suisse First Boston, under which approximately $110 million was drawn, including letters of credit; -- Repurchased EUR 114.99 million of Milacron Capital Holdings B.V.'s EUR 115 million 7.625% guaranteed bonds due 2005; and -- Issued 500,000 shares of 6% Series B convertible preferred stock to Glencore Finance AG and Mizuho International plc in exchange for their debt ($70 million in Series B Notes) and equity (15 million shares of common stock). As a result of these transactions, Milacron has increased its equity base, established a source of revolving credit through 2008 and consolidated all its major term debt into one obligation maturing in 2011. 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 CORP: Names Loyd Warnock As SVP For Governmental Affairs --------------------------------------------------------------- Mirant Corp. (Pink Sheets: MIRKQ - News) announced on June 3, 2004 that Loyd (Aldie) Warnock, 45, has joined the company as senior vice president, governmental and regulatory affairs. He will report to president and chief executive officer, Marce Fuller. Warnock will lead Mirant's federal and state legislative and regulatory activities, serve as primary contact with regional transmission organizations and oversee all policy matters related to these areas. He will also represent Mirant at the Federal Energy Regulatory Commission, the Electric Power Supply Association, the Edison Electric Institute and various public utility commissions. "Aldie's 22 years of energy-sector experience, proven track record, strong negotiation skills and extensive network of contacts made him the right choice to fill this important role. He will strengthen our management team through complementary knowledge and perspectives," said Fuller. "We are very confident that Aldie's governmental and regulatory efforts can make a valuable contribution to the goal of achieving our long-term business plan, and the development of competitive wholesale power markets in the U.S." Prior to joining Mirant, Warnock was vice president, regulatory affairs at Reliant Energy. In this role, he oversaw state and federal regulatory strategies that supported the company's wholesale and retail operations, and served as Reliant's primary liaison with FERC and PUCs across the country. Warnock has also held key positions at Houston Lighting and Power Company, including director, regulatory relations during deregulation of the Texas energy market. 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: Committee Brings-In Winston & Strawn as Attorneys -------------------------------------------------------------- The Official Unsecured Creditors Committee appointed in MJ Research, Incorporated's chapter 11 case sought and obtained approval from the U.S. Bankruptcy Court for the District of Nevada to hire Winston & Strawn LLP as its counsel. To help the Committee to execute faithfully its duties on behalf of the creditors as a whole, Winston & Strawn will: a) provide legal advice to the Committee with respect to its duties and powers in this case; b) consult with the Committee and the Debtor concerning the administration 16 of this case; c) assist the Committee in its investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtor, operation of the Debtor's business, and the desirability of continuing or selling such business and/or assets, and any other matter relevant to this case or to the formulation of a plan; d) assist the Committee in the evaluation of claims against the estate, including analysis of and possible objections to the validity, priority, amount, subordination, or avoidance of claims and/or transfers of property in consideration of such claims; e) assist the Committee in participating in the formulation of a plan, including the Committee's communications with unsecured creditors concerning the plan and the collecting and filing with the court acceptances or rejections of such a plan; f) assist the Committee with any effort to request the appointment of a trustee or examiner; g) advise and represent the Committee in connection with administrative matters arising in this case, including the obtaining of credit, the sale of assets, and the rejection or assumption of executory contracts and unexpired leases; h) appear before this Court, any other federal court, state court or appellate courts; and i) perform such other legal services as may be required and which are in the interests of the unsecured creditors. John D. Fredericks, Esq., reports that Winston & Strawn will bill the Debtor its customary hourly rates: Designation Billing Rate ----------- ------------ Partners $330 to $695 Associates $190 to $430 Paraprofessionals $40 to $215 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. MOBILEPRO CORP: CEO Jay Wright Issues Letter to Shareholders ------------------------------------------------------------ MobilePro Corp. (OTC Bulletin Board: MOBL) President and CEO Jay Wright issued the following Letter to Shareholders: Dear Shareholders: Many of you have emailed the company in recent days asking questions regarding the company's strategy, acquisitions, financing and stock price. I would like to take this opportunity to recap some of our key accomplishments over the past six months, address a number of your questions, outline our go- forward strategy and hopefully alleviate some concerns which may have arisen. Strategy and Acquisitions Technology Division -- Neoreach When I became CEO of MobilePro in December, the company had the beginnings of a good technology portfolio with five wireless antenna patents, a modem device and some ideas on a Zigbee semiconductor chip. Since that time, we have filed for a new patent application on our semiconductor chip technology and are now in the development stage. We are also looking at applying for patents on some other interesting technology applications over the coming months. Our strategy on the technology side of our business is twofold: first, we are going to push forward with development of our Zigbee semiconductor chip in a cost-effective way; second, we will look to monetize the remainder of our portfolio. We are currently looking at partnership opportunities to best leverage our intellectual property in the Zigbee area and hope to have news to report to you this summer. Development of semiconductor chips is inherently a risky, but potentially very lucrative business. We believe that we have something quite useful in the patent application we submitted in April, something which we believe has application in many areas of wireless including Wi-Fi, Bluetooth and Zigbee. The remainder of our IP Portfolio we will look to monetize via licensing or joint venture. John von Harz, one of our advisory board members, is looking at uses for our wireless antenna patents. We are also starting to look at applications for our modem technology. Going forward, our focus will be on our Zigbee semiconductor chip and related wireless applications. Wireless technology has a large addressable market and we will seek to grab a portion of that market for MobilePro. At some future point, it may make sense to "spin-off" Neoreach into a separate public company. Management and the Board of Directors will continue to evaluate the propriety and timing of such a strategy. Telecommunications Division -- Nationwide Internet and Subsidiaries In December, MobilePro was still a development stage company. In everyday language, the company had $0 of revenue. My goal was to quickly change that. And we have. Nationwide Internet and its three subsidiaries are generating approximately $5.3 million in annual revenue and an expected $1.2 million in earnings before interest, taxes, depreciation and amortization. When fully integrated together early in the third quarter, we expect this contribution to offset recurring corporate overhead and research and development costs and make the company cash flow positive. We also have signed five other letters of intent to acquire additional telecommunications assets. In aggregate, they generate an estimated $8.7 million in revenue and $1.8 million in EBITDA. Thus, if we were to close all five transactions, we would have revenue of $14.0 million and EBITDA of nearly $2.0 million. Please note that due to lags in SEC filings, these acquisitions, if completed, may not be reflected fully in our financial statements for many months to come. Our pipeline for telecommunications acquisitions is strong as well. We are looking today at acquisitions with expected annualized revenue of approximately $103 million and EBITDA of approximately $15 million. The intermediate and long-term strategy for our telecommunications division is to continue building revenue, cash flow, and customers. Then, with a sufficiently large base, we intend to look to implement a Voice over Internet Protocol technology, integrate our operations, opportunistically expand wireless operations, create a national branding strategy and drive operating costs down and operating margins up, in short, create a new significant player in the telecom marketplace. We would expect to pursue this phase of our plan in 2005. We currently own 10% of one VoIP company as part of our acquisition of August.net. We are also looking at other acquisitions of technology and technology companies which will allow us to leverage our projected customer base most effectively. With the huge deployed base of fiber in the United States and opportunities on the satellite front, we continue to believe that IP is the future of telecommunications and we intend to be in the vanguard of companies deploying VoIP broadly. Expect to hear more from us in the coming months as we develop this strategy. We are excited about VoIP's promise and believe it is a substantial opportunity to exploit. An additional wrinkle is the opportunity to sell Zigbee chips or other proprietary technology to our customer base. One final point on acquisitions. We are only interested in making acquisitions of companies which have a solid revenue stream, established customer base and are cash flow positive upon our acquisition. Specifically, management looks at the contribution of each acquisition to revenue per share, EBITDA per share and earnings per share as key metrics in making an acquisition decision. That is crucial to building intrinsic value per share in our stock. Financing Perhaps no other area has generated more questions and comments than our recently announced $100 million Standby Equity Distribution Agreement that we obtained from Cornell Capital. Let me summarize why we entered into the SEDA with Cornell. First, the SEDA gives us access to capital when we want it and in quantities that we want. Thus, if we need $1 million to close an acquisition, I am able to contact Cornell and have them provide the funds in a timely way. This means that we can raise capital as needed, rather than in a single lump as is the case with a PIPE, secondary offering, or regular private placement offering. As a result, we don't issue shares until and unless needed. Those shares that are issued under the line are sold by Cornell over a 10-week or longer period. And Cornell has restrictions under the SEDA on shorting our stock. All these protections allow us to raise capital as we build intrinsic value in the company, not at the beginning when our stock price is presumably the lowest and most dilutive. In my view, using $1 million of equity funding to acquire private company assets which may be worth $2 million or $3 million in a public vehicle is a good use of shareholders' money. Second, having access to $100 million of capital gives us the firepower to look at deals from a position of strength. Potential sellers are much more likely to listen to us and receive our offers knowing that we have the ability to close deals. Third, we can look at larger deals which have the potential of increasing intrinsic value more quickly. With only $10 million under our prior line, we could not look at a $15 or $20 million transaction. Now we can. Next, having the SEDA gives us leverage to negotiate a subordinated or mezzanine debt package on more favorable terms. We are currently looking at adding $15-20 million of debt to our capital structure. This would allow us to do acquisitions without issuing additional shares. Without the SEDA, negotiating such a deal would be difficult, if not impossible. Finally, having the SEDA allows us to recruit high quality executives. Kevin Kuykendall joined us only after we solidified the SEDA. And he has brought with him tremendous deal flow on the voice side of the business and experience with VoIP. The concern raised about the SEDA is one word: dilution. Some shareholders are fearful that management will take the money from the SEDA, issue a lot of shares and then not do anything useful with the money. That would give shareholders a smaller equity stake in a company no more valuable than it is today. In short, dilution. Here's my view. If management takes the capital from the SEDA and uses it to either acquire good, cash generating businesses or acquire or build new, exciting technologies, then the value of the enterprise should rise on a per share basis. That is the definition of accretive: when an acquisition adds not just to the total value, but to the per share value of an enterprise. Warren Buffet could acquire additional businesses for Berkshire Hathaway and expand the value of his company, but he chooses to be very selective because only a few add to the per share value of that company. We are looking to do likewise. To maximize the likelihood that we do accretive things with the SEDA, MobilePro has a process by which all acquisitions are reviewed by our board of directors prior to executing a definitive agreement. Management reviews the financials of all potential acquisitions and we do appropriate technical due diligence. We have a world-class law firm, Schiff Hardin, assist with the diligence and prepare the acquisition documents and we have a post-closing audit performed by our auditors with appropriate deductions from the purchase price for liabilities that they unearth. In summary, we believe that the SEDA is a huge asset to MobilePro and the concerns about dilution are overblown. To that end, I am going to put my money where my mouth is and hereby voluntarily agree to extend the lockup of my equity in MOBL for 17 additional months until the end of my employment contract in April 2006. For those long- term shareholders who wish to join me in what I think is a great business opportunity, this move fully aligns my interests with you. Stock Price Those of you who have written to me previously know that I am more concerned about building the intrinsic value per share of our company than in the minute-to-minute fluctuations in our stock price. That said, the recent sharp decline with no apparent reason does cause me concern because it raises our cost of capital for acquisitions and creates unneeded stress for some of our shareholders. Let me, therefore, address some issues raised by our shareholders. First, it has come to light that MOBL has been listed on the Berlin Stock Exchange by some brokers in Germany. Rumors about so- called "naked shorting" have also been circulating, despite minimal apparent volume on the Berlin Exchange. Let me be clear: I take market manipulation, including naked shorting, very seriously and we will look to take or trigger action, including SEC or other enforcement action or a delisting action, if necessary. Further, short sellers run a serious risk with our company: we are contemplating and pursuing strategies, including a possible spin- off of Neoreach and potential large acquisitions, which are difficult, if not impossible, to hedge against and could result in serious losses to someone caught short. Second, as addressed above, concerns have been raised about Cornell shorting our stock. Not only is that restricted under the SEDA, but the structure of the SEDA itself would make that a risky strategy for Cornell, even if permitted, because of the way the pricing works -- namely, the pricing is done weekly, not all at once. It is my view, therefore, that "Cornell shorting" is more bogeyman than reality. If evidence to the contrary comes to my attention, we will aggressively pursue all available remedies. Finally, some of you have asked about MobilePro getting a U.S. exchange listing and about a reverse stock split. On reverse stock splits, I am philosophically opposed to them. They generally destroy shareholder value and we are not currently looking at a reverse split. In fact, in only three instances does it make sense to even consider a reverse split: in connection with a significant acquisition, a significant value added financing or in conjunction with achieving a minimum price for listing on a stock exchange such as the Nasdaq. As for a listing, we are not focused on that right now due to the substantial opportunities on our plate, but will look at some future date at "moving up" provided it does not require a large reverse split. In closing, I would like to personally thank each and every shareholder for their support. Stock prices do not go up every day, but the strategies we are pursuing, I am confident, will cause our intrinsic value per share to continue to climb. That will, I strongly believe, translate into positive shareholder value over time. I am proud to be your CEO and look forward to continuing building MobilePro into a large, profitable company. Very sincerely yours, Jay O. Wright President and Chief Executive Officer MobilePro Corp. About MobilePro Corp. MobilePro Corp. is a wireless technology and broadband Internet services company based in Bethesda, Maryland with operations in Hurst, Dallas and Beaumont, Texas and Shreveport, Louisiana. The company is focused on creating shareholder value by developing innovative wireless technologies, acquiring and growing profitable broadband Internet service providers and forging strategic alliances with well-positioned companies in complementary product lines and industries. At March 31, 2004, Mobilepro Corp.'s balance sheet shows a stockholders' deficit of $2,109,795 compared to a deficit of $1,319,534 at December 31, 2003. NATIONWIDE ELECTRICAL: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Nationwide Electrical Supply, Inc. aka Ideal Electric aka Mohegan Electric 211 Kisco Avenue Mount Kisco, New York 10549 Bankruptcy Case No.: 04-22935 Type of Business: The Debtor is a Wholesale Electrical Distributor & Retail Lighting Showroom Operator. Chapter 11 Petition Date: June 10, 2004 Court: Southern District of New York (White Plains) Debtor's Counsel: Harold D. Jones, Esq. Jaspan Schlesinger Hoffman, LLP 300 Garden City Plaza Garden City, NY 11530 Tel: 516-746-8000 Fax: 516-393-8282 Total Assets: $1,924,827 Total Debts: $4,526,656 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Gerald A. Pinsky $550,000 515 Green Place Woodmere, NY 11598 Lightolier Inc. $383,420 631 Airport Road Fall River, MA 02720 IBEW Local 1430 Health $101,286 Colonial Wire & Cable $77,568 James Eder $63,100 Lutron Electronics Co. Inc. $55,371 Murray Electrical Products $51,161 American Express Company $50,458 Joseph Esposito $47,870 Highland Valley Industrial $37,352 Inc. Levitton Mfg. $32,793 Hadco Arch Outdoor Light $32,307 State Insurance Fund $32,080 Satco Products Inc. $29,331 Cooper Lighting $28,556 Progress Lighting $27,762 RAB Electric MFG. Inc. $26,569 Coronet Inc. $23,541 Stein & Stein Attorneys at $19,872 Law National Lighting Co. Inc. $19,220 NATURADE INC: Appoints Zreik As EVP-Sales & Kasprisin As COO ------------------------------------------------------------ Marwan Zreik has been named executive vice president of sales, and Stephen Kasprisin has been appointed chief operating officer at Naturade, Inc. (OTCBB:NRDC), a leading marketer of heart health and weight management products under the brand names Naturade Total Soy and Diet Lean(TM), it was announced by Bill Stewart, chief executive officer. Zreik, previously the Company's chief operating officer, will assume the responsibility for sales in the mass market, health food and international channels. Kasprisin, the Company's current chief financial officer, will assume responsibility for overall operations management of the organization, including distribution, purchasing, order entry and vendor relationships. In addition, he will retain his duties as the Company's CFO and principal accounting executive. Both Zreik and Kasprisin will report to Stewart. Zreik, a Certified Clinical Nutritionist, joined Naturade in 1997 and was responsible for all aspects of the Company's distribution, purchasing, customer service, research and development and quality control. He will continue to lead the Company's product research and development efforts, customer service and quality control while participating as a member of the Company's new product team. Zreik received his B.S. degree in animal physiology and neuroscience from University of California-San Diego, a M.S. degree in physiology and biophysics from Georgetown University and an M.B.A. from the University of Southern California. Kasprisin, who joined the Company in March 2003, brings over 25 years of experience in progressive leadership roles to Naturade, including financial and operating management of consumer products sold to the food and drug trade and in manufacturing businesses. He received a B.A. from Baldwin-Wallace College, and is a CPA, having started his career with PriceWaterhouseCoopers. "The realignment of our management team provides the Company with additional focus on market penetration while maintaining the high standards of customer service and operations management we have come to expect," says Stewart. "Marwan and Steve have proven their ability to work in concert, and I am confident that the entire management team will continue to pull together to make Naturade a success. I am excited about the resources we can bring to bear on this challenging consumer environment and am equally excited about our prospects for the near- and long-term future," adds Stewart. Headquartered in Irvine, California, Naturade provides healthy solutions for weight loss consistent with its commitment -- since 1926 -- to improve the health and well-being of consumers with innovative, natural products. Its premier brand, Naturade Total Soyr, is a complete line of meal replacement products for weight loss and cholesterol reduction, which is sold at major supermarket and club, health food, drug and mass merchandise stores throughout the U.S. and Canada. Well known for over 50 years of leadership in soy protein, Naturade also markets a complete line of protein boosters for low carbohydrate dieters, a new line of safe, natural weight loss products under the Diet Lean(TM) brand and a line of SportPharmar sports nutrition products for fitness-active consumers. Naturade's other brands include Calcium Shake(TM), Naturade Total Soy Menopause Relief(TM), Power Shaker and Aloe Vera 80r. For more information, visit http://www.naturade.com/ At March 31, 2004, Naturade Inc's balance sheet shows a stockholders' deficit of $3,462,380 compared to a deficit of $2,861,638 at December 31, 2003. NEXMED: Plans Additional Financing Through Partnering Agreements ---------------------------------------------------------------- NexMed Inc. has an accumulated deficit of $89,203,101 at March 31, 2004 and the Company expects to incur additional losses throughout 2004. The Company's current cash reserves raise substantial doubt about the Company's ability to continue as a going concern. Management anticipates that it will require additional financing, which it is actively pursuing, to fund operations, including continued research, development and clinical trials of the Company's product candidates. Management plans to obtain the additional financing through partnering agreements for Alprox-TD(R) and some of its other products under development using the NexACT(R) technology as well as through the issuance of debt and/or equity securities. If the Company is successful in entering into partnering agreements for some of its products under development using the NexACT(R) technology, it anticipates that it will receive milestone payments, which may offset some of its research and development expenses. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining financing on terms acceptable to it. If additional financing cannot be obtained on reasonable terms NexMed, Inc. is an emerging pharmaceutical and medical technology company, with a product development pipeline of innovative treatments based on the NexACT(R) transdermal delivery technology. ORBITAL SCIENCES CORP: S&P Raises Corporate Credit Rating to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings, including the corporate credit rating to 'BB-' from 'B+', on Orbital Sciences Corp. The outlook is stable. The company has $135 million in rated debt. "The upgrade reflects Orbital's improved credit profile, supported by adequate liquidity, better operating performance, and a sizable backlog," said Standard & Poor's credit analyst Christopher DeNicolo. The ratings on Dulles, Virginia-based Orbital reflect the company's modest size and the risky nature of the launch business, offset somewhat by leading positions in market niches and increased military spending, especially related to national missile defense. Orbital is a leading provider of small launch vehicles and small Geostationary communications satellites, as well as boost vehicles and targets for missile defense programs. The company has divested a number of units in recent years to focus on its core launch vehicle and satellite operations. The launch vehicle segment (50% of first-quarter 2004 revenues) has been bolstered by a contract with Boeing Co. to develop the booster for the Ground-based Midcourse Defense program, which could be worth $1 billion over the life of the contract. This contract contributed around half the revenues and earnings for this segment in 2003. In addition, the company was also on the winning team for the Kinetic Energy Interceptor, a separate missile defense program. The total Department of Defense budget for the missile defense program is expected to increase to $10.7 billion in fiscal 2005 from $9.5 billion in 2004. Orbital's Pegasus and Taurus small launch vehicles have been affected by weakness in the overall launch services market, but have recently won contracts to launch NASA scientific satellites. The company's satellite and related systems segment (46%) has been negatively affected by weak demand for GEO communications satellites, offset somewhat by higher sales in the science, technology and military low earth orbit satellite product line. The GEO satellite program had been operating at a loss due to development costs, but is now profitable. Revenues in the transportation management systems (TMS) unit (5%) declined significantly in 2003 and into 2004 as a result of a number of contracts nearing completion. Software development problems required Orbital to increase the cost to complete on certain contracts, resulting in an operating loss for TMS in 2003. As contracts that are in a loss position are completed, profitability in this segment should improve; it was breakeven in the first quarter of 2004. Consolidated firm backlog was a healthy $940 million at March 31, 2004, providing good visibility for future revenues and earnings. Revenues, profitability, and cash flows are expected to benefit from the missile defense contract and improved satellite operations, resulting in an overall financial profile appropriate for the rating over the intermediate term. OWENS CORNING: Court Approves Stipulations With Four Claimants -------------------------------------------------------------- Owens Corning entered into a stipulation with four claimants, which the Court approved: (1) The Debtors and the State of Louisiana agree that the State will be deemed to have a general, unsecured non- priority claim for $2,000,000 against Owens Corning, solely for voting purposes; (2) A.H. Bennett and the Debtors agree that A.H. Bennett will be deemed to have a general, unsecured, non-priority claim for $2,000,000 against Owens Corning, solely for voting purposes; (3) A.W. Kuettel and the Debtors agree that A.W. Kuettel will be deemed to have a general, unsecured non-priority claim for $400,000 against Owens Corning, solely for voting purposes; and (4) Plant Insulation Company and the Debtors agree that Plant Insulation will be deemed to have a general, unsecured non-priority claim for $20,000,000 against Fibreboard Corporation, solely for voting purposes. 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: Agrees to Resolve California State Dispute for $84MM ----------------------------------------------------------------- In a Court-approved stipulation, Pacific Gas and Electric Company PG&E and the People of the State of California, ex. rel. the California Energy Resources Scheduling division of the Department of Water Resources, agree to resolve DWR's unsecured, non-priority claim -- Claim No. 12323 -- which was subsequently amended by Claim No. 12592. Pursuant to the Stipulation, the parties agree that: (a) Claim No. 12592 will be allowed as an $84,487,319 general unsecured claim, subject to adjustment. The Allowed Claim Amount will be treated like any other similar allowed general unsecured claims in PG&E's bankruptcy cases. The Allowed Claim Amount reflects satisfaction of PG&E's obligations with respect to: -- payments made by DWR for prepetition prescheduled electric power and imbalance electric power supplied to retail customers in PG&E's service territory; and -- certain invoices by California Independent System Operator Corporation relating to charges incurred from and after January 17, 2001 relating to transmission, distribution, and administrative costs, consistent with the table of cost categories and specific associated CAISO charge types, and for energy and non-energy- related CAISO invoice amounts paid by DWR on behalf of PG&E attributable to servicing municipal utilities and other wholesale entities from and after January 17, 2001. To the extent that there are any true-ups or adjustments to the prepetition Retail Energy Charges, the true-ups or adjustments will be implemented by PG&E and DWR pursuant to the 2002 Servicing Order adopted by California Public Utilities Commission on May 16, 2002, pursuant to Decision No. 02-02-048 and the 2003 Servicing Order adopted by the CPUC on December 19, 2002 pursuant to CPUC Decision No. 02-12-072, and applicable CPUC, Federal Energy Regulatory Commission or non-bankruptcy forum directives and thus will not affect the Allowed Claim Amount; (b) Until the principal amount is paid, the Allowed Claim Amount will accrue postpetition interest, compounded monthly, at the monthly weighted average interest rate that PG&E earns on its short-term investments. For the period through December 31, 2003, interest on the Allowed Claim Amount will be in the aggregate amount of $2,467,415. Commencing on January 1, 2004, until 15 days after the Plan Effective Date, interest will be calculated on any outstanding balance -- as determined as of the Effective Date -- of the unpaid Allowed Claim Amount and accrued interest for the months within each quarter at a monthly average interest rate that PG&E earns on its short-term investments compounded monthly, which rate will be calculated by PG&E and communicated to DWR. Commencing on the 16th day after the Effective Date, interest will be calculated on any outstanding balance of the unpaid Allowed Claim Amount and accrued interest as calculated for the months within each quarter at prime rate plus 3% compounded monthly, consistent with the 2003 Servicing Order. PG&E will make quarterly interest payments on any outstanding balance of the unpaid Allowed Claim Amount and accrued interest for the months within each quarter; (c) In the event that there is an adjustment of the CAISO Disputed Charges resulting from additional adjustments, refunds, re-runs, or modifications by the CAISO -- of other FERC designated entity -- for the period from January 17, 2001 through the Petition Date, that PG&E or DWR pays to or is credited by the CAISO, the Allowed Claim Amount will be adjusted according to the principles set forth by the Operating Agreement as directed by the CPUC in Decision No. 03-04-029 on April 3, 2003, or any successor CPUC order or agreements between the parties, without the necessity of further Court approval. In the event of an adjustment to the Allowed Claim Amount after the Plan Effective Date, the principles of the Operating Agreement will govern the rights and obligations of the parties; (d) Notwithstanding any other provision of the Stipulation, in in the event that DWR is determined to be financially responsible for a certain disputed PX Invoice, the parties agree that the Allowed Claim Amount will be adjusted for any amounts attributable to the period from January 17, 2001 through February 14, 2001 for the imbalance energy purchases made under the CAISO Scheduling Coordinator Identification No. PXC1 based on a certain invoice generated by the California Power Exchange Corporation. The amount of the Disputed PX Invoice issued to PG&E is approximately $30 million and DWR's potential liability with respect to the Disputed PX Invoice is yet to be determined by FERC. Any disputes over the amount of, the payment of, or PG&E's liability for, the Disputed PX Invoice will be resolved in the otherwise applicable non- bankruptcy forum; (e) The parties agree that the Allowed Claim Amount will be adjusted for any amounts owed under Decision 03-09-017 for the Disputed Under-Remittance Interest relating to certain interest on PG&E's under-remittances associated with the Western Area Power Administration load to be paid to DWR. Any disputes over the amount of, the payment of, or PG&E's liability for, the Disputed Under-Remittance Interest will be resolved in the otherwise applicable non-bankruptcy forum. In the event an adjustment to the Allowed Claim Amount after the Plan Effective Date, the parties will comply with any applicable orders issued in the non- bankruptcy forum; and (f) DWR represents and warrants that it has neither assigned nor transferred any portion of the Claim. 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 GROUP: US Creditors Examine GE Capital & Citigroup Deals ----------------------------------------------------------------- The Official Committee of Unsecured Creditors wants the U.S. Bankruptcy Court's permission to take oral depositions from people at the Parmalat U.S. Debtors with specific knowledge regarding the Debtors' master lease agreement with GE Capital Corporation, and their Receivables Purchase Agreement and the credit facility transactions with Citigroup, Inc. The Committee is presently investigating claims and causes of action against GE Capital and Citigroup. GE Capital and Farmland Dairies, LLC, are parties to a Master Lease Financing Agreement dated April 30, 2003, as well as a $35,000,000 postpetition financing arrangement. Citigroup, as Agent and as successor-in-interest to Eureka Securitisation plc, entered into the Receivables Purchase Agreement on November 2, 2000, as amended, with Farmland and Milk Products of Alabama, LLC. The Debtors are also parties to a prepetition $7,000,000 credit facility with Citigroup, with respect to which a $2,000,000 payment was made to Citigroup in December 2003. The U.S. Debtors and the Creditors Committee have been discussing the possibility of interviewing the Debtors' employees with knowledge of the Lease Agreement, the Citigroup Agreement and the Citigroup Credit Facility. Although some interviews have already been scheduled and one has been completed, the Debtors have been unable to confirm an interview with Nash Lakha, a director and former officer of the Debtors, and the one with the most specific and comprehensive knowledge about the Master Lease, Citigroup Agreement and Credit Facility. Considering the time constraints imposed by the June 30, 2004 deadline, the Creditors Committee determined at this time to proceed with a Rule 2004 examination rather than an interview of Mr. Lakha without prejudice to its right to seek Rule 2004 examinations of other employees, representatives or agents of the Debtors. Mr. Lakha does not oppose the Committee's request to depose him pursuant to Rule 2004. The Creditors Committee also wants the U.S. Debtors to produce certain documents, to the extent they have not yet been produced, including: 1. All federal and state tax returns for the Debtors for the years 2000 and 2001; 2. All audited and unaudited financial statements for the Debtors for the year 2000; 3. All financial projections for the Debtors for the years 2002 and 2003; 4. A list of all equipment owned or acquired by Farmland Dairies from the years 2002 to the present; 5. Copies of all equipment appraisals and inventories performed or commissioned by or on behalf of Farmland from the years 2002 to the present; 6. All credit or loan applications and any other documents submitted by or on behalf of Farmland Dairies relating to or in connection with the Master Lease; 7. All credit or loan applications and any other documents submitted by or on behalf of Farmland and Milk Products relating to or in connection with the Citigroup Agreement; 8. All documents relating to any request or the decision made to include Mother's Cake and Cookie Co. and Archway Cookies, LLC, as parties to the Citigroup Agreement; 9. All documents and communications relating to Parmalat USA's $7,000,000 credit arrangement with Citibank; and 10. All documents and correspondence relating to Parmalat USA's $5,000,000 credit arrangement with UniCredito Italiano. 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. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEGASUS: Obtains Interim Nod to Prioritize Intercompany Claims -------------------------------------------------------------- According to Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, in Portland, Maine, the Pegasus Satellite Communications, Inc. Debtors fund certain intercompany transactions involving intercompany trade and intercompany capital needs of the Debtors. Intercompany trade relates to the transaction of goods and services between various Debtors. The intercompany capital needs are transactions through which Pegasus Satellite Television, Inc., and Pegasus Broadcast Television Inc., fund certain working capital needs of their subsidiaries. Reimbursements made to Pegasus Communications Management Company are disbursed from the Direct Broadcast Satellite Concentration Accounts, in accordance with the terms of a Services Support Agreement. Any amount entered into the accounts payable system results in a charge to the subsidiary and a credit in an intercompany payable account. At Pegasus Satellite, a payable is recorded and an intercompany receivable is charged to offset the liability at the affiliate company. When amounts are disbursed, the liability that was transferred to Pegasus Satellite is relieved and a credit for the cash disbursement is recorded. Mr. Keach points out that the Intercompany Transactions are an integral part of the Debtors' Cash Management System and critical to meeting the liquidity needs within the Debtors' organization. Because the Debtors are part of an integrated business, throughout the entirety of these transactions, the funds remain within the spectrum of the Debtors' control. Furthermore, the Cash Management System allows for the accurate tracking and tracing of all Intercompany Transactions. The Debtors believe that the continuation of the Intercompany Transactions is beneficial to their estates and creditors and, thus, the Intercompany Transactions should be permitted. The loss of liquidity within the Debtors' organization provided by the Intercompany Transactions would threaten the Debtors' ability to reorganize successfully. If the Court authorizes continuation of the Intercompany Transactions, at any given time there may be balances due and owing from one Debtor to another. These balances represent extensions of intercompany credit. The Debtors have maintained and will continue to maintain records of those transfers, including records of all current intercompany accounts receivable and accounts payable. To ensure that each individual Debtor will not, at the expense of its creditors, fund the operations of another entity, the Debtors ask the Court that all intercompany claims against a Debtor by another Debtor arising after the Petition Date as a result of Intercompany Transactions through the Cash Management System be accorded administrative expense priority status. If Intercompany Claims are accorded priority status, Mr. Keach explains that each entity utilizing funds flowing through the Cash Management System will continue to bear ultimate repayment responsibility for the borrowings. * * * On an interim basis, Judge Haines grants the Debtors' request. The Court will convene the Final Hearing 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) PETCO: Leonard Green & Texas Pacific Put 5MM Shares Up for Sale --------------------------------------------------------------- PETCO Animal Supplies, Inc. (Nasdaq: PETC) announced that affiliates of Leonard Green & Co. and Texas Pacific Group have agreed to sell an aggregate of 5,000,000 shares of the company's common stock with an expected price to the public of $32.10 per share. This sale is being made pursuant to the company's registration statement previously filed with the Securities and Exchange Commission. Morgan Stanley & Co. Incorporated is the underwriter of the offering. PETCO will not receive any of the proceeds from the offering. Copies of the final prospectus supplement and related prospectus may be obtained from Morgan Stanley's Prospectus Department, 1585 Broadway, New York, New York 10036 when they are available. * * * As reported in the Troubled Company Reporter's March 8, 2004 edition, Standard & Poor's Ratings Services raised its ratings on PETCO Animal Supplies Inc. The corporate credit rating was raised to 'BB' from 'BB-'. The outlook is stable. The upgrade reflects PETCO's improved financial profile and continued strength in its operations. Due to the company's better operating performance and modest debt reduction, credit protection measures have strengthened. Standard & Poor's expects PETCO's operations to remain solid, supported by its successful operating strategy and merchandising skills. PHILLIPS VAN HEUSEN: Reaffirms Earnings Guidance for FY 2004 ------------------------------------------------------------ Phillips-Van Heusen Corporation (NYSE:PVH) announced during its presentations at the Goldman Sachs 4th Annual Small-Cap Retail Conference and the Piper Jaffray Equity Conference that it is reaffirming the Company's May 19, 2004 earnings guidance for the full fiscal 2004 year. These presentations can be accessed by logging on to http://www.pvh.com/ and going to the "News Release" page under the "Investor Info" tab. For the year, the Company continues to be estimating that earnings per share will be in the range of $1.13 to $1.18, excluding restructuring and other items. The Company continues to be estimating that GAAP earnings per share for the year will be in the range of $0.53 to $0.58 including such expenses. The following table reconciles the Company's earnings per share estimates from those computed under GAAP to the non-GAAP earnings per share measure disclosed: Earnings per share range computed under GAAP......$0.53 - $0.58 Effect on earnings per share range from the elimination of restructuring and other items, including costs associated with closing underperforming retail outlet stores, exiting the wholesale footwear business and early debt extinguishment....................................$0.60 Earnings per share range, excluding such costs........................................$1.13 - $1.18 About the Company Phillips-Van Heusen Corporation (S&P, BB Corporate Credit Rating) is one of the world's largest apparel and footwear companies. It owns and markets the Calvin Klein brand worldwide. It is the world's largest shirt company and markets a variety of goods under its own brands, Van Heusen, Calvin Klein, Izod, Bass and G.H. Bass & Co., and its licensed brands Geoffrey Beene, Arrow, Kenneth Cole New York, Reaction by Kenneth Cole and BCBG Max Azia. POLYPORE INC: S&P Places Low-B Ratings on CreditWatch Positive -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit, 'B+' senior secured debt, and 'B-' senior subordinated notes ratings on Charlotte, North Carolina-based Polypore Inc. on CreditWatch with positive implications. Polypore is a wholly owned, indirect subsidiary of unrated Polypore International Inc. "The CreditWatch listing follows Polypore International's filing of a registration statement with the SEC for its proposed $300 million IPO of common stock," said Standard & Poor's credit analyst Nancy Messer. Proceeds from the proposed offering are to be used, in part, to reduce the 8.75% senior subordinated notes, due 2012, issued recently by Polypore Inc. About $150 million of the proceeds will be used to redeem the series A preferred stock of Polypore International held by its principal stockholder, Warburg Pincus. On May 13, 2004, all the capital stock outstanding of Polypore Inc. was purchased by Polypore International, which is controlled by Warburg Pincus. At closing of the transaction, Polypore Inc. had about $828 million of debt outstanding. Polypore is a global manufacturer of micro-porous membranes, a filtration technology used by makers of separations equipment found in health-care markets and energy storage devices. "We will resolve the CreditWatch listing after a review of Polypore's financial policy and capital structure pro forma for the proposed debt repurchase. If the improved credit profile is judged to be sustainable, a ratings upgrade may be warranted," Ms Messer said. "Depending on the amount of proceeds raised in the stock offering, Polypore Inc.'s leverage could decline to a level sufficient to warrant a one-notch upgrade." RCN CORPORATION: Hiring AP Services as Crisis Managers ------------------------------------------------------ Pursuant to Section 363 of the Bankruptcy Code, RCN Corporation seek the Court's authority to employ AP Services, LLC, to provide them with certain temporary employees to assist the Debtors in their restructuring efforts pursuant to the terms of an engagement letter. APS will provide John Dubel as its representative to serve as the Debtors' President and Chief Operating Officer. Mr. Dubel will assist the Debtors in their operations with an objective of restructuring the Debtors, and managing the Debtors' restructuring efforts, including negotiating with parties-in- interest and coordinating the "working group" of the Debtors' employees and external professionals who are assisting the Debtors in the restructuring. Mr. Dubel will be assisted by a staff of Temporary Employees provided through APS at various levels, all of whom have a wide range of skills and abilities related to this type of assignment. Deborah M. Royster, RCN Corporation's General Counsel and Corporate Secretary, tells the Court that Mr. Dubel is well suited to provide the restructuring services required by the Debtors. Mr. Dubel is affiliated with the restructuring firm AlixPartners, LLC, a leading corporate restructuring advisor. AlixPartners has a wealth of experience in providing services in Chapter 11 cases and has an excellent reputation for the services it has rendered on behalf of debtors in cases throughout the United States. APS, on the other hand, has provided, or is currently providing, restructuring services in numerous large cases. According to the terms of the Engagement Letter, Mr. Dubel and the Temporary Employees who will assist him will be compensated at these hourly rates: Principals $540 - 690 Senior Associates 430 - 520 Associates 300 - 400 Accountants and Consultants 225 - 280 Analysts 150 - 190 In addition to these hourly rates, the Debtors will pay directly or reimburse APS upon receipt of periodic billings, for all reasonable out-of-pocket expenses incurred in connection with the assignment like travel, lodging, postage, actual telephone and facsimile charges, and other expenses deemed reasonable and necessary in the administration of the Debtors' estates. Furthermore, APS received a $750,000 retainer to be applied against the compensation, including expenses, specific to the engagement and will hold the retainer for application in accordance with the Engagement Letter. Any unearned portion of the retainer will be returned to the Debtors upon the termination of the engagement. The Debtors will also compensate APS for its efforts by the payment of a Contingent Success Fee of: (a) $5,000,000 upon the completion of an out-of-court restructuring, the sale of a majority of the Debtors' assets, or the confirmation of a plan of reorganization that occurs before September 15, 2004; or (b) $4,000,000 upon the completion of an out-of-court restructuring, the sale of a majority of the Debtors' assets, or the confirmation of a plan of reorganization that occurs after September 15, 2004 but before February 15, 2005; or (c) $3,000,000 upon the completion of an out-of-court restructuring, the sale of a majority of the Debtors' assets, or the confirmation of a plan of reorganization that occurs after February 15, 2005. The Debtors acknowledge that the Contingent Success Fee is an integral part of APS' compensation. However, APS and the Debtors both acknowledge that the Contingent Success Fee is not payable if APS is terminated for cause or if there is a conversion of these cases. They further acknowledge that the Contingent Success Fee is subject to Court approval when earned. The Debtors will provide Mr. Dubel with director and officers' liability insurance coverage and Mr. Dubel will be entitled to the benefit of the most favorable indemnities provided by the Debtors to their officers and directors. Ms. Royster informs the Court that APS will not be submitting quarterly fee applications as prescribed by Sections 330 and 331 of the Bankruptcy Code because APS is not being employed as a professional under Section 327. However, 45 days after the end of each quarter, APS will file a notice of compensation earned and expenses incurred for the previous quarter with the Court and the Office of the U.S. Trustee. The compensation and expenses are subject to Court review only in the event that an objection to the notice is filed within 20 days of its service. Ms. Royster also reports that APS is not yet aware of any relationship, which would present a conflict of interest in these cases. Despite the efforts to identify and disclose the connections that APS and its affiliates have with parties-in- interest in these cases, because the Debtors are part of a large enterprise with numerous creditors and other relationships, APS is unable to state with certainty that every client relationship or other connection has been disclosed. In this regard, if APS discovers additional information that requires disclosure, APS will file a supplemental disclosure with the Court. Additionally, Mr. Dubel assures the Court that APS holds no adverse interest as to the matters for which is it has been employed by the Debtors. Certain individuals affiliated with APS may render crisis and interim management services to the Debtors on a part-time basis, while others have been, and will continue to be, engaged full-time. To the extent these individuals are employed on a part-time basis, Mr. Dubel submits that there are no simultaneous engagements existing which would constitute a conflict or adverse interest as to the matters for which it has been employed by the Debtors. Wells Fargo Objects The Debtors provide no explanation why it requires a multi- million dollar crisis manager for what appears to be a pre- packaged reorganization, Peter S. Goodman, Esq., at Andrews Kurth, LLP, in New York, tells the Court. To the degree a crisis manager is necessary, Wells Fargo & Company, a substantial holder of RCN Corporation preferred stock, complains that the Debtors fail to properly incentivize AP Services to maximize recoveries in RCN's case. To the contrary, under the proposed compensation structure, APS would benefit from completing a quick restructuring as proposed in the Debtors' looming pre-packaged plan of reorganization, which places little value to Wells Fargo. It is blatantly prejudicial for the Debtors to place a thumb on the scale against Wells Fargo, and other equity holders, through the retention of professionals, especially at this early stage before equity holders have properly organized or even investigated the value of RCN's assets. Mr. Goodman explains that the Debtors intend to essentially eliminate equity in a pre-planned reorganization in favor of its unsecured creditors and debt holders. Therefore, APS' retention is unjustified given the pre-planned nature of the bankruptcy and the large fees the Debtors would incur in retaining the firm. Wells Fargo believes that the Debtors failed to provide a valid reason for retaining APS beyond the canned information typically provided in similar applications. Since the reorganization is pre-planned, Wells Fargo notes that it is unclear what value APS would be adding to justify its success fee. Furthermore, the Debtors' Application fails to provide any information on whether the success fee is comparable to other success fees in similar cases. Additionally, Mr. Goodman points out that the success fee, which the Debtors presumably intend to pay in connection with a prepetition restructuring, should be approved as part of a plan process and not as part of a first day order. Wells Fargo, hence, asks the Court to deny the Debtors' Application. 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) REEVES COUNTY, TX: Fitch Upgrades $89MM Certificate Rating To B --------------------------------------------------------------- Fitch upgrades the underlying rating of approximately $89 million Reeves County, TX certificates of participation-lease rentals to 'B' from 'CCC' and removes the bonds from Rating Watch Positive. The Rating Outlook is Stable. The certificates are insured by various financial guarantors. Certificates financed construction of the west Texas county's 3000-bed prison, which markets itself to federal and state correctional agencies. The upgrade reflects Reeves County Detention Center's improved ability to fund debt service and core operating costs under a new agreement with the federal government and a new contract to house Arizona state prisoners. The rating remains in the 'B' category, indicating highly speculative credit characteristics, for several reasons. First, RCDC's contracts are short term in nature, and RCDC's history demonstrates the difficulty in assuming prisoner populations from any agency will be predictable over a long period. In 2003 expected federal occupancy of a new portion of the facility did not materialize. Second, while RCDC's relationship with a for-profit management company, The GEO Group, has proved helpful in recent months, this relationship is now highly vital to RCDC's continued ability to function. The management agreement is terminable upon county nonpayment of an invoice, certificate default, or other specified reasons. The GEO Group is not rated by Fitch. The county entered into an annually renewable contract with the Arizona Department of Corrections in March to house up to 864 new inmates in RCDC's phase three facility. More than 2,000 federal inmates already are housed at RCDC. The Arizona contract and a three-year intergovernmental agreement with the Federal Bureau of Prisons executed in February have resulted in occupancy near the projections of the county at the time of the last certificate issuance in 2001. Accordingly, RCDC has more capacity than before to meet its own debt service and core operating costs, at least for the short term, so long as BOP and Arizona use the facility. The ability of the facility to generate sufficient funds to pay fees to its for-profit manager and surpluses to the county is less certain. A forecast assuming RCDC houses 3,039 inmates shows 1.51 times and higher annual coverage of debt service, not counting management fees, county transfers, and other subordinated costs. The same forecast, assuming all subordinate payments and assumed or agreed- upon annual revenue increases, shows a declining cash balance in 2005, followed by slowly increasing balances thereafter. While the coverage and other projections are promising, they are reliant on continued use of RCDC by BOP and Arizona, and the county's contracts with each of these counterparties are short term in nature. The 2001 certificates mature through 2013. Net debt service on the certificates rises sharply beginning in 2005, from approximately $10.6 million in 2004 to $12.4 million in 2005. By agreement with The GEO Group, the county has agreed to use its best efforts to 'restructure/refinance' its RCDC obligations to reduce annual costs below currently scheduled levels. The ability of the county to access the capital markets for this purpose is unable to be assessed by Fitch. 'B' category ratings indicate highly speculative credit characteristics. Significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business environment. RELIANCE FINANCIAL: Disclosure Statement Hearing Set for July 7 --------------------------------------------------------------- Judge Gonzalez will convene a hearing on July 7, 2004 to consider the adequacy of the Disclosure Statement with respect to the First Amended Chapter 11 Plan of Reorganization filed by the Official Unsecured Bank Committee for Reliance Financial Services Corporation. At the hearing, Judge Gonzalez will consider whether the Disclosure Statement contains "adequate information" within the meaning of Section 1125(a)(1) of the Bankruptcy Code, and complies with Section 1125(b) of the Bankruptcy Code. The Disclosure Statement filed by the Bank Committee on June 2, 2004 contains descriptions and summaries of: (a) the Plan; (b) RFSC's corporate and capital structure; (c) RFSC's business; (d) the events leading up to the Chapter 11 Case, (e) the claims asserted against RFSC's estate; (f) the new common stock to be issued under the Plan; (g) the settlement agreements (1) among the Bank Committee, the Official Committee of Unsecured Creditors, and the Insurance Commissioner of the Commonwealth of Pennsylvania, as Liquidator of Reliance Insurance Company, and (ii) among the Bank Committee and the Creditors Committee, on behalf of the estates of RFSC and RGH; and (h) risk factors affecting the Plan and RFSC's operations; (i) securities law and tax law consequences of the Plan. The Disclosure statement also provides a discussion comparing the estimated return that creditors will receive under the Plan against the estimated return under a hypothetical liquidation of RFSC under Chapter 7 of the Bankruptcy Code. The Disclosure Statement also contains financial information relevant to a party's determination to accept or reject the Plan. 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) RURAL/METRO: Stockholders Vote to Authorize 17MM New Common Stock ----------------------------------------------------------------- Rural/Metro Corporation (NASDAQ: RURLC) announced that its stockholders voted to amend the company's certificate of incorporation to authorize 17 million new shares of common stock at its Annual Meeting in Scottsdale. Approximately 5 million of the newly authorized shares will be utilized immediately by the company to exchange all of its outstanding preferred stock for common stock. The company will retain the balance of the new shares. Jack Brucker, President and Chief Executive Officer, said, "Our stockholders gave thoughtful consideration to this measure, and we appreciate their support. We look forward to initiating the process to exchange the preferred stock held by our lenders and eliminate the accretion that has been reducing our earnings-per- share potential in the past year." Stockholders also re-elected two independent directors at Thursday's meeting. They are Cor J. Clement, Sr., Chairman of the Board of Directors since 1998 and a Board member since 1992; and Henry G. Walker, Board member since 1997. Rural/Metro Corporation provides emergency and non-emergency medical transportation and fire protection services in 24 states and more than 400 communities throughout the United States. For more information, visit the company's web site at http://www.ruralmetro.com/ About Rural/Metro Rural/Metro Corporation -- whose March 31, 2004 balance sheet shows a stockholders' deficit of about $209 million -- provides emergency and non-emergency medical transportation, fire protection, and other safety services in 24 states and more than 400 communities throughout the United States. For more information, visit the company's web site at http://www.ruralmetro.com/ ST. LOUIS CHARTER: Fitch Affirms $6.1M Revenue Bond Rating at BB ---------------------------------------------------------------- Fitch Ratings affirms the underlying 'BB' rating on $6.1 million outstanding Missouri Health and Educational Facilities Authority educational facilities revenue bonds, tax-exempt series 2002A and taxable series 2002B. The Rating Outlook is revised to Negative from Stable. Payment of scheduled principal and interest is insured by ACA Financial Guaranty Corp., whose insurer financial strength is rated 'BBB' by Fitch and currently on Rating Watch Evolving. The public charter school serves more than 900 kindergarten through eighth grade students in St. Louis, Missouri. With steady enrollment, St. Louis Charter School has maintained a sound balance sheet position, inclusive of supplemental debt service and maintenance reserves accumulated. This is notable as it occurred despite two consecutive years of challenging cuts in state per pupil funding, which led to a deficit in fiscal 2003 and a likely deficit in fiscal 2004, based on year-to-date figures. The cuts have made it difficult for the school to expand coverage levels and build a greater margin of safety in the face of future increases in debt service, infrastructure replacement costs, and personnel. The challenges the school may face in coping with these and other costs is the basis for the Negative Rating Outlook. The school's enrollment growth has been satisfactory, and this remains a key credit strength. At the time the bonds were issued, enrollment was 762. The official statement forecast projected enrollment of 930 by school year 2003-2004. In the fall of 2002, enrollment grew to 900 and now stands at 916. Enrollment growth to 930, the school's capacity, is budgeted for fall 2005 as the eighth-grade class expands to capacity. Testing results have been satisfactory to help ensure enrollment retention and growth, according to school officials. No disputes with the school's charter sponsor, the University of Missouri-St. Louis, are reported. The school's charter runs through 2005, subject to renewal. Despite enrollment growth, revenues have lagged projections due in large part to per pupil funding declines from $6,105 in fiscal 2002 to $6,025 in fiscal 2003 and $5,824 in fiscal 2004. Official statement projections estimated revenues of the school would grow to $8.3 million by fiscal 2004; instead, budgeted revenues for this year are $7.7 million, with a positive year-to-date variance, not counting summer school fees, through April 30. Budgeted expenses in fiscal 2004 are $7.6 million; with a negative variance, as of April, of $275,644 year-to-date. Payments from the school district to the school reportedly have been running about one week late, on average. The school's management company projects that cash should be accumulated to fund a replacement reserve up to $750,000, which will be needed for roof repairs in fiscal 2005 or 2006. The decline in per pupil revenues seems likely to be a major factor in keeping unrestricted cash balances very low; they were $51,074 at the end of fiscal 2003, or under 1% of the school's general fund expenditures. At March 31, unaudited cash of the school equaled just $64,805. Bond-funded and other debt service reserves totaled $783,520, as of March 31, or well over one year of debt service payments. Over time, Fitch believes periodic use of bond-funded and supplemental debt service reserves is possible due to enrollment and revenue timing volatility typical of charter schools. In fiscal 2003, debt service coverage is estimated by Fitch to have been approximately 1.53 times (x) actual debt service or 0.82x of peak debt service through fiscal 2010. Securities with 'BB' ratings have speculative credit characteristics. 'BB' ratings indicate that there is a possibility of credit risk developing, but business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade. In Fitch's opinion, most charter school bonds are of 'B' or 'BB' category credit quality. SALTON: Lenders Agree to Extend Forbearance Pact Until Sept. 30 --------------------------------------------------------------- Salton, Inc. (NYSE: SFP) announced that it has entered into an amended forbearance agreement with its senior lenders. The senior lenders have agreed, subject to the Company's compliance with the terms and conditions of the amended agreement, to extend until September 30, 2004 the period during which they will forbear from exercising their remedies relating to Salton's failure to comply with certain financial covenants in its senior debt. The forbearance period is subject to several conditions, including a requirement that Salton: (a) deliver to the senior lenders by no later than June 25, 2004 a commitment letter for additional funding of at least $25 million on terms acceptable to the senior lenders; and (b) receive such additional funding by July 12, 2004. The Company is currently negotiating with several parties the terms of such additional funding and other financing alternatives. The investment banking firm of Houlihan Lokey Howard & Zukin Capital has been assisting the Company in connection with its examination of various capital raising opportunities. There is no assurance that the Company will receive a commitment letter for, or consummate any, financing. The amended agreement permits the interest payment of approximately $6.7 million due on June 15, 2004 under Salton's outstanding 10-3/4% senior subordinated notes if Salton meets certain conditions, including that Salton's availability under its senior credit agreement is at least $10 million after such payment. There is no assurance that these conditions will be satisfied. About Salton, Inc. Salton, Inc. is a leading designer, marketer and distributor of branded, high quality small appliances, home decor and personal care products. Our product mix includes a broad range of small kitchen and home appliances, tabletop products, time products, lighting products, picture frames and personal care and wellness products. We sell our products under our portfolio of well recognized brand names such as Salton, George Foreman, Westinghouse(TM), Toastmaster, Melitta, Russell Hobbs, Farberware, Ingraham and Stiffel. The company believes its strong market position results from its well-known brand names, high quality and innovative products, strong relationships with customer base and focused outsourcing strategy. SEITEL INC.: S&P Rates Proposed $190 Million Senior Debt at B- -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to seismic data provider Seitel Inc. At the same time, Standard & Poor's assigned its 'B-' rating to the company's proposed $190 million senior unsecured notes due 2012, which will be issued as part of Seitel's bankruptcy and reorganization plan. The outlook is stable. Houston, Texas-based Seitel, a provider of seismic data and geophysical services to the North American oil and gas industry, is expected to have total debt of about $192 million, pro forma for the high yield bond issuance. The ratings on Seitel reflect the company's participation in the highly cyclical, intensely competitive seismic data acquisition and processing segment of the oilfield service industry. "The seismic sector continues to be plagued by continued overcapacity," said Standard & Poor's credit analyst. "We view the onshore domestic market as particularly challenging, as it is highly fragmented and characterized by intense competition and price pressure." The ratings on Seitel are constrained by the company's aggressive financial profile, which is characterized by high leverage following its emergence from bankruptcy about one year after its filing for protection under Chapter 11. "Given the deeply cyclical nature of the seismic industry and difficult market conditions, Seitel will be challenged to consistently produce adequate cash flows to materially improve its credit profile in the near to intermediate term," said Ms. Stokes. These concerns are somewhat mitigated by the size and scope of Seitel's existing data library and outsourcing strategy. The stable outlook reflects credit measures that are adequate for the rating and offset volatile industry conditions. SHAW GROUP: Agrees to Cooperate with Informal SEC Inquiry --------------------------------------------------------- The Shaw Group Inc. (NYSE:SGR) reported that on June 1, 2004, Shaw was notified by the Securities and Exchange Commission (SEC) that it is conducting an informal inquiry. The SEC has not advised the Company as to either the reason for the inquiry or its scope. However, the request for information appears to primarily relate to the purchase method of accounting for acquisitions, as presented in Shaw's Form 10-K for the fiscal year ended August 31, 2003. The SEC's notice states that the notice should not be construed as an indication of any improper or unlawful conduct. The SEC has not issued a formal order, and Shaw Group has voluntarily agreed to cooperate fully with the inquiry. Robert L. Belk, Executive Vice President and Chief Financial Officer, said, "We are confident that our accounting practices, including the application of the purchase method of accounting, are in accordance with generally accepted accounting principles. We have informed the SEC that we will cooperate fully with this informal inquiry and hope to resolve all of its questions. While this is only an informal inquiry, we feel it is important to advise our shareholders and others because of our commitment to the principles of full disclosure and openness." The Shaw Group Inc. is a leading global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation and facilities management services for government and private sector clients in the power, process, environmental, infrastructure and emergency response markets. A Fortune 500 company, Shaw Group is headquartered in Baton Rouge, Louisiana and employs approximately 17,000 people at its offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region. * * * As reported in the Feb. 10, 2004, issue of the Troubled Company Reporter, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating and its other ratings on The Shaw Group Inc. At the same time, Standard & Poor's revised the outlook on the company to negative from stable. "The outlook revision reflects the fact that profitability and cash flow generation for fiscal 2004 ending August will be weaker than previously anticipated, because of continuing challenges on a few problem projects, reduced expectations of asset divestitures, and weakness in the higher margin pipe manufacturing operation," said Standard & Poor's credit analyst Heather Henyon. As a result, it is unlikely that Shaw will be able to meet Standard & Poor's expectations of total debt to EBITDA of 2.5-3x and EBITDA to interest coverage in the 3x area in 2004. However, a growing backlog of more steady environmental and infrastructure projects may enable the company to achieve an acceptable credit profile in the intermediate term. SPEIZMAN INDUSTRIES: Hires Kilpatrick Stockton as Attorneys ----------------------------------------------------------- Speizman Industries, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Georgia, Newnan Division, to employ and retain Kilpatrick Stockton LLP as their counsel. Kilpatrick Stockton will: a) provide the Debtors with legal advice with respect to their powers, rights, duties, and obligations in these Chapter 11 cases; b) take all necessary action to protect and preserve the estates of the Debtors, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, and the negotiation of disputes in which the Debtors are involved; c) prepare on behalf of the Debtors all necessary motions, applications, answers, orders, reports, and papers in connection with the administration of the estates; d) take such legal action as is necessary to protect and conserve property of the estates; e) advise the Debtors regarding their Chapter I1 cases and any plan proposed in connection therewith; f) advise the Debtors regarding any claims and causes of action that the Debtors may have against various parties, including without limitation, claims for preferences, fraudulent conveyances, and other rights of recovery granted to a debtor-in-possession; g) advise and represent the Debtors in hearings and other judicial proceedings in connection with all applications, motions, or complaints and other similar matters; and h) perform all other necessary legal services in connection with these Chapter 11 cases. Dennis S. Meir, Esq., a partner of Kilpatrick Stockton reports that the firm will bill the Debtors its current hourly rates of: Designation Billing Rate ----------- ------------ Partners $395 - $570 per hour Counsel $335 - $355 per hour Associates $195 - $280 per hour Paralegals $130 - $170 per hour 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. STANDARD PARKING: S&P Affirms Corporate Credit Rating at B ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on parking provider Standard Parking Corp. Standard & Poor's also affirmed its 'CCC+' subordinated debt rating on the company's 9.25% senior subordinated notes due 2008. The ratings affirmation follows the company's recently completed initial public offering of 4.5 million shares of its new Class A common stock. All ratings have been removed from CreditWatch, where they were placed Feb. 10, 2004. In addition, Standard & Poor's assigned its 'B' bank loan rating and '3' recovery rating to Standard Parking's new $90 million senior secured credit facility due 2007. The bank loan is rated the same as the corporate credit rating; this and the '3' recovery rating indicate that lenders can expect meaningful recovery of principal in the event of a default or bankruptcy. The outlook on Chicago, Illinois-based Standard Parking is stable. Standard & Poor's estimates that Standard Parking had about $118.9 million of total debt outstanding pro forma for the May 2004 closing of its IPO. The rating actions follow the recent refinancing of the company's existing bank debt and 14% second-lien notes due 2006 using net proceeds of about $52 million from the IPO. The ratings on the existing bank loan and second-lien notes have been withdrawn. The transaction reduces Standard Parking's debt balance by about $39 million and lowers its annual debt service cost, improving credit protection measures somewhat. Despite the improvement in the company's financial profile, Standard & Poor's remains concerned about challenging industry conditions and the possibility that Standard Parking's future growth strategies may become more aggressive. "The ratings on Standard Parking reflect its highly leveraged financial profile, narrow business focus, and exposure to the challenging air travel industry," said Standard & Poor's credit analyst David Kang. Only partially offsetting these risks are the company's No. 2 market position within the highly fragmented and competitive parking industry, as well as its geographic diversity and fairly predictable cash flow generating ability. Standard Parking provides on-site management services at surface and multilevel parking facilities for two major markets: urban parking and airport parking. Despite its somewhat narrow business focus, it is the second-largest private provider of parking services, with about 1,900 parking facilities, while market leader Central Parking Corp. (B+/Negative/--) has about 3,600 facilities. Standard Parking operates in more than 275 cities in the U.S. and Canada and maintains a strong presence in major markets across the U.S., providing some geographic diversity to its operations. It operates most of its facilities (more than 80%) under management contracts, rather than owning or leasing them. STATE STREET: First Creditors' Meeting Scheduled for June 30 ------------------------------------------------------------ The United States Trustee will convene a meeting of State street Houses, Inc.'s creditors at 2:00 p.m., on June 30, 2004 in Room 106 at the Alexander Pirnie Federal Building, 10 Broad Street, Utica, New York 13501. 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 Utica, New York, State Street Houses, Inc. is a legal title holder of Kennedy Plaza Apartments in Utica, New York. The Company filed for chapter 11 protection on May 21, 2004 (Bankr. N.D.N.Y. Case No. 04-63672). Camille Wolnik Hill, Esq., at Hancock & Estabrook, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debts and assets of over $10 million. STELCO: Comments On Legal Action Taken By General Motors -------------------------------------------------------- Stelco Inc. (TSX: STE) commented on action taken by General Motors Corporation regarding its supply arrangements with Stelco's Lake Erie facility. Stelco has received a letter from General Motors and has been served with Motion materials seeking the Court's permission to terminate General Motors' supply arrangements with Stelco's Lake Erie facility effective July 31, 2004. General Motors cited Stelco's inability to provide certainty of supply beyond the July 31, 2004 expiry of the collective agreement at Stelco's Lake Erie facility plus the extended lead time needed to secure steel from alternative sources as the reasons underlying this action. In its letter, General Motors indicated that it would be prepared to consider alternative arrangements to the termination of its business with the Lake Erie facility if those arrangements are in place by June 14, 2004. General Motors would consider continuing the business relationship if it could be assured of at least 90 days prior written notice of any potential work stoppage associated with the expiry of the Lake Erie collective agreement. Courtney Pratt, President and Chief Executive Officer of Stelco, said, "This is an extremely serious development, but it is a possibility we have raised in public for months. We've stated the need to provide our customers with certainty of supply during our restructuring process. We've urged representatives of all three of our USWA Locals to engage in meaningful discussions about how to address their issues while providing customers with the certainty they demand. And we've indicated our willingness to consider the appointment of a neutral third party as a means of achieving progress on Lake Erie issues without presenting customers with the prospect of a strike. "We've held meetings with Lake Erie USWA Local representatives in search of progress in satisfying General Motors' needs. Unfortunately, we've not been successful thus far. "General Motors is offering a means of maintaining our business relationship - the provision of 90 days prior written notice of any potential work stoppage. We've asked the Lake Erie USWA Local to agree to that request and we hope that it will. A great deal is riding on that decision." About Stelco Inc. Stelco Inc. is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. To learn more about Stelco and its businesses, please refer to our Web site at http://www.stelco.ca/ TRW AUTOMOTIVE: Launches Safety Electronics Production in China --------------------------------------------------------------- TRW Automotive Holdings Corp. (NYSE: TRW), the global leader in automotive safety systems, has launched production of airbag electronic control units from its wholly-owned subsidiary in Anting, China. TRW Automotive Components Co. Ltd. was established in 2002 in Anting and initially produced power rack and pinion and electrically powered hydraulic steering systems beginning in 2003. The plant is now manufacturing and shipping safety electronics ECUs to a major Japanese vehicle manufacturer for its global platforms. Total investment in the 3,600 square meter facility to date is $11 million, with a current employment of 120 that will more than double with further production increases in 2005. "The production of safety electronics in China is another significant step in our efforts to support the global expansion of our customers in the region," said Peter J. Lake, executive vice president, Sales and Business Development for TRW Automotive. "TRW continues to expand the breadth and depth of its product lines in China and, we believe, is well positioned to supply customers with a full range of active and passive safety products." The Anting facility establishes TRW safety electronics manufacturing capability in Asia, Europe and North America to support global platforms across all regions. It also complements TRW's growing airbag production capabilities in China from its Shanghai TRW Automotive Safety Systems, Co. joint venture and the newly expanded TRW FAWER Automobile Safety Systems, Co. in Changchun. TRW Automotive has nine facilities in China including seven joint venture facilities, manufacturing chassis modules, steering systems, braking systems, seat belts, airbags and steering wheels, engine valves and switches as well as an aftermarket business. About TRW With 2003 sales of $11.3 billion, TRW Automotive ranks among the world's top 10 automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, employs approximately 61,000 people in 22 countries. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems, electronics, engine components, fastening systems and aftermarket replacement parts and services. TRW Automotive news is available on the internet at http://www.trwauto.com/ * * * As reported in the Troubled Company Reporter's February 12, 2004 edition, following the completion of TRW Automotive's initial public equity offering, Fitch Ratings has affirmed the earlier indicative debt ratings of TRW Automotive Inc. The ratings of 'BB+' for senior secured bank debt, 'BB-' for senior notes, and 'B+' for senior subordinated notes are all affirmed. The Rating Outlook is Stable. TRW's ratings are reflective of the de-leveraging of the capital structure since the initial deal funding, the projected lower interest costs resulting from these lower debt levels and some refinancing activities, and relatively stable operating performance as a standalone company. Additionally, TRW's ratings are supported by its diversity of revenue which spans across all the major global vehicle manufacturers, good competitive positions in active and passive restraint systems which should continue to benefit from both regulatory and market dynamics, and a solid book of forward business which reflect these operating positives. Balancing out some of these positives are the risks associated with the continued severe pricing pressures and production volatility in the automotive environment which will challenge TRW to expand, if not maintain, margin performance. And, while TRW has been increasing its business with the ascendant Asian vehicle manufacturers, TRW still remains heavily levered to the traditional North American Big Three which have collectively been losing market share. Furthermore, TRW still remains highly levered in its capitalization and will have limited free cash flow for continuing principal reduction. UAL CORP: Reaches Agreement With Retirees on Medical Benefits ------------------------------------------------------------- UAL Corporation (OTC Bulletin Board: UALAQ) announced that it has reached an agreement with a coalition representing the remaining retirees regarding modifications to retiree medical and life insurance benefits. This agreement, which covers more than 27,000 retirees, combined with the agreement previously announced in May with the Aircraft Mechanics Fraternal Association, will deliver cash savings to the company of more than $300 million through 2010. Executive Vice President and Chief Operating Officer Pete McDonald said, "As part of our efforts to reorganize successfully and be competitive for the longer term, we needed to address our retiree medical benefits. The agreements with all our retirees contribute to achieving the durable savings that we need while recognizing the concerns of retirees expressed by their representatives. We appreciate the hard work of the retirees' authorized representatives in helping us to achieve these important savings." The coalition includes the Association of Flight Attendants, the International Association of Machinists and Aerospace Workers, the International Federation of Professional and Technical Engineers, the Professional Airline Flight Control Association, the Transport Workers Union, as well as authorized representatives of the retired pilots and the retired salaried and management employees. The Company will file a motion with the Bankruptcy Court on Monday seeking approval of this agreement to modify retiree medical and life insurance benefits. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. the Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. ULTRA CAR WASH: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: T.B. AD. LLC dba Ultra Car Wash Route 1 Box 173 May, Texas 76857 Bankruptcy Case No.: 04-36428 Chapter 11 Petition Date: June 9, 2004 Court: Northern District of Texas (Dallas) Judge: Steven A. Felsenthal Debtors' Counsel: Thomas Ford, Esq. Fillmore and Ford 4921 Camp Bowie Boulevard Fort Worth, TX 76107 Tel: 817-377-2229 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-largest creditors. USG CORP: Court Grants Authority to Expand PwC's Employment ----------------------------------------------------------- Judge Fitzgerald authorizes USG Corporation to expand and supplement the scope of PricewaterhouseCoopers, LLP's employment as their Special Sarbanes-Oxley Consultant, in connection with their Chapter 11 cases. The Debtors relate that PwC is currently providing them with certain non-professional vendor services regarding internal information technology. Because these vendor services do not constitute professional services, they were not included in the scope of PwC's employment. Pursuant to the terms of PwC's current engagement as Special Sarbanes-Oxley Consultants, PwC has assisted the Debtors in complying with the requirements of the Sarbanes-Oxley Act of 2002. It is anticipated that PwC will continue to provide the Debtors with a wide range of services to ensure compliance with the S-O Act. Among other measures that they are taking, the Debtors have developed an internal "whistle-blower" program called "My Safe Workplace," which sets forth certain procedures for the reporting and investigation of any suspected incidents of fraud, violations of USG policy or other improprieties within USG. The Debtors believe that the My Safe Workplace program, along with USG's other programs and policies regarding workplace ethics and fraud prevention and investigation, constitute best corporate practices along the lines of the S-O Act. These programs and policies require that reports of fraud, violations of the Debtors' internal policies and other improprieties within USG be investigated. Therefore, the Debtors want to engage PwC to perform certain aspects of these investigations as the need for those services may arise from time to time. Because reports of impropriety require immediate action and skilled investigation, the Debtors believe that expanding the scope of PwC's employment to permit it to address these incidents as they may arise and without delay is appropriate. The specific forensic auditing services that PwC may perform include: (a) interviewing USG employees or individuals outside the company; (b) reviewing written and electronic documents; (c) analyzing data for evidence relevant to matters under investigation; and (d) documenting the results of PwC's findings and recommendations. In addition to the forensic auditing services, the Debtors anticipate that PwC will perform certain internal auditing services to assess internal controls, including controls contained within and surrounding the Debtors' internal information technology systems, and to test the effectiveness of and identify gaps in their internal controls. The specific internal auditing services that PwC will perform include: (a) interviewing USG employees in business units being audited; (b) reviewing written and electronic documents; (c) analyzing electronic data; (d) documenting and assessing configurable information systems controls; (e) documenting business process flows and related controls; (f) developing and performing tests of controls; (g) evaluating the efficiency and effectiveness of controls; (h) identifying control gaps and weaknesses; and (i) documenting the results of PwC's work, findings, and recommendations. The Debtors maintain that PwC is particularly well suited to provide the types of services they require. PwC has a vast domestic and international accounting and consulting practice and has extensive experience in providing S-O Act-related services as well as forensic accounting and internal auditing services. PwC is the world's largest professional services organization, employing 125,000 people in 142 countries. PwC's service offerings include audit, assurance and business advisory services, merger and acquisition services, corporate finance and recovery services, human resource services, and global tax services. PwC's global reach, combined with its depth of resources, knowledge and experience, allows it to deliver top quality service to their clients. The team of PwC professionals who will be providing forensic services to the Debtors are part of PwC's Chicago Corporate Investigations and Forensic Services practice. Professionals who will be providing internal auditing services to USG are part of PwC's Chicago Systems and Process Assurance and Internal Auditing Services practices. PwC has notably provided professional services to the Debtors in the past and thus is familiar with the Debtors' structure and operations. PwC will charge the Debtors for its services on an hourly basis in accordance with its hourly rates in effect on the date services are rendered: (A) Internal Auditing Partner $400 Senior Manager 310 Manager 260 Senior Associate 205 Associate 132 (B) Forensic Auditing Partner 578 Director 510 Manager 413 Senior Associate 290 Associate 203 Paraprofessional Staff 105 Administrative 75 The Debtors will also reimburse PwC for actual and necessary out- of-pocket expenses. Dina M. Norris, a partner at PwC, assures the Court that the firm does not have any connection with the Debtors, their creditors, the U.S. Trustee or any other party with an actual or potential interest in these Chapter 11 cases. 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) US UNWIRED: Prices $360 Million Senior Debt Offering ---------------------------------------------------- US Unwired Inc. (OTCBB:UNWR) announced that it has priced an offering of $360 million aggregate principal amount of senior secured notes, consisting of $125 million aggregate principal amount of first priority senior secured floating rate notes due 2010 and $235 million aggregate principal amount of 10% second priority senior secured notes due 2012. The 2010 Notes will bear interest at a rate equal to three-month LIBOR plus 425 basis points and are being offered to investors at a price of 100% of principal amount. The 2012 Notes are being offered to investors at a price of 99.326% of principal amount. The closing of the Offering is scheduled to occur on June 16, 2004, and is subject to customary closing conditions. US Unwired also announced that the tender offer for $400 million outstanding face amount of its 13 3/8% Senior Subordinated Discount Notes due 2009 expired at 1:00 p.m. on June 10, 2004, with a total of $235,814,000 face amount of notes tendered in the offer. US Unwired intends to accept for purchase and to pay for all of such tendered notes immediately following the closing of the Offering. The Notes are being offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended and to persons outside the United States under Regulation S of the Securities Act. The Notes will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state laws. This press release shall not constitute an offer to sell or a solicitation of an offer to purchase any of these securities, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act. About US Unwired US Unwired Inc., headquartered in Lake Charles, Lousiana, holds direct or indirect ownership interests in five PCS affiliates of Sprint: Louisiana Unwired, Texas Unwired, Georgia PCS, IWO Holdings and Gulf Coast Wireless. Through Louisiana Unwired, Texas Unwired, Georgia PCS and IWO Holdings, US Unwired is authorized to build, operate and manage wireless mobility communications network products and services under the Sprint brand name in 67 markets, currently serving over 650,000 PCS customers. US Unwired's PCS territory includes portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas, Massachusetts, New Hampshire, New York, Pennsylvania, and Vermont. For more information on US Unwired and its products and services, visit the company's web site at http://www.usunwired.com/.US Unwired is traded on the OTC Bulletin Board under the symbol "UNWR". * * * As reported in the Troubled Company Reporter's June 4, 2004 edition, Standard & Poor's Ratings Services placed its 'CCC-' corporate credit rating for US Unwired Inc. on CreditWatch with positive implications. The 'C' subordinated debt rating was also placed on CreditWatch with positive implications. This action is based on financial profile improvement that will result following debt for equity exchanges effected pursuant to Section 3(a)(9), together with a proposed refinancing to repay the company's bank credit facility and purchase 13.375% senior subordinated discount notes tendered in response to the company's cash tender offer for all of the notes. The 3(a)(9) exchange agreements will reduce discount note principal outstanding by $75 million face amount, or about $70 million in accreted value. The CreditWatch placement also reflects recent operating improvement, including better customer retention and cash flow growth. Upon completion of the refinancing, Standard & Poor's will raise the corporate credit rating to 'CCC+' with a positive outlook. The rating on any remaining 13.375% subordinated debt (estimated at $89 million) will be raised to 'CCC-' from 'C'. At the same time, a 'CCC+' rating was assigned to US Unwired's proposed $125 million first-priority senior secured floating rate notes due 2010. The 'CCC+' rating will be the same as the corporate credit rating, indicating the expectation of a meaningful, but less than full, recovery of principal in the event of a default or bankruptcy. A 'CCC-' rating was assigned to the $160 million second-priority senior secured notes due 2012. The second-priority notes are rated two notches below the corporate credit rating because of a likelihood of negligible recovery of principal in the event of a default or bankruptcy after first- priority claims are served. The new issues are being offered under Rule 144A with registration rights. Proceeds will be used to repay all of the existing credit facility and about $229 million face amount of the existing 13.375% senior subordinated discount notes. The rating on the bank facility was not placed on CreditWatch and will be withdrawn upon repayment. The 'CC' corporate credit rating and 'C' senior unsecured debt rating on IWO Holdings Inc., a wholly-owned subsidiary of US Unwired, are affirmed. IWO is a Sprint PCS affiliate operating in the Northeast. US Unwired expects to file IWO for bankruptcy protection because of very weak liquidity that makes IWO unable to pay the July 2004 interest payment on its senior notes. Under the terms of the two new US Unwired issues, IWO is classified as an unrestricted subsidiary, and US Unwired is limited in its capacity to provide financial support to IWO. WEIRTON STEEL: Court Approves Lease Decision Period Extension ------------------------------------------------------------- In the Chapter 11 case of Weirton Steel, the Court grants FW Holdings, Inc., and Weirton Venture Holdings Corporation's motion to extend through the confirmation of a Chapter 11 plan the deadline for them to assume or reject all of their unexpired non- residential real property leases, including, but not limited to, the MABCO Lease. To recall, FW Holdings and Weirton Venture recently filed for Chapter 11 protection. Pursuant to Section 365(d)(4) of the Bankruptcy Code, FW Holdings and Weirton Venture have 60 days from their Petition Date to assume or reject their Unexpired Leases. Unless the statutory time period is extended, the Leases not assumed on or before the deadline are deemed rejected. FW Holdings is a party to a sales/leaseback transaction with MABCO Steam Company, LLC, relating to a Foster Wheeler Steam Generation Facility. The FW Facility was originally owned by Weirton and was transferred to FW Holdings on October 26, 2001, which in turn, transferred the FW Facility to MABCO on the same day. MABCO members provided Weirton with certain trade debt concessions and some cash, and MABCO agreed to lease the FW Facility back to FW Holdings pursuant to that certain Lease Agreement dated as of October 26, 2001. FW Holdings, Weirton and MABCO are parties to several additional agreements relating to the MABCO Transaction. In February 2004, FW Holdings filed a complaint against MABCO. FW Holdings wants the Court to: (a) declare the MABCO Transaction and MABCO Agreements to be a disguised financing and not a true lease transaction; and (b) direct MABCO to turnover the property that is the subject of the MABCO Lease. Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, relates that the assumption and assignment of the MABCO Lease and the other MABCO Agreements are subject to and conditioned on the closing of the sale transaction to the Buyer and related terms and conditions of the Assignment Agreement. Mr. Freedlander argues that the effect of assuming any Lease at this time would unfairly elevate the obligations from prepetition unsecured claims to administrative priority expense claims to the prejudice of all non-Lessor creditors of FW Holdings and Weirton Venture's estates if the Lease is ultimately rejected. In the alternative, if FW Holdings and Weirton Venture rejected any Lease at this time, they could lose facilities that they need as a reorganized debtor. Furthermore, the assumption of MABCO Lease by FW Holdings at this time would preclude FW Holding's right to pursue the MABCO Suit. Mr. Freedlander contends that extending the lease decision period will not prejudice any lessor under any of the Leases because all of their rights are preserved. Similarly, it will not constitute an admission by any Debtor that any Lease, including the MABCO Lease, is a true lease. FW Holdings and Weirton Venture's rights with respect to the characterization of the Leases, including the MABCO Lease, are expressly reserved. In the event that the Closing of the Sale Transaction does not occur, FW Holdings and Weirton Venture will determine which of the properties they would need for reorganization and which they do not as part of formulating a business plan. Because FW Holdings and Weirton Venture have not yet determined which properties they need and the Leases represent only a portion of their real property interests, they cannot determine at this time whether they will need to assume or reject the Leases. An extension of the lease decision period will allow FW Holdings and Weirton Venture the opportunity to study and determine which properties they will need for a successful reorganization. FW Holdings and Weirton Venture do not want to forfeit the Leases as a result of the "deemed rejected" provision of Section 365(d)(4) of the Bankruptcy Code or, in the alternative, assume the Leases and incur a substantial, unnecessary administrative obligation in the event that the Sale Transaction does not close and FW Holdings and Weirton Venture are otherwise forced to liquidate their assets. Moreover, because their overall reorganization structure may significantly impact whether the Leases are necessary to their ongoing business, FW Holdings and Weirton Venture believe that it would be imprudent to make a final assumption or rejection decision outside of the plan of reorganization process, or at least until they know whether the Closing of the Sale Transaction will occur. (Weirton Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT STEVENS: Court Gives Until Nov. 30 to Decide on Leases ---------------------------------------------------------------- The Court allows WestPoint Stevens Inc. to further extend the period within which they may assume or reject their unexpired leases through and including November 30, 2004. John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that the Debtors have reduced the number of their Unexpired Leases from 82 to 63 since the Petition Date. Mr. Rapisardi asserts that a reasoned determination as to all Unexpired Leases cannot be made at this critical stage in the Debtors' Chapter 11 cases. The Debtors' management -- with the assistance of Kurt Salmon Associates, Inc., and the Debtors' other professionals -- is in the process of re-examining global business strategies and developing an overall business plan for emergence from Chapter 11. These determinations will necessarily impact the value to the Debtors' estates of certain Unexpired Leases and may affect the Debtors' decision whether to assume or reject the Unexpired Leases. Although the Debtors' Unexpired Leases are currently necessary for the continued operation of their businesses, in light of the potential fundamental changes to the Debtors' operations arising from Kurt Salmon's analysis, it is imperative that the Unexpired Leases continue to be reviewed in conjunction with the Debtors' ultimate restructuring plan before a final determination can be made with respect to the assumption or rejection of each individual Unexpired Lease. Mr. Rapisardi contends that the Debtors should not be compelled to make precipitous decisions regarding the assumption or rejection of the Unexpired Leases. Inadequate time for making informed decisions may result in an inadvertent rejection of a valuable lease or a premature assumption of a burdensome lease. In the absence of an extension, the Debtors will be compelled to assume their Unexpired Leases to avoid rejecting potentially valuable assets, with the resultant imposition of potentially substantial administrative expenses. Mr. Rapisardi assures the Court that an extension will not prejudice the Lessors as the Debtors have remained current and fully intend to remain current with respect to all outstanding postpetition obligations under the Unexpired Leases. Furthermore, the Debtors do not intend to wait until the end of the proposed extension period to make a determination as to the assumption or rejection of the Unexpired Leases. Rather, the Debtors will continue to evaluate the Unexpired Leases on an ongoing basis as expeditiously as practicable and will file appropriate motions as soon as informed decisions can be made. (WestPoint Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) WEST SENECA READI-MIX: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: West Seneca Readi-Mix Inc. 1650 Union Road West Seneca, New York 14224 Bankruptcy Case No.: 04-14200 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Nickel City Macadam, Inc. 04-14223 Johnson Steel Corp. 04-14224 Type of Business: The Debtor is a ready-mixed concrete dealer. Chapter 11 Petition Date: June 4, 2004 Court: Western District of New York (Buffalo) Judge: Carl L. Bucki Debtors' Counsel: Alan R. Feuerstein, Esq. Feuerstein & Smith, LLP 17 St. Louis Place Buffalo, NY 14202-1502 Tel: 716-856-9704 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 21 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ The Flury Partnership Unknown 1225 Seneca Creek Road West Seneca, NY 14224 Wells Fargo Financial Leasing, Inc. Unknown Lafarge North America, Inc. Unknown TLW Transport, Inc. Unknown Adawn Express, Inc. Unknown NCO Financial Systems Unknown Gernatt Asphalt Products, Inc. Unknown ATCO International Unknown Erie County Water Authority Unknown St. Mary's Cement Co. Unknown Green Environmental Specialists Inc. Unknown Carmody Roofing & Sheet Metal Co. Unknown Lawley Service Insurance Unknown AWA Collections Unknown Meeker Equipment Unknown Boehmer Transportation Unknown JSS Unknown Ed's Tire Service Unknown Neuman Claim Administrators, Inc. Unknown The State Insurance Fund Unknown AT&T Unknown WORLDCOM INC: Agrees to Resolve Various Tax Claim Disputes ---------------------------------------------------------- The Worldcom, Inc. Debtors identified 151 objectionable tax claims: Type of Tax Claims No. of Claims ------------------ ------------- Income 7 Excise 3 Property 96 Franchise 3 Tax Liens 3 Occupation 2 Trust Fund 7 Employment 2 Penalty 28 The Debtors dispute the Tax Claims based on one or more of these reasons: (a) The claim was filed as a secured claim but there is no collateral securing the claim and the claim is not a secured claim pursuant to Section 506(a) of the Bankruptcy Code; (b) The Claim does not qualify as an administrative claim because it was incurred prepetition; and (c) The Claim is not a priority claim under Section 507(a)(8). Mark A. Shaiken, Esq., at Stinson Morrison Hecker, LLP, in Kansas City, Missouri, says that these specific objections apply to a corresponding tax claim: A. Income Tax Claims (a) The Claim includes taxes for which a return was due more than three years before the Petition Date; (b) The Claim does not indicate the date for which a tax return was last due, or for which the taxes were assessed; and (c) The Claim is for taxes, which were assessed more than 240 days before the Petition Date. B. Excise Tax (a) The Claim is based on a transaction, which occurred before the Petition Date for which a return, if required, was last due more than three years before the Petition Date; and (b) The Claim is for a transaction for which a return is not required, occurring more than the three years immediately preceding the Petition Date. C. Franchise Tax Claims (a) The Franchise Tax Claim was based or measured on the Debtors' capital; and (b) The Franchise Tax Claim fails to indicate the basis for, or method of, measurement of the tax. D. Occupation Taxes (a) The Occupational Tax Claim fails to indicate the basis for, or method of, measurement of the tax; and (b) The Occupation Tax Claim was imposed based on the nature of the Debtors' business, without regard to the Debtors' sales or other transactions. E. Trust Fund Taxes (a) The Claim does not indicate that it is a tax required to be collected or withheld, and for which the Debtors are liable in whatever capacity. F. Employment Taxes (a) The Claim is not for an employment tax on a wage, salary, or commission of a kind specified in Section 507(a)(3) earned from a Debtor before Petition Date; and (b) The Claim is for an employment tax on a wage, salary or commission of a kind specified in Section 507(a)(3) for which a return was last due more than three years before the Petition Date. G. Penalties Claims (a) The Claim is for a penalty that is not related to a claim of a kind specified in Section 507(a)(8); and (b) The Claim is for a penalty and is not in compensation for actual pecuniary loss, but is punitive in nature. * * * Judge Gonzales expunges and disallows 75 Claim, including Claim No. 20500 filed by the City of White Plains, due to the claimants' failure to respond to the Debtors' objection. Some of these claims have been previously expunged, paid or expunged by agreement of the parties. Franklin County's Claim No. 7377 is allowed as filed and the Debtors' objection to the Claim is withdrawn. The Bureau of Workers' & Unemployment withdrew Claim Nos. 13579 and 33948. In light of the withdrawal, the Debtors withdrew their objections to the two claims. The Debtors also withdrew their objections to 31 claims, without prejudice. The Court approves several letter agreements to settle certain Tax Claims: A. The Treasurer of Arlington County and the Debtors agree that portions of Claim No. 10473 will be allowed in these amounts: Tax Type Agreed Allowed Amount -------- --------------------- 2002 Public Service Corp. Tax $532,710 2002 Real Estate Tax 4,712 2002 Real Estate Tax 392,051 --------------------- $929,473 The Debtors will pay the Allowed PSC/RE Amount within three to four days of the closing of the sale of the Pentagon City assets. Arlington waives all interest and penalties relating to the 2002 PSC and 2002 RE amounts. The Arlington Agreement is in complete satisfaction of all 2002 taxes and liens related to the Pentagon City assets. Arlington releases any and all liens related to the Pentagon City assets. The Debtors acknowledge that they will timely pay the 2nd half 2003 RE taxes when they become due. The Debtors will pay the Business License Tax portion of Claim No. 10473 in these amounts: Tax Type Agreed Amount Claim Status -------- ------------- ------------ BLC $779 Priority BLC 1,130 General Unsecured ------------- $1,909 The Arlington Agreement does not resolve the Department of Environmental Services' charges on Claim No. 10473 for $14,677 claimed as a general unsecured debt. The parties reserve their rights with respect to the DES Charges. The Debtors withdraw their objection to Claim No. 10473, except with respect to the DES Charges. B. The Debtors agree to pay Loudoun County these real estate taxes: Year Account Total ---- ------- ----- 2002 087-37-8917 $23,928 061-26-4401 774,332 061-28-3050 5,655 061-28-3050 1,077 061-19-4044 24,070 061-19-4044 4,585 ------ Sub-Total $833,647 2003 087-37-8917 $25,296 061-26-4401 1,531,800 061-28-3050 5,978 061-28-3050 1,077 061-19-4044 31,601 061-19-4044 5,694 061-25-1199 2,359 --------- Sub-Total 1,603,805 --------- GRAND TOTAL $2,437,452 The Debtors will make the payment simultaneously with the closing of the Dominion Virginia Power easement transaction on the UUNet Campus in Loudoun County. The Debtors agree that if they prevail in any challenge to the assessment of the real estate for tax year 2002, they will be entitled to interest on any refund at the rate of interest payable under their Reorganization Plan, rather than the statutory rate. Loudoun County: (a) waives all interest and penalties relating to the 2002 taxes, and agrees that the Payment is in complete satisfaction of all Taxes and corresponding liens on the Property; (b) withdraws Claim No. 30396 and any other claims based on the Taxes on receipt of the Payment; and (c) agrees that the Debtors retain the right to contest the assessment on the Property for tax year 2002 and subsequent years through normal statutory appeal procedures, except as modified with respect to interest on any refund payable with respect to tax year 2002. C. The Debtors agree to allow the Sioux Counties' proofs of claim: Claim No. Claim Amount Allowed Amount Claim Type --------- ------------ -------------- ---------- 2820 $32,075 $31,142 Priority 2935 56,733 53,480 Priority 3856 36,332 36,322 Priority 5463 41,682 40,468 Priority 6162 34,104 33,216 Secured 18166 63,166 61,326 Secured 25065 29,757 28,890 Priority Sioux Counties include Sioux County, Warren County, Dallas County, Clarke County, Franklin County, Poweshiek County, and Plymouth County Treasurer. D. The Debtors agree to allow the Butte County, California's claims: Claim No. Claim Amount Allowed Amount --------- ------------ -------------- 34895 $37,689 $37,689 9435 55,722 0 E. The Debtors agree to allow Claim No. 4029 filed by the Richmond County Tax Office as a secured claim for $27,335. Claim No. 1592 is expunged. F. The Debtors allow St. Charles County Collector of Revenue's Claim No. 12313 as a priority claim for $944,997. St. Charles waives all interest and penalties related to the Allowed Claim. The Debtors paid the Allowed St. Charles Claim in one lump sum payment on the Plan Effective Date. The St. Charles Agreement revokes and supersedes the agreement reached between the Debtors and St. Charles dated July 22, 2003. G. The Debtors allow the City of Hamlet's Claim No. 35990 as a priority claim for $19,160. Claim No. 34533 is expunged. H. The Debtors allow the Stillwater County Treasurer's Claim No. 8350 as a priority claim for $17,348. I. The Debtors allow the Utah County Treasurer's Claim No. 7486 as a priority claim for $30,453. J. The Debtors allow Hinds County, Mississippi's Claim No. 34095, which was filed as a secured claim for the 2002 tax year, for $1,215,968 plus interest accruing from the time of debt. The Debtors will expunge Claim No. 34294. Hinds County agrees that: (a) for purposes of the 2003 assessments regarding the Debtors-owned Clinton campus identified as parcels 5862-166-97 and 5862-166-98 in Hinds County, the properties will have a total combined valuation of $31,702. The Valuation is for the limited purposes of the Hinds Settlement only; and (b) all 2003 taxes will be assessed at the applicable 2003 millage, accounting for any tax exemptions. The Debtors will make a lump sum payment for the 2002 taxes. The 2003 taxes will be paid as they become due. K. The Debtors agree to allow Claim No. 1051 filed by the Shelby County Trustee as a secured claim for $67,628. L. The Debtors agree to allow Claim No. 3866 by the Lancaster County Treasurer for $166,118, of which $165,336 will be allowed as a priority claim, and $782 will be allowed as a secured claim. M. The Debtors agree to allow Claim No. 35992 filed by the Commonwealth of Massachusetts as a priority claim for $1,479. Claim No. 10717 is expunged. N. The Debtors allow Claim No. 11993 filed by the Licking County Treasurer as a secured claim for $168,693. O. The Debtors allow Claim No. 3706 filed by the Nevada Department of Taxation as a priority claim for $199,123. P. The Debtors allow Claim No. 36053 filed by the Juab County Treasurer as a priority claim for $6,352.42. The Juab County Treasurer agrees to the expungement of Claim Nos. 5721 and 36060, as these claims were amended and superseded by Claim No. 36053. Q. The Debtors, the Property Tax Division of the Utah State Tax Commission, and a number of Utah counties agree that the Debtors agree not to object to the amended proofs of claim to be filed by the City of Salt Lake, Utah. The Debtors will be barred from objecting to the Amended Claims on the ground that the claims are late filed or improperly filed against the wrong Debtor. The Amended Claims will be treated as if they were originally filed against the appropriate Debtor within the time set by the Bankruptcy Court. Salt Lake agrees to the expungement of Claim No. 10814. R. Marilyn Wood, Mobile County Revenue Commissioner, on Mobile County's behalf, and the Debtors agree that Claim Nos. 325, 360 and 9723 are withdrawn. Claim No. 34477 is allowed for $227,823 as a priority claim and will be paid pursuant to the Debtors' Plan. The Mobile Agreement resolves all prepetition claims of Mobile against the Debtors. S. Fresno County, California, and the Debtors agree that Claim No. 19000 is expunged. These Claims are allowed as secured claims: Claim No. Allowed Amount --------- -------------- 18999 $507 19001 163,690 19002 43 35158 82,098 T. The Debtors agree to allow the Claims filed by Sonoma County: Claim No. Allowed Amount --------- -------------- 33641 $159 33642 1,125 33643 44,224 33645 6,196 Sonoma will retain its lien until the Claims are paid in full. U. The Debtors allow Claim No. 9917 filed by the Clayton County Tax Commissioner as a secured claim for $150,699, which will be paid pursuant to the Plan. The Clayton County Agreement resolves all prepetition claims of Clayton County against the Debtors. V. The Debtors allow Claim No. 1118 filed by Jefferson County as a secured claim for $11,005. Claim No. 1118 will be paid in one lump sum payment. Jefferson waives the penalty and interest components of Claim No. 1118. W. The Debtors allow Claim No. 35805 filed by Arapahoe County as a secured claim for $967,010, which will be paid pursuant to the Debtors' Plan. Claim Nos. 10034, 34598, 34597, 34599, 34600, 34601 and 34602 are withdrawn. The Arapahoe Agreement resolves all prepetition claims of Arapahoe against the Debtors. X. The Debtors allow Claim No. 36050 filed by the Town of Billerica as a priority claim for $825,253, which will be paid pursuant to the Plan. Claim Nos. 4521 and 4522 are withdrawn. The Billerica Agreement resolves all prepetition claims of Billerica against the Debtors. Y. Lewis & Clark County and the Debtors agree that Claim No. 6127 is allowed as a secured claim for $26,114 in full and final satisfaction of Claim No. 6127 and any related claims. Claim No. 6127 will be paid in one lump sum payment. Z. These claims are allowed as secured tax claims: Claimant Claim No. Amount -------- --------- ------ Arlington County Treasurer 10474 $138,100 Millard County 38239 22,976 Millard County's Claim Nos. 2066 and 37954 are expunged and disallowed in their entirety. The hearing with respect to these claims is continued to August 24, 2004: Claimant Claim No. ------- --------- Allendale County 34725 Arkansas Dept. of Finance & Administration 23142 City of Boston, Massachusetts 532 City of Memphis, Nebraska 34757 Douglas County, Nebraska 33491 Nebraska Department of Revenue 22440 Nebraska Department of Revenue 22459 State of Connecticut, Dept. of Labor 12611 W.R. GRACE: Judge Appoints David Austern as Futures Representative ------------------------------------------------------------------ Judge Fitzgerald grants W.R. Grace & Co.'s request and appoints David Austern as the Futures Representative. The Court further exonerates Mr. Austern of any liability for damages arising from his appointment unless the injury at issue is caused by Mr. Austern's gross negligence or willful misconduct. As previously reported, The Grace Debtors again tried to appoint a legal representative for future asbestos claimants. "Due to a lack of consensus among the official committees in these cases," the Debtors asked the Court to determine the most appropriate individual from among the three candidates they identified to act as the Futures' Representative. Throughout the course of these bankruptcy cases, the Debtors have consistently sought to appoint a Futures' Representative who was supported by every affected constituency. Unfortunately, the Debtors' efforts to identify a consensus candidate have failed. Of the three candidates currently identified by the Debtors for consideration, no one has a consensus. The Committees have diverging opinions with respect to these candidates and, as a result, the Debtors have not been able to obtain unanimous support for any of the candidates. The three candidates were: (1) David T. Austern (2) Professor Eric D. Green (3) Dean M. Trafelet The Committees' opinions on the candidates, including that of yet another "new" candidate, were: Unsecured Equity Creditors PI PD Committee Committee Committee Committee --------- --------- --------- --------- David Austern Strongly Strongly Oppose Oppose support support Eric Green Slightly Oppose Support Oppose oppose Dean Trafelet Somewhat Somewhat Oppose Oppose oppose oppose "New" Candidate Oppose Oppose Oppose Oppose The PD Committee favors the appointment of a candidate who has never served in a similar capacity. The Debtors invited the PD Committee to suggest candidates, but to date none has been named. The Debtors considered seeking out such a candidate themselves, but ultimately decided that the interests of efficiency and fairness would not be well served through the appointment of a novice as Futures' Representative. Of the three candidates suggested, Mr. Austern is the only candidate that is not presently a futures' representative in any of the active asbestos Chapter 11 cases pending in the District of Delaware. As a result, the Debtors believe that Mr. Austern may be the most appropriate candidate with the most time available to devote to the role as Futures' Representative in these Chapter 11 cases. To the best of the Debtors' knowledge, each of the three candidates are disinterested persons within the meaning of the Bankruptcy Code and neither hold nor represent any adverse interest. Mr. Trafelet is the Futures' Representative in the Chapter 11 cases of Armstrong World Industries, Inc., and USG Corporation. Professor Green is the Futures' Representative in the cases of Fuller-Austin Insulation Co., Babcock and Wilcox Co., and Federal-Mogul Global, Inc. Mr. Austern presently serves as the Futures' Representative in Combustion Engineering, Inc. However, his role in that case is almost over as the Chapter 11 plan in that case has been confirmed. (W.R. Grace Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) W. R. Grace: Sealed Air Files Motion to Vacate Court Opinion ------------------------------------------------------------ Sealed Air Corporation (NYSE:SEE) announced that it filed a motion with the United States District Court for the District of Delaware requesting that the court vacate the July 29, 2002 opinion on the legal standard to be applied relating to the fraudulent transfer claims against the Company. Sealed Air is not challenging the settlement agreement signed and presented to the court for approval in November 2003. The Company still expects that the settlement agreement will become effective upon the court's approval and W. R. Grace's emergence from bankruptcy with a plan of reorganization that is consistent with the terms of the settlement. The Company filed the motion to vacate the opinion based on its belief that the opinion is contrary to established law set forth in other court rulings, both before and after the opinion was issued, holding that transactions should not be challenged after the fact on the basis of hindsight. The motion was filed as a protective measure in the event the settlement agreement is ultimately not approved or implemented. On November 10, 2003, Sealed Air reached a definitive settlement agreement with the Committees appointed to represent asbestos claimants in the bankruptcy case of W. R. Grace to resolve all current and future asbestos-related claims and the pending fraudulent transfer claims made against the Company and its affiliates in connection with the 1998 transaction in which Sealed Air acquired the Cryovac packaging business. About the Company Sealed Air Corporation, a Delaware corporation formerly known as W. R. Grace & Co., is a leading global manufacturer of a wide range of food and protective packaging materials and systems including such widely recognized brands as Bubble Wrap(R) cushioning, Jiffy(R) protective mailers and Cryovac(R) food packaging products. For more information about Sealed Air Corporation, please visit the Company's web site at http://www.sealedair.com/ On November 27, 2002, Sealed Air Corporation reached an agreement in principle with the committees appointed to represent asbestos claimants in the bankruptcy case of W.R. Grace & Co. to resolve all current and future asbestos-related claims made against the Company and its affiliates, the fraudulent transfer claims, and indemnification claims by Fresenius Medical Care Holdings, Inc. and affiliated companies in connection with the Cryovac transaction (on March 31, 2998, Sealed Air completed a multi-step transaction that brought the Cryovac packaging business and the former Sealed Air Corporation's business under the common ownership of Sealed Air Corporation). On December 3, 2002, the Company's Board of Directors approved the agreement in principle. The Company was advised that both of the committees had approved the agreement in principle as of December 5, 2002. The parties signed a definitive settlement agreement as of November 10, 2003 consistent with the terms of the agreement in principle. The Company recorded a charge of $850.1 million as a result of the asbestos settlement in its consolidated statement of operations for the year ended December 31, 2002. * BOND PRICING: For the week of June 14 - 18, 2004 -------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- American Restaurant 11.500% 11/01/06 59 American & Foreign Power 5.000% 03/01/30 65 AMR Corp. 10.200% 03/15/20 71 Applied Extrusion 10.750% 07/01/11 59 Asarco Inc. 8.500% 05/01/25 72 Burlington Northern 3.200% 01/01/45 52 Burlington Northern 3.800% 01/01/20 73 Calpine Corp. 7.750% 04/15/09 61 Calpine Corp. 8.500% 02/15/11 62 Calpine Corp. 8.625% 08/15/10 62 Calpine Corp. 8.750% 07/15/07 65 Continental Airlines 4.500% 2/01/07 75 Comcast Corp. 2.000% 10/15/29 38 Cummins Engine 5.650% 03/01/98 70 Delta Air Lines 7.900% 12/15/09 46 Delta Air Lines 8.300% 12/15/09 37 Delta Air Lines 9.000% 05/15/16 41 Delta Air Lines 9.250% 03/15/22 40 Delta Air Lines 9.750% 05/15/21 40 Delta Air Lines 10.125% 05/15/10 48 Delta Air Lines 10.375% 02/01/11 48 Elwood Energy 8.159% 07/05/26 69 Foamex L.P. 9.875% 06/15/07 73 Goodyear Tire 7.000% 03/15/28 75 Motorola Inc. 5.220% 10/01/97 74 Missouri Pacific 4.750% 01/01/30 70 Missouri Pacific 5.000% 01/01/45 72 National Vision 12.000% 03/30/09 62 Northwest Airlines 7.875% 03/15/08 63 Northwest Airlines 8.700% 03/15/07 70 Northwest Airlines 9.875% 03/15/07 73 Northwest Airlines 10.000% 02/02/09 66 Northern Pacific Railway 3.000% 01/01/47 51 Pegasus Satellite 11.250% 01/15/10 48 Salton Inc 12.250% 04/15/08 69 Solutia Inc. 7.375% 10/15/27 51 ********* 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. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***