/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040702.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 2, 2004, Vol. 8, No. 134 Headlines ADELPHIA BUSINESS: TelCove Receives $45MM Revolving Credit Line ADELPHIA: Devon Agrees to Allow American Tower's $1,628,274 Claim ADMIRAL CBO: S&P Affirms Class A-2 Rating at B- & Removes Watch ADVOCAT INC: Succeeds in Delisting From Berlin Stock Exchange AIR CANADA: Files Plan of Arrangement and Draft Info Circular AIR CANADA: Westjet Lawsuit to be Heard in Toronto on July 8, 2004 ALLEGHENY ENERGY: Two Generating Units Return to Service APPLIED EXTRUSION: Amends GE Commercial Finance Credit Facility ATA AIRLINES: ALPA Crewmembers Ratify Assistance Measures ATLANTIS SYSTEMS: Closes $6 Million Equity Financing BARNEYS: Hires Investment Bankers to Explore a Sale Transaction BEAR STEARNS: Fitch Gives Low-B Ratings To 6 2004-PWR4 Classes BEAR STEARNS: Fitch Downgrades $3.3M Class L Rating to CCC BEVERLY ENTERPRISES: Sells 11 Eldercare Operations in Arkansas COLTS TRUST: S&P Gives Class D Notes 'BB' Preliminary Rating CONSTELLATION BRANDS: Reports Higher Than Expected Q1 Earnings COVANTA: Court Okays Revenue Agents Reports Settlement with IRS CREDIT SUISSE: Fitch Affirms Low-B Ratings on 6 2001-CF2 Classes CRESCENT REAL: S&P Downgrades Corporate Credit Rating to BB- CROSSGEN ENTERTAINMENT: Case Summary & 20 Unsecured Creditors DB COMPANIES: Wants Nod to Continue Employing Partridge Snow DUNE ENERGY: Needs More Capital to Sustain Operations EMPIRE FINANCIAL: Pursues Financing Plans to Improve Liquidity EN POINTE: Secures $30 Million Credit Line With GE Commercial Unit ENCORE ACQUISITION: Files Universal Shelf Registration Statement ENRON CORP: Sues 35 Creditors to Recover Preferential Payments ENRON: Panel Wants 4 Workers to Return $4.9M Preferential Payments ENRON: Agrees to Settle Superior Natural Gas' Mega Claims ESCHELON TELECOM: Offering to Exchange $100M 8-3/8% Senior Notes FARMLAND: Land O'Lakes Now Wholly Owns Animal Feed Joint Venture FIBERMARK: Panel Signs-Up Chanin Capital as Financial Advisor FLEMING COS: Asks Court To Approve ACE Lost Portfolio Transfer FOREST OIL: Completes Merger with The Wiser Oil Company FOREST OIL: Appoints Timothy Savoy as VP -- Operations Support FOSTER WHEELER: Plans to Amend Debt Exchange Offer FOSTER WHEELER: Subsidiary Awarded Spanish LNG Terminal Contract FRANK'S NURSERY: Stockholders' Deficit Widens to $15.8M at May 16 FUN-4-ALL: U.S. Trustee Appoints 5-Member Creditors' Committee GENESCO INC: Declares Quarterly Dividends Payable on July 30 GENTEK INC: Five Directors Disclose Share Acquisitions GENTEK INC: Acquires Mexican Wire-Harness Business From Whirlpool GENTEK INC: Makes Required Tranche A Warrant Payment GLOBALNET INTERNATIONAL: Files Chapter 11 Petition in SD New York GLOBALSTAR TELECOMMUNICATIONS: Files Planned Chapter 7 Petition GLOBALSTAR TELECOMM: Chapter 7 Case Summary & Unsecured Creditors GS MORTGAGE: Fitch Affirms Junk Ratings on Classes H & J Notes HUDSON INVESTORS: Case Summary & 3 Largest Unsecured Creditors IKON OFFICE: GE Commercial Acquires Canadian Leasing Business INDEPENDENCE COURT: Case Summary & 20 Largest Unsecured Creditors INN OF THE MOUNTAIN: FY 2004 Net Revenues Increase to $81 Mil. INT'L FALCON: B.C. Securities Commission Issues Cease Trade Order INTERNATIONAL UTILITY: Obtains CCAA Stay Extension Until Sept. 30 JILLIAN'S ENTERTAINMENT: Taps Hilco Appraisal to Appraise Assets JP MORGAN: Fitch Assigns Low-B Ratings To 6 Ser 2004-CIBC9 Classes LUBRIZOL CORP: Reduces Workforce Following Noveon Acquisition LUNA GOLD CORP: Appoints Tim Searcy as New President & CEO LYNX ASSOCIATES: Look for Bankruptcy Schedules by July 25 MATRIA HEALTHCARE: Completes $130M Sale of Pharmacy & Supplies Biz MARINER HEALTH: S&P Places Low-B Ratings on CreditWatch Negative MEDIA SCIENCES: Raises $1.25 Million in Equity Funding MEDICAL DISCOVERIES: Erases $220K Secured Debt From Balance Sheet MIRANT AMERICAS: Committee Taps James Donnell As Energy Consultant MOONEY AEROSPACE: Look for Bankruptcy Schedules Next Week MORGAN GROUP HOLDING: Files Quarterly Report Minus Certifications MORGAN STANLEY: Fitch Downgrades $2.1M Class O Rating to CC NETWORK INSTALLATION: Del Mar Systems Awarded $60,000 VoIP Project NEW WEATHERVANE: Turns to FTI Consulting for Financial Advice NOMURA ASSET: Fitch Cuts Classes B-5 & B-6 Ratings to B-/CCC NORTHERN OFFSHORE: Mulls Liquidation After Creditor Talks Fail OBSIDIAN ENTERPRISES: Acquires Classic Manufacturing for $2.25M+ OMNI FACILITY: Goulston & Storrs Retained as Bankruptcy Counsel OMNI FACILITY: Want to Hire Togut Segal as Bankruptcy Co-Counsel OWENS CORNING: Asks Court To Approve Rhode Island Settlement Pact PACIFIC ENERGY: Completes Mid Alberta Pipeline Acquisition PARMALAT GROUP: U.S. Debtors Want To Expand Lazard's Engagement PARMALAT: Bondi Wants Preliminary Injunction Against US Creditors PEGASUS SATELLITE: Hires Hewitt Assoc. as Compensation Consultant PER-SE TECH: Closes Convertible Debt Sale & Amends Credit Facility PHOTOCHANNEL: Warrants Exercised & New Cash Totals $2.3 Million RELIANCE INSURANCE: Liquidator Objects to Disclosure Statement RESOLUTION SPECIALTY: S&P Rates Proposed Sr. Secured Loan at B+ RFC CDO I: S&P Assigns BB Rating To $9.45 Million Class E Notes SEQUOIA MORTGAGE: Fitch Assigns Low-B Ratings To Classes B-4 & B-5 SK GLOBAL AMERICA: Plan's Classification And Treatment Of Claims SKILLED HEALTHCARE: S&P Assigns 'B' Corporate & Bank Loan Ratings SLS INTERNATIONAL: Accountants Cite Going Concern Uncertainty SMTC CORPORATION: Appoints Jane Todd as Chief Financial Officer SOLUTIA: Wants to Extend Exclusive Plan Filing Period to Oct. 12 SPEEDWAY MOTORSPORTS: S&P Rates $100M Senior Sub. Notes At B+ TENET: Raises $68 Million from Brownsville Medical Center Sale UGS PLM: Completes D-Cubed, Ltd., Acquisition UNITED AIRLINES: Files Third Reorganization Status Report UNITY WIRELESS: May Liquidate Assets if Unable to Raise Funds UNIVERSAL HOSPITAL: Rex Clevenger Joins Company as SVP & CFO US ESCROW FINANCIAL: Case Summary & Largest Unsecured Creditors USG CORP: U.S. Gypsum Wants Restraining Order Against WFD Partners UTI CORPORATION: Acquires MedSource Technologies for $230 Million VIVENDI: Completes Tender Offer to Purchase High Yield Notes WEIRTON STEEL: Obtains Nod To Assume & Assign GE Capital Leases WESTPOINT: Gets Green Light to Assume Lease Plan Vehicle Contracts WISER OIL: Redeeming 9-1/2% Senior Sub. Notes Through July 30 WORLDCOM INC: Covad Presses For $2,667,311 Cure Payment WORLDSPAN: S&P Affirms B+ Corporate Rating & Removes CreditWatch XELAN INC: Case Summary & 60 Largest Unsecured Creditors * BOOK REVIEW: American Economic History ********* ADELPHIA BUSINESS: TelCove Receives $45MM Revolving Credit Line --------------------------------------------------------------- TelCove, a leading provider of business critical telecommunications services to enterprise customers and carriers, announced it has executed a three-year $45M revolving line of credit from Congress Financial Corporation, a wholly owned subsidiary of Wachovia Bank, N.A. The financing will provide working capital for growth of the business and will also be used to partially finance TelCove's acquisition of its PECO partnership. In April, TelCove announced that it had reached agreement with Exelon Communications Company, LLC, PECO Energy Company, and their affiliates for the purchase of certain metropolitan fiber network assets and the transfer of all PECO TelCove joint venture partnership interests in markets served by their joint venture. "This financing is another major milestone in the Company's post- restructuring efforts and provides the necessary financing to both complete an important partnership buy-out as well as fund future growth capital to serve our customer's telecommunications needs," stated Ed Babcock, Jr., Chief Financial Officer for TelCove. "In the three months since emerging from bankruptcy we have seen a significant increase in customer demand. This credit facility will provide the additional capital necessary to grow with our customers' increasing telecommunications services needs." The line of credit is collateralized by the assets of the Company. Interest will be charged at a rate of LIBOR plus 2.75% and borrowings are subject to customary restrictions and limitations. About TelCove Headquartered in Coudersport, Pennsylvania, TelCove, formerly known as Adelphia Business Solutions, Inc., -- http://www.adelphia-abs.com/-- is a leading provider of facilities-based integrated communications services to businesses, governmental customers, educational end users and other communications services providers throughout the United States. The Company filed for Chapter 11 protection on March March 27, 2002 (Bankr. S.D.N.Y. Case No. 02-11389) and emerged under a chapter 11 plan on April 7, 2004. Harvey R. Miller, Esq., Judy G.Z. Liu, Esq., Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $ 2,126,334,000 in assets and $1,654,343,000 in debts. ADELPHIA: Devon Agrees to Allow American Tower's $1,628,274 Claim ----------------------------------------------------------------- Prior to its bankruptcy petition date, Devon Mobile Communications, LP, entered into many agreements for space on telecommunications towers owned or leased by others to be utilized in the transmission of wireless telecommunications signals, including certain agreements with American Tower Corporation. The American Tower Agreements covered telecommunication towers located in Pennsylvania, Virginia, New York and New England. During the pendency of the Devon Debtors' bankruptcy cases, they, through various Delaware Bankruptcy Court orders, inter alia: (1) assumed and assigned various of the American Tower Agreements; (2) made certain payments to American Tower on account of the American Tower Agreements; (3) rejected various of the American Tower Agreements; and (4) extended its time to assume or reject various of the American Tower Agreements and fixed the amount of certain of American Tower's administrative claims arising in connection with them. The agreements gave rise to American Tower's various administrative and unsecured claims against the Devon Debtors. American Towers and Devon's Liquidating Trustee, Buccino & Associates, Inc., engaged in discussions regarding the extent, validity and priority of these various claims, filed or otherwise asserted by American Towers and agree that: (1) American Tower acknowledges that on January 26, 2004, it received from the Devon Debtors $394,497, which will be deemed payment in full and complete satisfaction of the Allowed Administrative Claim. The Parties further agree that American Tower will have an allowed unsecured claim against the Devon Debtors amounting to $1,628,274; (2) The Allowed Unsecured Claim will be treated as a Class 6 Claim in accordance with the terms and conditions of the Plan; and (3) On approval of the Stipulation, the Parties will exchange mutual releases. The Devon Trustee asks the Delaware Court to approve the Parties' Stipulation. (Adelphia Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADMIRAL CBO: S&P Affirms Class A-2 Rating at B- & Removes Watch --------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on the class A-1 notes issued by a Admiral CBO Ltd., a high-yield arbitrage CBO managed by Delaware Investment Advisers. Standard & Poor's also affirmed its rating on the class A-2 notes. Concurrently, both ratings are removed from CreditWatch with positive implications, where they were placed April 12, 2004. The raised rating on the A-1 notes reflects factors that have positively affected the credit enhancement available to support the class A-1 notes, including the redemption of $44.296 million of the class A-1 notes since the ratings were lowered June 30, 2003. The CreditWatch removal of the rating assigned to the A-2 notes reflects factors that have negatively affected the credit enhancement available to support the class A-2 notes since the rating on the class A-2 notes was placed on CreditWatch positive, including a negative migration of the overall credit quality of the assets within the collateral pool. Standard & Poor's reviewed the results of the current cash flow runs generated for Admiral CBO Ltd. to determine the level of future defaults the rated classes can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. When the results of these cash flow runs were compared with the projected default performance of the performing assets in the collateral pool it was determined that the rating assigned to the class A-1 notes was no longer consistent with the credit enhancement available. Standard & Poor's will continue to monitor the performance of the transaction to ensure that the ratings assigned reflect the credit enhancement available to support the rated notes. Rating Raised And Off Creditwatch Positive Admiral CBO Ltd. Rating Class To From A-1 AA A+/Watch Pos Rating Affirmed And Off Creditwatch Positive Admiral CBO Ltd. Rating Class To From A-2 B- B-/Watch Pos ADVOCAT INC: Succeeds in Delisting From Berlin Stock Exchange ------------------------------------------------------------- Advocat Inc. (NASDAQ OTC: AVCA) announced that it has succeeded in having its stock removed from trading on the Berlin-Bremen Stock Exchange. Advocat is one of many American companies whose stock was listed on the foreign exchange without their knowledge or authorization. As previously announced, Advocat sought delisting from the Berlin-Breman Stock Exchange because Advocat's management believes that certain investors may have been using the listing on the Berlin Exchange to engage in a practice known as "naked short selling" that is now banned in the United States. The suspension in trading of Advocat's stock on the Berlin-Bremen exchange was effective as of the close of Berlin-Bremen market on June 28, 2004. Advocat continues to trade under the symbol "AVCA" in the United States on the NASDAQ Over The Counter Bulletin Board. Investors interested in obtaining shares of Advocat should purchase their shares only from authorized broker-dealers who will execute trades on the Over The Counter Bulletin Board. Advocat Inc. -- whose March 31, 2004 balance sheet shows a stockholders' deficit of $38,284,000 -- provides long-term care services to nursing home patients and residents of assisted living facilities in 9 states, primarily in the Southeast, and three provinces in Canada. For additional information about the Company, visit Advocat's Web Site at http://www.irinfo.com/avc/ AIR CANADA: Files Plan of Arrangement and Draft Info Circular ------------------------------------------------------------- Air Canada provides the following update on the airline's restructuring under the Companies' Creditors Arrangement Act: The Company filed a Plan of Arrangement and Draft Information Circular with the Court in compliance with a critical milestone condition of both the GECAS and Deutsche Bank agreements. The documents are available on http://wwww.aircanada.ca/ 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. AIR CANADA: Westjet Lawsuit to be Heard in Toronto on July 8, 2004 ------------------------------------------------------------------ Air Canada issued the following statement in response to WestJet's announcement that it would seek leave to launch a counter-claim against Air Canada: There is no basis to WestJet's allegations and Air Canada will vigorously contest the counter-claim in Court. This is a diversionary tactic by WestJet to draw attention away from evidence filed in Court by Air Canada on June 28 including the cross examination of one of WestJet's senior vice presidents, that WestJet surreptitiously and continuously for a ten month period, logged into an Air Canada confidential website using automated technology. Air Canada's motion for interim relief resulting from the misappropriation and misuse by WestJet of confidential information about Air Canada's passenger loads, routes, and business operations will be heard in Toronto on July 8, 2004. Air Canada intends to continue to vigorously pursue its claim for damages. 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. ALLEGHENY ENERGY: Two Generating Units Return to Service -------------------------------------------------------- Allegheny Energy, Inc. (NYSE: AYE) announced that its coal-fired Hatfield's Ferry Unit No. 2 and Pleasants Unit No. 1 have returned to service after extended outages of eight months and four months, respectively. On November 3, 2003, a fire occurred in the 570-megawatt (MW) Unit No. 2 at the Hatfield's Ferry Power Station, located near Masontown, Pa. The fire caused significant damage to the generator, turbine and associated equipment. Hatfield's Ferry Unit No. 2 returned to service on June 27, 2004. A generator failure occurred on February 9, 2004, in the 650-MW Unit No. 1 at the Pleasants Power Station, located in St. Marys, W.Va. The failure damaged the generator and associated equipment. Pleasants Unit No. 1 returned to service on June 11, 2004. Headquartered in Greensburg, Pa., Allegheny Energy is an integrated energy company with a portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities, and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about four million people in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. More information about Allegheny Energy is available at http://www.alleghenyenergy.com/ * * * As reported in the Troubled Company Reporter's March 18, 2004 edition, Fitch Ratings affirmed and removed from Rating Watch Negative the ratings of Allegheny Energy, Inc. and the utility subsidiaries: Allegheny Energy, Inc. -- Senior unsecured debt 'BB-'; -- 11-7/8% notes due 2008 'B+'. Allegheny Capital Trust I -- Trust preferred stock 'B+'. West Penn Power Company -- Medium-term notes and senior unsecured 'BBB-'. Potomac Edison Company -- First mortgage bonds 'BBB'; -- Senior unsecured notes 'BBB-'. Monongahela Power Company -- First mortgage bonds 'BBB'; -- Medium-term notes 'BBB-'; -- Pollution control revenue bonds (unsecured) 'BBB-'; -- Preferred stock 'BB+'. The Rating Outlook is Stable. The 'BB-' rating of Allegheny Energy, Inc.'s former bank credit facility maturing in January 2005 is withdrawn as that bank credit facility has been terminated and replaced. APPLIED EXTRUSION: Amends GE Commercial Finance Credit Facility --------------------------------------------------------------- Applied Extrusion Technologies, Inc. (NASDAQ NMS - AETC) announced that it has amended its current credit facility with GE Commercial Finance to, among other things, restate its minimum EBITDA covenant for the third fiscal quarter of 2004 from approximately $35 million to $30 million and its minimum fixed charge coverage ratio covenant from 0.70 to 0.55. The amendment also restricts the Company from paying interest due on July 1, 2004, on its 10 3/4% senior notes unless the Company has excess availability under its current credit facility of $20 million after giving effect to such interest payment. Currently, the Company would not have the excess availability required under the amendment to make such interest payment. The Company believes it has the ability to raise additional financing to pay the interest before the end of the grace period, but believes that it is more likely that it will reach an agreement in principle with the ad hoc committee of bondholders on a recapitalization plan prior to the expiration of the grace period. Accordingly, the Company will not make the interest payment when due on July 1, 2004. The Company also announced that it continues discussions with its ad hoc committee of bondholders to recapitalize the Company's 10 3/4% senior notes. Any recapitalization plan would contemplate paying the trade creditors of the Company in full on a current basis. Amin J. Khoury, Chairman and Chief Executive Officer of the Company commented: "We are actively negotiating a recapitalization transaction that will dramatically reduce the indebtedness of the Company and substantially strengthen the Company's financial condition." The ad hoc committee of bondholders, which has represented to the Company that its members hold, in the aggregate, in excess of a majority of the outstanding 10 3/4% senior notes, has hired Milbank, Tweed, Hadley & McCloy as legal counsel and Houlihan Lokey Howard & Zukin as financial advisor to assist the ad hoc committee in structuring a deleveraging transaction with the Company. Jonathan Cleveland of Houlihan Lokey Howard & Zukin added: "We are engaging in productive conversations with the Company toward a potential transaction that would significantly reduce the total debt level of the Company and provide it with the financial flexibility to pursue its business strategies." About the Company Applied Extrusion Technologies, Inc. is a leading North American developer and manufacturer of specialized oriented polypropylene (OPP) films used primarily in consumer products labeling and flexible packaging application. As reported in the Troubled Company Reporter's May 19, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on New Castle, Delaware-based Applied Extrusion Technologies Inc. to 'CCC' from 'B-'. At the same time, Standard & Poor's lowered its ratings on the company's senior unsecured notes to 'CC' from 'CCC'. The outlook remains negative. Applied Extrusion had outstanding debt of approximately $362 million at March 31, 2004. "The downgrade reflects Applied Extrusion's extended poor operating and financial performance, weakened liquidity position, very aggressive debt leverage, and negative cash flows," said Standard & Poor's credit analyst Paul Blake. ATA AIRLINES: ALPA Crewmembers Ratify Assistance Measures --------------------------------------------------------- ATA Airlines, Inc., (Nasdaq: ATAH) announced that its cockpit crewmembers represented by the Air Line Pilots Association (ALPA) have ratified Letters of Agreement which amend the existing collective bargaining agreement. The amendments, which become effective July 1, 2004, will save the company approximately $70 million over the next three years. "We are extremely proud of our strong relationship between our employee labor unions and management," said George Mikelsons, ATA Chairman and CEO. "ATA is very pleased with the outcome of this negotiation and, in particular, with the speed in which the negotiation was completed. Several other carriers have been in concessionary discussions for months, if not years, and have yet to obtain an agreement. Our whole process was completed in 75 days, which speaks to the tremendous commitment our cockpit crewmembers share with all ATA employees." A new contract amendable date extends the terms of the cockpit crewmembers' current agreement by one year, to 2007. In addition, the amendment includes a new competitive pay scale for a proposed 110-seat aircraft the company is contemplating acquiring in the next 12 months. Founded in 1931, ALPA is the world's largest pilot union, representing 64,000 pilots at 42 airlines in the United States and Canada. Visit the ALPA web site at http://www.alpa.org Now celebrating its 31st year of operation, ATA -- whose March 31, 2004 balance sheet shows a shareholders' deficit of $168,426,000 -- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has the youngest, most fuel-efficient fleet among the major carriers, featuring new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago-Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of the Company's parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange under the symbol "ATAH." For more information, visit http://www.ata.com/ ATLANTIS SYSTEMS: Closes $6 Million Equity Financing ---------------------------------------------------- Atlantis Systems Corp. announced that it has closed its previously disclosed equity financing for the full amount of $6 million. This financing has resulted in the issuance of 15 million equity units. Each equity unit consists of one common share and one half of a common share purchase warrant. Each of the 7.5 million common share purchase warrants is exercisable until June 30, 2006 at an exercise price of $0.50 per share until June 30, 2005 and $0.60 per share from July 1, 2005 until June 30, 2006. An additional 730,750 common share purchase warrants were also issued relating to the structuring of the financing. Neil Raymond, Chairman stated, "This financing should convey to all of the Company's constituents, its shareholders, employees, and significant corporate and governmental relationships, that a well-funded Atlantis is embarking upon an aggressive new business course under the stewardship of Andrew Day and his colleagues. Over the ensuing months they will be increasingly putting their collective mark on Atlantis and its activities. The Board of Directors is appreciative of their persistence in effecting this funding and confident that their efforts will benefit all of Atlantis' stakeholders." Concurrently, $3.75 million of outstanding liabilities are being converted into equity. The debt conversion will result in the issuance of 7.5 million common shares and 1.55 million common share purchase warrants. Each common share purchase warrant will be exercisable until June 30, 2007 at an exercise price of $0.60 per share. As a result of these transactions, Atlantis will have 36,787,008 common shares outstanding. In addition, Atlantis will be releasing its year-end financial results next week. Atlantis is a globally recognised developer of simulation-based aircraft training systems, with a client base that spans defence forces and government agencies throughout the world, as well as major commercial airlines and aircrew training centres. Atlantis trades on the Toronto Stock Exchange under the symbol AIQ. BARNEYS: Hires Investment Bankers to Explore a Sale Transaction --------------------------------------------------------------- Barneys New York, Inc., has retained the investment banking firms of Morgan Stanley and Peter J. Solomon Company as financial advisors in connection with exploring strategic alternatives to enhance shareholder value. Such alternatives could include an investment by a third party or the sale of the Company. Under the majority ownership of two turnaround investors, Whippoorwill Associates, Inc. and Bay Harbour Management L.C., the Company has been focused on solidifying Barneys reputation as a top luxury retailer. In 2003 the Company achieved record sales and EBITDA. This strong performance has continued in 2004. Howard Socol, Chairman, President and Chief Executive Officer, stated "We have been extremely pleased with the Company's results for the past two years and believe that the Company is well poised for future growth. While the Company continues to engage in the expansion of its CO-OP concept and a number of other expansion projects, we believe there is even greater potential for the opening of Barneys New York flagship stores in selected markets." Mr. Socol continued, "A transaction of the type being explored, if consummated, would enable us to realize the potential for even greater growth." David A. Strumwasser, Managing Director of Whippoorwill and Douglas P. Teitelbaum, Managing Principal of Bay Harbour commented, "With the growth opportunities facing Barneys we want to ensure that the business is best positioned to realize its potential either through a new investor or owner who is interested in building the brand and taking the business to the next level." Barneys New York is a luxury retailer with flagship stores in New York City, Beverly Hills, and Chicago. In addition, the Company operates three regional full price stores, three CO-OP Barneys New York stores, twelve outlet stores and 2 semi-annual warehouse sale events. The Company also maintains corporate offices in New York City and an administrative and distribution center in Lyndhurst, New Jersey and has approximately 1,400 employees. Barney's, Inc. and certain of its subsidiaries voluntarily filed a petition of reorganization under Chapter 11 on January 10, 1996, in the U.S. Bankruptcy Court for the Southern District of New York. The upscale retailer emerged from bankruptcy in January 1999. BEAR STEARNS: Fitch Gives Low-B Ratings To 6 2004-PWR4 Classes -------------------------------------------------------------- Bear Stearns Commercial Mortgage Securities Trust 2004-PWR4, commercial mortgage pass-through certificates are rated by Fitch as follows: --$107,000,000 class A-1 'AAA'; --$106,000,000 class A-2 'AAA'; --$630,914,000 class A-3 'AAA'; --$19,098,000 class B 'AA'; --$8,356,000 class C 'AA-'; --$14,324,000 class D 'A'; --$9,549,000 class E 'A-'; --$954,924,323 class X 'AAA'; --$9,549,000 class F 'BBB+'; --$8,356,000 class G 'BBB'; --$10,743,000 class H 'BBB-'; --$3,581,000 class J 'BB+'; --$4,774,000 class K 'BB'; --$4,775,000 class L 'BB-'; --$2,387,000 class M 'B+'; --$2,388,000 class N 'B'; --$2,387,000 class P 'B-'; --$10,743,323 class Q not rated (NR). Classes A-1, A-2, A-3, B, C, D, and E are offered publicly, while classes X, F, G, H, J, K, L, M, N, P, and Q are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 79 fixed-rate loans having an aggregate principal balance of approximately $954,924,323 as of the cutoff date. BEAR STEARNS: Fitch Downgrades $3.3M Class L Rating to CCC ---------------------------------------------------------- Fitch downgrades Bear Stearns Commercial Mortgage Securities Inc., commercial mortgage pass-through certificates, series 2000-WF1, as follows: --$3.3 million class L to 'CCC' from 'B-'. Fitch upgrades the following classes: --$31 million class B certificates to 'AA+' from 'AA'; --$35.5 million class C certificates to 'A+' from 'A'; --$8.9 million class D certificates to 'A' from 'A-'; --$26.6 million class E certificates to 'BBB+' from 'BBB'; --$8.9 million class F certificates to 'BBB' from 'BBB-'. In addition, the following classes are affirmed: --$200.7 million class A-1 at 'AAA'; --$455.0 million class A-2 at 'AAA'; --Interest only class X at 'AAA'; --$31.1 million class B at 'AA'; --$15.5 million class G at 'BB+'; --$13.3 million class H at 'BB'; --$6.7 million class I at 'BB-'; --$5.6 million class J at 'B+'; --$8.9 million class K at 'B'. Fitch does not rate the $6.9 million class M. The downgrade is the result of expected losses on loans currently in special servicing. Losses are expected to negatively impact the credit enhancement of class L. The rating upgrades reflect both the improved credit enhancement levels resulting from scheduled amortization and the subordination levels of deals with similar characteristics issued today. As of the June 2004 distribution report, the pool's aggregate certificate balance was reduced by 6.05% to $826.9 million from $888.3 million at issuance. In addition, 3.84% of the pool has been fully defeased. To date, the trust has realized $7 million in losses. Currently the transaction is collateralized by 180 commercial and multifamily loans with an average loan size of $4.58 million. The transaction is diverse by property type, which includes office (28%), retail (18%), multifamily (17%), industrial (11%), and hotel (8%) property types. Geographic concentrations include California (33%), North Carolina (7%), New York (7%), and Texas (5%). Fitch has reviewed the two credit assessed loans in the pool, 650 Townsend Center and First Union Capitol. Both loans maintain their investment-grade credit assessment. The 650 Townsend Center loan is secured by a 612,848 square foot (SF) office building located in the South of Market submarket of San Francisco, CA. As of year-end (YE) 2003, the Fitch-stressed debt service coverage ratio (DSCR) was 1.85 times (x), versus 1.52x at issuance. The Fitch-stressed DSCR is based on cash flow adjusted for vacancy, capital expenditures, reserves, and a stressed debt service based on a 9.66% constant. Of concern to Fitch is the drop in occupancy. As of YE 2003, occupancy has decreased to 85% as compared with 92% for YE 2002 and 98% at issuance. However, the property's occupancy remains above market levels of approximately 79%. The First Union Capital Center loan is secured by a 544,482 SF class A office building in Raleigh, North Carolina. As of YE 2003, the property was 90% occupied, and the Fitch-stressed DSCR had increased to 1.72x from 1.37x at issuance. The Fitch-stressed DSCR is based on cash flow adjusted for vacancy, capital expenditures, reserves, and a stressed debt service at a 9.66% constant. There are currently three loans (2.16%) in special servicing. The largest loan in special servicing (1.06%) is secured by a 374,000 sf industrial property located in Dover, DE. The loan was transferred to the special servicer due to imminent default. The property suffered some structural damage and business interruption insurance has been used to cover debt service. The situation is being evaluated for possible workout strategies. The property remains current with the debt service payments. BEVERLY ENTERPRISES: Sells 11 Eldercare Operations in Arkansas -------------------------------------------------------------- Beverly Enterprises, Inc. (NYSE: BEV) announced the sale of ten skilled nursing facilities and one assisted living facility in Arkansas. This sale reflects Beverly's continuing commitment to strengthen its portfolio of eldercare facilities, significantly reduce its total projected patient care liability costs and strategically align its operations. The facilities - which were expected to account for approximately $53 million in revenues and a pre-tax loss of $2 million in 2004 - were sold to an investor group. They will be operated by Perennial Healthcare Management (Monkton, MD). The ten nursing facilities (five leased) contain 1,304 beds, and the assisted living facility (leased) contains 30 units. JPMorgan acted as exclusive financial advisor to Beverly in this transaction. Terms of the transaction are not being disclosed. As a result of this transaction, Beverly expects to record a pre-tax charge in Discontinued Operations of approximately $6 million in the second quarter of 2004. Excluding this charge, the overall transaction is expected to be slightly accretive to Beverly's pre-tax income in 2004 and increasingly accretive in 2005 and beyond. Beverly continues to operate 20 other eldercare facilities in Arkansas. The eleven divested Arkansas facilities were expected to account for less than three percent of Beverly's Skilled Nursing Facilities revenues and more than 13 percent of that unit's projected patient care liability costs in 2004. Since Beverly initiated its divestiture program in early 2003, it has sold, closed or terminated leases on a total of 107 eldercare facilities. Beverly expects to complete this program by divesting another 25 to 35 facilities during the second half of 2004. About the Company Beverly Enterprises, Inc. and its operating subsidiaries are leading providers of healthcare services to the elderly in the United States. At May 31, 2004, Beverly operated 367 skilled nursing facilities, as well as 19 assisted living centers, and 26 hospice centers. Through Aegis Therapies, Beverly also offers rehabilitative services on a contract basis to facilities operated by other care providers. As reported in the Troubled Company Reporter's June 18, 2004 edition, Fitch Ratings has assigned a 'B+' rating to Beverly Enterprises, Inc.'s planned up-to $225 million, 10-year, subordinated notes issue. Proceeds from the new issue will be used to fund the recent tender offer for the company's 'BB-' rated, $200 million, 9 5/8% senior unsecured notes due 2009. In conjunction, Fitch has affirmed the company's 'BB' secured bank facility, 'BB-' senior unsecured debt and 'B+' rated subordinated convertible notes. The Rating Outlook is Stable. Fitch notes that BEV's credit profile is improving following a difficult 2003 that saw profitability negatively impacted by rising patient liability costs and reduced Medicare reimbursement. Key factors driving the improvement include strong volume growth, increased Medicare and Medicaid per-diem rates, a significant reduction in patient liability-related costs and lower interest costs due to refinancing activities. COLTS TRUST: S&P Gives Class D Notes 'BB' Preliminary Rating ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to CoLTS Trust 2004-1's $246.779 million asset-backed floating-rate notes series 2004-1. The preliminary ratings are based on information as of June 30, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit enhancement provided to each class of notes through the subordination of cash flows to the preference shares; the transaction's cash flow structure, which has been subjected to various stresses requested by Standard & Poor's; and the legal structure of the transaction, including the bankruptcy remoteness of the issuer. Preliminary Ratings Assigned CoLTS Trust 2004-1 Class Rating Amount (mil. $) A AAA 186.397 B* A 32.816 C* BBB 13.127 D* BB 14.500 E N.R. 15.691 *These notes will be able to defer interest CONSTELLATION BRANDS: Reports Higher Than Expected Q1 Earnings -------------------------------------------------------------- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), a leading international producer and marketer of beverage alcohol brands, reported record net sales of $927 million, a 20 percent increase, for its first quarter ended May 31, 2004. Pro forma net sales for the quarter, which include $31 million of sales from Hardy for March 2003, increased 15 percent driven by growth across all categories - imported beer, spirits, wine and the U.K. wholesale business. Currency contributed six percent of the increase. "Our first quarter results represent a tremendous start to the new year and continue to demonstrate the strength of our strategy of breadth and scale leading to profitable growth," said Chairman and Chief Executive Officer Richard Sands. "Our recent beer price increase was well received in all channels resulting in a quicker volume rebound than we anticipated and our spirits business posted another quarter of sales growth that exceeded our expectations. Our wine business continued to experience healthy growth as evidenced by strong consumer purchases in all our major markets. With these strong results we are raising our full year earnings per share estimates." Net income as reported under generally accepted accounting principles for first quarter increased 31 percent to $51 million and reported diluted earnings per share increased 10 percent to $0.45. First quarter 2005 reported results include restructuring and related charges and net unusual costs of $8 million after tax, or $0.07 per share. First quarter 2004 reported results also include restructuring and related charges and net unusual costs of $8 million after tax, or $0.08 per share. Net income on a comparable basis, excluding the restructuring and related charges and net unusual costs, increased 27 percent to $60 million and comparable diluted earnings per share increased six percent to reach $0.52 per share. Earnings per share growth was negatively impacted by additional shares outstanding primarily as a result of the company's equity offerings in July 2003 which paid down debt incurred to partially finance the Hardy acquisition. Net income and diluted earnings per share on a comparable basis exclude restructuring and related charges and net unusual costs. The company discusses results on a comparable basis in order to give investors better insight on underlying business trends from continuing operations. A table reconciling these measures and other related financial measures to reported results is included in this release. For a detailed discussion of these items, please see the section "Items Affecting Comparability" following the financial statements. The company's measure of segment profitability excludes restructuring and related charges and net unusual costs, which is consistent with the measure used by management to evaluate results. Constellation Beers and Spirits Results Net sales for the quarter grew 14 percent to reach $316 million on both strong beer and spirits growth. Beer sales increased 14 percent driven by both pricing and volume gains on Corona Extra, Corona Light, Modelo Especial, Pacifico and Negra Modelo. The company's beer volumes rebounded quicker than expected following a planned price increase to wholesalers on its Mexican beers, which began to take effect in January 2004 and resulted in strong wholesaler demand prior to the price increase. A seven percent increase in branded spirits sales and a sharp increase in production services sales resulted in total spirits sales improving 13 percent. The seven percent rise in branded sales was driven by Black Velvet Canadian Whisky, Montezuma Tequila, Fleischmann and Barton vodkas, the 99 Cordials range and Chi-Chi's prepared cocktails. Operating income for Constellation Beers and Spirits grew 13 percent to reach $68 million for the first quarter due primarily to higher sales. Operating margins remained relatively even as increased gross profit margins were offset by increases in advertising, marketing and general expenses to support growth initiatives. Constellation Wines Results With growth in branded wines and the U.K. wholesale business, net sales for first quarter fiscal 2005 increased 23 percent to $611 million, including an eight percent benefit from currency. Branded wine sales increased 17 percent to reach $364 million, primarily due to an additional month of sales from the Hardy acquisition and a five percent benefit from currency. Pro forma net sales of branded wine, which include $27 million of sales from Hardy for March 2003, increased eight percent for the quarter, including six percent from currency. Consumer purchases remained healthy across the company's wine categories and geographies, and wine shipments were strong in the U.K. and Australia. In the U.S., sales to retailers and consumer purchases exceeded company shipments. Wholesale and other sales increased 34 percent driven by the U.K. wholesale business, which added new accounts and increased sales in existing accounts. Nearly half this increase was due to the benefit of currency. Operating income for Constellation Wines in first quarter fiscal 2005 increased 11 percent to reach $68 million. Operating margins were 11.1 percent in the quarter versus 12.3 percent in the prior year. The decline in margins was due to a greater volume of sales of lower margin products, and increased advertising spend. In summarizing the first quarter results Sands concluded, "With a broad portfolio of beverage alcohol products, strong global routes-to-market and independent businesses managing this wide breadth and scale within their geographies, we are able to take advantage of different market forces to consistently grow the business and deliver shareholder value." About Constellation Constellation Brands, Inc. is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Pacifico, St. Pauli Girl, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Franciscan Oakville Estate, Estancia, Simi, Ravenswood, Blackstone, Banrock Station, Hardys, Nobilo, Alice White, Vendange, Almaden, Arbor Mist, Stowells and Blackthorn. As reported in the Troubled Company Reporter's April 28, 2004 edition, Standard & Poor's Ratings Services said that it revised its ratings outlook for beverage alcohol producer and distributor Constellation Brands Inc. to stable from negative. The outlook revision reflects the company's continued deleveraging and its improvement in credit measures after its April 2003 debt-financed acquisition of Australian wine producer BRL Hardy Ltd. At the same time, Standard & Poor's has affirmed its 'BB' corporate credit and senior unsecured debt ratings on Constellation Brands, as well as its 'B+' subordinated debt and 'B' preferred stock ratings on the company. "The ratings on Fairport, N.Y.-based Constellation Brands Inc. reflect its strong cash generation from a diverse portfolio of beverage alcohol products, offset in part by the competitive nature of the company's markets and a leveraged financial profile reflecting an acquisitive growth strategy," said Standard & Poor's credit analyst Nicole Delz Lynch. COVANTA: Court Okays Revenue Agents Reports Settlement with IRS --------------------------------------------------------------- The Internal Revenue Service filed two claims against the Covanta Energy Corporation Debtors for unpaid federal corporate income tax returns: Claim No. Date Filed Tax Periods Amount --------- ---------- -------------------- -------- 3537 08/21/02 12/31/97 and 12/31/01 $498,118 4166 12/23/02 12/31/83 to 12/31/99 36,404,579 The IRS later amended Claim No. 4166 with Claim No. 4493 for the same amount. In the Claims, the IRS asserts a right of setoff against the Debtors' refunds. According to James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, the Debtors are entitled to refunds, credits or adjustments of about $11,000,000 for the tax years 1983 to 1995, and $10,256,893 for tax year 2001. The Debtors are also owed $440,812 in interest for the Refunds. To settle the IRS Claims and the Debtors' Refunds, the Debtors entered into a Revenue Agents Reports with the United States Department of the Treasury/IRS. The RAR recommends a settlement of certain claims and counterclaims among the IRS, on the one hand, and the Debtors and their various affiliates and subsidiaries, on the other hand. Among others, the RAR Settlement provides that: (a) the IRS Claims will be amended to state that the aggregate amount due to IRS is $806,147, representing the final and total resolution of all claims against the Debtors for tax years 1983 to 2001; and (b) the Allowed Claim will be considered an allowed priority tax claim and paid pursuant to the Debtors' Second Joint Plan of Reorganization. The RAR Settlement is the result of a difficult negotiation process between the Debtors and the IRS that stretched over nearly 20 years and included at least six previous RARs and four appeals, Mr. Bromley says. Numerous complicated tax issues were addressed during this process, the two most contentious issues being: -- the ability to carry back certain net operating losses under the 10-year carry back provisions of Section 172(f) of the Internal Revenue Code; and -- the allowability of deductions for interest expense that accrued on unpaid taxes that were assessed by the IRS and agreed to by the Debtors with respect to the Debtors' 1983- 1986 returns. Mr. Bromley provides a summary of the year-by-year calculation of taxes and refunds due as a result of various adjustments agreed between the IRS and the Debtors, resulting in the amount of the Allowed Claim: Deficiency Allowable Year Tax Interest Interest Total ---- ---------- ---------- --------- ---------- 1983 $1,518,871 $692,298 $19,931 $2,231,100 1984 (4,776,423) 3,290,037 566 (1,485,820) 1985 38,506 39,528 78,034 1986 (5,809,586) 2,164,153 17,122 (3,628,311) 1987 280,601 168,036 448,637 1988 874,114 389,161 1,263,275 1989 1,871,936 1,211,109 3,083,045 1990 22,856 21,332 44,188 1991 (52,828) (52,828) 1992 (239,029) (158,866) (397,895) 1994 3,495,747 2,568,087 5,987,836 1995 2,605,682 1,326,909 3,932,591 ---------- ---------- --------- ---------- Totals as of 04/01/02 $(169,553) $11,711,784 $37,619 11,503,852 ========== ========== ========= ---------- The Debtors' 2001 Refund (10,256,893) Interest Due to the Debtors on 2001 Refund (440,812) --------- Total Payment Due IRS $806,147 ========= In addition to the RAR Settlement, Mr. Bromley reminds Judge Blackshear of a prior Court-approved settlement between Debtor Ogden Constructors, Inc., and the United States government, relating to dewatering, excavation and dynamic compaction services performed by Ogden Constructors at the United States Bureau of Reclamations' Lost Creek Dam modification project. Pursuant to the Constructors Order, the government agreed to pay Ogden Constructors $250,000 plus interest. The Court stayed the payment of the Constructors Settlement pending resolution of the IRS Claims. The RAR Settlement also provides that the Constructors Settlement will be set off against amounts owed to the government. Mr. Bromley tells the Court that because the Refunds amount to over $20 million, the settlement process will involve the Joint Committee on Taxation. Pursuant to the Internal Revenue Code, the IRS must submit to the Joint Committee a report on the proposed refund to give the Joint Committee the opportunity to comment and make recommendations. However, the Debtors must first sign the RAR as a taxpayer before it can be submitted to the Joint Committee. The Debtors believe that the only express restraint limiting the IRS's ability to act on the RAR is a requirement in Section 6405(a) of the Internal Revenue Code that the IRS must wait a minimum of 30 days following the submission of the RAR to the Joint Committee before acting to implement the RAR Settlement. At the expiration of the 30-day Window, the Debtors believe that the IRS is free to perform the RAR Settlement regardless of whether the Joint Committee has expressed a view one way or the other with respect to the RAR. The IRS has agreed to use its best efforts to encourage the Joint Committee to complete its review within 30 days following submission of the RAR. Additionally, the Debtors and the IRS agree to a 40-day standstill period following submission of the RAR to the Joint Committee, during which neither party will take any action with respect to the RAR or the IRS Claims. If at the expiration of the Standstill Period the IRS does not take irrevocable steps to implement the RAR Settlement, the Standstill Period will terminate and the Debtors and the IRS will be free to exercise their rights and remedies. By entering into the RAR Settlement, both the Debtors and the IRS will avoid the uncertainty and the expense of any litigation that may arise from the IRS Claims, Mr. Bromley points out. Under the RAR Settlement and the Constructors Settlement, the net amount the Debtors will actually be liable to the IRS is $556,147. This amount, Mr. Bromley explains, represents significant value to the Debtors' estate in view of: -- the potential tax liability the Debtors could otherwise be required to pay; -- the expense of defending or prosecuting any appeal or further proceedings; and -- the uncertainty of prevailing in any litigation regarding the IRS Claims. The RAR Settlement is the product of vigorous arm's-length bargaining between the Debtors and the IRS, Mr. Bromley adds. At the Debtors' behest, Judge Blackshear approves the RAR Settlement. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) CREDIT SUISSE: Fitch Affirms Low-B Ratings on 6 2001-CF2 Classes ---------------------------------------------------------------- Fitch Ratings upgrades the Credit Suisse First Boston's commercial mortgage pass-through certificates, series 2001-CF2, as follows: --$43.8 million class B to 'AA+' from 'AA'; --$49.3 million class C to 'A+' from 'A'; --$10.9 million class D to 'A' from 'A-'; --$16.4 million class E to 'A-' from 'BBB+'; --$18.9 million class F to 'BBB+' from 'BBB'; --$14 million class G to 'BBB' from 'BBB-'. In addition, Fitch affirms the following classes: --$15.7 million class A-1 'AAA'; --$153.8 million class A-2 'AAA'; --$129.8 million class A-3 'AAA'; --$523.2 million class A-4 'AAA'; --Interest only classes A-CP and A-X 'AAA'; --$16.4 million class H 'BB+'; --$21.9 million class J 'BB'; --$8.2 million class K 'BB-'; --$9.3 million class L 'B+'; --$9.9 million class M 'B'; --$5.5 million class N 'B-'. Fitch does not rate the $8.3 million class O, $14.8 million class NM-1, $17.1 million class NM-2, and $1 million class RA certificates. The upgrades are due to an increase in credit enhancement since issuance and levels, which are in line with the subordination levels of deals issued today, having similar characteristics. As of the June 2004 distribution date, the pool's aggregate collateral balance has been reduced by approximately 3.5%, to $1.088 billion from $1.128 billion at issuance. Currently, seven loans (1.3%) are in special servicing, with losses expected on several of these loans. The largest loan in special servicing (0.6%) is secured by an office property located in Tampa, FL and is 90 days or more delinquent. The loan was transferred to the special servicer in February 2004 as a result of an increase in vacancy. Gentiva, who had occupied, 18.5% of the net rentable area, also announced that they would be vacating the property following their lease expiration in June 2004. The second largest specially serviced loan (0.2%) is a limited service hotel located in Louisville, CO. The property is real estate owned and the special servicer, GMAC Commercial Mortgage Corp., is marketing the property for sale. Two previous offers to purchase this property, one at $2.5 million and one at $2.05 million, have been cancelled; given the trust's $2.47 million exposure to the loan, Fitch expects a loss to be incurred at the time of disposition. CRESCENT REAL: S&P Downgrades Corporate Credit Rating to BB- ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit ratings on Crescent Real Estate Equities Co. and its operating partnership, Crescent Real Estate Equities L.P., to 'BB-' from 'BB'. In addition, the rating on the company's senior unsecured notes is lowered to 'B' from 'B+', and the rating on the company's preferred stock is lowered to 'B-' from 'B'. The outlook is revised to stable from negative. "The lowered ratings reflect office market conditions that remain persistently weak, pressuring Crescent's highly concentrated portfolio," said Standard & Poor's credit analyst Elizabeth Campbell. "They also reflect tenant concentration concerns, an aggressive financial profile with weak coverage measures, limited financial flexibility, and a high dividend payout ratio." For the near to medium term, financial measures are likely to remain at current, more aggressive levels until Crescent's core market conditions improve materially. These lower financial measures, however, should be relatively stable, given expectations for continued strong contribution from the residential land business, ongoing office portfolio repositioning efforts, and modest property refinancing/monetization opportunities. CROSSGEN ENTERTAINMENT: Case Summary & 20 Unsecured Creditors ------------------------------------------------------------- Debtor: CrossGen Entertainment, Inc. fka CrossGeneration Comics, Inc. dba CrossGen Comics dba Code 6 Comics dba CG Entertainment 4023 Tampa Road, Suite 2400 Oldsmar, Florida 34677 Bankruptcy Case No.: 04-12478 Type of Business: The Debtor is a comic book publishing company. See http://www.crossgen.com/ Chapter 11 Petition Date: June 18, 2004 Court: Middle District of Florida (Tampa) Judge: Alexander L. Paskay Debtor's Counsel: Noel R. Boeke, Esq. Rod Anderson, Esq. Holland & Knight, LLP P.O. Box 1288 Tampa, FL 33601 Tel: 813-227-8500 Fax: 813-229-0134 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Quebecor World Montreal $1,478,894 P.O. Box 945563 Atlanta, GA 30394-5563 Branded Entertainment $437,868 333 Crestmont Road Cedar Grove, NJ American Express $402,825 P.O. Box 297612 Ft. Lauderdale, FL 3332-7612 Foley & Lardner $262,382 100 N. Tampa St., Ste. 2700 Tampa, FL Automatic Data Processing $155,160 Fortis Software LLC $109,737 Newhouse Porter LLP $105,548 Hunton & Williams $102,985 Wizard Entertainment $63,798 580 Industrial Ltd. $63,010 CIT Technology Financial $50,420 Citicorp Vendor Finance $25,817 Reed Business Information $22,248 Diamond Comic Distributors $22,016 Absolute Exhibits $19,684 CGS Publishing Technologies $17,224 Westin Horton Plaza $16,832 Rosa $16,500 Florentino $16,450 Hyde Park Capital $15,791 DB COMPANIES: Wants Nod to Continue Employing Partridge Snow ------------------------------------------------------------ DB Companies, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to continue employing Partridge Snow & Hahn LLP as their special counsel for non-bankruptcy matters. The firm has represented the Debtors since 1989 as its general outside counsel in connection with a variety of matters involving real estate, employment, litigation, tax, general corporate matters, acquisitions, environmental matters, corporate finance and commercial law. As a result of that long term relationship, Partridge Snow has acquired extensive background and knowledge concerning the Debtors' businesses and operations. The firm will bill the Debtors at its current hourly rates: Professionals Billing Rate ------------- ------------ James H. Hahn $340 per hour John M. Boehnert $335 per hour Michael A. Gamboli $285 per hour Charles A. Lovell $300 per hour Daniel S. Crocker $205 per hour Christopher Cassara $210 per hour Tracey Baran $190 per hour Kristen Blaquiere $80 per hour Richard M. Gauvin $135 per hour Kim Sousa $125 per hour Headquartered in Pawtucket, Rhode Island, DB Companies, Inc. -- http://www.dbmarts.com/-- operates and franchises a regional Chain of DB Mart convenience stores in Connecticut, Massachusetts, Rhode Island, and the Hudson Valley region of New York. The Company filed for chapter 11 protection on June 2, 2004 (Bankr. Del. Case No. 04-11618). William E. Chipman Jr., Esq., at Greenberg Traurig, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed estimated assets of over $50 million and debts of approximately $65 million. DUNE ENERGY: Needs More Capital to Sustain Operations ----------------------------------------------------- Since May 2003, Dune Energy, Inc. has been an independent energy company engaged in the business of leasing, acquiring and subsequently developing, natural gas and crude oil producing properties. Through March 31, 2004, the Company has not generated revenues from operations and its ability to do so in the future is highly dependent on the Company's ability to raise additional capital. During the next six months, the Company anticipates minimum expenses of approximately $2,500,000 including $650,000 to complete the purchase of its interest in Los Mogotes by June 30, 2004; $680,000 (should the Company elect to exercise its option) to lease an additional 6,800 acres on the Welder Ranch; $240,000 to be paid to Seitel Data Ltd. to complete the purchase of the license for the 3D seismic data; $504,000 to the holders of certain promissory notes; and for its working capital needs. In the audit report of Dune Energy Inc. for the year ended December 31, 2003, the Company's independent auditors stated that the Company's accumulated deficit and working capital deficit raises substantial doubt about the Company's ability to continue as a going concern. The Company needs to raise additional capital to achieve its business objectives. The Company intends to acquire the capital it needs by raising additional funds through the issuance of debt and/or equity securities and by selling to third parties prospects and/or other rights in its interests in the Welder acreage and Los Mogotes. There can be no assurances that the Company will be able to raise additional capital or that the terms on which such capital is raised will be acceptable. Further, there can be no assurances that the Company will be successful in its efforts to sell any interests in its prospects or that the terms of any such transactions will be acceptable. To the extent that the Company relies upon third parties to drill the wells required to maintain its interest in the Welder acreage, its ability to achieve its business objectives will be dependent on the efforts of others. EMPIRE FINANCIAL: Pursues Financing Plans to Improve Liquidity -------------------------------------------------------------- Empire Financial Holding Company's continued existence is dependent upon its ability to return to profitability and to generate cash either from operations or from new financings. The Company has losses from continuing operations during 2003 and 2002 and had a stockholders' deficit of $643,110 as of March 31, 2004. Also, the Company is subject to pending federal and state investigations relating to the Company's involvement in trading in mutual fund shares by its customers, the outcome of which is uncertain. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management has implemented a plan, which it believes will return the Company to profitability. As part of the plan, the Company has reduced general and administrative overhead and operating expenses primarily by relocating and consolidating its offices and personnel, by entering into a new clearing arrangement with a third party at lower rates and by settling substantially all of its controversies with its former co-CEO. The Company has also hired additional personnel to enhance its market making and order execution capabilities. As a result of the foregoing and the sale of Advantage, the Company has focused its efforts on its core business. Additionally, the Company plans to raise additional capital through debt and equity financings and intends to rely on vendors, service providers, and management for periodic payment deferrals and cost reductions to improve liquidity and sustain operations. There is no assurance that the Company will achieve profitability or be able to generate cash from either operations or from debt or equity financings. Based on currently proposed plans and assumptions relating to the implementation of its business plan, management believes that cash flow from operations and cash on hand will enable the Company to fund its planned operations for at least 12 months and thereafter. If not, or if Company plans change, or the Company's assumptions change or prove to be inaccurate, or if available cash otherwise proves to be insufficient to implement the Company's business plans, Empire Financial may require additional financing and may seek to raise funds through subsequent equity or debt financings. Management cannot assure that additional funds will be available in adequate amounts or on acceptable terms. If funds are needed but not available, management indicates that Empire Financial Holding's business would be harmed. EN POINTE: Secures $30 Million Credit Line With GE Commercial Unit ------------------------------------------------------------------ En Pointe Technologies Sales, Inc., a wholly owned subsidiary of En Pointe Technologies, Inc. (Nasdaq: ENPT) announced the signing of a $30 million working capital line of credit with GE Commercial Finance's distribution financing unit, Vendor Financial Services. This financing, arranged by one of the technology sector's premier financing entities, replaces an existing credit facility. The new credit facility expands En Pointe's access to distribution financing solutions, provides access to working capital to support growth and acquisition capital, and supports the company's fundamental strategic growth objectives. "We are pleased to have a new business relationship partner in GE Commercial Finance who is dedicated to providing support to our company's strategy and one who thoroughly understands our industry," said Bob Din, President and CEO, En Pointe. "The terms of this agreement will provide En Pointe with the excess borrowing capacity that will be used to support any increase in revenue generation. It also provides the company with capital to pursue any expansion strategies. The overall effect of this arrangement is to provide En Pointe with certain economic and strategic alternatives in the marketplace." GE Commercial Finance continues to expand its investment in the technology market, teaming with manufacturers, distributors, VARs and solution providers to develop specialized financing plans that properly align with their respective cash conversion cycles and growth objectives. "We are excited about En Pointe's growth opportunities, and appreciate the opportunity to support management in its determination to expand their presence in the IT market," said Tom Grathwohl, President of GE Commercial Finance's distribution finance unit specializing in technology finance. "We have served the information technology industry since 1980, and we are experts at working with our customers to understand their unique market situations and create financing programs that exceed their expectations." About GE Commercial Finance, Vendor Financial Services Vendor Financial Services is a unit of GE Commercial Finance, a global leader in developing and providing financial solutions and services to equipment manufacturers, distributors, dealers and their end users. With $26 billion in served assets worldwide, 1,200 manufacturers, 49,000 dealers & distributors and over 600,000 accounts in more than 30 countries, Vendor Financial Services helps its customers drive new business by providing superior service, a commitment to quality and the application of the latest e-commerce technology. Their inventory finance business unit, Commercial Distribution Finance, has been a leading provider of specialized financing products and services for more than five decades. Programs and services include inventory financing, accounts receivable financing, asset-based lending, private label financing, inventory consignment, collateral management, e-commerce services and related financial products. For more information, visit http://www.gecdf.com/ About En Pointe Technologies, Inc. En Pointe Technologies, Inc. is a leading national provider of information technology products, e-business solutions and professional services to medium and large commercial customers and government and educational accounts of all sizes. A state-of-the- art e-commerce network electronically links En Pointe, via AccessPointe(TM) and its back-office business systems, to the largest distributors and manufacturers in the industry. En Pointe offers direct online access to several billion dollars of mainstream IT products available in the US while eliminating the risks associated with carrying significant inventory. Its flagship software AccessPointe(TM) provides En Pointe's customers with the ability to create private electronic exchanges, accessed through the Web, procurement applications or ERP systems, to efficiently manage the procurement process and allow the Company's customers to make fully informed strategic buying decisions. En Pointe Professional Services offers value-added services such as: Pre-sales consulting, Technology Planning and Management (including integration, configuration, deployment and migration), Helpdesk Support Services, Project and Program Management, and Infrastructure Support and Maintenance. En Pointe, a minority business enterprise (MBE), is represented nationally with a concentration in over 17 sales and service markets throughout the United States, as well as a value-added ISO 9001:2000 certified integration operation in Ontario, California. Please visit En Pointe at http://www.enpointe.com/ * * * In its Form 10-Q for the quarterly period ended March 31, 2004 filed with the Securities and Exchange Commission, En Pointe Technologies, Inc. reports: "During the six months ended March 31, 2004, operating activities provided cash of $5.3 million compared with using cash of $3.1 million in the prior fiscal year period. The principal reason for the increase in cash provided by operations was the decrease in accounts receivable of $3.6 million that relates mainly to the decline in product sales. The improvement in earnings also contributed $2.8 million to operating cash flow as the Company went from a net loss of $2.4 million to net income of $0.4 million. "The Company's revolving credit facilities are collateralized by accounts receivable and all other assets of the Company. As of March 31, 2004, approximately $11.2 million was outstanding, $26,732 of which was outstanding against the Foothill credit line and the balance against the IBM Credit Corporation ("IBMCC") credit line. At March 31, 2004, the Company had additional borrowings available of approximately $6.7 million after taking into consideration the available collateral and borrowing limitations under its financing agreements. Borrowings under both financing agreements are collateralized by substantially all of the Company's assets. In addition, each of the lines of credit contains certain financing and operating covenants relating to net worth, liquidity, profitability, repurchase of indebtedness and prohibition on payment of dividends, as well as restrictions on the use of proceeds obtained under the line. "The Company believed that it would be unable to meet its covenants related to liquidity and profitability for the quarter ended March 31, 2003 and would be in default under the terms of its financing agreements. To avert such a default, the Company renegotiated its lines of credit with IBMCC and Foothill to ease their respective covenant requirements and signed amendments to each of its financing agreements in May 2003. "While the Company is presently in compliance with its covenants under the financing agreements, should there be a resumption of negative earnings, which is possible, the Company may not meet its future quarter's EBITDA covenants, in which event it would be in default under its amended financing agreements. In such event, management would request a waiver of such defaults. If such defaults were not waived by its lenders the working capital and flooring lines of credit could be revoked prior to their expiration dates. Should the Company's working capital and flooring lines be revoked, management believes that it has sufficient working capital to enable it to continue to operate through at least the next twelve months. However, the Company would be required to significantly scale down its business plans if it were unable to obtain alternative sources of financing." ENCORE ACQUISITION: Files Universal Shelf Registration Statement ---------------------------------------------------------------- Encore Acquisition Company (NYSE:EAC) announced that it has filed a registration statement on Form S-3 with the Securities and Exchange Commission. The registration statement, when declared effective by the Securities and Exchange Commission, will allow Encore to issue an aggregate of $500,000,000 of common stock, preferred stock, senior debt and subordinated debt. Encore has no immediate plans to conduct any transactions under this registration statement, which is commonly referred to as a universal shelf registration statement. In connection with the common stock offering in June 2004, Encore agreed, subject to certain exceptions, not to offer or sell any shares of common stock prior to September 6, 2004 without the consent of Goldman, Sachs & Co. The universal shelf registration statement has been filed with the Securities and Exchange Commission but has not yet become effective. The securities covered by the registration statement may not be sold, nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities 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. At the time any of the securities covered by the registration statement are offered for sale, a prospectus supplement will be prepared and filed containing specific information about the terms of any such offering. When available, such a written prospectus may be obtained by contacting the underwriters which are named in any such prospectus supplement or by contacting Encore Acquisition Company, 777 Main Street, Suite 1400, Fort Worth, Texas 76102, * * * As reported in the Troubled Company Reporter's April 5, 2004 edition, Standard & Poor's Ratings Services assigned its 'B' rating to Encore Acquisition Co.'s $150 million senior subordinated notes due 2014. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit and 'B' subordinated debt ratings on the independent oil and gas exploration and production company. The outlook is stable. Proceeds from the proposed note offering will primarily be used to fund Encore's purchase of privately held Cortez Oil & Gas Inc. for $123 million, which was announced on March 3, 2004, as well as retire existing bank borrowings and other general corporate purposes. "The ratings affirmation reflects the fact that even with the increased debt Encore will take on to fund this transaction, financial measures will remain appropriate for current ratings," said Standard & Poor's credit analyst Brian Janiak. The stable outlook reflects Standard & Poor's expectation for management to effectively integrate the Cortez operations over the near term and expand the company's reserves and production through organic growth. The current rating incorporates the expectation that any additional significant acquisitions will be funded in a manner that does not increase leverage. Failure to adhere to moderate financial policies to expand its reserves and production growth could warrant an outlook revision or lower ratings. ENRON CORP: Sues 35 Creditors to Recover Preferential Payments -------------------------------------------------------------- On or within 90 days before their bankruptcy petition date, the Enron Corporation Debtors made, or caused to be made, transfers to 35 creditors: Creditor Amount -------- ------ Barnhart Crane & Rigging Co. 579,147 Barr-Rosin 35,600 Beach Software 63,717 Bearcom 21,622 Bennett Steel, Inc. 74,350 Berkel & Company 83,077 Bfg Immobilien 74,703 Boilermakers Health & Welfare Fund 55,757 Borden County 39,320 Dearborn Crane & Engineering 73,412 Debner & Company 490,932 Deer Park Construction 20,424 Delta Unibus Corporation 179,954 Dezurikk/Copes-Vulcan 111,897 Dixie Rental and Supply 62,478 Doolittle Erectors, Inc. 25,870 United Scaffolding, Inc. 269,219 United States Trust Co. of New York 87,676 United Steel Fabricators 140,729 Universal Limited, Inc. 33,034 Unnico 24,655 UOP 76,892 US Tool 25,805 Valley Technical Sales, Inc. 26,036 Valmet, Inc. 41,300 W N Couch, Inc. 521,586 Welsbach Electric Corporation 51,750 Westinghouse Process Ctl. 352,358 Wilson Industries, Inc. 25,758 Win Sam Valley View Center 94,505 World Water Works 46,900 Xtra Light Manufacturing, Inc. 68,557 Yarway Corporation 34,800 York International Corporation 397,440 York Refrigeration $111,856 ------------- TOTAL $4,423,116 Neil Berger, Esq., at Togut, Segal & Segal, LLP, in New York, relates that: (a) the Transfers constitute transfers of interest of the Debtors' property; (b) the Debtors made, or caused to be made, the Transfers to, or for the benefit of, the Creditors; (c) the Debtors made, or caused to be made, the Transfers for, or on account of, antecedent debts owed to the Creditors prior to the dates on which the Transfers were made; (d) the Debtors were insolvent when the Transfers were made; (e) the Transfers enabled the Creditors to receive more than they would have received if: -- Enron's cases were administered under Chapter 7 of the Bankruptcy Code; -- the Transfers had not been made; and -- the Creditors had received payment of the debt to the extent provided by the Bankruptcy Code. Thus, Mr. Berger contends that the Transfers constitute avoidable preferential transfers pursuant to Section 547(b) of the Bankruptcy Code. In accordance with Section 550(a), the Debtors may recover from the Creditors the amount of the Transfers, plus interest. In the alternative, Mr. Berger asserts that the Transfers are avoidable fraudulent transfers under Section 548(a)(1)(B) since: (a) the Transfers constitute transfers of interest in the Debtors' property; (b) the Transfers were to or for the benefit of the Creditors; (c) the Debtors received less than reasonable equivalent value in exchange for some or all of the Transfers; (d) the Debtors were insolvent, or became insolvent, or had unreasonably small capital in relation to their businesses or their transactions at the time or as a result of the Transfers; and (e) the Transfers were made within one year before the Petition Date. Accordingly, the Debtors ask the Court to: (i) avoid and set aside the Transfers pursuant to Section 547(b); (ii) in the alternative, avoid and set aside the Transfers pursuant to Section 548(a)(1)(B); (iii) direct the Creditors to immediately pay them an amount equal to the Transfers pursuant to Section 550(a), together with interest from the date of the Transfers; and (iv) award them their attorneys' fees, costs and other expenses incurred. (Enron Bankruptcy News, Issue No. 114; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON: Panel Wants 4 Workers to Return $4.9M Preferential Payments ------------------------------------------------------------------ Within one year before the Bankruptcy Petition Date, one or more Enron Corporation Debtors made, or caused to be made, these transfers to four employees: Employee Amount -------- ------ Rebecca P. Mark $3,202,997 Carol Whalen, Executor of the Estate 800,000 of John Baxter Terence H. Thorn 420,000 John R. Sherriff 1,500,000 ----------- TOTAL $4,922,000 Susheel Kirpalani, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, in New York, relates that pursuant to Section 547(b) of the Bankruptcy Code, the Transfers are avoidable because the Transfers: (a) were made within one year before the Petition Date, wherein the Debtors were considered to be insolvent; (b) constitute transfers of interests of the Debtors' property; (c) were made to, or for the benefit of, a creditor; (d) were made on account of an antecedent debt owed to the creditor; and (e) enabled the Employees to receive more than they would have received if: -- Enron's cases were administered under Chapter 7 of the Bankruptcy Code; -- the Transfers were not made; and -- the Employees received payment of the debt to the extent provided by the Bankruptcy Code. As avoidable preferential transfers, Mr. Kirpalani contends that the Transfers are recoverable under the purview of Section 550(a). In addition, Mr. Kirpalani tells the Court that the Transfers are also fraudulent transfers in accordance with Section 548(a)(1)(B) since the Debtors received less than reasonably equivalent value in exchange for some or all of the Transfers. In the alternative, Mr. Kirpalani asserts that the Transfers should be considered fraudulent transfers that may be avoided and recovered pursuant to Sections 554 and 550 of the Bankruptcy Code, Sections 270 to 281 of the New York Debtor and Creditor Law, or other applicable law on these additional grounds: -- As a direct and proximate result of the Transfers, the Debtors and their creditors suffered losses amounting to at least the value of the Transfers; and -- At the time of the Transfers, there were creditors holding unsecured claims and there were insufficient assets to pay the Debtors' liabilities in full. On the Debtors' behalf, the Official Committee of Unsecured Creditors asks the Court to avoid and set aside the Transfers pursuant to Section 547(b), Section 548(a)(1)(B), Section 544, New York Debtor and Creditor Law Sections 270-281, or other applicable law. The Committee asks the Court to direct the Employees to immediately pay the Transfers pursuant to Section 550(a), together with interest from the date of the Transfers. The Committee also asks the Court to award it for attorneys' fees, costs and other expenses incurred. (Enron Bankruptcy News, Issue No. 114; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON: Agrees to Settle Superior Natural Gas' Mega Claims --------------------------------------------------------- Before the Bankruptcy Petition date, Enron North America Corporation and Superior Natural Gas Corporation were parties to one or more transactions for the purchase and sale of natural gas. On October 2, 2002, Superior filed Claim No. 6242 against ENA for $5,605,425 based on the Contract. In support of the Contract, Enron Corporation issued a credit support guaranty to Superior. Superior filed Claim No. 6421 against Enron for $27,000,000 based on the Guaranty. Enron instituted an adversary complaint against Superior seeking to avoid certain amendments to the Guaranty on the grounds that its incurrence of its obligations under the amendments were constructively fraudulent. To resolve the Avoidance Action and the amounts and validity of the Claims, the parties stipulate that: (a) the ENA Claim will be allowed for $4,799,680 as a prepetition general unsecured claim against ENA; (b) the Enron Claim will be allowed for $1,909,482 as a prepetition guaranty claim against Enron; (c) Superior's maximum recovery on account of the Claims will be limited to $4,779,680 in the aggregate; (d) the Debtors and Superior will exchange a mutual release of claims related to the Contracts, the Guaranty, the ENA Claim and the Enron Claim; and (e) the Avoidance Action will be dismissed with prejudice and without costs to any party. Judge Gonzalez approves the parties' Stipulation in all respects. (Enron Bankruptcy News, Issue No. 114; Bankruptcy Creditors' Service, Inc., 215/945-7000) ESCHELON TELECOM: Offering to Exchange $100M 8-3/8% Senior Notes ---------------------------------------------------------------- Eschelon Operating Company offered to exchange $100,000,000 principal amount at maturity of its 8-3/8% Senior Second Secured Notes due 2010 for a like principal amount of registered 8-3/8% Senior Second Secured Notes due 2010. The new 8-3/8% Senior Second Secured Notes due 2010 will be free of the transfer restrictions that apply to the Company's outstanding unregistered 8-3/8% Senior Second Secured Notes due 2010 that persons currently hold, but will otherwise have substantially the same terms as the outstanding old notes. The offer was to expire at 5:00 P.M., New York City time, on June 11, 2004, unless extended. The new notes will not trade on any established exchange. Each broker-dealer that receives new notes for its own account pursuant to this exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. The letter of transmittal which accompanied the Company's May 14, 2004 prospectus states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for outstanding notes where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. Eschelo has agreed that, for a period of 180 days from the expiration of this exchange offer, it will make the prospectus available to any broker-dealer for use in connection with any such resale. * * * As reported in the Troubled Company Reporter's April 28, 2004 edition, Standard & Poor's Ratings Services assigned its 'CCC+' rating to the $100 million 8 3/8% senior second secured notes due 2010 issued by Eschelon Operating Co., a wholly owned subsidiary of Minneapolis, Minn.-based competitive local exchange carrier (CLEC) Eschelon Telecom Inc. Proceeds from these notes, which were issued under Rule 144A with registration rights, have been used to refinance bank debt. Simultaneously, Standard & Poor's affirmed Eschelon's 'CCC+' corporate credit rating. The outlook is developing. Pro forma for the refinancing, Eschelon had total debt of about $100 million ($116 million after adjusting for operating leases) at Dec. 31, 2003. "The corporate credit rating on Eschelon primarily reflects the company's lack of sustainable competitive advantages in the intensely competitive telecommunications services industry," said Standard & Poor's credit analyst Michael Tsao. FARMLAND: Land O'Lakes Now Wholly Owns Animal Feed Joint Venture ---------------------------------------------------------------- Land O'Lakes, Inc. completed the transaction to purchase Farmland Industries' ownership interest in Land O'Lakes Farmland Feed LLC, the animal feed joint venture that the two companies formed in 2000. Upon completion of the transaction on June 25, 2004, Land O'Lakes, directly, and through its subsidiaries, owned 100 percent of the company. Land O'Lakes announced June 15, 2004, that it had signed an agreement to purchase all of Farmland's ownership interest in Land O'Lakes Farmland Feed LLC. The proposed agreement provided that Land O'Lakes would pay approximately $12.15 million to acquire Farmland's eight percent interest in the joint venture. The sale was contingent upon bankruptcy court approval in the Farmland bankruptcy case. A motion to approve the sale was filed on June 15, 2004. The bankruptcy court approved the transaction June 24, 2004. About Land O'Lakes Land O'Lakes is a national, farmer-owned food and agricultural cooperative, with annual sales over $6 billion. Land O'Lakes does business in all 50 states and more than 50 countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the United States; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and local cooperatives with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services. About Farmland Industries Farmland Industries is one of the largest agricultural cooperatives in North America with about 600,000 members. The firm operates in three principal business segments: fertilizer production; pork processing, packing and marketing; and beef processing, packing and marketing. The company, along with its affiliates, filed for chapter 11 protection (Bankr. Mo. Case No. 02-50557) on May 31, 2002 before the Honorable Jerry W. Venters. The Debtors' Counsel is Laurence M. Frazen, Esq. of Bryan Cave LLP. When the company filed for chapter 11 protection, it listed total assets of $2.7 billion and total debts of $1.9 billion. Pursuant to the Second Amended Joint Plan of Reorganization filed by Farmland Industries, Inc. and its debtor-affiliates, the court declared May 1, 2004 as the Effective Date of the Plan. FIBERMARK: Panel Signs-Up Chanin Capital as Financial Advisor ------------------------------------------------------------- The Official Unsecured Creditors Committee appointed in FiberMark, Inc.'s chapter 11 cases sought and obtained approval from the U.S. Bankruptcy Court of Vermont to hire Chanin Capital Partners LLC as its financial advisor and investment banker. Chanin Capital is expected to: a) analyze the Debtors' operations, business strategy, and competition in each of their relevant markets as well as an analysis of the industry dynamics affecting the Debtors; b) analyze the Debtors' financial condition, business plans, capital spending budgets, operating forecasts, management, and the prospects for its future performance; c) assist in the determination of an appropriate capital structure for the Debtors; d) determine a theoretical range of values for the Debtors on a going concern basis; e) advise the Committee on tactics and strategies for negotiating with the Debtors and other purported stakeholders; f) render financial advice to the Committee and participate in meetings or negotiations with the Debtors and other stakeholders in connection with any restructuring, modification or refinancing of the Debtors' existing claims; and g) provide the Committee with other and further financial advisory services with respect to the Debtors and a Restructuring Transaction as may be requested by the Committee. Skip Victor reports that the firm does not hold or represent any interests materially adverse to those of the Committee in connection with the Debtors' chapter 11 cases and is "disinterested" as that term is defined in section 101(14) of the Bankruptcy Code. The Debtors' estate will pay Chanin Capital: a) $100,000 Monthly Advisory Fees; b) a Deferred Fee equal to 1.0% of the total consideration in excess of $165 million plus 50% of the non-debt related compromised prepetition unsecured claims; and c) Expense Reimbursements not exceeding $25,000. Headquartered in Brattleboro, Vermont, FiberMark, Inc. -- http://www.fibermark.com/-- produces filter media for transportation applications and vacuum cleaning; cover stocks and cover materials for books, graphic design, and office supplies and base materials for specialty tapes, wallcoverings and sandpaper. The Company filed for chapter 11 protection on March 30, 2004 (Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D. J. Baker, Esq., David M. Turetsky, Esq., Rosalie Walker Gray, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $329,600,000 in total assets and $405,700,000 in total debts. FLEMING COS: Asks Court To Approve ACE Lost Portfolio Transfer -------------------------------------------------------------- ACE American Insurance Company issued two workers' compensation policies to Fleming Companies, Inc., effective from July 1, 2001 through June 30, 2002. ACE currently holds a $220,147 prepetition cash deposit from Fleming. In addition, ACE is the beneficiary of a $28,157,765.89 Letter of Credit issued by JPMorgan Chase securing Fleming's obligations under the policies, as well as Fleming's obligations under other ACE policies regarding general and automobile liability. Fleming currently has outstanding potential losses under the policies for workers' compensation claims already made, as well as for claims which may be asserted in the future, relating to incidents which occurred during the Coverage Period. These potential losses related to claims are subject to a loss portfolio transfer. As of April 30, 2004, ACE valued the asserted claims at $20,808,820. Fleming already has paid $15,860,193 with respect to the Asserted Claims, and ACE currently has reserved $4,948,627 for the payment of the remainder of the Asserted Claims. Fleming believes that the estimated total reserves for Claims are at least $10,000,000. The parties intend to resolve Fleming's liabilities and obligations under the policies for Asserted Claims and Future Claims, subject to a Binder dated June 14, 2004 between Fleming and ACE Financial Solutions, Inc. The parties agree on the LPT, which will provide insurance coverage for the Claims. The primary terms of the LPT as they affect the Debtors are: (1) The Debtors will pay ACE a $12,100,000 premium consisting of a $220,147 deposit, $285,220.30 of which was already drawn down from the Letter of Credit on June 10, 2004, and through authorization to ACE to draw down on the Letter of Credit for the remainder of the Premium, or $11,594,632.70; (2) Upon payment of the total Premium, ACE will permit the permanent, further reduction of the Letter of Credit equal to $6,000,000. After these reductions, the Letter of Credit will total $10,563,133.89. The remaining $10,563,133.89 Letter of Credit will continue to be posted as collateral for the other policies issued by ACE which are not affected by the LPT; (3) Upon payment by Fleming of the Premium, ACE will assume Fleming's obligations with respect to the Claims, and will assume full control of the Claims, including processing, resolving, litigating, settling and paying the Claims, up to a $17,000,000 aggregate limit; and (4) Fleming will release ACE from all claims relating to any alleged overcharges in premiums for the policies. Accordingly, the Debtors ask the Court to approve the settlement. The Debtors believe that the settlement is for the best because, under the LPT, the Debtors receive coverage for the Claims and reduce the Letter of Credit by $6,000,000, which in turn increases their liquidity. ACE assumes all responsibility for the Claims, up to the program limit, and in exchange, Fleming will pay the Premium and grant ACE a release. The Debtors also believe that the Premium amount is reasonable. 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. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOREST OIL: Completes Merger with The Wiser Oil Company ------------------------------------------------------- Forest Oil Corporation (Forest) (NYSE:FST) announced that it completed the merger of a wholly owned subsidiary of Forest into The Wiser Oil Company (Wiser) (NYSE:WZR). Pursuant to the merger, all shares of Wiser common stock not previously tendered into the first-step cash tender offer have been converted into the right to receive $10.60 per share. As a result of the merger, Wiser is a wholly-owned subsidiary of Forest. Payment of the merger consideration will be made to former holders of Wiser common stock upon proper presentation of certificates formerly representing Wiser shares to Mellon Investor Services, paying agent for the merger, together with a properly completed letter of transmittal. The payment and transmittal process will begin promptly. Questions concerning this process should be directed to the paying agent, Mellon Investor Services, at its toll free number (800) 777-3674. Forest also announced that Wiser will redeem its outstanding 9.5% Senior Subordinated Notes due 2007. The redemption date is July 30, 2004. Forest Oil Corporation is engaged in the acquisition, exploration, development, and production of natural gas and liquids in North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in the Gulf of Mexico, Texas, Louisiana, Oklahoma, Utah, Wyoming and Alaska, and in Canada. Forest's common stock trades on the New York Stock Exchange under the symbol FST. For more information about Forest, please visit our website at http://www.forestoil.com/ * * * As reported in the Troubled Company Reporter's June 1, 2004 edition, Standard & Poor's Ratings Services said that it lowered its corporate credit and senior unsecured debt ratings on Forest Oil Corp. to 'BB-' from 'BB'. Standard & Poor's also lowered its senior secured bank loan rating on Forest's credit facility due 2005 to 'BB' from 'BB+' and assigned a recovery rating of '1' to the facility. All of the ratings were removed from CreditWatch where they were placed with negative implications on Jan. 27, 2004. The outlook is stable. The ratings downgrade on Forest reflects the company's increasing dependence on acquisitions to offset its faltered frontier development strategy, its high operating cost structure relative to its peers, and its debt leverage that is not commensurate with an acquire-and-exploit strategy. FOREST OIL: Appoints Timothy Savoy as VP -- Operations Support -------------------------------------------------------------- Forest Oil Corporation (Forest) (NYSE:FST) announced the appointment of Timothy F. Savoy as Vice President - Operations Support. In this position, Mr. Savoy is responsible for all aspects of Forest's land administration, purchasing, and health, safety and environmental activities. Mr. Savoy had served as Director - Health, Safety and Environment since joining Forest Oil Corporation on February 28, 2002. Prior to joining Forest, Mr. Savoy held positions in oil and gas production operations, drilling engineering and environmental engineering as well as management positions in environment, health and safety, purchasing, oil and gas marketing and administration with Amoco and Apache Corporation. Mr. Savoy holds a Bachelor of Science Degree in Mechanical Engineering from the University of Southwestern Louisiana. This position will report directly to H. Craig Clark, President and Chief Executive Officer. Mr. Clark stated: "I am extremely pleased to promote Tim to this position. He possesses extensive operations knowledge and leadership abilities. Tim has been involved in our successful acquisition program and will be key in the transition and integration of The Wiser Oil Company acquisition. This organizational change is part of the ongoing restructuring that began in 2003 to enable us to execute our 4- point game plan." About the Company Forest Oil Corporation is engaged in the acquisition, exploration, development, and production of natural gas and crude oil in North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in the Gulf of Mexico, Texas, Louisiana, Oklahoma, Utah, Wyoming and Alaska, and in Canada in Alberta. Forest's common stock trades on the New York Stock Exchange under the symbol FST. For more information, visit http://www.forestoil.com/ * * * As reported in the Troubled Company Reporter's June 1, 2004 edition, Standard & Poor's Ratings Services said that it lowered its corporate credit and senior unsecured debt ratings on Forest Oil Corp. to 'BB-' from 'BB'. Standard & Poor's also lowered its senior secured bank loan rating on Forest's credit facility due 2005 to 'BB' from 'BB+' and assigned a recovery rating of '1' to the facility. All of the ratings were removed from CreditWatch where they were placed with negative implications on Jan. 27, 2004. The outlook is stable. The ratings downgrade on Forest reflects the company's increasing dependence on acquisitions to offset its faltered frontier development strategy, its high operating cost structure relative to its peers, and its debt leverage that is not commensurate with an acquire-and-exploit strategy. FOSTER WHEELER: Plans to Amend Debt Exchange Offer -------------------------------------------------- Foster Wheeler Ltd. (OTCBB: FWLRF) announced that it intends to amend certain terms and conditions of its previously commenced equity for debt exchange offer. Institutional investors holding 50.1% of the 6.75% senior notes due 2005, 83.7% of the 6.50% convertible subordinated notes due 2007, 91.5% of certain of the Robbins bonds due 2009 and 19.6% of the 9% trust preferred securities have executed agreements not to transfer their securities. While Foster Wheeler has not yet requested these institutional investors to tender their securities in the offer, Foster Wheeler believes they will do so when requested. The amended exchange offer is subject to review by the Securities and Exchange Commission and other regulatory agencies, and revised offering materials will be distributed as soon as practicable. The amended exchange offer modifies certain terms and conditions for the proposed exchange of (i) senior notes due 2005 for a combination of equity and new senior secured notes due 2011; (ii) convertible subordinated notes and Robbins bonds for equity; and (iii) trust preferred securities for equity. The completion of the amended exchange offer is subject to, among other things, attaining certain minimum participation thresholds. As previously announced, Foster Wheeler has obtained a commitment from a group of institutional holders of its debt securities to purchase $120 million of new senior secured notes due 2011, contingent on the closing of the exchange offer. The proceeds will be used to repay the term loan and revolving debt outstanding under Foster Wheeler's existing senior secured credit agreement. After the closing of the exchange offer, the Company intends to seek a new multi-year revolving credit agreement and letter of credit facility. Assuming the amended exchange offer is completed as proposed, and at the minimum required participation levels, it would reduce Foster Wheeler's existing debt by approximately $410 million, extend the maturities on $135 million of debt to 2011, reduce interest expense by approximately $22 million per year, and, when combined with the sale of new notes to retire funded bank debt, eliminate substantially all material scheduled corporate debt maturities prior to 2011. Based upon the same assumptions, and prior to accounting for the warrants described below, Foster Wheeler's currently outstanding common stock would constitute approximately 5.1% of the voting equity securities of the Company. In addition, the holders of the following securities would hold the following approximate percentages of the Company's voting equity securities: (i) holders of the senior notes, 13.8%; (ii) holders of the 2009 Series C Robbins bonds, 3.5%; (iii) holders of the 2024 Series C Robbins bonds, 4.1%, (iv) holders of the Series D Robbins bonds, 7.1%; (v) holders of the convertible notes, 50.4%; and (vi) holders of the trust preferred securities, 11%. Finally, approximately 4.9% of the Company's voting equity securities would be reserved for grants to management of restricted stock. The exchange offer also contemplates the issuance of warrants. The holders of the trust preferred securities would be issued five- year warrants to purchase additional voting equity securities representing, at the minimum required participation level, approximately 15% of the Company's fully diluted equity, and the holders of common stock outstanding prior to the closing of the proposed exchange offer would receive a dividend in the form of three-year warrants to purchase additional voting equity securities representing approximately 5% of the Company's fully diluted equity. The warrants would be in addition to the previously described voting equity securities. In addition, there will be reserved for grants to the Company's management three-year stock options representing approximately 5% of the Company's fully diluted equity. Foster Wheeler will pay a soliciting brokers' fee to registered broker/dealers for soliciting qualifying tenders of trust preferred securities pursuant to this exchange offer. This fee will be equal to 50 cents per trust preferred security (liquidation amount $25) which the registered broker/dealers tender on behalf of their customers and which Foster Wheeler accepts for exchange. 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). 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/You may also obtain these documents for free (when available) from Foster Wheeler by directing your request to: John A. Doyle; email john_doyle@fwc.com; telephone 908-730-4270; and address Foster Wheeler Inc., Perryville Corporate Park, Clinton, NJ 08809-4000. 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/ FOSTER WHEELER: Subsidiary Awarded Spanish LNG Terminal Contract ---------------------------------------------------------------- Foster Wheeler Ltd. (OTCBB:FWLRF) announced that its subsidiary Foster Wheeler Iberia, S.A., in a joint venture with Soluziona Ingenieria, S.A., has been awarded a contract by Regasificacion del Noroeste, S.A. (Reganosa) for project management consultancy at the new liquid natural gas (LNG) terminal project located at Mugardos-Ferrol, Spain. The terms of the contract were not disclosed. "We are very pleased that Reganosa has awarded Foster Wheeler /Soluziona Ingenieria this significant LNG project in Spain," stated Jesus Cadenas, chief executive officer of Foster Wheeler Iberia. "The natural gas market is one of the most active energy segments in the world and increasingly important in Spain, where demand is expected to double by 2010. Our work with Reganosa and other gas companies solidifies Foster Wheeler Iberia's position as one of the leading Spanish engineering contractors in the natural gas sector. This project also adds to the work Foster Wheeler is doing globally leveraging our deep experience in the important and growing LNG market." The LNG terminal project includes two 150,000 cubic-meter tanks, regasification facilities and pipelines. The project is scheduled to be completed during the fourth quarter of 2006. This will be the sixth LNG terminal to be constructed in Spain and will receive LNG from various sources. 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/ FRANK'S NURSERY: Stockholders' Deficit Widens to $15.8M at May 16 ----------------------------------------------------------------- Frank's Nursery & Crafts, Inc. (OTC:FNCN) reported results for the first quarter ended May 16, 2004. Net sales for the first quarter of 2004 were $111.1 million versus $116.7 million in 2003. Comparable store sales for the first quarter of 2004 were down 4.2% compared to the first quarter of 2003. Frank's first quarter sales in the East region were up 0.1% versus the same period last year, while sales in the Midwest region were down 8.7% versus last year. The Midwest regional sales were severely impacted by unusually wet weather as both Chicago and Detroit reported record rain amounts for the month of May. As a result, the Company had a net loss of $1.9 million for the first quarter of 2004 versus a net income of $1.0 million for the first quarter of 2003. Frank's customers continue to show strong demand for our high- quality outdoor live goods. Outdoor live goods, including annuals and perennials, sales were up 3.1% versus the 2003 quarter. The new patio furniture, barbecue grills and silk, life-like floral businesses continue to improve. At May 16, 2004, Frank's Nursery & Crafts' balance sheet shows a stockholders' deficit of $15,831,000 compared to a deficit of $13,966,000 at January 25, 2004. Franks also announced it has completed an amendment to the revolving credit facility with Kimco Capital Corp. This amendment provides Franks with an additional $15 million of borrowing capacity, under certain circumstances. Subsequent to the end of the first quarter of 2004, Franks completed a sale and leaseback transaction of its Huntington, New York property. The Company will realize a gain of approximately $6 million on this transaction in the second quarter of 2004. Franks Nursery is the nation's largest lawn and garden specialty retailer and operates 169 stores in 14 states. Franks Nursery is also a leading retailer of indoor garden products and accessories, including silk floral arrangements, as well as Christmas decor merchandise. Franks was recently named "Michigan's Best Nursery/Garden Center" in 2004 by the Detroit News readers. FUN-4-ALL: U.S. Trustee Appoints 5-Member Creditors' Committee -------------------------------------------------------------- The United States Trustee for Region 2 appointed five creditors to serve on an Official Committee of Unsecured Creditors in Fun-4-All Corp.'s Chapter 11 case: 1. KidzCreations, Inc. 17 Denison Drive Narragansett, Rhode Island 02882 Attn: Paul Demty Tel. No. (401) 284-0166 Fax. No. (401) 284-0166 2. Talenttoy Factory, LTD. 200 Fifth Avenue, Suite 832 New York, New York 10010 Attn: Jeff Lewis Tel. No. (212) 255-8388 Fax. No. (212) 255-8520 3. R.J.E., Inc. 63 Colony Lane Syosset, New York 11791 Attn: Richard Esterow Tel. No. (516) 496-3479 Fax. No. (516) 496-2414 4. Pro Source Company Limited Shui On Centre, Suite 2701-8 No. 6-8 Harbour Road Wanchai, Hong Kong Attn: Charles Berzon Tel. No. 852-2581-0900 Fax. No. 852-2544-0343 5. CAS Marketing 55 West 26th Street, Apt. 22K New York, New York 10010 Attn: Cheryl Stoebenau Tel. No. (917) 693-5383 Fax. No. (212) 696-0777 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in New York, New York, Fun-4-All Corp., manufactures, sells and distributes toys under various licenses. The Company filed for chapter 11 protection on June 8, 2004 (Bankr. S.D.N.Y. Case No. 04-13943). Steven H. Newman, Esq., at Esanu Katsky Korins & Siger, LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $4,554,659 in total assets and $9,856,993 in total debts. The Company's Chapter 11 Reorganization Plan and Disclosure Statement are due on October 6, 2004. GENESCO INC: Declares Quarterly Dividends Payable on July 30 ------------------------------------------------------------ The board of directors of Genesco Inc. (NYSE: GCO) has declared dividends on the various classes of its preferred stock for the quarter ending July 31, 2004, payable on July 30, 2004, to shareholders of record on July 15, 2004. The rates are as follows: - Subordinated serial preferred stock: Series 1 $0.575 per share Series 3 $1.1875 per share Series 4 $1.1875 per share - Subordinated cumulative preferred stock: $0.375 per share Genesco, based in Nashville, sells footwear and accessories in more than 1,040 retail stores in the U.S., principally under the names Journeys, Journeys Kidz, Johnston & Murphy and Underground Station, and on internet websites http://www.journeys.com/and http://www.johnstonmurphy.com/ The Company also sells footwear at wholesale under its Johnston & Murphy brand and under the licensed Dockers brand. Additional information on Genesco and its operating divisions may be accessed at its website http://www.genesco.com/ * * * As reported in the Troubled Company Reporter's March 15, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating, along with a recovery rating of '3', to Genesco Inc.'s proposed $175 million senior secured credit facilities. The loan is rated at the same level as the corporate credit rating on the company; this and the '3' recovery rating indicate expectations for a meaningful (50%-80%) recovery of principal in the event of a default. At the same time, Standard & Poor's affirmed its outstanding ratings on Genesco, including the 'BB-' corporate credit rating. The affirmation follows the company's mostly debt-financed acquisition of Hat World. Although the acquisition of Hat World would somewhat diversify Genesco's sources of earnings, the business risk of the combined entity remains high due to the narrow product focus and aggressive growth of the headwear retailing business. However, the operating performance of Hat World has been positive and is expected to be accretive to Genesco's earnings in fiscal 2005. In addition, Hat World would provide additional growth opportunities to Genesco, given that the growth rate at the company's Journeys division is decelerating. GENTEK INC: Five Directors Disclose Share Acquisitions ------------------------------------------------------ From May 14, 2004 to June 16, 2004, five directors of GenTek, Inc., filed separate regulatory reports with the Securities and Exchange Commission, disclosing their acquisition of GenTek common stock: Amount par value Date of Director Acquired per share Transaction -------- -------- --------- ------------- Kathleen Flaherty 1,240 $0 May 14, 2004 John G. Johnson, Jr. 1,240 0 May 15, 2004 John McGovern 1,240 0 June 4, 2004 William E. Redmond, Jr. 250 38.80 June 3, 2004 1,240 0 June 7, 2004 Dugald K. Campbell 1,240 0 June 8, 2004 All acquired GenTek shares are subject to forfeiture under certain circumstances, the SEC filings say. (GenTek Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945- 7000) GENTEK INC: Acquires Mexican Wire-Harness Business From Whirlpool ----------------------------------------------------------------- GenTek Inc. (OTC Bulletin Board: GETI) announced that its Noma Corporation subsidiary has acquired a wire-harness and subassembly manufacturing business located in Reynosa, Mexico, from Whirlpool Corporation (NYSE: WHR). As part of the transaction, Noma has entered into a seven-year agreement to supply wire harnesses, panel assemblies, copper tubing and related components to Whirlpool's North American appliance production facilities. GenTek expects that this supply agreement will result in an increase of approximately $120 million in annual revenue. "We are very pleased to have this opportunity to greatly expand and strengthen our relationship with Whirlpool in product lines that are central to Noma's strategic growth plan," said Ray L. Patel, Noma's president and CEO. "The Reynosa facility will enhance Noma's position as a leading supplier of wire harness and related subassemblies for the appliance, electronic and automotive markets." The purchase price of $8.4 million, which may be subject to post- closing adjustments, includes $4.0 million in cash and a $4.4 million note payable in 4 installments over 40 months. The assets acquired by Noma include inventory, fixed assets and the stock in Whirlpool de Reynosa, S.A. de C.V. The Reynosa facility, which employs approximately 3,000 people, is a state-of-the-art facility that was constructed by Whirlpool in 2003 as a means to consolidate the operations of three facilities. The acquisition of the Reynosa operation is expected to result in the following strategic benefits to GenTek and Noma: -- further establishes Noma as a premier provider of wire harnesses and subassemblies to the appliance, electronic and automotive markets; -- more than doubles Noma's appliance and electronic annual revenues with minimal upfront investment; -- ensures that Noma's long-standing relationship with Whirlpool remains strong well into the future; -- provides significant flexibility to realize future cost savings throughout Noma's existing appliance, electronic and automotive wire-harness business. GenTek expects that the addition of the Reynosa operation will be neutral to GenTek's net income and operating cash flow during the first year of operation, with the contribution to net income and operating cash flow expected to increase after the first year of transition. "This transaction is an important step in GenTek's continued efforts to sharpen its focus on growing the core businesses within its manufacturing and performance products segments," said Richard R. Russell, GenTek's president and CEO. About Whirlpool Corporation Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances, with annual sales of over $12 billion, 68,000 employees, and nearly 50 manufacturing and technology research centers around the globe. The company markets Whirlpool, KitchenAid, Brastemp, Consul and other major brand names to consumers in more than 170 countries. Additional information about the company can be found on the internet at http://www.whirlpool.com/ About GenTek Inc GenTek Inc. is a manufacturer of industrial components and performance chemicals. Additional information about the company is available on GenTek's Web site at http://www.gentek-global.com/ GENTEK INC: Makes Required Tranche A Warrant Payment ---------------------------------------------------- GenTek Inc. (OTC Bulletin Board: GETI) announced that it has made a payment of $7.13 per warrant to holders of record of its Tranche A Warrants as of May 18, 2004, as required under the Tranche A Warrant Agreement. Pursuant to the terms of the Tranche A Warrant Agreement, the payment was required as a result of the completion of GenTek's recent sale of its KRONE communications business to ADC Telecommunications, Inc. All of the Tranche A Warrants expire on the date of such payment. About GenTek Inc GenTek Inc. is a manufacturer of industrial components and performance chemicals. Additional information about the company is available on GenTek's Web site at http://www.gentek-global.com/ GLOBALNET INTERNATIONAL: Files Chapter 11 Petition in SD New York ----------------------------------------------------------------- GlobalNet Corporation (OTCBB:GLBT), a major provider of international telecommunications services, announced that one of its operating subsidiaries, GlobalNet International LLC, has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code, in the United States Bankruptcy Court for the Southern District of New York. Chapter 11 allows a company to continue operating in the ordinary course of business and to maximize recovery for the company's stakeholders. The filing will enable LLC to continue to conduct business as usual while it develops a reorganization plan. GlobalNet Corporation, the parent company of LLC, is not included in the filing and will continue to operate normally. When GlobalNet Corporation acquired LLC from the Titan Corporation in August 2003, LLC was already struggling under a significant debt load, chiefly to trade creditor MCI and equipment lessor Cisco Capital. Despite significant financial support from GlobalNet Corporation, LLC has been unable to right itself on its own merits, primarily due to the decline in profit margins in Mexico off-net traffic, which accounts for the majority of LLC's revenues. The Chapter 11 filing will allow GlobalNet Corporation to isolate LLC's financial situation from the rest of the GlobalNet enterprise, while affording LLC bankruptcy court protection to attempt to regain financial health and focus. "As iDial Corporation -- as the parent company was known before acquiring LLC and changing its name GlobalNet Corporation in December 2003 -- we had other operating divisions in the retail and wholesale telephony area, and these will continue unaffected by LLC's filing," said Mark T. Wood, Chairman and CEO of GlobalNet Corporation. "LLC's wholesale business currently accounts for most of GlobalNet's consolidated revenues, and we will continue to account for those revenues on a consolidated basis while LLC is in reorganization. However, we also will continue to grow our wholesale business independently of LLC, using our other operating entity, GlobalNet Carrier Services, while giving LLC a fair opportunity to emerge from reorganization a stronger, more viable competitor in the wholesale arena. Nothing about LLC's filing changes GlobalNet Corporation's announced plans to expand service both in the United States and abroad, including wholesale, retail, and enhanced VoIP services." About GlobalNet Corporation GlobalNet Corporation is one of the top ten U.S. service providers of outbound traffic to Latin America and counts among its customers more than 30 Tier 1 and Tier 2 carriers. GlobalNet provides international voice, data, fax and Internet services on a wholesale basis over a private IP network to international carriers and other communication service providers in the United States and internationally. GlobalNet's state-of-the-art IP network, utilizing the convergence of voice and data networking, offers customers economical pricing, global reach and an intelligent platform that guarantees fast delivery of value-added services and applications. More information may be obtained from our website at http://www.gbne.net/ GLOBALSTAR TELECOMMUNICATIONS: Files Planned Chapter 7 Petition --------------------------------------------------------------- Restructuring Officer Ira E. Goldberg advises that on June 30, 2004, Globalstar Telecommunications Limited filed a Petition under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court in the Southern District of New York (Bankr. Case No. 04-14480). GTL does not anticipate having any ongoing business operations in the future other than the winding down of its affairs. Except as noted below, GTL believes that its shareholders will not receive any distribution or anything else of value on account of their ownership of GTL shares. Globalstar Telecommunications Limited disclosed in a Form 8-K filed with the SEC on June 21, 2004, that this chapter 7 filing was planned following the recently completed reorganization of Globalstar, L.P. in the United States Bankruptcy Court for the District of Delaware. Under the Globalstar, L.P., Reorganization Plan confirmed by the Delaware Bankruptcy Court on June 17, 2004, the GTL shareholders of record on the Effective Date of the GLP Plan have been granted certain rights to participate in certain specified public offerings of securities that may be issued in the future by the successor entity to Globalstar. These rights are contained in that certain Asset Contribution Agreement dated as of December 5, 2003 by and among Globalstar and certain of its subsidiaries and Thermo Capital Partners, L.L.C. Section 6.9 of the Agreement provides in part that: "Section 6.9 Right to Participate in First Public Offering. Thermo will use commercially reasonable efforts to provide that all shareholders of record of Globalstar Telecommunications Limited, a Bermuda corporation, as of the Plan Effective Date have the opportunity to acquire securities in the first underwritten public offering of equity securities, if any, made by New Globalstar (or any successor corporation) on or before the third anniversary of the Interest Acquisition Date at the price such securities are offered to the public and in such amounts as New Globalstar determines to be appropriate after consultation with the managing underwriter or underwriters for such offering, provided that so doing will not result in any additional material expense to New Globalstar, have an adverse effect on the success of such offering or result in any material delay of the completion of such offering." GTL tells its shareholders of record that they should consider monitoring the affairs of the successor entity to Globalstar, so that they may be aware of possible securities offerings that may qualify under the provisions of the Agreement. GTL shareholders may not receive any further notification of such public offering, if any, and GTL disclaims any obligation to notify GTL shareholders of such public offering. GTL presently lacks sufficient information to determine the value, if any, to GTL's shareholders of such rights offering. GLOBALSTAR TELECOMM: Chapter 7 Case Summary & Unsecured Creditors ----------------------------------------------------------------- Debtor: Globalstar Telecommunications Limited c/o Ira Goldberg 435 East 79th Street New York, New York 10021 Bankruptcy Case No.: 04-14480 Type of Business: The Debtor is a general partner of Globalstar, L.P., which provides global mobile and fixed wireless voice and data services. See http://www.globalstar.com/ Chapter 7 Petition Date: June 30, 2004 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtor's Counsel: Robert R. Leinwand, Esq. Robinson Brog Leinwand Greene Genovese & Gluck P.C. 1345 Avenue of the Americas, 31st Floor New York, NY 10105 Tel: 212-586-4050 Total Assets: $0 Total Debts: $1,823,799,468 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Qualcom Inc. $625,324,757 5775 Morehouse Dr. Suzanne Reynolds Bldg., R-143E San Diego, CA 92121 Loral Sattelite Incorporated $557,829,198 Attn: Tina Palazarano c/o Loral Skynet 500 Hills Drive Bedminster, NJ 07921 Space Systems/Loral $269,800,928 3825 Fabian Way Palo Alto, CA 94303-4604 Lockhead Martin $170,831,601 Corporation LMDS 3200 Zanker Rd. San Jose, CA 95134 Loral Space and Communication Ltd. $70,680,021 600 Third Ave., 36th Floor New York, NY 10016 Ericsson $54,235,420 Lawn Rd. Industrial Estate Carlton - IN - Linfrick, Workshop Nottinghamshire, U.K. Qualcom China Inc. $24,969,886 c/o Qualcom Inc. 5775 Morehouse Dr. San Diego, CA 92121 Qualcom Inc. $12,348,333 5775 Morehouse Dr. Suzanne Reynolds, Bldg., R-143E San Diego, CA 92121 Dasa Globalstar Limited Partner, Inc. $11,531,133 c/o Daimler Chrysler Aerospace AG BBD/PC Gebaille 56 Eughn - Bangler Strasse Ottbriinn, Germany 85221 Elsacom (Elsa G. Bailey/Finmeccanica) $6,407,996 Via Di Setteragni Rome, 138 Italy Space Systems/Loral $4,454,794 3825 Fabian Way Palo Alto, CA 94303-4604 TE.S.AM $4,156,631 8-16 Rue Paul Vaillant Couturier Malakoff Cedex, 92245 France Elsacom S.P.A. $1,883,920 Via Di Setteragni Rome, Italy TE.S.AM $1,740,161 7, Blvd. Romain-Rolland 92128 Montrouge Cedex Cedex, France Elsacom $1,159,300 Attn: Ms. Paolo Moschini 5300, Via Di Setteragni, 390 Rome, 138 Italy Saudi Globalstar Operation Co., Ltd. $1,074,011 P.O. Box 25916 Riyadh, 11476 Saudi Arabia Qualcom Global Services, Inc. $994,542 6455 Lusk Blvd. San Diego, CA 92121 Loral Space and Communications $732,373 600 Third Ave., 36th Fl. New York, NY 10016 Mexico Sattelite LLC $614,071 2999 Oak Road, 10th Fl. Walnut Creek, CA 94596 TE.S.AM $570,887 Attn: J.B. Lagarde 8-16 Rue Paul Vaillant Couturier Malakoff Cedex, 92245 France GS MORTGAGE: Fitch Affirms Junk Ratings on Classes H & J Notes -------------------------------------------------------------- Fitch Ratings upgrades GS Mortgage Securities Corp. II's commercial mortgage pass-through certificates, series 1998-C1, as follows: --$102.4 million class C to 'AA-' from 'A+'. In addition, Fitch affirms the following classes: --$65.7 million class A-1 'AAA'; --$436.0 million class A-2 'AAA'; --$544.4 million class A-3 'AAA'; --Interest-only class X 'AAA'; --$102.4 million class B 'AAA'; --$107.0 million class D 'BBB'; --$32.6 million class E 'BBB-'; --$23.3 million class G 'B+'; --$55.8 million class H 'CCC'. The $23.3 million class J remains at 'C'. Fitch does not rate classes F and K. The upgrade reflects an increase in subordination levels due to loan amortization and payoffs. Currently, 16 loans (5.2%) are specially serviced by GMAC Commercial Mortgage Corp. Fitch expects 14 specially serviced loans (4%) to result in losses. The largest loan in special servicing (1.3%) is secured by an outlet mall located in Bristol, WI. The loan was transferred to special servicing in June 2003 due to vacancy issues and converted to real estate owned (REO) in January 2004. The property is currently 50% occupied and listed for sale. The second largest loan in special servicing is Sequoia Plaza (0.8%), which is secured by a retail center located in Visalia, CA. The loan is expected to pay off shortly with minor losses. As of the June 2004 distribution date, the aggregate collateral balance has been reduced by 14.8% to $1.59 billion from $1.86 billion at issuance. To date, the transaction has realized losses in the amount of $27.9 million. GMAC, the master servicer, collected year-end 2003 financials for 82% of the pool balance. According to this information, the YE 2003 weighted average debt service coverage ratio (DSCR) is 1.61 times (x), compared with 1.51x as of YE 2002 and 1.52x at issuance for the same loans. Fitch reviewed the credit assessments of the Americold loan (8.3%) and the Four Winds Portfolio (1.8%). The DSCR for each loan is calculated using servicer-provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch-stressed refinance constant. The Americold loan is secured by 28 cold-storage warehouses totaling 6.2 million square feet. Net cash flow increased slightly as of YE 2003 from YE 2002. The DSCR for the YE 2003 is stable at 1.58x, which is flat compared with YE 2002. The Four Winds Portfolio comprises two cross-collateralized and cross-defaulted loans on two psychiatric facilities totaling 263 beds: one is in Katonah, New York and the other is in Saratoga Springs, New York. The YE 2003 DSCR for the portfolio increased to 1.85x from 1.69x for YE 2002. As of December 2003, the occupancy for both facilities was approximately 95%, up from 92% at last review. Although the performance of this loan has improved, the loan maintains a below investment-grade credit assessment. HUDSON INVESTORS: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Hudson Investors Fund Inc. 410 Broadway Suite 203 Laguna Beach, California 92651 Bankruptcy Case No.: 04-14082 Chapter 11 Petition Date: June 25, 2004 Court: Central District of California (Santa Ana) Judge: Robert W. Alberts Debtor's Counsel: Lawrence R. Young, Esq. Lawrence R. Young & Associates, P.C. 9530 East Imperial Highway, #K Downey, CA 90242-3041 Tel: 562-803-4240 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 3 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Parker Construction $53,520 John Semmens, CPA $30,000 Centennial Realty $3,150 IKON OFFICE: GE Commercial Acquires Canadian Leasing Business ------------------------------------------------------------- GE Commercial Finance announced the completion of its acquisition of IKON Office Solutions, Inc.'s (NYSE:IKN) Canadian leasing business. The acquisition was announced on March 31, 2004. As part of the acquisition, and subject to certain post-closing adjustments, IKON will sell certain assets, and GE will assume certain obligations, relating to IKON's leasing operations in Canada for approximately CDN$215 million in gross proceeds. IKON has also entered into a Program Agreement with GE Commercial Finance for the funding and servicing of IKON's lease originations in Canada. Earlier this year, GE Commercial Finance completed its acquisition of certain assets and liabilities from IKON Office Solutions, including a $1.9 billion U.S. leasing portfolio. It will operate IKON's lease financing programs in the U.S. and Canada under the name IKON Financial Services(SM). About GE Commercial Finance GE Commercial Finance offers businesses of all sizes an array of financial services and products worldwide. With approximately $217 billion in assets and an expertise in the mid-market segment, GE Commercial Finance provides loans, operating leases, financing programs and innovative structured capital to help customers grow. A wholly owned subsidiary of the General Electric Company, GE Commercial Finance is headquartered in Stamford, Connecticut, USA. GE (NYSE:GE) is a diversified technology, media and financial services company dedicated to creating products that make life better. From aircraft engines and power generation to financial services, medical imaging, television programming and plastics, GE operates in more than 100 countries and employs more than 300,000 people worldwide. For more information, visit the company's web site at http://www.ge.com About IKON IKON Office Solutions -- http://www.ikon.com-- integrates imaging systems and services that help businesses manage document workflow and increase efficiency. As the world's largest independent distribution channel for copier and printer technologies, IKON offers best-in-class systems from leading manufacturers such as Canon, Ricoh and HP and service support through its team of 7,000 service professionals worldwide. IKON also represents the industry's broadest portfolio of document management services: outsourcing and professional services, on-site copy and mailroom management, fleet management, off-site digital printing solutions, and customized workflow and imaging application development, as well as equipment lease financing. With Fiscal 2003 revenues of $4.7 billion, IKON has approximately 600 locations throughout North America and Europe. * * * In its Form 10-Q for the quarterly period ended March 31, 2004 filed with the Securities and Exchange Commission, Ikon Office Solutions, Inc. reports: "As of March 31, 2004, the Company terminated its $300,000,000 unsecured credit facility. Although the Company is currently negotiating a new credit facility, there can be no assurance as to the amount of any new credit facility or whether the new credit facility will be on an unsecured basis and otherwise on similar or improved terms and conditions relative to the prior credit facility. Furthermore, there can be no assurance that a new credit facility will actually be obtained. "As of March 31, 2004, the credit ratings on the Company's senior unsecured debt were designated Ba1 with negative outlook by Moody's Investor Services and BB with stable outlook by Standard and Poor's. On April 27, 2004, Moody's Investor Services lowered the Company's senior unsecured debt rating to Ba2 with a stable outlook. Our access to certain credit markets is dependent upon our credit ratings. Our current credit ratings, and any further downgrades, could reduce or foreclose our access to certain credit markets. There is no assurance that these credit ratings can be maintained or improved or that the credit markets can be readily accessed." INDEPENDENCE COURT: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Independence Court of Ormond Beach Associates LP 313 Castle Shannon Boulevard Pittsburgh, Pennsylvania 15234 Bankruptcy Case No.: 04-06355 Type of Business: The Debtor operates an assisted living facility. Chapter 11 Petition Date: June 21, 2004 Court: Middle District of Florida (Jacksonville) Judge: Jerry A. Funk Debtor's Counsel: Albert H. Mickler, Esq. Mickler & Mickler 5452 Arlington Expressway Jacksonville, FL 32211 Tel: 904-725-0822 Total Assets: $342,120 Total Debts: $6,185,065 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ FHA Hud Five Points Plaza Location: 535 N. $3,960,000 40 Marietta St. Nova Rd., Ormond Atlanta, GA 30303-2806 Beach FL Peridot Enterprises, Inc. Business Loan $700,000 313 Castle Shannon Blvd Pittsburgh, PA 15234 FHA Hud Five Points Plaza Location: 535 N. $629,000 40 Marietta St. Nova Rd., Ormond Atlanta, GA 30303-2806 Beach FL Peridot Enterprises, Inc. Business Loan $522,273 313 Castle Shannon Blvd. Pittsburgh, PA 15234 Peridot Place/The Woodlands Business Loan $136,900 Penelope Lohr Business Loan $50,211 Peridot Enterprises, Inc. Business Loan $38,000 Internal Revenue Service Payroll Taxes $30,268 Patrick and Hillary Cahalan Business Loan $28,315 McKesson Medical Medical services $13,393 Florida Power & Light Utilities $13,208 US FoodService Open account $10,620 SCI Open account $6,774 County of Volusia Open account $3,915 Florida UC Fund Unemployment taxes $3,388 Dr. James Shoemaker Medical services $3,384 WNDB-AM Radio Open account $3,340 City of Ormond Beach Utilities $2,460 American Pharm. Servs. Medical services $2,196 Healthcare Environments Open account $1,960 INN OF THE MOUNTAIN: FY 2004 Net Revenues Increase to $81 Mil. -------------------------------------------------------------- Inn of the Mountain Gods Resort and Casino, a business enterprise of the Mescalero Apache Tribe, reported that net revenues for fiscal 2004 were $81 million, an increase of $14.7 million, or 22.2%, from $66.3 million for fiscal 2003. For the fourth quarter ended April 30, 2004, net revenues were a record $22.1 million, an increase of $6.9 million, or 45.4%, from $15.2 million for the comparable period in the prior year. Increases in net revenues in both periods were primarily attributable to increased gaming, food and beverage and retail, recreational and other revenues due to the effect of the opening of IMGRC's new gaming and travel center facility, The Travel Center, in May 2003, together with results from our increased marketing and promotional activities during fiscal 2004. Michael French, Chief Operating Officer of IMGRC, stated: "We are particularly pleased with the continued growth in our gaming revenues, which reached another record performance for the fourth quarter of 2004. Average gross slot win per unit per day for the full year and fourth quarter was $140 and $134 (compared to $155 and $176 for fiscal 2003 and the fourth quarter of 2003) and the average table game win per unit per day was $580 and $550 (compared to $632 for fiscal 2003 and $628 for the fourth quarter of 2003). While there was a decline in the average per unit per day win, there was a significant increase in the number of slots and table games between periods as a result of the opening of the Travel Center. The weighted average number of slot machines for full year and the fourth quarter increased 46.0% and 88.7% over the comparable periods in 2003; the weighted average number of table games increased 52.0% for the year and fourth quarter over 2003. In addition to focusing on improving our operations, we remain focused on preparation for the transition of our gaming and resort operations to our new resort project in less than a year." IMGRC experienced healthy revenue gains in each of the gaming, food and beverage and retail, recreational and other segments for both the 2004 fiscal year and fourth fiscal quarter. Gaming revenues increased 28.6%, from $46.9 million to $60.3 million, in fiscal 2004, when compared to fiscal 2003, and 44.2%, from $10.4 million to $15.0 million, in the fourth quarter 2004 when compared to the fourth quarter fiscal 2003. Food and beverage revenues were $5.6 million in fiscal 2004 and $4.9 million in fiscal 2003. Fourth quarter food and beverage revenues were $1.6 million in 2004 compared to $1.0 million in 2003. The 2004 results represent a 14.3% and 60.0% increase in food and beverage revenues for the annual and quarterly 2004 periods. Retail, recreational and other revenues experienced a 37.5% and 51.2% increase for the 2004 fiscal year and 2004 fourth fiscal quarter, when compared with the comparable prior periods. Retail, recreational and other revenues for the 2004 and 2003 fiscal years were $16.5 million and $12.0 million, respectively. For the fourth quarters, retail, recreational and other revenues were $6.2 million and $4.1 million, respectively. The current year includes revenue from the smoke shop, convenience store and refueling stations at the Travel Center. When compared with the prior year, these added revenues during 2004 were partially offset by a decline in lift tickets at Ski Apache related to below-normal snowfall. Revenue gains in the gaming, food and beverage and retail and other segments were partially offset by a revenue decline in the rooms revenue resulting from the demolition of IMGRC's old hotel in the third quarter of fiscal 2003. The new resort hotel is currently scheduled to open in April 2005. Adjusted EBITDA(1) for fiscal 2004 was $29.1 million as compared to $29.2 million for fiscal 2003. For the fourth quarter, adjusted EBITDA was $6.8 million for the 2004 quarter as compared to $7.5 million for the 2003 quarter. During the fourth quarter of fiscal 2004, the Mescalero Apache Tribe and the State of New Mexico settled their outstanding disputes over the computation and payment of revenue sharing and regulatory fees. Under the settlement, the tribe agreed to pay the state $25 million, and also agreed to sign a gaming compact calling for the Tribe to pay to the State 8% of the "net win" from gaming machines operated by IMGRC. IMGRC will fund these payments out of cash reserves established for this purpose. The fiscal 2004 and fourth quarter of 2004 operating results reflect the reversal of accrued fees that were the subject of the dispute. This non- cash item is excluded from the computation of adjusted EBITDA. Construction of IMGRC's new resort project is on schedule with the enclosure of the structure completed. Construction costs incurred through April 30, 2004, were $102.1 million with another $33.1 million construction-related expenditures expected to be incurred to complete the project by its expected opening in April 2005. About Inn of The Mountain Gods Resort and Casino IMGRC is a business enterprise of the Tribe, a federally recognized Indian tribe with an approximately 725-square mile reservation situated in the Sacramento Mountains in south-central New Mexico. IMGRC includes all of the resort enterprises of the Tribe including Casino Apache, Casino Apache Travel Center, Ski Apache and a new resort project, currently under construction which, upon completion, will include a 273-room hotel, a new 38,000 square foot casino (replacing the existing Casino Apache), a fitness center and indoor swimming pool and a 37,000 square foot convention and special events center, which will include capacity for 17,000 square feet of divisible meeting room space. * * * As reported in the Troubled Company Reporter's April 2, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Inn of the Mountain Gods Resort and Casino (IMG) to negative from stable. At the same time, Standard & Poor's affirmed its ratings on Mescalero, New Mexico-based IMG, including its 'B' corporate credit rating. "The outlook revision follows weaker-than-expected third-quarter financial performance due to its May 2003 opening of the Travel Center casino, which resulted in operating inefficiencies and higher costs associated with operating two casinos, as well as unseasonably warm weather impacting its ski operations" said Standard & Poor's credit analyst Peggy Hwan. Adjusted EBITDA during the quarter ended Jan. 31, 2004 declined about 20% year over year, despite a 28% year-over-year increase in gaming revenues. "As a result, Standard & Poor's now expects leverage to be meaningfully higher by the end of IMG's fiscal 2004 (April 30) than originally anticipated." INT'L FALCON: B.C. Securities Commission Issues Cease Trade Order ----------------------------------------------------------------- A Cease Trade Order has been issued by the British Columbia Securities Commission on June 30, 2004 against International Falcon Resources Inc. (TSX:ILF.H) for failing to file a Financial Statement indicated within the required time period, January 31, 2004. Upon revocation of the Cease Trade Order, the Company's shares will remain suspended until the Company meets TSX Venture Exchange requirements. Members are prohibited from trading in the securities of the Company during the period of the suspension or until further notice. International Falcon Resources, Inc. is a public corporation incorporated in February 180 under the laws of the Province of British Columbia. Its prinicipal business activity since incorporation has been natural resource developmetn. over the past nine years the Company has been involved in the development, prototyping and refinement of a unique low speed wind turbine for the economical production and supply energy in isolated regions worldwide. At October 31, 2003, International Falcon Resources, Inc.'s balance sheet shows a total shareholder's deficit of CDN$80,343 as compared to a deficit of CDN$27,879 at October 31, 2002. INTERNATIONAL UTILITY: Obtains CCAA Stay Extension Until Sept. 30 ---------------------------------------------------------------- International Utility Structures Inc. announced that it has received an extension of its CCAA stay to September 30, 2004 in order to continue its restructuring efforts. For further information please contacet Gerald A. Diener,Vice President Finance and Chief Financial Officer, at tel num (403) 269-2350 or 1-800-263-9444, or general@iusi.ca IUSI manufactures and markets overhead lighting, powerline, and telecommunications support structures. JILLIAN'S ENTERTAINMENT: Taps Hilco Appraisal to Appraise Assets ---------------------------------------------------------------- Jillian's Entertainment Holdings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Western District of Kentucky, Louisville Division, for permission to hire Hilco Appraisal Services, LLC to appraise certain assets. The Debtors believe that Hilco Appraisal is well qualified and able to represent them in a cost-effective, efficient and timely manner. The Debtors relate that they are a party to several secured financing agreement relating to the assets at up to 33 locations. Hilco Appraisal will conduct a valuation analysis of the assets to determine the characterization of the Capital Leases of the Uniform Commercial Code. In addition, should the Debtors commence an adversary proceeding to prove that the Capital Leases are indeed secured financing agreements, the Debtors may also use the firm as a fact or witness in connection with the proceeding. Hilco Appraisal's services will include, among other things: a) the fair market value and b) the orderly liquidation value of each asset or group of assets. The Debtors point out that this information will assist them in deciding whether it is appropriate to file any adversary complaints against any of the asset lessors to the extent the lessors assert that a Capital Lease is not a true lease rather than a disguised financing agreement. The Debtors will pay Hilo Appraisal $3,500 to $4,000 per location plus normal and customary travel expenses. 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 and James H.M. Sprayregen, P.C. at Kirkland & Ellis LLP, represent 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. JP MORGAN: Fitch Assigns Low-B Ratings To 6 Ser 2004-CIBC9 Classes ------------------------------------------------------------------ J.P. Morgan Chase Commercial Mortgage Securities Corp., series 2004-CIBC9, commercial mortgage pass-through certificates are rated by Fitch as follows: --$64,985,000 class A-1 'AAA'; --$145,991,000 class A-2 'AAA'; --$103,723,000 class A-3 'AAA'; --$466,392,000 class A-4 'AAA'; --$167,933,000 class A1-A 'AAA'; --$1,101,915,388 class X* 'AAA'; --$27,548,000 class B 'AA'; --$13,774,000 class C 'AA-'; --$20,661,000 class D 'A'; --$11,019,000 class E 'A-'; --$15,151,000 class F 'BBB+'; --$9,642,000 class G 'BBB'; --$17,906,000 class H 'BBB-'; --$2,755,000 class J 'BB+'; --$4,132,000 class K 'BB'; --$5,510,000 class L 'BB-'; --$5,509,000 class M 'B+'; --$2,755,000 class N 'B'; --$2,755,000 class P 'B-'; --$13,774,388 class NR 'NR'; *Interest Only. Class NR is not rated by Fitch. Classes A-1, A-2, A-3, A-4, B, C, D, and E are publicly offered, while classes A1-A, X, F, G, H, J, K, L, M, N, and P, are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 98 fixed-rate loans having an aggregate principal balance of approximately $1,101,915,388, as of the cutoff date. LUBRIZOL CORP: Reduces Workforce Following Noveon Acquisition ------------------------------------------------------------- The Lubrizol Corporation (NYSE: LZ) announced workforce reductions related to the company's restructuring following its acquisition of Noveon International, Inc., which was completed June 3, 2004. The reductions are estimated to result in annual pretax savings of approximately $16 million. In April, the company announced its target to achieve $40 million in acquisition-related cost savings over three years. Approximately 95 positions are being eliminated, primarily affecting technical and commercial employees at the company's Wickliffe, Ohio headquarters. These reductions are expected to be completed by the end of the third quarter 2004. A second-quarter 2004 pretax restructuring charge, projected to be approximately $8 million, includes about $6 million for employee severance costs and a $2 million charge for impaired assets related to PuriNOx(TM) technology. A second-half 2004 pretax restructuring charge is projected to be approximately $9 million, including about $6 million for a non-cash pension benefit settlement charge and $3 million for the remainder of the employee severance costs associated with this reduction in force. James L. Hambrick, President and Chief Executive Officer, commented, "Staff reductions are always very difficult; however, the Noveon acquisition created some clear redundancies that we addressed quickly. Both companies' headquarters are in the Cleveland area, which has been an obvious advantage for merging and consolidating organizations. As anticipated, during our first month, we are making solid progress with identifying and implementing commercial, operating and financial synergies. "As a result of the acquisition, we have reevaluated our commercial development programs. Some of Tuesday's workforce reductions reflect our decision to reduce our activities in fluid technologies for advanced systems. In addition, we have realigned our research, development and testing groups to continue to ensure the long-term competitiveness of our lubricant additives business." Commenting on business conditions in the quarter, Hambrick continued, "Sales momentum continues to be strong and we are maintaining our focus on serving our customers. The second quarter earnings guidance of $.60 to $.65 per share that we issued in late April assumed no impact from the Noveon acquisition. On that same basis, we believe earnings are on track to meet the upper end of the range of April guidance. We have not yet completed our assessment of the acquisition impact, but we are encouraged by Noveon's strong operating performance for the month of June. "Overall, we are moving rapidly to integrate our organizations and improve our operational efficiency and effectiveness. These actions are an important step toward long-term growth and a stronger future for Lubrizol." The Lubrizol Corporation (NYSE: LZ) is a global provider of specialty chemicals and materials for a wide variety of markets and end-use applications, such as lubricant additives for engine oils, other transportation-related fluids and industrial lubricants, as well as fuel additives for gasoline and diesel fuel. In addition, Lubrizol makes ingredients and additives for personal care products and pharmaceuticals; specialty materials, including polymer additives and plastics technology; performance coatings in the form of specialty resins and additives; and additives for the food and beverage industry. Lubrizol's industry- leading positions in additives, ingredients and compounds enhance the quality, performance and value of customers' products, while reducing their environmental impact. Headquartered in Wickliffe, Ohio, The Lubrizol Corporation owns and operates manufacturing facilities in 22 countries, as well as sales and technical offices around the world. Founded in 1928, Lubrizol has more than 7,800 employees worldwide. In June 2004, Lubrizol acquired Noveon International, Inc. With Noveon, Lubrizol generated pro forma revenues of $3.2 billion in 2003 and $900 million in the first quarter of 2004. For more information, visit http://www.lubrizol.com/or http://www.noveoninc.com/ * * * As reported in the Troubled Company Reporter's May 26, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB+' preliminary senior unsecured rating to Cleveland, Ohio-based Lubrizol Corp.'s recently filed $2 billion Rule 415 shelf registration and placed it on CreditWatch with negative implications. In addition, Lubrizol's 'B' commercial paper rating has been withdrawn following the company's termination of this program. "Lubrizol is expected to use the proceeds raised under the shelf registration to repay existing indebtedness, including debt that Lubrizol incurs or assumes in connection with the pending acquisition of Noveon Inc.," said Standard & Poor's credit analyst Franco DiMartino. LUNA GOLD CORP: Appoints Tim Searcy as New President & CEO ---------------------------------------------------------- Luna Gold Corp. (TSXV-LGC.U) announced that Tim Searcy has been appointed President and Chief Executive Officer of the Company. Mr. Searcy holds an M.Sc. in Geology and an M.B.A., both from the University of Toronto. Prior to joining Luna, Tim worked in the corporate offices of Placer Dome where he held positions in Treasury, and more recently Corporate Development. Before obtaining his M.B.A. and joining Placer, Tim worked as an Exploration Geologist in Canada and Asia. As an Exploration Geologist Tim worked with Falconbridge and BHP, as well as a number of junior companies. "Tim's knowledge of the mineral exploration and precious metals industries combined with his business background makes him ideal for executing Luna's strategy", said David De Witt former President and current director. As noted in Luna's press release on May 18th, Mr. Kit Lee has agreed to join the Board of Directors of Luna. Mr. Lee, employed with Placer Dome Inc. from 1970 to 1987, worked as a Senior Geologist in charge of project generation in South East Asia, and has extensive experience in China. In 1987, Kit joined Niugini Mining Ltd. and began a successful tenure as Exploration Manager Asia and Manager Ore Reserves. From 1994 to 2000, Kit was the President of Zen International Resources Ltd., which he founded with a mandate to investigate mining opportunities in China. While with Zen, Kit identified a package of very attractive gold and copper projects in China. Zen obtained full governmental approvals for the first Sino-Foreign Joint Venture for the Zijinshan gold copper project located in the Fujian Province. Luna is also pleased to announce the appointment of Mr. Paul Visosky as Corporate Secretary. Mr. Visosky was educated at the University of Western Ontario in London, Ontario, where he received his M.B.A. and LL.B. in 1982. Paul is a partner with DuMoulin Black, a Vancouver securities law firm, where he practices corporate and securities law. Paul has served as a director and officer of a number of companies listed on the TSX Venture Exchange and is a current member of the Exchange's Local Advisory Committee. Luna has also pursuant to its Stock Option Plan granted to certain eligible participants options to purchase a total of 160,000 common shares at a price of US$0.30 per share, exercisable on or before June 30, 2009. Any securities issued on exercise thereof will be subject to a four month hold period expiring October 31, 2004. After this stock option grant, a total of 1,069,556 options will remain available for exercise pursuant to the Stock Option Plan, which was approved by Shareholders at the Company's last Annual General Meeting held June 28, 2004. About Luna Gold Corp. Luna Gold Corp. is a mineral exploration company engaged in the acquisition, exploration, and development of mineral properties, with a focus on precious metals in China. Luna Gold has a well- qualified team which has extensive experience in China and has experience with start-ups, acquisitions, reorganizations, exploration, development, financing, construction, and mine operations. At March 31, 2004, Luna Gold Corp.'s balance sheet shows a total shareholders' deficit of US$163,017 compared to a deficit of US$37,016 at December 31, 2003. LYNX ASSOCIATES: Look for Bankruptcy Schedules by July 25 --------------------------------------------------------- Lynx Associates, LP asks the U.S. Bankruptcy Court for the District of Nevada for more time to file its schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtor wants until July 25, 2004, to file its Schedules of Assets and Liabilities and Statement of Financial Affairs. The Debtor tells the Court that the analysis and compilation of the information for the Schedules of Assets and Liabilities and Statement of Financial Affairs is difficult and time consuming given the complexity of the Debtor's operations, the fact that the Debtors and its accountants are based in New York, New York and the very limited number of qualified staff to perform and oversee the job. Headquartered in New York, New York, Lynx Associates, L.P., filed for chapter 11 protection on June 10, 2004 (Bankr. Nev. Case No. 04-16441). William Noall, Esq., at Gordon & Silver, Ltd., 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. MATRIA HEALTHCARE: Completes $130M Sale of Pharmacy & Supplies Biz ----------------------------------------------------------------- Matria Healthcare, Inc. (NASDAQ/NM: MATR) announced the completion of the sale of its Pharmacy and Supplies business to a subsidiary of CCS Medical effective 11:59 p.m. Wednesday. The acquirer is a portfolio company of KRG Capital, a Denver-based private equity firm. Matria operated the divested business through its wholly owned subsidiaries, Diabetes Self Care, Inc. and Diabetes Management Solutions, Inc. The transaction, valued at approximately $130 million, closed Wednesday for a cash price of approximately $102 million. As stated in the Company's earlier release, Matria will retain existing accounts receivable and certain other assets from its Pharmacy and Supplies business. The Company also announced that it has completed the funding of the tender offer and accepted for payment and repurchased all $120 million, or 98.36%, of the outstanding principal amount, of its 11% Senior Notes tendered in the tender offer. The financing condition to the tender offer has been satisfied, and therefore the amendments to the 11% Senior Notes indenture have become operative and the guarantees of its 4.875% Convertible Notes by Matria's subsidiaries, Quality Oncology, Inc. and Facet Technologies, LLC, have become effective. In addition, Matria has paid in cash the $20.5 million earnout payment to Quality Oncology. Parker H. Petit, Chairman and Chief Executive Officer of Matria, stated, "With the sale of our Pharmacy and Supplies business and our tender offer completed, we have increased our financial flexibility, improved our cash position and significantly deleveraged our balance sheet. We are now in an ideal position to pursue our strategic plan to capitalize on the opportunities that are developing for expanded disease management and health enhancement programs and services." Matria's Pharmacy and Supplies business will be treated as a discontinued operation in accordance with generally accepted accounting principles (GAAP). Consequently, revenues and earnings for the second quarter of 2004 and prior periods will be excluded from the Company's reported results from continuing operations. Matria Healthcare is a leading provider of comprehensive disease management programs to health plans and employers. Matria manages the following major chronic diseases and episodic conditions - diabetes, cardiovascular diseases, respiratory diseases, high-risk obstetrics, cancer, chronic pain and depression. Headquartered in Marietta, Georgia, Matria has more than 40 offices in the United States and internationally. More information about Matria can be found on line at http://www.matria.com/ * * * As reported in the Troubled Company Reporter's May 4, 2004 edition, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on disease-state management and fulfillment services provider Matria Healthcare Inc. Standard & Poor's also assigned its 'B-'subordinated debt rating to the company's proposed $75 million of 4.875% convertible senior subordinated notes due in 2024. At the same time, Standard & Poor's withdrew its 'BB-' senior secured bank loan rating on Matria's $35 million revolving credit facility and withdrew its 'B+' senior unsecured rating on the company's $122 million of senior notes. The outlook is stable. "While Standard & Poor's believes that the total transaction will slightly increase the company's total debt, it should lower Matria's overall cost of capital and improve its cash flow. Therefore, we view this transaction as neutral for the company's credit quality," said Standard & Poor's credit analyst Jesse Juliano. MARINER HEALTH: S&P Places Low-B Ratings on CreditWatch Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit, 'BB-' secured debt, and 'B-' subordinated debt ratings on Atlanta, Georgia-based Mariner Health Care Inc. on CreditWatch with negative implications. "The CreditWatch placement follows the company's announcement of its pending acquisition by National Senior Care Inc. for $1 billion, including the assumption of Mariner's outstanding long-term debt," said Standard & Poor's credit analyst David P. Peknay. As of March 31, 2004, Mariner's long-term debt totaled $385 million. Standard & Poor's will monitor the progress of this proposed acquisition, which includes the possibility that the transaction could add to the company's financial leverage. MEDIA SCIENCES: Raises $1.25 Million in Equity Funding ------------------------------------------------------ Media Sciences International, Inc. (Amex: GFX), the leading independent manufacturer of generic supplies for office color printers, announces that it has closed $1.25 million in equity funding from Richard L. Scott Investments, LLC. The Company has issued one million shares of common stock in exchange for $1.25 million. This investment has allowed the Company to pay down $695,000 of debt including a $195,000, 10% term loan from officer, and $500,000 on its credit facility. Furthermore, the Company recently refinanced, with its bank, $400,000 in loans from investors formally carrying 20% interest rates for a savings of approximately $65,000 in interest expense over the next 12 months. As a result of the Company's performance, preferred stock conversion and the $1.25 million equity investment, the Company has repaid all its non-bank loans and at June 30, 2004 has no long term debt. "With our recent product announcements, an improved balance sheet, sales growth momentum and a strong partner in Richard L. Scott Investments, LLC, we are well positioned to continue to grow our revenues and our earnings," said Michael W. Levin, President and CEO. "At this time, the Company is increasing its sales estimate for the fiscal 2004 year to approximately $17mm." In conjunction with the investment, Alan Bazaar, Vice President and Portfolio Manager for Richard L. Scott Investments has joined the Company's board of directors to fill an open board seat. About Richard L. Scott Investments, LLC Richard L. Scott Investments, LLC was established in 1997 by Richard L. Scott, founder and former Chairman and CEO of Columbia/HCA Healthcare Corporation (later renamed HCA, Inc.), one of the world's largest healthcare services companies. Since its founding in 1997, Richard L. Scott Investments, LLC has invested in companies in the following industries: transaction processing, financial services, manufacturing, cable network, recreation/leisure, mobile home & RV, network security, catalog retail, medical equipment, pharmacy retail and healthcare services. Richard L. Scott Investments, LLC makes leveraged buyout, recapitalization/restructuring and growth capital investments in companies with superior management, predictable cash flow, strong market share and growth potential. About Media Sciences International, Inc. Media Sciences, (Amex: GFX), is the leading independent manufacturer of office color printer supplies. Media Sciences products, which include color toner cartridges and solid ink sticks, are the generic alternative to the printer manufacturer's brand. Media Sciences products offer customers the ability to save up to 30% on their office color printer supplies. Media Sciences products are sold through an international network of dealers, national office supply resellers and distributors under the Media Sciences brand, as well as, several private brands. All Media Sciences products are backed with a 100% satisfaction warranty. For more information visit http://www.mediasciences.comor contact 201-236-9311. * * * In its Form 10-QSB for the quarterly period ended March 31, 2004, Media Sciences International Inc. reports: Liquidity and Capital Resources "We experienced positive cash flow for the nine months ended March 31, 2004. Cash flows from operating activities were $548,933 primarily due to net income of $656,686, a non cash charge of $595,066 for depreciation and amortization, $463,587 for deferred income taxes and an increase in accounts payable of $637,403 offset by increases in accounts receivable of $458,820, in inventories of $696,868 and in prepaid expenses and other current assets of $92,150 and a decrease in accrued supplier expenses, income taxes payable, deferred revenue and other accrued expenses and current liabilities of $600,151. Our inventory levels are increasing due to the increase in products in our product line, growing sales and the long lead time from Asian suppliers. "The cash we used in investing activities included the purchase of equipment in the amount of $165,441. "Cash used in financing activities included net debt payments of $148,046, payments of accrued dividends of $152,375 and payment of expenses associated with the issuance of common stock of $37,485. We have an agreement with a lender under which we can borrow up to $3,000,000 under a revolving line of credit, subject to availability of collateral. Borrowings bear interest at 1.75% over the lender's base rate, are payable on demand and are collateralized by all assets of the Company. As of March 31, 2004, $2,247,606 was outstanding under this line. In December 2003, we repaid an aggregate of $225,000 to several individuals upon the maturity of one year notes carrying interest rates of 20%-23%. In January 2004, we paid the balance in the amount of $250,000 on the 13% note due to UltraHue. In January 2004, our President, Michael W. Levin, voluntarily reduced the interest rate on one of his two loans to us to 10%. Both of these loans now carry a 10% interest rate. We are in discussions with our bank and several individuals to reduce the interest rate due on $400,000 of notes that mature in June of 2005 from 20% to 10%." Seasonality "We anticipate that our cash flow from operations will be slightly better in the fall and winter months than in the spring and summer months due to the sales cycles associated with our Cadapult Graphic Systems subsidiary business. In the event that we are unable to generate sufficient cash flows from operations, we may be required to utilize other cash reserves, if any, or seek additional equity or debt financing to meet operating expenses, and there can be no assurance that there will be any other cash reserves or that additional financing will be available or, if available, on reasonable terms." MEDICAL DISCOVERIES: Erases $220K Secured Debt From Balance Sheet ----------------------------------------------------------------- The management team at Medical Discoveries, Inc. (OTC Bulletin Board: MLSC) announced that, as a result of a negotiated transaction, the company was able to eliminate approximately $220,000 of secured debt from its balance sheet. The transaction in effect converted a secured promissory note in the original principal amount of $195,000, plus accrued interest, to common stock. "This is the latest in a series of successful efforts to reduce the liabilities on the balance sheet," said President & Chief Executive Officer Judy M. Robinett. "We have now eliminated over $960,000 in debt and liabilities from our balance sheet this year. Each time that we have converted debt to equity, it has been on successively higher conversion rates as our stock price continues to trend upward. As we announced in our Goals for 2004 on January 14th, we will continue to reduce the debt on our balance sheet, streamline our capital structure, and advance MDI-P through preclinical development toward an IND." About the Company Formed in 1991, Medical Discoveries, Inc. is a publicly traded (OTC Bulletin Board: MLSC) development-stage biopharmaceutical research company (as defined in SFAS No. 7) engaged in the research, development and validation of its patented anti- infective technology. MDI's electrolyzed solution of free radicals represents a novel approach to treating its initial target indication, HIV. At March 31, 2004, Medical Discoveries, Inc.'s balance sheet shows a stockholders' deficit of $ 3,225,158 compared to a deficit of $3,430,816 at December 31, 2003. MIRANT AMERICAS: Committee Taps James Donnell As Energy Consultant ------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Mirant Americas Generation, LLC, seeks the Court's authority to retain James M. Donnell as its energy industry consultant. Pursuant to a Letter Agreement, dated June 11, 2004, Mr. Donnell will: (a) provide the MAGi Committee with strategic advice and information regarding the energy industry and in particular, the assets and business of MAGi and its subsidiaries, and the various alternatives available to the MAGi Committee to maximize value for the benefit of MAGi's creditors; (b) review, analyze and advise on the operational, personnel, regulatory, financial and other issues related to a sale or other disposition of MAGi and its subsidiaries, and a severance of their stock ownership and other relationships with Mirant and its other subsidiaries; (c) assist in the preparation of a business plan to sever MAGi and its subsidiaries from ownership and other relationships with Mirant and its other subsidiaries, and for the operation of MAGi and its subsidiaries post- emergence from Chapter 11; (d) provide advice to the MAGi Committee on other strategic alternatives relating to MAGi's business and assets; (e) assist and advice the MAGi Committee on other matters as it may request; and (f) testify in Court on the MAGi Committee's behalf. Charles Greer, Co-Chair of the MAGi Committee, tells the Court that the MAGi Committee intends to retain Mr. Donnell to obtain the benefit of his substantial experience leading merchant energy companies similar to MAGi. Mr. Donnell was previously president and chief executive officer of Duke Energy North America. In that position, Mr. Donnell was responsible for a merchant energy operation of 1,400 employees and annual revenues of $3,300,000,000. Hence, Mr. Donnell has in-depth knowledge of all aspects of the power generation business. The MAGi Committee believes that the services and advice to be provided by Mr. Donnell will benefit MAGi and its creditors. Mr. Donnell's focus will be the development of an operational business plan to sever MAGi's assets from the other Mirant Debtors, so that MAGi may be run on a stand-alone basis. This will entail developing the management and other infrastructure necessary for MAGi to run independently. Mr. Greer assures the Court that the services Mr. Donnell will provide are distinct from the other presently retained professionals. Nevertheless, to ensure that there is no overlap or duplication of services, Mr. Donnell will coordinate carefully with the MAGi Committee's other professionals in developing a work plan that will provide distinct tasks for each retained professional. For his services, Mr. Donnell will be paid a $100,000 monthly fee for the first three months of the engagement and $75,000 per month for the remaining terms of this retention. Mr. Donnell will be reimbursed for out-of-pocket expenses incurred in relation to the engagement. Mr. Donnell tells the Court that he is not related to nor connection with, and neither holds nor represents any interest adverse to the Debtors, their estates, creditors or any other party-in-interest or their attorneys or the United States Trustee or anyone employed in the Office of the U.S. Trustee, in the matters for which he is proposed to be retained. Thus, Mr. Donnell is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. * * * Judge Lynn authorizes the retention of Mr. Donnell on an interim basis effective June 1, 2004. If no objections are filed with the Court by July 12, 2004, this order will become final on July 13, 2004. 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. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOONEY AEROSPACE: Look for Bankruptcy Schedules Next Week --------------------------------------------------------- Mooney Aerospace Group, Ltd., wants the deadline for it to file its schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases extended through July 8, 2004. The Debtor tells the U.S. Bankruptcy Court for the District of Delaware that it has not yet completed the process of gathering the necessary data to complete the Schedules of Assets and Liabilities and Statement of Financial Affairs required under 11 U.S.C. Sec. 521(1). The Debtor believes it can file the required disclosure documents by the end of next week. Headquartered in Kerrville, Texas, Mooney Aerospace Group, Ltd. -- http://www.mooney.com/-- is a general aviation holding company that owns Mooney Airplane Co., located in Kerrville, Texas. The Company filed for chapter 11 protection on June 10, 2004 (Bankr. Del. Case No. 04-11733). Mark A. Frankel, Esq., at Backenroth Frankel & Krinsky LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $16,757,000 in total assets and $69,802,000 in total debts. MORGAN GROUP HOLDING: Files Quarterly Report Minus Certifications ----------------------------------------------------------------- Morgan Group Holding Co. is a holding company that has a 64.2% ownership interest and a 77.6% voting interest in The Morgan Group, Inc. On May 17, 2004, Holdings filed its Quarterly Report on Form 10-Q for the quarter ended March 31, 2004. The certifications of periodic financial reports required under Rule 15d-4 promulgated under the Securities Exchange Act of 1934, as amended, and Section 906(a) of the Sarbanes-Oxley Act of 2002 did not accompany the Form 10-Q. On October 3, 2002, Morgan closed down its operations when its liability insurance expired and it was unable to secure replacement insurance. On October 28, 2002, Morgan and two of its operating subsidiaries filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Indiana, South Bend Division. The Debtors intend to conduct an orderly liquidation of their assets. As a result of the Bankruptcy, Morgan's corporate, financial and accounting staff were substantially eliminated. On November 12, 2002, Morgan filed a Form 15 with the Securities and Exchange Commission to terminate its registration under Section 12(g) of the Exchange Act. On April 29, 2003, Holdings, individually and on behalf of all others similarly situated, commenced an action against Ernst & Young LLP, among others, in the United States District Court, Southern District of New York. The allegations in the lawsuit do not relate to the audit by Ernst & Young of any of Holdings' financial statements but rather to the audit by Ernst & Young of the financial statements of Morgan. By letter dated May 2, 2003, Ernst & Young LLP confirmed that the client-auditor relationship between Holdings and Ernst & Young ceased. Because Holdings' interim financial statements contained in the Form 10-Q have not been reviewed by independent public accountants as required by Regulation S-X, the Form 10-Q does not fully comply with the requirements of Section 13(a) or 15(d) of the Exchange Act and therefore neither the chief executive officer nor the chief financial officer of Holdings are able to make the required certifications. MORGAN STANLEY: Fitch Downgrades $2.1M Class O Rating to CC ----------------------------------------------------------- Fitch downgrades Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates, series 1999-LIFE 1, as follows: --$2.1 million class O certificates from 'CCC' to 'CC'. Fitch upgrades the following classes: --$20.8 million class B certificates to 'AA+' from 'AA'; --$23.8 million class C certificates to 'A+' from 'A'; --$8.9 million class D certificates to 'A' from 'A-'; --$13.4 million class E certificates to 'BBB+' from 'BBB'; --$7.4 million class F certificates to 'BBB' from 'BBB-'. In addition, Fitch affirms the following classes: --$50.5 million class A-1 'AAA'; --$399 million class A-2 'AAA'; --$569.8 million interest-only class X 'AAA'; --$1.5 million class G 'BBB-'; --$10.4 million class H 'BB+'; --$7.4 million class J 'BB'; --$4.5 million class K 'BB-'; --$5.9 million class L 'B+'; --$4.5 million class M 'B'; --$5.3 million class N 'B-'. Fitch does not rate the $4.5 million class P certificates. The downgrade is the result of expected losses on the loan currently in special servicing. Losses are expected to negatively affect the credit enhancement of class O, which may incur a loss when the loan is disposed. The rating upgrades reflect both the improved credit enhancement levels resulting from scheduled amortization, and the subordination levels of deals with similar characteristics issued today. As of the June 2004 distribution report, the pool's aggregate certificate balance was reduced by 5% to $564.6 million from $594.0 million at issuance. To date, the trust has not experienced any losses. Currently, one loan (1.8%) is in special servicing. The loan is secured by three industrial buildings in Warren and Detroit, MI and is currently in foreclosure. The loan transferred to special servicing as a result of a major tenant filing involuntary bankruptcy. Currently, all properties are 100% vacant. The special servicer is reviewing alternative workout solutions and has ordered an updated appraisal. Some losses are possible upon the disposition of this asset. Fitch reviewed the credit assessment of the Edens & Avant loan portfolio (14.7%). The loan maintains an investment-grade credit assessment. The Edens & Avant portfolio is secured by 21 retail properties, anchored mostly by grocery and drug stores. The stressed DSCR for YE 2003 was 1.82x, compared with 1.35x at issuance. The DSCR is calculated using borrower-provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch-stressed refinance constant. NETWORK INSTALLATION: Del Mar Systems Awarded $60,000 VoIP Project ------------------------------------------------------------------ Network Installation Corp. (OTC Bulletin Board: NWIS) announced that through its wholly-owned subsidiary Del Mar Systems, it has been awarded a project order from the City of Rancho Santa Margarita, CA to install and deploy an Avaya IP telephony platform that shall be used for City Hall and the Community Center. The project is valued at approximately $60,000. Network Installation CEO Michael Cummings stated, "Penetrating the Voice over Internet (VoIP) market was clearly one of our main objectives when we acquired Del Mar Systems earlier this year. As an Avaya partner and with their state of the art IP telephony platform, we are well positioned to exploit one of the fastest growing segments of the communications market." He added, "We have recently begun bidding on more numerous and sizeable VoIP projects which yield extremely attractive profit margins." About Network Installation Corp Network Installation Corp. -- whose March 31, 2004 balance sheet reflects a stockholders' deficit of $1,607,403 -- provides communications solutions to the Fortune 1000, Government Agencies, Municipalities, K-12 and Universities and Multiple Property Owners. These solutions include the design, installation and deployment of data, voice and video networks as well as wireless networks and Wi-Fi. Through its wholly-owned subsidiary Del Mar Systems International, Inc., the Company also provides integrated telecom solutions including Voice over Internet Protocol (VoIP) applications. Network Installation maintains offices in Irvine, Los Angeles, Gold River and San Marcos, CA; Las Vegas, NV and Phoenix, AZ. To find out more about the company, visit http://www.networkinstallationcorp.net/ NEW WEATHERVANE: Turns to FTI Consulting for Financial Advice ------------------------------------------------------------- New Weathervane Retail Corp., and its debtor-affiliates wants to hire FTI Consulting, Inc., as their financial advisors. The Debtors tell the U.S. Bankruptcy court for the District of Delaware that they are familiar with FTI Consulting's professional standing and reputation. The firm has a wealth of experience in providing financial advisory services in restructuring and reorganizations. Specifically, FTI Consulting will: a) assist the Debtors in the preparation of financial related disclosures required by the Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; b) assist the Debtors with information and analyses required pursuant to the Debtors' Debtor-In-Possession ("DIP") financing including, but not limited to, preparation for hearings regarding the use of cash collateral and DIP financing; c) provide advisory assistance in connection with the development and implementation of key employee retention and other critical employee benefit programs; d) assist and advice the Debtors with respect to the identification of core business assets and the disposition of assets or liquidation of unprofitable operations; e) assist regarding the valuation of the present level of operations and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; f) assist in the preparation of financial information for distribution to creditors and others, including, but not limited to, cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which Court approval is sought; g) attend at meetings and assistance in discussions with potential investors, banks and other secured lenders, the Creditors' Committee appointed in this chapter 11 case, the U.S. Trustee, other parties in interest and professionals hired by the same, as requested; h) provide analysis of creditor claims by type, entity and individual claim, including assistance with development of a database to track such claims; i) assist in the preparation of information and analysis necessary for the confirmation of a Plan of Reorganization in this chapter 11 case; j) assist in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers; and k) render such other general business consulting or such other assistance as Debtors' management or counsel may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals in this proceeding. The customary hourly rates that FTI Consulting will bill the Debtors are: Designation Billing Rate ----------- ------------ Senior Managing Director $560 per hour Director/Managing Director $395 to $560 per hour Associates/Consultants $195 to $385 per hour Administration/Paraprofessionals $95 to 168 per hour Headquartered in New Britain, Connecticut, New Weathervane Retail Corporation -- http://www.wvane.com/-- is a Women's specialty retailer. The Company filed for chapter 11 protection on June 3, 2004 (Bankr. Del. Case No. 04-11649). William R. Firth, III, Esq., at Pepper Hamilton LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $28,710,000 in total assets and $24,576,000 in total debts. NOMURA ASSET: Fitch Cuts Classes B-5 & B-6 Ratings to B-/CCC ------------------------------------------------------------ Fitch Ratings downgrades Nomura Asset Securities Corporation, commercial mortgage pass-through certificates, series 1998-D6, as follows: --$18.6 million class B-5 to 'B-' from 'B'; --$27.9 million class B-6 to 'CCC' from 'B-'. The following class is upgraded by Fitch: --$204.7 million class A-3 to 'AA' from 'AA-'. In addition Fitch affirms the following classes: --$212.9 million class A-1A at 'AAA'; --$1.8 billion class A-1B at 'AAA'; --$382.7 million class A-1C at 'AAA'; --Interest Only (IO) class PS-1 at 'AAA'; --$223.4 million class A-2 at 'AAA'; --$167.5 million class A-4 at 'A-'; --$55.8 million class A-5 at 'BBB+'; --$37.2 million class B-2 at 'BB'; --$37.2 million class B-3 at 'BB-'; --$18.6 million class B-5 at 'B-'. Fitch does not rate the following classes: --$158.2 million class B-1; --$65.1 million class B-4; --$43.8 million class B-7; --$942 class B-7H; --IO class A-CS1. The downgrade of classes B-5 and B-6 is the result of expected losses on specially serviced loans which will negatively impact the credit enhancement levels of these classes. Losses are expected on six loans (1.61%) of the eleven (2.7%) loans currently in special servicing. The non-rated class B-7 is sufficient to absorb all expected losses. The upgrade of class A-3 is the result of stable portfolio performance and improved credit enhancement levels resulting from loan payoffs, defeased loans, and scheduled amortization. As of June 2004 distribution date, the transaction's aggregate principal balance has decreased 8.1%, to $3.4 billion from $3.7 billion at issuance. The eleven specially serviced loans (2.7%) are comprised of, two 60-day delinquent loan (0.1%), five 90-day delinquent loans (0.9%), a real estate owned (REO) loan (0.5%), two loans in foreclosure (0.4%), and one loan (0.8%), which was transferred to the special servicer as a result of the borrower filling Chapter 11 bankruptcy. The largest specially serviced loan (0.5%), Commerce Point, is secured by a 236,789 square feet (sf) office building located in Arlington Heights, IL. As of May 2003 the property was 46% occupied and no new leasing activity has occurred to date. The trust acquired the property via a deed-in-lieu in April 2004 and is actively leasing the property. The second largest loan (0.5%), in special servicing is Best Buy - City of Industry. The loan is cross-collateralized and cross- defaulted (CC/CD) with the Penrose and Crestview loans also in the transaction. The CC/CD loans are 90-days delinquent and the special servicer is in the process of foreclosing on the assets. Fitch reviewed the six credit assessments as part of its analysis. The debt service coverage ratio (DSCR) for each loan is calculated using servicer provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. The Bristol Portfolio (3.8%) is secured by 15 hotels located in five states, with a total of 4,201 rooms. In January 2004 three properties (Holiday Inn - Jackson North, Crowne Plaza Houston and Crowne Plaza Downtown Jackson) were substituted for three additional properties (Embassy Suites Park Central, Holiday Inn- Northeast and Holiday Inn-Knoxville). Fitch did not receive year end (YE) 2003 financials for the new properties. Net operating income (NOI) for these properties was derived from annualized year-to-date (YTD) 9/30/2003 financials. The portfolio's combined revenue per available room (RevPar) as of YE 2003 and YTD 9/30/2003 was $45.87 compared to $48.02 as of YE 2002 and $49.53 since issuance. Fitch maintains a below investment grade credit assessment. Innkeepers Portoflio (1.1%) is secured by eight hotels located in six states, with a total of 1,068 rooms. Fitch reviewed annualized YTD 9/30/2003 financials provided by the servicer in the absence of YE 2003 financials. The portfolio's combined RevPar as of YTD 9/30/2003 was $58.93 compared to $65.69 as of YE 2002 and $67.94 at issuance. Fitch maintains a below investment grade credit assessment. The Westin Grand Cayman (0.5%) is secured by a 341 room luxury resort hotel located on the Island of Grand Cayman along Seven Mile Beach. As of YE 2003 the RevPar was $114.4 compared to $128.88 as of YE 2002 and $151.2 at issuance. Fitch maintains a below investment grade credit assessment based on the hotel's deteriorating performance. The transaction's remaining three credit assessments: Fox Plaza (4.8%), Burnham Pacific (3.7%) and Morris Corporate Center (1.0%), maintain investment grade credit assessments. NORTHERN OFFSHORE: Mulls Liquidation After Creditor Talks Fail -------------------------------------------------------------- Northern Offshore Ltd. announced that it is preparing for liquidation in light of an impasse between the Company and its creditors. The Company indicated that although an unofficial committee of unsecured creditors had formed to consider the Company's restructuring proposal, the committee had sent a letter and term sheet to the Company stating that it would not engage in negotiations with the Company without the Company's immediate payment of US$7.2 million of interest due on May 15, 2004 in connection with the 10.0% senior notes due 2005 and further on July 6, 2004 pay interest which is due on that date on the outstanding NOK bonds. However, at this stage and in light of the Company's current financial position, the Board of Directors does not believe it is appropriate to pay funds to any stakeholder without agreement on a comprehensive restructuring. "The preference of the Board of Directors is to engage with the bondholders in a consensual restructuring," said Tor Olav Troim, the Company's chief executive officer. "To that end, the Company has taken the necessary steps to prepare for restructuring negotiations, including agreeing to pay for creditor advisors, preparing a detailed due diligence package for the committee, and providing the committee with a detailed term sheet. Despite these initiatives, the committee does not want to engage in further discussions without the interest payment being made." Joseph Swanson, a director at Houlihan Lokey Howard & Zukin, which was retained by the Company to assist in implementing the restructuring, added further, "In these circumstances, where a company is endeavouring to restructure its financial obligations as the only alternative to an insolvent liquidation, it is standard practice for the company to preserve its cash and other assets for the benefit of the general body of creditors until there is certainty as to the company's future. Ultimately, such cash and other assets would be distributed either in accordance with the definitive restructuring or, if no agreement can be reached and the restructuring consequently fails, in the company's liquidation." As previously announced on June 15, 2004, the Company did not pay the interest due on its 10% senior notes, which constituted an event of default under the indenture governing the senior notes. On June 1, 2004, the Company proposed a transaction whereby the Company's senior notes together with its Norwegian krone- denominated floating rate notes due 2004 would be exchanged for newly issued shares of common stock representing 85% of the Company's fully diluted share capital, with the remaining 15% to be retained by current shareholders. If approved, the transaction would be consummated under Bermuda law through a scheme of arrangement and an increase in share capital approved by Northern Offshore's shareholders. The Company considers that the implementation of a restructuring represents the only means by which the Company can avoid insolvent liquidation. The Company believes it is in the best interests of all stakeholders to implement a restructuring as quickly as possible. It is the Company's opinion that the implementation is critical to the continued operation of the Company. Unless the committee engages the Company in negotiations, the Board of Directors of Northern Offshore considers that it will have no alternative but to take steps in relation to the appointment of a Bermuda-based liquidator responsible for the liquidation of the Company's assets for the benefit of its creditors. About the Company Northern Offshore Ltd. is a continuation of the offshore drilling and production business of Northern Offshore ASA, a public limited company registered in Norway. The Company owns the floating production platform; "Northern Producer" which is currently working under a four years plus six optional years contract for Chevron-Texaco in the Galley field in the UK sector of the North Sea. In addition, the Company owns three drillships; "Northern Explorer III", "Discoverer I" and "Energy Searcher" and one semi- submersible drilling rig; "Galaxy Driller", all operated by our subsidiary Jet Drilling, Singapore. OBSIDIAN ENTERPRISES: Acquires Classic Manufacturing for $2.25M+ ---------------------------------------------------------------- Effective as of the close of business on April 30, 2004, Obsidian Enterprises, Inc., acquired all of the outstanding shares of capital stock of Classic Manufacturing, Inc., a Michigan-based manufacturer of open and enclosed trailers, for a purchase price of $2,250,000 in cash and 170,451 shares of the Company's common stock. The Classic shares were acquired from Bradley J. Baker, Classic's Chief Executive Officer, and Wade Wolf, Classic's President. The sources of the cash consideration paid by the Company were working capital and funds borrowed under a Credit Agreement with National City Bank of Indiana. Obsidian -- whose April 30, 2004 balance sheet shows a total shareholders' equity deficit of $7,246,000 -- is a holding company headquartered in Indianapolis, Indiana. It conducts business through five subsidiaries: Pyramid Coach, Inc., a leading provider of corporate and celebrity entertainer coach leases; United Trailers, Inc., and its sister company, Southwest Trailers, manufacturers of steel-framed cargo, racing ATV and specialty trailers; U.S. Rubber Reclaiming, Inc., a butyl-rubber reclaiming operation; and Danzer Industries, Inc., a manufacturer of service and utility truck bodies and accessories. More information can be found at http://www.obsidianenterprises.com/ OMNI FACILITY: Goulston & Storrs Retained as Bankruptcy Counsel --------------------------------------------------------------- Omni Facility Services and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for approval of their application to employ Goulston & Storrs, PC, as their attorneys in their bankruptcy proceedings. The legal services that Goulston & Storrs will render to the Debtors will include: a) advising the Debtors with respect to their powers and duties as debtors in possession and the continued management of their businesses and properties; b) representing the Debtors in connection with negotiating and seeking Court approval of debtor in possession financing and/or exit financing; c) attending meetings and negotiating with representatives of creditors, committees, equity holders, the Office of the United States Trustee and other parties-in-interest and responding to creditor inquiries and advising and consulting the Debtors on the conduct of the cases, including all of the legal and administrative requirements of operating in chapter 11; d) representing the Debtors in connection with any adversary proceedings or automatic stay litigation that may be commenced in the proceedings and any other action necessary to protect and preserve the Debtors' estates; e) advising and representing the Debtors in connection with any sale or potential sale of the Debtors' assets or businesses, or in connection with any strategic partnering or equity infusions; f) negotiating and preparing on behalf of the Debtors any plan of reorganization or liquidation, disclosure statement, and all related documents, and taking any action necessary to obtain confirmation of and consummate such plan; g) appearing before this Court, any appellate or non- bankruptcy courts, and the United States Trustee and protecting the interests of the Debtors before such courts and the United States Trustee; h) preparing necessary motions, applications, answers, orders, reports, and papers necessary to the administration of the Debtors' estates; i) representing the Debtors on corporate and real estate matters relating to the sale of assets or any plan of reorganization or liquidation and the administration of these cases and the Debtors' estates; and j. performing all other legal services for and providing all other legal advice to the Debtors that may be requested, necessary and proper in these cases and any adversary proceedings, appeals or ancillary proceedings. James F. Wallack, Esq., a director of Goulston & Storrs will lead the team in this engagement. Mr. Wallack reports that his firm will bill the Debtors at the Firm's current hourly rates: Designation Billing Rate ----------- ------------ directors and counsel $330 to $565 per hour associates $225 to $370 per hour legal assistants $135 to $260 per hour The professionals principally engaged in this cases will be: Professional Designation Billing Rate ------------ ----------- ------------ James F. Wallack Director $500 per hour Douglas B. Rosner Director $400 per hour Christine D. Lynch Director $345 per hour Mary Ellen Welch Rogers Counsel $365 per hour Rafael Klotz Associates $335 per hour Christian J. Urbano Associates $290 per hour Stacey A. Mordas Legal Assistant $185 per hour Headquartered in South Plainfield, New Jersey, Omni Facility Services, Inc. -- http://www.omnifacility.com/-- provides architectural, janitorial, landscaping, and electrical services. The Company filed for chapter 11 protection on June 9, 2004 (Bankr. S.D.N.Y. Case No. 04-13972). When the Company filed for protection from their creditors, they listed $80,334,886 in total assets and $100,285,820 in total debts. OMNI FACILITY: Want to Hire Togut Segal as Bankruptcy Co-Counsel ---------------------------------------------------------------- Omni Facility Services, Inc., and its debtor-affiliates are asking the U.S. Bankruptcy Court for the Southern District of New York for permission to hire Togut, Segal & Segal LLP as their co- counsel. Goulston & Storrs, P.C., a law firm based in Boston, Massachusetts, was recently retained as counsel to the Debtors to handle restructuring and bankruptcy matters, and any related corporate, tax and real estate matters. While Goulston & Storrs does maintain a small office in New York City, that office is not equipped to handle bankruptcy-related matters. Accordingly, the Debtors wish to retain Togut Segal to serve as co-counsel in these proceedings. The two firms will confer frequently and diligently to assure that there is no duplication of services. Frank A. Oswald, Esq., a member of Togut Segal reports that his firm will bill the Debtors its current hourly rates that range from: Designation Billing Rate ----------- ------------ Partners $590 to $720 per hour Associates $195 to $505 per hour Paralegals and Law Clerks $115 to $180 per hour Headquartered in South Plainfield, New Jersey, Omni Facility Services, Inc. -- http://www.omnifacility.com/-- provides architectural, janitorial, landscaping, and electrical services. The Company filed for chapter 11 protection on June 9, 2004 (Bankr. S.D.N.Y. Case No. 04-13972). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $80,334,886 in total assets and $100,285,820 in total debts. OWENS CORNING: Asks Court To Approve Rhode Island Settlement Pact ----------------------------------------------------------------- For decades, the Owens Corning Debtors' manufacturing operations in the State of Rhode Island produced industrial waste that may have contained hazardous substances and that was disposed of at various third-party facilities, like public landfills, or commercial dumps located in Rhode Island. Even where the disposal was legal at the time it occurred, environmental statutes, principally the Comprehensive Environmental Response, Compensation and Liability Act, make the Debtors jointly and severally liable with other generators of the waste for the past and future costs incurred by the federal government or the State in cleaning up the facilities and for damages to natural resources. Although the CERCLA provides for joint and several liability, cost recovery cases brought by governmental authorities against generators of waste that involve disposal or treatment facilities used by numerous parties are typically settled equitably based on factors like the relative volume or toxicity of a particular generator's waste. Nevertheless, Rhode Island relies on joint and several liabilities to assert a proof of claim in the bankruptcy of a generator for the full amount of the state's response costs and natural resource damages at each facility where there has been disposal of that generator's waste. Rhode Island identified five disposal sites to which the Debtors sent industrial waste over the years and with respect to which the Debtors could consequently be jointly and severally liable under the CERCLA for response costs and natural resource damages. The Rhode Island Department of Environmental Management filed Claim No. 8766, asserting the Debtors' liability under the CERCLA and various provisions of Rhode Island law for an estimated $80,000,000 that the State has or will incur in implementing or overseeing the implementation of remedial measures at the five disposal sites. In light of the Debtors' long history of manufacturing operations in Rhode Island, additional sites in the State that were historically used by the Debtors for disposal or treatment of their waste may still be identified in the future. On November 21, 2003, after extensive negotiations, Owens Corning and Rhode Island, by and through the Environmental Management Department, entered into a settlement agreement to resolve the Disputed Claim. The Settlement Agreement also resolves potential future claims by Rhode Island arising from the Debtors' use of disposal sites before the Petition Date that are presently unknown. The basic terms of the Settlement Agreement are: (1) Owens Corning and Rhode Island agree to the terms of the Settlement Agreement without admission of any liability or violation of the law; (2) The Settlement Agreement lists five third-party disposal sites, referred to as "Liquidated Sites," with respect to which a Debtor has been identified as a generator of waste and which are the basis of the Disputed Claim. These sites are: (a) the Dupraw Dump -- also known as the Dexter Quarry -- located in the Town of Lincoln, Rhode Island; (b) the Mackland Farms -- also known as the Kelly House -- located in the Town of Lincoln, Rhode Island; (c) the Cumberland Municipal Landfill -- investigation phase only -- located in the Town of Cumberland, Rhode Island; (d) the Boulter Farms, located in the Town of Cumberland, Rhode Island; and (e) the Peterson/Puritan CERCLA site located in the Town of Cumberland, Rhode Island and the Town of Lincoln, Rhode Island. With respect to those sites and in settlement of the Disputed Claim, the Debtors will pay Rhode Island $750,000; (3) The Settlement Agreement generally provides the Debtors with protection against contribution actions by other liable parties and with a covenant not to be sued by Rhode Island; (4) The claims by Rhode Island relating to the Debtors' prepetition conduct at the treatment or disposal sites where they have not yet been identified as potentially liable generators are discharged and no distribution is provided with respect to them. However, if a Debtor is identified after confirmation as a potentially liable generator of waste at a site as a result of prepetition conduct, the liability attributable to the Debtor at the site will be determined at that time and a percentage of that liability equal to the percentage paid with respect to Allowed General Unsecured Claims in the bankruptcy will be paid by the reorganized Debtor. These sites are referred to as "Additional Sites;" (5) The Debtors agree, pursuant to an agreement with the United States in a Court-approved settlement, to perform remedial work at two waste disposal sites in Rhode Island where remedial action is being overseen by the Federal Environmental Protection Agency; (6) Rhode Island reserves the right to withdraw or withhold consent if interested parties file comments disclosing facts or considerations that indicate that the Settlement Agreement is not in the public interest. Hence, the Debtors ask the Court to approve the Settlement Agreement. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. On Jun 30, 2001, the Debtors listed $6,875,000,000 in assets and $8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC ENERGY: Completes Mid Alberta Pipeline Acquisition ---------------------------------------------------------- Pacific Energy Partners, L.P. (NYSE:PPX) announced the closing of the acquisition of the Mid Alberta Pipeline from Imperial Oil. This acquisition completes another milestone in the development of a new, integrated pipeline corridor from Edmonton, Alberta to U.S. Rocky Mountain refineries. The acquisition price is Cdn. $31.5 million, of which Cdn. $5 million is payable in three years. In addition, Pacific Energy acquired linefill for Cdn. $5 million and expects to incur expenditures of approximately Cdn. $4 million for first year capital expenditures in Edmonton, Alberta, and for transaction costs. The aggregate of purchase price, linefill, first year construction costs, and transaction costs is approximately U.S. $30.2 million. The funding of the purchase was from existing credit facilities. MAPL originates at the Edmonton, Alberta oil hub and extends south to a connection with the Rangeland Pipeline system near Sundre, Alberta. Rangeland was acquired by Pacific Energy on May 11, 2004. The Rangeland system extends south from Sundre to the Canada-U.S. border where it connects to Pacific Energy's Rocky Mountain pipeline network. Through this network and third party connecting pipelines, Pacific Energy serves 14 refineries in the U.S. Rocky Mountain region, which process nearly 600,000 barrels per day of crude oil. The Rangeland Pipeline system also delivers crude oil, condensate and butane north to Edmonton through third party pipelines. The addition of MAPL will allow Pacific Energy to transform Rangeland from what is now principally a gathering pipeline, serving declining conventional production areas in central and southern Alberta, into a main line transportation system with access in Edmonton to the growing synthetic oil production of northern Alberta. Over the next year, Pacific Energy will construct a new initiating terminal facility with multiple pipeline connections in Edmonton. In the interim, current volumes of approximately 7,000 bpd are expected to continue being transported on MAPL, and the Rangeland Pipeline system will transport these volumes plus current Rangeland volumes of approximately 38,000 bpd, for a total of 45,000 bpd, south to the United States. In addition, approximately 20,000 bpd will continue to be gathered and transported north to Edmonton. In light crude oil service, MAPL has an estimated capacity of approximately 50,000 bpd and the Rangeland pipeline system has an estimated capacity of approximately 85,000 bpd south to the Canada-U.S. border. Supplies of synthetic crude production and blends derived from synthetic crude oil are increasing as a result of the on-going expansion of oil sands processing in northern Alberta. These supplies are important to the U.S. Rocky Mountain refineries currently served by Pacific Energy, as production in the U.S. Rocky Mountain region and in southern Alberta is declining and needs to be replaced. In addition, new supplies are needed to meet increasing demand for refined products in the U.S. Rocky Mountain region. Irv Toole, President and Chief Executive Officer, said, "Producers in Alberta and refiners in the U.S. Rocky Mountain region have already shown great interest in this new pipeline corridor. Producers have a need to find additional outlets for their growing oil sands production, and refiners need to replace supplies of conventional crude oil that are declining. Synthetic oil producers have already made significant investments to upgrade and customize synthetic crude oil blends to meet the processing needs of the Rocky Mountain refiners." Mr. Toole continued, "We expect this new pipeline corridor to be successful because it will allow Pacific Energy to participate in a meaningful way in meeting the increasing crude oil requirements of U.S. Rocky Mountain refineries by accessing new synthetic oil supplies in Edmonton." Mr. Toole commented, "The combined Rangeland and MAPL acquisitions are expected to be slightly accretive in the initial year of operation, the period during which initiating terminal facilities are to be constructed in Edmonton. Once the integration of these facilities is complete, we expect the acquisitions to be approximately five percent accretive to net income and approximately five percent, or $0.10 per unit, accretive to cash distributions to unitholders." Pacific Energy Partners, L.P. (Moody's, Ba2 Corporate Credit Rating) is a Delaware limited partnership headquartered in Long Beach, California. Pacific Energy Partners is engaged principally in the business of gathering, transporting, storing and distributing crude oil and other related products in California and the Rocky Mountain region. Pacific Energy Partners generates revenues primarily by charging tariff rates for transporting crude oil on its pipelines and by leasing capacity in its storage facilities. Pacific Energy Partners also buys, blends and sells crude oil, activities that are complimentary to its pipeline transportation business. PARMALAT GROUP: U.S. Debtors Want To Expand Lazard's Engagement --------------------------------------------------------------- The Parmalat U.S. Debtors recently determined that reorganizing their businesses as a going concern provides greater benefits to creditors and other parties-in-interest. As a result of this new reorganization strategy, the Debtors propose to expand the scope of Lazard Freres & Co.'s services to include providing restructuring services like: (a) assisting the Debtors arrange out-of-court DIP and exit financing, and preparing financial information in support of it; (b) assisting the Debtors evaluate their potential debt capacity in light of their projected cash flows; (c) assisting the Debtors determine a reorganized capital structure; (d) assisting the Debtors determine the range of value the Debtors could receive for the sale of certain assets as part of a restructuring; (e) advising the Debtors on tactics and strategies for negotiating with creditors; (f) advising and attending meetings of the Debtors' Boards of Directors and their committees on matters related to a restructuring; (g) providing testimony and evidence related to its services, as necessary, in any proceeding before the Court on matters related to a restructuring; and (h) providing other general restructuring advice on matters related to a restructuring. The U.S. Debtors also revise Lazard Freres' compensation structure. For the Expanded Services, the Debtors will pay Lazard Freres: (1) a fee payable on the consummation of any Sale Transaction equal to 2.5% of the Aggregate Consideration involved in the Sale Transaction, subject to a minimum of $1 million for the first Sale Transaction. Any fee paid under the first Sale Transaction in excess of 2.5% of the Aggregate Consideration involved in the first Sale Transaction will be credited, without duplication, against any fee payable in any subsequent Sale Transaction; (2) a Restructuring Fee payable on the consummation of any Restructuring equal to $1.25 million, with any fees payable on the consummation of a Sale Transaction being credited against this fee; and (3) a $50,000 monthly fee payable until the effective date of a plan of reorganization. All Monthly Fees paid will be credited against any Restructuring Fee. However, if a Sales Transaction is consummated, then only Monthly Fees paid with respect to the months of June through October will be credited against any Restructuring Fee. Pursuant to the Engagement Letter, Lazard Freres is entitled to a fee payable upon consummation of any Sale Transaction equal to 1.3% of the Aggregate Consideration involved in the Sale Transaction, subject to a minimum of $1 million. While the Revised Engagement Letter contemplates additional fees payable to Lazard Freres in consideration of their expanded role in these cases, the U.S. Debtors believe that the additional fees are reasonable. Lazard Freres will also be reimbursed for reasonable out-of- pocket expenses, and other fees and expenses, including reasonable expenses of counsel, if any. The U.S. Debtors will indemnify Lazard Freres. James Mesterharm, the U.S. Debtors' Chief Restructuring Officer, tells Judge Drain that the Restructuring Services to be performed by Lazard Freres are necessary to enable the Debtors to make fully informed decisions that would maximize the value of their estates for the benefit of all creditors and parties-in-interest. As a result of Lazard Freres' retention as financial advisor and investment banker from the outset of the U.S. Debtors' cases, the firm gained an unmatched familiarity with the Debtors' current financial situation and stands singularly capable of providing specialized and immediate services related to the Debtors' reorganization. Lazard Freres has forged a close working relationship with the Debtors' financial personnel. Frank "Terry" A. Savage, Managing Director at Lazard Freres, assures the Court that the firm remains a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT: Bondi Wants Preliminary Injunction Against US Creditors ----------------------------------------------------------------- Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges, LLP, in New York, appeared before Judge Drain in the United States Bankruptcy Court for the Southern District of New York to obtain a Temporary Restraining Order and Preliminary Injunction, enjoining and restraining U.S. creditors from seizing the U.S. assets of Parmalat Finanziaria SpA and 22 foreign subsidiaries and affiliates. Ms. Goldstein appeared on behalf of Dr. Enrico Bondi, in his capacity as the extraordinary commissioner of Parmalat. The Parmalat affiliates are: (1) Parmalat SpA, (2) Parmalat Netherlands B.V., (3) Parmalat Finance Corporation B.V., (4) Parmalat Capital Netherlands B.V., (5) Dairies Holding International B.V., (6) Parma Food Corporation B.V., (7) Parmalat Soparfi S.A., (8) Olex S.A., (9) Eurolat SpA, (10) Lactis SpA, (11) Coloniale SpA, (12) Parmatour SpA, (13) Hit SpA, (14) Hit International SpA, (15) Nuova Holding, SpA, (16) Contal S.r.l., (17) Geslat S.r.l., (18) Newco S.r.l., (19) Eliair S.r.l., (20) Centro Latte Centallo S.r.l., (21) Panna Elena S.r.l., and (22) Parmengineering S.r.l. Parmalat Needs a "Breathing Spell" Ms. Goldstein relates that Parmalat's restructuring in Italy will be effectuated through a plan of reorganization prepared pursuant to Italian Insolvency Law. On June 21, 2004, Parmalat presented the Italian Plan to Dr. Antonio Marzano, the Italian Minister of Productive Activities, for approval. The composition with creditors proposed pursuant to the Italian Plan does not address the reorganization of all of the foreign affiliates. Certain of the foreign affiliates will be included in a different plan providing for the sale of certain assets or liquidation. Dr. Bondi believes that numerous holders of private and public debt instruments issued by Parmalat are domiciled in New York and other parts of the United States. Most of the private debt instruments are governed by New York law with the exception of the private debt instruments issued by Finanziaria, which are governed by Italian law. Most of Parmalat's public debt instruments are governed by English law. Most of the note purchase agreements governing the issuance of the Public and Private Debt provide: -- for the automatic acceleration, in case of the private placements; or -- acceleration upon written request, in case of issuance of the public debt, of the Public and Private Debt in the event that the entity that issued the debt, or in certain circumstances the guarantor of the debt, begins insolvency proceedings. Ms. Goldstein tells Judge Drain that Dr. Bondi's ultimate goal is to restructure Parmalat's financial obligations in the most expedient and economical manner possible, and on the best available terms for Parmalat's creditors, while balancing the interests of all Parmalat stakeholders. To effectuate this goal, Mr. Bondi requires injunctive relief against actions that would interfere with his ability to restructure Parmalat's financial obligations abroad and determine how the interests of all creditors can best be served. An injunction, Ms. Goldstein asserts, will best assure an economical and expeditious administration of all claims against Parmalat's estates, consistent with the statutory mandate of Section 304(c) of the Bankruptcy Code: (i) Just treatment of all holders of claims against or interests in the estate; (ii) Protection of claim holders in the United States against prejudice and inconvenience in the processing of claims in the Italian proceedings; (iii) Prevention of preferential or fraudulent dispositions of property of the estate; (iv) Distribution of proceeds of the estate substantially in accordance with the order prescribed by the Bankruptcy Code; and (v) Comity. In the absence of an injunction, Ms. Goldstein contends that U.S. creditors' claims may proceed to judgment without regard to Parmalat's financial restructuring, leading to the unequal treatment of certain creditors and dismemberment of the estates. Such an outcome would be contrary to the provisions of the Italian Insolvency Law, which has provisions that allow Parmalat to "claw-back" or set aside transactions that unfairly favor a creditor at the expense of other creditors, as well as the fundamental purpose of the United States Bankruptcy Code. Ms. Goldstein assures the Court that the injunction will neither prejudice nor unduly inconvenience U.S. creditors. The Italian Insolvency Law shares with the U.S. many fundamental insolvency law principles, and all of Parmalat's creditors will be treated justly in the Italian proceedings. ABN Amro Complaint Should Be Stayed Dr. Bondi also asks the Court to stay the complaint filed ABN Amro Bank N.V. before the Supreme Court of the State of New York, County of New York. On March 22, 2004, ABN Amro sued Parmalat SpA to recover the principal and interest allegedly due under a promissory note executed by Wishaw Trading S.A. and guaranteed by Parmalat SpA. No agreement has been reached between Parmalat and ABN Amro with respect to the stay of the Complaint. ABN Amro also named Wishaw as a co-defendant. Parmalat SpA holds a 16.67% ownership interest in Wishaw. Parma Court's Jurisdiction Dr. Bondi asks Judge Drain to grant the Civil and Criminal Court of Parma exclusive jurisdiction to: -- hear and determine any suit, action, claim or proceeding, other than the enforcement action filed by the U.S. Securities and Exchange Commission; and -- settle all disputes which may arise out of the construction or interpretation of the Italian Plan, or out of any action taken or omitted to be taken by any person or entity in connection with the administration of the Italian Plan. The Injunction will not affect the SEC Complaint. Dr. Bondi further ask the Court to give full force and effect to all provisions of the Italian Plan, once finalized and approved. July 2 Hearing in Manhattan Judge Drain will convene a hearing on July 2, 2004 at 10:00 a.m. to consider Dr. Bondi's request. At the hearing, Judge Drain will ask interested parties to show cause why a preliminary injunction should not be granted. Evan D. Flaschen, Esq., at Bingham McCutchen, LLP, represents an ad hoc committee of Parmalat creditors. 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. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEGASUS SATELLITE: Hires Hewitt Assoc. as Compensation Consultant ----------------------------------------------------------------- The Pegasus Satellite Communications, Inc. Debtors seek the Court's authority to employ Hewitt Associates, LLC, as compensation consultant in their Chapter 11 cases. Ted S. Lodge, the Debtors' President, Chief Operating Officer and Counsel, tells the Court that the Debtors selected Hewitt based on its experience in providing advice, analysis, and expert testimony with respect to a wide variety of employment-related issues including executive compensation. The Debtors also selected Hewitt based on its expertise and experience with executive employment issues with respect to the telecommunications industry in general, and the cable and satellite television industries in particular. Hewitt is one of the leading executive compensation consulting firms, specializing in the analysis and compensation programs to attract, retain, motivate and reward key executives, employees and directors. Founded in 1943, Hewitt's client roster includes more than half of the Fortune 500 companies and more than a third of the Fortune Global companies. As the largest multi-service human resource delivery provider in the world, Hewitt handles more than 53,000,000 HR-related customer interactions a year from more than 13,000,000 participants. For 60 years, Hewitt has been pioneering HR ideas, services and products to improve its clients' business results. Hewitt is familiar with the Debtors' compensation incentive programs. Through its prepetition activities, Hewitt's professionals worked closely with the Debtors' senior management, financial staff, and other professionals and have become well acquainted with the Debtors' compensation and incentive programs. The Debtors believe that Hewitt is well qualified to analyze whether their compensation and incentive programs are reasonable, and whether the programs are comparable to other compensation and incentive programs in the cable and satellite television industry. As the Debtors' consultant, Hewitt will: (a) analyze the Debtors' process for comparing pay levels to that of the market place. Hewitt will review the analyses and comment on the process used and how that compares to typical studies of this nature; (b) independently market price a sample of jobs using its own methodology and techniques. Hewitt will benchmark all officer level jobs as well as a sampling of about 20% of the remaining 150 jobs that the Debtors had previously benchmarked. Thus, including the officer group, Hewitt will independently benchmark about 40 positions. Hewitt's benchmarking of jobs will then be used to compare current pay levels, as well as the competitive data previously collected by the Debtors; and (c) present a letter that addresses its views of: * the process the Debtors use to competitively benchmark pay levels; and * competitive posture of the Debtors' pay programs relative to market. At their sole option, the Debtors may ask Hewitt to perform additional services like requesting a Hewitt representative to testify at a hearing in the Bankruptcy Court relating to its services to the Debtors and assistance with the design or redesign of any severance or retention programs that may be contemplated in the future. Hewitt secretary C. Lawrence Connolly, III, assures Judge Haines that no partner, principal or staff person of Hewitt holds any interest adverse to the Debtors' estates. While Hewitt partners and principals may have business associations with certain of the Debtors' creditors or parties-in-interest, the associations have no connection with the Debtors' Chapter 11 cases. Mr. Connolly ascertains that Hewitt is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The Debtors will pay an $80,000 fixed fee for Hewitt's contracted services, including expenses. For additional services, compensation will generally be based on the firm's hourly rates: Staff Level Hourly Rate ----------- ----------- Lead Compensation Consultant $400 - 600 Junior Compensation Consultants 250 - 400 Compensation Analysts 150 - 250 Administrative Assistants 100 - 175 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. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) PER-SE TECH: Closes Convertible Debt Sale & Amends Credit Facility ------------------------------------------------------------------ Per-Se Technologies, Inc. (Nasdaq: PSTI) announced that it has completed the sale of $125 million principal amount of 3.25% convertible subordinated debentures due 2024 to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended. The initial purchasers of the convertible debentures exercised their option to purchase an additional $25 million principal amount of the debentures, bringing the total offering to $125 million. The Company has retired its $118.8 million outstanding Term Loan B concurrently with the completion of the offering. The debentures and the shares of common stock issuable upon conversion of the debentures have not been registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Revolving Credit Facility Amendment The Company also announced that it has completed an amendment to its senior revolving credit facility to increase its capacity and lower the Company's borrowing rate. The facility's capacity has been expanded from $50 million to $75 million and the facility's maturity has been extended to three years. The facility's interest rate has been amended to LIBOR plus 2.5% to 3.0%, compared to LIBOR plus 3.0% to 3.5% prior to the amendment. The amendment became effective upon closing the offering of convertible debentures and retiring the Term Loan B. About Per-Se Technologies Per-Se Technologies (Nasdaq:PSTI) is the leader in Connective Healthcare. Connective Healthcare solutions from Per-Se enable physicians and hospitals to achieve their income potential by creating an environment that streamlines and simplifies the complex administrative burden of providing healthcare. Per-Se's Connective Healthcare solutions help reduce administrative expenses, increase revenue and accelerate the movement of funds to benefit providers, payers and patients. More information is available at http://www.per-se.com/ At March 31, 2004, Per-Se Technologies' balance sheet shows a stockholders' deficit of $14,084,000 compared to a deficit of $17,612,000 at December 31, 2003. PHOTOCHANNEL: Warrants Exercised & New Cash Totals $2.3 Million --------------------------------------------------------------- PhotoChannel Networks Inc. (TSX - V: PNI; OTCBB: PHCHF), one of North America's leading digital imaging technology providers, announced the Company has received gross proceeds of $2,315,000 from the exercise of common share purchase warrants and the completion of a non-brokered private placement. Proceeds of $1,315,000 have been received from the exercise of common share purchase warrants resulting from the exercise of the call option associated with the PhotoChannel Limited Partnership, as previously announced on May 13, 2004. The common share purchase warrants were exercisable at a price of $0.10 and resulted in the issue of 13,150,000 common shares of the Company. Investors in the PhotoChannel LP were lead by TELUS Corp, Discovery Capital Corp and Peter Scarth, PhotoChannel's CEO. In addition, the Company has completed a private placement for gross proceeds of $1,000,000 under which it has sold 8,000,000 units at a price of $0.125 per unit. Each unit consists of one common share and one common share purchase warrant, each of which, and the shares underlying the warrants, will be subject to a four month hold period from the date of issuance of the units. The common share purchase warrant will entitle the holder to purchase one additional common share of PhotoChannel at a price of $0.15 for a period of one year from closing. "This further investment by TELUS and Discovery Capital demonstrates their confidence in our business model and their recognition of our business growth during the past year," stated Peter Scarth, PhotoChannel CEO. "By completing the small private placement, the Company has strengthened its balance sheet, while it continues discussions with large photofinishing retailers in the United States. We are very pleased that the investors have recognized our continued growth." As per the Company's last quarterly results: - Online transactional revenue grew by 700% from the end of Q2 2003 to Q2 2004; and - Quarterly transactional revenues at March 31, 2004 increased 66% over the previous quarter. The Company paid a 10% cash finder's fee to a third party in connection with the private placement. The TSX has neither approved nor disapproved of the information contained in this release. About PhotoChannel Founded in 1995, PhotoChannel is a leading digital imaging technology provider for a wide variety of businesses including photofinishing retailers and telecommunications companies. PhotoChannel has created and manages the open standard PhotoChannel Network environment whose focus is delivering digital image orders from capture to fulfillment under the control of the originating PhotoChannel Network partner. There are now over 7000 retail locations worldwide accepting print orders from the PhotoChannel system. For more information on the Company visit http://www.photochannel.com * * * In its Form 20-F for the fiscal year ended September 30, 2003, Photochannel Networks Inc. reports: Liquidity and Capital Resources "As at September 30, 2003, for the first time since fiscal 2000, we had a positive working capital position of $388,277 compared to a working capital deficiency of $2,601,835 at September 30, 2002 (working capital deficiency of $6,484,812 at September 30, 2001). As a start-up company, which continues to strive for profitability, our main source of funds has been, and will continue to be, the sale of equity capital until we manage to reach a cash flow positive position. "We currently generate monthly revenues of approximately $80,000, of which $40,000 relates to recurring revenues from the use of our Network. We believe that cash on hand and recurring revenues will be sufficient to support our operating expenditures for a period of approximately four months, without any revenue growth. We anticipate accessing the equity markets for additional funding depending on actual sales and resulting cash flow during this period. Should our revenue not grow during the next 12 months we would be required to raise approximately $1,800,000 to sustain our current level of operations for this period. "We have yet to generate sufficient revenues to cover our operating expenses. Accordingly, if we are unable to generate positive cash flow from operations or continue to raise funds, we may be required to either limit, curtail, cease or stop operations. In the event that we cease or stop operations, shareholders could lose their entire investment." RELIANCE INSURANCE: Liquidator Objects to Disclosure Statement -------------------------------------------------------------- M. Diane Koken, Insurance Commissioner of the Commonwealth of Pennsylvania, as Liquidator of Reliance Insurance Company, complains that the Disclosure Statement filed by the Official Unsecured Bank Committee for Reliance Financial Services Corporation does not contain sufficient and adequate information on the appropriate safeguarding and retention of the RFSC Books and Records. Michael Z. Brownstein, Esq., at Blank Rome, in New York City, reminds the Court that the Liquidator is participating in complex legal matters with RFSC, including the RIC D&O Action and the PA Settlement Agreement. Additionally, the Liquidator is involved in an investigation by the United States Department of Justice through the U.S. Attorney's Office in Philadelphia, of the pre- bankruptcy activities of RFSC, RIC and Reliance Group Holdings, Inc. There are hundreds of millions of dollars and potential criminal and civil liabilities at stake in the Pending Litigation and Investigations. Insurance companies like RFSC are highly complex and heavily regulated, necessitating the maintenance of voluminous books, records and other documents that detail the operations. According to Mr. Brownstein, the RFSC documents relating to the Pending Litigation and Investigations will heavily influence the disposition of the Pending Litigation and Investigations. Therefore, the Liquidator wants to make sure that RFSC's Books and Records will be preserved and protected. Mr. Brownstein says that RFSC has a duty to maintain its Books and Records to enable the parties to the Pending Litigation and Investigations full and fair access to this information. However, the Plan gives the Reorganized RFSC's CEO discretion to discard the Books and Records. The Plan provides that: "After the Effective Date and as soon as the disposition of the books and records of the Reorganized Debtor shall be legally feasible, the CEO will seek to dispose of such books and records." This Plan provision is wholly insufficient to protect the Books and Records. The Plan should be amended to provide that the CEO may not discard any of the Books and Records unless: (i) there is adequate notice to all parties-in-interest; and (ii) the Bankruptcy Court holds a hearing to determine whether disposal is reasonable and appropriate. Furthermore, Mr. Brownstein insists that the Plan should contain a specific provision to enable the Bankruptcy Court to retain post-confirmation jurisdiction over this issue. The Liquidator asks Judge Gonzalez to deny approval of the Disclosure Statement unless the Plan is amended to reflect the suggested changes. 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. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) RESOLUTION SPECIALTY: S&P Rates Proposed Sr. Secured Loan at B+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Houston, Texas-based Resolution Specialty Materials LLC. At the same time, Standard & Poor's assigned its 'B+' senior secured bank loan rating and a recovery rating of '3' to the company's proposed $145 million senior secured credit facilities, based on preliminary terms and conditions. The senior secured bank loan rating is the same as the corporate credit rating; this and the '3' recovery rating indicate the expectation of a meaningful (50% to 80%) recovery of principal in the event of default. The outlook is stable. The proceeds from the transaction will be used in part to finance the acquisition of the Resins, Inks and Monomers division of Eastman Chemical Co. (BBB/Negative/A-3) by Apollo Management L.P. Pro forma for the transaction, total debt, including $50 million of holding company notes, will be about $167 million. The ratings on Resolution Specialty Materials incorporate the company's below-average business profile as a global manufacturer of resins and inks. "The business segments have experienced diminished profitability measures over the past few years due to integration difficulties at Eastman, as well as a weak global economy. These negative developments are partially offset by the company's solid market positions in niche markets, good geographic sales and manufacturing diversity, a diverse composition of raw materials, and a manageable level of initial debt leverage," said Standard & Poor's credit analyst Franco DiMartino. With annual revenues approaching $700 million, Resolution is a leading global producer of resins (73% of sales) and inks (27% of sales) for use in a variety of industries and end-markets. The resins segment manufactures materials for the coatings, composites, acrylics, and textiles industries. Representative products include alkyds, copolymers, polyurethanes, polyester resins, acrylic emulsions, powder resins and curing agents, and other specialty resins. The inks segment manufactures specialty polymers for the graphics arts industry and provides a variety of products used in inks for printing bags, wrappers, and cartons. Inks' products enable printing presses to run at higher speeds and offer better performance characteristics such as gloss, brightness, and scratch resistance. While both divisions operate in mature, regional markets with growth in line with economic expansion, the resins business is somewhat dependent on demand in the paint and coatings industry, while the inks business is dependent on growth in demand for consumer goods and the general health of the advertising industry. RFC CDO I: S&P Assigns BB Rating To $9.45 Million Class E Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to RFC CDO I Ltd.'s $289.85 million notes. RFC CDO I Ltd. is a CDO backed primarily by a static pool of ABS. The ratings are based on the following: -- Adequate credit support provided in the form of subordination and excess spread; -- The cash flow structure, which is subject to various stresses requested by Standard & Poor's; -- Characteristics of the underlying collateral pool, consisting primarily of RMBS; -- The manager's experience in the RMBS/ABS market; -- Hedge agreements entered into with an appropriately rated counterparty to mitigate the interest rate risk created by having certain fixed-rate assets in the collateral pool and having floating-rate liabilities; -- Scenario default rates of 22.13% for the class A notes, 16.96% for the class B notes, 13.95% for the class C notes, 10.04% for the class D notes, and 5.05% for the class E notes; and break-even loss rates of 26.48% for the class A notes, 23.88% for the class B notes, 16.47% for the class C notes, 13.67% for the class D notes, and 6.55% for the class E notes; -- Weighted average rating of 'BBB+'; -- Weighted average maturity for the portfolio of 6.943 years; -- S&P default measure of 0.44%; -- S&P variability measure of 1.30%; -- S&P correlation measure of 2.08; and -- Rated overcollateralization of 117.23% for the class A notes, 114.16% for the class B notes, 109.08% for the class C notes, 106.00% for the class D notes, and 104.70% for the class E notes. Ratings Assigned RFC CDO I Ltd. Class Rating Amount (mil. $) A AAA 226.80 B-1 AA 22.50 B-2 AA 2.00 C A 16.20 D BBB 12.90 E BB 9.45 SEQUOIA MORTGAGE: Fitch Assigns Low-B Ratings To Classes B-4 & B-5 ------------------------------------------------------------------ Sequoia Mortgage Trust 2004-6 mortgage pass-through certificates, classes A-1, A-2, A-3-A, A-3-B, X-A, X-B, and A-R ($885,687,100) are rated 'AAA' by Fitch. In addition, Fitch rates class B-1 ($15,725,000) 'AA', class B-2 ($9,250,000) 'A', class B-3 ($5,550,000) 'BBB', class B-4 ($2,313,000) 'BB', and class B-5 ($2,313,000) 'B'. The class B-6 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 4.25% subordination provided by the 1.70% class B-1, the 1.00% class B- 2, the 0.60% class B-3, the 0.25% privately offered class B-4, the 0.25% privately offered class B-5, and the 0.45% privately offered class B-6 certificates. The ratings on the class B-1, B-2, B-3, B- 4, and B-5 certificates are based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults, as well as bankruptcy, fraud and special hazard losses in limited amounts. The ratings also reflect the quality of the mortgage collateral, the capabilities of Wells Fargo Bank, National Association, as master servicer (rated 'RMS1' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The trust consists of three cross-collateralized groups of adjustable-rate mortgage loans, designated as pool 1 loans, pool 2 loans, and pool 3 loans, with an aggregate principal balance of $925,004,685. The pool 1 loans consist of 1,610 fully amortizing 25- and 30-year adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $522,196,156 and a weighted average principal balance of $324,345. All of the loans have interest-only terms of either five or 10 years, with principal and interest payments beginning thereafter and adjusting semi-annually based on the six-month LIBOR rate plus a margin. Approximately 67.75% and 14.08% of the mortgage loans in pool 1 were originated by GreenPoint Mortgage Funding, Inc. and Morgan Stanley Dean Witter Credit Corporation, respectively. The remainder of the loans was originated by various mortgage lending institutions. The pool 1 mortgage loans have a weighted average original loan-to-value ratio (OLTV) of 70.04% and a weighted average FICO of 732. Second home and investor-occupied properties constitute 6.24% and 1.13%, respectively. The states with the largest concentration of mortgage loans are California (34.57%), Florida (8.81%), and Arizona (6.16%). All other states represent less than 5% of the pool 1 balance as of the cut-off date. The pool 2 loans consist of 551 fully amortizing 25- and 30-year adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $193,993,154 and a weighted average principal balance of $352,075. All of the loans have interest-only terms of either five or 10 years, with principal and interest payments beginning thereafter and adjusting monthly based on the one-month LIBOR rate plus a margin (69.38% of the loan pool) or semi-annually based on the six-month LIBOR rate plus a margin (30.62% of the loan pool). Approximately 61.17% and 27.50% of the mortgage loans in pool 2 were originated by GreenPoint Mortgage Funding, Inc. and Morgan Stanley Dean Witter Credit Corporation. The remainder of the loans was originated by various mortgage lending institutions. The pool 2 mortgage loans have a weighted average OLTV of 70.41% and a weighted average FICO of 738. Rate/term refinance and cash-out refinance loans represent 33.50% and 34.22% of the loan pool, respectively. Second home and investor-occupied properties constitute 8.33% and 3.20%, respectively. The states with the largest concentration of mortgage loans are California (28.20%), Florida (12.02%), and Washington (8.82%). All other states represent less than 5% of the pool 2 balance as of the cut-off date. The pool 3 loans consist of 663 fully amortizing 25- and 30-year adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $208,878,766 and a weighted average principal balance of $315,051. All of the loans have interest-only terms of either five or 10 years, with principal and interest payments beginning thereafter and adjusting semi-annually based on the six-month LIBOR rate plus a margin. Approximately 68.12%, 12.94%, and 10.32% of the mortgage loans in pool 3 were originated by GreenPoint Mortgage Funding, Inc., Morgan Stanley Dean Witter Credit Corporation, and Countrywide Home Loans, Inc., respectively. The remainder of the loans was originated by various mortgage-lending institutions. The pool 3 mortgage loans have a weighted average OLTV of 70.47% and a weighted average FICO of 733. Rate/term refinance and cash-out refinance loans represent 37.16% and 28.82% of the loan pool, respectively. Second home and investor-occupied properties constitute 6.21% and 1.74%, respectively. The states with the largest concentration of mortgage loans are California (32.89%), Florida (8.59%), and Arizona (6.88%). All other states represent less than 5% of the pool 3 balance as of the cut-off date. Sequoia Residential Funding, Inc., a Delaware corporation and indirect wholly owned subsidiary of Redwood Trust, Inc., will assign all its interest in the mortgage loans to the trustee for the benefit of certificate-holders. For federal income tax purposes, an election will be made to treat the trust as multiple real estate mortgage investment conduits. HSBC Bank USA will act as trustee. SK GLOBAL AMERICA: Plan's Classification And Treatment Of Claims ---------------------------------------------------------------- In accordance with Section 1122 of the Bankruptcy Code, the Liquidation Plan classifies claims against and equity interests in the SK Global Debtor under 10 classes: Class Description Recovery Under the Plan ----- ------------ ----------------------- N/A Administrative Paid in full, in Cash Claims Estimated amount of Allowed Claims not to exceed $4 million N/A Priority Tax Holder will receive a Distribution Claims on account of the Allowed Claim: -- in Cash, in full; or -- in other amounts and on other terms as may be agreed on by the holder and the Debtor, or as permitted by statute. Estimated amount of Allowed Claims not to exceed $1.5 million 1 Priority Non-Tax Paid in full in Cash Claims Estimated amount of Allowed Claims will not exceed $100,000 Unimpaired, deemed to accept 2 Cho Hung Senior In full and complete satisfaction of Secured Claims the Claims, including, but not limited to, interest, fees, expenses, Cho Hung will receive $88,993,908 in Cash on the Effective Date, plus interest at the contractual non-default rate for the period commencing on the Petition Date through and including the Effective Date of the Plan. Any interest paid before the Effective Date by SK Networks to Cho Hung will be reimbursed in Cash by the Debtor directly to SK Networks on the Effective Date. Unimpaired, deemed to accept 3 KEB Junior Secured In full and complete satisfaction of Claims the Claims, KEB will receive aggregate Cash payments equal to $55,119,837, payable in three equal installments for $18,373,279 each on July 31, 2004, September 30, 2004 and December 31, 2004. Any installment payments made by SK Networks on the Debtor's behalf will be reimbursed in Cash by the Debtor or the Creditor Trustee directly to SK Networks on the later of: -- the Effective Date; and -- the date that the installment payment is made. The first installment payment due on July 31, 2004 will be made by the Debtor or SK Networks, with the two remaining installments paid by the Debtor, SK Networks, or the Creditor Trust. The payments due KEB under the Plan on account of the KEB Junior Secured Claims will be guaranteed by SK Networks. Impaired, entitled to vote 4 General Unsecured Holder will receive Cash equal to Claims 100% of the Allowed amount of the Claim. Estimated amount of Allowed Claims will not exceed $5 million Impaired, entitled to vote 5 FRN Unsecured In full settlement, release and Claims discharge of their Class 5 Claims, as soon as practicable after the later of the Effective Date and the date on which the final installment of the Distribution on the Allowed KEB Junior Secured Claims is either made pursuant to the Plan or set aside in the KEB Account, the holders of Allowed FRN Unsecured Claims will receive periodic Distributions from the Creditor Trust, on a pari passu basis, as the holders of other Unsecured Liquidating Trust Claims, in an aggregate amount of up to 100% of the Allowed FRN Unsecured Claims. Estimated amount of Allowed Claims will not exceed $71 million Impaired, entitled to vote 6 Unsecured Bank In full settlement, release and Claims discharge of their Class 6 Claims, as soon as practicable after the later of the Effective Date and the date on which the final installment of the Distribution on the Allowed KEB Junior Secured Claims is either made pursuant to the Plan or set aside in the KEB Account, the holder will receive periodic Distributions from the Creditor Trust, on a pari passu basis, as the holder of other Unsecured Liquidating Trust Claims, in an aggregate amount of up to 100% of the Allowed Unsecured Bank Claims. Allowed Claims estimated at $347.2 million, consisting of: * $153.3 million in Allowed Foreign Unsecured Banks Claims; and * $193.9 million in Allowed Korean Unsecured Bank Claims. Impaired, entitled to vote 7 SK Group Trade In full settlement, release and Claims discharge of their Class 7 Claims, as soon as practicable after the later of the Effective Date and the date on which the final installment of the Distribution on the Allowed KEB Junior Secured Claims is either made pursuant to the Plan or set aside in the KEB Account, each holder will receive periodic Distributions from the Creditor Trust, on a pari passu basis, as the holder of other Unsecured Liquidating Trust Claims, in an aggregate amount of up to 100% of the Allowed SK Group Trade Claims. Estimated amount of Allowed Claims not exceed $441 million Impaired, entitled to vote 8 SKN Trade Claims In full settlement, release and discharge of their Class 8 Claims, as soon as practicable after the later of the Effective Date and the date on which the final installment of the Distribution on the Allowed KEB Junior Secured Claims is either made pursuant to the Plan or set aside in the KEB Account, each holder will receive periodic Distributions from the Liquidating Creditor Trust, on a pari passu basis, as the holder of other Unsecured Liquidating Trust Claims, in an aggregate amount up to 100% of the Allowed SKN Trade Claims. Estimated amount of Allowed Claims not exceed $1.21 billion Impaired, entitled to vote 9 SKN Affiliate No Distribution Trade Claims Holders of SKN Affiliate Trade, however, will not be prejudiced or limited with respect to any legal rights any holder may have to recover the amount of its Allowed Claim against an obligation due and owing to the Debtor. Estimated amount of Allowed Claims not exceed $558 million Impaired, deemed to reject 10 Equity Interests No Distribution All Class 10 Equity Interests will be deemed cancelled, null and void and of no force and effect without further act or action under any applicable law, regulation, order, rule or agreement. Impaired, deemed to reject KEB asserts $77.4 million in Secured Claims against the Debtor. The Debtor and KEB agree to compromise and settle certain disputes regarding KEB's Secured Claims and fix the Allowed KEB Junior Secured Claims at $55,119,837. KEB will have no other Claims against the Debtor. The Debtor will also release and discharge KEB from Liabilities arising from or relating to Avoidance Actions or Causes of Action. The Debtor believes that the classification of Claims and Equity Interests is appropriate and consistent with applicable law. (SK Global Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) SKILLED HEALTHCARE: S&P Assigns 'B' Corporate & Bank Loan Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to nursing home operator Skilled Healthcare Group Inc. At the same time, Standard & Poor's assigned its 'B' bank loan rating and its recovery rating of '3' to the company's proposed $175 million senior secured first-lien credit facility due in 2010, and assigned its 'CCC+' senior secured debt rating and its recovery rating of '5' to the company's proposed $85 million senior secured second-lien term loan due in 2010. The 'B' rated senior secured first-lien credit facility is rated the same as the corporate credit rating; this and the '3' recovery rating indicate that the lenders can expect meaningful (50%-80%) but not full recovery of principal in the event of default. The secured second-lien debt is rated 'CCC+', two notches below the 'B' corporate credit rating. The '5' recovery rating indicates that the lenders can expect negligible (0-25%) recovery of principal in the event of default. The outlook is positive. The company will use the proceeds from the senior secured loans to refinance existing debt. Pro forma for the transaction, debt outstanding will be $225 million. "The low speculative-grade ratings on Skilled Healthcare Group reflect the risks associated with the company's concentration in two difficult states, and its operation in a tough business that has suffered reimbursement cuts and increased insurance costs," said Standard & Poor's credit analyst David Peknay. The company emerged from bankruptcy in August 2003 and was previously known as Fountain View Inc. Foothill Ranch, California-based Skilled Healthcare is the owner, operator, and manager of 49 nursing homes and five assisted-living facilities in California and Texas. The company also provides rehabilitation therapy services to its own facilities as well as other facilities. It also has two institutional pharmacies in California and another one in Texas. The company focuses on providing sub-acute services to patients with more medically complex needs than those in a typical nursing home. By affiliating with hospitals and physicians, Skilled Healthcare seeks to attract those patients that require its facilities' higher level of services. Baylor Healthcare System in Dallas, Texas, and St. Joseph's Hospital in Orange County, California are currently its two key affiliations. The company is improving its payor mix by increasing Medicare and managed care business and by attempting to increase its below- industry occupancy rate of about 85% by focusing on admissions from hospitals. Nevertheless, although the company enjoys economies of scale and strong local market positions in its two states, there are many risks. Medicaid is the source of about 40% of the company's revenues, however, reimbursement for the program in both California and Texas is subject to adverse rate trends. Texas lowered these payments by 2.5% in 2003, and California's ongoing financial difficulties could lead to rate cuts in future years. Medicare, its recent rate increases notwithstanding, has a history of cutting rates and did so as recently as September 2002. Another cut is possible in 2006 if the payment system for nursing homes is revised. Such changes in reimbursement could materially hurt Skilled Healthcare's financial results. As a small company in a limited number of markets, the company could also be hurt by weak trends in managed care in its key markets. In addition, the company is more subject to adverse shifts in economic and political trends than a larger, more diversified company would be. SLS INTERNATIONAL: Accountants Cite Going Concern Uncertainty ------------------------------------------------------------- SLS International Inc. has suffered losses from operations during the three months ended March 31, 2004 and the years ended December 31, 2003, 2002, and 2001. Its cash position may be inadequate to pay all of the costs associated with establishing a market for sales of its loudspeakers. Management intends to use borrowings and security sales to mitigate the effects of its cash position, however no assurance can be given that debt or equity financing, if and when required, will be available. On March 31, 2004, the Company's current assets exceeded current liabilities by $3,435,620, compared to an excess of current assets over current liabilities of $1,945,227, on December 31, 2003. Total assets exceeded total liabilities by $3,786,615, compared to an excess of total liabilities over total assets of $2,249,489 on December 31, 2003. The increased working capital was primarily due to the sale of 143,500 shares of Series B Preferred Stock for net proceeds of $2,561,250 in the first quarter of 2004. In addition to funding operations, the proceeds from such sales of stock allowed SLS to increase cash by $1,209,656, increase inventory by $258,068, increase net fixed assets by $45,920, and decrease accounts payable by $53,483. On March 31, 2004, the Company had a backlog of orders of approximately $50,000. However, SLS International has experienced operating losses and negative cash flows from operating activities in all recent years. The losses have been incurred due to the development time and costs in bringing its products through engineering and to the marketplace. The report of its accountants contains an explanatory paragraph indicating that these factors raise substantial doubt about SLS' ability to continue as a going concern. SMTC CORPORATION: Appoints Jane Todd as Chief Financial Officer --------------------------------------------------------------- SMTC Corporation (Nasdaq: SMTX) (TSX: SMX), announced the appointment of Jane M. A. Todd as Senior Vice President Finance, Chief Financial Officer effective July 5th, 2004. Ms. Todd brings extensive financial management experience having previously served as Vice-President and Chief Financial Officer of Agility Recovery Solutions, Vice-President of Finance with Dell Computer Corporation's Canadian subsidiary as well as senior financial positions at Beamscope Canada Inc. and Abitibi- Consolidated Inc. Ms. Todd holds BBA and MBA degrees and has a Chartered Accountant designation. "Jane Todd brings a relevant business and financial background to SMTC. We are delighted that she is joining our senior management team," stated John Caldwell, Chair, President and Chief Executive Officer. "Jane will play an important role in assisting SMTC through its transformation to future growth." SMTC Corporation is a global provider of advanced electronic manufacturing services to the technology industry. SMTC offers technology companies and electronics OEMs a full range of value- added services including product design, procurement, prototyping, printed circuit assembly, advanced cable and harness interconnect, high precision enclosures, system integration and test, comprehensive supply chain management, packaging, global distribution and after-sales support. SMTC is a public company incorporated in Delaware with its shares traded on the Nasdaq National Market System under the symbol SMTX and on The Toronto Stock Exchange under the symbol SMX. Visit SMTC's web site http://www.smtc.com/for more information about the Company. * * * As reported in the Troubled Company Reporter's April 8, 2004 edition, SMTC Corporation (Nasdaq: SMTX, TSX: SMX), filed its annual report on Form 10-K with the United States Securities and Exchange Commission on March 30, 2004. In response to a recent Nasdaq requirement, SMTC announced that the Auditors' Report, included in the Company's Annual Report on Form 10-K, included an unqualified audit opinion with an explanatory paragraph related to uncertainties about the Company's ability to continue as a going concern, based upon the Company's historical financial performance and the classification of its long-term debt as a current liability at December 31, 2003, due to its maturity on October 1, 2004. SOLUTIA: Wants to Extend Exclusive Plan Filing Period to Oct. 12 ---------------------------------------------------------------- Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher, LLP, in New York, tells Judge Beatty that during the first six months of the Debtors' Chapter 11 cases, the Solutia, Inc. Debtors focused on creating a business environment conducive to productive and constructive negotiations with respect to a Chapter 11 plan. After six months of work, the building blocks for those negotiations are moving into place and the Debtors believe that discussions can now begin in earnest. Significant progress has been made in the last six months with respect to three critical areas: (i) stabilization of the Debtors' businesses and development of their business plan; (ii) productive discussions with creditor and equity constituencies; and (iii) progress toward clarifying issues and positions in connection with challenging legal issues and litigation areas. However, Mr. Reilly states that there is much left to do and while the Debtors believe that the parties are poised to begin plan negotiations, it would be impossible in light of the complexity of the Chapter 11 cases to conclude those negotiations in time to finalize and confirm a reorganization plan within the current exclusive periods. Accordingly, the Debtors ask the Court to further extend their exclusive period to file a reorganization plan to October 12, 2004 and their exclusive period to solicit acceptances of that plan to December 11, 2004. Debtors' Businesses Stabilize The Debtors believe that they have taken important steps toward preserving and maximizing the value of their business enterprises. Work in that area undoubtedly must continue as the Debtors take the necessary steps to achieve their business plan. However, much as been accomplished to date: * The Debtors have stabilized their businesses and substantially eliminated or mitigated the negative effects of their Chapter 11 filing on the businesses. Most recently, the Debtors worked with their creditor and equity constituencies to negotiate and implement an employee retention and incentive plan that should stem employee losses related to the difficulty of working in a Chapter 11 environment. The stabilization of the Debtors' businesses frees their management and other parties-in-interest to focus on maximizing the value of the businesses and determine how that value should be distributed to stakeholders; * The Debtors have developed, with the Official Committee of Unsecured Creditors' input, an overall business plan that contemplates significant cost reductions as a means of improving the performance and viability of the Debtors' businesses. The Debtors have already taken key steps toward implementing the business plan, including rejecting unprofitable contracts with creditors like E. I. du Pont de Nemours and Company, Calpine Central, L.P., Calpine Power Services Company and Decatur Energy Center, L.P., and preparing to close their chlorobenzene business. The Debtors and their advisors continue to work hard toward identifying and implementing additional cost savings measures; and * In early May 2004, the Debtors announced that, with the Creditors Committee's consent, they made significant changes to restructure Solutia, Inc.'s senior management team. The Debtors believe that the new leaders of Solutia, and the focus that they will bring to bear on the reorganization process, will provide a strong foundation for execution of the business plan and the successful development of a reorganization plan. Discussions With Creditor and Equity Constituencies According to Mr. Reilly, an important development in the past six months with respect to the Debtors' ability to develop and negotiate a successful reorganization plan is that all of the constituencies have been identified and are acquiring the necessary background information about the Debtors' businesses and their financial condition. In addition to the Creditors Committee, an official committee of retirees and an official committee of equity security holders have been formed and all of the committees have retained professional advisors. Much has been accomplished to prepare all parties for plan negotiations: * In addition to having reviewed the business plan, the Creditors Committee and its professionals are developing a thorough understanding of the Debtors' businesses and industries, and of the various forms of legacy liabilities that the Debtors face. Creditors Committee members, together with advisors, are on the verge of concluding a series of tours of the Debtors' plants during which they have met with key members of the Debtors' operating management team. The on-site visits and interactions heightened their understanding of the manufacturing process, the complex guest-host relationships at the Debtors' facilities, and the work necessary to implement the next steps of the business plan. In addition, the Debtors created a "virtual data room" in which important documents and financial information can be made available quickly and efficiently to the Creditors Committee; * Representatives of Monsanto Company participated in the Creditors Committee's plant visits and other meetings with the Debtors' management and have been given access to the virtual data room, so that this important constituent can begin plan negotiations with a base of knowledge in common with that of other parties; and * The Retiree Committee and Equity Committee are currently in the process of gaining the necessary core knowledge about the Debtors' businesses and financial condition. In recent weeks, the Debtors have met with representatives of both of those committees, and each has begun using the virtual data room to gather information. Furthermore, the Debtors scheduled a meeting with the Retiree Committee and Equity Committee at which time the management team will formally present the business plan and engage in a question-and- answer session. Clarification and Stabilization of Litigation Positions Mr. Reilly relates that the Debtors' Chapter 11 cases will need some manner of resolution of complex legal questions, including challenging questions related to the interface between the Bankruptcy Code, on the one hand, and ERISA and federal and state environmental laws, on the other hand. To date, the Debtors and other parties pursued a dual-track strategy of litigation and negotiation with respect to several of these complex issues. That dual-track strategy appears to have created opportunities for the parties to pursue discussions toward a reorganization plan. Specifically: * The Debtors and the Environmental Protection Agency have entered into a stipulation that clarifies and limits the scope of discussion among them with respect to what environmental obligations must be performed during the Chapter 11 cases and, ultimately, which obligations are dischargeable under a reorganization plan; * Solutia, the EPA and Monsanto developed a working understanding with respect to division of responsibility for continuing environmental remediation efforts for various properties, which currently allows for an effective standstill that can allow plan negotiations to go forward; * Solutia, Monsanto, Pharmacia Corporation, the Creditors Committee and the Retiree Committee entered into a 45-day standstill agreement with respect to litigation among those parties to attempt to resolve the significant issues through negotiation rather than litigation; and * The briefing conducted in the pending litigation, together with informal analysis presented by the parties out of court, has begun to clarify the parties' positions on complex litigation issues so that negotiations can proceed from a more informed base. Next Steps Although the Debtors are pleased with the recent progress in their Chapter 11 cases, the work to be done and the complexity of the issues that they face will preclude them from being able to formulate a workable Chapter 11 plan in the short term. The Debtors have identified a short list of next steps aimed ultimately to negotiation and proposal to the Court of a Chapter 11 plan: (a) continuing to implement and refine the Debtors' business plan, including using the tools of bankruptcy to reduce or eliminate operating liabilities and improve cash flows; (b) identifying and quantifying the Debtors' potential liabilities, including considering the best way to proceed toward an effective and appropriate discharge of those liabilities by establishing procedures for identifying and handling claims in the Debtors' cases; (c) in the near term, developing and proposing to key constituencies a "straw man plan" that could form the basis for further plan discussions; (d) evaluating the potential for asset sales; (e) continuing to work toward stabilizing the Debtors' pension plan so as to avoid a distressed termination of that plan; and (f) working toward a valuation of the Debtors' domestic and foreign businesses. The Debtors have been working diligently toward completing these steps, and anticipate significant further work and progress in these areas. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Company filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPEEDWAY MOTORSPORTS: S&P Rates $100M Senior Sub. Notes At B+ ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Speedway Motorsports Inc.'s Rule 144A offering of $100 million 6.75% senior subordinated notes due 2013. The offering is an addition to the company's 2003 $230 million senior subordinated notes issue. Also, Standard & Poor's affirmed its ratings on the Concord, North Carolina-based motorsports facilities owner and operator, including its 'BB' corporate credit rating. The rating outlook remains positive. "Upgrade potential would hinge on the company's ability to favorably renegotiate or extend its lucrative broadcasting contracts, which rights holders can opt out of at the end of 2006," said Standard & Poor's credit analyst Hal Diamond. "Over the intermediate term, we expect that the company will pursue acquisitions of additional tracks if the opportunity arises, which could result in a temporary increase in debt leverage." TENET: Raises $68 Million from Brownsville Medical Center Sale -------------------------------------------------------------- Tenet Healthcare Corporation (NYSE: THC) announced that a company subsidiary has completed the sale of Brownsville Medical Center in Brownsville, Texas, to an affiliate of Valley Baptist Health System. Gross proceeds to Tenet from the sale are estimated at $82 million, which includes approximately $67 million from the sale of property, plant and equipment and approximately $15 million from the liquidation of certain working capital items. Net after-tax proceeds are expected to be approximately $68 million. The company expects to use the proceeds of the sale for general corporate purposes. Brownsville Medical Center is a 243-bed hospital that has provided quality medical and health care services to the Brownsville community since 1923. Valley Baptist, a nonprofit health system based in nearby Harlingen, Texas, is one of the largest integrated health systems in South Texas with 613 licensed acute care beds and approximately 2,100 employees. Valley Baptist has served the Harlingen area and the Rio Grande Valley community since 1925. Under the agreement, Valley Baptist has committed to offer employment to substantially all Brownsville Medical Center employees in good standing. Brownsville Medical Center is one of 27 hospitals Tenet announced it was divesting on Jan. 28, 2004. In addition to Brownsville Medical Center, the 27 hospitals consist of 19 in California, two in Louisiana, three in Massachusetts and two in Missouri. Negotiations for the sale of 25 of the remaining hospitals are ongoing. One of the California hospitals, a leased facility, is being returned to the hospital district that owns it. About the Company Tenet Healthcare Corporation, through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. Tenet can be found on the World Wide Web at http://www.tenethealth.com/ * * * As reported in the Troubled Company Reporter's June 21, 2004 edition, Standard & Poor's Ratings Services said that the ratings and outlook on Tenet Healthcare Corp. (B/Negative/--) will not be affected by an increase in the size of the company's new senior unsecured note issue due in 2014, to $1 billion from $500 million. Tenet used $450 million of the proceeds to repay debt due in 2006 and 2007, and the balance will be retained in cash reserves. Despite the additional debt and interest costs, Standard & Poor's considers the additional liquidity provided by the cash, as well as the effective extension of maturities, to be offsetting factors. The ratings already consider expectations of weak operating performance and cash flow over the next year while the negative outlook incorporates the risk of ongoing litigation and investigations related to the hospital chain's operations. UGS PLM: Completes D-Cubed, Ltd., Acquisition --------------------------------------------- UGS, a leading global provider of product lifecycle management software and services, announced the closing of its transaction to acquire D-Cubed, Ltd., a Cambridge, England-based supplier of embedded technology used by many of the world's leading computer-aided design, manufacturing and engineering analysis application developers. Several prominent PLM industry analysts have hailed the strategic acquisition as a strong sign of UGS' commitment to invest in its growth while maintaining its leadership in providing open solutions to the PLM industry. A sample of industry reaction is shown below with a more complete list at http://www.ugs.com/products/open/d_cubed/quotes.shtml/ -- "In its first investment since becoming an independent company, UGS has continued the quest to own the underlying technology components that are common across multiple CAD vendors. With the strategy, UGS can push for openness in collaborative design while benefiting from licensing the technology foundation that supports the openness strategy." -- "UGS kicked off its new-found independence with the acquisition of D-Cubed, sending a powerful message that it plans to become the magnet for the world's leading PLM technologies," said Charles Foundyller, CEO, Daratech, Inc. "The combination of Parasolid, JT Open, PLM Vis, PLM XML, and now D-Cubed, enables UGS to make a compelling argument that it is indeed a one-stop shop for robust PLM component technology." -- "Besides bringing yet another world-class technology into the UGS component portfolio, the D-Cubed acquisition signals UGS' new owners are committed to investing in both near- and long-term goals," said Bruce Jenkins, senior analyst and managing partner, Spar Point Research, LLC. "D-Cubed stands to gain added market reach, while UGS is positioned to integrate constraint management with its visualization and other component offerings in ways that enable new levels of intelligent 3D data sharing." UGS announced its intention to acquire D-Cubed -- http://www.d-cubed.co.uk/-- on June 8 and run the company as a wholly-owned subsidiary. "The closing of this transaction furthers our efforts to promote open solutions throughout our industry and represents a major milestone in UGS' PLM Open strategy and business model," said Bruce Feldt, vice president of Open Tools for UGS. "The addition of the D-Cubed team to UGS and the D-Cubed suite of component software to our family of PLM Components strengthens UGS' position as the PLM industry's principal supplier of state-of-the- art component software technology." About UGS UGS is a leading global provider of product lifecycle management software and services with more than 3 million licensed seats and 42,000 clients worldwide. The company promotes openness and standardization and works collaboratively with its clients in creating enterprise solutions enabling them to transform their process of innovation and thus begin to capture the value of PLM. For more information on UGS products and services, visit http://www.ugs.com/ * * * As previously reported in the Trouble Company reporter, May 3, 2004 issue, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Plano, Texas-based UGS PLM Solutions Inc., and a 'B-' subordinated debt rating to the company's $550 million senior subordinated notes due 2012. At the same time, Standard & Poor's assigned its 'B+' bank loan rating and a recovery rating of '3' to UGS PLM Solutions Inc.'s $625 million senior secured credit facility, reflecting expectations for meaningful (50%-80%) recovery of principal in a default or bankruptcy scenario. The secured credit facility consists of a $125 million revolving credit facility due 2010 and $500 million term loan facility due 2011. The outlook is stable. UNITED AIRLINES: Files Third Reorganization Status Report --------------------------------------------------------- James H.M. Sprayregen, Esq., at Kirkland & Ellis, reports that the United Airlines Inc. Debtors have continued making solid progress in their restructuring efforts and in narrowing the issues that need to be addressed prior to their exit from bankruptcy. However, there are still hurdles that must be surmounted and issues that remain unresolved. Booking growth on Ted flights continues to match or exceed capacity additions, filing 86% of its seats in the first three months of operation. Fuel prices continue to challenge the Debtors. Prices have come off their record highs, but are still significantly higher than last year. In response, the Debtors are implementing a range of activities to safely and strategically conserve fuel, including the limited use of various fuel hedging strategies. The Debtors have resolved 525 of the 600 executory contracts with counterparties holding the largest prepetition trade claims. The Debtors have made progress with a small number of the 75 counterparties holding the largest remaining trade claims and are working on draft term sheet to restructure the contracts. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. the Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNITY WIRELESS: May Liquidate Assets if Unable to Raise Funds ------------------------------------------------------------- Unity Wireless Corporation's financial statements have been prepared on the going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. The Company's operations to date have been primarily financed by borrowing and equity transactions. Its future operations are dependent upon the identification and successful completion of additional long-term or permanent equity financing, the continued support of creditors and stockholders, and, ultimately, the achievement of profitable operations. There can be no assurances that the Company will be successful. If it is not, the Company will be required to reduce operations or liquidate assets. Management will continue to evaluate projected expenditures relative to available cash and to seek additional means of financing in order to satisfy working capital and other cash requirements. The auditors' report on the audited consolidated financial statements for the fiscal year ended December 31, 2003 contained in the 10-KSB filed on March 29, 2004, includes an explanatory paragraph that states that as Unity Wireless has suffered recurring losses from operations, substantial doubt exists about its ability to continue as a going concern. During the three month period ended March 31, 2004, the Company's cash position decreased. The primary use of cash was for its continued operations. The Company is currently in various stages of discussion with suppliers regarding extended payment terms for their respective outstanding March 31, 2004 accounts payable balances. Management indicates that the Company's capital requirements are difficult to plan in light of its current strategy to expand its customer base and to develop new products and technologies. Its operations to date have been primarily financed by sales of its equity securities. As of March 31, 2004, the working capital deficit was $42,827. The Company's operations presently are generating negative cash flow, and management does not expect positive cash flow from operations in the near term. The ability to continue as a going concern is dependent upon obtaining further financing, successful and sufficient market acceptance of the Company's current products and any new product offerings that it may introduce, the continuing successful development of its products and related technologies, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by Unity Wireless could result in a significant dilution in the equity interests of its current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase the Company's liabilities and future cash commitments. UNIVERSAL HOSPITAL: Rex Clevenger Joins Company as SVP & CFO ------------------------------------------------------------ Universal Hospital Services, Inc., announced that Rex Clevenger has joined the company as its Senior Vice President & Chief Financial Officer. "We are excited to have Rex join our management team," said Gary Blackford, President and CEO of UHS. "He has hit the ground running already. Bringing a financial executive with Rex's talent and experience is a key milestone on our path to transforming UHS from a market leading equipment rental company, to the premier medical equipment lifecycle services company in the country. Rex will do great things here." Mr. Clevenger brings over 25 years of financial operations and capital markets experience to UHS. Prior to joining UHS, he had extensive capital attraction, corporate finance and planning roles as Senior Vice President, Finance for Reliant Resources, Inc. (NYSE:RRI) in Houston, and with privately held Koch Industries in Wichita and Singapore. Rex also worked in commercial and investment banking roles in Houston and New York, and as a CPA for Arthur Andersen. He is a graduate of the University of Missouri and holds a Bachelor of Science degree in Business Administration. About Universal Hospital Services, Inc. Universal Hospital Services, Inc. is the leading medical equipment lifecycle services company in the country, offering comprehensive solutions that maximize utilization, increase productivity and support optimal patient care resulting in capital and operational efficiencies. Based in Bloomington, Minnesota, Universal Hospital Services currently operates through 71 district offices and 13 regional service centers, serving customers in all 50 states and the District of Columbia. At March 31, 2004, Universal Hospital Services, Inc.'s balance sheet reflects a stockholders' deficit of $88,588,000 compared to a deficit of $89,903,000 at December 31, 2003. US ESCROW FINANCIAL: Case Summary & Largest Unsecured Creditors --------------------------------------------------------------- Debtor: US Escrow Financial Services, LLC 6886 South Yosemite Street, Suite 200 Centennial, Colorado 80112 Bankruptcy Case No.: 04-23785 Type of Business: The Debtor provides full-service accounts receivable management, including accounts receivable financing, billing, credit reports and through a wholly owned subsidiary commercial collection services. See http://www.factoring.net/ Chapter 11 Petition Date: June 25, 2004 Court: District of Colorado (Denver) Judge: Elizabeth E. Brown Debtors' Counsel: Lee M. Kutner, Esq. Jeffrey S. Brinen, Esq. Kutner Miller Kearns, P.C. 303 East 17th Avenue, Suite 500 Denver, CO 80203 Tel: 303-832-2400 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ G.L. Bryan Investments, Inc. $825,726 6886 South Yosemite Street, Suite 230 Centennial, CO 80112 Dex Media, Inc. $763 EON Office Products $233 Check Processing Services, Inc. $205 Home Depot Credit Services, Inc. $51 Experian $41 Blasti Express, Inc. $15 USG CORP: U.S. Gypsum Wants Restraining Order Against WFD Partners ------------------------------------------------------------------ Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that United States Gypsum Company operates a manufacturing facility in Aliquippa, Pennsylvania, that employs around 160 individuals. The Aliquippa Facility is one of U.S. Gypsum's primary revenue-producing assets. The primary product manufactured there is Gypsum Wallboard. An equivalent of 130 truckloads of Gypsum Wallboard is manufactured at the Facility on a daily basis. To operate, the Aliquippa Facility requires a continuous source of electrical power. If electric power becomes unavailable for any reason, the Aliquippa Facility will be shut down. To secure a continuous source of electric power for the Aliquippa Facility, U.S. Gypsum entered into an Electric Power Line Lease Agreement with J&L Structural, Inc., dated as of December 27, 1999. Pursuant to the J&L Lease, U.S. Gypsum obtained from J&L the right to exclusively use a 69 KV transmission line and related equipment adjacent to U.S. Gypsum's Aliquippa Facility for 99 years. Circuit No. 2 is connected with Duquesne Light Company's transmission system through the Hopewell Substation, which is located in the proximity of the Aliquippa Facility. Other than the Duquesne Transmission System, there is no other available electric power source for the Aliquippa Facility. The J&L Lease reflects this reality in that it could not be terminated by J&L except with a two-year written notice of termination. The two-year termination requirement is crucial to allow U.S. Gypsum adequate time to develop an alternative power source before its use of Circuit No. 2 is ceased. Recognizing the importance of a continuous flow of electric power to the Aliquippa Facility, J&L agreed that it would take no action to impinge on or diminish U.S. Gypsum's exclusive right to use Circuit No. 2. J&L also agreed that it would not sell Circuit No. 2 without U.S. Gypsum's written consent. Moreover, the parties agree that as long as U.S. Gypsum continue to use Circuit No. 2 and any related facilities, prior to any attempt by J&L to abandon them, J&L would allow U.S. Gypsum to purchase any equipment proposed for abandonment. The J&L Lease also provides that U.S. Gypsum would pay scrap value minus transaction costs for any equipment purchased. On June 30, 2000, J&L filed a voluntary petition for bankruptcy under Chapter 11 of the Bankruptcy Code in the United States Court for the Western District of Pennsylvania. J&L's bankruptcy case was dismissed on August 20, 2002, and was reinstated and converted to a Chapter 7 bankruptcy on December 31, 2002. After its entry into bankruptcy, J&L did not exercise dominion over Circuit No. 2. J&L did not demand the annual lease payments due under the J&L Lease for calendar years 2001 or 2003. J&L also did not properly maintain Circuit No. 2 as required. As a result, U.S. Gypsum incurred and paid maintenance costs related to Circuit No. 2, a portion of which should have been J&L's responsibility. J&L effectively abandoned Circuit No. 2 triggering U.S. Gypsum's rights under the J&L Lease. U.S. Gypsum appeared in J&L's bankruptcy to protect and enforce its rights under the J&L Lease. Pursuant to correspondence dated June 12, 2003, the counsel for U.S. Gypsum advised the counsel for J&L and its Trustee that U.S. Gypsum was invoking its rights under the J&L Lease and that U.S. Gypsum stood ready to purchase Circuit No. 2 for scrap value minus transaction costs. Neither the J&L Trustee nor J&L responded to U.S. Gypsum's correspondence. On October 30, 2003, J&L's Trustee entered into an Asset Purchase Agreement with AES Realty, LLC, pursuant to which AES purchased certain assets of J&L's bankruptcy estate. The J&L Trustee did not seek U.S. Gypsum's consent of the sale, in violation of the J&L Lease. Pursuant to the Asset Purchase Agreement, AES specifically agreed to purchase the assets subject to U.S. Gypsum's rights, claims and interest. Both the J&L Trustee and AES explicitly recognized in the Asset Purchase Agreement the validity and enforceability of U.S. Gypsum's claims to possession and use of Circuit No. 2 and, therefore, the essential nature of power transmission to the Aliquippa Facility. AES subsequently assigned all its right and interest in the Asset Purchase Agreement to WFD Partners, L.P., a Pennsylvania limited partnership. Thereafter, U.S. Gypsum negotiated with WFD regarding the extension of the lease and U.S. Gypsum's continued use of and ability to purchase Circuit No. 2. Through these negotiations, WFD recognized U.S. Gypsum's enforceable rights to the continued use of Circuit No. 2, and WFD is well aware of the importance of a continuous flow of power to the Aliquippa Facility. Despite its ongoing negotiations with U.S. Gypsum, WFD recently intimated that it had the ability to immediately terminate all power supplied to the Aliquippa Facility. The implication was that WFD might shut off power to the Aliquippa Facility with no prior notice or with inadequate notice that U.S. Gypsum would not have adequate time to develop an alternative power source before the power supply through Circuit No. 2 was shut off. Because of the negotiations, U.S. Gypsum has had no reason to pursue development of an alternative electric power source, which would take between one to two years. If power is shut off, the Aliquippa Facility will become immediately inoperable. This will directly and adversely impact the value of a primary revenue-producing asset of U.S. Gypsum's estate, and will directly and adversely impact the persons employed at the Aliquippa Facility, as well as create a potentially hazardous environment for the employees. In violation of Section 362 of the Bankruptcy Code, WFD filed a replevin action before the United States District Court for the Western District of Pennsylvania to compel U.S. Gypsum to cease using Circuit No. 2. However, according to Mr. DeFranceschi, the resolution of U.S. Gypsum's property interest in Circuit No. 2 is an issue for the Bankruptcy Court to resolve. Accordingly, U.S. Gypsum asks Judge Fitzgerald: (a) to direct WFD to take no efforts to shut off or in any way adversely impact the flow of electric power to the Aliquippa Facility; (b) to declare that it has an enforceable property interest in Circuit No. 2 that entitles it to continued possession and use of Circuit No. 2 at least through the remainder of the 99-year term of the J&L Lease, subject to termination only by two years written notice; or, in the alternative (c) for permission to purchase Circuit No. 2 for scrap value minus transactional costs. To prevent WFD from carrying through on its threat to immediately terminate power to the Aliquippa Facility, U.S. Gypsum also asks the Bankruptcy Court to grant temporary, preliminary and permanent injunction directing WFD not to terminate or in any way interfere with U.S. Gypsum's continued use of Circuit No. 2. Mr. DeFranceschi believes that U.S. Gypsum has a reasonable probability of success in the Action. U.S. Gypsum has an enforceable property interest in Circuit No. 2 that was not extinguished by any orders entered in J&L's bankruptcy proceeding. Moreover, the termination of power to the Aliquippa Facility will cause an immediate shut-down and U.S. Gypsum will be irreparably harmed, which cannot be fully compensated through an award of monetary damages. In addition, under Section 366, WFD is acting as a utility with respect to the Aliquippa Facility, and therefore cannot terminate the flow of electric power to the Aliquippa Facility. 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. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) UTI CORPORATION: Acquires MedSource Technologies for $230 Million ----------------------------------------------------------------- UTI Corporation announced that it has completed the acquisition of Minneapolis-based MedSource Technologies, Inc. (Nasdaq: MEDT), making the new organization the largest design, engineering and contract manufacturing company serving the medical device market. The acquisition, which was announced in April 2004, has an aggregate transaction value of approximately $230 million, including net debt. Under the agreement, the MedSource common stockholders will receive $7.10 per share in cash. "The acquisition of MedSource will enable us to redefine order fulfillment and accelerate the delivery of innovation to the market place, helping our customers grow and improve processes across many aspects of their business," said Ron Sparks, President and CEO of UTI. "With our comprehensive services and capabilities, we now have the infrastructure in place to bring the highest quality service and efficiency to our customers." UTI Corporation, whose lead equity sponsor is KRG Capital Partners, LLC, received new equity financing from DLJ Merchant Banking Partners, part of the family of funds of CSFB Private Equity, the global private equity arm of Credit Suisse First Boston's Alternative Capital Division. UTI will remain privately held. "Combining UTI and MedSource establishes a dynamic new force of excellence in a market that has long been characterized by smaller, fragmented service providers," said Bruce Rogers, Co- founder and Managing Director of KRG Capital and Chairman of UTI Corporation. "Leveraging the talents and capabilities of both organizations now provides customers one organization that can fulfill everything from raw materials, engineering design and prototyping, to manufacturing, packaging and complete supply chain management." Andy Rush, Managing Director of DLJ Merchant Banking Partners added, "We are confident in the decision to align ourselves with UTI and are encouraged by the enthusiasm and interest surrounding this acquisition." UTI serves the medical device market with a comprehensive portfolio including: design and engineering services, precision component fabrication, finished device assembly and complete supply chain management. UTI provides a wide variety of finished goods and components in its target markets: cardiovascular, endoscopy and orthopedics. Examples include stents, stent tubing, endoscopic devices, endoscopic instruments, orthopedic replacement joints, plates, screws and fixation devices. In addition UTI offers, engineering services including, rapid prototyping, raw materials consulting and alloy design. UTI customers typically benefit from a significant reduction in cost of goods sold while increasing productivity, capacity, quality and overall customer service levels. The newly combined entity will soon be announcing its new corporate name and logo. Also underway is a restructuring of its operating divisions to better align with key customers in target markets: cardiovascular, endoscopy and orthopedics. The commitment to these three areas will allow the company to focus on customers' specific needs and address the various special needs of these sectors as efficiently as possible. "Now that the acquisition is complete, we can continue to fulfill our strategic intent which is: As ranked by our customers, to be the world's best order fulfillment and design organization to the medical device industry," Sparks said. About UTI Corporation UTI serves the medical device market with full service: design and engineering services, precision component fabrication, finished device assembly and complete supply chain management. UTI can help speed new products to market and manage complete product lines, allowing companies to refocus internal resources more efficiently. The company's design center provides clients with rapid prototyping and engineering support. In addition, UTI now offers a comprehensive portfolio of applied technologies and manufacturing solutions, with particular expertise in state-of-the-art fabrication, plastic/metallic injection molding, forging, polymer and plastic extrusion, precision machining and alloy design. UTI is a Class III/PMA- experienced manufacturer and is equipped to manage projects from assembly to direct-to-inventory finished goods. For more information, visit http://www.uticorporation.com/ * * * As reported in the Troubled Company Reporter's June 16, 2004 edition, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to medical-device contract manufacturer UTI Corp. It also assigned its 'B+' bank loan rating and '3' recovery rating to UTI's proposed $40 million senior secured five- year revolving credit facility due in 2009 and to a $174 million senior secured six-year bank term amortizing loan B due in 2010. In addition, Standard & Poor's assigned its 'B-' debt rating to UTI's proposed $190 million senior subordinated notes due in 2014. Proceeds from these financings are expected to be used to fund the company's net-of-cash $230 million acquisition of medical device maker MedSource Technologies Inc., to refinance existing debt, and to fund a minor dividend to one of UTI's two financial sponsors. Both the bank debt and the subordinated notes will be issued by Medical Device Manufacturing Inc., a wholly owned subsidiary of the parent holding company and guarantor, UTI. Pro forma for the proposed debt, the Collegeville, Penn.-based UTI will have about $364 million of debt outstanding. The outlook is positive. VIVENDI: Completes Tender Offer to Purchase High Yield Notes ------------------------------------------------------------ Vivendi Universal (Paris Bourse: EX FP; NYSE: V) announced the successful completion of its tender offer to purchase high yield notes in an aggregate cash consideration of approximately EUR2.3 billion. Initially planned for EUR1 billion, the amount of this transaction was hence more than doubled in view of the favourable response by noteholders. The 9.50% high yield notes denominated in euros and the 9.25% high yield notes denominated in dollars, issued by Vivendi Universal on April 8, 2003, were tendered at approximately 90% and 99% respectively. The 6.25% high yield notes denominated in euros and dollars, issued by Vivendi Universal on July 10, 2003, were tendered at approximately 43% and 90%, respectively. Vivendi Universal is pleased with the success of this offer, which is a further step in the group's financial restructuring and which should provide significant savings in financing expense. About Vivendi Universal Games Headquartered in Los Angeles, VU Games (S&P, BB Long-Term and B Short-Term Corporate Credit Ratings, Positive) is a leading global developer, publisher and distributor of multi-platform interactive entertainment. Its development studios and publishing labels include Blizzard Entertainment, Sierra Entertainment, Fox Interactive and Massive Entertainment. VU Games' library of over 700 titles features multi-million unit selling properties such as Warcraft, StarCraft and Diablo from Blizzard; Crash Bandicoot, Spyro The Dragon, Ground Control, Tribes and Leisure Suit Larry. WEIRTON STEEL: Obtains Nod To Assume & Assign GE Capital Leases --------------------------------------------------------------- The Weirton Steel Corporation Debtors sought and obtained the Court's authority to assume various equipment leases with General Electric Capital Corporation, and assign these Leases to ISG Weirton, Inc., as assignee, pursuant to the terms of an Assumption and Assignment Agreement between the Debtors, GE Capital and ISG Weirton, dated May 17, 2004. According to James H. Joseph, Esq., at McGuireWoods, LLP, in Pittsburgh, Pennsylvania, the Debtors will benefit from this arrangement because ISG Weirton will: -- pay all cure amounts owed to GE Capital pursuant to the Leases; and -- assume all other obligations as set forth in the Assignment Agreement so that the Debtors will not have any liability to GE Capital on account of the Leases. Specifically, pursuant to the Assignment Agreement: (1) Certain of the Leases which had expired will be deemed extended and renewed, commencing on May 17, 2004 and continuing to and until December 31, 2006; (2) The Debtors will be deemed to have assumed the Leases and all obligations owed to GE Capital under the Original Lease Documents, as modified, as well as to have assigned the Leases and all of its obligations under the Original Lease Documents, as modified, to ISG Weirton; and (3) GE Capital will be deemed to have consented to the Debtors' assumption of the Leases pursuant to Section 365 of the Bankruptcy Code, and the assignment of the Leases and all of the Debtors' obligations under the Original Lease Documents, as modified, to ISG Weirton. ISG Weirton will tender to GE Capital $258,130 as initial payment, consisting of $96,130 as cure amount in delinquent lease payments due to GE Capital under the Original Lease Documents as of May 17, 2004, as well as $162,000 as additional payment. On GE Capital's receipt of the Initial Payment, the Debtors will be released from all further obligations to GE Capital under the Original Lease Documents. GE Capital will not have any claim against the Debtors arising out of the Debtors' obligations or defaults under the Leases prior to May 17, 2004. Furthermore, GE Capital will be deemed to have waived and released any claims it may have against the Debtors arising out of or related to the Leases, as well as any claim related to or arising under or in connection with the Leases filed against the Debtors or listed by the Debtors in their Schedules of Liabilities. Likewise, the Debtors will be deemed to have waived any claims they may have against GE Capital related to or arising under or in connection with the Leases, any payments made to GE Capital, or any conduct in which GE Capital engaged in connection with the Leases. (Weirton Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT: Gets Green Light to Assume Lease Plan Vehicle Contracts ------------------------------------------------------------------ Before its Bankruptcy Petition Date, West Point-Pepperell, Inc., as predecessor-in-interest to WestPoint Stevens, Inc., entered into a Vehicle Lease Agreement dated November 25, 1992 with Lease Plan U.S.A., Inc., to facilitate the leasing of vehicles necessary to the Debtors' business operations. The Debtors utilize the Vehicles to transport both personnel and products between various locations within their operations. The Debtors and Lease Plan entered into various lease schedules pursuant to the Master Lease. The Schedules govern the leasing of individual Vehicles and set out specific details like the term of the specific individual lease, rental rate, and other provisions. As of the Petition Date, the Debtors were party to various Schedules for the lease of 128 Vehicles. The Debtors' current rental obligations under the Master Lease and Schedules total about $40,000 per month, with individual Schedules expiring at various times over the next 50 months. To ensure that the Vehicles remain in good working condition, the Debtors also entered into a Fleet Management Services Agreement with Lease Plan to provide scheduled maintenance of the Vehicles, as well as fuel cards, management reports, accident management programs, daily replacement programs, repairs, and replacement parts as needed. The Debtors' obligations under the Maintenance Agreements total $18,500 per month. The Vehicles play a crucial role in the efficient operation of the Debtors' businesses. The Vehicles are used both as executive cars for the transportation of the Debtors' management and sales force throughout the diverse offices and plants, and as facility automobiles used for internal transport of raw materials and products. Absent the Vehicles, the Debtors would incur significant additional costs associated with the purchase and service of automobiles as well as the higher costs of reimbursement to management and salespeople. Because of the importance of the Vehicles to the Debtors' operations, the Debtors would need to lease new Vehicles as the need arises. After the Petition Date, Lease Plan advised the Debtors that no new lines of credit would be available for new leases or trade- ins of older models unless the Debtors agree to assume the Contracts. Faced with the inability to continue to lease new Vehicles, the Debtors conducted an exhaustive search to find possible alternatives to Lease Plan. The Debtors were unable to identify any alternative equipment lessor who would be able to provide terms more favorable than those contained in the Lease Plan Contracts. The Debtors engaged in extensive, arm's-length negotiations with Lease Plan to ensure their ability to continue to lease new Vehicles pursuant to the Contracts. The Debtors and Lease Plan agreed that, subsequent to assuming the Contracts, Lease Plan will open the Debtors' credit line to allow the leasing of an additional 25 vehicles until April 30, 2005. In exchange, the Debtors will assume the Contracts on slightly modified terms, which Lease Plan insisted are necessary to remain competitive in the leasing market. The modified terms for the Contracts include: (a) an increase in the spread from 30-day LIBOR plus 0.35% to 30-day LIBOR plus 2.00%; (b) an increase in the monthly administrative fee from 0.055% to 0.075%; and (c) a shortening of the maximum depreciation from 50 to 45 months. The Debtors believe that notwithstanding the modifications to the rates, the Contracts continue to provide the best opportunity for them to continue leasing the Vehicles. Accordingly, the Debtors sought and obtained the Court's authority to assume the Contracts, as amended. Pursuant to Section 365(b) of the Bankruptcy Code, the Debtors are obligated to cure any prepetition amounts outstanding prior to the assumption of any executory contract. As the Debtors continue to remain current on all of their leases with Lease Plan, no outstanding amounts are owed under the Contracts. Thus, the assumption of the Contracts will not result in any cure costs. (WestPoint Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) WISER OIL: Redeeming 9-1/2% Senior Sub. Notes Through July 30 ------------------------------------------------------------- The Wiser Oil Company (NYSE:WZR) announced it has called for redemption of all of the outstanding 9-1/2 % Senior Subordinated Notes due 2007 at a redemption price of 101.583% of the principal amount of the notes, plus interest on the notes through July 30, 2004, the date of the redemption of the notes. On June 30, 2004, Forest Oil Corporation (NYSE:FST) announced that it completed the merger of a wholly-owned subsidiary of Forest into Wiser and, as a result of the merger, Wiser is a wholly-owned subsidiary of Forest. A notice of redemption is being sent by JPMorgan Chase Bank, the successor trustee for the notes, to all registered holders of the notes. Copies of the notice of redemption and additional information relating to the procedures for redemption may be obtained from JPMorgan Chase by calling 1-800-275-2048. The Wiser Oil Company is a Dallas based independent energy company engaged in the acquisition, development and production of oil and natural gas in the United States and Canada. * * * As reported in the Troubled Company Reporter's May 20, 2004 edition, Standard & Poor's Ratings Services lowered the corporate credit ratings on independent oil and gas exploration and production company Wiser Oil Co. to 'B-' from 'B' following a review of recent financial and business results. The outlook remains negative. "The negative rating action reflects the failure by Wiser to stem the erosion of its reserves (down 10% over the past three years), adequately improve its cost structure ($5.40 as of Dec. 31, 2003), and improve liquidity despite record hydrocarbon prices," noted Standard & Poor's credit analyst Paul B. Harvey. WORLDCOM INC: Covad Presses For $2,667,311 Cure Payment ------------------------------------------------------- Covad Communications Company has an executory contract with the Worldcom Inc. Debtors for communication services Covad provided to Debtor UUNET Technologies, Inc. Pursuant to the Debtors' Plan, the Debtors assumed all leases and executory contracts other than those enumerated on certain schedules to the Plan. The Covad Contract was not included in the Schedules. Therefore, the Covad Contract was deemed assumed pursuant to the Plan. Robert J. Dehney, Esq., at Morris, Nichols, Arsht, & Tunnell, in Wilmington, Delaware, recounts that the Plan provides for the Debtors to cure all undisputed defaults under assumed executory contracts without delay. Hence, Mr. Dehney contends, the Debtors need to pay $2,667,311 plus attorneys' fees to Covad to cure the default under the Covad Contract. The Debtors have not responded to Covad's requests for cure payment nor have they disputed the Cure Amount. Hence, Covad asks the Court to compel the Debtors to immediately pay, in full, the Cure Amount pursuant to Section 365(b)(1)(A) of the Bankruptcy Code. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI-- http://www.worldcom.com-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. On April 20, the company (WCOEQ, MCWEQ) formally emerged from U.S. Chapter 11 protection as MCI, Inc. This emergence signifies that MCI's plan of reorganization, confirmed on October 31, 2003, by the U. S. Bankruptcy Court for the Southern District of New York is now effective and the company has begun to distribute securities and cash to its creditors. (Worldcom Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDSPAN: S&P Affirms B+ Corporate Rating & Removes CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating and its other ratings on Worldspan L.P. and removed them from CreditWatch, where they placed on April 5, 2005. The outlook is stable. "The ratings affirmation is due to the company's announcement that it has indefinitely postponed its previously announced initial public offering of common stock because of market conditions," said Standard & Poor's credit analyst Betsy Snyder. "Proceeds of the IPO, expected to amount to approximately $645 million, were to be used to reduce debt and redeem preferred stock." At the same time, ratings on the company's proposed new $225 million credit facility were withdrawn, since funding from that facility was contingent upon Worldspan's receipt of at least $645 million in gross proceeds from the IPO. Worldspan is the leading processor of GDS transactions for on-line travel agencies. A GDS is a computerized system that is used by suppliers of travel and travel-related products and services to sell their services either through the suppliers themselves or through travel agencies. Despite the seasonality and cyclicality, on-line travel bookings are expected to continue to grow due to travelers' growing ease using the Internet and the lower fees associated with these transactions. Standard and Poor's expects that Worldspan's internally generated funds, expected to exceed $100 million a year, should be sufficient to repay its debt obligations and to fund capital spending. XELAN INC: Case Summary & 60 Largest Unsecured Creditors -------------------------------------------------------- Lead Debtor: Xelan Inc. 401 West A Street, Suite 2210 San Diego, California 92101 Bankruptcy Case No.: 04-05832 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Xelan Insurance Services, Inc./ 04-05833 Pyramidal Funding Xelan Financial Planning, Inc. 04-05834 Xelan Pension Services, Inc. 04-05835 Type of Business: The Debtor provides asset protection, offshore accounting, and investment services for doctors. See http://www.xelan.com/ Chapter 11 Petition Date: June 30, 2004 Court: Southern District of California (San Diego) Debtors' Counsel: Martin A. Eliopulos, Esq. Higgs, Fletcher & Mack LLP 401 West A Street, Suite 2600 San Diego, CA 92101 Tel: 619-236-1551 Total Assets Total Debts ------------ ----------- Xelan Inc. $2,329,081 $5,976,158 Xelan Insurance Services, Inc./ $4,727,268 $3,314,166 Pyramidal Funding Xelan Financial Planning, Inc. $0 $0 Xelan Pension Services, Inc. $640,422 $112,175 A. Xelan Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Xelan Insurance Services Trade payable $3,414,195 401 West A Street San Diego, CA 92101 Xelan of Texas Trade payable $633,476 401 W A St. San Diego, CA 92101 Unimarc, Ltd. Huff Judgment $552,342 c/o James D. Rohde 105 N Redwood Dr., Ste. 110 San Rafael, CA 94903 Xelan Pensions Services Trade payable $333,537 401 West A Street San Diego, CA 92101 Royal Maccabees Judgment creditor $225,000 Chicoine & Hallett P.S. Trade payable $145,595 Anderson Direct Trade payable $102,762 Post Kirby Noonan & Sweat Trade payable $93,958 LLP Xelan Administrative Trade payable $83,643 Services Skadden, Arps, Slate, Trade payable $59,447 Meagher & Flom LLP Wyndham Emerald Plaza Hotel Trade payable $45,086 Century Park Capital Trade payable $41,000 Partners Womble Carlyle Sandridge Trade payable $27,136 & Rice Neyenesch Printers, Inc. Trade payable $17,498 Sierra Programming, Inc. Trade payable $15,000 Planet Post Trade payable $12,816 McDermott, Will & Emery Trade payable $12,615 Blatchford, Ltd. Trade payable $12,500 Conner & Winters, P.C. Trade payable $10,780 Reassure America Life Trade payable $8,878 Insurance Company B. Xelan Insurance Services' 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Xelan Investment Services Trade Payable $2,474,192 401 West A Street San Diego, CA 92101 Indianapolis Life Ins. Co. secured by renewed $480,000 Attn: Linda Starnes account agency P.O. Box 14590 Des Moines, IA 50306-3590 Indianapolis Life Ins. Co. Commission payable $138,504 to Indianapolis Life as of 4/30/04. Viatical Liquidity LLC Commission withheld $126,241 From Financial Counselor due to Viatical Liquidity LLC Xelan Administrative Trade Payable $52,377 Services Devens, Nakano, Saito, Legal Services $37,381 Lee, Wong & Ching Patricia De La Torre Employee vacation pay $3,765 Sonya Siqueira Employee Vacation $940 Pay Angelica Tachiquin Employee Vacation Pay $450 Form-Craft Business Systems Trade Payable $172 Copy Graphix Trade Payable $75 SBC Trade Payable $69 A. Coldwell Assoc., Inc. Financial Counselor- Unknown Earned but unpaid commissions due under financial counselor contract ABG Consulting Inc. Financial Counselor- Unknown Earned but unpaid commissions due under financial counselor contract ALS II Inc. Financial Counselor- Unknown Earned but unpaid commissions due under financial counselor contract Actuarial Consulting Group, Financial Counselor- Unknown Inc. Earned but unpaid commissions due under financial counselor contract Allen Jr., Stephen Financial Counselor- Unknown Earned but unpaid commissions due under financial counselor contract Anderson, Eric Financial Counselor- Unknown Earned but unpaid commissions due under financial counselor contract Andrew F. Mytinger Financial Counselor- Unknown Earned but unpaid commissions due under financial counselor contract Arthur Lee Smith Financial Counselor- Unknown Earned but unpaid commissions due under financial counselor contract C. Xelan Pension Services' 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Xelan Investment Services Trade Payable $44,966 Xelan Pensions Services Trade Payable $40,000 Xelan Administrative Trade Payable $13,150 Services SunGard Corbel, Inc. Trade Payable $4,782 George Taylor Trade Payable $2,050 Larry Deutsch Enterprises Trade Payable $2,000 Sheffler Consulting Trade Payable $1,611 Actuaries Coast Consultants Trade Payable $1,247 Cole Office Products, Inc. Trade Payable $791 Minolta Business Solutions Trade Payable $643 Precision Printing & Copying Trade Payable $460 Xelan Economic Association Trade Payable $275 MBS, a Konica Minolta Trade Payable $200 Business Accountemps Trade Payable Unknown BenefitsLink.com, Inc. Trade Payable Unknown CCC Communications Trade Payable Unknown CDW Direct, LLC Trade Payable Unknown Conexis Trade Payable Unknown Copy Graphix, LLC Trade Payable Unknown Danka Office Imaging, Inc. Trade Payable Unknown * BOOK REVIEW: American Economic History ---------------------------------------- Author: Seymour E. Harris, editor Publisher: Beard Books Softcover: 560 pages List Price: $34.95 Order your personal copy today at http://www.amazon.com/exec/obidos/ASIN/158798136X/internetbankrupt Review by Gail Owens Hoelscher A classic text on a fascinating topic by a host of notable authors is again in print. American Economic History is a collection of 15 studies of the economic development of the United States from about 1800 to the late 1950s, written by 20 prominent and diverse 20th century thinkers. The authors show America to be, in the words of contributor Arthur Schlesinger, Jr., ". . . a compact example of the growth of an underdeveloped country into a great and rich industrial state." The chapters are divided into four topics: major issues, policy issues, determinants of income, and regional growth. The section on major issues includes an compelling discussion by Mr. Schlesinger called "Ideas and the Economic Process." In it, he claims that the contribution to our unprecedented growth by the "unfettered individual," the "genius" personage of the American businessman, has been exaggerated, while the roles of public policy and the influx of ideas and capital from abroad have been diminished. Mr. Schlesinger concludes that "(t)he ability to change one's mind (which is easier in a society in which people have the freedom to think, inquire and speculate) turns out, in the last analysis, to be the secret of American economic growth, without which resources, population, climate and the other favoring factors would have been of no avail." To complete this section, Alfred H. Conrad discusses income growth and structural change over time, and Peter B. Kenan undertook a statistical survey of growth in population, transportation, output, wealth, and industry. The second part deals with policy. J. G. Gurley and E. S. Shaw discuss the history of U.S. monetary policy, concluding that "the failure to manufacture enough money may bring on recession and stultify economic growth, (but) it is also clear . that merely manufacturing money is not enough." Mr. Harris devotes a chapter to fiscal policy, defined as an attempt "to adapt tax, spending, and debt policies to the needs of the economy." He agrees with Herbert Hoover, in that "when the private economy was foundering, it was the task of the government to increase the total amount of purchasing power at the disposal of the people," and the "medicine for recession was to cut taxes and increase the total amount of spending." Asher Achinstein chronicles economic fluctuations in the U.S., and Douglass C. North the role of the U.S. in the international economy. G. A. Lincoln, W. Y. Smith, and J. B. Durst recount the effects of war and defense on the economy. Part Three deals with determinants of income. In it are thorough discussions of population and immigration (Elizabeth W. Gilboy and Edgar M. Hoover); patterns of employment (Stanley Lebergott); natural resource policies ( Joseph L. Fisher and Donald J. Patton); transportation (Merton J. Peck); trade unionism and collective bargaining (Lloyd Ulman); and agriculture (John D. Black). The writers discuss the historic linkages between and among population growth, construction, and transportation growth. Messrs. Fisher and Patton lament the lack of serious effort to conserve resources until the first quarter of the 20th century. Professor Ulman concludes that collective bargaining contributed much to the growth of fringe benefits. Professor Black charts the decline in relative importance of the agricultural sector. The book ends with a chapter on regional income trends, 1840-1950, by Richard A. Easterlin. Seymour E. Harris (1897-1974), earned undergraduate and doctoral degrees from Harvard University. He was chairman of the Department of Economics at Harvard and the University of California, San Diego. Advisor to numerous government officials, he was editor of the Review of Economics and Statistics from 1943 to 1964 and associate editor of the Quarterly Journal of Economics from 1947 to 1974. ********* 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 ***