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/raid1/www/Hosts/bankrupt/TCR_Public/040714.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, July 14, 2004, Vol. 8, No. 144 Headlines 360NETWORKS: Panel Sues J. Fletcher Creamer to Recover $488,753 A.B.DICK: Files for Chapter 11 Protection to Facilitate Sale A.B.DICK COMPANY: Case Summary & 30 Largest Unsecured Creditors ABAR DEVELOPMENT: Case Summary & 2 Largest Unsecured Creditors ADELPHIA: Devon Trustee Has Until Sept. 27 to Object to Claims AFTON FOOD: Applies for BIA Protection After Default Notice AIRLEASE LTD: Will Make Special Cash Distribution on August 6 ALLOY INC: Forms Strategic Alliance With Regal Entertainment Group APPLIED DIGITAL: Subsidiary Wins $1.1M Contract from Tennessee BALLY TOTAL FITNESS: Agrees to Redeem Stockholder Rights Plan BORDEN CHEMICAL: Starts Formaldehyde Plant in Edmonton, Alberta CANDESCENT TECHNOLOGIES: Wants to Hire PwC as Tax Accountants CEDRIC KUSHNER: Forms New Ckrush Entertainment, Inc., Subsidiary CHARTER COMMS: Jim Heneghan Named SVP -- Marketing & Advertising CITIZENS COMMS: Fitch Downgrades Sr. Unsecured Debt Rating to BB CLIFTONDALE OAKS: Case Summary & 9 Largest Unsecured Creditors COUNTRYSIDE HOME LOANS: Fitch Takes Various Rating Actions CROSSGEN ENTERTAINMENT: Employs Holland & Knight as Attorneys DEEP WELL OIL: Signs Binding Agreement to Acquire Mikwec Energy DEXTERITY SURGICAL: 3-Member Creditors' Committee Appointed DII/KBR: Halliburton To Hold Q2 2004 Conference Call on July 23 DLJ COMMERCIAL: S&P Raises 1998-CF-1 Class B-4 Rating To BB+ ENRON BROADBAND: Objects To Metromedia's $24,711,625 Claims ENRON CORPORATION: Modifies Fifth Amended Reorganization Plan ENRON: AEGIS & Federal Want Stay Lifted for Insurance Proceeds FEDERAL-MOGUL: Committees Have Until Sept. 30 To Commence Actions FLEMING: Sureties Ask Court To Allow Disputed Claims For Voting FRESH CHOICE: Voluntary Chapter 11 Case Summary GLOBALNET IN'L: Gets Nod to Hire Todtman Nachamie as Counsel GLYCOGENESYS INC: Closes $5 Million Funding From Institutions HANOVER DIRECT: Chelsey Finance Provides $20MM New Loan Facility HEALTH CARE: Completes $74.2 Million Gross Investments in Q2 HEARME: Expects to Make Final Liquidation Distribution in November HOUGHTON MIFFLIN: Fitch Affirms BB- Senior Secured Debt Rating IBERIA VILLAGE: Case Summary & 20 Largest Unsecured Creditors INGRESS I: S&P Downgrades $21,250,000 Class C Note Rating To B- INN OF THE MOUNTAIN: Completes 12% Senior Debt Exchange Offer JEAN COUTU: S&P Assigns BB- Rating to Long-Term Corporate Credit KAISER ALUMINUM: East Baton Rouge Offers $2 Mil. for Properties LAIDLAW: Selling Up to 3,777,419 Shares to Benefit Pension Trust LANTIS EYEWEAR: Gets Court Nod to Appoint BSI as Claims Agent LASER MORTGAGE: Declares Final Liquidation Distribution LEINER HEALTH: Signs Distribution Agreements With IMPAX Labs LOEWEN: Mayflower to Sell Security Plan Life Shares to Citizens MAGELLAN HEALTH: Will Webcast Q2 2004 Results on July 29 MAJESTIC STAR: Legends Gaming to Buy Black Hawk Casino for $66 Mil MANUFACTURED HOUSING: S&P Lowers 1999-4 Class B-1 Rating to D MARINER POST-ACUTE: Wants To Discharge, Release & Remove 21 Liens MCWATTERS MINING Court Approves Sigma-Lamaque Proposals MIRANT AMERICAS: Wants To Reject El Paso Transportation Contract MORGAN STANLEY: S&P Raises 1998-CF1 Class E & F Ratings to BB+/BB- MORGAN STANLEY: S&P Downgrades 1997-XL1 Class H Note Rating to D N-VIRO INTL: Strained Liquidity Triggers Going Concern Uncertainty NEW CENTURY COMPANIES: Looks for More Capital to Fund Operations NEW WEATHERVANE: Gets Interim Court Nod for $6 Million DIP Credit NIKITA INC: Case Summary & 16 Largest Unsecured Creditors OWENS CORNING: Plans to Build New Foam Insulation Plant in Oregon OWENS CORNING: Provides Court with Status Report PACIFIC GAS: Enters Into Four Loan Pacts Providing $345 Million PARMALAT: CoolBrands Acquires Kinnet Dairy Distribution Assets PARMALAT GROUP: Citigroup Probe Period Extended through July 30 PEGASUS: Hires Capital Management as Cooperative Issues Expert PG&E NATIONAL: USGen Inks Salem Harbor Pact With ISO New England PILLOWTEX CORP: Wants Court to Disallow Various Big Claims POLO BUILDERS: U.S. Trustee Meets With Creditors on July 27 QWEST COMMS: Signs Exclusive 2-Year Service Contract with Wet Seal R L WASHINGTON: Case Summary & 11 Largest Unsecured Creditors REFCO GROUP: S&P Rates Long-Term & Senior Secured Debt at BB- RELIANCE GROUP: Bank Committee Responds To Disclosure Objections ROYAL HAWAIIAN: Case Summary & 20 Largest Unsecured Creditors SHAW GROUP: Subsidiary Awarded EPC Contract by Marathon Ashland SIGHT RESOURCE: Look for Bankruptcy Schedules by August 23 SIRIUS SATELLITE: Registers 2-1/2% Conv. Notes & Shares for Resale SOLUTIA INC: Asks for November 15 Deadline to Decide on Leases SPIEGEL: Wants Court Nod To Assume & Assign Newport News Lease TEXAS PETROCHEMICALS: Names Charles W. Shaver President and CEO TNP ENTERPRISES: Fitch Downgrades Ratings to Low-B & Junk Levels TWODAYS PROPERTIES: Lease-Related Decisions not Due Until Aug. 6 UAL CORP: Wants Nod To Restructure 10 Aircraft Financing Pacts UNIFLEX: U.S. Trustee Names 5-Member Creditors' Committee VESTA INSURANCE: Fitch Removes All Ratings from Negative Watch WEIRTON: United States EPA Wants Disclosure Statement Modified WORLDCOM INC: Class 3A Bank Claimants Ask To Enforce Stipulation WR GRACE: Asbestos Personal Injury Committee Issues Status Report * Cadwalader Names Barnes, Lanning & Pauquette as Special Counsel * Dewey Ballantine Adds Alison L. Smith as Litigation Partner * Douglas Greenburg Returns to Winston & Strawn's D.C. Office * Local Law Firm Alvarado Smith Links Up With Adorno & Yoss * Upcoming Meetings, Conferences and Seminars ********* 360NETWORKS: Panel Sues J. Fletcher Creamer to Recover $488,753 --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in 360networks inc. chapter 11 cases, on the Debtors' behalf, seeks: (a) the avoidance, recovery and turnover of preferential transfers totaling at least $488,753 that the Debtors made to J. Fletcher Creamer & Son, Inc., on or within 90 days before the Petition Date; and (b) in the alternative, the avoidance, recovery and turnover of fraudulent transfers totaling at least $488,753 that the Debtors made to J. Fletcher during the one-year period prior to the Petition Date. According to Norman N. Kinel, Esq., at Sidley Austin Brown & Wood, LLP, in New York, on March 26, 2002, the Debtors demanded J. Fletcher to return the Transfers. But J. Fletcher refused. Mr. Kinel points out that: (a) each of the Transfers was made to J. Fletcher for or on account of an antecedent debt the Debtors owed before each Transfer was made; (b) J. Fletcher was a creditor at the time of the Transfers; (c) the Transfers were made while the Debtors were insolvent; and (d) by reason of the Transfers, J. Fletcher was able to receive more than it would otherwise receive if: -- the Debtors' Cases were cases under Chapter 7 of the Bankruptcy Code; -- the Transfers had not been made; and -- J. Fletcher received payment of the debts in a Chapter 7 proceeding in the manner the Bankruptcy Code specified. Moreover, Mr. Kinel informs Judge Gropper that on or within one year before the Petition Date, the Debtors made fraudulent transfers to or for J. Fletcher's benefit. On March 26, 2002, the Debtors made a written demand for J. Fletcher to return the Fraudulent Transfers. But J. Fletcher didn't heed the demand. Mr. Kinel asserts that: (a) the Debtors received less than a reasonable equivalent value in exchange for the Fraudulent Transfers; (b) upon information and belief, any consideration or value for the Fraudulent Transfers was received by the Debtors' affiliate; (c) at the time of the transfers, the Debtors were insolvent; and (d) J. Fletcher was the original transferee of the Fraudulent Transfers pursuant to Section 550(a)(1) of the Bankruptcy Code. Accordingly, the Committee asks the Court to: (a) declare, pursuant to Section 547 of the Bankruptcy Code, that the Transfers be and are avoided; (b) pursuant to Section 547, declare that J. Fletcher pay to the Debtors $488,753, representing the amount it owed, plus interest from the date of the Debtors' Demand Letter as permitted by law; (c) pursuant to Section 550, declare that J. Fletcher pay to the Debtors at least $488,753, representing the amount it owed, plus interest from the date of the Demand Letter as permitted by law; (d) in the alternative, pursuant to Section 548, declare that the Fraudulent Transfers be and are avoided; (e) in the alternative, declare that J. Fletcher pay at least $488,753, representing the amount it owed, plus interest from the date of the Debtors' Demand Letter for the return of the amount; (f) provide, pursuant to Section 502(d), that any and all J. Fletcher claims against the Debtors be disallowed until it repays in full the amount of the Transfers or, in the alternative, the Fraudulent Transfers, plus all applicable interest; and (g) award to the Committee and the Debtors all costs, reasonable attorneys' fees and interest. Headquartered in Vancouver, British Columbia, 360networks, Inc. -- http://www.360.net/-- is a leading independent provider of fiber optic communications network products and services worldwide. The Company filed for chapter 11 protection on June 28, 2001 (Bankr. S.D.N.Y. Case No. 01-13721), obtained confirmation of a plan on October 1, 2002, and emerged from chapter 11 on November 12, 2002. Alan J. Lipkin, Esq., and Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, represent the Company before the Bankruptcy Court. When the Debtors filed for protection from its creditors, they listed $6,326,000,000 in assets and $3,597,000,000 in liabilities. (360 Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) A.B.DICK: Files for Chapter 11 Protection to Facilitate Sale ------------------------------------------------------------ A.B.Dick Company, a privately held, worldwide supplier of equipment and supplies to the graphic arts and printing industry, has signed a purchase agreement with Presstek, Inc. (Nasdaq: PRST), a leading manufacturer and marketer of high- tech digital imaging solutions for the graphic arts and laser imaging markets, to acquire the business and assets of A.B.Dick. The purchaser intends to operate the A.B.Dick business as a wholly-owned subsidiary based in Niles, Illinois. A.B.Dick, its parent company, Paragon Corporate Holdings, Inc., and Paragon subsidiaries Itek Graphix, Inc., Interactive Media Group, and Multigraphics LLC filed voluntary petitions for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. During the Chapter 11 process, A.B.Dick and all its units will continue to manufacture and deliver products and provide services to customers as usual. The Chapter 11 filings do not include the A.B.Dick subsidiaries in Canada and the United Kingdom, which operate independently of A.B.Dick (U.S.) and are not directly affected by the Company's financial situation. The pending sale to Presstek does include the U.K. operation. A.B.Dick also announced that Presstek and A.B.Dick's current lender, KeyBank, will provide a $7 million debtor-in-possession (DIP) credit facility, subject to Court approval. The DIP financing will be used for salaries and benefits of employees of the entities in Chapter 11, as well as for materials and services from vendors, ongoing operating expenses and other working- capital requirements necessary to fund the Company's operations through the closing of the sale. Frank Zaffino, Chairman of Paragon, said, "A.B.Dick has been working to grow and strengthen operations, and we had hoped to further develop our business through a strategic transaction outside the bankruptcy process. Unfortunately, industry conditions have combined to severely pressure cash flow and this filing has become necessary. The Chapter 11 filing, together with the DIP financing, should allow A.B.Dick to operate with no interruption of business, and to satisfy ongoing obligations to customers while we finalize a sale. We look forward to a smooth and swift conclusion to the sale process." Zaffino said that successful printing companies in the future will need to adopt digital technologies and workflow, and that the combined capabilities of Presstek and A.B.Dick would bring to the market a set of skills, technologies, products and services suited to lead a digital transformation in the in-plant, quick print, and small commercial print markets. Terms of the transaction will be included in filings to be made with the Bankruptcy Court. In accordance with Section 363 of the Bankruptcy Code, other interested parties will have an opportunity to submit bids through a court-supervised process. A.B.Dick intends to ask the Bankruptcy Court to assign a near-term deadline for submission of other bids, as well as dates for an auction and a final hearing. Presstek, Inc. is a leading manufacturer and marketer of environmentally responsible high-tech digital imaging solutions to the graphic arts and laser imaging markets. For more information on Presstek, visit http://www.presstek.com/ A.B.Dick Company celebrates 120 years as a leading worldwide supplier to the graphic arts and printing industry in 2004. It manufactures and markets equipment and supplies for all stages of document creation -- pre-press, press and post-press -- and provides continuing service and support. For more information: Scott MacKenzie, Vice President, Marketing, 7400 Caldwell Ave., Niles, IL 60714. Telephone (847) 779-1900, Web: http://www.abdick.com/ A.B.DICK COMPANY: Case Summary & 30 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: A.B.Dick Company 7400 Caldwell Avenue Niles, Illinois 60714-3806 Bankruptcy Case No.: 04-12002 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Multigraphics LLC 04-12003 Interactive Media Group, Inc. 04-12005 Paragon Corporate Holdings, Inc. 04-12006 Type of Business: The Debtor is presently a leading global supplier to the graphic arts and printing industry, manufacturing and marketing equipment and supplies for the global quick print and small commercial printing markets. See http://www.abdick.com/ Chapter 11 Petition Date: July 13, 2004 Court: District of Delaware Judge: Charles G. Case II Debtors' Counsels: Frederick B. Rosner, Esq. Jaspen Schlesinger Hoffman 1201 North Orange Street, Suite 1001 Wilmington, DE 19801 Tel: 302-351-8000 Fax: 302-351-8010 Jami B. Nimeroff, Esq. Buchanan Ingersoll P.C. 1201 North Market Street, Suite 1501 Wilmington, DE 19801 Tel: 302-428-5500 Fax: 302-428-3996 Estimated Assets Estimated Debts ---------------- --------------- A.B.Dick Company $10 M to $50 M More than $100 M Multigraphics LLC $0 to $50,000 $1 M to $10 M Interactive Media Group, $100,000-$500,000 $50,000-$100,000 Inc. Paragon Corporate Holdings, $50 M to $100 M More than $100 M Inc. Debtors' Consolidated List of 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ MHR Institutional Partners LP Promissory Note $11,893,875 c/o MHR Fund Management, LLC 40 West 57th Street Thirty-Third Floor New York, NY 10019 Delaware Asset Management Promissory Notes $5,780,000 c/o Wells Fargo Bank Minnesota, N.A. Corporate Trust Services MAC N9303-120 Sixth and Marquette Minneapolis, MN 55479-0069 MHR Capital Partners LP Promissory Note $5,196,625 c/o MHR Fund Management, LLC 40 West 57th Street Thirty-Third Floor New York, NY 10019 Cleveland Union Retiree Benefits $3,009,256 c/o Al Lewis UAW, Region 2B 1691 Woodlands Drive Maumee, OH 43537 John P. Kirwan Promissory Note $2,689,525 115 Franklin Street Boston, MA 02110 OBIE & Co. Promissory Notes $1,602,275 c/o JP Morgan Chase (aggregate) Attn: Carolyn Jernagin 811 Rusk Street 18-HCB-340 Houston, TX 77072 FAMCO Value Income Partners Promissory Notes $1,487,825 (aggregate) Mitsubishi Imaging (MPM) Inc. Trade Debt $1,394,713 5505 N. Cumberland Avenue Suite 307, Dept. CH17137 Chicago, IL 60656-1471 MHRM LP Promissory Note $1,272,650 c/o MHR Fund Management, LLC 40 West 57th Street Thirty-Third Floor New York, NY 10019 Konica Business Technologies Trade Debt $960,087 500 Day Hill Road Windsor, CT 06095 Esko Production A/S Trade Debt $954,761 Industriparken 35-37 DK-2750 Ballerup Denmark Ohio EPA Environmental Claim $677,779 Lazarus Government Center 122 S. Front Street Columbus, OH 43215-1099 Elof Hansson K K Trade Debt $568,933 302 Shuwa No. 2 Taranomon Building 21-19 Taranomob 1-Chome Minato-Ku Tokyo 105 Japan BNY Clearing Services LLC Promissory Note $561,950 Reorganization Department 4th Floor 111 East Kilbourn Avenue Milwaukee, WI 53202 Global Graphics Software Inc. Trade Debt $346,250 5875 Trinity Parkway Ste. 110 Centerville, VA 20120 HT Specialty Inc. Trade Debt $314,187 622 Pullman Avenue Rochester, NY 14615 Braden-Sutphin Ink Co. Trade Debt $306,104 3650 East 93rd Street Cleveland, OH 44105 Presstek Trade Debt $292,162 55 Executive Drive Hudson, NH 03051 FAMCO Offshore Ltd. Promissory Notes $286,125 Distributees Ernst & Young LLP Trade Debt $265,209 5 Times Square New York, NY 10036 Varn Products Company Inc. Trade Debt $262,134 P.O. Box 828730 Philadelphia, PA 19182-8563 BBA Nonwovens Simpsonville Trade Debt $253,165 Inc. One Lakeview Place, Ste. 204 Nashville, TN 37214 Base Line Inc. Trade Debt $232,880 Van Son Holland Ink Corp. Trade Debt $224,279 Kodak Polychrome Graphics LLC Trade Debt $209,458 Microtek Lab Inc. Trade Debt $184,868 Baumfolder Corp. Trade Debt $184,679 Ohio Bureau of Workers' Employee Benefits $162,978 Compensation Liberty Manual Employee Benefits $151,816 Emkay Trade Debt $131,550 ABAR DEVELOPMENT: Case Summary & 2 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: ABAR Development, Inc. 605 Antietam Drive Stone Mountain, Georgia 30087 Bankruptcy Case No.: 04-70980 Chapter 11 Petition Date: July 5, 2004 Court: Northern District of Georgia (Atlanta) Judge: James Massey Debtor's Counsel: David L. Miller, Esq. Law Offices of David L. Miller Suite 2615 - Tower Place 100 3340 Peachtree Road North East Atlanta, GA 30326 Tel: 404-231-1933 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Dekalb County Tax Commissioner $117,936 Sam Barber, Jr. $85,000 ADELPHIA: Devon Trustee Has Until Sept. 27 to Object to Claims -------------------------------------------------------------- Judge Walsh extended the deadline for the Devon Liquidating Trustee, Buccino & Associates, Inc., to object to proofs of claim to September 27, 2004. As previously reported, since Devon's plan was confirmed, the Devon Debtors, the Devon Trustee and their professionals have worked diligently and closely to timely resolve each of the proofs of claim and interest filed in their Chapter 11 cases. As a result, the Devon Trustee filed and is prosecuting many Claim Objections. Despite the Devon Trustee's best efforts, Michael R. Nestor, Esq., at Young, Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, says, there are still a number of claims outstanding. The Devon Trustee believes that an extension would allow a conclusive determination as to the existence of any additional objectionable claims. An extension of the Claims Objection Deadline was bargained for in the Plan. Specifically, the Plan grants the Devon Trustee the right to extend the deadline by which it must object to claims. The Plan further authorizes the Devon Trustee to seek an extension by ex parte motion without notice or hearing. Since an extension was contemplated under the Plan, the Devon Trustee believes that extending the Claims Objection Deadline is entirely reasonable and appropriate. The Devon Trustee has not shirked its duties under the Plan, Mr. Nestor contends. Rather, it worked diligently to evaluate the remaining claims in a timely and efficient manner and is prosecuting the Claims Objection. (Adelphia Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) AFTON FOOD: Applies for BIA Protection After Default Notice ----------------------------------------------------------- July 12, 2004 / Business Wire After the close of market on July 9th, 2004, Afton Food Group Ltd. (TSX VENTURE:AFF) received formal notice from its secured lenders, which include Rabobank Nederland Canadian Branch, Credit Union Central of Ontario and HEPCOE Credit Union Limited that the Company was in default of certain provisions of the lending agreement including late or deficient principal and interest payments. The default notice contained a demand for payment in the amount of $19,529,871.16 representing the balance of principal, interest, annual administration fee and amendment fee outstanding under the lending agreement. Accompanying the notice of default and demand for payment was a "Notice of Intention to Enforce Security" also dated July 9, 2004. Under the notice of intention to enforce security, the secured lenders may exercise their rights to enforce their security after the expiry of a ten-day notice period unless the outstanding amounts are paid. The notice period may be waived by the Company. The Company is unable to repay the balance of the secured loans outstanding at this time. The Company is in the process of applying for protection under the Bankruptcy and Insolvency Act (BIA) as a response to the Notice of Default. Providing the Company's application is approved, the Company will file a subsequent application to have the BIA protection transferred to a Companies' Creditors Arrangement Act (CCAA) filing. The purpose of the Company's applications is to provide an opportunity to participate in the restructuring process so that the interests of all stakeholders are recognized. Afton, through its subsidiaries, is a franchisor in the Quick Service Restaurant industry with locations throughout Canada operating under two principal brands, 241 Pizza and Robin's Donuts. At March 31, 2004, Afton Food Group's balance sheet shows a total stockholders' deficit of $18,954,351 compared to a deficit of $19,070,106 at December 31, 2003. AIRLEASE LTD: Will Make Special Cash Distribution on August 6 ------------------------------------------------------------- Airlease Ltd., a California Limited Partnership, (OTC Bulletin Board: AIRL), said the Board of Directors of its General Partner has approved, in connection with the dissolution, winding up and liquidation of Airlease, a special cash distribution of 88 cents per unit. The special cash distribution will be payable August 6, 2004, to unitholders of record on July 22, 2004. Airlease which sold its remaining aircraft in May 2004, has now been dissolved and has ceased conducting business. The General Partner of Airlease currently is winding up the affairs of Airlease and expects to terminate Airlease at or before the end of 2004. The Board of Directors of the General Partner approved this distribution after concluding that the remaining assets of Airlease, consisting only of cash and cash equivalents, are reasonably likely to satisfy all creditors and liabilities of Airlease through termination of Airlease. This distribution represents a majority of the net available funds as of June 30, 2004. The 88 cents per unit distribution equates to approximately $4,111,000 to be distributed pro rata to all unitholders, including the General Partner. The Board of Directors of the General Partner currently anticipates making a final cash distribution to Unitholders out of its remaining net available funds in conjunction with the termination of Airlease at or before the end of 2004. After accounting for the 88 cents per unit distribution, Airlease will have approximately $841,000 in cash and cash equivalents remaining on hand, part of which will be used to pay the Partnership's expenses and liabilities in connection with winding up, liquidating and terminating Airlease, which expenses the General Partner currently estimates to be between $400,000 and $500,000. Airlease Ltd., A California Limited Partnership has been engaged in the business of acquiring, either directly or through joint ventures, commercial jet aircraft, and leasing such aircraft or parts thereof to domestic and foreign airlines, freight carriers and charter companies. The general partner of the Partnership is Airlease Management Services, Inc. ALLOY INC: Forms Strategic Alliance With Regal Entertainment Group ------------------------------------------------------------------ Regal CineMedia Corporation(SM), the media subsidiary of Regal Entertainment Group (NYSE:RGC), the largest theatre operator in the world, and 360 Youth, the youth media and marketing unit of leading media, marketing services, direct marketing and retail company, Alloy, Inc. (NASDAQ:ALOY), entered into a joint venture to establish a multi-faceted, targeted marketing channel throughout REG's theatre circuit. The announcement was made by Cliff Marks, President, Marketing and Sales, Regal CineMedia, and Matt Diamond, CEO and Co-founder of Alloy, Inc. Under the terms of the agreement, Alloy's 360 Youth will deploy custom interactive kiosks, restroom media panels, and backlit poster cases in REG theatres, comprising Regal Cinemas, United Artists Theatres and Edwards Theatres nationwide, with a rollout beginning immediately during the summer movie season. The custom- built interactive kiosks with electronic 42" plasma screens connected to the RCM Digital Content Network and 150 backlit advertising panels will initially be deployed in 50 theatre lobbies in the top-25 DMAs. An additional 550 backlit advertising panels in 150 theatres and more than 2,600 restroom panels in 545 theatres, round out this new national media network. In addition, the partnership allows for more promotional marketing opportunities including event marketing and sampling programs. "This new, first-of-its-kind theatre-based marketing network gives major advertisers something rare in today's cluttered media environment: a clean, multi-faceted channel to an active, aware, attentive and well-understood customer base," said Marks. "The marketing environment extends from the door, throughout the lobby, the most-trafficked areas in the theatre, and on to the big screen. We now have the tools to provide a much more immersive and integrated product to our marketing partners." The companies will work closely to establish the channel, collaborating to develop a suite of flexible and sophisticated marketing programs that draw on REG's geographic reach and targeting capabilities and Alloy's youth and out-of-home marketing expertise. Alloy's 360 Youth will assume field operations and take the lead sales and marketing role. The venture is a partnership between industry leaders. REG operates the largest and most geographically diverse theatre circuit in the United States, consisting of 545 theatres reaching 6,020 screens in 39 states. 360 Youth's existing proprietary location media assets include the nation's only in-school and on- campus advertising network, reaching 20,000,000 students annually, with over 75,000 displays across elementary, middle school, high school and college campuses nationwide. The recent acquisition of InSite, the largest indoor media company, expands Alloy's reach with over 13,000 targeted displays across 3,000 restaurants, clubs and bars nationwide. The REG theatre network extends Alloy's reach to over 300,000,000 annual theatergoers, and marks further expansion for Alloy from its youth market foundation, into the young adult market. "Alloy's 360 Youth brings a wealth of expertise in the out-of-home arena and is a natural partner to introduce this new platform," Marks said. "They own substantial media assets and robust research capabilities that complement our core customer markets and existing sales and marketing resources. After surveying the field, it became obvious that Alloy was the best fit." "The youth market is clearly a strong segment of the theatre going audience," commented Diamond. "Our studies show that college students and teens spend billions on movie tickets annually, and go to the theatre on a regular basis. Based on that crossover, the world's largest theatre circuit is the perfect platform for Alloy to continue its expansion to new markets. We are thrilled and proud to be working with Regal, an innovator and undisputed leader in its class." About Regal CineMedia Regal CineMedia is a wholly owned subsidiary of Regal Entertainment Group focusing on the expansion and development of advertising and new uses for Regal's theatre assets, while at the same time enhancing the movie-going experience. Regal CineMedia operates other divisions that focus on meetings and special productions in a theatre environment, including the presentation of entertainment, sports and educational events, as well as the sale of group tickets and gift certificates. About Regal Entertainment Group Regal Entertainment Group (NYSE:RGC) is the largest motion picture exhibitor in the world. The Company's theatre circuit, comprising Regal Cinemas, United Artists Theatres, and Edwards Theatres, operates 6,020 screens in 545 locations in 39 states. Regal operates approximately 17% of all screens in the United States including theatres in 46 of the top 50 U.S. markets and growing suburban areas. The size, reach and quality of the Company's theatre circuit not only provides patrons with a convenient and enjoyable movie-going experience, but is also an exceptional platform to realize economies of scale in theatre operations and, through Regal CineMedia, develop new sources of revenue and cash flow by utilizing Regal's existing asset base. About Alloy Alloy, Inc. is a media, marketing services, direct marketing and retail company targeting Generation Y, a key demographic segment comprising the more than 60 million boys and girls in the United States between the ages of 10 and 24. Alloy's convergent media model uses a wide range of media assets to reach more than 25 million Generation Y consumers each month. Through Alloy's 360 Youth media and marketing services unit, marketers can connect with the Generation Y audience through a host of advertising and marketing programs incorporating Alloy's media and marketing assets such as direct mail catalogs, college and high school newspapers, Web sites, school-based media boards, college guides, and sponsored on- and off-campus events. Alloy generates revenue from its broad reach in the Generation Y community by providing marketers advertising and marketing services through 360 Youth and by selling apparel, accessories, footwear, room furnishings and action sports equipment directly to the youth market through catalogs, Web sites and retail stores. For further information regarding Alloy, please visit our Web site (www.alloyinc.com) and click on "Investor Relations". Information on 360 Youth's marketing services can be found at http://www.360youth.com/ * * * Liquidity and Capital Resources In its Form 10-K for the fiscal year ended January 31, 2004, Alloy, Inc. reports: "We have financed our operations to date primarily through the sale of equity and debt securities as we generated negative cash flow from operations prior to fiscal 2002. At January 31, 2004, we had approximately $46.3 million of unrestricted cash, cash equivalents and short-term investments along with $5.6 million of marketable securities classified as non-current assets due to their stated maturities and our intention to hold them for more than one year. Our principal commitments at January 31, 2004 consisted of the Debentures, accounts payable, bank loans, accrued expenses and obligations under operating and capital leases. "Our liquidity position as of January 31, 2004 consisted of $46.3 million of unrestricted cash, cash equivalents and short- term investments. We expect our liquidity position to meet our anticipated cash needs for working capital and capital expenditures for at least the next 24 months, excluding the impact of any potential, as yet unannounced acquisitions. If cash generated from our operations is insufficient to satisfy our cash needs, we may be required to raise additional capital. If we raise additional funds through the issuance of equity securities, our stockholders may experience significant dilution. Furthermore, additional financing may not be available when we need it or, if available, financing may not be on terms favorable to us or to our stockholders. If financing is not available when required or is not available on acceptable terms, we may be unable to develop or enhance our products or services. In addition, we may be unable to take advantage of business opportunities or respond to competitive pressures. Any of these events could have a material and adverse effect on our business, results of operations and financial condition." APPLIED DIGITAL: Subsidiary Wins $1.1M Contract from Tennessee -------------------------------------------------------------- Perimeter Technology, a wholly owned subsidiary of Applied Digital Solutions, Inc. (Nasdaq: ADSX), has been awarded a $1.1 million contract to provide the State of Tennessee with a Net-VU Contact Manager interaction management platform. Under the contract, Perimeter Technology will provide the Department of Human Services with a 250-agent telephony platform which enables Skills Based Routing, IVR, Call Recording, Web Self- service, E-mail Response and Knowledge Management, along with robust real time and historical reporting capabilities. "We look forward to the solutions this product will provide as we implement our Family Assistance Service Centers later this year," said Glenda Shearon, Assistant Commissioner for Adult and Family Services with the Department of Human Services. " Net-VU Contact Manager offers us many features that will help us meet our goal of improving client services." Net-VU Contact Manager is an OEM branded coupling of Perimeter Technology's VU-ACD Management Information System and the Customer Interaction Center (CIC) from Interactive Intelligence (NASDAQ: ININ). About Perimeter Techology Perimeter Technology -- http://www.ip-acd.com/-- a wholly owned subsidiary of Applied Digital, delivers a comprehensive suite of customer interaction tools consisting of ACD management systems, IP-ACDs, Web contact solutions, soft phones and status displays. The company specializes in Centrex-based contact centers with customers ranging from small enterprises to multinational Fortune 500 companies. Perimeter serves many industries, including manufacturing, financial, utilities, retail, health, communications, high-tech, insurance, transportation and government. The company has more than 700 customers and sells its systems directly and through a reseller network composed of RBOCs, ILECs, CLECs, ISPs and independent agents throughout the United States, Canada, the U.K. and Australia. Perimeter was founded in 1987 and is headquartered in Manchester, NH. About Applied Digital Solutions, Inc. Applied Digital Solutions is an advanced technology development company that focuses on a range of early warning alert, miniaturized power sources and security monitoring systems combined with the comprehensive data management services required to support them. Through its Advanced Wireless unit, the Company specializes in security-related data collection, value-added data intelligence and complex data delivery systems for a wide variety of end users including commercial operations, government agencies and consumers. For more information, visit the company's website at http://www.adsx.com/ * * * In its Form 10-K for the fiscal year ended December 31, 2003 filed with the Securities and Exchange Commission, Applied Digital Solutions, Inc., reports: "We are a Missouri corporation and were incorporated on May 11, 1993. Our business has evolved during the past few years. We grew significantly through acquisitions and since 1996 have completed 51 acquisitions. During the last half of 2001 and during 2002, we sold or closed many of the businesses we had acquired that we believed did not enhance our strategy of becoming an advanced technology development company. These companies were primarily telephone system providers, software developers, software consultants, networking integrators, computer hardware suppliers or were engaged in other businesses or had customer bases that we believed did not promote or complement our current business strategy. As of December 31, 2003, our business operations consisted of the operations of five wholly-owned subsidiaries, which we collectively refer to as the Advanced Technology segment, and two majority-owned subsidiaries, Digital Angel Corporation (AMEX:DOC), and InfoTech USA, Inc. (OTC:IFTH) (formerly SysComm International Corporation). As of December 31, 2003, we owned approximately 66.9% of Digital Angel Corporation and 52.5% of InfoTech USA, Inc. "Historically we have suffered losses and have not generated positive cash flows from operations. Excluding the effects of a gain on the extinguishment of debt of $70.1 million, we incurred a consolidated loss from continuing operations of $66.5 million for the year ended December 31, 2003. We incurred consolidated losses from continuing operations of $113.9 million and $188.6 million, respectively, for the years ended December 31, 2002 and 2001, and as of December 31, 2003, we had an accumulated deficit of $413.9 million. Our consolidated operating activities used cash of $11.4 million, $3.9 million and $18 million during 2003, 2002 and 2001, respectively. Digital Angel Corporation has suffered losses and has not generated positive cash flows from operations. Digital Angel Corporation incurred losses during 2003, 2002 and 2001, which are presented below. In addition, its operating activities used cash of $4.7 million, $2.7 million and $3.2 million during 2003, 2002 and 2001, respectively. "The reduced settlement payment of our debt obligations to IBM Credit LLC, the conversion to equity of our obligations under our 8.5% Convertible Exchangeable Debentures, and the sale of 3 million shares of our common stock under our 3 million share offering, have been major factors mitigating concerns that existed about our ability to continue as a going concern. Our profitability and liquidity depend on many factors including the success of our marketing programs, the maintenance and reduction of expenses and our ability to successfully develop and bring to market our new products and technologies. We have established a management plan intending to guide us in achieving profitability and positive cash flows over the twelve months ending December 31, 2003, however, no assurance can be given that such plan will be realized." BALLY TOTAL FITNESS: Agrees to Redeem Stockholder Rights Plan ------------------------------------------------------------- Bally Total Fitness (NYSE: BFT) has agreed to redeem its stockholder rights plan as part of an agreement reached with Liberation Investments and Amalgamated Bank LongView SmallCap 600 Index Fund, and the Company reinforced its strong commitment to enhance stockholder value. Liberation and Amalgamated have agreed to withdraw the stockholder proposals recently put forth for consideration at Bally's upcoming annual meeting. In conjunction, Liberation has terminated its solicitation of proxies with respect to all of its proposals, including separation of the offices of Chief Executive Officer and Chairman of the Board, removal of the Company's stockholder rights plan and declassification of the Company's Board of Directors, and Amalgamated has agreed to withdraw its Board declassification proposal. Bally's Board of Directors will redeem the Company's existing stockholder rights plan immediately. The Board will also adopt a "poison pill" policy under which any new poison pill will require prior stockholder approval. The independent directors of the Board may act on their own to reinstate a pill, so long as the Board subsequently submits the pill to a binding stockholder vote by the later of the Company's next annual meeting or 270 days after the pill is adopted. Bally Chairman and CEO Paul Toback said, "Monday's actions reinforce our strong commitment to enhancing stockholder value and promoting good corporate governance." As part of this commitment, Toback highlighted the following initiatives: * Financing. The Company is actively engaged in discussions with several major financial institutions about the refinancing of the $100 million securitization facility. * Drive revenues. Bally's new marketing campaigns continue to drive strong leads and new member joins. * Return to profitability. Bally will continue to implement aggressive cost cutting programs, including the elimination of redundancies and inefficiencies within the organization. Liberation owns approximately 5.8% of the Company's outstanding shares. Liberation majority member Emanuel Pearlman said, "Going forward, we anticipate supporting the Company's efforts to enhance stockholder value." About Bally Total Fitness Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Asia and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter's May 3, 2004 edition, Fitch has lowered these ratings of Bally Total Fitness Holding Corp.: --Secured bank credit facility to 'B+' from 'BB-'; --Senior notes to 'B-' from 'B'; --Senior subordinated notes to 'CCC' from 'B-'. The downgrade reflects Bally's ongoing weak operating performance and recent write-down of its receivables. Further, on March 30 Bally announced that its auditors resigned and the company just disclosed that the Securities and Exchange Commission (SEC) is investigating Bally's recent change in accounting for its memberships. Simultaneously, Fitch is withdrawing all ratings and will no longer provide analytical coverage of this issuer. BORDEN CHEMICAL: Starts Formaldehyde Plant in Edmonton, Alberta --------------------------------------------------------------- Borden Chemical, Inc. has completed startup of its new formaldehyde plant at its manufacturing complex in Edmonton, Alberta, Canada. In addition, the company announced the start of a new Six Sigma process improvement initiative designed to increase yields and improve throughputs in its network of formaldehyde plants, with a goal of creating "virtual plants" through anticipated capacity improvements. "Our new Edmonton plant, as well as our initiative to create additional capacity through process improvements, reinforces our commitment to be the world leader in formaldehyde production and technology," said Reggie Jenkins, Business Director, Formaldehyde and Derivatives. New Edmonton Plant Adds 200 Million Pounds Of Capacity The new formaldehyde plant in Edmonton adds 200 million pounds of capacity to the site manufacturing complex, bringing annual production capacity to 460 million pounds of 50 percent formaldehyde solution. Formaldehyde made at the facility is used by Borden Chemical to make resins for oriented strandboard and other engineered wood product applications, and also is sold to industrial users in the region. The new $10 million plant uses silver catalyst technology and state of the art process controls and environmental systems. It is the latest addition to the company's Edmonton complex. In 2002, the company expanded the site's resin production to meet growing demand in western Canada. Built in 1957, the Edmonton complex has undergone a number of significant expansions and improvements over the years and now is one of the largest manufacturing operations in Borden Chemical's plant network. Six Sigma Productivity Initiative To Generate Additional Network Capacity The Edmonton plant is one of 17 Borden Chemical facilities in North America producing formaldehyde to serve the wood products sector and industrial markets. Globally, the company has a total network of 25 locations that produce formaldehyde for these markets. Through a joint venture affiliate, it also is constructing a formaldehyde plant in China. Through a Six Sigma initiative focused on increasing formaldehyde yields and throughput, the company believes it can further expand production without building additional facilities in North America. The goal of the initiative is to create 400 millions pounds of additional capacity in the next three years, the equivalent of two "virtual plants," according to Executive Vice President Joseph Bevilaqua. Six Sigma is a widely recognized methodology to drive process improvement by eliminating waste and inefficiency. Bevilaqua said the company's Six Sigma "blackbelts" will lead the initiative, using analytical tools and working in project teams with operations, manufacturing and engineering, and commercial associates. Work will start immediately with a focus on North American operations. Methods that create improvements in the North American plant network will be shared globally throughout Borden Chemical's organization. The company's Six Sigma program includes "voice of the customer" input to ensure critical customer focus and quality aspects are designed into all process enhancements, helping to create competitively advantaged supplier-customer partnerships, Bevilaqua said. Borden Chemical is a leading global producer of formaldehyde with annual production of approximately 5 billion pounds. The company also is North America's leading supplier of resin systems for the forest products industry. Its resins are used to produce a wide range of structural panels, beams, joists and trusses, and other engineered wood products. The company also is a leading global source for industrial resins and adhesives, UV-light curable coatings and other chemical products serving a broad range of markets that include the fiber optics, oilfield, composites, electronics, automotive and foundry industries. You can find Borden Chemical on the web at http://www.bordenchem.com/ * * * As reported in the Troubled Company Reporter's July 8, 2004 edition, Standard & Poor's Ratings Services placed its ratings on Borden Chemical Inc., including the 'BB' corporate credit rating, on CreditWatch with negative implications, citing the announcement that Apollo Management LP will acquire Borden Chemical. Columbus, Ohio-based Borden Chemical has about $551 million of total debt outstanding. "The CreditWatch placement follows the announcement that Apollo Management LP has entered into a definitive agreement to acquire Borden Chemical for approximately $1.2 billion, including the assumption of outstanding debt," said Standard & Poor's credit analyst Peter Kelly. "The ratings on Borden Chemical could be lowered if, as anticipated, the financial structure resulting from the proposed transaction reflects a significant increase in leverage. More aggressive financial policies employed by new management could also impact credit quality." CANDESCENT TECHNOLOGIES: Wants to Hire PwC as Tax Accountants ------------------------------------------------------------- Candescent Technologies Corporation and its debtor-affiliate want to hire PricewaterhouseCoopers LLP to assist them in connection with real and personal property tax work for fiscal 2002 and 2003. PricewaterhouseCoopers will: a) obtain the personal property tax returns, work papers, real and personal property tax assessments and bills, real property descriptive information and fixed asset records for each fiscal year; b) conduct a sample analysis of the fixed asset records and source documents to identify and preliminarily quantify tax savings; c) compile updated information on the business and industry conditions as of the January 1, 2002 and 2003 tax lien dates; d) identify potential obsolescence opportunities; e) if necessary, conduct an inspection of selected properties; f) discuss with Candescent our conclusions regarding potential tax reduction opportunities, as well as any errors, identified pursuant to our analysis and the factors supporting our conclusions; g) gather evidence to support a reduction in the original assessed value; h) represent Candescent in negotiations with the tax assessor to discuss any difference between the assessed value assigned by the tax jurisdiction and the value as estimated by PricewaterhouseCoopers; and i) identify and assist Candescent with property tax refund opportunities and the correction of errors. PricewaterhouseCoopers will charge the Debtors $31,000 for both fiscal years' work. Headquartered in Los Gatos, California, Candescent Technologies Corp. -- http://www.candescent.com/-- is a supplier of flat panel displays for notebook computers, communications and consumer products. The Company filed for chapter 11 protection on June 16, 2004 (Bankr. N.D. Calif. Case No. 04-53803). Ramon Naguiat, Esq., at Pachulski, Stang, Ziehl, Young et al represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debt and assets of over $100 million each. CEDRIC KUSHNER: Forms New Ckrush Entertainment, Inc., Subsidiary ---------------------------------------------------------------- Cedric Kushner Promotions, Inc. (PK: CKHP) has formed a new wholly-owned subsidiary, Ckrush Entertainment, Inc. Ckrush will focus on film and television. The formation of Ckrush reflects the Company's strategic business plan to expand its position in the entertainment industry. "We are incredibly excited about the launch of the Ckrush Entertainment brand," said Jim DiLorenzo, Vice President. "We anticipate having an active slate of entertainment projects with a particular emphasis on film and television. Ckrush will be a great compliment to the CKP brand which focuses on sports and live events." About Cedric Kushner Promotions, Inc. Cedric Kushner -- whose December 31, 2003 balance sheet shows a stockholders' deficit of $12,018,823 -- promotes world champion and top contender boxers. In addition to its representation and promotion efforts, the agency also produces and syndicates world championship boxing events for distribution worldwide. A steady program supplier to the world's leading television networks, including HBO, SHOWTIME, ESPN, and EuroSport, the company promotes televised events from venues all around the world. With a roster rich in world champions and a track record that includes having promoted approximately 300 world championship bouts, CKP is at the forefront of the international boxing business. CKP, formed in 1974 by promoter Cedric Kushner, originally achieved prominence in the field of rock-'n-roll music and is now one of the most active promoters of championship bouts worldwide. In addition to its North American business, CKP is the foremost American-based promoter of boxing in Europe and Africa. CHARTER COMMS: Jim Heneghan Named SVP -- Marketing & Advertising ---------------------------------------------------------------- Margaret A. "Maggie" Bellville, Executive Vice President and Chief Operating Officer of Charter Communications named Jim Heneghan to Senior Vice President of Marketing and Advertising Sales for Charter Communications, Inc. (Nasdaq:CHTR). Mr. Heneghan was previously Senior Vice President of Charter Media(R), the Company's advertising sales and production services unit. He succeeds Kip Simonson who resigned. Ms. Bellville said Mr. Heneghan will maintain his current responsibilities for advertising sales and production services, and has assumed overall responsibility for Branding and Creative Services, headed by Charter Vice President Greg Field; Product Management, headed by Charter Vice President Barbara Hedges; and Sales and Retail Distribution, headed by Charter Vice President John Maurer. In making the announcement, Ms. Bellville said, "Jim Heneghan has played a critical role in developing the potential of Charter Media. His leadership has helped make Charter Media a solidly performing revenue source for the Company. I'm confident this experience will translate well in this new and expanded role." Mr. Heneghan joined Charter in March, 2001, as Vice President of Advertising Sales for the Company's Western Operating Division. He was promoted to Corporate Vice President of Charter Media in February, 2002, and to Senior Vice President in May, 2003. Before joining Charter, he was Director of Advertising Sales for Cable One, with responsibility for advertising support in 19 states. Previous to this, he was with Cable One's parent company, The Washington Post, where he functioned in several capacities in newspaper advertising sales. He also worked with the DDB Needham and J. Walter Thompson advertising agencies. Mr. Heneghan earned a Bachelor's degree in Economics and Political Science from Bucknell University in Lewisburg, Pennsylvania. About Charter Charter Communications, Inc., a broadband communications company, provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform via Charter Digital(TM) and Charter High- Speed Internet Service(TM). Charter also provides business to business video, data and Internet protocol (IP) solutions through Charter Business Division. Advertising sales and production services are sold under the Charter Media(R) brand. More information about Charter can be found at http://www.charter.com/ * * * As reported in the Troubled Company Reporter's May 26, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Charter Communications Inc. and subsidiaries to positive from developing. All ratings, including the 'CCC+' corporate credit rating, were affirmed. "The outlook revision is based largely on the company's improved maturity profile following the April 2004 refinancing," explained Standard & Poor's credit analyst Eric Geil. "Operating improvement, including a slowing rate of basic subscriber loss, also factored into the outlook revision." Nevertheless, the ratings are still dominated by very high financial risk from elevated leverage, negative discretionary cash flow, and pressure from rising debt maturities, including $588 million in convertible debt due in 2005. Repayment of this debt could depend on access to external financing, which will hinge on Charter's demonstration of sustainable positive operating momentum. Performance could be challenged by intense competition for video customers from satellite TV companies, which have recently increased promotional spending. CITIZENS COMMS: Fitch Downgrades Sr. Unsecured Debt Rating to BB ---------------------------------------------------------------- Fitch Ratings has downgraded and removed from Rating Watch Negative Citizens Communications Company's senior unsecured debt to 'BB' from 'BBB' and the rating assigned to Citizens Utilities Trust 5% company obligated mandatorily redeemable convertible preferred securities due 2036 to 'BB-'. In addition, Fitch has withdrawn the 'F2' rating assigned to Citizens' commercial paper as the company has no CP outstanding, nor has plans to issue CP in the future. The rating assigned to Electric Lightwave's $6 million of outstanding 6.05% guaranteed notes due 2004 has been downgraded to 'BB' and withdrawn, given its maturity in May 2004. The Rating Outlook is Stable. Fitch had placed Citizens on Rating Watch Negative on Dec. 11, 2003 following the company's announcement to consider strategic alternatives. The rating action follows Citizens' July 11, 2004, announcement that it will pay a $2 per common share special dividend to shareholders in September 2004, and institute a quarterly dividend of $0.25 per common share beginning in September 2004. The new dividend program also concludes Citizens' review of financial and strategic alternatives. Fitch believes the dividend program is a material negative change for the company from its previous strategy whereby it used free cash flow for debt reduction. Instead, Citizens intends to enhance shareholder value through the delivery of significant levels of cash flow to shareholders. Assuming the conversion of all Citizens' equity units and EPPICs, the special dividend would amount to approximately $675 million, and the ongoing cash flow requirements of the quarterly dividend would approximate $340 million annually. Debt reductions are likely to be significantly lower in the future that in recent years, given that the ongoing dividend will approximate 73% of 2004 free cash flow. Moreover, the increase in dividends comes at a time when Fitch believes Citizens' cash flows will be pressured by greater competition, and potentially significant changes to access charges and universal service funding that could be implemented over the next couple of years. Fitch estimates Citizens' total debt/EBITDA will be approximately 4.2 times (x) at the end of 2004 and will remain above 4.0x in 2005. In Fitch's view, leverage is not expected to decline significantly in the next several years, given the expected flat performance of its wireline-only telecommunications business, and the expected high dividend payout ratio. Liquidity remains strong, with $648 million in cash at March 31, 2004, and an undrawn, $805 million, five-year credit facility that matures in October 2006. It should be noted that if Citizens is successful in remarketing its equity units in August 2004, this will result in a cash inflow of $460 million, but also a debt component with no equity credit. Therefore leverage will increase materially following the conversion since the company has no offsetting maturities to fund until 2006. CLIFTONDALE OAKS: Case Summary & 9 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Cliftondale Oaks, LLC 236 Auburn Avenue, Suite 204 Atlanta, Georgia 30303 Bankruptcy Case No.: 04-95161 Chapter 11 Petition Date: July 2, 2004 Court: Northern District of Georgia (Atlanta) Judge: W. Homer Drake Debtor's Counsel: Gary A. Barnes, Esq. Gambrell & Stolz, LLP 3414 Peachtree Road Suite 1600, Monarch Plaza Atlanta, GA 30326 Tel: 404-577-6000 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 9 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ DJP (Jana, Inc.) $42,594 Stites & Harbison $11,130 United Consulting $10,336 SSK Enterprise, Inc. $7,750 Austell Seed & Grass $7,358 Tidbitts Land Surveying $6,746 Erosion Management, Inc. $2,444 Grant Shepherd $1,121 Georgia Blue Print Co. $42 COUNTRYSIDE HOME LOANS: Fitch Takes Various Rating Actions ---------------------------------------------------------- Fitch Ratings has upgraded four, affirmed 15, downgraded four, and placed one class on Rating Watch Negative from the following CWMBS residential mortgage-backed securitizations: Countrywide Home Loans, Inc. mortgage pass-through certificates, series 1998-12 (Alt 1998-4): --Class A affirmed at 'AAA'; --Class M affirmed at 'AAA'; --Class B1 affirmed at 'AAA'; --Class B2 affirmed at 'A'; --Class B3 affirmed at 'BB'; --Class B4 downgraded to 'CCC' from 'B,' and removed from Rating Watch Negative. Countrywide Home Loans, Inc. mortgage pass-through certificates, series 1999-6 (Alt 1999-1): --Class A affirmed at 'AAA'; --Class M affirmed at 'AAA'; --Class B1 upgraded to 'AAA' from 'AA'; --Class B2 upgraded to 'A+' from 'BBB'; --Class B3 affirmed at 'BB'; --Class B4 rated 'B,' placed on Rating Watch Negative. Countrywide Home Loans, Inc. mortgage pass-through certificates, series 2001-26 (Alt 2001-11): --Class A affirmed at 'AAA'; --Class M upgraded to 'AAA' from 'AA'; --Class B1 upgraded to 'AA' from 'A'; --Class B2 affirmed at 'BBB'; --Class B3 affirmed at 'BB' --Class B4 downgraded to 'CCC' from 'B,' and removed from Rating Watch Negative. Countrywide Home Loans, Inc. mortgage pass-through certificates, series 2002-11 (Alt 2002-7): --Class A affirmed at 'AAA'; --Class M affirmed at 'AA'; --Class B1 affirmed at 'A'; --Class B2 affirmed at 'BBB'; --Class B3 downgraded to 'BB' from 'BBB' --Class B4 downgraded to 'CC' from 'B.' The upgrades reflect an increase in credit enhancement relative to future loss expectations, and the affirmations on the above classes reflect credit enhancement consistent with future loss expectations. The negative rating actions are the result of a review of the level of losses incurred to date as well as Fitch's future loss expectations on the delinquent loans in the pipeline relative to the applicable credit support levels as of the June 25, 2004 distribution. CROSSGEN ENTERTAINMENT: Employs Holland & Knight as Attorneys ------------------------------------------------------------- The U.S. Bankruptcy Court gave its nod of approval to CrossGen Entertainment, Inc., and its debtor-affiliates to employ Holland & Knight LLP as its bankruptcy attorneys. The Debtor informs the Court that the firm has extensive experience and knowledge in the field of debtors' and creditors' rights and business reorganizations under chapter 11 of the Bankruptcy Code. The Debtor chose Holland & Knight because of the firm's experience in representing it before the Petition Date, its ability to quickly respond to all issues that may arise in the company's reorganization, including issues related to restructuring of debt, the development of imaginative solutions to difficult problems, debtors' and creditors' rights, securities and tax issues, and ongoing litigation matters. The specific attorneys and legal assistants presently designated to represent the Debtor and their hourly rates are: Professional Designation Billing Rate ------------ ----------- ------------ Rod Anderson Partner $350 per hour Noel Boeke Associate $250 per hour Jennifer Nichols-Moore Associate $200 per hour Diane Spaulding Paralegal $130 per hour Holland and Knight will: a) advise Debtor with respect to its powers and duties as debtor-in-possession in the continued management and operation of its business and properties; b) attend meetings and negotiate with representatives of creditors and other parties in interest; c) take all necessary action to protect and preserve Debtor's estate, including the prosecution of actions on Debtor's behalf, the defense of any action commenced against Debtor, negotiations concerning all litigation in which Debtor is involved, and objections to claims filed against Debtor's estate; d) prepare on behalf of Debtor all motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; e) negotiate and prepare on Debtor's behalf any plan or plans of reorganization, disclosure statement, and all related agreements and/or documents, and take any necessary action on behalf of Debtor to obtain confirmation of such plan; f) represent Debtor in connection with obtaining post- petition loans; g) advise Debtor in connection with any potential sale of assets, restructuring or recapitalization; h) appear before this Court, any appellate courts, and the United States Trustee and protect the interests of Debtor's estate before such Courts and the United States Trustee; i) consult with Debtor regarding tax matters; j) representing Debtor with respect to general corporate and transactional matters; and k) perform all other necessary legal services and provide all other necessary legal advice to Debtor in connection with these chapter 11 cases. Headquartered in Oldsmar, Florida, CrossGen Entertainment, Inc. -- http://www.crossgen.com/-- is a comic book publishing company. The Company filed for chapter 11 protection on June 18, 2004 (Bankr. M.D. Fla. Case No. 04-12478). Noel R. Boeke, Esq., and Rod Anderson, Esq., at Holland & Knight, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $1 million and debts of more than $10 million. DEEP WELL OIL: Signs Binding Agreement to Acquire Mikwec Energy --------------------------------------------------------------- Deep Well Oil & Gas, Inc.(Pink Sheets: DWOG), a Nevada Corporation, entered into an agreement to acquire a 100% interest of Mikwec Energy Canada, Ltd., a privately held Alberta, Canada Corporation, from Mikwec's Shareholders in exchange for newly issued shares of Deep Well's common stock. Mikwec's Board of Directors approved the transaction and the transaction has been approved by Mikwec's shareholders. Under the terms of the agreement, Deep Well will acquire one hundred percent (100%) of Mikwec's issued and outstanding common stock and will obtain an exclusive option to acquire 100% of Mikwec's preferred stock. The agreement provides that one hundred percent (100%) of Mikwec's common and preferred shareholders will exchange their Mikwec shares for newly issued shares of Deep Well's restricted common stock. The agreement has various conditions to closing, contains specific representations of the parties, and is subject to final due diligence. Upon completion of the transaction, Deep Well will have 53,364,843 shares of common stock outstanding. Alberta, Canada contains more than 2.5 Trillion barrels of heavy oil with more than 300 Billion barrels deemed ultimately recoverable according to Canadian Government agencies. Heavy oil now accounts for more than half of all of Canada's oil production. Heavy oil production is expected to increase from the current 1.0 million barrels per day to more than 3.3 million barrels per day within 10 years. Expenditures in the Canadian Heavy Oil Industry exceeded $22 Billion between 1996 and 2002 and are anticipated to exceed $70 Billion in the period 2003 to 2012. Upon closing, Deep Well will control a major heavy oil property in Northern Alberta, Canada. Deep Well, through its ownership of Mikwec's common stock shares, will have an 80% working interest in 32 contiguous sections near Sawn Lake Alberta. The Sawn Lake Oil Sands are situated in and near an all weather accessible region of north central Alberta with good proximity to roads, pipelines and facility infrastructure. The region has been explored for deeper conventional oil reserves by others since the mid 1980's. As a result of this exploration, existing well bore data is readily available. Improvements in oilfield technology, notably horizontal drilling and progressive cavity pumping technologies, have rendered this previously bypassed resource economically attractive. The reservoirs are shallow, generally about 675 meters from surface and thus less expensive to drill and operate. Available data indicate thick hydrocarbon zones, up to 35 meters (115 feet), under the Mikwec lands. Porosity is greater than 30% and core data available indicate permeability greater than 4,000 milli-Darcies with oil saturations of 70% or better. Work by Mikwec indicates more than 1,500 million barrels of oil are originally in place. Please visit the Mikwec web site at http://www.mikwec.com/ for more information about the project. Deep Well continues to focus on its business plan to commence operations as an oil and gas exploration and development company with special emphasis on heavy oil and gas exploration activities in Northern Alberta, Canada. Deep Well Oil & Gas, Inc. -- whose total stockholders' deficit tops $44,440 at March 31, 2004 -- and its former subsidiaries, were engaged in the manufacture and distribution of standard and custom precision mechanical assemblies and components throughout the United States. DEXTERITY SURGICAL: 3-Member Creditors' Committee Appointed ----------------------------------------------------------- The United States Trustee for Region 6 appointed three creditors to serve on an Official Committee of Unsecured Creditors in Dexterity Surgical, Inc.'s Chapter 11 cases: 1. Bowne of Dallas Attn: Nelson Lopez 1931 Market Center Blvd., Suite 111 Dallas, Texas 75207 Tel: (214) 651-1001 Fax: (214) 571-5236 nelson.lopez@bowne.com 2. U.S. Surgical, Inc., a division of Tyco Healthcare Group, LP. Attn: Alan R. Carlton 150 Glover Avenue Norwalk, Connecticut 06856 Tel: (203) 845-1156 Fax: (203) 846-5988 alan.carlton@tycohealthcare.com 3. Dr. Clark Gerhart, MD 200 South River Street Plains, Pennsylvania 18705 Tel: (570) 821-1100 Fax: (570) 821-1108 clarkgerhart@epix.net 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 Houston, Texas, Dexterity Surgical, Inc., is engaged in the distribution of instruments, equipment and surgical supplies, primarily used in hand-assisted laproscopic surgery. The Company filed for chapter 11 protection on April 19, 2004 (Bankr. S.D. Tex. Case No. 04-35817). Robert Andrew Black, Esq., at Fulbright & Jaworski represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $3,639,923 in total assets and $8,715,167 in total debts. DII/KBR: Halliburton To Hold Q2 2004 Conference Call on July 23 --------------------------------------------------------------- Halliburton (NYSE:HAL) will host a conference call on Friday, July 23, 2004, to discuss second quarter financial results. The call will begin at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). The results will be released that morning before the market opens. The press release concerning the 2004 second quarter earnings will be posted on the Halliburton web site http://www.halliburton.com/ Please visit our website to listen to the call live via webcast. A replay will be available on our web site for seven days following the event. In addition, you may participate in the call by telephone at (913) 981-5508. Halliburton, founded in 1919, is one of the world's largest providers of products and services to the petroleum and energy industries. The company serves its customers with a broad range of products and services through its Energy Services and Engineering and Construction Groups. The company's World Wide Web site can be accessed at http://www.halliburton.com/ Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged in the engineering and construction business, providing a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. The Company filed for chapter 11 protection on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) DLJ COMMERCIAL: S&P Raises 1998-CF-1 Class B-4 Rating To BB+ ------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on six classes of certificates from DLJ Commercial Mortgage Corp. series 1998-CF-1. At the same time, all other ratings from the same transaction are affirmed. The raised and affirmed ratings reflect seasoning and credit support levels that adequately support the revised ratings under various stress scenarios. As of June 2004, the pool consisted of 160 fixed-rate mortgages with an aggregate principal balance of $752.5 million, down from $838.8 million, at issuance. ORIX Capital Markets LLC, the master servicer, provided interim and year-end 2003 net cash flow data for 96.94% of the pool. Based on this information, Standard & Poor's calculated the weighted average debt service coverage (DSC) ratio for the outstanding loans at 1.40x, flat from issuance. The calculation excludes six loans totaling $29.3 million, or 3.9% of the pool, which have been defeased. To date, realized losses have been experienced on four mortgage loans totaling $2.3 million. The top 10 loans constitute 31.4% of the outstanding pool balance. The ninth-largest loan, at $12.2 million, is defeased. Excluding this loan, the weighted average DSC ratio for the top 10 loans increased to 1.32x from 1.31x at issuance, based on year-end 2003 financial data. The largest loan is $93.2 million and is secured by a ground lease on the Showboat Hotel and Casino in Atlantic City, N.J., which is owned and operated by a subsidiary of Harrah's Entertainment Inc. ('BBB-'). Notable declines in DSC have occurred since issuance on the second and sixth largest loans. The second-largest loan is secured by the Washington Marriott Hotel. Reported DSC, based on net cash flow, as of December 2003, declined 24% since issuance to 1.23x, due to declining occupancy levels. However, DSC based on NOI was reported at a healthier 1.58x. The sixth-largest loan experienced a 70% decline in DSC and appears on the watchlist, which will be discussed later in this release. Not reflected in the above discussion is the Stone Container portfolio, which consists of 18 cross-collateralized cross-defaulted industrial loans leased to Stone Container (now Smurfit-Stone Container Corp.; 'B+'). As of the June 2004 distribution date, there are two specially serviced mortgage loans totaling $12.4 million (1.6% of the pool). One of the two, totaling $5.4 million, is 90-plus days delinquent, while the remaining mortgage, totaling $7.0 million, is current. All other loans in the pool are current. The delinquent loan has an outstanding balance of $5.4 million, a total exposure of $5.7 million, and is secured by a 103-unit limited-service hotel, in Cleveland, Ohio that is flagged as a Comfort Inn. The hotel was constructed in 1961 and renovated in 1995. The loan's most recent transfer to the special servicer was in December 2003 for imminent default. The borrower requested a deed-in-lieu of foreclosure, which is expected to close this month. A February 2004 appraisal valued the property at $3.6 million. The most recent operating performance, as of March 2004, reports occupancy at 35.2% and an average daily rate of $67.66. A year-end 2003 occupancy level of 38.8% was reported, along with an ADR of $71.13. The remaining specially serviced mortgage loan has a balance of $7 million and is secured by a 167,612-sq.-ft. retail center in North Miami, Florida. The most recent transfer to the special occurred in January 2004 for imminent default. The borrower is set to re-finance the loan, with a tentative payoff date for the end of this month. ORIX reported 35 mortgages totaling $161.1 million on its watchlist. The watchlist includes a $15.2 million mortgage secured by the Lake Calhoun Executive Center, which is the sixth-largest mortgage in the pool. Built in 1955 and renovated in 1989, the 156,149-sq.-ft. office property is located in Minneapolis, Minnesota. Occupancy levels declined to 48.8% after several tenants vacated, including the largest tenant who occupied 12,963 sq. ft. NCF DSC at March 2004 was reported at 0.22x. The 11th largest loan also appears on the watchlist. The $10.2 million mortgage is secured by a 215,096-sq.-ft.-strip center located in Decatur, Georgia. The center is suffering from low occupancy levels of 50%, as of December 2003, with DSC ratio of 0.85x. The borrower is negotiating with a new tenant who is interested in 30,000 sq. ft., which would improve occupancy levels to 63%. Approximately 63% of the remaining mortgages on the watchlist appear due to low DSC ratios. Included in the group of mortgages with low coverages are five cross-collateralized and cross- defaulted mortgages secured by multifamily properties in North Carolina, with an aggregate principal balance of $26.1 million. Occupancy levels have declined to 77%, resulting in a decline of cumulative DSC ratio to 0.82x from 1.30x at issuance. The pool is geographically diverse, with the only concentrations in excess of 10% being in New Jersey (13.8%) and California (10.6%). The property type composition of the pool includes retail (32.1%), lodging (19.5%), multifamily (19.0%), office (14.6%), and industrial (6.7%). Standard & Poor's stressed the specially serviced, watchlist loans, and other loans in the pool that appeared to be underperforming. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised DLJ Commercial Mortgage Corp. Commercial mortgage pass-thru certs series 1998-CF-1 Rating Class To From Credit Support A-2 AAA AA+ 25.87% A-3 AA+ A+ 19.19% B-1 A BBB 13.62% B-2 BBB+ BBB- 11.67% B-3 BBB BB+ 10.34% B-4 BB+ BB 6.74% Ratings Affirmed DLJ Commercial Mortgage Corp. Commercial mortgage pass-thru certs series 1998-CF-1 Class Rating Credit Support A-1A AAA 32.57% A-1B AAA 32.57% CP AAA - S AAA - B-5 BB- 4.74% B-6 B 2.75% ENRON BROADBAND: Objects To Metromedia's $24,711,625 Claims ----------------------------------------------------------- On May 20, 2002, Metromedia Fiber Network, Inc., and its affiliated entities filed for Chapter 11 protection in the United States Bankruptcy Court for the Southern District of New York. Prior to the Metromedia Petition Date, Enron Broadband Services, Inc., provided Metromedia with, among other things, the use of portions of the Enron Broadband fiber optic communications system. Neil Berger, Esq., at Togut, Segal & Segal, LLP, in New York, relates that Metromedia and Enron Broadband were parties to these agreements, which obligate Metromedia to make payments to Enron Broadband for use of the System: (i) a Lease Agreement dated June 30, 1999; (ii) a Collocation Agreement dated June 30, 1999, as amended on November 15, 2000; and (iii) an Indefeasible Right to Use Agreement dated November 15, 2000. The laws of Oregon govern the Agreements. Pursuant to the Lease, Mr. Berger explains that Enron Broadband leased to Metromedia six fibers in the System that are routed from Salt Lake City, Utah to Houston, Texas. Enron Broadband provided or arranged for certain of Metromedia's maintenance and repair requirements, government or municipal approvals, as well as rights, licenses, authorizations, rights of way and other agreements necessary for installation and use of the System. The fiber optic route was delivered in two segments: (1) a segment routed from Salt Lake City, Utah to Dallas, Texas with $2,014,836 annual payments to Enron Broadband; and (2) a segment routed from Dallas, Texas to Houston, Texas with $762,307 annual payments to Enron Broadband. Under the Collocation Agreement, Enron Broadband provided Metromedia with the right and license to, among other things, locate, install, maintain and operate equipment in Enron Broadband's collocation facilities at regeneration space sites along the route from Salt Lake City, Utah to Houston, Texas. Metromedia was obligated to pay $78,956 to Enron Broadband every month for the use of the collocation facilities. Pursuant to the IRU Agreement, Enron Broadband provided Metromedia with an indefeasible right to use fiber optic cables located both in Salt Lake City, Utah and Denver, Colorado. Metromedia was obligated to pay $2,500 per month to Enron Broadband for the use of the Salt Lake City Fibers and $5,000 per month for the use of the Denver fibers. The Settled Administrative Claims On October 7, 2002, in the Metromedia Cases, Enron Broadband sought for the allowance and immediate payment of an administrative expense claim for $3,122,967 for services provided to Metromedia under the Agreements subsequent to Metromedia's Petition Date. Enron Broadband's claim represents: (i) $2,777,143 arising from the Lease; plus (ii) $315,824 arising from the Collocation Agreement; plus (iii) $30,000 arising from the IRU Agreement. Enron Broadband also sought to reject the Agreements effective January 21, 2003. By its application dated October 25, 2002, in the Enron Broadband case, Metromedia sought allowance and payment of a $1,964,996 administrative claim against Enron Broadband due under the Agreements postpetition. Ultimately, Mr. Berger reports that the parties agreed to settle the Enron Broadband Motion and the Metromedia Motion by fixing and disposing of the Enron Broadband Administrative Claim and the Metromedia Administrative Claims, and providing for the mutual rejection of the Agreements. However, Mr. Berger clarifies that the settlement of the administrative claims and the rejection of Agreements expressly did not constitute a waiver or release of the parties' rights to file or assert claims against each other for prepetition amounts due under the Agreements or for damages arising out of the rejection of the agreements. The Rejection Damages According to Mr. Berger, Metromedia's rejection of the Agreements resulted in damages in favor of Enron Broadband. Enron Broadband determines that it suffered losses from the rejection and cessation of operations totaling $54,166,748. Enron Broadband did not file a proof of claim in Metromedia's cases for its Rejection Damages. However, Enron Broadband did file a proof of claim for $3,749,983 for Metromedia's obligations that are due, owing and unpaid under the Agreements for periods prior to Metromedia's Petition Date. Mr. Berger tells the Court that Metromedia filed two proofs of claim in Enron Broadband's case. Under Claim No. 20363, Metromedia asserts a $799,930 general unsecured claim for obligations that remained due and owing for periods prior to Enron Broadband's Petition Date. Under Claim No. 21357, Metromedia asserts a $23,911,685 general unsecured claim for rejection damages arising out of Enron Broadband's rejection of the Agreements. Debtors' Objection The Debtors object to the Metromedia Unsecured Claims, and ask the Court to expunge them in their entirety based on their right to set off its Rejection Damages. Mr. Berger notes that Enron Broadband's $54,166,748 Rejection Damages exceeds the total Metromedia Unsecured Claims for $24,711,625 by more than 100%. Consequently, Enron Broadband's Rejection Damages fully offset and extinguishes Metromedia's Unsecured Claims. Notwithstanding the set-off and extinguishments of its claims in the Enron Broadband Case, Metromedia asserts that it may resurrect its Unsecured Claims in the Metromedia Cases to defeat Enron Broadband's Unsecured Claim filed in that case. "This is patently incorrect and contrary to well-established legal precedent," Mr. Berger argues. Once Metromedia's Unsecured Claims are set off and expunged in Enron Broadband's case, they may not be used in the Metromedia Cases to set off against the Enron Broadband Unsecured Claim filed in that case. (Enron Bankruptcy News, Issue No. 116; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORPORATION: Modifies Fifth Amended Reorganization Plan ------------------------------------------------------------- On July 2, 2004, the Enron Corporation Debtors filed with the Court further modifications and amendments to the Modified Fifth Amended Plan of Reorganization. The modifications include: 1. A new Section 1.41 of the Plan, entitled "Benefit Plan" will be added to the Plan and read in its entirety as: "Benefit Plan: Any employee welfare benefit plan, employee pension benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit plan within the meaning of Section 3(3) of ERISA, including, without limitation, the Enron Corp. Medical Plan for Actives, the Enron Corp. Medical Plan for Inactives, the Enron Corp. Savings Plan, the Enron Corp. Flexible Compensation Plan, the Enron Corp. Long Term Care Plan, the Enron Corp. Dental Plan for Active Employees, the Enron Corp. Dental Plan for Inactive Participants, the Enron Corp. Business Travel Accident Plan, the Enron Corp. Accidental Death & Dismemberment Insurance Plan, the Enron Corp. Life Insurance Plan, the Enron Corp. Educational Assistance Plan, the Enron Gas Pipelines Employee Benefit Trust, the Data Systems Group, Inc. Employees' 401(k) Plan, the Enron Wind Corp. Profit Sharing Plan, the Enron Wind Corp. Savings & Retirement Plan, the Garden State Paper 401(k) Plan, the MGMCC Savings Plan & Trust, the Affiliated Building Services, Inc. Money Purchase Pension Plan, the Limbach Holdings, Inc. Profit Sharing Retirement Plan, the EFS Savings Plan, the Enron Corp. Cash Balance Plan, the San Juan Gas Pension Plan, the Garden State Paper Pension Plan, the EFS Pension Plan and any such similar employee benefit plan or arrangement which any of the Debtors maintained prior to the Initial Petition Date." 2. A new Section 1.80 of the Plan, entitled "Defined Benefit Plans", will be added to the Plan and read in its entirety as: "Defined Benefit Plans: The Enron Corp. Cash Balance Plan, the San Juan Gas Pension Plan, the Garden State Paper Pension Plan and the EFS Pension Plan." 3. A new Section 1.105 of the Plan, entitled "ENA Examiner Order" will be added to the Plan and read in its entirety as: "ENA Examiner Order: The Bankruptcy Court order, dated June 3, 2004, relating to, among other things, the transition of the ENA Examiner's duties and obligations." 4. A new Section 1.144 of the Plan, entitled "ERISA", will be added to the Plan and read in its entirety as: "ERISA: Employee Retirement Income Security Act of 1974, as amended, to the extent codified in Title 29, United States Code." 5. Section 1.218 of the Plan, now referred to as Section 1.222 of the Plan, entitled "Pro Rata Share", will be amended by deleting the second proviso and inserting: "; and, provided, further, that, notwithstanding the foregoing, with respect to the election of distributions to be made pursuant to Section 7.3 of the Plan, "Pro Rata Share" shall refer to the proportion that a Claim held by a Creditor electing such distribution bears to the sum of all Claims electing such alternative distributions pursuant to Section 7.3 of the Plan." 6. A new Section 34.7 of the Plan, entitled "Termination of Benefit Plans", will be added to the Plan and read in its entirety as: "Termination of Benefit Plans: Notwithstanding anything contained in the Plan to the contrary, from and after the Confirmation Date, the Debtors or the Reorganized Debtors, as the case may be, shall be entitled to terminate any and all Benefit Plans in accordance with the terms and provisions of the documents and instruments relating thereto and applicable law; provided, however, that, until the termination of any such Benefit Plan, the Debtors or the Reorganized Debtors, as the case may be, shall (i) continue to perform any and all of their administrative obligations thereunder and (ii) with respect to the Defined Benefit Plans, continue to make minimum contributions and pay Pension Benefit Guaranty Corporation insurance premiums; and, provided, further, that, upon termination thereof, the Debtors or the Reorganized Debtors, as the case may be, shall provide administrative services in connection with the operation and wind down of the Benefit Plans; and, provided, further, that the continuation of the Benefit Plans from and after the Confirmation Date, including, without limitation, the provision of administrative services in connection with the operation and wind down of the Benefit Plans, shall not constitute an assumption of the Benefit Plans in accordance with section 365 of the Bankruptcy Code; and, provided, further, that, except with respect to the making of minimum contributions and the payment of Pension Benefit Guaranty Corporation insurance premiums in connection with the Defined Benefit Plans, the failure to perform any obligations under the Benefit Plans or to provide administrative services in connection with the wind down of the Benefit Plans shall be without prejudice to any Entity to (i) assert such failure gives rise to an Administrative Expense Claim and (ii) contest the assertion thereof; and, provided, further, that the foregoing is without prejudice to the rights of the Debtors or the Reorganized Debtors, as the case may be, to make payments in accordance with the terms and provisions of the Standard Termination Order."; and 7. Section 38.1 of the Plan will be amended by deleting the proviso at the conclusion and by inserting: "provided, however, that the foregoing is not intended to (1) expand the Bankruptcy Court's jurisdiction beyond that allowed by applicable law, (2) impair the rights of an Entity to (i) invoke the jurisdiction of a court, commission or tribunal, including, without limitation, the Federal Energy Regulatory Commission, with respect to matters relating to a governmental unit's police and regulatory powers and (ii) contest the invocation of any such jurisdiction; provided, however, that the invocation of such jurisdiction, if granted, shall not extend to the allowance or priority of Claims or the enforcement of any money judgment against a Debtor or a Reorganized Debtor, as the case may be, entered by such court, commission or tribunal, and (3) impair the rights of an Entity to (i) seek the withdrawal of the reference in accordance with 28 U.S.C. [Section] 157(d) and (ii) contest any request for the withdrawal of reference in accordance with 28 U.S.C. [Section] 157(d)." A full-text copy of the Supplemental Modified Fifth Amended Plan is available at no charge at: http://bankrupt.com/misc/19475SupplementalModifiedFifthAmendedPlan.pdf (Enron Bankruptcy News, Issue No. 116; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON: AEGIS & Federal Want Stay Lifted for Insurance Proceeds -------------------------------------------------------------- In 1999, Enron purchased a Fiduciary and Employee Benefit Liability Insurance Policy from Associated Electric & Gas Insurance Services, Policy No. F0079A1A99. The AEGIS ERISA Policy provides coverage to Enron, Enron's Employee Benefit Plans, and its debtor and non-debtor subsidiaries, as well as their past, present and future trustees, officers, directors or employees, and certain other fiduciaries and certain persons performing administration of those Employee Benefit Plans. The AEGIS ERISA Policy provides insurance coverage for legal fees and related expenses, settlements and judgments incurred by covered AEGIS Insureds resulting from covered "Claims." The AEGIS ERISA Policy provides $35,000,000 of insurance coverage for covered loss, plus an additional $10,000,000 of insurance for covered "Defense Costs." The Policy applies to covered Claims first made during the period from May 5, 1999 to May 5, 2002. Effective May 15, 1999, Federal Insurance Company issued to Enron an Excess Fiduciary Policy, Policy No. 8146-41-84A BMH, for the policy period of May 15, 1999 to May 15, 2002. The Excess Fiduciary Policy has a $50,000,000 limit of liability for each year that liability against the Insureds exceeds the $35,000,000 coverage limit from the AEGIS ERISA Policy. Lawsuits On Federal's behalf, David M. Posner, Esq., at Hogan & Hartson, L.L.P., in New York, recounts that Enron, its former officers and directors, and certain other parties are defendants in a consolidated putative class action lawsuit styled as Pamela M. Tittle, et al. v. Enron Corp., et al., Civil Action No. H-01- 3919, commenced before the Petition Date in the United States District Court for the Southern District of Texas, Houston Division. In January 2002, certain plaintiffs in the Tittle Litigation sought protection from the automatic stay to permit them to liquidate their prepetition claims against Enron for its alleged breaches of fiduciary duty under the Employee Retirement Income Securities Act. Accordingly, the Court lifted the automatic stay as to Enron as of June 21, 2002 for all purposes, provided that the plaintiffs do not seek to enforce any judgment against the Debtors' assets without further Court order. On March 20, 2002, AEGIS sought protection from the automatic stay, to the extent applicable, to pay or advance Defense Costs to certain individual Defendants under the Debtors' Directors and Officers Liability Insurance Policy and the AEGIS ERISA Policy, being incurred in pending and future lawsuits, proceedings and investigations -- including, without limitation, the Tittle Litigation -- subject to the full reservation of rights and defenses by AEGIS and the execution of a written undertaking by each of the subject Defendants to repay any amounts advanced if it ultimately is determined that they are not entitled to coverage. On May 15, 2002, the Court permitted AEGIS to pay or advance the Defense Costs. In addition, the Tittle Defendants, as well as others, are defendants in a lawsuit brought by the United States Department of Labor styled as Elaine L. Chao v. Enron Corporation, et al., Civil Action No. H-03-2257, commenced in the U.S. District Court for the Southern District of Texas, Houston Division. The named plaintiffs in the Tittle Litigation are: * Pamela M. Tittle, * Thomas O. Padgett, * Gary S. Dreadin, * Janice Farmer, * Linda Bryan, * John L. Moore, * Betty J. Clark, * Shelly Farias, * Patrick Campbell, * Fanette Perry, * Charles Prestwood, * Roy Rinard, * Steve Lacey, * Catherine Stevens, * Roger W. Boyce, * Wayne M. Stevens, * Norman L. and Paula H. Young, * Michael L. McCown, and * Dan Shultz. The Tittle Plaintiffs have alleged that they represent a class of similarly situated individuals. No class has yet been certified in the Tittle Litigation. The plaintiffs in the Tittle Litigation and the DOL Litigation allege breaches of fiduciary duty and other claims against the Defendants related to the administration of certain Employee Benefit Plans. Various Defendants submitted the claims to AEGIS and Federal for coverage under the AEGIS ERISA Policy and the Excess Fiduciary Policy, which collectively afford up to the $85,000,000 in coverage for settlements and judgments. The Insurers, AEGIS and Federal, have been advised of a preliminary partial settlement of claims against some but not all Defendant Insureds in the Tittle Litigation. The Settlement would exhaust the collective $85,000,000 of coverage under the Policies, and would release the liability of some but not all of the Insureds who are Tittle Defendants. Accordingly, Mr. Posner concludes, if the proceeds of the Policies are applied to the Settlement, the non-settling Defendants who are Insureds would be left uninsured for loss incurred by them in the Tittle Litigation or the DOL Litigation. The non-settling Defendant Insureds have objected to AEGIS and Federal applying the Policies' proceeds to the Settlement. A request for preliminary approval of the Settlement is pending in the Tittle Litigation. The Interpleader Action Mr. Posner explains that the $85,000,000 collective limits of liability under the Policies are insufficient to resolve all claims against all Insureds. Accordingly, AEGIS and Federal face adverse and conflicting claims from the Insureds for the use of the Policies' proceeds. If AEGIS and Federal were to pay the $85,000,000 to the Tittle Plaintiffs as part of the Settlement in that litigation, AEGIS and Federal may be subjected to claims from the non-settling Insureds that the Polices' proceeds were improperly paid for the benefit of some but not all Insureds. As a consequence, AEGIS and Federal have moved to intervene in the Tittle Litigation to file a complaint in the nature of interpleader. The Interpleader Action is currently pending in the U.S. District Court for the Southern District of Texas, Houston Division. Enron and the other defendants in the Interpleader Action are the potential Insureds under the Policies who have submitted claims for coverage under the Policies. Mr. Posner notes that the Insurers are merely stakeholders in the Interpleader Action, and by that action, seek only a determination as to whom the proceeds of the Policies should be paid. Automatic Stay Should be Lifted Hence, Federal and AEGIS ask the Court to lift the automatic stay to allow them to release the proceeds of the Debtors' Primary and Excess ERISA Fiduciary Liability Insurance Policies as directed by and in accordance with the ruling of the Texas District Court in the Interpleader Action, subject to their reservation of rights and defenses. On AEGIS' behalf, Louis A. Scarcella, Esq., at Scarcella Rosen & Slome, LLP, points out that no determination has yet been made on whether the proceeds of the Policies are property of the estate. Accordingly, the automatic stay may not apply to Federal and AEGIS' release of the proceeds of the Policies. However, to the extent that the proceeds of the Policies are property of the estate, both Federal and AEGIS acknowledge that the automatic stay does apply. Mr. Scarcella asserts that cause exists to lift the stay because the Insurers would otherwise be in a position where they will be forced to refuse to comply with an order that the District Court may issue in connection with the Interpleader Action with respect to disbursement of the proceeds of the Policies to avoid violating the automatic stay. Federal and AEGIS run the risk of either violating the automatic stay by releasing the proceeds of the Policies in accordance with the ruling in the Interpleader Action or violating a District Court order directing them to tender the $85,000,000 proceeds of their Policies into the registry of the District Court, into other accounts as the District Court may specify or to one or more third parties. Lifting the automatic stay, Mr. Scarcella adds, would avoid the entry of conflicting court orders and would expedite the administration and resolution of issues related to the proceeds of the Policies. (Enron Bankruptcy News, Issue No. 116; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Committees Have Until Sept. 30 To Commence Actions ----------------------------------------------------------------- Judge Lyons put his stamp of approval on a stipulation granting the Official Committee of Unsecured Creditors, the Official Committee of Asbestos Claimants, and the Legal Representative for the Future Asbestos-Related Claimants until September 30, 2004 to: (i) commence an adversary proceeding or contested matter challenging the amount, validity, enforceability, perfection, or priority of the Existing Obligations or the liens on the Existing Obligations Collateral; or (ii) otherwise assert any claims or causes of action, against the Federal-Mogul Corporation Debtors' Surety Bond Issuers. The Statute of Limitations by which the Committees and the Futures Representative must commence Chapter 5 Avoidance Actions against the Sureties is tolled until September 30, 2004. The Committees and the Futures Representative promise the Sureties that they will: (a) coordinate, and share the results of, their discovery requests to the Sureties; (b) not serve duplicative discovery requests on the Sureties; and (c) not notice, whether by subpoena or otherwise, more than one deposition of the same individual representative of any of the Sureties absent a showing of good cause as to why an additional deposition of the representative is necessary. These depositions will not, in and for itself, constitute duplicative discovery: (1) The deposition of a corporate representative designated pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure and a separate deposition of the same witness specifically noticed by name; and (2) A narrow deposition limited to privilege or other evidentiary issues and a separate deposition of the same individual on substantive issues. The Committees and the Futures Representative's Litigation Commencement Deadline with respect to the Debtors' Prepetition Agent, the Existing Lenders and the holders of Tranche C Loans has been indefinitely extended, subject to the Prepetition Agent's right to reinstate the Statute of Limitations on 30 days prior written notice to the Parties. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- <http://www.federal-mogul.com/>http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01- 10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING: Sureties Ask Court To Allow Disputed Claims For Voting --------------------------------------------------------------- CGU Insurance Company, OneBeacon Insurance Company and XL Specialty Insurance Company, through Richard W. Riley, Esq., at Duane Morris, LLP, in Wilmington, Delaware, asks the U.S. Bankruptcy Court to temporarily allow their claim for purposes of voting on the Fleming Companies, Inc. Debtors and Official Committee of Unsecured Creditors' Third Amended and Revised Joint Plan of Reorganization in the claim amount filed by the Sureties. CGU is the surety on certain bonds issued on the Debtors' behalf. CGU is now known as OneBeacon. All but one of the Bonds are related to the Debtors' cigarette and tobacco tax obligations. The other bond is an appeal bond in the penal amount of $846,729 plus interest, issued on the Debtors' behalf for the benefit of New Plan Realty Trust. XL is OneBeacon's true and lawful attorney-in-fact pursuant to the Power of Attorney dated September 7, 2001. The Debtors executed a Continuous Contract of Indemnity dated April 4, 2001, in favor of XL. Under the Indemnity Agreement, the Debtors agreed to indemnify, defend, exonerate and hold XL harmless for any losses incurred by XL under the Bonds. The Sureties' Claims On August 3, 2003, the Sureties timely filed proofs of claim, each asserting contingent claims for $36,146,283, which equals the aggregate penal sum of the Bonds. The contingent claims were filed in the names of each of the Sureties in an abundance of caution, but the claims all relate to the Bonds. The Sureties intend to file amended proofs of claim asserting a non-contingent claim for $15,604.89 and a contingent claim for $34,477,311. The non-contingent portion of the Amended Claim is based on Bond Claims paid to the States of West Virginia and Maryland. Rule 3018(a) of the Federal Rules of Bankruptcy Procedure permits a court, notwithstanding objection to a claim or interest, to temporarily allow the claim or interest in an amount which the court deems proper for the purpose of accepting or rejecting a plan. Since neither the Bankruptcy Code nor the Bankruptcy Rules prescribe the appropriate methodology to be used in estimating claims, the determination of the appropriate estimation methodology is committed to the discretion of the bankruptcy courts. The Court should use whatever estimation method is best suited for the circumstances of the case. For purposes of temporary allowance of claims, the Sureties' claims can be categorized as: (a) Liquidated, non-contingent and undisputed claim for $15,604.89 relating to payments made by XL to date under the Bonds to taxing authorities for the Debtors' cigarette and tobacco tax liability; (b) Contingent claim for $33,249,554 relating to Bonds issued to taxing authorities for the Debtors' cigarette and tobacco tax liability; and (c) Contingent claim for $1,227,758 relating to the Appeal Bond. With respect to the cigarette and tobacco tax claims paid by XL to the taxing authorities, XL has a liquidated, non-contingent and undisputed claim for the amount of the payment pursuant to the right of equitable subrogation and the terms of the Indemnity Agreement. To the extent of the payment, the Sureties do not seek temporary allowance of the claim for voting purposes. However, the Sureties object to the classification of the claim as a general unsecured claim. With respect to the unliquidated claim relating to the outstanding cigarette and tobacco tax bonds, the Sureties assert that they are entitled to the same treatment as the state taxing authorities under Section 1129(a)(9) of the Bankruptcy Code and, accordingly, their claim should be unclassified under the Plan in accordance with Section 1123(a)(1). Under the Plan, the Debtors seek to classify the Sureties' claims as general unsecured claims. Since the Sureties intend to object to confirmation of the Plan on this basis, as a precautionary measure, the Sureties assert that their Amended Claim for $33,249,554 should be estimated separately for the purpose of preserving their right to vote on the Plan. Basis for Estimation Since the penal sum of the claim is clearly identifiable on the face of the Bonds, the most appropriate basis for estimating the claim for purposes of voting on the Plan is the aggregate penal sum of the outstanding Bonds. Accordingly, the Sureties' claims relating to those Bonds covering the Debtors' cigarette and tobacco tax liability should be allowed for voting purposes for $33,249,554. With respect to the Appeal Bond, the Sureties assert that their claim should be estimated at the $846,729.88 filed amount plus interest, for purposes of voting on the Plan. The penal amount of the Appeal Bond is $846,729.88 with interest at the rate of 1.5% per month. Hence, the estimated total liability is $1,227,758.33. The appeal to which the Appeal Bond applies has been stayed by the bankruptcy proceeding. It is unlikely that the Debtors will pursue a successful judgment in light of the projected dividend to unsecured creditors in the bankruptcy cases. The Sureties will be significantly impacted by the confirmation of the Plan, or any plan in the Debtors' cases. Plan confirmation will only be equitable, just and truly reflective of the Sureties' vote if the Sureties are permitted to vote based on the amount of their claims. 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. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) FRESH CHOICE: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Fresh Choice aka Fresh Choice Restaurant aka Zoopa aka Fresh Choice Express aka Starbucks 485 Cochrane Circle Morgan Hill, California 95037 Bankruptcy Case No.: 04-54318 Type of Business: The Debtor owns and operates a chain of more than 40 salad bar eateries, mostly located in California. See http://www.freshchoice.com/ Chapter 11 Petition Date: July 12, 2004 Court: Northern District of California (San Jose) Judge: Arthur S. Weissbrodt Debtor's Counsel: Debra I. Grassgreen, Esq. Pachulski, Stang, Ziehl, Young and Jones 3 Embarcadero Center #1020 San Francisco, CA 94111 Tel: 415-263-7000 Total Assets: $29,651,000 Total Debts: $14,348,000 The Debtor did not file a list of its 20-largest creditors. GLOBALNET IN'L: Gets Nod to Hire Todtman Nachamie as Counsel ------------------------------------------------------------ GlobalNet International, LLC, sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to hire and employ Todtman, Nachamie, Spizz & Johns, P.C. as its counsel in its chapter 11 proceeding. The Debtor informs the Court that Todtman Nachamie has considerable experience in matters of this nature, and believes that the firm is well qualified to represent it as a debtor-in- possession in its restructuring proceeding. Todtman Nachamie is expected to: a) give advice to the Debtor with respect to its powers and duties as a debtor-in-possession in the continued management of their property; b) negotiate with creditors of the Debtor in working out a plan and to take necessary legal steps in order to confirm said plan, including, if need be, negotiations in financing a plan; c) prepare, on behalf of Applicant, as debtor-in-possession, necessary applications, answers, orders, reports and other legal papers; d) appear before the bankruptcy judge and to protect the interests of the debtor-in-possession before the bankruptcy judge and to represent the debtor in all matters pending in the Chapter 11 proceeding; and e) perform all other legal services for Applicant, as debtor- in-possession, which may be necessary herein. Partner Scott S. Markowitz, Esq., reports that the Firm agreed to accept a $69,000 retainer in contemplation of legal services to be rendered postpetition. Mr. Markowitz is the attorney primarily responsible for handling the Debtor's Chapter 11 case. The Firm does not disclose the hourly billing rates it will charge the Debtor's estate for legal services. Headquartered in New York, New York, GlobalNet International LLC is engaged in the wholesale global telecommunications business. The Company filed for chapter 11 protection on June 30, 2004 (Bankr. S.D. N.Y. Case No. 04-14488). Scott S. Markowitz, Esq., at Todtman, Nachamie, Spizz & Johns, P.C., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $1 million and estimated debts of more than $10 million. GLYCOGENESYS INC: Closes $5 Million Funding From Institutions ------------------------------------------------------------- GlycoGenesys, Inc. (Nasdaq: GLGS), a biotechnology company developing carbohydrate-based drugs, has entered into definitive agreements to close on gross proceeds of $5,000,000 from institutions in exchange for issuance of 10,000,000 shares of common stock at $.50 and warrants to purchase 8,000,000 shares of common stock at $1.00. The Company intends to use the proceeds from this transaction for funding its ongoing Phase I dose escalation monotherapy clinical trial for GCS-100LE, initiating a planned Phase I/II dose ranging clinical trial in multiple myleoma at the Dana Farber Cancer Institute (planned later this year), increases in staffing levels and working capital for general corporate purposes. The securities being sold have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States, except pursuant to an applicable exemption from the Securities Act registration requirements. GlycoGenesys GlycoGenesys, Inc. is a biotechnology company that develops and licenses products based on glycobiology. The Company's human therapeutic product GCS- 100, a unique compound to treat cancer, has been evaluated in Phase II(a) human clinical trials for both colorectal and pancreatic cancers. The Company most recently initiated a Phase I dose escalation trial of GCS-100LE at Sharp Clinical Oncology Research in San Diego, California. Further information is available on GlycoGenesys' web site: http://www.glycogenesys.com/ * * * Liquidity and Capital Resources In its Form 10-Q for the quarterly period ended March 31, 2004 filed with the Securities and Exchange Commission, GlycoGenesys, Inc. reports: "For the three months ended March 31, 2004, our operations utilized cash of $2,317,977 primarily to fund our operating loss, partially offset by an increase in accounts payable. We also invested $112,598 in purchases of property and equipment. We intend to raise additional funds through sales of our securities and possibly through partnering arrangements with pharmaceutical or mature biotechnology companies. "As of March 31, 2004, our accumulated deficit was $87,075,915 and as of May 14, 2004, our cash balances were $3,734,697. "We believe that our existing funds will be sufficient to fund our operating expenses and capital requirements into the third quarter of 2004 consistent with prioritizing R&D expenditures. Since inception, we have funded our operations primarily through the proceeds from the sale of equity securities; however, there can be no assurance that additional equity financing will be available. "Our future is dependent upon our ability to obtain financing to fund our operations. As of May 14, 2004, we have not obtained commitments from any existing or potential investors to provide additional financing. We expect to incur substantial additional operating costs, including costs related to ongoing research and development activities, preclinical studies and clinical trials. To the extent that we are unable to raise additional capital on a timely basis, management plans to prioritize research activities to conserve cash. In the event additional financing is not obtained, we may be required to significantly reduce or curtail operations." HANOVER DIRECT: Chelsey Finance Provides $20MM New Loan Facility ---------------------------------------------------------------- Hanover Direct, Inc. (Amex: HNV) has closed and funded a $20 million junior secured term loan facility with Chelsey Finance, LLC, an affiliate of its controlling shareholder, Chelsey Direct LLC. The Term Loan Facility is for a three-year term, subject to earlier maturity upon the occurrence of a change in control or sale of the Company, and carries an interest rate of 5% above the prime rate publicly announced by Wachovia Bank, N.A., payable currently. The Term Loan Facility is secured by a second priority lien on the assets of the Company. In connection therewith, Chelsey Finance concurrently entered into an intercreditor and subordination agreement with the Company's senior secured lender, Congress Financial Corporation. In consideration for providing the Term Loan Facility to the Company, Chelsey Finance received a closing fee, which was paid in cash, and will receive a warrant to purchase 30% of the fully diluted shares of common stock of the Company. Pending shareholder approval of such issuance, Chelsey Finance received a warrant to purchase a newly-issued series of nonvoting preferred stock of the Company that will be automatically exchanged for such common stock warrant upon the receipt of shareholder approval of the issuance thereof, which is anticipated at the Company's 2004 Annual Meeting of Shareholders scheduled for August 12, 2004. In connection with the closing of the Term Loan Facility, Chelsey Direct received a waiver fee payable in common stock of the Company in consideration for the waiver by Chelsey Direct of its blockage rights over the issuance of senior securities. The terms of the Term Loan Facility with Chelsey Finance were approved by the Company's Audit Committee, all of whose members are independent, and the Company's Board of Directors. Concurrently with the closing of the Term Loan Facility with Chelsey Finance, the Company amended its existing senior credit facility with Congress to (1) release certain existing availability reserves and remove the excess loan availability covenant, increasing availability to the Company by approximately $10 million, (2) reduce the amount of the maximum credit, the revolving loan limit and the inventory and accounts sublimits of the borrowers, (3) defer for three months the payment of principal with respect to the Tranche A Term Loan, (4) modify certain provisions of the Congress Credit Facility with respect to asset sales and the application of proceeds thereof by borrowers, (5) extend the term of the Congress Credit Facility until July 8, 2007, and (6) permit the secured indebtedness to Chelsey Finance arising under the Term Loan Facility and other related transactions in connection with the Term Loan Facility. The amendment required the payment of fees to Congress. Together, these two arrangements have increased the Company's liquidity by approximately $25 million. Proceeds from the Term Loan Facility with Chelsey Finance have been used to repay the Tranche B Term Loan of approximately $4.9 million under the Congress Credit Facility and to pay fees and expenses in connection with the two transactions and will provide ongoing working capital for the Company. About Hanover Direct, Inc. Hanover Direct, Inc. (Amex: HNV) and its business units provide quality, branded merchandise through a portfolio of catalogs and e-commerce platforms to consumers, as well as a comprehensive range of Internet, e-commerce, and fulfillment services to businesses. The Company's catalog and Internet portfolio of home fashions, apparel and gift brands include Domestications, The Company Store, Company Kids, Silhouettes, International Male, Scandia Down, and Gump's By Mail. The Company owns Gump's, a retail store based in San Francisco. Each brand can be accessed on the Internet individually by name. Keystone Internet Services, LLC -- http://www.keystoneinternet.com/-- the Company's third party fulfillment operation, also provides the logistical, IT and fulfillment needs of the Company's catalogs and web sites. Information on Hanover Direct, including each of its subsidiaries, can be accessed on the Internet at http://www.hanoverdirect.com/ At March 27, 2004, Hanover Direct's balance sheet shows a stockholders' deficit of $47,086,000 compared to a deficit of $47,508,000 at December 27, 2003. HEALTH CARE: Completes $74.2 Million Gross Investments in Q2 ------------------------------------------------------------ Health Care REIT, Inc. (NYSE:HCN) had completed $74.2 million of gross investments during the second quarter of 2004. The investment activity during the quarter was approximately 94 percent real property investments and six percent loans. Facility- based investments include 21 percent assisted living facilities, 73 percent skilled nursing facilities and six percent specialty care facilities. Investments for the quarter included the acquisition of one 61-unit assisted living facility and nine skilled nursing facilities with 1,037 beds as well as a mortgage loan relating to a 145-bed specialty care hospital. These new facilities represented $60.6 million of the investment activity for the quarter. The remaining $13.6 million relates primarily to funding of construction and renovations on existing facilities. During the quarter, the company had asset sales of $33.8 million, including four assisted living facilities, one skilled nursing facility and one specialty care hospital. Net investments for the quarter totaled $40.4 million. For the six months ended June 30, 2004, the company completed gross investments of $161.5 million, offset by $33.8 million of asset sales, which generated a total of $127.7 million of net new investments. The company also confirmed that it will release its 2004 second quarter earnings results on July 20, 2004, after the market closes. A conference call is scheduled for 9:00 a.m. Eastern on July 21, 2004, to discuss these results. The information to be discussed on the call will be contained in the company's earnings release, which will be available on the press releases page of the company's Web site at http://www.hcreit.com/ The conference call will be accessible by telephone and through the Internet. Telephone access will be available by dialing 973- 582-2767 or 877-825-5811. Callers to this number will be able to listen to the company's business update. For those unable to listen to the call live, a taped rebroadcast will be available beginning two hours after completion of the live call on July 21, 2004 through July 28, 2004. To access the rebroadcast, dial 973- 341-3080 or 877-519-4471. The conference ID number is 4919533. To participate on the webcast, log on to http://www.hcreit.com/or http://www.fulldisclosure.com/15 minutes before the call to download the necessary software. A replay will be available on these Web sites for 90 days. Health Care REIT, Inc. (Fitch, BB+ Outstanding Preferred Share Rating, Positive Outlook), with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care facilities, primarily skilled nursing and assisted living facilities. For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code - HCN. More information is available on the Internet at http://www.hcreit.com/ HEARME: Expects to Make Final Liquidation Distribution in November ------------------------------------------------------------------ HearMe (HEARZ.PK) released certain updated information relating to the Company's cash position and reserves for estimated future liquidation expenses as of May 31, 2004, as well as information regarding the status of certain litigation. Liquidating Distributions and Reserves HearMe currently expects that it will make a single final liquidating distribution in late November 2004, which is the end of the three-year wind-down period mandated under Delaware law. Although the Company is unable to predict with certainty the amount of this final liquidating distribution, based on information currently available, the Board of Directors expects this distribution to be in the approximate range of $.04 to $.05 per share. Numerous factors could cause the actual amount of this distribution to fall outside this range or for there to be no distribution, and the actual distribution amount will depend upon the amount of cash available. In addition, the timing of the distribution could potentially be delayed at the discretion of the Board of Directors if circumstances so dictate. An initial cash distribution of $0.18 per share, totaling approximately $5,113,000, was made to stockholders of record as of the final record date on or about March 12, 2002. The proportionate interests of all of the stockholders of the Company have been fixed on the basis of their respective stock holdings at the close of business on the final record date, November 26, 2001, and after such date, any distributions made by the Company shall be made solely to stockholders of record on the close of business on the final record date, except to reflect permitted transfers. The number of outstanding shares of the Company's common stock outstanding on November 26, 2001, the date on which the Company closed its stock transfer books and discontinued recording transfers, was 28,402,908. As of May 31, 2004, the Company's material assets consisted of approximately $1,832,000 in cash and cash equivalents. The Company's estimated future cost of liquidation, consisting of the reserves established by the Company for costs to be incurred and potential claims, liabilities and contingencies during the liquidation period, at December 31, 2003 was $985,000. The estimated future cost of liquidation as of May 31, 2004 was approximately $410,000. Litigation Matters Promissory Notes and Related Litigation On October 29, 2002, HearMe filed complaints in the Superior Court of California in the County of Santa Clara against seven individuals (including certain former officers and directors of the Company), seeking payment of an aggregate of $1,243,795.77 in outstanding principal and interest under promissory notes held by the Company from the Debtors, as well as certain additional interest payments and reimbursement of costs and expenses of collection, including attorneys' fees. The Notes are all past due, and the Debtors are in default thereunder. The Notes were executed and delivered by the Debtors as of various dates ranging from January 1998 to April 1999 as consideration for the purchase from the Company of shares of the Company's common stock. In February 2003, the Company was served with answers to its complaints from six of these defendants, each of whom also filed a cross-complaint against HearMe. In the cross-complaints, the defendants asserted various causes of action, including breach of contract, securities fraud, illegal sale of securities, intentional misrepresentation and negligent misrepresentation, among others, and allege, among other things, that (i) such defendants were coerced by the Company into buying the Shares, (ii) such defendants were informed by the Company that the Notes would be forgiven if the Company's business did not succeed, (iii) the Shares were sold without registration or qualification under federal and state securities laws, or a valid exemption therefrom, and (iv) such defendants were coerced by the Company into not selling the Shares. Each of these defendants has asserted approximate damages in excess of $216,000, plus costs and punitive damages, as well as rescission of the purchase of the Shares. The Company engaged in settlement discussions with the defendants and has entered into settlement agreements with each of the seven defendants, resulting in aggregate payments to HearMe of $111,250. The lawsuits with each of the defendants has been, or is in the process of being, dismissed. The Company also has other outstanding promissory notes due and payable from other former employees, which promissory notes also related to the purchase of shares of the Company's common stock, consisting of an aggregate of approximately $100,000 in principal and accrued interest as of May 31, 2004. The Company does not consider the uncollected amounts of these other notes to be collectible in a cost-effective manner. New York Lease Litigation On November 19, 2001, the Company was served with a complaint filed by Michael Ring and Frank Ring against the Company and GameSpy Industries, Inc. in the New York Supreme Court (the trial court), County of New York, alleging breach of a written lease relating to a facility in New York, New York which had been assigned to GameSpy, and seeking damages of approximately $197,000 plus attorneys' fees. In December 2001, the Company removed this matter to Federal District Court in New York and filed its Answer and Counterclaim, denying the Plaintiffs' allegations. Motions for Summary Judgment were filed by the parties in December 2003. A Final Judgment was entered by the Court on May 4, 2004, and on June 2, 2004, the Plaintiffs filed a Notice of Appeal. The Company has also filed a Cross-Notice of Appeal. Although the Company intends to defend this matter vigorously through the appellate process, the Company does not believe its ultimate resolution will have a material adverse effect on the Company's financial condition and funds potentially available for distribution in dissolution. Accordingly, the Company has reserved $150,000 for the defense and/or settlement of this matter. About the Company HearMe (formerly Mpath Interactive) is a specialist in real-time voice technology for the Web, HearMe licenses its Voice over Internet Protocol (VoIP) technology to companies such as Raindance Communications and eshare communications. The company offers PC- to-PC and PC-to-phone applications focusing on voice conferencing, calling, and voice interaction for e-commerce sites. As part of a restructuring initiative to concentrate on its voice technology, HearMe sold its Web communities (including entertainment and games Web site Mplayer.com) to online game firm GameSpy Industries in early 2001. It later decided to totally shut down operations. Investment firm Accel Partners owns about 10% of the company. HOUGHTON MIFFLIN: Fitch Affirms BB- Senior Secured Debt Rating -------------------------------------------------------------- Fitch Ratings has affirmed the 'BB-' ratings on Houghton Mifflin Company's senior secured $325 million bank facility due 2008 and on its $138 million 7.2% senior secured notes due 2008. Fitch also affirmed the 'B-' rating on the $600 million 8.25% senior unsecured notes due 2011 and the 'CCC+' rating on the $397 million 9.875% senior subordinated notes due 2013. In addition, Fitch has assigned a 'CCC' rating to HM Publishing Corp.'s $265 million 11.5% senior discount notes due 2013, which have an accreted value of $160 million. Approximately $1.3 billion of debt is affected by Fitch's actions. The Rating Outlook is Stable. Overall, Fitch's 'B-' senior unsecured rating reflects the company's high debt balance relative to cash flow, modest cash flow coverage ratio, significant working capital requirements, and current state level budgetary pressures. The rating also incorporates the risks associated with the cyclical, though predictable, nature of adoption schedules and the associated revenue fluctuations. Positive rating factors include Houghton Mifflin's prominent franchise in educational publishing, strong barriers to entry in elementary-through-high school textbook publishing, an improving adoption schedule in 2005-2007, and federal funding associated with the No Child Left Behind Act. Furthermore, the company should benefit from changes to management that includes the appointment of senior executives with strong industry experience. The affirmation of the company's 'BB-' senior secured debt rating reflects its priority in the capital structure and Fitch's belief of solid recovery potential. The facility and senior secured notes are backed by a first priority interest in the operating assets of the company and the stock of its direct subsidiaries. The 'CCC' rating on the HM Publishing discount notes reflect the lack of operating assets and independent cash flow generation at the entity, the reliance on operating company cash flow to service its interest expense beginning in 2008, which Fitch estimates will be approximately $30 million, and the structural subordination of the debt at the holding company relative to the operating company. The fixed charge demands at the operating subsidiaries reduces cash flow to service the eventual expense of the parent company, highlighting the operating company's necessity to improve cash generating ability over the next few years. HM Publishing owns 100% of the stock of the Houghton Mifflin Company, which represents the primary assets of the holding company. The Stable Rating Outlook is supported by nominal debt amortization in the intermediate term and the anticipation that credit metrics will stabilize during a more robust 2005 adoption schedule. The company's credit metrics weakened in 2003 as higher initial costs associated with operating as an independent company, employee retention costs, and acquisition-related costs offset a 6% increase in total revenue. Consequently, adjusted EBITDA declined by 9% to $149 million in 2003 from $163 million in 2002, which, combined with moderately higher debt levels resulted in the total Debt/adjusted EBITDA leverage ratio increasing to 7.6 times (x) from 6.3x and a rating downgrade. Fitch does not anticipate significant improvement in 2004 credit metrics due to a soft 2004 adoption schedule, sustained state budgetary constraints, rising pension expense, and high pre- publication investment. However, credit metrics should improve in 2005 as the company benefits from a more robust adoption schedule. Major adoptions in social studies, math, and reading should contribute to increased industry sales in general and Houghton Mifflin's sales in particular, assuming the company maintains its solid market position. Management's ongoing efforts to improve the cost structure would also strengthen credit metrics. The company has adequate liquidity. At March 31, 2004, Houghton Mifflin had cash balances of $38 million and had $299 million, net of letters of credit, available under its $325 revolving credit facility. Fitch recognizes that Houghton Mifflin's educational publishing business has significant working capital requirements, which is characteristic of the industry. Educational programs require substantial prepublication investment as a result of a lengthy developmental period, typically ranging from two to three years. Working capital is also highly seasonal, reflecting the patterns of textbook shipments and receivable collection. However, Fitch believes the company's availability under its facility provides adequate liquidity to support working capital requirements. The company typically draws on its revolver throughout the year and repays the balance by year-end. At March 31, 2004, total debt for Houghton Mifflin was $1.1 billion, and HM Publishing's $265 million discount notes due 2013 had an accreted value of $160 million. The company faces no near- term maturities as amortizations are highly back-ended. IBERIA VILLAGE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Heitler-Iberia Village Apartments Partnership aka Iberia Village Apartments Partnership 502 West Admiral Doyle Drive New Iberia, Louisiana 70560 Bankruptcy Case No.: 04-51629 Chapter 11 Petition Date: July 6, 2004 Court: Western District of Louisiana (Opelousas) Judge: Gerald H. Schiff Debtor's Counsel: Arthur A. Vingiello, Esq. Steffes, Vingiello & McKenzie, LLC 3029 South Sherwood Forest Boulevard #100 Baton Rouge, LA 70816 Tel: 225-368-1006 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Louisiana Water Company $4,818 Home Depot Credit Service $3,573 Lowes Business Account $2,365 Cleco Power LLC $1,500 Office Depot Credit Plan $1,329 Larry Delcambre A/C Htg., Inc. $943 Southwest Equipment $873 Gordon's Const. & Landfill $783 Maintenance Warehouse $626 Sherwin Williams $567 Acme Refrigeration of New Iberia $500 C.K.I. Wholesale Supply, Inc. $448 Sherman's Key Store $400 Bell South $356 Iberia Glass Company $354 Long's Preferred Products, Inc. $275 Quinlan Publishing Group $189 MCI Small Business Services $137 Center Point Energy $86 Fed Ex $83 INGRESS I: S&P Downgrades $21,250,000 Class C Note Rating To B- --------------------------------------------------------------- Fitch Ratings downgrades the ratings on two classes of notes and affirms the ratings on two classes of notes issued by Ingress I, Ltd. The ratings on the following classes have been downgraded: --$54,000,000 class B notes to 'A-' from 'A+'; --$21,250,000 class C notes to 'B-' from 'BB-'. The ratings on the following classes have been affirmed: --$74,759,225 class A-1 notes 'AAA'; --$98,432,633 class A-2 notes 'AAA'. The ratings of the class A-1 and A-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class B and C notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. Ingress is a collateralized debt obligation supported by a static pool of asset-backed securities, residential mortgage-backed securities, commercial mortgage-backed securities and real estate investment trusts. Structured Credit Partners, LLC a subsidiary of Wachovia Securities, selected and is monitoring the portfolio. SCP may but is not required to sell defaulted or credit risk securities. Fitch has reviewed the credit quality of the individual assets comprising the portfolio, including discussions with SCP and has conducted cash flow modeling of various default timing and interest rate scenarios. Since Fitch's rating action May 21, 2003, collateral of $13.98 million (5.2%) has been downgraded to or below 'CCC'. Total collateral rated equal to or below 'CCC+' is $32.98 million (12.2%). The class B overcollateralization ratio and class C OC ratio have decreased from 111.65% and 103.22%, respectively as of April 30, 2003 to 110.81% and 101.36% as of June 30, 2004. The class B OC ratio has failed its required level of 112% on each payment date following September 30, 2003 causing the class C notes to capitalize missed interest payments of over $1.3 million. Additionally, Ingress' interest rate hedging position continues to reduce the interest cash flow available to the noteholders. INN OF THE MOUNTAIN: Completes 12% Senior Debt Exchange Offer ------------------------------------------------------------- Inn of the Mountain Gods Resort and Casino has completed its offer to exchange up to $200 million aggregate principal amount of its 12% Senior Notes due 2010 that have been registered under the Securities Act of 1933, as amended, for an equal principal amount of its 12% Senior Notes due 2010 that were issued in a transaction exempt from registration on November 3, 2003. The exchange offer expired at 5:00 p.m., New York City time, on July 12, 2004. All of the $200 million aggregate principal amount of the outstanding notes were tendered in the exchange offer. 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." JEAN COUTU: S&P Assigns BB- Rating to Long-Term Corporate Credit ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' long-term corporate credit rating to The Jean Coutu Group Inc. At the same time, Standard & Poor's assigned its 'BB' bank loan rating, and a recovery rating of '1', to Jean Coutu's proposed US$1.7 billion senior secured credit facilities, comprised of a US$350 million five-year revolving credit facility, a five-year US$250 million term loan A, and a seven-year US$1.1 billion term loan B. The 'BB' bank loan ratings and the '1' recovery rating indicate that lenders can expect full recovery of principal in the event of a default. The company's proposed senior subordinated debentures were assigned a 'B' rating. Jean Coutu is the borrower under the Term A and Term B facilities, while The Jean Coutu Group USA, Inc. is the borrower under the revolving credit facility. The outlook is negative. Jean Coutu is a Montreal, Quebec-based drugstore operator that operates 319 franchised stores in Canada, and 333 corporate stores in the U.S. northeast under the Brooks Pharmacy Network banner. Jean Coutu has acquired 1,549 Eckerd stores--primarily on the U.S. east coast--from J.C. Penney, for US$2.375 billion. The purchase price is also subject to a working capital adjustment and, along with other fees, will bring the total outlay for the stores to US$2.7 billion. "The ratings on Jean Coutu reflect the company's very high lease- adjusted pro forma leverage resulting from the acquisition; its integration risk associated with the Eckerd stores; the challenge to enhance their profitability, particularly in the front-end; and somewhat constrained liquidity," said Standard & Poor's credit analyst Don Povilaitis. These factors are partially offset by management's track record of successful drugstore integration in both the U.S. and Canada, the scale of the acquisition, which will allow the company to become the fourth-largest drugstore chain operator in North America, and favorable long-term industry dynamics. Several challenges face Jean Coutu in terms of raising profitability of the acquired Eckerd stores to levels commensurate with those of the company's Brooks stores, situated primarily throughout New England. Although the Eckerd stores have prescription operations that will provide important economies of scale and operating profit, the real weakness of these stores has been the management of store front-end sales. Shortcomings have included irrational pricing and out-of-stock positions, particularly relating to low-margin high-turn product categories, which have resulted in very poor front-end comparable store sales performance in the past few years. The current outlook incorporates the considerable integration risk facing Jean Coutu in the next 12 to 18 months. The company's business position should nonetheless provide support for the current ratings; however, failure to execute the company's operational strategies to enhance cash flow could result in the ratings being lowered. KAISER ALUMINUM: East Baton Rouge Offers $2 Mil. for Properties --------------------------------------------------------------- Pursuant to Sections 363(b)(1) and 363(f) of the Bankruptcy Code, Kaiser Aluminum and Chemical Corporation seeks the Court's authority to: (a) enter into a sale agreement with the City and Parish of East Baton Rouge, Louisiana, and sell certain real property, spent bauxite, and two red mud pipelines, all of which are located in East Baton Rouge, free and clear of liens, claims and encumbrances; (b) enter into a pipeline right of way agreement and assign existing pipeline rights of way; and (c) pay a related real estate broker's commission and certain prepetition real property taxes. The Real Property is a 600-acre tract of undeveloped real property that has been held by KACC as part of its discontinued operations. The Real Property contains solid waste impoundments containing Spent Bauxite and is anticipated to be used by the City and Parish of East Baton Rouge, Louisiana as a solid waste facility. The Pipelines carried the Spent Bauxite from another of the Debtors' facility, which has since been sold, to the Real Property. The Pipelines have not been used by KACC for several years and are also part of the Debtors' discontinued operations. In connection with the installation of the Pipelines, the Debtors acquired certain pipeline rights of way from various landowners. The pipeline rights of way will be assigned to East Baton Rouge. The Debtors has been actively marketing the Properties for a number of years before and after the Petition Date. Although several parties expressed varying degrees of interest in the Properties, none of these prospects proved willing to purchase the Properties on reasonable terms. This is in part because the Properties are unique. It is also because it is clear that East Baton Rouge is the natural owner for the Properties, given their proximity to the East Baton Rouge's landfill and the its ability to institute a condemnation proceeding to take the Properties. Thus, parties were interested only in acquiring the property at a discount and on unreasonable terms in speculation on the ability to extract additional value from East Baton Rouge in the future. The Debtors determined that it would be in the best interest of their estate to sell the Properties to East Baton Rouge for the Properties' fair market value at this time. The Sale Agreement with East Baton Rouge The significant terms of the Purchase and Sale Agreement, in which the Debtors will sell and transfer its interests in the Properties to East Baton Rouge, are: A. Property Interests To Be Sold The assets to be sold include the Real Property and all improvements located on the Real Property, the Spent Bauxite, the Pipeline ROWs and the Pipelines. B. Purchase Price The purchase price for the Properties is $2,000,000, which will be paid in cash at the closing of the transaction. Closing will occur on the first business day that is 10 days after a final non-appealable order is entered by the Bankruptcy Court. East Baton Rouge will pay closing and title policy costs. East Baton Rouge will also release the Debtors from any and all claims or demands for indemnification arising from or related to the Properties. C. Proration of Taxes Real and personal property taxes relating to the Real Property will be prorated between the Debtors and East Baton Rouge, and the Debtors will be responsible for those taxes incurred before the closing. D. As-Is Condition East Baton Rouge will take the Properties on an "as-is, where is" basis "with all faults," without warranty of title or warranty as to merchantability or fitness for any particular purpose. E. Remedies If the Debtors fail -- where the failure is based on a willful and intentional default by the Debtors -- to consummate the Sale Agreement -- except due to East Baton Rouge's default or the Debtors' termination of the Sale Agreement -- East Baton Rouge will, as its sole and exclusive remedy, elect either to: (a) sue for specific performance; or (b) terminate the Sale Agreement and recover from the Debtors East Baton Rouge's cost associated with its Phase I environmental assessment of the Real Property, not to exceed $25,000. If East Baton Rouge fails to consummate the Sale Agreement -- except where the Debtors' default excuses East Baton Rouge's performance -- the Debtors may, as their sole and exclusive remedy, elect to either: (a) sue for specific performance; or (b) terminate the Sale Agreement. According to Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, under Section 363(f), a debtor may sell property of the estate free and clear of all liens, claims, encumbrances and other interests asserted in or against the property if: -- the sale is permitted under applicable non-bankruptcy law; -- the party asserting the Property Interest consents to the sale; -- the Property Interest is a lien and the aggregate purchase price exceeds the value of all liens on the property; -- the Property Interest is subject to a bona fide dispute; or -- the party asserting the Property Interest could be compelled, in a legal or equitable proceeding, to accept a money satisfaction for that interest. In In re Elliot, 94 B.R. 343, 345 (E.D. Pa. 1988), a court may approve a sale free and clear of all Property Interests so long as one of the requirements of Section 363(f) is satisfied. Ms. Newmarch states that there are no holders of liens on any of the Properties other than the Debtors' postpetition lenders and the East Baton Rouge Parish Tax Assessor. To the extent that any holders of Property Interests do not consent to the sale, KACC believes that any Property Interests asserted in or against the Properties would be subject to money satisfaction or would meet one of the other Section 363(f) requirements. Moreover, Ms. Newmarch explains that the Debtors' entry into a pipeline right of way agreement with East Baton Rouge in connection with the sale of the Pipelines complies with the standard of Section 363(b). The ROW Agreement between the Debtors and East Baton Rouge will allow East Baton Rouge access to the Pipelines that are located on real property still owned by the Debtors, which is not part of the sale. East Baton Rouge's rights under the ROW Agreement, however, are subordinate to that certain lease between the Debtors and the Defense National Stockpile Center, dated as of March 1, 1996. Nonetheless, without granting a right of way, the Debtors would not be able to achieve the value that would be realized from the transaction, as East Baton Rouge requires access to the Pipelines that are on the Debtors' retained property in the same way as it requires access to the existing Pipeline ROWs. Without the ROW Agreement, the Pipelines would be unusable. Ms. Newmarch notes that another critical element of the sale of the Properties is the Debtors' assignment of the existing Pipeline ROWs to East Baton Rouge -- or the State of Louisiana if the RFR is exercised. The Pipeline ROWs are necessary for East Baton Rouge to have access to and use of the Pipelines that are not located on the Debtors' property. Furthermore, Ms. Newmarch states that the Debtors intend to pay the real estate sales commission associated with the sale of the Properties and the related prepetition real property taxes. To perform the Sale Agreement, the Debtors are required to pay to Latter & Blum, Inc./Realtor, a 4% broker's commission or $80,000. East Baton Rouge has a statutory lien on the Real Property for the total amount of Prepetition Taxes and is therefore a fully secured creditor. Consequently, payment of the Prepetition Taxes will not prejudice other creditors. Headquartered in Houston, Texas, Kaiser Aluminum Corporation operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) LAIDLAW: Selling Up to 3,777,419 Shares to Benefit Pension Trust ---------------------------------------------------------------- In a prospectus filed with the Securities and Exchange Commission on June 14, 2004, Laidlaw International, Inc., disclosed that it may offer, from time to time, in one or more offerings, up to 3,777,419 shares of common stock. Laidlaw will not receive any proceeds from the sale. The 3,777,419 shares of common stock to be offered are held in a trust pursuant to a settlement agreement between Laidlaw and the United States Pension Benefit Guaranty Corporation. The net proceeds from any sale of shares of common stock will be contributed to certain pension plans of Laidlaw's subsidiary, Greyhound Lines, Inc., pursuant to the settlement agreement. On June 9, 2004, the reported sale prices of Laidlaw common stock on the New York Stock Exchange and Toronto Stock Exchange were $12.72 per share and CND$17.07 per share. Use of Proceeds Pursuant to the PBGC Agreement, on June 23, 2003, in connection with Laidlaw's emergence from bankruptcy, Laidlaw and its subsidiaries contributed $50 million in cash to the Greyhound Lines Plans and issued 3,777,419 shares of common stock to a trust, or the Pension Plan Trust. Furthermore, pursuant to the PBGC Agreement, Laidlaw agreed to contribute an additional $50 million in cash to the Greyhound Lines Plans on June 30, 2004. These contributions and transfers will be in addition to the minimum funding obligations to the pension plans, if any, required under current regulations. The trustee of the Pension Plan Trust is U.S. Trust Company, National Association, in New York. The PBGC Agreement requires the trustee to sell the common stock at Laidlaw's direction as soon as practicable, but in no event later than December 31, 2004. Laidlaw will contribute all net proceeds from the sales of the common stock held in the Pension Plan Trust directly to the Greyhound Lines Plans. If the net proceeds from the common stock sales exceed $50 million, the excess amount may be credited against any of Laidlaw's future required minimum funding obligations, but will not reduce the June 2004 required contribution under the PBGC Agreement. If the net proceeds from the common stock sales are less than $50 million, Laidlaw will be required to contribute the amount of the shortfall in cash to the pension plans in December 2004. (Laidlaw Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) LANTIS EYEWEAR: Gets Court Nod to Appoint BSI as Claims Agent ------------------------------------------------------------- Lantis Eyewear Corporation sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to appoint Bankruptcy Services, LLC as the official claims and noticing agent in its chapter 11 proceeding. BSI services, among others, include: a) notifying all potential creditors of the filing of the bankruptcy petition and of the setting of the first meeting of creditors pursuant to section 341(a) of the Bankruptcy Code, under the proper provisions of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure; b) maintaining an official copy of the Debtor's schedules of assets and liabilities and statement of financial affairs, listing the Debtors' known creditors and the amounts owed thereto; c) furnishing a form for the filing of a proof of claim, after such notice and form are approved by this Court; d) once the bar date has been set, mailing personalized proofs of claim forms to all creditors and other identified parties with the scheduled amount noted; e) filing with the Clerk a copy of the notice, a list of persons to whom it was mailed (in alphabetical order), and the date the notice was mailed, within ten (10) days of service; f) docketing all claims received, maintaining the official claims registers for the Debtor on behalf of the Clerk, and providing the Clerk with certified duplicate unofficial Claims Registers on a monthly basis, unless otherwise directed; g) specifying, in the applicable Claims Register, the following information for each claim docketed: (i) the claim number assigned, (ii) the date received, (iii) the name and address of the claimant and agent, if applicable, who filed the claim, and (iv) the classification of the claim (e.g., secured, unsecured, priority, etc.); h) relocating, by messenger, all of the actual proofs of claim filed with the Court to BSI, not less than weekly; i) recording all transfers of claims and providing any notices of such transfers required by Rule 3001 of the Federal Rules of Bankruptcy Procedure; j) making changes in the Claims Registers pursuant to Court Order; k) upon completion of the docketing process for all claims received by the Clerk, turning over to the Clerk copies of the Claims Registers for the Clerk's review; l) maintaining the official mailing list for the Debtor of all entities that have filed a proof of claim, which list shall be available upon request by a party-in-interest or the Clerk; m) assisting with, among other things, solicitation as approved by the Court and calculation of votes and distribution as required in furtherance of confirmation of a plan of reorganization; n) 30 days prior to the close of these cases, an Order dismissing BSI shall be submitted terminating the services of BSI upon completion of its duties and responsibilities and upon the closing of these cases; and o) at the close of the case, boxing and transporting all original documents in proper format, as provided by the Clerk, to the Federal Records Center. BSI assures the Debtor that it neither holds or represents any interest adverse to the Debtor or the Debtor's estate on matters for which it is to be retained. BSI's hourly rates are: Professional Billing Rate ------------ ------------ Kathy Gerber $210 per hour Senior Consultants $185 per hour Programmer $130 to $160 per hour Associate $135 per hour Data Entry/Clerical $40 to $60 per hour Schedule Preparation $225 per hour Headquartered in New York, New York, Lantis Eyewear Corporation -- http://lantiseyewear.com/-- is a leading designer, marketer and distributor of sunglasses, optical frames and related eyewear accessories throughout the United States. The Company filed for chapter 11 protection on May 25, 2004 (Bankr. S.D.N.Y. Case No. 04-13589). Jeffrey M. Sponder, Esq., at Riker, Danzig, Scherer, Hyland & Perretti, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $39,052,000 in total assets and $132,072,000 in total debts. LASER MORTGAGE: Declares Final Liquidation Distribution ------------------------------------------------------- LASER Mortgage Management, Inc.'s (OTC Bulletin Board: LSMM) final liquidation distribution to be paid on July 20, 2004 to holders of record of LASER's common stock as of July 5, 2004 pursuant to the company's plan of liquidation and dissolution will be $0.8623029 per outstanding share of common stock. The Company has been advised that this final distribution should be treated as a distribution in a complete liquidation. As such, the final liquidation distribution should not be treated as a dividend received by a stockholder, but rather as if the stockholder had sold its shares. Therefore, a stockholder should recognize gain or loss with respect to each share held by the stockholder, measured by the difference between the total amount of cash received by the stockholder with respect to such share and the stockholder's basis in that share. Stockholders should consult their own tax advisors regarding the U.S. federal income tax consequences to them of receiving the final liquidation distribution. This is the final liquidating distribution and no further distributions will be made. The share record books of the Company will be closed and the stock certificates will be deemed worthless and represent only the right to receive the final liquidation distribution as of the close of business on the payment date. About LASER Mortgage LASER Mortgage Management is a real estate investment trust (REIT) that invests in mortgage-backed securities and mortgage loans. Its mortgage securities include pass-through certificates and collateralized mortgage obligations. The company's mortgage loans are typically secured by first or second liens on residential, commercial, and other real estate. More than 95% of LASER Mortgage Management's assets are invested in highly rated securities, government-backed securities, and mortgage loans that substantially meet federal guidelines. The REIT has reduced its investments in higher-risk mortgage loans and non-investment grade high-yield corporate debt to ease its pending liquidation and dissolution. LEINER HEALTH: Signs Distribution Agreements With IMPAX Labs ------------------------------------------------------------ IMPAX Laboratories, Inc. (NASDAQ:IPXL) has signed a series of agreements with Leiner Health Products, LLC for the supply and distribution of the Company's Loratadine Orally Disintegrating Tablets (ODT) and Loratadine and Pseudoephedrine Sulfate Extended Release Tablets 24 hour products. Both of these products are indicated for the relief of symptoms of seasonal allergic rhinitis (hay fever). These products will be manufactured by IMPAX and marketed by Leiner as over the counter (OTC) store brand equivalents to both Claritin(R) Reditabs(R) and Claritin-D(R) 24- hour respectively. "These agreements with Leiner enable IMPAX to further capitalize on our Loratadine product portfolio," stated IMPAX's CEO Barry R. Edwards. "Leiner's strong position in the OTC store brand space should provide us with additional market presence," Mr. Edwards continued. These new agreements are in addition to those previously announced with several major pharmaceutical companies for IMPAX's Loratadine product family. IMPAX currently has 14 applications pending at the FDA, including five tentatively approved, which address approximately $5.2 billion in U.S. product sales for the twelve months ended March 31, 2004, based on NDCHealth data. Twelve of these filings were made under Paragraph IV of the Hatch-Waxman Amendments. IMPAX Laboratories, Inc. is a technology based specialty pharmaceutical company applying its formulation expertise and drug delivery technology to the development of controlled-release and specialty generics in addition to the development of branded products. IMPAX markets its generic products through its Global Pharmaceuticals division and intends to market its branded products through the IMPAX Pharmaceuticals division. Additionally, where strategically appropriate, IMPAX has developed marketing partnerships to fully leverage its technology platform. IMPAX Laboratories is headquartered in Hayward, California, and has a full range of capabilities in its Hayward and Philadelphia facilities. For more information, please visit the Company's Web site at: http://www.impaxlabs.com/ Claritin(R) Reditabs(R) and Claritin-D(R) 24-hour are registered trademarks of Schering-Plough Corporation. About Leiner Carson, California-based Leiner is the largest U.S. private-label VMS manufacturer; that sector accounts for about 70% of company sales, while the remainder comes from OTC drugs. The company also markets its own brands, including the Your Life trademark. About 60% of its sales are to its top three accounts. The company's products are mainly sold under private labels through mass merchandisers, grocery and supermarket chains, drug stores, and warehouse clubs. Given the lower pricing inherent in the private-label business and the company's customer concentration, pricing flexibility is limited. The VMS category is also vulnerable to negative press reports on the efficacy of these products that can have a significant effect on sales trends. * * * As reported in the Troubled Company Reporter's May 13, 2004 edition, Standard & Poor's Ratings Services revised its outlook on vitamin and drug manufacturer Leiner Health Products Inc. to positive from stable and affirmed its 'B' corporate credit rating on the company. At the same time, Standard & Poor's assigned its 'CCC+' subordinated debt rating to Leiner's proposed $150 million Rule 144A note offering. Standard & Poor's also assigned a 'B' senior secured bank loan rating and a '3' recovery rating to Leiner's proposed $290 million bank loan due 2011. The '3' recovery rating indicates that the asset values provide lenders with the expectation of meaningful recovery of principal (50%-80%) in a default scenario. "The outlook revision reflects Standard & Poor's expectation that Leiner's improved operating performance is sustainable," said Standard & Poor's credit analyst Martin Kounitz. "However, while a component of the company's financial risk has improved with higher profitability, this improvement is somewhat dimmed by the increased debt levels the company will incur following its planned recapitalization." LOEWEN: Mayflower to Sell Security Plan Life Shares to Citizens --------------------------------------------------------------- Alderwoods Group, Inc. (NASDAQ:AWGI) announced the signing of an agreement by its subsidiary Mayflower National Life Insurance Company to sell the shares of Security Plan Life Insurance Company to Citizens Insurance Company of America. This transaction is conditional upon the parties having obtained all necessary approvals and consents from the applicable regulatory authorities. Alderwoods currently expects the transaction to be concluded in October 2004. Alderwoods has been engaged in a strategic market rationalization assessment to identify and dispose of operations that are not consistent with the Company's long-term business plans. During the second quarter of 2003, the Company identified Security Plan Life as a non-strategic asset as it did not support the Company's pre-need funeral sales efforts. On closing the cash proceeds resulting from this sale will be in the amount of $85 million and the Company is expected to record a gain on the sale of approximately $17 million. After payment of applicable taxes and expenses associated with the transaction and the recapitalization of Mayflower, the Company plans to use the net proceeds of this sale to pay a portion of its outstanding debt. "We are very pleased that we have been able to enter into an agreement for the sale of Security Plan" said Paul Houston, President and Chief Executive Officer. "The proceeds from this sale represent a significant portion of the Company's assets held for sale and this transaction will materially contribute to the achievement of our objectives to improve the quality of our balance sheet and focus on the Company's core business operations." (Loewen Bankruptcy News, Issue No. 86; Bankruptcy Creditors' Service, Inc., 215/945-7000) MAGELLAN HEALTH: Will Webcast Q2 2004 Results on July 29 -------------------------------------------------------- Magellan Health Services, Inc., (Nasdaq:MGLN), will release second quarter 2004 earnings results on Thursday, July 29, 2004. The second quarter earnings announcement will be issued at approximately 6:30 a.m. on Thursday, July 29, and will be immediately available on the investor relations page at http://www.MagellanHealth.com/ A conference call will be held to discuss the earnings at 11:00 a.m. Eastern time on Thursday, July 29. To participate in the call, interested parties should call 1-888-390-4698 and reference the passcode Second Quarter Earning and conference leader Steve Shulman approximately 15 minutes before the start of the call. The conference call also will be available via a live Webcast at Magellan's investor relations page at http://www.MagellanHealth.com/ A taped replay of the conference call will be available from approximately 1:00 p.m. Eastern time on Thursday, July 29, until 12:00 midnight on Thursday, August 5. The call-in numbers for the replay are 1-866-360-3310 and 1-203-369-0165 (from outside the U.S.). Those who plan to listen to the call and/or Webcast are encouraged to read Magellan's Annual Report on Form 10-K for the year ended December 31, 2003, filed with the Securities and Exchange Commission on March 30, 2004, including the discussion of risk factors. In addition, listeners are encouraged to read all other 2003 and 2004 reports filed with the Securities and Exchange Commission, including but not limited to the Quarterly Report on Form 10-Q filed with the SEC on April 29, 2004, to learn about Magellan's historical operational and financial results. Magellan Health Services is headquartered in Columbia, Maryland, and is the leading behavioral managed healthcare organization in the United States. Its customers include health plans, corporations and government agencies. The Company filed for chapter 11 protection on March 11, 2003, and confirmed its Third Amended Plan on October 8, 2003. Under the Third Amended Plan, nearly $600 million of debt dropped from the Company's balance sheet and Onex Corporation invested more than $100 million in new equity. MAJESTIC STAR: Legends Gaming to Buy Black Hawk Casino for $66 Mil ------------------------------------------------------------------ The Majestic Star Casino, LLC, by and through a wholly-owned subsidiary, has signed a definitive agreement for Majestic to sell its Black Hawk, Colorado casino to Legends Gaming, LLC, a company controlled by William J. McEnery. Mr. McEnery was a founding partner and director of Argosy Gaming Company. He was also a founding partner of Empress River Entertainment Corp. which previously owned and operated Empress-brand casinos in Joliet, Illinois and Hammond, Indiana. The purchase price is $66,000,000, subject to adjustment. The purchase by Legends Gaming is subject to licensure and regulatory approval and is expected to close within six to nine months. The Company's Black Hawk casino, a non-core asset and the smallest of the Company's casinos in terms of net revenues, operating income and assets, consists of approximately 594 slot machines, 6 table games, a 392 space parking garage, a restaurant and a bar. "We are extremely pleased with the strategic opportunity presented by the interest of Legends Gaming in the Colorado gaming market," said Don H. Barden, President and CEO of the Company. "This type of transaction gives the Company increased financial flexibility," added Mr. Barden. "We could reinvest the net cash proceeds in our other properties or pursue new gaming ventures which are becoming increasingly attractive in various jurisdictions across the country." The Company will provide further information regarding the sale in connection with its press release of its second quarter earnings in approximately three weeks. About The Majestic Star Casino, LLC The Majestic Star Casino, LLC is a multi-jurisdictional gaming company that directly owns and operates one dockside gaming facility located in Gary, Indiana and, pursuant to a 2001 acquisition through its restricted subsidiary, Majestic Investor Holdings, LLC, owns and operates two Fitzgeralds brand casinos located in Tunica, Mississippi and Black Hawk, Colorado. For a fee, The Majestic Star Casino, LLC manages a Fitzgeralds brand casino in Las Vegas, Nevada, which is wholly owned by Barden Development, Inc., the parent of The Majestic Star Casino, LLC. For more information about us, please visit our web sites at http://www.majesticstar.com/or http://www.fitzgeralds.com/ At March 31, 2004, Majestic Star Casino's balance sheet reflects a stockholders' deficit of $102,772,004 compared to a deficit of $102,166,955. MANUFACTURED HOUSING: S&P Lowers 1999-4 Class B-1 Rating to D ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the subordinate B-1 classes of Manufactured Housing Contract Senior/Subordinated Pass-Thru Trust 1999-4 and Manufactured Housing Contract Senior/Subordinated Pass-Thru Cert Series 2000-5. The lowered ratings reflect the unlikelihood that investors will receive timely interest and the ultimate repayment of their original principal investment. Manufactured Housing Contract Senior/Subordinated Pass-Thru Trust 1999-4 reported an outstanding liquidation loss interest shortfall for its B-1 class on the July 2004 payment date. In addition, the rating on the class B-1 from Manufactured Housing Contract Senior/Subordinated Pass-Thru Cert Series 2000-5 is being lowered in anticipation of a liquidation loss interest shortfall in the near future. Standard & Poor's believes that interest shortfalls for these deals will continue to be prevalent in the future, given the adverse performance trends displayed by the underlying pool of collateral, as well as the location of B-1 writedown interest at the bottom of the transaction payment priorities. Furthermore, the high level of monthly losses has caused the complete principal writedown on the B-1 class of series 2000-5, resulting in the partial principal writedown of the M-2 class. Ratings Lowered Manufactured Housing Contract Sr/Sub Pass-Thru Trust 1999-4 Rating Class To From B-1 D CCC- Manufactured Housing Contract Sr/Sub Pass-Thru Cert Series 2000-5 Rating Class To From B-1 CC CCC- MARINER POST-ACUTE: Wants To Discharge, Release & Remove 21 Liens ----------------------------------------------------------------- Section 1141(c) of the Bankruptcy Code provides that a lien that is not preserved by a plan may be extinguished by virtue of plan confirmation. The Mariner Post-Acute Network, Inc. (MPAN) and Mariner Health Group (MHG) Debtors have identified 21 liens: -- whose holders either did not respond to any mailing or communication, or did not file proofs of claim on the bar date; or -- which have been resolved under the plan. The Debtors propose to discharge, release and remove the liens. The Debtors report that 12 of the liens were listed in the MPAN Debtors' Schedules of Assets and Liabilities as disputed: Lien Type of Lien Amount ---- ------------ ------ First Alabama Bank of Mortgage Indenture $2,000,000 Montgomery and Security Agreement Public Trustee of Deed of Trust 300,000 Denver County Public Trustee of Deed of Trust 306,800 La Plata County Marine Bank of Trust Indenture 2,570,000 Springfield James L. Correll, Jr. Deed of Trust 3,000,000 Joseph G. Maddrey Deed of Trust 500,000 Southern Trust & Deed of Trust 300,000 Mortgage Company Edward Beverly Deed of Trust 37,500 McAllen State Bank Deed of Trust 1,293,432 Jan Farley Deed of Trust 250,000 First Financial Bank Mortgage 32,000 Kimberly-Bartlett II Grant Deed 1,323,066 Five liens were not scheduled in the MPAN Debtors' Schedules: Lien Type of Lien Amount ---- ------------ ------ Joseph G. Maddrey Deed of Trust $1,200,000 Charles R. Young Deed of Trust 750,000 Care Enterprises West Deed Upon Sale 1,323,066 Avalon Inc., Avalon Collateral 2,325,000 Pharmacy, and Forest Assignment of Hills Nursing Center Financing Documents Anderson Nursing Vendor's Lien 218,903 Homes, Inc. 176,000 The MHG Debtors identified one lien held by Rassman and Fritz Schneider for $5,330,770. Each holder of these liens was given notice of the Debtors' bankruptcy proceeding including the Bar Date notice. Nonetheless, the holders failed to file a proof of claim as required. In effect, the holders are deemed bound by the terms of the Plan and are not entitled to receive further mailings or notices regarding the Debtors' cases. The Debtors further identified three liens that were separately classified and are fully satisfied under the Plan: Lien Type of Lien Amount ---- ------------ ------ Public Trustee of Deed of Trust $366,150 Morgan County Public Trustee for Deed of Trust 505,155 Lanmer County Equitable Savings and Mortgage 460,000 Loan Association of Fremont Nebraska (Mariner Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) MCWATTERS MINING Court Approves Sigma-Lamaque Proposals ------------------------------------------------------- McWatters Mining Inc. announced that the Proposals made by Sigma-Lamaque Limited Partnership and McWatters Mining to their respective creditors under the Bankruptcy and Insolvency Act were approved by the Superior Court of Quebec at a hearing held on July 9, 2004. These proposals had been accepted by the creditors at meetings held on June 22, 2004, in Val-d'Or. McWatters is an important Canadian gold producer, with reserves of 1.7 million ounces of gold and total resources of 6.8 million ounces of gold. McWatters is also involved in developing an extensive portfolio of exploration properties. MIRANT AMERICAS: Wants To Reject El Paso Transportation Contract ---------------------------------------------------------------- El Paso Natural Gas Company owns and operates a gas transmission system. Mirant Americas Energy Marketing, LP, and El Paso entered into a Transportation Service Agreement, dated February 22, 2001, to provide for transportation of 5,766 Mcf/day gas, on a firm basis, to the Debtors' California plants. The Contract requires MAEM's payment to El Paso of demand charges amounting to $55,765 per month. The Contract expires on June 1, 2006. Michelle C. Campbell, Esq., at White & Case, LLP, in Miami, Florida, relates that on July 1, 2002, MAEM posted a $5,000,000 letter of credit as collateral issued by Wachovia Bank for El Paso and its affiliates' benefit. The Letter of Credit secures MAEM's performance of its obligations under the Contract and various other agreements, which are not being assumed or rejected at the moment. El Paso and three of its affiliates have drawn on the Letter of Credit. The current amount available under the Letter of Credit is $829,290. Although the principal amount of the Letter of Credit is $5,000,000, only $193,047 was allocated as collateral for the Contract. The Letter of Credit expired on June 30, 2004. According to Ms. Campbell, at the time the Debtors entered into the Contract, they intended to use the firm gas transportation capacity to provide a greater supply of natural gas for the California plants. However, the Debtors have alternative supplies of fuel sufficient to meet the needs of the California plants and have no need for the firm transport capacity at any price. Pursuant to Section 365 of the Bankruptcy Code, the Debtors seek the Court's authority to reject the Contract with El Paso. 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. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) MORGAN STANLEY: S&P Raises 1998-CF1 Class E & F Ratings to BB+/BB- ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on classes B, C, D, E, and F of Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates from series 1998-CF1. At the same time, the ratings on classes A-1, A-2, A-MF1, A-MF2, and X are affirmed. The raised and affirmed ratings reflect credit support levels that adequately support the ratings under various stress scenarios. As of June 2004, the trust collateral consisted of 242 commercial mortgages with an outstanding balance of $858.7 million, down 22.4% from issuance. There have been cumulative principal losses of $66.65 million since issuance. The master servicer, GMAC Commercial Mortgage Corp., reported either full- or partial-year 2003 net cash flow debt service coverage ratios for 53.9% of the pool and full-year 2002 NCF DSCRs for 34% of the pool. The largest loan and the fifth largest loan, together totaling $58.8 million, have been fully defeased. Excluding the defeased loans, Standard & Poor's calculated the current weighted average DSCR for the pool to be 1.66x, compared to 1.39x at issuance. The current weighted average DSCR for the top 10 loans, which comprise 24.2% of the pool, has remained steady at 1.40x, compared to 1.38x at issuance for the same loans. This DSCR calculation not only excludes the defeased loans, but also the eighth-largest loan, Cambridge Shopping Center, for which financials were not available. This loan, with an outstanding balance of $15.9 million, is in special servicing and will be discussed below. The fifth-largest loan, secured by a portfolio of six limited-service hotels located in Wisconsin called the WISCO Portfolio, is on the watchlist for a NCF DSCR below 1.0x as of March 31, 2003, down from 1.34x at issuance. At present, there are 19 loans with the special servicer, Lennar Partners Inc., with a combined balance of $106.9 million (12.45%). Of the 19, six loans totaling $54.45 million, or 51% of the total balance in special servicing, are current. Another six loans totaling $36.39 million, or 34% of the balance in special servicing, are in the process of foreclosure. Two smaller balance loans totaling $3.0 million are REO and five are delinquent. The largest property type exposure in special servicing is retail, with six loans totaling $46.8 million, or 44% of the total balance in special servicing. The second largest property type exposure is office, with three loans totaling $27.1 million. The third largest exposure by property type is healthcare, represented by a nursing home in Great Neck, New York, with a loan balance of $9.2 million. The three largest loans in special servicing are also top 10 loans and account for 58% of the balance in special servicing. They are discussed below. -- Broadview Village Square, the second-largest loan in the pool, has a current balance of $24.6 million (2.87%) and a total exposure of $27.5 million ($78 per sq. ft.). A 10 year old, 353,787-sq.-ft. retail center located 13 miles from Chicago in Broadview, Illinois. secures the loan, which has been negatively impacted by a dark Super Kmart. Shadow anchors include a Target Greatland and a Home Depot. Tenants of the loan collateral include a Marshalls, a Sports Authority and a Petsmart. A prospective purchase of the vacant Kmart parcel by Wal-Mart did not materialize. However, Target has expressed interest in the space. Lennar continues to negotiate a forbearance agreement with the borrower whereby the borrower would be permitted to payoff the principal in full within four to six months. Lennar reports a current occupancy of 43% with a net operating income of approximately $366,000, resulting in a 0.20x DSCR. The borrower is remitting cash flow. An appraisal dated Sept. 29, 2003 valued the property at $23.2 million as is and $27.4 million stabilized. -- Elliott Bay Office Park has a balance of $21.94 million (2.56%; $101 per sq. ft.). The loan is current and is secured by a 218,086-sq.-ft. office park in Seattle, Washington. That was built in 1980. The borrower was a chronic late payer, so a lockbox has been instituted. Once the remaining outstanding default interest and late fees have been collected, the loan will be returned to the master servicer. Last reported occupancy was 93.5% as of May 2004 and NOI DSCR was 1.57x based on year-to-date results through April 2004. -- Cambridge Square Shopping Center has a balance of $15.9 million (1.85%; $69 per sq. ft.). The loan is current and is secured by a 230,549-sq.-ft. retail property in Marlboro Township, New Jersey that was built in 1996. The borrower has negotiated a lease assumption with Home Depot for the vacant Kmart space. In addition, Home Depot has come to an agreement with the township that would allow it to take the space. DSCR would be 1.48x if Home Depot assumes the rejected Kmart lease. Once the restatement is finalized, it is expected that this loan will be returned to the master servicer. The current watchlist includes 70 loans totaling $192 million (22.36%). The largest loan on the watchlist, the WISCO Portfolio, for $20.9 million (2.43%), is the fifth-largest loan in the pool, secured by six limited-service hotels located in Wisconsin. The loan appears on the watchlist due to its low NCF DSCR, but this is based on data from March 31, 2003. More recent financial data was not available, although recent property inspection reports noted all of the hotels to be in "good" condition. Preston Place Apartments, the other top 10 loan on the watchlist, reports a 1.23x DSCR and 88.3% occupancy. It will be removed from the watchlist next month. The average loan balance on the watchlist is $2.7 million. The pool has large geographic concentrations in California (22.1%), Florida (11.5%), Texas (8.4%), New York (6.9%), and New Jersey (6.9%). Significant collateral type concentrations include retail (25.7%), multifamily (25.6%), office (12.0%), lodging (11.2%), and industrial (7.4%). Standard & Poor's stressed various loans in the mortgage pool, paying particular attention to the specially serviced and watchlisted loans. The expected losses and resultant credit levels adequately support the current rating actions. Ratings Raised Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1998-CF1 Rating Class To From Credit Enhancement B AAA AA 24.64% C AA- BBB 17.55% D BBB B 10.46% E BB+ CCC 8.20% F BB- D 5.62% Ratings Affirmed Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1998-CF1 Class Rating Credit Enhancement A-1 AAA 31.09% A-2 AAA 31.09% A-MF1 AAA 31.09% A-MF2 AAA 1.09% X AAA N.A. MORGAN STANLEY: S&P Downgrades 1997-XL1 Class H Note Rating to D ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on two classes of Morgan Stanley Capital I Inc.'s commercial mortgage pass-through certificates from series 1997-XL1. Additionally, ratings are lowered on two classes from the same transaction. At the same time, the ratings on five other classes are affirmed. The upgrades reflect the increased credit enhancement due to three of the original 12 loans paying off and continued amortization of seven of the nine remaining loans. In addition, 49% of the remaining pool is defeased. The lowered rating on class G reflects the deterioration in the operating performance of four of the six remaining, non-defeased loans, representing 32% of the outstanding pool balance. The weighted average debt service coverage ratio on a net cash flow basis for the remaining non-defeased loan balance decreased to 1.28x from 2.00x at issuance. Additionally, the rating on class H has been lowered to 'D' to reflect a growing interest shortfall that has been accruing since the Westgate Mall loan was transferred to special servicing in January 2003. Standard & Poor's expects that this loan will be liquidated at a significant principal loss to class H. The three defeased loans include: the 605 Third Avenue loan, which is the largest loan in the pool with an outstanding loan amount of $120 million; the Edens & Avant loan, which is the second-largest loan in the pool with an outstanding loan balance of $82.75 million; and the Ashford Financial Pool loan, which is the fourth- largest loan in the pool with an outstanding loan amount of $60 million. The four loans whose collateral has experienced a decrease in operating performance since issuance include: -- Grand Kempinski Hotel is the sixth-largest loan in the pool, with a $49.3 million loan balance, and is on the servicer's watchlist. A 528-room luxury hotel located in Addison, Texas secures the loan. NCF for this property declined by 90% for the 12 months ending Dec. 31, 2003 from its level at issuance in October 1997. As a result, the DSCR declined to 0.15x for this same period from 1.73x at issuance. However, NCF has increased by 117% for the first five months of 2004 compared to the same period in 2003. Using the borrower's budget for 2004, Standard & Poor's estimates the value has declined by 37% since issuance. There is a major capital improvement plan in place, which will total up to $18 million extending through 2008. The plan calls for renovation of all guest rooms, renovation of the ballrooms, expansion of meeting space, and renovation of the lounge and restaurant areas. However, this submarket north of Dallas continues to be over-supplied in terms of hotel product, and is not expected to return to equilibrium before 2005; -- Mansion Grove Apartments is the third-largest loan in the pool with a loan balance of $67.8 million, and is secured by an 77-unit multifamily rental complex located in Santa Clara, California. NCF decreased by 11% for the 12 months ending Dec. 31, 2003 from its level at issuance. As a result, DSCR declined to 1.21x in 2003 from 1.39x at issuance. Rental rates have declined as a result of weak economic conditions in Silicon Valley and very competitive submarket conditions; -- Westgate Mall is the eighth-largest loan in the pool with a loan balance of $38.3 million, is 30-days delinquent, and is currently being specially serviced by GE Capital Realty Group Inc. The mall contains 789,222 total sq. ft., 617,222 sq. ft. of which serves as collateral for the loan, located in Fairview Park, Ohio. NCF for the mall declined by 40% for the 12 months ending Dec. 31, 2002 from its level at issuance. Operating performance data is not available for 2003. DSCR was 1.00x in 2002, down from 1.20x at issuance. A six-month forbearance agreement calling for any NCF after operating expenses and reserves to be used to pay principal and interest was executed in May 2004. Management is looking to re-position the property with the addition of big box retailers. It is estimated that the value of the mall has declined by 58% since issuance; and -- Westshore Mall is the ninth-largest loan in the pool with a loan balance of $19.3 million, and is on the servicer's watchlist. It is secured by 393,949 sq. ft. of a 473,619- sq.-ft. mall located in Holland, Michigan. NCF for the mall declined by 21% for the 12 months ending Dec. 31, 2003 from its level at issuance. DSCR declined to 0.96x in 2003 from 1.68x at issuance. The actual maturity date for this loan is March 1, 2027. However, the anticipated maturity date was March 1, 2004, and the borrower was unable to refinance the loan due to property performance. As a result, the interest rate was raised by 5.0% from its initial fixed rate of 8.07%. Operating expenses were unusually high in 2003 due to lease renewal costs, as several major tenant leases expired in 2003. The vacancy rate increased to 14% in March 2004. It is understood that the borrower is re-tenanting this vacant space in an attempt to ready the property for refinancing. Ratings Raised Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1997-XL1 Rating Class To From Credit Support D AAA AA 25.2% E AA+ A 16.8% Ratings Lowered Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1997-XL1 Rating Class To From Credit Support G B- B 4.2% H D CCC 0.0% Ratings Affirmed Morgan Stanley Capital I Inc. Commercial mortgage pass-thru certs series 1997-XL1 Class Rating Credit Support A-1 AAA 42.1% A-2 AAA 42.1% A-3 AAA 42.1% B AAA 37.9% C AAA 33.7% N-VIRO INTL: Strained Liquidity Triggers Going Concern Uncertainty ------------------------------------------------------------------ N-Viro International Corporation has in the past and continues to sustain net and operating losses. In addition, the Company has used substantial amounts of working capital in its operations which has reduced the Company's liquidity to a low level. At March 31, 2004, current liabilities exceed current assets by $946,126. These matters raise substantial doubt about the Company's ability to continue as a going concern. Total revenues were approximately $1,458,000 for the quarter ended March 31, 2004 compared to approximately $1,245,000 for the same period of 2003. The net increase in revenue is due primarily to an increase in site license fee and alkaline admixture service and sales revenues. The Company's cost of revenues increased to approximately $1,040,000 in 2004 from approximately $913,000 for the same period in 2003, and the gross profit percentage increased to 29% from 27% for the quarters ended March 31, 2004 and 2003, respectively. The increase in gross profit percentage was primarily the result of the increase in revenue derived from the site license fee contract sold for the quarter. Operating expenses increased for the comparative period, while the Company's share of the income of a joint venture, the Company's interest in Florida N-Viro, L.P., decreased for the same period of 2004. These changes collectively resulted in a net loss of approximately $157,000 for the quarter ended March 31, 2004 compared to a net loss of approximately $138,000 for the same period in 2003. The Company had a working capital deficit of $946,000 at March 31, 2004, compared to a working capital deficit of $1,642,000 at December 31, 2003, an increase in working capital of $696,000. Current assets at March 31, 2004 included cash and investments of $192,000 (including restricted cash of $75,000), which is an increase of $68,000 from December 31, 2003. The increase in working capital was principally due to the private placement of unregistered common stock with four stockholders for $435,188, the Company issuing stock for payment of trade payables for approximately $254,000 and the exercise of stock warrants and options totaling approximately $111,000, offset by the operating loss for the three month period. The Company is currently actively pursuing sale of its investment in Florida N-Viro, L.P., which may provide, in management's opinion, additional funds to finance the Company's cash requirements. Because these efforts are still in progress, there can be no assurance the Company will successfully complete these negotiations. The Company expects continued improvements in operating results for 2004 as a result of a return to low administrative costs, along with realized and expected new sources of revenue. Additionally, market developments and ongoing discussions with companies in the cement, fuel and wastewater industries could provide enhanced liquidity and positively impact 2004 operations. NEW CENTURY COMPANIES: Looks for More Capital to Fund Operations ---------------------------------------------------------------- As of March 31, 2004, New Century Companies Inc. has negative working capital of $3,075,942, an accumulated deficit of $6,254,547 and recurring losses from operations. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The Company intends to fund operations through increased sales and debt and equity financing arrangements which management believes may be insufficient to fund its capital expenditures, working capital and other cash requirements for the fiscal year ending December 31, 2004. Therefore, the Company will be required to seek additional funds to finance its long-term operations. The successful outcome of future activities cannot be determined at this time and there is no assurance that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results. The Company is currently addressing its liquidity issue by the following actions: The Company continues its aggressive program for selling inventory that has been produced or is currently in production. The Company continues to implement plans to further reduce operating costs. The Company is continually seeking investment capital through the public markets including through its PPM. However, there is no guarantee that any of these strategies will enable the Company to meet its obligations for the foreseeable future. NEW WEATHERVANE: Gets Interim Court Nod for $6 Million DIP Credit ----------------------------------------------------------------- New Weathervane Retail Corporation and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to borrow up to $6,000,000 from Wells Fargo Retail Finance II, LLC, on an interim basis pending a final DIP Financing Hearing. Judge Walsh agreed with David B. Stratton, Esq., at Pepper Hamilton, LLP, in Wilmington, Delaware, that interim access to working capital financing is essential to avoid immediate and irreparable harm to the Debtors' estates. The DIP Financing is urgently needed for the Debtors to continue operations, purchase inventory, and administer and preserve the value of their estates, as necessary to permit going concern, store closing or going out of business sales of substantially all of their assets. New Weathervane acknowledges that it owes the Lender $6,533,551 on account of prepetition borrowings. New Weathervane believes Wells Fargo holds valid, perfected and unavoidable liens in all or substantially all of the estates' assets. To further secure their obligations to fund their purchase of a last-out participation in the Prepetition Obligations, the Prepetition Lender was provided with a $6 million letter of credit from: -- The 1818 SBIC Fund, LP, and -- GB Retail Funding, LLC. Prior to the Petition Date, the Prepetition Lender drew down around $3,264,729 of the Participant Letters of Credit, which caused the funding of the purchase by the Participants of $3,264,729 in last-out participations in the Prepetition Obligations. The DIP Loan Agreement provides for a $6,000,000 loan to the debtors with a sublimit of $1,000,000 with respect to letters of credit and bankers acceptances. The borrowing base applicable to the DIP Loan Agreement will be equal to the the lesser of 85% of the orderly liquidation value of eligible inventory and 75% of the cost of the eligible inventory minus various reserves. Borrowing Base collateral reports will be provided to the Wells Fargo on a daily basis. To secure all of the Debtors' obligations under the DIP Loan Agreement, Wells Fargo will receive a fully perfected first priority security interest subject to valid, enforceable, non- avoidable liens disclosed to Wells Fargo and acceptable to it in all of the existing and after acquired real and personal, tangible and intangible, Debtors' assets. New Weathervane will pay Wells Fargo a $75,000 closing fee and monthly $3,000 agency fees. The DIP Credit Facility will be due on the termination date, which is at the earliest of: -- August 31, 2004; -- a continuing event of default by the Debtors; or -- the Debtors' emergence from Chapter 11. 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. NIKITA INC: Case Summary & 16 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Nikita, Inc. 95 South Service Road Austell, Georgia 30168 Bankruptcy Case No.: 04-70894 Chapter 11 Petition Date: July 5, 2004 Court: Northern District of Georgia (Atlanta) Judge: Ray Mullins Debtor's Counsel: Louis G. McBryan, Esq. Macey Wilensky Cohen Wittner & Kessler Suite 600, Marquis Two Tower 285 Peachtree Center Avenue North East Atlanta, GA 30303-1229 Tel: 404-584-1200 Fax: 404-681-4355 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 16 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ P.S.N., Inc. $380,800 1611 Peachtree Street Atlanta, GA 30309 Rohit Patel $35,000 Days Inn $25,000 Alka Patel $20,000 Dehesh Patel $15,000 Mana International $3,000 Premium Financing Specialists $2,800 Georgia Power Co. $2,700 Cobb County Water System $2,500 World Cinema, Inc. $1,000 Austell Gas $800 Bharti Desai, C.P.A., P.C. $400 EcoLab $250 United Waste Services $200 U.S.A. Today $150 Home Depot Supply $100 OWENS CORNING: Plans to Build New Foam Insulation Plant in Oregon ----------------------------------------------------------------- Spurred by strong customer demand for its rigid extruded polystyrene foam (XPS) insulation products, Owens Corning (OTC:OWNENQ) plans to build a new 50,000 sq. ft. manufacturing plant in Gresham, Oregon, which would begin operation in 2005. The plant will employ approximately 35 people and expands Owens Corning's presence in the Portland area, where the company already has an existing support warehouse and a roofing manufacturing facility. The proposed plant will supply the Company's rigid XPS products -- including its signature Foamular(R) and Celfort(R) brands -- to customers throughout the Western United States and Western Canada. Its location allows Owens Corning to better serve customers in these regions and achieve greater cost efficiencies. "Customer demand for extruded foam insulation has surged in recent years due to its outstanding moisture resistance, durability and thermal properties when compared to comparable building materials," said George Kiemle, president, Owens Corning Insulating Systems Business. "The plant in Gresham allows us to not only meet our customers' current demand, but provides us with the flexibility to grow with them as their needs change." This news follows on the heels of the company's recent announcement of low-cost expansions and upgrades at facilities in the U.S. and Canada to increase fiberglass batt and loose fill capacity for the North American market. 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) OWENS CORNING: Provides Court with Status Report ------------------------------------------------ Norman L. Pernick, Esq., at Saul Ewing, LLP, in Wilmington, Delaware, contends that the principal issues pertaining to the Owens Corning Debtors' Chapter 11 cases -- substantive consolidation and asbestos claim valuation -- are already ripe for the District Court's decision. Substantive Consolidation From the outset of the Debtors' bankruptcy, there has been a deep division among the unsecured creditor constituencies regarding their relative standing. Owens Corning has virtually no secured debt. However, unlike Owens Corning's other major creditor constituencies, a group of lenders -- with Credit Suisse First Boston as agent -- has guaranties from certain Owens Corning subsidiaries that were issued under a 1997 Bank Credit Agreement. To the extent that the guaranties are enforceable, the Bank Debt Holders would receive a greater proportion recovery from the Debtors' estates than other unsecured creditors. If the guarantees are not enforceable, the Bank Debt Holders will be pari passu with all other unsecured creditors. The decisive issue is whether the Debtors' estate should be substantially consolidated. To resolve the issue, the Debtors instituted a voluntary, two- year discovery and stipulation process that enabled all constituencies to learn about Owens Corning's history, business, management and liabilities. Under the Bankruptcy Court's supervision, extensive document discovery was undertaken and a substantial factual record was developed. The Debtors concluded that, despite its substantial corporate structure, Owens Corning was essentially operated prepetition as one enterprise with little regard for corporate fences. The terms of the Credit Agreement and the utter disinterest in financial information regarding the guarantor subsidiaries made clear that the bank lenders had relied on the enterprise as a whole in making the commitments and not the pledges of subsidiaries about which they knew virtually nothing other than a name. Based on extensive facts, the Debtors and their Plan Co-Proponents determined that it was appropriate to propose a Reorganization Plan that substantially consolidated the debtor entities. The Bank Debt Holders opposed the Plan, particularly the substantive consolidation provisions, seeking instead to attempt to enforce their guaranties. The initial phase of the Plan confirmation hearings was held by the District Court on the substantive consolidation portions of the Plan in April 2003. The hearing comprised 13 trial days, a substantial documentary and stipulation record, and the presentation of numerous witnesses via live and deposition testimony. At the close of the Plan Proponents' case, the District Court denied the Bank Debt Holder's request and ruled that there was significant evidence supporting the substantive consolidation provisions of the Plan. No decision has been issued on that matter. Asbestos Claim Valuation The Debtors agree that the Court must estimate for Plan Confirmation purposes Owens Corning's present and future asbestos liability. The Debtors are prepared to proceed to a hearing on the asbestos valuation issue as early as September 2004. In a December 20, 2002 Order, District Court Judge Wolin indicated an intention to withdraw the reference on the asbestos valuation issue at a future date, but had not done so before his recusal case. Although Bankruptcy Court Judge Fitzgerald supervised an informal discovery process on estimation in the Debtors' cases while the recusal proceedings were pending, it was unclear whether the Bankruptcy Court had jurisdiction to conduct an estimation proceeding. The Debtors believe that their cases will be materially benefited if the reference to the asbestos valuation issue is withdrawn and is promptly determined as part of the plan confirmation process. The Bank Debtors Holders seem to agree. The Debtors have a substantial statistical database regarding asbestos claims litigation and settlements developed over decades of participation in the tort system. Without requiring formal discovery, beginning in December 2001, the Debtors voluntarily made available their substantial asbestos claims database to all constituencies. The parties held numerous meetings to discuss the Debtors' data and to respond to any inquiry that the valuation experts deemed useful. The parties also had several telephone calls with the experts during which they were free to ask any questions they had regarding the database. The Debtors are promptly prepared to exchange reports and other valuation information with the Bank Debt Holders to complete the discovery for estimation purposes. The Debtors do not believe that establishing an asbestos claims bar date is a prerequisite to an estimation proceeding. Mr. Pernick contends that the filing of hundreds of thousands of asbestos claims in response to the setting of an asbestos bar date would only serve to engender scattergun litigation by the Bank Debt Holders with respect to individual asbestos claims and therefore indefinitely delay the estimation process. In any event, the Official Committee of Unsecured Creditors' separate Bar Date Motion is one of the issues presently before the District Court. Mr. Pernick relates that there are other pending matters before the District Court: (1) On December 2, 2003, the Bankruptcy Court conditionally approved Owens Corning's Disclosure Statement pending the outcome of its request for Substantive Consolidation. Judge Fitzgerald also deferred sending out the Disclosure Statement pending the District Court's consideration of the request to approve the Voting Procedures. The Disclosure Statement and the Plan need to be modified to reflect changes necessitated by the Term Sheet among the Debtors, the Official Committee of Asbestos Personal Injury Claimants, the Official Representative for Future Claimants, and Designated Members of the Commercial Committee, as well as to reflect recent developments. (2) On December 3, 2003, the Bankruptcy Court entered a recommended findings of fact and order establishing procedures for solicitation and tabulation of votes to accept or reject the Plan, approving ballot forms and establishing record date for voting purposes only. Due to the passage of time and the contemplated changes to the Disclosure Statement and Plan, certain technical modifications may be required to the Voting Procedures. (3) Owens Corning sought to avoid as fraudulent transfers the subsidiary guaranties of its bank debt. The District Court withdrew the reference with respect to the adversary Action and stayed the matter pending the outcome of the request for substantive consolidation. (4) The Commercial Committee asked the Court to establish a bar date for filing proofs of asbestos claims. The District Court withdrew the reference with respect to the request and stayed it pending further order. (5) The Commercial Committee appealed the Bankruptcy Court's denial of its request for structural protection required to eradicate the alleged legal and ethical conflicts of asbestos law firms. The remainder of the request, which alleged that the membership of the Asbestos Committee is operating under conflict of interest, was denied by the Bankruptcy Court. (6) Would-be representatives of a class that purchased allegedly defective roofing products from Owens Corning -- John and Kathleen Stratton, Robert and Linda Lopez, and Anne Rudin -- moved for the withdrawal of the reference so that the matter may be tried in the District Court. Owens Corning opposed the request. On April 20, 2004, the Bankruptcy Court determined that it is a "core" proceeding within the meaning of Section 157 of the Judiciary Procedures Code. (7) Plant Insulation Company's appeal of the Bankruptcy Court's Order directing the appointment of an examiner to investigate Fibreboard Corporation is pending before the District Court. The parties agreed that the appeal will be stayed pending the outcome of the proceedings on the Commercial Committee's request to appoint a Chapter 11 Trustee in the Bankruptcy Court. (8) There are consolidated appeals from a June 20, 2002 Order determining the rights to certain personal injury settlement payments made by the Debtors and held in escrow accounts by Baron & Budd. The briefing of the issue is complete and the appeal is pending. The Asbestos Committee and the Futures Representative, James M. McMonagle, tell the District Court they agree with the Debtors' assessment of where the cases stand and how to resolve the important issues. 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. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC GAS: Enters Into Four Loan Pacts Providing $345 Million --------------------------------------------------------------- On July 1, 2004, Pacific Gas and Electric Company Vice President and Controller, Dinyar B. Mistry, disclosed to the Securities and Exchange Commission that the Utility entered into four separate loan agreements with the California Pollution Control Financing Authority on June 29, 2004. Each loan agreement is dated as of June 1, 2004. The California Authority issued $345,000,000 aggregate principal amount of its Pollution Control Refunding Revenue Bonds for the benefit of PG&E in order to refund $345,000,000 of the California Authority's Pollution Control Revenue Bonds -- Pacific Gas and Electric Company -- 1992 Series A and B and 1993 Series A and B. The four New Bonds are: * 2004 Series A -- $70,000,000 * 2004 Series B -- $90,000,000 * 2004 Series C -- $85,000,000 * 2004 Series D -- $100,000,000 As previously disclosed, on March 5, 2004, PG&E entered into a term loan facility of $345,000,000 that was used to fund the Utility's purchase, in lieu of redemption, of the Old Bonds on April 12, 2004, the effective date of the Utility's Reorganization Plan under Chapter 11 of the U.S. Bankruptcy Code. The proceeds of the California Authority's issuance of the New Bonds were used to refund the Old Bonds held by the Utility. In turn, the Utility used the funds it received for the Old Bonds to repay the $345,000,000 term loan facility. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly-owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. (Pacific Gas Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT: CoolBrands Acquires Kinnet Dairy Distribution Assets -------------------------------------------------------------- CoolBrands International Inc. (TSX: COB.A) has acquired from Parmalat the Kinnet Dairy DSD ice cream distribution business located primarily in the State of Georgia, with additional distribution coverage in areas of Alabama and South Carolina. Pursuant to the transaction, CoolBrands' wholly owned subsidiary, Eskimo Pie Frozen Distribution, Inc., acquired the entire Kinnet Dairy ice cream distribution business, including customer lists, route lists, delivery vehicles, trademarks and inventory, from Parmalat's subsidiary Farmland Dairies LLC for an undisclosed cash purchase price. The business and assets acquired by CoolBrands do not include any business or assets related to Parmalat's Kinnet Dairy milk business, which Parmalat continues to operate. On July 7, 2003, CoolBrands acquired from Nestle substantially all of its distribution assets in the U.S., making CoolBrands one of only two "directstore-door" (DSD) ice cream distribution systems with broad penetration of major markets across the U.S. in the grocery and convenience channels, including in the States of Washington, Oregon, California, Utah, Florida, Georgia, Maryland, Pennsylvania, New Jersey, Delaware and the District of Columbia. "This acquisition expands our distribution footprint, adds operational synergies and enhances our strategic value as a favored vendor to retailers in the grocery and convenience channels across the Southeast region," stated CoolBrands' President and Co-Chief Executive Officer, David J. Stein. "Acquiring smaller regional systems such as Kinnet Dairy is part of our strategy of expanding and strengthening our DSD system." About CoolBrands International CoolBrands International is a leader in the consumer products and franchising segments of the frozen dessert industry, marketing a diverse range of frozen dessert products under nationally and internationally recognized brand names. CoolBrands is the pre- eminent company in the fast-growing "better-for-you" ice cream category with offerings such as fat free, non-dairy Whole Fruit (TM) Sorbet, Weight Watchers(R) Smart Ones(R) low-fat and fat-free frozen desserts and new Atkins(R) Endulge(TM) controlled carbohydrate super premium ice cream. CoolBrands also competes in the super premium ice cream category with the Dreamery(R) Ice Cream and Godiva(R) Ice Cream brands. In addition, CoolBrands markets a wide variety of "all family" premium ice creams, frozen novelties and frozen desserts under the Eskimo Pie(R), Chipwich(R), Tropicana(R), Welch's(R), Yoplait(R), Betty Crocker(R) and Trix(R) brand names. 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 GROUP: Citigroup Probe Period Extended through July 30 --------------------------------------------------------------- In a Consent Order signed by Judge Drain, the Official Committee of Unsecured Creditors appointed in Parmalat USA's chapter 11 cases and Citibank, N.A., London Branch, agree to extend until July 30, 2004, the Committee's deadline to investigate claims, rights and causes of action against Citibank on the Parmalat U.S. Debtors' behalf. The DIP Financing Order is amended to reflect the parties' agreement. All Citigroup Entities are also deemed released of all claims and causes of action by, and liabilities owing to, the U.S. Debtors arising out of or based on any facts or circumstances occurring before June 25, 2004. 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. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEGASUS: Hires Capital Management as Cooperative Issues Expert -------------------------------------------------------------- Pegasus Satellite Communications, Inc., and its debtor-affiliates sought and obtained Bankruptcy Court authority to employ Capital Management Associates, Inc., as their cooperative issues expert to provide various services in connection with issues relating to entities organized on a cooperative basis. The Debtors selected Capital Management based on its: (a) vast experience in providing advisory and regulatory consulting services to entities organized or operated on a cooperative basis and to entities with an interest in patronizing or otherwise conducting business with cooperative organizations; (b) extensive experience in providing consulting services to supply cooperatives and other parties-in-interest in bankruptcy and reorganization proceedings; (c) familiarity with the Debtors' business, finances, capital structure and operations; and (d) familiarity with the unique aspects of the Debtors' relationships with the National Rural Telecommunications Cooperative. As the Debtors' cooperative issues expert, Capital Management will: -- provide advice and services in connection with issues related to entities organized and operating on a cooperative basis, particularly NRTC; -- provide advice regarding issues involving entities that are patrons of organizations that are organized and operating on a cooperative basis; and -- testify on those matters as requested by the Debtors. In return for the services, the Debtors will compensate Capital Management in accordance with its ordinary and customary rates. The current hourly rates for Capital Management professionals, who are expected to work on the Debtors' Chapter 11 cases are: James Howard Smith, Managing Director $325 Howard S. Stone, Managing Director 300 Thomas Eddy, Director 275 Senior Consultant 225 - 275 Associate 225 - 275 Staff 125 - 200 During the year before the Petition Date, the Debtors paid Capital Management $51,163 for fees and expenses. The payment was from the Debtors' cash on hand. Since February 3, 2003, Capital Management has been engaged by the Debtors' bankruptcy counsel, Sidley Austin Brown & Wood, LLP, to advise the Debtors in connection with certain litigation involving cooperative issues. Payments to Capital Management in connection with those services were made by the Debtors and included in the $51,163. Mr. Smith tells the Court that Capital Management does not hold adverse interests against the Debtors. Additionally, Mr. Smith discloses that: (1) In 1992, Capital Management's parent, Central Iowa Power Cooperative, "joined" the NRTC. In 1996, Central Iowa Power paid $1,500 to NRTC, which was acknowledged in a letter from NRTC indicating that it was a "member in good standing." As Central Iowa Power has never been and does not intend to be a patron of NRTC, it cannot, by law, be a "member in good standing." Central Iowa Power has no activity and no relationship with NRTC; (2) From time to time, Capital Management may perform services or maintain relationships with certain creditors of the Debtors and other parties adverse to the Debtors, in each case in matters unrelated to these cases; and (3) From time to time, Capital Management may have had dealings on other unrelated matters with certain of the other professionals expected to provide services in the Debtors' cases. Mr. Smith assures Judge Haines that Capital Management is a disinterested person as defined in Section 101(14) of the Bankruptcy Code. 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. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) PG&E NATIONAL: USGen Inks Salem Harbor Pact With ISO New England ---------------------------------------------------------------- USGen New England, Inc., buys and sells electricity and other energy-related products at wholesale through the New England Power Pool pursuant to the Restated New England Power Pool Agreement dated as of September 1, 1971, as amended, supplemented and restated from time to time. The Restated NEPOOL Agreement is accepted by the Federal Energy Regulatory Commission. ISO New England, Inc., is the independent system operator for NEPOOL and coordinates the flow of electricity in the New England market among the NEPOOL participants, including USGen, pursuant to the Restated NEPOOL Agreement. ISO is required to evaluate the impact on reliability of shutting down electric generating facilities in New England. If ISO determines that a particular generating facility is needed to assure system reliability, then ISO and the facility's owner are required to engage in negotiations to determine how the adverse impact on reliability can be avoided. The Salem Harbor Facility One of USGen's electric generating facilities is a coal-fired power plant in Salem, Massachusetts known as the Salem Harbor Facility. The Salem Harbor Facility produces power through four generating units with an aggregate generating capacity of 745 MW. USGen operates the Salem Harbor Facility in accordance with the Restated NEPOOL Agreement. In May 2001, the Massachusetts Department of Environmental Protection promulgated new regulations requiring certain fossil- fueled power plants, including the Salem Harbor Facility, to reduce air emissions. The DEP subsequently determined that the Salem Harbor Facility would need to comply with the DEP Regulations by October 1, 2004. Around the time of adoption of the DEP Regulations, USGen advised DEP that, based on what it then knew, compliance with the DEP Regulations by October 1, 2004 was impossible and that the DEP Regulations would require USGen to spend well over $100 million to comply -- an expenditure that USGen doubted could be justified given the price of electricity, the condition of the capital markets, and its financial condition. In April 2003, USGen filed an application with ISO seeking to retire the Salem Harbor Facility in accordance with the terms of the Restated NEPOOL Agreement. However, ISO rejected USGen's proposed retirement of the Salem Harbor Facility based on a determination that the retirement would have a significant adverse impact on the reliable operations of the NEPOOL system, specifically, on the Boston vicinity. USGen was mindful of ISO's request for continued operation of the Salem Harbor Facility but was unwilling to operate it in violation of the DEP Regulations. Faced with a shortage of time and cash to comply with the DEP Regulations, USGen successfully negotiated an Administrative Consent Order with DEP, the City of Salem, and certain environmental organizations to resolve some concerns and establish a framework by which the Salem Harbor Facility would be able to operate in compliance with the DEP Regulations. Among other things, the Administrative Consent Order contemplates that USGen will seek funding for the costs of constructing some or all of the required emission control equipment at the Salem Harbor Facility from sources other than the capital markets or internally generated cash. Contract with ISO After substantial negotiations pursuant to the Restated NEPOOL Agreement, ISO and USGen have agreed to the terms by which ISO will make the funds available to construct some or all of the Compliance Equipment at the Salem Harbor Facility to permit USGen to operate in compliance with the DEP Regulations pursuant to the terms of the Administrative Consent Order. The Salem Harbor Reliability Agreement At USGen's request, Judge Mannes authorizes USGen to enter into the Salem Harbor Reliability Agreement. The Reliability Agreement establishes a mechanism by which ISO will make available to USGen the funds necessary to pay the schedule of anticipated cash flow requirements associated with the construction of the Compliance Equipment by depositing the funds into an escrow account. In return, USGen will pay to ISO defined percentages of its gross margin from the Salem Harbor Facility, subject to certain conditions, on both a monthly and a yearly basis until USGen has repaid, with interest, the actual costs associated with the construction of the Compliance Equipment. If USGen permanently retires all or a portion of the Salem Harbor Facility, USGen's obligation to make any further repayments to ISO will be terminated. USGen currently estimates that the costs to construct the Compliance Equipment will be $85,000,000 -- although the exact amount of the costs and the precise measures USGen will implement to achieve continuing compliance with the DEP Regulations remain flexible. The final cost estimates, which will be used to determine ISO's obligations to deposit funds into the escrow account pursuant to the Reliability Agreement, will be agreed on by the parties after the Reliability Agreement has become effective -- including acceptance by FERC -- and after ISO notifies USGen that the funding mechanism established in the Reliability Agreement should be initiated to ensure that the Salem Harbor Facility may remain available for reliability purposes. The Reliability Agreement neither compels ISO to fund nor USGen to pay back any specific amount of money. If USGen can work out an agreement with DEP and various other stakeholders that accommodates both system reliability and the Salem Harbor Facility's continued compliance with the DEP Regulations without the need to make the capital improvements contemplated in the Reliability Agreement, then ISO may well not initiate the funding process. Similarly, if the Salem Harbor Facility will not be needed beyond the next several years to provide a reliability supply of electricity, whether due to a drop in demand, construction of transmission lines or construction of new generation, then ISO may well not initiate the funding process. At this time, the external factors are unclear. Therefore, the most prudent course is to provide a contractual mechanism for the funding, if and when it becomes necessary. A full-text copy of the Reliability Agreement between USGen and ISO is available at no charge at: http://bankrupt.com/misc/USGen_Reliability_Agreement_with_ISO_New_England.pd f Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) PILLOWTEX CORP: Wants Court to Disallow Various Big Claims ---------------------------------------------------------- The Pillowtex Corporation Debtors ask the Court to disallow and expunge two claims that are duplicative of claims filed against the same Debtor for the same amount: Duplicate Remaining Claimant Claim No. Claim No. Amount -------- --------- --------- ------ Commonwealth of Virginia 1763 47 $91,199 State of South Carolina 1832 1419 3,592 Amended Claims The Debtors found two claims in the claims register that were already amended by another claim: Amended Remaining Claimant Claim No. Claim No. Amount -------- --------- --------- ------ Box USA, Inc. 35 720 $59,794 State of North Carolina 4228 4310 19,513,880 To avoid double recovery for the Claimants, the Debtors want the Amended Claims disallowed. Claims Based on Stock Ownership and Warrants Pursuant to Rule 3003(c)(1) of the Federal Rules of Bankruptcy Procedure, only a creditor or an indenture trustee may file claims in a Chapter 11 case. Holders of shares of Pillowtex common stock or warrants exercisable for shares of Pillowtex common stock may not file proofs of claim on account of the holdings. Accordingly, the Debtors ask Judge Walsh to disallow and expunge: -- the unliquidated portion of James P. Seery's Claim No. 3548, which is filed on account of warrants exercisable for shares of Pillowtex common stock; and -- seven claims based entirely on the ownership of Pillowtex common stock: Claimant Claim No. Amount -------- --------- ------ Burkett, Herman 346 $9,887 Dupree, Kyle 3380 2,380 Mitchell, Jimmy 2389 15,403 Moravec, Joseph 4070 13,395 Rothchild, Louis 1910 894 Schnepp, Keith 3371 7,405 U.S. Bancorp Leasing 3478 3,211,000 Incorrect Debtor Claims The Debtors discovered 27 claims aggregating $640,367 filed in the wrong Debtor's cases. The Debtors propose to reclassify the claims as filed in the correct Debtor's case. The Incorrect Debtor Claims include: Claimant Claim No. Amount -------- --------- ------ Barton Protective Services 4076 $376,469 Box USA, Inc. 720 59,794 Corestaff Services 138 16,792 Murata Machinery USA, Inc. 827 25,812 Nissan Liftrucks of Memphis, LLC 914 5,680 PAXAR Corporation 106 76,613 Smith & Williams Co. 295 23,596 SNS International 245 10,304 Thomas M. Smith Lawn Care 94 6,632 TXU Energy Retail Company, LP 118 25,672 Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sells top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211). David G. Heiman, Esq., at Jones, Day, Reavis & Poque represents the Debtors in their restructuring efforts. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) POLO BUILDERS: U.S. Trustee Meets With Creditors on July 27 ----------------------------------------------------------- The United States Trustee will convene a meeting of Polo Builders, Inc.'s creditors at 1:30 p.m., on July 27, 2004, in Room 3330 at 227 W. Monroe Street, Chicago, Illinois 60606. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Pittsburgh, Pennsylvania, Independence Court of Ormond Beach Associates LP operates an assisted living facility. The Company filed for chapter 11 protection on June 21, 2004 (Bankr. M.D. Fla. Case No. 04-06355). Albert H. Mickler, Esq., at Mickler & Mickler represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $342,120 in total assets and $6,185,065 in total debts. Headquartered in Villa Park, Illinois, Polo Builders, Inc., filed for chapter 11 protection on June 23, 2004 (Bankr. N.D. Ill. Case No. 04-23758). Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debts and assets of over $10 million. QWEST COMMS: Signs Exclusive 2-Year Service Contract with Wet Seal ------------------------------------------------------------------ Qwest Communications International Inc. (NYSE: Q) signs an exclusive, two-year contract to provide The Wet Seal, Inc., a leading specialty retailer of contemporary apparel and fashion accessories, with long-distance voice communication services. Under the contract, Qwest will connect all of the company's nearly 600 retail stores with its California-based corporate office and will also provide local voice services to over 60 stores located in Qwest's 14-state local service region. "This new agreement with Qwest will substantially reduce our long- distance costs while providing us with a high level of service," said Gerry Adams, director of networks and systems of The Wet Seal, Inc. Headquartered in Foothill Ranch, Calif., The Wet Seal, Inc. owns and operates 575 Wet Seal and Arden B. stores in 47 states, the District of Columbia and Puerto Rico. "We are pleased that The Wet Seal chose Qwest as the communications provider for its retail operations," said Clifford S. Holtz, executive vice president of Qwest's business markets group. "Our nationwide communications network makes Qwest ideal for connecting multi-location businesses, such as The Wet Seal." About The Wet Seal, Inc. Headquartered in Foothill Ranch, California, The Wet Seal, Inc. (NASDAQ: WTSLA) is a leading specialty retailer of fashionable and contemporary apparel and accessory items. The company currently operates a total of 575 stores in 47 states, the District of Columbia and Puerto Rico, including 476 Wet Seal and 99 Arden B. stores. The company's products can also be purchased online at http://www.wetseal.com/or http://www.ardenb.com/For more company information, visit http://www.wetsealinc.com/ About Qwest Qwest Communications International Inc. (NYSE: Q) is a leading provider of voice, video and data services to more than 25 million customers. The company's 46,000 employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at http://www.qwest.com/ R L WASHINGTON: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: R. L. Washington Enterprises, Inc. 1030 Rugglestone Way Duluth, Georgia 30097-7821 Bankruptcy Case No.: 04-70954 Type of Business: The Debtor operates a fine dining restaurant offering a variety of steak, poultry and seafood dishes. Chapter 11 Petition Date: July 5, 2004 Court: Northern District of Georgia (Atlanta) Judge: Margaret Murphy Debtor's Counsel: Diana McDonald, Esq. Law Office of Diana McDonald Suite C - George Towne Creek 2800 Peachtree Industrial Boulevard Duluth, GA 30097 Tel: 678-542-2255 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 11 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Payroll withholding $11,000 taxes Buckhead Beef Trade debt $8,118 Sysco Food Services Of Trade debt $7,484 Atlanta PFG Milton's Trade debt $3,952 National Linen Trade debt $3,883 Suwanee Power Trade debt $3,847 B B & T Bank Card Corp. Trade debt $3,203 U.S. Food Service Trade debt $2,729 Waste Management of Atlanta Trade debt $2,300 Georgia Natural Gas Trade debt $1,216 FreshPoint Trade debt $1,039 REFCO GROUP: S&P Rates Long-Term & Senior Secured Debt at BB- ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' long-term counterparty credit rating to Refco Group Ltd., its 'BB-' rating to the firm's $800 million senior secured bank term loan and $75 million senior secured revolving credit facility, and its 'B' rating to the firm's $600 million senior subordinated notes due 2012. The outlook is stable. The proceeds from the note issuance and the senior secured bank loan, with the addition of an equity investment from Thomas H. Lee Partners L.P., will be used to recapitalize the firm, including the buyout of certain shareholders. "The ratings are based on Refco's strong and well-established franchise as one of the leading firms in futures and options brokerage, prime brokerage, U.S. Treasury, and foreign exchange markets," said Standard & Poor's credit analyst Tom Foley. The firm also has a strong and well-seasoned management team and a good earnings track record. Offsetting these strengths is the weak capitalization, pro forma for the recapitalization, with respect to tangible equity. Refco, which was founded in 1969, is the largest broker, by volume, on The Chicago Mercantile Exchange and the Chicago Board of Trade. In addition to futures brokerage, the firm provides prime brokerage services to large institutional investors in the U.S. Treasury and foreign exchange markets. Retail futures brokerage services include products provided by Refco's Lind- Waldock division. Refco has its headquarters in New York City, and has offices worldwide. After the recapitalization, Refco will continue to be privately held and will have management and TH Lee as its shareholders. RELIANCE GROUP: Bank Committee Responds To Disclosure Objections ---------------------------------------------------------------- On the Bank Committee's behalf, Andrew P. DeNatale, Esq., at White & Case, in New York City, tells the Court that the confirmability of the chapter 11 Plan proposed for Reliance Financial Services Corporation should be decided at the Confirmation Hearing. The hearing on the Disclosure Statement is not a miniature Confirmation Hearing. Only if a plan is unconfirmable on its face should the Court entertain confirmation objections at the Disclosure Statement Hearing. Otherwise, confirmation objections disguised as disclosure statement objections should not be considered until confirmation. Classification of Claims and Interests The PBGC argues that the Plan's classification scheme violates the Bankruptcy Code by treating Bank Claims and General Unsecured Claims similarly. Mr. DeNatale emphasizes that the Bank Claims and the General Unsecured Claims cannot be classified together, because the Bank Claims are secured claims. The Banks were granted a security interest in the common stock of Reliance Insurance Company. The security interest was properly perfected when JPMorgan Chase Bank, as successor stock collateral agent under the Pledge Agreement, obtained the RIC Common Stock by taking delivery of a stock certificate and related stock transfer powers. The control of the RIC Common Stock is a valuable property right. The Banks also have a properly perfected security interest in all "proceeds" of the RIC Common Stock. Pursuant to Section 2.1 of the Pledge Agreement, the Banks were granted a security interest in any proceeds derived from the collateral. Distributions by RIC to Reliance Financial Services Corporation on account of the RIC Common Stock, including distributions of the Section 847 Refunds or benefits from the NOLs, constitute "proceeds" and are part of the Banks' collateral. Mr. DeNatale tells the Court that the Banks' security interest in the RIC Common Stock has value. The PBGC asserts that because the collateral may not have any value and the Bank Claims are undersecured, these Claims should be classified as general unsecured claims. The PBGC is correct in that a "secured creditor's allowed claim is limited to the value of the collateral." However, this does not mean that the Bank Claims should be classified with the General Unsecured Claims since the Banks' collateral has value. Therefore, although the Banks may be undersecured, they are not unsecured and it would be a violation of Section 1122(a) of the Bankruptcy Code to classify the secured portion of their claims in the same class as the General Unsecured Claims. The RIC Common Stock has value because M. Diane Koken, the RIC Liquidator, and Reliance Group Holdings allocated assets to RFSC under the PA Settlement Agreement and the RGH/RFSC Settlement. The value of the RIC Common Stock is based on the recovery of tax attributes that constitute a major asset of the RFSC estate, the RIC estate and the RGH estate. The Liquidator and RGH would not have allocated to RFSC a portion of the potential proceeds of the Tax Attributes if the collateral was worthless. Consequently, the collateral has value and the Banks have a secured claim that they will exchange for the shares of New RFSC Common Stock. Mr. DeNatale states that there is a legitimate reason for separate classification. The realization of the Tax Attributes, which constitute the majority of RFSC's assets, are subject to complex rules and regulations. The recovery of the Section 847 Refunds is dependent on the NOLs. The NOLs will be rendered inert unless the Reorganized RFSC stock is granted to the Holders of the Bank Claims since, pursuant to the relevant regulations, over 50% of Reorganized RFSC's stock must go to qualified creditors under the Internal Revenue Code. The Holders of the Bank Claims are the only qualified RFSC creditors under the IRC. Thus, the Reorganized RFSC stock cannot be granted to creditors other than the Holders of the Bank Claims without risk to the viability of the Tax Attributes. The Release Provisions The proposed releases under the Plan are proper. The U.S. Trustee argues that the releases provided in the Plan are overbroad and the Plan is not confirmable. Mr. DeNatale contends that the objection relates to the confirmability of the Plan rather than the adequacy of the Disclosure Statement and does not render the Plan unconfirmable. As a result, this issue should be addressed at the Confirmation Hearing, when objecting parties will have a full opportunity to be heard. Mr. DeNatale observes that the objections mischaracterize the release provisions as overly broad, when in fact, they are narrowly tailored. Mr. DeNatale points out that there are no non-consensual releases under the Plan. Releases will only be given to parties who are unimpaired or who vote to accept the Plan. The Holders of claims or equity interests who reject the Plan or are deemed to have rejected the Plan, will not be granted a release. In addition, the Plan does not provide an absolute release from all liability. The release provisions have no affect on liability in the criminal or civil context for violations of the tax codes, environmental laws or criminal laws. The parties receiving releases have been intimately involved in the Chapter 11 Cases, namely the Committees, the Banks, RFSC and RGH and their officers, directors, employees and professionals. These parties have preserved the ability of RFSC and RGH to reorganize rather than liquidate. These individuals have negotiated multiple settlements among RFSC, RGH and the Liquidator to facilitate RFSC's reorganization. Mr. DeNatale asserts that those efforts constitute consideration for the releases. Moreover, the releases constitute an essential part of the proposed restructuring. If the release provisions are removed, the Bank Committee and the Banks will be unwilling to sponsor the Plan. The Books and Records The Liquidator complains that the current Plan provisions for the retention and disposition of books and records violate applicable non-bankruptcy law. Mr. DeNatale states that the objection relates to the confirmability of the Plan rather than the adequacy of the Disclosure Statement and does not render the Plan patently unconfirmable. To address the Liquidator's concerns, the Bank Committee revises the Plan to provide that: "After the Effective Date and as soon as the disposition of the books and records of the Debtor and Reorganized Debtor shall be legally feasible, the CEO shall seek to dispose of such books and records as the CEO deems appropriate, upon notice to the Liquidator and any other persons the CEO deems appropriate. To the extent that the Liquidator at any time requires such books and records for its own purposes or determines that any or all of them should not be disposed, the Liquidator shall be allowed the reasonable opportunity to take possession of any or all of such books and records." The Bank Committee also revises the Plan to provide for the resolution of any disputes regarding the retention or disposition of books and records: ". . . with respect to any disputes relating to or arising under . . . the Plan, the Bankruptcy Court shall not have exclusive jurisdiction . . ." 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. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) ROYAL HAWAIIAN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Royal Hawaiian Entertainment, Inc. 2201 Kalakaua Avenue, Suite A402 Honolulu, Hawaii 96815 Bankruptcy Case No.: 04-01747 Chapter 11 Petition Date: July 12, 2004 Court: District of Hawaii (Honolulu) Judge: Robert J. Faris Debtor's Counsels: Christopher J. Muzzi, Esq. Ted N. Pettit, Esq. Case Bigelow & Lombardi Pacific Guardian Center, Mauka Tower 737 Bishop Street, Suite 2600 Honolulu, HI 96813 Tel: 808-547-5400 Fax: 808-523-1888 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Lynne T. Nakama, CPA $650,000 Trustee of RHEI Shareholders Liquidating Account 1299 S. Beretania St. #200 Honolulu, HI 96814 Allen L. Zecha $100,000 Michael Yee, Esq. $50,000 Sanjo Corporation $1,594 Viacom $1,333 Oahu Air Conditioning Service, Inc. $732 Security Equipment Corp. $490 Retail Display & Design $322 Office Product Warehouse $319 Mapco $278 American Linen $222 Home Depot / GECF $195 Pacific Lightnet Communications $148 EZ Access Storage Systems, Inc. $134 Verizon Hawaii, Inc. $125 Young Laundry & Drycleaning $101 Pacific Business Machines, Inc. $67 Nextel Partners $56 Au's Extinguisher Service LLC $42 Usuable Life $25 SHAW GROUP: Subsidiary Awarded EPC Contract by Marathon Ashland --------------------------------------------------------------- Shaw Constructors, Inc., a subsidiary of Shaw Group Inc. (NYSE: SGR), was awarded an engineering, procurement and construction (EPC) services contract by Marathon Ashland Petroleum LLC (MAP) for MAP's Louisiana Refining Division. Under the contract, Shaw will provide EPC services for a distillate hydrotreater unit at MAP's Garyville, Louisiana refinery. The distillate hydrotreater unit, which is the second phase of MAP's clean fuels project at the Garyville refinery, will produce 46,000 barrels per day of ultra low sulfur diesel in compliance with the Clean Air Act regulations recently mandated by the U.S. Environmental Protection Agency (EPA). Shaw was previously awarded the first phase of MAP's clean fuels project for the same facility in September 2003, which included EPC services for a gasoline desulfurization unit and a coker naphtha splitter unit. Phase I construction is underway. Michael P. Childers, President of Shaw's Engineering, Construction and Maintenance division, stated, "We are pleased to have expanded our involvement in this important project for Marathon Ashland. This project is a significant step in helping our clients around the world meet new clean fuels regulations. Our international and domestic clean fuels experience as well as our extensive refinery expertise position Shaw well to secure additional projects of this magnitude and to further expand our portfolio of clean fuels solutions around the globe." Based in Findlay, Ohio, MAP is the nation's fifth largest oil refiner with 935,000 barrels-per-day capacity in its seven- refinery system. MAP is a limited liability company owned 62 percent by Marathon Oil Corporation (NYSE:MRO) and 38 percent by Ashland Inc. (NYSE:ASH). The Shaw Group Inc. is a leading global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation and facilities management services for government and private sector clients in the power, process, environmental, infrastructure and emergency response markets. A Fortune 500 company, Shaw Group is headquartered in Baton Rouge, Louisiana and employs approximately 17,000 people at its offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region. * * * As reported in the Feb. 10, 2004, issue of the Troubled Company Reporter, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating and its other ratings on The Shaw Group Inc. At the same time, Standard & Poor's revised the outlook on the company to negative from stable. "The outlook revision reflects the fact that profitability and cash flow generation for fiscal 2004 ending August will be weaker than previously anticipated, because of continuing challenges on a few problem projects, reduced expectations of asset divestitures, and weakness in the higher margin pipe manufacturing operation," said Standard & Poor's credit analyst Heather Henyon. As a result, it is unlikely that Shaw will be able to meet Standard & Poor's expectations of total debt to EBITDA of 2.5-3x and EBITDA to interest coverage in the 3x area in 2004. However, a growing backlog of more steady environmental and infrastructure projects may enable the company to achieve an acceptable credit profile in the intermediate term. SIGHT RESOURCE: Look for Bankruptcy Schedules by August 23 ---------------------------------------------------------- Sight Resource Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, for more time to file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtors tell the Court that despite the relatively modest size of their overall business, they have multiple locations in seven states, and a correspondingly large number of landlords, vendors, employees and customers at and in connection with those locations. The Debtors cite four reasons why they won't be in a position to complete the Schedules and Statements by the deadline imposed by Rule 1007 of the Federal Rules of Bankruptcy Procedure: (a) the multiple number of debtors; (b) the number and diversity of their respective creditors; (c) the limited staffing available to perform the required internal review of their accounts and affairs; and (d) the press of business incident to the commencement of these Chapter 11 cases, the Debtors were unable to assemble, prior to the Petition Date, all of the information necessary to complete and file the Schedules and Statements. Completing the Schedules and Statements for each of the Debtors will require the collection, review and assembly of information from multiple locations. Nevertheless, the Debtors intend to complete the Schedules and Statements as quickly as possible under the circumstances. The Debtors believe that they can submit the Schedules and Statements on or before August 23, 2004. Headquartered in Cincinnati, Ohio, Sight Resource Corporation -- http://www.sightresource.com/-- manufactures, distributes and sells to the general public eyewear and related products and services through retail eye care centers operated by its wholly owned subsidiaries. The Company filed for chapter 11 protection on June 24, 2004 (Bankr. S.D. Ohio Case No. 04-14987). Jennifer L. Maffett, Esq., and Louis F Solimine, Esq., at Thompson Hine LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $5,400,000 in total assets and $12,500,000 in total debts. SIRIUS SATELLITE: Registers 2-1/2% Conv. Notes & Shares for Resale ------------------------------------------------------------------ Sirius Satellite Radio Inc. has prepared a prospectus relating to resales of its 2-1/2% Convertible Notes due 2009 issued in private offerings and 68,027,220 shares of its common stock issuable upon conversion of the notes, plus an indeterminate number of additional shares of common stock that may be issued from time to time upon conversion of the notes as a result of antidilution adjustments, in circumstances described in the prospectus. The notes and the shares of common stock may be sold from time to time by, and for, the account of the selling security holders named in the prospectus or in supplements to the prospectus. The selling securityholders may sell all, or a portion of, the notes or the shares of common stock from time to time in market transactions, in negotiated transactions or otherwise, and at prices and on terms which will be determined by the then prevailing market price for the notes, or at negotiated prices directly, or through a broker or brokers who may act as agent, or as principal, or by a combination of such methods of sale. The Company will not receive any of the proceeds from the sale of the notes or the shares of common stock offered by the selling securityholders. The selling securityholders will receive all proceeds from the sale of the notes or the shares of common stock being registered. Sirius Satellite Radio will pay cash interest on the notes at the rate of 2-1/2% per year. Cash interest is payable semiannually in arrears on February 15 and August 15 of each year, beginning August 15, 2004, until February 15, 2009. Holders may convert all, or a portion, of their notes into shares of Company common stock prior to the close of business on the final maturity date of the notes, subject to prior redemption or repurchase of the notes. The conversion rate is 226.7574 shares of Company common stock per $1,000 principal amount of the notes. The conversion rate is subject to adjustment in certain events, such as an issuance by the Company of common stock as a dividend or distribution on its common stock, or a subdivision or combination of its common stock. Sirius Satellite Radio may not redeem the notes in whole or in part at its option prior to maturity. If the Company experiences specified types of fundamental changes prior to the maturity of the notes, holders may require it to purchase the notes, in whole or in part, at a price equal to 100% of the principal amount of the notes to be purchased, plus accrued interest to, but excluding, the repurchase date. The notes will be repurchased only in integral multiples of $1,000 principal amount. The notes are the Company's senior unsecured obligations and will rank equally with all of its other existing and future senior unsecured indebtedness and prior to all subordinated indebtedness. However, the notes are effectively subordinated to all of the Company's existing and future secured debt, to the extent of the security on such other indebtedness. The notes are not listed on any national securities exchange or on Nasdaq. The Company's common stock is quoted on the Nasdaq National Market under the symbol "SIRI". On May 19, 2004, the sale price of the common stock was $3.18 per share. About SIRIUS SIRIUS -- http://www.SIRIUS.com/-- is the only satellite radio service bringing listeners more than 100 streams of the best music and entertainment coast-to-coast. SIRIUS offers 61 music streams with no commercials, along with over 40 world-class sports, news and entertainment streams for a monthly subscription fee of only $12.95, with greater savings for upfront payments of multiple months or a year or more. SIRIUS is also the official satellite radio partner of the NFL. Stream Jockeys create and deliver uncompromised music in virtually every genre to our listeners 24 hours a day. Satellite radio products bringing SIRIUS to listeners in the car, truck, home, RV and boat are manufactured by Kenwood, Panasonic, Clarion and Audiovox, and are available at major retailers including RadioShack, Circuit City, Best Buy, Car Toys, Good Guys, Tweeter, Ultimate Electronics, Sears and Crutchfield. SIRIUS is the leading OEM satellite radio provider, with exclusive partnerships with DaimlerChrysler, Ford and BMW. Automotive brands currently offering SIRIUS radios in select new car models include BMW, MINI, Chrysler, Dodge, Jeep(R), Nissan, Infiniti, Mazda, Audi, Ford and Lincoln-Mercury. Automotive brands that have announced plans to offer SIRIUS in select models include Mercedes-Benz, Jaguar, Volvo, Volkswagen, Land Rover and Aston Martin. Genmar Holdings, the world's largest manufacturer of recreational boats, Formula Boats and Winnebago, the leading supplier of recreational vehicles and motor homes, also offer SIRIUS. Hertz currently offers SIRIUS in 29 vehicle models at 53 major locations around the country. * * * As previously reported, Standard & Poor's Ratings Services assigned its 'CCC-' rating to Sirius Satellite Radio Inc.'s new $250 million convertible notes due 2009. At the same time, Standard & Poor's affirmed its existing ratings, including its 'CCC' corporate credit rating, on the satellite radio broadcaster. The outlook is stable. The New York, New York- based firm has approximately about $450 million in debt. "The company is expected to use the proceeds for general corporate purposes, including expanding distribution and product development," according to Standard & Poor's credit analyst Steve Wilkinson. He noted, "The added liquidity is important to ratings stability given the considerable cash being consumed as Sirius works to accelerate subscriber growth." SOLUTIA INC: Asks for November 15 Deadline to Decide on Leases -------------------------------------------------------------- Solutia, Inc., and its debtor-affiliates ask the Bankruptcy Court for more time to decide whether to assume, assume and assign, or reject their unexpired real property leases. The Debtors ask for an extension of the deadline to and including November 15, 2004, without prejudice to their ability to request a further extension. M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher, LLP, in New York, relates that the Debtors are currently lessees under more than 40 Unexpired Leases. The Debtors use the leases premises in connection with their business operations throughout the United States. Many of the Debtors' business offices, from which the Debtors conduct all aspects of their business operations, are in space that is subject to Unexpired Leases. Thus, the Unexpired Leases are valuable assets of the Debtors' estates and are integral to the continued operation of their businesses. With the Official Committee of Unsecured Creditors' input, the Debtors developed an overall business plan that contemplates significant cost reductions as a means of improving the performance and viability of each of the Debtors' businesses. As part of implementing the business plan, the Debtors are evaluating the Unexpired Leases to determine which leases are beneficial to business operations and which leases should be rejected to reduce costs. Though continuing to review and analyze the Unexpired Leases, the Debtors believe that they will not be able to decide whether to assume or reject all of the Unexpired Leases before the August 16, 2004 Lease Decision Deadline. According to Ms. Labovitz, the Debtors do not want to make premature assumption or rejection decisions that may result in their incurring a substantial administrative claim or the loss of a valuable lease. The Debtors want to continue to address the process in a rational and practical manner that will benefit their estates, their creditors and all other parties-in-interest. Due to the significant amount of information the Debtors must consider in evaluating each Unexpired Lease in connection with the business plan, the number of Unexpired Leases, and the complexity of the Debtors' businesses, the Debtors require additional time to ensure that their decisions regarding the Unexpired Leases will be supported by sound business judgment. 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. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL: Wants Court Nod To Assume & Assign Newport News Lease -------------------------------------------------------------- Andrew V. Tenzer, Esq., at Shearman & Sterling, LLP, in New York, relates that on June 16, 2004, the Court approved the Amended and Restated Stock and Asset Purchase Agreement, dated June 7, 2004, pursuant to which: (i) substantially all assets and liabilities of Newport News, Inc., would be sold, assigned and transferred to Newport News Holdings Corporation -- a newly formed, wholly owned non-Debtor subsidiary of one of the Spiegel Group Debtors -- in exchange for all of the issued and outstanding stock of Newport News Holdings; (ii) that Debtor would transfer the stock of Newport News Holdings to Spiegel, Inc.; and (iii) Spiegel would sell the stock of Newport News Holdings to Newport News International Limited -- formerly known as Pangea Acquisition 8 Limited. The transactions under the Newport Purchase Agreement have been consummated and, as a result, Newport News International owns 100% of Newport News Holdings' common stock to which 100% of Newport News' assets and liabilities have been contributed. Hence, the Debtors seek the Court's authority to assume and assign all right, title and interest to a certain lease agreement between SLG 711 Third, LLC, and Newport News, dated March 14, 1995, to Newport News Holdings. As a result of the Newport Asset Sale, the Debtors no longer require the premises that are the subject of the Lease. Accordingly, the parties agreed that the Lease should be included among the Purchased Assets and that Newport News will assume the Lease and assign it to Newport News Holdings. It was also agreed that Newport News Holdings will pay, perform and discharge when due, all of the liabilities of Newport News arising under, or relating to performance under the Lease. Newport News has also agreed that it will pay all cure costs associated with the assumption and assignment of the Lease and will use reasonable efforts to obtain a Court order necessary to assume and assign the Lease to Newport News Holdings. Newport News Holdings and Newport News International have further agreed that from and after the assignment of the Lease, Newport News Holdings and Newport News International will be responsible for any and all liabilities under the Lease. From and after the Newport Sale Closing until the date an order authorizing the assumption and assignment of the Lease is entered, the terms of a Transition Services Agreement executed in connection with the Purchase Agreement will govern with respect to the Lease. To the extent that any monetary defaults exist under the Lease, Newport News or the Debtors will cure any of these defaults prior to the assumption and assignment of the Lease. Newport News and the Debtors submit that Newport News Holdings, as owner of all of the interests in and guarantor of all of the obligations under the Lease, has sufficient financial resources and experience to assure the Lessor of adequate future performance. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and 1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 215/945-7000) TEXAS PETROCHEMICALS: Names Charles W. Shaver President and CEO --------------------------------------------------------------- Newly reorganized company Texas Petrochemicals LP (TPC) elects Charles W. Shaver, 45, as President, Chief Executive Officer and a member of the board of directors. He succeeds Carl S. Stutts who has served as President and CEO of TPC since April 2003. Mr. Shaver, with more than 24 years of experience in the chemical industry, joins TPC from Gentek, Inc. where he served as vice president with specific responsibility for the chemical businesses of Gentek. Prior to that, he served in a succession of global operational and business management positions in Dow Chemical and Arch Chemical. Mr. Shaver is a chemical engineering graduate from Texas A&M University and currently serves on the Advisory Council to the Look College of Engineering at Texas A&M. He and his family will relocate to Houston from Ridgefield, CT. "I am excited about the opportunity to join TPC, the market leader in butadiene processing in North America, and look forward to the challenges as we build upon that position over the next several years," said Mr. Shaver. The company also announces that Mr. Frederick M. Pevow, Jr., interim senior vice president and CFO, is succeeding Joseph Grady, who served as CFO since May 2003. Mr. Pevow joins TPC from Teal Capital Partners, a boutique merchant and investment banking firm. Prior to that, he served as a senior investment banker at CIBC World Markets and Salomon Smith Barney and predecessors. After filing for bankruptcy in July 2003, the company successfully emerged from Chapter 11 in May 2004. TPC, a Houston-based company, maintains market leadership positions in the C4 hydrocarbon-based commodity and specialty chemicals market at http://www.txpetrochem.com/ The company is a producer of quality C4 chemical products widely used as chemical building blocks for synthetic rubber, nylon carpets, adhesives, catalysts and additives used in high- performance polymers. The company has manufacturing facilities in the industrial corridor adjacent to the Houston Ship Channel and operates product terminals in Baytown, Texas and Lake Charles, Louisiana. For more information about the company's products and services, visit the Company online Texas Petrochemicals LP Announces Changes in Executive Management Team TNP ENTERPRISES: Fitch Downgrades Ratings to Low-B & Junk Levels ---------------------------------------------------------------- Fitch has downgraded the ratings of TNP Enterprises, Inc. and Texas New Mexico Power Company following Fitch's review of a draft order by the Public Utility Commission of Texas regarding TNMP's stranded cost recovery filing. The ratings are removed from Rating Watch Negative. The Rating Outlook is Negative. TNMP had requested recovery of $266 million in stranded costs in accordance with Texas' restructuring law, Senate Bill 7. This amount consists primarily of the difference between the book value of TNP One and proceeds from the sale of that asset in 2002 and offsetting amounts relating to the reconciliation of prior fuel expenses and to retail customers retained by TNMP's retail affiliate. The PUCT draft order acknowledges stranded costs of a range of $87 million to $98 million. While the company and other intervenors in the case can appeal the decision, in the interim the company is exposed to continuing uncertainty. Fitch expects the disallowance to have a substantial negative effect on financial results and particularly on debt reduction by TNMP and TNP. The TNP downgrades also reflect weaker than expected financial results at FCP during the first half of 2004 as a result of competitive pressure in the Texas marketplace in addition to the unfavorable implications of the recently announced stranded cost disallowance at TNMP. A final PUCT ruling similar to the draft order would cause TNMP to record a non-cash write-down of roughly $100 million. Such a write-down could result in materially lower dividends from TNMP to its parent and cause the parent to rely on dividends from the more volatile FCP. The disallowance is not expected to trigger a covenant violation under the parent's bank facility, but TNP would have less margin to offset any future business set-backs. The ratings of TNP's unsecured debt obligations and preferred stock also consider Fitch's expectation of less favorable recoveries in the event of a default. TNP is a highly leveraged holding company with limited financial flexibility. Parent debt is structurally subordinated to both TNMP debt and FCP's creditors and relies on cash flow from dividends from TNMP and FCP and a tax sharing arrangement. TNP's senior credit facility which matures in 2006 is secured by a pledge of TNMP and FCP common stock. The downgrade of TNMP's senior unsecured debt rating reflects the expectation of slower deleveraging and weakened financial measures as a result of the disallowance, as well as the possibility of a distribution rate decrease. TNMP's ratings have historically considered the utility's relatively stable financial performance and low risk business profile while also considering the relationship between the utility and its affiliate, FCP. Since FCP obtained a new power supply arrangement with Constellation Power Source, Inc., TNMP no longer provides guarantees of affiliate obligations. The Negative Outlook for both companies reflects continuing exposure to the challenges of the deregulated Texas retail supply market and heightened refinancing risk. TNP has announced engaging a financial advisor on strategic alternatives, and the ratings could be affected favorably or unfavorably depending on the terms and structure of a strategic transaction. TNMP is an electric utility with about 238,000 customers in Texas and New Mexico. FCP provides retail supply service to customers both in TNMP's Texas service territory and in other parts of Texas and does not own any generation. The following ratings were downgraded and removed from Rating Watch Negative TNP Enterprises, Inc.: --Senior secured bank facility to 'B+' from 'BB'; --Senior subordinated notes to 'B' from 'BB-'; --Preferred stock, to 'CCC' from 'B+'; --Rating Outlook Negative. Texas New Mexico Power Company --Senior unsecured notes to 'BB' from 'BB+'; --Rating Outlook Negative. TWODAYS PROPERTIES: Lease-Related Decisions not Due Until Aug. 6 ---------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the District of Kansas, Two Days Properties, LLC and its debtor-affiliates obtained an extension of their lease decision period. The Court gives the Debtors until August 6, 2004 to determine whether to assume, assume and assign, or reject their unexpired nonresidential real property leases. TwoDays Properties LLC is a Wichita, Kansas based management and real estate company, which owns the real estate under 12 restaurants, and in turn leases all 12 to the operating companies. The Company filed for chapter 11 protection on April 8, 2004 (Bankr. D. Kans. Case No. 04-11792). Edward J. Nazar, Esq., at Redmond & Nazar LLP and Douglas S. Draper, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed both estimated debts and assets of over $10 million. UAL CORP: Wants Nod To Restructure 10 Aircraft Financing Pacts -------------------------------------------------------------- The UAL Corporation Debtors seek the Court's permission to reject 10 aircraft financing arrangements, settle and compromise claims arising from the rejected financing arrangements, and amend or restructure the financing arrangements to consummate certain postpetition lease financing transactions. James H.M. Sprayregen, Esq., at Kirkland & Ellis, reminds the Court that the Debtors have negotiated with many aircraft financing parties who have economic interests in the fleet. The Debtors have rejected aircraft leases and abandoned several aircraft to unburden the bankruptcy estate of costly and surplus assets. This process is integral to the Debtors' overall restructuring and to rationalize the Debtors' cost structure and reduce their debt burden. After several months of negotiations, the Debtors and Societe Nationale d'Etude et de Construction de Moteurs d'Aviation reached an agreement to amend and restructure the financing arrangements for 10 aircraft. Tail No. N178UA is currently financed as a U.S.-leveraged lease. The Debtors and the N178UA Aircraft Financiers will convert and restructure the current financing arrangement into a single investor-operating lease. The Financing Arrangements for aircraft with Tail Nos. N943UA, N944UA, N945UA, N946UA, N948UA, N951UA, N955UA, N956UA and N957UA are structured as U.S.-leveraged leases, French-leveraged leases or Secured Financings, in which Snecma owns the debt. For the Snecma Financings, the parties have executed a Term Sheet amending a stipulation that was previously approved by the Court. The amendments provide for interim adequate protection payments for General Electric Company/Snecma-Guaranteed Aircraft. The Debtors and the entities financing the aircraft have negotiated to preserve the Aircraft Financier's rights to assert administrative expense claims and a general unsecured non- priority prepetition claim for damages due to the termination and rejection of the existing financing arrangements. Mr. Sprayregen assures the Court that the restructurings will provide substantial benefits to the Debtors and their bankruptcy estates, namely: (a) significant reductions in the Debtors' rental payment and other obligations, like stipulated loss values and insurance obligations; (b) for the U.S.-leveraged lease, reservation of the Debtors' right to terminate or reject the Financing Arrangement before the consummation of a plan of reorganization; (c) limitations on administrative and general unsecured claims arising from the Debtors' rejections; and (d) for the Snecma transaction, a reduction in the length of the terms to meet the Debtors' current fleet plan. 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. 53; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNIFLEX: U.S. Trustee Names 5-Member Creditors' Committee --------------------------------------------------------- The United States Trustee for Region 3 appointed five creditors to serve on an Official Committee of Unsecured Creditors in Uniflex, Inc.'s Chapter 11 case: 1. Favorite Plastics Attn: Mitchell Kirschner 1465 Utica Avenue Brooklyn, New York 11234 Phone: 718-253-7000, Fax: 718-377-1918; 2. Erick K. Vetter 6822 E. Brownstone Place Tucson, Arizona 85050 Phone: 520-751-2709; 3. Carl R. Welkom 3191 Snow Road Burlington, Kentucky 41005 Phone: 859-689-0997, Fax: 859-689-0997; 4. Honeywell International, Inc. Master Pension Trust Attn: Joseph R. Thorton Attorney in fact c/o W.R. Huff Asset Management Co., L.L.C. 67 Park Place Morris, New Jersey 07960 Phone: 973-984-1233, Fax: 973-984-5818; and 5. Tyco Plastics L.P. Attn: Scott Chase 1401 Wet 94th Street Minneapolis, Minnesota 55431, Phone: 952-885-9378, Fax: 952-885-9237 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 Hicksville, New York, Uniflex, Inc. -- http://www.uniflexbags.com/-- makes custom-printed plastic bags and other plastic packaging for promotions and advertising. The Company filed for chapter 11 protection on June 24, 2004 (Bank. Del. Case No. 04-11852). Peter C. Hughes, Esq., at Dilworth Paxson LLP 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. VESTA INSURANCE: Fitch Removes All Ratings from Negative Watch -------------------------------------------------------------- Fitch Ratings removed all ratings of the Vesta Insurance Group and its subsidiaries from Rating Watch Negative. Fitch affirmed VTA's 'B-' long-term issuer and debt ratings with a Stable Outlook. Fitch also affirmed the 'CCC' capital securities rating of Vesta Capital Trust I. The ratings cover approximately $56 million of public senior debt and $20 million of deferrable capital securities. Fitch also affirmed the 'BB' insurer financial strength ratings of Florida Select Insurance Co., Hawaiian Ins. & Guaranty Co., Shelby Casualty Insurance Co., The Shelby Insurance Co., Vesta Fire Insurance Corporation, Vesta Insurance Corporation, and Texas Select Lloyds Insurance Company with a Stable Outlook. The ratings were placed on Rating Watch on March 5, 2004 following VTA's announcement of an adverse ruling in a reinsurance arbitration dispute. VTA also indicated that it was reviewing the implication of the ruling on other reinsurance recoverables, as well as the recoverability of its deferred tax asset. Vesta subsequently announced that it has written off the reinsurance recoverables related to the arbitration ruling and had established a valuation allowance for its deferred tax asset, resulting in a combined fourth quarter 2003 GAAP charge of $118.8 million. Today's rating action follows Vesta's successful completion of an initial public offering of its Affirmative Insurance Holdings (AFFM) subsidiary. Vesta sold 3.75 million shares of AFFM for net proceeds of approximately $48.8 million. The underwriters have a 30-day option to purchase an additional 563,000 shares from VTA, which would generate additional proceeds of $7.3 million. Assuming full exercise of the underwriters' option, VTA will own 43% of AFFM. The affirmations of VTA's ratings reflect its successful completion of the offering, which enabled it to replenish capital lost as a result of the arbitration and deferred tax write-downs. Additionally, the transaction transfers approximately $180 million of annual premium to AFFM, which should enable VTA to reduce its gross leverage. The affirmations also assume VTA will successfully complete the sale of its American Founders life insurance subsidiary for $63.5 million. A definitive agreement has been reached in that transaction, which currently awaits state regulatory approval of the sale. The ratings also recognize that, subsequent to the sale of AFFM, VTA is a smaller and less diversified insurance organization. Additionally, the business retained by VTA contains considerable natural catastrophe risk. Fitch also notes that the proceeds from the sale of American Founders are in the form of cash and a $38.5 million note. Therefore, the sale exposes VTA to some credit risk. Vesta Insurance Group, Inc., headquartered in Birmingham, AL, is a holding company for a group of insurance companies. Fitch ratings affected: --Florida Select Insurance Co. --Hawaiian Ins. & Guaranty Co. --Shelby Casualty Insurance Co. --The Shelby Insurance Co. --Vesta Fire Insurance Corporation --Vesta Insurance Corporation --Texas Select Lloyds Insurance Co. --Insurer Financial Strength/Affirm/'BB'/Stable Vesta Insurance Group, Inc.: --Long-term issuer affirmed at 'B-'; Stable Outlook; --Senior debentures due 2025; affirmed at 'B-'; Stable Outlook. Vesta Capital Trust I: --Deferrable capital securities due 2027; affirmed at 'CCC'. WEIRTON: United States EPA Wants Disclosure Statement Modified -------------------------------------------------------------- The United States, through the United States Environmental Protection Agency, is charged with the police and regulatory responsibility to protect public health and the environment under several environmental statutes. Thomas L. Sansonetti, Assistant Attorney General of the U.S. Department of Justice, asserts that Weirton Steel Corporation's Disclosure Statement has several gaps, omissions, or ambiguities relating to environmental matters. Accordingly, the United States, on the EPA's behalf, suggested specific modifications that would address its concerns. Sub-Section VI.E.1 To avoid confusion or misleading any interested parties, the United States proposes that Sub-Section VI.E.1 of the Disclosure Statement be modified as: "With the exception of the matters listed below, the Debtor maintains submits [sic.] that its operations as of the Closing Date were generally in material compliance with all applicable environmental regulations and permitting requirements. The Debtor's position, however, is not based upon any finding or any determination by any court or any federal or state governmental agency." Sub-Section VI.E.1(a) The United States' counsel has been unable to locate any Fourth Circuit case law supporting Weirton's position in Sub-Section VI.E.1(a) of the Disclosure Statement, which states: "The Debtor maintains that under prevailing law in the Fourth Circuit, an off-site environmental obligation is a dischargeable claim in bankruptcy when remediation would require the debtor to spend money." Thus, the United States suggests that Weirton delete the statement or provide the authority on which it is relying. Also, the United States proposes that Weirton add this language: "Certain governmental authorities have disputed the Debtor's position and contend that the Plan can not be confirmed under 11 U.S.C. [Section] 1129(a)(3) (plan must be "proposed in good faith and not by any means forbidden by law") unless the Plan provides for compliance with the Debtor's regulatory obligations to comply with the law under RCRA and the Clean Water Act and related permits, including implementation of any equitable remedies that are not within the definition of "claim" under Section 101(5) of the Bankruptcy Code, 11 U.S.C. [Section] 101(5). The Bankruptcy Court has ruled that the Debtor's post-petition compliance liabilities may be an administrative expense of the bankruptcy estate." Off-site Environmental Obligations The United States also objects to Weirton's statement that the Plan treats all off-site environmental and compliance obligations as general unsecured claims. Mr. Sansonetti points out that Weirton does not cite to any provisions in the Plan providing for the treatment, which would be contrary to the Bankruptcy Code. Discharge of Debts and Claims Section V1.K of the Disclosure Statement provides that the liquidating Debtor will receive a "discharge [of] all existing debts and Claims." Mr. Sansonetti points out that Section 1141(d)(3) of the Bankruptcy Code bars a discharge for a liquidating corporation. The Disclosure Statement should therefore delete the sentences and any other references to discharge. Alternatively, if there is some legal basis that Weirton alleges the provision, the Disclosure Statement should explain Weirton's position in light of Section 1141(d)(3) and note that their position may be disputed by various interested parties. Subsection E.1(b) On-site Environmental Matters Subsection E.1(b) provides that Weirton will not perform any on- site environmental obligations with respect to a given parcel of property after it sell that real property. Any environmental obligations will be General Unsecured Claims subject to treatment afforded to Class 4 Claims under the Plan. Mr. Sansonetti reports that the Disclosure Statement does not identify any pending on-site environmental obligations filed against Weirton. Without identifying an actual obligation or liability, it is misleading to suggest that there are general unsecured claims and impossible to determine whether the Plan actually provides for the treatment and whether the treatment is legal under the Bankruptcy Code. Final Administrative Order Weirton also states that the purchasers of certain property and assets will assume responsibility for any environmental obligations. Weirton's position fails to take into account specific requirements of an environmental administrative order applicable to them. Mr. Sansonetti tells that Court that in 1996, Weirton became subject to a Final Administrative Order, requiring Weirton take actions related to threats to human health or the environment from releases of hazardous wastes and hazardous constituents at or from its facility in Weirton, West Virginia. The Order has ongoing environmental injunctive obligations, and Weirton has been implementing the requirements of the Order since 1996. Weirton advised the United States, by a May 25, 2004 letter, that pursuant to the Asset Purchase Agreement between Weirton and the International Steel Group, ISG will assume responsibility for the Order. The government believes that Weirton remains liable under the Order. In addition, Weirton entered into a Consent Decree in 1996 with the United States and the West Virginia Department of Environmental Protection. The United States District Court for the Northern District of West Virginia approved and entered the Consent Decree on December 24, 1996. Weirton has also provided the Environmental Protection Agency with a brief letter, which states that as result of the Asset Purchase Agreement between Weirton and ISG, ISG will assume responsibility for the Consent Decree. The United States suggests that the representatives of the Agency, Weirton, ISG and the West Virginia DEP meet to discuss relevant issues related to the FAO and the Consent. Weirton's counsel has indicated its willingness to have that meeting. Given that the parties expect to meet in the near future, the United States reserves the right to submit appropriate objections regarding the proposed Plan of Liquidation. (Weirton Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 215/945- 7000) WORLDCOM INC: Class 3A Bank Claimants Ask To Enforce Stipulation ---------------------------------------------------------------- Before the bankruptcy petition date, 25 banks that were parties to the Worldcom Inc. Debtors' 364-Day Facility filed a Constructive Trust Action against the Debtors in the New York state court. According to Abbey W. Ehrlich, Esq., at O'Melveny & Myers, LLP, in New York, the Banks subsequently filed an action in Maryland against Susan Mayer, who was then the Debtors' Senior Vice President and Treasurer. At the Debtors' request, the Court entered a preliminary injunction under Section 104 of the Bankruptcy Code staying the Maryland Action through June 15, 2003. The Banks filed proofs of claim against Debtor WorldCom, Inc. Wells Fargo Bank, N.A., also filed proofs of claim against substantially all of the other Debtors. The Debtors objected to Wells Fargo's multiple claims. Wells Fargo filed a response on May 15, 2003. Ms. Ehrlich relates that after the Court approved the Debtors' Disclosure Statement on May 23, 2003, the Banks and the Debtors agreed on a compromise of the Bank Actions. The compromise was described in a supplement to the Debtors' Disclosure Statement, which was approved by the Court for distribution to creditors. The Supplement also contained the Debtors' Amended Plan, which included provisions for the distribution of New Notes to the holders of Bank Settlement Claims under Class 3A. Ms. Mayer resigned on June 10, 2003, thereby obviating the need for the preliminary injunction entered in the Injunction Proceeding. However, to preserve the status quo, the Debtors and the Banks consented to various extensions of the preliminary injunction pending consummation of the Class 3A settlement. After it became apparent that the Debtors would not make distributions to the holders of Class 3A claims, the Banks in the Maryland Action agreed to extend the preliminary injunction entered in the Injunction Proceeding through June 8, 2004. Under the Bank Settlement, the holders of Bank Settlement Claims are to receive $75 million in New Notes. The Bank Settlement required that the Banks deliver to the Debtors dismissals of the Maryland Action. The Banks anticipated that Wells Fargo's Plan objections and the Debtors' objections to Wells Fargo's multiple claims would be resolved during the plan confirmation process. However, instead of resolving the Wells Fargo Issues, the Debtors and Wells Fargo entered into a stipulation which permitted the Debtors to confirm the Plan, while putting off to a later date a determination of the Wells Fargo Issues. Wells Fargo understood that the Stipulation would permit distributions to the other holders of Bank Settlement Claims under Class 3A of the Plan despite the pendency of the Wells Fargo Issues and Wells Fargo's refusal to tender a dismissal of the Maryland Action. Based on the Stipulation, the Debtors and Wells Fargo agreed to several continuances of the hearing on the Wells Fargo Issues and those matters did not come on for hearing by the Court until March 22, 2004. As of June 16, 2004, the Court still has not ruled on the Wells Fargo Issues. On April 20, 2004, the Plan became effective. Notwithstanding the Stipulation, no distributions were made, and none have been made to the non-Wells Fargo holders of Bank Settlement Claims under Class 3A of the Plan. Wells Fargo and the other bank parties to the Bank Settlement Claims believe that the Stipulation was intended to preclude an indefinite delay in making distributions to the other holders of Class 3A Claims under the Plan. Furthermore, the preliminary injunction entered in the Injunction Proceeding has a June 22, 2004 expiry. Unless the injunction is extended, the Court in the Maryland Action will insist that the Maryland Action be prosecuted or dismissed. The Banks in the Maryland Action cannot allow the Maryland Action be dismissed without adequate assurance that they will receive their share of the Class 3A distributions. However, recommencing litigation of the Maryland Action would arguably violate the terms of the Bank Settlement. Ms. Ehrlich emphasizes that the current stalemate should be resolved as quickly as possible. Therefore, the holders of Bank Settlement Claims under Class 3A of the Plan ask the Court to enforce the terms of the Wells Fargo Stipulation and direct the Debtors to make distributions to the holders of Class 3A Claims, other than Wells Fargo. 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. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) WR GRACE: Asbestos Personal Injury Committee Issues Status Report ----------------------------------------------------------------- The Official Committee of Asbestos Personal Injury Claimants agrees with the W.R. Grace & Co. Debtors that a major focus of dispute in their cases concerns the determination of the Debtors' aggregate liability for present and future asbestos personal injury claims. However, Kathleen J. Campbell, Esq., at Campbell & Levine, LLC, in Wilmington, Delaware, notes that the Committee and the Debtors have "radically different proposals" for determining that liability. Debtors' Irretrievably Flawed Proposals The Debtors' proposed pre-confirmation procedure utilizing summary judgment motions for "common issues" is irretrievably flawed. The issues that Grace seeks to resolve that way -- the extent of a particular claimant's injury, exposure to Grace's products, and causation -- cannot be resolved in summary judgment proceedings involving tens of thousands of cases. Rather, these questions have to be resolved for each claimant individually based on the varying tort and choice-of-law rules of the fifty states, following particularized discovery and jury trials where the facts are in dispute. This process of liquidating claims individually would be extremely costly and would take decades to complete. The Committee also believes that the Debtors' proof of claim form and bar date proposal are extremely burdensome and unnecessary, and because these are constituent components of the Debtors' summary judgment scheme, unworkable. According to Ms. Campbell, the Debtors' newest scheme: (i) improperly attempts to shift the burden of going forward to the claimants, in violation of the Bankruptcy Rules; (ii) deprives those claimants of discovery rights to which they are entitled; (iii) seeks to negate liability by the use of mechanisms like "show cause" hearings that violate collateral estoppel principles and the claimants' due process rights; and (iv) improperly seeks to resolve inherently factual issues like exposure, injury, and causation, as a matter of law. Ms. Campbell adds that, in addition to all these defects, Grace's modified proposal improperly seeks to have entire categories of claims declared non-compensable, in defiance of governing state law, and improperly seeks to use so-called "Daubert hearings," not to determine a particular expert's qualifications to testify, but to create substantive legal standards to govern prospective determinations of liability. Apart from these defects, Grace's "litigation protocol" would ultimately prove to be pointless. Claims that survived all of the Debtors' proposed defenses and "liability filters" would, by definition, be successful claims that must be valued by reference to judgments -- jury verdicts -- in the tort system. Given the size of the judgments that Grace has suffered in cases that have gone to verdict, the Debtors would be hopelessly insolvent -- many times over -- if their aggregate liability for present and future personal injury claims were determined this way. Estimate Claims and Confirm Plan, Committee Suggests As an alternative to the Debtors' costly, impractical and legally flawed proposal, the Committee recommends an immediate estimate, under Section 502 of the Bankruptcy Code, of the Debtors' aggregate liability for present and future asbestos personal injury claims. In an estimation proceeding, the number and types of claims against Grace would be determined statistically, based on projections from prior experience. This makes it unnecessary for particular claimants to identify themselves and their disease categories by filing proof of claim forms, thus eliminating the need for costly notification, claim preparation, and bar date procedures. The valuation of the personal injury claims, moreover, would be determined on an aggregate basis in light of Grace's own prior claims-paying experience and claims-rejection ratio. This makes it unnecessary to place actual values on individual claims, thus eliminating the need for the Debtors' proposed "omnibus summary judgment" and "show cause" procedures, which are legally impermissible in any event, or for jury trials on each claim, which would take forever. The function of the estimation procedure would be to determine the sum of money needed to fund a trust established under Section 524(g). The time-consuming process of determining the validity and value of individual claims would be discharged post- bankruptcy by the Section 524(g) Trust, thus enabling the Debtors to emerge swiftly from Chapter 11. This common sense method for valuing pending and future claims -- tailored to the facts of each case -- has been used in numerous asbestos-related bankruptcies since the Manville case. Testimony concerning estimation of asbestos liability has been cited favorably and accepted by courts in several bankruptcy reorganizations that have already been consummated, like Eagle- Picher, which involved the National Gypsum Trust, Celotex, UNR, Raytech and Western McArthur. Testimony concerning estimation of asbestos liability has also been received in several bankruptcies in which plans of reorganization are now awaiting final approval, like Babcock & Wilcox and Armstrong World Industries. (W.R. Grace Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Cadwalader Names Barnes, Lanning & Pauquette as Special Counsel ----------------------------------------------------------------- Cadwalader, Wickersham & Taft LLP, one of the world's leading international law firms, has named Cheryl D. Barnes, Ronald N. Lanning, and Lisa J. Pauquette as Special Counsel to the firm. "We are pleased to recognize the value and contributions made by these outstanding associates, all members of the Capital Markets Department, by naming them as Special Counsel to the firm," said Robert O. Link, Jr., Cadwalader's Chairman. "They demonstrate the expertise and strength Cadwalader has in the areas of securitization, derivatives and structured finance. It is a great pleasure to congratulate them and we look forward to their continued success and progress in years to come." Cheryl D. Barnes, resident in the Washington, D.C. office, received her J.D. from the University of Maryland School of Law in 1995, and her B.A. from Bennett College in 1991. Ronald N. Lanning, resident in the New York office, received his J.D. from the University of Pennsylvania Law School in 1995, an M.B.A. from Adelphi University in 1992, and his undergraduate degree from Pennsylvania State University in 1982. Lisa J. Pauquette, resident in the New York office, received her J.D. from Boston University School of Law in 1995, and her B.A. from Middlebury College in 1989. "Special Counsel at Cadwalader enhance the level of service the firm provides while also supporting each of the firm's departments by supervising cases and deals, maintaining client relationships and training junior attorneys," stated Mr. Link. "We look forward to the contributions they will make in their respective departments and to the firm." About Cadwalader Cadwalader, Wickersham & Taft LLP, established in 1792, is one of the world's leading international law firms, with offices in New York, London, Charlotte and Washington. Cadwalader serves a diverse client base, including many of the world's top financial institutions, undertaking business in more than 50 countries in six continents. The firm offers legal expertise in securitization, structured finance, mergers and acquisitions, corporate finance, real estate, environmental, insolvency, litigation, health care, banking, project finance, insurance and reinsurance, tax, and private client matters. More information about Cadwalader can be found at http://www.cadwalader.com/ * Dewey Ballantine Adds Alison L. Smith as Litigation Partner ------------------------------------------------------------- Alison L. Smith has joined Dewey Ballantine LLP, a leading international law firm, as a litigation partner and co-chair of the Antitrust and Trade Regulation practice group. Ms. Smith was previously a partner with Vinson & Elkins LLP, where she co- chaired the firm's Antitrust practice group. She resides in Dewey Ballantine's Houston office. Ms. Smith has extensive experience in antitrust, securities and other complex business litigation, including class action litigation, and in white collar criminal defense. She defends both corporate and individual clients. Ms. Smith has represented clients in the energy, natural gas pipeline, chemical, telecommunications, transportation, healthcare and manufacturing industries. From 1989 to 1991, Ms. Smith served in the United States Department of Justice as Deputy Assistant Attorney General of the Antitrust Division. In this role, she was responsible for enforcement of the federal antitrust laws in the nation's regulated industries, including investigations and challenges of anticompetitive mergers and criminal antitrust violations. Included among her responsibilities was enforcement of the Modified Final Judgment (MFJ) that broke up the Bell System. She successfully argued the government's appeal to the United States Court of Appeals for the District of Columbia, resulting in the reversal of the district court's decision that denied the Regional Bell Operating Companies the right to enter the information services line of business under the MFJ. "A top-tier litigator and regulatory expert, Alison is a tremendous asset to our practice group," said Joe Angland, partner and co-chair of Dewey Ballantine's Antitrust and Trade Regulation practice group. "Her experience in the complexities of antitrust law across a wide range of industries will be key to our ongoing expansion in this area and help us provide the best possible counsel to our clients. In this era of stiff prosecution of alleged international cartels, her addition will be of particular value." Ms. Smith serves as co-chair of the Private Antitrust Litigation Committee of the Antitrust Section of the American Bar Association and has been appointed as vice-chair of the Sherman Act Section One Committee. She previously served as chair of the Antitrust and Trade Regulation Section of the Houston Bar Association, from 1999-2000, and the Transportation Industry Committee of the Antitrust Section of the American Bar Association, from 1992 to 1995. She is a member of the American Law Institute. Ms. Smith is included in Chambers USA's "America's Leading Lawyers for Business in 2004," recommended in antitrust. She has also been named as a "Texas Super Lawyer" for 2003 and 2004. Ms. Smith received a B.J. summa cum laude from The University of Texas in 1974 and a J.D. cum laude from The University of Texas School of Law in 1977. She was an adjunct professor in antitrust law at The University of Texas School of Law in 1992 and 1993. Attorneys in Dewey Ballantine's antitrust and trade regulation practice group represent clients in antitrust and trade regulation litigation, provide legal support in complex corporate transactions and provide expert counsel on a range of business strategies, including: supply and distribution arrangements; research and development initiatives; intellectual property right issues; and joint ventures. The firm's United States and European attorneys also address client concerns with European Commission and other foreign antitrust authorities. About Dewey Ballantine Dewey Ballantine LLP, founded in 1909, is an international law firm with more than 550 attorneys located in New York, Washington, D.C., Los Angeles, East Palo Alto, Houston, Austin, London, Warsaw, Budapest, Prague, Frankfurt, Milan and Rome. Through its network of offices, the firm handles some of the largest, most complex corporate transactions, litigation and tax matters in such areas as M&A, private equity, project finance, corporate finance, corporate reorganization and bankruptcy, antitrust, intellectual property, sports law, structured finance and international trade. Industry specializations include energy and utilities, healthcare, insurance, financial services, media, consumer and industrial goods, consumer electronics, technology, telecommunications and transportation. * Douglas Greenburg Returns to Winston & Strawn's D.C. Office ------------------------------------------------------------- Douglas N. Greenburg, most recently counsel to the National Commission on Terrorist Attacks Upon the United States (9/11 Commission), has rejoined Winston & Strawn as a partner in the litigation practice. In his work with the 9/11 Commission, Greenburg investigated the financing of al Qaeda and the 9/11 plot, as well as efforts on the part of the U.S. government to combat financing of terrorist groups. Greenburg focuses his practice on internal corporate investigations, Securities and Exchange Commission investigations and enforcement actions, white-collar criminal defense and commercial litigation. He has participated in numerous internal investigations for many national and international corporations, and has investigated and defended clients in government inquiries into a wide variety of alleged criminal activity, including money laundering, payments in violation of the Foreign Corrupt Practices Act, securities fraud, environmental crimes, public corruption, tax evasion, Customs fraud, and many varieties of mail and wire fraud. In addition, he has significant experience in complex civil matters at both the state and federal levels, including defending clients in RICO, securities fraud, class actions and antitrust matters. Before joining the 9/11 Commission staff, Greenburg was a litigation partner at Winston & Strawn. He also previously served as an attorney with the SEC's enforcement division, where he investigated violations of federal securities law. Greenburg was a law clerk to the Honorable Alan E. Norris, United States Court of Appeals for the Sixth Circuit, and a contributing author to the American Bar Association's White Collar Crime 2002. Greenburg received his juris doctor from the University of Chicago Law School, with honors. He was on the staff of the Law Review and a member of the Order of the Coif. He holds a bachelor's of arts degree in history and international relations from Brown University. Winston & Strawn LLP is an international commercial law firm that celebrated its 150th Anniversary in 2003. It has more than 850 attorneys in eight offices including Chicago, New York City, Washington, D.C., Los Angeles, San Francisco, London, Paris and Geneva. * Local Law Firm Alvarado Smith Links Up With Adorno & Yoss ----------------------------------------------------------- California-based Alvarado, Smith & Sanchez has agreed to partner with Miami-based Adorno & Yoss, the largest certified minority- owned law firm in the United States. The firm, to be known locally as Adorno Yoss Alvarado & Smith, will continue to specialize in banking, real estate, litigation, motor vehicle, employment, corporate/business and public agency law. The firm will also draw on its national resources to provide local and national clients with high quality legal advice in a wide array of practice areas, including international business, cross-border financings, corporate finance, transportation, environmental and bankruptcy. Alvarado, Smith & Sanchez is one of the largest Hispanic-owned law firms in California and currently has offices in Irvine and Los Angeles. The resulting venture will have over 185 attorneys in eight offices in California, Florida and Georgia. "We have been looking for an opportunity to expand our firm to better serve our local and Fortune 500 clients. We believe Adorno & Yoss is the perfect fit for our firm because we share a strong commitment to delivering high quality legal services and minority development and empowerment," stated Ruben Smith of Alvarado, Smith & Sanchez. "This partnership is an important part of Adorno Yoss Alvarado & Smith's plan to effectively compete for national and international legal work arising from a significant sector of corporate America that is committed to the advancement of minority-owned law firms. This plan started with the opening of an office in Atlanta, Georgia, last month, and in the next few weeks, we plan to open additional offices in Baltimore/Washington, DC and New York City," said Hank Adorno, President of Adorno & Yoss. The firm also plans to expand its operations in Latin America by opening a new office in both Mexico City and Santiago, Chile. "The focus of the firm and this partnership is to expand our current client base of Fortune 500 companies and other public and private sector clients throughout the United States and Latin America. We offer an unparalleled depth of service with the largest contingent of quality lawyers from diverse backgrounds," stated Raymond Alvarado, Managing Shareholder of Alvarado, Smith & Sanchez. Hank Adorno stated, "We are undoubtedly pleased. Our friends at the Alvarado, Smith and Sanchez firm are just as committed as we are to our plan to create a national legal powerhouse that happens to be owned by minorities, in our case Latinos." About the Firms Adorno & Yoss is one of the nation's largest full service law firms and the largest certified minority-owned law firm in the country. Adorno & Yoss provides a full range of legal services to corporations ranging from Fortune 500 and publicly traded companies to major insurance organizations as well as governments and individuals. Please visit our web site at www.adorno.com for more information. The firm is a member of Law Firm of the Americas, an alliance of law firms providing legal services of the highest quality to individuals and corporations doing business in the Northern hemisphere and Spain. For more information about LFA see http://www.lfalaw.org/, or contact Francisco J. Gonzalez at fjg@adorno.com. Alvarado, Smith & Sanchez is a premier minority-owned law firm dedicated to superior legal representation and serving clients locally, nationally and internationally. Having opened its doors in 1993 as a two attorney practice, the firm has grown to more than 20 attorneys with offices in Los Angeles and Irvine. Alvarado, Smith & Sanchez has represented some of the largest businesses in the nation and has gained international recognition for business in Latin America and Mexico. Please visit our website at http://www.asands.com/for more information. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- July 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE The Mount Washington Hotel Bretton Woods, NH Contact: 1-703-739-0800 or http://www.abiworld.org July 28-31, 2004 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Reynolds Plantation, Lake Oconee, GA Contact: 1-703-739-0800 or http://www.abiworld.org September 18-21, 2004 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference The Bellagio, Las Vegas, NV Contact: 1-703-739-0800 or http://www.abiworld.org October 9-10, 2004 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC Annual Fall Conference Nashville, TN Contact: 1-703-449-1316 or www.iwirc.com October 10-13, 2004 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Seventh Annual Meeting Nashville, TN Contact: http://www.ncbj.org/ October 15-18, 2004 TURNAROUND MANAGEMENT ASSOCIATION 2004 Annual Convention Marriott Marquis, New York City Contact: 312-578-6900 or www.turnaround.org November 29-30, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Eleventh Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Plaza Hotel - New York City Contact: 1-800-726-2524; 903-592-5168; dhenderson@renaissanceamerican.com December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org March 9-12, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Spring Conference JW Marriott Desert Ridge, Phoenix, AZ Contact: 312-578-6900 or www.turnaround.org April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, DC Contact: 1-703-739-0800 or http://www.abiworld.org June 2-4, 2005 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities and Bankruptcy Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org July 14 -17, 2005 AMERICAN BANKRUPTCY INSTITUTE Ocean Edge Resort, Brewster, MA Contact: 1-703-739-0800 or http://www.abiworld.org July 27- 30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, SC Contact: 1-703-739-0800 or http://www.abiworld.org October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or www.turnaround.org November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, TX Contact: http://www.ncbj.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, CA Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. 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. 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