/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040722.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, July 22, 2004, Vol. 8, No. 151 Headlines 98 FOOD MART INC: Case Summary & 3 Largest Unsecured Creditors ADELPHIA COMMS: Taps Sullivan & Cromwell as Special M&A Counsel AIR CANADA: Non-Union Representatives Back Pension Relief Proposal AK STEEL: Second Quarter 2004 Results Turn Positive ALICE'S WONDERLAND: Voluntary Chapter 11 Case Summary ALLEGHENY ENERGY: Amends Non-Employee Director Stock Plan ALLIED PRINTING: First Creditors' Meeting Slated for August 17 ALLMERICA CBO: Fitch Downgrades $184M Senior Notes to B+ from BB- AMERICAN COMPUTER: Court Approves Chapter 7 Conversion AMERIDEBT: Wants to Hire Stein Mitchell as Litigation Counsel ASSET SECURITIZATION: Fitch Cuts 1997-D5 Class A-5 Rating to B+ ATMI INC: Completes Sale of Epitaxial Services to Int'l Rectifier BLOUNT INT'L: Files Amended Stock Registration Statement with SEC CANDESCENT TECHNOLOGIES: Hires Bachecki Crom as Tax Consultants CARDIAC SCIENCE: Raises $12.4 Million from Private Placement CATHOLIC CHURCH: Asks to Continue Using Existing Business Forms CHURCH & DWIGHT: Acquires Remaining 50% Interest in Armkel CONSECO/GREEN TREE: Fitch Takes Rating Actions on RMBS Classes COVANTA TAMPA: Files Schedule of Assumed Contracts with Court COVANTA TAMPA: Court Confirms Amended Reorganization Plan DII INDUSTRIES: Judge Fitzgerald Confirms Prepackaged Plan DLJ MORTGAGE: S&P Raises Series 1996-CF2 Class B4 Rating to BB E*TRADE ABS: S&P Lowers Ratings and Removes Negative Credit Watch ENRON NORTH AMERICA: Enters Into Texaco Release Agreement ENRON CORP: Sues 24 Creditors to Recover $8M Preferential Payments FLEMING COMPANIES: Agrees to Settle Bay 4's $380K Equipment Claim FLINTKOTE COMPANY: Wants Until Sept. 28 to Make Lease Decisions FOG CUTTER: Plans to Appeal Nasdaq's Move to Delist Shares FURNAS COUNTY: Gets Nod to Continue Employing Steven Zumbach GENTEK INC: Robert Novo Discloses Equity Ownership GLOBAL CROSSING: WilTel Asserts $480,469 Cure Amount is Owed GOODYEAR: Fitch Affirms B/CCC+ Ratings & Says Outlook Now Stable HEALTH CARE: Low-B Rated REIT Reports Second Quarter Results HEART PLACE HOSPITAL: Case Summary & Largest Unsecured Creditors INFINIUM LABS: Secures New $50 Million Equity Credit Line INFOUSA INC: Reports Fiscal Year 2005 Guidance IPCS INC: Sprint's PCS Affiliate Emerges from Chapter 11 JOURNAL REGISTER: S&P Affirms BB+ Ratings with Negative Outlook JP MORGAN: Fitch Affirms Ratings on Two 2000-C9 Classes at Low-Bs KAISER: Expects to Close Bauxite/Alumina Asset Sale in 3rd Quarter KEY ENERGY: S&P Revises 'B' CreditWatch Implications to Developing KINTERA INC: Closes $20 Million Private Equity Financing KNIGHTCO OIL INC: Case Summary & 20 Largest Unsecured Creditors MERCURY AIR: Agrees to Settle with David Murdock for $525,000 MIRANT: Agrees to Setoff Dominion Claims Against Collateral MIRANT: Inks Stipulation Keeping Documents Produced To PG&E Secret MERITAGE CORPORATION: Reports Record Second Quarter 2004 Results NATIONSLINK FUNDING: Fitch Upgrades 1999-1 Classes G & H to BB+/B+ NES RENTALS: S&P Assigns Low-B Corporate and Bank Loan Ratings NETWORK INSTALLATION: Expands Reach with Multiple Project Orders NEW HEIGHTS: Committee Hires Jaspan Schlesinger as Local Counsel NEW WORLD PASTA: Gets Final Nod to Obtain $45 Million Financing NEW WORLD PASTA: Court Stretches Lease Decision Time to Jan. 5 NEW WORLD PASTA: Discontinues Filing SEC Reports NEXPAK CORPORATION: Case Summary & 30 Largest Unsecured Creditors NORTHLAND FUNDING: S&P Downgrades Class B Note Rating to BB+ NUCENTRIX: Digital Broadcast Acquires Sizable Block of Bandwidth OMEGA HEALTHCARE: Declares Common and Preferred Stock Dividends OMEGA HEALTHCARE: 2nd Quarter Earnings Call Scheduled for Tuesday OMI CORPORATION: Says Q2 2004 Net Income is Highest Ever to Date OWENS CORNING: Babcock Futures Rep. Asks Court to Quash Subpoena PARMALAT: Milk Products Proposes Alabama Sale Bidding Protocol PENN BIOTECH: Reorganizes Operations to Set Up Separate Units PG&E NATIONAL: Niagara Mohawk Wants to File Late Proof of Claim PLEJ'S LINEN: Committee Turns to Huron for Financial Advice POTLATCH CORP: Reports Higher Earnings of $49.6M in Second Quarter QUADRAMED CORPORATION: Completes Tender Offer for 10% Senior Notes QWEST COMMS: Arizona Awards 3-Year Multimillion-Dollar Contract RCN CORP: Creditors Want to Retain Capital & Technology Advisors RCN CORPORATION: David C. McCourt Leads Search for New CEO REMEDIATION FINANCIAL: Sec. 341(a) Meeting Scheduled for Aug. 17 RENT-A-CENTER: Will Webcast Q2 2004 Financial Results on Tuesday SK GLOBAL: Proposes Plan Solicitation & Vote Tabulation Procedures SOLUTIA: Trade Creditors Sell 102 Claims To Liquidity Solutions STANADYNE CORP: S&P Affirms Low-B Ratings & Removes CreditWatch STERLING FINANCIAL: Fitch Upgrades Long Term Rating to BB+ from BB TAMBORIL CIGAR: Changes Name to Axion Power International, Inc. TECO ENERGY: S&P Cuts Debt Ratings to BB & Says Outlook is Stable TENNECO AUTOMOTIVE: Reports Record Revenue & Earnings for Q2 2004 VIALINK COMPANY: Provides Financing and Debt Conversion Update VITAL BASICS: Gets Okay to Hire Donlin Recano as Claims Agent WEIRTON STEEL: Court OKs Effects Agreement with Steelworkers Union WESTPOINT STEVENS: Abandons Nine De Minimis Assets W.R. GRACE: Futures Representative Reports Talks Going on W.R. GRACE: Futures Representative Wants Phillips as Counsel * Buchalter Welcomes Jeffrey Kirschenbaum in San Francisco Office * Alcasabas, Berson & Falcone Join Chadbourne & Parke as Partners * Samir Barakat Joins Charles River Associates as Sr. Consultant * Davenport Lyons Appoints Five New Partners ********* 98 FOOD MART INC: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: 98 Food Mart, Inc. 991 Durham Road Wake Forest, North Carolina 27587 Bankruptcy Case No.: 04-02588 Type of Business: The Debtor operates a convenience store. Chapter 11 Petition Date: July 14, 2004 Court: Eastern District of North Carolina (Raleigh) Judge: A. Thomas Small Debtor's Counsels: Danny Bradford, Esq. Eileen M. Bornstein, Esq. Younce Hopper Vtipil Bradford, PLLC 4300 Six Forks Road, Suite 800 Raleigh, NC 27609 Tel: 919 783-7887 Total Assets: $3,374,000 Total Debts: $2,205,000 Debtor's 3 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wake Forest Federal S&L Convenience Store $1,860,000 405 W. Brook located at 991 Wake Forest, NC 27587 Durham Road Wake Forest, NC Eric Lytie Disputed claim for $50,000 work allegedly performed on Wilton store Elizabeth J. Parrot Convenience Store $20,000 located at 991 Durham Road Wake Forest, NC ADELPHIA COMMS: Taps Sullivan & Cromwell as Special M&A Counsel --------------------------------------------------------------- In connection with the process to sell substantially all of their assets, Adelphia Communications and its debtor-affiliates selected Sullivan & Cromwell, LLP, to serve as their special mergers and acquisition counsel in view of its extensive experience in the field of corporate mergers and acquisitions, and its proven ability to handle large and complex transactions. Sullivan & Cromwell is an international law firm with 700 lawyers and 12 offices worldwide. Accordingly, the ACOM Debtors seek the Court's authority to employ Sullivan & Cromwell, nunc pro tunc to June 11, 2004, as their special M&A counsel. The scope of Sullivan & Cromwell's engagement will be limited to matters relating to the ACOM Sale Transaction, and will include, among other things, advice and assistance to the ACOM Debtors in connection with, among other things: (1) structuring, negotiating, and documenting a sale transaction; (2) developing and implementing sales procedures; (3) advising the ACOM Debtors' Board of Directors with respect to issues relating to the directors' duties; (4) analyzing tax consequences of various sale structures; (5) assisting the ACOM Debtors with due diligence investigations by potential bidders; (6) analyzing proposed transactions for anti-trust issues; (7) assisting the ACOM Debtors in obtaining anti-trust clearance, if necessary, as well as certain regulatory approvals; (8) assisting Willkie Farr & Gallagher, LLP, in the preparation of necessary disclosures, including the preparation of a description of the Sale Transaction in a disclosure statement; and (9) assisting the ACOM Debtors with the closing of any Sales Transaction. Niel T. Anderson, Alexandra Korry, Willard Taylor, and Erik Launder, along with other Sullivan & Cromwell partners, attorneys and paraprofessionals, are expected to participate in the representation of the ACOM Debtors. Sullivan & Cromwell will be compensated on an hourly basis, plus reimbursement of actual and necessary expenses incurred. Sullivan & Cromwell ordinarily does not determine its fees in M&A matters solely on the basis of standardized hourly rates. However, for purposes of the ACOM Debtors' proposed engagement, the firm agreed to charge fees solely on an hourly basis, according to these rates: Partners $585 - 860 Associates 240 - 520 Legal Assistants and Summer Law Clerks 125 - 225 Neil T. Anderson, a member of Sullivan & Cromwell, assures the Court that the firm does not represent or hold any interest adverse to the ACOM Debtors or their estates. In addition, Sullivan & Cromwell has not represented and has no relationship with: -- the ACOM Debtors; -- their creditors or equity security holders; -- any party-in-interest in the ACOM Debtors' cases; -- the attorneys and accountants; or -- the United States Trustee or any person employed in the Office of the U.S. Trustee. (Adelphia Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945- 7000) AIR CANADA: Non-Union Representatives Back Pension Relief Proposal ------------------------------------------------------------------ Mr. Justice Farley confirms that the Non-Union and ACPA Retiree Representatives are specifically authorized to provide, on behalf of the pension plan beneficiaries they represent, notice of their consent, partial content or opposition to the 10-year Solvency Pension Funding Relief Proposal dated February 18, 2004, as amended, between Air Canada and the Office of the Superintendent of Financial Institutions, as a settlement of the pension funding issues between the Applicants and the beneficiaries. John R. Varley, Esq., at Pallett Valo, LLP, in Mississauga, Ontario, relates that the Non-Union Retiree Representatives actively participated in the negotiations regarding the pension funding and related issues with the Applicants and other parties- in-interest. Over the last year, the Non-Union Retiree Representatives also carried an extremely intense, constant and concentrated process of consultation and information sharing with their members, through thousands of e-mails, dozens of bulletins, daily telephone contacts and regular cross-country meetings. The Non-Union Retiree Representatives, Mr. Varley continues, also have had the advantage of professional advise and detailed information, and have developed professionally informed perspectives on the Proposal. Together with the other Pension Beneficiary Groups, the Non-Union Retiree Representatives retained David Short and Cameron Hunter at Eckler Partners, Ltd., to provide actuarial advice, and David Murray and Andrew Harington at Cole and Partners to provide financial consulting advice. The Non-Union Retiree Representatives support the Proposal. The CCAA Court also declares that the Non-Union Representatives have no organizational or personal liability or obligation as a result of their appointment or the fulfillment of their duties in carrying out the provisions of the Court Order appointing them as Non-Union and ACPA retiree representatives, except for gross negligence or unlawful misconduct on their part. Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and Section 304 petition with the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. (Air Canada Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 215/945-7000) AK STEEL: Second Quarter 2004 Results Turn Positive --------------------------------------------------- AK Steel (NYSE: AKS) reported net income of $92.7 million, or $0.85 per share of common stock, for the second quarter of 2004, compared to a net loss of $78.2 million, or $0.72 per share in the second quarter of 2003. The 2004 second quarter results include an after-tax gain of $44.2 million, or $0.41 per share, on the sale of the company's Houston industrial park, completed on April 9, 2004, and a tax benefit related to discontinued operations of $27.2 million, or $0.25 per share. The tax benefit was due to AK Steel's improved financial results and outlook, and reflects the use of net operating loss carryforwards that were previously expected to expire unused. AK Steel reported an operating profit of $56.4 million and income from continuing operations of $20.2 million, or $0.18 per share, in the second quarter of 2004, compared to an operating loss of $115.2 million and a loss from continuing operations of $86.6 million, or $0.80 per share, in the second quarter of 2003. "AK Steel employees have earned well-deserved congratulations for helping us quickly reach an important milestone -- earning income from operations," said James L. Wainscott, President and CEO of AK Steel. "Compared to where we were just nine months ago, that is a remarkable feat that we will savor only momentarily, as I believe all AK Steel employees recognize that much hard work remains in order to sustain and build upon the progress we have made." Mr. Wainscott reiterated the company's focus on what he termed "the 3 C's," customers, costs and cash, for the first phase of the company's recovery. "Our attention to customers has helped restore and even increase business, resulting in higher volumes and record quarterly revenues," he said. "At the same time, we have made excellent progress in cost control and replenishing our cash position. As we move into the second phase of our return to sustainable profitability, we will work on developing long-term modifications to our labor agreements, contract sales arrangements and raw materials supply strategy." Net sales in the second quarter of 2004 totaled $1,311.8 million on shipments of 1,565,100 tons, 34% and 12% higher, respectively, than sales of $981.3 million and shipments of 1,399,000 tons in the year-ago quarter. The company said that increased global steel demand spurred the higher shipment volumes and increases in spot market pricing helped increase revenues. Steel prices also rose as a result of surcharges implemented to help offset unprecedented prices paid for certain raw materials and energy sources. The company's average flat-rolled selling price per ton reached a record $835 per ton in the second quarter of 2004, up 22% from $682 per ton in the second quarter of 2003 and nearly 12% higher than the $747 per ton average in the first quarter of 2004. For the first half of 2004, the company reported net sales of $2,446.2 million compared to $1,966.6 million in the first half of 2003. Operating profit for the first six months of 2004 was $57.9 million compared to an operating loss of $158.3 million in the same period last year. First half 2004 net income of $258.1 million, or $2.37 per share, includes $246.3 million for the combined gain on the sale of Douglas Dynamics and Greens Port Industrial Park in Houston. For the same period in 2003, AK Steel reported a net loss of $119 million, or $1.10 per share. AK Steel said its liquidity at the end of the second quarter of 2004 totaled $735 million, including cash and availability under its two credit facilities, including an accounts receivable-based revolving credit facility established in May. Outlook AK Steel said it expects continued improvements in its operating profitability for the third quarter and second half of 2004. The expected improvements are due primarily to anticipated higher selling prices and lower planned maintenance and overhead costs that, collectively, are expected to more than offset higher raw material costs. About AK Steel Headquartered in Middletown, Ohio, AK Steel -- whose December 31, 2003 balance sheet shows a $52.8 million shareholders' equity deficit -- produces flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as tubular steel products. ALICE'S WONDERLAND: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Alice's Wonderland 1120 East Sixth Street Casa Grande, Arizona 85222 Bankruptcy Case No.: 04-03576 Type of Business: The Debtor specializes in the treatment of drug dependency and alcoholism. See http://www.aliceswonderland.org/ Chapter 11 Petition Date: July 19, 2004 Court: District of Arizona (Tucson) Judge: Eileen W. Hollowell Debtor's Counsel: Dennis J. Wortman, Esq. Dennis J. Wortman, P.C. 2700 North Central Avenue #850 Phoenix, AZ 85004 Tel: 602-257-0101 Fax: 602-776-4544 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of it's 20-largest creditors. ALLEGHENY ENERGY: Amends Non-Employee Director Stock Plan --------------------------------------------------------- Allegheny Energy, Inc., filed an Application/Declaration pursuant to Sections 6(a) and 7, and Rule 54 under the Public Utility Holding Company Act of 1935, as amended, requesting that the Securities and Exchange Commission authorize Allegheny to issue shares of common stock, $1.25 par value, pursuant to a Non- Employee Director Stock Plan. Pursuant to the Plan, Allegheny proposes to issue up to 300,000 shares of common stock to its non- employee directors. The Plan will supersede and replace Allegheny's prior policy of granting $12,000 worth of common stock to non-employee directors annually as part of his or her director compensation. The Plan has been approved by Allegheny's Board of Directors and by Allegheny's stockholders at its 2004 annual meeting of stockholders. Headquartered in Greensburg, Pa., Allegheny Energy is an integrated energy company with a portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities, and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about four million people in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. More information about Allegheny Energy is available at http://www.alleghenyenergy.com/ * * * As reported in the Troubled Company Reporter's March 18, 2004 edition, Fitch Ratings affirmed and removed from Rating Watch Negative the ratings of Allegheny Energy, Inc. and the utility subsidiaries: Allegheny Energy, Inc. -- Senior unsecured debt 'BB-'; -- 11-7/8% notes due 2008 'B+'. Allegheny Capital Trust I -- Trust preferred stock 'B+'. West Penn Power Company -- Medium-term notes and senior unsecured 'BBB-'. Potomac Edison Company -- First mortgage bonds 'BBB'; -- Senior unsecured notes 'BBB-'. Monongahela Power Company -- First mortgage bonds 'BBB'; -- Medium-term notes 'BBB-'; -- Pollution control revenue bonds (unsecured) 'BBB-'; -- Preferred stock 'BB+'. The Rating Outlook is Stable. The 'BB-' rating of Allegheny Energy, Inc.'s former bank credit facility maturing in January 2005 is withdrawn as that bank credit facility has been terminated and replaced. ALLIED PRINTING: First Creditors' Meeting Slated for August 17 -------------------------------------------------------------- The United States Trustee will convene a meeting of Allied Printing, Inc.'s creditors at 1:30 p.m., on August 17, 2004, at 300 North Hogan St. Suite 1-200, Jacksonville, Florida 32202. 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 Jacksonville, Florida, Allied Printing, Inc. -- http://www.alliedgraphics.net/-- also known as Allied Graphics, is a commercial, financial and publication printer specializing in high quality color lithography. The Company filed for Chapter 11 protection on July 2, 2004 (Bankr. M.D. Fla. Case No. 04-06812). Earl M. Barker, Jr., Esq., at Slott & Barker represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $3,373,230 in total assets and $6,099,485 in total debts. ALLMERICA CBO: Fitch Downgrades $184M Senior Notes to B+ from BB- ----------------------------------------------------------------- Fitch Ratings downgrades the rating of one class of notes issued by Allmerica CBO I, Ltd./Corp., which closed June 11, 1998. The following rating action is effective immediately: -- $184,400,267 senior secured floating-rate notes downgraded from 'BB-' to 'B+'; The rating for the $56,500,000 second priority senior fixed-rate notes remains at 'C'. Allmerica is a collateralized bond obligation (CBO) managed by Opus Investment Management, Inc. The collateral of Allmerica is composed of high yield bonds with 85.03% invested in non-emerging markets assets and 14.97% in emerging markets assets. Payments are made semi-annually in June and December, and the reinvestment period ended in June, 2003. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and its portfolio management strategy. According to the June 4, 2004 trustee report, the portfolio includes $16.95 million (8.93%) in defaulted assets. The portfolio currently contains another $51.27 million (27.02%) of assets rated 'CCC+' or below. The senior par value test is failing at 103.48% with a trigger of 126.50% and the second priority par value test is failing at 78.27% with a trigger of 104.90%. The portfolio includes $13.10 million (6.90%) of assets maturing after the deal's stated maturity date. The rating of the senior secured notes addresses 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 stated maturity date. The rating of the second priority senior notes addresses 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 stated maturity date. Fitch will continue to monitor Allmerica closely to ensure accurate ratings. AMERICAN COMPUTER: Court Approves Chapter 7 Conversion ------------------------------------------------------ Richard K. Diamond, the Chapter 11 Trustee overseeing American Computer & Digital Components' case, asks the U.S. Bankruptcy Court for the Central District of California to convert the company's chapter 11 restructuring to a chapter 7 liquidation proceeding. The Trustee points out that the Debtor's business is no longer operating and the estate is administratively insolvent. It has come to the Trustee's knowledge that there is little, if any, unencumbered cash to support operations. Mr. Diamond indicates that the Debtor's inventory is aged or obsolete and there is new money to purchase new goods. Additionally, the Debtor's main secure creditors, Harris Bank, does not consent to continued use of cash collateral to support or maintain any postpetition operations. The Trustee tells the Court that reorganization under Chapter 11 of the Bankruptcy Code is not feasible in this case. He believes that liquidating the estates will be completed more efficiently under Chapter 7 of the Code. The Court, having considered the Trustee's request and the reasons thereof, finds that the request to convert the case to a chapter 7 liquidation proceeding is appropriate. Headquartered in Baldwin Park, California, American Computer & Digital Co., filed for chapter 11 protection on April 22, 2004 (Bankr. C.D. Calif. Case No. 04-19259). Robert P. Goe, Esq., at Goe & Forsythe 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. AMERIDEBT: Wants to Hire Stein Mitchell as Litigation Counsel ------------------------------------------------------------- AmeriDebt, Inc., is named defendant in numerous cases pending in various courts. Stein, Mitchell and Mezines, LLP represented the Debtor prior to its chapter 11 filing. Stein Mitchell also provided general regulatory and litigation counsel to the Debtor for the past two years in five areas: (1) Federal Trade Commission investigation and litigation Stein Mitchell's representation began in June 2002 when AmeriDebt was confronted with a nonpublic investigation by the Federal Trade Commission pursuant to a May 2002 civil investigative demand. In November 2003, the Commission filed a complaint against AmeriDebt in the United States District Court for the District of Maryland, Southern Division. The case is still pending. (2) State Attorneys' General investigations and litigation Stein Mitchell has provided counsel to AmeriDebt with regard to investigations commenced by the States of Missouri, Texas, Illinois and Minnesota. The subject matter of these investigations is the same as the FTC Litigation. Each state subsequently filed suit in their state courts in November 2003. The complaint allegations generally are the same as those presented in the FTC Litigation. The state cases are still pending. (3) Civil Litigation Stein Mitchell has provided counsel to AmeriDebt with regard to four lawsuits, including putative class actions, brought by AmeriDebt's consumer clients of. Similar to the state law enforcement cases, the civil litigation generally involves the same allegations presented in the FTC Litigation. In addition to the litigation, AmeriDebt filed a complaint in the United States District Court for the District of Maryland against Gulf Insurance Company and St. Paul Fire & Marine Insurance. The complaint alleges breaches of contract and breaches of fiduciary duties and duties of good faith and seeks a declaratory judgment in connection with the defendants' failure to provide insurance coverage to AmeriDebt for several covered lawsuits. (4) Congressional investigations and hearings Within the past several months, AmeriDebt has participated in investigations of the credit counseling industry conducted by both the House of Representatives and the Senate involving the same subject matter as the FTC Litigation. Stein Mitchelle represented the company in both proceedings. (5) General Federal and State Regulatory and Compliance Matters Stein Mitchell has provided regulatory advice to the company in various non-public federal and state inquiries and other compliance matters. Some of those litigation matters may not be stayed by Sec. 362 of the Bankruptcy Code, and it will be necessary for the Debtor to be represented in the cases by competent and experienced litigation and regulatory counsel, to preserve the Debtor's estate and to prevent loss. The Debtor believes that it has meritorious defenses to the complex claims asserted in the litigation. Hence, the Debtor seeks the authority of the U.S. Bankruptcy Court for the District of Maryland to employ Stein Mitchell, nunc pro tunc to June 5, 2004. Nelson Deckelbaum, Esq., at Deckelbaum Ogens & Raftery, CHTD, in Bethesda, Maryland, explains that AmeriDebt selected Stein Mitchell to represent it as special litigation and regulatory counsel because it competently represented it prior to the bankruptcy petition date and is well-versed in AmeriDebt's business and can, accordingly, represent its interests more efficiently then could other counsel unfamiliar with the history of the litigation and with the Debtor's business. Stein Mitchell is a prestigious law firm and well-qualified and has ample expertise in the matters upon which it is to be engaged. The Stein Mitchell lawyers working on these matters, Messrs. Mitchell and Beato, combined have more than fifty years of federal and state regulatory and litigation experience. This experience would be a valuable benefit to AmeriDebt in defending the complex litigation and regulatory issues confronting the company. Stein Mitchell's hourly billing rates are: Paralegals and Associates $75 Partner $200 to $225 Senior Partners $350 Stein Mitchell received a $50,000 prepetition retainer. That retainer has been deposited into its client's escrow account and will be applied to charges for postpetition legal services. Headquartered in Germantown, Maryland, AmeriDebt, Inc. -- http://ameridebt.org/-- is a credit counseling company. The Company filed for chapter 11 protection on June 5, 2004 (Bankr. Md. Case No. 04-23649). Stephen W. Nichols, Esq., at Deckelbaum, Ogens, et al., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $8,387,748 in total assets and $12,362,695 in total debts. ASSET SECURITIZATION: Fitch Cuts 1997-D5 Class A-5 Rating to B+ --------------------------------------------------------------- Asset Securitization Corp.'s (ASC) commercial mortgage pass- through certificates, series 1997-D5, $39.5 million class A-5 is downgraded to 'B+' from 'BB' and removed from Rating Watch Negative by Fitch Ratings. Fitch also affirms and removes the following classes from Rating Watch Negative: --$43.9 million class A-6 'B'; --$21.9 million class A-7 'B-'. The following remain on Rating Watch Negative: --$87.7 million class A-2 'AA'; --$52.6 million class A-3 'A+'; --$26.3 million class A-4 'A'. Fitch also affirms the following classes: --$126.4 million class A-1B 'AAA'; --$713 million class A-1C 'AAA'; --$229.8 million class A-1D 'AAA'; --$52.6 million class A-1E 'AAA'; --Interest-only class PS-1 'AAA'. The following classes remain at their current levels: --$39.5 million class B-1 'C'; --$39.5 million class B-2 'C'; --$8.8 million class B-3 'C'; --$13.2 million class B-4 'C'; --$13.2 million class B-5 'C'; --$11.6 million class B-6 'D'. The downgrade of class A-5 reflects the losses expected on several specially serviced loans, with a majority of losses due to occur after the disposition of the Hyde Park loan, secured by a vacant hospital in Chicago, IL. A lawsuit, filed on behalf of the trust against the depositor and mortgage loan seller to have the Hyde Park loan repurchased, is likely to continue through 2005 unless a settlement is reached beforehand. The Fitch expected principal losses to the Hyde Park loan are due to unpaid principal balance, legal fees and assumed future legal fees, accruing at approximately $500,000 per month. Additionally, Fitch anticipates losses of approximately $10 million on four other specially serviced loans (1%). Classes A-2 through A-4 remain on Rating Watch Negative. Although the interest shortfalls on these classes have been paid in full, Fitch remains concerned about the continuing deterioration of the pool's collateral. The interest shortfalls are currently affecting classes A-5 through B-6. Realized losses to date total $31.7 million or 1.77% of the original principal balance. While there has been a decline in the pool performance due to the increased number of loans of concern, five loans, the Saul Centers pool, 3 Penn Plaza, the Fath Multifamily pool, Swiss Bank Tower and Comsat maintain investment grade credit assessments. One loan, the Westin Casuarina Resort, maintains a below investment grade credit assessment. Fitch will continue to monitor this transaction for developments on the Hyde Park repurchase claim, the loans in special servicing and any other potential issues. Further rating actions might be necessary if there is an increase in loans of concern in the pool or if the expected losses continue to increase. ATMI INC: Completes Sale of Epitaxial Services to Int'l Rectifier ----------------------------------------------------------------- ATMI, Inc. (Nasdaq: ATMI), a supplier of materials and materials packaging to the world's leading semiconductor manufacturers, has completed the previously announced sale of its specialty epitaxial services business, located in Mesa, Arizona, to International Rectifier Corporation (NYSE: IRF), a world leader in power management technology. ATMI provides specialty materials and materials packaging to the worldwide semiconductor industry. As the Source of Semiconductor Process Efficiency, ATMI helps customers improve wafer yields and lower operating costs. For more information, please visit http://www.atmi.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, ATMI, Inc. reports: "The Company finances its activities principally through cash from operations, the sale of equity, the issuance of convertible debt securities and various lease and debt instruments. All of the assets and liabilities associated with the discontinued operations are classified as held for sale in the consolidated balance sheets. The Company's working capital increased to $254.5 million at March 31, 2004 from $244.9 million at December 31, 2003, primarily as a result of increased accounts receivable and inventory balances associated with the increased sales in the First Quarter-2004. "ATMI believes that the Company's existing cash and cash equivalents and marketable securities balances, existing sources of liquidity, available lines of credit and anticipated proceeds from disposal of assets and liabilities held for sale will satisfy the Company's projected working capital and other cash requirements through at least the end of 2004. However, management also believes the level of financing resources available to ATMI is an important competitive factor in its industry, and management may seek additional capital prior to the end of that period. Additionally, management considers, on a continuing basis, potential acquisitions of strategic technologies and businesses complementary to ATMI's current business. There are no present definitive agreements with respect to any such acquisitions. However, any such transactions may affect ATMI's future capital needs. In addition, the activities the Company is currently undertaking to exit non-core businesses and reduce its exposure to the cyclical capital equipment spending environment may generate additional sources of liquidity and also affect ATMI's future capital needs." BLOUNT INT'L: Files Amended Stock Registration Statement with SEC ----------------------------------------------------------------- Blount International, Inc. (NYSE: BLT) filed an amendment to a registration statement with the Securities and Exchange Commission for a proposed offering of $125 million of its common stock and a proposed offering by Blount, Inc., its wholly-owned subsidiary, of $175 million in principal amount of Senior Subordinated Notes due 2012. Lehman Brothers and JPMorgan are serving as joint book-running managers for the common stock offering. Lehman Brothers is serving as the sole book-running manager for the Senior Subordinated Notes offering. Blount International, Inc. is a diversified international company operating in three principal business segments: Outdoor Products, Lawnmower, and Industrial and Power Equipment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Each of the offerings will be made only by means of a prospectus. Once available, preliminary prospectuses for the common stock offering and the Senior Subordinated Notes offering may be obtained from Lehman Brothers Inc., c/o ADP Financial Services, Integrated Distribution Services, 1155 Long Island Avenue, Edgewood, New York, 11717 (telephone: 631-254-7106) and preliminary prospectuses for the common stock offering may be obtained from J.P. Morgan Securities Inc., Prospectus Department, One Chase Manhattan Plaza, New York, NY 10081 (telephone: 212-552- 5164). At March 31, 2004, Blount International, Inc.'s balance sheet shows a stockholders' deficit of $390.3 million compared to a deficit of $397.3 million at December 31, 2003. CANDESCENT TECHNOLOGIES: Hires Bachecki Crom as Tax Consultants --------------------------------------------------------------- Candescent Technologies Corporation and Candescent Technologies International, Ltd., ask the U.S. Bankruptcy Court for the Northern District of California, San Jose Division, for permission to employ Bachecki, Crom & Co., LLP as their tax consultants and accountants. The Debtors want Bachecki Crom to provide tax advice and prepare their 2004 tax returns. Bachecki Crom is a certified public accounting practice, established for over 25 years with substantial experience in providing tax consulting services to the debtors and debtor-in- possession. Bachecki Crom presently holds a $9,000 prepetition retainer for prepetition tax services and an $11,000 retainer for postpetition consulting services. The firm's current hourly rates range from: Designation Billing Rate ----------- ------------ Partners $295 to $335 per hour Senior Accountants $170 to $290 per hour Junior Accountants $100 to $160 per hour Gregori W. Somoff will lead the team in this engagement. Mr. Somoff's hourly rate is $300. 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. CARDIAC SCIENCE: Raises $12.4 Million from Private Placement ------------------------------------------------------------ Cardiac Science, Inc. (Nasdaq: DFIB), a leading manufacturer of life-saving automatic public access defibrillators (AEDs) and provider of comprehensive AED/CPR training and program management services, completed a private placement of common stock and warrants raising approximately $12.4 million in gross proceeds. The financing was led by Perseus, LLC, a current investor in the Company. The transaction involved the sale of 5.22 million newly-issued shares of Cardiac Science common stock at a price of $2.37 per share. The share price was based on the closing bid price of the Company's common stock as quoted on the Nasdaq National Market on Monday, July 19. In addition to the common stock, the Company issued the investors five-year warrants to purchase up to an aggregate of 2.09 million shares of common stock with an exercise price of $2.84 per share. Proceeds of the offering will provide additional working capital for the Company and fund product development initiatives. The securities issued in the private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or an applicable exemption from those registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the Company's securities. About Cardiac Science Cardiac Science develops manufactures and markets the Powerheart(R)-brand, automatic public access defibrillators (AEDs), and offers comprehensive AED/CPR training and AED program management services that facilitate successful deployments. The Company also makes the Powerheart(R) CRM(TM), the only FDA-cleared therapeutic patient monitor that instantly and automatically treats hospitalized cardiac patients who suffer life-threatening heart rhythms. Cardiac Science also manufactures its AED products on a private label basis for other leading medical companies. For more information please visit http://www.cardiacscience.com/or call 1.949.797.3800. * * * Liquidity and Capital Resources In its Form 10-Q for the quarterly period ended March 31, 2004, filed with the Securities and Exchange Commission, Cardiac Science, Inc. reports: "From inception through March 31, 2004, we have incurred losses of approximately $111,000. Recovery of our assets is dependent upon future events, the outcome of which is indeterminable. Additionally, transition to profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure. The accompanying financial statements have been prepared assuming that we will continue as a going concern. "Based on meeting our internal sales growth targets, we believe that our current cash balances, combined with net cash that we expect to generate from operations, the sale of two product lines and access to our unused line of credit of $5,000, will sustain our ongoing operations for the next twelve months. In the event that we require additional cash to support our operations during the next twelve months or thereafter, we will attempt to raise the required capital through either debt or equity arrangements. We cannot provide any assurance that the required capital will be available on acceptable terms, if at all, or that any financing activity will not be dilutive to our current stockholders. If we are not able to raise additional funds, we may be required to significantly curtail our operations and this would have an adverse effect on our financial position, results of operations and cash flows." CATHOLIC CHURCH: Asks to Continue Using Existing Business Forms --------------------------------------------------------------- The Archdiocese of Portland in Oregon seeks the Court approval to continue using its correspondence and business forms. This includes, but is not limited to, checks, letterhead, envelopes, promotional materials, and other forms substantially in the forms existing immediately prior to the Petition Date, without reference to its status as debtor-in-possession. "It would be very costly and disruptive to the Debtor's operations to alter its forms to address its status as a debtor- in-possession," Thomas W. Stilley, Esq., at Sussman Shank, LLP, in Portland, Oregon, relates. Paul DuFresne Wants Forms Changed Paul DuFresne, a creditor in the Debtor's Chapter 11 case, asks Judge Perris to direct the Debtor to destroy all old business forms, letterheads, stationary, and checks. Mr. DuFresne also wants all computer files containing templates for letterheads, business forms, and stationary, irrevocably altered or erased. "It is vital for me and for all creditors to know if, in reviewing records, financial or business transactions were conducted before or after the application for bankruptcy," Mr. DuFresne says. According to Mr. DuFresne, "figuring by dates marked on forms or records may be unreliable." The marked dates can be false. The Debtor's tacit and voluntary admission of poor business practice -- through application for Chapter 11 Bankruptcy -- allows for at least a credible possibility that accounting methods are sloppy, or managerial controls over the actions of subordinates are poor. Either of these could lead to intentional or inadvertent dating on forms, letters, checks or records, which falsely indicate when events occurred. Therefore, it is vital that all new business forms be immediately brought into use. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP represent the debtor in its restructuring efforts. When the debtor filed for chapter 11 protection, it listed estimated assets of $10,000,000 to $50,000,000 and estimated debts of $25,000,000 to $50,000,000. (Catholic Church Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHURCH & DWIGHT: Acquires Remaining 50% Interest in Armkel ---------------------------------------------------------- On May 28, 2004, Church & Dwight Co., Inc., acquired the 50% ownership interest in Armkel, LLC, not previously owned by Church & Dwight. The acquisition was effected through Church & Dwight's acquisition from Kelso Blockers Holdings, LLC, an affiliate of Kelso & Company, of all of the issued and outstanding shares of capital stock of several corporations (collectively, the "Kelso Blocker Corporations") that collectively owned all of the outstanding ownership interests in Kelso Protection Ventures, LLC. The Kelso Member directly owned the 50% interest in Armkel. The purchase price for the acquisition was $253,650,000, which was determined through arm's-length negotiations. The acquisition was completed pursuant to the terms of a Stock Purchase Agreement, dated May 28, 2004, between Kelso Blockers Holdings, LLC, Church & Dwight and certain other parties named as guarantors in the Stock Purchase Agreement. Prior to the acquisition, Armkel marketed a portfolio of domestic consumer products, including TROJAN condoms, NAIR depilatories and waxes and FIRST RESPONSE and ANSWER home pregnancy/ovulation test kits. Internationally, Armkel primarily marketed oral care products, depilatories, condoms, skin care products, home pregnancy test kits and other regional niche products. All of these product lines are now wholly-owned by Church & Dwight. Following the acquisition, the Kelso Blocker Corporations, the Kelso Member and Armkel were merged with and into Church & Dwight. As a result of the mergers, Church & Dwight assumed all of the obligations of the Kelso Blocker Corporations, the Kelso Member and Armkel, including all of the obligations of Armkel under $225,000,000 principal amount of 9-1/2% Senior Subordinated Notes due 2009 issued by Armkel and its wholly-owned subsidiary, Armkel Finance, Inc. Church & Dwight also entered into an amended and restated credit agreement with several banks and other financial institutions, The Bank of Nova Scotia, Fleet National Bank and National City Bank, each as a documentation agent, Citicorp North America, Inc., as syndication agent, and J.P. Morgan Chase Bank, as administrative agent. The Credit Agreement provides for (i) a five year term loan in a principal amount of $100,000,000, (ii) a seven year term loan a principal amount of $440,000,000, which term loan may be increased by up to an additional $250,000,000 upon the satisfaction of certain conditions, and (iii) a five year multi-currency revolving credit and letter of credit facility in an aggregate principal amount of up to $100,000,000. The Term Loans were used to finance the acquisition of the remaining 50% interest in Armkel not previously owned by Church & Dwight, pay amounts outstanding under Armkel's principal credit facility and refinance Church & Dwight's principal credit facility. The Revolving Loans, which are currently undrawn, are available for general corporate purposes. The obligations of Church & Dwight under the Credit Agreement are secured by substantially all of the assets of Church & Dwight and certain of its domestic subsidiaries. Those domestic subsidiaries have also guaranteed the loan obligations under the Credit Agreement. The Term Loans and the Revolving Loans bear interest under one of two rate options, selected by Church & Dwight, equal to either (i) a eurocurrency rate (adjusted for any reserve requirements) or (ii) the greater of the prime rate, the secondary market rate for three-month certificates of deposit (adjusted for any reserve requirements) plus 1%, or the federal funds effective rate plus 0.5%, plus (b) an applicable margin. The applicable margin is determined by Church & Dwight's then current leverage ratio. At the closing date of the Credit Agreement, the applicable margin was (a) 1.75% for the Eurocurrency Rate and (b) 0.75% for the Alternate Base Rate. Church & Dwight Co., Inc. manufactures and markets a wide range of personal care, household and specialty products, under the ARM & HAMMER brand name and other well-known trademarks. * * * As reported in the Troubled Company Reporter's June 11, 2004 edition, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on Church & Dwight following the closing of the company's new $640 million senior secured bank facility. The facility was used to refinance existing debt and to purchase the remaining 50% of Armkel LLC the company did not already own. Armkel's senior subordinated debt rating was raised to 'B+' from 'B', in line with Church & Dwight's ratings. Armkel's corporate credit rating was withdrawn, as the company is now 100% owned by Church & Dwight. All of Armkel's ratings are removed from CreditWatch, where they were placed May 6, 2004. Approximately $965 million of rated debt is affected by these actions. "The ratings on Princeton, New Jersey-based Church & Dwight Co. Inc. reflect its participation in the highly competitive personal care segment of the consumer products industry, its lack of geographic diversity, and its acquisitive nature," said Standard & Poor's credit analyst Patrick Jeffrey. Partially mitigating these factors are management's expected focus on reducing debt and the successful growth of the company's product portfolio through acquisitions. This strategy has expanded the Arm & Hammer brand name into several household and personal care product lines, such as detergents, toothpaste, cat litter, and deodorant. CONSECO/GREEN TREE: Fitch Takes Rating Actions on RMBS Classes -------------------------------------------------------------- Fitch Ratings has affirmed 96 classes and downgraded 132 classes from 52 Conseco Finance/Green Tree Finance manufactured housing (MH) transactions. The total dollar amount of all rated classes is approximately $13 billion. The downgrade rating actions reflect the current and future expectations of reduction in credit enhancement combined with high losses and delinquencies. While Fitch's rating actions reflect the deteriorating performance of the MH pools as well as the limitation of capital, changes in servicing fees from 125 basis points (bps) to 115bps (as of July 2004) may be a source of future capital. Fitch will continue to closely monitor the status of the servicing as well as the performance of the pools and take appropriate rating actions. Fitch has taken these rating actions: Series 1994-1: --Class A-5 is affirmed at 'AA'; --Class B-2 remains at 'C'. Series 1994-2: --Class A-5 is affirmed at 'AA'; --Class B-2 remains at 'C'. Series 1994-3: --Class A-5 is affirmed at 'AA'; --Class B-2 remains at 'C'. Series 1994-5: --Class A-5 is affirmed at 'AA'; --Class B-2 remains at 'C'. Series 1994-6: --Class A-6 is affirmed at 'AAA'; --Class M-1 is affirmed at 'AA'; --Class B-1 is affirmed at 'A-'; --Class B-2 remains at 'C'. Series 1994-7: --Class A-6 is affirmed at 'AAA'; --Class M-1 is affirmed at 'AA'; --Class B-1 is affirmed at 'BBB+'; --Class B-2 remains at 'C'. Series 1994-8: --Class A-6 is affirmed at 'AAA'; --Class M-1 is affirmed at 'AA'; --Class B-1 is affirmed at 'BBB+'; --Class B-2 remains at 'C'. Series 1995-1: --Class A-6 is affirmed at 'AAA'; --Class M-1 is affirmed at 'AA'; --Class B-1 is affirmed at 'BBB+'; --Class B-2 remains at 'C'. Series 1995-2: --Class A-6 is affirmed at 'AAA'; --Class M-1 is affirmed at 'AA-'; --Class B-1 is affirmed at 'BBB'; --Class B-2 remains at 'C'. Series 1995-3: --Class A-6 is affirmed at 'AAA'; --Class M-1 is affirmed at 'AA-'; --Class B-1 is downgraded to 'BBB-' from 'BBB'; --Class B-2 remains at 'C'. Series 1995-4: --Classes A-5 - A-6 are affirmed at 'AAA'; --Class M-1 is affirmed at 'AA-'; --Class B-1 is downgraded to 'BB' from 'BBB-'; --Class B-2 remains at 'C'. Series 1995-5: --Class A-6 is affirmed at 'AAA'; --Class M-1 is affirmed at 'A'; --Class B-1 is downgraded to 'B' from 'BB+'; --Class B-2 remains at 'C'. Series 1995-6: --Classes A-5 - A-6 are affirmed at 'AAA'; --Class M-1 is downgraded to 'BBB-' from 'A-'; --Class B-1 is downgraded to 'B-' from 'BB+'; --Class B-2 remains at 'C'. Series 1995-7: --Classes A-5 - A-6 are affirmed at 'AAA'; --Class M-1 is affirmed at 'A-'; --Class B-1 is downgraded to 'B-' from 'BB+'; --Class B-2 remains at 'C'. Series 1995-8: --Class A-6 is affirmed at 'AAA'; --Class M-1 is affirmed at 'A+'; --Class B-1 is downgraded to 'B-' from 'BB+'; --Class B-2 remains at 'C'. Series 1995-9: --Class A-6 is affirmed at 'AAA'; --Class M-1 is downgraded to 'BBB' from 'A-'; --Class B-1 is downgraded to 'B-' from 'BB+'; --Class B-2 remains at 'C'. Series 1995-10: --Class A-6 is affirmed at 'AAA'; --Class M-1 is affirmed at 'A'; --Class B-1 is downgraded to 'B' from 'BB+'; --Class B-2 remains at 'C'. Series 1996-1: --Classes A-4 - A-5 are affirmed at 'AAA'; --Class M-1 is downgraded to 'BBB' from 'BBB+'; --Class B-1 is downgraded to 'CCC' from 'B+'; --Class B-2 remains at 'C'. Series 1996-2: --Classes A-4 - A-5 are affirmed at 'AAA'; --Class M-1 is downgraded to 'BB' from 'BBB'; --Class B-1 is downgraded to 'CC' from 'B-'; --Class B-2 remains at 'C'. Series 1996-3: --Classes A-5 - A-6 are affirmed at 'AAA'; --Class M-1 is downgraded to 'B' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1996-4: --Classes A-6 - A-7 are affirmed at 'AAA'; --Class M-1 is downgraded to 'B' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1996-5: --Classes A-6 - A-7 are affirmed at 'AAA'; --Class M-1 is downgraded to 'B' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1996-6: --Class A-6 is affirmed at 'AAA'; --Class M-1 is downgraded to 'BB' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1996-7: --Class A-6 is affirmed at 'AAA'; --Class M-1 is downgraded to 'BBB-' from 'BBB'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1996-8: --Classes A-6 - A-7 are affirmed at 'AAA'; --Class M-1 is downgraded to 'BB' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1996-9: --Classes A-5 - A-6 are affirmed at 'AAA'; --Class M-1 is downgraded to 'BB' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1996-10: --Classes A-5 - A-6 are affirmed at 'AAA'; --Class M-1 is downgraded to 'BBB-' from 'BBB'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1997-1: --Classes A-5 - A-6 are affirmed at 'AAA'; --Class M-1 is downgraded to 'BB' from 'BBB'; --Class B-1 is downgraded to 'C' from 'B'; --Class B-2 remains at 'C'. Series 1997-2: --Classes A-6 - A-7 are affirmed at 'AA+'; --Class M-1 is downgraded to 'B-' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1997-3: --Classes A-5 - A-7 are affirmed at 'AA'; --Class M-1 is downgraded to 'B-' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1997-4: --Classes A-5 - A-7 are affirmed at 'AA+'; --Class M-1 is downgraded to 'BB-' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1997-5: --Classes A-5 - A-7 are affirmed at 'AA+'; --Class M-1 is downgraded to 'BB' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'B-'; --Class B-2 remains at 'C'. Series 1997-6: --Classes A-6 - A-10 are affirmed at 'AA'; --Class M-1 is downgraded to 'B+' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'CCC; --Class B-2 remains at 'C'. Series 1997-8: --Class A-1 is affirmed at 'AA-'; --Class M-1 is downgraded to 'B' from 'BBB-'; --Class B-1 is downgraded to 'C' from 'CCC'; --Class B-2 remains at 'C'. Series 1998-1: --Classes A-4 - A-6 are affirmed at 'A+'; --Class M-1 is downgraded to 'CCC' from 'BB+; --Class B-1 is downgraded to 'C' from 'CCC'; --Class B-2 remains at 'C'. Series 1998-3: --Classes A-5 - A-6 are downgraded to 'BBB+' from 'A'; --Class M-1 is downgraded to 'CCC' from 'BB-'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1998-4: --Classes A-5 - A-7 are downgraded to 'BBB' from 'A'; --Class M-1 is downgraded to 'CCC' from 'BB-'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1998-6: --Class A-5 is affirmed at 'AAA'; --Class A-6 is affirmed at 'AA'; --Class A-7 is affirmed at 'A'; --Class A-8 is downgraded to 'BBB+' from 'A'; --Class M-1 is downgraded to 'B-' from 'BB-'; --Class M-2 is downgraded to 'CC' from 'B-'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1998-7: --Class A-1 is downgraded to 'BBB+' from 'A-'; --Class M-1 is downgraded to 'B-' from 'BB-'; --Class M-2 is downgraded to 'CC' from 'B-'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1999-1: --Class A-4 is affirmed at 'AA'; --Class A-5 is affirmed at 'A-'; --Class A-6 is downgraded to 'BBB-' from 'BBB'; --Class A-7 is downgraded to 'BB' from 'BBB'; --Class M-1 is downgraded to 'CCC' from 'B+'; --Class M-2 is downgraded to 'CC' from 'B-'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1999-2: --Class A-3 is affirmed at 'A+'; --Class A-4 is downgraded to 'BBB-' from 'A-'; --Classes A-5 - A-7 are downgraded to 'B+' from 'BBB'; --Class M-1 is downgraded to 'CCC' from 'B+'; --Class M-2 is downgraded to 'CC' from 'B-'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1999-3: --Class A-5 is affirmed at 'BBB+'; --Class A-6 is affirmed at 'BBB'; --Classes A-7 - A-9 are downgraded to 'B' from 'BBB-'; --Class M-1 is downgraded to 'CCC' from 'B'; --Class M-2 is downgraded to 'CC' from 'CCC'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1999-4: --Class A-5 is downgraded to 'BBB-' from 'BBB+'; --Class A-6 is downgraded to 'BB' from 'BBB'; --Classes A-7 - A-9 are downgraded to 'B-' from 'BB+'; --Class M-1 is downgraded to 'CC' from 'B'; --Class M-2 is downgraded to 'C' from 'CCC'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 1999-5: --Class A-4 is affirmed at 'BBB+'; --Classes A-5 - A-6 are downgraded to 'B-' from 'BB+'; --Class M-1 is downgraded to 'CC' from 'B'; --Class M-2 is downgraded to 'C' from 'CCC'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 2000-1: --Class A-4 is downgraded to 'BBB-' from 'A'; --Class A-5 is downgraded to 'B-' from 'BB-'; --Class M-1 is downgraded to 'C' from 'B-'; --Class M-2 is downgraded to 'C' from 'CC'; --Class B-1 is downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 2000-2: --Class A-3 is affirmed at 'AAA'; --Class A-4 is downgraded to 'BB-' from 'BBB-'; --Classes A-5 - A-6 are downgraded to 'CCC' from 'BB-'; --Class M-1 is downgraded to 'C' from 'B-'; --Class M-2 is downgraded to 'C' from 'CC'; --Class B-1 is downgraded to 'C' from 'CC'. Series 2000-4: --Class A-4 is downgraded to 'B+' from 'BBB-'; --Classes A-5 - A-6 are downgraded to 'CCC' from 'BB-'; --Class M-1 is downgraded to 'C' from 'B-'; --Class M-2 is downgraded to 'C' from 'CC'; --Class B-1 is downgraded to 'C' from 'CC'. Series 2000-5: --Class A-4 affirmed at 'BBB'; --Class A-5 is downgraded to 'BB+' from 'BBB-'; --Class A-6 is downgraded to 'B-' from 'BB'; --Class A-7 is downgraded to 'B-' from 'BB-'; --Class M-1 is downgraded to 'C' from 'B-'; --Class M-2 is downgraded to 'C' from 'CC'; --Class B-1 is downgraded to 'C' from 'CC'. Series 2000-6: --Class A-4 affirmed at 'A-'; --Class A-5 is downgraded to 'BB+' from 'BBB-'; --Class M-1 is downgraded to 'CC' from 'B'; --Class M-2 is downgraded to 'C' from 'CCC'; --Class B-1 is downgraded to 'C' from 'CC'. Series 2001-1: --Classes A-3 & A-IO are affirmed at 'AAA'; --Class A-4 affirmed at 'A'; --Class A-5 is downgraded to 'BB+' from 'BBB-'; --Class M-1 is downgraded to 'CC' from 'B+'; --Class M-2 is downgraded to 'C' from 'CCC'; --Class B-1 is downgraded to 'C' from 'CC'. Series 2001-2: --Classes A & A-IO are affirmed at 'AAA'; --Class M-1 is downgraded to 'B-' from 'BB-'; --Class M-2 is downgraded to 'C' from 'B-'; --Class B-1 downgraded to 'C' from 'CC'; --Class B-2 remains at 'C'. Series 2001-4: --Class A-IO is affirmed at 'AAA'; --Class A-2 affirmed at 'AA'; --Class A-3 affirmed at 'A+'; --Class A-4 is downgraded to 'BBB' from 'A-'; --Class M-1 is downgraded to 'B' from 'BB+'; --Class M-2 is downgraded to 'CC' from 'B'; --Class B-1 is downgraded to 'C' from 'CCC'. COVANTA TAMPA: Files Schedule of Assumed Contracts with Court ------------------------------------------------------------- Debtors Covanta Tampa Bay, Inc., and Covanta Tampa Construction, Inc., file with the Court a schedule of 23 executory contracts and unexpired leases that they intend to assume pursuant to the Covanta Tampa Plan. The Covanta Tampa Debtors will assign 22 of the contracts to Tampa Bay Water. The Debtors will assign a wireless telephone contract with Nextel Communications to Covanta Projects, Inc. A free copy of the Schedule is available at: http://bankrupt.com/misc/Covanta_Tampa_Assumed_and_Assigned_Contracts.pdf The Covanta Tampa Debtors reserve the right to add or remove executory contracts and unexpired leases to or from the Schedule at any time before the effective date of the Covanta Tampa Plan. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) COVANTA TAMPA: Court Confirms Amended Reorganization Plan --------------------------------------------------------- On July 14, 2004, the Covanta Tampa Debtors, Tampa Bay Water and Debtor Covanta Energy Corporation filed with the Court amendments to the TBW Settlement Agreement underpinning the Covanta Tampa Debtors' Joint Plan of Reorganization. Pursuant to the Amendments, the Parties agree and acknowledge that: (a) Immediately after the Interim Settlement Effective Date, TBW made $550,000 in funds available to pay valid subcontractor claims for certain subcontracts previously assigned to TBW. As of July 1, 2004, $306,681 of the funds made available immediately after the Interim Settlement Effective Date has been paid to subcontractors that have furnished signed final lien waivers and final contractor affidavits pursuant to Florida Statutes Section 713.06(3)(d)(1), leaving a $243,319 balance available to pay valid claims; (b) On the Final Settlement Effective Date, and in addition to $4,400,000, TBW will pay to CTC $77,859 from the Balance, in partial reimbursement for the actual out-of-pocket costs and expenses incurred by CTC with respect to the subcontracts for which CTC has not received reimbursement from TBW. The amounts constitute back charges and offsets against the applicable subcontracts previously assigned to TBW; (c) If CTC holds the right to seek reimbursement for the back charges and offsets, the right to seek reimbursement from the applicable subcontractor is assigned to TBW; (d) TBW will be entitled to retain the remainder of the Balance; and (e) Immediately after the Final Settlement Effective Date, CTC will transfer to TBW all Facility records, documents, and signed and sealed as-builts, excluding the records and documents which are subject to attorney-client privilege or attorney work product privilege. In addition, on or before the Interim Settlement Effective Date, CTC will provide to TBW all final affidavits and partial and final lien waivers that CTC has received from subcontractors, vendors and materialmen related to the Facility. According to Vincent E. Lazar, Esq., at Jenner & Block, in Chicago, Illinois, the Parties' agreement and consent to the revisions assist in the consummation of the Settlement Agreement and in the smooth transition of the operation of the Facility. Court Confirms Amended Plan Judge Blackshear finds that Covanta Tampa Debtors' Plan, as amended by the July 14 revisions to the Settlement Agreement, satisfies the 13 requirements for confirmation provided in Section 1129 of the Bankruptcy Code: A. The Covanta Tampa Plan satisfies Section 1129(a)(1): * The classification scheme of Claims and Equity Interests is reasonable. Valid business, factual and legal reasons exist for separately classifying the various Classes of Claims and Equity Interests. Claims or Equity Interests in each Class are substantially similar to other Claims or Equity Interests in that Class, thus satisfying the requirements of Section 1122(a); * Classes of Claims and Equity Interests are properly designated in accordance with the applicable provisions of the Bankruptcy Code, including Sections 1122 and 1123(a)(1); * Classes 1 and 5 are specified as Unimpaired, thereby satisfying the requirements of Section 1123(a)(2). Pursuant to Section 1126(f), Classes 1 and 5 are deemed to accept the Plan; * Class 2, Subclass 3A, Subclass 3B, and Class 4 are specified as Impaired, thereby satisfying the requirements of Section 1123(a)(3); * The same treatment of each Claim or Equity Interest of a particular Class or Subclass is provided, thereby satisfying the requirements of Section 1123(a)(4); * Unsecured Claims in Subclass 3A and Subclass 3B are placed in separate Subclasses to implement the pro rata distributions of the Net Settlement Funds provided under the Plan, where Unsecured Claims will have priority over Intercompany Claims for purposes of distribution of the Net Settlement Funds, thus further satisfying the requirements of Section 1123(a)(4); * The Plan provides for adequate means of its implementation, including: -- authorizing the Covanta Tampa Debtors to implement the TBW Settlement Agreement and all transactions contemplated thereby; and -- revesting the Covanta Tampa Debtors' assets that have not been transferred pursuant to the TBW Settlement Agreement. The Plan, therefore, satisfies the requirements of Section 1123(a)(5); * The Plan provides that the articles of incorporation of the Covanta Tampa Debtors will prohibit the issuance of non-voting equity securities to the extent required by Section 1123(a)(6); * The appointment or employment of individuals or entities proposed to serve on or after the Effective Date as officers or directors of the Reorganized Covanta Tampa Debtors, and their proposed compensation and indemnification arrangements are consistent with the interests of creditors, equity security holders and public policy in accordance with Section 1123(a)(7); * The Plan does not contain provisions that are inconsistent with the applicable provisions of the Bankruptcy Code, hence, satisfying Section 1123(b)(6); * In accordance with Rule 3016(a) of the Federal Rules of Bankruptcy Procedure, the Plan is dated and identifies the proponents. B. The Covanta Tampa Debtors comply with Sections 1125 and 1126 and, therefore, have satisfied the requirements of Section 1129(a)(2). The Debtors are eligible debtors under Section 109 and proper Plan proponents under Section 1121(a). C. The Covanta Tampa Plan is proposed in good faith and not by any means forbidden by law, thereby, complying with Section 1129(a)(3). The Chapter 11 cases were filed, and the Plan was proposed, with the purpose of maximizing the value of the Covanta Tampa Debtors' estates by providing a means through which the Covanta Tampa Debtors may implement the TBW Settlement Agreement, so that creditors may expeditiously receive distributions in respect of their claims, and the Covanta Tampa Debtors may emerge from Chapter 11 for purposes of operating the Facility on behalf of TBW for an agreed-upon amount of time. D. The Covanta Tampa Plan complies with the requirements of Section 1129(a)(4). To the extent required by the Bankruptcy Code, the Bankruptcy Rules or the Orders of the Court, any payments made or to be made by the Covanta Tampa Debtors for services or for costs and expenses in connection with, the Chapter 11 cases or the Plan, have been approved by, or are subject to the approval of, the Court as reasonable. E. The Covanta Tampa Plan satisfies the requirements of Section 1129(a)(5) since the Covanta Tampa Debtors adequately disclosed or identified in the Disclosure Statement the identities and affiliations of all individuals or entities proposed to serve on or after the Effective Date as officers or directors of the Reorganized Covanta Tampa Debtors. F. Section 1129(a)(6) permits confirmation only if any regulatory commission that will have jurisdiction over the Debtors after confirmation has approved any rate change provided for in the Plan. This requirement is inapplicable in the Covanta Tampa's Chapter 11 cases. The Plan does not provide for any change in rates over which a governmental regulatory commission has jurisdiction. G. The Covanta Tampa Plan satisfies Section 1129(a)(7) of the Bankruptcy Code. Each holder of an Impaired Claim: * has accepted the Plan; or * will receive or retain under the Plan, on account of the Claim, property of a value, as of the Effective Date, that is not less than the amount that the holder would so receive or retain if the Covanta Tampa Debtors were to be liquidated under Chapter 7 of the Bankruptcy Code on that date. The liquidation analysis in the Disclosure Statement and other evidence proffered, adduced or presented at the Confirmation Hearing are persuasive and credible and have not been controverted by other evidence. H. Classes 1 and 5 are Unimpaired and are deemed to accept the Covanta Tampa Plan under Section 1126(f). Class 2, Subclass 3A, Subclass 3B, and Class 4 are Impaired and designated as voting Classes under the Plan. Class 2, Subclass 3A and Subclass 3B have voted to accept the Plan. With respect to Class 4, which currently contains no creditors given the disallowance of the Hydranautics Claims under the Hydranautics Claim Stipulation, no votes were solicited and no votes were cast to accept or reject the Covanta Tampa Plan. In the event that Section 1129(a)(8) has not been satisfied with respect to Class 4, the Plan nevertheless is confirmable because it satisfies Section 1129(b) with respect to Class 4. I. The treatment of Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Priority Non-Tax Claims and the Allowed Covanta Administrative Expense Claim under the Covanta Tampa Plan satisfies the applicable requirements of Section 1129(a)(9). J. Class 2, Subclass 3A, and Subclass 3B are Impaired Classes of Claims that have voted to accept the Covanta Tampa Plan. Other than Subclass 3B, to the best of the covanta Tampa Debtors' knowledge, the Intercompany Claims, do not contain "insiders," thus satisfying Section 1129(a)(10). K. In satisfaction of Section 1129(a)(11), the Covanta Tampa Disclosure Statement and the evidence proffered, adduced or presented at the Confirmation Hearing: * are persuasive and credible; * have not been controverted by other evidence; and * establish that the confirmation of the Covanta Tampa Plan is not likely to be followed by liquidation or the need for further financial reorganization of the Covanta Tampa Debtors. L. The fees due and payable by the Covanta Tampa Debtors to the United States Trustee or the Clerk of Court, as provided under Section 1930(a)(6) of the Judiciary and Judicial Procedures Code, have been paid or will be paid by the Covanta Tampa Debtors pursuant to the Covanta Tampa Plan. Thus, the Section 1129(a)(12) requirements are satisfied. M. The Covanta Tampa Debtors do not provide retiree benefits, as that term is defined in Section 1114 of the Bankruptcy Code, to any person. Thus, the requirements of Section 1129(a)(13) do not apply in the Debtors' Chapter 11 Cases. Accordingly, the Court confirmed the Covanta Tampa's Amended Reorganization Plan on July 16, 2004. Furthermore, the Court: (a) approves in their entirety and on a final basis, the terms of the TBW Settlement Agreement, as amended on July 14, 2004, to be implemented pursuant to the terms of the Covanta Tampa Plan; (b) approves the resolution of Hydranautics' objection to the Plan in accordance with the provisions of the Stipulation between the Covanta Tampa Debtors and Hydranautics; (c) rules that except for evidencing a right to receive a distribution under the Covanta Tampa Plan or as otherwise provided thereunder, and except as provided in the Covanta Tampa Plan or the Confirmation Order, on the Effective Date all agreements and documents evidencing these rights or interests will be released and cancelled without the need for further action: -- claims or rights of any holder of a Claim or Equity Interest against the applicable Covanta Tampa Debtor; -- security interests, liens or encumbrances against property of the Covanta Tampa Debtors with respect to the Claims; and -- options or warrants to purchase Equity Interests, obligating the applicable Covanta Tampa Debtor to issue, transfer or sell Equity Interests or any of their capital stock; (d) approves in their entirety the executory contract and unexpired lease provisions of the Covanta Tampa Plan; (e) directs the Covanta Tampa Debtors to implement the distributions to Class 1, Class 2, Subclass 3A and Subclass 3B upon the Covanta Tampa Plan's Effective Date; (f) makes it clear that pursuant to the terms of the Covanta Tampa Plan, on or after the Effective Date, the holders of any Allowed Class 4 Claims will be entitled to the Judgment Reduction Protection described in the Covanta Tampa Plan, in full and complete satisfaction of their Allowed Third Party Claims; (g) approves the treatment of the Covanta Administrative Expense Claim as provided in the Covanta Tampa Plan. In the Plan, the Covanta Administrative Expense Claim is reduced and allowed in the total amount of $3,400,000, which voluntary reduction represents new value provided by Debtor Covanta Energy Corporation to the Covanta Tampa Debtors; (h) approves the treatment of Intercompany Claims as provided in the Covanta Tampa Plan; and (i) authorizes the Covanta Tampa Debtors to maintain the indemnification agreements with respect to the Specified Personnel in accordance with the Covanta Tampa Plan, and enter into new indemnification and other agreements for active directors, officers and employees. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) DII INDUSTRIES: Judge Fitzgerald Confirms Prepackaged Plan ---------------------------------------------------------- On July 16, 2004, Judge Fitzgerald confirmed the DII Industries, LLC Debtors' Prepackaged Plan in its entirety. The Court overruled all objections to the confirmation of the Plan, other than those withdrawn in writing prior to the Confirmation Hearing. Judge Fitzgerald finds that the Plan complies with the requirements for confirmation under Section 1129 of the Bankruptcy Code: (a) The Debtors' Plan complies with all applicable provisions of the Bankruptcy Code, as required by Section 1129(a)(1), including Sections 1122 and 1123. Specifically, the Plan classifies each claim against and interest in the Debtors into a class containing only substantially similar claims. A reasonable basis exists for the choices made in the Plan's classification scheme, and the classification of claims and interests is appropriate under applicable law. (b) The Debtors have complied with all applicable provisions of Section 1129(a)(2), including Sections 1125 and 1126 and Rules 3017 and 3018 of the Federal Rules of Bankruptcy Procedures. Specifically, the Debtors disclosed to the holders of impaired claims adequate information. Moreover, the Debtors have acted in good faith within the meaning of Section 1125(e). (c) Pursuant to Section 1129(a)(3), the totality of the circumstances surrounding the formulation and proposal of the Plan demonstrates that the Plan was proposed in good faith and not by any means forbidden by law. (d) The payments for costs, services and expense in connection with the Debtors' Chapter 11 cases, or in connection with the Plan, have been or will be fully disclosed and subject to Court approval, pursuant to Section 1129(a)(4). (e) Pursuant to Section 1129(a)(5), the Debtors have fully duly and properly disclosed the identity and affiliations of the proposed directors and officers of each of the Reorganized Debtors, the Trustees, the Legal Representative, the Asbestos TAC and Silica TAC members, and the identity and compensation of insiders who will be employed by the Reorganized Debtors or the Asbestos PI Trust or the Silica PI Trust. (f) Pursuant to Section 1129(a)(6), the Debtors' current businesses do not involve the establishment of rates over which any regulatory commission has or will have jurisdiction after the Confirmation Date. (g) Pursuant to Section 1129(a)(7), the liquidation analysis, which concludes that holders of impaired claims against the Debtors who did not accept the Plan would receive less in a Chapter 7 liquidation than the value that will be realized by the holders under the Plan, is reasonable. (h) Pursuant to Section 1129(a)(8), each class of claims or interests either has accepted the Plan or is not impaired under the Plan. (i) The Plan provides for the treatment of administrative claims, priority tax claims and claims entitled to priority pursuant to Sections 507(a)(3) to(8) in the manner required by Section 1129(a)(9). (j) The Plan has been accepted by all classes of impaired claims that are entitled to vote on the Plan, including Classes 4 and 6, determined without including any acceptance of the Plan by any insider, thus satisfying the requirements of Section 1129(a)(10). (k) Pursuant to Section 1129(a)(11), the Plan is feasible. (l) Pursuant to Section 1129(a)(12), all fees payable under Section 1930 of the Judiciary Procedures Code have been paid or will be paid on the Effective Date. The Debtors will possess cash necessary to pay any fees payable. (m) Pursuant to Section 1129(a)(13), the Debtors' Plan provides for the continued payment of all retiree benefits due and owing to qualifying persons. No party-in-interest has asked the Court to deny confirmation of the Plan on grounds that the principal purpose of the Plan is the avoidance of taxes or the avoidance of the application of Section 5 of the Securities Act of 1933. Accordingly, the Plan satisfies the requirements of Section 1129(d) of the Bankruptcy Code. Disclosure Statement Approved Judge Fitzgerald also approved the Debtors' Disclosure Statement because it contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. The Court overruled all objections to the Disclosure Statement, other than those withdrawn in writing. The Court also approved all Plan Documents, including the Asbestos PI Trust Documents and the Silica PI Trust Documents together with all amendments, modifications, and supplements, and all annexes, exhibits, and schedules, and all the terms and conditions. All transactions effected by the Debtors during the period from the Petition Date, through and including the Confirmation Date, have been approved, ratified, and confirmed by the Court. Judge Fitzgerald also approved as reasonable all payments made or to be made by the Debtors, or by any entity to the extent that the Entity issues or delivers securities or acquires property under or pursuant to the Plan, for services or for costs and expenses in or in connection with the Debtors' Chapter 11 Cases. Vesting of Assets and Continued Corporate Existence On the Effective Date of the Plan, the Reorganized Debtors will be vested with all of the assets and property of their former estates, free and clear of all claims, liens, charges, and other interests of holders of claims or interests, and may operate their businesses free of any restrictions imposed by the Bankruptcy Code. Substantive Consolidation for Certain Purposes Pursuant to the Plan, the Debtors' estates will be substantially consolidated on the Effective Date for purposes of funding the Asbestos PI Trust and Silica PI Trust. The substantive consolidation will not affect the Debtors' obligations to holders of claims in Classes other than Class 4 and Class 6, which will continue to be obligations solely of the specific entities that were obligated on a Claim on the Petition Date. The Reorganized Debtors will continue to maintain their separate corporate existence for all purposes other than funding the Asbestos PI Trust and the Silica PI Trust. Institution & Maintenance of Legal and Other Proceedings As of the Effective Date, the Asbestos PI Trust and the Silica PI Trust will be empowered to initiate, prosecute, defend, settle, and resolve all legal actions and other proceedings related to any asset, liability, or responsibility of the Asbestos PI Trust and the Silica PI Trust, as the cases may be. The Asbestos PI Trust and the Silica PI Trust will be responsible for the payment of all damages, settlements, expenses, costs, fees, and other charges incurred by or on behalf of the Trust subsequent to the Effective Date arising from, or associated with, any legal action or other proceedings. No Transfer of Taxes Pursuant to Section 1146(c) of the Bankruptcy Code, the issuance, transfer, or exchange of any securities issued, transferred, or exchanged under, or transfer of any other assets or property pursuant to the Plan, or the making or delivery of an instrument of transfer in connection with the Plan will not be taxed under any law imposing a stamp tax, transfer tax, or other similar tax. The Asbestos PI Trust (a) Establishment and Purpose of Asbestos PI Trust On the Effective Date, the Asbestos PI Trust will be established in accordance with the Plan Documents. The Asbestos PI Trust will be a "qualified settlement fund" within the meaning of regulations issued pursuant to Section 468B of the IRC. The purpose of the Asbestos PI Trust will be to, among others: (i) liquidate, resolve, pay, and satisfy all Asbestos PI Trust Claims in accordance with the Plan, the Asbestos Trust Distribution Procedures, procedures to be developed and implemented by the Asbestos Trustees for the processing or the liquidation of Indirect Asbestos PI Trust Claims, and the Confirmation Order; and (ii) preserve, hold, manage, and maximize the Asbestos PI Trust Assets for use in paying and satisfying Liquidated Asbestos PI Trust Claims in accordance with the terms of the Asbestos PI Trust Agreement. (b) The Appointment of Trustees, Asbestos TAC Members, and Legal Representative The initial trustees of the Asbestos PI Trust will be: * Mark A. Gleason * Alan R. Kahn * the Honorable Robert M. Parker The initial members of the Asbestos TAC will be: * Steven Baron * John, Cooney * Theodore Goldberg * Steven Kazan * Michael Kelley * Glen Morgan * Perry Weitz Eric D. Green will continue to serve as the Futures Representative on and after the Effective Date pursuant to the Asbestos PI Trust Agreement. The Silica PI Trust (1) Establishment and Purpose of Silica PI Trust On the Effective Date, the Silica PI Trust will be established in accordance with the Plan. The Silica PI Trust will be a "qualified settlement fund" within the meaning of regulations issued pursuant to Section 468B of the IRC. The purpose of the Silica PI Trust will be to, among other things: (i) direct liquidation, resolution, payment, and satisfaction of all Silica PI Trust Claims in accordance with the Plan, the Silica TDP, procedures to be developed and implemented by the Silica Trustees for the processing or the liquidation of Indirect Silica PI Trust Claims, and the Confirmation Order; and (ii) preserve, hold, manage, and maximize the Silica PI Trust Assets for use in paying and satisfying Liquidated Silica PI Trust Claims in accordance with the terms of the Silica PI Trust Agreement. (2) The Appointment of Trustee, Silica TAC Members, and Legal Representative The initial trustee of the Silica PI Trust will be Martin J. Murphy. The initial members of the Silica TAC will be: * Steven Baron * Bryan Blevins * Joseph Rice Eric D. Green will continue to serve as the Futures Representative on and after the Effective Date pursuant to the Silica PI Trust Agreement. Insurance Except for the rights provided to the Asbestos PI Trust in the Asbestos PI Trust Additional Funding Agreement, all rights to recoveries under any insurance policy providing the Debtors, Halliburton, and the Halliburton Current Affiliates with coverage for asbestos-related liabilities, the right to control insurance- coverage litigation, negotiations, and settlements will be vested and remain, as applicable, with the Reorganized Debtors, Halliburton, or the Halliburton Current Affiliates on and after the Effective Date. Discharge and Release On the Effective Date, to the fullest extent permitted under applicable law, the rights provided in the Plan will discharge the Debtors and the Reorganized Debtors, and release each of the Halliburton Entities and the Harbison-Walker Entities from all Asbestos Unsecured PI Trust Claims and Silica Unsecured PI Trust Claims, whether or not: * a Proof of Claim was filed or deemed filed under Section 501 of the Bankruptcy Code; * the Claim is or was allowed under Section 502; * the Claim was listed on a Debtor's schedules; or * the holder of the Claim has voted on or accepted the Plan. (A) Under the Plan, there will be a 100% payment of asbestos- related and silica-related claims. Approximately $4.2 billion in funding is being provided under the Plan. Of that amount, more than $1.8 billion, measured on a net present value basis, is dedicated to payment of unsettled and future asbestos-related personal injury claims. With respect to the Silica PI Trust, under the Plan, DII Industries and KBR will issue a note, guaranteed by Halliburton, that will provide payment of up to $450 million over a 30-year period, and up to $750 million over a 50-year period if the Silica PI Trust Note is extended, pursuant to its terms, to ensure that the Silica PI Trust has sufficient assets to meet projected future demands. Based on this, it was determined that the funding provided to the Asbestos and Silica PI Trusts is sufficient to provide 100% payment to all claims liquidated under both trusts. (B) For Qualifying Settled Asbestos PI Trust Claims, Qualifying Settled Silica PI Trust Claims, Asbestos Final Judgment Claims, and Silica Final Judgment Claims, amendments to the Plan provide that the Payment Percentage will be the Initial Payment Percentage calculated on the 105th day after the Confirmation Date by dividing $2.775 billion by the aggregate dollar value of Qualified Claims. In total, there are $3.085 billion in claims that potentially could be Qualified Claims based on agreements with the Asbestos Committee. (C) As of May 7, 2004, there are 307,632 Qualified Claimants with claims totaling $2,557,653,842. While the review of claims is not yet complete and will not be complete until the 105th day after the entry of the Confirmation Order, the Debtors and the Legal Representative expect that the Initial Payment Percentage for Qualified Claimants will be 100%. The Court finds that the Initial Payment Percentage under the unique facts of the Debtors' case must be 100%. (D) For Claims liquidated under the Asbestos TDP and claims liquidated under the Silica TDP, the Payment Percentage will be established by the trustees of the trusts with the consent of the Legal Representative and the Silica TAC in the case of Silica Unsecured PI Trust Claims. Professor Green testified that the Payment Percentage for the claimants also likely will be 100%. (E) The DII Industries, LLC. Asbestos PI Trust Distribution Procedures makes certain provisions in the Payment Percentage; Periodic Estimates provision under the Plan. The Plan acknowledges the uncertainty of the Halliburton Entities' and the Harbison-Walker Entities' asbestos personal injury liabilities and notes that there is uncertainty regarding the amounts that the holders of the Asbestos PI Trust Claims will receive. The Silica PI TDP provides a procedure for the processing and payment of silica claims. The Plan is structured so that the Asbestos and Silica PI Trusts are funded sufficiently to provide 100% payment to all claims liquidated under the Trusts. (F) Under the Halliburton Intercompany Settlement Agreement, Halliburton has agreed, on behalf of itself and the other parties to be protected under the Permanent Channeling Injunction to: -- issue 59.5 million shares of Halliburton stock which DII Industries will contribute to the Asbestos PI Trust on the Effective Date; -- raise or obtain commitments for the approximately $2.4 billion that will be needed to fund cash contributions to the asbestos and silica trusts; -- guarantee the obligations of DII Industries under the Asbestos PI Trust Note; -- guarantee the obligations of DII Industries and KBR under the Silica PI Trust Note; -- guarantee the obligations of the Debtors under the Asbestos PI Trust Funding Agreement and the Silica PI Trust Funding Agreement; -- perform various other undertakings in connection with the Plan; -- provide up to $350 million in DIP financing for the Debtors to meet financial obligations during and after the Reorganization Cases; and -- enter into a third-party master letter of credit facility covering draws on approximately $1.1 billion in letters of credit issued on behalf of various Debtors. (G) Because Halliburton is solvent, Section 524 of the Bankruptcy Code requires that Halliburton pay 100% of the claims against it to receive the benefit of the Channeling Injunction. The testimony and evidence of record establish that Halliburton's contributions will be sufficient to accomplish 100% payment of its obligations under the Plan. Discharge Injunction The satisfaction, release, and discharge set forth in the Plan will operate as an injunction permanently prohibiting and enjoining the commencement or continuation of any action, the employment of process or any act to collect, recover from, or offset: (a) any claim or demand against or interest in the Debtors, the Reorganized Debtors, the Asbestos PI Trust, or the Silica PI Trust by any entity, including all claims and demands discharged and released in the Plan; and (b) any cause of action against any Halliburton Entity or Harbison-Walker Entity that is derivative of, or based on, any claim or interest discharged and released under the Plan. Permanent Channeling Injunction To preserve and promote the settlement contemplated by and provided for in the Plan, the injunctive effect of the discharge both provided by Sections 1141 and 524 of the Bankruptcy Code and pursuant to the exercise of the equitable jurisdiction and power of the Court under Sections 524(g) or 105(a), the Permanent Channeling Injunction under the Plan will be issued and approved as of the Effective Date. Pursuant to the Permanent Channeling Injunction, all entities which have held or asserted, which hold or assert, or which may in the future hold or assert any Asbestos PI Trust Claim, any Silica PI Trust Claim, or Claim or Demand for or respecting any Asbestos PI Trust Expense or Silica PI Trust Expense against any of the Debtor-Affiliated Protected Parties based on, arising out of, attributable to, or in any way casually connected with, any Released Claim whenever and wherever arising or asserted will be permanently and forever stayed, retained, and enjoined from taking any action for the purpose of directly or indirectly collecting, recovering, or receiving payments, satisfaction, or recovery from any Debtor-Affiliated Protected Party with respect to any Released Claim, including, but not limited to: (i) commencing, or continuing any suit, action, or other proceeding of any kind in any forum with respect to any released claim against any of the Debtor-Affiliated Protected Party, with respect to any Released Claim; (ii) enforcing, levying, attaching, collecting, or otherwise recovering any judgment, award, decree, or other order against any of the Debtor-Affiliated Protected Parties, or against the property or interests in property of any Debtor-Affiliated Protected Parties, with respect to any Released Claim; (iii) creating, perfecting, or enforcing any lien of any kind against any Debtor-Affiliated Protected Party, or the property or interests in property of any Debtor-Affiliated Protected Party, with respect to any Released Claim; (iv) asserting or accomplishing any set-off, right of subrogation, indemnity, contribution, reimbursement or recoupment of any kind against any obligation due any Debtor-Affiliated Protected Party, or against the property or interests in property of any Debtor-Affiliated Protected Party, with respect to any Released Claims; and (v) proceeding or taking any action that does not conform to, or comply with, the provisions of the Plan Documents, the Asbestos PI Trust Documents, or the Silica PI Trust Documents, relating to any released claim. Asbestos/Silica Insurance Company Injunction To preserve and promote the property of the Debtors' estates, as well as the settlements contemplated by and provided for in the Plan, and to supplement, where necessary, the injunctive effect of the discharge and releases, and pursuant to the exercise of the equitable jurisdiction and power of the Court under Sections 524(g) or 105(a) of the Bankruptcy Code, the Asbestos/Silica Insurance Company Injunction set forth in the Plan will be issued and approved as of the Effective Date. Pursuant to the Asbestos/Silica Insurance Company Injunction, all Entities which have held or asserted, which hold or assert, or which may in the future hold or assert any claim, demand, or cause of action, against a Settling Asbestos/Silica Insurance Company based on, arising out of, attributable to, or in any way connected casually with, any claim against or relating to Asbestos/Silica In-Place Insurance Coverage, or an Asbestos/Silica Insurance Policy, whenever and wherever arising or asserted will be permanently and forever stayed, restrained, and enjoined from taking any action for the purpose of directly or indirectly collecting, recovering, or receiving payments, satisfaction, or recovery with respect to any claim, demand, or cause of action. Release of Intercompany Settlement Claims Pursuant to the Plan and the Halliburton Intercompany Settlement Agreement, neither the Debtors, nor any representative of their estates, nor the Reorganized Debtors will commence or prosecute any Intercompany Settlement Claim against a Settlement Released Party. All Intercompany Settlement Claims will be deemed to have been unconditionally and absolutely released by the Debtors and the Reorganized Debtors, without the need for further action, on the Effective Date. Treatment of Executory Contracts and Unexpired Leases (a) Assumption and Rejection of Certain Unexpired Leases and Executory Contracts Pursuant to the Plan, any unexpired lease or executory contract that has not been expressly assumed or rejected by the Debtors prior to the Confirmation Date will, as of the Confirmation Date, be deemed to have been assumed by the Debtors under Sections 365(a) and 1123 of the Bankruptcy Code, provided however, that this provision will not apply to: (i) Asbestos/Silica PI Trust Claimant Settlement Agreements, to the extent executory; or (ii) agreements, to the extent executory, providing for indemnification of third parties for Asbestos PI Trust Claims and Silica PI Trust Claims. To the extent executory, all Asbestos/Silica PI Trust Claimant Settlement Agreements set forth on the Plan and agreements providing for indemnification of third parties for Asbestos PI Trust Claims and Silica PI Trust Claims will be deemed rejected by operation of law or entry of the Confirmation Order unless expressly identified and assumed pursuant to other Court Order. Upon rejection, each claimant under an Asbestos/Silica PI Trust Agreement will be deemed to have a claim for damages equal to the amount payable to that claimant under the applicable agreement subject to the satisfaction of the preconditions to payment. (b) Compensation and Benefits Program All of the Debtors' obligations under employment and severance policies, and all their compensation and benefit plans, policies, and programs applicable to their present and former employees, officers, and directors will be deemed to be, and will be treated as though they are, executory contracts that are deemed assumed under the Plan, and the Debtors' obligations under these plans, policies, and programs will be deemed assumed pursuant to Sections 365(a) and 1123 of the Bankruptcy Code, survive Plan Confirmation. Any defaults existing as of the Effective Date under these plans, policies, and programs will be cured promptly after the Debtors become aware of them. (c) Letters of Credit, Surety Bonds, Corporate Guaranties, Indemnity Agreements, and Postpetition Contracts All of the Debtors' obligations under letters of credit, surety bonds, corporate guaranties, and indemnity agreements existing immediately prior to the Effective Date, and postpetition contracts entered by the Debtors after the Petition Date, will be deemed to be, and will be treated as though they are executory contracts that are assumed under the Plan. The Debtors' obligations under these letters of credit and surety bonds, corporate guaranties, indemnity agreements, and postpetition contracts will be deemed assumed pursuant to Sections 365(a) and 1123 of the Bankruptcy Code and will survive the occurrence of the Effective Date, remain unaffected, and not be discharged in accordance with Section 1141. The Reorganized Debtors will have the right to cure any defaults existing as of the Effective Date under any letters of credit and surety bonds, corporate guaranties, indemnity agreements, or postpetition contracts in the ordinary course of their business promptly after any default becomes known to the Debtors or the Reorganized Debtors and, if disputed, established pursuant to applicable law. All letters of credit, surety bonds, guaranties, indemnity agreements, and postpetition contracts of the Debtors will be deemed reinstated on the Effective Date notwithstanding any default by the Debtors, any delay in the cure by the Debtors, or the filing or existence of the Chapter 11 cases, or any connected action, and will be binding on, and enforceable against all parties, subject to any rights and existing defenses, provided that the reinstatement will not apply to guaranties and indemnity agreements related to Claims to be addressed by the Asbestos PI Trust or the Silica PI Trust. Claims Bar Dates (1) Administrative Claims The Bar Date for filing and serving requests for allowance of Administrative Claims, will be 45 days after the Effective Date. Other than Professional Persons required to do so pursuant to the terms of their retention, claimants holding Administrative Claims that have arisen in the ordinary course of their business will not be required to submit a Request for the Payment of Administrative Expense, unless ordered by the Court. The notice of Confirmation to be delivered pursuant to Bankruptcy Rules 2002 and 3020(c) will set forth the date and constitute notice of the Administrative Claims Bar Date. The Reorganized Debtors and any other party-in- interest will have 30 days after the Administrative Claims Bar Date to review and object to the Claims before hearing for determination of the Administrative Claims is held by the Court, provided that the 30-day review period may be extended by the Court on the Reorganized Debtors' request. (2) Resolution of Disputed Claims On the Effective Date, the parties who accepted the Plan agree that the Reorganized Debtors will have the sole and exclusive authority to file objections to claims, other than Asbestos Unsecured PI Trust Claims and Silica Unsecured PI Trust Claims, in accordance with the Plan. Non-accepting creditors may file objections to claims. Judge Fitzgerald Transmits Plan to District Court Judge Fitzgerald has transmitted her Findings of Fact and Conclusions of Law and Order Confirming Plan in the Debtors' Chapter 11 cases, together with the Disclosure Statement, the Plan, and all Plan Documents, to the Honorable Donetta Ambrose, Chief Judge of the United States District Court for the Western District of Pennsylvania. Judge Fitzgerald advises Judge Ambrose that the Bankruptcy Court has determined the matter in its entirety to be a core bankruptcy matter pursuant to Section 157 of the Judiciary Procedures Code. Pursuant to Section 524(g)(3)(A) of the Bankruptcy Code, the Order issued by the Bankruptcy Court confirming the Debtors' Plan must be affirmed by the District Court. Thus, Judge Fitzgerald asks Judge Ambrose to facilitate the assignment of a District Court judge for the purpose of reviewing the Debtors' Plan. Halliburton's Concerns In a regulatory filing dated July 19, 2004, Halliburton Company disclosed to the Securities and Exchange Commission that it is currently reviewing and may seek clarification of portions of the Confirmation Order. "We expect that, by the end of the summer 2004, the district court will affirm the order issued by the bankruptcy court," Margaret E. Carriere, Halliburton Vice President and Secretary, relates. If the current Plan is not affirmed by the District Court and the Chapter 11 proceedings are not dismissed, the Debtors could propose a new reorganization plan. Chapter 11 permits a company to remain in control of its business, protected by a stay of all creditor action, while that company attempts to negotiate and confirm a reorganization plan with its creditors. However, it is uncertain for how long a period of time the Bankruptcy Court would permit the Debtors to retain their exclusive right to file an amended reorganization plan. If the Debtors are unsuccessful in obtaining district court confirmation of the currently Plan, their assets could be liquidated in the Chapter 11 proceedings, a third party may obtain the right to file another plan of reorganization, the Chapter 11 proceedings could be converted to proceedings under Chapter 7 of the United States Bankruptcy Code or the cases could be dismissed. In the event of a liquidation, or a plan proposed by a third party, Halliburton could lose its controlling interest in DII Industries and KBR. Moreover, Ms. Carriere continues, if the plan of reorganization is not confirmed and the Debtors have insufficient assets to pay the creditors, Halliburton's assets could be drawn into the liquidation proceedings because Halliburton guarantees certain of the Debtors' obligations. Possible Appeals The Bankruptcy Court denied standing to insurance carriers' objections to the confirmation of the Plan except on limited issues. According to Ms. Carriere, the insurers have the right to appeal the Confirmation Order. "These appeals could be withdrawn if proposed insurance settlements become effective." "[T]o the extent announced or proposed settlements with these insurance carriers are not finalized or approved by the bankruptcy court, we believe that these insurance carriers may take additional steps to prevent or delay effectiveness of a plan of reorganization, including appealing the rulings of the bankruptcy court. In that event, there can be no assurance that the insurance carriers would not be successful or that such efforts would not result in delays in the reorganization process. There can be no assurance that we will obtain the required judicial approval of the proposed plan of reorganization or any amended plan of reorganization that we may propose if a final order affirming the proposed plan of reorganization is not issued," Ms. Carriere says. A full-text copy of Halliburton's SEC filing is available at no charge at: http://sec.gov/Archives/edgar/data/45012/000095012904004967/0000950129-04-004967.txt Debtors Seek Clarification The Debtors intend to ask the Court for clarification with respect to certain ambiguities contained in the Confirmation Order, and have been advised by the Court's staff that the Court is amenable to receiving the request under seal. Accordingly, the Debtors seek the Court's authority to file their request to amend the Confirmation Order under seal. 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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) DLJ MORTGAGE: S&P Raises Series 1996-CF2 Class B4 Rating to BB -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of DLJ Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates series 1996-CF2. At the same time, the ratings on two other classes from the same transaction are affirmed. The raised and affirmed ratings reflect increased credit support since issuance due to increased loan payoffs since the last review in March 2003. As of the July 2004 distribution date, the pool consisted of 46 loans with an aggregate unpaid principal balance of $159.05 million, down from 121 loans totaling $508.58 million at issuance. The master servicer, Midland Loan Services Inc. (Midland), provided partial- and full-year 2003 net cash flow (NCF) debt service coverage (DSC) for 98.81% of the pool. Based on this information, Standard & Poor's calculated the most recent weighted average DSC to be 1.20x, down from 1.38x at issuance for the same loans. To date, there have been realized losses on four mortgage loans totaling $7.99 million (1.57% of the initial pool balance). The top 10 loans comprise 49% of the current pool balance. Standard & Poor's calculated the most recent weighted average DSC of 1.18x for the top 10 loans. Three of the top 10 loans are on the watchlist and one has been placed with the special servicer, CRIIMI MAE Services L.P. (CRIIMI). The remaining top 10 loans were noted to be in good or better overall condition based on sight- inspection reports received from Midland. Five loans, totaling 5.97% of the pool, are currently in special servicing. This includes two Texas multifamily assets that are 90- plus days delinquent and three other related borrower multifamily assets that are current, which are located in Florida and Ohio. One of the 90-plus days delinquent loans, Lakeside Village Apartments, located in Houston, Texas, is the eighth-largest loan in the pool, with a current loan balance of $5.18 million (3.26% of the pool). The loan was transferred to special servicing in November 2003 for imminent default, at which time the borrower had requested a four-month forbearance. The property has experienced cash flow problems and a performance decline due to a deteriorating market. However, a sales contract has been signed with a purchase price that exceeds the total loan exposure; full payoff is expected at closing, which is scheduled for July 30. Vista Villas Retirement Community is a 90-days delinquent loan and secured by an independent living facility in New Braunfels, Texas (near San Antonio) that currently has a loan balance of $1.18 million (0.74%). The 58-unit property was built in 1985 and has reported occupancy of 78% as of September 2003. The DSC ratio as of December 2003 was 0.80x NCF, down from 1.30x at issuance. The loan was transferred to the special servicer in April 2003 due to a loan modification request, which was ultimately denied by CRIIMI. The borrower is currently making payments equivalent to interest-only payments. A forbearance agreement permitting interest only for two years is expected to be completed by July 31. The servicer's watchlist includes 15 loans with an aggregate balance equal to 39% of the pool. Three of the top 10 loans are on the watchlist. Arcadia Gateway Retail Center, the largest loan in the pool, is a multiuse, office/retail property in Arcadia, Calif., 21 miles north of Los Angeles. The loan has been watchlisted for a decrease in occupancy due to Caremark vacating 48,458 sq. ft. last April. Of that original space, 24,228 sq. ft. has been leased up, which is reflected in the most recent occupancy figure available, 78% as of May 2004. At issuance occupancy was 99%. The DSC ratio as of December 2003 was 1.12x NCF, down from 1.18x at issuance. The two other top 10 loans that have been watchlisted are both multifamily properties in Texas. The first is Harvest Hill Village Apartments, a $6.9 million (4.37% of the pool) Dallas property. The loan is reporting a DSC ratio of 0.03x NCF as of December 2003, down from 1.15x at issuance. Occupancy was 39% at of December 2003. The property is located in a deteriorating neighborhood, which is experiencing increased crime and gang- related activity. The final top 10 loan on the watchlist, Malibu Apartments, has a loan balance of $5.66 million (3.56% of the pool) and is located in Austin, Texas. The July payment for the loan was reported as past due, but less than 30 days. According to Midland, the borrower has paid the loan in full, which will be reflected in the August 2004 remittance report. The pool's current property concentrations in excess of 10% include multifamily (43%), retail (20%), and office (18%). The properties are located in 20 states, with significant concentrations in Texas (24%) and California (23%). Standard & Poor's stress scenarios included the specially serviced and watchlisted loans, as well as other loans in the pool that appeared to be underperforming. The resulting credit enhancement levels adequately support the raised and affirmed ratings. RATINGS RAISED DLJ Mortgage Acceptance Corp. Commercial mortgage pass-through certs series 1996-CF2 Rating Class To From Credit Support (%) A-3 AAA AA+ 60.60 B1 AAA A 44.57 B2 AAA BBB+ 36.58 B3 A BB 17.35 B4 BB B 6.15 RATINGS AFFIRMED DLJ Mortgage Acceptance Corp. Commercial mortgage pass-through certs series 1996-CF2 Class Rating Credit Support (%) A-1B AAA 99.08 A2 AAA 79.84 E*TRADE ABS: S&P Lowers Ratings and Removes Negative Credit Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class B, C-1, and C-2 notes, composite securities, and preference shares issued by E*Trade ABS CDO I Ltd., a cashflow arbitrage CDO of ABS/RMBS, and removed them from CreditWatch with negative implications, where they were placed March 25, 2004. At the same time, the rating on the class A-1 notes was affirmed, based on the credit enhancement available to support the notes. The rating on the class A-2 notes was also affirmed and removed from CreditWatch with negative implications, where it was placed March 25, 2004, based on the credit enhancement available to support the A-2 notes. The lowered ratings reflect factors that have negatively affected the credit enhancement available to support the notes since the transaction closed in September 2002, primarily a negative migration in the credit quality of the assets within the collateral pool. Standard & Poor's noted that $21.577 million (or approximately 10.33%) of the underlying assets are rated 'CCC+' and below, and come from bonds issued in ABS manufactured housing transactions. Standard & Poor's also noted that, according to the effective date portfolio, the weighted average rating of the underlying collateral for E*Trade ABS CDO I was 'A' and that no assets were rated below investment grade ('BB+' and below). Currently, 13.06% of the underlying collateral is rated below investment grade, with a weighted average rating of 'BBB'. Standard & Poor's reviewed the results of the current cash flow runs generated for E*Trade ABS CDO I to determine the level of future defaults the rated classes can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. When the results of these cash flow runs were compared with the projected default performance of the performing assets in the collateral pool it was determined that the ratings assigned to the class B, C, composite securities, and preference shares were no longer consistent with the credit enhancement available. Ratings Lowered And Removed From Creditwatch Negative E*Trade ABS CDO I Ltd. Rating Class To From B AA- AA+/Watch Neg C-1 BB+ BBB/Watch Neg C-2 BB+ BBB/Watch Neg Composite securities BB BBB-/Watch Neg Preference shares B+r BB+r/Watch Neg Rating Affirmed E*Trade ABS CDO I Ltd. Rating Class A-1 AAA Rating Affirmed And Removed From Creditwatch Negative E*Trade ABS CDO I Ltd. Rating To From Class A-2 AAA AAA/Watch Neg ENRON NORTH AMERICA: Enters Into Texaco Release Agreement --------------------------------------------------------- Enron North America Corporation, Louisiana Resources Company, LRCI, Inc., Louisiana Gas Marketing Company, and LGMI, Inc., seek the Court's authority to enter into and perform under a Release Agreement with Texaco Exploration and Production, Inc. Herbert K. Ryder, Esq., at LeBoeuf, Lamb, Greene & MacRae, LLP, in New York, relates that LRC, LRCI, Louisiana Gas and LGMI are each a limited partner in Bridgeline Holdings, LP, wherein they collectively own limited partnership interests totaling 39.6% in the Partnership. LRC, LRCI, Louisiana Gas, LGMI and Texaco are parties to the Amended and Restated Partnership Agreement effective as of April 19, 2004. ENA holds a 40% membership interest in Bridgeline, LLC, which in turn holds a 1% general partnership interest in the Partnership, pursuant to the Second Amended and Restated Limited Liability Company Agreement of the General Partner effective on April 19, 2004, by and among, Texaco, ENA and certain managers. Mr. Ryder notes that ENA and the Bridgeline Debtors, among other Enron Entities, are parties to a Settlement Agreement, dated as of February 24, 2004. The Settlement Agreement resolved: (i) amounts due pursuant to prepetition physical and financial commodity trading transactions; and (ii) several litigation matters and an arbitration among the parties. The Settlement Agreement discloses that the Bridgeline Debtors, along with the other Enron Entities, are contemplating the sale of their interests in the Partnership and the General Partner. Under the terms of the Settlement Agreement, in conjunction with any sale, the Bridgeline Debtors agreed, among other things, to: (i) adopt bidding procedures that are consistent with the terms of the Settlement Agreement; (ii) consult with the Texaco Parties with respect to the identity of the bidders; and (iii) consider and seek the Texaco Parties' consent to the sale of the Enron Parties' interests in the General Partner and the Partnership to any buyer other than the Agreed No Consent Bidders, which consent will not be unreasonably withheld. Mr. Ryder reports that the Bridgeline Debtors are actively marketing the LP Interests and the LLC Interest and have identified a number of potential bidders. It is anticipated that one of the potential bidders will serve as a stalking horse bidder and that the Bridgeline Debtors will negotiate and seek Court approval of a definitive purchase agreement with the bidder in the near future. In conjunction with the contemplated sale of the LP Interests and the LLC Interest, the Bridgeline Debtors want Texaco to provide certain non-public information in its possession and control with respect to the Partnership and the General Partner to potential bidders to enable the bidders to conduct due diligence. To induce Texaco to provide the Information, the Bridgeline Debtors propose to enter into the Release Agreement, dated June 23, 2004. The operative terms of the Release Agreement are: A. Release And Covenant Not To Sue The Bridgeline Debtors release and waive any and all claims against and agree not to sue Texaco for any claims, demands, causes of action, losses, or liabilities incurred as a result of any of the Information it provided or other acts taken by Texaco in furtherance of the proposed sale of the LP Interests and LLC Interest by the Bridgeline Debtors, provided that the Information provided by, or the conduct of, Texaco did not constitute actual fraud, gross negligence, bad faith or willful misconduct. B. Expenses Of Texaco The Bridgeline Debtors agree to reimburse Texaco on a monthly basis for reasonable out-of-pocket costs and expenses incurred by any Texaco Party in connection with preparing or providing the Information upon receipt of a written request summarizing the costs and expenses. C. Confidentiality The Bridgeline Debtors agree to maintain in confidence, and to cause their employees, representatives, and agents to maintain in confidence, the Information obtained from Texaco and to use the Information only as expressly contemplated by the Release Agreement and the Confidentiality and Release Agreements with potential bidders. D. Covenant Not To Release Information The Bridgeline Debtors agree that they will not make any Information available to a potential bidder until they have received from that potential bidder an executed copy of the Confidentiality and Release Agreement and have delivered the Confidentiality and Release Agreement to Texaco or have received written confirmation from Texaco that it has received an executed copy of the Confidentiality and Release Agreement from the potential bidder. In the event a potential bidder makes any changes to the form of Confidentiality and Release Agreement, the changes must be approved by Texaco prior to any Information being made available. Mr. Ryder points out that the Release Agreement is essential to the sale of the LP Interests and the LLC Interest, and will maximize the proceeds they will be able to realize from the sale. * * * Judge Gonzalez grants the Debtors' request in its entirety. (Enron Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Sues 24 Creditors to Recover $8M Preferential Payments ------------------------------------------------------------------ On or within 90 days before the bankruptcy petition date, the Enron Corporation Debtors made, or caused to be made, transfers to 24 creditors: Creditor Amount -------- ------ Tesla Power & Automation, Inc. $991,486 Tellepsen Corporation 3,221,613 TD International, LLC 193,249 T Bailey, Inc. 156,727 Synetix 70,036 Synergy Investment 51,225 Symons Corporation 121,586 Syacamore Networks 208,855 Sulzer Pumps (USA), Inc. 117,796 Reily Electrical Supply 400,697 Reginald Townsend 20,000 Rebis 32,377 Rasmussen Wire Rope & Rigging 22,865 Railworks WT Byler 546,724 Public Service Electric & Gas 739,956 Psychrometric Systems, Inc. 650,781 Prospect Steel Company 38,000 Pro Mechanical Corporation 150,161 Prime Lube, Inc. 50,847 Presentations Northwest 36,035 Precision Powered Products, Inc. 51,960 Precision Roll Grinders, Inc. 29,658 Power Equipment Company of Memphis 36,241 MP Husky Corporation 73,735 ------------- TOTAL $8,012,610 Neil Berger, Esq., at Togut, Segal & Segal, LLP, in New York, relates that: (a) the Transfers constitute transfers of interest of the Debtors' property; (b) the Debtors made, or caused to be made, the Transfers to, or for the benefit of, the Creditors; (c) the Debtors made, or caused to be made, the Transfers for, or on account of, antecedent debts owed to the Creditors prior to the dates on which the Transfers were made; (d) the Debtors were insolvent when the Transfers were made; (e) the Transfers enabled the Creditors to receive more than they would have received if: -- Enron's cases were administered under Chapter 7 of the Bankruptcy Code; -- the Transfers had not been made; and -- the Creditors had received payment of the debt to the extent provided by the Bankruptcy Code. Thus, Mr. Berger contends that the Transfers constitute avoidable preferential transfers pursuant to Section 547(b) of the Bankruptcy Code. In accordance with Section 550(a), the Debtors may recover from the Creditors the amount of the Transfers, plus interest. In the alternative, Mr. Berger asserts that the Transfers are avoidable fraudulent transfers under Section 548(a)(1)(B) since: (a) the Transfers constitute transfers of interest in the Debtors' property; (b) the Transfers were to or for the benefit of the Creditors; (c) the Debtors received less than reasonable equivalent value in exchange for some or all of the Transfers; (d) the Debtors were insolvent, or became insolvent, or had unreasonably small capital in relation to their businesses or their transactions at the time or as a result of the Transfers; and (e) the Transfers were made within one year before the Petition Date. Accordingly, the Debtors ask the Court to: (i) avoid and set aside the Transfers pursuant to Section 547(b); (ii) in the alternative, avoid and set aside the Transfers pursuant to Section 548(a)(1)(B); (iii) direct the Creditors to immediately pay them an amount equal to the Transfers pursuant to Section 550(a), together with interest from the date of the Transfers; and (iv) award them attorney's fees, costs and other expenses incurred. (Enron Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING COMPANIES: Agrees to Settle Bay 4's $380K Equipment Claim ----------------------------------------------------------------- Bay 4 Capital of Harbor, Florida, as assignee from Comdisco, Inc., as lessor, and Fleming Companies, Inc., as lessee, were parties to a master equipment lease, which was rejected by the Debtors as of December 31, 2003. The Debtors admit that, although they continued to use the leased equipment up to the rejection date, they made no payments to Bay 4 under the lease, or for the related equipment taxes, between September 1, 2003 and December 31, 2003, and that as a result, they owed Bay 4 $379,956.04. To settle Bay 4's claims under the lease, the parties agree that: (1) the Debtors will pay Bay 4 the full amount owed; and (2) Bay 4's unsecured claim is fixed and allowed for $885,703.76, representing the outstanding balance under the rejected lease. Bay 4 is represented in the stipulation by Leslie A. Berkoff, Esq., at Moritt Hock Hamroff & Horowitz, LLP, in Garden City, New Jersey. The Fleming Debtors are represented by Samuel L. Blatnick, Esq., at Kirkland & Ellis, LLP, in Chicago, Illinois. 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. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLINTKOTE COMPANY: Wants Until Sept. 28 to Make Lease Decisions --------------------------------------------------------------- The Flintkote Company tells the U.S. Bankruptcy Court for the District of Delaware that it needs more time to decide whether to assume, assume and assign, or reject its unexpired nonresidential real property leases. The Debtor asks for an extension, through September 28, 2004, of the deadline imposed under 11 U.S.C. Sec. 365(d)(4) to make these important decisions. The Debtor assures the Court that it is current on all of its prepetition and postpetition obligations under the unexpired leases. The Debtor has been using some of the premises as its headquarters. The employees conduct and mange the Debtor's operations which include providing records and analytical support to insurance and legal professionals engaged in company activities. Most importantly, the Debtor and its creditor constituencies have not had sufficient time to formulate a plan of reorganization. Formulation of a plan will require the participation of multiple parties. Recently, the Debtor has only selected a counsel, which awaits for the Court's approval. There has been no legal representative for future asbestos claimants appointed in this case. Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company filed for chapter 11 protection on April 30, 2004 (Bankr. Del. Case No. 04-11300). Attorneys at Sidley Austin Brown & Wood LLP serve as lead counsel to the Company. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young & Jones serve as local counsel to the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of more than $100 million. FOG CUTTER: Plans to Appeal Nasdaq's Move to Delist Shares ---------------------------------------------------------- Nasdaq notified Fog Cutter Capital Group Inc. (Nasdaq:FCCG) of a staff determination to de-list Fog Cutter from the Nasdaq Stock Market, effective July 29, 2004. Fog Cutter will challenge the staff's determination and will request an oral hearing by a Listing Qualifications Panel to review the staff's error. Fog Cutter will continue to be listed on the Nasdaq Stock Market while the Listing Qualifications Panel's decision is pending. "The staff's notice fails to address the actual facts and circumstances underlying Mr. Wiederhorn's plea to two violations committed in reliance on counsel's advice, involving no corporate financial wrongdoing, and whose underlying acts did not involve Fog Cutter," stated Lanny Davis, Fog Cutter's outside counsel. "For one violation, the government conceded Mr. Wiederhorn did not intend to commit it. The other was for listing a loss on a personal tax return that did not reduce his tax liability, was real, and did not cost the government or taxpayers any money," added Mr. Davis. "That is why, in my opinion, the Listing Qualifications Panel will reject the staff's determination. I believe the Panel will focus on the facts, reach a just result, and maintain Fog Cutter's Nasdaq listing." The staff's decision arises from the Leave of Absence Agreement that Fog Cutter entered into with Chief Executive Officer Andrew Wiederhorn and filed with the S.E.C. on June 4, 2004. Nasdaq's notice stated that the staff based its determination on Nasdaq rules 4300 and 4330(a)(3). Fog Cutter recently released a White Paper explaining the facts surrounding the Leave of Absence Agreement. There can be no assurance that the Listing Qualifications Panel will grant Fog Cutter's request for continued listing. The business strategy of Fog Cutter Capital Group consists of developing, strengthening and expanding its restaurant and commercial real estate mortgage brokerage operations and continuing to identify and acquire real estate investments with favorable risk-adjusted returns. The Company also seeks to identify and acquire controlling interests in other operating businesses in which it can add value. The Company's operating segments consist of (i) restaurant operations conducted through Fatburger Holdings, Inc., (ii) commercial real estate mortgage brokerage activities conducted through George Elkins Mortgage Banking Company and (iii) real estate, merchant banking and financing activities. * * * In its Form 10-K/A for the year ended December 31, 2003, filed with the Securities and Exchange Commission, Fog Cutter Capital Group reports: Liquidity and Capital Resources "Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund business operations and acquisitions, engage in loan acquisition and lending activities, meet collateral calls and for other general business purposes. The primary sources of funds for liquidity during the year ended December 31, 2003 consisted of net cash provided by investing activities, including cash repayments related to our mortgage-backed securities portfolio, cash distributions from BEP and the sale of mortgage-backed securities. "If our existing liquidity position were to prove insufficient, and we were unable to fund additional collateral requirements or to repay, renew or replace maturing indebtedness on terms reasonably satisfactory to us, we may be required to sell (potentially on short notice) a portion of our assets, and could incur losses as a result. Furthermore, since from time to time there is extremely limited liquidity in the market for subordinated and residual interests in mortgage-related securities, there can be no assurance that we will be able to dispose of such securities promptly for fair value in such situations. "We consider the sale of assets to be a normal, recurring part of our operations and we are currently generating positive cash flow as a result of these transactions. However, excluding the sale of assets from time to time, we are currently operating with negative cash flow, since many of our assets do not generate current cash flows sufficient to cover current operating expenses. We believe that our existing sources of funds will be adequate for purposes of meeting our liquidity needs; however, there can be no assurance that this will be the case. Material increases in interest expense from variable-rate funding sources, collateral calls, or material decreases in monthly cash receipts, generally would negatively impact our liquidity. On the other hand, material decreases in interest expense from variable-rate funding sources or an increase in market value of our mark-to-market financial assets generally would positively affect our liquidity." FURNAS COUNTY: Gets Nod to Continue Employing Steven Zumbach ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Nebraska gave its stamp of approval to Furnas County Farms and its debtor- affiliates' request to employ Belin Lamson McCormick Zumbach Flynn, PC as their special counsel. At the time of the company's bankruptcy filing, the Debtors were engaged in negotiations for the purchase of their assets. Steven Zumbach, Esq., a shareholder at Belin Lamson was specifically engaged on behalf of the Debtors in the negotiations and preparation of documents for the potential sale of the assets. The Debtors believe that the continued employment of Mr. Zumbach in connection with the asset sale negotiations is in the best interest for the estates. Mr. Zumbach will bill the Debtors at his present hourly rate of $350. Other attorneys' rates range from $150 to $350 per hour and paralegals bill at $105 per hour. Headquartered in Columbus, Nebraska, Furnas County Farms is engaged in owning, leasing, operating and managing swine operations. The Company, along with 4 of its debtor-affiliates filed for chapter 11 protection on May 3, 2004 (Bankr. D. Neb. Case No. 04-81489). James Overcash, Esq., and Joseph H. Badami, Esq., at Woods & Aitken, LLP 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 $50 million. GENTEK INC: Robert Novo Discloses Equity Ownership -------------------------------------------------- Robert D. Novo, GenTek, Inc.'s Vice President, Human Resources, directly and beneficially owns 7,617 shares of GenTek common stock, par value $0 per share, which he acquired as of June 30, 2004. In a regulatory filing with the Securities and Exchange Commission, Mr. Novo disclosed that the GenTek shares are restricted and subject to forfeiture under certain circumstances. Mr. Novo also reported his acquisition of Stock Options -- Right to Buy -- for 3,495 shares at a $36 exercise price. The Stock Options expire on March 19, 2014. According to Mr. Novo, one- third of the Stock Options will vest on March 19, 2005 and an additional one-third will vest on March 19, 2006. The remaining one-third will vest on March 19, 2007. (GenTek Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) GLOBAL CROSSING: WilTel Asserts $480,469 Cure Amount is Owed ------------------------------------------------------------ WilTel Communications, LLC, asks Judge Gerber to determine the correct amount of its cure claim in connection with the assumption of an executory contract between WilTel and the Global Crossing Ltd. (GX) Debtors. WilTel also asks the Court to direct the GX Debtors to pay the correct cure amount under the Plan. James S. Carr, Esq., at Kelley Drye & Warren, LLP, in New York, tells the Court that the correct cure amount of WilTel's claim arising from the GX Debtors' assumption of an IRU Agreement dated December 21, 1998, wherein WilTel provides certain dark fiber to the GX Debtors, is $480,469.57. WilTel did not receive notice of the GX Debtors' assumption of the Dark Fiber IRU and now wants to vacate any Court order fixing WilTel's cure claim at any amount less than $480,469.57 on the grounds of mistake, inadvertence, surprise, fraud or misconduct of the adverse party. The Dark Fiber IRU and Other Agreements On the Petition Date, WilTel and the GX Debtors were parties to several different contracts, other than the Dark Fiber IRU: Type of Contract WilTel No. Revenue/Expense Effective Expiration Status __________ ________________ _________ __________ ______ 99B182900 Capacity Purchase 11/30/99 11/29/04 Assumed Expense to WilTel MME112900 Collocation 06/19/00 11/29/04 Unknown Expense to WilTel 99E0193.00 Collocation 12/19/94 -- Unknown Expense to WilTel 98E0496.00 IRU 04/07/98 -- Unknown Expense to WilTel MMM2096.00 Bi- lateral 08/25/00 -- Unknown interconnect 98R137200 Dark Fiber IRU 12/21/98 12/20/18 Assumed Revenue to WilTel 99R0396.00 Carrier Services 03/03/99 03/02/04 Rejected? Revenue to WilTel Expired? MMR157500 Int'l Backhaul 09/08/00 -- Rejected? Revenue to WilTel Expired? 01R250500 Master Services 11/28/00 -- Rejected? Revenue to WilTel/WGVS (Superseded by MSA 4/4/03) During the GX Debtors' bankruptcy case, WilTel sought to track what happened to its various contracts with them -- i.e., whether they were being assumed or rejected -- but not always with success. WilTel's Claims WilTel timely and properly filed proofs of claim for the amounts the GX Debtors owed under the Dark Fiber IRU: (a) WilTel filed a Proof of Claim on September 30, 2002, for $217,920.64 on account of collocation charges. The Proof of Claim appears to be denominated -- based on the information affixed on the copy returned to WilTel and based on a review of the proof of claim records -- as Claim Nos. 5637, 5639 and 5640. (b) WilTel filed a Proof of Claim on September 30, 2002, for $262,549 for maintenance charges. The Proof of Claim appears to be denominated as Claim No. 5643. WilTel filed a total of five proofs of claim -- which for reasons unknown to WilTel were assigned a total of 10 claim numbers -- for the amounts due to it under the Dark Fiber IRU and under its other contracts with the GX Debtors. No objections have been filed by the GX Debtors to WilTel's proofs of claim concerning the Dark Fiber IRU. GX's Assumption of the Dark Fiber IRU According to Mr. Carr, WilTel was unaware of whether the GX Debtors had assumed or rejected the Dark Fiber IRU when WilTel was contacted by e-mail on October 21, 2003, by John Guella, Carrier Relations Director for the GX Debtors. Mr. Guella indicated that his records reflected that there was a signed settlement agreement with WilTel and he wished to confirm the correct remittance address. During ensuing discussions, Mr. Guella advised WilTel that the Debtors had assumed the Dark Fiber IRU and that he had a check for WilTel for the first of 24 installment payments for the cure amount due, which amount Mr. Guella said was $169,866. WilTel advised Mr. Guella that although there had been lengthy negotiations over the Dark Fiber IRU and various other agreements between the parties, there was no signed settlement agreement and the correct cure amount was $480,469.57. Mr. Carr clarifies that there is no agreement between the parties wherein WilTel has consented to a lesser cure amount than the $480,469.57 due. After investigating the matter, WilTel has determined that the Dark Fiber IRU was listed on Schedule 1.1 of the Plan as one of the "interconnection agreements" to which the Debtors are a party. Mr. Carr argues that a dark fiber IRU is not an "interconnection agreement." Schedule 1.1 listed the Dark Fiber IRU with a $169,866 cure amount. WilTel received the Notice of Assumption of Certain Executory Contracts and Unexpired Leases of Non-residential Real Property. The Assumption Notice advised WilTel to check a database listing on the Internet at http://www.bsillc.comto determine if any of its contracts were being assumed and if so, the associated cure amount as proposed by the Debtors. WilTel's review of the Internet database revealed one contract WilTel had with the GX Debtors, but the Dark Fiber IRU was not listed there. The Assumption Notice further advised that if a contract was not listed on the database, it would be rejected pursuant to the Plan unless otherwise assumed by the GX Debtors. The Internet database also noted three categories of contracts not included in the database, including the "interconnection agreements" listed in Schedule 1.1 of the Plan. Because a dark fiber IRU is not an interconnection agreement, WilTel did not check Schedule 1.1 of the Plan for the Dark Fiber IRU. Debtors' Cure Negotiations with WilTel In the Fall of 2002 and continuing into 2003, WilTel and the GX Debtors engaged in negotiations concerning various of the contracts between them, including the Dark Fiber IRU. WilTel understood that the GX Debtors wanted to assume the Dark Fiber IRU if WilTel would make certain concessions, which included the $480,469.57 cure amount sought by WilTel. These negotiations involved David Hirsch, then a senior officer in carrier relations with the Debtors. The GX Debtors wanted price and cure amount concessions from WilTel and WilTel wanted price concessions from the GX Debtors. WilTel declined to reduce its cure amount on the Dark Fiber IRU and no agreements were ever reached compromising the parties' rights on any of their contracts. As a result of the negotiations between the GX Debtors and WilTel regarding the assumption of the Dark Fiber IRU, it is apparent that the GX Debtors had notice of the amount of "cure" sought by WilTel with respect to the Dark Fiber IRU. The GX Debtors also knew, or should have known, of the correct "cure" amount with respect to the Dark Fiber IRU from the proofs of claim WilTel timely filed on September 30, 2002. In contrast, WilTel did not receive proper notice that the Dark Fiber IRU would be included in Schedule 1.1. Moreover, even if WilTel had noticed that the Dark Fiber IRU had been improperly classified as an interconnection agreement, each of the various versions of Schedule 1.1 indicated that settlement negotiations were ongoing and that if negotiations did not proceed to the satisfaction of the GX Debtors, they reserved the right to reject any scheduled contract. As a result, the GX Debtors failed to provide WilTel with proper notice of their intention to assume the Dark Fiber IRU or of their proposed cure amount in connection with the assumption of the Dark Fiber IRU. WilTel is willing to consent to the GX Debtors' assumption of the Dark Fiber IRU, but requests that in connection with the assumption of that contract, the Court order the Debtors to pay WilTel the correct cure amount of $480,469.57 over the 24-month period provided by the Plan. To the extent that any prior notice or order provides that its cure amount has been allowed in a lesser amount, WilTel asks the Court to vacate that Order with respect to the Dark Fiber IRU. WilTel contends that the cure claim must be reconsidered and allowed at the correct amount, pursuant to Section 502(j) of the Bankruptcy Code, and Rule 3008 of the Federal Rules of Bankruptcy Procedure. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02- 40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. (Global Crossing Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) GOODYEAR: Fitch Affirms B/CCC+ Ratings & Says Outlook Now Stable ---------------------------------------------------------------- Fitch Ratings has affirmed Goodyear Tire & Rubber Company's senior unsecured rating at 'CCC+' and the senior secured bank facilities at 'B'. The Rating Outlook has been revised to Stable from Negative. While the Securities and Exchange Commission's (SEC) investigation of accounting irregularities at Goodyear continues, restated financial statements have recently been filed for the affected historical periods. The accounting restatements resulted in total reductions in net income of $280.8 million over several of the affected periods. Liquidity was not affected by the outcome. Furthermore, filing and disclosure of results and statements for the quarter ended March 31, 2004 and fiscal year ended Dec. 31, 2003 places Goodyear in compliant standing with the bank credit agreements. Of the $5.34 billion of consolidated debt at March 31, 2004, $280 million was short-term debt. Additionally, $1.14 billion of debt comes due in 2005 with $650 million of senior secured European facilities in April and $490 million of Euro notes in June of 2005. The $750 million senior secured U.S. revolver (resized to $680 million) with no funded borrowings but $491 million of letters-of-credit issued against it comes due in April 2005 also. For 2006, debt maturities amounted to $1.95 billion. At March 31, 2004, liquidity included $1.29 billion of consolidated cash and equivalents along with $564 million of availability in committed bank lines. While several financings done through the private placement markets in March and July 2004 for $650 million and $350 million, respectively, partially extended the company's debt profile, substantial debt maturities and cash payment commitments continue to loom. The legislative changes regarding the ERISA required pension contribution schedule have benefited the company by deferring required contributions. An earlier estimate of $350 million-$400 million in ERISA required domestic funding into Goodyear's $2.8 billion underfunded global pension fund, has been revised to $160 million. Estimated 2005 required funding is now approximately $325-350 million, and in the absence of strong asset returns and/or an increase in the discount rate will ratchet up significantly in 2006. While the very large underfunded pension liability will continue to pose substantial claims on Goodyear's cash flow, the immediacy of the onerous schedule has been deferred. Operationally, Goodyear showed some signs of making headway in its turnaround strategy. First quarter 2004 sales were up 21% nominally to $4.29 billion. However, net of foreign currency translation and FIN 46 consolidation effects sales were up 8%. Rebounding volume in North American replacement tire market and better product mix with gains in higher priced premium brands in passenger and in commercial tires, along with improved pricing generally, have all contributed to the good sales gains. Segment operating income shot up to $216 million in the first- quarter 2004 versus $42 million in 2003. While the critical North American tires segment continued to post segment operating losses, albeit at a lesser rate, robust gains in almost all the other operating business areas allowed for the consolidated gains. Overall, sales gains, cost reduction efforts, and better capacity utilization in the quarter contributed to overcoming adverse raw material costs and partially restoring profitability. Goodyear is currently in the midst of implementing a turnaround strategy, which, among other operating initiatives, features a $1.5 billion cost reduction effort. The closure of the Huntsville, AL tire manufacturing facility in December 2003 was a crucial element in the rationalization drive, particularly in the struggling North American tire segment. In the first quarter, the Huntsville plant rationalization added $14 million in savings while also contributing to a boost in capacity utilization to 93% of annual operating capacity in North America versus a high 80% last year. Short-term risks include continued high or further rising raw material costs, market share loss, and lack of execution on the remaining cost-reduction efforts. Further improvement in margins and free cash flow will be required to initiate debt reduction. A reversal of operating progress could impair the company's access to external capital markets. HEALTH CARE: Low-B Rated REIT Reports Second Quarter Results ------------------------------------------------------------ Health Care REIT, Inc. (NYSE:HCN) reported operating results for its second quarter ended June 30, 2004. "We had a strong quarter of investment activity driving our gross and net new investment total for the first half of 2004 to $161.5 million and $127.7 million, respectively," commented George L. Chapman, chief executive officer of Health Care REIT, Inc. "This first half activity, together with an additional $148.4 million of net new investments to date in the third quarter, allows us to increase our 2004 projected net new investment guidance to $400 million to $500 million. Many of these investments will incorporate rental escalators that enable us to generate additional organic growth and minimize straight-line rent over time. While this change will impact FFO guidance in the short run, cash flow and our ability to pay dividends are unaffected." The Board of Directors declared a dividend for the quarter ended June 30, 2004 of $0.60 per share as compared to $0.585 per share for the same period in 2003. The dividend represents the 133rd consecutive dividend payment. The dividend will be payable August 20, 2004 to stockholders of record on July 30, 2004. Net income available to common stockholders totaled $19.2 million, or $0.37 per diluted share, for the second quarter of 2004, compared with $16.7 million, or $0.41 per diluted share, for the same period in 2003. Funds from operations totaled $35.8 million, or $0.69 per diluted share, for the second quarter of 2004, compared with $28.6 million, or $0.70 per diluted share, for the same period in 2003. Net income available to common stockholders totaled $37.9 million, or $0.73 per diluted share, for the six months ended June 30, 2004, compared with $33.2 million, or $0.81 per diluted share, for the same period in 2003. Funds from operations totaled $71.5 million, or $1.39 per diluted share, for the six months ended June 30, 2004, compared with $56.7 million, or $1.39 per diluted share, for the same period in 2003. Health Care REIT had a total outstanding debt balance of $1.0 billion at June 30, 2004, as compared with $833.5 million at June 30, 2003, and stockholders' equity of $1.2 billion, which represents a debt to total book capitalization ratio of 47 percent. The debt to total market capitalization at June 30, 2004 was 36 percent. Its coverage ratio of EBITDA to interest was 3.21 to 1.00 for the six months ended June 30, 2004. Straight-line Rent. The Company recorded $2.5 million and $9.1 million of straight-line rent for the three and six months ended June 30, 2004, respectively. Straight-line rent is net of $2.4 million and $3.0 million in cash payments outside the normal monthly rental payments for the three and six month periods, respectively. Based upon a review of the existing portfolio, the Company reduced its recognition of straight-line rent for the second quarter by $2.5 million. Outlook for 2004 and 2005. Going forward, most of the Company's master leases will incorporate annual rental escalators based on the lesser of a Consumer Price Index factor or a fixed basis point increase. Because the increases are not known at the commencement of the lease, straight-lining the average rental rate over the life of the lease is not required. Therefore, primarily due to its revised straight-line rent expectations, the Company is adjusting its 2004 guidance and now expect to report net income available to common stockholders in the range of $1.49 to $1.54 per diluted share, down from $1.68 to $1.73 per diluted share, and FFO in the range of $2.87 to $2.92 per diluted share, down from $2.99 to $3.04 per diluted share. The Company expects to record straight-line rent of approximately $18 million to $20 million for the full year 2004, down from previous expectations of $24 million to $28 million. These expectations exclude any additional payments outside the normal monthly rental payments. As previously stated, the Company is also increasing its net new investment guidance for 2004 to a range of $400 million to $500 million. The Company is initiating guidance for 2005 and expects to report net income available to common stockholders in the range of $1.47 to $1.55 per diluted share, and FFO in the range of $2.98 to $3.06 per diluted share. The guidance assumes net new investments of $250 million with leases that will not require rents to be straight-lined. The Company expects to record straight-line rent of approximately $14 million to $16 million for the full year 2005, before any payments outside the normal monthly rental payments. The Company guidance does not account for any impairments or increased quarterly charges to the loan loss reserve. Additionally, it plans to manage the company to maintain investment grade status with a capital structure consistent with its current profile. Portfolio Update. Eight assisted living facilities stabilized during the quarter and one assisted living facility in fill-up was acquired. The Company ended the quarter with four assisted living facilities remaining in fill-up, representing two percent of revenues. Only one facility, representing one percent of revenues, has occupancy of less than 50 percent. The facility was a new acquisition in the fourth quarter of 2003. 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/ HEART PLACE HOSPITAL: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Heart Place Hospital, L.P. 25 Village Circle Midland, Texas 79701 Bankruptcy Case No.: 04-70521 Type of Business: The Debtor is an acute care hospital designed to treat heart and vascular patients. See http://www.midlandheartcenter.com/ Chapter 11 Petition Date: July 19, 2004 Court: Western District of Texas (Midland) Judge: Ronald B. King Debtor's Counsel: Vivian Lea Borland, Esq. 213 North Main, Suite 101 Midland, TX 79701 Tel: 432-684-5290 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Community National Bank $6,500,000 P.O. Box 3903 Midland, TX 79702 Boston Scientific $151,509 Stubbeman, McRae, Sealy & Laughlin $138,894 Standard Capital $125,010 US Bank Portfolio Services $106,073 Assoc. Of MC & IM, P.C. $90,707 Dynacare Laboratories $67,824 Banclease Acceptance Corp. $61,632 Staff Care $56,918 Texas Nurse Connections, LLC $55,335 Datex-Ohmeda, Inc. $43,978 Medtronic USA, Inc. $43,228 United Blood Services $39,744 Brown's Permian Eletric Co. $37,135 Abbott Laboratories, Inc. $35,667 Durbin & Company, LLP $32,424 Prime Staff Odessa $32,416 Texas West Ambulance $29,600 Metro Financial Services $29,221 Mckesson Medical $28,030 INFINIUM LABS: Secures New $50 Million Equity Credit Line --------------------------------------------------------- HPC Capital Management, an investment banking firm serving as advisor to Infinium Labs (OTCBB:IFLB), has facilitated a $50 million equity line of credit from an institutional investor. The new line of financing replaces an earlier agreement for an equity investment of $46 million from SBI-USA, Trilogy Capital Partners, HaDavar HaNachon LLC and Reich Capital, which has been cancelled by the company. Timothy M. Roberts, Chairman and CEO, Infinium Labs, said the company decided to accept the offer of a new set of investors because the deal is less dilutive to shareholders, provides better terms and is a better fit for the company's capital plan and budgetary needs. The Phantom Gaming Service(TM) -- the first end-to-end, on-demand gaming service -- is slated to be available to consumers fourth quarter 2004. The global video/PC game industry has been estimated by industry marketing analysts at more than $20 billion in annual revenue from system and software sales and growing at double-digit figures, as the player moves from the avid to the casual gamer. "Infinium Labs is at the forefront of the revolution in gaming -- the move from consoles and PCs to the streaming of a library of titles over broadband networks into the home, to a receiver that sits in the living room and is used by everyone in the family," Vince Sbarra, President, HPC Capital Management, said. "We've been watching the number of broadband users increase every year. After carefully evaluating the industry, we feel that Infinium Labs represents a significant opportunity to enter this market with a company that has a solid management team that combines the experience of two worlds -- executives from networking businesses and senior managers that have previously launched a successful game system." HPC Capital Management has been retained by Infinium Labs to evaluate the company's current and future capital needs. The new equity line of credit is subject to final documentation and is contingent on the filing and effectiveness of a Registration Statement with the SEC covering the resale of shares, among other conditions. About HPC Capital Management HPC Capital Management -- http://www.hpccapital.com/-- is a NASD member firm based in Atlanta, Ga. HPC Capital Management focuses on providing funding for public and private companies, consulting and merger & acquisition advice. The company has offices in Atlanta, Ga. and Miami, Fla. About Infinium Labs Infinium Labs was founded by a management team with extensive experience in interactive media, entertainment, broadband services and technology. The company is set to launch a cutting edge online gaming service in the fourth quarter of 2004. The Phantom Gaming Service will be delivered online over any broadband network and offer a broad library of games designed to appeal to the avid gamer as well as the casual player. For more information, please visit http://www.phantom.net/ At March 31, 2004, Infinium Labs' balance sheet shows a stockholders' deficit of $1,733,272 compared to a deficit of $191,375 at December 31, 2003. INFOUSA INC: Reports Fiscal Year 2005 Guidance ---------------------------------------------- infoUSA(R) (Nasdaq:IUSA), the leading provider of proprietary business and consumer databases and sales leads, reported guidance for fiscal year 2005 computed on a GAAP basis: -- 2005 Revenue Guidance: $390.00 Million to $400.00 Million -- 2005 EBITDA Guidance: $98.00 Million to $102.00 Million -- 2005 EPS Guidance: $0.63 Per Share to $0.67 Per Share About infoUSA infoUSA -- http://www.infoUSA.com/-- founded in 1972, is the leading provider of business and consumer information products, database marketing services, data processing services and sales and marketing solutions. Content is the essential ingredient in every marketing program, and infoUSA has the most comprehensive data in the industry, and is the only company to own a proprietary database of 250 million consumers and 14 million businesses under one roof. The infoUSA database powers the directory services of the top Internet traffic-generating sites, including Yahoo! (Nasdaq:YHOO) and America Online. Nearly 3 million customers use infoUSA's products and services to find new customers, grow their sales, and for other direct marketing, telemarketing, customer analysis and credit reference purposes. infoUSA headquarters are located at 5711 S. 86th Circle, Omaha, NE 68127 and can be contacted at 402-593-4500. * * * As reported in the Troubled Company Reporter's May 20, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB' ratings and recovery ratings of '4' to infoUSA Inc.'s $250 million of senior secured credit facilities, indicating a marginal recovery (25%-50%) of principal in the event of a default. In addition, Standard & Poor's affirmed its 'BB' corporate credit rating on the Omaha, Nebraska-headquartered company. The outlook is stable. "The ratings on infoUSA Inc. reflect the company's meaningful pro forma debt levels, moderate-size operating cash flow base and competitive market conditions, including competition from companies that have greater financial resources," said Standard & Poor's credit analyst Donald Wong. "These factors are tempered by infoUSA's historical operating cash flow margins in the mid-to high-20% range, free operating cash flow generation, strong niche market positions, a broad product and service offering distributed through numerous channels to a diverse base of businesses, and a significant portion of sales derived from existing or former customers." IPCS INC: Sprint's PCS Affiliate Emerges from Chapter 11 -------------------------------------------------------- iPCS, Inc.'s Plan of Reorganization became effective Tuesday, July 20. iPCS, the PCS Affiliate of Sprint that owns and operates the Sprint Nationwide PCS Network in 38 markets in four Midwestern states and serves more than 227,400 customers, has emerged from the bankruptcy process as a reorganized entity, and an application has been filed for approval of trading of its newly issued common stock on the Pink Sheets under the trading symbol IPCS. Timothy Yager, iPCS' president and chief executive officer, said, "We are pleased to be entering a new phase of our business, emerging from reorganization with a new capital structure and the liquidity necessary to participate in the anticipated continued growth and evolution of the wireless business. "Through the consummation of the Plan, our relationships with all of our stakeholders, including Sprint and our unsecured creditors, have been redefined and restored, and we can now return to aggressively pursuing our core business. We are excited about the road ahead of us," Mr. Yager said. iPCS' Plan was filed with the U.S. Bankruptcy Court for the Northern District of Georgia on March 31, 2004 and subsequently amended. The Plan was confirmed by the Court on July 8, 2004. In general, the Plan provided: -- Repayment in full in cash of its senior secured credit facility; -- Cancellation of its $300 million 14% senior discount notes due 2010 and other unsecured non-convenience claims in exchange for its new common stock; -- Discharge of all of its subordinated claims and the cancellation of all of its existing common stock; -- Assumption of its amended Sprint PCS affiliation agreements and the settlement of previously stayed litigation against Sprint; -- The merger of iPCS Escrow Company with and into iPCS, Inc. as the surviving corporation and the release from escrow to iPCS of the net proceeds of the $165 million 11.5% senior notes due 2012 offering; -- The appointment of Timothy Yager as President and Chief Executive Officer as well as five new directors, including Mr. Yager. iPCS is the PCS Affiliate of Sprint with the exclusive right to sell wireless mobility communications, network products and services under the Sprint brand in 38 markets in Illinois, Michigan, Iowa and eastern Nebraska with approximately 7.6 million residents. The territory includes key markets such as Grand Rapids, Mich., Champaign-Urbana and Springfield, Ill., and the Quad Cities of Illinois and Iowa. iPCS is headquartered in Schaumburg, Illinois. On April 30, 2004, iPCS Escrow Company, a recently formed, wholly owned indirect subsidiary of iPCS, completed an offering of $165 million aggregate principal amount of 11.50% senior notes due 2012. In connection with the confirmation and effectiveness of the plan of reorganization, iPCS Escrow Company will be merged with and into iPCS and, upon the consummation of the merger, the senior notes will be senior unsecured obligations of iPCS. iPCS Escrow Company deposited the proceeds of the offering into an escrow account pending the merger. If the merger has not been consummated or if iPCS elects a special mandatory redemption, in each case prior to August 28, 2004, iPCS Escrow Company will redeem all of the senior notes at a price equal to 100% of the principal amount plus interest. At March 31, 2004, iPCS, Inc.'s balance sheet shows a stockholders' deficit of $191,828,000 compared to a deficit of $179,577,000 at September 30, 2003. JOURNAL REGISTER: S&P Affirms BB+ Ratings with Negative Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit and senior secured debt ratings on newspaper publisher Journal Register Co. and removed them from CreditWatch where they were placed on July 6, 2004. The outlook is negative. The Trenton, N.J.-headquartered company had about $380 million of debt outstanding at June 2004. "The ratings on Journal Register reflect the company's substantial pro forma debt levels, attributable to the planned acquisition of unrated 21st Century Newspapers Inc. for $415 million in cash," said Standard & Poor's credit analyst Donald Wong. Pro forma debt to EBITDA is in the mid-5x area, up from the mid-3x area for the 12 months ended June 2004, which is weak for the 'BB+' corporate credit rating. The ratings also reflect the company's moderate-size cash flow base and growth through acquisition. In addition, like other media companies, there is uncertainty over the strength of the advertising revenue recovery, as well as greater employee benefit costs and higher newsprint prices. These factors are tempered by Journal Register's geographically diverse market positions, relatively stable revenue base, and free operating cash flow generation. In addition, the company has a track record of significantly reducing its debt levels following a major acquisition. Standard & Poor's expects that the majority of Journal Register's free operating cash flow will be used for debt reduction in the intermediate term. JP MORGAN: Fitch Affirms Ratings on Two 2000-C9 Classes at Low-Bs ----------------------------------------------------------------- J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass- through certificates, series 2000-C9, $36.6 million class B certificates is upgraded to 'AA+' from 'AA' by Fitch Ratings. Fitch also affirms these classes: --$122.8 million class A-1 at 'AAA'; --$404.7 million class A-2 'AAA'; --Interest-only class X at 'AAA'; --$38.7 million class C at 'A'; --$10.2 million class D at 'A-'; --$28.5 million class E at 'BBB'; --$14.3 million class F at 'BBB-'; --$14.3 million class G at 'BB+'; --$20.4 million class H at 'BB'. The $26.5 million class J and $2.8 million class K certificates are not rated by Fitch. The upgrade to class B reflects the increased credit enhancement levels from loan payoffs and amortization. As of the June 2004 distribution date, the pool's aggregate principal balance has been reduced by approximately 12% to $719.7 million from $814.4 million at issuance. ORIX Capital Markets LLC, the master servicer, collected year-end (YE) 2003 operating statements for 86% of the pool. The pool's YE 2003 weighted average debt service coverage ratio (DSCR) was 1.51 times (x), compared with 1.54x at issuance for the same loans. Five loans (2.9%) are delinquent, including three specially serviced loans (1.4%). The largest of these loans, English Park Village (0.67%), is secured by an office property in Lancaster, NY. The property is 68% occupied and the special servicer is evaluating workout options. The next loan (0.56%) is secured by a vacant industrial property in Longmont, CO. The foreclosure sale took place in July 2004, and the trust is expected to take the title to the property in September 2004 due to the 75 days redemption period in Colorado. Losses are expected on several of these loans; however, they are expected to be absorbed by the classes not rated by Fitch. The pool's realized losses total $17.1 million, or 2.4% of the original pool balance. KAISER: Expects to Close Bauxite/Alumina Asset Sale in 3rd Quarter ------------------------------------------------------------------ Century Aluminum Company (NASDAQ:CENX) and Noranda, Inc. were approved by a bankruptcy court as the successful bidders to jointly acquire the Gramercy (LA) alumina refinery and related Jamaican bauxite mining assets from Kaiser Aluminum & Chemical Corporation for US $23 million, subject to closing adjustments. Century and Noranda will each pay one-half, or $11.5 million, of the purchase price. Closing is expected to occur late in the third quarter of 2004. The Gramercy refinery has the capacity to produce 1.25 million metric tons of alumina a year. Century and Noranda each purchase approximately 500,000 metric tons of this alumina a year for their respective primary aluminum reduction plants in Hawesville, KY and New Madrid, MO. The refining process chemically converts bauxite into alumina, the raw material from which primary aluminum is produced. Century owns 615,000 metric tons per year (mtpy) of primary aluminum capacity. The company owns and operates a 244,000-mtpy plant at Hawesville, KY, a 170,000-mtpy plant at Ravenswood, WV and a 90,000-mtpy plant at Grundartangi, Iceland. Century also owns a 49.67-percent interest in a 222,000-mtpy reduction plant at Mt. Holly, SC. Alcoa Inc. owns the remainder and is the operating partner. Century's corporate offices are located in Monterey, CA. 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. KEY ENERGY: S&P Revises 'B' CreditWatch Implications to Developing ------------------------------------------------------------------ Standard & Poor's Ratings Services said that its 'B' corporate credit rating on Key Energy Services Inc. remains on CreditWatch, but that it is revising the CreditWatch implications to developing from negative. The rating action follows the company's announcement that it has received consent waivers from its noteholders and amended the terms of its previously announced consent solicitation relating to its outstanding 6.375% senior notes due 2013 and 8.375% senior notes due 2008. Midland, Texas-based Key has about $485 million of total debt outstanding as of June 30, 2004. "The change to a CreditWatch listing with developing implications more accurately accounts for Key's current credit profile," said Standard & Poor's credit analyst Brian Janiak. "Several recent developments including the noteholders' willingness to work with Key during its current financial predicament may provide a potential platform for Key's credit quality at a higher rating." In addition, the consent waivers mitigate Standard & Poor's immediate concerns regarding the company's liquidity position by alleviating the potential debt acceleration that could have severely affected the firm's financial condition. Standard & Poor's continues to have heightened credit concerns with regard to the successful completion the SEC's investigation of the company's South Texas operations and the company's filing its 2003 10-K. However, the CreditWatch with developing implications also reflects that the consent waivers provide the company with more time to resolve these issues. Timely completion of the filings would likely result in higher ratings. Conversely, failure to do so by year-end 2004 would likely result in lower ratings. Resolution of the CreditWatch is dependent on Key filing its 10-K, the completion of the SEC investigation, and the demonstration of sound performance by the firm's new management team. KINTERA INC: Closes $20 Million Private Equity Financing -------------------------------------------------------- Kintera(R) Inc. (NASDAQ:KNTA), a leading provider of software as a service to nonprofits, has closed its private placement with certain existing institutional investors of 2,500,000 shares of its common stock at a price of $8.00 per share for aggregate proceeds of $20 million. The shares were not registered under the Securities Act, or any state securities laws, and were sold in a private transaction under Regulation D. Unless the shares are registered, they may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state laws. Kintera is obligated to register the shares for resale on a registration statement to be filed within 30 days. About Kintera Inc. Kintera(R) Inc. (NASDAQ:KNTA) is an innovative provider of software as a service that helps nonprofit organizations foster a powerful sense of community to achieve their mission. Kintera's Knowledge Interaction technology strengthens an organization's community by providing volunteers, members, donors and staff web- based tools to efficiently fulfill their tasks and share real-time data and information. The company's Internet innovations include its Friends Asking Friends(R) solicitation program and Kintera Sphere(TM), an enterprise-grade software system that provides content management, contact management, communication tools, commerce applications, community-building features and reporting functions. Kintera's technology is built on a unified database and payment processing engine. A web browser is all that is needed to use Kintera Sphere to help increase donations, reduce fundraising costs and build awareness and affinity for a cause. For more information, visit Kintera at http://www.kintera.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, Kintera, Inc. reports: "We have historically funded our operations principally through private placements of equity securities. In December 2003, we completed our initial public offering and received net proceeds of $36.1 million, including $4.9 million from the exercise of the underwriters' over allotment option. As of March 31, 2004, we had cash, cash equivalents and short-term investments totaling approximately $35.7 million. "We believe that our cash, cash equivalents and short-term investments and available borrowings under our line of credit that we may draw from time to time will be sufficient to meet our working capital requirements and contractual commitments for at least the next 12 months. "If we are unable to increase our revenues, we will need to raise additional funds to finance our future capital needs. We may need additional financing earlier than we anticipate. If we raise additional funds through the sale of equity or convertible debt securities, these transactions may dilute the value of our outstanding common stock. We may also decide to issue securities, including debt securities, which have rights, preferences and privileges senior to our common stock. We cannot assure you that we will be able to raise additional funds on terms favorable to us or at all. If future financing is not available or is not available on acceptable terms, we may not be able to fund our future needs. This may prevent us from increasing our market share, capitalizing on new business opportunities or remaining competitive in our industry." KNIGHTCO OIL INC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Knightco Oil, Inc. 3000 North Sylvania Avenue Fort Worth, Texas 76111 Bankruptcy Case No.: 04-46924 Type of Business: The Debtor is the owner of a lubricant sales and service business. Chapter 11 Petition Date: July 19, 2004 Court: Northern District of Texas (Ft. Worth) Judge: D. Michael Lynn Debtor's Counsel: Richard G. Dafoe, Esq. Vial, Hamilton, Koch & Knox 1700 Pacific Avenue, Suite 2800 Dallas, TX 75201 Tel: 214-712-4650 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Shell Oil Products US $357,004 fka Equilon Lubes P.O. Box 200889 Houston, TX 77216-0889 Steagall Oil Company $275,392 616 North 16th St. Chickasha, OK 73026-0625 Kost USA $260,845 P.O. Box 633784 Cincinnati, OH 45263-3784 ConocoPhillips $173,255 Shell Oil Products US $56,497 ARK Lubricants Marketers, Inc. $26,355 Charles W. Green $24,529 Chevron - Texaco $24,486 Advanta Business Cards $12,825 Comptroller of Public Accounts $12,798 Tarrant County Tax Assessor $11,875 First USA (Visa) $8,905 Texaco Fleet Management $3,991 Federated Insurance - Medical $3,911 Kafco $3,194 Balcones Mineral Corp. $2,988 Purchase Power - Pitney Bowes $2,845 Verizon Wireless $2,723 Jesse P. Taylor Oil Company $2,415 American Express $2,299 MERCURY AIR: Agrees to Settle with David Murdock for $525,000 ------------------------------------------------------------- Mercury Air Group, Inc. (Amex: MAX) entered into a settlement agreement with David H. Murdock and related parties. Mercury and Murdock agreed to enter into a certain mutual release of claims, and Mercury agreed to pay $525,000 to Murdock representing all costs, fees and expenses incurred by Murdock in connection with the settlement agreement and due diligence investigation and in consideration for Murdock's execution of the mutual release of claims. In addition, Murdock agreed to sell and Mercury agreed to purchase 150,000 shares of Mercury's common stock for $6.00 per share. Mercury's President and Chief Executive Officer, Joseph A. Czyzyk, said, "By entering into this agreement, Mercury is able to focus its efforts on its business and profitability for the benefit of all of its shareholders." About Mercury Air Group Los Angeles-based Mercury Air Group (Amex: MAX) provides aviation petroleum products, air cargo services and transportation, and support services for international and domestic commercial airlines, general and government aircraft and specialized contract services for the United States government. Mercury Air Group operates three business segments worldwide: MercFuel, Inc., Maytag Aircraft Corporation and Mercury Air Cargo, Inc. For more information, please visit http://www.mercuryairgroup.com/ * * * In its Form 10-Q for the quarterly period ended March 31, 2004, filed with the Securities and Exchange Commission, Mercury Air Group reports: Liquidity and Capital Resources "As of March 31, 2004, the Company's cash and cash equivalents were $1.8 million, a decrease of $1.0 million as compared to cash and cash equivalents of $2.8 million as of June 30, 2003. "Petroleum product prices, including aviation fuel prices, have risen to historically high levels due primarily to an increase in world-wide petroleum product consumption and instability in the Middle East. The increased aviation fuel prices have resulted in an increase in the Company's trade receivables for many of the Company's customers. If aviation fuel prices maintain these recent high levels for an extended period of time and the Company's customers are unable to pass on the increased fuel costs to their customers, the Company may experience longer collection periods and/or higher uncollectible amounts from certain customers. This would result in reduced cash availability adversely affecting the Company's ability to pay its fuel suppliers on a timely basis. "The Company is currently evaluating new credit facilities to support the Company's expansion of its remaining three business lines and to support the Company's Letters of Credit requirements thereby releasing the cash collateral of approximately $16 million to be used for working capital requirements and general corporate purposes." MIRANT: Agrees to Setoff Dominion Claims Against Collateral ----------------------------------------------------------- Prior to the bankruptcy petition date, Dominion Transmission, Inc., and Dominion Cove Point LNG, LP, entered into natural gas transmission agreements with Mirant Americas Energy Marketing, LP, whereby DTI and Cove Point agreed to provide natural gas transportation and storage services to MAEM in exchange for MAEM's agreement to pay for the Transmission Services. Pursuant to the applicable tariffs, MAEM provided to DTI cash deposits amounting to $2,570,458 and provided to Cove Point cash deposits totaling $113,400 prior to the Petition Date to secure amounts MAEM owed for Transmission Services under the Transmission Agreements. On August 6, 2003, DTI invoiced MAEM $211,243 for Transmission Services provided to MAEM in July 2003. With MAEM's bankruptcy filing, it only paid DTI $117,345 arising from postpetition Transmission Services in July, leaving an unpaid balance of $93,898 arising from prepetition Transmission Services in July. On July 4, 2003, Cove Point invoiced MAEM $5,684 for prepetition Transmission Services provided to MAEM in June 2003. MAEM was unable to pay Cove Point. On August 5, 2003, Cove Point invoiced MAEM $8,492 for Transmission Services provided to MAEM in July 2003. MAEM paid Cove Point $3,865 arising from postpetition Transmission Services in July, leaving a $4,627 unpaid balance arising from prepetition Transmission Services in July. Accordingly, as of the Petition Date, MAEM owes DTI $93,898 and Cove Point $10,311 for unpaid prepetition Transmission Services. DTI and Cove Point acknowledge that there are no other amounts owed by MAEM to them arising from prepetition transactions between the parties. DTI and Cove Point have not applied their Claims against the Collaterals. On December 22, 2003, MAEM provided Cove Point with a $113,400 letter of credit as a postpetition collateral under the applicable tariffs. In exchange, on June 7, 2004, Cove Point returned $103,081 representing the Cove Point Collateral less the Cove Point Claims. The unreturned portion of the Cove Point Collateral was retained by Cove Point to maintain security for the Cove Point Claims. On May 27, 2004, MAEM provided DTI a $1,990,458 letter of credit. MAEM amended the amount to $2,067,144 on June 7, 2004 as postpetition collateral in accordance with DTI's tariff. Separately, MAEM provided DTI a $744,000 letter of credit as postpetition collateral to support the provision of Rate Schedule Market Center Services, which arise under natural gas transmission agreements with DTI pursuant to DTI's tariff. In exchange, on June 9, 2004, DTI returned $2,476,560 to MAEM representing the DTI Collateral less the DTI Claims. The unreturned portion the DTI Collateral was retained by DTI to maintain security for the DTI Claims. DTI and Cove Point represent that the amount of the Letters of Credit, as amended, satisfies the creditworthiness standards under their applicable Federal Energy Regulatory Commission tariffs at MAEM's current level of service. To date, MAEM continues to perform and participate under the Transmission Agreements and continues to receive and render payment for postpetition Transmission Services. DTI and Cove Point asked MAEM to agree to the application of the DTI Claims against the DTI Remaining Collateral and the Cove Point Claims against the Cove Point Remaining Collateral. MAEM agreed. The parties now ask the Court to approve their agreement. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. The Company filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590). Thomas E. Lauria, Esq., at White & Case LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT: Inks Stipulation Keeping Documents Produced To PG&E Secret ------------------------------------------------------------------ At Pacific Gas & Electric Company's request, the Mirant Corporation Debtors have provided various monthly operating reports and other public documents to Pacific Gas relating to the operations and assets of Mirant Delta, LLC, and Mirant Potrero, LLC. Pacific Gas asked the Debtors' representatives to meet with its representatives to discuss the Documents. The Debtors agreed to do so provided that Pacific Gas agrees to keep any non-public information the Debtors communicate during any meetings confidential under the terms of a stipulation. In a Court-approved stipulation, the parties agree that: (a) they will act in good faith to schedule one or more meetings between their representatives to discuss the Documents and any other matters to which they may agree at mutually convenient times and locations; (b) any documents produced by any of the Debtors and any information the Debtors provided in any other form or format in connection with any of the activities undertaken pursuant to the Stipulation and the uses will be governed by the provisions of the Amended and Restated Order Approving Specified Information Blocking Procedures and Permitting Trading in the Debtors' Securities, Bank Debt, Purchase or Sale of Trade Debt and Issuing of Analyst Reports upon Establishment of a Screening Wall Effective July 25, 2003; and (c) the meetings to be held are settlement discussions and that any statements made or documents provided by the Debtors during the meetings will be subject to Rule 408(e) of the Federal Rules of Evidence and will not be admissible as evidence in any proceedings between the parties for any reason whatsoever. 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) MERITAGE CORPORATION: Reports Record Second Quarter 2004 Results ---------------------------------------------------------------- Meritage Corp. reported net earnings of $24.6 million for the second quarter ended June 30, 2004, compared to $21.3 million in the same period a year ago, a 14% increase in EPS. Net earnings for the first six months of 2004 were $51.6 million compared to $37.1 million for the same period in 2003, a 37% increase in EPS. "For the second quarter of 2004, Meritage once again set all-time quarterly records for the dollar value and number of homes ordered, and we saw our backlog exceed $1 billion for the first time in the company's history," said Steve Hilton, Meritage co- chairman and CEO. "We also set second quarter records for home closing revenue, the number of homes closed, net earnings and diluted earnings per share. For the first six months of 2004, the dollar value of new home orders was up 47%, home closing revenue up 40%, net earnings up 39% and diluted earnings per share up 37% over the first six months of 2003." "Meritage's pre-tax margin for the first six months of 2004 was 9.7%, unchanged from the same period in 2003, but decreased 102 basis points in this year's second quarter from the second quarter of 2003 to 9.2%. Our pre-tax margin was relatively stable in our California and Arizona divisions for the second quarter, however it was down somewhat in Texas and Nevada," said John Landon, Meritage co-chairman and CEO. "In Texas, the Dallas/Fort Worth market is not as strong as last year, creating pricing pressures which lowered margins. In addition, heavy rains in Dallas/Fort Worth and Houston delayed home closings during the quarter, which also affected our pre-tax margin. In Nevada, where the housing market is very strong, the margin compression resulted from a short-term fluctuation in deliveries of homes with lower margins. We anticipate that our pre-tax margin will improve during the second half of 2004, resulting in a relatively consistent full- year pre-tax margin in comparison to last year's 10.3%, meeting our goal of achieving a 10.0% or better pre-tax margin." Meritage received 2,556 orders for new homes valued at $700 million in the three months ended June 30, 2004, increases of 36% and 51%, respectively, from the same period a year ago. For the same period, home closing revenue increased 32% to $431 million, and the number of homes closed increased 29% to 1,620. At June 30, 2004, the number of homes in backlog was up 34% over June 30, 2003 to 4,215, and the value of those homes increased 45% to $1,169 million. In addition, the number of active communities increased 17% to 137 at June 30, 2004 from 117 at June 30, 2003. "Demand for our homes has been very strong during the first half of this year, and we expect this to continue during the second half of 2004, given stable economic conditions, job growth and moderate changes in mortgage interest rates," said Mr. Hilton. "The dollar value of orders in California increased nearly one and a half times over the second quarter of 2003 and more than doubled over the first six months. Demand for our homes in Arizona has also been very strong, where we generated a 71% increase in order value for the second quarter and 70% for the first six months. In Texas, order value was up a solid 21% for the second quarter and 23% for the first six months, in spite of some softness in the Dallas/Fort Worth housing market. Although order value in our Nevada division was down 39% for both the second quarter and first half of this year, we introduced two new communities there during the latter part of the second quarter and anticipate opening another five during the second half of this year, bringing our community count in Nevada to approximately eight by the end of this year. We expect these new communities to generate an increase in order activity for the full year 2004 over 2003. With the strength of demand for our homes and our anticipated margin expansion in the second half of this year, we anticipate full-year diluted earnings per share will approximate $8.55 to $8.80, an increase of $0.30 from our previous guidance and 25% to 29% above last year. For the third quarter of 2004, we expect diluted earnings per share to approximate $2.10 to $2.20, or 13% to 18% ahead of last year's third quarter." Net debt-to-capital at June 30, 2004 was 49%, versus 50% a year earlier. EBITDA increased 21% from the second quarter of 2003 to $49.7 million during this year's second quarter. Meritage generated after-tax returns on average assets and equity of 11% and 27%, respectively, for the four quarters ended June 30, 2004, as compared to 12% and 26% for the same period last year. For the four quarters ended June 30, 2004, the company's EBITDA to interest incurred ratio was 6.7 times, and the debt-to-EBITDA ratio 2.0 times as compared to 7.3 times and 2.3 times, respectively, for the same period last year. "In a move that strengthens our balance sheet and provides capital for additional growth, in April of this year we issued $130 million in principal amount of 7% senior notes due 2014," said Mr. Landon. "Proceeds from this offering were mostly used to pay down our bank credit facility, as well as to repurchase 300,000 shares of our common stock. "We remain very positive regarding the state of the homebuilding industry and expect 2004 to be our 17th consecutive year of record revenue and earnings. We believe that recent job growth and the improving economy will more than offset the recent moderate interest rate increases. With our all-time record levels of sales, orders and backlog; our expectation for second-half margin expansion; and good economic conditions, we believe that Meritage is in excellent position for solid financial growth," concluded Mr. Landon. About Meritage Corp. Meritage Corp. is one of the nation's largest single-family homebuilders, and is traded on the NYSE, symbol: MTH. Fortune recently named Meritage to its "Fortune 1000" list of America's largest corporations and included the company as a "top pick from 50 great investors" in its Investor's Guide 2004. Additionally, Meritage is ranked No. 11 of Fortune's Fastest Growing Companies in America, its third appearance on this list in five years. The company is included in the S&P SmallCap 600 Index, appears on Forbes' "Platinum 400" list and is part of an elite group of only five companies on the list that have exceeded 50% in five-year annualized total return. In its 18-year history the company has built approximately 31,000 homes, ranging from entry-level to semi-custom luxury. Meritage operates in fast-growing states of the southern and western United States, including five of the top 10 single-family housing markets in the country. The Meritage Web site is located at http://www.meritagehomes.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, Meritage Corporation reports: "Our principal uses of capital for the quarter ended March 31, 2004 were the acquisition of Citation Homes, operating expenses, land purchases, and the payment of various liabilities. We use a combination of borrowings and funds generated by operations to meet our short-term working capital requirements. "Cash flows for each of our communities depends on the status of the development cycle, and can differ substantially from reported earnings. Early stages of development or expansion require significant cash outlays for land acquisitions, plat and other approvals, and construction of model homes, roads, utilities, general landscaping and other amenities. Because these costs are capitalized, income reported for financial statement purposes during those early stages may significantly exceed cash flow. Later cash flows may significantly exceed earnings reported for financial statement purposes, as cost of sales includes charges for substantial amounts of previously expended costs. "We believe that our current borrowing capacity, cash on hand at March 31, 2004, and anticipated net cash flows from operations are and will be sufficient to meet liquidity needs for the foreseeable future. We believe our future cash needs will include funds for the completion of projects that are underway, the maintenance of our day-to-day operations, and the acquisition or start-up of additional homebuilding operations, should the opportunities arise. There is no assurance, however, that future cash flows will be sufficient to meet future capital needs. The amount and types of indebtedness that we incur may be limited by the terms of the indenture governing our senior notes and by the terms of the credit agreement governing our senior unsecured credit facility." NATIONSLINK FUNDING: Fitch Upgrades 1999-1 Classes G & H to BB+/B+ ------------------------------------------------------------------ Fitch Ratings upgrades NationsLink Funding Corporation's commercial mortgage pass-through certificates, series 1999-1: --$64.2 million class B to 'AAA' from 'AA+'; --$61.1 million class C to 'AA+' from 'A+'; --$67.2 million class D to 'A+' from 'BBB+' --$9.2 million class G to 'BB+' from 'BB-'; --$30.6 million class H to 'B+' from 'B'. In addition Fitch affirms the following classes: --$648.8 million class A-2 'AAA'; --Interest only class X 'AAA'. Fitch does not rate the $33.6 million class E, $52 million class F, $15.3 million class J or $26.4 million class K certificates. The class A-1 certificates have been paid in full. The upgrades are the result of scheduled amortization and paydown resulting in increased credit enhancement levels as well as continued stable performance of the collateral. As of the June 2004 distribution report the transaction balance has been reduced 16.68% to $1 billion from 1.2 billion at issuance. There are currently six loans (2.29%) in special servicing with ORIX Capital Markets. The largest loan (1.09%) in special servicing is a group a four cross-collateralized and cross default loans secured by four health care facilities in Florida. The loans transferred to the special servicer in May 2004 as a result of a technical default and are all current. The special servicer is working with the borrower to clear the default. Losses are not expected at this time. The second largest loan (.75%) in special servicing is a single tenant retail property in Everett, Washington and is current. The loan transferred to the special servicer as a result of occupancy when the tenant, HomeBase Inc., filed bankruptcy in 2001 and vacated the property. The special servicer is monitoring the property and working with the borrower until a replacement tenant is found. NES RENTALS: S&P Assigns Low-B Corporate and Bank Loan Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to NES Rentals Holdings Inc. (NES; formerly known as National Equipment Services Inc.). Standard & Poor's also assigned a secured bank loan rating of 'B' to the company's proposed offering of a $275 million second-lien secured term loan due 2010. The recovery rating assigned to the second-lien facility is '3', indicating meaningful (50%-80%) recovery of principal in the event of a default, after recovery of an unrated $300 million first-lien senior secured credit facilities due 2009. The outlook is stable. "The rating on NES reflects a weak financial profile and a below- average business position as an equipment rental provider," said Standard & Poor's credit analyst John R. Sico. As a regional company, NES is the fourth-largest equipment rental company in the U.S. in this competitive and still-challenging industry. Chicago, Ill.-based NES operates in about 140 locations in 34 states and Canada, offering about 45,000 pieces of general construction and other equipment for rent to construction, petrochemical, and other industrial end users. NES reorganized and emerged from Chapter 11 in February 2004, after filing for protection in June 2003. Deteriorating construction market conditions, weak industrial markets, and an excess of rental fleet industrywide had adversely impacted operating performance. Prior to its Chapter 11 filing, the company had a heavy debt burden and significant near-term maturities. NETWORK INSTALLATION: Expands Reach with Multiple Project Orders ---------------------------------------------------------------- Network Installation Corp. (OTC Bulletin Board: NWIS) was awarded three Seattle-based IT projects including a project with American Millworks. Additionally, the Company received a structured cabling and Samsung telecom solution project order from Cave Creek, AZ- based Trugreen Landscape and a project order from Los Angeles- based Sound Solutions for an Avaya Partner system solution. Network Installation CEO Michael Cummings stated, "I am extremely encouraged by the early results of our recent expansion into markets outside of California. Having initiated aggressive sales and marketing campaigns into those regions we are now just beginning to realize top line growth from those efforts." He added, "Although we also continue to evaluate potential acquisitions, internal growth remains a major focus and I believe we will achieve considerable revenue growth in this fiscal year." About Network Installation Corp. Network Installation Corp. -- whose March 31, 2004 balance sheet reflects a stockholders' deficit of $1,607,403 -- provides communications solutions to the Fortune 1000, Government Agencies, Municipalities, K-12 and Universities and Multiple Property Owners. These solutions include the design, installation and deployment of data, voice and video networks as well as wireless networks and Wi-Fi. Through its wholly-owned subsidiary Del Mar Systems International, Inc., the Company also provides integrated telecom solutions including Voice over Internet Protocol applications. Network Installation maintains offices in Irvine, Los Angeles, Gold River and San Marcos, CA; Las Vegas, NV and Phoenix, AZ. To find out more about the company, visit http://www.networkinstallationcorp.net/ NEW HEIGHTS: Committee Hires Jaspan Schlesinger as Local Counsel ---------------------------------------------------------------- The Official Unsecured Creditors Committee appointed in New Heights Recovery & Power, LLC's chapter 11 proceeding, seeks authority from the U.S. Bankruptcy Court for the District of Delaware to hire Jaspan Schlesinger Hoffman LLP as its local bankruptcy counsel. Lowenstein Sandler PC will serve as the Committee's lead counsel and Jaspan Schlesinger will serve as local counsel. The Committee anticipates that Jaspan Schlesinger will: i) advise the Committee and representing it with respect to proposals and pleadings submitted by the Debtor or others to the Court or the Committee; ii) represent the Committee with respect to any plans of reorganization or disposition of assets proposed in these cases; iii) attend hearings, drafting pleadings and generally advocating positions which further the interests of the creditors represented by the Committee; iv) assist in the examination of the Debtor's affairs and a review of operations; v) advise the Committee as to the progress of the Chapter 11 cases; and vi) perform such other professional services as are in the best interests of those represented by the Committee, including, without limitation, those delineated in Section 1103(c) of the Bankruptcy Code. Frederick B. Rosner, Esq., a partner of Jaspan Schlesinger, reports that the firm's hourly rates are: Designation Billing Rate ----------- ------------ paralegals $140 per hour associates $250 per hour partners $350 per hour Headquartered in Ford Heights, Illinois, New Heights Recovery & Power, LLC -- http://www.tires2power.com/-- is the owner and operator of the Tire Combustion Facility and other tire rubber processing facilities. The Company filed for chapter 11 protection on April 29, 2004 (Bankr. Del. Case No. 04-11277). Eric Lopez Schnabel, Esq., at Klett Rooney Lieber & Schorling represents the Debtor in its restructuring efforts. When the Company filed for chapter 11 protection, it listed both its estimated debts and assets of over $10 million. NEW WORLD PASTA: Gets Final Nod to Obtain $45 Million Financing --------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Pennsylvania gave its final approval to New World Pasta Company and its debtor- affiliates' request to obtain $45,000,000 secured postpetition financing on a superpriority basis from Black Diamond Commercial Finance, LLC, as Agent. The Debtors disclose that they owe at least $140,896,000 under the Prepetition Credit Agreement with BNY Asset Solutions LLC, as successor to The Bank of Nova Scotia, as administrative agent for the prepetition lenders. The Prepetition Junior Lenders assert that, as of the Petition Date, the aggregate principal amount of all indebtedness owed by the Debtors to them is $152,398,000. To secure the prepetition indebtedness, the Debtors executed certain security agreements, pledge agreements and mortgages and other agreements to which the Debtors granted security interests and senior liens in and upon substantially all of their assets. The Prepetition Senior Liens are senior and superior to the Prepetition Junior Liens, if any junior liens are binding, enforceable and properly perfected. The Debtors tell the Court that they do not have sufficient available sources of working capital and financing to carry on the operation of their businesses without the use of the postpetition financing. Their ability to maintain business relationships with their vendors and suppliers so that they may be able to purchase new inventory and finance their operations is essential to their continued viability and ability to restructure successfully. Given the Debtor's current financial condition and capital structure, the debtors have attempted but are unable to obtain unsecured credit allowable under Sections 503(b)(1), 364(a), 364(b), or 364(c) of the Bankruptcy Code. The Lenders have consented to the Debtors' entering into the financing agreements in which they have an interest. The Court finds that the terms of the Postpetition Credit Agreement are fair and reasonable, reflect the Debtors' exercise of prudent business judgment consistent with their fiduciary duties, and are supported by reasonably equivalent value and fair consideration. The Postpetition Agent and Lenders are granted security for the repayment of all Postpetition Indebtedness as valid, binding, enforceable, first priority and perfected security interests and liens in all properties and assets of the Debtors. Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is the leading dry pasta manufacturer in the United States. The Company filed for chapter 11 protection on May 10, 2004 (Bankr. M.D. Pa. Case No. 04-02817). Eric L. Brossman, Esq., at Saul Ewing LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed both estimated debts and assets of over $100 million. NEW WORLD PASTA: Court Stretches Lease Decision Time to Jan. 5 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Pennsylvania, gave New World Pasta Company and its debtor-affiliates more time to decide whether to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors have until January 5, 2005, to make their lease-related decisions. Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is the leading dry pasta manufacturer in the United States. The Company filed for chapter 11 protection on May 10, 2004 (Bankr. M.D. Pa. Case No. 04-02817). Eric L. Brossman, Esq., at Saul Ewing LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed both estimated debts and assets of over $100 million. NEW WORLD PASTA: Discontinues Filing SEC Reports ------------------------------------------------ New World Pasta Company is not required to file periodic and other such reports with the Securities and Exchange Commission, under the Securities Exchange Act, since it has less than 300 holders of its 9-1/4% Senior Subordinated Notes due 2009, and it has no other class of securities for which it is required to file reports under the Securities Exchange Act. In light of its recent filing of a voluntary petition seeking reorganization under Chapter 11 of the U. S. Bankruptcy Code, and the cost associated with preparing periodic and other reports for filing with the Securities and Exchange Commission, New World Pasta Company will discontinue filing such reports. Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is the leading dry pasta manufacturer in the United States. The Company filed for chapter 11 protection on May 10, 2004 (Bankr. M.D. Pa. Case No. 04-02817). Eric L. Brossman, Esq., at Saul Ewing LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed both estimated debts and assets of over $100 million. NEXPAK CORPORATION: Case Summary & 30 Largest Unsecured Creditors ----------------------------------------------------------------- Lead Debtor: NexPak Corporation 3475 Forest Lake Drive, Suite 200 Uniontown, Ohio 44685 Bankruptcy Case No.: 04-63816 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- AEI Acquisition LLC 04-63817 Atlanta Precision Molding Co., LLC 04-63818 EPM Holdings, Inc. 04-63819 JMC Acquisition LLC 04-63820 NexPak Holdings LLC 04-63821 Type of Business: The Debtor is the market leader in manufacturing and supply of standard and custom packaging for DVD, CD, video, audio, and professional media formats. See http://www.nexpak.com/ Chapter 11 Petition Date: July 18, 2004 Court: Northern District of Ohio (Canton) Judge: Russ Kendig Debtor's Counsels: Ryan Routh, Esq. Shana F. Klein, Esq. Jones Day 901 Lakeside Avenue Cleveland, OH 44114 Tel: 216-586-3939 Fax: 216-579-0212 Estimated Assets as of March 30, 2004: approx. $101 Million Estimated Debts as of March 30, 2004: approx. $209 Million Debtors' Consolidated List of 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Foothill Group, Inc. Bank Loan Undetermined 2450 Colorado Ave., (Deficiency Suite 3000W Claim) Santa Monica, CA 90404 Chevron Phillips Chemical Trade Debt $2,823,985 Company, LP P.O. Box 96001 Chicago, IL 60693 BP Amoco Trade Debt $1,671,922 150 West Warrenville Mail Code CS-3 Naperville, IL 60563 Atofina Petrochemicals, Inc. Trade Debt $1,154,617 P.O. Box 932437 3585 Atlanta Avenue Hapeville, GA 30354 O'Melveny & Myers, LLP Fees $543,341 30 Rockefeller Plaza New York, NY 10112 ACOT USA Corp. Trade Debt $413,673 1204 W. Industrial Park Dr. Nogales, AZ 85621 Deutsche Bank Securities, Consulting Fees $387,563 Inc. 222 South Riverside Plaza 29th Floor Chicago, IL 60606 Andercraft De Mexico S.A. Trade Debt $317,660 Cerrada Via De La Produc #84 Parque Indust. Pisma 111 Mexica Li BCN 21397 American Profol, Inc. Trade Debt $237,252 Tollman Spring Company, Inc. Trade Debt $147,739 JB Hunt Transport Services, Trade Debt $105,165 Inc. Kuehne & Nagel, Inc. Trade Debt $96,531 Contech, Inc. Trade Debt $59,795 F&S Carton Company Trade Debt $52,685 AFCO Insurance Premium $52,548 Financing Ponica Industries Corp. Trade Debt $49,248 Wayne Battle Lumber Co, Inc. Trade Debt $43,290 Pallet One of Florida Trade Debt $42,071 Unisource Trade Debt $41,576 USF Holland Trade Debt $32,458 Selinsky Bros. Inc. Trade Debt $29,906 Compressed Air Products Trade Debt $29,280 Toray Plastics America, Inc. Trade Debt $27,731 Nestal Machinery, Inc. Trade Debt $27,439 Forward Electronics Trade Debt $24,101 Manufacturing, Co. Morris Trucking Corp. Trade Debt $22,383 C.H. Robinson Company Trade Debt $19,932 Yellow Transportation Trade Debt $19,327 Dubois Limited Royalty Payments Undetermined Altek, Inc. Contract Claim Undetermined NORTHLAND FUNDING: S&P Downgrades Class B Note Rating to BB+ ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on the class A-2 and B notes issued by Northland Funding I Ltd. and removed them from CreditWatch with negative implications, where they were placed March 30, 2004. Northland Funding I Ltd. is an arbitrage CBO transaction collateralized primarily by investment- grade bonds and managed by TCW Asset Management Co. At the same time, the 'AAA' rating assigned to the class A-1 notes is affirmed due to the level of overcollateralization available to support the notes. The lowered ratings reflect factors that have negatively affected the credit enhancement available to support the class A-2 and B notes since the transaction was originated in December 2001. These factors include a negative migration in the overall credit quality of the assets within the collateral pool, and the fact that the transaction is not in compliance with Standard & Poor's CDO Monitor Test, a measure of the amount of credit quality in a current portfolio to support the ratings assigned to the liabilities. Standard & Poor's has reviewed the results of current cash flow runs generated for Northland Funding I Ltd. to determine the level of future defaults the rated notes can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. Standard & Poor's will continue to monitor the performance of the transaction to ensure that the ratings assigned reflect the credit enhancement available to support the rated notes. Ratings Lowered And Removed From Creditwatch Negative Northland Funding I Ltd. Rating Class To From A-2 AA- AA/Watch Neg B BB+ BBB/Watch Neg Rating Affirmed Northland Funding I Ltd. Class Rating A-1 AAA NUCENTRIX: Digital Broadcast Acquires Sizable Block of Bandwidth ---------------------------------------------------------------- Digital Broadcast Corporation has recently completed a substantial acquisition of licensed frequencies in the 2.5 to 2.7 GHz range bandwidth (MMDS/ITFS) from Nucentrix Broadband Networks, Inc. (Pink Sheets: NCNXQ) through the federal bankruptcy court in the northern district (Dallas) of Texas. The frequencies cover 24 mid tier markets in Texas, Oklahoma, Kansas and Illinois creating an additional footprint in the mid United States. The acquisition adds another 3 million potential customers to the company's already existing national footprint. "We are in negotiations with every major player in the industry as a result of the passage of the FCC's new BandPlan in the 2.5 to 2.7 GHz", says Chief Operating Officer, Gary Nerlinger. DBC, who is the only digital wireless video provider utilizing this bandwidth, is leasing, buying, swapping and selling from other licensees in order to maximize the value of the new band plan. The FCC has mandated a complete reorganization of the frequency band of the 2.5 to 2.7 GHz range across the country. As previously reported, DBC became a super magnet for the bandwidth due to its exclusive super high compression ratio technology solutions, from its technology partners, Scopus Network Technology. With the FCC's approval of the new bandwidth it has become official. DBC has become the only magnet for this extremely valuable bandwidth in the new midband (7 high powered channels) allocated solely for digital wireless television. DBC is the only company that has exclusive rights to the patented super high ratio compression with statistical multiplexing (30:1 effective compression) technology which turns this bandwidth into viable and substantial revenue source. About DBC The Company is the only remaining commercial national video provider and beneficiary of the new midband swatch of frequencies. The admission of the FCC along with the industry that it took a total reorganization of the bandwidth was a primary factor in allowing DBC to launch the most superior digital wireless platform ever created. While DBC has lined up the necessary joint venture capital financing, and investment banking capital. DBC can now proceed unimpeded due to the clear path that is now provided by the new BandPlan. In fact, in his statement of June 10, 2004, FCC Commissioner Michael J. Copps offered these comments. "So now our ITFS/MMDS licensees can fully demonstrate to the commission that with this stability they will build out their systems. Many licensees are already doing incredible work in making efficient and intensive use of the spectrum. Others are not, but now they have the opportunity and the obligation to do so. The Wireless Bureau of the FCC has been tasked on progress on the transition and on the intensity of use in the bands". About Nucentrix Nucentrix Broadband Networks, Inc. provides broadband wireless Internet services using radio spectrum licensed by the Federal Communications Commission. This spectrum commonly is referred to as MMDS (Multichannel Multipoint Distribution Service) and ITFS (Instructional Television Fixed Service). Nucentrix is the third largest holder of MMDS and ITFS spectrum in the U.S. Nucentrix holds the rights to an average of approximately 128 MHz of MMDS and ITFS spectrum, covering over 8 million households in over 90 primarily medium and small markets across Texas, Oklahoma and the Midwest. Nucentrix also holds licenses for 20 MHz of WCS (Wireless Communications Services) spectrum at 2.3 GHz covering over 2 million households, primarily in Texas. OMEGA HEALTHCARE: Declares Common and Preferred Stock Dividends ---------------------------------------------------------------- Omega Healthcare Investors, Inc.'s (NYSE:OHI) Board of Directors declared a common stock dividend of $0.18 per share as well as the regular quarterly dividends for its series B and D preferred stock. Common Dividends The Company's Board of Directors announced a common stock dividend of $0.18 per share. The common stock dividend will be paid August 16, 2004 to common stockholders of record on July 30, 2004. At the date of this release the Company had approximately 46.6 million common shares outstanding. Preferred Dividends The Company's Board of Directors also declared its regular quarterly dividends for its series B and D preferred stock to preferred stockholders of record on July 30, 2004. Series B and Series D preferred stockholders of record on July 30, 2004 will be paid dividends in the amount of $0.53906 and $0.52344, per preferred share, respectively, on August 16, 2004. The liquidation preference for each of the Company's Series B and D preferred stock is $25.00. Regular quarterly preferred dividends represent dividends for the period May 1, 2004 through July 31, 2004 for both the Series B and Series D preferred stock. About the Company Omega is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At June 30, 2004, the Company owned or held mortgages on 205 skilled nursing and assisted living facilities with approximately 21,900 beds located in 29 states and operated by 39 third-party healthcare operating companies. As previously reported, Standard & Poor's Ratings Services assigned its 'BB-' rating to Omega Healthcare Investors Inc.'s issued $200 million 7% senior notes due April 2014. Concurrently, the senior unsecured debt rating is raised to 'BB-' from 'B' and removed from CreditWatch positive, where it was placed March 5, 2004. Additionally, the rating on the preferred stock is raised to 'B' from 'B-' and removed from CreditWatch positive, where it was also placed March 5, 2004. The rating actions affect $526 million of rated securities. The outlook is stable. OMEGA HEALTHCARE: 2nd Quarter Earnings Call Scheduled for Tuesday ----------------------------------------------------------------- Omega Healthcare Investors, Inc., (NYSE:OHI), scheduled to release its earnings results for the quarter ended June 30, 2004, on Tuesday, July 27, 2004. In conjunction with its release, the Company will be conducting a conference call on July 27, 2004, at 10 a.m. EDT to review its second quarter 2004 results and current developments. To listen to the conference call via webcast, log on to http://www.omegahealthcare.com/and click the "earnings call" icon on the Company's homepage. Webcast replays of the call will be available on the Company's website for at least two weeks following the call. Additionally, a copy of the earnings release will be available on the "news releases" section of the Company's website. About the Company Omega is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At June 30, 2004, the Company owned or held mortgages on 205 skilled nursing and assisted living facilities with approximately 21,900 beds located in 29 states and operated by 39 third-party healthcare operating companies. As previously reported, Standard & Poor's Ratings Services assigned its 'BB-' rating to Omega Healthcare Investors Inc.'s issued $200 million 7% senior notes due April 2014. Concurrently, the senior unsecured debt rating is raised to 'BB-' from 'B' and removed from CreditWatch positive, where it was placed March 5, 2004. Additionally, the rating on the preferred stock is raised to 'B' from 'B-' and removed from CreditWatch positive, where it was also placed March 5, 2004. The rating actions affect $526 million of rated securities. The outlook is stable. OMI CORPORATION: Says Q2 2004 Net Income is Highest Ever to Date ---------------------------------------------------------------- OMI Corporation (NYSE: OMM) a major international tanker owner and operator reported net income of $30,312,000 for the second quarter ended June 30, 2004. Net income for the second quarter ended June 30, 2003 was $25,440,000. For the six months ended June 30, 2004 net income was $86,721,000. Net income for the six months ended June 30, 2003 was $51,168,000. Net income for the first half of 2004 was higher than net income reported in each of the prior full fiscal years since the Company's inception in 1998. Net income without non-recurring item is presented to provide additional information with respect to the Company's ability to compare from period to period vessel operating revenues and expenses and general and administrative expenses without non- recurring losses such as the amount written off in June 2004 relating to the termination of the stand still agreements in relation to the Stelmar transaction. While Net income without non- recurring items is frequently used by management as a measure of the vessels operating performance in a particular period it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculations. Net income without non-recurring losses should not be considered an alternative to net income or other measurements under generally accepted accounting principles. Revenue of $97,934,000 for the three months ended June 30, 2004 increased $20,008,000 or 26 percent compared to revenue of $77,926,000 for the three months ended June 30, 2003. Revenue of $224,572,000 for the six months ended June 30, 2004 increased $62,861,000 or 39 percent compared to revenue of $161,711,000 for the six months ended June 30, 2003. Craig H. Stevenson, Jr., Chairman and Chief Executive Officer of the Company commented that "we are once again very pleased to announce another record for OMI. We achieved record net income for the first half of the year in comparison to prior fiscal years in our history. By staying focused on our core businesses and steadily increasing our tonnage for modern double hulled vessels through strategic acquisitions, we will have successfully implemented our plan to better serve our customers and enhance value to our shareholders. Recently, we have made significant capital expenditures for 14 vessels, yet our cash flow is sufficient to pay dividends and our Balance Sheet remains strong. These acquisitions by year end will reduce the average age of our fleet to approximately four years and to approximately three years when the Vessels Held for Sale are excluded. We continue to see strong rates in the third quarter, significantly higher than 2003 third quarter rates, and more importantly higher than the second quarter of 2004. The third quarter is usually seasonally weak so its present strength is a sign of continued significant demand growth. We have fixed approximately 50% of our current Suezmax fleet at an average TCE rate of $47,000 per day, significantly higher than the second quarter average TCE rate of $43,415 per day. We anticipate rates to remain strong throughout the rest of this year and next." Recent Activities and Other Highlights Operational -- Acquired three 2004 built vessels in July; one vessel continued an existing time charter upon delivery. We continued to expand our fleet through our most recent purchase of seven vessels (six modern double hull Suezmax vessels and one product carrier); two Suezmax vessels and one product carrier were delivered, one Suezmax vessel is scheduled to be delivered in July and three in August, and seven newbuilding contracts for product carriers, which are to be delivered between 2004 and 2006 (See Capital Expenditures for Vessel Acquisitions and Fleet Report). -- In April and July of 2004, OMI took delivery of two 37,000 dwt 1A ice-class product carriers, both of which began five year time charters with profit sharing upon delivery. -- During June 2004, a time charter contract for a handysize product carrier was extended for one year to December 2005. -- In May and June 2004, we sold two of our single hull Panamax vessels (VOLGA built in 1981 and ELBE built in 1984). -- In June 2004, our remaining single hull Panamax vessel (NILE built in 1981) was contracted to be sold for scrap and is classified as held for sale at its book value at June 30, 2004. Delivery is scheduled in the third quarter of 2004. -- We are expanding our chartering operations to include an office in London, which will begin operating in the third quarter. -- During the third quarter of 2004, OMI appointed a Director of Environmental Compliance to oversee internal compliance with applicable environmental laws and regulations. Financial -- In the second quarter of 2004, time charter equivalent rates for OMI's Suezmax fleet improved over the comparable second quarter of 2003. The following table reflects the improvement in average daily TCE rates earned in the spot market by our Suezmax fleet during the second quarter and year-to date 2004 as compared to the same periods in 2003: 2nd Qtr. 2nd Qtr. Percent YTD YTD Percent 2004 2003 Increase 2004 2003 Increase __________________________________________________________________ Suezmax Tankers $43,415 $38,053 14% $52,984 $41,732 27% __________________________________________________________________ -- On June 29, 2004, OMI issued 12,204,000 of common stock and we received approximately $139,213,000 in proceeds. -- On June 4, 2004, OMI declared a dividend to shareholders of record on June 24, 2004 of $0.05 per share, which was paid on July 14, 2004. Market Overview Suezmax Tanker Overview The strong tanker market continued in the second quarter of 2004, and the average TCE for Suezmax tankers in the West Africa to U.S. trade, though lower than the peak preceding quarter level, was substantially higher compared to the rate in the same quarter of last year, and the highest level for this period since at least 1990. In addition, the average rate in the first half of 2004 was the highest level for this period since at least 1990. The crude tanker market strength has been the result of higher world oil demand due to improving world economic activity especially in the U.S., China and South East Asia, a tight U.S. natural gas market, and the decline of the U.S. Dollar. Furthermore, the tanker market is benefiting from a switch of combined carrier tonnage into the strong dry bulk sector, and more long-haul Middle East OPEC oil replacing the loss of Iraqi oil production through a pipeline to the Mediterranean and the persistent shortfall of oil production in Venezuela, notwithstanding an increase in the world tanker fleet. Freight rates in the crude tanker market have continued to be strong thus far in the third quarter of 2004. The average OPEC oil production in the second quarter of 2004 totaled about 28.1 million barrels per day, an average increase of 1.5 million b/d compared to the same period last year. Most of OPEC's oil production growth came from the long-haul Middle East. OPEC oil producers last February announced a reduction to their oil production quotes to 23.5 million b/d (excluding Iraq), beginning April 1, 2004. However, OPEC decided in its early June 2004 meeting to increase its quota by 2.0 million b/d, up to 25.5 million b/d (excluding Iraq), beginning on July 1, 2004, and to implement an additional 0.5 million b/d on August 2004. The OPEC quota increase was the result of tight oil markets and very high oil prices, relatively low oil inventories, and the expected strong world oil demand growth in the second half of the year. Currently, OPEC oil production, including Iraq, is estimated at about 28.5 million b/d, well above its quota and 1.8 million b/d more than the year ago level, with most of the gain in the long- haul Middle East, affecting positively the oil tanker market. World oil demand in the second quarter of 2004, though lower than the preceding quarter due to seasonality, was substantially higher than the level prevailing in the same period of last year. World oil demand is expected to be strong in the second half of 2004 due to increasing world economic activity, especially in the United States, Latin America, China and Southeast Asia, and the usual seasonal oil demand gains late in the year. Total commercial crude oil and petroleum products inventories in the United States, Western Europe and Japan at the end of June 2004 were about 20 million barrels, or 1.0% lower than the year earlier level, and 2.9% below the average of the last five years. At the same time, crude oil inventories were marginally higher and petroleum products inventories were 4.7% below the average of the last five years, respectively. Oil inventories are expected to decrease in the second half of the year, and by year-end to be below the end 2003 level. The world tanker fleet totaled 298.4 million deadweight tons at the end of the second quarter of 2004, an average increase of 9.2 million dwt or 3.2% from the year-end 2003 level. The tanker orderbook totaled about 83.3 million dwt, or 27.9% of the existing fleet at the end of the second quarter of 2004. Approximately 12.6 million dwt are for delivery in 2004, 30.9 million dwt in 2005, 21.7 million dwt in 2006 and most of the balance in 2007. The tanker orderbook includes 80 Suezmaxes of about 12.6 million dwt or 32.2% of the existing internationally trading Suezmax tanker fleet. The accelerated phase-out of single-hull tankers due to new International Maritime Organization and European Union regulations is expected to moderate the effect of the relatively large tanker orderbook. At the end of June 2004, approximately 38.6 million dwt or 12.9% of the total tanker fleet was 20 or more years old, including 16.1 million dwt or 5.4% of the fleet which was 25 or more years old. Furthermore, 16 Suezmaxes were 20 or more years old, including 7 which were 25 or more years old. Tanker sales for scrap and for Floating Production Storage Offloading conversion totaled about 6.4 million dwt in the first half of 2004, including eight Suezmaxes and seven VLCCs. Tanker deletions are likely to be high in the next few years given the age profile of the tanker fleet and stricter regulations. The EU adopted new tanker regulations which commenced on October 21, 2003. In response to the EU regulations, the IMO adopted new strict tanker regulations which will commence on April 5, 2005. These regulations primarily prevent single-hull tankers of 5,000 dwt and above from carrying heavy fuel oil from early April 2005, accelerate the phase-out of single-hull tankers to 2010, in line with EU rules, and force all single-hull tankers to comply with the Condition Assessment Scheme ("CAS") from the age of 15 years, commencing in 2005. Finally, tankers with only double sides or double bottoms will be allowed to operate beyond 2010, provided that these tankers were in service on July 1, 2001. Such tankers will not be allowed to operate beyond the date on which they become 25 years of age after the date of delivery. At the end of the second quarter of 2004, there were about 109.4 million dwt of tankers or 36.7% of the total tanker fleet which will be affected by these regulations. Product Tanker Overview Freight rates in the product tanker market in the second quarter of 2004 continued at high levels, and the average spot TCE for handysize product tankers in the Caribbean, though lower than the peak preceding quarter level, was higher than last year. In addition, the average rate in the first half of 2004 was the highest level for this period since at least 1990. The product tanker market improvement was the result of increasing world economic activity especially in the U.S., China and Southeast Asia, a tight U.S. gas market and relatively low oil product inventories, notwithstanding a substantial increase of the world product tanker fleet. Freight rates in the product tanker market have continued at high levels thus far in the third quarter of 2004. The world product tanker fleet totaled about 56.3 million dwt at the end of the second quarter of 2004, an average increase of about 6.4% from the year-end 2003 level. The product tanker orderbook for delivery over the next few years totals about 23.8 million dwt, or about 42.3% of the existing product tanker fleet at the end of the second quarter of 2004. Approximately 4.5 million dwt are for delivery in 2004, 8.9 million dwt in 2005, 6.8 million dwt in 2006 and most of the balance in 2007. At the end of the second quarter of 2004, approximately 12.2 million dwt or 21.7 % of the existing fleet was 20 or more years old. The orderbook for handysize and handymax product tankers at the end of the second quarter of 2004 totaled about 9.7 million dwt or 29.3% of the existing handysize and handymax product tanker fleet. Total commercial inventories of oil products in the United States, Western Europe and Japan at the end of June 2004 were 44 million barrels or 3.3% lower than the same time a year ago, and 4.7% below the average of the last five years. At the same time, gasoline inventories in these areas were about 3.0% and 5.3% below year ago and last five years average, respectively, and at the lowest level in the last fifteen years. The tanker market is expected to benefit from higher world oil demand due to improving world economic activity, especially in the U.S., Latin America, China and Southeast Asia, higher oil production by the long-haul Middle East OPEC members, relatively low oil inventories, possible disruptions due to political instability in short-haul oil producers Venezuela and Nigeria and stricter tanker regulations by IMO and the European Union. Time Charter Equivalent Revenue TCE revenue comprises revenue from vessels operating on time charters and voyage revenue less voyage expenses from vessels operating in the spot market. TCE revenue is used to measure and analyze fluctuations between financial periods and as a method of equating TCE revenue generated from a voyage charter to time charter revenue. TC revenue is earned by vessels under contract for a specific period of time with duration usually greater than one year. The Company earned TCE revenue of $83,384,000 for the three months and $194,451,000 for the six months ended June 30, 2004 and $66,390,000 for the three months and $137,860,000 for the six months ended June 30, 2003. During the second quarter of 2004, 37 percent or $31,097,000 of our TCE revenue was earned by vessels operating on TC and 63 percent or $52,287,000 of our TCE revenue was earned by vessels operating on voyage charters in the spot market. The TC revenue was $2,354,000 higher for the three months ended June 30, 2004 compared to the respective 2003 period, primarily because of 284 additional operating days from four newbuildings that began TCs (two in 2004 and two in the second quarter of 2003). However, the percent of TCE revenue earned by vessels on TC to total TCE revenue declined in 2004 from 43 percent for the second quarter 2003 to 37 percent because the spot market was stronger in 2004. There was an increase of 39 percent or $14,760,000 in TCE revenue earned by vessels operating in the spot market during the three months ended June 30, 2004 compared to the comparable period in 2003. For the six months ended June 30, 2004, 31 percent or $60,879,000 of our TCE revenue was earned by vessels operating on TC and 69 percent or $133,572,000 of our TCE revenue was earned by vessels operating on voyage charters in the spot market. The TC revenue was $8,039,000 higher for the six months ended June 30, 2004 compared to the respective 2003 period, primarily because of 632 additional operating days from six newbuildings that began TCs (two in 2004 and four in 2003). However, the percent of TCE revenue earned by vessels on TC to total TCE revenue declined in 2004 from 38 percent for the first half of 2003 to 31 percent because the spot market was stronger in 2004. There was an increase of 57 percent or $48,599,000 in TCE revenue earned by vessels operating in the spot market during the six months ended June 30, 2004 compared to the comparable period in 2003. Our business strategy is to blend long-term contract revenue at attractive rates with the ability to capture additional earnings in strong spot markets with the Suezmax tanker fleet and certain of our product carriers with profit sharing arrangements (currently five of the product carriers are on time charters with profit sharing; there will be three more when certain vessels are delivered in 2004 and 2005). These profit sharing arrangements enable us to benefit from strong tanker markets while protecting our downside. All of our contracts that have profit sharing arrangements have a floor rate and profit sharing without a cap. Currently, 24 of our 38 vessels operate on time charters (including the two time charters on vessels acquired in July). During 2004, contracts for four vessels expiring in 2004 were extended; two have been extended at a fixed rate. Although most of our vessels operate on time charters, the majority of our tonnage (approximately 69 percent), including all but one of our Suezmaxes, operates in the spot market, giving us the ability to take advantage of high rates. TCE revenue increased during the three and six months ended June 30, 2004 compared to the three and six months ended June 30, 2003 primarily as a result of improvement in the market (see Market Overview and detailed fleet schedules) and additional operating days. There were additional operating days during 2004 as a result of vessels acquired: -- Suezmax fleet on spot charters-- acquired two second hand vessels in August 2003 increasing the fleet's operating days by 182 in the second quarter and 364 days in the first half of 2004. Two vessels that began operating in the Gemini Suezmax tanker pool in December 2003 also increased the fleet's operating days by 182 in the second quarter and 364 days in the first half of 2004. -- Product carriers--acquired six newbuildings delivered in January, March, April and July 2003 and February and April 2004, which contributed an increase of 284 operating days for the second quarter of 2004 compared to the second quarter of 2003 and an increase of 632 operating days for the first half of 2004 compared to the first half of 2003. TCE revenue declined for product carriers operating on spot resulting from the disposal of five vessels, two in April, one in October and two in November 2003. Vessel expenses and charter hire expense increased $7,263,000 for the three months and $16,803,000 for the six months ended June 30, 2004. Charter hire expense increased $6,084,000 for the three months and $16,382,000 for the six months ended June 30, 2004 compared to the same periods in 2003, primarily for the charter hire expense for the two vessels that commenced operating in the Gemini Suezmax pool (see discussion of Gemini Pool). Vessel expenses increased $1,179,000 for the three months and $421,000 for the six months ended June 30, 2004 compared to the same periods in 2003, primarily as a result of vessels acquired offset by a reduction in vessel expenses for the disposal of the older single hull vessels, which had higher operating costs than the newbuildings acquired. Compared to the same periods in 2003, depreciation and amortization expense decreased $211,000 during the three months and increased $1,053,000 during the six months ended June 30, 2004. There were increases in depreciation expense in both periods (there was a decrease in depreciation expense in addition to the increase, as mentioned previously) because of the acquisition of vessels and reductions to depreciation expense relating to the five vessels disposed of in 2003 and four vessels held for sale (two of which were sold in June) during 2004. Gemini Pool In December 2003, OMI began operating Gemini Tankers, which is a wholly owned subsidiary of OMI. Gemini is a pool for double hulled Suezmax vessels. Currently, there are 12 Suezmax vessels (10 from OMI and two from a European shipowner) operating in the pool. The earnings of the pool are allocated to the pool members by an agreed upon formula. The revenues and expenses (included primarily as charter hire expense) of Gemini are consolidated into OMI and are reflected in the results for the three and six months ended June 30, 2004. Since Gemini did not commence until December 2003, there was no effect on the first half of 2003. Liquidity and Capital Expenditures Cash and cash equivalents of $256,201,000 at June 30, 2004 increased $207,413,000 from $48,788,000 at December 31, 2003. In June, we raised cash by selling 12,204,000 shares of common stock which generated proceeds of $139,213,000. In addition, we drew down $70,000,000 from our revolving credit facilities in anticipation of the initial payments in July for the purchase agreements (see Capital Expenditures for Vessel Acquisitions). Net cash provided by operating activities of $123,742,000 for the six months ended June 30, 2004 increased $39,811,000 compared to $83,931,000 for the six months ended June 30, 2003. Our debt to total capitalization (debt and stockholders' equity) at June 30, 2004 was 44 percent and net debt (total debt less cash and cash equivalents) to total net capitalization (total capitalization less cash and cash equivalents) was 30 percent. We expect to use undrawn balances available to us through our revolving credit facilities and additional bank debt to finance capital expenditures as discussed below. Contracted Time Charter Revenue The contracted TC revenue schedule below does not include any estimates for profit sharing in the future periods; however, profit sharing of $2.6 million earned by two vessels during the first half of 2004 is included. We have reduced future contracted revenue for any estimated off-hire days relating to drydocks. Capital Expenditures 2004 Drydocks OMI evaluates certain vessels to determine if a drydock, special survey, both a drydock combined with a special survey or a postponement is appropriate for each vessel. On a regular basis we have certain vessels inspected and evaluated in anticipation of a drydock during the year. Currently, we anticipate drydocking six vessels during the second half of 2004 for an estimated aggregate cost of $4,100,000, and the vessels could incur approximately 135 off-hire days. Capital Expenditures for Vessel Acquisitions During June 2004, OMI signed agreements with Athenian and Arcadia, which included the purchase of seven vessels and seven product carriers under construction. Four vessels (three Suezmaxes and one product carrier) are scheduled for delivery in July and three Suezmax vessels will be delivered in August. OMI will pay $455,300,000, in aggregate, in July and August for these two transactions upon the delivery of each vessel. The payments for the construction contracts are discussed below. At June 30, 2004, OMI had commitments with a shipyard to construct six vessels; five handysize and one handymax 1A ice class product carriers (including the vessel to be delivered in July 2004) and a commitment with Athenian to purchase the construction contracts (from the same shipyard) for seven handysize product carriers with total contract costs for the 13 vessels aggregating $449,140,000. As of June 30, 2004, $31,894,000 of payments has been made to the shipyard. Upon the closing of the Athenian transaction in July, OMI paid Athenian $98,393,000 for the seven construction contracts and will pay the remaining balance to the shipyard in accordance with the yard schedule of installment payments. Cash, undrawn debt, bank financing and/or operating cash flow will provide most of the additional amounts to be paid. We have also obtained an unsecured $250 million bridge loan to finance the initial payments and until we finalize long-term financing for the vessels. One vessel, which we had contracted for in 2003, will be delivered on July 23, 2004, and two more will be delivered October and November of 2004. Five vessels will be delivered in 2005 and five in 2006. Three of the vessels will begin five year time charters upon delivery. As of June 30, 2004, future construction and delivery payments aggregate approximately $417,246,000 (before financing) as follows (in thousands): Year Payments ---- -------- 2004 $176,920 2005 140,088 2006 100,238 -------- Total Remaining Payments $417,246 ======== (1) Includes payment of $98,393,000 upon the closing on July 8, 2004 for the seven Athenian vessels under construction. (2) Includes payment of $16,884,000 in July 2004 for the delivery of the SAONE. About OMI Corporation OMI is a major international owner and operator of crude oil tankers and product carriers. Its fleet currently comprises 36 vessels, primarily Suezmaxes and product carriers, aggregating 3.0 million deadweight tons. The Company currently has 23 of its vessels on time charter. OMI currently has on order five 37,000 and one 47,000 dwt ice class 1A product carriers. Two vessels are scheduled to be delivered in 2004, three in 2005 and the last in 2006. * * * As reported in the Troubled Company Reporter's June 11, 2004 edition, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating and its other ratings on OMI Corporation and removed all the ratings from CreditWatch, where they were placed on May 28, 2004. The removal from CreditWatch followed OMI's announcement that it had withdrawn its offer to acquire unrated Stelmar Shipping Ltd. The outlook is stable. Stamford, Connecticut-based OMI has $613 million in lease-adjusted debt. "The improved tanker market, even if it weakens somewhat, should enable the company to maintain its credit profile," said Standard & Poor's credit analyst Kenneth Farer. "However, ratings upside potential is limited because of the ongoing fleet renewal program and participation in the competitive and cyclical tanker market." OWENS CORNING: Babcock Futures Rep. Asks Court to Quash Subpoena ---------------------------------------------------------------- Eric D. Green is the duly appointed Future Asbestos Claimants Representative in the bankruptcy cases involving The Babcock & Wilcox Company pending before the United States Bankruptcy Court for the Eastern District of Louisiana. On June 14, 2004, Mr. Green was served a deposition subpoena and a subpoena duces tecum. Mr. Green was to produce documents, which refer to Professor Francis E. McGovern and to the proposed FAIR Act bankruptcy legislation and the Fibreboard Settlement Trust. Mr. Green wants Judge Fitzgerald to quash the subpoenas. Sharon Cormack Mize, Esq., at Sessions, Fishman & Nathan, LLP, in New Orleans, Louisiana, observes that neither the Subpoena nor the cover letter identifies the party who requested the subpoena or the pending contested matter. Although the subpoena and the cover letter are signed by law firms in Delaware and Washington, D.C., Mr. Green is not a party to Owens Corning's bankruptcy cases and does not know which party the law firms represent. The discovery requests seek information concerning Professor McGovern. If the discovery requests are in connection with the request to disqualify Professor McGovern as mediator in the Debtors' proceedings, the motion and the discovery requests are moot. Professor McGovern withdrew as mediator effective June 30, 2004. To the extent discovery requests seek information concerning Mr. Green's communications with Professor McGovern and other futures representatives with respect to the proposed FAIR Act bankruptcy legislation, trust distribution procedures and trust claims processing, the information is irrelevant to the Debtors' bankruptcy and it is premature. 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) PARMALAT: Milk Products Proposes Alabama Sale Bidding Protocol -------------------------------------------------------------- Milk Products of Alabama, LLC, asks the Court to establish competitive bidding procedures so it may identify and select higher and better offers for its Decatur, Alabama business. Milk Products believes that an auction of the Alabama Business conducted in accordance with the Bidding Procedures will maximize the Business' value. Milk Products proposes that the deadline for submitting bids for the Alabama Business, in whole or in part, will be September 1, 2004. If needed, Milk Products will conduct an auction on September 13, 2004. To qualify, potential purchases must execute a confidentiality agreement with Milk Products and provide evidence of its financial ability to purchase the Alabama Business, in whole or in part, and timely consummate the sale. Milk Products will send to each Qualified Bidder a copy of the NDH Purchase Agreement. Each Qualified Bidder must produce a markup of the NDH Agreement, containing the terms of the Qualified Bidder's bid, including the amount of any other terms of consideration offered for the Alabama Business. All Markups must be accompanied by a good faith deposit equal to 10% of the total proposed purchase price, in the form of a certified check or wire transfer payable to an account designated by Milk Products. The NDH Purchase Agreement is a qualified bid. NDH, however, may make subsequent bids at the Auction. NDH may include the Break- Up Fee and Expense Reimbursement in the amount of any subsequent bid. NDH is entitled to credit the amount of the Break-Up Fee and Expense Reimbursement against the purchase price of the subsequent bid payable at the Closing. Milk Products also asks the Court to hold a sale hearing on September 16, 2004 to consider approval of the sale of the Alabama Business to NDH or any successful bidder. Milk Products will mail notices of the Bid Deadline, the Auction, and the Sale Hearing to all known creditors. Milk Products will also publish the Notices in The Wall Street Journal (National Edition) and The New York Times (National Edition). Milk Products will consult the Official Committee of Unsecured Creditors on a timely basis concerning all acts, decisions or determinations that Milk Products makes, in connection with the Bidding and the sale transaction. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) PENN BIOTECH: Reorganizes Operations to Set Up Separate Units ------------------------------------------------------------- Penn Biotech Inc. (OTCBB:PBOTF) is restructuring its operations such that its Canadian and Chinese seed potato businesses will be set up as separate operating subsidiaries, and that the parent company will become a public holding company. As part of this process, the Company plans to re-file with the Securities and Exchange Commission in the U.S. to become a domestic issuer for reporting purposes. This organizational structure will allow for each of the company's operating activities, including those of Traffic - ITS Company Ltd. when the acquisition is closed, to be in a separate subsidiary, with the parent offering overall management advice and financing for the respective companies. This structure is expected to further the Company's objective of qualifying to apply for a listing on a senior exchange. As stated in the CEO Update of July 7th 2004, the Company expects that both PBI and Traffic ITS will report significant revenues in calendar year 2005. Penn Biotech Inc. was incorporated in Vancouver, B.C., Canada in 2002 to advance the biotechnology of the seed potato production system. The PBI system mass produces seed tubers that are healthier, cost effective, have more vigour and are more profitable than the conventional potato production system. At December 31, 2003, Penn Biotech Inc.'s balance sheet showed a stockholders' deficit of $287,260 compared to a deficit of $16,215 at December 2002. PG&E NATIONAL: Niagara Mohawk Wants to File Late Proof of Claim --------------------------------------------------------------- The transmission of electricity in New York is governed by a tariff and agreements of the New York Independent System Operator. Under the Tariff, the New York ISO provides transmission owners like Niagara Mohawk Power Corporation with billing determinants. Niagara Mohawk issues bills to the users of its transmission system based on the billing determinants provided by the New York ISO. The Tariff also permits the New York ISO to perform recalculations of, and to make retroactive adjustments to the billing determinants, which may in turn be billed to Niagara Mohawk's customers, which includes NEGT Energy Trading - Power, LP. On May 7, 2004, the New York ISO notified Niagara Mohawk of certain recalculations and adjustments aggregating $230,839 for electricity transmission transactions with ET Power that occurred during the time period from November 1999 through February 2000. The New York ISO made the retroactive recalculations and adjustments in accordance with its Tariff. Subsequently, Niagara Mohawk contacted ET Power to advise it of the new claim and to request its consent to file the new claim. However, ET Power did not consent. For this reason, Niagara Mohawk asks the Court to allow it to file a late proof of claim for $230,839 against ET Power for the recent recalculations and adjustments made by the New York ISO. Matthew W. Cheney, Esq., at Swidler Berlin Shereff Friedman, LLP, in Washington, D.C., tells the Court that Niagara Mohawk learned of the new Claim based on the information provided by the New York ISO in May 2004, which was way after the Claims Bar Date. Niagara Mohawk had no knowledge of the Claim on the Claims Bar Date. Furthermore, the adjustments were not reasonably foreseeable by Niagara Mohawk because they relate to transmission system usage more than four years in the past. Mr. Cheney states that the delay in filing the new claim will not impact the efficient administration of the Debtor's estate since the ET Debtors are at an early stage in working together to formulate a Chapter 11 plan. Furthermore, an additional $230,839 claim to its $2.5 billion in liabilities already existing will not prejudice the ET Debtors' ability to formulate a Plan. 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) PLEJ'S LINEN: Committee Turns to Huron for Financial Advice ----------------------------------------------------------- The Official Unsecured Creditors' Committee appointed in Plej's Linen Supermarket SoEast Stores, LLC's chapter 11 cases wants to retain Huron Consulting Group LLC as its financial advisors. Huron Consulting will assist and advise the Committee in: a) determining the Debtors' short-term cash flow requirements and availability of assets to support DIP loans; b) understanding the Debtors' accounting systems; c) monitoring the Debtors' postpetition operating results and cash flows; d) ascertaining the Debtors' current financial condition; e) reviewing historical financial information of the Debtors; f) reviewing key employee retention plans; g) reviewing proposed financing commitments; h) reviewing the Debtors' expense structure and identifying opportunities for further reductions; i) preparing a liquidation analysis; and j) identifying or evaluating strategies to maximize the value of the estate, including any proposed sale transactions. Huron Consulting will also render other bankruptcy and consulting services, attend hearings and meetings and provide assistance as necessary. Huron Consulting will bill the Debtors' estates at its current hourly rates: Designation Billing Rate ----------- ------------ Managing Directors $450 to $600 per hour Directors $350 to $495 per hour Managers $310 to $375 per hour Associates $225 to $310 per hour Analysts $150 to $200 per hour William C.B. Floyd assures the Court that the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Rock Hill, South Carolina, Plej's Linen Supermarket SoEast Stores LLC, with its debtor-affiliates, are engaged primarily in two core businesses: retail sale of first quality program home accessories for bed, bath, window, decorative and house wares and limited closeout and discontinued opportunistic merchandise; and wholesale distribution of similar bed and bath textiles. The Company filed for chapter 11 protection on April 15, 2004 (Bankr. W.D. N.C. Case No. 04-31383). John R. Miller, Jr., Esq., and Paul R. Baynard, Esq., at Rayburn Cooper & Durham, P.A., 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. POTLATCH CORP: Reports Higher Earnings of $49.6M in Second Quarter ------------------------------------------------------------------ Potlatch Corporation (NYSE:PCH) reported significantly higher earnings for the second quarter of 2004, compared to the second quarter of 2003, due primarily to continued strength in its wood products markets. Improved financial performance from the company's Pulp and Paperboard and Consumer Products operating segments also contributed to the positive results, while the Resource segment posted lower earnings compared to the prior year second quarter. Second quarter 2003 earnings were positively affected by significant interest income of $12.5 million from a federal income tax settlement. For the second quarter of 2004, the company reported net earnings of $49.6 million compared to earnings from continuing operations of $6.8 million for the same period in 2003. Including discontinued operations, the company earned $6.6 million for the second quarter of 2003. Net sales for the second quarter of 2004 were $472.6 million, substantially higher than the $368.1 million recorded in the second quarter of 2003. Net earnings for the first half of 2004 totaled $71.4 million. The loss from continuing operations for the first half of 2003 was $2.1 million. Including discontinued operations, the net loss for the first half of 2003 totaled $2.9 million. Net sales for the first half of 2004 were $893.1 million, compared with $702.9 million for 2003's first half. The Resource segment reported operating income of $6.8 million for the second quarter of 2004, substantially lower than the $23.5 million earned in the second quarter of 2003. Land sales revenue totaled $1.1 million in the second quarter of 2004, versus $14.1 million in the second quarter of 2003. The June 2003 sale of approximately 15,300 acres of hardwood timberland in Arkansas was the primary reason for the unfavorable comparison. Lower fiber sales in Arkansas during the second quarter of 2004 also negatively affected earnings. Operating income for the Wood Products segment was $94.4 million for the second quarter of 2004, a dramatic increase over the $2.3 million earned in the second quarter of 2003. "The conditions that started the rally in wood products markets during the third quarter of 2003 -- low interest rates, a strong housing market and a weaker U.S. dollar -- have continued through the second quarter of 2004," noted L. Pendleton Siegel, Potlatch chairman and chief executive officer. "Selling prices for all of the segment's products were higher when compared to the second quarter of 2003, especially oriented strand board, which was more than double last year's price early in the quarter," Mr. Siegel added. Prices began an expected decline mid-quarter, but still remained at favorable levels at the end of 2004's second quarter. The higher selling prices more than made up for lower shipments of oriented strand board, lumber and particleboard on a quarter-to-quarter comparison. The Pulp and Paperboard segment reported operating income for the second quarter of $5.9 million, versus a loss of $1.2 million for 2003's second quarter. "The segment benefited from higher paperboard and pulp shipments compared to 2003's second quarter, as well as higher selling prices for pulp. Additionally, higher production at both of the segment's facilities, especially the mill in Lewiston, Idaho, resulted in lower per ton costs," Mr. Siegel noted. "Pulp prices have steadily improved during the first half of 2004, and paperboard prices have improved modestly in recent months," Mr. Siegel added. The Consumer Products segment incurred an operating loss of $1.2 million during the quarter, smaller than the operating loss of $5.0 million posted in the second quarter of 2003. "Although markets for consumer tissue products continued to be very competitive, segment shipments increased 18% over the second quarter of 2003, and net selling prices also showed a slight improvement," Siegel remarked. Both shipment and selling price measures were positively affected by the rollout of the ultra towel product manufactured at the company's new Las Vegas tissue facility. Results for the second quarter of 2003 were adversely affected by downtime taken on numerous converting lines to reduce finished goods inventory levels. Potlatch is a diversified forest products company with timberlands in Arkansas, Idaho and Minnesota. * * * In its Form 10-Q for the quarter ended March 31, 2004, filed with the Securities and Exchange Commission, Potlatch Corporation reports: Liquidity and Capital Resources "At March 31, 2004, our financial position included long-term debt of $618.8 million, including current installments on long-term debt of $0.5 million. Long-term debt at March 31, 2004 (including current installments) was substantially unchanged from the December 2003 balance. Stockholders' equity increased $37.4 million, largely due to net earnings of $21.8 million for the first three months of 2004 and the issuance of treasury stock totaling $19.8 million, partially offset by dividend payments of $4.4 million. The ratio of long-term debt (including current installments) to stockholders' equity was 1.22 to 1 at March 31, 2004, compared to 1.31 to 1 at December 31, 2003. "We believe that our cash, cash flows from operations and available borrowings under our current bank credit facility (including our anticipated extension or replacement of the bank credit facility) will be sufficient to fund our operations, capital expenditures and debt service obligations for the next twelve months. We cannot assure, however, that our business will generate sufficient cash flow from operations or that we will be able to extend or replace our current bank credit facility, or that we will be in compliance with the financial covenants in our bank credit facility so that future borrowings thereunder will be available to us. Thus, our ability to fund our operations will be dependent upon our future financial performance, which will be affected by general economic, competitive and other factors, many of which are beyond our control. "It is our practice to periodically review strategic and operational alternatives to improve our operating results and financial position. In this regard, we consider and plan to continue to consider, among other things, adjustments to our capital expenditures and overall spending, the restructuring of our operations to achieve greater efficiencies, and the disposition of assets that may have greater value to others. There can be no assurance that we will be successful in implementing any new strategic or operational initiatives or, if implemented, that they will have the effect of improving our operating results and financial position." QUADRAMED CORPORATION: Completes Tender Offer for 10% Senior Notes ------------------------------------------------------------------ QuadraMed Corporation's (OTCBB:QMDC.OB) previously announced cash tender offer to purchase any and all of its outstanding 10% Senior Secured Notes due 2008 expired as of 5:00 p.m. EDT, on Friday, July 16, 2004. All of the Notes were purchased; for an aggregate purchase price including accrued and unpaid interest of approximately $79.3 million. About QuadraMed Corporation QuadraMed is dedicated to improving healthcare delivery by providing innovative healthcare information technology and services. From clinical and patient information management to revenue cycle and health information management, QuadraMed delivers real-world solutions that help healthcare professionals deliver outstanding patient care with optimum efficiency. Behind our products and services is a staff of more than 850 professionals whose experience and dedication to service has earned QuadraMed the trust and loyalty of customers at more than 1,900 healthcare provider facilities. To find out more about QuadraMed, visit http://www.quadramed.com/ At March 31, 2004, QuadraMed Corporation's balance sheet showed a stockholders' deficit of $19,936,000 compared to a deficit of $16,883,000 at December 31, 2003. QWEST COMMS: Arizona Awards 3-Year Multimillion-Dollar Contract --------------------------------------------------------------- Qwest Communications International Inc. (NYSE: Q) is awarded a three-year, multimillion-dollar contract by the State of Arizona Department of Administration. Qwest long-distance services will be available to the state's more than 400 agencies, counties, municipalities, K-12 schools, libraries, universities and non-profit organizations. Under this new contract, the Arizona Department of Administration is expected to save approximately 18 percent, or $215,000 annually, in long- distance costs beginning with their first year of service with Qwest. Additional savings will accrue for the customer as more of the 400 entities sign up for Qwest service under the new agreement. "Customers have a choice of communication services providers," said Clifford S. Holtz, executive vice president of Qwest's business markets group. "Qwest is continually helping customers realize that by choosing Qwest they are going to receive the highest quality of service and support that meet their communication needs." 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/ At March 31, 2004, Qwest Communications International, Inc.'s balance sheet shows a stockholders' deficit of $1,251,000,000 compared to a deficit of $1,016,000,000 at December 31, 2003. RCN CORP: Creditors Want to Retain Capital & Technology Advisors ---------------------------------------------------------------- Pursuant to Sections 328(a) and 1103(a) of the Bankruptcy Code and Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure, the Official Committee of Unsecured Creditors in RCN Corporation's chapter 11 proceedings seeks the Court's authority to retain Capital & Technology Advisors, LLC, as industry and technology advisor, effective June 14, 2004. The Committee selected C&TA due to its extensive experience in operations and technology, and its familiarity with and experience in Chapter 11 cases and representation of creditors. C&TA will provide appropriate and feasible operations advisory services to the Committee. Specifically, C&TA will: (a) analyze the Debtors' telecommunication operations, service delivery and technological capabilities, each as it applies to the Debtors' current financial condition and its prospects for the Debtors' future performance; (b) conduct a detailed review of the Debtors' recent and historic financial performance, business plan, marketing plan, revenue forecast, capital program, management and competitive environment. C&TA will continue to review and comment on the Debtors' long-term business plan projections and be in a position to validate the projections or propose alternatives; (c) assist the Committee in: (i) evaluating the Debtors' proposed plan of reorganization and developing, evaluating, structuring and negotiating the final, definitive terms and conditions of a restructuring or reorganization plan, including the value of the securities, if any, that may be distributed to unsecured creditors under any restructuring or plan; and (ii) analyzing any merger, acquisition, divestiture, joint venture, or other transactions proposed by the Debtors; (d) assist the Committee in evaluating the Debtors' proposed bank debt refinancing transaction; (e) review and advise the Committee with respect to operating cash flow risks and opportunities associated with the Debtors' proposed reorganization plan; (f) assist and advise the Committee in connection with the Debtors' current contracts, both from market level evaluation, and overall usefulness of the contracts in the context of the Debtors' proposed reorganization plan and business plan; and (g) provide other advice and assistance as may be reasonably requested by the Committee from time to time. C&TA will be paid $150,000 as monthly fee, plus reimbursement of all out-of-pocket expenses. Wayne Barr, Jr., managing member of C&TA, assures Judge Drain that the firm serves no interest adverse to the Committee or the Debtors' estate. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- is a provider of bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) RCN CORPORATION: David C. McCourt Leads Search for New CEO ---------------------------------------------------------- David C. McCourt, Chairman and CEO of RCN Corp., will lead a search committee to identify and select a successor to serve as the company's chief executive officer subject to approval by the new equity holders. McCourt will retain his role as Chairman of the Board and continue working with the directors and the bondholders to oversee the vision of the company he founded in 1997. "I remain committed to the competitive vision that RCN established when I founded the company," said Mr. McCourt. "Now, as we enter the next stage of our evolution, I want to bring in new leadership to work with the new equity holders to continue our journey towards what I believe is a very promising future for the company." "We look forward to David's continuing role as board chairman," said Alfred Fasola, Lead Director of RCN's Board of Directors. "His vision, energy, and competitive spirit have had a lasting effect on the company." Mr. McCourt will continue as chief executive officer until a successor is found and added that he hopes to name a successor upon the completion of RCN's restructuring process. "We are happy David has agreed to stay as Chairman," said Russ Belinsky of Chanin Capital Partners, financial advisors to the Official Creditors' Committee. "His strategic thinking will continue to be indispensable to the company going forward." Over the past 25 years, David McCourt has founded 10 companies in three countries. The Economist described him as having "incredible credentials as a telecom revolutionary." In 1993, Mr. McCourt purchased controlling interest in C-TEC Corporation, a diversified telecommunications company based in Wilkes- Barre, Pennsylvania. Four years later, he split C-TEC into three publicly traded companies listed on the NASDAQ Stock Exchange: RCN Corporation, Cable Michigan, Inc, and Commonwealth Telephone Enterprises, Inc. Initially, Mr. McCourt became Chairman and CEO of all three companies, until sold or until a successor was found. "I am proud of what RCN has done to create a competitive marketplace to the benefit of all consumers. This company was founded to open the marketplace, tear down the barriers created by monopolies and offer better services and better prices. I look forward to continuing the fight as Chairman along with a new CEO," Mr. McCourt said. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- is a provider of bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. REMEDIATION FINANCIAL: Sec. 341(a) Meeting Scheduled for Aug. 17 ---------------------------------------------------------------- The United States Trustee will convene a meeting of Remediation Financial Inc.'s creditors at 2:00 p.m., on August 17, 2004, at the U.S. Trustee Meeting Room, 2929 N. Central Ave., Suite 820, Phoenix, Arizona. 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 Phoenix, Arizona, Remediation Financial Inc. is a real estate developer. The Company filed for chapter 11 protection on July 7, 2004 (Bankr. Ariz. Case No. 04-11910). Alisa C. Lacey, Esq., at Stinson Morrison Hecker LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed an estimated asses of more than $100 million and an estimated $10 million to $50 million in debts. RENT-A-CENTER: Will Webcast Q2 2004 Financial Results on Tuesday ---------------------------------------------------------------- Rent-A-Center, Inc. (NASDAQ/NNM:RCII) will broadcast its quarterly earnings conference call on Tuesday, July 27, 2004 at 10:45 AM ET over the internet to discuss the earnings release that will be issued after the close of the market on Monday, July 26, 2004. Audio of the call will be broadcast live and will be available on the Investor Relations section of Rent-A-Center, Inc.'s website, located at http://investor.rentacenter.com/ For those unable to attend the live broadcast, a replay will be available beginning July 27th at 1:45 p.m., Eastern time. There is no charge to access this event. As of July 17, 2004, Rent-A-Center, Inc., headquartered in Plano, Texas, operates 2,849 company-owned stores nationwide and in Puerto Rico. The stores generally offer high-quality, durable goods such as home electronics, appliances, computers, and furniture and accessories to consumers under flexible rental purchase arrangements that generally allow the customer to obtain ownership of the merchandise at the conclusion of an agreed-upon rental period. ColorTyme, Inc., a wholly-owned subsidiary of the Company, is a national franchisor of 319 rent-to-own stores, 307 of which operate under the trade name of "ColorTyme," and the remaining 12 of which operate under the "Rent-A-Center" name. * * * As reported in the Troubled Company Reporter's July 16, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB+' rating to Rent-A-Center Inc.'s proposed $600 million bank loan. A recovery rating of '2' was also assigned to the bank loan, indicating the expectation of a substantial (80%-100%) recovery of principal in the event of a default. The ratings are based on preliminary information and are subject to review upon final documentation. The proceeds will be used to refinance the company's existing bank loan. "The ratings on Rent-A-Center reflect the company's leading market position in the rent-to-own retail industry, moderate leverage, and adequate liquidity," said Standard & Poor's credit analyst Robert Lichtenstein. "These strengths are partially offset by the highly competitive and fragmented nature of the industry, and challenges in continuing growth in the face of slowing same-store sales." SK GLOBAL: Proposes Plan Solicitation & Vote Tabulation Procedures ------------------------------------------------------------------ SK Global America, Inc., asks the Court to approve certain proposed procedures for solicitation and tabulation of votes to accept or reject its Liquidation Plan. In addition, the Debtor wants Judge Blackshear to approve: (i) the proposed confirmation hearing date; (ii) the proposed voting record date; (ii) the notice and objection procedures for confirmation of the Plan; (iii) the Solicitation Packages and the corresponding distribution procedures; and (iv) the ballot forms and procedures for voting on the Plan. Confirmation Hearing The Debtor asks the Court to schedule the Confirmation Hearing on September 15, 2004 at 10:00 a.m. Pursuant to Rule 2002(b) of the Federal Rules of Bankruptcy Procedure, at least 25 days notice by mail must be given to all creditors of the time fixed for filing objections to, and the hearing to consider, confirmation of a plan. The Debtor intends to serve notice of the Confirmation Hearing and related matters on or before August 13, 2004, to satisfy the notice requirements of Bankruptcy Rule 2002(b). The Debtor further asks Judge Blackshear to declare that: * the Confirmation Hearing may be continued from time to time by announcing the continuance in open court, or by notation on the official calendar of the Court for the date of the Confirmation Hearing; and * the Plan may be modified pursuant to Section 1127 of the Bankruptcy Code before, during, or as a result of the Confirmation Hearing, in each case, without further notice to parties-in-interest, provided that the modification does not materially and adversely affect any class of claims under the Plan. Notice to Creditors The Debtor will transmit to creditors no later than August 13, 2004, a solicitation package containing a copy or conformed version of: (a) the Confirmation Hearing Notice, which contains notice of: -- the approval of the Disclosure Statement; -- the date of the Confirmation Hearing; -- the deadline and procedures for filing objections to confirmation of the Plan; -- the deadline and procedures for the temporary allowance of claims for voting purposes; -- the treatment to be accorded certain contingent, unliquidated or disputed claims for notice and voting purposes; and -- the voting deadline for receipt of ballots; (b) the Disclosure Statement; (c) the Plan, which will be furnished in the Solicitation Package as exhibit to the Disclosure Statement; (d) the Proposed Order; and (e) a ballot, if applicable, with instructions attached, and a pre-addressed, postage prepaid return envelope, appropriate for the specific creditor. On or before August 13, 2004, the Debtor will also provide copies of the solicitation package to the United States Trustee, the United States Attorney for the Southern District of New York, all parties having filed notice of appearance and request for pleadings in the Debtor's bankruptcy case, and counsel to each of: -- SK Networks Co. Ltd., -- Cho Hung Bank, and -- Korea Exchange Bank. According to Scott E. Ratner, Esq., at Togut, Segal & Segal, LLP, in New York, these creditors will receive the Solicitation Package by United States first-class mail, postage pre-paid: (a) known creditors holding claims in classes designated as unimpaired under the Plan -- excluding a ballot; and (b) known creditors holding claims designated as impaired, provided that only those creditors who are entitled to vote on the Plan -- that is, those creditors who have filed a timely liquidated and noncontingent proof of claim and as to which no objection is pending or, if no proof of claim has been filed, those creditors listed on the Debtor's schedules of assets and liabilities as holding liquidated, noncontingent and undisputed claims or whose claims have been temporarily allowed for voting purposes pursuant to the procedures provided -- will receive a ballot. Mr. Ratner tells the Court that the transmittal and mailing of the Solicitation Package provides adequate notice to creditors and complies with the applicable Bankruptcy Rules. Notice to Equity Holders Under the Plan, the equity holders will not retain or receive any property on account of their equity interests and are deemed to have rejected the Plan. Accordingly, the Debtor will serve a Solicitation Package, without a ballot, on its equity holders and their counsel of record in the Chapter 11 case. Publication Notice To supplement the Confirmation Hearing Notice that will be mailed to creditors, the Debtor will publish a notice in the form of an abbreviated version of the Confirmation Hearing Notice on or before August 13, 2004, in the national and international editions of each of The Wall Street Journal and Chosun Ilbo, a mass circulation newspaper in Korea. Confirmation Objections The Debtor asks the Court to declare September 7, 2004 at 5:00 p.m. as the deadline for filing and serving objections to confirmation of the Plan, in order to: (a) allow the Debtor to provide creditors and other interested parties with at least 25 days notice of the time by which objections to the Plan must be filed, thus complying with the notice requirements of Rule 2002(b); and (b) provide the Debtor with the time necessary to consider and, if necessary, respond to any objections that may be filed. The Debtor wants the Court to consider only timely filed and served written objections that describe with particularity the grounds and the evidence that will be presented in support of the objections. Objections should be filed with the Court and be served on: Togut, Segal & Segal LLP One Penn Plaza, Suite 3335 New York, New York 10119 Attn: Scott E. Ratner, Esq. Attorneys for the Debtor Cleary Gottlieb Steen & Hamilton One Liberty Plaza New York, New York 10006 Attn: James L. Bromley, Esq. Attorneys for SK Networks, Co., Ltd. McDermott Will & Emery 50 Rockefeller Plaza New York, New York 10020 Attn: Stephen Selbst, Esq. Attorneys for Cho Hung Bank Nixon Peabody LLP 437 Madison Avenue New York, New York 10022 Attn: William S. Thomas, Esq. Attorneys for Korea Exchange Bank Office of the United States Trustee 33 Whitehall Street 21st Floor New York, New York 10004 Attn: Greg M. Zipes, Esq. The Debtor further seeks the Court's authority to extend the Objection Date for specific creditors or parties-in-interest as it may deem appropriate in its sole discretion. Treatment of Contingent Unliquidated or Disputed Claims The Debtor asks the Court to declare: -- August 27, 2004 as the last day for creditors that hold disputed, contingent or unliquidated claims to file motions for the temporary allowance of the claims for purposes of accepting or rejecting the Plan; and -- September 6, 2004 as the hearing date to consider the Temporary Allowance Motions. Certain creditors whose claims were scheduled as unliquidated, disputed or contingent may have failed to timely file proofs of claim. Hence, the Debtor asks Judge Blackshear to declare that any holder of a claim (i) that is listed in the Schedules as disputed, contingent or unliquidated, and (ii) that is not the subject of a timely filed proof of claim or an Order specifically allowing the claim, will not be treated as a creditor for purposes of receiving distributions under the Plan or for voting on the Plan. Moreover, to avoid the time and expense associated with producing large numbers of copies and service on entities who can neither vote on nor receive a distribution under the Plan, the Debtor asks the Court to declare that the entities will not to be treated as creditors for the purpose of receiving notices, other than by publication. Approval of Ballots The Debtor asks the Court to approve the form of ballots to be used in connection with the solicitation of acceptances of the Plan from creditors in each class designated as impaired under the Plan and not, by operation of Section 1126(g) of the Bankruptcy Code, deemed to have rejected the Plan. Voting Record Date The Debtor proposes that August 4, 2004 at 5:00 p.m. be set as the Voting Record Date. The claims register maintained by the Voting Agent, Bankruptcy Services, LLC, will be deemed closed as of that day. Accordingly, the Debtor and BSI will have no obligation to recognize for purposes of voting on the Plan any claim transferred after the Voting Record Date. Instead, the Debtor and BSI will be entitled to recognize and deal with, for voting purposes, only those record holders of claims set forth in the claims register as of August 4, 2004. Voting Deadline for Receipt of Ballots To afford creditors sufficient time to vote and provide BSI with adequate time to tabulate the ballots expected to be returned, the Debtor asks the Court to fix September 7, 2004 at 5:00 p.m. as the last date by which ballots for accepting or rejecting the Plan must be received by BSI, to be included in the tabulation of ballots. Vote Tabulation Procedures A. Ballots Counted as Acceptances These ballots will be counted and deemed acceptances of the Plan: (a) Any ballot timely received that contains sufficient information to easily permit the identification of the claimant and that is cast as an acceptance of the Plan; and (b) Any ballot timely received that is cast as an acceptance of the Plan by a claimant which has previously submitted a ballot that voted to reject the Plan, so that the latter submitted ballot will be deemed to supersede and amend the earlier submitted ballot. B. Ballots Not Counted Unless otherwise ordered by the Court, after notice to the Debtor and a hearing, these ballots should not be counted in determining whether the Plan has been accepted or rejected: (a) Any ballot received after the Voting Deadline; (b) Any ballot that is illegible or contains insufficient information to permit the identification of the claimant; (c) Any ballot cast by: -- a creditor who has not timely filed a proof of claim with respect to the claim being voted, and whose claim either is not listed, or is listed as a disputed, contingent or unliquidated claim on the Schedules; or -- a creditor who has timely filed a proof of claim which is filed as contingent, unliquidated or disputed or is the subject of an objection, unless the creditor has had its claim temporarily allowed for voting purposes pursuant to the procedures outlined; (d) Any ballot cast by a person that does not hold a claim in a class that is entitled to vote to accept or reject the Plan; (e) Any ballots returned by facsimile transmission; (f) Any non-original ballots which are returned, or original ballots which do not contain original signatures; and (g) Any ballot received that indicates neither an acceptance nor rejection of the Plan, or which indicates an acceptance and rejection of the Plan. C. Amount and Number, and Multiple Ballots In determining whether a particular class of claims has accepted the Plan by the requisite dollar amount, the Debtor proposes that, for voting purposes only, the amount of each claim counted be: (a) the amount allowed by a final Court Order; or (b) the amount temporarily allowed by the Court pursuant to Bankruptcy Rule 3018(a); or (c) if not so allowed under any of the previous provisions, then: -- the liquidated amount specified in a proof of claim timely filed with the Court by the voting creditor and not subject to an objection; or -- if no proof of claim has been timely filed, on the basis of the undisputed, noncontingent and liquidated amount of the claim as it appears in the Schedules. Ballots may, at the Debtor's discretion, be preprinted with the dollar amount indicated. If they are so preprinted, the preprinted amount will be used in tabulating the votes unless the holder of the claim obtains a Court Order under Bankruptcy Rule 3018(a). The amount and classification of a claim listed on a ballot will be without prejudice to the Debtor's right to file an objection to the claim for any purposes. Changing Votes Whenever two or more ballots are cast voting the same claim before the Voting Deadline, the last valid ballot received prior to the Voting Deadline will be deemed to reflect the voter's intent and thus to supersede any prior ballots. No Vote Splitting Creditors must vote all of their claims within a particular class in the Plan to either accept or reject the Plan and may not split their votes. Accordingly, a ballot -- or multiple ballots with respect to multiple claims within a single Plan class -- that partially rejects and partially accepts the Plan will be deemed to be and will be counted as an acceptance of the Plan. (SK Global Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA: Trade Creditors Sell 102 Claims To Liquidity Solutions --------------------------------------------------------------- In Solutia, Inc.'s chapter 11 proceedings, the Clerk of the Court recorded 102 claim transfers, aggregating $842,625, to Liquidity Solutions, Inc., doing business as Revenue Management, between March 25, 2004 to June 3, 2004: Claim Transferors Amount ----------- ------ A & A Machinery Shop, Inc. $2,457 Accurate Industrial Products 913 Advanced Control Concepts 2,200 Advantage Plus Centrifuge Service 6,950 Affton Fabricating & Welding Co., Inc. 1,481 Alabama Fluid System Technologies 25,290 Ameraflex Rubber & Gasket Co. 451 Analytical Sensors, Inc. 2,550 Arctic Rental & Leasing 3,400 Associated Pallet, Inc. 1,007 Baileys Upholstery 2,550 BGV, Inc. 1,400 BHL Industries 6,050 Bobbie Graves Supply Co. 1,242 Bodycote K-Tech, Inc. 1,632 Brooklyn Machine Shop 3,150 Burmaster, Martha J. 4,277 C P I Controls, Inc. 1,632 Capstone Technology, Inc. 19,178 Cardan Design Corp. 9,978 Carolina Specialty Co. 2,605 Ceramtec North America Innovative 62,727 Chemcentral/Continental 1,858 Chris Blueker, Inc. 1,375 CHWMEG, Inc. 1,000 Cintas Cleanroom Resources 4,792 Clean One Janitorial 3,593 Columbian Tectank of Kansas City 1,649 Community Alert Network, Inc. 4,033 Conax Buffalo Technologies 2,040 Conceptual Product Technologies, LLC 5,466 Connection Technology Center 1,340 Continental Disc Corp. 6,719 Contractors Staffing, Inc. 5,888 Cooley Group 7,392 Creative Packaging Resources 26,927 D & B Lawn Service 1,798 Decatur Electronics Communications, LLC 845 Don Aslett, Inc. 1,917 Don Aslett, Inc. 3,840 Dons Rent -A- Store, Inc. 2,977 Dowdle Gas Co. 386 Dura-Bar Metal Services 1,615 Ed Roehr Safety Products 2,857 Eddington Thread Co. 1,786 Electric Motors & Drives, Inc. 9,848 Emerald Systems, Inc. 2,130 Environmental Sampling Services, Inc. 4,517 Erlab, Inc. 2,712 Esco Tool 2,335 Faderpa, Ltd. 1,905 Filter Technology 9,852 Fragomen Del Ray & Bernsen & Loewy, PC 14,579 Gateway Tankers 4,592 GZA Geoenvironmental, Inc. 74,442 Industrial Fence & Landscaping, Inc. 1,268 Inquiry Intelligence Systems 4,581 International Valve & Instrument Corp. 25,219 Jerrys Machine, Inc. 15,101 Joes Truck Repair, Inc. 1,886 John R Hess & Co., Inc. 7,467 Kittredge Equipment Co., Inc. 2,977 K-Tron America Corp. 3,830 Leak Sealers, Inc. 19,585 Liquid Handling Equipment 4,548 Maybury Associates, Inc. 45,541 Mid-South Marking Systems 3,641 Montello, Inc. 4,251 Mouldagraph Corporation 4,850 Munters Corp. 1,776 N T H Consultants, Ltd. 2,355 Nafeco, Inc. 4,058 Norman McGrath Photographer, Inc. 2,270 Pacer/Anixter formerly Pacer Electronics, Inc. 1,968 Peterson Group 18,387 Power Motion Sales, Inc. 1,612 Process & Energy Measurements Corp. 1,570 Professional Testing Laboratory, Inc. 2,800 Rickard Metals, Inc. 1,076 Roberts Loading Dock Equipment Co., Inc. 2,793 Roto-Rooter Sewer & Drain Services 8,629 Royal Services, Inc. 1,758 RPM Services, Inc. 66,927 RPS Inc doing business as Hampden Zimmerman 1,746 RPS Inc doing business as Hampden Zimmerman 1,746 RRen Manufacturing & Engineering 7,610 Safety and Health Associates, Ltd. 3,580 Semcor, Inc. 44,099 Shawn Mann/MannCreative 1,050 Shay Roofing, Inc. 2,773 St. Louis Marriot West 3,344 Taratec Development Corp. 4,308 TBS Carolinas 1,020 Technical Env Svcs, LLC 2,360 Technical Env Svcs, LLC 2,360 Tennille, Inc. 16,768 Tributyl Phosphates Task Force 9,160 United States Tape And Label 1,404 University of Pittsburgh 1,205 VNU Business Media, Inc. 44,982 William A Good dba Goods Consulting Svc 29,000 Workplace Solutions 19,261 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) STANADYNE CORP: S&P Affirms Low-B Ratings & Removes CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit and 'B' subordinated debt ratings on Windsor, Conn.-based Stanadyne Corp. and removed them from CreditWatch where they were placed on June 24, 2004. At the same time, Standard & Poor's assigned its 'BB' senior secured bank loan rating and its recovery rating of '1' to Stanadyne's proposed $35 million senior secured asset-based revolving credit facility and assigned its 'B+' debt rating and its recovery rating of '3' to Stanadyne's proposed $65 million senior secured term loan. Standard & Poor's also assigned its 'B' debt rating to the company's proposed $160 million senior subordinated notes. The bank loan and recovery ratings on the revolving credit facility indicate a high expectation of full recovery of principal in the event of a default or bankruptcy. The term loan debt and recovery ratings indicate a meaningful (50%-80%) likelihood of recovery of principal in the event of default. The outlook is stable. The rating affirmation and CreditWatch resolution reflect Standard & Poor's analysis of the company's expected business strategy, capital structure, and financial policy following a transaction whereby Stanadyne will be purchased by an affiliate of Kohlberg & Co. LLC, a private merchant bank. Stanadyne will have about $225 million of total debt pro forma at the transaction's closing, which is expected to occur in the third quarter of 2004. Proceeds from the issuance of debt will be used to refinance certain existing debt, to partly fund Kohlberg's purchase of Stanadyne's equity, to provide working capital financing, and for other general corporate purposes. "Downside ratings risk is mitigated by the expectation of continued positive free cash flow generation that will enable Stanadyne to reduce leverage in the near term. This expectation rests on the assumption that the economic uplift that has supported the company's improved sales in the past several quarters will continue into 2005," said Standard & Poor's credit analyst Nancy Messer. "Upside ratings potential is limited by the cyclical and competitive characteristics of Stanadyne's operating environment." Stanadyne is an independent manufacturer of diesel fuel injection equipment and precision engine components for diesel and gasoline engines supplied to original equipment manufacturers in the automotive, agricultural, construction, industrial, and marine industries. STERLING FINANCIAL: Fitch Upgrades Long Term Rating to BB+ from BB ------------------------------------------------------------------ Fitch Ratings has upgraded the long-term rating of Sterling Financial Corporation (STSA) to 'BB+' from 'BB'. All other ratings have been affirmed by Fitch. Additionally, Fitch has assigned ratings to Sterling Savings Bank, including an investment grade long-term deposit rating of 'BBB-'. A complete list of ratings is provided at the end of this release. The rating upgrade reflects the progress that STSA has made improving both its franchise as well as its balance sheet structure. Through acquisitions, as well as organic growth, STSA has created a Pacific Northwest franchise with approximately $6.1 billion in assets and 134 branches in four states. Additionally, the company has been transforming itself from a thrift to a more community banking oriented entity. An improving level of earnings, aided by a relatively stable NIM over an interest rate cycle, sound asset quality and increased levels of capitalization are the drivers of our higher ratings assessment. The successful continuation of these trends and the additional accumulation of capital remain opportunities for further ratings improvements. Rating upgraded by Fitch: Sterling Financial Corporation --Long-term issuer to 'BB+' from 'BB'. Ratings affirmed by Fitch: Sterling Financial Corporation --Short-term issuer 'B'; --Individual 'C'; --Support '5'; --Rating Outlook Stable. New ratings assigned by Fitch: Sterling Savings Bank --Long-term deposit 'BBB-'; --Short-term deposit 'F3'; --Long-term issuer 'BB+'; --Short-term issuer 'B'; --Individual 'C'; --Support '5'; --Rating Outlook Stable. TAMBORIL CIGAR: Changes Name to Axion Power International, Inc. --------------------------------------------------------------- On June 4, 2004, at a meeting of stockholders that was duly noticed, called and held in accordance with the requirements of the General Corporation Law of Delaware, the stockholders of Tamboril Cigar Company approved three amendments to the Certificate of Incorporation that: a. Changed the Company's name to Axion Power International, Inc. b. Implemented a reverse split of the common stock in the effective ratio of one (1) new share for every sixteen (16) shares presently outstanding; and c. Decreased the authorized capital stock to 50,000,000 shares of common stock and 12,500,000 shares of preferred stock Upon adjournment of the stockholders meeting, the Company filed two amendments to its Certificate of Incorporation with the Secretary of State of the State of Delaware that became effective at 11:59 p.m. on June 4, 2004 and 12:01 a.m. on June 5, 2004. In addition to the name change, the amendments to the Certificate of Incorporation collectively effect the equivalent of a 1 for 16 reverse split. For the reasons described in the Company's proxy statement, however, the mechanics of the reverse split involve a two-stage process that includes a 1 for 1,600 reverse split followed immediately by a 100 for 1 forward split. The Company did not issue scrip or purchase fractional shares for cash in connection with the implementation of the reverse split. Instead, all calculations that would have resulted in the issuance of a fractional share were rounded up to the next whole number. After giving effect to the reverse split and forward split, every stockholder will own a round trading lot of at least one hundred shares and all share positions will be integral multiples of 100 shares. Until the close of business on June 11, 2004, the Company allowed brokerage firms and other nominees who held shares of the Company's common stock for the accounts of beneficial owners to make the necessary rounding calculations on behalf of their clients. Any nominees that fail to make a timely request will be aggregated and treated as a single shareholder. As a result of the name change and reverse split, the Company's OTC trading symbol was changed from SMKE to AXPW effective at the opening of business on June 7, 2004. In addition to the fundamental corporate changes, the stockholders approved certain amendments to the By-Laws that authorize the Board of Directors to fix the number of directors by resolution, require that a majority of the members of the Board be independent directors, and provide for the classification of the Board into three classes of directors who serve for staggered terms of office. The stockholders also: a. Elected the seven individuals identified in the Company's proxy statement to serve on the Board of Directors for the terms specified in the proxy statement; b. Ratified the adoption of an Incentive Stock Plan for Company employees as described in the Proxy Statement; c. Ratified the adoption of a stock option plan for the independent directors as described in the Proxy Statement; and d. Ratified the selection of Michael F. Cronin, CPA as independent auditor for the year ended December 31, 2004. Tamboril Cigar and two of its subsidiaries filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Florida on April 11, 2000 (Bankr. S.D. Fl. Cases No. 00-13040). The Debtors filed their plan of reorganization with the Bankruptcy Court in August of 2000 and the court confirmed the plan in December of 2000. The Company, which used to be in the cigar manufacturing business, engaged in no substantive business activities during the period from April 2000 through December 2003. On December 31, 2003, it entered into a business combination transaction with Axion Power Corporation that was structured as a reverse takeover. Since then Tamboril has been engaged principally in research and development on a nanotechnology enabled hybrid electrochemical storage battery that it refers to as the E 3 Cell. As reported in the Troubled Company Reporter's May 13, 2004 edition, the auditors report on Tamboril Cigar's financial statements includes a going concern qualification. The Company had accumulated losses of $506,300 and a working capital deficit of $791,631 at December 31, 2003. It will not be able to commence second stage beta testing of its proposed products without obtaining additional funds through the sale of securities or from other sources. It is currently seeking additional capital in order to meet its anticipated obligations. While recent sales of securities in private placement transactions alleviate the going concern issues, they do not eliminate them. Accordingly, the independent auditors' report on Tamboril's financial statements for the year ended December 31, 2003 contains a fourth explanatory paragraph that the Company's financial statements have been prepared assuming that the Company will continue as a going concern and that its potential to incur operating losses raises substantial doubt about that assumption. The Company will need additional financing to continue operations. Tamboril Cigar had approximately $372,500 in cash on December 31, 2003. The ability to continue its research, development and testing will be dependent upon increasing its capital resources. Management believed the Company's cash resources would be adequate for its cash requirements for a period of 30 to 60 days into the new year, 2004. Tamboril will not be able to complete its alpha testing or commence its preliminary beta testing without obtaining additional funds from the sale of additional securities or from other sources. There is no assurance that additional capital will be available to the Company on favorable terms, or at all. If adequate financial resources are not available when required, management states that the Company may be forced to curtail its proposed operations. If it raises additional capital by selling preferred stock, the purchasers may have rights, preferences or privileges that are senior to the rights of its common stockholders. If unable to obtain additional capital when needed, the ability to continue its research and development and product testing activities will be materially and adversely affected. TECO ENERGY: S&P Cuts Debt Ratings to BB & Says Outlook is Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on TECO Energy Inc. to 'BB' from 'BBB-'. Standard & Poor's also lowered its senior unsecured debt rating on the company to 'BB' from 'BB+'. The outlook is stable. In addition, Standard & Poor's affirmed its 'BBB-/A-3' corporate credit rating on utility subsidiary Tampa Electric Co. and revised the outlook on the company to stable from negative. Tampa, Fla.-based TECO Energy has about $3.7 billion of total debt outstanding. "The drop in ratings at the parent holding company is due to a combination of lower expected financial performance at TECO Energy and less support accorded to TECO Energy from its Tampa Electric utility subsidiary," said Standard & Poor's credit analyst Todd Shipman. "In making the ratings distinction between the utility and its parent company, Standard & Poor's is acknowledging the wide differential in the stand-alone credit profiles of the two companies, which have diverged as TECO Energy has foundered in its unregulated merchant energy operations," continued Mr. Shipman. In affirming the Tampa Electric ratings, Standard & Poor's is positing its view that the utility's credit profile is unlikely to suffer further deterioration from the parent's activities. The separation is substantiated by management actions over the past three years that have been consistent with maintaining the utility's strong investment-grade credit quality. Thus, despite the absence of explicit mechanisms to insulate the utility, Standard & Poor's believes Tampa Electric's independent credit profile justifies a corporate credit rating of 'BBB-'. TECO Energy's move out of an investment-grade rating category, its refocused utility business strategy, and its ability to weather recent liquidity needs without burdening its utility franchise were also determining factors in Standard & Poor's rating actions. TECO Energy's commitment to refocus its business strategy by rationalizing its merchant power exposure and focusing primarily on its utility (about 70% of cash flow) and coal (about 15% of cash flow) businesses will create a lower-risk consolidated business mix that is expected to produce a more reliable cash flow stream. The credit strengths of the refocused business are offset by high debt leverage, a byproduct of the failed merchant strategy. Although the company has taken steps to exit from merchant activities, the transition has caused weaker financial results than Standard & Poor's had previously incorporated into its analysis. The company's efforts to recover from its failed merchant strategy will therefore take longer and be more difficult to achieve, and the lower ratings on TECO Energy better reflect that risk. TENNECO AUTOMOTIVE: Reports Record Revenue & Earnings for Q2 2004 ----------------------------------------------------------------- Tenneco Automotive (NYSE: TEN) reported a 25 percent increase in second quarter net income of $30 million versus net income of $24 million in the second quarter of 2003. The company reported a 15 percent improvement in EBIT (earnings before interest, taxes, and minority interest) to $76 million over second quarter 2003 EBIT of $67 million. EBITDA (EBIT before depreciation and amortization) in the quarter increased 12 percent to $120 million compared with $108 million a year earlier. Second quarter 2004 net income improved 55 percent to $31 million and earnings per share was up 43 percent to 70-cents per diluted share. Second quarter EBIT was up 24 percent to $84 million and EBITDA improved 17 percent to $128 million. "Our strategies for top-line growth, cash generation and aggressive cost management continue to prove effective as we posted another solid quarter with strong revenues and improved operational performance," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "We are well-positioned with the flexibility to adapt quickly to changing market conditions. Going forward, we will continue to benefit from our strong geographical balance, highly variable cost structure and more efficient manufacturing operations." The company reported its highest ever quarterly revenue of $1.114 billion compared with $998 million in second quarter 2003, driven by higher volumes on top-selling vehicle platforms worldwide and strengthening aftermarket sales in North America and South America. Favorable currency exchange rates benefited revenue by $27 million. Tenneco Automotive was awarded approximately $495 million in new business, over the life of the contracts, in the second quarter for OE platforms expected to begin production in 2006-2007 and approximately $5 million annualized in new aftermarket business. The new business includes one of the company's largest ever contracts to supply the full diesel exhaust system on a major pick-up truck platform in North America. The company's cost management activities and operational efficiency programs continued to generate savings in the second quarter. SGA&E (selling, general, administrative and engineering) expense decreased to 10.7 percent of sales, versus 11.0 percent one year ago, on track toward an annual goal of less than 11.5 percent of sales. Six Sigma initiatives generated $7 million in savings and the company realized $3 million in savings from Project Genesis restructuring activities. The company's gross margin in the quarter was 21.5 percent, versus 21.9 percent one year ago. Excluding restructuring related expenses, gross margin was flat year-over-year. Gross margin in the quarter was also impacted by a shifting business mix as the company's global OE growth outpaced higher margin aftermarket growth. A record low net debt of $1.253 billion was driven by improved cash flow performance in the quarter. Cash balances were $166 million at quarter-end and total debt was $1.419 billion. Tenneco Automotive outperformed the requirements of its bank debt covenants in the quarter. At June 30, the leverage ratio was 3.78, below the maximum limit of 5.00; the fixed charge coverage ratio was 2.04, exceeding the minimum required ratio of 1.10; and the interest coverage ratio was 3.15, exceeding the minimum coverage ratio of 2.00. NORTH AMERICA -- North American original equipment revenue was $379 million, up 4 percent compared with $365 million in second quarter 2003. The company outperformed the market's flat production rate due to its strong position on better-selling platforms and higher heavy-duty truck volumes. -- North American aftermarket revenue was $144 million, a 7 percent increase versus $136 million in second quarter 2003. An 11 percent improvement in ride control sales drove the increase and offset a 3 percent decline in exhaust sales. -- EBIT for North American operations was $50 million, flat with second quarter 2003. Excluding the items below, EBIT increased 6 percent, driven by manufacturing efficiencies and cost savings. -- Second quarter 2004 EBIT results include $1 million in restructuring costs, $2 million for an aftermarket customer changeover costs, and $1 million associated with stock price indexed consulting fees. EUROPE -- European original equipment revenue was $343 million in the quarter, a 20 percent increase over second quarter 2003 revenue of $286 million. Excluding $18 million in favorable currency, revenue was up 14 percent compared with one year ago. The launch of new ride control platforms and higher exhaust volumes drove the increase. -- European aftermarket revenue was $103 million, flat with second quarter 2003. Excluding the impact of favorable currency, revenue was $99 million. The decrease was due to lower sales in both product lines. -- European EBIT was $14 million, including $1 million in favorable currency, compared with second quarter 2003 EBIT of $11 million. Excluding the items below, EBIT increased 55 percent to $18 million, versus $12 million one year ago. The improvement was driven by OE volume increases, manufacturing efficiencies and lower overhead costs. -- Second quarter 2004 EBIT results include $4 million in restructuring related expenses. Second quarter 2003 EBIT results include $1 million in restructuring related expenses. REST OF WORLD -- Revenue from Asian operations increased 47 percent to $58 million from $40 million in second quarter 2003, primarily driven by a 58 percent increase in China OE revenues. -- Revenue from South America operations was $36 million, a 22 percent increase versus $29 million in second quarter 2003. The increase was the result of higher OE volumes and stronger aftermarket sales. -- Australian operations generated revenue of $51 million, a 27 percent increase compared with $40 million a year earlier. Excluding the impact of $4 million in favorable currency, revenue increased 15 percent, due to higher OE volumes and stronger aftermarket sales. -- Reported combined EBIT for Asia, South America and Australia was $12 million versus $7 million in second quarter 2003, primarily driven by higher OE volumes. "Despite some market uncertainties, we are cautiously optimistic that our improving performance will continue over the second half of 2004 due to our geographical balance, strong position on top- selling vehicles globally, upcoming new platform launches and strong foothold in growing markets such as China and commercial vehicles," said Frissora. "Our intense focus on reducing discretionary spending, improving operational efficiency and leveraging our global supply chain management system should also help counter any changes in the marketplace." Tenneco Automotive is a $3.8 billion manufacturing company with headquarters in Lake Forest, Illinois and approximately 19,200 employees worldwide. Tenneco Automotive is one of the world's largest designers, manufacturers and marketers of emission control and ride control products and systems for the automotive original equipment market and the aftermarket. Tenneco Automotive markets its products principally under the Monroe(R), Walker(R), Gillet(R) and Clevite(R)Elastomer brand names. Among its products are Sensa- Trac(R) and Monroe Reflex(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(R) mufflers, Dynomax(R) performance exhaust products, and Clevite(R)Elastomer noise, vibration and harshness control components. * * * As reported in the Troubled Company Reporter's May 27, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Tenneco Automotive Inc. to 'B+' from 'BB-' following the company's announcement that it decided not to proceed with its planned $150 million common equity offering. Credit statistics will be somewhat weaker than expected, as proceeds were to be used to tender for $130 million of the firm's 11 5/8% senior subordinated notes due 2009. A positive outlook is assigned. Total outstanding debt at March 31, 2004 was about $1.4 billion on the Lake Forest, Illinois-based company. "Ratings could be raised if operating performance continues to strengthen with free cash flow earmarked primarily for debt reduction or if Tenneco, at some later date, goes forward with a common equity offering with proceeds used to pay down high coupon debt," said Standard & Poor's credit analyst Daniel DiSenso. VIALINK COMPANY: Provides Financing and Debt Conversion Update -------------------------------------------------------------- In a series of transactions completed in May 2004, viaLink Company (OTCBB: VLNK), the leading provider of synchronization and scan based trading services to the retail supply, has concluded its issuance of Convertible Promissory Notes. The proceeds from the issuance of these notes totaled $5.4 million and have been used to fund the Company's operations since early 2003. In connection with the definitive merger agreement with Prescient Systems, the holders of the notes have agreed to convert the face value into a newly Designated Series E Convertible Preferred Stock upon shareholder approval of the merger transaction. The Series E has a conversion price of $0.10 per share and beginning 18 months from the issuance date will pay a dividend of 4%. The terms of the Series E are structured for inclusion within equity on the Company's balance sheet. Additionally, viaLink has received funding commitments of an additional $2.75 million in the form of Series F Convertible Preferred Stock to be funded as follows: $1.25 million will be funded through 10% secured promissory notes prior to the closing of the merger and will automatically convert into $1.25 million of Series F upon the closing of the merger. The remaining $1.5 million of the Series F will be funded at the closing of the merger transaction. viaLink has agreed to issue warrants to purchase 27.5 million shares of common stock with an exercise price of $0.10 to the providers of this funding. The Series F will have an initial conversion price $0.10 per share. Under the terms of the Series F, the Series F will automatically convert into a qualified equity financing that results in at least $3 million of gross proceeds to the merged company. The terms of the Series F are structured for inclusion within equity on the Company's balance sheet. At March 31, 2004, viaLINK's balance sheet shows a stockholders' deficit of $3,893,783 compared to a deficit of $3,090,404 at December 31, 2003. VITAL BASICS: Gets Okay to Hire Donlin Recano as Claims Agent ------------------------------------------------------------- Vital Basics, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Maine to appoint Donlin, Recano & Company, Inc. as their claims, noticing and balloting agent. Donlin Recano will: a. prepare and serve required notices in these chapter 11 cases, including, without limitation: (1) the Section 341(a) Notice, if not already served; (2) the bar date notice, if not already served; (3) notice of hearings on a disclosure statement and confirmation of a plan of reorganization; and (4) other miscellaneous notices to any entities, as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases. b. within five business days after the mailing of a particular notice, file with the Clerk's Office a declaration of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was served and the date and manner of service; c. maintain copies of all proofs of claim and proofs of interest filed in these cases; d. maintain official claims registers in these cases by docketing all proofs of claim and proofs of interest in a claims database that includes the following information for each such claim or interest asserted: (1) the name and address of the claimant or interest holder and any agent thereof, if the proof of claim or proof of interest was filed by an agent; (2) the date the proof of claim or interest was received by Donlin or the Court; (3) the claim number assigned to the proof of claim or proof of interest; and (4) the asserted amount and classification of the claim. e. implement necessary security measures to ensure the completeness and integrity of the claims registers; f. transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis: g. maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest and make such list available upon request to the Clerk's Office or any party in interest; h. provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; i. record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of such transfers as required by Bankruptcy Rule 3001(e), if directed to do so by the Court; j. comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; k. promptly comply with such further conditions and requirements as the Clerk's Office or Court may at any time prescribe; l. provide balloting and solicitation services, including preparing ballots, producing personalized ballots and tabulating creditor ballots on a daily basis; m. provide such other noticing, disbursing and related administrative services as may be required from time to time by the Debtors; n. oversee the distribution of the applicable solicitation material to each holder of a claim against or interest in the Debtors; o. respond to mechanical and technical distribution and solicitation inquiries; p. receive, review and tabulate the ballots cast; and q. certify the results of the balloting to the Court. The Debtors paid Donlin Recno a $10,000 retainer. Donlin Recano will bill the Debtors for services at its current hourly rates: Services Billing Rate -------- ------------ Noticing & Docketing $125 per hour Claims Docketing/Support Services Data Entry (pre-coded) $35 per hour Data Entry (uncoded) $60 per hour Reports and Services $125 per hour For consultation services, Donlin Recano charges at $140 per hour on average. Headquartered in Portland, Maine, Vital Basics, Inc. -- http://www.vitalbasics.com/-- is engaged in the business of Sales, through direct consumer marketing and at retail, of nutraceutical and related products throughout the United States and Canada. The Company filed for chapter 11 protection along with its debtor-affiliate, Vital Basics Media, Inc., on May 10, 2004 (Bankr. D. Maine Case No. 04-20734). George J. Marcus, Esq., at Marcus, Clegg & Mistretta, P.A., represents the Debtor in its restructuring efforts. When the Debtors filed for protection from their creditors, Vital Basics, Inc., listed $6,291,356 in total assets and $16,314,589 in total debts; Vital Basics Media, Inc., listed total assts of $378,308 and total debts of $179,242. WEIRTON STEEL: Court OKs Effects Agreement with Steelworkers Union ------------------------------------------------------------------ Debtor Weirton Steel Corporation and the Independent Steelworkers Union maintained a collective bargaining relationship since 1983. The ISU is the collective bargaining representative for: -- Production, Maintenance and Hourly-Rated Plant Clerical Employees, -- Salaried Office Clerical, Plan Clerical and Technical Employees; and -- Salaried Registered Nurse and X-Ray Technicians of the Weirton facility. According to Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, Weirton and the ISU were parties to eight collective bargaining agreements, as amended from time to time, including these benefit programs: A. Hourly Unit (1) Agreement between Weirton and the ISU, effective October 26, 2001, as amended by: -- Settlement Agreement, dated November 13, 2002, -- Settlement Agreement, dated February 5, 2003, and -- Memorandum of Understanding between Weirton and the ISU, dated February 19, 2004 (2) Insurance Agreement, effective September 26, 1993 (3) Supplemental Unemployment Benefits Plan (Hourly), effective September 26, 1993 B. Salary Non-Exempt Unit (1) Agreement between Weirton Steel Corporation and the Independent Steelworkers Union (Salary), effective October 26, 2001, as amended by: -- Settlement Agreement, dated November 13, 2002; and -- Settlement Agreement (Salary Non-Exempt), dated February 5, 2003 (2) Salaried Employee Insurance Agreement, effective September 26, 1993 (3) Long Term Disability Benefits (Salary) (Plan 510) C. Professional Unit (1) Agreement between Weirton and the ISU, effective September 26, 1996, as amended by: -- Settlement Agreement (Nurse Unit), dated May 17, 2001; -- Settlement Agreement (Nurse Unit), dated September 14, 2001; -- Settlement Agreement, dated November 13, 2002; -- Settlement Agreement (Nurse Unit), dated February 5, 2003 (2) Salaried Employee Insurance Agreement, effective September 26, 1993 (3) Current CBAs may or have provided for participation by members of one or more of the collective bargaining units in: -- Weirton Steel Corporation Retirement Plan (Plan 001), terminated as of October 21, 2003; -- Weirton Steel Corporation 1984 ESOP (Plan 002); -- Weirton Steel Corporation 1989 ESOP (Plan 003); -- Weirton Steel Corporation Tax Deferred Savings Plan 401(k) (Plan 004); -- Program of Health Benefits, Prescription Drug, Dental, Orthodontics, and Vision Benefits (Plan 501); -- Sickness & Accident Benefits (Plan 502); -- Travel Accident Insurance (Plan 511); -- Weirton Steel Corporation Employee Assistance Program (Plan 516); and -- Life Insurance (Plan 517) The collective bargaining agreements would have expired as of June 3, 2004 pursuant to the written notice of termination provided by the ISU to Weirton. As a result of the Sale Transaction with the International Steel Group, Inc., and ISG Weirton, Inc., Weirton was obligated to engage in effects bargaining with the ISU in accordance with the National Labor Relations Act, Section 151 of the Labor Code. Thus, Weirton bargained with the ISU regarding the effects of the Sale Transaction on the employees of Weirton's steel production facility. Weirton and the ISU met at reasonable times and engaged in good faith negotiations related to the termination of Weirton's collective bargaining relationship with the ISU in connection with the Sale Transaction. The parties exchanged proposals based on the most relevant, complete and reliable information available; and ultimately determined that under a proposed effects agreement, ISU members, Weirton's creditors, Weirton and affected third parties would be treated fairly and equitably. In advance of the Closing of the Sale Transaction, the ISU and ISG Weirton negotiated a new collective bargaining agreement that was ratified by the membership of the ISU. Weirton and the ISU also negotiated an agreement to resolve all claims or potential claims asserted or assertable by the ISU on behalf of its members and retirees against Weirton arising under or related to the collective bargaining agreements. Mr. Freedlander tells the Court that the Effects Agreement is intended to be all encompassing and leave open no issues between Weirton and the ISU. The pertinent terms of the Effects Agreement are: (a) Establishment of timeframes -- 45 or 60 days, as the case may be -- after the Closing in which Weirton is obligated to provide the ISU and ISU-represented employees: (1) reports relating to employees eligible for workers' compensation benefits; (2) access to records including, but not limited to, medical records, work records and personnel files; (b) Provisions for the transition from the Weirton/ISU collective bargaining agreements to the ISG Weirton/ISU collective bargaining agreements, including implementation of a Transition Benefit Program; (c) Limitations on the extent to which claims for benefits provided under the Weirton/ISU collective bargaining agreements will be paid; (d) Limitations on the extent to which claims for benefits formerly provided by Weirton to ISU-represented retirees will be paid; (e) Termination of the collective bargaining agreements and the collective bargaining relationship as between Weirton and the ISU as of the Closing on the Sale Transaction; and (f) A waiver and release by the ISU on behalf of itself and, to the greatest extent permitted by law, its bargaining unit employees, former bargaining unit employees and retirees of claims, known or unknown, liquidated or unliquidated including, but not limited to: (1) claims under the collective bargaining agreements, including grievance claims; (2) claims under the National Labor Relations Act, the Labor Management Relations Act, the WARN Act, ERISA and any other federal, state or local law relating to employment, discrimination in employment, wages, benefits or otherwise; (3) claims filed with the Bankruptcy Court; and (4) claims for reimbursement of counsel fees in consideration of payment by Weirton to the ISU of $200,000. Accordingly, Weirton sought and obtained the Court's authority to enter into the Effects Agreement with ISU. (Weirton Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945- 7000) WESTPOINT STEVENS: Abandons Nine De Minimis Assets -------------------------------------------------- WestPoint Stevens Inc. abandoned two de minimis assets in December 2003: De Minimis Asset Reason Book Value ---------------- ------ ---------- Machine parts (Wagram Fabrication) obsolete $99,873 Fabrication and packaging materials obsolete 170,448 From March 2004 to May 2004, the Debtors abandoned seven de minimis assets, with an aggregate book value of $982,532: De Minimis Asset Reason Book Value ---------------- ------ ---------- Packaging materials (Chipley) obsolete $97,606 Packaging materials (Chatham) obsolete 30,897 Surplus equipment (Fairfax) obsolete 62,819 Packaging materials (Longview) obsolete 107,676 Fabrication equipment (Middletown) obsolete 37,188 Fabrication equipment (Clemson) obsolete 112,410 Fabrication and packaging materials obsolete 533,936 (WestPoint Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) W.R. GRACE: Futures Representative Reports Talks Going on --------------------------------------------------------- David T. Austern, the legal representative of future asbestos personal injury claimants, represented by John C. Phillips, Esq., at Phillips Goldman & Spence in Wilmington, Delaware, reports that, since his appointment on May 24, 2004, he and his professionals have begun their due diligence, met with the W.R. Grace & Co. Debtors, and contacted all other major constituencies in the Debtors' cases. The initial meetings should be concluded in July 2004. As to the appeal of his appointment, the Futures Representative anticipates that the record on appeal will be transmitted to the United States District Court for the District of Delaware in July 2004, and until then, will be monitoring the appeals and participate as he deems appropriate. (W.R. Grace Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) W.R. GRACE: Futures Representative Wants Phillips as Counsel ------------------------------------------------------------ David T. Austern, the legal representative of future asbestos personal injury claimants in W.R. Grace & Co.'s chapter 11 case, asks the Court for permission to retain Phillips Goldman & Spence, PA, in Wilmington, Delaware, as local counsel, retroactive to May 24, 2004. Specifically, Phillips Goldman will: (1) provide legal advice and representation with respect to the Futures Representative's powers and duties in connection with the Debtors' Chapter 11 cases, and any matters which may arise, including in connection with appropriate due diligence, the formulation of a plan, and one or more asbestos payment trusts; (2) prepare and file on the Futures Representative's behalf applications, motions, responses, objections and other pleadings as necessary and as authorized by the Futures Representative; (3) appear on the Futures Representative's behalf in the Debtors' Chapter 11 cases for hearings, meetings of creditors, and other matters as appropriate; (4) advise and represent the Futures Representative with respect to any contested matter, adversary proceeding, lawsuit or other proceeding to which the Futures Representative may be a party; and (5) perform all other necessary legal services that the Futures Representative authorizes or requests. On the Futures Representative's behalf, Phillips Goldman has begun conducting due diligence with respect to the Debtors and their non-debtor affiliates, their financial affairs, prepetition transactions, postpetition matters, and proposals regarding potential plans of reorganization. John C. Phillips, Esq., a director at Phillips Goldman, assures the Court that neither he nor his firm have or represent any interests adverse to the Futures Representative or the Debtors' estates on the matters for which approval of his firm's retention is sought. Phillips Goldman is a "disinterested person" within the meaning of the Bankruptcy Code. (W.R. Grace Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Buchalter Welcomes Jeffrey Kirschenbaum in San Francisco Office ----------------------------------------------------------------- Jeffrey B. Kirschenbaum has joined the California-based law firm of Buchalter, Nemer, Fields & Younger as a shareholder in the firm's San Francisco office. Kirschenbaum, an experienced litigator who handles a wide range of complex commercial disputes, comes to Buchalter from the San Francisco law firm of Berg & Parker, where he was a partner. Previous law firm experience included working as an associate in the New York City office of White & Case. Kirschenbaum represents clients in real estate, land use, banking and commercial litigation matters. He has extensive trial and appellate experience, and regularly advises clients on real estate transactions. "Jeff is a highly regarded trial lawyer with a strong record of successfully serving institutional clients. He represents some of the same institutional clients that Buchalter, Nemer has represented for many years, so his joining us should be synergistic for both parties to this deal," said James B. Wright, managing partner of Buchalter's San Francisco office. "In particular, Jeff's experience handling banking, finance and real estate litigation is an ideal fit with our firm, and we look forward to his significant contributions as we close in on a quarter-century of steady growth here in the San Francisco office." Kirschenbaum received a J.D. from Boalt Hall School of Law at U.C. Berkeley, after completing his undergraduate studies at U.C. San Diego. Currently a resident of Alameda, he is admitted to practice law in both California and New York. Founded in 1948, Buchalter, Nemer, Fields & Younger P.C. is a California law firm with nearly 150 attorneys in its three offices in Los Angeles, San Francisco and Irvine. The firm represents clients in several major areas of practice: Bank and Finance; Business Practices; Insolvency; Intellectual Property; Labor and Employment; Litigation; and Real Estate. The firm is headquartered in Los Angeles and also has offices in San Francisco and Irvine. Buchalter's professionals provide a range of legal services across an array of industries, in local, regional, national and international venues. For more information, see http://www.buchalter.com/ * Alcasabas, Berson & Falcone Join Chadbourne & Parke as Partners ----------------------------------------------------------------- The international law firm of Chadbourne & Parke LLP has elected three attorneys to the partnership, effective September 1, 2004. The newly elected partners are Allison M. Alcasabas, Scott D. Berson and Joseph G. Falcone. "We enthusiastically welcome to the partnership these extremely talented lawyers," said Charles K. O'Neill, the Firm's Managing Partner. "We are tremendously proud of their professional accomplishments, the breadth of their experience and their commitment to the Firm and its clients." About the New Partners Allison M. Alcasabas, age 36, New York office, Litigation: Ms. Alcasabas' practice focuses on complex products liability litigation. She is currently representing Brown & Williamson Tobacco Corporation in smoking and health litigation throughout the United States. Ms. Alcasabas received her B.A., cum laude, from Bucknell University, and her J.D. from Cornell Law School, where she was a member of the Cornell Law Review. She is admitted to practice in New York, New Jersey, Connecticut and Washington State. Scott D. Berson, age 34, New York office, Corporate: Mr. Berson principally represents financial institutions in connection with structured and more conventional financings, in addition to general corporate transactional matters. In his representation of arrangers and administrative agents, Mr. Berson participated in the creation of a single-seller commercial paper conduit to finance trade receivables and a series of lease financing transactions for a Fortune 100 industrial/service company. Mr. Berson also recently represented an international lending institution in connection with a secured loan to an energy company emerging from bankruptcy, and currently represents a major financial institution arranging several restructurings of lease financing transactions, including a refinancing through a Rule 144A capital markets offering. He received his B.A., with honors, from Amherst College, and his J.D. from New York University School of Law. He is admitted to practice in New York. Joseph G. Falcone, age 36, New York office, Litigation: Mr. Falcone concentrates his practice on complex products liability litigation. He has assisted in the successful defense of cigarette manufacturers in several product liability trials throughout the United States. He also has counseled manufacturers in the United Kingdom and Asia with respect to product liability defense issues. Mr. Falcone received his B.A. from Haverford College, where he was a member of Phi Beta Kappa, and his J.D., magna cum laude, from Syracuse University College of Law, where he was managing editor of the Syracuse Law Review. After graduating from law school, Mr. Falcone clerked for two years for the Hon. Nicholas H. Politan, U.S. District Judge for the District of New Jersey. He is admitted to practice in New York and New Jersey. About Chadbourne & Parke LLP Chadbourne & Parke LLP, an international law firm headquartered in New York City, provides a full range of legal services, including mergers and acquisitions, securities, project finance, corporate finance, energy, telecommunications, commercial and products liability litigation, securities litigation and regulatory enforcement, white collar defense, intellectual property, antitrust, domestic and international tax, reinsurance and insurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. The Firm has offices in New York, Washington, D.C., Los Angeles, Houston, Moscow, Kyiv, Warsaw (through a Polish partnership), Beijing and a multinational partnership, Chadbourne & Parke, in London. For additional information, visit http://www.chadbourne.com/ * Samir Barakat Joins Charles River Associates as Sr. Consultant ---------------------------------------------------------------- Samir F. Barakat has joined Charles River Associates Incorporated (NASDAQ: CRAI), an internationally known leader in providing economic, financial, and management consulting services, as a Senior Consultant to the firm's Energy & Environment Practice and will be affiliated with CRA's Oakland office. Mr. Barakat's expertise is in litigation economics, valuation studies, regulatory policy and pricing, and strategic planning. During his 25-year career, he has worked extensively for electric utilities, other energy companies, and solid waste firms. In addition to strategic consulting, he has provided expert testimony on damages, asset valuation for tax and condemnation purposes, regulatory policy, and utility ratesetting before both administrative bodies and civil courts. In addition to his role as a Senior Consultant to CRA, Mr. Barakat is the Founding President of Barakat Consulting, Inc. Prior to forming Barakat Consulting, Mr. Barakat was Vice President for Customer Strategies at PG&E Energy Services, where he was responsible for developing and implementing a strategic analysis and custom rate negotiation capability that would permit large industrial, commercial, institutional, and governmental energy users to benefit from the advent of competitive energy markets. Previously, he was President of Barakat & Chamberlin, Inc., which grew to become a nationally regarded energy and utility consulting firm with more than 100 professional staff. Heading the firm, Mr. Barakat directed numerous litigation and strategic projects for clients in the electric utility, independent power, natural gas, telecommunications, and solid waste industries. (Barakat & Chamberlin merged with PG&E Energy Services in 1997.) Earlier in his career, Mr. Barakat held several positions in the ratesetting and revenue requirement departments at Pacific Gas & Electric Company. In announcing this affiliation, James C. Burrows, CRA's President and CEO, said, "In his distinguished career, Sam Barakat has demonstrated the ability to join the roles of consultant and entrepreneur to great effect, most notably in his founding and developing one of the leading utility consulting firms in the United States. Sam's extensive knowledge of and experience with ratemaking, regulation, and utility industry restructuring, combined with his astute economic and financial analyses, have benefited his many satisfied clients within the energy and waste management industries. CRA's Energy & Environment Practice welcomes Sam and looks forward to a long and fruitful collaboration." About CRA Founded in 1965, Charles River Associates is an economics, finance, and business consulting firm that works with businesses, law firms, accounting firms, and governments in providing a wide range of services. CRA combines economic and financial analysis with expertise in litigation and regulatory support, business strategy and planning, market and demand forecasting, policy analysis, and engineering and technology management. The firm is distinguished by a corporate philosophy of providing responsive, top-quality consulting; an interdisciplinary team approach; unsurpassed economic, financial, and other analytic skills; and pragmatic business insights. In addition to its corporate headquarters in Boston and international offices in Auckland, Brussels, Dubai, London, Melbourne, Mexico City, Toronto, and Wellington, CRA also has U.S. offices in Chicago, College Station, Dallas, Houston, New York, Oakland, Palo Alto, Pasadena, Philadelphia, Salt Lake City, Silicon Valley, and Washington, D.C. Detailed information about CRA can be found at http://www.crai.com/ * Davenport Lyons Appoints Five New Partners -------------------------------------------- West End law firm Davenport Lyons has boosted its partners with five internal promotions. These appointments take the number of partners at Davenport Lyons to thirty-five. Martin Haines - (Media) Martin joined the firm's Media Department in January 2000, becoming an Associate in July 2002. His practice spans all aspects of the media but is primarily focussed on film and television production and finance. Sam Tatton-Brown - (Media) Sam joined the Media Department in November 1999 and became an Associate in July 2002. His practice concentrates primarily on film and television finance work. Fraser Bloom - (Media) Fraser joined the Media Department in March 2003 as an Associate. He advises on all aspects of film and television development, production, finance and distribution. Julie Killip - (Insolvency) Julie joined the firm's Insolvency Group as an Associate in January 2002. Julie specialises in contentious insolvency, both corporate and personal, and acts not only for insolvency practitioners, but also for companies, partnerships and individuals on insolvency issues. Alun Thomas - (Licensing) Alun joined the firm``s Licensing Group as an Associate in January 2002. A former Police Officer involved in licensing and Clubs and Vice, Alun has a wealth of experience in contentious and non-contentious work. Partnership Director, Richard Bunn said "We are absolutely delighted to be able to promote such talented individuals within the firm". ********* 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, Emi Rose S.R. Parcon, Bernadette C. de Roda, Rizande B. Delos Santos, Paulo Jose A. Solana, Jazel P. Laureno, Aileen M. Quijano and Peter A. Chapman, Editors. Copyright 2004. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***