/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040802.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 2, 2004, Vol. 8, No. 160 Headlines A.B. DICK: Look for Schedules & Statements by August 27 ACCLAIM ENTERTAINMENT: Receives Nasdaq Delisting Notification ADELPHIA COMMS: Blue River Resigns from Equity Committee ADELPHIA COMMS: Aug. 30 is ML Media and Century/ML Claims Bar Date AIR CANADA: Three Travel Agencies Wants Claim Ruling Reversed ALLIANT RESOURCES: S&P Assigns B Issuer Credit & Bank Loan Ratings APM INC: Case Summary & 20 Largest Unsecured Creditors APPLIED EXTRUSION: 70% of Sr. Noteholders Agree Chapter 11 Prepack ARMSTRONG HOLDINGS: Releases Upbeat Second Quarter Results ARTHURS COMPANY: Case Summary & 20 Largest Unsecured Creditors ASARCO INC: Union Says Loss Due to Stripping & Reduced Output BIP INT'L: U.S. Trustee Schedules Creditors Meeting on August 4 BUCYRUS INT'L: S&P Raises B- Corporate Credit Rating to BB- CANBRAS COMMS: Declares Initial Distribution of Sale Proceeds CATHOLIC CHURCH: Section 341(a) Meeting Reset to August 6 CENTURY ALUMINUM: Commences 11-3/4% Sr. Secured Debt Offering CLARK CRANE LLC: Case Summary & 20 Largest Unsecured Creditors CONTIGROUP COS: S&P Affirms BB- Corporate Credit Rating DB COMPANIES: Committee Looks to KPMG for Financial Advice DENALI CAPITAL: S&P Puts Prelim Lower-B Rating on Class D Notes DOMAN INDUSTRIES: S&P Withdraws D Ratings After Debt Restructuring DONNELLEY CORP: S&P Affirms Subsidiary's B+ Sub. Debt Rating DOW CORNING: Reports 47% Net Income Increase in 2nd Quarter '04 EMERGING VISION: Dissident Director Launches Proxy Fight ENRON CORP: Wants to Settle with El Paso Entities to End Disputes FEDERAL-MOGUL: Settles Prior's $6.3 Asbestos PI Claim for $918,000 FLEMING COMPANIES: Asks Court to Approve Local 653 Settlement Pact FOSTER WHEELER: Extends Sr. Debt Exchange Offer to August 30 FRESH CHOICE: U.S. Trustee to Meet with Creditors on August 11 FT WILLIAMS CO: Case Summary & 20 Largest Unsecured Creditors GLOBAL CROSSING: Seeks NASDAQ Extension for Listing Compliance GRAHAM PACKAGING: S&P Assigns Single-B Corporate Credit Ratings HERITAGE NETWORKS: Former Employees File Claims for Unpaid Wages HOLLINGER: Provides Update in Accordance with Cease Trade Order IWO HOLDINGS: Missed Interest Payment Triggers S&P Default Rating J.P. MORGAN: Fitch Places Low B-Ratings on 2 Certificate Classes JEUNIQUE INTERNATIONAL: Gets Nod for $325K Interim DIP Financing KAISER ALUMINUM: PBGC Will Take Over Inactive Pension Plan KOLORFUSION INT'L: Deficit & Losses Raise Going Concern Doubt LANTIS EYEWEAR: Committee Hires Martin Chow as Co-Counsel LES BOUTIQUES: Reorganized Company Closes $19.2M Placement Today MAGELLAN HEALTH: Reports $28.4 Million 2nd Quarter Net Income MASTEC INC: Releases Final Results of Operations for FY 2003 MCCANN: Section 341(a) Meeting Slated for August 19, 2004 MEDSOLUTIONS: Looks to Private Placements to Raise Needed Cash MIRANT CORP: Committee Asks Court to Discharge Risk Capital MITSUBISHI MOTORS: S&P Upgrades Corporate Credit Rating to CCC+ MOHEGAN TRIBAL: S&P Assigns BB- for Proposed $200M Senior Notes MONUMENT CAPITAL: Fitch Upgrades 1 Tranche From B to B+ NATIONAL BEEF: S&P Affirms BB- Corporate Credit Rating NAVISITE: Completes $46+ Million Surebridge Acquisition NEW VISUAL: Strained Liquidity Raises Going Concern Doubt NEW WEATHERVANE: Panel Taps Jaspan Schlesinger as Local Counsel NOMURA ASSET: S&P Affirms Low B-Rating on Class 1-M-3 Certificates OWENS CORNING: Wants to Make $Redacted Pension Plan Contributions OWENS-ILLINOIS INC: S&P Affirms BB- Corporate Credit Rating PACIFIC GAS: Wants to Settle Williams Claims for $69.3 Million PARMALAT GROUP: Inks Consent Judgment Settling SEC's Civil Suit PEGASUS SATELLITE: Wants to Hire King & Spalding as Corp. Counsel PINNACLE ENT: S&P Assigns B+ Rating to Proposed $350M Bank Loan PG&E NATIONAL: Affiliate to Pay Bethesda Place $11.8M Under Lease REGUS CORP: S&P Assigns B- Preliminary Bank Loan Rating RECYCLING SOLUTIONS: Seeks Nod to Hire Kevin Heard as Attorney RELIANCE: Liquidator Wants to Sell King County Land for $450K ROCHESTER: Alberta Securities Commission Revokes Cease Trade Order SEQUOIA MORTGAGE: Fitch Rates Class B-4 & B-5 Certificates BB & B SMITHFIELD FOODS: S&P Affirms BB+ Corporate Credit Rating SOLUTIA INC: To Add $1.74 Million to China Subsidiary's Capital SONNY & LISHA INC: Case Summary & 5 Largest Unsecured Creditors SONTRA MEDICAL: Demands Halt of Trading from Berlin Stock Exchange SOUTH STREET: S&P Keeps Outstanding Junk Ratings on 3 Classes SPIEGEL GROUP: Eddie Bauer Redmond Real Estate Auction this Week STRONGBOW EXPLORATION: Increase Private Placement to $2 Million SWIFT & CO: S&P Removes Corporate Credit Rating From CreditWatch THAXTON: Judge Denies FINOVA's Bid to Terminate Exclusive Periods UAL CORP: Reports $7 Mil. 2nd Quarter Operating Profit UNIFIED HOUSING: Voluntary Chapter 11 Case Summary UNITED AIRLINES: Will Pay $820K for Hazardous Waste Infractions UNITED BISCUITS: Fitch Puts Subordinated Rating on Watch Negative WATERFRONT WAREHOUSE: Case Summary & Largest Unsecured Creditors WEIRTON STEEL: To Settle with Independent Guards Union WEST PENN: S&P Affirms B Underlying & Standard Long-Term Ratings WESTERN PACIFIC: US Trustee Names 3-Member Creditors' Committee WHEELING CITY CENTER: List of 20 Largest Unsecured Creditors Y-USA INC: First Creditors Meeting Scheduled for August 6 * BOND PRICING: For the week of August 6 - August 30, 2004 ********* A.B. DICK: Look for Schedules & Statements by August 27 ------------------------------------------------------- A.B. Dick Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for more time to file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtors tell the Court they have more than 8,000 creditors. Gathering the data necessary to prepare the Schedules and Statements will require a significant time commitment and substantial effort by the Debtors' employees . . . and these employees are also essential to the company's day-to-day business operations. The Debtors also relate that some prepetition invoices have not yet been received nor entered into the company's financial systems. The Debtors the Court they have already commenced the extensive process of gathering the information needed to prepare and finalize their Schedules and Statements. The Debtors believe an extension until August 27, 2004, will provide enough time to complete the information gathering and reporting process. Headquartered in Niles, Illinois, A.B. Dick Company -- http://www.abdick.com/-- is a leading global supplier to the graphic arts and printing industry, manufacturing and marketing equipment and supplies for the global quick print and small commercial printing markets. Together with 3 of its debtor- affiliates, A.B. Dick filed for chapter 11 protection on July 13, 2004 (Bankr. Del. Case No. 04-12002). Frederick B. Rosner, Esq., at Jaspen Schlesinger Hoffman and Jami B. Nimeroff, Esq., at Buchanan Ingersoll P.C., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed over $10 million in estimated assets and estimated debts in over more than $100 million. ACCLAIM ENTERTAINMENT: Receives Nasdaq Delisting Notification ------------------------------------------------------------- Acclaim Entertainment, Inc. (Nasdaq: AKLM), has received a letter from The Nasdaq Stock Market, Inc. stating that, because the Company's market value of its listed securities was below $35,000,000 as of July 16, 2004, pursuant to Marketplace Rule 4310(c)(8)(C), the Company has until August 18, 2004 in which to regain compliance with this rule. The calculation of the market value of the Company's listed securities was based upon 129,573,500 shares of common stock outstanding as of June 19, 2004 multiplied by a closing bid price on that date of $0.20 per share. If, at any time prior to August 18, 2004, the market value of Company's listed securities is $35,000,000 or more for a minimum of 10 consecutive business days, then the Nasdaq staff will determine if the Company complies with the rule. Based upon the current number of shares outstanding, the Company's common stock will need to close at or above $0.28 per share for a minimum of 10 consecutive business days prior to August 18, 2004. The letter also states that if compliance cannot be demonstrated with the rule by August 18, 2004, then the Company's securities would be subject to delisting. At that time, the Company may appeal such determination, but there can be no assurance that such an appeal would be successful. In the event that the Company's securities are delisted from The Nasdaq Stock Market, then the Company's securities will be reported on the OTC Bulletin Board(R)(OTCBB) so long as two or more broker/dealers make a market in the Company's securities and the Company continues to remain current with its filings with the Securities and Exchange Commission. The letter also states that, based upon the Company's Form 10-K for the period ended March 31, 2004, the Company does not comply with Marketplace Rule 4310(c)(2)(B)(i) or 4310(c)(2)(B)(iii), which require minimum stockholders' equity of $2,500,000 or net income from continued operations of $500,000 in the most recently completed fiscal year or two of the last three most recently completed fiscal years, and that these factors will also be considered by Nasdaq in determining the Company's overall compliance with the Nasdaq Marketplace Rules and whether the Company's securities will be subject to delisting. * * * In compliance with NASDAQ Marketplace rule 4350 (b) Acclaim Entertainment, Inc.'s (Nasdaq: AKLM) independent auditors, KPMG, LLP, have included in their independent auditor's report dated June 29, 2004 an explanatory paragraph relating to substantial doubt as to Acclaim's ability to continue as a going concern, due to working capital and stockholders' deficits as of March 31, 2004 and the recurring use of cash in operating activities. The auditor's report is contained within the Company's annual report on Form 10-K filed with the Securities and Exchange Commission on July 1, 2004. This explanatory paragraph is not a new qualification, as KPMG's independent auditor reports have included a going concern qualification relating to the Company's financial statements, for each of the Company's past four fiscal years ending August 31, 2001 and 2002 and March 31, 2003 and 2004. About Acclaim Entertainment Based in Glen Cove, N.Y., Acclaim Entertainment, Inc., is a worldwide developer, publisher and mass marketer of software for use with interactive entertainment game consoles including those manufactured by Nintendo, Sony Computer Entertainment and Microsoft Corporation as well as personal computer hardware systems. Acclaim owns and operates five studios located in the United States and the United Kingdom, and publishes and distributes its software through its subsidiaries in North America, the United Kingdom, Australia, Germany, France and Spain. The Company uses regional distributors worldwide. Acclaim also distributes entertainment software for other publishers worldwide, publishes software gaming strategy guides and issues "special edition" comic magazines periodically. Acclaim's corporate headquarters are in Glen Cove, New York and Acclaim's common stock is publicly traded on NASDAQ.SC under the symbol AKLM. For more information please visit our website at http://www.acclaim.com/ At March 31, 2004, Acclaim Entertainment's balance sheet reflects a stockholders' deficit of $97,983,000 compared to a deficit of $55,088,000 at March 31, 2003. ADELPHIA COMMS: Blue River Resigns from Equity Committee -------------------------------------------------------- The U.S. Trustee for Region 2, Deirdre A. Martini, advises the United States Bankruptcy Court for the Southern District of New York that Blue River, LLC, is no longer a member of the Official Committee of Equity Security Holders of Adelphia Communications Corporation, et al. The Equity Security Holders Committee is now composed of four members: 1. Leonard Tow 3 High Ridge Park, Stamford, Connecticut 06905 Phone: (203) 614-4601 Fax: (203) 614-4627 Attn: Mr. Leonard Tow 2. The Northern Mutual Life Insurance Company 720 East Wisconsin Ave., Milwaukee, Wisconsin 53202 Phone: (414) 665-5852 Attn: Brett Elver Director, Northwestern Investment Management Co. 3. AIG DKR Sound Shore Funds 1281 East Main St., 3rd Floor, Stamford, Connecticut 06902 Phone: (203) 324-8429 Fax: (203) 324-8498 Attn: Mr. Marc Seidenberg 4. Highbridge Capital Corp. 9 West 57th Street, 27th Floor New York, New York 10019 Phone: (212) 287-4735 Fax: (212) 755-4250 Attn: Andrew R. Martin, Portfolio Manager Adelphia Communications Corporation and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 65 Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMS: Aug. 30 is ML Media and Century/ML Claims Bar Date ------------------------------------------------------------------ In a stipulation approved by the United States Bankruptcy Court for the Southern District of New York, Century/ML Cable Venture, the Adelphia Communications Corporation Debtors and ML Media Partners, LP, agree that the date within which ML Media and Century/ML may file proofs of claim against one or more of the ACOM Debtors will be extended to August 30, 2004 at 4:00 p.m. Adelphia Communications Corporation and more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Century/ML Cable Venture filed for Chapter 11 protection on September 30, 2002. Century/ML is a New York joint venture of Century Communications Corporation, a wholly owned indirect subsidiary of Adelphia Communications Corporation, and ML Media Partners, LP. Century/ML holds the cable franchise in Leviton, Puerto Rico. Lawyers at Willkie, Farr & Gallagher represent ACOM and Century/ML. (Adelphia Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Three Travel Agencies Wants Claim Ruling Reversed ------------------------------------------------------------- On June 22, 2004, the Honorable Allan M. Austin, as Claims Officer, disallowed a claim for damages filed by Always Travel, Inc., Highbourne Enterprises, Inc., and Canadian Standard Travel Agent Registry against Air Canada. Justice Austin affirmed the decision of Ernst & Young, Inc., the Court-appointed Monitor in Air Canada's CCAA restructuring, to disallow the Travel Agencies' CN$1,700,000,000 claim for voting and distribution purposes. Before Air Canada commenced its CCAA proceeding, the Travel Agencies commenced an action before the Federal Court of Canada against Air Canada, five other carriers and the International Air Transport Association, for breach of the Competition Act. The Travel Agencies brought the Action on behalf of 3,7000 Canadian travel agents accredited by the IATA. The Travel Agencies complain that Justice Austin: (a) erred in declining to permit the Travel Agencies to cross examine the affiants on behalf of Air Canada, to call evidence in the nature of an examination under Rule 39.03 of the Rules of Civil Procedure, or to call oral evidence; (b) failed to consider relevant documents and facts, and did admit irrelevant and inadmissible documents and facts for the purpose of coming to his decision; (c) made findings of fact based on determinations of credibility without giving the Travel Agencies or their witnesses an opportunity to be heard; (d) made findings of fact that were clearly wrong and made overriding and palpable errors on the evidence; and (e) made errors of fact and law in misapprehending the nature of the Travel Agencies' claim. Thus, the Travel Agencies ask Mr. Justice Farley to set aside Justice Austin's determination as to their claim. The Travel Agencies ask the Court to fix the value of their claim for voting and distribution purposes. 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. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIANT RESOURCES: S&P Assigns B Issuer Credit & Bank Loan Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' issuer credit rating to Alliant Resources Group Inc. (ARG). At the same time, Standard & Poor's assigned its 'B' bank loan rating to ARG's $205 million senior secured credit facilities comprised of a $175 million seven-year term loan and a $30 million five-year revolving credit facility. The outlook is stable. "The ratings are based on an experienced senior management team, adequate operating results, and successful integration of acquired companies," explained Standard & Poor's credit analyst Donovan Fraser. "Offsetting these strengths is a very limited track record, very weak capitalization, and the reliance on cash flow in the near term to rebuild equity." Standard & Poor's expects the $175 million term loan net of transaction fees to be used to repay existing debt of approximately $80 million and the balance to retire ARG preferred stock and pay accrued and other dividends on ARG preferred and common stock. The $30 million revolving credit facility is expected to remain unused at debt issuance and to be available for working capital or for other liquidity purposes. Standard & Poor's expects the company to maintain expense discipline and an attention to the bottom line by achieving EBITDA margins of more than 25% in 2004 and 2005. Furthermore, the company is expected to rebuild equity through significant free cash flow generation in 2004 and 2005 to maintain interest coverage (which in this case, due to no preferred dividends, is equal to GAAP fixed-charge coverage) of more than 3.5x and decrease debt-to-total capital to 80% or less by year-end 2005. Standard & Poor's believes that ARG has limited product and geographic diversity. As of Dec. 31, 2003, 94% of ARG's revenue was derived from insurance brokerage operations, with the remainder attributable to Mutual Inc., a provider of investment products to 403(b) plan participants. ARG's main operating subsidiary, Driver Alliant (Driver), constitutes 76% of the company's top-line and Driver itself derives a significant proportion of its revenue from California. Standard & Poor's expects ARG's geographic concentration and reliance on Driver to lessen considerably as the company continues to grow and incorporate new hubs. APM INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------ Debtor: APM, Inc. aka ICORE International Trading Co., Inc. fdba APM Europack c/o Bert Loughmiller 137 Fremont Avenue Los Altos, California 94022 Bankruptcy Case No.: 04-27694 Type of Business: The Debtor is engaged in the business of distributing and marketing wine bottles, capsules and corks to the international wine industry. Chapter 11 Petition Date: July 27, 2004 Court: Eastern District Of California (Sacramento) Judge: Christopher M. Klein Debtor's Counsel: George C. Hollister, Esq. 3415 American River Drive #B Sacramento, CA 95864-4417 Tel: 916-488-3400 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Abel Da Costa Tavares Trade Creditor $1,402,842 Rue Da Estacao, 447 Pacos De Brandao 4535 Lourosa, Portugal William Preston Stuck Buyout $1,000,000 1230 Hamilton Ave. Agreement Palo Alto, CA 94301 Enoplastic S.P.A. Trade Creditor $819,495 Via Luigi Galvani 1 21020 Bodio Lomango, VA Italy Bert Loughmiller Deferred Compensation $700,000 137 Fremont Ave. Los Altos, CA 94022 Trefinos, S.L. $682,567 Cami de la Fanga, sn Aparto 192; 17200 Palagrugell Girona, Spain Corticas Janosa, S.A. Trade Creditor $342,532 Rua Da Estacao, 447 Pacos De Brandao 4535 Lourosa, Portugal Cortica Benicia, S.A. Trade Creditor $203,008 Novembal Attorney fees $175,000 Andreini and Company Trade Creditor - $142,242 Insurance Premiums Saver Glass, Inc. Trade Creditor $137,721 Jorge Pinto De SA, LDA Trade Creditor $113,893 Bayerische Hypo-and Trade Creditor $103,920 Vereinsbank Encore Glass, Inc. Trade Creditor $98,763 Bingham McCutchen LLP Trade Creditor - $78,020 Legal Fees H and N Packaging, Inc. Trade Creditor $71,356 Baker and McKenzie Legal Fees $66,427 Januario Nogueira De Trade Creditor $64,365 Sousa-Cortica The St. Paul Trade Creditor $41,240 Sociedade Export De Artigos Trade Creditor $34,435 De Cortica IKON Financial Services Contingent Breach $23,000 of Copier Lease APPLIED EXTRUSION: 70% of Sr. Noteholders Agree Chapter 11 Prepack ------------------------------------------------------------------ Applied Extrusion Technologies, Inc. (NASDAQ NMS - AETC) has reached an agreement in principle with six bondholders holding over 70% in aggregate outstanding principal amount of the Company's 10-3/4% senior notes to recapitalize the senior notes. Pursuant to the agreement in principle, the Company will not pay the interest on the senior notes that became due on July 1, 2004. New Equity & New Debt for Existing Notes The recapitalization will be accomplished through a prepackaged chapter 11 plan of reorganization and will involve: * the exchange of the 10-3/4% senior notes pursuant to which the bondholders will receive 100% of the common equity of the reorganized Company and * new senior notes to be issued by the reorganized Company. The new senior notes will be unsecured, will have an aggregate principal amount of $50 million, a seven-year term and will be redeemable after the first year at declining premiums. Interest will accrue at a rate of 12%, and may be paid in cash or in kind, unless certain minimum financial requirements are achieved, in which case the interest must be paid in cash. Shareholders Get $2.5 Million in Cash All of the Company's existing stock will be canceled and the existing stockholders will receive a ratable portion of $2.5 million in cash. Trade Creditors Unaffected Under the prepackaged chapter 11 plan, the Company will pay its trade creditors in full on a current basis. In addition, the reorganized Company is expected to become a non- reporting company pursuant to the U.S. securities laws; as a result, it is anticipated that there will be restrictions on trading the securities of the reorganized Company. The Company expects to commence the solicitation of votes from the holders of its senior notes before the end of August. If sufficient votes for a prepackaged chapter 11 plan are obtained from the holders of its senior notes, the Company will file a chapter 11 petition and seek to have the plan confirmed by the bankruptcy court. The Company does not anticipate being subject to the bankruptcy for more than sixty days. Under U.S. bankruptcy law, at least one-half in number and two-thirds in principal amount of an impaired class entitled to vote on a chapter 11 plan, in both cases counting only those claims actually voting on the plan, must vote in favor of the plan. Although the holders of at least 70% of the aggregate outstanding principal amount of the senior notes have indicated that they would agree to vote in favor of the plan, there can be no assurance that sufficient votes of holders of senior notes, with respect to both the number and principal amount requirements, will be obtained to confirm a prepackaged chapter 11 plan. In addition, consummation of the recapitalization is subject to the completion of definitive documentation and the satisfaction of customary conditions. The Company expects the prepackaged chapter 11 plan to be confirmed by the bankruptcy court and consummated in mid- to late-fall of this year. The Company has received financing proposals from various lenders, including GE Commercial Finance, for financing during the chapter 11 case and for exit financing. The Company expects to have commitments with respect to such financings prior to the time it commences the solicitation of votes on its plan from the holders of its senior notes. In addition, the Company's bank group, led by GE Commercial Finance, has agreed to waive any event of default arising under its current credit facility with respect to the non- payment of interest on its senior notes through September 1, 2004, which date may be extended by the lenders. Amin J. Khoury, Chairman and Chief Executive Officer of the Company commented: "We are very pleased that we have been able to reach agreement with holders of a substantial majority of our senior notes. This recapitalization will significantly reduce debt and restore the long-term financial stability of the Company." Applied Extrusion Technologies, Inc. is a leading North American developer and manufacturer of specialized oriented polypropylene (OPP) films used primarily in consumer products labeling and flexible packaging application. * * * As reported in the Troubled Company Reporter's July 5, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Applied Extrusion Technologies Inc. to 'D' from 'CCC'. Standard & Poor's also lowered its rating on the company's $275 million 10.75% senior notes due 2011 to 'D' from 'CC'. The downgrade follows the New Castle, Delaware-based company's failure to make the $14.8 million interest payment due July 1, 2004, on its $275 million senior notes. "In light of very weak operating results, the company obtained an amendment to financial covenants under its credit agreement for the third fiscal quarter of 2004. However, the amendment restricts the company from paying interest due on July 1, 2004, on its senior notes unless it has excess availability under its current credit facility of $20 million after giving effect to the interest payment. Currently, the company would not have the excess availability required under the amendment to make the interest payment," said Standard & Poor's credit analyst Liley Mehta. ARMSTRONG HOLDINGS: Releases Upbeat Second Quarter Results ---------------------------------------------------------- Armstrong Holdings, Inc. (OTC Bulletin Board: ACKHQ) reported second quarter 2004 net sales of $903.5 million, a 9.3% increase over second quarter net sales of $826.9 million in 2003. Excluding the favorable effects of foreign exchange rates of $16.5 million, consolidated net sales increased by 7.1%. Sales increased in all regions of the world and in most operating segments. The improvement in sales was due to higher prices in North America and to generally improved demand for Armstrong's products throughout the world. At June 30, 2004, Armstrong Holdings' balance sheet showed a $1,330,500,000 stockholders' deficit, compared to a deficit of $1,330,200,000 at December 31, 2003. The Honorable Randall J. Newsome confirmed Armstrong's chapter 11 plan of reorganization on November 18, 2003. The Company is waiting for a U.S. District Court judge to affirm the confirmation order. Operating income of $3.6 million was recorded for the second quarter of 2004 compared to an operating loss of $33.4 million in the second quarter of 2003. 2004 results include a non-cash charge of $60.0 million to reflect a goodwill impairment loss related to the European resilient flooring reporting unit. In the second quarter of 2003, a non-cash charge of $73.0 was recorded related to management's updated assessment of probable asbestos-related insurance asset recoveries. Excluding these non-cash charges results in an adjusted operating income of $63.6 million in 2004 compared to an adjusted operating income of $39.6 million in 2003, an increase of 60.6%. The improvement in operating income is primarily due to higher U.S. selling prices, improved volume, and the savings associated with 2003 cost reduction initiatives. These improvements were partially offset by higher raw material costs, particularly lumber and PVC, as well as higher selling, general, and administrative expenses. Segment Highlights Resilient Flooring net sales were $321.9 million in the second quarter of 2004 and $308.3 million in the second quarter of 2003. 2004 sales compared to 2003 were favorably impacted by $5.6 million from the translation effect of the changes in foreign exchange rates. An operating loss of $39.5 million was recorded for the quarter. In the second quarter of 2004, a non-cash charge of $60.0 million was recorded for a goodwill impairment loss related to the European resilient flooring reporting unit. Excluding the $60.0 million charge, operating income increased from $19.1 million in 2003 to $20.5 million in the second quarter of 2004 as improvements in sales volume and the benefits from cost reduction initiatives more than offset increased raw material costs. Wood Flooring net sales of $214.1 million in the second quarter of 2004 increased 17.9% from $181.6 million in the prior year. This increase was primarily driven by improved selling prices and higher sales volume. Operating income of $21.1 million in the second quarter of 2004 compared to $5.7 million in the second quarter of 2003. The increase in operating income was primarily attributable to higher prices, sales volume gains and lower manufacturing overhead costs, partially offset by higher lumber prices. Textiles and Sports Flooring net sales of $65.1 million decreased in the second quarter of 2004 compared to $67.1 million in the second quarter of 2003. Excluding the favorable effects of foreign exchange rates of $4.2 million, net sales decreased 8.7%. An operating loss of $1.7 million in the second quarter of 2004 was incurred compared to an operating loss of $3.1 million in the second quarter of 2003. The decreased loss was due to reduced manufacturing expenses, lower raw material costs and the effects of selling price increases partially offset by the impact of sales volume declines. Building Products net sales of $247.3 million in the second quarter of 2004 increased from $216.7 million in the prior year. Excluding the favorable effects of foreign exchange rates of $6.8 million, sales increased by 10.6%, primarily due to higher sales volume and higher selling prices. In 2004, operating income increased to $38.4 million in 2004, from $27.8 million in the second quarter of 2003. This increase resulted from increased sales, improved production efficiencies and higher equity earnings from the WAVE joint venture. These gains were partially offset by higher raw material and energy costs and wage and salary increases. Cabinets net sales in the second quarter of 2004 of $55.1 million increased from $53.2 million in 2003 due primarily to price increases and sales of higher priced products. Operating income of $1.5 million in 2004 improved by $3.9 million from a 2003 operating loss of $2.4 million. The improvement in operating income was primarily due to the increased sales and reduced manufacturing costs, partially offset by higher employee bonus accruals. Year-to-Date Results For the six-month period ending June 30, 2004, net sales were $1,748.5 million, an increase of 9.2% from the $1,601.8 million reported for the first six months of 2003. Increases were reported for all segments except Textiles and Sports Flooring. Excluding the favorable effects of foreign exchange rates of $51.2 million, consolidated net sales increased 5.8%. Operating income in the first half of 2004 was $45.2 million. This compares to an operating loss of $22.1 million for the first six months of 2003. The improvement in operating income was due to higher prices and increased volume as well as savings from 2003 cost reduction initiatives. Partially offsetting these gains were increased raw material and salary and wage costs. More details on the Company's performance can be found in its Form 10-Q, filed with the SEC today. References to performance excluding the effects of foreign exchange are non-GAAP measures. Management believes that this information improves the comparability of business performance by excluding the impacts of changes in foreign exchange rates when translating comparable foreign currency amounts. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., Weil, Gotshal & Manges LLP and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. ARTHURS COMPANY: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Arthurs Company, Ltd. 1247 East Main Street Coshocton, Ohio 43812 Bankruptcy Case No.: 04-61926 Type of Business: The Debtor is engaged in residential construction, remodeling and renovation. See http://www.thearthurscompany.com/ Chapter 11 Petition Date: July 29, 2004 Court: Southern District of Ohio (Columbus) Debtor's Counsel: Robert E. Bardwell, Jr., Esq. 995 South High Street Columbus, OH 43206 Tel: 614-445-6757 Fax: 614-224-4870 Total Assets: $682,798 Total Debts: $1,134,617 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ 1st Federal Savings Bank of Guaranty $74,000 Eastern Ohio Coshocton Lumber Trade debt $29,565 Apache Aggregate Trade debt $28,329 Carter Lumber Trade debt $27,049 CitiCapital Financial Deficiency balance $20,000 Corporation owed on lease Internal Revenue Service 2nd Qtr. 2004 $14,975 84 Lumber Company Trade debt $14,300 R & K Industrial Supply Trade debt $12,039 Federal Heating & Cooling Trade debt $11,549 Auer Hardware Trade debt $10,201 James Plumbing Trade debt $9,504 Tim Pickering Trade debt $9,500 Laser Innovations Trade debt $9,200 Insul-Serv. Inc. and David Trade debt $7,861 Carlock Frontier Supply Trade debt $7,251 Marsh Building Products Trade debt $6,514 Wilson Cabinet Company, Inc. Trade debt $6,447 D.J. & Woody's Trade debt $5,585 Verizon Wireless Utility Bill $5,436 Ohio Dept. of Job and Family 1st and 2nd Quarter $5,222 2004 charges ASARCO INC: Union Says Loss Due to Stripping & Reduced Output ------------------------------------------------------------- Asarco's second quarter results are further evidence that its problems are not with labor costs or productivity, but with stripping, equipment availability and production levels, union representatives said today in response to Grupo Mexico's second quarter earnings report (Mexico: GMEXICOB.MX). "The Company has acknowledged what we have known all along, that in order for Asarco to make money, it needs to increase its mining operations," said Terry Bonds, United Steelworkers Association (USWA) District 12 Director and the union's chief negotiator with Asarco. According to Grupo Mexico's second quarter earnings release, Asarco had an operating loss of $1.9 million during the second quarter of 2004, compared to a loss of $921,000 during the same period of 2003. Asarco's stripping activities at its Mission and Ray mines increased by 258% and 90%, respectively, during the quarter, resulting in an 11% reduction in the amount of copper ore moved at Mission and 22% reduction at Ray. Stripping is the process of removing waste material overlying ore in an open-pit to enable the ore to be exposed and removed. Grupo Mexico noted that it expected during the coming months that Asarco could "... achieve a sustainable breakeven point per pound of copper for the long term of roughly 70 cents." "How can Asarco lose money when copper prices are at an eight-year high? -- The answer can be found in the Company's failure to invest in plant and equipment so that it could take advantage of this extraordinary market," Mr. Bonds said. "It is time for Asarco and its ultimate parent, Grupo Mexico, to invest in these facilities and its skilled workforce, so that it can finally take advantage of the strong global demand for copper," he added. "I would hope that the Company will return to the bargaining table with the intent of reaching a fair labor agreement with its Unions that recognizes the contribution made by its hourly workforce, rather than continuing to insist on wage and benefit concessions," Mr. Bonds said. Despite the rise in copper prices, Asarco has demanded its Unions agree to cuts in wages, health care, overtime and vacation payments, reduced pension benefits, and dramatic increases in monthly employee health care premiums. On July 1, 2004, contracts covering approximately 750 hourly employees expired between Asarco and Unions at the Company's facilities in; Amarillo, Texas; Hayden, Arizona; Sahuarita, Arizona (Mission mine); Marana, Arizona (Silver Bell mine); and El Paso, Texas. Members of the United Steelworkers, International Brotherhood of Electrical Workers, Operating Engineers and Teamsters are working without a new labor agreement, under the terms and conditions of the expired agreements. The next bargaining session between the parties is scheduled for August 16th, in Phoenix, Arizona. Asarco is 100%-owned by AMC, a direct subsidiary of Grupo Mexico. The company's mining operations in the United States consist of three open-pit copper mines, Ray, Mission and Silver Bell in the state of Arizona. Asarco also operates a custom smelter in Hayden, Arizona, a refinery in Amarillo, Texas and two SX/EW plants. In 2003, Asarco produced 170,000 tons of copper and it expects output to be about 180,000 tons in 2004, (110,000 tons from copper contained in concentrate and 70,000 tons via the SX/EW process). This level of production is lower than prior years in which output was about 230,000-240,000 tons. Asarco has reduced production at its Mission and Ray mines due to the high cost of production above the average price of copper. In 2003, Asarco's cash cost of production was $0.85/lb. * * * As reported in the Troubled Company Reporter's February 10, 2004 edition, Fitch Ratings has upgraded the rating of Asarco Inc. to 'CCC' from 'C'. The rating applies to Asarco's notes due in 2013 and 2025. The Rating Outlook is Stable. This rating action reflects Fitch's belief that Asarco's credit profile is no longer one of imminent default, as indicated by our 'C' rating. In 2003, Asarco reduced its outstanding debt by about $600 million through the sale of its stake Southern Peru Copper Corporation and faces no significant maturities until 2013. Fitch's 'CCC' rating maintains that default is a real possibility and a company's capacity for meeting financial commitments is solely reliant upon sustained favorable business or economic conditions over the medium-term. In conjunction with the debt restructuring in April 2003 of Asarco's affiliate, Minera Mexico (formerly Grupo Minero Mexico), Asarco sold its 54.2% stake in SPCC for $765 million to its direct parent company, Americas Mining Corporation, a subsidiary of Grupo Mexico S.A. de C.V. The proceeds were used to pay off $550 million in overdue debt obligations (consisting of a $450 million bank facility due in November 2001 and a $100 million bond due in February 2003). For the sale of its stake in SPCC, Asarco received $500 million in cash, $223 million in notes payable from AMC, as well as $42 million in debt forgiveness of a loan from AMC. The $223 million in notes consists of: 1) a $123 million obligation of AMC to pay Asarco $8.8 million semiannually over seven years at a rate of 7%; and 2) a $100 million obligation of AMC to pay Asarco up to $12.5 million (based on copper prices) over eight years at a rate of 8%. The payments on this note were endorsed by Asarco to an environmental trust fund. Asarco now has total debt of about $440 million (consisting of $250 million of unsecured debt due 2013-2025 and $190 million in pollution control bonds due 2004-2033), and has no significant maturities until a $100 million note matures in 2013. Approximately $36 million of debt matures in 2004-2009. Fitch's 'CCC' rating of Asarco's debt obligations reflects the substantial uncertainly regarding the company's potential environmental lawsuits as well as its inability to generate significant cash flow due to its high cash cost of production. BIP INT'L: U.S. Trustee Schedules Creditors Meeting on August 4 --------------------------------------------------------------- The United States Trustee will convene a meeting of BIP International, Inc.'s creditors at 1:00 p.m., on August 4, 2004, in Room 243A at the United States Bankruptcy Court for the Southern District of New York, 300 Quarropas Street, White Plains, New York 10601-5008. 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 Nanuet, New York, BIP International, Inc., is an importer, exporter, wholesaler and general contractor for marine interior and joiner systems products. The Company filed for chapter 11 protection on July 8, 2004 (Bankr. S.D.N.Y. Case No. 04-23072). Harvey S. Barr, Esq., at Barr & Haas, LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $359,243 in total assets and $8,224,311 in total debts. The Debtor's Chapter 11 Reorganization Plan and Disclosure Statement are due on Nov. 5, 2004. BUCYRUS INT'L: S&P Raises B- Corporate Credit Rating to BB- ----------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on South Milwaukee, Wis.-based Bucyrus International Inc. to 'BB-' from 'B-' and removed all ratings from CreditWatch, where they were placed on April 12, 2004. The outlook is stable. "The upgrade is due to the completion of the company's IPO of common stock with net proceeds of approximately $130 million used to repay debt and the establishment of a new bank facility, resulting in a dramatically improved financial profile," said Standard & Poor's credit analyst John Sico. At the same time, Standard & Poor's assigned its 'BB-' senior secured bank loan rating and a recovery rating of '3' to Bucyrus International's $150 million senior secured credit facilities due in six years. The recovery rating reflects the expectation of meaningful recovery of principal (50%-80%) in the event of a default. Standard & Poor's also withdrew its ratings on the $150 million 9.75% senior unsecured notes due in 2007, which were repaid with the proceeds from the transactions. Bucyrus International manufactures surface-mining equipment. It is now a public company but remains principally owned by unrated American Industrial Partners (AIP). Following the IPO, AIP owns slightly more than half of the outstanding stock. Financial flexibility has been enhanced and credit protection measures improved significantly as a result of the IPO. Bucyrus used the proceeds from the offering and the new senior secured credit facility to retire its outstanding senior unsecured notes and existing bank debt. These transactions, dramatically improve the capital structure. The $150 million secured credit facilities are secured by first- priority perfected security interests in all the assets of the company, a first-perfected pledge of the stock of its direct and indirect domestic subsidiaries, and a first-priority perfected pledge of 65% of the stock of its direct and indirect foreign subsidiaries, except Bucyrus Canada. The facilities consist of a $50 million five-year senior secured revolving credit facility that is governed by a borrowing base that includes up to 85% of eligible accounts receivable, up to 50% of eligible raw material, and 35% of eligible work-in-process inventory. There is also a $100 million six-year senior secured term loan that amortizes quarterly, amounting to $5 million-$7.5 million annually. CANBRAS COMMS: Declares Initial Distribution of Sale Proceeds ------------------------------------------------------------- Canbras Communications Corp. (NEX.CBC.H) has declared an initial distribution in the amount of $11.6 million in the aggregate to common shareholders of record as of August 11, 2004, which will be payable as of August 23, 2004. This distribution represents the initial distribution to shareholders of the proceeds received by Canbras upon the sale of all of its operations, which Sale Transaction was concluded on December 24, 2003. Canbras estimates that the final distribution, which will be made in one or more instalments, will aggregate approximately $16.5 million, bringing the total amount of distributions (including the initial distribution) of proceeds from the sale of all of its operations to $28.1 million. The final distribution will be made in one or more instalments after the receipt of the balance of the purchase price payable pursuant to the one-year note issued to Canbras in the Sale Transaction and due on December 24, 2004, the satisfaction of all remaining liabilities of the Corporation and the receipt by the Corporation of up-dated tax clearance certificates. Estimated remaining total proceeds to be distributed to shareholders of $16.5 million reflect Canbras' net assets as at June 30, 2004 of $29.3 million less the initial distribution to shareholders of $11.6 million and estimated net costs of wind-up of $1.2 million and assume no unforeseen claims are asserted against the Corporation. Second Quarter Results As the Corporation completed the Sale Transaction on December 24, 2003, the Corporation's unaudited consolidated statements of earnings for the second quarter of 2004 reflect only the winding up activities of the Corporation. As at June 30, 2004, Canbras' shareholders' equity was $29.3 million, down from $29.4 million at March 31, 2004. This decrease reflects the second quarter loss of $80 thousand comprised of $430 thousand of administrative expenses offset by accrued interest income of $351 thousand. Canbras' cash and cash equivalents and the Note (including accrued interest) as at June 30, 2004 were $19.0 million and $11.0 million respectively. Cash and cash equivalents held by the Corporation pending shareholder distributions in the amount of $19.0 million at June 30, 2004, is being invested in high-grade money market instruments. Accrued liabilities of $854 thousand at the end of the second quarter of 2004 represent mainly the provision for estimated remaining costs of completing the Sale Transaction and were up $100 thousand from March 31, 2004 mainly as a result of the accrual of professional fees. Following the initial distribution to shareholders of $11.6 million, the estimated remaining future net assets of Canbras at December 31, 2005 are $16.5 million. The differences between shareholders equity on the consolidated balance sheet at June 30, 2004 and the estimated remaining future net assets at December 31, 2005 is the deduction of the initial distribution to shareholders in the amount of $11.6 million and future net costs from July 1, 2004 to December 31, 2005. Such future net costs are estimated at approximately $1.2 million comprised of wind-up costs of approximately $2.0 million and interest income of approximately $0.8 million. These future net costs exclude any amounts that may be required to settle unforeseen claims against the Corporation including unforeseen indemnification claims which might be asserted by the purchaser under the Sale Transaction. The loss for the second quarter was $80 thousand. Canbras, through the Canbras Group of companies, is a leading broadband communications services provider in Brazil, offering cable television, high speed Internet access and data transmission services in Greater Sao Paulo and surrounding areas and the State of Paran . Canbras Communications Corp.'s common shares are listed on the Toronto Stock Exchange under the trading symbol CBC. CATHOLIC CHURCH: Section 341(a) Meeting Reset to August 6 --------------------------------------------------------- The Assistant U.S. Trustee for Region 18, Pamela J. Griffith, relates that the Section 341(a) meeting of creditors of the Archdiocese of Portland in Oregon is rescheduled to 10:00 a.m. on Friday, August 6, 2004, at the United States District Court, 1000 SW 3rd Avenue, 16th Floor Courtroom, in Portland, Oregon. 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. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY ALUMINUM: Commences 11-3/4% Sr. Secured Debt Offering ------------------------------------------------------------- Century Aluminum Company (Nasdaq:CENX) has commenced a cash tender offer for any and all of its outstanding 11-3/4% Senior Secured First Mortgage Notes Due 2008 (CUSIP No. 156431AC2). Century is also soliciting consents to proposed amendments to the indenture governing the Notes that would eliminate substantially all of the restrictive covenants and certain default provisions in the indenture. The tender offer will expire at 10:00 a.m., New York City time, on August 26, 2004, unless extended or terminated. The tender offer and consent solicitation are being made solely pursuant to an Offer to Purchase and Consent Solicitation Statement, dated July 29, 2004, and related Letter of Transmittal, which include a more comprehensive description of the terms and conditions thereof. The principal purpose of the tender offer and consent solicitation is to refinance Century's outstanding Notes with debt bearing a lower interest rate, thereby reducing the Company's annual interest expense. The Company intends to fund the tender offer and consent solicitation and any expenses incurred in connection therewith with proceeds from planned private placements of new debt. The tender offer and consent solicitation are being made in conjunction with, and are conditioned upon, the consummation of such private placements. The tender offer is also conditioned upon the receipt of consents from the holders of at least a majority of the outstanding principal amount of such Notes to amend the indenture governing the Notes and certain general conditions. Under the terms of the tender offer, the purchase price for each $1,000.00 principal amount of Notes validly tendered and accepted for purchase by Century will be determined on August 12, 2004 based on the present value of the Notes as of the payment date, calculated in accordance with standard market practice, assuming each $1,000.00 principal amount of the Notes would be paid at a price of $1,058.75 on April 15, 2005, the earliest redemption date of the Notes, discounted at a rate equal to 50 basis points over the yield on the 1.625% U.S. Treasury Note due April 30, 2005, minus a consent payment of $20.00 per $1,000 of principal amount of Notes. Holders who tender their Notes prior to 5:00 p.m., New York City time, on August 6, 2004, unless extended will be entitled to receive the consent payment. Holders who tender their Notes after the Consent Date will not receive the consent payment. The settlement date is currently expected to be August 27, 2004. Holders who properly tender also will be paid accrued and unpaid interest, if any, up to, but not including, the settlement date. Holders who desire to tender their Notes must consent to the proposed amendments and may not deliver a consent without tendering their Notes. Any Notes tendered before the Consent Date may be withdrawn at any time on or prior to the Consent Date, but not thereafter, except as may be required by law. Any Notes tendered after the Consent Date may not be withdrawn, except as may be required by law. Credit Suisse First Boston LLC is the exclusive Dealer Manager and Solicitation Agent for the tender offer and the consent solicitation. Questions regarding the tender offer and consent solicitation may be directed to Credit Suisse First Boston's Liability Management Group, at 800-820-1653 (toll-free) or 212-538-0652 (collect). Requests for documents may be directed to Morrow & Co., Inc., the Information Agent, by telephone at 800-607-0088 (toll-free), 800-662-5200 (toll-free), or 212-754-8000 (collect), or by e-mail at cenx.info@morrowco.com This press release is not an offer to purchase, a solicitation of an offer to sell or a solicitation of consent with respect to any securities, including the Notes. The securities that may be offered in connection with Century's refinancing plan described above will be offered pursuant to an exemption from registration under the Securities Act of 1933. Such securities will not be registered under the Securities Act and, accordingly, may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from the registration requirements. About Century Century is a leading U.S.-based primary aluminum producer with 615,000 metric-tons-per-year of primary aluminum production capacity. Century owns and operates a 244,000-mtpy primary aluminum reduction facility at Hawesville, KY, a 170,000-mtpy facility in Ravenswood, WV and a 90,000-mtpy facility in Grundartangi, Iceland. Century also owns a 49.67-percent interest in a 222,000-mtpy facility in Mt. Holly, SC. Alcoa Inc. owns the remainder and is the operator of the facility. Century's corporate offices are located in Monterey, CA. * * * As reported in the Troubled Company Reporter's April 27, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Century Aluminum Co. to stable from negative, and affirmed its 'BB-' corporate credit, senior secured bank loan and senior secured notes ratings. Total debt at Monterey, California-based Century was about $345 million at Dec. 31, 2003. "The outlook revision reflects an expected improvement in Century's financial performance as a result of higher aluminum prices and better industry fundamentals," said Standard & Poor's credit analyst Paul Vastola. The ratings on Century reflect its exposure to the cyclical aluminum industry, its high cost position as a primary aluminum producer, limited product diversity, and its somewhat aggressive financial profile. These factors offset currently favorable conditions in the aluminum industry, a relatively low free cash flow break-even aluminum price and its fair liquidity position. CLARK CRANE LLC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Clark Crane, LLC 500 Industrial Park, Boulevard Holt, Florida 32564 Bankruptcy Case No.: 04-31960 Type of Business: The Debtor provides construction services. See http://www.clarkcrane.com/ Chapter 11 Petition Date: July 30, 2004 Court: Northern District of Florida (Pensacola) Debtor's Counsel: Edwin Paul Keiffer, Esq. Hance Scarbrough Wright Ginsbert et al. 1401 Elm Street, Suite 4250 Dallas, TX 75201 Tel: 214-651-6517 Fax: 214-744-2615 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Orix Financial Services I Load Deficiency $1,000,000 P.O. Box 1679 Pittsburgh, PA 15230-1679 Portfolio Advisors II Loan Deficiency $1,200,000 NW 5067 P.O. Box 1450 Minneapolis, MN 55484 GE Capital Corp. Loan Deficiency $1,000,000 P.O. Box 747016 Pittsburgh, PA 15274-7016 Southtrust Bank Loan Deficiency $1,000,000 P.O. Box 830716 Birmingham, AL 35283-0716 De Lage Landen Financial Loan Deficiency $800,000 P.O. Box 41601 Philadelphia, PA 19101-1601 Terex Corporation Trade Debt $569,082 12460 Collections Center Dr. Chicago, IL 80693 The CIT Group Loan Deficiency $500,000 Key Equipment Finance(CLS) Trade Debt $102,655 Bauer Maschinen Loan Deficiency $83,508 All Crane Rental of GA Trade Debt $81,695 AmSouth Leasing Corp. Loan Deficiency $54,000 Bankcard Center Trade Debt $52,675 Reedrill Trade Debt $45,000 Terex Cranes Waverly Trade Debt $39,306 American Crane Corp. Trade Debt $33,069 First Insurance Trade Debt $30,797 Conmaco Rector Trade Debt $28,907 Essex Crane Rental Corp. Trade Debt $26,258 First Specialty Insurance Trade Debt $25,000 CTC Resources Trade Debt $22,516 CONTIGROUP COS: S&P Affirms BB- Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and other ratings on ContiGroup Cos. Inc. and removed them from CreditWatch where they were placed on Dec. 24, 2003. The outlook is positive. About $82.5 million of rated debt of New York, N.Y.-based ContiGroup is affected. "The rating action follows the completion of Standard & Poor's review of the meat processing industry following the announcement on Dec. 23, 2003, of a case of bovine spongiform encephalopathy (BSE), otherwise known as mad cow disease. The impact, to date, on ContiGroup has been minimal in terms of its operating and financial performance as well as the stability in its credit protection measures," said Standard & Poor's credit analyst Jayne M. Ross. "ContiGroup, as the second leading cattle feedlot in the U.S., has benefited from the import ban on Canadian cattle and from strong consumer demand. Although the first fiscal quarter of 2005 (ended June 30, 2004) is a seasonally weak period for fed cattle, this should be offset by improved profitability in the company's poultry operations, which have rebounded from a year ago despite the avian flu outbreaks in the industry. Standard & Poor's expects that ContiGroup's overall operating performance and its related financial performance will remain appropriate for the rating." The ratings on privately held ContiGroup reflect its position as an integrated agribusiness firm operating in the competitive, highly variable, and commodity-based meat production and processing industries. The company has major positions in beef, poultry, and hog production and processing in the U.S. ContiGroup also has positions in feed and flour milling internationally. DB COMPANIES: Committee Looks to KPMG for Financial Advice ---------------------------------------------------------- The Official Unsecured Creditors Committee appointed in DB Companies, Inc., and its debtor-affiliates' chapter 11 cases, asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain and employ KPMG LLP as its financial advisors. The Committee expects KPMG to: (i) assist in the review of reports or filings as required by the Bankruptcy Court or the Office of the United States Trustee, including, but not limited to, schedules of assets and liabilities, statement of financial affairs, and monthly operating reports; (ii) review the Debtor's financial information, including, but not limited to, analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Bankruptcy Court approval is sought; (iii) review and analyze the reporting regarding cash collateral and any debtor-in-possession financing arrangements and budgets; (iv) evaluate potential employee retention and severance plans; (v) assist with identifying and implementing potential cost containment opportunities; (vi) assist with identifying and implementing asset redeployment opportunities; (vii) analyze assumption and rejection issues regarding executory contracts and leases; (viii) review and analyze the Debtor's proposed business plans and the business and financial condition of the Debtor generally; (ix) assist in evaluating reorganization strategy and alternatives available to the creditors; (x) review and critique the Debtor's financial projections and assumptions; (xi) prepare enterprise, asset and liquidation valuations; (xii) assist in preparing documents necessary for confirmation; (xiii) advice and assist the Committee in negotiations and meetings with the Debtor and the bank lenders; (xiv) advice and assist on the tax consequences of proposed plans of reorganization; (xv) assist with the claims resolution procedures, including, but not limited to, analyses of creditors' claims by type and entity and maintenance of a claims database; (xvi) provide litigation consulting services and expert witness testimony regarding confirmation issues, avoidance actions or other matters; and (xvii) perform other functions requested by the Committee or its counsel to assist the Committee in this Chapter 11 case. KPMG partner Stephen B. Darr reports that the firm's current customary billing rates range from: Designation Billing Rate ----------- ------------ Partners $590 to $650 per hour Directors $480 to $570 per hour Managers $390 to $450 per hour Senior Associates $300 to $360 per hour Associates $190 to $270 per hour Paraprofessionals $140 per hour Headquartered in Pawtucket, Rhode Island, DB Companies, Inc. -- http://www.dbmarts.com/-- operates and franchises a regional Chain of DB Mart convenience stores in Connecticut, Massachusetts, Rhode Island, and the Hudson Valley region of New York. The Company filed for chapter 11 protection on June 2, 2004 (Bankr. Del. Case No. 04-11618). William E. Chipman Jr., Esq., at Greenberg Traurig, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed estimated assets of over $50 million and debts of approximately $65 million. DENALI CAPITAL: S&P Puts Prelim Lower-B Rating on Class D Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Denali Capital CLO IV Ltd./ Denali Capital CLO IV (Delaware) LLC's $368 million floating-rate notes due 2016 (see list). The preliminary ratings are based on information as of July 29, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The credit enhancement provided to each class of notes through the subordination of cash flows to more junior classes and preferred shares; -- The transaction's cash flow structure, which has been subjected to various stresses requested by Standard & Poor's; -- The experience of the portfolio manager; and -- The legal structure of the transaction, including the bankruptcy remoteness of the issuer. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/Select Credit Ratings, then find the article under Presale Credit Reports. Preliminary Ratings Assigned Denali Capital CLO IV Ltd./Denali Capital CLO IV (Delaware) LLC Class Rating Amount (mil. $) A AAA 312.0 B A 26.0 C BBB 22.0 D BB 8.0 E N.R. 32.0 N.R.-Not rated. DOMAN INDUSTRIES: S&P Withdraws D Ratings After Debt Restructuring ------------------------------------------------------------------ Standard & Poor's Ratings Services has withdrawn its long-term corporate credit, senior secured debt, and senior unsecured debt ratings on Duncan, B.C.-based pulp and lumber producer Doman Industries Ltd., following the completion of the company's restructuring under the Companies' Creditors Arrangement Act (CCAA). Under the court approved Plan of Compromise and Arrangement (PCA), Western Forest Products Inc. becomes the successor business to Doman. About 25.6 million common shares of Western Forest and US$221 million of secured bonds of Western Forest were distributed under the Plan to former creditors of Doman and certain standby purchasers. The ratings on Doman had been lowered to 'D' on Nov. 8, 2002, following the company's filing for protection under the CCAA. DONNELLEY CORP: S&P Affirms Subsidiary's B+ Sub. Debt Rating ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB' corporate credit ratings on R.H. Donnelley Corp. (RHD) and its operating subsidiary, R.H. Donnelley Inc. (RHDI), as well as RHDI's 'B+' subordinated debt rating. In addition, Standard & Poor's placed its 'B+' senior unsecured debt rating on RHDI on CreditWatch with positive implications. The outlook is stable. The ratings affirmations follow RHD's agreement to acquire SBC Communications Inc.'s directory publishing business in Illinois and northwest Indiana, including SBC's 50% interest in the DonTech partnership, for $1.42 billion in cash or about 8.3x acquired 2004 EBITDA. The purchase price is after the settlement of a $30 million liquidation preference related to DonTech, which is an existing partnership between SBC and RHD for local sales into the Illinois and northwest Indiana SBC yellow pages. The acquisition will be financed with an amendment and increase in RHD's existing credit facilities. The transaction is expected to close in the 2004 third quarter, subject to regulatory approval and certain closing conditions. RHD is expected to have about $3.4 billion of debt outstanding following the acquisition. The CreditWatch listing of RHDI's $325 million 8.875% senior notes due 2010 reflects the plan that this debt will be secured ratably with the senior secured credit facilities in connection with the transaction. This rating will be raised to 'BB' and removed from CreditWatch when the SBC acquisition is completed. DOW CORNING: Reports 47% Net Income Increase in 2nd Quarter '04 --------------------------------------------------------------- Dow Corning Corp. reported consolidated adjusted net income of $79.8 million for the second quarter of 2004, a 47 percent increase over $54.2 million reported in same quarter of 2003. First half 2004 adjusted net income was $132.0 million, 47 percent higher than the $90.1 million reported in the first half of 2003. Adjusted net income excludes unusual items consisting of restructuring costs and a cumulative adjustment to Chapter 11 interest expense, both in the second quarter of 2004. Second quarter 2004 sales were $851.9 million, up 20 percent compared to sales of $712.6 million in last year's second quarter. First half 2004 sales were $1.67 billion, up 22 percent over sales of $1.37 billion in the same period last year. Including unusual items, Dow Corning reported consolidated net income of $35.7 million for the second quarter of 2004 and $87.9 million for the first half of 2004. "Dow Corning has emerged from Chapter 11 with a continued focus on meeting the needs of our customers in every industry we serve, in every geography," said Dow Corning's Chief Financial Officer, J. Donald Sheets. Dow Corning -- http://www.dowcorning.com/-- provides performance- enhancing solutions to serve the diverse needs of more than 25,000 customers worldwide. A global leader in silicon-based technology and innovation, offering more than 7,000 products and services. Dow Corning is equally owned by The Dow Chemical Company (NYSE: DOW) and Corning, Incorporated (NYSE: GLW). More than half of Dow Corning's annual sales are outside the United States. The Company filed for chapter 11 protection on May 15, 1995 (Bankr. E.D. Mich. Case No. 95-20512) to resolve silicone implant-related tort liability. The Company owed its commercial creditors more than $1 billion at that time. A consensual Joint Plan of Reorganization, amended on February 4, 1999, offering to pay commercial creditors in full with post-petition interest, establish a multi-billion- dollar settlement trust for tort claims, and leave Dow Corning's shareholders unimpaired, took effect on June 30, 2004. EMERGING VISION: Dissident Director Launches Proxy Fight -------------------------------------------------------- Emerging Vision, Inc., has advised its stockholders, through a detailed proxy statement for the Company's 2004 Annual Meeting of Shareholders, that dissident director Benito Fernandez, through his controlled company Horizons Investors Corp., has filed preliminary proxy materials with the SEC with the intention of launching a hostile and costly proxy contest to take control of the Board and the Company. ENRON CORP: Wants to Settle with El Paso Entities to End Disputes ----------------------------------------------------------------- Six Enron Entities -- Enron North America Corporation, Enron Power Marketing, Inc., Enron Gas Liquids, Inc., Enron Broadband Services, LP, Enron Energy Services, Inc. and Enron Liquid Fuels, Inc. -- were parties to various physical and financial transactions with respect to, among other things, natural gas, with eight El Paso Entities: * El Paso Merchant Energy, LP, successor-in-interest to El Paso Merchant Energy-Gas, LP; * El Paso Merchant Energy-Petroleum Company, successor-in- interest to Coastal States Trading, Inc.; * CIG Merchant Company, successor-in-interest to Coastal Gas Marketing Company; * El Paso Industrial Energy, LP; * El Paso Global Networks Company; * El Paso Merchant Energy Canada, Inc.; * El Paso Networks, LP, successor-in-interest to El Paso Networks, LC; and * El Paso Tankships USA Company. As credit support for the Contracts, Enron Corporation and El Paso Corporation issued guaranty agreements. Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New York, relates that on March 6, 2003, EPMI filed a complaint against EPME related to a termination valuation dispute under one of the Contracts. On November 26, 2003, the Debtors and Bear Stearns & Co., Inc., as successor-in-interest to certain claims held by EPME, entered into a Stipulation Tolling Applicable Statutes of Limitations with respect to Claim against Bear Stearns. The Stipulation was amended on March 30, 2004 to toll the statute of limitations for any claims and causes of actions under or through Sections 544, 547, 548 and 550 of the Bankruptcy Code as the Causes of Action pertain to Proof of Claim No. 14042 filed against Enron, based on a January 10, 2000 Guaranty. Mr. Smith notes that ENA previously demanded that EPMEPC tender a certain sum to ENA in final settlement of any and all amounts due and owing between the entities arising under the relevant Contracts between ENA and EPMEPC. EPMEPC refused to pay that amount to ENA based on arguments it believes are available under the Contracts and applicable law, and in equity. The Enron Entities and the El Paso Entities, and Bear Stearns with respect to its Claim, have reached an agreement to amicably settle all matters between them relating to the Contracts, the Adversary Proceeding, the Stipulation, the Causes of Action and the EPMEPC Dispute. The parties agree that: -- the Guaranty will be revoked to the extent it supports the obligations under the Contracts; -- the El Paso Entities will pay the Enron Entities a payment in connection with the Dispute; -- the parties will release each other from all claims, obligations and liabilities related to the Dispute; -- EPMI will dismiss the Adversary Proceeding; -- Claim Nos. 14039, 14040, 14041, 14055, 6057 and 14044, together with the $42,500,000 interest in Claim No. 14057 retained by EPMI after the assignment to Bear Stearns, will be deemed irrevocably withdrawn with prejudice; -- with respect to Claim No. 14056, Bear Stearns will have an allowed claim against ENA for $24,500,000, and the balance of that Claim is disallowed; -- with respect to Claim No. 14057, Bear Stearns will have an allowed $132,500,000 claim against ENA, and the balance will be disallowed; -- with respect to Claim No. 14042, Bear Stearns will have an allowed $24,500,000 claim against Enron, and the balance is disallowed; -- with respect to Claim No. 14043, Bear Stearns will have an allowed $65,000,000 claim against Enron; and -- each liability the Debtors scheduled in favor of the El Paso Entities will be deemed irrevocably withdrawn with prejudice. Accordingly, pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure and the Safe Harbor Agreements Termination Protocol, the Debtors ask the United States Bankruptcy Court for the Southern District of New York to approve the Settlement Agreement with El Paso. Mr. Smith contends that the Settlement Agreement is fair and reasonable because: (a) it resolves any disagreement as to the Disputes; (b) it allows the Enron Entities to capture value for their estates and creditors; and (c) it enables the Enron Entities and the El Paso Entities to avoid potential future disputes and litigation regarding the Contracts. (Enron Bankruptcy News, Issue No. 119; Bankruptcy Creditors' Service, Inc., 215/945- 7000) FEDERAL-MOGUL: Settles Prior's $6.3 Asbestos PI Claim for $918,000 ------------------------------------------------------------------ Renee M. Prior, a Federal-Mogul Corporation employee, who -- for a substantial length of time -- used, handled or otherwise had been exposed to asbestos products. As a direct and proximate result of the conduct of the Debtors and certain other defendants, Ms. Prior suffered severe and permanent injury, including asbestosis, other lung damage and cancer. On June 10, 2001, Ms. Prior filed a complaint for damages in the Superior Court of California, County of San Francisco, citing negligence, strict liability, enterprise liability, false representation, and punitive damages against the Debtors. The case was styled as M. Renee Prior v. Raybestos-Manhattan, Inc., et al., Case No. 313504. A jury awarded Ms. Prior $6,345,000 in damages, of which $1,345,000 is for economic damages and $5,000,000 is for non- economic damages. The jury found these defendants liable to a certain extent for Ms. Prior's injury, damage, loss or harm: Defendants Liability ---------- --------- Allied Signal, Inc. 7% American Suzuki Motor Corporation, Inc. 1% Moog Automotive, Inc., as successor-in-interest to Wagner Electric Corporation 14% Volkswagen of America, Inc. 10% Others 68% --------- 100% Ms. Prior disclosed to United States Bankruptcy Court for the District of Delaware that she has a prior settlement arrangement with the defendants regarding her present, past and potential future causes of action aggregating to $3,685,892. According to Ms. Prior, settlement negotiations were still ongoing with five of the originally named defendants -- AcandS, Inc., Asbestos Corporation, Ltd., Combustion Engineering Company, The Flintkote Company and Flintkote Mines, Ltd., and Garlock, Inc. The California Superior Court ruled that Allied Signal, American Suzuki, Moog Automotive, and Volkswagen be: (a) jointly and severally liable for $837,324, plus interest at the rate of 10% per annum; and (b) severally liable for these amounts at 10% interest rate per annum: Defendant Amount --------- ------- Allied Signal $350,000 American Suzuki 50,000 Moog Automotive 700,000 Volkswagen 500,000 Moog Automotive filed an appeal to the Appeals Division of the California Superior Court regarding the state court decision. The briefing on the appeal did not commence when the Debtors filed for bankruptcy on October 1, 2001. Moog Automotive posted an appeal bond for $1,365,995 issued by SAFECO Insurance Company of America, as surety. The Bond is secured by an irrevocable standby letter of credit issued by JP Morgan Chase Bank. Robert Jacobs, Esq., at Jacobs & Crumplar, P.A., in Wilmington, Delaware, asserts that cause exists to permit Ms. Prior to: (a) continue to prosecute the appeal before the California Superior Court against the Debtors; (b) recover damages, to the extent possible, from policies of insurance insuring the pending claims; (c) levy on the appeal bond posted by the Debtors; and (d) file a claim for unpaid balance in the bankruptcy proceeding in the event there is insufficient insurance. To resolve their disputes, the Debtors and Ms. Prior entered into a stipulation which the Court approved. The Stipulation provides that: (a) The Debtors will withdraw the pending appeal of the California Judgment in the California Superior Court, Appeals Division; (b) The automatic stay is modified solely for the limited purposes of allowing: (1) Ms. Prior to collect the California Judgment from the Bond against SAFECO Insurance; and (2) SAFECO Insurance to draw on the letter of credit in connection with any payment concerning the Bond; (c) SAFECO Insurance will wire transfer $918,000 to Ms. Prior in accordance with Ms. Prior's counsel's instructions; and (d) The $918,000 payment will be in full satisfaction of: (1) the California Judgment and all other claims that Ms. Prior has or may have against any of the Debtors or their estates; and (2) the Surety's obligations in connection with the Bond. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING COMPANIES: Asks Court to Approve Local 653 Settlement Pact ------------------------------------------------------------------ Christopher J. Lhulier, Esq., at Pachulski, Stand, Ziehl, Young, Jones & Weintraub, PC, in Wilmington, Delaware, relates that United Food and Commercial Workers, Local 653 represents certain former employees who were employed at the Debtors' various retail operations throughout Minnesota. Prior to the Petition Date, Fleming and Local 653 entered into various collective bargaining agreements that established the rights and obligations of the Parties with respect to the terms of employment of the Former Employees who are members of a bargaining unit of Local 653. Mr. Lhulier notes that after the Petition Date, the Debtors sold or closed their operations in 23 locations in Minnesota. At the time of the closing or sale, the Former Employees became either unemployed or employees of the purchaser of that Location. Local 653, on behalf of the Former Employees, filed proofs of claim against the Debtors totaling $2,683,496, comprising of: -- $333,301 in administrative claims; -- $869,142 in priority claims; and -- $1,491,053 in general unsecured non-priority claims. The Local 653 Claims are based on alleged breaches of the CBAs for failure to pay vacation and holiday pay. On the other hand, Mr. Lhulier notes that some of the Former Employees filed 65 Proofs of Claim totaling $111,920. The Former Employees allege that the Debtors owed them wages, holiday pay, sick day pay, severance pay, vacation pay and unpaid pension and health and welfare benefits. The breakdown of the Former Employees' Claims: * $51,975 filed as administrative claims; * $52,557 filed as priority claims; and * $7,388 filed as general unsecured non-priority claims. Fleming Companies, Inc. and its debtor-affiliates and subsidiaries dispute the factual and legal bases of the Local 653 Claims and the Former Employee Claims because: (a) many of the Former Employee Claims are redundant of the Local 653 Claims and, the Local 653 Claims are redundant of one another; (b) the Former Employee Claims and the Local 653 Claims generally overstate the amounts due; and (c) the Former Employee Claims and the Local 653 Claims overstate the administrative and other priority portions that should be allowed if the Former Employee Claims were allocated properly pursuant to a proration formula. The Parties want to settle the Local 653 Claims and the Former Employee Claims through a Settlement Agreement. The primary terms of the Settlement Agreement are: (a) The Debtors agree to pay $433,518 in cash to the Former Employees and Local 653; (b) Local 653 agrees, on behalf of itself and the Former Employees, to accept the Debtors' payment in full and complete satisfaction of the Administrative Portions and Priority Portions of the Former Employee Claims; (c) On the Settlement Effective Date, the Debtors will distribute to each Former Employee his or her share of the $433,518 cash; (d) The Debtors will allow as general unsecured non-priority claims the General Unsecured Portions of the Local 653 Clams and the Former Employee Claims, which aggregate to $1,617,920 in complete and full satisfaction of the General Unsecured Portions of the Settled Claims; (e) The Debtors agree to release Local 653 from all claims and causes of action arising out or related to the CBAs, except that any avoidance actions arising under Chapter 5 of the Bankruptcy Code and any retained cause of action set forth in Article XIII of the Plan will not be released; (f) Local 653 will release the Debtors from any and all further liability arising out of or related to the CBAs except that Local 653 is not releasing any workers compensation claims or Civil Rights Claims; and (g) The Debtors will create a $10,000 reserve fund that will be utilized according to the terms of the Settlement Agreement in the event it is determined that the Administrative Portions or the Priority Portion of the Former Employees' settlement payment amounts have been undercalculated to pay the difference to the Former Employees. Mr. Lhulier tells the United States Bankruptcy Court for the District of Delaware that the Settlement Agreement avoids further litigation regarding, and fully resolves, the Local 653 Claims and the Former Employee Claims. In addition, the Settlement Agreement reflects a reasoned compromise of all differences between the parties' calculation of due amount. If approved, the Settlement Agreement allows the Debtors to settle claims in excess of $2,700,000 for $433,518 in cash and an unsecured claim for $1,600,000, which will be satisfied in stock. 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. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOSTER WHEELER: Extends Sr. Debt Exchange Offer to August 30 ------------------------------------------------------------ Foster Wheeler Ltd. (OTCBB: FWLRF) extended, until 5:00 p.m. New York City time on Monday, August 30, 2004, its offer to exchange: (1) its Common Shares and its Series B Convertible Preferred Shares for any and all outstanding 9.00% Preferred Securities, Series I issued by FW Preferred Capital Trust I (liquidation amount $25 per trust security) and guaranteed by Foster Wheeler Ltd. and Foster Wheeler LLC, including accrued dividends; (2) its Common Shares and Preferred Shares for any and all outstanding 6.50% Convertible Subordinated Notes due 2007 issued by Foster Wheeler Ltd. and guaranteed by Foster Wheeler LLC; (3) its Common Shares and Preferred Shares for any and all outstanding Series 1999 C Bonds and Series 1999 D Bonds (as defined in the Second Amended and Restated Mortgage, Security Agreement, and Indenture of Trust dated as of October 15, 1999 from Village of Robbins, Cook County, Illinois, and to SunTrust Bank, Central Florida, National Association, as Trustee); and (4) its Common Shares and Preferred Shares and up to $150,000,000 of Fixed Rate Senior Secured Notes due 2011 of Foster Wheeler LLC guaranteed by Foster Wheeler Ltd. and certain Subsidiary Guarantors for any and all outstanding 6.75% Senior Notes due 2005 of Foster Wheeler LLC guaranteed by Foster Wheeler Ltd. and certain Subsidiary Guarantors; and solicitation of consents to proposed amendments to: (x) the indenture relating to the 9.00% Junior Subordinated Deferrable Interest Debentures, Series I of Foster Wheeler LLC, (y) the indenture relating to the 6.50% Convertible Subordinated Notes due 2007 and (z) the indenture relating to the 6.75% Notes due 2005. As of the close of business on July 29, 2004, holders have tendered: Security Amount Tendered -------- --------------- 9.00% Preferred Securities $18,797,975 6.50% Convertible Subordinated Notes $838,000 Robbins Series C Bonds due 2024 $6,268,000 Robbins Series C Bonds due 2009 $45,000 Robbins Series D Bonds $91,000 6.75% Senior Notes $12,585,000 As announced on June 30, 2004, Foster Wheeler has modified the terms of the exchange offer. The modified terms and conditions of the exchange offer are set forth in Foster Wheeler's registration statements on Form S-4 (File Nos. 333-107054 and 333-117244) filed on July 23, 2004. Today the amended exchange offer was declared effective by the Securities and Exchange Commission, and revised offering materials will be distributed as soon as practicable. The dealer manager for the exchange offer and consent solicitation is: Rothschild Inc. 1251 Avenue of the Americas, 51st Floor New York, New York 10020 Telephone (212) 403-3784 The exchange agent for the exchange offer is the Bank of New York, London Branch. The foregoing reference to the proposed registered exchange offer and any other related transactions shall not constitute an offer to buy or exchange securities or constitute the solicitation of an offer to sell or exchange any securities in Foster Wheeler Ltd. or any of its subsidiaries. Investors and security holders are urged to read the following documents filed with the SEC, as amended from time to time, relating to the proposed exchange offer because they contain important information: (1) the registration statements on Form S-4 (File Nos. 333-107054 and 333-117244) and (2) the Schedule TO (File No. 005-79124). These and any other documents relating to the proposed exchange offer, when they are filed with the SEC, may be obtained free at the SEC's Web site at http://www.sec.gov/ You may also obtain these documents for free (when available) from Foster Wheeler by directing your request to: John A. Doyle Foster Wheeler Inc. Perryville Corporate Park Clinton, NJ 08809-4000 Telephone (908) 730-4270 john_doyle@fwc.com About Foster Wheeler Foster Wheeler Ltd. -- whose December 26, 2003 balance sheet shows a total shareholders' deficit of $872,440,000 -- is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, oil and gas, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, New Jersey, USA. For more information about Foster Wheeler, visit http://www.fwc.com/ FRESH CHOICE: U.S. Trustee to Meet with Creditors on August 11 -------------------------------------------------------------- The United States Trustee will convene a meeting of Fresh Choice's creditors at 11:00 a.m., on August 11, 2004, at the U.S. Federal Building, 280 S. 1st Street, Number 130, San Jose, California 95113. 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 Morgan Hill, California, Fresh Choice -- http://www.freshchoice.com/-- owns and operates a chain of more than 40 salad bar eateries, mostly located in California. The Company filed for chapter 11 protection on July 12, 2004 (Bankr. N.D. Calif. Case No. 04-54318). Debra I. Grassgreen, Esq., at Pachulski, Stang, Ziehl, Young and Jones represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $29,651,000 in total assets and $14,348,000 in total debts. The Debtor's Chapter 11 Plan and Disclosure Statement are due on November 9, 2004. FT WILLIAMS CO: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: F.T. Williams Company Incorporated 9500 Statesville Road Charlotte, North Carolina 29269 Bankruptcy Case No.: 04-32623 Type of Business: The Debtor is a general contractor. See http://www.ftwilliams.com/ Chapter 11 Petition Date: July 27, 2004 Court: Western District of North Carolina (Charlotte) Judge: J. Craig Whitley Debtor's Counsels: Kevin Michael Profit, Esq. Travis W. Moon, Esq. Hamilton Gaskins Fay and Moon, PLLC 2020 Charlotte Plaza 201 South College Street Charlotte, NC 28244-2020 Tel: 704-344-1117 Fax: 704-344-1483 Total Assets: $10,000,001 Total Debts: $12,703,065 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Mainline Supply Company $1,134,494 P.O. Box 830800 Birmingham, AL 35283 Briggs Equipment Co. $913,507 P.O. Box 409794 Atlanta, GA 30384 Phillips & Jordan, Inc. $912,151 PO Drawer 604 Robbinsville, NC 28771 CAT Financial Services/FCC $800,000 2120 West End Avenue PO Box 340001 Nashville, TN 37203 Rea Contracting, LLC $786,356 P.O. Box 19012 Charlotte, NC 28219 Granite Contracting, LLC $782,226 545-B Pitts School Road Concord, NC 28028 APAC-Atlantic, Inc. $636,428 P.O. Box 5310_ Concord, NC 28027 Internal Revenue Service $616,877 Memphis, TN 37501 May Heavy-Equip $604,848 5941 NC Highway 8 Lexington, NC 27292 Volvo Commercial $527,667 P.O. Box 7247-0236 Philadelphia, PA 19170 Herrin Brothers Coal $470,106 PO Box 5291 Charlotte, NC 28225 Suzanne Wrenn $322,461 c/o BB&T Trust Dept. 223 West Nash Street Wilson, NC 27894 NC Department of Revenue $244,327 John Deer Credit $241,762 Cross Utilities, Inc. $222,754 Concrete Supply Co. $189,693 Johnson Concrete Company $184,876 Martin Marietta $182,868 CitiCapital $146,258 Sanders Utility Const. $145,194 GLOBAL CROSSING: Seeks NASDAQ Extension for Listing Compliance -------------------------------------------------------------- Global Crossing (Nasdaq: GLBCE) requested an additional exception until September 10, 2004 from the NASDAQ Listing Qualifications Panel for returning to compliance with NASDAQ listing requirements. Global Crossing's common stock will continue to trade on the NASDAQ National Market while the Panel considers Global Crossing's request. The company will provide prompt public disclosure after the Panel issues its decision. Global Crossing also reported significant progress today in its previously announced cost of access review. The company has determined that the amount of the adjustment to its cost of access liabilities is approximately $54 million, net of vendor dispute settlements, representing approximately three percent of its 2003 cost of access operating expenses of $1,915 million. There will also be a separate adjustment for an approximately $12 million balance sheet reclassification related to cost of access amounts recorded upon the company's emergence from bankruptcy. The combined adjustments of $66 million are in line with the company's original estimate of $50 million to $80 million. There is no material adjustment required to the cost of access liabilities at December 31, 2002. As previously announced, Deloitte & Touche LLP recently completed an independent investigation of the facts and circumstances giving rise to the company's understatement of cost of access liabilities and expenses. Deloitte & Touche reported that the investigative procedures it performed did not reveal any management integrity issues related to the cost of access accrual and expenses, or any knowledge by management of an understatement related to the year- end 2003 financial statements until after the filing of such financial statements in March 2004. The company has been consulting with its independent auditors for 2002 and 2003, Grant Thornton LLP; its new independent auditors, Ernst & Young; and the Board of Directors' independent audit committee regarding the proper accounting treatment of the change in the company's cost of access liabilities. Based on these consultations, the company's current view is that the charge should be recorded in the first quarter of 2004 and that a restatement of prior period financials statements will not be required. The company intends to review this accounting treatment with the SEC. 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. GRAHAM PACKAGING: S&P Assigns Single-B Corporate Credit Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit ratings on Graham Packaging Holdings Co., its 100%-owned operating subsidiary, Graham Packaging Co., and related entities on CreditWatch with developing implications. The CreditWatch placement follows the company's announcement that it has signed a definitive agreement to acquire the plastic container business of Owens-Illinois Inc. for about $1.2 billion. Closing of the transaction is subject to regulatory approval and other customary conditions. Developing means the ratings could be raised, lowered, or affirmed. "The rating action reflects the near-term uncertainty associated with the financing plan of the acquisition," said Standard & Poor's credit analyst Liley Mehta. Standard & Poor's will monitor developments and will resolve the CreditWatch listing as more information is made available. "To resolve the CreditWatch, Standard & Poor's will meet with Graham to discuss the financial structure of the proposed transaction, and management's future operating and financial strategies," Ms. Mehta said. Ratings could be affirmed or lowered, if the transaction is entirely debt financed and the company's very aggressive debt leverage is maintained. Conversely, a more favorable financing plan that includes a meaningful equity contribution could support a higher rating, although this is not expected given the lack of information on the financing plan. York, Pa.-based Graham is a leading manufacturer of customized, blow-molded plastic containers for various foods and non- carbonated beverages, household and personal care products and is a market leader for motor oil containers. Debt outstanding at March 31, 2004 was about $1.1 billion. HERITAGE NETWORKS: Former Employees File Claims for Unpaid Wages ---------------------------------------------------------------- Seven former employees of Heritage Networks, LLC (dba The Heritage Networks and African Heritage Network) have filed claims with the California Labor Board alleging that the company failed to pay them for work performed during November 2003. Based in New York City, Heritage Networks produces urban themed television programs including Showtime at the Apollo and Livin' Large hosted by Carmen Electra. The company was founded by Frank Mercado-Valdes. It has been reported recently in the press that Mr. Mercado-Valdes is a candidate to run Al Sharpton's new media venture, Reverend Al Communications, Inc. The seven employees who filed claims assert that they were not paid for work performed despite repeated assurances by Heritage Networks' Los Angeles legal representative, Debra L. Johnson, as well as executive producer Susan De Passe that payment was forthcoming. The employees filed their initial claims with the California Labor Board on December 11, 2003. On March 31, 2004, Heritage Networks' new CEO, Charles Walker, announced that the company had filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division. In a letter dated March 31, 2004, Heritage Networks informed the seven claimants that only employees who worked for the company during the 90 days prior to the bankruptcy filing would be entitled to unpaid wages through the bankruptcy process. This is due to a stipulation in the bankruptcy code, that shields employers from paying wages that were earned more than 90 days prior to the date of a bankruptcy filing. The employees believe that Heritage Networks has acted in bad faith, failing to pay them money they are owed and carefully timing its bankruptcy filing to exploit provisions in the bankruptcy law, even as its programs have continued to air on television stations nationwide. Headquartered in New York, New York, Heritage Networks is a television sales, distribution, and marketing company that concentrates on ethnically diverse programming, such as the sitcoms Moesha and The Parkers. The Company filed for chapter 11 protection on March 31, 2004 (Bankr. N.D. Tex. Case No. 04-33505). Craig C. Gant, Esq., represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets between $1 million to $10 million. HOLLINGER: Provides Update in Accordance with Cease Trade Order --------------------------------------------------------------- Hollinger Inc. (TSX: HLG.C; HLG.PR.B) provided an update in accordance with the guidelines pursuant to which the June 1, 2004 management and insider cease trade order was issued. These guidelines contemplate that Hollinger will normally provide bi- weekly updates on its affairs until such time as it is current with its filing obligations under applicable Canadian securities laws. Hollinger continues to devote resources to the completion and filing of its financial statements as soon as practicable and is encouraged by recent developments. The Litigation Committee of the board of directors of Hollinger authorized the commencement of legal proceedings to compel access to the financial records and management personnel of Hollinger International Inc. and the working papers of Hollinger International's auditors in order to allow for the preparation and, where required, audit of Hollinger's financial statements. Thereafter, at the request of Hollinger International, a meeting was held in this regard with representatives of Hollinger and representatives of Hollinger International and its Special Committee. As a result of this meeting, the Litigation Committee instructed counsel to temporarily hold the commencement of the applicable legal proceedings in abeyance. Hollinger International has now indicated it is prepared in principle to co-operate with and assist Hollinger and its auditors in the audit of Hollinger's 2003 annual financial statements and to assist in obtaining the co-operation of Hollinger International's auditors, and has set out a process for so doing. Hollinger and Hollinger International are pursuing, on a without prejudice basis, the conclusion of mutually acceptable arrangements to permit the audit of Hollinger's 2003 annual financial statements begin as soon as possible. As of the close of business on July 28, 2004, Hollinger had approximately US$10.8 million of cash or cash equivalents on hand and owned, directly or indirectly, 792,560 shares of Class A Common Stock and 14,990,000 shares of Class B Common Stock of Hollinger International. The decrease in Hollinger's cash and cash equivalents on hand during the period since its July 15, 2004 status update is substantially due to Hollinger's contribution to the payment of the monetary portion of the order and final judgment of the Delaware Chancery Court requiring Hollinger and Conrad Black to repay certain non-compete payments to Hollinger International. Based on the July 28, 2004 closing price of the shares of Class A Common Stock of Hollinger International on the New York Stock Exchange of US$15.80, the market value of Hollinger's direct and indirect holdings in Hollinger International was US$249,364,448. All of Hollinger's direct and indirect interest in the shares of Class A Common Stock of Hollinger International are being held in escrow with a licensed trust company in support of future retractions of its Series II Preference Shares and all of Hollinger's direct and indirect interest in the shares of Class B Common Stock of Hollinger International are pledged as security in connection with Hollinger's senior secured notes due 2011. Further to Hollinger's announcement of the appointment of Mr. Adrian M.S. White as Interim Chief Financial Officer of Hollinger, the appointment has not in fact become effective as Mr. White and Hollinger were unable to resolve terms of such appointment satisfactory to both parties. Hollinger's principal asset is its approximately 68.0% voting and 18.2% equity interest in Hollinger International. Hollinger International is a global newspaper publisher with English- language newspapers in the United States, Great Britain and Israel. Its assets include The Daily Telegraph, The Sunday Telegraph and The Spectator and Apollo magazines in Great Britain, the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. * * * As reported in the Troubled Company Reporter's March 17, 2004 edition, Hollinger International Inc. (NYSE: HLR) announced that primarily as a result of the ongoing investigation being conducted by the Special Committee of the Company's Board of Directors, as well as the disruption of management services provided to the Company arising from its ongoing dispute with Ravelston Corporation Limited, the Company is not able to complete its financial reporting process and its audited financial statements for inclusion in the Annual Report on Form 10-K for fiscal year 2003 by the filing deadline. The Company intends to complete its financial reporting process as soon as practicable after the completion of the investigation by the Special Committee, and then promptly file the 10-K. The company's September 30, 2003, balance sheet shows a working capital deficit of about $293 million. IWO HOLDINGS: Missed Interest Payment Triggers S&P Default Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on wireless telecommunications carrier IWO Holdings Inc. to 'D' from 'CC'. The senior unsecured debt rating was lowered to 'D' from 'C'. These actions follow IWO's failure to make the July 15, 2004 interest payment on its 14% senior notes due 2011, as indicated in the company's form 10-Q for the quarter ended June 30, 2004. IWO anticipates seeking protection under Chapter 11 in 2004 and had $352.5 million debt outstanding as of June 30, 2004. IWO is an affiliate of Sprint PCS, serving about 226,000 customers in smaller markets in the Northeast, and is a wholly owned subsidiary of US Unwired Inc. (CCC+/Postive/--). Restrictions in US Unwired's debt instruments prohibit US Unwired from providing financial support to IWO, and IWO creditors have no recourse to assets of US Unwired. There is no rating impact on US Unwired from IWO's default. "IWO's financial distress stems from elevated debt levels and weak liquidity caused by negative discretionary cash flow incurred during the company's wireless network construction and business start-up period," said Standard & Poor's credit analyst Eric Geil. "Heavy industry competition and IWO's relatively late entry into the wireless business have impeded operating cash flow growth needed to support the leveraged capital structure, and interest coverage remains fractional." Although the company has curtailed capital expenditures for network construction, including cell sites required to meet requirements under the Sprint PCS affiliate agreement, free cash flow is still negative. Given the importance of IWO's network to Sprint PCS's national network coverage, IWO's positive subscriber and revenue momentum, and a record of successful financial reorganizations of other Sprint PCS affiliates, it is likely that IWO will restructure its balance sheet and continue operating. J.P. MORGAN: Fitch Places Low B-Ratings on 2 Certificate Classes ---------------------------------------------------------------- Fitch rates J.P. Morgan Mortgage Trust $373.3 million mortgage pass-through certificates, series 2004-A4: Class Principal Amount Rating ----- ---------------- ------ Classes 1-A-1, 1-A-2, 1-A-3, 1-A-4, 2-A-1, 2-A-2, 2-A-3, 3-A-1, and A-R (senior certificates) $373,300,000 AAA Class B-1 certificates $6,180,400 AA Class B-2 certificates $2,510,700 A Class B-3 certificates $1,545,000 BBB Privately offered class B-4 certificates $1,158,800 BB Privately offered class B-5 certificates $579,400 B Privately offered class B-6 certificates $965,921 Not rated The 'AAA' rating on the senior certificates reflects the 3.35% subordination provided by the 1.60% class B-1, the 0.65% class B- 2, the 0.40% class B-3, the 0.30% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.25% privately offered class B-6 certificates. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults, as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, the primary servicing capabilities of Cendant Mortgage Corporation, Countrywide Home Loans Servicing LP, and Chase Manhattan Mortgage Corporation (all rated 'RPS1' by Fitch), and the master servicing capabilities of Wells Fargo Bank Minnesota, National Association, which is rated 'RMS1' by Fitch. As of the cut-off date, July 1, 2004, the trust consists of three cross-collateralized groups of 976 conventional, adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate scheduled balance of $386,270,320.51. The average unpaid principal balance of the aggregate pool as of the cut-off date is $395,769. The weighted average original loan-to-value ratio (LTV) is 71.44%. The loans were originated by Chase Manhattan Mortgage Corporation (56.77%), Cendant Mortgage Corporation (23.91%), and Countrywide Home Loans, Inc. (19.32%). Group 1 consists of 168 one- to four-family residential properties with an aggregate principal balance of $82,010,957. The mortgage pool has a weighted average original LTV of 69.40% with a weighted average mortgage rate of 4.962%. All of the mortgage loans have mortgage rates that are fixed for approximately seven years and will be adjusted annually or semi-annually thereafter. All the loans in group 1 are originated under a full documentation program, while cash-out refinance loans approximate 24.63% of the pool and second homes 4.59%. The average loan balance is $488,160, and the loans are primarily concentrated in California (26.56%), Virginia (12.80%), and Missouri (10.48%). Group 2 consists of 334 one- to four-family residential properties with an aggregate principal balance of $166,985,930, as of the cut-off date. The mortgage pool has a weighted average original LTV of 72.32% with a weighted average mortgage rate of 5.095%. All of the mortgage loans have mortgage rates that are fixed for approximately seven years and will be adjusted annually or semi- annually thereafter. Approximately 67.72% of the pool 2 mortgage loans provide for payments of interest at the related mortgage interest rate but no payments of principal for a period of seven years following origination of such mortgage loan. Loans originated under a reduced loan documentation program account for approximately 34.70% of the pool, cash-out refinance loans 20.25%, and second homes 7.30%. The average loan balance is $499,958, and the loans are primarily concentrated in California (35.31%), New Jersey (8.88%), and Illinois (6.01%). Group 3 consists of 474 one- to four-family residential properties with an aggregate principal balance of $137,273,434, as of the cut-off date. The mortgage pool has a weighted average original LTV of 71.60% with a weighted average mortgage rate of 4.645%. All of the mortgage loans have mortgage rates that are fixed for approximately five years and will be adjusted annually or semi- annually thereafter. Loans originated under a reduced loan documentation program account for approximately 0.65% of the pool, cash-out refinance loans 31.74%, and second homes 5.06%. The average loan balance is $289,606, and the loans are primarily concentrated in California (47.76%) and Washington (7.91%). None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com/ Wachovia Bank, National Association, will serve as trustee. J.P. Morgan Acceptance Corporation I, a special purpose corporation, deposited the loans in the trust that issued the certificates. For federal income tax purposes, the trustee will elect to treat all or portion of the assets of the trust funds as comprising multiple real estate mortgage investment conduits (REMICs). JEUNIQUE INTERNATIONAL: Gets Nod for $325K Interim DIP Financing ---------------------------------------------------------------- Jeunique International, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, to obtain Postpetition Financing to finance its ongoing operation under chapter 11 proceeding. The Debtor discloses that as of the Petition Date, it owed Mulford J. Nobbs, the Nobbs Family Truste, Vestal Nobbs, Hacienda Holdings, Inc., and Nutritional Research Foundation, $27,761,356 on an unsecured basis. The Nobbs Family Trust further extended an additional $460,000 of secured financing to the Debtor shortly before it filed for bankruptcy protection. The Debtor says it needs new financing now to minimize any disruption of its business operations. A new source of working capital financing is necessary for the Debtor to manage and preserve the assets of its bankruptcy estate, to maximize the value of the estate and maximize creditor recoveries. Despite diligent efforts, Jeunique says it's unable to procure financing in the form of unsecured credit allowable under Section 503(b)(1) or in exchange for an administrative expense priority under Section 364(a) or (b) or (c). Nobbs' offer to extend new DIP financing is the best deal available to Jeunique at this time. On an interim basis, the Bankruptcy Court allows the Debtor to borrow up to $325,000 from Nobbs. This interim borrowing arrangement will continue until the Bankruptcy Court enters a final order allowing the Debtor to borrow the full $450,000 the Debtor projects its needs to support its business post-petition. All amounts loaned to the Debtor will accrue interest at the rate of 1.5% per annum. Unless extended, the Postpetition obligations will be due and payable on the earliest of: (1) June 14, 2005; (2) confirmation of a plan of reorganization; or (3) an event of default. As adequate protection of Lender's interest in the Postpetition Collateral and as security for the Debtor's performance of its obligations, the Lender is granted a lien and security interest on all presently owned and hereafter acquired tangible and intangible prepetition and postpetition assets. Headquartered in City of Industry, California, Jeunique International Inc. -- http://www.jeunique.com/-- a direct selling company, filed for chapter 11 protection on June 1, 2004 (Bankr. C.D. Calif. Case No. 04-22300). Mark S. Horoupian, Esq., at Sulmeyer Kupetz A P.C., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $10 million and estimated debts of more than $50 million. KAISER ALUMINUM: PBGC Will Take Over Inactive Pension Plan ---------------------------------------------------------- Kaiser Aluminum has been notified by the Pension Benefit Guaranty Corporation that the PBGC intends to assume responsibility for the Kaiser Aluminum Inactive Pension Plan retroactive to June 30, 2004. The Inactive Plan generally covers hourly retirees who were represented by unions at several smaller Kaiser plants where operations were discontinued a number of years ago. The PBGC's action was not unexpected. In February 2004, Kaiser had obtained a ruling from the U.S. Bankruptcy Court for the District of Delaware that the company met the legal requirements for a distress termination of the Inactive Plan and several other plans. The PBGC has appealed some portions of that ruling but not with respect to the Inactive Pension Plan. The company and the PBGC continue to be in discussions concerning the status of the other plans. The PBGC assumed responsibility for Kaiser's salaried employee pension plan in December 2003. 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. KOLORFUSION INT'L: Deficit & Losses Raise Going Concern Doubt ------------------------------------------------------------- Virchow, Krause & Company, LLP, in Minneapolis, Minnesota, audits Kolorfusion International, Inc.'s financial statements. In its latest audit report, dated September 24, 2003, the auditing firm observes that Kolorfusion has historically had more expenses than income in each year of its operations. The accumulated deficit from inception to March 31, 2004, is $10,586,537, and current liabilities are in excess of current assets. Kolorfusion has been able to maintain a positive cash position solely through financing activities . . . and plans to continue relying on outside financing or lines of credit. These factors, the auditors say, raise doubt about the Kolorfusion's ability to continue as a going concern. Kolorfusion International, Inc., a Colorado corporation formed on May 17, 1995, develops and markets a system for transferring color patterns to metal, wood, glass and plastic products. Its principal office is located at 7347 S. Revere Parkway, Centennial, Colorado. Kolorfusion is a process that allows the transfer of colors and patterns into coated metal, wood, and glass and directly into a plastic surface that can be any shape or size. LANTIS EYEWEAR: Committee Hires Martin Chow as Co-Counsel --------------------------------------------------------- The Official Unsecured Creditors Committee appointed in Lantis Eyewear Corporation's chapter 11 case, asks the U.S. Bankruptcy Court for the Southern District of New York for permission to hire Martin W. Chow, Esq., as its co-counsel. The Committee has selected Mr. Chow because he has considerable experience in the field of bankruptcy, insolvency, reorganizations, liquidations, debtors' and creditors' rights, debt restructurings, corporate reorganizations and commercial litigation . . . and he can communicate in Chinese. The Committee tells the Court that many of the 20 largest unsecured creditors, and 4 of the 7 Committee members are from Taiwan and Hong Kong. Mr. Chow is fluent in the Mandarin language and is able to communicate and interpret the nuances of the Debtor's case to the largest of the creditors that comprise the Committee. Specifically, Mr. Chow will: a) assist, advise and represent the Committee in its negotiations with the Debtor in administering the Chapter 11 case; b) assist, advise and represent the Committee in analyzing the Debtor's past, present and future financial structure, investigating the extent and validity of liens, participating and reviewing asset sales or disposition; c) attend meetings and negotiate with representatives of the Debtor and secured creditors; d) assist and advise the Committee concerning the Debtors financial affairs; e) assist the Committee in analyzing plans of reorganization that may be filed and to review, analyze any Disclosure Statement that may be filed with the plan; f) assist in analyzing and reviewing financing and funding options and plans; g) take any and all actions necessary for the protection of the Committee's interest, including but not limited to prosecuting actions for preferential transfers, fraudulent conveyances and lien voidance and review of all claims that are filed with the estate; h) prepare and submit all necessary motions, applications, complaints, answers, discovery, trial and appeals before this court, the District Court, the Court of Appeals and other courts; and i) perform all other necessary and appropriate legal services in connection with this case. Mr. Chow's usual and customary billing rate is $350 per hour. His legal assistants' current billing rate is $125 per hour. Mr. Chow can be reached at: Martin W. Chow, Esq. LAW OFFICES OF MARTIN W. CHOW LLC CITIC Bank Building 11 East Broadway, 11th Floor New York, N.Y. 10038 Telephone (212) 571-9550 Cell (917) 968-2559 Fax (212) 571-9065 mchow7@hotmail.com http://mchowesq.tripod.com/law/ Headquartered in New York, New York, Lantis Eyewear Corporation -- http://lantiseyewear.com/-- is a leading designer, marketer and distributor of sunglasses, optical frames and related eyewear accessories throughout the United States. The Company filed for chapter 11 protection on May 25, 2004 (Bankr. S.D.N.Y. Case No. 04-13589). Jeffrey M. Sponder, Esq., at Riker, Danzig, Scherer, Hyland & Perretti, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $39,052,000 in total assets and $132,072,000 in total debts. LES BOUTIQUES: Reorganized Company Closes $19.2M Placement Today ---------------------------------------------------------------- "Now that our restructuring is complete, we have a well- capitalized company that has virtually no debts and the liquidities needed to support its operations. We now have all the elements needed to make the Company successful again," said Paul Delage Roberge, Chairman of the Board of Les Boutiques San Francisco Incorporees (TSX:SF.A) (TSX:SF.B), at the annual shareholders' meeting held Friday, July 30, 2004. Once the bankruptcy protection provided under the Companies' Creditors Arrangement Act is lifted, the Company plans to conclude a $19.2-million private placement for recapitalization, today, August 2. As announced at the shareholders' meeting, it will also form a Board of Directors with four new members; only Mr. Roberge and Richard Soly will continue to sit on the Board. The four new directors are Jean-Guy Lambert, President and CEO of Dacha Capital, Normand Legault, President of Grand Prix F1 du Canada, Real Mimeault, Company Director, and Placide Poulin, founder of Maax. Mr. Roberge will continue to serve as Chairman. The Company also plans to hire a new President and CEO, whose mandate will be to generate profits and oversee the optimal development of the company's two divisions: Les Ailes de la Mode stores and Bikini Village swimwear shops. A recruitment firm has already been hired for this purpose. The new President will be supported by the new Chief Financial Officer, Gilles Morneau, a chartered accountant with extensive experience in finance, operations management and human resources. "After the turbulent times the Company went through recently, the next few months will be devoted to stabilizing our administration and getting back to a more regular operating context. This return to normal will be reflected in the consolidation of our operating systems," said Mr. Roberge. Gaetan Frigon, Chief Restructuring Officer, said: "the Company can now turn the page on its past troubles and look forward to renewed profitability in 2005. It will be able to focus on its strengths: the four Les Ailes de la Mode stores and Bikini Village swimwear shops." Mr. Frigon's mandate as Chief Restructuring Officer will come to an end when bankruptcy protection has been lifted. He will also step down from the Board of Directors, as planned. "I'm proud to be able to say 'Mission accomplished,' since this restructuring exercise has ensured the future of a Quebec company whose vitality and innovation has been recognized for 25 years. I believe the Company justly deserves to continue its activities," concluded Mr. Frigon. As a result of the restructuring, the Company's name will be changed to reflect its new situation. Boutiques San Francisco Incorporees will become Groupe Les Ailes de la Mode Inc. and its stock market symbol will be changed to MOD. The name change will take effect at the beginning of next week, immediately before the closing of the private placement. The Company's TSX symbol will change shortly thereafter. Les Boutiques San Francisco Incorporees operates 137 stores in Quebec, Ontario, British Columbia and Alberta under five banners and targeting as many market segments. As part of its restructuring process, the Corporation has sold its Boutiques San Francisco as well as two lingerie boutiques, Victoire Delage and Moments Intimes. The Corporation still operates four Les Ailes de la Mode stores and a network of bathing suit stores operating under the banners Bikini Village and San Francisco Maillots. MAGELLAN HEALTH: Reports $28.4 Million 2nd Quarter Net Income ------------------------------------------------------------- Magellan Health Services, Inc., (Nasdaq:MGLN), reported operating results for the second quarter and six months ended June 30, 2004. The Company also raised its financial guidance for 2004. Financial Results For the quarter ended June 30, 2004, Magellan reported net revenues of $452.1 million and net income of $28.4 million compared with net revenues of $390.3 million and net income of $14.4 million for the prior year quarter. The Company's segment profit (net revenue less salaries, cost of care and other operating expenses plus equity in earnings of unconsolidated subsidiaries) for the current year quarter was $60.1 million versus $39.9 million for the prior year quarter. For the six months ended June 30, 2004, the Company reported net revenues of $892.3 million and net income of $41.4 million. For the prior year period, net revenues were $799.2 million and net income was $2.0 million. Year-to-date segment profit for 2004 was $108.2 million versus $80.6 million for the first six months of 2003. The Company ended the quarter with $261.9 million in unrestricted cash and cash equivalents. Cash flow from operations for the six months ended June 30, 2004 was $30.3 million compared to $95.4 million in the prior year period. Cash flow from operations for the current six months includes net payments of $64.9 million for liabilities related to the Company's Chapter 11 proceedings; excluding the impact of these liabilities, cash flow from operations for the six months ended June 30, 2004 was $95.2 million. The Company has not drawn on its $50.0 million revolving credit facility. Steven J. Shulman, chairman and CEO, said, "As we discussed last quarter, our plan for 2004 is to focus on three main areas - maintaining our core business, improving efficiency and managing expenses, and working to develop new products. Magellan's second quarter financial results demonstrate our success in continuing to run our business effectively while also implementing performance improvement initiatives and managing expenses responsibly. Further, our strong operating results enhance our ability to invest in and grow our business over time. We fully expect to continue to successfully execute on our business strategy and are raising our guidance accordingly." Outlook Based on developments to date, Magellan now expects to generate net income in the range of $80 million to $100 million and segment profit in the range of $210 million to $230 million for fiscal year 2004, compared to previous guidance of net income of $36 million to $56 million and segment profit of $160 million to $180 million for the year. Mark S. Demilio, chief financial officer, said, "Magellan's revised guidance reflects our expectations for continued strong operating performance while also taking into consideration the impact of product development and other investments and the planned effects of certain contract terminations. Furthermore, we experienced an unusually low care cost trend during the first six months of this year due, in part, to the implementation of certain initiatives that had a one-time impact. Our new guidance reflects this lower level of costs but also reflects our belief that the care cost trend going forward will return to previously expected rates of increase." Mr. Shulman added, "We are committed to continuing to make substantive improvements in Magellan's operations to benefit our members, customers and providers. As a result, in addition to our robust financial results, we continue to deliver the operational performance our customers expect and the high caliber services that have earned us significantly more quality accreditations than any other organization in our industry. "In addition to producing strong financials and enhancing service, a key area of focus is the development of innovative products to meet the existing and emerging needs of current and potential customers. We continue to develop and test disease management, obesity and pharmacy products and are encouraged by the level of interest in these capabilities that we are seeing in the marketplace. I am pleased with our progress to date in positioning the Company to produce meaningful revenue from these products by 2007." Magellan Health Services is headquartered in Columbia, Maryland, and is the leading behavioral managed healthcare organization in the United States. Its customers include health plans, corporations and government agencies. The Company filed for chapter 11 protection on March 11, 2003, and confirmed its Third Amended Plan on October 8, 2003. Under the Third Amended Plan, nearly $600 million of debt will drop from the Company's balance sheet and Onex Corporation will invest more than $100 million in new equity. MASTEC INC: Releases Final Results of Operations for FY 2003 ------------------------------------------------------------ MasTec, Inc. (NYSE: MTZ) reported results for 2003. For the year ended December 31, 2003, the net loss was $52.3 million on revenue of $870.2 million, compared with a restated net loss of $136.6 million on revenue of $838.1 million for the prior year. Included in the loss for 2002 was a $79.7 million non-cash charge related to periodic SFAS 142 goodwill impairment evaluations as a result of a previously disclosed change of accounting method. On April 13, 2004, the Company reported an estimated net loss of $39.7 million for the year ended December 31, 2003. This estimated net loss for the year ended December 31, 2003 was increased by $12.6 million. The primary reason for the increased loss was the recording of an additional liability for labor claims resulting from the initiation of the shut-down of operations of the Company's Brazilian subsidiary. MasTec ceased performing contractual services for Brazilian customers in the first quarter of 2004 and expects to dispose of this investment in 2004 through liquidation of this subsidiary. Except for legal costs, MasTec does not expect to fund any significant additional costs associated with the termination of the subsidiary's operations. The Company expects to record additional non-cash write-offs for its Brazilian investment in 2004 as MasTec completes the shut- down of the operation. The Brazilian operation comprised approximately 2.2% of total revenue in 2003. MasTec continues to finance operations primarily through internally generated cash flows. At July 26, 2004, the Company had approximately $15.5 million in cash on hand and gross liquidity, before reserves, of approximately $47.5 million. MasTec currently has no draws on its $125 million bank credit facility. The Company recently amended the loan agreement for this credit facility, resulting in additional covenant flexibility. * * * As reported in the Troubled Company Reporter's May 13, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on MasTec Inc. to 'B' from 'BB-', its senior secured bank loan rating to 'B+' from 'BB', and its subordinated debt rating to 'CCC+' from 'B'. At the same time, all ratings remain on CreditWatch with negative implications, where they were placed on March 17, 2004. Total debt (including present value of operating leases) was $226 million at Sept. 30, 2003, for the Miami, Fla.-based provider of infrastructure services. The downgrade follows MasTec's announcement of a net loss for the 2004 first quarter that is significantly greater than the year- earlier loss as well as a delay in its Form 10Q filing for the first quarter because of an unfinished audit for full-year 2003. market conditions in the specialty contractor industry are weak, resulting in declining margins and higher leverage. "We continue to be concerned about the breakdown of certain financial controls and policies, the length of time it is taking to complete the 2003 audit, and the liquidity profile, including obtaining a waiver or amendment to bank covenants," said Standard & Poor's credit analyst Heather Henyon. MCCANN: Section 341(a) Meeting Slated for August 19, 2004 --------------------------------------------------------- The United States Trustee will convene a meeting of McCann, Inc.'s creditors at 2:30 p.m., on August 19, 2004, at Office of the United States Trustee, 80 Broad Street, Second Floor, New York, New York 10004-1408. 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 New York, New York, McCann, Inc., is a commercial interior general contracting company. The Debtor's primary shareholder is Bruce Fahey, who owns 90% of the Debtor's common stock. In March 2004, The Company abruptly ceased all active operations when one of its subcontractors complained about not getting paid. Currently, the Debtor and Mr. Fahey are the subject of an investigation by the Manhattan District Attorney's office with regard to forged lien waivers and violations of Article 3A of the New York Lien Law. On April 15, 2004, a group of creditors filed an involuntary Chapter 7 petition against McCann, Inc. On June 23, 2004, the Debtor exercised its right under Sec. 706(a) of the Bankruptcy Code to convert its bankruptcy case to a Chapter 11 case, and an order for relief was entered on June 25, 2004 (Bankr. S.D.N.Y. Case No. 04-12596 (SMB)). On July 22, 2004, the court appointed Lee E. Buchwald to serve as Chapter 11 Trustee. Mr. Buchwald hired Scott S. Markowitz, Esq., at Todtman, Nachamie, Spizz & Johns, P.C., as his counsel. Clifford A. Katz, Esq., at Goldberg & Jaslow, LLP serves as the Debtor's counsel. MEDSOLUTIONS: Looks to Private Placements to Raise Needed Cash -------------------------------------------------------------- MedSolutions, Inc.(MSI) was incorporated in Texas in 1993, and through its wholly owned subsidiary, EnviroClean Management Services, Inc. (EMSI), principally collects, transports and disposes of regulated medical waste in north and south Texas. During 2002, the Company formed three new wholly owned subsidiaries: ShredSolutions, Inc., SharpSolutions, Inc. and EnviroClean Transport Services, Inc. These subsidiaries did not have any significant operations during 2003 or 2004. During 2003, the Company acquired the business and certain assets of AmeriTech Environmental, Inc., a Texas corporation in the regulated medical waste industry. The Company historically has incurred consolidated net losses. The Company has significant deficits in both working capital and stockholders' equity and therefore, these factors raise substantial doubt about the Company's ability to continue as a going concern. Historically, stockholders of the Company have funded cash flow deficits; however, the stockholders are under no specific funding obligation. MedSolutions's principal source of liquidity is collections on accounts receivable from regulated medical waste management service revenue, from sales of its common stock through private offerings to certain individuals, primarily existing shareholders, and from loans and advances received from certain shareholders. Revenues during the three months ended March 31, 2004 were approximately $110,000 per month higher than the comparable monthly average revenue for 2003. The principal uses of liquidity are payments for labor, material and expenses, and debt, litigation and lease obligations to carry out regulated medical waste management services. Management is of the opinion that the Company's existing cash position and cash flow from operations will not enable it to satisfy current cash requirements. The Company will be required to obtain additional financing to implement its business plan. Historically, the Company has met its cash requirements from a combination of revenues from operations (which by themselves have been insufficient to meet such requirements), shareholder loans and advances, and proceeds from the sale of debt and equity securities. As indicated by the Company's year end consolidated financial statements, the Company incurred consolidated net losses of $957,757 and $285,726 for the years ended December 31, 2003 and 2002, respectively. Additionally, the Company has significant deficits in both working capital and stockholders' equity at December 31, 2003 and March 31, 2004. Historically, shareholders of the Company have funded cash flow deficits. However, the shareholders are under no specific funding obligation. As a means of providing working capital and funding for a proposed financing, the Company has received, from private placements of the Company's common stock, approximately $864,500 and $1,155,763 during the years ended December 31, 2003 and 2002. One of the Company's largest shareholders loaned the Company $615,000 in 2002. Also, the Company President has advanced funds for working capital to MedSolutions from time to time. In March 2003 another stockholder loaned the Company $500,000, and two stockholders purchased common stock in the aggregate amount of $130,000. There is no assurance that such private placement funding, loans and advances will continue to satisfy MedSolutions' cash needs. A few of MedSolutions' customers have accounted for a majority of its sales. During the year ended December 31, 2003, sales of Company services to 43 customers represented approximately 81.5% of total revenues, including sales to UTMB, which amounted to approximately 19.4% of total revenues. A loss of any of these customers could reduce revenues, educe earnings or increase Company losses from operations, and limit MedSolutions' ability to achieve or maintain profitability. MIRANT CORP: Committee Asks Court to Discharge Risk Capital ----------------------------------------------------------- Monica S. Blacker, Esq., at Andrews & Kurth, LLP, in Dallas, Texas, recalls that on September 29, 2003, United States Bankruptcy Court for the Northern District of Texas authorized the Official Committee of Unsecured Creditors of Mirant Corporation, et al. to retain Risk Capital Management Partners to provide risk management services effective as of September 3, 2003. Risk Capital provided the services from September 3, 2003 through June 30, 2004. Beginning in May 2004, Ms. Blacker relates that the Mirant Committee began to gradually utilize PA Consulting Group, Inc., and Capstone Corporate Recovery, LLC, to perform Risk Capital's duties. To date, all matters Risk Capital previously handled have been transferred to PA and Capstone. Accordingly, the Court: (a) discharges Risk Capital from providing any services to it; (b) releases Risk Capital from all of its duties and obligations to the Mirant Committee; and (c) allows Risk Capital to file its final application for fees and expenses to be paid in full, including any holdbacks. 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. 39, 40; Bankruptcy Creditors' Service, Inc., 215/945- 7000) MITSUBISHI MOTORS: S&P Upgrades Corporate Credit Rating to CCC+ --------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit rating on Mitsubishi Motors Corp. (MMC) to 'CCC+' from 'SD', and its rating on the company's senior unsecured bonds to 'B-' from 'CCC+'. The outlook on the corporate credit rating is negative. "The upgrade of MMC reflects the lower possibility of near-term default by the company following the recent completion of a capital enhancement," said Chizuko Satsukawa, a credit analyst at Standard & Poor's. On June 28, 2004, the corporate credit rating on MMC was lowered to 'SD' after the company completed a transaction tantamount to a debt-for-equity swap on its bank loans. On July 15, 2004, the company issued common and preferred shares to Phoenix Capital and J.P. Morgan, completing a capital enhancement totaling �496 billion, slightly exceeding the planned amount. MMC expects its interest-bearing debt to have fallen to about �737 billion at the end of June 2004, down by about �325 billion from the end of March 2004. Although Standard & Poor's believes the capital enhancement has lowered the possibility of immediate default by the company, it is not optimistic about MMC's viability, given the damage to the carmaker's brand image and plummeting domestic sales. The company's vehicle sales in Japan (including minivehicles) fell by nearly 50% in June 2004 compared with June 2003, following a decrease of about 40% in May 2004. In the U.S., its sales performance is also deteriorating: light vehicle sales decreased by about 50% in June 2004, compared with a year earlier. Given the challenge of restoring consumer confidence in vehicle safety, plus increasingly fierce competition in key global vehicle markets, it remains unclear whether pending operational and financial restructuring measures will be sufficient to ensure MMC's survival. The rating on MMC's senior unsecured debt is higher than that on the issuer by one notch, reflecting the better protection for bondholders than bank lenders, given the likelihood of support by key creditor banks through loan waivers if the company were to again face financial distress (see Standard & Poor's report "Rating Implications of Loan Waivers for Japanese Corporates" published on Sept. 23, 2003.) MOHEGAN TRIBAL: S&P Assigns BB- for Proposed $200M Senior Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to the Mohegan Tribal Gaming Authority's (MTGA) proposed $200 million senior subordinated notes due 2014. Proceeds from this offering, in conjunction with borrowings under its revolving credit facility, will be used refinance the outstanding $200 million 8.125% senior notes due 2006 and $150 million 8.375% senior subordinated notes due 2011, as well as to pay fees and expenses. At the same time, Standard & Poor's affirmed its ratings on the Connecticut-based casino operator, including its 'BB+' corporate credit rating. The outlook is stable. Pro forma for this transaction, MTGA had approximately $1.2 billion in debt outstanding, including approximately $115 million of tax-exempt off-balance sheet Tribal debt at March 31, 2004. MTGA relies for liquidity on internally generated cash and its revolving credit facility. Pro forma for the proposed notes, MTGA had approximately $84 million available under its revolving credit facility. "With the majority of its capital spending completed, we expect MTGA to generate in excess of $50 million in discretionary cash flow over the near term, a significant portion of which is likely to be applied towards debt reduction," said Standard & Poor's credit analyst Peggy Hwan. MONUMENT CAPITAL: Fitch Upgrades 1 Tranche From B to B+ ------------------------------------------------------- Fitch Ratings upgrades one tranche and affirms one tranche issued by Monument Capital Limited (Monument Capital). The rating actions effective immediately are: -- $281,389,854 class A senior floating rate notes affirmed at 'AAA'; -- $64,000,000 class B subordinated floating rate notes upgraded to 'B+' from 'B'. Monument Capital is a collateralized debt obligation (CDO) managed by Alliance Capital Management which closed May 13, 1999. Monument Capital is composed of approximately 80% senior secured loans and 20% senior unsecured bonds. Included in this review, Fitch Ratings discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch Ratings conducted cash flow modeling utilizing various default timing and interest rate scenarios. Since the last rating action, the collateral has continued to improve. The weighted average rating factor has increased from 'B- ' to 'B+'. The Book Value Ratio has increased from 103.8% as of March 31, 2003 to 104.01% as of the most recent trustee report dated June 30, 2004. The interest coverage ratio of 224.98% passed versus the trigger of 110%, however, the weighted average life of 4.00 years failed versus the trigger of 3.22 years and the average margin of 2.80% failed versus its trigger of 2.95. There are currently no defaulted assets and the 'CCC+' or lower represented approximately 4.6%, excluding defaults. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that the current ratings assigned to the class B notes no longer reflect the current risk to noteholders, and has subsequently improved over the past year. The rating of the class A 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 legal final maturity date. The rating of the class B notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. NATIONAL BEEF: S&P Affirms BB- Corporate Credit Rating ------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and other ratings on beef processor National Beef Packing Co. LLC. At the same time, the ratings were removed from CreditWatch where they were placed on Dec. 24, 2003. The outlook is stable. Kansas City, Mo.-based National Beef had about $354.0 million in lease-adjusted total debt outstanding as of May 29, 2004. The rating affirmation follows a review of the meat processing industry protein sector by Standard & Poor's prompted by an announcement on Dec. 23, 2003, that a case of bovine spongiform encephalopathy (BSE), otherwise known as mad cow disease, had been detected in the state of Washington. So far, the impact on National Beef Packing's financial performance and credit measures has been minimal. Generally, beef prices have remained at historically high levels and consumer demand has been strong. However, it is Standard & Poor's expectation that the company's margins will remain weak during the next couple of quarters, because of tight cattle supplies and the company's ability to obtain high quality cattle, which will likely constrain margins. "Still, National Beef should continue to generate adequate cash flow to meet debt service requirements and maintain credit measures appropriate for the rating," said Standard & Poor's credit analyst Ronald Neysmith. The rating reflects National Beef's debt levels, which are moderately high for a largely commodity-oriented protein processor, one with low margins that operates in a very challenging environment. Somewhat mitigating these factors are the company's niche position in value-added cuts, its broad customer base, its experienced management team, and the high barriers for competitors entering the industry. During the first nine months of fiscal 2004, continued tight cattle supplies and the loss of key export markets due to BSE hurt National Beef's margins, given the company's high degree of operating leverage. The sector is inherently volatile, and its results are affected by several factors outside of the firm's control, including weather, the supply of outside proteins, and disease. The company focuses on its value-added business segment, which has represented about a quarter of sales and more than half of EBITDA and thus provided National Beef with some financial cushion in the past. National Beef is the fourth-largest beef processing company in the U.S., accounting for about 10% of the U.S.-fed cattle processed. The company processes, packages, and delivers fresh beef for sale to customers in the U.S. and international markets. Its products include boxed beef and value-added beef under its own brands and animal by-products from processing, such as hides and offal. Branded products include Certified Premium Beef, Black Angus Beef, and Black Canyon Angus Beef. The company markets products to retailers, distributors, food service providers, and the U.S. military. NAVISITE: Completes $46+ Million Surebridge Acquisition ------------------------------------------------------- Surebridge, Inc. beneficially owns 3,000,000 shares of the common stock of NaviSite, Inc., representing 10.77% of NaviSite's outstanding common stock. Surebridge has sole voting and dispositive powers over the 3 million shares held. NaviSite acquired the assets of Surebridge in exchange for two promissory notes in the aggregate principal amount of approximately $39.3 million, 3 million shares of NaviSite common stock (currently trading at about $2 per share) and the assumption of certain liabilities at closing. The promissory notes issued by NaviSite to Surebridge accrue interest on the unpaid balance at an annual rate of 10%, however no interest shall accrue on any principal paid within nine months of the closing. The notes shall be paid in full no later than the second anniversary of the closing. In the event that NaviSite realizes proceeds from certain equity or debt financings or sales of assets, NaviSite is obligated to use a significant portion of the proceeds to make payments on the notes. The notes are convertible into common shares of NaviSite under certain conditions. About NaviSite, Inc. NaviSite is a leading provider of outsourced hosting and managed application services for middle-market organizations, which include mid-sized companies, divisions of large multi-national companies and government agencies. About Surebridge Surebridge, is the leading application outsourcer of On Demand Solutions for middle market companies, delivering brand-name application choice and affordable strategy, implementation, outsourcing and optimization services. Surebridge is an intregral part of NaviSite's comprehensive IT infrastructure and application management portfolio for mid-sized enterprises, business units of multi-national corporations and government agencies. Liquidity and Capital Resources In its latest Form 10-Q filed with the Securities and Exchange Commission, NaviSite reports: "At January 31, 2004, we had a working capital deficit of $14.7 million, an accumulated deficit of $425 million, and have reported losses from operations since incorporation. We anticipate incurring additional losses throughout our current fiscal year. We have taken several actions we believe will allow us to continue as a going concern through July 31, 2004, including the closing and integration of strategic acquisitions, the changes in 2003 to our Board of Directors and senior management and bringing costs more in line with projected revenues. "On January 22, 2004, we filed with the Securities and Exchange Commission a registration statement on Form S-2 to register shares of our common stock to issue and sell in a public offering to raise additional funds. We believe that that offering will allow us to raise the necessary funds to meet our anticipated needs for working capital and capital equipment for at least 12 months following the proposed offering. In the event we are unable to complete the proposed offering, we will need to find alternative sources of financing in order to remain a going concern. Potential sources include our financing agreement with Silicon Valley Bank and public or private sales of equity or debt securities. We may also consider sales of assets to raise additional cash. If we use a significant portion of the net proceeds from an offering to acquire a company, technology or product, we may need to raise additional debt or equity capital. "During fiscal 2003, we acquired four companies, downsized our workforce and restructured our business and balance sheet to improve operating cash flow. We plan to continue to look for efficiencies and redundancies to maximize our cash flow. Our cash flow estimates are based upon attaining certain levels of sales, maintaining budgeted levels of operating expenses, collections of accounts receivable and maintaining our current borrowing line with Silicon Valley Bank among other assumptions, including the improvement in the overall macroeconomic environment. However there can be no assurance that we will be able to meet such cash flow estimates. Our sales estimate includes revenue from new and existing customers which may not be realized and we may be required to further reduce expenses if budgeted sales are not attained. We may be unsuccessful in reducing expenses in proportion to any shortfall in projected sales and our estimate of collections of accounts receivable may be hindered by our customers' ability to pay." NEW VISUAL: Strained Liquidity Raises Going Concern Doubt --------------------------------------------------------- New Visual Corporation was incorporated under the laws of the State of Utah on December 5, 1985. In November of 1999, the Company began to focus its business activities on the development of new content telecommunications technologies. Pursuant to such plan, in February of 2000, the Company acquired New Wheel Technology, Inc., a development stage, California-based, technology company, which now operates as the Company's wholly- owned subsidiary, NV Technology, Inc., a Delaware corporation. As a result of the change in business focus, the Company became a development stage entity commencing November 1, 1999. With the completion of the film "Step Into Liquid" and its revenue generation during the fourth quarter of fiscal 2003 the Company was no longer considered a development stage entity. The Company operates in two business segments, the production of motion pictures, films and videos (the "Entertainment Segment") and development of new content telecommunications technologies (the "Telecommunication Segment"). The success of the Company's Entertainment Segment is dependent on future revenues from the film "Step Into Liquid." The success of the Telecommunications Segment is dependent on the Company's ability to successfully commercialize its semiconductor technology. Through its subsidiary NV Entertainment the Company recorded operating revenues for its Entertainment Segment, but may continue to report operating losses for this segment. The Telecommunications Segment will have no operating revenues until successful commercialization of its developed technology, but will continue to incur substantial operating expenses, capitalized costs and operating losses. The Company's condensed consolidated financial statements have been prepared assuming that the Company will continue as a going- concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, for the six and three months ended April 30, 2004, the Company incurred net losses of $2,414,767 and $982,580, respectively. In addition, the Company had a working capital deficiency of $3,311,310 as of April 30, 2004. The Company has limited capital resources and requires additional funding in order to sustain its operations, accomplish its growth objectives and market its planned products and services. There is no assurance that the Company can reverse its operating losses, or that it can raise additional capital to allow it to maintain operations or expand its planned operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company needs to raise a minimum of $400,000 on an immediate basis in order to maintain its operations as presently conducted through fiscal 2004. The Company has no commitments for any such financing, and there can be no assurance that the financing will be available to it on commercially acceptable terms, or at all. The inability to obtain such financing will have a material adverse effect on New Visual's business, its operations and future business prospects. It is also anticipated that any successful financing will have a significant dilutive effect on existing stockholders. NEW WEATHERVANE: Panel Taps Jaspan Schlesinger as Local Counsel --------------------------------------------------------------- The Official Unsecured Creditors Committee appointed in New Weathervane Retail Corp., and its debtor-affiliates' cases asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Jaspan Schlesinger Hoffman LLP as its local counsel. The Committee selected Jaspan Schlesinger as its local counsel because of the firm's experience and knowledge in the field of bankruptcy and creditors' rights. 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 their 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. Jaspan Schlesinger intends to work closely with Kronish Lieb Weiner & Hellman LLP to ensure that there is no unnecessary duplication of services performed. Frederick B. Rosner, Esq., a partner of Jaspan Schlesinger reports that the firm professional hourly rates are: Designation Billing Rate ----------- ------------ paralegals $140 per hour associates $250 per hour partners $350 per hour Headquartered in New Britain, Connecticut, New Weathervane Retail Corporation -- http://www.wvane.com/-- is a Women's specialty retailer. The Company filed for chapter 11 protection on June 3, 2004 (Bankr. Del. Case No. 04-11649). William R. Firth, III, Esq., at Pepper Hamilton LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $28,710,000 in total assets and $24,576,000 in total debts. NOMURA ASSET: S&P Affirms Low B-Rating on Class 1-M-3 Certificates ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on 15 classes of certificates from three transactions issued by Nomura Asset Securities Corp. Approximately $14.3 million in certificates are affected. The affirmations are based on current credit support levels that are sufficient to maintain the ratings. Current credit support percentages on certificates not currently rated 'AAA' range from 1.03x to 3.19x their original amounts. Credit enhancement for these transactions is provided through subordination of the junior classes. The performance of these transactions has been adequate. As of the July 25, 2004 distribution date, delinquencies ranged from 0.0% to 15.91% of the current pool balances. Additionally, 90-plus day delinquencies ranged from 0.0% to 9.08%. Cumulative losses ranged from 0.01% to 4.06% the original pool balances. The underlying collateral for these transactions are mostly fixed- and adjustable-rate, first-lien, 15- to 30-year mortgage loans on single-family homes. Ratings Affirmed Nomura Asset Securities Corp. Series Class Rating ------ ----- ------ 1994-1 A-6, A-11, A-12, A-13 AAA 1994-2 1-IO, 2A, 2IO, 1-M-1, 2-M-1 AAA 1994-2 1-M-2 AA+ 1994-2 2-M-2 BBB 1994-2 1-M-3 B 1994-3 IO, PO AAA 1994-3 M-3 AA- OWENS CORNING: Wants to Make $Redacted Pension Plan Contributions ----------------------------------------------------------------- For decades, Owens Corning and its debtor-affiliates and subsidiaries have sponsored pension plans to provide retirement income to eligible employees, which are embodied in a merged pension plan called the Owens Corning Merged Retirement Plan. The Pension Plan is an Employee Retirement Income Security Act of 1974 defined benefit pension plan qualified under the Internal Revenue Code. The Pension Plan has approximately 30,200 participants. The Pension Plan covers eligible salaried and hourly employees. When a Plan Participant retires, the Pension Plan provides a pension benefit based on formulas stated in the plan document. A participant's benefit, whether paid as an annuity or lump sum, is independent of the Pension Plan's investment performance. For most participating hourly employees, the benefit formulas typically provide a monthly pension at retirement of a certain dollar amount multiplied by years of service. The retirement formula varies by employee group and can be different for past and future years of service. For most hourly employees, benefits earned for service after January 1, 1995 can only be received in the form of an annuity. A lump sump option may be available on benefits earned prior to January 1, 1995. Prior to January 1, 1996, salaried employees were covered by a traditional final average pay pension formula. The formula provided a monthly benefit at retirement based on a percentage determined by the average compensation earned over the prior three years. On January 1, 1996, the salaried pension formula was converted to a cash balance formula. Cash balance accounts work like savings accounts. They grow monthly by Pay/Service Credits and Interest Credits. The Pay/Service Credits are based on defined percentages of covered compensation or defined dollar amounts. The Interest Credits are based on five-year U.S. Treasury rates. When the employment relationship ends, participants may receive the value of their benefit in a lump sum or an annuity. Both the ERISA and the IRC mandate that every employer maintaining a qualified benefit plan must make minimum funding contributions if the plan funding falls below certain levels. Failure to pay required minimum funding contributions to an ERISA plan may result in termination of a plan, loss of tax qualification, loss of tax deductions, or taxable income to participants. Section 412 of the Internal Revenue Code compels Watson Wyatt Worldwide, the Pension Plan's actuary, to determine annually whether the required minimum funding contributions must be made and in what amount. In this regard, Watson projected that the Debtors will be required to make: -- $[redacted] in mandatory minimum funding contributions from 2004 to 2008, assuming the Pension Plan experience matches actuarial assumptions: Projected Minimum Contribution Requirements Calendar Year Contribution [Redacted] ------------- ----------------------- 2004 $[redacted] 2005 $[redacted] 2006 $[redacted] 2007 $[redacted] 2008 $[redacted] PBGC $[redacted] ----------------------- TOTAL $[redacted] plus -- $[redacted] variable premiums to the Pension Benefit Guaranty Corporation over the next five years. Watson also projected that to avoid payment of PBGC variable rate premiums and required participant notices under ERISA Section 4011, the Debtors will have to make these contributions from 2004 through 2008 to satisfy the funding criteria: Projected Contribution to Satisfy Funding Criteria Calendar Year Contribution [Redacted] ------------- ----------------------- 2004 $[redacted] 2005 $[redacted] 2006 $[redacted] 2007 $[redacted] 2008 $[redacted] ----------------------- TOTAL $[redacted] The Debtors ask the United States Bankruptcy Court for the District of Delaware to authorize Owens Corning to contribute $[redacted] to the Pension Plan on or before September 15, 2004, thereby substantially reducing the otherwise projected required contributions over the five-year period. Norman L. Pernick, Esq., at Saul & Ewing LLP, in Wilmington, Delaware, relates that the reduction in the projected aggregate contributions over the Projection Period is achieved by avoiding the very large mandatory minimum contributions that would otherwise be projected to be required in subsequent years. This is done by increasing the Plan's Current Liability Funding Ratio as defined in Section 412(l)(9)(C) of the Internal Revenue Code from [redacted]% to [redacted]% as of January 1, 2004. This in turn: (i) exempts the Plan from participant notices for 2004 and 2005; (ii) eliminates the PBGC variable rate premium payment for the 2004 plan year; and (iii) allows the Pension Plan's assets to grow and compound over time on a tax-free basis. 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. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS-ILLINOIS INC: S&P Affirms BB- Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Owens-Illinois Inc. and removed it from CreditWatch where it was placed on Feb. 19, 2004. The outlook is negative. Toledo, Ohio-based Owens-Illinois' total debt was $6.7 billion at June 30, 2004. Concurrently, following the completion of Owens- Illinois' acquisition of France-based BSN Glasspack S.A. in June 2004, the corporate credit rating on BSN Glasspack is raised to 'BB-' from 'B+' and the ratings on BSN's ?180 million 10.25% notes due 2009 and ?160 million 9.25% subordinated notes due 2009 are raised to 'B' from 'B-'. "The rating actions follow the completion of the company's debt-financed acquisition of BSN Glasspack, and the company's announcement that it has signed a definitive agreement to sell its blow-molded plastic container operations to Graham Packaging Co. for $1.2 billion," said Standard & Poor's credit analyst Liley Mehta. The blow-molded plastic container operations being sold had 2003 sales of $1.1 billion across North America, Europe and South America serving the food, beverage, household, chemical, and personal care markets. The proposed transaction is subject to regulatory approval and is expected to close in the fourth quarter of 2004. The announced sale removes considerable uncertainty regarding the timing and valuation of these assets, and the higher than previously expected sale proceeds would substantially offset the BSN acquisition-related debt increase. Moreover, the recent appointment of a Chief Executive Officer has also been an important development with regard to the establishment of long- term business goals and financial policy objectives. Actions to curtail capital spending and improve working capital management are expected to result in higher than previously expected free cash generation in 2004 and beyond. The ratings on Owens-Illinois and its related entities reflect its aggressive financial profile, subpar credit measures, and meaningful concerns regarding its asbestos liability. These factors are offset by an above-average business position and attractive profitability. Owens-Illinois' business risk profile reflects the company's preeminent market position, which is bolstered by advanced production technology, operating efficiency, and the relatively recession-resistant nature of many of its packaging products. Owens-Illinois' financial results reflect exposure to changing conditions in regional economies and the vagaries of currency swings, but the breadth of operations tends to provide more stability during the business cycle than that of many other industrial companies. Owens-Illinois is the largest manufacturer of glass containers in North America, South America, Australia, and New Zealand, and the largest in Europe, following the recently completed BSN acquisition. The company is publicly held and Kohlberg Kravis Roberts & Co. owns about 25% of the stock. PACIFIC GAS: Wants to Settle Williams Claims for $69.3 Million -------------------------------------------------------------- On November 13, 2003, Pacific Gas and Electric Company and a number of its creditors holding Class 6 claims under the reorganization plan entered into a stipulation wherein PG&E agreed to deposit $1,600,000,000 in a disputed claims escrow account to be held on account of Class 6 Claims only. The Class 6 Stipulation further provided that any reduction in the amount deposited in the escrow would be made "only upon order of the Bankruptcy Court pursuant to a reasonably noticed motion." On March 5, 2004, the United States Bankruptcy Court for the Northern District of California approved the Disputed Claims Escrow Accounts. Pursuant to the Escrow Order, PG&E established a separate escrow account for disputed Claims in Class 6 aggregating $1,600,000,000. PG&E has entered into a settlement with one of the Class 6 Claimants and now seeks to withdraw $69,348,300 from the Class 6 Escrow, based on the settlement. The Williams Settlement Janet A. Nexon, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, in San Francisco, California, relates that on July 2, 2004, the Federal Energy Regulatory Commission approved a settlement between The Williams Companies, Inc., Williams Power Company, Inc., and PG&E, among other parties. As set forth in the FERC Order, the Williams Settlement is "based upon a calculation and allocation of Williams' total refund amounts associated with its spot sales into markets operated by the California Independent System Operator Corporation and the California Power Exchange for the period from October 2, 2000 to June 20, 2001," and resolves all claims within the May 1, 2000 to October 1, 2000 "pre-refund Period." The Williams Settlement provides that certain parties to the settlement, the "Deemed Distribution Participants," including PG&E, will not receive cash distributions on account of the settlement. Rather, the portion of the settlement amount allocated to each Deemed Distribution Participant will be deemed a set-off to amounts payable by that Deemed Distribution Participant to the PX, and will result in a corresponding reduction in the amounts payable to Williams by the PX. The amount of the set-off for each Deemed Distribution Participant will equal the portion of the settlement amount allocated to that Deemed Distribution Participant. Ms. Nexon relates that notwithstanding restrictions on cash payments to Deemed Distribution Participants, the FERC Order approving the Williams Settlement will give PG&E the right, subject to approval by the Bankruptcy Court, to withdraw funds in an amount equal to PG&E's allocated portion of the settlement amount from the PG&E bankruptcy escrow. The amount allocated to PG&E's benefit under the Williams Settlement is $69,348,330. Accordingly, the PG&E Refund Amount will be applied as a credit by the PX, thereby reducing PG&E's obligations to the PX with respect to the Class 6 Claims. In accordance with the Plan, the amount will be applied by PG&E to reduce the regulatory asset, which, in turn, will reduce the rates of PG&E ratepayers. Ms. Nexon explains that because the set-off of the Refund Amount by the PX under the Williams Settlement will have the effect of reducing PG&E's total obligations to Class 6 Claimants, it is appropriate for PG&E to reduce the amount in the Class 6 Escrow in a like amount. The FERC Order provides that PG&E is directed to request Court approval for the disbursal of funds from the PG&E escrow account. PG&E asks the Court for permission to reduce the amount in the Class 6 Escrow by $69,348,330, and direct the escrow agent for the Class 6 Escrow account to release the funds to PG&E. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly-owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. (Pacific Gas Bankruptcy News, Issue No. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT GROUP: Inks Consent Judgment Settling SEC's Civil Suit --------------------------------------------------------------- The Securities and Exchange Commission filed an amended complaint in its lawsuit against Parmalat Finanziaria SpA in U.S. District Court in the Southern District of New York. The amended complaint alleges that the company engaged in one of the largest financial frauds in history and defrauded U.S. institutional investors when it sold them more than $1 billion in debt securities in a series of private placements between 1997 and 2002. Simultaneously with the filing of the amended complaint, Parmalat Finanziaria consented to the entry of a final judgment settling the Commission's action against it. The settlement is subject to the Court's entry of the proposed judgment. The complaint the Commission filed alleges the following, among other things: -- Parmalat Finanziaria consistently overstated its level of cash and marketable securities. For example, at year-end 2002, Parmalat Finanziaria overstated its cash and marketable securities by at least EUR2.4 billion. As of year-end 2003, Parmalat Finanziaria had overstated its assets by at least EUR3.95 billion (approximately $4.9 billion). -- As of September 30, 2003, Parmalat Finanziaria had understated its reported debt of EUR6.4 billion by at least EUR7.9 billion. Parmalat Finanziaria used various tactics to understate its debt, including: (a) eliminating approximately EUR3.3 billion of debt held by one of its nominee entities; (b) recording approximately EUR1 billion of debt as equity through fictitious loan participation agreements; (c) removing approximately EUR500 million of liabilities by falsely describing the sale of certain receivables as non-recourse, when in fact the company retained an obligation to ensure that the receivables were ultimately paid; (d) improperly eliminating approximately EUR300 million of debt associated with a Brazilian subsidiary during the sale of the subsidiary; (e) mischaracterizing approximately EUR300 million of bank debt as intercompany debt, thereby inappropriately eliminating it in consolidation; (f) eliminating approximately EUR200 million of Parmalat SpA payables as though they had been paid when, in fact, they had not; and (g) not recording a liability of approximately EUR400 million associated with a put option. -- Between 1997 and 2003, Parmalat SpA transferred approximately EUR350 million to various businesses owned and operated by Tanzi family members. -- Parmalat Finanziaria transferred uncollectible and impaired receivables to "nominee" entities, where their diminished or nonexistent value was hidden. As a result, Parmalat Finanziaria carried assets at inflated values and avoided the negative impact on its income statement that would have been associated with a proper reserve or write-off of bad debt. -- Parmalat Finanziaria used these same nominee entities to fabricate non-existent financial operations intended to offset losses of its operating subsidiaries. For example, if a subsidiary experienced losses due to exchange rate fluctuations, the nominee entity would fabricate foreign exchange contracts to offset the losses. Similarly, if a subsidiary had exposure due to interest rate fluctuations, the nominee entity would fabricate interest rate swaps to curb the exposure. -- Parmalat Finanziaria used the nominee entities to disguise intercompany loans from one subsidiary to another subsidiary that was experiencing operating losses. Specifically, a loan from one subsidiary would be made to another subsidiary operating at a loss. The recipient then improperly applied the loan proceeds to offset its expenses and thereby increase the appearance of profitability. As a result, rather than have a neutral effect on the consolidated financials, the loan transaction served to inflate both assets and net income. -- Parmalat Finanziaria recorded fictional revenue through sales by its subsidiaries to controlled nominee entities at inflated or entirely fictitious amounts. In order to avoid unwanted scrutiny due to the aging of the receivables associated with these fictitious or overstated sales, the related receivables would be transferred or sold to nominee entities. In its consent, Parmalat Finanziaria has agreed, without admitting or denying the allegations of the amended complaint, to be permanently enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5, as well as Section 17(a) of the Securities Act of 1993. In addition, Parmalat Finanziaria has agreed to adopt changes to its corporate governance to promote future compliance with the federal securities laws, including: (1) adopting by-laws providing for governance by a shareholder-elected board of directors, the majority of whom will be independent and serve finite terms; (2) specifically delineating in the by-laws the duties of the board of directors; (3) adopting a Code of Conduct governing the duties and activities of the board of directors; (4) adopting an Insider Dealing Code of Conduct; and (5) adopting a Code of Ethics. The by-laws will also require that the positions of chairman of the board of directors and managing director be held by two separate individuals. Parmalat Finanziaria's consent also provides for the continuing jurisdiction of the U.S. District Court to enforce its provisions. The Commission's investigation into federal securities law violations related to the fraud at Parmalat Finanziaria is continuing. A full-text copy of the SEC's revised complaint is available for free at: http://www.sec.gov/litigation/complaints/comp18803.pdf 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) PEGASUS SATELLITE: Wants to Hire King & Spalding as Corp. Counsel ----------------------------------------------------------------- Pegasus Satellite Communications, Inc. and its debtor-affiliates and subsidiaries anticipate that during the course of their Chapter 11 proceeding, they may engage in discussions relating to certain strategic transactions, like a possible sale of some or all of their assets, a financial restructuring, a possible joint venture, or a strategic merger. Thus, the Debtors will require the services of a special corporate counsel with extensive experience in complex transactional matters, along with strength in other associated practice areas, including corporate finance, banking, tax, antitrust and employee benefits law. The Debtors seek permission of the United States Bankruptcy Court for the District of Maine to employ King & Spalding, LLP, nunc pro tunc to the Petition Date, as their special corporate and transactional counsel in their Chapter 11 cases. The Debtors believe that King & Spalding is particularly well qualified to act as their special corporate and transactional counsel based on its extensive experience with corporate and transactional issues and its familiarity with the Debtors and their business, operations and capital structure. King & Spalding has been advising the Debtors' parent company, Pegasus Communications Corporation, a non-debtor entity, on various issues since 1998. The Debtors agree that the firm may continue to represent Pegasus Communications in matters not substantially related to its work for the Debtors, so long as the interests of Pegasus Communications and the Debtors do not become materially adverse to each other. If an actual conflict of interest develops, King & Spalding will discontinue rendering services to the Debtors solely with respect to the matter where conflict exists. The Debtors will pay King & Spalding for its legal services on an hourly basis in accordance with ordinary and customary rates: Partners $380 - 675 Associates 215 - 380 Paralegals 100 - 185 John L. Graham, a partner at King & Spalding, assures Judge Haines that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Graham asserts that the firm does not represent or hold any interest adverse to the Debtors or to the estate with respect to the matters on which it is being employed. Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Me. Lead Case No. 04-20889) on June 2, 2004. Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) PINNACLE ENT: S&P Assigns B+ Rating to Proposed $350M Bank Loan --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on casino owner and operator Pinnacle Entertainment Inc. to positive from stable. At the same time, Standard & Poor's assigned its 'B+' rating and a recovery rating of '1' to Pinnacle's proposed $350 million senior secured bank facility, indicating Standard & Poor's expectation that the lenders would realize full recovery of principal in the event of default. This facility is secured by a first priority interest in substantially all assets of Pinnacle and its domestic subsidiaries. The bank loan is rated one notch above the corporate credit rating. Proceeds from the proposed bank facility will be used to refinance the company's existing credit facilities, to help provide funding for several of the company's planned capital investments, including the Lake Charles development project, and for general corporate purposes. At the same time, Standard & Poor's affirmed its 'B' corporate credit and 'CCC+' subordinated debt ratings on Las Vegas, Nev.- based Pinnacle. The rating on the company's existing senior secured bank facility will be withdrawn once the new facility is funded. Total debt outstanding at March 31, 2004, was $656 million. "The outlook revision reflects Pinnacle's steadily improved operating results over the past several quarters and Standard & Poor's expectation that this trend is likely to continue in the near term," said Standard & Poor's credit analyst Michael Scerbo. "In addition, the company has completed several liquidity enhancing transactions over the past few quarters that provide ample funding for the completion, and ramping up, of its ongoing Lake Charles development." PG&E NATIONAL: Affiliate to Pay Bethesda Place $11.8M Under Lease ----------------------------------------------------------------- Pursuant to Section 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, National Energy & Gas Transmission, Inc., sought and obtained the permission of the United States Bankruptcy Court of the District of Maryland to modify an existing real property lease and to make certain payments under the Lease Modification. The Lease Power Services Company, a non-debtor affiliate of NEG, is a tenant of all the office and retail space, including a parking garage, in an 11-story office building commonly referred to as Bethesda Place II at 7600 Wisconsin Avenue in Bethesda, Maryland. The lease is dated June 25, 1998. The Lease has been amended on numerous occasions, including by: (a) a letter agreement dated June 2, 2000, (b) a letter agreement dated June 6, 2001, and (c) a First Amendment to Lease dated March 25, 2003. The landlord under the Lease is Bethesda Place II Limited Partnership. An affiliate of the Landlord, Bethesda Place Limited Partnership, also known as Bethesda Place I Limited Partnership, owns a building at 7700 Wisconsin Avenue, which is adjacent to the 7600 Building. Bethesda Place Limited Partnership joined in the execution of the Lease as the "Adjacent Building Landlord," primarily for granting certain expansion rights to Power Services for office space in the 7700 Building. Power Services' obligations under the Lease are guaranteed by National Energy Power Company, LLC, a non-debtor affiliate of NEG, by virtue of a guarantee dated June 25, 1998. Pursuant to the Lease, Power Services was granted certain options to expand into certain office space as the space became available in the 7700 Building, and upon the occurrence of certain conditions, including a written notice -- the Put Notice -- from Bethesda Place Limited Partnership, Power Services would become obligated to lease two floors of the 7700 Building for a term ending on October 31, 2012, defined as the "Must-Take Space". Bethesda Place Limited Partnership sent the Put Notice to Power Services on December 1, 2003. Accordingly, pursuant to the Lease, Power Services is obligated to rent the Must-Take Space. Moreover, Power Services has previously entered into four subleases under which 43% of the 7600 Building has been subleased to others. The Modifications Power Services and Bethesda Place II Limited have negotiated certain modifications to the Lease to resolve several issues. Under the Modified Lease, the parties agree that: * Power Services does not have any need for the Must-Take Space. Under the Lease, the potential gross rental obligation for the Must-Take Space over the next eight years is estimated to be in excess of $19,000,000, which Power Services believes exceeds the fair rental value of the Must-Take Space that Power Services might obtain if it were able to sublet the Must-Take Space. In exchange for a $4,327,799 payment by Power Services to Bethesda Place Limited Partnership -- NEG will fund that payment by down-streaming funds to Power Services -- that amount to be reduced by amounts paid by Power Services on account of the Must-Take Space before the actual payment pursuant to the Modification Agreement, and a surrender of any expansion rights, Bethesda Place II Limited and Bethesda Place Limited Partnership will release Power Services and National Energy Power from any obligations with respect to the Must-Take Space. * Power Services does not anticipate needing any space in the 7600 Building after June 30, 2005. Subject to the assignment of subleased portions of the premises, Bethesda Place II Limited will change the expiration of the term of the Lease from October 31, 2012 to June 30, 2005, insofar as it relates to the Occupied Space -- that portion of the space in the 7600 Building not included as part of the Sublet Space -- and to release Power Services from any obligation to restore most of those items listed in the June 2001 Letter. Effective June 30, 2004, Bethesda Place II Limited is willing to: (a) accept the assignment of the Subleases from Power Services; (b) release Power Services and the National Energy Power from any further liability with respect to the Subleases and the Sublet Space; and (c) indemnify Power Services from any further liability as sublessor under the Subleases and the Sublet Space. As a result, Power Services' obligations under the Lease after June 30, 2004 will be only for the Occupied Space. Additionally, Power Services no longer has a need to lease the entire garage located in the 7600 Building. Bethesda Place II Limited will also release Power Services from its obligation to lease and maintain the Garage and to permit Power Services to lease parking spaces in the Garage based on the amount of space it occupies in the 7600 Building after July 1, 2004. Bethesda Place II Limited and Power Services agreed that with regard to the Occupied Space, in the event Bethesda Place II Limited identifies new qualified tenants to lease entire-floor portions of the Occupied Space, Power Services will use reasonable efforts to vacate those portions of the Occupied Space even before June 30, 2005, and Bethesda Place II Limited will release Power Services from any future obligation related to the vacated space. In the event of a sale by Power Services or NEG of assets or subsidiaries to a qualified purchaser where the qualified purchaser desires to lease entire-floor portions of the Occupied Space under certain specified terms and conditions, Bethesda Place II Limited will enter into a lease with a Purchaser Tenant to be effective on July 1, 2005. Under the terms of the Modification Agreement, Power Services will continue to pay the electricity charges for the entire 7600 Building, including the Sublet Space, through June 30, 2005, and Bethesda Place II Limited will reimburse Power Services for amounts due from subtenants under the Subleases and New Tenants on account of electricity charges. The Payment Under the Lease, the potential gross rental obligation for the Occupied Space and the Garage until 2012 is estimated to exceed $52,500,000. This exceeds the fair rental value that Power Services might obtain if it were able to sublet the Occupied Space and the Garage. The Lease Modification provides that Power Services will pay $11,844,000 to Bethesda Place II Limited. Of the $11,844,000, $5,000,000 will be placed in escrow. The Escrow Amount will be held by LaSalle Bank and will be released to Power Services on or before July 6, 2005: (a) $1,500,000 for each of the first two full floors of the Occupied Premises leased by Purchaser Tenants on or before June 30, 2005 up to a maximum of $3,000,000; plus (b) in the event more than two full floors of the Occupied Premises will be leased by Purchaser Tenants on or before June 30, 2005, $1,000,000 for each of the next two full floors so leased, up to a maximum of $5,000,000 in the aggregate. To the extent Purchaser Leases are not entered into by Purchaser Tenants by June 30, 2005, then the balance of the Escrow Amount, if any, will be released to Bethesda Place II Limited. Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, LLP, in Baltimore, Maryland, explains that Bethesda Place II Limited entered into the Lease Modification to: (1) accomplish the reduction in the size of the premises leased by Power Services; (2) change the expiration of the Lease with respect to the Occupied Space from October 31, 2012 to June 30, 2005; (3) release Power Services of obligations to restore many of the items set forth in the June 2001 Agreement; (4) provide for the release of Power Services and National Energy Power from any further liability with respect to the Lease after June 30, 2005; (5) release Power Services from its obligation to lease and maintain the entire garage in the 7600 Building; (6) allow Power Services to vacate certain portions of the Occupied Space before the expiration of the Lease to the extent the Landlord identifies new tenants for the space; and (7) agree to refund to Power Services certain portions of the Premises Payment if one or more Purchaser Tenants enter into a lease with Landlord. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) Pursuant to Section 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, National Energy & Gas Transmission, Inc., sought and obtained the permission of the United States Bankruptcy Court of the District of Maryland to modify an existing real property lease and to make certain payments under the Lease Modification. The Lease Power Services Company, a non-debtor affiliate of NEG, is a tenant of all the office and retail space, including a parking garage, in an 11-story office building commonly referred to as Bethesda Place II at 7600 Wisconsin Avenue in Bethesda, Maryland. The lease is dated June 25, 1998. The Lease has been amended on numerous occasions, including by: (a) a letter agreement dated June 2, 2000, (b) a letter agreement dated June 6, 2001, and (c) a First Amendment to Lease dated March 25, 2003. The landlord under the Lease is Bethesda Place II Limited Partnership. An affiliate of the Landlord, Bethesda Place Limited Partnership, also known as Bethesda Place I Limited Partnership, owns a building at 7700 Wisconsin Avenue, which is adjacent to the 7600 Building. Bethesda Place Limited Partnership joined in the execution of the Lease as the "Adjacent Building Landlord," primarily for granting certain expansion rights to Power Services for office space in the 7700 Building. Power Services' obligations under the Lease are guaranteed by National Energy Power Company, LLC, a non-debtor affiliate of NEG, by virtue of a guarantee dated June 25, 1998. Pursuant to the Lease, Power Services was granted certain options to expand into certain office space as the space became available in the 7700 Building, and upon the occurrence of certain conditions, including a written notice -- the Put Notice -- from Bethesda Place Limited Partnership, Power Services would become obligated to lease two floors of the 7700 Building for a term ending on October 31, 2012, defined as the "Must-Take Space". Bethesda Place Limited Partnership sent the Put Notice to Power Services on December 1, 2003. Accordingly, pursuant to the Lease, Power Services is obligated to rent the Must-Take Space. Moreover, Power Services has previously entered into four subleases under which 43% of the 7600 Building has been subleased to others. The Modifications Power Services and Bethesda Place II Limited have negotiated certain modifications to the Lease to resolve several issues. Under the Modified Lease, the parties agree that: * Power Services does not have any need for the Must-Take Space. Under the Lease, the potential gross rental obligation for the Must-Take Space over the next eight years is estimated to be in excess of $19,000,000, which Power Services believes exceeds the fair rental value of the Must-Take Space that Power Services might obtain if it were able to sublet the Must-Take Space. In exchange for a $4,327,799 payment by Power Services to Bethesda Place Limited Partnership -- NEG will fund that payment by down-streaming funds to Power Services -- that amount to be reduced by amounts paid by Power Services on account of the Must-Take Space before the actual payment pursuant to the Modification Agreement, and a surrender of any expansion rights, Bethesda Place II Limited and Bethesda Place Limited Partnership will release Power Services and National Energy Power from any obligations with respect to the Must-Take Space. * Power Services does not anticipate needing any space in the 7600 Building after June 30, 2005. Subject to the assignment of subleased portions of the premises, Bethesda Place II Limited will change the expiration of the term of the Lease from October 31, 2012 to June 30, 2005, insofar as it relates to the Occupied Space -- that portion of the space in the 7600 Building not included as part of the Sublet Space -- and to release Power Services from any obligation to restore most of those items listed in the June 2001 Letter. Effective June 30, 2004, Bethesda Place II Limited is willing to: (a) accept the assignment of the Subleases from Power Services; (b) release Power Services and the National Energy Power from any further liability with respect to the Subleases and the Sublet Space; and (c) indemnify Power Services from any further liability as sublessor under the Subleases and the Sublet Space. As a result, Power Services' obligations under the Lease after June 30, 2004 will be only for the Occupied Space. Additionally, Power Services no longer has a need to lease the entire garage located in the 7600 Building. Bethesda Place II Limited will also release Power Services from its obligation to lease and maintain the Garage and to permit Power Services to lease parking spaces in the Garage based on the amount of space it occupies in the 7600 Building after July 1, 2004. Bethesda Place II Limited and Power Services agreed that with regard to the Occupied Space, in the event Bethesda Place II Limited identifies new qualified tenants to lease entire-floor portions of the Occupied Space, Power Services will use reasonable efforts to vacate those portions of the Occupied Space even before June 30, 2005, and Bethesda Place II Limited will release Power Services from any future obligation related to the vacated space. In the event of a sale by Power Services or NEG of assets or subsidiaries to a qualified purchaser where the qualified purchaser desires to lease entire-floor portions of the Occupied Space under certain specified terms and conditions, Bethesda Place II Limited will enter into a lease with a Purchaser Tenant to be effective on July 1, 2005. Under the terms of the Modification Agreement, Power Services will continue to pay the electricity charges for the entire 7600 Building, including the Sublet Space, through June 30, 2005, and Bethesda Place II Limited will reimburse Power Services for amounts due from subtenants under the Subleases and New Tenants on account of electricity charges. The Payment Under the Lease, the potential gross rental obligation for the Occupied Space and the Garage until 2012 is estimated to exceed $52,500,000. This exceeds the fair rental value that Power Services might obtain if it were able to sublet the Occupied Space and the Garage. The Lease Modification provides that Power Services will pay $11,844,000 to Bethesda Place II Limited. Of the $11,844,000, $5,000,000 will be placed in escrow. The Escrow Amount will be held by LaSalle Bank and will be released to Power Services on or before July 6, 2005: (a) $1,500,000 for each of the first two full floors of the Occupied Premises leased by Purchaser Tenants on or before June 30, 2005 up to a maximum of $3,000,000; plus (b) in the event more than two full floors of the Occupied Premises will be leased by Purchaser Tenants on or before June 30, 2005, $1,000,000 for each of the next two full floors so leased, up to a maximum of $5,000,000 in the aggregate. To the extent Purchaser Leases are not entered into by Purchaser Tenants by June 30, 2005, then the balance of the Escrow Amount, if any, will be released to Bethesda Place II Limited. Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, LLP, in Baltimore, Maryland, explains that Bethesda Place II Limited entered into the Lease Modification to: (1) accomplish the reduction in the size of the premises leased by Power Services; (2) change the expiration of the Lease with respect to the Occupied Space from October 31, 2012 to June 30, 2005; (3) release Power Services of obligations to restore many of the items set forth in the June 2001 Agreement; (4) provide for the release of Power Services and National Energy Power from any further liability with respect to the Lease after June 30, 2005; (5) release Power Services from its obligation to lease and maintain the entire garage in the 7600 Building; (6) allow Power Services to vacate certain portions of the Occupied Space before the expiration of the Lease to the extent the Landlord identifies new tenants for the space; and (7) agree to refund to Power Services certain portions of the Premises Payment if one or more Purchaser Tenants enter into a lease with Landlord. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) REGUS CORP: S&P Assigns B- Preliminary Bank Loan Rating ------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B-' long-term corporate credit rating to the U.K.-based serviced- offices provider Regus Group PLC (Regus), subject to a successful rights issue of $218 million, the placing of proposed $155 million senior secured facilities, and the successful acquisition of U.S.- based HQ Global Holding Inc. (HQ). The outlook is stable. The ratings will be withdrawn, however, if the acquisition of HQ fails to occur. At the same time, Standard & Poor's assigned a preliminary 'B-' long-term rating to the $155 million senior secured credit facilities, with final maturity in 2010, issued by Regus Corp., the U.S. holding company. A recovery rating of '4' was also assigned to the loan, indicating Standard & Poor's expectations of marginal recoveries (in the range of 25%-50%) for senior lenders in the event of default. The credit facilities are guaranteed by Regus and several other group companies. All ratings are subject to final documentation. "The preliminary ratings on Regus reflect the group's high operating leverage, mismatch in the duration of headleases and subleases, relatively short visibility, a fragmented and cyclical serviced-office industry, integration risk, and a very weak EBITDAR-to-interest and rent coverage ratio," said Standard & Poor's credit analyst Kenneth Mak. "Positive rating factors include Regus' strong brand identity, good market position, and moderate working capital needs." Regus offers a global network of serviced offices available to rent on a short-term basis. Regus has entered into an agreement to acquire HQ, subject to various factors including a rights issue and the sale of credit facilities. After the acquisition of HQ, Regus would operate 508 centers in 52 countries offering fully equipped office spaces. The combined group is expected to generate �416 million ($756 million) sales in 2004 on a pro forma basis. The group will have �779 million of total adjusted debt, including �697 million of operating lease adjustment (4.2x the pro forma annual lease payment of �166 million). Regus has an improved cost structure after significant restructuring in the past three years and emergence from Chapter 11 bankruptcy protection in the U.S. The group will have a strong market position and adequate liquidity once the proposed refinancing and acquisition have been completed. To maintain the ratings, Regus is expected to achieve earnings before interest, taxes, depreciation, amortization, and rents (EBITDAR) to interest plus rents of more than 1.2x. The group's debt levels are not expected to rise significantly after the refinancing. RECYCLING SOLUTIONS: Seeks Nod to Hire Kevin Heard as Attorney -------------------------------------------------------------- Recycling Solutions, Inc., asks the U.S. Bankruptcy Court for the Northern District of Alabama, Northern Division, for permission to hire Kevin D. Heard, Esq., at Heard & Heard, as its bankruptcy attorney. Mr. Heard is expected to: a) give debtor legal advice with respect to its powers and duties as debtor-in-possession; b) take necessary action against various creditors, entities, governmental agencies, etc., to enforce the stay and protect the interests of the debtor; c) prepare on behalf of or to assist the debtor in preparing, as debtor-in-possession, all necessary applications, answers, orders, reports and legal papers including the formulation of a disclosure statement and plan of reorganization; and d) perform all other legal services for debtor, as debtor-in- possession, which may be necessary herein. To the best of the Debtor's knowledge, Mr. Heard and his firm are "disinterested persons" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Heard will bill the Debtor his current hourly rate of $185 per hour. Headquartered in Madison, Alabama, Recycling Solutions, Inc., is a waste systems company with services like recycling waste and improving material handling efficiencies. The Company filed for chapter 11 protection on July 2, 2004 (Bankr. N.D. Ala. Case No. 04-83052). When the Company filed for protection from its creditors, it listed $5,064,689 in total assets and $1,248,775 in total debts. RELIANCE: Liquidator Wants to Sell King County Land for $450K ------------------------------------------------------------- M. Diane Koken, the Insurance Commissioner of Pennsylvania, as Liquidator of Reliance Insurance Company, asks the Commonwealth Court of Pennsylvania for permission to sell a parcel of property located in King County, Washington, to TSS, LLC. The Property is known as King County Tax Parcel 926500-0020-07 and consists of 1.58 acres. Local real estate agents refer to the Property as Lot 2, West Campus Office Park. Jerome B. Richter, Esq., at Blank Rome, in Philadelphia, Pennsylvania, informs the Court that the Property was purchased in 1993 as part of RIC's acquisition of 5.73 acres of raw land for $1,500,000, or $6.00 per square foot. TSS will pay the Liquidator $450,000 for the Property, or $6.54 per square foot. TSS has escrowed a $10,000 initial cash deposit and delivered to the escrow agent a note for an additional $10,000. TSS will accept the Property in "as-is" condition. Once Court approval of the agreement is received, TSS will have 90 days to perform due diligence, opt out of the agreement, and recover its deposit. The review period may be extended an additional 90 days if TSS pays a $6,000 non-refundable fee, which will be applied to the purchase price if the closing occurs. RIC's closing expenses are limited to the costs of preparing the deed, payment of real estate transfer taxes, costs of standard owner's title insurance policy, which is customary in Washington state, and its own attorney's fees. GVA Kidder-Mathews represented RIC as its broker. Western Commercial Real Estate acts as a co-broker under an agreement with TSS. GVA Kidder-Mathews actively marketed the Property for the past three years. RIC will pay GVA Kidder-Mathews a commission equal to 6% of the purchase price, which GVA Kidder-Mathews will share with Western Commercial Real Estate. Based on the $450,000 purchase price, RIC will pay $27,000 as commission. To ensure that any purchase price represented fair value, the Liquidator obtained the advice of Cushman & Wakefield's appraisal unit, which prepared a report on March 24, 2003. The Cushman & Wakefield report determined that the combined value of two separate parcels was $6.41 per square foot. The Liquidator is satisfied with TSS's offer as it contemplates a 2% premium to the estimated value. Furthermore, the transaction will help the Liquidator marshal RIC's assets to minimize and apportion any loss to policyholders, claimants and creditors. Mr. Richter assures the Court that TSS is financially able to consummate the transaction. TSS has combined assets of over $12,000,000, with a net worth of over $11,000,000. Columbia Private Banking, an affiliate of Columbia Bank in Bellevue, Washington, has provided a letter, dated March 23, 2004, stating that TSS has sufficient funds to complete the transaction. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Reliance Insurance Company. The Company filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403). When the Company filed for protection from their creditors, they listed $12,598,054,000 in assets and $12,877,472,000 in debts. (Reliance Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) ROCHESTER: Alberta Securities Commission Revokes Cease Trade Order ------------------------------------------------------------------ Rochester Energy Corp. (formerly International Rochester Energy Corp.) reports the full revocation of a cease trade order issued by the Alberta Securities Commission and a partial revocation of cease trade orders issued by both the British Columbia Securities Commission and the Ontario Securities Commission. On April 8, 2004 the Alberta Securities Commission granted a full revocation of a cease trade order imposed on April 4, 2003. The cease trade order was imposed for a failure on the Corporation's behalf to file audited annual financial statements for the year ended September 30, 2002. On May 26, 2004 the British Columbia Securities Commission granted a partial revocation of a cease trade order imposed on February 25, 2003. On July 28, 2004 the Ontario Securities Commission granted a partial revocation of a cease trade order imposed on March 11, 2003. Rochester reports a corporate name change from International Rochester Energy Corp. to Rochester Energy Corp. effective July 29, 2004. The full revocation of the Alberta Securities Commission cease trade order, and partial revocation of both the British Columbia Securities Commission and the Ontario Securities Commission cease trade orders allow Rochester to pursue the following: -- the completion of a previously approved nine-for-one share consolidation. Prior to the Consolidation, Rochester had 9,280,290 common shares issued and outstanding. Following the Consolidation Rochester has 1,031,141 common shares issued and outstanding; -- the execution of a shares-for-debt settlement and a private placement. The private placement will consist of an offering of up to 3,000,000 units, each comprised of one common share and one common share purchase warrant. Each warrant will be exercisable for a term of five years at a price of $0.40 per common share. Rochester is a junior oil and gas company with its head office in Calgary, Alberta and is a reporting issuer in Alberta, British Columbia and Ontario. Rochester's primary focus is the acquisition of oil and gas properties in Western Canada in an effort to regain financial stability. Common shares of Rochester Energy Corp. are not listed or posted for trading on any exchange or quotation system in North America. Rochester shares are not freely tradable to or by residents of British Columbia and Ontario as the cease trade orders issued by the Ontario Securities Commission and the British Columbia Securities Commission have not been fully revoked. SEQUOIA MORTGAGE: Fitch Rates Class B-4 & B-5 Certificates BB & B ----------------------------------------------------------------- Sequoia Mortgage Trust 2004-7 mortgage pass-through certificates are rated by Fitch as follows: -- Classes A-1, A-2, A-3-A, A-3-B, X-A, X-B, and A-R ($1,002,760,100) 'AAA'; -- Class B-1 ($18,900,000) 'AA'; -- Class B-2 ($11,025,000) 'A'; -- Class B-3 ($6,300,000) 'BBB'; -- Class B-4 ($3,150,000) 'BB'; -- Class B-5 ($2,625,000) 'B'. The class B-6 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 4.50% subordination provided by the 1.80% class B-1, the 1.05% class B- 2, the 0.60% class B-3, the 0.30% privately offered class B-4, the 0.25% privately offered class B-5, and the 0.50% privately offered class B-6 certificates. The ratings on the class B-1, B-2, B-3, B- 4, and B-5 certificates are based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud, and special hazard losses in limited amounts. The ratings also reflect the quality of the mortgage collateral, the capabilities of Wells Fargo Bank, National Association, as master servicer (rated 'RMS1' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The trust consists of three cross-collateralized groups of adjustable-rate mortgage loans, designated as pool 1, pool 2, and pool 3. Each group's senior certificates will receive interest and/or principal from its respective mortgage loan group. In certain very limited circumstances when a pool experiences either rapid prepayments or disproportionately high realized losses, principal and interest collected from the other pools may be applied to pay principal or interest, or both, to the senior certificates of the pool that is experiencing such conditions. The subordinate certificates will support all three groups and will receive interest and/or principal from available funds collected in the aggregate from all mortgage pools. The three groups in aggregate contain 3,117 fully amortizing 25- and 30-year adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $1,050,010,683, and a weighted average principal balance of $336,866. All of the loans have interest-only terms of either five or 10 years, with principal and interest payments beginning thereafter and adjusting semi-annually based on the six-month LIBOR rate plus a margin. Approximately 6.38%, 18.06%, 54.49%, and 18.64% of the mortgage loans in the pool were originated by Bank of America, N.A, Countrywide Home Loans, Inc., GreenPoint Mortgage Funding, Inc., and Morgan Stanley Dean Witter Credit Corporation, respectively. The remainder of the loans was originated by various mortgage lending institutions. The weighted average original loan-to-value ratio (OLTV) is 70.58% and the weighted average FICO 734. Second home and investor-occupied properties constitute 9.22% and 1.83%, respectively. The states with the largest concentration of mortgage loans are California (30.11%), Florida (10.68%), and Arizona (5.44%). All other states represent less than 5% of the pool 1 pool balance as of the cut- off date. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com/ Sequoia Residential Funding, Inc., a Delaware corporation and indirect wholly owned subsidiary of Redwood Trust, Inc., will assign all its interest in the mortgage loans to the trustee for the benefit of certificate holders. For federal income tax purposes, an election will be made to treat the trust as multiple real estate mortgage investment conduits (REMICs). HSBC Bank USA will act as trustee. SMITHFIELD FOODS: S&P Affirms BB+ Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit rating and other ratings on Smithfield Foods Inc. and removed them from CreditWatch, where they were placed on July 15, 2003. The outlook is stable. About $1.9 billion of rated debt of Smithfield, Va.-based Smithfield Foods is affected. At the same time, Standard & Poor's assigned its 'BB' rating to Smithfield Foods' $400 million 7% senior notes due 2011. Proceeds will be used to refinance the debt under the company's revolving credit facility and for general corporate purposes. "The rating action follows the completion of Standard & Poor's review of the meat processing industry following the announcement on Dec. 23, 2003, of a case of bovine spongiform encephalopathy (BSE), otherwise known as mad cow disease. The impact, to date, on Smithfield Foods' operating and financial performance has been minimal," said Standard & Poor's credit analyst Jayne M. Ross. "In addition, credit protection measures have strengthened because of improvement in operating performance in pork production and processing as well as Smithfield Foods' debt reduction following the divestiture of Schneider Corp., its Canadian pork operations. The proceeds from Schneider almost entirely offset the debt that was used to acquire Farmland Industries Inc.'s pork operations in 2003. Even though, in the next several quarters, there will be some weakness in Smithfield Foods' beef operations because of tight cattle supplies resulting from the continuing U.S. ban on Canadian cattle imports, Standard & Poor's expects that Smithfield Foods' overall operating performance and its related financial performance will remain appropriate for the rating." The ratings on Smithfield Foods reflect the highly competitive, commodity-based, cyclical nature of the swine industry; the high fixed costs of pork processing operations; and the company's acquisitiveness. These factors are mitigated by the company's position as the leading producer, processor, and marketer of fresh and processed pork in the U.S. as well as its position as a leading beef processor, an experienced management team, and a track record of successfully integrating acquisitions. SOLUTIA INC: To Add $1.74 Million to China Subsidiary's Capital --------------------------------------------------------------- The Solutia Group is a world leader in the manufacture of certain heat transfer fluids, which have been used by major chemical, textile, and plastic manufacturers for more than 40 years. Therminol(R), the Solutia Group's primary product line in that division, is comprised of a family of low and high temperature transfer fluids used primarily in industrial applications like in oil and gas processing, and has been a very profitable component of the Solutia Group's performance products division. The Solutia Group produces Therminol(R) at several locations throughout the world. M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher, LLP, in New York, tells the United States Bankruptcy Court for the Southern District of New York that the Solutia Group manufactures and supplies Therminol(R) to the Chinese market through Solutia Chemical Co., Ltd., a non-debtor Chinese joint venture that was formed in 1995 by Solutia Greater China, Inc., a U.S. debtor entity, and Jiangsu Chemical Pesticide Group Company Ltd., an unaffiliated Chinese corporation. Solutia Greater China owns 60% of Solutia Chemical while Jiangsu owns 40% of the company. Solutia Chemical's manufacturing operations are located in Suzhou, China and, like the Debtors' overall Therminol(R) business, Solutia Chemical's operations are very profitable. In 2003, Solutia Chemical's sales totaled $15 million and its net income totaled $2.5 million. New Suzhou Facility In recent years, Therminol(R) has become the premier heat transfer fluid of choice in China, and market demand has exceeded Solutia Chemical's production capacity at the Suzhou Facility. To meet increased demand, the Debtors explored options to expand the facility but the expansion was not permitted by the Chinese government because of the plant's proximity to other residential and commercial properties. To resolve plant expansion issues, the Venture Parties decided to construct and operate a new Therminol(R) manufacturing facility in another less restricted area of Suzhou and formed Solutia Therminol Company Ltd., a non-debtor Chinese joint venture, in December 2001. Solutia Greater China owns 25%, Solutia Chemical owns 58%, and Jiangsu owns 17%, of Solutia Therminol. _________ _________________ | | | | | JIANGSU | | SOLUTIA GREATER | | (CHINA) | | CHINA (US) | |_________| |_________________| | | |_____________________________| | 40% | 60% | | | | | _________|__________ | | | | | | | SOLUTIA CHEMICAL | | | | (CHINA) | | | |____________________| | | | 58% | | | | | _________|_________ | | | | | |____| SOLUTIA THERMINOL |____| 17% | (CHINA) | 25% |___________________| Construction of the New Suzhou Facility began in 2003 and is ongoing. Pursuant to the Solutia Therminol joint venture agreement, construction costs of the New Suzhou Facility have been funded by initial capital contributions from the Venture Parties. The contributions totaled about $1.6 million, about $400,000 of which were provided by Solutia Greater China prior to the Petition Date. The Debtors estimate that once the New Suzhou Facility is operating, it will be able to produce enough Therminol(R) to meet the increased demand in the Chinese market and, on an annual basis, generate more sales and income than the existing Suzhou Facility. In addition, the New Suzhou Facility would provide the Debtors with production flexibility in the future because the facility is being constructed to accommodate additional capacity without running afoul of Chinese government zoning restrictions. Postpetition Capital Contributions Ms. Labovitz relates that to complete the construction of the New Suzhou Facility, the Venture Parties must make additional capital contributions in July and November of 2004. Solutia Greater China's share of these contributions is necessary to ensure that the percentage ownership interests in the joint venture remains unchanged. Solutia Greater China's ownership enables Solutia Therminol to obtain favorable tax treatment because Solutia Greater China qualifies as a foreign investor under Chinese law. Accordingly, the Solutia Group would like to maintain Solutia Therminol's joint venture structure unchanged. Estimates of the amounts and timing of the additional capital contributions are: Venture Party July 2004 November 2004 Total ------------- --------- ------------- --------- Solutia Greater China $262,000 $174,000 $436,000 Solutia Chemical 610,000 407,000 1,017,000 Jiangsu 174,000 116,000 290,000 ---------- -------- ---------- Total $1,046,000 $697,000 $1,743,000 ========== ======== ========== While the joint venture agreement for Solutia Therminol requires each of the interest holders to fund a portion of the investment, as a practical matter, Solutia Chemical will fund 100% of the contributions either through direct payments from itself or indirectly through dividend payments to Solutia Greater China and Jiangsu. To fund Solutia Greater China's $436,000 capital contributions, Solutia Chemical would make dividend payments to Solutia Greater China in amounts that equal each of the July 2004 and November 2004 Postpetition Capital Contributions. Immediately after receiving these payments, Solutia Greater China would make its Postpetition Capital Contributions to Solutia Therminol. Jiangsu's capital contributions would be funded in a similar manner. The Business Needs the Capital Contributions Although the Solutia Group's operations at the Suzhou Facility are very profitable, Ms. Labovitz asserts that the Chinese government restricts the expansion that could allow an increase in those profits. By contrast, a completion of the New Suzhou Facility would enable the Solutia Group to meet the increased demand for Therminol(R) in the Chinese market and, as a result, would enhance the profitability of the Solutia Group's Chinese operations and the overall Therminol(R) business. As a 60% owner of Solutia Chemical, Solutia Greater China currently benefits from its investment in Solutia Chemical and, as a 25% owner of Solutia Therminol, Solutia Greater China stands to further benefit directly and indirectly from the operation of the Ne Suzhou Facility. However, without the Postpetition Capital Contributions, construction of the New Suzhou Facility will grind to a halt. If the facility is not completed, this would put the $400,000 Solutia Greater China has already invested in Solutia Therminol in jeopardy. In addition, the Solutia Group would forfeit any increased profits expected from the operation of the New Suzhou Facility and, if the Solutia Group can no longer meet market demand, it could risk losing its position as the leading heat transfer fluid producer in China. Solutia Greater China, hence, asks the Court to authorize and approve the Postpetition Capital Contributions, whereby it would receive a dividend from one of its Chinese joint ventures and reinvest those funds in another Chinese joint venture. Solutia Greater China does not seek to assume or reject any executory contracts connected with its operations at the Suzhou Facility or in connection with the construction of the New Suzhou Facility, and reserves all of its rights with respect to those contracts until further court action is requested. * * * Judge Beatty approves Solutia's request. 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. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) SONNY & LISHA INC: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Sonny & Lisha, Inc. 6023 Briar Hill Court Sugarland, Texas 77478 Bankruptcy Case No.: 04-40536 Type of Business: The Debtor operates a hotel. Chapter 11 Petition Date: July 28, 2004 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: Willard Penn Conrad, Esq. 9898 Bissonnet, Suite 112 Houston, TX 77036 Tel: 713-777-4077 Fax: 713-777-1034 Total Assets: $2,225,000 Total Debts: $2,477,010 Debtor's 5 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Sonny Joseph and Best Judgment $93,510 ALLEGIANT Purchase Money $98,000 Value of Collateral: $15,000 G.E. Capital Contract $56,000 Value of Collateral: $5,000 IRS 1040 Taxes $20,000 Willard P. Conrad Attorney Fees $9,500 SONTRA MEDICAL: Demands Halt of Trading from Berlin Stock Exchange ------------------------------------------------------------------ Sontra Medical Corporation (Nasdaq: SONT) has sent a cease and desist letter to the Berlin-Bremen Stock Exchange demanding an immediate halt of trading and the delisting of Sontra Medical Corporation. The Company's common stock is currently listed on the Berlin-Bremen Stock Exchange without the Company's prior request, approval or consent. Sontra Medical Corporation is one of numerous US companies that have been added to the Berlin-Bremen Stock Exchange without permission. These listings may be part of an effort by stock traders to avoid recently enacted SEC restrictions prohibiting "naked short selling". Such practices may allow for market manipulation by selling non-existent shares of a stock in an effort to force the price down. Thomas W. Davison, PhD, Sontra's CEO said, "We believe that this unauthorized listing on the Berlin-Bremen Stock Exchange may have contributed to the recent decline in our share price. We have no interest in having our stock trade on any exchange that may subject Sontra's common stock to price manipulation. Sontra has authorized only the NASDAQ Small Cap Exchange to trade our shares which is required by federal securities laws to have rules and regulations in place to prevent fraudulent and manipulative practices, to promote just and equitable principles of trade, and to protect investors. We want our stock price to reflect only the intrinsic value of our business". About Sontra Medical Corporation Sontra Medical Corporation is the pioneer of SonoPrep, a non- invasive ultrasound-mediated skin permeation technology that enables transdermal diagnosis and drug delivery. Sontra's products under development include: a continuous non-invasive glucose monitor developed in collaboration with Bayer Diagnostics; a rapid onset (less than 5 minutes) topical anesthetic delivery system and the use of SonoPrep for the transdermal delivery of large molecule drugs and biopharmaceuticals. For additional information, please visit the Company's website at http://www.sontra.com/ * * * In its Form 10-KSB filed with the Securities and Exchange Commission, Sontra Medical Corporation reports: "We have a history of operating losses, and we expect our operating losses to continue for the foreseeable future. "We have generated limited revenues and have had operating losses since our inception. Our historical accumulated deficit was approximately $18,022,000 as of December 31, 2003. It is possible that the Company will never generate any additional revenue or generate enough additional revenue to achieve and sustain profitability. Even if the Company reaches profitability, it may not be able to sustain or increase profitability. We expect our operating losses to continue for the foreseeable future as we continue to expend substantial resources to conduct research and development, feasibility and clinical studies, obtain regulatory approvals for specific use applications of our SonoPrep technology, identify and secure collaborative partnerships, and manage and execute our obligations in strategic collaborations. "If we fail to raise additional capital, we will be unable to continue our development efforts and operations." SOUTH STREET: S&P Keeps Outstanding Junk Ratings on 3 Classes ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its rating on the class A-1LA notes issued by South Street CBO 1999-1 Ltd., a high- yield arbitrage CBO transaction managed by Colonial Asset Management. The rating withdrawal follows the complete paydown of the A-1LA notes following the July 1, 2004 payment date. RATING WITHDRAWN South Street CBO 1999-1 Ltd. Rating Balance (mil. $) Class To From Current Previous ----- -- ---- ------- -------- A-1LA NR AAA $0.00 $7.212 OTHER OUTSTANDING RATINGS South Street CBO 1999-1 Ltd. Class Rating Balance (mil. $) ----- ------ ---------------- A-1LB BBB- $7.752 A-1 BBB- $42.636 A-2L CC $24.000 A-2 CC $36.000 A-3 CC $45.500 SPIEGEL GROUP: Eddie Bauer Redmond Real Estate Auction this Week ---------------------------------------------------------------- As previously reported, Microsoft Corporation has offered to buy Eddie Bauer, Inc.'s real property located in Redmond, Washington, and Microsoft's bid will be tested in the marketplace using these bidding procedures approved by the United States Bankruptcy Court Southern District of New York: (a) Qualified Overbids Eddie Bauer will require a minimum initial overbid that is greater than: (1) $38,915,000, which amount represents the sum of: * $38,000,000 -- the Purchase Price payable by Microsoft under the Purchase Agreement; * $665,000 -- the Break-up Fee; and * $250,000 -- the Overbid Increment; plus (2) the consideration to Eddie Bauer arising from the assumption of the Assumed Liabilities under the Purchase Agreement; plus (3) all other consideration to Eddie Bauer under the Purchase Agreement. (b) Delivery of Overbid and Good Faith Deposit A Qualified Overbidder -- other than Microsoft -- who desires to make a bid must deliver the Required Bid Documents and a good faith deposit via wire transfer to Account No. 3752186004 at the Bank of America, ABA No. 111000012, in an amount equal to or greater than $1,915,000, which amount represents the sum of: * $1,000,000 -- the Earnest Money Deposit; plus * $665,000 -- the Break-up Fee; plus * $250,000 -- the Overbid Increment, and must deliver a copy of its Required Bid Documents to each of: -- Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 Attention: Jill Frizzley, Esq. jfrizzley@shearman.com -- Eddie Bauer, Inc. c/o Spiegel, Inc. 3500 Lacey Road, Downers Grove Illinois 60515 Attention: Terry Pieniazek terry_pieniazek@spgl.com -- Preston Gates & Ellis LLP Counsel for Microsoft 925 Fourth Avenue, Suite 2900 Seattle, WA 98104 Attention: Robert Neugebauer, Esq. robertn@prestongates.com -- CB Richard Ellis, Inc. 700 Commerce No.550 Oak Brook, Illinois 60523 Attention: Gary M. Fazzio gary.fazzio@cbre.com -- Chadbourne & Parke LLP Counsel to the Creditors Committee 30 Rockefeller Plaza New York, New York 10112 Attention: David M. LeMay, Esq. dlemay@chadbourne.com -- Kaye Scholer LLP Counsel to the postpetition secured lenders 425 Park Avenue New York, New York, 10022 Attention: Gary B. Bernstein, Esq. gbernstein@kayescholer.com COMPETING BIDS WERE DUE July 29, 2004 at 4:00 p.m. (c) August 3 Auction If Eddie Bauer determines, in consultation with its professionals and the Creditors Committee, that one or more Qualified Overbids has been timely tendered, the Auction, if required, will commence at 10:00 a.m. on Tuesday, August 3, 2004, before the Honorable Cornelius Blackshear, United States Bankruptcy Judge for the Southern District of New York, at the United States Bankruptcy Court, Courtroom 601, One Bowling Green, in New York, or at such other time or place as determined by the Court. Eddie Bauer will notify Microsoft as soon as it is practical following the Bid Deadline of the identities of the Qualified Overbidders. During the Auction, the bidding will begin at the purchase price stated in the highest or otherwise best Qualified Overbid, and will subsequently continue in minimum increments of at least $250,000 higher than the previous Qualified Overbid. Subsequent overbids submitted by Microsoft will be deemed to include a credit equal to the amount of the Break-up Fee, provided, however, that to the extent the Court approves different bidding procedures but are not, in the reasonable judgment of Microsoft and Eddie Bauer, materially different from, or materially disadvantageous when compared to those approved in connection with other asset sales in the Debtors' Chapter 11 cases, the changed bidding procedures will not be grounds for terminating the Purchase Agreement. (d) Determination of the Highest and Best Bid At the conclusion of the Auction, Eddie Bauer will: (i) review each Qualified Overbid on the basis of financial and contractual terms and other factors relevant to the sale process, including those factors affecting the speed and certainty of consummating the Sale; and (ii) identify the Successful Bid and the second highest and best offer for the purchase of the Property. The Debtor may, in consultation with the Creditors Committee: -- determine, in their business judgment, which Qualified Overbid, if any, is the highest or otherwise best offer; and -- reject, at any time before entry of a Court order approving a Qualified Overbid, any bid that Eddie Bauer determine to be: * inadequate or insufficient; * not in conformity with the requirements of the Bankruptcy Code, the Bidding Procedures or the terms and conditions of the Purchase Agreement; or * contrary to the best interests of Eddie Bauer, its estate and its creditors. (e) The Sale Hearing A hearing to approve the sale of the Property to Microsoft or, alternatively, to any other Successful Bidder, will be conducted immediately following the Auction on Tuesday, August 3, 2004 at 10:00 a.m. before Judge Blackshear. Following the Sale Hearing approving the sale of the Property to the Successful Bidder, if the Successful Bidder fails to consummate an approved sale because of a breach or failure to perform on its part, the Back-up Bid, as disclosed at the Sale Hearing, will be deemed to be the Successful Bid and the Debtor will be authorized, but not required, to consummate the sale with the Back-up Bidder without further Court order. (f) Failure to Close If any sale of the Property to a Qualified Overbidder, other than Microsoft, fails to close for any reason and the Microsoft has made the Back-up Bid, then Microsoft will purchase the Property on the terms and conditions set forth in the Purchase Agreement -- except the Closing Date will be extended for a reasonable period of time, not to exceed 30 days, to allow Microsoft to complete the purchase -- and at the final purchase price bid by Microsoft at the Auction, without requiring further Court approval. (g) Return of Good Faith Deposit Eddie Bauer will retain the Good Faith Deposits of all Qualified Overbidders and all Qualified Overbids will remain open until the Closing of a Sale, provided, however, that if no Closing of a Sale occurs on or before 90 days after the Sale Hearing, Eddie Bauer will return each of the Good Faith Deposits to the Overbidder that made the Good Faith Deposit. If a Successful Bidder fails to consummate an approved sale because of a breach or failure to perform on its part, Eddie Bauer will not have any obligation to return the Good Faith Deposit deposited by the Successful Bidder, and the Good Faith Deposit irrevocably will become property of Eddie Bauer and will not be credited against the purchase price of the subsequent buyer. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and 1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) STRONGBOW EXPLORATION: Increase Private Placement to $2 Million --------------------------------------------------------------- Strongbow Exploration Inc. (TSXV: SBW) has increased the size of the private placement it announced to 2,666,667 flow-through shares at $0.75 per share for gross proceeds of $2,000,000. The proceeds of the financing will be used to finance the Company's ongoing exploration in the Northwest Territories and Nunavut. Strongbow has a number of field operations underway with crews on the ground in the Anialik volcanic belt, the Melville Peninsula and on the Musk deposit. Ground geophysics will shortly be carried out on the Musk property and will be followed by a drilling program scheduled to commence by August 15, 2004. The presence of a gravel airstrip on the property will enable drilling to continue through freeze-up. The Musk leases cover a volcanogenic massive sulphide deposit which is enriched in gold and silver. Drilling is aimed at increasing the existing 400,000 tonne reserve by exploring down dip and along strike. The property is subject to an agreement with Noranda Inc. About the Company Strongbow Exploration Inc. was formed on May 3, 2004, as a result of the amalgamation of Strongbow Resources Inc. and Navigator Exploration Corporation, both significant northern explorers. The new company maintains an interest in approximately 1.5 million hectares of prospective land in Canada's north. Strongbow is actively exploring these properties, with exposure to over $7 million in planned exploration expenditures in 2004. The company continues to pursue high-quality diamond, gold, silver and base metal properties in an effort to provide shareholders with leveraged exposure to northern Canada's most exciting exploration plays. As of January 31, 2004, the Company posts a stockholders' deficit of $6,548,335 compared to a deficit of $6,006,916 at January 31, 2003. SWIFT & CO: S&P Removes Corporate Credit Rating From CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and other ratings on Swift & Co. and removed them from CreditWatch where they had been placed on Dec. 24, 2003. The outlook is negative. About $968 million of rated debt of Greeley, Colo.-based Swift is affected. "The rating action follows the completion of Standard & Poor's review of the meat processing industry following the announcement on Dec. 23, 2003, of a case of bovine spongiform encephalopathy (BSE), otherwise known as mad cow disease. To date, there has been some affect on Swift in terms of operating and financial performance and a related impact on credit protection measures," said Standard & Poor's credit analyst Jayne M. Ross. "Generally, beef prices have remained at historically high levels and consumer demand has been strong. In addition, the U.S. ban on cattle imported from Canada remains in effect. It is Standard & Poor's expectation that margins will remain weak for Swift over the next several quarters as tight cattle supplies and fairly strong consumer demand continue to constrain margins. There may be some further weakening in credit protection measures in the near term." The ratings on Swift reflect the company's high debt levels for a commodity-oriented, low-margin protein processor that operates in a very challenging environment. These concerns are somewhat mitigated by Swift's No. 3 positions in both the U.S. beef and pork processing industries, its diverse customer base, and the high barriers to entry in these industries. THAXTON: Judge Denies FINOVA's Bid to Terminate Exclusive Periods ----------------------------------------------------------------- FINOVA Capital Corporation asked the bankruptcy judge overseeing The Thaxton Group, Inc.'s chapter 11 proceedings, to terminate Thaxton's exclusive periods to file and solicit acceptances of a reorganization plan. FINOVA Capital wants to file its own, clearly confirmable plan for Thaxton, and dual track that plan with Thaxton's restructuring plan filed on June 18, 2004. Thaxton is a consumer loan and health and life insurance services provider. Thaxton's Chapter 11 Petition Thaxton and its related entities sought bankruptcy protection in October 2003 after it defaulted on a $110,000,000 senior secured loan with FINOVA Capital. As a result, FINOVA Capital exercised its rights under the loan agreement and accelerated the indebtedness. Thaxton's Chapter 11 petition is pending in the United States Bankruptcy Court for the District of Delaware before Judge Walsh. FINOVA Capital is Thaxton's largest secured lender. Substantive Consolidation of Thaxton The Official Committee of Unsecured Creditors of the Thaxton Group, Inc., has sought the substantive consolidation of the Thaxton entities for distribution purposes under the Thaxton Plan. Thaxton supports the Committee's request. FINOVA Capital objects to the substantive consolidation. The Thaxton Court will convene a hearing on the Committee's proposal on September 14 and 15, 2004. FINOVA Capital and the Thaxton Committee have agreed to informally extend Thaxton's Exclusive Periods to June 18, 2004. Nature of Thaxton Plan Voids Exclusivity Mark D. Collins, Esq., Richards, Layton & Finger, PA, in Wilmington, Delaware, representing FINOVA, tells Judge Walsh that any fair reading of the Thaxton Plan shows that: (1) it is really the Thaxton Committee's Plan, whose primary constituency are the Thaxton's Noteholders, or, (2) at best, a joint effort of Thaxton and the Committee, which, in effect, already terminates the exclusivity. According to Mr. Collins, the Plan favors the Noteholders by: (a) substantially consolidating Thaxton's estates, which allow the Noteholders access to recovery from Thaxton's assets without any legal claim; and (b) giving the Noteholders complete ownership and control of Thaxton, as well as complete control over its liquidation. FINOVA Capital was barely consulted in the preparation of Thaxton's Plan, which also proposes a cram down and stretch out of FINOVA Capital's claim. Mr. Collins argues that Thaxton's Plan is clearly patently unconfirmable because, among others, the Plan: (1) calls for substantive consolidation, which is inappropriate; (2) provides generally for payment of unsecured claims, except that it, illegally, does not provide for any payment of any unsecured claim of FINOVA Capital, whether substantive or otherwise; (3) violates the absolute priority rule by allowing the Noteholders to conceivably recover a payout in excess of 100% of their claim; and (4) provides the possibility of a stretch out of FINOVA Capital, with a third party exit lender taking liens on FINOVA Capital's collateral senior in priority to those of FINOVA Capital, in violation of Section 1129(b) of the Bankruptcy Code, by, inter alia, not allowing FINOVA Capital to effectively "retain" its liens. Mr. Collins points out that, by providing for the substantive consolidation of all Thaxton's assets and making the assets of Thaxton's subsidiaries available for distribution to it, the Noteholders, and any of its creditors, Thaxton's Plan usurps value from Thaxton's subsidiaries for the benefit of Thaxton's estates and its creditors. FINOVA Capital has not disclosed the proposed terms of its plan in its pleading for fear of somehow being deemed to have breached its exclusivity by doing so. However, unlike Thaxton's Plan, FINOVA Capital's plan would: -- not substantively consolidate The Thaxton Group with its subsidiaries; -- comply with the Bankruptcy Code and be clearly confirmable; and -- provide for all creditors, with the exception of the Noteholders, an equal or greater recovery as proposed in the Plan. Objections (1) Thaxton The Thaxton Group, Inc.'s bankruptcy counsel, Daniel B. Butz, Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, contends that FINOVA Capital has not demonstrated cause necessary to terminate Thaxton's Exclusive Periods. Mr. Butz argues that terminating the Exclusive Periods would not move Thaxton's cases forward but would only serve to waste Thaxton's resources. Thaxton, instead, asks Judge Walsh to: -- deny FINOVA Capital's request; -- extend its Exclusive Filing Period through and including 21 days after the Substantive Consolidation Hearing in September 2004; and -- extend its Exclusive Solicitation Period through and including 60 days after the expiration of the Exclusive Filing Period. (2) Thaxton Committee On behalf of the Official Committee of Unsecured Creditors of The Thaxton Group, Inc., Michael L. Vild, Esq., at The Bayard Firm, in Wilmington, Delaware, asserts that FINOVA Capital misstated the facts relevant to each of its fatally flawed arguments. Mr. Vild contends the Thaxton Plan is not the Thaxton Committee's plan, but is the compromise result of negotiations between Thaxton and the Thaxton Committee. In addition, Thaxton's decision to negotiate more extensively with the Thaxton Committee than with FINOVA Capital does not constitute cause to terminate the Exclusive Periods. Nothing in the Bankruptcy Code precludes a debtor from choosing to consult with its creditors' committee rather than with a secured creditor when drafting its plan of reorganization, and FINOVA Capital cites no authority in support of its position. Mr. Vild notes that the issue before the Thaxton Court is whether cause exists to extend or terminate Thaxton's Exclusive Periods. The Court need not hold an emergency confirmation hearing on the first draft plan filed by a debtor to extend exclusivity. Hence, Thaxton should be given the chance to solicit concerning its Plan and consider whether amendments would be appropriate. FINOVA Capital's position on the confirmability of the Thaxton Plan is doubtful at best, and represents a misunderstanding or deliberate misleading of the Plan, Mr. Vild says. Furthermore, FINOVA Capital acts as if it had already prevailed in its objection to substantive consolidation and the filing of a plan proposing consolidation were patently absurd and consummate bad faith. To the contrary, the Thaxton Committee's request for consolidation clearly details the extensive grounds for consolidation. The Thaxton Committee suspects that FINOVA Capital seeks to terminate Thaxton's Exclusive Periods so that it could file a plan that better serves its interests. Accordingly, the Committee asks the Thaxton Court to deny FINOVA Capital's request. * * * Peg Brickley of Dow Jones Newswires reports that the Thaxton Court extended Thaxton's Exclusive Periods until mid-September 2004. Judge Walsh, according to Ms. Brickley, held that Thaxton showed promise of reorganizing around its Southern Management Corp. business and emerging as a going on concern. Judge Walsh believes that a competing plan might disturb Thaxton's efforts to find exit financing and could unsettle the company's employees, Ms. Brickley adds. Headquartered in Lancaster, South Carolina, The Thaxton Group, Inc., is a diversified consumer financial services company. The Company filed for Chapter 11 protection on October 17, 2003 (Bankr. Del. Case No. 03-13183). The Debtors are represented by Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell. Headquartered in Scottsdale, Arizona, The Finova Group, Inc., provides commercial financing to small and midsized businesses; other services include factoring, accounts receivable management, and equipment leasing. The firm has three segments: Commercial Finance, Specialty Finance, and Capital Markets. FINOVA targets such markets as transportation, wholesaling, communication, health care, and manufacturing. Loan write-offs had put the firm on shaky ground. FINOVA has since emerged from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway and Leucadia National Corporation (together doing business as Berkadia) own FINOVA through the almost $6 billion lent to the commercial finance company. The Company and its debtor-affiliates and subsidiaries filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del. 01-00697). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents the Debtors. (Finova Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Reports $7 Mil. 2nd Quarter Operating Profit ------------------------------------------------------ UAL Corporation (OTC Bulletin Board: UALAQ), the holding company whose primary subsidiary is United Airlines, reported its second- quarter 2004 financial results. UAL's second-quarter operating profit was $7 million, a significant improvement of $438 million over second-quarter results last year. UAL reported a net loss of $247 million, or a loss per basic share of $2.25, which includes $144 million in reorganization items described in the notes to the financial tables. The majority of reorganization charges resulted from non- cash items caused by the rejection of aircraft. Excluding reorganization items, UAL's net loss for the second quarter totaled $103 million, or a loss per basic share of $0.95. "Despite the challenging environment created by high fuel prices and soft domestic yields, we are focused on driving continuous improvement," said Glenn Tilton, chairman, president and chief executive officer. "We are making progress, but we know there is much work to do. Our business plan must generate the cash flow and liquidity that the financial markets are willing to support. It is clear that we must continue to reduce our overall cost structure if United is to be competitive and achieve sustainable profitability." In the meantime, UAL's restructuring efforts continue to deliver positive results, outperforming the industry. Tilton cited several of United's achievements in the second quarter: -- Increased passenger unit revenue 10% compared to last year, an improvement that outperformed the industry; -- Reduced mainline unit costs by 10%. Excluding fuel, unit costs dropped by 17%; -- Improved earnings from operations by $438 million over the same quarter a year ago. As previously reported, UAL has successfully negotiated the expansion of its debtor-in-possession financing to $1 billion on favorable terms and extended the repayment schedule through June 2005, demonstrating that major financial institutions support the company's long-term prospects. Throughout the restructuring, United has consistently acknowledged that the company must adapt to a very difficult, challenging and dynamic marketplace. UAL expects to substantially update its business plan based on feedback from the capital markets as to the appropriate cash flows, coverage ratios and other metrics necessary to support its exit financing package. Jake Brace, United's executive vice president and chief financial officer, said, "In the second quarter, United's financial performance met our expectations given historically high fuel prices. However, our overall financial performance is still unacceptable. Even though we are experiencing strong traffic -- in June we reported our highest load factor ever -- the pricing environment prohibits us from recouping these high costs." Financial Results Continue Improvement The company recorded positive operating cash flow of $62 million for the second quarter. UAL ended the quarter with a strong cash balance of $2.2 billion, including $838 million in restricted cash. UAL's second-quarter 2004 operating revenues were $4 billion, up 30% compared to second quarter 2003. Load factor increased 5 points to 82% as traffic increased 20% on a 13% increase in capacity. In June, load factor reached a record 86%, up 4 points over June 2003. During the second quarter, passenger unit revenue was 10% higher on a 3% yield increase. SARS and the Iraq War contributed to a weak unit revenue performance last year. The recovery from last year, along with route and capacity adjustments, aggressive marketing and sales activities, helped United outperform the industry this year. Total operating expenses for the quarter were $4 billion, up 14% from the year-ago quarter. Operating expenses per available seat mile decreased 10% from the second quarter 2003. Excluding fuel, operating expenses per available seat mile decreased 17%. Productivity (available seat miles divided by manpower) was up 14% for the quarter year-over-year. Average fuel price for the quarter was $1.18 per gallon (including taxes), up 36% year-over-year. The company had an effective tax rate of zero for the second quarter, which makes UAL's pre-tax loss the same as its net loss. Restructuring Progress This quarter the company began working with a new group of regional air carriers to fly ongoing United Express Service out of Washington Dulles and Chicago O'Hare and, as previously announced, plans to end its relationship with Atlantic Coast Airlines (ACA). United and ACA have reached agreement on a transition of aircraft that began June 3 and will be completed August 4. During the quarter the company reached an agreement with a coalition representing retirees regarding modifications to retiree medical and life benefits. This agreement, which covers more than 27,000 retirees, combined with the agreement previously announced in May with the Aircraft Mechanics Fraternal Association (AMFA), is expected to deliver cash savings to the company of more than $300 million through 2010. Operational Performance Among the Best in UAL History The company continued to deliver outstanding operational performance for the second quarter 2004. Sixty-nine percent of United flights departed exactly on time during the quarter, one percentage point better than the goal set by the company for its new employee incentive program. Customer satisfaction ratings were among the highest the company has received. Outlook Booked load factor for August is about the same as last year while September is running ahead of last year. We expect third-quarter system mainline capacity to be up about 7% from last year and fourth-quarter up about 3%. Capacity for 2004 is expected to be about 6% higher than 2003. The company expects fuel price, including taxes, for the third quarter to average $1.23 per gallon. June Monthly Operating Report UAL also filed with the United States Bankruptcy Court its Monthly Operating Report for June. The company posted a $77 million operating profit for June and met its DIP covenants for the month. During June the company made a scheduled DIP repayment of $60 million. In early July, the company made the last of its five scheduled payments to repay its $300 million DIP loan from the former Bank One. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. the Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. UNIFIED HOUSING: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Unified Housing of Kensington, LLC Four Hickory Centre 1755 Wittington Place Suite 340 Dallas, Texas 75234 Bankruptcy Case No.: 04-47183 Chapter 11 Petition Date: July 29, 2004 Court: Northern District of Texas (Ft. Worth) Judge: D. Michael Lynn Debtor's Counsel: John P. Lewis, Jr., Esq. 1412 Main St., Suite 210 Dallas, TX 75202 Tel: 214-742-5925 Fax: 214-742-5928 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million The Debtor did not file a list of its 20-largest creditors. UNITED AIRLINES: Will Pay $820K for Hazardous Waste Infractions --------------------------------------------------------------- The Department of Justice, the U.S. Environmental Protection Agency and the State of California reports that United Airlines, Inc. has agreed to a $850,000 civil penalty to resolve its violations of state and federal hazardous waste laws at its San Francisco International Airport facility. During inspections conducted by the EPA in 1999 and 2001, inspectors found widespread violations of hazardous waste regulations throughout the United aircraft maintenance center. The violations included failure to close hazardous waste containers, improper labeling of hazardous waste containers, and storage of hazardous waste for longer than the allowable limits. The facility -- which is United's only aircraft maintenance center in the nation -- currently employs 5,200 people and operates 24 hours a day, seven days a week. As part of the settlement, United worked with the EPA to develop an environmental compliance management system for the facility. "Today's settlement shows our strong commitment to enforce the proper management of hazardous waste in compliance with federal regulations," said Tom Sansonetti, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. "In addition, United has agreed to conduct an independent audit at the facility of its Environmental Compliance Management System to further promote compliance." "Hazardous wastes must be handled safely and within the guidelines of the law to prevent any harm to human health and the environment," said Wayne Nastri, administrator of the EPA's Pacific Southwest region. "We are pleased that United Airlines has committed to improve hazardous waste management at its maintenance facility." "The resolution of this case demonstrates that state, federal and local agencies can work together to achieve compliance with laws regulating hazardous waste," said Ed Lowry, Director of California's Department of Toxic Substances Control. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. the Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 54; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNITED BISCUITS: Fitch Puts Subordinated Rating on Watch Negative ----------------------------------------------------------------- Fitch Ratings, the international rating agency, has placed the ratings on United Biscuits Group's senior subordinated debt on Rating Watch Negative (RWN), following its announcement that it is to acquire Jacob's Biscuits Group. All other ratings of the group (listed below), have been affirmed. Fitch aims to resolve the RWN status once it has obtained further information on the acquisition and details of the bank financing, in order to assess the implications for the company's cash flows, restructuring costs and interest charges. The acquisition was announced by UB on July 23, 2004 and includes the savoury biscuit and snacks businesses of Groupe Danone. In 2003 Jacob's reported sales of over GBP184 million. This acquisition comes on the back of the acquisition in February 2004 of the Portuguese biscuit manufacturer, Triunfo Productos Alimentares, S.A. for EUR40m. Both acquisitions are subject to regulatory approval Fitch anticipates the transaction cost for the above acquisition to be in the range of GBP190m-GBP210m, which UB intends to fund the through increasing its bank debt. The agency has therefore placed the rating of the notes on RWN, given the increased amount of senior secured debt that would rank ahead of the notes. The notes are both contractually and structurally subordinated to the senior secured facilities and trade creditors at the group's operating companies and do not benefit from any upstream guarantees or support from operating companies. With additional debt in the structure ranking ahead of the notes, Fitch's view is that in a distress scenario, recovery for the noteholders would be weaker than previously indicated. At the same time, Fitch has affirmed the senior secured and senior unsecured ratings, based on its analysis of proposed acquisition. Despite the acquisition being funded through debt, Fitch believes that the proposed increase in leverage is still supported by the current ratings. The agency downgraded all of the company's ratings on 7 July 2004 by one notch. The ratings placed on Watch Negative: -- United Biscuits Finance plc's GBP165m 10.75% senior subordinated notes due 2011 and EUR192.8m 10.625% senior subordinated notes due 2011 - rated 'B+'; The following ratings have been affirmed: -- Regentrealm Limited's GBP435m senior secured facilities - rated 'BB+' and its senior unsecured rating of 'B+'. WATERFRONT WAREHOUSE: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Waterfront Warehouse, Inc. 1630 Oakland Road #A210 San Jose, California 95131 Bankruptcy Case No.: 04-92879 Type of Business: The Debtor has a commercial building consisting of retail and office space. Chapter 11 Petition Date: July 28, 2004 Court: Eastern District Of California (Modesto) Judge: Thomas Holman Debtor's Counsel: Michael W. Malter, Esq. Binder & Malter, LLP 2775 Park Avenue Santa Clara, CA 95050 Tel: 408-295-1700 Total Assets: $8,025,700 Total Debts: $6,690,752 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Adforce Private Security Trade debt Unknown ADT Security Services Trade debt Unknown All City Glass Trade debt Unknown Atlas Security & Patrol Trade debt Unknown B&R Landscaping Trade debt Unknown California Water Trade debt Unknown City of Stockton Trade debt Unknown Collier International Trade debt Unknown Contract Installations Trade debt Unknown Frank Dutton Trade debt Unknown Gianelli Electric Trade debt Unknown H&L Pest Control Trade debt Unknown James Payton Trade debt Unknown Landlord Eviction Service Trade debt Unknown MCI Trade debt Unknown Merit Supply, Inc. Trade debt Unknown Muzak Music Service Trade debt Unknown MW Plumbing, Inc. Trade debt Unknown PG&E Trade debt Unknown Pinasco Plumbing HVAC Trade debt Unknown WEIRTON STEEL: To Settle with Independent Guards Union ------------------------------------------------------ At Debtor Weirton Steel Corporation's request, the United States Bankruptcy Court for the Northern District of West Virginia permits Weirton to enter into an agreement with the Independent Guards Union, which resolves all claims or potential claims asserted or assertable by the IGU on behalf of its members and retirees against Weirton arising under or related to their collective bargaining agreements. Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, tells the Court that Weirton and the IGU have maintained a collective bargaining relationship since 1983. The IGU is the collective bargaining representative for approximately 20 guards at the Weirton facility. Weirton and the IGU were parties to collective bargaining agreements, as amended from time to time, including these benefit programs: (1) Agreement between Weirton and the IGU, effective as of September 26, 1996, as amended by: -- Settlement Agreement (Hourly Plant Guards), dated June 12, 2001; -- Settlement Agreement (Hourly Plant Guards), dated September 26, 2001; -- Settlement Agreement, dated November 13, 2002; -- Settlement Agreement, (Hourly Plant Guards), dated February 5, 2003; and -- Memoranda of Understanding between Weirton and the IGU, dated February 19, 2004 and April 22, 2004 (2) Insurance Agreement, effective September 26, 1993 (3) Supplemental Unemployment Benefits Plant (Hourly Plant Guards), effective September 26, 1993 (Plan 504) (4) Current CBAs may have provided for participation by members of the collective bargaining unit 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 current collective bargaining agreements between Weirton and the IGU will expire after the expiration of Weirton's collective bargaining agreement with the Independent Steelworkers Union. In connection to Weirton's Sale Transaction with International Steel Group, Inc., and ISG Weirton, Inc., ISG may hire ISG's represented workforce from among IGU employees of Weirton. Whether or not IGU members are hired by ISG, ISG and the IGU have agreed to the terms and conditions of certain payment to be made to IGU members upon termination of service, including: (a) certain vacation payments to former Weirton employees hired by ISG which were earned by those former Weirton employees prior to the Closing; and (b) certain buy-out payments to be paid by ISG under the Transition Benefit Program. The IGU and ISG have agreed to a Transition Benefit Program to be funded entirely by ISG. A purpose of the Program is to induce voluntary attrition of the IGU-represented workforce at Weirton, thereby minimizing unemployment that would otherwise occur at the time of the Closing. To resolve all claims, Weirton and the IGU negotiated an Effects Agreement, which provides for: (a) Establishment of timeframes -- 45 or 60 days, as the case may be -- after the Closing in which Weirton is obligated to provide the IGU and IGU-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 cooperation with respect to implementation of the Transition Benefit Program; (c) Limitations on the extent to which claims for benefits provided under the Weirton/IGU collective bargaining agreements will be paid; (d) Limitations on the extent to which claims for benefits formerly provided by Weirton to IGU-represented retirees will be paid; (e) Termination of the collective bargaining agreements and the collective bargaining relationship between Weirton and the IGU as of the Closing on the Sale Transaction; and (f) A waiver and release by the IGU 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. Headquartered in Weirton, West Virginia, Weirton Steel Corporation is a major integrated producer of flat rolled carbon steel with principal product lines consisting of tin mill products and sheet products. The company is the second largest domestic producer of tin mill products with approximately 25% of the domestic market share. The Company filed for Chapter 11 protection on May 19, 2003 (Bankr. N.W.Va. Case No. 03-01802). Judge L. Edward Friend, II presides the proceedings. Robert G. Sable, Esq., Mark E. Freedlander, Esq., David I. Swan, Esq., and James H. Joseph, Esq., at McGuireWoods LLP represent the Debtor. (Weirton Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945- 7000) WEST PENN: S&P Affirms B Underlying & Standard Long-Term Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook to positive from stable on West Penn Allegheny Health System (West Penn), Pa.'s outstanding bonds issued by various issuers, reflecting expectations that the rating will be raised within the year if current financial and operating performance is sustained. In addition, Standard & Poor's affirmed its 'B' underlying rating (SPUR) and 'B' standard long-term rating on West Penn's debt. "The positive outlook reflects successful management efforts to stabilize and improve the financial and operating profile of this credit, although it is still at a non-investment-grade rating level," said Standard & Poor's credit analyst Cynthia Keller Macdonald. "Although challenges remain, the current management seems committed to continued profitability improvement, which, if sustained, is likely to result in a higher rating in the near term," she added. West Penn's financial profile has shown steady signs of improvement in the past year, highlighted by improved profits, liquidity, and debt service coverage. However, the system continues to face numerous challenges, including maintenance of already slim liquidity in light of the planned acceleration in capital spending, pension contributions, losses from employed physicians, and strong competition from the region's leading provider, UPMC Health System. These issues have no easy or immediate solutions, though new management has imposed more structure on the organization in the past year to address these concerns. If West Penn's audited results for fiscal year ended June 30, 2004, and interim results for 2005 show continued improvement, it is possible that the rating will be raised in the near future. West Penn was formed as a single obligated entity with its August 2000 financing, and includes six acute-care hospitals (two of which are tertiary flagships) in and around the Pittsburgh area. with about 1,750 staffed acute-care beds, West Penn admitted 80,624 patients in 2004, almost 2% above the previous year's levels. Management expects to post break-even profitability from operations for fiscal 2004 and earn a total profit of about $19 million. These earnings should generate about 2.0x coverage of maximum annual debt service for the first time since the system's inception, which represents a solid improvement over 2003's 1.6x coverage. WESTERN PACIFIC: US Trustee Names 3-Member Creditors' Committee --------------------------------------------------------------- The United States Trustee for Region 13 appointed three creditors to serve on an Official Committee of Unsecured Creditors in Western Pacific Network Services, Inc.'s Chapter 11 cases: 1. Michael D. Travelstead P.O. Box 336 9098 Majestic Road DuQuoin, Illinois 62832 2. Dennis F. Doelitzsch P.O. Box 1888 Marion, Illinois 62959-8088 3. Andrew Aken Global Eyes Telecommunications, Inc. 1206 Chestnut Street Murphysboro, Illinois 62966 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in St. Louis, Missouri, Western Pacific Network Services, Inc., is an Internet Service Provider offering both dial-up and broadband access to residential and business customers throughout Eastern Missouri and Central and Southern Illinois. The Company, together with its affiliate, Habanero Computing Solutions, Inc., filed for chapter 11 protection on June 29, 2004 (Bankr. E.D. Miss. Case No. 04-48324). David A. Warfield, Esq., at Blackwell Sanders Peper Martin LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debts and assets of over $1 million WHEELING CITY CENTER: List of 20 Largest Unsecured Creditors ------------------------------------------------------------ Wheeling City Center Hotel, LLC released a list of its 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $245,772 Ramada Franchise Systems $144,612 WV State Tax Department $100,716 Sheriff of Ohio County $78,152 City of Wheeling $40,882 WV Bureau of Employment Programs $29,432 Undo's Catering $28,577 Sparchane Ent. $17,950 AEP $17,648 WV State Tax Department $16,858 Lamar Companies $15,712 Sampey Associates Architects $14,180 Schindler Elevator Corp. $9,565 Pittsburgh Trane $8,078 ThyssenKrupp Elevator $7,871 Guest Distribution/Breckenridge $7,820 NextiraOne, LLC $7,139 Digital Connections $6,805 Otis Elevator $6,540 WV Bureau of Employment Programs $6,491 Headquartered in Wheeling, West Virginia, Wheeling City Center Hotel, LLC -- http://www.ramada.com/-- provides hotel accommodations and services. The Company filed for chapter 11 protection (Bankr. N.D.W.V. Case No. 04-02644) on July 23, 2004. Martin P. Sheehan, Esq., at Sheehan & Nugent, PLLC, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed both estimated debts and assets of over $1 million. Y-USA INC: First Creditors Meeting Scheduled for August 6 --------------------------------------------------------- The United States Trustee will convene a meeting of Y-USA Inc.'s creditors at 9:00 a.m., on August 6, 2004 in Room 2610 at 725 South Figueroa Street, Los Angeles, California 90017. 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 El Segundo, California, Y-USA Inc., distributed DVD players until adverse by GBM Logistic forced it to go defunct. The Company filed for chapter 11 protection on June 29, 2004 (Bankr. C.D. Calif. Case No. 04-24293). R. Gibson Pagter Jr., Esq., at Pagter & Miller represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed unknown amount of total assets and $17,000,000 in total debts. * BOND PRICING: For the week of August 6 - August 30, 2004 ---------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- American & Foreign Power 5.000% 03/01/30 68 AMR Corp. 4.500% 02/15/24 68 AMR Corp. 9.000% 08/01/12 73 AMR Corp. 9.000% 09/15/16 73 AMR Corp. 10.200% 03/15/20 69 Atlantic Coast 6.000% 02/15/34 64 Burlington Northern 3.200% 01/01/45 53 Burlington Northern 3.800% 01/01/20 74 Calpine Corp. 7.750% 04/15/09 61 Calpine Corp. 8.500% 02/15/11 62 Calpine Corp. 8.625% 08/15/10 62 Calpine Corp. 8.750% 07/15/07 67 Comcast Corp. 2.000% 10/15/29 39 Continental Airlines 4.500% 02/01/07 70 Cummins Engine 5.650% 03/01/98 72 Delta Air Lines 7.700% 12/15/05 62 Delta Air Lines 7.900% 12/15/09 42 Delta Air Lines 7.920% 11/18/10 60 Delta Air Lines 8.300% 12/15/09 36 Delta Air Lines 9.000% 05/15/16 40 Delta Air Lines 9.250% 03/15/22 39 Delta Air Lines 9.750% 05/15/21 40 Delta Air Lines 10.125% 05/15/10 45 Delta Air Lines 10.375% 02/01/11 45 Elwood Energy 8.159% 07/05/26 71 Greyhound Lines 8.500% 03/31/07 75 Inland Fiber 9.625% 11/15/07 49 Missouri Pacific 4.750% 01/01/30 72 National Vision 12.000% 03/30/09 62 Northern Pacific Railway 3.000% 01/01/47 53 Northwest Airlines 7.875% 03/15/08 68 Northwest Airlines 8.700% 03/15/07 72 Northwest Airlines 9.875% 03/15/07 75 Northwest Airlines 10.000% 02/01/09 71 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Bernadette C. de Roda, Rizande B. Delos Santos, Emi Rose S.R. Parcon, Jazel P. Laureno 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 ***