/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040824.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, August 24, 2004, Vol. 8, No. 179 Headlines A.B. DICK: Wants to Continue Hiring Squire Sanders as Counsel ACCLAIM ENT: Replacing GMAC Loan Facility with Potential Lender AIR AMBULANCE: Case Summary & 17 Largest Unsecured Creditors AIR CANADA: Justice Hoy Frees Air Canada from $1.6MM Lease Arrears ALASKA AIRLINES: Cutting 150 Jobs to Save $5 to $10 Million ALLEGHENY ENERGY: S&P Raises Corporate Credit Rating to 'B+' ALLEGHENY ENERGY: Files SEC Papers to Register 4.5 Million Shares ALLIANCE HOLDINGS: Fitch Holds 'CC' Rating on $44MM Senior Notes ARCH COAL: Completes $364 Million Triton Coal Acquisition ARMOR HOLDINGS: Wins 3-Year $461 Million Defense Contract ASPEN TECH: BASF Implements Manufacturing Info Management Solution BREUNERS HOME: Look for Bankruptcy Schedules Late This Week CATHOLIC CHURCH: Hires Rothgerber as First Amendment Counsel CCC INFORMATION: Extends $210 Million Self-Tender Offer to Friday CHAPCO CARTON: U.S. Trustee Names 9-Member Creditors' Committee CITIZENS COMMS: D&E Communications Completes Stock Repurchase CLASSIC CONSTRUCTION: Case Summary & Largest Unsecured Creditors COMMUNITY HEALTH: Fitch Assigns BB Rating to New $1.625B Bank Loan CYGNUS BUSINESS: Division Restructures Printing & Graphics Mags EMPIRE FIN'L: Stockholders' Deficit Climbs to $1.4MM at June 30 ENRON CORP: Enters $3 Million Methanol Purchase Pact with BASF ENRON CORP: JPMorgan Wins Enron-Related Lawsuit against West LB FLEMING COMPANIES: Emerges From Chapter 11 Bankruptcy Protection FLEMING COS.: Wants Court Nod on Associated Grocers Stipulation FRANKLIN CAPITAL: Former Auditors Express Going Concern Doubt FRIEDMAN'S INC: Lenders Approve Proposed Credit Pact Restructuring F.T. WILLIAMS: Administrator Names 6-Member Creditors Committee GALEY & LORD: Hires Dechert LLP as Lead Bankruptcy Counsel GENERAL GROWTH: Rouse Acquisition Prompts Fitch's Rating Watch GENERAL GROWTH: Rouse Merger Spurs S&P's CreditWatch GLOBAL CROSSING: Court Extends Service Period to Sept. 24 GMAC COMM'L: Fitch Places 3 Classes on Rating Watch Negative GRUPO IUSACELL: Inks Final Contract with Operadora Unefon HI-RISE RECYCLING: Hires Shearman & Sterling as Special Counsel HYPERTENSION DIAGNOSTICS: Dismisses Ernst & Young as Auditors INDYMAC ABS: Fitch Downgrades Class BV Notes to 'BB' from 'BBB' INTEGRATED HEALTH: Prepares for Distribution to Premiere Creditors JONES LEGACY I: Case Summary & 8 Largest Unsecured Creditors KAISER ALUMINUM: Court Okays Settlement with National Entities KING SERVICE: Wants to Employ Segel Goldman as Attorneys LIQUIDMETAL TECH: Completes $5.5 Million Senior Debt Offering METALLURG INC: S&P Raises Senior Debt Ratings to CCC & CC METROPCS INC: Delays Filing Second Quarterly Report with SEC MIRANT CORP: Wants Court to Reconsider Expanding Examiner's Role NEWMARKET TECH: 2nd Quarter Results Show Dramatic Turnaround NORTEL NETWORKS: Obtains New Waiver from Export Development Canada NQL DRILLING: Bits Business $17 Mil. Asset Sale Ends Restructuring ORDERPRO LOGISTICS: Neg. Fin'l Results Prompt Going Concern Doubt ORDERPRO LOGISTICS: Updates New Web Look as Part of Restructuring OXFORD AUTOMOTIVE: Names David Treadwell Chief Executive Officer PAXSON COMMUNICATIONS: NBC Files Complaint re Investment Terms PG&E NATIONAL: Wants Court OK on IPP Portfolio Bidding Procedures PG&E NATIONAL: Court Okays $15 Million Break-up Fee for Denali POLO BUILDERS: Committee Wants Freeborn & Peters as Counsel RANGE RESOURCES: Files Universal Shelf Reg. Statement with SEC RCN CORP: Files Joint Reorganization Plan & Disclosure Statement RCN CORP: Court Gives Final Okay to Blackstone Group's Employment RCN ENTERTAINMENT: Case Summary & 14 Largest Unsecured Creditors SALTIRE INDUSTRIAL: Taps Togut Segal as Bankruptcy Attorneys SIX FLAGS: Weak Operating Outlook Triggers S&P's Low-B Ratings SOLECTRON CORP: Secures 3-Year $500 Million Revolving Credit Loan STRATUS TECH: S&P Affirms 'B' Rating & Revises Outlook to Negative TANGO INC: Projects $6.5 Million Increase in FY 2005 Revenue TELEWEST COMMS: Fitch Raises Long-Term Credit Rating to 'CCC+' TOM'S FOODS: S&P Places Low-B Ratings on CreditWatch Negative TRAINER WORTHAM: Fitch Affirms 'BB' Rating After Review Process U.S. CANADIAN: Completes $2 Mil. Foreclosure Sale on Nevada Unit U.S. PLASTIC: Settles AMPAC Balance with Property Turn-Over UAL CORP: Asks Court to Okay Avoidance Action Settlement Protocol UAL CORP: Flight Attendants Demand Employee Pension Contributions US AIRWAYS: Alabama's Aircraft Claims Allowed for $98.7 Million US AIRWAYS: S&P Downgrades Junk Ratings as Deadlines Approach WAVELAND-INGOTS: Fitch's Average Rating Factor Stays at 'BB-' WEIRTON STEEL: Asks Court to Compel United Bank to Turn Over Funds ZIM CORP: Recurring Losses Raise Going Concern Doubt * Large Companies with Insolvent Balance Sheets ********* A.B. DICK: Wants to Continue Hiring Squire Sanders as Counsel ------------------------------------------------------------- A.B. Dick Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to continue employing Squire Sanders & Dempsey L.L.P., as their corporate counsel. Squire Sanders has represented the Debtors since 1998 in many areas, including, inter alia, corporate governance, mergers and acquisitions, tax, financing, and the proposed sale of their businesses to Presstek, Inc. The Debtors believe that Squire Sanders is well qualified and able to represent them because of the firm's familiarity with their business and financial affairs and many of the potential legal issues that may arise in their chapter 11 restructuring. Squire Sanders is expected to: a) provide the Debtors advice in connection with the proposed transactions involving the sale of the Debtors businesses; b) provide the Debtors advice in connection with their obligations to comply with various environmental, employee benefit and labor laws and regulations; and c) provide advice regarding matters to come before the boards of directors of the Debtors and the boards' fiduciary obligations with respect to same. The current hourly rates charged by Squire Sanders professionals who will render services to the Debtors are: Professional Designation Hourly Rates ------------ ----------- ------------ Joseph C. Weinstein Partner $495 G. Christopher Meyer Partner 485 David A. Zagore Partner 390 Jordan A. Kroop Partner 315 Christopher W. Haffke Associate 315 Roger M. Gold Associate 275 Anthony M. Smits Associate 240 Patrick J. Brooks Associate 240 To the best of the Debtors knowledge, Squire Sanders is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. 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 ENT: Replacing GMAC Loan Facility with Potential Lender --------------------------------------------------------------- The extension agreement with Acclaim Entertainment, Inc.'s (Nasdaq: AKLM) primary lender, GMAC Commercial Finance LLC, to extend GMAC CF's previously announced termination of the Company's credit facility, expired on August 20, 2004. The Company is in negotiations with a new proposed lender seeking to replace the GMAC CF credit facility. The replacement of the GMAC CF facility will be subject to the execution and delivery of definitive legal documentation by the Company, GMAC CF and the new lender; provided that there can be no assurance that the new lender will consummate the proposed transaction. Pending the outcome of these negotiations, GMAC CF has agreed to refrain from exercising its remedies against the Company. If these negotiations are unsuccessful and GMAC CF exercises its remedies, then the Company would be forced to seek the protection of the bankruptcy laws. In addition, the Company had received notice from the Nasdaq Stock Market that delisting proceedings had been initiated against the Company due to the Company's inability to meet the minimum market capitalization continued listing requirements of the Nasdaq Small Cap Market, as set forth in Marketplace Rule 4310(c)(2)(B)(ii), and the Company's failure to file its quarterly report on Form 10- Q for the period ended June 27, 2004, as required by Marketplace Rule 4310(c)(14). The Company intends to appeal Nasdaq's delisting decision and expects to regain compliance as a timely filer once it files its Form 10-Q with the Securities and Exchange Commission, as soon as possible. During the appeal process with Nasdaq, the Company's securities will continue to trade on the Nasdaq Small-Cap Market pending a final determination. 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 becomes current and continues to remain current with its filings with the Securities and Exchange Commission. About Acclaim Entertainment Based in Glen Cove, New York, 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 visit http://www.acclaim.com/ At March 31, 2004, Acclaim Entertainment's balance sheet reflects a $97,983,000 stockholders' deficit, compared to a $55,088,000 deficit at March 31, 2003. AIR AMBULANCE: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Air Ambulance by B & C Flight Management 4650 College Blvd., Suite 202 Overland Park, Kansas 66211 Bankruptcy Case No.: 04-41866 Chapter 11 Petition Date: August 20, 2004 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtor's Counsel: H. Miles Cohn, Esq. Sheiness, Scott, Grossman & Cohn, LLP 1001 McKinney, Suite 1400 Houston, TX 77096 Tel: 713-374-7020 Fax: 713-374-7049 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 17 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Forgy and Company, LLC $27,465 Premium Financing Specialists $11,071 RIM Aviation, Inc. $8,293 Premium Financing Specialists $7,778 Coats & Evans $7,756 Meca $7,752 Houston Air Service Interiors $2,779 Universal Weather & Aviation, Inc. $2,204 CB Avionics, Inc. $1,698 Paladin Aviation $1,642 Handy Page $582 Whitney National Bank $250 Duncan Aviation Unknown Frank W. Harley Unknown Honeywell Unknown Honeywell Unknown Xerox Unknown AIR CANADA: Justice Hoy Frees Air Canada from $1.6MM Lease Arrears ------------------------------------------------------------------ As previously reported, New GSM Holding Corporation leases to Air Canada the premises at 355 Portage Avenue, in Winnipeg, Manitoba, which houses the primary data center for Air Canada's worldwide passenger reservation system. The Lease is for a 27-year term, beginning December 31, 1996. The Lease requires Air Canada to pay $6,253,600 as Fixed Net Rent plus $286,000 as Additional Fixed Net Rent, per annum, together with other obligations payable as rent under the Lease. As a condition of the airline's continued occupancy, New GSM asks Mr. Justice Farley to compel Air Canada to pay all amounts due and owing under the Lease. Air Canada presently owes $1,634,900 under the Lease for the rent from January 1, 2003 to March 31, 2003. David S. Ward, Esq., at Cassels Brock & Blackwell, LLP, in Toronto, Ontario, asserts that New GSM is a critical supplier that is entitled to be brought current pursuant to the Initial CCAA Order. Mr. Ward explains that the Leased Premises is critical to Air Canada's operations. Air Canada has not terminated, repudiated or disclaimed the Lease. However, the airline has not formally indicated that it intends to remain in the Premises. Meanwhile, Air Canada continues to occupy the Leased Premises, and to sublease and collect rent from its subtenants of portions of the Leased Premises. New GSM filed a claim in November 2003 for the payment of all outstanding amounts due under the Lease. New GSM included a claim for payment in full of all unpaid rent for the period from January 1, 2003 to March 31, 2003, plus interest. Ernst & Young, Inc., in its capacity as the airline's Monitor, denied New GSM's Lease Arrears Claim as a claim that Air Canada must pay. The Monitor allowed New GSM's Lease Arrears Claim as an ordinary unsecured claim that is to be compromised under Air Canada's Plan of Arrangement. New GSM further asks the CCAA Court to find that the Lease is unaffected for the purposes of Air Canada's Plan. Court Dismisses Debtors' Motion The Honorable Madam Justice Alexandra Hoy of the Ontario Superior Court of Justice does not accept New GSM's argument that providing Air Canada with the right to repudiate leases in the Initial Order, and specifying therein that the consequences of termination would be dealt with in the Plan, means that arrears of rent in respect of the pre-filing period for leases that were not repudiated cannot be dealt with by the Plan. "This provision must be viewed in light of the Claims Procedure Order." Mm. Justice Hoy notes that New GSM did not appeal the Claims Procedure Order. If the Court sanctions the Plan, New GSM's Claim for pre-filing rent will be compromised and fully satisfied by the Plan. New GSM will be deemed to have waived the default under the lease. Mm. Justice Hoy further rules that Air Canada's decision not pay the pre-filing rent is not a unilateral amendment of New GSM's lease. Rather, Air Canada is attempting to act in a manner consistent with the Plan. "[I]t is not appropriate for me to, at this juncture, order Air Canada to pay all amounts due under the lease as a condition of continued occupancy. It is, of course, open to New GSM to oppose court sanction of the Plan on the basis that the Plan is not fair in this respect," Mm. Justice Hoy explains. While New GSM may argue that the leased premises houses the primary data center for Air Canada's worldwide passenger reservations systems and are, therefore, critical to Air Canada's business, Mm. Justice Hoy finds that it remains within Air Canada's discretion -- not the Court's -- to determine which creditors are "critical suppliers." Mm. Justice Hoy defers ruling on the issue of whether Air Canada should be required to designate New GSM's lease as an "Unaffected Contract" for purposes of the Plan. "[I]t is inappropriate for the Court to consider the specific provisions of the Plan until it has been approved by the creditors and is brought to the Court for sanction," Mm. Justice Hoy explains. "[T]his issue should be deferred until the consideration of the fairness of the Plan in the context of the sanction hearing." Mm. Justice Hoy also dismisses New GSM's request to attorn rents due from Air Canada's sublessees in respect of the premises, to the extent Air Canada continues defaulting under its obligations to New GSM as head lessor. "While I appreciate that New GSM considers it unfair that Air Canada be able to collect rent from its sub-lessee in respect of the pre-filing period and then compromise the rent owing to New GSM in respect of the same period, if the Plan is approved by creditors and sanction, as is, the default in payment of rent will . . . be waived," Mm. Justice Hoy notes. 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. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALASKA AIRLINES: Cutting 150 Jobs to Save $5 to $10 Million ----------------------------------------------------------- Alaska Airlines began offering a voluntary severance package to management employees as a precursor to a reorganization that will eliminate about 9% of its management positions between now and spring 2005. Alaska anticipates a reduction of up to 150 employees resulting in permanent annual savings ranging between $5 and $10 million. "The reasons for the reorganization are to speed decision-making and to improve communication and accountability," said CEO Bill Ayer in a memo to all management employees. Mr. Ayer said the aim is to improve execution by eliminating some of the layers of management that served the airline well in a different era, but now must meet a tougher standard in view of the changes and challenges facing the industry. Mr. Ayer said an outline of the overall management restructuring has been mapped out. It will be adjusted in September prior to implementation depending upon how many management employees voluntarily choose to leave. "We recognize the key role that employees have played over the years and, for those who leave, we want to make the transition as smooth as possible," Mr. Ayer said. "So we've crafted a generous severance package, one that compares favorably to any offered since 9/11 triggered 100,000 layoffs at other airlines." The voluntary program is being offered to all management personnel. Acceptance of applications, as well as the timing of the departure of personnel, will be based upon the needs of the company's operations. Among the features: -- two weeks of pay for each year of service; -- a bonus of between $3,000 and $15,000 depending on length of service; -- one year of healthcare coverage; and travel benefits for the employee and eligible dependents. "Since 9/11, and especially since we unveiled our broad-based Alaska 2010 repositioning plan last summer, we have looked -- and will continue to look -- at every possible way to strengthen this airline to compete successfully over the long-term," Mr. Ayer said. The management reorganization will not affect any of the airline's current routes and services. Alaska Airlines is the nation's ninth largest carrier. Alaska and its sister carrier, Horizon Air, together serve more than 80 cities in Alaska, the Lower 48, Canada and Mexico. For more news and information, visit the Alaska Airlines Newsroom on the Internet at http://newsroom.alaskaair.com/ Seattle-based Alaska Air Group is the parent company of Alaska Airlines and Horizon Air Industries. The company and its sister carrier, Horizon Air, together serve 80 cities in Alaska, the Lower 48, Canada and Mexico. As previously reported, Standard & Poor's Ratings Services lowered its ratings on Alaska Air Group Inc. and subsidiary Alaska Airlines Inc., including lowering the corporate credit rating on both to 'BB-' from 'BB.' Ratings were removed from CreditWatch, where they were placed March 18, 2003. The outlook is negative. ALLEGHENY ENERGY: S&P Raises Corporate Credit Rating to 'B+' ------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit ratings on Allegheny Energy Inc. and its subsidiaries to 'B+' from 'B'. The outlook is positive. As of June 30, 2004, the Greensburg, Pa.-based company had $5.1 billion of nonsecuritization debt outstanding. "The rating action reflects the company's improved financial performance from a very weak level and expectation of sustained profitability," said Standard & Poor's credit analyst Tobias Hsieh. "The higher rating on Allegheny reflects that of a company whose business risk profile is improving toward that of a typical integrated utility, but still heavily burdened with debt incurred from largely discontinued merchant and trading operations," said Mr. Hsieh. The positive outlook reflects Standard & Poor's expectation that the company will continue to execute on its plan to pay down $1.5 billion or more of debt between December 2003 and the end of 2005. Increased progress selling assets, paying down debt and stabilizing cash flow, or positive outcomes from rate filings could lead to further ratings upgrades. Allegheny owns about 11,500 MW of generation capacity and serves about 1.5 million customers. Allegheny's service territory spans five states, Pennsylvania, West Virginia, Maryland, Ohio, and Virginia. ALLEGHENY ENERGY: Files SEC Papers to Register 4.5 Million Shares ----------------------------------------------------------------- Allegheny Energy, Inc., a registered holding company, has filed an Application/Declaration pursuant to Sections 6(a) and 7, and Rule 54 under the Public Utility Holding Act of 1935, as amended, requesting that the Securities & Exchange Commission authorize Allegheny to issue shares of common stock, $1.25 par value, pursuant to a Stock Unit Plan. Pursuant to the Plan, Allegheny proposes to issue up to 4,500,000 shares of common stock to settle stock units issued to employees who are essential for Allegheny's growth and profitability. Specifically, upon vesting of each Unit, participants in the Plan will receive one share of Allegheny common stock for each Unit, as well as dividends paid by Allegheny during the period the Unit was held. Allegheny requested expedited treatment of the Application/Declaration. Expedited treatment is appropriate, in the opinion of Allegheny Energy, in that authorizing Allegheny to issue common stock to settle Units will enable Allegheny to reduce earnings volatility associated with the Units, conserve cash and increase common stock capitalization. Allegheny therefore requested that the Commission issue an order authorizing the transactions contemplated in the Application/Declaration on, or before, June 30, 2004. The Plan became effective upon its approval by Allegheny's Board of Directors on May 14, 2004. At that time, 3,414,048 Units that had previously been granted to certain of Allegheny's executive officers pursuant to employment agreements were made subject to the Plan, as consented to by each of the relevant executive officers. Subject to adjustment as provided under the Plan, the total number of Units authorized under the Plan is 4,500,000, inclusive of the Outstanding Units. If any award pursuant to the Plan is forfeited or otherwise terminated, or is cancelled prior to the vesting of any Units, then the Units covered by such award, to the extent of such forfeitures, termination or cancellation, shall again be available under the Plan. Headquartered in Greensburg, Pennsylvania, Allegheny Energy is an integrated energy company with a portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities, and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about four million people in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. More information about Allegheny Energy is available at http://www.alleghenyenergy.com/ * * * As reported in the Troubled Company Reporter's March 18, 2004, edition, Fitch Ratings affirmed and removed from Rating Watch Negative the ratings of Allegheny Energy, Inc. and the utility subsidiaries: Allegheny Energy, Inc. -- Senior unsecured debt 'BB-'; -- 11-7/8% notes due 2008 'B+'. Allegheny Capital Trust I -- Trust preferred stock 'B+'. West Penn Power Company -- Medium-term notes and senior unsecured 'BBB-'. Potomac Edison Company -- First mortgage bonds 'BBB'; -- Senior unsecured notes 'BBB-'. Monongahela Power Company -- First mortgage bonds 'BBB'; -- Medium-term notes 'BBB-'; -- Pollution control revenue bonds (unsecured) 'BBB-'; -- Preferred stock 'BB+'. The Rating Outlook is Stable, Fitch says. Fitch withdrew its 'BB-' rating of Allegheny Energy, Inc.'s former bank credit facility maturing in January 2005 as that bank credit facility has been terminated and replaced. ALLIANCE HOLDINGS: Fitch Holds 'CC' Rating on $44MM Senior Notes ---------------------------------------------------------------- The Fitch rating for the $44,006,859 second priority senior notes remains at 'CC'. This class of notes was issued by Alliance Holdings International II, Ltd./Corp., which closed April 16, 1998. The rating action is effective immediately. Alliance Holdings is a collateralized bond obligation managed by Alliance Capital Management L.P. The collateral of Alliance Holdings is composed of high yield bonds with 79.61% invested in USD-denominated emerging market bonds and loans and 20.39% in USD- denominated high yield debt securities and loans of non-emerging market issuers. Payments are made semi-annually in April and October and the reinvestment period ended in April 2003. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and its portfolio management strategy. According to the July 14, 2004 trustee report, the portfolio includes $13.73 million (12.85%) in defaulted assets. The portfolio currently contains another $14.08 million (13.17%) of assets rated 'CCC+' or below. The Senior Par Value Test is passing at 149.72% with a trigger of 142.50% and the Second Priority Par Value Test is failing at 89.83% with a trigger of 115.40%. The portfolio includes $1.71 million (1.60%) of assets maturing after the deal's stated maturity date. The rating of the second priority senior notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the stated maturity date. ARCH COAL: Completes $364 Million Triton Coal Acquisition --------------------------------------------------------- Arch Coal, Inc. (NYSE: ACI) has completed the acquisition of Triton Coal Company for a purchase price of $364 million. The transaction was consummated following the recent decision by the U.S. District Court for the District of Columbia denying the Federal Trade Commission's request for a preliminary injunction to block the deal, and the refusal by the Circuit Court of Appeals for the District of Columbia to issue a stay pending appeal. "We remain as enthusiastic as ever about the transaction, and we look forward to beginning the integration of the Black Thunder and North Rochelle mines immediately," said Steven F. Leer, Arch Coal's president and chief executive officer. Located in the Powder River Basin of Wyoming, North Rochelle is the larger of two mines formerly operated by Triton. "We have always viewed North Rochelle as the principal source of value creation for Arch in this transaction," Mr. Leer said. "By integrating the North Rochelle mine and our existing Black Thunder operation, we are creating what we believe will be the premier mine in the nation's fastest growing coal supply region." The integration of the two mines -- which share a 5.5-mile property line - creates tremendous opportunities for cost savings and synergies. Arch expects the combination to create operating synergies of between $15 million and $20 million beginning in 2005, with that number climbing in subsequent years as future mine development for the integrated properties is optimized. "The addition of North Rochelle enhances our ability to serve our utility and industrial customers with the broadest range of super- compliance, compliance and low-sulfur coal products, as well as the widest array of transportation options," Mr. Leer said. "Consequently, we expect this acquisition to further strengthen Arch's standing as a preferred supplier of many of the nation's largest power generators." North Rochelle's reserve base totaled an estimated 226 million tons at Dec. 31, 2003. In 2003, North Rochelle produced an estimated 23.9 million tons of coal with an estimated sulfur content of 0.5 pounds of SO2 per million Btu's. North Rochelle is the newest mine in the Powder River Basin, having ramped up to full production less than five years ago. As a result, North Rochelle's modern rail loadout facility and other infrastructure, as well as its large equipment fleet, greatly add to the value of the transaction. In 2003, North Rochelle generated earnings before interest, taxes, depreciation and amortization of approximately $41.6 million. "We view North Rochelle as an excellent strategic fit with our existing operations, and we look forward to working with the dedicated and professional Triton workforce to achieve a quick and efficient integration," Mr. Leer said. Following the consummation of the transaction, Arch completed a previously disclosed agreement to sell the smaller of Triton's two mines, Buckskin, to Kiewit Mining Acquisition Company. The net sales price for this second transaction was $72.9 million, reflecting the originally negotiated sales price less certain previously disclosed adjustments related to the timing of the deal's completion. Arch used the proceeds as part of the financing for the acquisition of North Rochelle. In total, Arch financed the acquisition with $242 million in cash, including the proceeds from the Buckskin sale; $22 million in borrowings under its existing revolving credit facility; and a new $100 million term loan at its Arch Western Resources subsidiary. Mr. Leer also reconfirmed Arch's previous earnings guidance of approximately 15 cents to 25 cents for the third quarter, excluding any acquisition-related costs. "We fully expect the addition of North Rochelle to be accretive to earnings beginning with the first quarter of 2005," Mr. Leer said. "We will provide more details about the acquisition's expected impact on our financial performance once we have reviewed developments at the mine since the transaction was first announced." Mr. Leer indicated that Arch would provide additional commentary about the acquisition in its third quarter earnings release. Arch Coal, Inc. is the nation's second largest coal producer and mines clean-burning, low-sulfur coal exclusively. Arch produces more than 135 million tons of coal annually through its subsidiary operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah. Through these operations, Arch provides the fuel for approximately 7% of the electricity generated in the United States. * * * As reported in the Troubled Company Reporter on August 5, 2004, Standard & Poor's Rating Services lowered its corporate credit rating on Arch Coal Inc., the third-largest coal producer in the U.S., to 'BB' from 'BB+'. At the same time, Standard & Poor's also lowered its senior secured revolving credit facility rating to 'BB-' from 'BB', its preferred stock rating to 'B' from 'B+', and its senior secured note rating on Arch's subsidiary, Arch Western Finance LLC, to 'BB' from 'BB+'. The outlook is stable. Total outstanding debt as of June 30, 2004 was $700 million. "The downgrade reflects expectations that rising costs at the company's eastern mining operations and higher capital expenditures required to maintain production levels will offset the benefit of increased coal prices, resulting in negative free cash flow in 2004 and 2005 significantly below prior expectations," said Standard & Poor's credit analyst Dominick D'Ascoli. The ratings on St. Louis, Missouri-based Arch Coal reflect strong coal markets, the company's diversified base of coal reserves, its high percentage of low-sulfur coal deposits, offset by difficult operating conditions in the east, and an aggressive financial profile. Arch's operating performance has been weak over the past year because of high operating costs at its eastern operation, which accounts for about 25% of production. Average realized sales price per ton at its eastern operations increased 22% to $36.21 in the second quarter of 2004, from $29.66 a year earlier. By comparison, average total costs per ton rose 16% to $33.29 from $28.62. In general, eastern operating costs have risen because of the difficult operating environment in Central Appalachia. Standard & Poor's believes the trend of increasing eastern operating costs will continue. With about 100 million tons of coal produced during 2003, Arch is one of the top three U.S. coal producers, accounting for approximately 10% of U.S. coal production. The company operates numerous mines in the eastern and western coal producing regions of the U.S. ARMOR HOLDINGS: Wins 3-Year $461 Million Defense Contract --------------------------------------------------------- Armor Holdings, Inc. (NYSE: AH), a leading manufacturer and distributor of security products and vehicle armor systems, has been awarded a new 36-month Indefinite Delivery/Indefinite Quantity (ID/IQ) government contract by the Department of Defense for ceramic body armor, which provides for an award of up to $461 million at the government's option. The Company noted that it would announce specific orders under this contract award as appropriate. Robert Schiller, President and Chief Operating Officer of Armor Holdings, Inc. said, "We are pleased to have been named as a participant in this important program. While the level of participation for Armor Holdings and for each of the other companies involved in this program has yet to be determined, we believe that our industry-leading capacity, position as the government's largest supplier under prior SAPI contracts, and our strong track record of performance for these programs, will lead to a meaningful share of this new program." About Armor Holdings, Inc. Armor Holdings, Inc. (NYSE: AH) is a diversified manufacturer of branded products for the military, law enforcement, and personnel safety markets. Additional information can be found at http://www.armorholdings.com/ * * * As reported in the Troubled Company Reporter's June 4, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Armor Holdings Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings, including the 'BB' corporate credit rating, on the security products supplier. "The outlook revision reflects Armor's improved financial flexibility from a proposed common stock offering and solid operating performance," said Standard & Poor's credit analyst Christopher DeNicolo. ASPEN TECH: BASF Implements Manufacturing Info Management Solution ------------------------------------------------------------------ BASF, one of the world's leading chemical companies, has selected Aspen Technology, Inc.'s (Nasdaq: AZPN) information management solution for its worldwide manufacturing plants. The AspenTech solution will provide a foundation for BASF's new Manufacturing Execution System strategy, which is based on the deployment of a standard set of business and plant technologies. The information management systems will play a key role in enabling users to visualize and analyze real-time data from the manufacturing process, providing the basis for continuous improvement and more effective operational decision-making. The adoption of an AspenTech information management system will enable BASF to establish a common platform for all MES functions, with a consistent process for both the implementation and support of the solution. This will allow BASF to share best practices across its organization and reduce the cost and complexity of maintaining its manufacturing systems. The solution is built on the Aspen Operations Manager Integration Infrastructure, which provides the integration platform to connect with BASF's enterprise resource planning system and other plant applications. Providing plant managers and engineers with access to accurate, reliable real-time process information coupled with relevant business information is a fundamental requirement for improving manufacturing performance. AspenTech's solution will give BASF a standard framework to analyze and optimize its plant operations. AspenTech is a recognized leader in MES technologies for the process industries, based on a clear understanding of the business drivers and operational needs. The process data captured by the information management system will be used for a range of functions including batch monitoring and analysis, engineering analysis, management information, and quality control. AspenTech's information management solution was selected after a comprehensive evaluation of competing business and plant solution providers. "BASF is a long-standing user of AspenTech's engineering and manufacturing solutions, and we welcome this opportunity to further strengthen our partnership," said David McQuillin, President and CEO of AspenTech. "By using AspenTech's information management systems, BASF has demonstrated its commitment to achieving operational excellence across its global manufacturing network. The adoption of our information management solution, leveraging our Aspen Operations Manager infrastructure, is an important first step in meeting those objectives." About BASF BASF is the world's leading chemical company. Our goal is to grow profitably and further increase the value of our company. We help our customers to be more successful through intelligent system solutions and high-quality products. BASF's portfolio ranges from chemicals, plastics, performance products, agricultural products and fine chemicals to crude oil and natural gas. Through new technologies we can tap into additional market opportunities. We conduct our business in accordance with the principles of sustainable development. In 2003, BASF had sales of more than EUR33 billion (circa $42 billion) and over 87,000 employees worldwide. BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA), New York (BF), Paris (BA) and Zurich (AN). Further information on BASF is available on the Internet at http://www.basf.com/ About AspenTech Aspen Technology, Inc. provides industry-leading software and implementation services that enable process companies to increase efficiency and profitability. AspenTech's engineering product line is used to design and improve plants and processes, maximizing returns throughout an asset's operating life. Its manufacturing/supply chain product line allows companies to increase margins in their plants and supply chains, by managing customer demand, optimizing production, and streamlining the delivery of finished products. These two offerings are combined to create solutions for enterprise operations management (EOM), integrated enterprise-wide systems that provide process manufacturers with the capability to dramatically improve their operating performance. Over 1,500 leading companies already rely on AspenTech's software, including Aventis, Bayer, BASF, BP, ChevronTexaco, Dow Chemical, DuPont, ExxonMobil, Fluor, Foster Wheeler, GlaxoSmithKline, Shell, and Total. For more information, visit http://www.aspentech.co/ * * * In its Form 10-Q for the quarter ended March 31, 2004, Aspen Technology, Inc. reports: Liquidity and Capital Resources "During the nine months ended March 31, 2004, operating activities provided $40.8 million of cash primarily due to income from operations, our commitment to both the aggressive collection of receivables and the increased sale of receivables, partially offset by the continuing cash payments related to the ongoing proceedings in connection with the anti-trust claims filed by the Federal Trade Commission, or FTC, with respect to our acquisition of Hyprotech, Ltd., and our previous restructuring charges. Investing activities used $5.8 million of cash primarily as a result of the capitalization of computer software development costs and the ordinary purchases of property and equipment, partially offset by the proceeds from the sale of land in December 2003. Financing activities provided $27.0 million of cash primarily due to the proceeds from the Series D financing, partially offset by pay-off of amounts owed to Accenture and repurchase and retirement of $24.4 million of the convertible debentures. "We believe our current cash balances, availability of sales of our installment contracts, availability under the Silicon Valley Bank line of credit and cash flows from our operations will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months. However, we may need to obtain additional financing thereafter or earlier, if our current plans and projections prove to be inaccurate or our expected cash flows prove to be insufficient to fund our operations because of lower-than-expected revenues, unanticipated expenses or other unforeseen difficulties, due to normal operations or FTC-related costs. In addition, we may seek to take advantage of favorable market conditions by raising additional funds from time to time through public or private security offerings, debt financings, strategic alliances or other financing sources. Our ability to obtain additional financing will depend on a number of factors, including market conditions, our operating performance and investor interest. These factors may make the timing, amount, terms and conditions of any financing unattractive. They may also result in our incurring additional indebtedness or accepting stockholder dilution. If adequate funds are not available or are not available on acceptable terms, we may have to forego strategic acquisitions or investments, reduce or defer our development activities, or delay our introduction of new products and services. Any of these actions may seriously harm our business and operating results." BREUNERS HOME: Look for Bankruptcy Schedules Late This Week ----------------------------------------------------------- Breuners Home Furnishings Corp., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for an extension, until August 27, 2004, 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 explain that due to the size and complexity of their business, the diversity of their operations and assets, and the limited staffing available to gather, process and complete the requirement, they will not be able to complete the Schedules and Statements before August 27. Headquartered in Lancaster, Pennsylvania, Breuners Home -- http://www.bhfc.com/-- is one of the largest national furniture retailers focused on the middle to upper-end segment of the market. The Company, along with its debtor-affiliates, filed for chapter 11 protection on July 14, 2004 (Bankr. Del. Case No. 04-12030). Liquidators Great American Group, Gordon Brothers, Hilco Merchant Resources, and Zimmer-Hester) were brought on board within the first 30 days of the bankruptcy filing to conduct Going-Out-of-Business sales at the furniture retailer's 47 stores. Bruce Grohsgal, Esq. and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young & Jones represent the Debtors in their restructuring efforts. The Company reported more than $100 million in assets and liabilities when it sought protection from its creditors. CATHOLIC CHURCH: Hires Rothgerber as First Amendment Counsel ------------------------------------------------------------ Leonard E. Vuylsteke, the Canonical Director of Financial Services of the Archdiocese of Portland in Oregon, tells the United States Bankruptcy Court for the District of Oregon that the Debtor needs a special legal counsel to assist and advise it in all First Amendment issues in its Chapter 11 case, including, but not limited to: (a) the application of the Doctrine of Church Autonomy, derived from the Religion Clauses of the First Amendment of the Constitution of the United States of America, to the bankruptcy context; (b) the relationship between civil and canon law regarding determining the assets of the Debtor's estate; (c) the relationship under civil and canon law between the Archdiocese, parishes and religious schools within the Archdiocese, and other Catholic entities in the United States and abroad; and (d) the application of the canonical provisions on alienation of property by a Catholic archdiocese. Mr. Vuylsteke explains that First Amendment issues will arise throughout the Debtor's case due to the Debtor's status as a religious corporation sole, including its ability to operate its religious affairs free from government interference. Mr. Vuylsteke relates that the Debtor selected Rothgerber Johnson & Lyons, LLP, as special counsel to provide professional services with regards to the Debtor's rights and obligations under the First Amendment. Rothgerber has provided legal services related to First Amendment issues to a significant number of religious organizations from around the country. L. Martin Nussbaum, Esq., and Eric V. Hall, Esq., are the persons principally in-charge of this engagement. Messrs. Nussbaum and Hall are duly admitted and qualified as attorneys in the State of Colorado, and are experienced in dealing with all legal issues relevant to religious organizations, including the Religion Clauses of the First Amendment, state constitutional provisions regarding religion, and federal and state statues regarding religion. Accordingly, the Debtor seeks the Court's authority to employ Rothgerber. The Debtor will pay the firm in accordance with its professionals' standard hourly billing rates: Professionals Hourly Rate ------------- ----------- L. Martin Nussbaum $325 Charles Goldberg 385 Brent Cohen 350 Carl Esbeck 350 Lars Fuller 250 Eric Hall 215 Michael DeBoer 205 Messrs. Nussbaum and Hall assure the Court that Rothgerber and its professionals have no interest materially adverse to the Debtor, its estate, or any class of creditors or equity security holders, if any. The firm and its professionals are "disinterested persons" within the meaning of Section 101(14) of the Bankruptcy Code and as required under Section 327. 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. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) CCC INFORMATION: Extends $210 Million Self-Tender Offer to Friday ----------------------------------------------------------------- CCC Information Services Group Inc. (Nasdaq:CCCG) reported that its self-tender offer to repurchase up to $210 million of its common stock at a price of $18.75 per share, which commenced on July 27, 2004 and was previously announced to expire on August 24, 2004, will instead expire at 5:00 p.m., New York City time on Friday, August 27, 2004, unless further extended by the company. The reason for the extension is because CCC filed its new credit agreement, a portion of the proceeds of which will be used to fund the purchase of shares in the tender offer and pay associated fees and expenses, and SEC rules require that the offer be held open for five business days after filing of such financing arrangements. As of August 19, 2004, 12,630,198 shares had been tendered into the offer. The offer to purchase and related documents have been mailed to stockholders of record and are available for distribution to beneficial owners of CCC's shares. For questions or information, please call Georgeson Shareholder Communications, Inc., the information agent for the self-tender offer, toll free at (800) 255-4719. Once the tender offer is complete, the company will update its financial guidance to reflect the effects of the transaction. About CCC CCC Information Services Group, Inc., (Nasdaq:CCCG), headquartered in Chicago, is a leading supplier of advanced software, communications systems, Internet and wireless-enabled technology solutions to the automotive claims and collision repair industries. Its technology-based products and services optimize efficiency throughout the entire claims management supply chain and facilitate communication among approximately 21,000 collision repair facilities, 350 insurance companies, and a range of industry participants. For more information about CCC Information Services, visit CCC's Web site at http://www.cccis.com/ * * * As reported in the Troubled Company Reporter on August 5, 2004, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Chicago, Illinois-based CCC Information Services Inc. At the same time, Standard & Poor's assigned its 'B+' senior secured debt rating, with a recovery rating of '4', to the company's proposed $208 million senior secured bank facility, which will consist of a $30 million revolving credit facility (due 2009) and a $178 million term loan (due 2010). The 'B+' rating on the senior secured debt is the same as the corporate credit rating and the '4' recovery rating indicates that the first priority senior secured debt holders can expect marginal (25%-50%) recovery of principal in the event of a default. The proceeds from this facility, along with about $38 million of cash on hand, will be used to repurchase $210 million in CCC's common stock. The outlook is positive. Pro forma for the proposed bank facility, CCC had approximately $205 million in operating lease-adjusted debt as of June 2004. "The ratings reflect CCC's narrow product focus within a mature niche marketplace and leveraged balance sheet," said Standard & Poor's credit facility Ben Bubeck. "These are only partially offset by a largely recurring revenue base supported by intermediate-term customer contracts, high barriers to entry, and solid operating margins, allowing for modest free operating cash flow generation." CHAPCO CARTON: U.S. Trustee Names 9-Member Creditors' Committee --------------------------------------------------------------- The United States Trustee for Region 11 appointed nine creditors to serve on an Official Committee of Unsecured Creditors in Chapco Carton Company's Chapter 11 case: 1. Ekvall International, Ltd. Attn: Horst Westerling 309 Vine Street, Suite 710 Cincinnati, Ohio 45202 2. Gibbon America II, Corp. Attn: Robert S. Olech 801 North State Street Elgin, Illinois 60673 3. The Newark Group, Inc. Attn: Lynn Herro 20 Jackson Drive Cranford, New Jersey 07016 4. Printers' Service Attn: Harold Botkin 312 Stewart Avenue Addison, Illinois 60101 5. RiverCor, LLC Attn: Sean Waller 2850 Gilchrist Road, Building #5 Akron, Ohio 44305 6. Rockford Paperboard, Inc. Attn: Graydon Fox c/o Lakeland Paper Corp. 506 Prairie Sturgis, Minnessota 49091 7. Rock-Tenn Company Attn: Greg King 504 Thrasher Street Norcross, Georgia 30071 8. Simpkins Industries Attn: Tony Battaglia Department 0271 P.O. Box #40000 Hartford, Connecticut 06151 9. Smurfit-Stone Corp. Attn: Edward Paredes 450 East North Avenue Carol Stream, Illinois 60188 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's 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 Debtor 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 Bolingbrook, Illinois, Chapco Carton -- http://www.chapcocarton.com/-- sells and distributes folding cartons used for retail packaging in food, candy, office supplies and automotive parts industries. The Company filed for chapter 11 protection on July 13, 2004 (Bankr. N.D. Ill. Case No. 04-26000). Chad H. Gettleman, Esq., at Adelman Gettleman & Merenas represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $15,232,256 in total assets and $19,220,379 in total debts. CITIZENS COMMS: D&E Communications Completes Stock Repurchase ------------------------------------------------------------- D&E Communications, Inc. (NASDAQ:DECC) has completed the repurchase of 1,333,500 shares of its common stock from Citizens Communications Company at a price of $10.00 per share pursuant to an agreement entered into between D&E and Citizens earlier this month. D&E Communications, Inc. is a provider of integrated communications services to residential and business customers in markets throughout central and eastern Pennsylvania. D&E offers its customers a comprehensive package of communications services including local and long distance telephone service, high-speed data services and Internet access service. D&E also provides business customers with systems integration services including voice and data network solutions. Citizens Communications is a telecommunications-focused company providing wireless communications service to 2.5 million access lines in 24 states. * * * As reported in the Troubled Company Reporter's July 23, 2004 edition, Standard & Poor's Ratings Services lowered its ratings on Citizens Communications Co. The corporate credit rating was lowered to 'BB+' from 'BBB'. All ratings are removed from CreditWatch, where they were placed with negative implications on Dec. 11, 2003, following Citizens' announcement of its decision to explore strategic alternatives. The outlook is negative. "The downgrade is based on the concern that Citizens' initiation of a substantial dividend, indicating a distinct shift toward a more shareholder-oriented financial policy, will limit further deleveraging and reduce the company's financial flexibility," explained Standard & Poor's credit analyst Eric Geil. "The smaller resulting financial cushion might hamper Citizens' ability to address rising competitive pressure on its mature local telephone operations." CLASSIC CONSTRUCTION: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Classic Construction, Inc. P.O. Box 666 Anderson, South Carolina 29622 Bankruptcy Case No.: 04-09901 Type of Business: The Debtor manufactures custom and spec homes. Chapter 11 Petition Date: August 20, 2004 Court: District of South Carolina (Spartanburg) Judge: John E. Waites Debtor's Counsel: Robert H. Cooper, Esq. Cooper Law Firm 2320 East North Street, Suite B Greenville, SC 29607 Tel: 864-271-9911 Total Assets: $2,189,688 Total Debts: $2,660,833 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ GBS Lumber, Inc. Trade Debt $418,336 PO Box 159 Mauldin, SC 29662 Stock Building Supply Trade Debt $79,802 Kinley's Cabinets Trade Debt $71,846 Carolina Brick Distrib. Trade Debt $46,965 Community Supply Trade Debt $43,120 Precision Roof Trusses Trade Debt $31,375 Carolina Custom Stair Trade Debt $28,745 Thomas Concrete of SC Trade Debt $26,477 USA Floor covering Trade Debt $25,482 Columbia Siding & Windows Trade Debt $24,391 RMC Mid-Atlantic Trade Debt $22,780 Illuminations, LLC Trade Debt $22,677 Gallery of Lighting Trade Debt $20,251 Glenco Insulation Co. Trade Debt $20,118 Clayton Tile Trade Debt $19,088 All-Phase Electric Supply Trade Debt $17,937 Crenshaws TV & Appliance Trade Debt $17,478 Jeff Lynch Appliances Trade Debt $12,850 Builders Firstsource Trade Debt $12,100 Wayne's Overhead Door Trade Debt $11,664 COMMUNITY HEALTH: Fitch Assigns BB Rating to New $1.625B Bank Loan ------------------------------------------------------------------ Fitch Ratings has assigned a 'BB' rating to CHS/Community Health Systems, Inc.'s new $1.625 billion senior secured bank facility. The new bank facilities include a $425 million, 5-year revolving credit facility and a $1.2 billion, 7-year term loan B facility. Fitch has also affirmed the 'B+' rating on Community Health Systems, Inc.'s -- Community's parent company -- convertible subordinated notes due 2008. The Rating Outlook is Stable. The new bank facility will replace the company's $1.050 billion Term Loan B (currently at $1.034 billion including amortization) with the new $1.2 billion Term Loan B for net proceeds of $166 million. Proceeds beyond refinancing the current facility will be used to fund the company's acquisition of Pheonixville Hospital (PA). The company is not expected to immediately draw on the revolver. Additionally, the new facility will allow for the issuance of $400 million in additional term loan debt (accordion feature) and will result in substantially better pricing for the revolver including undrawn amounts. Finally the new facility will allow for the repurchase of $300 million in company stock. The bank facility is secured by a perfected first priority security interest in the capital stock of CHS/Community Health Systems Inc. and all wholly owned subsidiaries. Community's rating reflects the validity of the company's business model and its leading market presence, experienced management and track record of successful acquisitions, offset by modestly high leverage and acquisition-associated risks. The rating further reflects the company's improved capital structure and rebalanced maturity schedule. Additionally, Fitch notes that several provisions of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 will have a direct, positive impact on rural hospital providers such as Community in the coming years. Concerns center on acquisition-associated risks and that the company's model relies, to some degree, on acquisitions to sustain current growth and margin momentum. While labor costs have moderated in recent quarters, labor expense still needs to be monitored given the nationwide shortage of skilled nurses and technicians. Other concerns include industry-wide issues such as bad debt expense, slower-than-expected volume trends, sustainability of private-pay rate increases, and the highly regulated nature of the industry. For the 12 months ended June 30, 2004, EBITDA/interest was 6.3 times, with total debt-to-EBITDA of 2.9x. Total debt at June 30, 2004, was approximately $1.4 billion and lease-adjusted debt-to- adjusted capital was approximately 57%. CYGNUS BUSINESS: Division Restructures Printing & Graphics Mags --------------------------------------------------------------- Cygnus Publishing will suspend publishing of Southern Graphics, Printing Journal, Print & Graphics, and Printing Views which makes up the regional Graphics Network of publications following the September issue. The strategic move comes after evaluating the best way to deliver information to the changing printing and graphics industry, and how best to serve Cygnus advertisers. "The printing and graphics industry took a hit after 9-11 that particularly affected the regional markets with some experiencing more than three solid years of decline," says Jann Levesque, group publisher of the Graphics Network. "Industries change, realign and grow. Suspending our regional print publications is perhaps only temporary as we continue to watch how the market evolves." Industry interest has advanced over the past several years to include a greater focus on specific segments of the market with less weight given to broader more general topics. Cygnus will remain one of the leading sources for the printing and graphics market with top industry titles that include Ink Maker, Quick Printing, Printing News, and Wide-Format Imaging gaining more resources. Its print and graphics industry Websites receive nearly 500,000 page views monthly. "By concentrating on existing market-leading positions, we can continue to efficiently deliver must-read information to audiences through our strong and trusted magazine brands and deliver greater value to our advertising customers," adds Levesque. "We are confident that this strategic restructuring will benefit the industry and assist the market to capitalize on the printing industry recovery." Cygnus Publishing's Printing and Graphics market segment, known as the Cygnus Graphics Group, is a nationally circulated group of vertical and horizontal print and graphic titles that reach more than 145,000 influential professionals in nearly every major sector of the graphic communications industry. The penetration of this select audience group goes even deeper than the numbers imply and allows the titles to boast that they are "everywhere in the community of print." Cygnus Publishing is a division of Cygnus Business Media, a leading, diversified business-to-business media company with a portfolio of over 200 media products reaching five million professionals annually within 15 major markets. Its four distinct divisions - Cygnus Publishing, Cygnus Expositions, Cygnus Interactive and Cygnus Custom Marketing - provide comprehensive, integrated advertising and marketing programs for Cygnus' valued customers and clients. The company's leading business publications, trade shows, conferences, Web sites, online products and custom marketing capabilities enhance brand identity, generate sales leads, and build product awareness as they strengthen customer/client relationships. * * * As reported in the Troubled Company Reporter on May 31, 2004, Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Cygnus Business Media Inc. and its parent company CommerceConnect Media Holdings Inc., which are analyzed on a consolidated basis. At the same time, Standard & Poor's assigned its 'B' rating and a recovery rating of '4' to Cygnus's proposed $190 million first lien secured bank facility, indicating expectations for a marginal recovery of principal (25%-50%) in a default scenario. In addition, Standard & Poor's assigned its 'CCC+' rating and a recovery rating of '5' to the proposed $30 million second lien institutional term loan, indicating expectations for a negligible recovery of principal (0%-25%) in default. On a pro forma basis, the Westport, Conn.-based firm will have about $202 million in consolidated debt and $34 million in mandatorily redeemable series A preferred stock, as of March 31, 2004. The outlook is stable. "The ratings reflect Cygnus's high leverage, small cash flow base, reliance on acquisitions to support its revenue and cash flow in recent years, and the weak, albeit improving, operating environment," said Standard & Poor's credit analyst Steve Wilkinson. "These risks are partially offset by the company's good cash flow diversity, the complementary nature and good competitive positions of its niche trade publications, expositions, and related operations, and its experienced management team." Cygnus publishes 65 controlled circulation trade magazines (representing about 80% of revenue and cash flow), organizes 50 trade events and conferences, has 79 related websites, and creates customized marketing publications. These assets target 15 sectors with many publications and expositions serving the same niches, which provides some cross-promotional opportunities and leverage of industry knowledge and client relationships. EMPIRE FIN'L: Stockholders' Deficit Climbs to $1.4MM at June 30 --------------------------------------------------------------- Empire Financial Holding Company (Amex: EFH), a financial brokerage services firm serving retail and institutional clients, reported financial results for the second quarter ended June 30, 2004. Second quarter 2004 financial results included a year-over- year increase in revenue of 43%. The Company reported a net loss applicable to common stockholders of $0.9 million. President Donald A. Wojnowski, Jr. stated, "The revenue increase over 2003 results were generated by the addition of our securities market making and trading business in addition to an increase in the number of independent registered representatives processing their securities transactions through Empire. We are disappointed with the loss during the quarter which was primarily the result of legal, accounting and employee severance expenses related to the previously announced SEC investigation. We believe that the Company has taken certain actions to facilitate a settlement with the SEC, and, therefore, we are optimistic that a resolution of the SEC investigation will occur during 2004. We are thankful for the continued support of our clients, employees, registered representatives and shareholders." Financial Results Total revenues for the three months ended June 30, 2004 were $5.6 million, an increase of $1.7 million, or 43%, over $3.9 million for the same period in 2003. The revenue growth was primarily the result of the establishment of market-making and trading operations during the third quarter of 2003 that resulted in a contribution of 21% of total revenues for the second quarter of 2004. In addition, the Company generated an 11% increase in commissions and fee revenues associated with an increase in retail trading volume and the processing of more securities transactions by affiliated independent registered representatives, including by newly affiliated representatives. Total operating expenses for the three months ended June 30, 2004 were $6.5 million compared to total operating expenses of $5.3 million for the same period in 2003. The increase was primarily due to higher commissions and clearing costs associated with higher transaction volumes and higher legal and accounting expenses related to ongoing regulatory investigations and litigation. For the three months ended June 30, 2004, the Company reported a net loss applicable to common stockholders of $(859,188), compared to a net loss of $(1,312,620) for the same period in 2003. As a result of the Company's completion of the sale of its correspondent clearing business, Advantage Trading Group, Inc. in November 2003, results for fiscal 2003 have been restated to separate continuing operations from discontinued operations. Therefore, the 2003 net loss applicable to common stockholders included income from discontinued operations of $19,486. Financial Condition At June 30, 2004, the Company had total assets of $1.9 million the majority of which consisted of receivables from brokers, dealers and clearing brokers arising from customer-related securities transactions. The Company's balance sheet shows a $1,427,797 stockholders' deficit at June 30, 2004 -- nearly an 80% increase from the $801,183 stockholders' deficit reported at December 31, 2003. Going Concern Doubt The audit report contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2003 contains an explanatory paragraph that raises doubt about the Company's ability to continue as going concern because the Company has had net losses from continuing operations in 2003 and 2002, a stockholders' deficit and has uncertainties relating to regulatory investigations. About Empire Financial Holding Company Empire Financial Holding Company, through its wholly owned subsidiary, Empire Financial Group, Inc., provides full-service retail brokerage services through its network of independently owned and operated offices and discount retail securities brokerage via both the telephone and the Internet. Through its market-making and trading division, the Company offers securities order execution services for unaffiliated broker dealers and makes markets in domestic and international securities. Empire Financial also provides turn-key fee based investment advisory and registered investment advisor custodial services through its wholly owned subsidiary, Empire Investment Advisors, Inc. ENRON CORP: Enters $3 Million Methanol Purchase Pact with BASF -------------------------------------------------------------- In December 2000, Enron Ventures Corporation refinanced an existing synthetic lease facility guaranteed by Enron Corporation covering, in relevant part, the property located at 4403 La Porte Freeway, Pasadena, in Harris County, Texas, pursuant to: (i) an Amended and Restated Participation Agreement, dated as of December 27, 1995, as amended by Master Amendment No. 1 and Assignment, dated as of December 7, 2000, and by Master Amendment No. 2, dated as of June 29, 2001, among EVC, Reliance Trust Company as Trustee of the 1991 ENRON/NGL Trust, Reliance Trust Company as the Collateral Trustee, Citibank N.A. as the Agent, and certain Note Purchasers and Certificate Holders; (ii) an Amended and Restated Lease, dated as of December 27, 1995, as amended by Master Amendment No. 1 and Assignment, dated as of December 7, 2000, and by Master Amendment No. 2, dated as of June 29, 2001, between the Trustee as Lessor and EVC as Lessee; (iii) a Second Amended and Restated Parent Guaranty, dated as of December 7, 2000, issued by Enron to guarantee all of the Lessee's obligations under the Operative Documents; (iv) an Amended and Restated Parent Purchase Agreement, dated as of December 27, 1995, between Enron and the Trustee; and (v) an Amended and Restated Declaration of Trust, dated as of December 27, 1995, as amended by Master Amendment No. 1 and Assignment dated as of December 7, 2000, and by Master Amendment No. 2, dated as of June 29, 2001, executed by the Trustee. The Trust issued: (i) A-Notes in an aggregate principal amount of $59,200,000 and B-Notes in an aggregate principal amount of $12,215,622 to the Note Purchasers; and (ii) Certificates in an aggregate stated amount of $2,584,378 to the Certificate Holders. Enron Methanol Company subleased the Property pursuant to a Sublease with EVC dated March 20, 1992. On October 10, 2002, the Trustee filed: -- Claim Nos. 10806 and 10807 against Enron, each asserting about $74,300,000 relating to Enron's obligations under certain Operative Documents; and -- Claim No. 10808 against EVC asserting about $75,800,000 relating to its obligations under certain Operative Documents. The Marketing Efforts On November 13, 2003, the Debtors engaged Cushman & Wakefield of Texas, Inc., as an exclusive real estate agent for the marketing and sale of the Property. Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that C&W, which has offices in Houston, Texas, is an expert in the marketing and sale of real estate similar to the Property. C&W has distributed information regarding the proposed sale of the Property to approximately 250 prospective bidders, and the Debtors have executed eight confidentiality agreements with interested parties. Five of the Interested Parties have visited the Property to conduct due diligence. According to Mr. Sosland, potential bidders ranged from owner/occupants to property developers to pure financial investors. After substantial negotiations, on August 11, 2004, the Debtors, the Trustee and BASF Corporation entered into a Purchase and Sale Agreement. The Purchase Agreement The salient terms of the Purchase Agreement are: A. Purchase Price: $3,000,000 B. Payment: (a) BASF has made an initial earnest money deposit of $150,000, which is equal to 5% of the Purchase Price, by wire transfer of immediately available Federal funds to the account of: Stewart Title Company 1980 Post Oak Blvd., Suite 110 Houston, Texas 77056 Attention: Jim Putnam, Escrow Officer The Deposit is being held in escrow by the Title Company in a segregated interest-bearing account at Southwest Bank of Texas or at another banking institution acceptable to all Parties. Any interest earned on the Deposit will be considered as part of the Deposit, to be applied to the Purchase Price at Closing; and (b) At the Closing, BASF will deliver the balance of the Purchase Price to the Title Company and the Title Company will pay the Purchase Price to the Trustee, on behalf of the Note Purchasers and Certificate Holders, subject to adjustments, via wire transfer of immediately available Federal funds to the bank account at: Citibank, N.A. ABA #021 000 089 Account #36852248 Attention: Lisa Rodriquez Reference: JT Holdings C. Property Acquired All of EVC and the Trustee's right, title and interest in and to: (a) 23.9259 acres of Land; (b) the methanol facility, and all structures, buildings, fixtures and other improvements constituting real property located on the Land; (c) all machinery, apparatus, equipment and other personal property used or usable in the operation, repair or maintenance of the Land and Improvements and situated in the Property as of the Execution Date; (d) all easements, hereditaments, and appurtenances belonging to or inuring to the benefit of EVC or Trustee and pertaining to the Land; (e) all transferable warranties or guaranties given by any contractor, manufacturer or materialmen in connection with the construction, installation, maintenance or repair of the Personal Property or Improvements, to the extent the Warranties may be lawfully assignable without the consent of another party; and (f) in accordance with Section 3.3 of the Purchase Agreement, the Assumed Contract; all of which are being sold in an "as is," "where is" condition and "with all faults" as of August 11, 2004, and as of the Closing Date. The Personal Property may or may not be in operable condition at the time of Closing. Neither the Trustee nor any of the Enron Parties will have any obligation to repair or replace any of the Personal Property. D. Assumed Contract As of the Closing Date, the Channel Area Industrial District Agreement between EMC and The City of Houston, Texas, will be assigned to and assumed by BASF as of the Closing Date. BASF will pay all costs and expenses to cure any defaults under the Assumed Contract, except that ad valorem real property taxes and assessments that are delinquent as of the Closing Date will be paid out of sale proceeds at the Closing. E. Insurance Until the Closing, the Enron Parties will, at their sole expense, maintain comprehensive public liability insurance against claims for bodily injury and property damage occurring in, on or about the Property, subject to a deductible of no greater than $2,000,000. F. New Encumbrances Neither EVC nor the Trustee will (a) grant, amend or consent to any easement, restriction, lien, assessment, or other encumbrance affecting the Property or pursue any land use approvals relative to the Property without BASF's prior consent, which consent may be withheld in BASF's sole discretion, or (b) enter into any written agreement that would materially and adversely change title to the Property. However, the Parties agree that the transfer of record title to the Property from State Street Bank and Trust Company of Connecticut, National Association, as predecessor trustee, to the Co-Trustee will not be considered a material or adverse change in title to the Property. G. Title Defects If, prior to the Closing, any of the Enron Parties or the Trustee discloses in writing to BASF or BASF discovers that (a) title to the Property is subject to material defects, limitations or encumbrances other than Permitted Encumbrances that are not required to be released or otherwise removed at or prior to Closing pursuant to the terms in the Purchase Agreement, or (b) any representation or warranty of any of the Enron Parties or the Trustee contained in the Purchase Agreement is or, as of the Closing Date, will be materially untrue, then BASF will promptly give written notice to all Parties of its objection. In this event, Enron may elect to postpone the Closing for 30 days to afford Enron and BASF an opportunity to cure the objection. The Parties acknowledge and agree that none of the Enron Parties nor the Trustee will have any obligation to cure any objection. H. Closing Payment of the Purchase Price and the Closing will take place at the offices of Weil, Gotshal & Manges LLP, in Houston, Texas, at 10:00 a.m. Houston, Texas time on a date mutually acceptable to the Parties that occurs no later than the first business day after expiration of the 10-day appeal period relating to entry of the Court's order. The Closing is anticipated to occur no later than November 1, 2004. If the Closing has not occurred by the close of business on November 1, 2004 for any reason other than a default by BASF of its obligations, it will have the right, in its sole discretion, to terminate the Purchase Agreement, by written notice delivered to EVC and the Trustee. The Assumed Contract Mr. Sosland informs the Court that the Property is located in an area known as the Channel Area Industrial District No. 75. On October 22, 1997, EMC and The City of Houston, Texas, entered into the Channel Area Industrial District Agreement pursuant to which: (i) the City of Houston guaranteed the immunity of the Channel Area Industrial District from annexation of any type by the City of Houston; and (ii) the City of Houston agreed to provide to the owner of the Property certain property tax protection. In exchange, EMC, as the property owner, agreed, among other things, to timely pay its property taxes. For the proceeds of the Sale Transaction, the Debtors will pay all outstanding delinquent real property taxes due and owing with respect to the Property as of the Closing Date, which is calculated to be about $1,350,000. Of the owed Tax amount, $185,348 will be paid to the City of Houston as Cure Payment. Mr. Sosland assures the Court that BASF is capable of performing its obligations under the Assumed Contract. Accordingly, the Debtors seek the Court's authority to: (a) sell the Property to BASF, subject to higher and better bids, free and clear of any liens and encumbrances, pursuant to Section 363 of the Bankruptcy Code; and (b) assume and assign the Assumed Contract to BASF pursuant to Section 365 of the Bankruptcy Code. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. The Company filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01- 16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 121; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: JPMorgan Wins Enron-Related Lawsuit against West LB --------------------------------------------------------------- JPMorgan Chase & Co. has won a victory in an Enron-related lawsuit after a six-week trial in London. In late 2001, Mahonia, a special purpose company, sued West LB AG to collect on a $165 million letter of credit that West LB had issued to back an Enron prepaid swap contract. West LB had refused to honor the letter of credit on the ground, among others, that the prepay contract was part of a "fraudulent scheme" to which JPMorgan Chase was a party. West LB counterclaimed against JPMorgan Chase, which had a security interest in the letter of credit and had arranged the transaction. Justice Jeremy Cooke of the High Court of Justice in London today issued a decision in favor of JPMorgan Chase and Mahonia, rejecting all of West LB's allegations. The Court's decision requires West LB to pay $165 million, plus interest and costs. "We're extremely pleased that the English courts have upheld our claim in full in this important case and rejected West LB's accusations," said William McDavid, co-General Counsel, JPMorgan Chase. JPMorgan Chase & Co. is a leading global financial services firm with assets of $1.1 trillion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, asset and wealth management, and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. has its corporate headquarters in New York and its U.S. retail financial services and commercial banking headquarters in Chicago. Under the JPMorgan, Chase and Bank One brands, the firm serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients. Information about the firm is available on the Internet at http://www.jpmorganchase.com/ Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. The Company filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01- 16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 121; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING COMPANIES: Emerges From Chapter 11 Bankruptcy Protection ---------------------------------------------------------------- Core-Mark Holding Company, Inc. has emerged from the Chapter 11 reorganization process. The Company, and its subsidiaries, officially concluded its reorganization yesterday after completing all required actions and satisfying all remaining conditions to its Third Amended Plan of Reorganization, as modified, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware by order dated July 26, 2004. The Company was previously a wholly owned subsidiary of the Fleming Companies, Inc., which filed for bankruptcy protection April 1, 2003. In conjunction with its emergence from Chapter 11, Core-Mark also closed on its new $250 million credit facility provided by a syndicate led by GE Commercial Finance. This credit facility, which is secured by all assets, along with a $60 million term loan provided by Sankaty Advisors, LLC, is available to Core-Mark to help meet its ongoing working capital needs. Mike Walsh, Core-Mark President and Chief Executive Officer, said, "This is a momentous day for Core-Mark. Although the last 15 1/2 months have been a challenge, we believe the experience has made us much stronger and even more committed to the customer service values which made this Company successful. Core-Mark emerges from Chapter 11 having accomplished all our major objectives for this process. We have strengthened our balance sheet and have secured $310 million in exit financing, which we believe will assure our vendors of our strong liquidity position. Additionally, we are continuing the integration of the former Fleming convenience divisions in order to expand the proven Core-Mark business model to a larger market in the U.S." Mr. Walsh continued, "Core-Mark emerges from Chapter 11 as a new and vital enterprise focused on delivering value to customers and stakeholders alike. Our focus will be on continuing to execute the fundamentals of distribution service to the highest standards, make it easy for our customers to do business with us, and help our customers grow their sales. The Core-Mark family is facing the future with new energy and enthusiasm." In accordance with the Plan of Reorganization, which became effective yesterday, the Company completed an internal corporate restructuring in which Core-Mark International became an indirect subsidiary of a newly formed corporation, Core-Mark Holding Company, Inc. Unsecured creditors will receive the majority of the common stock of Core-Mark Holding Company, Inc. Effective upon yesterday's emergence, the members of the new Board of Directors of Core-mark Holding Company, Inc. in addition to CEO J. Michael Walsh, are: Robert A. Allen, Gary F. Colter, Harvey L. Tepner and Randolph I. Thornton. Also, Edward J. Stenger, Rebecca A. Roof, Michael Scott and Thomas A. Morrow of APServices, LLC, who served as Fleming's Chief Restructuring Officer, Interim Chief Financial Officer, Treasurer and Core-Mark's Chief Restructuring Officer, respectively, have left upon the completion of their responsibilities. Core-Mark is expected to conduct an executive search for its post-emergence chief financial officer and expects to name a successor in the future. Consistent with the Plan, Fleming's common stock outstanding prior to the effective date was cancelled. The new shares of Core-Mark Holding Company, Inc. common stock being issued to Fleming and Core-Mark unsecured creditors in accordance with the Plan will be listed on a trading exchange at such time as the Company is able to satisfy the listing criteria for a national securities exchange. Core-Mark does not expect to be able to satisfy these requirements until at least the fourth quarter of 2004. Until such listing requirements are met, the shares of Core-Mark Holding Company, Inc. will not be listed for trading on any exchange. Fleming Companies, Inc.'s remaining assets and liabilities not related to the convenience operations have been transferred to either a Post-Confirmation Trust, which now has the responsibility for liquidating such assets and liabilities, pursuing causes of action and reconciling and paying claims, or a Reclamation Creditors' Trust, which will have similar responsibilities and rights with respect to reclamation creditors. About Core-Mark Core-Mark is a leading distributor of consumer packaged goods and store supplies to the convenience retail industry. Core-Mark provides distribution and logistics services as well as value- added programs to over 19,500 customer locations across 38 states and five Canadian provinces. Core-Mark services a variety of store formats including traditional convenience retailers, mass merchandisers, drug, liquor and specialty stores, and other stores that carry consumer packaged goods. 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). Judge Walrath confirmed Fleming's Third Amended Plan on July 26, 2004, under which Core-Mark Holding Company, Inc., will emerge as a rehabilitated company and be owned by Fleming's unsecured creditors. 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 their creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. FLEMING COS.: Wants Court Nod on Associated Grocers Stipulation --------------------------------------------------------------- Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, PC, in Wilmington, Delaware, relates that in September 1998, Associated Grocers, Inc. and Fleming Companies, Inc., entered into a series of agreements under which AGI acquired Fleming's Oregon wholesale distribution business. The agreements included, among others: -- an Asset Purchase Agreement, dated as of September 10, 1998; -- a Fleming-Associated Grocers Agreement to Form Joint Venture, dated as of September 10, 1998; and -- a Limited Liability Company Agreement of AGI/Fleming Nortwest LLC, dated as of October 16, 1998. The 1998 Agreements also included agreements that implicate the rights of eight individual grocery store owners that are owned by AGI Members: (1) Salem Food 4 Less, (2) Portland Food 4 Less, (3) Hermiston Stop 'N Kart, (4) Woodburn Shop 'N Kart, (5) Ashland Shop 'N Kart, (6) White City Shop 'N Kart, (7) Lebanon Shop 'N Kart, and (8) Gresham Food 4 Less. Ms. McFarland explains that the 1998 Agreements would allow the transfer to AGI the Debtors' wholesale supply business in Oregon and Washington, and permit AGI to conduct its wholesale grocery distribution business in Oregon and Washington. Prior to the Petition Date, Ms. McFarland tells the Court that AGI commenced an arbitration proceeding against some of the Debtors for alleged breaches of non-competition provisions of the 1998 Agreements. In the Arbitration, AGI sought damages for $1,000,000. Subsequently, AGI filed Claim Nos. 4401 and 17124 for damages relating to the Debtors' alleged breaches of the 1998 Agreements. The Debtors filed several motions to reject executory contracts with AGI or its members. AGI objected partly because it believes that the 1998 Agreements and the AGI-Related Contracts are not executory, and therefore not subject to rejection. Ms. McFarland reports that the Debtors and AGI entered into a stipulation to provide for the rejection of the 1998 Agreements and the AGI-Related Contracts to the extent they are executory and to provide for mutual releases of claims between them. The salient terms of the Stipulation are: (a) To the extent that any portion of all of the 1998 Agreements and the AGI-Related Contracts constitute executory contracts, these agreements will be deemed rejected as of February 29, 2004; (b) AGI will purchase for $100 any interest held by any of the Debtors in the JVA; (c) The AGI Proofs of Claim will be deemed withdrawn with prejudice; and (d) The Debtors and AGI exchange mutual releases of all claims or causes of action arising under or in connection with any business dealings between them. Ms. McFarland asserts that the Stipulation is reasonable because it resolves various objections on the Rejection Motions and it eliminates AGI's claims that aggregate more than $1,000,000. The Debtors believe that they will not be able to unwind the 1998 Agreements and assess with certainty the potential damages in connection with the Arbitration without expending significant time, effort and expense. By this motion, the Debtors ask the United States Bankruptcy Court for the District of Delaware to approve their stipulation with AGI. 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). Judge Walrath confirmed Fleming's Third Amended Plan on July 26, 2004, under which Core-Mark Holding Company, Inc., will emerge as a rehabilitated company and be owned by Fleming's unsecured creditors. 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 their creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. (Fleming Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) FRANKLIN CAPITAL: Former Auditors Express Going Concern Doubt ------------------------------------------------------------- On July 6, 2004, Ernst & Young LLP indicated to Franklin Capital Corporation that, due to economic reasons, E&Y would not stand for re-election as Franklin's independent accountants for the year ended December 31, 2004 and that the client auditor relationship between Franklin and E&Y will cease upon the filing of Franklin's Quarterly Report on a Form 10-Q for the quarterly period ended June 30, 2004. E&Y's reports dated March 5, 2004 and March 7, 2003 on Franklin's financial statements contained an explanatory paragraph indicating substantial doubt existed about Franklin's ability to continue as a going concern. The decision to change accountants was not presented to, recommended or approved by Franklin's audit committee or Board of Directors. Franklin has not yet engaged independent accountants to succeed E&Y as Franklin's independent accountants. About Franklin Capital Corporation Franklin Capital Corporation is a subsidiary of Franklin Resources Inc., formed to expand Franklin Resources automotive and consumer lending activities related primarily to the purchase, securitization and servicing of retail installment sales contracts originated by retailers and automobile dealerships. Franklin Capital Corporation originates and services direct and indirect loans for itself and its sister company Franklin Templeton Bank and Trust, F.S.B. Eight different loan programs are offered, allowing Franklin Capital Corporation to serve the needs of prime, non-prime and sub-prime customers throughout the United States. FRIEDMAN'S INC: Lenders Approve Proposed Credit Pact Restructuring ------------------------------------------------------------------ Friedman's Inc.'s (OTC: FRDM) existing lenders have agreed to the terms of the restructuring of the Company's existing secured credit facility contemplated by a commitment letter entered into with Farallon Capital Management, L.L.C., an affiliate of one of the lenders under the existing facility. As previously announced on August 5, the Amended and Restated Credit Facility would provide for total commitments of up to $135 million comprised of a senior revolving loan of up to $75 million and a $60 million junior term loan. The proposed transaction remains subject to negotiation and execution of definitive documentation and the satisfaction of customary closing conditions by August 31, 2004. The Company has also entered into a Forbearance Agreement with the lenders under its existing amended and restated credit agreement which provides that the lenders will forbear from exercising their remedies with respect to any existing default until the earlier of August 31, 2004 or the occurrence of a new default. Under the Forbearance Agreement, Friedman's is required to complete the proposed restructuring transaction by August 31, 2004. The extent to which Friedman's will be able to draw upon the availability under the restructured credit facility will depend upon, among other things, the Company's ability to enter into mutually acceptable vendor support agreements. The Company is in active discussions regarding implementation of the Company's vendor support program with an informal committee of creditors formed at Friedman's request. Mr. Sam Cusano, Friedman's CEO, said, "Friedman's greatly appreciates the support that our lenders have given to the Company and their commitment to making our proposed restructuring a success. We remain focused on completing definitive documentation and satisfying the closing conditions for our restructuring credit facility as well as successfully completing negotiations with our creditors regarding implementation of our vendor support program." Separately, Friedman's commented on its investment in Crescent Jewelers in light of Crescent's announcement last week that Crescent has filed a Chapter 11 bankruptcy reorganization case. Friedman's intends to actively participate in Crescent's chapter 11 case with the objective of maximizing the value of Friedman's claims and interests in Crescent for the benefit of Friedman's stakeholders. Friedman's appeared at Crescent's first day hearing held on August 16, 2004 in the United States Bankruptcy Court for the Northern District of California to support entry of interim relief on various first day motions filed by Crescent. Friedman's also planned to continue to provide certain services relating to accounting and information technology support, certain other back-office processing services and to permit Crescent to use Friedman's "The Value Leader" trademark on an interim basis subject to the Bankruptcy Court's approval of appropriate agreements that would authorize Crescent to assume the agreements and perform its related obligations on mutually acceptable terms. Crescent is currently in default of the payments required under these agreements and has asserted that it has claims on account of and defenses to payment in connection with the agreements. Friedman's holds Crescent's Series A preferred stock which it acquired for $50 million in August, 2002, as well as a warrant which it acquired in 1999 to purchase 50% of the non-voting capital stock of Crescent Jewelers, Inc., a Delaware corporation, the owner of 100% of the common stock of Crescent, for $500,000. The warrant remains outstanding and unexercised, and was received by Friedman's in connection with credit enhancements previously extended by Friedman's on behalf of Crescent. Friedman's also presently has debt claims against Crescent in the amount of approximately $48 million. These debt claims consist of a senior subordinated note in the principal amount of $36.3 million issued by Crescent as well as accrued and unpaid amounts on account of dividends on the preferred stock, interest on the subordinated note, and under contractual arrangements between Friedman's and Crescent. On March 16, 2004, Friedman's reported in a Current Report on Form 8-K filed with the Securities and Exchange Commission that it expected to record a substantial impairment of its investment in Crescent in Friedman's fiscal 2003 financial statements and that financial information for Crescent previously included in Friedman's public filings should no longer be relied upon. While neither the valuation of Friedman's investment in Crescent or the 2003 financial statements have been finalized and Friedman's is unable at this time to make a precise estimate of the amount of such impairment, any recovery on Friedman's investment is now highly dependent on the outcome of Crescent's chapter 11 case including distributions made by Crescent to creditors and equityholders as part of Crescent's reorganization case. The Company also reported the resignation of Thaddeus S. Jaroszewicz from the Board of Directors. Chairman Allan Edwards said, "We thank Ted for his service and contributions to the board during what has been a difficult period for Friedman's." Friedman's Inc. is a leading specialty retailer of fine jewelry based in Savannah, Georgia. The Company is the leading operator of fine jewelry stores located in power strip centers. At December 29, 2003, Friedman's Inc. operated a total of 710 stores in 20 states, of which 482 were located in power strip centers and 228 were located in regional malls. Friedman's Class A Common Stock is traded on the New York Stock Exchange (NYSE Symbol, FRM). As of December 8, 2003, Crescent Jewelers, the Company's west coast affiliate, operated 179 stores in six western states, 102 of which were located in regional malls and 77 of which were located in power strip centers. On a combined basis, Friedman's and Crescent operate 889 stores in 25 states of which 559 were located in power strip centers and 330 were located in regional malls. * * * As reported in Troubled Company Reporter's January 2, 2003 edition, the Company was notified by its lenders that it is in default under certain provisions of its credit agreement. The Company's lenders continue to provide the Company with the benefits of its credit agreement, with certain limited exceptions, although they have the right to terminate their support at any time. The company's most recently published balance sheet -- dated June 28, 2003 -- shows $496 million in assets and $190 million in liabilities. The Company explains that its year-end closing process was delayed because of an investigation by the Department of Justice, a related informal inquiry by the Securities and Exchange Commission, and its Audit Committee's investigation into allegations asserted in a August 13, 2003, lawsuit filed by Capital Factors Inc., a former factor of Cosmopolitan Gem Corporation, a former vendor of Friedman's, as well as other matters. Ernst & Young has been working on a restatement of the company's financials. The company's signaled that a 17% or greater increase to allowances for accounts receivable can be expected. Also, Friedman's Inc. has been notified that the New York Stock Exchange (NYSE) has made a determination to delist the company's Class A Common Stock that traded under the ticker symbol FRM on the NYSE effective May 11, 2004. Friedman's is evaluating an appeal of the decision of the NYSE. The Company noted that while it is disappointed with the NYSE's decision, the delisting from the Exchange does not affect Friedman's day-to-day business operations. The Company also noted that although its common stock is not eligible for trading on the NASD over-the-counter bulletin board (OTC), the Company understands that market makers have independently begun to make a market in the company's common stock on the Pink Sheets under the symbol "FRDM." F.T. WILLIAMS: Administrator Names 6-Member Creditors Committee --------------------------------------------------------------- The Bankruptcy Administrator for the Western District of North Carolina appointed six creditors to serve on an Official Committee of Unsecured Creditors in F.T. Williams Company, Inc.'s Chapter 11 case. The six appointees are: 1. Mainline Supply of Charlotte, LLC Attn: Tim Tysinger 11900 Sam Roper Drive Charlotte, North Carolina 28269 2. Sanders Utility Construction Co., Inc. Attn: F. Dewey Sanders 6801 Brookshire Boulevard Charlotte, North Carolina 28216 3. Briggs Construction Equipment, Inc. Attn: John H. Small c/o Brooks, Pierce, McLendon, Humphrey & Leonard, LLP 230 North Elm Street, Suite 2000 Greensboro, North Carolina 27401 4. May Heavy-Equip Rental & Sales, Inc. Attn: James H. Bingham, Jr., Esq. Robinson, Bradshaw & Hinson, PA 101 North Tryon Street, Suite 1900 Charlotte, North Carolina 28246 5. Cross Utilities, Inc. Attn: Teresa Lancaster P.O. Box 39 Mooresboro, North Carolina 28114 6. Granite Contracting, LLP Attn: Stephen M. Cosper 545-B Pitts School Road, North West Concord, North Carolina 28027 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's 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 Charlotte, North Carolina, FT Williams, filed for Chapter 11 protection on July 27, 2004 (Bankr. W.D. N.C. Case No. 04-32623). Kevin Michael Profit, Esq., and Travis W. Moon, Esq., at Hamilton Gaskins Fay and Moon represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $10,000,001 in total assets and $12,703,065 in total debts. GALEY & LORD: Hires Dechert LLP as Lead Bankruptcy Counsel ---------------------------------------------------------- Galey & Lord, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Northern District of Georgia to employ Dechert LLP as their bankruptcy counsel. The Debtors selected Dechert as counsel because of the firm's extensive knowledge of their operations and legal affairs. In Galey & Lord's chapter 11 restructuring, Dechert is expected to: a) provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continued operation of their business and management of their properties; b) take necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on behalf of the Debtors, the defense of any action commenced against the Debtors, negotiations concerning all litigation in which the Debtors are involved, and objecting to claims filed against the Debtors' estates; c) prepare on the Debtors' behalf all necessary applications, motions, responses, objections, orders, reports, and other legal papers; d) negotiate and draft any agreements for the sale or purchase of assets of the Debtors in connection with the planned sale of substantially all of the Debtors' assets, and otherwise advise the Debtors in connection with the auction related thereto, and taking the steps necessary to consummate any such sale; e) negotiate and draft a plan of reorganization consensual or otherwise, and all documents related thereto, including, but not limited to, the disclosure statements and ballots for voting thereon; f) take the steps necessary to confirm and implement the Plan, including, if needed, modifications thereof and negotiating financing for the Plan; and g) render such other legal services for the Debtors as may be necessary and appropriate in these proceedings. The current hourly rates that Dechert will charge the Debtors are: Position Hourly Rate -------- ----------- Partners $500 - 695 Counsel 430 - 455 Associates 250 - 425 Paralegals 145 - 160 Headquartered in Atlanta, Georgia, Galey & Lord, a leading global manufacturer of textiles for sportswear, including denim, cotton casuals and corduroy, filed for chapter 11 protection on August 19, 2004 (Bankr. N.D. Ga. Case No. 04-43098). When the Debtor filed for protection from its creditors, it listed $533,576,000 in total assets and $438,035,000 in total debts. GENERAL GROWTH: Rouse Acquisition Prompts Fitch's Rating Watch -------------------------------------------------------------- Fitch Ratings has placed the ratings of General Growth Properties, Inc. on Rating Watch Negative following GGP's announced $12.6 billion acquisition of The Rouse Company. The Rating Watch Negative status affects the 'BB' preferred stock shelf rating of GGP and the 'BBB-' senior unsecured ratings of $100 million of unsecured notes issued by Price Development Company, L.P., a wholly owned subsidiary of General Growth Properties, Inc. The Negative Rating Watch contemplates the anticipated execution of GGP's highly leveraged financing of the transaction which includes $7 billion of new debt financing, a minimum of $500 million of equity, and the assumption of $5.4 billion of Rouse debt, including approximately $1.5 billion of Rouse's senior unsecured notes. GGP does not issue senior unsecured bonds as part of its capital structure, and its financing strategy has primarily been through the use of secured debt (mortgages), equity, and its $1.8 billion of credit facilities. However, in July 2002, GGP acquired JP Realty along with its $100 million of senior unsecured notes. The JP Realty notes are held in a wholly-owned GGP subsidiary, along with an unencumbered asset pool which provides ratings support. Fitch anticipates the $1.5 billion Rouse bonds will be held in a similar wholly-owned subsidiary. However, with a heightened levered transaction placing pressure on GGP's overall coverage and leverage ratios, and the uncertainty regarding the unencumbered support for the existing $100 million of JP Realty bonds and the assumed $1.5 billion Rouse bonds, the ratings have been placed on Negative Watch, reflecting the potential for a one notch downgrade. From an operational and asset standpoint, Fitch views the acquisition of Rouse, specifically Rouse's mall assets, as consistent with GGP's strategy and the integration of the mall assets should not be an issue. When considering asset quality Fitch views the Rouse portfolio as a compliment and upgrade to the current GGP portfolio with its highly productive assets with reported sales per square foot being $419 vs. GGP at $369. Rouse's land development business and office portfolio are non-core assets to GGP and Fitch will evaluate how they are incorporated and/or disposed. Post the Rouse acquisition, GGP will have a portfolio of approximately 215 malls and total assets approaching $20 billion. On a square footage basis, GGP will continue to be the second largest owner of shopping malls with approximately 168 million square feet - post acquisition, behind Simon Property Group at 192 million square feet. The transaction is anticipated to close by year-end 2004. GENERAL GROWTH: Rouse Merger Spurs S&P's CreditWatch ---------------------------------------------------- Standard & Poor's Ratings Services placed its 'BBB' corporate credit rating for The Rouse Co. and its 'BBB-' corporate credit rating for General Growth Properties Inc. on CreditWatch with negative implications. The CreditWatch listings follow today's announcement that General Growth Properties and The Rouse Co. have entered into a definitive merger agreement. Approximately $1.6 billion of rated securities for The Rouse Co. and $100 million of rated securities for General Growth Properties (that were issued by Price Development Co. L.P.) are affected. Under the terms of the agreement, which has been approved by each company's board of directors, shareholders of The Rouse Co. will receive $67.50 per share in cash. The total consideration will be approximately $12.6 billion, including the assumption of approximately $5.4 billion of existing debt. The transaction is expected to close in the fourth quarter of 2004, and is subject to the approval of Rouse shareholders, as well as customary closing conditions. While Standard & Poor's expects the combination will significantly enhance the business profile of General Growth Properties, the transaction is expected to initially result in a more aggressive financial risk profile, with higher leverage, lower debt service coverage, and an increased component of variable rate debt within the capital structure. While The Rouse Co. had made great strides in reducing secured debt within the capital structure, General Growth Properties has stated that it intends to maintain its strategy of adding mortgage debt, further encumbering the property portfolio. Standard & Poor's will meet with management in the near term to assess the planned capital structure, as well as the company's strategic plans for the combined entity, to determine the extent to which ratings could be impacted. However, it does appear likely that the ratings assigned to The Rouse Co. bonds will be lowered upon completion of the merger transaction. Ratings List ------------ The Rouse Co. Rating To From -- ---- Corporate Credit BBB/Watch Neg BBB/Stable Unsecured Debt BBB-/Watch Neg BBB-/Positive General Growth Properties Rating To From -- ---- Corporate Credit BBB-/Watch Neg BBB-/Stable Unsecured Debt BB+/Watch Neg BB+ GLOBAL CROSSING: Court Extends Service Period to Sept. 24 --------------------------------------------------------- John P. Biedermann, Esq., at Brown Rudnick Berlack Israels, LLP, in New York, relates that in accordance with the terms of the GX Global Crossing Ltd. and its debtor-affiliates' Plan, the Confirmation Order and the Liquidating Trust Agreement dated as of December 9, 2003, a liquidating trust was established for the purpose of liquidating the Debtors' assets for the benefit of the GX creditors who hold Allowed Claims in Classes C, D, E, and F. The assets of the Liquidating Trust consist of, among other things, certain causes of actions transferred by the Debtors to the Liquidating Trust free of all claims, liens and encumbrances, including certain preference avoidance actions pursuant to Section 547 of the Bankruptcy Code and fraudulent transfer avoidance actions pursuant to Section 548 of the Bankruptcy Code. Pursuant to the Plan, the Global Crossing Estate Representative is specifically empowered to prosecute avoidance or recovery actions under Sections 544, 547, 548 and 550 of the Bankruptcy Code. The GX Representative has filed approximately 1,000 adversary complaints to recover preferential and fraudulent transfers totaling approximately $340 million. The Adversary Proceedings were commenced over a period of six days beginning on January 22, 2004, and concluding on January 27, 2004. As of May 2004, the GX Representative asked the Clerk of the Bankruptcy Court to issue approximately 470 summonses. The GX Representative has served summonses, together with the accompanying complaints, on approximately 455 defendants in certain of the Adversary Proceedings. Approximately 15 summonses are presently in the hands of the Clerk of the Court for issuance, and approximately 460 summonses have yet to be sent to the Clerk of the Court for issuance by the GX Representative. The time set forth in Rule 4(m) of the Federal Rules of Civil Procedure, made applicable in the Adversary Proceedings by Rule 7004(a) of the Federal Rules of Bankruptcy Procedure, to effectuate service of the summons and complaint in each of the Adversary Proceedings expired on May 21, 2004, for the first of the Adversary Proceedings -- 120 days after the date of filing -- and expired on May 27, 2004, for the last-filed Adversary Proceedings. By this motion, the GX Representative asks the Court, pursuant to Sections 102(1) and 105(a) of the Bankruptcy Code and Bankruptcy Rules 7004(a) and 9006(b), to: (a) extend the time limit to effect service of the summons and complaint in each of the Adversary Proceedings from 120 days to 240 days from the date of the filing of the complaint; and (b) extend the time limit set forth in Local Bankruptcy Rule 9078-1 to file proof of service of the summons and complaint in each of the Adversary Proceedings from three days to 30 days from the date of service of the summons and complaint. Mr. Biedermann notes that the GX Representative has acted and continues to act promptly and diligently in its efforts to effect service of process in the Adversary Proceedings. The GX Representative provides four reasons why an extension of the deadline should be granted: (1) Missing Addresses The task of amassing the addresses of approximately 1,000 defendants has proven to be extremely time- consuming. In serving the Adversary Proceeding Complaints on domestic defendants, the GX Representative's counsel utilized the nationwide service by first class mail provision of Bankruptcy Rule 7004(b). Although this service should be a fairly simple process, the GX Representative and its professionals have had substantial difficulty in timely securing addresses for some Adversary Proceeding defendants, as well as obtaining the names of the requisite officer or agent that must be the recipient of this service. The GX Representative is reluctant to have summonses issued in all of the Adversary Proceedings before accurate information is available for all the defendants. New Global Crossing possesses and controls the information -- including defendant addresses and names of contact employees -- supporting the preference actions. The GX Representative must rely on getting this information from New Global Crossing pursuant to a Cooperation Agreement that was executed in connection with the Plan. While the GX Representative is not asserting any breach of the Cooperation Agreement, the reality of the situation is that, to get this information, the GX Representative must rely on the "cooperation" of a substantially downsized workforce that faced -- and continues to face -- many competing work demands in connection with New Global Crossing's emergence from bankruptcy. In addition, some of New Global Crossing's books and records containing this information simply cannot be found yet. Where possible, the GX Representative's professionals have resorted to using information sources outside of New Global Crossing to supply the missing information, but those outside sources have only been a partial and uncertain cure. (2) Administrative Concerns The sheer volume of summonses that the Clerk of the Court must process has inevitably, and understandably, resulted in delay in the issuance of summonses. Immediately prior to and during the period during which the GX Representative sought the issuance of its first summonses, nearly 5,000 adversary proceedings were filed in other bankruptcy cases like that of Enron Corp., Ames Department Stores, Inc., and Bethlehem Steel Corporation. Due to the sheer volume of summonses which must be issued by the Clerk of the Court in Global Crossing and the other large cases, it is anticipated that there will continue to be delays in the issuance of summonses, with the result that the GX Representative may simply be unable to effect service of process in each of the nearly 1,000 Adversary Proceedings within the 120-day Service Period. (3) Delay of Returned Mail In several instances, summonses and complaints that were believed to be properly served have been returned by the U.S. Postal Service several weeks later. Given this elapse in time, the GX Representative may not be aware for several weeks that service was not effected and therefore that it must obtain an alias summons. The risk of returned mail is greater in Global Crossing's case given that the GX Representative must rely in large part on getting accurate information from New Global Crossing. These facts add a considerable amount of time to the service process, despite the best efforts of the GX Representative to see that service is made in timely manner. (4) Judicial Economy To avoid having to file piecemeal motions for extension of the time to serve the summons and complaint after the 120- day Service Period has elapsed in each of hundreds of Adversary Proceedings, the GX Representative maintains that in the interest of judicial economy a single order extending the 120-day Service Period is warranted. Mr. Biedermann ascertains that the GX Representative's request for an extension of the Service Period and the Proof of Service Period will substantially aid in the efficient administration of the Adversary Proceedings. The benefit of extension is apparent: * the Clerk of the Court will have an extended window of time to issue the remaining summonses in the Adversary Proceedings; * the GX Representative will not have to burden the Court or the Clerk of the Court with multiple and piecemeal requests for extensions of the Service Period after the 120-day period has expired; and * the Court will not have to be burdened by motions to dismiss the Adversary Proceedings due to untimely service. * * * Judge Gerber extends the 120-day service period to and including September 24, 2004, with respect to adversary proceedings commenced by the GX Representative. Judge Gerber also extends the time to file proof of service of the summons and complaint in any adversary proceeding under Local Bankruptcy Rule 9078-I from three days to 30 days from the date of service. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02- 40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. (Global Crossing Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) GMAC COMM'L: Fitch Places 3 Classes on Rating Watch Negative ------------------------------------------------------------ Fitch Ratings places the following classes of GMAC Commercial Mortgage Securities, Inc., mortgage pass-through certificates, series 2002-FL-1, on Rating Watch Negative: --$24.3 million class D certificates 'BBB'; --$11.5 million class E certificates 'BBB-'; --$14.2 million class F certificates 'BB'. In addition, Fitch affirms the following classes: --$164.1 million class A certificates 'AAA'; --$31.7 million class B certificates 'AA'; --$24.3 million class C certificates 'A'; --Interest only class X 'AAA'. The Rating Watch Negative status on the aforementioned classes reflects concerns with declining performance of two loans: One Kendall Square and The Infomart. One Kendall Square, the largest loan in the pool (40.9%) is secured 639,907 square feet of office space, a 31,641 sf cinema and a 1,530 space parking garage. The property is located in Cambridge, MA adjacent to the Massachusetts Institute of Technology. The property is further encumbered by a $49.6 million B note. Fitch stressed net cash flow for One Kendall Square based on leases in place as of May 2004 declined approximately 42.2% from issuance resulting in a Fitch-stressed debt service coverage ratio of 0.85 times, compared to 1.46x at issuance, for the A note. The declining NCF was driven by decreased occupancy, resulting from less demand for biotech lab space (52.2% of the subject net rentable area) and an abundance of new office space in the market. As of May 31, 2004, the property was 69.7% occupied compared to 93.5% at issuance. The largest tenant at One Kendall, Genzyme Corporation, currently occupies approximately 150,000 sf which expires in July 2005. According to the master servicer, the borrower, sponsored by J.E. Robert Companies (97%) and Lincoln Property Company (3%), is negotiating a renewal lease for the tenant at below market rents. Fitch is closely monitoring the results of this negotiation and its subsequent effect on future NCF. The loan has two extension options, subject to passing a DSCR test of 1.10x at a fixed constant of 10.09%. The second largest loan in the pool, The Infomart (20.7%), is secured by a 1,168,198 sf class 'A-' office building, consisting of both traditional (55%) and telecom space (45%), located in Dallas, TX. The property is further encumbered by a $59 million B note. The subject loan originally matured on May 1, 2004 and the borrower exercised its sole one-year extension through May 1, 2005. Fitch-stressed NCF based on leases in place as of June 2004 for The Infomart declined 23.2% from issuance resulting in a Fitch-stressed DSCR of 1.19x as compared to 1.55x at issuance. Over the past two years the property has been severely impacted by the downturn in the national telecom industry. Approximately 22 tenants have either filed for bankruptcy protection, or have restructured respective leases. Occupancy has declined from 91% at issuance to 76% as of June 30, 2004. Although interest is paid sequentially, principal is paid pro rata based on the class balances until a trigger event is met. A trigger event is defined as either a) the outstanding balance of the trust mortgage assets is 30% or less of its initial size, or b) six or fewer trust mortgage assets remain in the pool (in each case, exclusive of any specially serviced mortgage loans). Additionally, any principal payments from trust mortgage assets that are 60 days or more delinquent and principal recoveries on defaulted loans will be distributed sequentially, while losses will be borne in reverse sequential order. Even thought the transaction's aggregate principal balance has decreased 41.4% the subordination levels have not increased as the deal is pro rata pay. The remaining six loans in the pool have stable to increasing performance characteristics as compared with issuance. Of note, is the Park Central Office loan (14.0% of the pool) which is secured by an office building located in Denver, CO. Fitch-stressed year- end 2003 NCF increased approximately 13.2% from issuance, resulting in a Fitch-stressed DSCR of 1.64x as compared with 1.45x at issuance. The servicer indicated this loan will pay in full at maturity of Sept. 1, 2004. GRUPO IUSACELL: Inks Final Contract with Operadora Unefon --------------------------------------------------------- Grupo Iusacell, S.A. de C.V. (NYSE: CEL) (BMV: CEL), and Operadora Unefon, S.A. de C.V., principal subsidiary of Unefon, S.A. de C.V. (BMV: UNEFON), signed the final contract and annexes that define the technical aspects involved in providing exchange capacity and roaming services. The contract period is 10 years, during which time both companies will exchange services in regions 2, 3, 4, 5, 6, 7, 8 and 9 of Mexico. The current contract has been approved by both the related parties committee and the board of directors of Grupo Iusacell. Both companies are ready to begin exchanging services. "We believe this contract will benefit Iusacell customers allowing for an increase in company capacity and service coverage," said Gustavo Guzman, CEO of Grupo Iusacell. About Iusacell Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE and BMV: CEL) is a wireless cellular and PCS service provider in Mexico encompassing a total of approximately 92 million POPs, representing approximately 90% of the country's total population. Independent of the negotiations towards the restructuring of its debt, Iusacell reinforces its commitment with customers, employees and suppliers and guarantees the highest quality standards in its daily operations offering more and better voice communication and data services through state-of-the-art technology, such as its new 3G network, throughout all of the regions in which it operate. * * * As reported in the Troubled Company Reporter on June 16, 2004, Grupo Iusacell, S.A. de C.V. (NYSE: CEL) (BMV: CEL) informed on June 11 that, in line with its disclosure in its annual reports for fiscal year 2002 filed in June 2003 with the Mexican Stock Exchange and the New York Stock Exchange (20-F), and in accordance with the terms of the US$266 million Amended and Restated Syndicated Credit Agreement (Syndicated Loan) dated March 29, 2001 entered into by its principal subsidiary, Grupo Iusacell Celular, S.A. de C.V., the maturity date for the total principal amount under this credit was to be accelerated to March 31, 2004 in the event that Grupo Iusacell Celular was unable to refinance by such date its US$150 million 10% senior notes due 2004. Grupo Iusacell Celular has not reached any agreement with the holders of its senior notes. Nonetheless, the company continues to work on the process of restructuring its indebtedness. HI-RISE RECYCLING: Hires Shearman & Sterling as Special Counsel --------------------------------------------------------------- Hi-Rise Recycling Companies, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Ohio to employ Shearman & Sterling LLP as its special counsel. The Debtor reports that Shearman & Sterling is familiar with the Company's corporate and debt structure as a result of its previous engagement during the sale of the Company's Solid Waste Division. The Debtor believes that the Firm's extensive experience in commercial matters and its understanding of the facts and issues regarding its corporate and debt structures, will greatly improve efficiency in the administration of the Company's chapter 11 proceeding. Shearman & Sterling will receive a $50,000 retainer for general corporate legal advice. Shearman does not disclose its hourly rates. To the best of the Debtor's knowledge, Shearman & Sterling is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Wooster, Ohio, Hi-Rise Recycling manufactures and distributes industrial recycling and waste handling equipment in North America. The company filed for chapter 11 protection on August 16, 2004 (Bankr. N.D. Oh. Case No. 04-64352). Lawrence E. Oscar, Esq., and Warren Goldenberg, Esq., at Hahn Loeser & Parks LLP, represent Hi-Rise. When the Debtor filed for protection from its creditors, it listed more than $1 million in estimated assets and more than $10 million in estimated debts. HYPERTENSION DIAGNOSTICS: Dismisses Ernst & Young as Auditors ------------------------------------------------------------- On June 23, 2004, the Audit Committee of the Board of Directors of Hypertension Diagnostics, Inc. dismissed Ernst & Young LLP as the Company's independent accountants. The report of Ernst & Young on the financial statement of the Company for the year ended June 30, 2002 contained an explanatory paragraph wherein Ernst & Young expressed substantial doubt about the Company's ability to continue as a going concern. The Company's Audit Committee recommended and approved the decision to change independent accountants. On June 23, 2004, the Audit Committee of the Board of Directors of the Company engaged Virchow, Krause & Company, LLP as its new independent accountants. INDYMAC ABS: Fitch Downgrades Class BV Notes to 'BB' from 'BBB' --------------------------------------------------------------- Fitch has taken the following rating actions on the IndyMac ABS, Inc. Home Equity issue: Series SPMD 2000-B Group 2: --Class AV-1 affirmed at 'AAA'; --Class MV-1 affirmed at 'AA'; --Class MV-2 affirmed at 'A'; --Class BV downgraded to 'BB' from 'BBB' and removed from Rating Watch Negative. The affirmations on the above classes reflect credit enhancement consistent with future loss expectations. The negative rating action on class BV is the result of poor collateral performance and the deterioration of asset quality beyond original expectations. Portfolio performance is, in part, suffering from adverse selection. IndyMac SPMD 2000-B Group 2 contained 6.7% manufactured housing (MH) collateral at closing (July 28, 2000), and as of July 2004, the percentage of MH has increased to 19.1%. To date, MH loans have exhibited very high historical loss severities, causing Fitch to have concerns regarding the adequacy of enhancement in this deal, especially with regard to Class BV. MH has been responsible for nearly 40% of total losses to date. As of the July distribution, this transaction has $934,144 of overcollateralization compared to the OC target of $1.104 million. Monthly excess spread generated within the transaction is generally decreasing over time (pursuant to the structure, OC began stepping down in April 2004), while - on average - monthly gross losses are increasing, resulting in increasing monthly reductions in credit enhancement (i.e., OC). While the twelve- month average net losses (gross losses net of available excess spread) equal $45,156, the six- and three-month average net losses are $62,348 and $108,977, respectively. The Group 1 and 2 mortgage pools within the SPMD 2000-B transaction are not cross-collateralized, so any excess spread generated within Group 1 is not available to offset losses in Group 2. However, the deal was structured with mortgage insurance. Currently, approximately 35% of the mortgage pool has MI down to 80% loan to value, which will serve to somewhat mitigate the overall loss numbers. INTEGRATED HEALTH: Prepares for Distribution to Premiere Creditors ------------------------------------------------------------------ In January 2002, the Official Committee of Unsecured Creditors of Premier Associates, Inc. (one of Integrated Health Services, Inc.'s debtor-affiliates) pursued fraudulent conveyance claims and related causes of action on behalf of Premier. The IHS Debtors believed that the pursuit of these causes of action would most likely harm their estates because of the associated litigation costs. The resulting dispute led to briefing, testimony and oral argument before the United States Bankruptcy Court for the District of Delaware during the Summer of 2002. The matter remained sub judice until March 2003 when the Debtors and the Premier Committee agreed to a settlement. The Settlement includes: (1) Special and favorable treatment for the holders of Premier Unsecured Claims, which allow them to receive greater distribution than the holders of General Unsecured Claims under the Plan; (2) The IHS Debtors' payment of the Premier Committee's professional fees; and (3) The dissolution of the Premier Committee and elimination of the associated costs on the Plan Effective Date. The Plan sets forth the agreed classification and treatment of Premier Unsecured Claims (Class 7): "Irrespective of whether the Sale Transaction or the Stand- Alone Transaction are implemented each holder of an Allowed Premier Unsecured Claim shall receive a distribution of Cash in an amount equal to 6% of its Allowed Premier Unsecured Claim, provided, however, that: (i) if the aggregate amount of the Allowed Premier Unsecured Claims exceeds $22,000,000.00 but is less than or equal to $37,000,000.00, then in lieu of the foregoing, each holder of an Allowed Premier Unsecured Claim shall receive a distribution of Cash in an amount equal to 3% of its Allowed Premier Unsecured Claim plus such holder's Pro Rata Share of $660,000.00; and (ii) if the aggregate amount of the Allowed premier Unsecured Claims exceeds $37,000,000.00, then in lieu of all the foregoing, each holder of an Allowed Premier Unsecured Claim shall receive a distribution of Cash in an amount equal to its Pro Rata Share of $1,770,000.00. In no event shall the amount to be distributed to holders of Allowed Premier Unsecured Claims exceed $1,770,000.00." After the Effective Date, notwithstanding that the Plan had dissolved the Premier Committee, the Premier Committee's former counsel, Blanco Tackaberry Combs & Matamoros and The Bayard Firm, asked the Court -- on behalf of the defunct Premier Committee -- to direct IHS Liquidating, LLC, as successor to the IHS Debtors, to make distributions to Premier Unsecured Claim holders. In response, IHS Liquidating: -- explained the reasons why a distribution was not yet possible; -- asked the Court to designate those claims on the IHS Debtors' consolidated claims register as Premier Unsecured Claims, without prejudice to IHS Liquidating's right to object to any of the claims on other grounds; and -- objected to the standing of the Premier Committee and the Former Premier Committee Counsel to file motions or charge the IHS Debtors' estates for fees and expenses, after having been dissolved and discharged of all duties pursuant to the Plan. On March 8, 2004, the Court entered a Designation Order, a consensual form of order resolving most of the issues between IHS Liquidating and the Former Premier Committee Counsel. The Designation Order designated those claims constituting Premier Unsecured Claims, without prejudice to IHS Liquidating's right to object or dispute any of the Premier Unsecured Claims. By separate order, the Court directed IHS Liquidating to file all new objections or requests to estimate Premier Unsecured Claims in sufficient time to schedule a hearing on April 22, 2004. The Designation Order further requires IHS Liquidating to seek the Court's authority to make an initial distribution to the Allowed Premier Unsecured Claim holders, within 10 days after the first date on which all Premier Unsecured Claims are estimated, capped, fixed or expunged pursuant to a final Court Order. In accordance with the Designation Order, IHS Liquidating filed objections to certain Premier Unsecured Claims, including the unliquidated or contingent claims. Certain of the claims were fixed or expunged at the April 22, 2004 hearing pursuant to a Court Final Order. The unliquidated or contingent claims filed by Don G. Angell and his affiliates were addressed in a June 25, 2004 Court Order, which has been subsequently appealed by IHS Liquidating. On May 26, 2004, the Court held a hearing on whether the Premier Committee had standing to file motions after the Effective Date. At that time, IHS Liquidating's counsel did not object to the payment of the Former Premier Committee Counsel's fees and expenses so long as the payment is funded from the aggregate distribution that would otherwise be paid to the Allowed Premier Unsecured Claim holders pursuant to the Plan. The Former Premier Committee Counsel, while not conceding this point, advised the Court that it would file requests for compensation at a later time. To date, no request has been filed. Currently, the amount of all Premier Unsecured Claims, including both Allowed and Disputed Premier Unsecured Claims, aggregate $20,000,000 -- 70% of which are the disputed Angell Claims. Pursuant to the Court's Final Order, the existing Allowed Premiere Unsecured Claims total $6,000,000. Accordingly, a 6% distribution to the Allowed Premier Unsecured Claim holders would amount to less than $350,000. Since there are no longer any unliquidated or contingent Premier Unsecured Claims, IHS Liquidating asks the Court: (1) for permission to make an initial distribution to the Allowed Premier Unsecured Claim holders; (2) to direct the Former Premier Committee Counsel to file requests for compensation and set a deadline by which the Compensation Motions must be filed; and (3) to rule that any payments due to the Former Premier Committee Counsel or the Premier Committee resulting from the Court's consideration of the Compensation Motions will be charged to the Allowed Premier Unsecured Claim holders. Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that IHS Liquidating has performed substantially all the work necessary to facilitate an initial distribution to the Allowed Premiere Unsecured Claim holders. IHS Liquidating believes that it is appropriate and feasible to make that distribution at this time. Despite its desire to make the initial distribution promptly, IHS Liquidating finds it unfair to the holders of Class 6 General Unsecured Claims for the proposed distribution to be made prior to consideration of any Compensation Motion. If the fees and expenses of the Former Premiere Committee Counsel are not charged to the Allowed Premiere Unsecured Claim holders, then those costs, if approved by the Court, would presumably be borne by the General Unsecured Claim holders. Unlike the Premiere Unsecured Claim holders, which are receiving a fixed distribution, Mr. Brady points out that General Unsecured Claim holders are receiving pro rata residual distributions from IHS Liquidating, based on the assets after all other distributions are made and costs are satisfied. Mr. Brady maintains that the post-Effective Date motion practice and other activity undertaken by the Former Premiere Committee Counsel were performed solely for the benefit of the Premiere Unsecured Claim holders and were not authorized under the Plan. There has already caused IHS Liquidating to incur legal costs in responding to various filings and informal demands. The General Unsecured Claim holders, who bargained for the dissolution of the Premiere Committee in exchange for agreeing to special treatment for Premiere Unsecured Claims, should not be forced to fund the litigation efforts of the Former Premiere Committee Counsel. If IHS Liquidating is allowed to make an initial distribution to the Allowed Premiere Unsecured Claim holders, Mr. Brady adds, there will still be at least $30,000,000 available for distribution to other unsecured creditors after the payment of all Allowed and reasonably anticipated Excluded Administrative Expense Claims, Priority Tax Claims, Other Priority Claims and Other Secured Claims. Headquartered in Owings Mills, Maryland, Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the Debtors in their restructuring efforts. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000) JONES LEGACY I: Case Summary & 8 Largest Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Jones Legacy I, LLC 8101 Leonora Houston, Texas 77061 Bankruptcy Case No.: 04-41745 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Jones Legacy 2, LLC 04-41751 Chapter 11 Petition Date: August 18, 2004 Court: Southern District of Texas (Houston) Debtor's Counsel: Marilee A. Madan, Esq. Russell and Madan 4265 San Felipe, Suite 250 Houston, TX 77027 Tel: 713-355-3333 Fax: 713-355-3303 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ CenterPoint Energy Unstated City of Houston Unstated Tax Assessor Collector City of Houston Unstated Water Department Harris County Tax Assessor Collector Unstated Houston Community College System Unstated Houston Independent School District Unstated International Interests, L.P. Unstated Reliant Energy Unstated KAISER ALUMINUM: Court Okays Settlement with National Entities -------------------------------------------------------------- On December 31, 1984, Kaiser Aluminum & Chemical Corporation, Kaiser Aluminum & Chemical of Canada Limited, and Kaiser Aluminum Properties, Inc., on the one hand, and National Refractories & Mineral Corporation and its affiliates, CFB Liquidated Corporation, WFB Liquidating Corporation, National Refractories & Minerals, Inc., on the other hand, entered into an asset purchase agreement. KACC, Kaiser Canada Limited and Kaiser Properties agreed to sell to the National Entities real and personal property located in Oakville, Ontario, Canada, and various other locations in the United States and Mexico. Additionally, pursuant to the terms of the Asset Purchase Agreement, the parties executed an agreement on environmental compliance, which allocated responsibility among the parties for any liability imposed by federal, state or local law for any environmental conditions relating to the properties that were sold. The Compliance Agreement contained indemnification provisions and imposed certain obligations on the National Entities in their use of the Oakville Property. In May 1999, in connection with its acquisition of CFB Industries, Inc., the National Entities incurred certain indebtedness to Congress Financial Corporation (Western). On May 10, 1999, KACC, National Refractories and Congress Financial entered into an amended and restated Intercreditor and subordinator agreement, pursuant to which, among other things, KACC agreed to subordinate its indebtedness against the National Entities to that of Congress Financial. In connection with a $2,500,000 bridge loan Congress Financial made to National Refractories, a Put/Call Agreement was entered into by KACC, National Refractories, and Congress Financial in September 2001, involving real and personal property owned by National Refractories in Moss Landing, Monterrey County, California. According to the terms of the Put/Call Agreement, National Refractories had the right to require KACC to purchase the Moss Landing Property for $5,000,000, and KACC had the right to require National Refractories to sell the Moss Landing Property for $5,000,000. At the time that the National Entities filed their voluntary petitions for relief under Chapter 11 of the Bankruptcy Code, they were indebted to Congress Financial for $28,000,000, which was secured by a senior security interest in substantially all of the National Entities' assets. The National Entities owed KACC: (a) $4,275,000, plus interest from May 6, 1999, pursuant to a Subordinated Note dated April 30, 1985; and (b) $2,500,000, plus interest from May 6, 1999, pursuant to a Standby Note under a Standby Revolving Credit and Security Agreement and Guaranty, which was secured by a junior security interest in substantially all of the assets of the National Entities. KACC filed two proofs of claim against the National Entities: (a) Claim No. 954, filed in National Refractories' Chapter 11 case on February 15, 2002, for $11,775,000, plus attorneys' fees and costs; and (b) Claim No. 19, filed in NR&M's Chapter 11 case on March 24, 2002, for $8,000,000, plus attorneys' fees and costs, and included amounts owed for goods sold, services performed, guaranty obligations, potential environmental claims and warranty claims. The National Entities also filed two proofs of claim against KACC: (a) Claim No. 1256, filed by National Refractories on January 9, 2003, for an unstated amount, but asserted claims, for, or in respect of: -- breach of the Put/Call Agreement; -- breach of the indemnity provisions of the Asset Purchase Agreement, and the Compliance Agreement; -- environmental costs associated with the Oakville Property; and -- environmental costs associated with other properties transferred pursuant to the Asset Purchase Agreement; (b) Claim No. 1257, filed by NR&M on January 9, 2003, for amounts arising from: -- breaches of the Asset Purchase Agreement and the Compliance Agreement; and -- environmental costs associated with the Oakville Property. The National Entities further assert that they have a right to recover from KACC, or from the proceeds of the liquidation of the properties subject to KACC's lien, a significant portion of $200,000 in taxes that are due to the State of California as a result of the sale of the Moss Landing Property in 2003. As of March 1, 2004, the secured obligation owed by the National Entities to Congress Financial had been paid in full from the liquidation of collateral subject to the senior security interest of Congress Financial. Congress Financial has retained a reserve of $31,000, pending the outcome of a review of Congress Financial's accounting of the proceeds. The review will be conducted by KACC, the National Entities, and the Official Committee of Unsecured Creditors appointed in National Refractories' Chapter 11 case. All assets of the National Entities subject to KACC's junior security interest have been liquidated except for certain mold power technology that is currently the subject of litigation between National Refractories and Metallurgica. In addition, as of March 1, 2004, the assets of the National Entities' estates consisted primarily of $1,725,000 in cash, representing the proceeds from the liquidation of assets constituting collateral for KACC's junior secured claim as well as other assets not necessarily subject to KACC's claim. To avoid the expense and uncertainty of litigation and the concomitant delay in the administration of their Chapter 11 cases, the Debtors sought and obtained the Court's approval of their Settlement Agreement with the National Entities to resolve all related claims. The salient terms of the Settlement Agreement are: (a) Of the $1,725,000 currently held by the National Entities, $475,000 will be set aside to pay the fees incurred in 2004 by any professionals retained by the National Entities pursuant to a Court order. Any remaining portion of the $475,000 will be used to pay a pro-rata distribution to the holders of administration claims, other than the retained professionals; (b) The remaining $1,250,000 held by the National Entities will be paid to KACC, and NR&M will withdraw, with prejudice, the claims it filed in the Debtors' Chapter 11 cases; (c) Within ten days of the receipt of the $1,250,000, KACC will withdraw, with prejudice, the claims it filed in the National Refractories and NR&M Chapter 11 cases; (d) Congress Financial will withdraw, with prejudice, its claim filed in the Debtors' Chapter 11 cases; (e) Congress Financial and the National Entities will release each of the Debtors from any and all claims arising between the parties before the execution of the Settlement Agreement; (f) KACC will release Congress Financial and the National Entities with respect to any and all claims arising before the execution of the Settlement Agreement; and (g) National Refractories agrees to use its best efforts to reach a settlement agreement with the owner of the property located at 1852 Rutan Drive in Livermore, California, regarding his administrative claim filed in the National Entities' Chapter 11 cases. That settlement agreement will include the property owner's release of KACC -- including its present and former officers Joseph Bonn and John T. LaDuc -- from all claims relating to the Rutan Property. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) KING SERVICE: Wants to Employ Segel Goldman as Attorneys -------------------------------------------------------- The King Service, Inc., asks the U.S. Bankruptcy Court for the Northern District of New York for permission to retain Segel, Goldman, Mazzotta & Siegel, PC., as its bankruptcy Counsel. Segel Goldman will: a) give the Debtor legal advice with respect to its rights, powers and duties as debtor-in-possession in the continued operation of its business and administration of its estate; b) prepare on behalf of the Debtor any necessary schedules, statements, applications, answers, orders, reports, documents, disclosure statement, plan and other legal papers necessary for the proper administration of the Estate; c) negotiate and represent the Debtor with regards to its business affairs, any sale of assets or other aspects of Debtor's business including the preparation of proposals, contracts and other documentation necessary to administer the estate, formulate and implement a Chapter 11 Plan together with the Debtor; and d) perform all other legal services for the Debtor which may be necessary or proper herein. Segel Goldman professionals will charge the Debtor at their current hourly rates: Position Hourly Rate -------- ----------- senior attorneys $220 associate attorneys 175 paralegals 140 Headquartered in Troy, New York, The King Service operates gasoline service stations, convenience stores and a fuel oil business. The Company filed for chapter 11 protection on July 14, 2004 (Bankr. N.D.N.Y. Case No. 04-14661). Howard M. Daffner, Esq., at Segel, Goldman, Mazzota & Siegel, PC. represents the Debtor in its restructuring efforts. When the Debtor filed for protection, it listed $12,090,890 in total assets and $13,498,949 in total debts. LIQUIDMETAL TECH: Completes $5.5 Million Senior Debt Offering ------------------------------------------------------------- Liquidmetal(R) Technologies, Inc. (Pink Sheets:LQMT) has completed a private exchange offer for its 6% Secured Convertible Notes due 2007. Under terms of the exchange offer, approximately $5.5 million in aggregate principal amount of the Prior Notes have been exchanged for an aggregate of: (i) $2.75 million of 6% Senior Secured Notes Due 2007 and (ii) $2.75 million of 10% Senior Secured Notes Due 2005. In addition, the company voluntarily redeemed approximately $4.5 million of the Prior Notes, in cash. The newly issued Short-Term Notes will have a maturity date of July 29, 2005, and a conversion price of $2.00 per share (compared to a conversion price of $3.00 per share under the Prior Notes). The Long-Term Notes will have a maturity date of July 29, 2007, and a conversion price of $1.00 per share. Holders of the Long- Term Notes will also have the right to call for repayment of the Long-Term Notes prior to maturity at any time after the second anniversary of the closing of the exchange offer. In addition, holders of both the Long-Term Notes and Short-Term Notes will have the right to call for repayment of the notes if the company does not, within 180 days of the issuance of the notes, become compliant with its SEC reporting obligations and become listed or quoted on the OTC Bulletin Board, the Nasdaq Stock Market, or other national securities exchanges. A total of 562,151 warrants to purchase the company's common stock at an exercise price of $3.00 per share -- all of which were previously issued in connection with the purchase of the Prior Notes -- have been amended to provide for an extended expiration date of March 1, 2006. As disclosed in the company's SEC Form 8-K filings on March 3 and July 2, 2004, the Prior Notes were issued in a private placement transaction in the amount of approximately $10 million to investor groups based in the U.S. and South Korea. The exchange offer was made as a result of the company's previously announced delays in filing its periodic financial reports with the SEC and resulting inability to timely file a registration statement covering the resale of the common stock into which the Prior Notes were convertible. Under the terms of the exchange offer, the company's default under the Prior Notes has been waived, and the company has an extended period of 90 days after the issue date of the New Notes, or until October 27, 2004, to become current in its periodic SEC filings and then file a registration statement covering the shares into which the new notes are convertible. As a result of the completion of the exchange offer, none of the Prior Notes remain outstanding. About Liquidmetal Technologies, Inc. Liquidmetal Technologies, Inc., http://www.liquidmetal.com/is the leading developer, manufacturer, and marketer of products made from amorphous alloys. Amorphous alloys are unique materials that are characterized by a random atomic structure, in contrast to the crystalline atomic structure possessed by ordinary metals and alloys. Bulk Liquidmetal(R) alloys are two to three times stronger than commonly used titanium alloys, harder than tool steel, and relatively non-corrosive and wear resistant. Bulk Liquidmetal alloys can also be molded into precision net-shaped parts similar to plastics, resulting in intricate and sophisticated engineered designs. Liquidmetal Technologies is the first company to produce amorphous alloys in commercially viable bulk form, enabling significant improvements in products across a wide array of industries. The combination of a super alloy's performance coupled with unique processing advantages positions Liquidmetal alloys for what the company believes will be The Third Revolution(TM) in material science. * * * Liquidity and Capital Resources In its most recent Form 10-K for the fiscal year ended Dec. 31, 2002, filed with the Securities and Exchange Commission, Liquidmetal Technologies reports: "We believe that our current cash and cash equivalents, together with anticipated cash flow from our operations, will be sufficient to fund our working capital and capital expenditure requirements for at least the next 12 months. However, our future capital needs will be dependent to a significant extent on our ability to generate cash flow from operations. Our projections of cash flows from operations and, consequently, future cash needs are subject to uncertainty. If our available funds and cash generated from operations are insufficient to satisfy our liquidity requirements, we may need to raise additional capital to fund our working capital or capital expenditure requirements. We cannot be certain that additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us. If we issue additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of the rights of our common stock and our stockholders may experience additional dilution." The company posted net losses in each quarter of 2002 and 2003 for which it published financial results. METALLURG INC: S&P Raises Senior Debt Ratings to CCC & CC --------------------------------------------------------- Standard & Poor's Rating Services raised its corporate credit rating on New York, N.Y.-based Metallurg Inc. and its parent Metallurg Holdings Inc. to 'CCC' from 'D'. At the same time, Standard & Poor's raised its ratings on Metallurg's 11% senior unsecured notes due 2007 to 'CC' from 'D' and Metallurg Holdings' 12.75% senior discount notes due 2008 to 'CC' from 'D'. The outlook is negative. The upgrade follows the recent $1.5 million interest payment made by Metallurg Holdings to public holders of its 12.75% senior discount notes due 2008 within the 30-day grace period provided under the bond indenture, and the refinancing of Metallurg's credit facility. The new credit facility consists of a $21 million letter of credit facility and a $10 million term loan at Metallurg and a $1.7 million term loan at Metallurg Holdings, all maturing on Aug. 31, 2007. The term loan at Metallurg Holdings was used to help make an interest payment on its 12.75% notes. "The ratings reflect an onerous debt burden, limited liquidity, and dependence on favorable industry conditions," said Standard & Poor's credit analyst Dominick D'Ascoli. Metallurg produces and markets metal alloys used by manufacturers of steel, aluminum, and superalloys from production facilities located in the U.S., U.K., and Brazil. The company's poor financial condition resulted from high financial leverage and a downturn in its end markets, including steel, aluminum, and aerospace. METROPCS INC: Delays Filing Second Quarterly Report with SEC ------------------------------------------------------------ MetroPCS, Inc. will delay its second quarter 2004 earnings release, and will also delay, beyond the previously extended required filing date, the filing with the Securities and Exchange Commission of its quarterly report on Form 10-Q for the quarter ended June 30, 2004. As announced earlier, the MetroPCS Audit Committee is conducting an independent investigation into an understatement of revenues and net income for the quarter ended March 31, 2004, and has retained independent counsel to assist in the investigation. MetroPCS will delay its second quarter 2004 earnings release and the filing of its second quarter 2004 10-Q until after completion of the investigation, and cannot predict when such investigation will be completed. By not filing its 10-Q, MetroPCS has failed to comply with a covenant in the indenture governing its $150 million of 10 3/4% senior notes due 2011. The filing delay will not result immediately in an event of default under the indenture or acceleration of the notes. The indenture trustee or the holders of 25% of the principal amount of the notes will have the right to accelerate the notes only if MetroPCS fails to file the second quarter 2004 10-Q within 60 days after the date the trustee or the abovementioned holders provide a notice to MetroPCS. If an acceleration of the notes were to occur, MetroPCS might then be unable to satisfy its note payment obligations, and would likely seek alternative financing sources to satisfy those obligations. However, MetroPCS expects to cure this covenant breach in a timely fashion, and consequently expects that the notes will not become due as a result of the filing delay. About MetroPCS, Inc. Dallas-based MetroPCS, Inc. is a wholly-owned subsidiary of MetroPCS Communications, Inc. and a provider of wireless communications services. Through its subsidiaries, MetroPCS, Inc. holds 18 PCS licenses in the greater Miami, San Francisco, Atlanta and Sacramento metropolitan areas. MetroPCS offers customers flat rate plans with unlimited anytime local and long distance minutes with no contract. MetroPCS is among the first wireless operators to deploy an all-digital network based on third generation infrastructure and handsets. For more information, visit the MetroPCS web site at http://www.metropcs.com/ * * * In its Form 10-Q for the quarterly period ended March 31, 2004, filed with the Securities and Exchange Commission, MetroPCS, Inc. reports: Liquidity and Capital Resources "The construction of our network and the marketing and distribution of our wireless communications products and services have required, and will continue to require, substantial capital investment. Capital outlays have included license acquisition costs, capital expenditures for network construction, funding of operating cash flow losses and other working capital costs, debt service and financing fees and expenses. We estimate that our aggregate capital expenditures for 2004, which will be primarily associated with our efforts to increase the capacity of our network, will be approximately $210 million, of which $49.2 million had been incurred through March 31, 2004. We believe our cash on hand and cash generated from operations will be sufficient to meet our projected capital requirements for the foreseeable future. Although we estimate that these funds will be sufficient to finance our continued growth, we may have additional capital requirements, which could be substantial, for future network upgrades, and advances in new technology. "Existing Indebtedness. As of March 31, 2004, we had $193.1 million of total indebtedness. This indebtedness consists of $150.0 million of our senior notes, $43.5 million face amount of our FCC notes, which are recorded net of unamortized original issue discount of $4.2 million, and $3.8 million of debt associated with our obligation to other carriers for the cost of clearing microwave links in areas covered by our licenses." MIRANT CORP: Wants Court to Reconsider Expanding Examiner's Role ---------------------------------------------------------------- Judge Lynn of the U.S. Bankruptcy Court for the Northern District of Texas concluded that it is necessary and appropriate to expand the role of the Examiner in Mirant Corp.'s on-going chapter 11 restructuring proceeding. The Court instructs the Examiner to file reports by the 10th day of every other month, beginning October 10, 2004, and at other times he deems necessary. Judge Lynn makes it clear that the Examiner may not assume or exercise any authority over the Debtors' operations. Requests for Reconsideration (1) Mirant Committee The Official Committee of Unsecured Creditors of Mirant Corporation, et al. asks the Court to reconsider and modify that portion of the Memorandum Order regarding access to a record. Moreover, the Mirant Committee asks Judge Lynn to re-institute the Court-supervised monthly status conferences. Paul S. Silverstein, Esq., at Andrews & Kurth, LLP, in New York, contends that the monthly status conferences are specifically authorized by Section 105(d) of the Bankruptcy Code and, with an appropriate record, provide a forum for the Court and parties-in- interest to attempt to address myriad case matters. Vesting the Examiner with authority to conduct status conferences without access to the record of those conferences except upon a showing of "cause" would do a disservice to all concerned by cloaking the conferences under an inappropriate shroud of secrecy. Because the Court has indicated that it may give some deference to the Examiner's views, Mr. Silverstein asserts that a complete record of status conferences presided over by the Examiner is essential to insure fairness to all parties-in-interest. Under the Memorandum Order, the Court further directed the Examiner to nominate a representative to the Fee Review Committee. In response, the Examiner designated one of his Court-retained attorneys rather than a business person. Mr. Silverstein points out that this designation is in marked contrast to the designees sitting on the Fee Review Committee from each of the other principal constituents in Mirant's case -- none of whom are outside retained counsel to constituencies in these cases. Accordingly, the Mirant Committee asks Judge Lynn to clarify the Memorandum Order to provide that the Examiner will designate to the Fee Review Committee a business person as opposed to one of his attorneys. (2) MAGi Committee Deborah D. Williamson, Esq., at Cox & Smith Incorporated, in San Antonio, Texas, notes that on its face, the Examiner's authority under the Order appears to encompass many duties and tasks that generally are reserved to the Debtors and the official committees, and indeed appears to be almost boundless. Other powers, like the Examiner's charge to monitor and evaluate the parties' negotiations, appear to be inappropriate. The MAGi Committee is deeply concerned that the effect of this expansion of the Examiner's powers will be to curtail the parties' ability to negotiate freely, discuss and, where appropriate, enforce their rights in these matters, as they are charged to do. Given that these cases are at a sensitive juncture as to plan discussions, the MAGi Committee is unclear as to the purpose and intention behind adding an additional party to "police" these discussions. Moreover, the MAGi Committee is concerned because, now that plan negotiations are to be conducted under the scrutiny of an Examiner charged with evaluating the parties' good faith, the vigor with which the parties will advocate on behalf of their constituencies may be restrained or chilled -- a result that is inconsistent with the committees' charge to represent their constituencies vigorously. The combination of all of these powers granted under the Expanded Examiner Order -- the access to parties' negotiations, reporting to the Court thereon, together with the potential standing as a litigant -- implicates critical issues of potential waiver of privilege and separation between the Court and litigants. Just as importantly, Ms. Williamson points out that the Expanded Examiner Order is based on factual conclusions that the MAGi Committee believes are either inaccurate or without any basis in the record of these cases. The MAGi Committee is concerned that these findings will be used as findings of fact on substantive issues that will arise in these cases. At a minimum, the views of the constituencies in these cases, including the MAGi Committee, should be on the record. Ms. Williamson contends that the Court should reconsider its order for three reasons: (a) The Court may have made errors of law justifying reconsideration of the Order given the expansive powers it granted the Examiner that far exceed those permitted under the Bankruptcy Code; (b) As it appears that the grant of the expanded powers to the Examiner was premised on certain errors of fact or unfounded conclusions with respect to these Chapter 11 cases, the Expanded Examiner Order contains certain errors in fact also justifying reconsideration; and (c) Because the parties did not have prior notice of the substantial expansion of the Examiner's duties, the MAGi Committee's request for reconsideration does not constitute an attempt to re-litigate or re-argue matters previously brought before the Court. 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. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEWMARKET TECH: 2nd Quarter Results Show Dramatic Turnaround ------------------------------------------------------------ NewMarket Technology, Inc.'s (OTCBB:NMKT) financial statements reflect a dramatic turnaround in the quarter ending June 30, 2004. Sales are up, losses have narrowed and liquidity's been restored. Net Revenue increased 1,250% from $562,000 for the quarter ended June 30, 2003, to $7.6 million for the quarter ended June 30, 2004. Second Quarter of 2004 revenue increased 280% over First Quarter revenue of $2.6 million. Forty percent (40%) of this increase or $2.8 million was due to organic sales growth of the existing core operations and organic growth from the previously acquired companies. Substantial earnings improvements in the Second Quarter accelerated the Company toward realizing forecasted operational profitability by year-end 2004. While management anticipated quarterly losses associated with investments to expand operations, the reported net loss for this quarter of $73,529 is less than 1% of revenue and reflects a reduction in loss of 88% over the previous quarter. In addition to improved earnings, the Company also reported a working capital surplus of $1.2 million with cash on hand of $3.3 million. The reported revenue of $10.2 million for the first six months of 2004 reflects just over 50% of the forecasted booked revenue of $20 million for 2004. The Company has a revenue run rate goal of $50 million by year end 2004. NewMarket's June 30 balance sheet shows $10.8 million in shareholder equity -- more than double what it was at Dec. 31, 2003. "In December 2003, NewMarket Technology announced an aggressive plan to introduce an innovative new business model that included an equally aggressive financial forecast," said Philip Verges, CEO of NewMarket Technology. "The Company is consistently meeting or exceeding both planned objectives and financial milestones. We expect to continue to meet or exceed planned objectives and milestones into the third and fourth quarter of 2004. Third and fourth quarter results will reflect our continuing organic sales growth and the additional benefit to be realized beginning in the third quarter from our recent acquisition which will contribute an additional $20 million in annualized revenue." About NewMarket Technology Inc. In 2002, NewMarket Technology, Inc. (f/k/a IPVoice Communications, Inc.) -- http://www.newmarkettechnology.com/-- launched a business plan to continuously introduce emerging communication technologies to market. The plan included a financing model for early technologies and an approach to creating economies of scale through a specialized service and support organization intended specifically for the emerging technology industry. The Company posted six consecutive profitable quarters through 2003 and established an annualized $15 million in revenue. In 2003, NewMarket acquired Infotel Technologies in Singapore and IP Global Voice, led by CEO Peter Geddis, a former Executive Vice President and Chief Operating Officer of Qwest Communications (NYSE:Q - News). In 2004, the Company diversified its communications technology offering into the healthcare and homeland security industries with the respective acquisitions of Medical Office Software Inc. and Digital Computer Integration Corp. RKM IT Solutions of Caracas, Venezuela was also recently acquired as NewMarket's entry into the Latin American market. As reported in yesterday's edition of the Troubled Company Reporter, NewMarket has acquired a 20% equity stake in Sensitron Inc. and inked a partnership deal under which it will sell Sensitron's wireless CareTrends(TM) technology in the Healthcare market segment. NORTEL NETWORKS: Obtains New Waiver from Export Development Canada ------------------------------------------------------------------ Nortel Networks Corporation's (NYSE:NT)(TSX:NT) principal operating subsidiary, Nortel Networks Limited, has obtained a new waiver from Export Development Canada under the EDC performance- related support facility. It is a waiver of certain defaults related to the delay by the Company and NNL in filing their respective 2003 Annual Reports on Form 10-K, Q1 2004 Quarterly Reports on Form 10-Q and Q2 2004 Quarterly Reports on Form 10-Q, in each case with the U.S. Securities and Exchange Commission, the trustees under the Company's and NNL's public debt indentures and EDC. The waiver also applies to certain additional breaches under the EDC Support Facility relating to the delayed filings and the previously announced restatement of the Company's and NNL's financial results. NNL has obtained a new waiver from EDC that will remain in effect until the earlier of certain events including: -- the date on which the Reports have been filed with the SEC; or -- 11:59 p.m. Eastern Daylight Time on September 30, 2004. The EDC Support Facility provides up to US$750 million in support, all presently on an uncommitted basis. Once the Reports have been filed with the SEC and the related breaches cured, the US$300 million revolving small bond sub-facility of the EDC Support Facility would again become committed support. As of August 15, 2004, there was approximately US$274 million of outstanding support utilized under the EDC Support Facility, US$202 million of which was outstanding under the small bond sub-facility. If the Company and NNL fail to file the Reports within the waiver period, there can be no assurance that NNL would receive any further waivers or any extensions of the waiver beyond its scheduled expiry date. If the waiver announced today expires prior to the filing of such Reports, EDC would have the right at such time to require NNL to cash collateralize the support outstanding under the EDC Support Facility and to exercise its rights against the collateral under related security agreements. As previously announced, the Company and NNL expect to file the Reports by the end of the third quarter of 2004. About Nortel Networks Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com/or http://www.nortelnetworks.com/media_center/ * * * As reported in the Troubled Company Reporter on August 18, 2004, the Integrated Market Enforcement Team of the Royal Canadian Mounted Police recently advised the Company that it will commence a criminal investigation into the Company's financial accounting situation. As reported in the Troubled Company Reporter on August 12, 2004, the Company's directors and officers, and certain former directors and officers are facing allegations from certain shareholders in the U.S. District Court for the Southern District of New York that the directors and officers breached fiduciary duties owed to the Company during the period from 2000 to 2003. NQL DRILLING: Bits Business $17 Mil. Asset Sale Ends Restructuring ------------------------------------------------------------------ NQL has entered into an agreement to sell its Bits business, comprised of Diamond Products International, Inc., to Grant Prideco, Inc. for a purchase price of US$17 million, subject to typical adjustments. NQL has agreed to place US$3 million of the proceeds in escrow for a maximum of one year related to general indemnification provisions as well as the collection of certain foreign inventories and accounts receivables. The transaction is expected to close in the next 14 days and is subject to the satisfaction of various conditions typical for this type of arrangement. Proceeds at closing will be used to reduce term and operating debt currently outstanding. The Company also reports changes in its senior management team: -- appointment of Kevin Nugent as the company's new President and Chief Executive Officer; and -- reconfiguration of its Board of Directors, including the appointment of William Myers to the Board. Effective immediately, Dean Livingstone, formerly President and Chief Executive Officer and a Director, has left the company to pursue other interests following his recovery from a recent illness. Kevin Nugent, the Company's Chief Financial Officer, has been appointed President and Chief Executive Officer and a director of the company. Mr. Nugent joined NQL in September 2003 and has played an integral role in the financial and operational restructuring that has taken place to date. Mr. Nugent has also been acting as the President and Chief Executive Officer of the Company for the past two months during Mr. Livingstone's illness. These changes in management and the Board, and the conclusion of the strategic process, now mark an end to the overall restructuring of the company that began in July 2003. The Board and management intend to continue the improvement initiatives already begun to optimize NQL's remaining core operations, including the Black Max downhole mud motor product line. In addition, the sale of the company's Bits business, together with the previously announced sale of its CanFish division for in excess of CDN$24 million, will provide NQL with a strong balance sheet for future growth. As the Company has now successfully completed its financial restructuring, several of the directors who were elected to the Board in 2003 are stepping down to facilitate a reconstitution of a smaller board suitable to the company's current circumstances. This includes R.T. (Tim) Swinton (Chairman), Bruce Libin, Glen Roane and Derek Martin. William Myers has been appointed to the Board of Directors. Mr. Myers brings a wealth of operational knowledge to the Board with over 40 years of experience in the drilling and oilfield service industry, most recently as the Group Vice President of Pool Company, an international drilling and well service organization. The Board of Directors is now composed of the following members: -- Tom Bates -- John Clarkson -- Dean Prodan -- William Myers -- Kevin Nugent With the conclusion of the strategic process, the reconstituted Board and management intend to turn their full focus and attention to optimizing the remaining operations of the company. In addition, the company expects to soon be able to provide financial guidance and commentary on the strategic direction of NQL to shareholders and the investment community. To that end, management will be hosting a conference call on September 16, 2004 during which shareholders and the investment community will have an opportunity to ask questions of management. Details related to participation in this call will be released at a future date. Kevin Nugent commented, "On behalf of employees and shareholders, I express our gratitude for the leadership and guidance provided by those leaving NQL. The last 14 months have been difficult ones for the company as it underwent its restructuring to emerge as a focussed and financially sound business." Simmons & Company International has acted as financial advisor to the Board of Directors of NQL in connection the strategic process and the sale of the Bits and Fishing businesses. NQL Drilling Tools Inc. is an industry leader in providing downhole tools, technology and services used primarily in drilling applications in the oil and gas, environmental and utility industries on a worldwide basis. NQL trades on the Toronto Stock Exchange under the symbol NQL.A. ORDERPRO LOGISTICS: Neg. Fin'l Results Prompt Going Concern Doubt ----------------------------------------------------------------- OrderPro Logistics, Inc.'s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the Company's condensed consolidated financial statements, the Company has a net loss of $6,313,458, a negative cash flow from operations of $714,627 and a working capital deficiency of $1,019,391. These factors raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional funds and become profitable. Management's plans include obtaining additional financing for which they are currently in active negotiations with several financing institutions and increasing sales through additional acquisitions. At March 31, 2004 the Company had cash of approximately $104,000, which is offset by overdrafts of approximately $129,000. The Company expects that it will need to obtain additional debt and equity financing to maintain operations in 2004. To date, OrderPro has financed its operations principally through the founder's investment, the placement of convertible debentures and the sale of common stock. It will consider both the public and private sale of securities and or debt instruments for expansion of operations if such expansion would benefit the overall growth and income objectives of the Company. Should sales growth not materialize, OrderPro may look to these public and private sources of financing. The Company does not know whether it can obtain sufficient capital on acceptable terms, if at all. Under such conditions, failure to obtain such capital likely would affect adversely the Company's ability to continue as a going concern, or at a minimum negatively impact the Company's ability to timely meet its business objectives. Any additional equity financing may be dilutive to shareholders and such additional equity securities may have rights, preferences or privileges that are senior to those of its existing common stock. Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on operating flexibility. Failure to obtain capital likely would adversely affect the Company's ability to continue as a going concern, or negatively impact the Company's ability to meet its business objectives. OrderPro Logistics, Inc. is a customer-oriented provider of innovative and cost-effective logistics solutions. With expertise in multi-modal transportation management, OrderPro provides complete supply chain management, including transportation services, freight brokerage, on-site logistics management, packaging assessment, process improvement consulting, claims management, private fleet management and procurement management. ORDERPRO LOGISTICS: Updates New Web Look as Part of Restructuring ----------------------------------------------------------------- OrderPro Logistics Inc. (OTCBB: OPLO), as part of a company-wide restructuring, has begun the design of new Web site features to provide a source of up-to-date information to shareholders and the public. Functional changes and updates will now be readily maintained by staff to allow public access to the latest news and reports. Management is confident this improved design will appeal to all users and help to publicize the facts while dispelling erroneous rumors regarding the activities of OrderPro Logistics. Jeffrey Smuda, president and chief executive officer of OrderPro Logistics Inc., stated, "We recognize the importance of disseminating accurate information in a timely manner to our shareholders and other interested parties. Our integrated team of Web consultants, designers, writers and programmers has produced results that we believe will prove effective in the marketplace." Smuda also emphasized that other improvements are underway at OrderPro Logistics Inc. "The staff and management is proud of our achievements to date and excited about the future." The new Web site features at http://www.orderprologistics.com/are expected to be available on Sept. 7, 2004, and user feedback will be appreciated. About OrderPro Logistics Inc. OrderPro Logistics Inc. was created to capture the potential of the Internet in the transportation and logistics industry by employing new and innovative processes. OrderPro Logistics Inc. can integrate every aspect of the customer shipping needs from order entry through successful delivery. Customer priorities, shipment integrity, best quality, and optimization of every load is the objective of supply chain management with OrderPro Logistics Inc. lowering costs while adding value in process and service. For more information, please visit http://www.orderprologistics.com/ * * * Liquidity and Capital Resources In its Form-10QSB for the quarterly period ended March 31, 2004, filed with the Securities and Exchange Commission, OrderPro Logistics, Inc. reports: "Cash used for operating activities was approximately $715,000 in 2004 as compared to approximately $266,000 in 2003. The use of cash in 2004 is the result of a net loss of approximately $6,313,000, partially offset by non-cash charges of approximately $5,839,000, and a net change in operating assets and liabilities of approximately $241,000. For 2003, a loss of approximately $617,000 was partially offset by non-cash charges of approximately $320,000 and a net increase in operating assets and liabilities of approximately $31,000. "[The Company's] financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying condensed consolidated financial statements, the Company has a net loss of $6,313,458, a negative cash flow from operations of $714,627 and a working capital deficiency of $1,019,391. These factors raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional funds and become profitable. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern." OXFORD AUTOMOTIVE: Names David Treadwell Chief Executive Officer ---------------------------------------------------------------- Oxford Automotive, Inc., a $1 billion Tier 1 supplier of specialized welded metal assemblies, has named David Treadwell Chief Executive Officer. Mr. Treadwell, 50, replaces John Potter who retired in June. Mr. Treadwell's experience spans more than 20 years. In his role as CEO, he becomes responsible for the development of Oxford's strategic direction, focusing immediately on its capital structuring and divestiture issues. Oxford, which is privately held, is poised for the launch of its 380,000-square-foot plant in McCalla, Alabama this year. It will supply complete underbody assemblies for the Mercedes M-Class and Grand Sports Tourer. "David's strong transitional skills -- financial and organizational -- coupled with his automotive management background provide an invaluable combination for Oxford," said Mark R. Patterson, chairman of the board of Oxford Automotive. "I believe in team work," said Mr. Treadwell, "I have great confidence in Oxford's president Jeff Wilson and the operational management team. This allows me to focus my attention on the capital structuring side of the business." Mr. Treadwell has earned a solid reputation for working companies though transitions. He began his career with the late Heinz Prechter in his automotive, publishing and real estate groups. During Mr. Treadwell's tenure he led ASC Incorporated, a global specialty vehicle company, through several transitions and oversaw acquisitions and divestitures under the Prechter Holdings umbrella. Mr. Treadwell led the divestiture and wrap up of Prechter Holdings after the death of Mr. Prechter. Most recently he has provided consulting services to early stage business ventures and stepped up his involvement on several corporate and public boards, including ASC Incorporated, Fifth Third Bank-Michigan East Region, Flat Rock Metals and the Wayne County Airport Authority. Mr. Treadwell received his bachelor's degree in business administration from the University of Michigan in 1976, graduating with high honors. A resident of Canton, Michigan, he is married and the father of three children. About Oxford Automotive Oxford Automotive, Inc., with headquarters in Troy, Mich., is a leading Tier 1 supplier of specialized welded metal assemblies and related services. The company, which is privately held, employs approximately 6,600 people at 32 locations in nine countries. It has technology centers in the United States, France, and Germany. Annual sales in 2003 were approximately $1 billion. For more information, http://www.oxauto.com/ * * * As reported in the Troubled Company Reporter on August 16, 2004, Moody's Investors Service lowered the ratings for Oxford Automotive, Inc. due to intensified concerns regarding the company's declining cash flow from operations, weakened liquidity, and ability to meet debt service requirements. The new ratings reflect Moody's estimations of recovery values should the company pursue either liquidation of some or all of its assets and reorganization of its existing capital structure through another distressed exchange. The rating outlook remains negative. Moody's took the following specific rating actions: -- Downgrade to C, from Caa1, of Oxford's $280 million of 12% guaranteed senior secured second-lien notes due October 2010; -- Downgrade to Ca, from Caa1, of Oxford's senior implied rating; -- Downgrade to C, from Caa2, of Oxford's senior unsecured issuer rating Oxford also has in place a $60 million guaranteed senior secured first-lien revolving credit facility due November 2006 that is not rated by Moody's. This revolving credit facility is secured on a first-priority basis by most assets of the company. The company continues to explore the possibility of establishing a $25 million operating lease for its McCalla, Alabama plant, but the current status of this operating lease remains unclear. The rating downgrades and continued negative outlook reflect Moody's belief that there has been a severe weakening of the company's operating cash flow performance and liquidity position. Moody's additionally notes that while Oxford's foreign operations have accounted for more than half of overall revenues, profitability, and assets, there appear to be difficulties surrounding the ability to repatriate much of the foreign cash. It is furthermore unclear to Moody's to what extent Oxford has had to absorb rising steel prices, wages, and retirement benefits. Moody's has also learned that Oxford appointed a new CEO and CFO in recent weeks. The new CFO is notably the seventh CFO that Oxford has had in as many years, and the third CFO that the company has had since the beginning of 2004. It is Moody's opinion that management instability over the past few years has exacerbated the company's problems. Moody's has been unable to formally validate the company's current operations and financial condition due to the lack of reported financial information. Oxford has not completed either its fiscal year end March 2004 audit, nor its quarterly results for June 2004. PAXSON COMMUNICATIONS: NBC Files Complaint re Investment Terms -------------------------------------------------------------- NBC Universal, Inc., a subsidiary of the General Electric Company (NYSE:GE), filed a complaint against Paxson Communications Corporation (AMEX:PAX) in the Court of Chancery of the State of Delaware seeking a declaratory ruling regarding the terms of its investment in the Company. NBC's complaint seeks a declaration as to the meaning of the terms "Cost of Capital Dividend Rate" and "independent" investment bank as used in the Certificate of Designation of the Company's 8% Series B Convertible Exchangeable Preferred Stock which is held by NBC. Lowell W. Paxson, Chairman and Chief Executive Officer of the Company said, "The terms at the heart of this dispute are clear and unambiguous and contradict the claim NBC has filed. We are disappointed that NBC chose to resort to litigation rather than accept the plain meaning of the Certificate of Designation." On September 15, 2004, the rate on the non-cash pay dividend on the Preferred Stock will be reset from 8% to the "Cost of Capital Dividend Rate" as defined under the terms of Certificate of Designation. While the Company directs all interested parties to review the Certificate of Designation, it has furnished the following summary of the provisions of the Certificate of Designation which govern the determination of the Cost of Capital Dividend Rate. The Company has 41,500 shares of Preferred Stock issued and outstanding under the Certificate of Designation. As of September 15, 2004, the Preferred Stock will have a face amount value equal to approximately $581 million in the aggregate (or $14,000 per share), consisting of $415 million in liquidation preference (equal to $10,000 per share) plus approximately $166 million of accumulated and unpaid dividends thereon (equal to $4,000 per share). The Cost of Capital Dividend Rate is defined under paragraph (n) of the Certificate of Designation to be "a rate per annum equal to the dividend rate on the Series B Convertible Preferred Stock at which the Series B Convertible Preferred Stock would trade at its liquidation preference on such date of determination." The term "liquidation preference" is defined under paragraph (a) of the Certificate of Designation to be $10,000.00 per share of Preferred Stock (or $415 million in the aggregate). Therefore, the Cost of Capital Dividend Rate would be the dividend rate on September 15, 2004 which would allow the Preferred Stock to trade at its liquidation preference of $10,000 per share (or $415 million in the aggregate for all shares). The definition of the Cost of Capital Dividend Rate under paragraph (n) of the Certificate of Designation further specifies that such rate shall be determined by a nationally recognized independent investment banking firm selected in the sole discretion of the Company. About Paxson Communications Corporation Paxson Communications Corporation owns and operates the nation's largest broadcast television distribution system and the PAX TV network. PAX TV reaches 89% of U.S. television households via nationwide broadcast television, cable and satellite distribution systems. PAX TV's original programming slate for the 2004-2005 broadcast season features three new unscripted series, "Cold Turkey," "Model Citizens" and "Second Verdict"; two scripted dramas, "Young Blades" and "Left Behind"; two entertaining variety programs, "America's Most Talented Kids" and "World Cup Comedy," executive produced by Kelsey Grammer; and two fast-paced game shows, "On the Cover" and "Balderdash." Returning series include all-new episodes of PAX's top-rated dramas, "Doc" and "Sue Thomas: F.B.Eye." For more information, visit PAX TV's website at http://www.pax.tv/ At June 30, 2004, Paxson Communications Corporation's balance sheet showed a $1,194,210,000 stockholders' deficit -- nearly a 10% increase from the $1,089,845,000 stockholders deficit reported at December 31, 2003. PG&E NATIONAL: Wants Court OK on IPP Portfolio Bidding Procedures ----------------------------------------------------------------- PG&E National Energy Group, Inc., and its debtor-affiliates sought and obtained approval from Judge Mannes of uniform bidding procedures designed to maximize the value of National Energy & Gas Transmission, Inc.'s equity interests in National Energy Power Company, LLC, Plains End, LLC, and Madison Windpower, LLC: (A) Qualification as Bidder NEG and NEGT Power, after consultation with the Official Committee of Unsecured Creditors of NEG and the Official Noteholders Committee, will determine whether a potential bidder that wishes to make a bid for the Equity Interests or for a Superior Transaction is a "Qualified Bidder". To be considered eligible as Qualified Bidder, a Potential Bidder must provide NEG and NEGT Power with: (a) An executed confidentiality agreement in form and substance satisfactory to NEG and NEGT Power which, in the aggregate, is no less favorable to NEG and NEGT Power than the confidentiality agreement executed by ArcLight Capital Holdings, LLC; (b) Current audited financial statements of the Potential Bidder or, if the Potential Bidder is an entity formed for the purpose of acquiring the Equity Interests or engaging in a Superior Transaction, current audited financial statements of the equity holders of the Potential Bidder or other form of financial disclosure acceptable to NEG and NEGT Power and the Official Committees and their advisors, which demonstrates the Potential Bidder's ability to close the transaction; and (c) A written statement that the Potential Bidder agrees to be bound by the terms and conditions of the Bidding Procedures. The Potential Bidder also must establish that it has the financial ability to consummate its proposed transaction within the timeframe contemplated for consummation of the Equity Purchase Agreement. Denali Power is deemed to be a Qualified Bidder. (B) Bid Requirements (a) NEG and NEGT Power will determine whether a bid qualifies as a "Qualified Competing Bid." To constitute a Qualified Competing Bid, the bid must: -- be a written irrevocable offer from a Qualified Bidder containing written evidence of a commitment for financing or other evidence of the financial ability to consummate the transaction satisfactory to NEG and NEGT Power, subject to no conditions other than those set forth in the Equity Purchase Agreement; -- be for the acquisition of all of the Equity Interests in a single transaction; -- not be materially more burdensome or conditional than the terms of the Equity Purchase Agreement; -- not request or entitle the bidder to any termination or break-up fee, expense reimbursement or similar type of payment; and -- acknowledge and represent that the bidder: (i) has had an opportunity to conduct any and all due diligence prior to making its offer; (ii) has relied solely on its own independent review, investigation and inspection of any documents in making its bid; and (iii) did not rely on any written or oral statements, representations, promises, warranties or guaranties regarding the Equity Interests or proposed transaction, or the completeness of any related information provided, except as expressly stated in the Bidding Procedures. The Equity Purchase Agreement is deemed to be a Qualified Bid. (b) All bids must include clean and black-lined versions of the revised Equity Purchase Agreement, Escrow Agreement and the Post-Signing Related Agreements. The clean versions must be duly executed originals of the revised Purchase Agreement and revised Escrow Agreement, signed by an individual authorized to bind the Qualified Bidder. The black-lined versions must show all proposed changes from the Equity Purchase Agreement, Escrow Agreement, and Post-Signing Related Agreements. (c) Deposit Each bid must be accompanied by a $15,000,000 deposit. Before the Bid Deadline, the Deposit must be delivered to the escrow agent by wire transfer. Upon the execution of the revised Equity Purchase Agreement and the revised Escrow Agreement by NEG and NEGT Power, a Winning Bidder's Deposit will be deposited by the escrow agent into an escrow account as required by the party's agreements. (d) Bid Deadline and Submission Bids must be received no later than 12:00 noon EST on September 9, 2004 by: -- Willkie Farr & Gallagher, LLP 787 Seventh Avenue New York, New York Attn: Matthew A. Feldman, Esq., and Paul V. Shalhoub, Esq.; -- Whiteford, Taylor & Preston, LLP Seven Saint Paul Street Baltimore, Maryland 21202-1626 Attn: Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq.; -- National Energy & Gas Transmission, Inc. 7600 Wisconsin Avenue Bethesda, Maryland 20814 Attn: Sanford L. Hartman, Esq.; -- Counsel to the Official Committees: * Linowes and Blocher, LLP 7200 Wisconsin Avenue, Suite 800 Bethesda, Maryland 20814 Attn: Bradford F. Englander, Esq.; * Kaye Scholer, LLP 425 Park Avenue New York, New York 10022 Attn: Ana Alfonso, Esq.; * Klee, Tuchin, Bogdanoff & Stern, LLP 2121 Avenue of the Stars, Suite 3300 Los Angeles, California 90067 Attn: Lee Bogdanoff, Esq.; and * Shapiro Sher Guinot & Sandler 36 South Charles St., Suite 2000 Baltimore, Maryland 21201 Attn. Joel I. Sher, Esq.; -- The Office of the U.S. Trustee Suite 600, 6305 Ivy Lane Greenbelt, Maryland 20770 Attn: John L. Daugherty, Esq.; -- Lazard Freres & Co. 30 Rockefeller Plaza New York, New York 10020 Attn: J. Blake O'Dowd and Peter J. Marquis Financial advisors to NEG and NEGT Power; and -- Paul, Hastings, Janofsky & Walker, LLP 1055 Washington Boulevard Stamford, Connecticut 06901 Attn: Leslie A. Plaskon, Esq. (e) No Conditions The Competing Bid must not be subject to financing, due diligence or any other material condition or material contingency less favorable to NEG and NEGT Power than those contained in the Equity Purchase Agreement as of the date of the auction. (f) Initial Overbid The value of an initial overbid must exceed the $558,000,000 Purchase Price by at least $26,000,000. The excess amount represents the Break-up Fee plus the maximum amount of Expense Reimbursement -- which will be deemed to be $7,000,000 for the purposes of determining the Initial Overbid -- plus $4,000,000. (C) Diligence and Confidentiality Agreement Any Qualified Bidder must deliver to NEG and NEGT Power an executed confidentiality agreement in form and substance satisfactory to NEG and NEGT Power, which, in the aggregate, is no less favorable to them than the confidentiality agreement executed by ArcLight. Qualified Bidders will be provided with a Confidential Information Memorandum. NEG and NEGT Power have also established a "data room" containing "due diligence" information and documents related to the IPP's businesses and assets. NEG and NEGT Power will afford each Qualified Bidder access to the data room. NEG and NEGT Power will also designate an employee or other representative to coordinate all reasonable requests for additional information and due diligence access from Qualified Bidders. Additional due diligence will not be permitted after the Bid Deadline. None of NEG and NEGT Power, their affiliates or any of their representatives is obligated to furnish any information to any person except a Qualified Bidder. Any Qualified Bidder who desires to conduct due diligence should contact Andrew Curtis at Lazard. (D) Auction (a) Determination of Qualifying Competing Bids Promptly after the Bid Deadline, NEG and NEGT Power will: -- evaluate all bids, if any, received; and -- determine which bids, if any, constitute Qualified Competing Bids. NEG will provide Denali Power with copies of all Qualified Competing Bids at least two business days before the auction. (b) Auction Date and Time If any Qualified Competing Bids are submitted before the Bid Deadline, then NEG and NEGT Power will conduct an auction. The Auction will be held on September 14, 2004, commencing at 12:00 noon, at the offices of Willkie Farr in New York, or another time and place before the sale hearing. Only the authorized representatives of each of the Qualified Bidders that has submitted a Qualified Competing Bid, the Official Committees, Denali Power, NEG and NEGT Power will be permitted to attend the Auction. Only Denali Power and the Qualified Bidders that have submitted a Qualified Competing Bid will be entitled to make further bids for all of the Equity Interests or other equity interests, or all or substantially all of the assets of the IPPs at the Auction. During the course of the Auction, NEG and NEGT Power will inform each participant which Qualified Competing Bid reflects the highest or otherwise best offer. To the extent that a bid has been determined to be the highest or otherwise best offer because of the addition, deletion or modification of a provision or provisions in the Equity Purchase Agreement, Escrow Agreement or Post- Signing Related Agreements, or, if applicable, in the Qualified Competing Bid, other than an increase in the cash purchase price, NEG and NEGT Power will provide notice to each participant of the value reasonably ascribed by NEG and NEGT Power to the added, deleted or modified provision or provisions. (c) Adjournment of Auction The Auction may be adjourned as NEG and NEGT Power deem appropriate. Reasonable notice of an adjournment and the time and place for the resumption of the Auction will be given to Denali Power, all Qualified Bidders that have submitted a Qualified Competing Bid, and the Official Committees. (d) Subsequent Bids NEG and NEGT Power will not consider any subsequent bid in the Auction unless any subsequent bid after the Initial Overbid exceeds the previous highest bid by at least $2,000,000 in value. NEG and NEGT Power will provide notice to each participant in the Auction of the value reasonably ascribed by NEG and NEGT Power to any provision in a subsequent bid other than an increase in the cash purchase price. (e) Subsequent Bids by Denali Power Denali Power will have the right to include the amount of the Break-up Fee and the maximum amount of the Expense Reimbursement in any subsequent bid that it makes in the Auction. In the event Denali Power is the Winning Bidder as a result of a subsequent bid made at the Auction, Denali Power will be entitled to credit the Break-up Fee and the maximum amount of the Expense Reimbursement against the Purchase Price payable at the Closing. (f) Other Terms All Qualified Competing Bids, the Auction, and the Bidding Procedures are subject to additional terms and conditions as are announced by NEG and NEGT Power. At the conclusion of the Auction and before the Court approves the transaction with the Winning Bidder, NEG and NEGT Power will announce their intention to either: (i) pursue a transaction with the Winning Bidder at the Auction -- and announce the identity of the Winning Bidder; or (ii) not proceed with a sale to the Winning Bidder. (g) Irrevocability of Certain Bids The Winning Bid will remain irrevocable in accordance with the terms of the purchase agreement executed by the Winning Bidder. The bidder that submits the next highest or otherwise best bid, or the Back-up Bidder will be irrevocable until the earlier of: -- 60 days after the approval of the sale to the Winning Bidder; -- The closing of the sale to the Winning Bidder or the Back-up Bidder; and -- A date as NEG and NEGT Power affirm in writing that in lieu of pursuing the sale under the Purchase Agreement or other Alternative Transaction, NEG and NEGT Power do not intend to proceed with a sale to the Winning Bidder. (h) Retention of Deposit The Winning Bidder's Deposit will be held and disbursed by the escrow agent in accordance with the terms of the purchase agreement executed by the Winning Bidder. The Back-up Bidder's Deposit will be held until the earlier of: -- 60 days after the approval of the sale to the Winning Bidder; -- Closing of the sale to the Winning Bidder or the Back- up Bidder; and -- A date as NEG and NEGT Power affirm in writing that, in lieu of pursuing the sale under the Equity Purchase Agreement or other Alternative Transaction, NEG and NEGT Power do not intend to proceed with a sale to the Winning Bidder. After the conclusion of the Auction, the Deposit of all bidders other than the Winning Bidder and the Back-up Bidder will be returned promptly. (i) Failure to Close If the Winning Bidder fails to consummate the transaction in accordance with the terms of the purchase agreement executed by the Winning Bidder by the closing date contemplated in the purchase agreement agreed to by the parties for any reason, NEG and NEGT Power will: -- retain the Winning Bidder's Deposit -- except in the case of Denali Power, whose rights to any deposit will be governed by the Escrow Agreement; -- maintain the right to pursue all available remedies, whether legal or equitable available to them; and -- upon consultation with the Official Committees, be free to consummate the proposed transaction with the Back-up Bidder at the highest price bid by the Back-up Bidder at the Auction. If the Back-up Bidder is unable to consummate the transaction at that price, NEG and NEGT Power may consummate the transaction with the next highest bidder at the Auction -- without the need for an additional hearing or Court Order. (j) Non-Conforming Bids NEG and NEGT Power will have the right to entertain any bid that does not conform to one or more of the Bid requirements and deem that Non-Conforming Bid a Qualified Competing Bid. The Non-Conforming Bid must be irrevocable in accordance with the terms of the Bidding Procedures Order and must meet each of these conditions: -- The Deposit must be made in the amount specified; -- The Initial Overbid must meet the minimum requirement; -- Any subsequent bid must meet the requirements; -- The Non-Conforming Bid must be structured as a single transaction for all of the Equity Interests or equity interests held by NEGT Power, or all or substantially all of the assets of the Acquired Companies. For the avoidance of doubt, NEG and NEGT Power will provide the required notice with respect to Non- Conforming Bids. (k) NEG and NEGT Power reserve the right to reject any, other than Denali Power's offer pursuant to the Equity Purchase Agreement, Qualified Bid if NEG or NEGT Power determine that the Qualified Bid is: -- inadequate or insufficient; -- not in conformity with the requirements of the Bankruptcy Code, any related rules or terms set forth in the Bidding Procedures Order; or -- contrary to the best interests of NEG and NEGT Power and NEG's estate. (E) Expenses Bidders will bear their own expenses in connection with the proposed sale, whether or not the sale is ultimately approved, in accordance with the terms of the purchase agreement. Denali Power may recover expenses in accordance with the provisions of the Equity Purchase Agreement. (F) Conflict Any conflict between the terms and provisions of the Bidding Procedures Order and any purchase agreement, including the Equity Purchase Agreement, executed by NEG and NEGT Power and a Qualified Bidder will be resolved in favor of the Bidding Procedures Order. The Court will conduct a hearing to consider the sale of the IPP Portfolio on September 22, 2004. 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. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) PG&E NATIONAL: Court Okays $15 Million Break-up Fee for Denali -------------------------------------------------------------- Judge Mannes gave his stamp of approval to payment of a $15,000,000 in the event Denali Power, LLC, does not prevail as the winning bidder for PG&E National Energy Group, Inc.'s equity interests in National Energy Power Company, LLC, Plains End, LLC, and Madison Windpower, LLC. National Energy & Gas Transmission, Inc., and NEGT Energy Company, LLC, will pay Denali Power, LLC, a $15,000,000 break-up fee if the Purchase Agreement is terminated: (a) by Denali Power, if before the Closing, NEG and NEGT Power decide to sell their equity interests in National Energy Power Company, LLC, Plains End, LLC, and Madison Windpower, LLC, to another buyer. In this event, the Break-up Fee will be payable on the earlier of: -- the consummation of the Alternative Transaction; and -- March 31, 2005, the Outside Date; (b) by Denali Power, if NEG or NEGT Power willfully breach the Purchase Agreement. In this event, the Break-up Fee will be payable within three business days after the date of termination; (c) by NEG or NEGT Power, or Denali Power, if the Auction is held and Denali Power is not the Winning Bidder or the Back-up Bidder, or Denali Power was the Back-up Bidder but is no longer obligated to remain as the Back-up Bidder pursuant to the terms of the Bidding Procedures Order. In this event, the Break-up Fee will be payable within three business days after the consummation of the transaction with the Winning Bidder or the Back-up Bidder, as the case may be; (d) by NEG or NEGT Power at any time prior to the date on which NEG and NEGT Power deliver notice to Denali Power of the Anticipated Closing Date, which termination will have been made for purposes of NEG retaining substantially all of its interests in the IPPs and operating the business as a going concern upon no longer being subject to the jurisdiction of the Bankruptcy Court. The Notice must be provided to Denali Power 45 days before the Closing. In this event, the Break-up Fee will be payable simultaneously with the effective date of termination. NEG and NEGT Power will also reimburse up to $7,000,000 of Denali Power's reasonable out-of-pocket fees and expenses, less a $2,000,000 non-refundable initial reimbursement NEG and NEGT Power paid to Denali Power prior to the execution of the Purchase Agreement. However, if the amount of the Unasserted PG&E Corp. Claims Escrow Amount is estimated by Denali Power to be greater than $10,000,000, NEG and NEGT Power will have the right to terminate the Purchase Agreement with no obligation to pay to Denali Power the Break-up Fee and the Expense Reimbursement, other than the initial $2,000,000 reimbursement. The Break-up Fee and Expense Reimbursement will be treated as allowed administrative priority expenses in NEG's Chapter 11 case without the need for any application, motion or further Court order. NEG or NEGT Power will pay the Break-up Fee or Expense Reimbursement in accordance with the Purchase Agreement. Denali Power's rights to the Break-up Fee and Expense Reimbursement and the administrative status of the claims will survive rejection or breach by NEG or NEGT Power of the Purchase Agreement, and will be unaffected by it. Paul M. Nussbaum, Esq., at Whiteford, Taylor & Preston, LLP, in Baltimore, Maryland, explains that the payment of the Break-up Fee and Expense Reimbursement is fair and reasonable and was negotiated by the parties in good faith and at arm's-length. The Break-up Fee and Expense Reimbursement are actual and necessary costs and expenses of preserving NEG's estate. The Break-up Fee and Expense Reimbursement allow NEG and NEGT Power to (i) initiate an overbid process at a floor price that is desirable for NEG and NEGT Power and (ii) foster competitive bidding for the Equity Interests. 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. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) POLO BUILDERS: Committee Wants Freeborn & Peters as Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors in Polo Builders, Inc., and its debtor-affiliate's chapter 11 cases asks the U.S. Bankruptcy Court for the Northern District of Illinois for permission to employ Freeborn & Peters LLP as its counsel. Freeborn & Peters is expected to: a) give the Committee advice on all legal issues as they arise; b) represent and advise the Committee regarding the terms of any sales of assets or plans of reorganization and assist in the negotiations with the Debtors and other parties; c) investigate the Debtors' assets and pre-bankruptcy conduct; d) prepare, on behalf of the Committee, all necessary pleadings, reports and other papers; e) represent and advise the Committee in all proceedings in these cases; f) assist and advise the Committee in its administration; and g) provide such other services as are customarily provided by counsel to a creditors' committee in cases of this kind. Harley J. Goldstein, Esq., and Neal H. Levin, Esq., both partners at the Firm, will be primarily responsible for representing the Committee. They will charge the Debtor for services provided to the Committee at an hourly rate of $420. Other professionals who will assist the Committee and their rates are: Professionals Billing Rate ------------- ------------ David M. Madden $200 per hour David L. Kane $235 per hour To the best of the Committee's knowledge, the Firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Villa Park, Illinois, Polo Builders, is a general contractor. The Company, and its Debtor affiliate, M&MM Enterprises, LLC, filed for chapter 11 protection on June 23, 20004(Bankr. N.D. Ill. Case No. 04-23758). Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC, represents the Debtors. When the Company filed for protection, it listed more than $10 million in assets and debts. RANGE RESOURCES: Files Universal Shelf Reg. Statement with SEC -------------------------------------------------------------- Range Resources Corporation (NYSE:RRC) has filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission. The registration statement, when declared effective by the Securities and Exchange Commission, will allow Range to sell an aggregate of $500 million of securities, including common stock, preferred stock, senior debt or subordinated debt. The universal shelf registration statement has been filed with the Securities and Exchange Commission but has not yet become effective. The securities covered by the registration statement may not be sold, nor may offers to buy be accepted prior to the time the registration statement becomes effective. Following the effectiveness of the registration statement, Range may periodically offer one or more of these securities in amounts, at prices, and on terms to be announced when, and if, the securities are offered. Range's previous universal shelf registration filed in September 1999 was fully utilized in the Company's equity offering in June 2004. At the time any offering is made under the newly filed universal shelf registration statement, the offering specifics, along with the use of proceeds of any securities will be set out in a prospectus supplement. The Company believes that the universal shelf registration statement will afford it flexibility in accessing capital markets in the future. Range Resources Corporation (NYSE:RRC) is an independent oil and gas company operating in the Permian, Midcontinent, Gulf Coast and Appalachian regions of the United States. * * * As reported in the Troubled Company Reporter's June 16, 2004 edition, Standard & Poor's Ratings Services assigned its 'B' rating to Range Resources Corp.'s (BB-/Stable/--) proposed $100 million senior subordinated notes due in 2013. The outlook is stable. Pro forma for the new notes, the oil and gas exploration and production company will have about $535 million of debt outstanding. Proceeds from the notes will be used to partially fund Range's acquisition of the 50% of Great Lakes Energy Partners LLC (GLEP) that it does not currently own. "The stable outlook reflects the expectation that Range will prudently manage its financial profile," said Standard & Poor's credit analyst John Thieroff. "Application of excess cash flow and proceeds from expected asset sales toward debt reduction is factored into the ratings." RCN CORP: Files Joint Reorganization Plan & Disclosure Statement ---------------------------------------------------------------- RCN Corporation and certain of its subsidiaries filed their Joint Plan of Reorganization and Disclosure Statement in the United States Bankruptcy Court for the Southern District of New York. The Company and the Official Creditors' Committee, a co-proponent of the Plan, agreed to this plan, which is consistent with RCN's previously announced restructuring terms. The Company continues to expect to emerge from its restructuring process during the fourth quarter of 2004. "We have worked very closely with the Committee, banks and other constituents to develop and file this plan," said David C. McCourt, RCN's Chairman and CEO. "This plan of reorganization is a win for all of us. As many telecom companies have done before us, we are restructuring our debt so we can remain a strong and innovative competitor in the marketplace. "We were one of the first companies to recognize that delivering bundled services over a superior state-of-the-art network is the essential strategy in today's telecom environment," continued Mr. McCourt. "With the restructuring of our debt, we will be in a position to continue delivering the triple-play bundle to residential customers and to continue rolling out new cutting-edge products." The Plan will reduce RCN's total debt by $1.2 billion through a debt for equity swap. As part of this restructuring, several additional non-operating subsidiaries have filed voluntary petitions for reorganization under Chapter 11. The Plan is subject to creditor approval and confirmation by the Bankruptcy Court. RCN does not anticipate any disruption of service to its customers. "RCN has worked diligently with its financial partners to ensure the timely filing of this plan of reorganization," said Russ Belinsky of Chanin Capital Partners, financial advisors to the Official Creditors' Committee. "We are eager to continue working closely with the Company to position RCN for future success when it emerges." Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. RCN CORP: Court Gives Final Okay to Blackstone Group's Employment ----------------------------------------------------------------- On a final basis, Judge Drain authorizes RCN Corp. and its debtor- affiliates to employ The Blackstone Group, LLP, as their financial advisor, nunc pro tunc to May 26, 2004. Judge Drain further rules that: (a) Blackstone will be compensated in accordance with the Application, subject to applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules for the Southern District of New York, guidelines established by the Court, the United States Trustee Fee Guidelines, and the orders of the Court, except that Blackstone will not be required to maintain time records in accordance with the United States Trustee Guidelines, provided that in its fee applications filed with the Court, Blackstone will present descriptions of those services provided on behalf of the Debtors, the approximate time expended in providing those services and the individuals who provided professional services on the Debtors' behalf. Blackstone will otherwise comply with, and be entitled to the benefits of, the Administrative Order under Sections 105 and 331 of the Bankruptcy Code Establishing Procedures for Interim Compensation and Reimbursement of Expenses of Professionals dated June 22, 2004. (b) The initial monthly fee will be $200,000 for the months from and including June 2004 through and including November 2004, and the final monthly fee will be $100,000 for each month thereafter. This is provided that Blackstone may seek by application to the Court to increase the amount of the Final Monthly Fee in the event of a significant change in the services to be provided in the Debtors' cases. There will be no presumptions created by these provisions to either grant or deny the application to increase the Final Monthly Fee, and all objections of the United States Trustee and all parties- in-interest are preserved until that time. (c) Under all circumstances and notwithstanding any claim under the Blackstone engagement letter for a higher fee, the Restructuring Fee and the Transaction Fee will be $7.8 million in the aggregate and be deemed earned -- and not subject to review other than under the disclosed provisions -- on the earlier of: -- a sale or sales of all or substantially all of the assets of the Debtors as a going concern; or -- upon the substantial consummation of a plan or plans of reorganization, as the case may be, for each of the Debtors. This is provided that no Restructuring Fees will be payable: * prior to, but will be paid on, the earlier of: (i) substantial consummation of a plan or plans of reorganization, as the case may be, for each of the Debtors; and (ii) the making of the initial distributions with respect to any of the Debtors under Section 726 of the Bankruptcy Code; or * in the event of a liquidation, other than in a sale or sales as a going concern, of any entity or entities individually or collectively constituting 50% or more of the subscribers of the United States businesses of RCN Corporation and its direct and indirect subsidiaries, including subscribers at its United States joint venture affiliates but only to the extent of its percentage ownership or membership interest in the affiliate, as of August 3, 2004. Other than the Monthly Fee and the Restructuring Fee, no other fees will be paid to Blackstone. (d) Except as provided and as otherwise modified, the terms of the Monthly Fee and the Restructuring Fees will not be subject to further challenge except under the standard of review set forth in Section 328(a) of the Bankruptcy Code, provided that if Blackstone seeks an increase in the Final Monthly Fee above $100,000 or if Blackstone requests payment of the Restructuring Fee following the termination of the engagement, the request will be subject to objection, review and approval under Section 330. (e) The United States Trustee retains all rights to object to Blackstone's interim and final fee applications, including expense reimbursement, the Monthly Fee and Restructuring Fees on all grounds including, but not limited to, the reasonableness standard provided for in Section 330. All compensation and reimbursement of expenses to be paid to Blackstone will be subject to prior Court approval. (f) In addition to any termination rights or provisions in the Engagement Letter attached to the Application or in the Application, Blackstone's retention as financial advisor to the Debtors will terminate if: -- the voluntary Chapter 11 case or cases of any entity or entities individually or collectively constituting 50% or more of the subscribers of the United States businesses of RCN Corporation and its direct and indirect subsidiaries as of August 3, 2004, will be dismissed without the consent of the Committee; -- a Chapter 11 trustee with plenary powers for all or substantially all of the Debtors' estates will be appointed, provided that the trustee may elect to retain Blackstone on the same or different terms as his or her financial advisor and provided further that all rights of the Committee to object to the retention and all terms of the retention are reserved; or -- the Chapter 11 case of any entity or entities individually or collectively constituting 50% or more of the subscribers of the United States businesses of RCN Corporation and its direct and indirect as of August 3, 2004, will be converted to a case or cases under Chapter 7 of the Bankruptcy Code. (g) All of Blackstone's requests for payment of indemnity pursuant to the Indemnification Agreement will be made by means of an application and will be subject to review by the Court to ensure that payment of the indemnity confirms to the terms of the Indemnification Agreement and is reasonable based on the circumstances of the litigation or settlement in respect of which indemnity is sought. This is provided that in no event will Blackstone be indemnified in the case of its own bad-faith, self- dealing, breach of fiduciary duty, gross negligence or willful misconduct. (h) In no event will Blackstone be indemnified if the Debtors or a representative of the Debtors' estates, asserts a claim for, and a court determines by final order that the claim arose out of, Blackstone's own bad-faith, self- dealing, breach of fiduciary duty, gross negligence or willful misconduct. (i) In the event that Blackstone seeks reimbursement for attorneys' fees from the Debtors pursuant to the Indemnification Agreement, the invoices and supporting time records from the attorneys will be included in Blackstone's own applications and the invoices and time records will be subject to the United Sates Trustee's guidelines for compensation and reimbursement of expenses and the Court's approval. As reported in the Troubled Company Reporter on June 22,2004, The Court permits the RCN Corp. Debtors to employ The Blackstone Group, LP, as their financial advisors, effective as of the Petition Date, on an interim basis. Blackstone will not be required to file time records in accordance with the U.S. Trustee Guidelines. Prior to entry of a Court order approving Blackstone's retention on a final basis, all compensation and reimbursement of expenses to be paid to Blackstone will be subject to prior Court approval. The U.S. Trustee retains all rights to object to Blackstone's interim and final fee applications, including expense reimbursement, on all grounds including, but not limited to, the reasonableness standard provided for in Section 330 of the Bankruptcy Code. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945- 7000) RCN ENTERTAINMENT: Case Summary & 14 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: RCN Entertainment, Inc. 80 West End Avenue New York, New York 10023 Bankruptcy Case No.: 04-15505 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- ON TV, Inc. 04-15506 21st Century Telecom Services, Inc. 04-15507 RCN Telecom Services Of Virginia, Inc. 04-15508 Type of Business: The Debtors are affiliates of RCN Corporation (Bankr. S.D.N.Y. Case No. 04-13638). See http://www.rcn.com/ Chapter 11 Petition Date: August 20, 2004 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtor's Counsel: Jay M. Goffman, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Time Square New York, New York 10036 Tel: (212) 735-3000 Fax: (212) 735-2000 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,000 to $500,000 Debtors' 14 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ International Family Trade $101,920 Entertainment Inc./ABC Family Photobition Bonded Services Trade $7,356 DHL Express (USA), Inc. Trade $1,239 US Fund for UNICEF Trade $1,052 The Weeks-Lerman Group, LLC Trade $250 Charles, Christopher Trade $195 Actors Connection Trade $181 Professional Sound Services Trade $163 Phantom Power, Grip & Trade $150 Electric The Siege Perilous L.L.C. Trade $130 John Clifford Photography Trade $125 All Rack Trade $120 Ship-It Trade $117 Gotham Sound & Communications Trade $90 SALTIRE INDUSTRIAL: Taps Togut Segal as Bankruptcy Attorneys ------------------------------------------------------------ Saltire Industrial, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York for permission to employ Togut, Segal & Segal LLP as its bankruptcy counsel. Togut Segal will: a) assist in the preparation of financial statements, schedules of assets and liabilities, statement of financial affairs, and other reports and documentation required by the Bankruptcy Code and the Bankruptcy Rules; b) represent the Debtor at hearings on matters pertaining to its affairs as debtor in possession; c) prosecute and defend litigation matters that may arise during this chapter 11 case; d) negotiate, formulate and confirm an appropriate chapter 11 plan for the Debtor; e) counsel and represent the Debtor concerning the assumption or rejection of executory contracts and leases, administration of claims, and numerous other bankruptcy related matters arising from this case; and f) perform such other bankruptcy services that are desirable and necessary for the efficient and economic administration of this chapter 11 case. The Debtor paid a $340,000 retainer to Togut Segal. The hourly rates of the firm's professionals range from: Position Billing Rate -------- ------------ Partners $590 to $720 Associates $195 to $505 Paralegals and law clerks $115 to $180 Headquartered in New York, New York, Saltire Industrial, manufactures diverse consumer and industrial products sold under a variety of brand names. The Company filed for protection on August 17, 2004 (Bankr. S.D.N.Y. Case No. 04-15389). When the Debtor filed for protection, it listed more than $1 million in estimated assets and more than $10 million in estimated debts. SIX FLAGS: Weak Operating Outlook Triggers S&P's Low-B Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on theme park operator Six Flags Inc., including its corporate credit rating to 'B' from 'B+', and removed the ratings from CreditWatch, where they were placed on July 19, 2004. The rating outlook is negative. The Oklahoma City, Okla.-based company's total debt and preferred stock as of June 30, 2004, was $2.48 billion. "The downgrade is based on the company's weak operating outlook for the full year 2004 and higher debt leverage," said Standard & Poor's credit analyst Hal Diamond. "In addition, despite lower capital spending, we expect discretionary cash flow will be slightly negative in 2004 due to reduced profitability, as well as the heavy interest expense and preferred dividend burden." The company has provided guidance of roughly an 8% decline in EBITDA for 2004, reflecting lower attendance and higher operating expenses. Attendance was down 4% in the first seven months of 2004, despite increased advertising expenses, reflecting the absence of major new rides and attractions and the weak operating environment. The outlook for the remainder of 2004 will likely continue to be challenging, and company will need to maintain marketing expenses and ticket price discounting in order to generate attendance. Discretionary cash flow has been minimal during the past four years despite reduced capital spending. Standard & Poor's is concerned that this strategy has resulted in underinvestment in the rides and attractions necessary to stimulate visitation. The company plans to raise capital spending from $75 million in 2004 to roughly $125 million in 2005, which includes $35 million to build a new water park adjacent to its existing Chicago-based theme park. This strategy, which is designed to stimulate attendance, will likely result in continued negative discretionary cash flow in 2005, and higher debt levels. SOLECTRON CORP: Secures 3-Year $500 Million Revolving Credit Loan ----------------------------------------------------------------- Solectron Corporation (NYSE:SLR), a leading provider of electronics manufacturing and integrated supply chain services, has secured a three-year, $500 million revolving credit facility. The facility, which will expire Aug. 20, 2007, amends and restates a $250 million credit agreement scheduled to expire in February 2005. The company said the new $500 million revolver includes more favorable terms than the previous facility and increases available liquidity. No amounts are currently drawn on the credit facility. The facility was co-arranged by Banc of America Securities LLC and J.P. Morgan Securities Inc. Scotia Capital and Citigroup were two other top lenders. In addition, 11 other lenders committed to the facility. About Solectron Solectron -- http://www.solectron.com/-- provides a full range of worldwide manufacturing and integrated supply chain services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, high-tech product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, California, and had sales from continuing operations of $9.8 billion in fiscal 2003. * * * As reported in the Troubled Company Reporter, June 28, 2004 edition, Fitch Ratings has affirmed Solectron Corporation's 'BB-' senior unsecured debt, 'BB+' senior secured bank credit facility, and the remaining 'B' adjustable conversion rate equity security units. The Rating Outlook is changed to Stable from Negative. Approximately $1.2 billion of debt is affected by Fitch's action. The Stable Rating Outlook reflects Solectron's improved financial performance, a more stable demand environment across key-end markets, and the company's progress related to asset sales. The company's ongoing asset divestiture program, announced during the fourth fiscal quarter of 2003, represented approximately $700 million of aggregate revenues and break-even cash flows. To date the company has received approximately $405 million of pretax cash proceeds, which is within range of Fitch's expectations, with three businesses still to sell. In addition, the company's refinancing risk has been reduced and financial flexibility improved as a result of meeting the $950 million liquid yield option notes put with cash in May 2004 and repurchasing approximately 94% of the outstanding ACES units, mostly with common stock, representing approximately $1.0 billion of debt. Solectron's ratings continue to reflect relatively weak albeit improving operating margins, driven by a continued competitive pricing environment and less than optimal capacity utilization rates, and a cash conversion cycle that lags those of its peers. Positively, the ratings are supported by Solectron's top tier position within the EMS industry, with significant scope and global footprint of operations, a lower revenue break-even point resulting from a combination of past restructuring and asset divestitures, a solid liquidity profile, and a manageable maturity schedule. Solectron's credit protection measures meaningfully improved in the third quarter, as a result of the aforementioned debt repayments and a 100 basis points sequential improvement in operating margins. Operating margins have improved in each of the past four quarters, rising to 1.8% in the third quarter of 2004 from -1.1% one year ago. Leverage improved significantly to 3.8 times(x) for the LTM ended May 31, 2004 versus 6.3x and 11.8x for the LTM periods ended May 30, 2003 and May 31, 2002, respectively. Interest coverage was 2.9x for the LTM ended May 31, 2004 versus 0.3x for the twelve months ended May 31, 2003. Fitch expects credit protection measures will remain stable and ultimately improve over the next several quarters, driven by continued demand strength in its key-end markets, especially communications and consumer, profitability enhancement resulting from higher capacity utilization rates, and incremental cost savings associated with past restructuring programs and LEAN manufacturing initiatives, as well as meaningfully lower debt service requirements. Liquidity as of May 31, 2004 consisted of unrestricted cash of $1.2 billion and an undrawn three-year $250 million secured revolving facility, expiring February 2005. The company also has various committed and uncommitted revolving lines of credit related to its foreign subsidiaries, totaling approximately $225 million. Free cash flow is likely to be modestly positive over the next several quarters; however, Fitch believes that in a rapidly accelerating demand environment profitability enhancement could increase more slowly than working capital requirements without continued reductions in cash conversion days. Furthermore, Solectron expects approximately $100 million of proceeds for the sale of the remaining three businesses in the divestiture program, none of which have a meaningful impact on cash flow. Total debt was $1.2 billion as of May 31, 2004, consisting primarily of $150 million of 7.375% senior notes due March 2006, $500 million of 9.625% senior notes due February 2009, and $450 million of 0.5% convertible senior notes due February 2034. In addition, approximately $63 million of ACES remain and are expected to be remarketed in August 2004 and mature in 2006. STRATUS TECH: S&P Affirms 'B' Rating & Revises Outlook to Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Maynard, Mass.-based Stratus Technologies Inc., and revised its outlook to negative from stable. "The outlook revision follows the company's recent announcement that a review of revenue recognition practices for certain customer transactions could lead to a financial restatement for fiscal 2004 and the first quarter of fiscal 2005," said Standard & Poor's credit analyst Martha Toll-Reed. The Stratus announcement indicated that the accounting issues identified relate to the timing of the recording of revenue, not whether the transactions can be recorded as revenue, and are not expected to result in changes to historical cash flow. The ratings on Stratus reflect a niche market position in the highly competitive global server market, which is dominated by competitors with significantly greater financial resources. These factors are partially offset by a significant base of more stable and recurring service revenues, and improved financial flexibility. With more than 20 years of operating history, privately owned Stratus is a provider of "fault tolerant" computers and related services for mission-critical applications. Stratus' server product sales have been adversely affected by weakness in high-end server spending and by an ongoing revenue transition from products based on its proprietary operating system to industry standard- based products. Stratus' strategic intent is to expand revenues and market share in the higher-growth Windows and Linux segments of the high-availability server market. The current rating reflects Standard & Poor's expectation that Stratus will be challenged to gain significant market share through sustained product innovation and differentiation. TANGO INC: Projects $6.5 Million Increase in FY 2005 Revenue ------------------------------------------------------------ Tango (OTCBB:TNGO) said revenue for August, 2004 positions the Company for the highest revenue year since inception. Tango is currently projecting to increase its annual revenue to about $6.5 million for the next fiscal year which translates into about a 40% increase from last year's revenue. The success Tango is demonstrating in Portland positions the Company to engage in discussions to acquire another company of equal size in order to double Tango's revenue, achieve economies of scale and post a sustained long term profit. Tango's plan is to become vertically integrated over the next six fiscal quarters. Tango will be looking to purchase a manufacturing operation to enable the Company to offer a complete manufacturing, embellishment and packing operation for distribution of garments to major branded apparel companies. Tango's growth strategy will allow it to become a global corporation with global assets. Tango's current research indicates that Central America is the most likely target for an acquisition because of its geographic location, accessibility of transportation, time zone issues and a lack of language barriers. "Traditionally the barrier for entry into this market has been extremely high; however, we feel that based upon our success, we should be able to secure the financing for our corporate objectives," said Todd Violette, Chairman and COO. He also said, "My personal goal is to build Tango into a vertically integrated, one-stop shopping and manufacturing facility for tee shirts, sweat clothing and other garments. This will uniquely position Tango to be able to provide a complete packaged product to its end user. The ability for the Company to achieve this objective will make it a dominant player within our industry, unmatched by any rival. I believe Tango's combination of its acquisition and organic growth strategy should enable us to meet our revenue objectives of $12 million to $18 million by this time next year, making us well positioned to trade on the American Stock Exchange." About Tango Tango Incorporated is a leading garment manufacturing and distribution company, with a goal of becoming a dominant leader in the industry. Tango pursues opportunities, both domestically and internationally. Tango provides major branded apparel the ability to produce the highest quality merchandise, while protecting the integrity of their brand. Tango serves as a trusted ally, providing them with quality production and on-time delivery, with maximum efficiency and reliability. Tango becomes a business partner by providing economic solutions for development of their brand. Tango provides a work environment that is rewarding to its employees and at the same time has an aggressive plan for growth. Tango is currently producing for many major brands, including Nike, Nike Jordan and RocaWear. In its Form 10-QSB for the quarterly period ended April 30, 2004, filed with the Securities and Exchange Commission, Tango reports: "As of April 31, 2003 and 2004, our auditors indicated in their audit report that our net loss and working capital deficit raised substantial doubt that we would be able to continue as a going concern." TELEWEST COMMS: Fitch Raises Long-Term Credit Rating to 'CCC+' -------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit ratings on Telewest Communications Networks Ltd. (TCN)--the U.K.-based telephony, cable-TV, and Internet provider--to 'CCC+' from 'SD' and placed the ratings on CreditWatch with positive implications, following the group's restructuring. At the same time, Standard & Poor's withdrew its ratings on related entities Telewest Communications PLC and Telewest Finance (Jersey) Ltd., including its 'SD' corporate credit rating on Telewest Communications PLC. This is because these entities will not form part of the restructured group. "The rating actions principally reflect the group's balance sheet and corporate restructuring, which involved a o3.8 billion debt (and interest) for equity swap," said Standard & Poor's credit analyst Simon Redmond. The ratings on TCN reflect the company's refinancing risk, material leverage, weak cash generation, and competitive operating environment. The ratings are supported, however, by the group's substantially complete network, customer base of about 1.75 million, and high average revenues per user. On July 15, 2004, the Telewest group completed its financial restructuring, which involved the extinguishment of o3,282 million of bonds and o479 million of interest. The post-restructuring liabilities and substantially all the assets were transferred to Telewest Global Inc., a new U.S.-listed holding company. Pro forma for the completion of the group's restructuring in July 2004, at June 30, 2004, Telewest Global had gross debt of about o2.0 billion ($3.6 billion) including o1.8 billion of bank debt at TCN. "To resolve the CreditWatch placement, we will closely monitor the group's refinancing plans; the benefits garnered from the restructuring; and the strategic and operational performance and expectations for the business," said Mr. Redmond. "Subject to a satisfactory review and successful refinancing, the ratings are likely to be raised by more than two notches." TOM'S FOODS: S&P Places Low-B Ratings on CreditWatch Negative ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on snack food manufacturing and distribution company Tom's Foods Inc. on CreditWatch with negative implications because of concerns about the company's ability to finance upcoming maturities. On CreditWatch are both the company's 'B' corporate credit and 'B-' senior secured debt ratings. CreditWatch with negative implications means that the ratings could be affirmed or lowered following the completion of Standard & Poor's review. Columbus, Ga.-based Tom's Foods had $66.8 million of total debt outstanding at June 19, 2004. "Standard & Poor's is concerned about Tom's Foods' ability to refinance its financial obligations given the imminent maturities for its unrated $17 million revolving credit facility and its rated $60 million in 10.5% senior secured notes due in November 2004," said Standard & Poor's credit analyst David Kang. The prior termination date for the revolving credit facility was Aug. 31, 2004, but the company has extended this to Sept. 30, 2004, while it works on a transaction to refinance both the credit facility and notes. Standard & Poor's believes it is likely the company will also be able to secure subsequent extensions of the credit facility. However, we remain concerned about the company's ability to successfully complete a comprehensive refinancing transaction within the next two months. Standard & Poor's will continue to monitor developments and review the company's near-term refinancing plans before resolving the CreditWatch listing. If Tom's Foods is unable to provide Standard & Poor's with a definitive refinancing plan within the next few weeks, the ratings could be lowered. Tom's Foods is a regional snack food manufacturing and distribution company. Its product categories include chips, sandwich crackers, baked goods, nuts, and candy. TRAINER WORTHAM: Fitch Affirms 'BB' Rating After Review Process --------------------------------------------------------------- Fitch Ratings affirms all classes of notes issued by Trainer Wortham First Republic CBO III, LTD., (Trainer Wortham III). These affirmations are the result of Fitch's review process. The following rating actions are effective immediately: --$195,000,000 class A-1 notes 'AAA'; --$60,750,000 class A-2 notes 'AAA'; --$9,000,000 class B notes 'AA'; --$8,000,000 class C notes 'A'; --$13,200,375 class D notes 'BBB'; --$16,000,000 preference shares 'BB'. Trainer Wortham III is a collateralized bond obligation (CBO) managed by Trainer Wortham & Company, Inc., which closed Feb. 19, 2003. The notes issued by Trainer Wortham III are supported by a portfolio composed of 71% residential mortgage-backed securities (RMBS), 11% commercial mortgage-backed securities (CMBS), 5% asset-backed securities (ABS), 3% real estate investment trusts (REITs), and 5% collateralized debt obligations (CDOs). Included in this review, Fitch 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. Fitch assumed various levels of losses on several manufactured housing assets for modeling purposes. During simulations, Trainer Wortham III was able to withstand these stresses at its original ratings. If actual write-downs exceed expectations, the risk level of the liabilities will be reassessed. Since closing, the collateral has continued to perform within expectations. As of the most recent trustee report dated July 27, 2004, there were no defaulted assets and assets rated 'CCC+' or lower represent approximately 4.46% of the portfolio. The weighted average rating factor has deteriorated from the April 24, 2003 trustee report level of 11.86 ('BBB+/BBB') to 16.30 ('BBB'), compared to a maximum required level of 14 ('BBB'). The class A/B overcollateralization (OC) ratio has decreased from 118% to 111.5%, compared to a required level of 103.5%. Trainer Wortham III has several robust structural features, which Fitch believes will aid the deal's future performance. During the reinvestment period, there is an additional collateral coverage test which if activated would divert interest proceeds towards the purchase of new collateral. Also during the reinvestment period, the distributions to equity are limited to a 20% dividend yield, and any excess interest proceeds are then used to redeem the class D notes. To date $2.049 million has been applied to redeem the class D notes through this mechanism. The ratings of the class A-1, A-2 and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class C and D 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. The rating of the preference shares addresses the likelihood that investors will ultimately receive the stated balance of principal by the legal final maturity date. 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. (For more information on the Fitch Vector Model, see 'Global Rating Criteria for Collateralised Debt Obligations', dated Aug. 1, 2003, available on the Fitch Ratings web site at -- http://www.fitchratings.com/ As a result of this analysis, Fitch has determined that the original ratings assigned to all classes of notes still reflect the current risk to noteholders. U.S. CANADIAN: Completes $2 Mil. Foreclosure Sale on Nevada Unit ---------------------------------------------------------------- U.S. Canadian Minerals Inc. (OTCBB: UCAD) completed the foreclosure sale on the property in Lincoln County, Nevada, upon which it holds an option to purchase, securing the property for Nevada Minerals Inc. UCAD was previously granted an option to purchase this property from Nevada Minerals Inc. for $2,000,000 This transaction clears the way for UCAD to consider the exercise of such option and the launching of operations on the property. UCAD is currently negotiating a land use agreement for access and use prior to exercising the option. Among the infrastructure comprising the property are 88,400 square feet of industrial and office buildings, certain riparian rights to more than 515.6 acre-feet of water annually drawn from two wells, and an electric power sub-station with a long-term, low- cost power supply contract. About UCAD U.S. Canadian Minerals is a multi-dimensional, mineral-based corporation headquartered in Las Vegas , Nevada . On its own and through Joint Ventures, UCAD is looking to expand and develop mining properties throughout the world. UCAD has already begun work on several projects, all of which are in various stages of development. * * * As reported in the Troubled Company Reporter on July 30, 2004, the Board of Directors of U.S. Canadian Minerals, Inc. dismissed Beckstead and Watts, LLP as its independent public accountants on June 11, 2004. The Company's Board of Directors participated in and approved the decision to dismiss Beckstead and Watts, LLP. Beckstead and Watts, LLP had been the Company's certifying accountant for the prior year. During the past year, Beckstead and Watts, LLPs' report on the Company's financial statements contained an explanatory paragraph questioning the Company's ability to continue as a going concern. U.S. PLASTIC: Settles AMPAC Balance with Property Turn-Over ----------------------------------------------------------- As previously reported, on or about May 25, 2004, AMPAC Capital Solutions, LLC, a Nevada limited liability company, received an assignment of all of rights, title and interest of Guaranty Business Credit Corporation, a Delaware corporation, in and to the Loan and Security Agreement dated December 19, 2002 and entered into between Guaranty Business Credit Corporation and U S Plastic Lumber (as amended, restated, modified and supplemented from time to time). U.S. Plastic Lumber has failed to pay the monthly payments due on the Term Advance and the Special Advance Subline on June 1, 2004 or the Extension Fee due on June 9, 2004 as required by the Loan Agreement, which failures constitute material breaches of the terms and conditions of the Loan Agreement. Due to the Company's default, AMPAC may exercise all of its rights and remedies including taking possession of and liquidating the Collateral specified in the Loan Agreement. The outstanding principal balance due from the USPL to AMPAC as of June 21, 2004 was approximately $7,097,202.89 plus interest, costs, fees and expenses. On June 17, 2004, U.S. Plastic Lumber entered into a Surrender of Collateral, Consent to Strict Foreclosure, and Release Agreement with AMPAC, which provides that USPL shall turn over certain personal property of USPL located at 14312 Central Ave., Chino, California, including, but not limited to, all of the furniture, equipment, leasehold improvements, inventory, accounts, chattels, security deposits, utilities deposits, credits and general intangibles and other assets of all kinds, tangible and intangible, used at, or in connection with, the business being operated at the Chino Facility by USPL, to AMPAC and that AMPAC shall retain said California Collateral in partial satisfaction of the Indebtedness. Specifically, the Consent Agreement provides that AMPAC shall retain the California Collateral in satisfaction of the $300,000.00 of the Indebtedness as provided for in Section 9620 of the California Uniform Commercial Code and that such amount shall be credited against, and reduce the amount of, the Indebtedness. USPL has waived and renounced, after default, all of their rights to notice of any kind, including a Notification of Disposition of Collateral, and their right to require disposition of collateral as provided for in Section 9624 of the California Uniform Commercial Code. USPL has also acknowledged that the credit being received for the California Collateral is fair and reasonable. Headquartered in Boca Raton, Florida, U.S. Plastic -- http://www.usplasticlumber.com/-- manufactures plastic lumber and is the technology leader in the industry. The Company filed for a chapter 11 protection on July 23, 2004 (Bankr. S.D. Fla. Case No. 04-33579). Stephen R. Leslie, Esq., at Stichter, Riedel, Blain & Prosser, P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for protection it listed $78,557,000 in total assets and $48,090,000 in total debts. UAL CORP: Asks Court to Okay Avoidance Action Settlement Protocol ----------------------------------------------------------------- UAL Corp. and its debtor-affiliates ask Judge Wedoff to establish omnibus procedures to settle claims and causes of action threatened in connection with, or brought by the Debtors in adversary proceedings. The actions seek to recover preferential transfers received by individuals or entities from the Debtors. James H.M. Sprayregen, Esq., at Kirkland & Ellis, relates that the Debtors made numerous payments to providers of goods and services within 90 days before the Petition Date. The Debtors, working with Kirkland, financial consultants Huron Consulting Group and management consultants Mercer Management Consulting, have thoroughly analyzed the 90-day payments to determine what portion should be pursued. The analysis examined more than 1,000 providers of goods and services, assessed the importance of the relationships, reviewed rejected or terminated contracts, and assessed potential preference defenses. As result of the study, the Debtors will pursue approximately $450,000,000 in potential preferences against 2,500 suppliers. Mr. Sprayregen assures the Court that the Official Committee of Unsecured Creditors participated extensively in the preference review process. The Debtors have responded to questions and shared detailed data and analysis with the Creditors' Committee and its advisors. The Debtors promise to continue this working relationship. Mr. Sprayregen notes that it would become prohibitively expensive if the Debtors are required to obtain Court approval to settle each and every Avoidance Claim. Such process would entail the costs of preparing, filing and serving documents for each settlement. The flood of paperwork would needlessly clog the Court's docket and impose unnecessary burden on the Court and its staff. The Avoidance Action Settlement Procedures provide that: -- The Debtors will settle an Avoidance Claim without further approval from the Creditors Committee or the Court if: (i) the Avoidance Claim payments to a party are $500,000 or less; or (ii) the Avoidance Claim exceeds the settlement amount by no more than $500,000. Settling Avoidance Claims exceeding the settlement amount by no more than $500,000 without further Committee or Court approval will give the Debtors flexibility to settle higher dollar amount claims where the discrepancy between the Avoidance Claim and the settlement amount is a relatively small percentage of the full Avoidance Claim. For example, the Debtors may settle a $4,900,000 Avoidance Claim for $4,500,000 without Court or the Creditors Committee approval; -- The Debtors will ask the Creditors Committee to review and approve, pursuant to a 10-day notice process, the settlement of Avoidance Claims greater than $500,000 but less than or equal to $2,500,000 -- where the Avoidance Claim exceeds the settlement amount by more than $500,000; and -- The Debtors will seek a Court order, after providing all affected parties with an opportunity to object, when dealing with Avoidance Claims over $2,500,000. 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 Debtors 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. 57; Bankruptcy Creditors' Service, Inc., 215/945- 7000) UAL CORP: Flight Attendants Demand Employee Pension Contributions ----------------------------------------------------------------- Greg Davidowitch, president of the Association of Flight Attendants-CWA United Airlines Master Executive Council, made the following statement regarding the bankruptcy court approval of a 30-day extension of the exclusivity period during which United Airlines management may file its own plan of reorganization and the approval of new debtor-in-possession financing: "Based upon a change in the terms of the loan, the court approved the DIP agreement. That change, as stated by the court, allows United to make its pension payments. Previously, the agreement prohibited United in effect from making pension contributions. Based upon this change in the terms, we call on CEO Glenn Tilton to immediately meet funding obligations that were due on July 15, 2004. "Flight attendants have already made enormous sacrifices to help the airline's finances. Workers' economic concessions totaling nearly $13 billion between 2003 and 2009 have left United with some of the lowest labor costs among the major airlines -- and workers feel those cuts on a daily basis. Even so, flight attendants continue to prove our dedication to our airline as we bring the passengers back. Management should not misread our dedication and industry-leading service records as complacency about the company's continued attack on our work rules, healthcare, wages and pensions. We have only begun to fight current managements' efforts to extract more concessions from flight attendants. We will continue to challenge current management decisions as they relate to United Airlines' successful exit from bankruptcy. "Limiting the extension of exclusivity period to 30 days during which United Airlines management may file its own plan of reorganization, although unsatisfactory, is a step in the right direction. We will continue to demonstrate to the court that flight attendants and other creditors must be provided the opportunity to explore plans other than those that have consistently failed under the direction of current management. The latitude afforded this management after their consistent failure to make good faith progress toward reorganization is astounding. "Flight attendants are currently participating in a web-based vote of no confidence in the senior management of United Airlines. The vote will conclude at 5 p.m. Central Time on August 24. Depending upon the outcome, AFA anticipates joining the motion by the International Association of Machinists and Aerospace Workers for the appointment of a trustee." More than 46,000 flight attendants, including the 21,000 flight attendants at United, join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. Visit us at http://www.unitedafa.org/ 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 Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. US AIRWAYS: Alabama's Aircraft Claims Allowed for $98.7 Million --------------------------------------------------------------- On November 4, 2002, U.S. Bank, N.A., as successor-in-interest to State Street Bank and Trust Company and State Street Bank and Trust Company of Connecticut, N.A., filed Claim No. 3372 with respect to aircraft bearing Tail Nos. N885US, N886US, N887US, N888AU, N889US, N890US, and N891US. After negotiation and discussion, U.S. Bank and the Reorganized US Airways and its debtor-affiliates agree to allow Claim No. 3372 in part as a general unsecured Class USAI-7 claim with respect to these Tail Nos.: Tail No. Amount -------- ------ N885US $14,097,461 N886US 14,097,461 N887US 14,097,461 N888AU 14,097,461 N889US 14,097,461 N890US 14,097,461 N891US 14,097,461 ----------- Total $98,682,227 Distribution on the Allowed Claims will be made to these entities according to these percentages: Percentage Name TIN Allowed ---- --- ---------- Teachers' Retirement 63-0474588 64.3% System of Alabama Employees' Retirement 63-0474399 32.1% System of Alabama Judicial Retirement 63-0693796 3.6% Fund of Alabama (US Airways Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) US AIRWAYS: S&P Downgrades Junk Ratings as Deadlines Approach ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on US Airways Group Inc. and its US Airways Inc. subsidiary, including lowering the corporate credit ratings of both entities to 'CCC' from 'CCC+'. The outlook is negative. The rating action reflects an increasing risk that crucial labor negotiations will not be completed successfully by Sept. 30, after which the airline could be in default under its federally guaranteed loan, financing arrangements for regional jet deliveries could be withdrawn, and a credit card processor could demand added cash collateral. In addition, the company faces pension payments of $133 million during the second half of 2004, a substantial portion of which is due Sept. 15. According to media reports, US Airways Group's Chairman, David Bronner, said on Aug. 18 that the airline's unions must agree to wage concessions by mid-September or the company would face bankruptcy and could well be liquidated. Ratings on senior classes of enhanced equipment trust certificates, which are either bond insured or well collateralized, were not lowered. "The lack of progress in labor talks and dwindling time in which agreements must be reached indicate a substantial and increasing risk of bankruptcy in the near term," said Standard & Poor's credit analyst Philip Baggaley. US Airways' pilots are in active negotiations with management, but talks with other labor groups are less advanced. The company has said that it expects to be in violation of certain financial covenants under its federally guaranteed loan following third-quarter 2004 financial results, and would accordingly need to seek another waiver or amendment from the Air Transportation Stabilization Board. Likewise, General Electric Capital Corp. (AAA/Stable/A-1+) and regional jet manufacturers providing financing for new deliveries of regional jets have waived covenant violations linked to credit ratings through Sept. 30, but may not extend them further without significant progress in labor talks. That financing could not likely be replaced and the regional jets are important to US Airways' turnaround plan. Liquidity is constrained; unrestricted cash totaled $975 million at June 30, 2004, but is likely to decline as the airline enters the seasonally weak period following Labor Day. The company faces pension payments of $133 million during the second half of 2004, a substantial (but undisclosed) portion of which is due Sept. 15. US Airways announced on Aug. 16, 2004, that it will ask the IRS for permission to reschedule $67.5 million of upcoming minimum pension payments relating to the 2004 plan year. If the request is granted, the company could offset $28.6 million of that amount against the 2003 plan year amounts that are due Sept. 15, 2004. Failure to make rapid progress toward needed labor concessions could prompt a further downgrade. In addition, covenant violations or moves toward out-of-court debt restructuring could lead to a downgrade. WAVELAND-INGOTS: Fitch's Average Rating Factor Stays at 'BB-' ------------------------------------------------------------- Fitch Ratings-New York-August 20, 2004: Fitch Ratings affirms six classes of notes issued by Waveland-INGOTS, Ltd.,. These affirmations are the result of Fitch's review process. The following rating actions are effective immediately: --$80,000,000 class A-1 notes affirmed at 'AAA'; --$201,750,000 class A-2 notes affirmed at 'AAA'; --$14,500,000 class B-1 notes affirmed at 'A'; --$10,000,000 class B-2 notes affirmed at 'A'; --$40,750,000 class C-1 notes affirmed at 'BBB'; --$3,000,000 class C-2 notes affirmed at 'BBB'. Waveland-INGOTS, Ltd. is a collateralized debt obligation managed by Pacific Investment Management Company, which closed June 24, 2003. Waveland-INGOTS, is composed of 93.5% loans and 6.5% 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. Since closing, the collateral has continued to perform. The weighted average rating factor has stayed the same at 'BB-'. As of the July 7, 2004 trustee report, Waveland-INGOTS $359 million portfolio contained no defaulted assets or assets rated 'CCC+' or below. Waveland-INGOTS weighted average spread test has decreased since closing, and is currently 2.84% relative to it trigger of 2.75%. As of the July 7, 2004 distribution date, there is currently $37.7 million balance in the principal collection account which has been received through prepayment, tenders and calls of eligible investments. The manager has indicated that they are currently in the process of selecting suitable investments to reduce the cash balance of the portfolio. After discussing Waveland-INGOTS with PIMCO, Fitch Ratings believes the asset manager will continue to be selective in the reinvestment process. PIMCO remains optimistic that they will be able to sell some low spread assets and reinvest in higher spread assets coming out in the new issue market to improve the WAS. PIMCO currently has a Leveraged Loan CDO Asset Manager rating of 'CAM 1' by Fitch. The rating of the class A-1 and A-2 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 ratings of the class B-1 and class B-2 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. The ratings of the class C-1 and class C-2 notes address the likelihood that investors will receive ultimate the stated balance of principal by the legal final maturity date. WEIRTON STEEL: Asks Court to Compel United Bank to Turn Over Funds ------------------------------------------------------------------ Weirton Steel Corporation created a Deferred Compensation Plan for Directors, which became effective as of January 1, 1991. The Debtor subsequently amended certain provisions of the Compensation Plan by resolution. Pursuant to the Compensation Plan, members of the Debtor's Board of Directors were provided the opportunity to defer all or a portion of the fees to which they were entitled for their services as Directors, and instead receive their fees in the form of Weirton common stock. The Compensation Plan was available only to Directors who were not also Weirton employees. Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, relates that in accordance with the terms of the Compensation Plan, the Debtor created a trust pursuant to that certain Trust Under Weirton Steel Corporation Deferred Compensation Plan for Directors. Section 3(a) of the Trust Agreement states that the Debtor will be considered "Insolvent" if: "(i) [Weirton] is unable to pay its debts as they become due, or (ii) [Weirton] is subject to a pending proceeding as a debtor under the United States Bankruptcy Code." As of June 30, 2004, the aggregate balance held by United Bank, Inc., in accordance with the Trust Agreement is approximately $230,187. By this motion, Weirton asks the Court to compel United Bank, successor by merger to United National Bank of Wheeling, as trustee, to turn over funds currently in United Bank's possession under the Trust Agreement. United Bank refused to comply with the Debtor's demand in the absence of a Court order directing payment of the Trust Assets to Weirton. Mr. Freedlander points out that the Trust Agreement expressly states that the Trust Assets are subject to the claims of the Debtor's general creditors in the event that Weirton Steel is a debtor under the Bankruptcy Code. Therefore, the Trust is a grantor, or "rabbi", trust, subject to the claims of the Debtor's general creditors, thus constituting property of Weirton's bankruptcy estate under Section 541 of the Bankruptcy Code. Section 542 of the Bankruptcy Code obligates United Bank to distribute the Trust Assets to the Debtor for the benefit of its creditors. 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.D. W. Va. Case No. 03-01802). Judge L. Edward Friend, II administers the Debtors cases. Robert G. Sable, Esq., Mark E. Freedlander, Esq., David I. Swan, Esq., James H. Joseph, Esq., at McGuireWoods LLP represent the Debtors in their restructuring efforts. (Weirton Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) ZIM CORP: Recurring Losses Raise Going Concern Doubt ---------------------------------------------------- In the three-month period ending June 30, 2004, ZIM Corporation reports a $992,203 loss. ZIM has incurred losses during each of the last five years. In addition, the Corporation generated negative cash flows from operations of $848,754 for the three months ended June 30, 2004 and has generated negative cash flows from operations during each of the last five years. The Corporation's management team has focused the direction of the Corporation from a mature database and application development technology player to a provider of interactive mobile messaging. To establish the interactive mobile messaging, the Corporation needs substantial funds for marketing and business development. All of the factors above raise substantial doubt about the Corporation's ability to continue as a going concern. Management's plans to address these issues include continuing to raise capital through the placement of equity, obtaining additional advances from related parties and, if necessary, renegotiating the repayment terms of accounts payable and accrued liabilities. The Corporation's ability to continue as a going concern is subject to management's ability to successfully implement the above plans. Failure to implement these plans could have a material adverse effect on the Corporation's position and/or results of operations and may necessitate a reduction in operating activities. The consolidated financial statements do not include adjustments that may be required if the assets are not realized and the liabilities settled in the normal course of operations. In the longer term, the Corporation has to generate the level of sales which would result in cash self sufficiency and it may need to continue to raise capital by selling additional equity or by obtaining credit facilities. The Corporation's future capital requirements will depend on many factors, including, but not limited to, the market acceptance of its software, the level of its promotional activities and advertising required to support its software. No assurance can be given that any such additional funding will be available or that, if available, it can be obtained on terms favorable to the Corporation. Auditor Turmoil Effective June 1, 2003, ZIM Corporation engaged Raymond Chabot Grant Thornton General Partnership, as the independent accounting firm for ZIM Corporation, ZIM Technologies and Private Capital. Also effective June 1, 2003, ZIM dismissed Kenneth A. Gill, Chartered Accountant, the Company's former independent accounting firm, and David I. Tow, C.P.A., Private Capital's former independent accounting firm. On May 1, 2003, KPMG LLP resigned as ZIM Technologies' independent accounting firm. The decision to terminate Kenneth A. Gill, Chartered Accountant, and David I. Tow, C.P.A., was approved by ZIM's Audit Committee and its entire Board of Directors. The decision to retain Raymond Chabot Grant Thornton General Partnership was approved by the Company's Audit Committee and its entire Board of Directors. Neither the report of Kenneth A. Gill, Chartered Accountant, for the periods ended on April 30, 2003, January 31, 2003 and October 31, 2002, nor the reports of KPMG LLP for the years ended May 31, 2002 and May 31, 2001, contained an adverse opinion or disclaimer of opinion, nor were the reports modified as to uncertainty, audit scope or accounting principles, except for an auditor's comment for United States readers in regard to the ability of ZIM Corporation or ZIM Technologies, as applicable, to continue as a going concern. David I. Tow, C.P.A. issued no reports on behalf of Private Capital subsequent to his retention on December 16, 2002, and therefore issued no report that contained any adverse opinion, disclaimer of opinion, or modification as to uncertainty, audit scope or accounting principles. David I. Tow died on January 14, 2004, and his accounting practice ceased upon his death. As such, there is no one available to comment on the Company's statements with respect to David I. Tow C.P.A.'s limited work on behalf of Private Capital. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Akamai Technologies AKAM (175) 279 140 Amazon.com AMZN (1,036) 2,162 568 Blount International BLT (397) 400 83 Centennial Comm CYCL (579) 1,447 (99) Choice Hotels CHH (118) 267 (42) Cincinnati Bell CBB (640) 2,074 (47) Compass Minerals CMP (144) 687 106 Cubist Pharmacy CBST (18) 223 91 Delta Air Lines DAL (384) 26,356 (1,657) Deluxe Corp DLX (298) 563 (309) Domino Pizza DPZ (718) 448 (1) Echostar Comm DISH (1,033) 7,585 1,601 Graftech International GTI (97) 967 94 Hawaian Holdings HA (143) 256 (114) Idenix Pharm IDIX (28) 67 30 Imax Corporation IMAX (52) 250 47 Kinetic Concepts KCI (246) 665 228 Lucent Tech. Inc. LU (3,371) 15,765 2,818 Millennium Chem. MCH (46) 2,398 637 McMoRan Exploration MMR (54) 169 83 Northwest Airlines NWAC (1,775) 14,154 (297) Nextel Partner NXTP (13) 1,889 277 ON Semiconductor ONNN (499) 1,161 213 Pinnacle Airline PNCL (48) 128 13 Rightnow Tech. RNOW (13) 29 (9) Sepracor Inc SEPR (619) 1,020 256 St. John Knits Int'l SJKI (65) 234 69 UST Inc. UST (115) 1,726 727 Vector Group Ltd. VGR (3) 628 142 WR Grace & Co. GRA (183) 2,874 658 Western Wireless WWCA (225) 2,522 15 ********* 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. 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