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/raid1/www/Hosts/bankrupt/TCR_Public/040827.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, August 27, 2004, Vol. 8, No. 182 Headlines AIR CANADA: Pilots Ass'n Wants Rights in Plan Proceeds Confirmed ALDERWOODS GROUP: Adopts FIN 46R in Accounting Policies AMKOR TECHNOLOGY: John Boruch Returns to Post as President & COO ASSET SECURITIZATION: Strong Performances Prompts Fitch Upgrade BEAR STEARNS: Fitch Assigns Low-B Ratings on Six Cert. Classes BLEECKER STRUCTURED: Fitch Junks $39.3M Class C Fixed-Rate Notes CANADA PAYPHONE: Asks Quebec & British Columbia Courts to OK Sale CEC IND: Restructured Company Changes Name to Advantage Capital CHAS COAL: Wants Until Sept. 30 to Make Lease-Related Decisions CINRAM INTERNATIONAL: Amends $1.175 Billion Credit Facilities CINRAM INT'L: S&P Affirms BB Long-Term Corporate Credit Rating CORNERSTONE PROPANE: Plan Confirmation Hearing on September 30 CORNERSTONE: Court Approves Plan Voting & Tabulation Procedures CSFB MORTGAGE: Moody's Puts Low-B Ratings on 4 Classes & Junks 2 CSFB MORTGAGE: Fitch Puts Low-B Ratings on Five Cert. Classes DELAWARE RIBBON: Case Summary & 20 Largest Unsecured Creditors DENALI CAPITAL: S&P Puts BB Rating on $8 Million Class D Notes DLJ MORTGAGE: S&P Raises Class B-4 Cert. Rating a Notch to B+ DONINI INC: Inks Food Brokerage Agreement with Premier Marketing DORADO MARINE INC: Voluntary Chapter 11 Case Summary DP8 LLC: Signs-Up Schian Walker as Bankruptcy Attorneys ELITE MODEL: Sells Substantially All Assets to Creative World FEDERAL-MOGUL: Plan Proposes to Compromise T&N Pension Obligations FIRST VIRTUAL: Common Stock Begins Trading on Pink Sheets FLEMING COS: Continental Holds $91K Admin & $753K Unsecured Claims FLINTKOTE MINES: Case Summary & 20 Largest Unsecured Creditors FRANCHISE FINANCE: Moody's Junks 11 Note Classes & Puts Low-B on 5 FRANCHISE PICTURES: Files for Bankruptcy after Losing Fraud Case FRANCHISE PICTURES: Case Summary & Largest Unsecured Creditors GREENSBURG COUNTRY: Case Summary & 20 Largest Unsecured Creditors HAWAIIAN AIRLINES: Parent & Trustee Agree on Joint Reorg. Plan HILTON HOTELS: Moody's Reviews Low-B Ratings for Possible Upgrade IMPAC MEDICAL: Nasdaq Threatens to Halt Stock Trading on Sept. 2 INTERNATIONAL WIRE: Court Confirms Reorganization Plan KAISER: Retirees Comm. Wants to Retain ABD Insurance as Consultant KING SERVICE: Taps Friedman Hirschen as Environmental Counsel MANDALAY RESORT: Will Hold 2nd Qtr. Conference Call on Sept. 2 MICROAGE INC: Publishes Notice of Impending Final Distribution MICROAGE INC: Wants to Restrict Who Gets Final Distributions MIRANT CORP: Appoints Michele Burns as Chief Restructuring Officer MIRANT CORP: Gets Court Nod to Implement Employee Severance Plan MORGAN STANLEY: S&P Affirms Low-B Ratings on Three Cert. Classes NATIONAL CENTURY: Avidity Wants to Recover Preferential Transfers NORTEL NETWORKS: Providing Wireless Services to T-Mobile USA NORTHWEST AIRLINES: Sues Sabre Travel for Breach of Contract NORTHWEST AIRLINES: Proposed Fees Would Violate Worldspan Pacts OMNI FACILITY: Gets Nod to Obtain $5.3 Million of DIP Financing OWENS CORNING: Bondholders Press for an Asbestos Claims Bar Date PACIFIC GAS: Says Confirmation Order Should've Stopped 31 Lawsuits PAXSON COMMS: Liquidity Troubles Prompt S&P's B- Credit Rating PEGASUS SATELLITE: Court Approves Final DirecTV-NRTC Settlement PENINSULA GAMING: S&P Lowers Credit & Debt Ratings One Notch to B PG&E NATIONAL: NEG & ET Holdings Object to $6.8MM Hoffman Claims PURE TECH: U.S. Patent Office Grants P-Wave(R) Technology Patent QWEST COMMS: Subsidiary Pays $569 Million Cash for 7.20% Notes R.J.REYNOLDS: Moody's Affirms Ba2 Sr. Sec. & B2 Sr. Unsec. Ratings RELIANCE: Liquidator Wants to Pay $375MM to Guaranty Associations RHYNO CBO: Fitch Junks $127M Class A-3 & $37M Class B Notes RIVERSIDE FOREST: Tolko Offers C$29 Per Share to Buy Company RIVERSIDE FOREST: Says Tolko's Offer is Inadequate RIVERSIDE FOREST: S&P Places B+ Credit & Debt Ratings on Watch SARDONYX ASSOCIATES: Case Summary & Largest Unsecured Creditors SCHLOTZSKY'S: Look for Bankruptcy Schedules by October 2 SOLUTIA INC: Gets Court Nod to Pay Letter of Credit Claims SOTAV LTD: Case Summary & 2 Largest Unsecured Creditors STANDARD MOTOR: Seeks New Accountant Following KPMG's Resignation SUNRISE CDO: Fitch's B- Rating on $14.79M Notes on Watch Negative TANGO INC: Sets Guidelines for Potential Acquisition Targets THREE PROPERTIES: Section 341(a) Meeting Slated for September 9 TRICOM S.A.: Names Gerald Gitner Independent Non-Exec. Director TRUE TEMPER: S&P Rates Bank Debt at B & Sub. Debt at CCC+ U.S. CANADIAN: Inks Land Use Pact for Property in Rachael, Nevada UAL CORP: Fee Review Committee Issues Jan. to Mar. 2004 Report UNIFLEX, INC: Gets Court Approval to Pay Employee Benefits UNITED AGRI: Further Extends Senior Debt Tender Offer to Sept. 3 VHJ ENERGY: Turns to Gale Wilson for Accounting Services WASTE SERVICES: Senior Lenders Waive Covenants Until October 5 WEIRTON STEEL: U.S. Govt. Objects to Debtors' Liquidation Plan * BOOK REVIEW: From Industry to Alchemy: Burgmaster, A Machine Tool Company ********* AIR CANADA: Pilots Ass'n Wants Rights in Plan Proceeds Confirmed ---------------------------------------------------------------- The Air Canada Pilots Association asks the Ontario Superior Court of Justice to: -- confirm the unions' capacities to deal with the proceeds received under the Applicants' Consolidated Plan of Reorganization, Compromise and Arrangement; and -- declare that the collective agreements between the Applicants and the Unions as well as the clean slate agreements the parties entered into in May 2004 are Unaffected Contracts under the Plan. Richard B. Jones, Esq., at Jones, Rogers, LLP, in Toronto, Ontario, asserts that, while the Plan compromises the rights of creditors, including ACPA, the Plan is not intended to derogate from the obligations of the Applicants under amended or new contracts or written agreements entered into in the course of the CCAA proceedings under the supervision and direction of the CCAA Court. ACPA asks the CCAA Court to rule that the obligations of the Applicants and Ernst & Young, Inc., as Monitor, under the Plan -- including any obligations under the Plan arising on the exercise of ACE Rights under the Rights Offering -- in respect of the Unions' Claims will be fully satisfied and discharged on the delivery of the ACE Shares due in respect of the Claims to the Union. The ACPA asks the Court to direct the Monitor to deliver the ACE Shares to the applicable Union or as the Union directs in writing. Creditor Union Reference No. Claim Amount ----- ------------- ------------ Air Canada Pilots Association 10638 CN$300,004,455 International Association of 10726 190,700,000 Machinists and Aerospace Workers National Automobile, Aerospace 10694 236,100,000 and Agricultural Implement Workers Union of Canada (CAW/TCA - Canada) Canadian Airline Dispatchers 12189 8,030,000 Association Canadian Union of Public Employees 9801 126,820,389 Teamsters 9544 13,500,000 Air Line Pilots Association 4-009138 61,900,000 Ten days before the Initial Distribution Date, the Monitor must advise the Unions of the cash amount required for any tax withholding obligations referred to in the Plan. The Unions should be entitled to satisfy their obligations under the Plan by making escrow or trust arrangements in the form and amount satisfactory to the Monitor. The Monitor, as Distributing Agent, will then distribute the ACE Shares. ACPA asks Mr. Justice Farley to permit the Unions, which have filed Claims and received ACE Shares or ACE Rights, to: -- take delivery of the ACE Shares or exercise the ACE Rights in accordance with the terms of the Plan; and -- sell or otherwise deal with the ACE Shares together with the proceeds from any of those dealings and to determine the manner of any allocation of the ACE Shares or proceeds. The Applicants and the Unions will seek further directions from the Court no later than 10 days before the Initial Distribution Date regarding the compliance with certain reporting obligations. Nothing in the Sanction Order or the Plan should be construed or have the effect of impairing or reducing the jurisdiction of arbitrators appointed under the collective agreements, the Canada Industrial Relations Board or the Federal Court of Canada in any future proceedings brought by the Applicants or the Unions under the Canada Labour Code. 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. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALDERWOODS GROUP: Adopts FIN 46R in Accounting Policies ------------------------------------------------------- In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, "Consolidation of Variable Interest Entities," which was revised in December 2003. FIN No. 46R clarifies the application of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to enterprises that have a variable interest in variable interest entities, and is effective no later than the end of the first reporting period that ends after March 15, 2004. Alderwoods Group, Inc., elected to adopt FIN No. 46R at the beginning of its 2004 fiscal year on January 4, 2004. The adoption of FIN No. 46R resulted in the consolidation of the funeral and cemetery merchandise and service, and perpetual care trusts in the company's consolidated balance sheet, but did not change the legal relationships among the funeral trusts, cemetery trusts, perpetual care trusts, the company, and its holders of pre-need contracts. Alderwoods does not consolidate certain funeral trusts for which the company does not absorb a majority of their expected losses and, therefore, is not considered a primary beneficiary of these funeral trusts under FIN No. 46R. The adoption of FIN No. 46R has not materially impacted Alderwoods' net income or its consolidated statement of cash flows. In connection with the adoption and application of FIN 46R, Alderwoods engaged in discussions with the staff of the Securities and Exchange Commission over several months. In a July 21, 2004, letter to SEC Chief Accountant Donald T. Nicolaisen, Alderwoods advises the SEC of its conclusions on the application of FIN 46R to its statutorily required trusts: July 21, 2004 Mr. Donald T. Nicolaisen Chief Accountant Office of the Chief Accountant Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549-1103 Via FAX-(202) 942-9656 Dear Mr. Nicolaisen: Based on discussions with the staff of the Securities and Exchange Commission ("SEC Staff") over the past several months, culminating with a meeting with the SEC Staff on April 29, 2004, we have prepared this letter summarizing the application of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities ("FIN 46R"), to statutorily required trusts (the "Trusts") utilized by the undersigned registrants in the deathcare industry (the "Registrants"). The information included herein represents our conclusions regarding the accounting for the Trusts under the requirements of FIN 46R. We acknowledge that our accounting conclusions that follow are an industry-specific application of the literature discussed herein and should not be analogized to in other situations. Based on these discussions, we understand the SEC Staff will not object to these conclusions. Background A significant component of the Registrants' businesses is the sale on a pre-need basis of funeral and cemetery merchandise and services and cemetery interment rights and property. State laws generally require all or a substantial portion of the funds collected for pre-need funeral and cemetery merchandise and service contracts to be placed into merchandise and service trusts ("M&S Trusts"). State laws also require a portion of the funds collected from sales of cemetery interment rights and property to be placed into perpetual care trusts ("Care Trusts"). M&S Trusts are required by state statutes and are established explicitly to protect pre-need consumers by limiting access by funeral and cemetery operators to the funds until the merchandise is delivered or services are performed. The funds deposited into the M&S Trusts are invested in accordance with the investment requirements established by statute or, where the prudent investor rule is applicable, the trustees' judgment. In exchange for the amounts paid by the customer plus the accumulated earnings on these amounts, the Registrants are contractually obligated to deliver the merchandise or perform the services stipulated by the contract terms. Economically, the M&S Trust earnings compensate the funeral or cemetery operator for increases in the costs of providing the merchandise or performing the services because funeral and cemetery operators are contractually obligated to provide such merchandise and services in the future at a price established at the time the contract is entered into with the pre-need consumer. The assets of the M&S Trusts are not subject to the claims of the Registrants' creditors. Care Trusts are also required by state statutes and obligate the Registrants to remit a portion of the proceeds from the sale of cemetery interment rights and property to such Care Trusts. Earnings on the Care Trust corpus are used for the perpetual upkeep of the cemetery grounds. Except in very limited circumstances, neither the cemetery operators nor the customers have any right to the Care Trust corpus and the Care Trusts' assets are not subject to the claims of the Registrants' creditors. Adoption of FIN 46R Under the provisions of FIN 46R, M&S Trusts and Care Trusts are variable interest entities because the Trusts meet the conditions of paragraphs 5(a) and 5(b)(1) of FIN 46R. That is, as a group, the equity investors (if any) do not have sufficient equity at risk and do not have the direct or indirect ability through voting or similar rights to make decisions about the Trusts' activities that have a significant effect on the success of the Trusts. FIN 46R requires the Registrants to consolidate M&S Trusts and Care Trusts for which the Registrants are the primary beneficiaries (i.e., those for which the Registrants absorb a majority of the Trusts' expected losses). A Registrant is the primary beneficiary of a given Trust whenever a majority of the assets of the Trust are attributable to deposits for customers of the Registrant. If the assets of a given Trust arise as a result of deposits for customers of multiple Registrants or multiple funeral and cemetery operators, such that a majority of the assets of the Trust are not attributable to customers of any single Registrant or single funeral and cemetery operator, then no Registrant would absorb a majority of the Trust's expected losses (i.e., the Trust would not have a primary beneficiary) and the Trust would not be consolidated under the provisions of FIN 46R. Although FIN 46R requires consolidation of most of the M&S Trusts and the Care Trusts, it does not change the legal relationships among the Trusts, the Registrants and their customers. In the case of the M&S Trusts, the customers are the legal beneficiaries. In the case of the Care Trusts, the Registrants do not have a legal right to the trust assets. For these reasons, upon consolidation of the Trusts, the Registrants are recognizing non-controlling interests in their financial statements to reflect the third party interests in these Trusts in accordance with FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liability and Equity. As discussed with the SEC Staff, the Registrants are classifying deposits to M&S Trusts as liability non- controlling interests and are classifying deposits to Care Trusts as equity non-controlling interests. The Registrants are continuing to account for amounts received from customers prior to delivery of merchandise or services that are not deposited in either M&S Trusts or Care Trusts as deferred revenue. In consolidation, the Registrants recognize realized investment earnings of the M&S Trusts within Other income, net. The Registrants then recognize a corresponding expense within Other income, net that represents the realized earnings of those trusts that are attributable to the non- controlling interest holders. The corresponding credit for this expense is Non-controlling interest in funeral and cemetery trusts for M&S Trusts or Non-controlling interest in perpetual care trusts for Care Trusts. The sum of these expenses recorded in Other income, net will offset the realized earnings of such trusts also recognized within Other income, net. Accordingly, the Registrants' income statements are not affected by consolidation of the Trusts in accordance with FIN 46R (i.e., the application of this accounting policy is income statement neutral to the Registrants' financial statements). To the extent the earnings of the Trusts are distributed prior to the delivery of merchandise and/or services, a corresponding amount of non-controlling interest will be reclassified to deferred revenue, until it is recognizable as revenue. In the case of M&S Trusts, the Registrants recognize as revenues amounts previously attributed to non-controlling interests and deferred revenues upon the performance of services and delivery of merchandise, including earnings accumulated in these trusts. In the case of the Care Trusts, distributable earnings are recognized in cemetery revenues to the extent of qualifying cemetery maintenance costs. Both the M&S Trusts and the Care Trusts hold investments in marketable securities that generally are classified as available-for-sale by the Registrants under the requirements of FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities ("FAS 115"). In accordance with the provisions of FAS 115, available-for-sale securities of the Trusts are initially recorded at fair value, with unrealized gains and losses excluded from earnings of the Registrants and initially recorded as a component of Accumulated other comprehensive income (loss) in the consolidated balance sheet. By analogy to the guidance in EITF Topic D-41, Adjustments in Assets and Liabilities for Holding Gains and Losses as Related to the Implementation of FASB Statement No. 115 ("Topic D-41"), unrealized gains and losses on available-for-sale securities of the Trusts attributable to the non-controlling interest holders are not recorded as Accumulated other comprehensive income (loss), but are recorded as an adjustment to either Non-controlling interest in funeral and cemetery trusts for M&S Trusts or Non-controlling interest in perpetual care trusts for Care Trusts. Therefore, unrealized gains and losses attributable to the non-controlling interest holders are reclassified from Accumulated other comprehensive income (loss) to either Non-controlling interest in funeral and cemetery trusts for M&S Trusts or Non-controlling interest in perpetual care trusts for Care Trusts. The gross effect from applying Topic D-41 on the Registrants' Accumulated other comprehensive income (loss) will be disclosed in the Registrants' footnotes to their financial statements, but the Registrants' Accumulated other comprehensive income (loss) on the face of the balance sheet is ultimately not affected by consolidation of the Trusts. * * * * * We respectfully thank the SEC Staff for their time and attention over the last several months regarding the application of FIN 46R to the Trusts. This letter sets forth the accounting policies that we, the Registrants, will follow as a result of the adoption of FIN 46R. Service Corporation International Alderwoods Group, Inc. Stewart Enterprises, Inc. Carriage Services, Inc. cc: PricewaterhouseCoopers LLP KPMG LLP (Loewen Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service, Inc., 215/945-7000) About Alderwoods Group The Company provides funeral and cemetery services and products on both an at-need and pre-need basis. In support of the pre-need business, it operates insurance subsidiaries that provide customers with a funding mechanism for the pre-arrangement of funerals. * * * As reported in the Troubled Company Reporter on July 27, 2004, Standard & Poor's Ratings Services it affirmed its 'B+' corporate credit rating on the funeral home and cemetery operator Alderwoods Group, Inc., and assigned its 'B' debt rating to the company's proposed $200 million senior unsecured notes due in 2012. At the same time, Standard & Poor's also assigned its 'BB-' senior secured bank loan rating and its '1' recovery rating to Alderwoods' proposed $75 million revolving credit facility, which matures in 2008, and to its proposed term loan B, which matures in 2009. The existing term loan had $242 million outstanding at March 27, 2004, but will be increased in size. The bank loan ratings indicate that Standard & Poor's expects a full recovery of principal in the event of a default, based on an assessment of the loan collateral package and estimated asset values in a distressed default scenario. The company is expected to use the proceeds from the new financings to redeem $320 million of 12.25% senior unsecured notes, repay a $25 million subordinated loan, and fund transaction costs. As of March 27, 2004, the company had $614 million of debt outstanding. The ratings outlook has been revised to positive from stable to indicate that, in time, the ratings could be raised if Alderwoods can continue to demonstrate improved operating performance and if it can sustainably deleverage. The decline in leverage would give the company additional financial capacity to weather adverse competitive factors, such as periodic weaknesses in death rates and rising consumer preference for lower cost death-care services. "The low-speculative-grade ratings on funeral and cemetery services provider Alderwoods Group, Inc., reflect its highly leveraged financial profile, uncertainties related to the longer term success of a new business plan, and the company's vulnerability to periods of business weakness," said Standard & Poor's credit analyst Jill Unferth. "These factors are mitigated by the relatively favorable long-term predictability of the funeral home and cemetery business." AMKOR TECHNOLOGY: John Boruch Returns to Post as President & COO ---------------------------------------------------------------- Amkor Technology, Inc. (Nasdaq: AMKR) reported a leadership change. Bruce Freyman, former President and COO, has resigned from Amkor. John Boruch, Vice Chairman, has moved back into his former role as President and COO. "I am glad to be back in the role as President and COO of Amkor, and I'm excited about the future of our company. My initial focus is to articulate a clear direction for the future through a renewed focus on total customer satisfaction," said John Boruch. "As an industry veteran, John has the commitment and wisdom to lead our company forward to the next level," said Jim Kim, Amkor's Chairman and CEO. "I am confident that his leadership and experience will generate continued growth and success for Amkor." Mr. Boruch joined Amkor in 1984 as Corporate Vice President of Sales. He was promoted to President 1992, and Chief Operating Officer in 1999. He was most recently promoted to Vice Chairman in January of 2004. About Amkor Amkor Technology, Inc., (Nasdaq: AMKR) is a leading provider of contract semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronic design, manufacturing and support services. More information on Amkor is available from the company's SEC filings and on Amkor's web site: http://www.amkor.com/ Amkor's $200 million issue of 10-1/2% Senior Subordinated Notes due May 1, 2009, carry a B3 rating from Moody's Investors Service and a CCC+ rating from Standard & Poor's Ratings Services. Those notes currently trade at 92 to 93 cents-on-the-dollar for about a 12.5% yield. ASSET SECURITIZATION: Strong Performances Prompts Fitch Upgrade --------------------------------------------------------------- Fitch Ratings upgrades and removes from Rating Watch Positive Asset Securitization Corp.'s commercial mortgage pass-through certificates, series 1995-MD IV as follows: -- $29 million class A-5 to 'AA' from 'BBB'; -- $67.7 million class B-1 to 'BBB' from 'B'. In addition, Fitch affirms these classes: -- $132.8 million class A-1 'AAA'; -- $67.7 million class A-2 'AAA'; -- $53.2 million class A-3 'AAA'; -- $58 million class A-4 'AAA'; -- Interest only class A-CS2 'AAA'. The $32.4 million class B-2, $836 class B-2H and interest only class A-CS3 remain at 'D' because of principal losses resulting from the discounted payoff of the Hardage Hotel Portfolio in July 2003. The upgrades reflect the strong performance of three of the four remaining loans in the pool, representing 76% of the pool. The Crescent and Hallwood loans (52.8% and 17.4%, respectively), and the G&L loan (5.8%), which is defeased, all have investment grade credit assessments. Both, the Crescent and Hallwood loans, continue to have Fitch stressed debt service coverage ratios -- DSCR -- well above issuance levels. The Crescent's year-end 2003 Fitch stressed DSCR is 1.82 times (x) as compared to 1.42x at issuance and Hallwood's YE 2003 DSCR is 2.04x versus 1.40x at issuance. Of some concern is the drop in occupancy to 81.5%, as of June 2004, from 89.4% at YE 2002 for the Hallwood portfolio. The performance of the Columbia Sussex loan (24.9%) continued to decline through YE 2003 with Fitch's stressed net cash flow -- NCF -- down 8.6% from YE 2002. The loan is fully amortizing over a twenty-year schedule and has eleven years remaining until maturity. As a result of the 25% paydown on the loan, the Fitch YE 2003 stressed DSCR of 1.61x is only slightly lower than the 1.66x reported at issuance. The DSCR is based on Fitch adjusted net cash flow and a stressed debt service based on the current loan balance and a 10.48% hypothetical mortgage constant. Although YE 2003 occupancy improved from YE 2002, the average daily rate -- ADR -- decreased by 6.1% from YE 2002, resulting in a decrease in revenue per available room -- RevPAR --, approximately equal to the RevPAR at issuance. BEAR STEARNS: Fitch Assigns Low-B Ratings on Six Cert. Classes -------------------------------------------------------------- Fitch Ratings affirms Bear Stearns Commercial Mortgage Securities commercial mortgage pass-through certificates, series 2002-TOP8, as follows: -- $166.6 million class A-1 at 'AAA'; -- $538.8 million class A-2 at 'AAA'; -- Interest only (I/O) class X-1 at 'AAA'; -- I/O class X-2 at 'AAA'; -- $25.3 million class B at 'AA'; -- $28.4 million class C at 'A'; -- $9.5 million class D at 'A-'; -- $11.6 million class E at 'BBB+'; -- $6.3 million class F at 'BBB'; -- $4.2 million class G at 'BBB-'; -- $8.4 million class H at 'BB+'; -- $3.2 million class J at 'BB'; -- $4.2 million class K at 'BB-'; -- $3.2 million class L at 'B+'; -- $3.2 million class M at 'B'; -- $2.1 million class N at 'B-'. Fitch does not rate the $8.4 million class O. The affirmations are due to the stable pool performance and scheduled amortization. As of the August 2004 distribution date, the pool's aggregate certificate balance has decreased 2.4% to $822.5 million, compared with $842.2 million at issuance. There is currently one loan in special servicing. The Highland Orchard Apartments (0.83% of the pool) is secured by a 182-unit garden style multi-family complex, located in Conyers, Georgia. A foreclosure was completed on Aug. 3, 2004. A loss is expected on this loan; however, the nonrated class O is sufficient to absorb this loss. The seven credit assessed loans (30.9% of the pool) remain investment grade. Fitch reviewed operating statement analysis reports and other performance information provided by the master servicer, Wells Fargo Bank, N.A. The debt service coverage ratio -- DSCR -- for the loans are calculated based on a Fitch-adjusted net cash flow -- NCF -- and a stressed debt service based on the current loan balance and a hypothetical mortgage constant. Eighty Park Place (7.7%) is secured by one 26-story and one three- story building totaling 955,924 square feet, located in Newark, New Jersey. The property is 100% leased and occupied by Public Service Electric & Gas Company under a lease expiring in 2015, three years past loan maturity. The Fitch-adjusted NCF as of the year-end 2003 decreased approximately 6.5% since issuance. The corresponding DSCR as of YE 2003 is 1.46 times (x), compared with 1.53x at issuance. One Seaport Plaza (7.6%) is secured by a 35-story, 1.1 million sf office building located in downtown Manhattan, New York. The loan consists of a 33.7% ($62.9 million) pari passu interest in a $186.6 million whole loan. The Fitch-adjusted NCF as of YE 2003 decreased approximately 10.4% since issuance, the corresponding DSCR as of YE 2003 was 1.34x, compared with 1.48x at issuance. The decrease is due to tenant concessions being paid by the borrower for recent leasing at the property, once those concessions have been paid, the property's overall performance should be in-line with issuance. Occupancy as of July 2004 has increased to 96.4%, compared with 82.0% at issuance. Dulles Towne Crossing (5.8%) is secured by 418,047 sf and the ground under the three largest anchors: Wal-Mart; Lowe's; and Sam's out parcels. The center consists of a 737,558 sf, seven- building power retail center located in Sterling, Virginia. Additional tenants include: * Best Buy; * Nordstrom Rack; * Bed, Bath & Beyond; * Dick's Sporting Goods; and * T.J. Maxx. The Fitch-adjusted NCF as of YE 2003 increased 1.8%, compared with issuance. The corresponding YE 2003 DSCR increased to 1.43x, compared with 1.39x at issuance. Flushing Plaza (3.7%) is secured by a two-story, 243,092 sf office building with street level retail, located in Flushing, New York. The Fitch-adjusted NCF as of YE 2003 decreased 3.8% since issuance. The corresponding DSCR as of YE 2003 was 1.68x, compared with 1.69x at issuance. Fitch is concerned that the top three tenants, 40.0% of net rentable area, have lease expirations within the next 12 months. This loan has been placed on the master servicer watch list. Fitch will monitor the leasing efforts of the property. Skyway Terrace Apartments (2.0%) is secured by a 348-unit garden style apartment complex located in San Jose, California. Occupancy as of September 2003 declined to 80.0%, compared with 90.0% at issuance. Fitch will monitor occupancy levels at this property. The remaining two credit assessed loans have remained stable since issuance. BLEECKER STRUCTURED: Fitch Junks $39.3M Class C Fixed-Rate Notes ---------------------------------------------------------------- Fitch Ratings has downgraded three classes of notes issued by Bleecker Structured Asset Funding, Ltd., as issuer, and Bleecker CBO Delaware Corp., as co-issuer. These classes have been downgraded: -- $148,289,537 class A first priority senior secured notes due 2035 to 'A-' from 'AAA'; -- $40,203,233 class B second priority senior secured floating- rate notes due 2035 to 'B-' from 'BBB'; -- $39,331,009 class C senior subordinated secured fixed-rate notes due 2035 to 'C' from 'B'. In conjunction with the downgrades, Fitch has removed the class C notes from Rating Watch Negative. The class A and B notes remain on Rating Watch Negative. The transaction, a collateralized bond obligation, is supported by a diversified portfolio of asset-backed securities, residential mortgage-backed securities and commercial mortgage-backed securities. Fitch has had discussions with the Clinton Group, Inc., the collateral manager, regarding the current state of the portfolio. An event of default has occurred and is continuing whereby the sum of the principal balances of all non- defaulted/deferred interest PIK securities, the calculation amount of all defaulted/deferred interest PIK bonds and the total amount of cash and eligible investments on deposit in the principal collection account is not at least equal to the outstanding amount of rated notes. As such, the collateral manager cannot direct the sale of any defaulted and credit risk securities. Fitch has reviewed the credit quality of the individual assets comprising the portfolio and has conducted cash flow modeling of various default timing and interest rate stress scenarios. As a result, Fitch has determined that the original ratings assigned to all rated classes of Bleecker no longer reflect the current risk to noteholders. The rating actions are a result of deterioration in the credit quality of Bleecker's collateral pool and the negative impact of its interest rate hedge. According to its July 30, 2004 trustee report, 6.4% of the collateral pool was defaulted per Bleecker's governing documents. As part of its analysis, Fitch identified an additional 10.7% of the collateral pool whereby default is a real possibility. Both the distressed and defaulted assets represent exposures to the manufactured housing, franchise loan and aircraft lease sectors. These assets, coupled with other assets that have migrated in credit quality, have contributed to a decrease in Bleecker's overcollateralization levels. As of July 30, 2004, the class A OC test was passing at 109% versus a trigger of 106.5% and the class B and C OC tests were failing at 85.8% and 71%, respectively, versus triggers of 110.5% and 102%. Interest proceeds available to pay Bleecker's notes have undergone stress largely attributable to an interest rate swap in place to hedge the mismatch between fixed-rate collateral (currently $110.7 million, excluding defaults) and floating-rate liabilities (currently $211.3 million when including the class D notes, 'NR', and excluding class B deferred interest). Because Bleecker is currently overhedged with its swap ($225 million notional; 7.418% strike rate) and in a low interest rate environment, Bleecker continues to be negatively impacted. In addition, Bleecker's structure allows principal to be used to pay unpaid interest on subordinate notes while senior classes are still outstanding. This practice, using principal to pay interest to subordinate notes, in some scenarios, may erode senior note OC. Fitch will continue to monitor and review this transaction for future rating adjustments. CANADA PAYPHONE: Asks Quebec & British Columbia Courts to OK Sale ----------------------------------------------------------------- Canada Payphone Corporation filed the necessary documents with the Quebec Superior Court and with the British Columbia Supreme Court seeking authority to proceed to implement the offer of Globalive Communications, Inc., including without limitation the process undertaken under the Bankruptcy and Insolvency Act (Canada) and the offering to the existing shareholders of half of the proceeds from the offer of Globalive as referred to in its press releases of August 18 and 23, 2004. Pursuant to its offer and subject to the receipt of the necessary court orders and approval of creditors, Globalive Communications, Inc., agreed to lend $500,000 to the Company which amount will be shared by the unsecured creditors of the Company to compromise and settle all of the Company's unsecured debts. A majority in number and two thirds in value of the unsecured creditors present must approve the proposal, personally or by proxy, at the meeting and voting. The meeting of creditors is scheduled to be held at 10:00 am today, August 27, 2004 in Montreal, Quebec. The Company has already received commitments from significant creditors in favour of the proposal. Following the approval of the proposal by the creditors, the Company intends to apply to the Quebec Superior Court on August 27, 2004 for final approval of the proposal by that court. In conjunction with the offer of Globalive and subject to receipt of the necessary court orders, the Company will be required to purchase from, and all shareholders will be deemed to have sold to the Company, all of the issued and outstanding Common Shares of the Company at a price of $0.02 per share. Globalive has agreed to provide the Company with sufficient funds to permit the purchase of such shares. Concurrent with the purchase of such shares, Globalive will also subscribe for additional shares with the result that the Company will, upon completion of the transactions contemplated under the offer of Globalive, become a wholly owned subsidiary of Globalive. As the Company is incorporated under the laws of British Columbia, the Company is today seeking an order of the British Columbia Supreme Court permitting it to apply for an order on August 27, 2004 to effect the transactions. "We have done our utmost to investigate all possible alternatives that may be available to the Company for the benefit of our various stakeholders" commented Mr. Andre Cote, President and Chief Executive Officer of "The Globalive offer was the only offer presented and represents a positive outcome in the circumstances and in the best interest of our stakeholders", he added. About Canada Payphone Corporation Canada Payphone Corporation is Canada's leading competitive payphone service provider. Over the past few years, Canada Payphone has played an instrumental role in the deregulation of the competitive payphone industry and continues to create exciting business opportunities in the new era of public access communications. In 1999, Canada Payphone began installing payphones across Canada. An experienced telecommunications team and the latest advancements in payphone technology provide Canada Payphone's customers with superior service and reliability. Canada Payphone Corporation is currently registered in the TSX Venture Exchange under the symbol 'CPY'. CEC IND: Restructured Company Changes Name to Advantage Capital --------------------------------------------------------------- CEC Industries Corp. (OTC Pink Sheets: CECC) changed its name to Advantage Capital Development Corp. to better reflect its new business operations. The Company's board of directors has elected to be regulated pursuant to Section 54 of the Investment Act to better reflect its new corporate direction as a business development company. As a business development company, Advantage Capital Development Corp. will be able to invest in both public and private entities, including developing companies. The Company recently completed a major corporate restructuring that included the resignation of its former officers and directors as well as the establishment of a new board of directors and the appointment of new senior management. The Company cleaned up its balance sheet by eliminating debt and disposed of its ownership in a subsidiary, and reclaimed 3 million shares of its common stock as the result of a breach of an agreement with the principals of that subsidiary. Additionally, the Company's corporate offices have been relocated from Las Vegas to Miami. "The primary intention of the comprehensive restructuring plan was to create long-term shareholder value for a company that has had little specific direction," said Sternberg. "As a regulated, business development company we will be able to pursue a variety of opportunities including the investment in developing companies. Most importantly, to achieve our short- and long-term goals we have the necessary financing in place." In other developments, David Goldberg, currently President and CEO of ChampionLyte Industries, Inc., (OTC Bulletin Board: CPLY) was appointed to fill a vacancy on the Board of Directors of the Company. He joins Company Chairman and CEO Sternberg, as well as recently appointed board member Craig Press. The Company said it has also authorized a new capital structure and has applied for a new stock symbol. About the Company C.E.C. Industries, Corp., is a Nevada Corporation which has recently entered into a Memorandum of Proposed Terms to acquire the majority of a company that provides a suite of cash-based debit cards and stored value cards for ATM and debit "point of sale" transactions. At June 30, 2004, C.E.C. Industries Corp.'s balance sheet showed a $477,977 stockholders' deficit, compared to an $831,034 deficit at March 31, 2004. CHAS COAL: Wants Until Sept. 30 to Make Lease-Related Decisions --------------------------------------------------------------- Chas Coal, LLC, asks the U.S. Bankruptcy Court for the Eastern District of Kentucky, London Division, for more time to decide whether to assume, assume and assign, or reject its unexpired nonresidential real property leases and executory contracts. The Debtor reminds the Court that it has already filed motions to reject two unexpired executory coal sales contracts, but remains a party to several other executory contracts for vehicles and mining equipment and unexpired nonresidential real property leases involving its coal reserves. Since filing for bankruptcy protection after ceasing its active mining operations, Chas Coal has been involved in extensive discussions with numerous third parties for the sale or lease of its assets. However, the Company is still waiting for the term sheet that contains provisions allowing the Debtor to resume its mining operations. The provisions of this term sheet will require that Debtor and the third party entity to review these contemplated mining operations and the anticipated claims in order to determine the level of DIP funding needed to assume them. The Debtor tells the Court that an extension of the lease decision deadline imposed under 11 U.S.C. Sec. 365(d)(4) through September 30, 2004, should provide enough time to complete an extensive review and evaluation of the term sheet. Headquartered in London, Kentucky, Chas Coal, LLC -- http://www.chascoal.com/-- mines, processes and sells high quality, low sulfur Eastern Kentucky coal. The Company filed for chapter 11 protection on June 17, 2004 (Bankr. E.D. Ky. Case No. 04-60972). Robert Gregory Lathram, Esq., in London, Kentucky, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $28,080,624 in total assets and $8,601,895 in total debts. CINRAM INTERNATIONAL: Amends $1.175 Billion Credit Facilities ------------------------------------------------------------- Cinram International Inc. (TSX: CRW) amended its $1.175 billion credit facilities, originally established in connection with its acquisition of the Time Warner businesses in 2003, to significantly reduce borrowing costs. As part of the refinancing, the Company also negotiated more favorable debt covenants to improve its financial flexibility. "The financial markets continue to recognize Cinram's improving credit quality. These amendments reflect the benefits of our deleveraging strategy and of improved financial performance," said Cinram chief financial officer Lewis Ritchie. "These amendments also represent significant cost savings and will provide us with greater financial flexibility going forward." The interest rate on the outstanding principal amount of $181 million on Cinram's $250 million term loan A facility has been reduced to the London Interbank Offered Rate -- LIBOR -- plus 250 basis points, from LIBOR plus 300 basis points. Cinram used $65 million in cash to repay part of the $635 million outstanding principal amount under its $675 million term loan B facility and part of the $98 million outstanding principal amount under its $100 million term loan C facility. The remaining principal amounts outstanding under term loan facilities B and C were paid out from a new $668 million term loan D facility that bears an interest rate of LIBOR plus 300 basis points. Prior to the amendments, the term loan B facility had an interest rate of LIBOR plus 375 basis points and the term loan C facility an interest rate of LIBOR plus 575 basis points. The maturity date for the term loan A facility remains 2007. The maturity date for the term loan D facility is 2009; the maturity dates for term loan facilities B and C were 2009 and 2010, respectively. The terms of the $150 million revolving credit facility remain unchanged. At June 30, 2004, there were no borrowings under this facility. About Cinram Cinram International, Inc. -- http://www.cinram.com/-- (S&P, BB Corporate Credit Rating) is the world's largest independent provider of pre-recorded multimedia products and logistics services. With facilities in North America and Europe, Cinram manufactures and distributes pre-recorded DVDs, VHS video cassettes, audio CDs, audio cassettes and CD-ROMs for motion picture studios, music labels, publishers and computer software companies around the world. The Company's shares are listed on the Toronto Stock Exchange (CRW) and are included in the S&P/ TSX Composite Index. CINRAM INT'L: S&P Affirms BB Long-Term Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' bank loan rating and '4' recovery rating to Toronto, Ontario-based Cinram International, Inc.'s US$668 million secured tranche D term loan due 2009. The loan is rated the same as the long-term corporate credit rating. The '4' recovery rating indicates a modest (25%- 50%) recovery of principal in the event of a default or bankruptcy. The bank loan rating is based on preliminary terms and conditions and is subject to review once final documentation is received. At the same time, Standard & Poor's affirmed its 'BB' long-term corporate credit rating on Cinram. The company has about US$953 million in total debt outstanding at June 30, 2004. The outlook is stable. Proceeds from the new tranche D term loan were used to repay most of Cinram's previous tranche B term loan and a portion of its tranche C loan. The balances remaining on the tranche B and C loans were repaid with cash. "The ratings on Cinram are based on the commodity-like nature of the media replication industry, which is also subject to shifts in technology and availability of hit new releases," said Standard & Poor's credit analyst Lori Harris. "Although hit new releases are a significant revenue growth driver, the availability of previously released titles in DVD format is also an important component of the company's revenue base," Ms. Harris added. The ratings also reflect the risk of customer and product concentration. Partially offsetting these factors are Cinram's long-term customer contracts, management's proven track record in adapting to changing technologies and achieving solid operating margins, and very good industry growth prospects in the medium term. Furthermore, the ratings reflect the successful integration of certain assets of Time Warner, Inc., (BBB+/Negative/A-2) acquired in 2003. Cinram is now the world's largest independent manufacturer of prerecorded multimedia products after more than doubling its revenue base in 2003 through the acquisition of Time Warner's DVD and CD manufacturing and distribution businesses, plus certain related businesses in the U.S. and Europe. Cinram's business base continued to strengthen in first-quarter 2004 with the signing of exclusive multiyear contracts with Metro-Goldwyn-Mayer Studios, Inc., for DVD and VHS manufacturing and distribution in North America and with EMI Music for CD and DVD manufacturing in the U.S. The stable outlook reflects Standard & Poor's expectation that Cinram will maintain its strong key market positions and solid credit measures. Furthermore, we expect that Cinram's free cash flow will turn positive in 2005 and allow for meaningful reduction of debt. CORNERSTONE PROPANE: Plan Confirmation Hearing on September 30 -------------------------------------------------------------- The Honorable Robert D. Drain put his stamp of approval on Cornerstone Propane, L.P. and its debtor-affiliates' Disclosure Statement explaining their Joint Reorganization Plan. Judge Drain found that the disclosure document contains "adequate information" within the meaning of Section 1125 of the Bankruptcy Code and the plan should be sent to creditors for a vote. Judge Drain will convene a hearing at 10:00 a.m., on September 30, 2004, to review whether the Plan should be confirmed. Any written objections to confirmation of the Plan must be filed with the Court on or before September 23, 2004, and copies must be served on: (i) the Clerk of the Court, Southern District of New York Alexander Hamilton Customs House One Bowling Green New York, New York 10004 (ii) attorneys for the Debtors, Matthew A. Cantor, Esq. Kirkland & Ellis LLP Citicorp Building 153 East 53rd Street New York, NY 10022 (iii) attorneys for the Committee, Fred S. Hodara, Esq. Akin Gump Strauss Hauer & Feld, LLP 590 Madison Avenue New York, New York 10022 (iv) the attorneys for the OLP Notes Committee Allan S. Brilliant, Esq. Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza New York, New York 10005 (v) the U.S. Trustee Pamela J Lustrin, Esq. Office of the U.S. Trustee 33 Whitehall Street, 21st Floor New York, New York 10004 Headquartered in New York, New York, Cornerstone Propane Partners, L.P. -- http://www.cornerstonepropane.com/-- is the nation's sixth largest retail propane marketer, serving more than 440,000 retail propane customers in over 30 states. The Company filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13856) on June 3, 2004. Matthew Allen Cantor, Esq., at Kirkland & Ellis LLP, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $582,455,000 in assets and $692,470,000 in liabilities. CORNERSTONE: Court Approves Plan Voting & Tabulation Procedures --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved Cornerstone Propane, L.P. and its debtor-affiliates' Disclosure Statement explaining their Joint Reorganization Plan. The Court found that the Debtors' Disclosure Statement contains adequate information for creditors to make reasoned decisions to accept or reject the Plan. The Plan Confirmation hearing is on September 30, 2004. The Court also approved the Debtors' proposed notice, solicitation and balloting procedures. Solicitation Packages may be viewed at http://www.kccllc.net/cornerstone Creditors' ballots are due by 5:00 p.m., on September 23, 2004. This period in which the Debtors may solicit votes to accept or reject the Plan provides sufficient time for: (i) creditors to make informed decisions to accept or reject the Plan and submit timely Ballots to the Debtors' voting agent, Kurtzman Carson Consultants LLC, and (ii) brokers, banks, dealers or nominees for beneficial owners of the notes issued by the Debtors to distribute the Ballots for Beneficial Owners to complete and timely submit the Ballots to the Nominees and for the Nominees to complete and timely submit master ballots for tabulation. To be counted, all Ballots and Master Ballots cast on behalf of Beneficial Holders must be properly executed, completed and delivered to Kurtzman Carson either by: a) first-class mail, in the return envelope provided with each Ballot, b) overnight courier, or c) personal delivery and must be received on or before 5:00 p.m., on Sept. 23, 2004. In tabulating the Ballots and Master Ballots, these procedures will be followed: a. Ballots and Master Ballots received after the Voting Deadline will not be accepted or counted by the Debtors; b. beneficial Holders must vote all of their claims with respect to a particular issue of Notes either to accept or reject the Plan and may not split their votes with respect to a particular issue of Notes; c. any Ballot that partially rejects and partially accepts the Plan will not be counted as either an acceptance or rejection of the Plan; d. the method of delivery of the Ballots and Master Ballots to be sent to the Voting Agent is at the election of each claimholder and will be deemed made only when the original executed Ballot or Master Ballot is actually received by the Kurtzman Carson; e. delivery of a Ballot or Master Ballot by facsimile, e-mail or any other electronic means will not be accepted; f. Ballot or Master Ballot sent to the Debtors, any indenture trustee or the Debtors' financial or legal advisors will not be accepted; g. if multiple Ballots are received an individual holder of the same claim, the last Ballot timely received will be deemed to reflect the intent and to supercede and revoke any prior Ballot; h. if a Ballot is signed by a trustee, executor, administrator, guardian, attorney-in-fact, or other person acting in a fiduciary or representative capacity, that person will be required to indicate such capacity when signing; i. in their sole discretion, the Debtors may waive any defect in any Ballot or Master Ballot at any time, without notice, whether before or after the Voting Deadline; j. any holder of impaired claims who has delivered a valid Ballot voting on the Plan may withdraw their vote solely in accordance with Bankruptcy Rule 3018(a); k. the Debtors reserve the absolute right to reject any Ballots or Master Ballots not in proper form; l. if no votes to accept or reject the Plan are received with respect to a particular class, such class shall be deemed eliminated from the Plan for purposes of voting to accept or reject the Plan; m. unless waived by the Debtors, any defects or irregularities in connection with the deliveries of the Ballots or Master Ballots must be cured by the Voting Deadline, and delivery will not be deemed to have been made until such irregularities have been cured or waived; and n. neither the Debtors, nor any other person or entity, will be under any duty to provide notification of defects or irregularities with respect to deliveries of Ballots or Master Ballots. Additional rules will apply to the tabulation of Master Ballots and Ballots cast by Nominees and Beneficial Owners: a. Votes will be applied against the positions held by the entities in the applicable security as of the Record Date, as evidenced by the record and depository listings; b. the Debtors will attempt to reconcile discrepancies with the Nominees if there are conflicting votes or "overvotes;" c. to the extent that overvotes on a Master Ballot or "prevalidated" Ballot are not reconciled prior to the preparation of the vote certification, the Debtors will apply the votes to accept and to reject the Plan in the same proportion as the votes to accept and reject the Plan submitted on the Master Ballot or prevalidated Ballots that contained the overvote; d. for purposes of tabulating votes, each Nominee or Beneficial Owner will be deemed to have voted the principal amount of its Claim relating to the security; and e. a single Nominee may complete and deliver multiple Master Ballots. Solely for purposes of voting to accept or reject the Plan each claim within a class of claims entitled to vote to accept or reject the Plan will be temporarily allowed in accordance with these Tabulation Rules: a. the claim will be temporarily allowed for voting purposes in the amount set forth in the proof of claim if it is not listed on the Schedules and no objection to the claim has been filed; b. the claim will be temporarily allowed for voting purposes in the amount of $1.00 if a claim by its terms, contingent, unliquidated, or disputed; c. the claim will be temporarily allowed for voting purposes in an amount equal to $1.00 if a claim is listed as contingent, unliquidated or disputed, either in the Schedules or in a proof of claim; d. the claim will be allowed for voting purposes in the deemed allowed amount set forth in the Plan; e. if the Debtors object to a claim prior to the Voting Deadline, the claim will be temporarily allowed for voting purposes in amount equal to the greater of $1.00 or the undisputed amount of such claim; f. if a claim is listed in the Schedules as being a non- priority claim or is not listed in the Schedules and a proof of claim is filed as a priority claim, the claim will be temporarily allowed for voting purposes as a non- priority claim in an amount that the claim would have been allowed; g. if a claim is listed in the Schedules as being an unsecured claim or is not listed in the Schedules and a proof of claim is filed as a secured claim, the claim will be temporarily allowed for voting purposes as an unsecured claim in an amount that such claim would have been allowed; h. the claim will be temporarily allowed in the amount that is estimated or allowed by the Court for voting purposes; i. if a claim relates to rejection damages under an executory contract or unexpired lease that has not been rejected, to the extent the claim is for rejection damages, the claim will be temporarily disallowed by the Court for voting purposes and, to the extent the claim is solely for rejection damages, the Ballot will not be counted as having voted for or against the Plan; and j. if a claim holder identifies a claim amount on its Ballot that is less than the amount otherwise calculated in accordance with the Tabulation Rules, the claim will be temporarily allowed for voting purposes in the lesser amount identified on the Ballot. Headquartered in New York, New York, Cornerstone Propane Partners, L.P. -- http://www.cornerstonepropane.com/-- is the nation's sixth largest retail propane marketer, serving more than 440,000 retail propane customers in over 30 states. The Company filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13856) on June 3, 2004. Matthew Allen Cantor, Esq., at Kirkland & Ellis LLP, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $582,455,000 in assets and $692,470,000 in liabilities. CSFB MORTGAGE: Moody's Puts Low-B Ratings on 4 Classes & Junks 2 ---------------------------------------------------------------- Moody's Investors Service downgraded the ratings of five classes and affirmed the ratings of fifteen classes Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2001-CF2 as follows: -- Class A-1, $14,024,902, Fixed, affirmed at Aaa; -- Class A-2, $153,750,000, Fixed, affirmed at Aaa; -- Class A-3, $129,750,000, Fixed, affirmed at Aaa; -- Class A-4, $523,158,000, Fixed, affirmed at Aaa; -- Class A-X, Notional, affirmed at Aaa; -- Class A-CP, Notional, affirmed at Aaa; -- Class B, $43,796,000, Fixed, affirmed at Aa2; -- Class C, $49,271,000, Fixed, affirmed at A2; -- Class D, $10,949,000, Fixed, affirmed at A3; -- Class E, $16,423,000, Fixed, affirmed at Baa1; -- Class F, $18,887,000, Fixed, affirmed at Baa2; -- Class G, $13,960,000, Fixed, affirmed at Baa3; -- Class H, $16,423,000, Fixed, affirmed at Ba1; -- Class J, $21,898,000, Fixed, downgraded to Ba3 from Ba2; -- Class K, $8,211,000, Fixed, downgraded to B1 from Ba3; -- Class L, $9,306,000, Fixed, downgraded to B2 from B1; -- Class M, $9,854,000, Fixed, downgraded to Caa1 from B2; -- Class N, $5,474,000, Fixed, downgraded to Caa2 from B3; -- Class NM-1, $14,760,000, WAC, affirmed at A2; -- Class MN-2, $17,050,000, WAC, affirmed at Baa2. As of the August 17, 2004 distribution date, the transaction's aggregate balance has decreased by approximately 3.7% to $1.1 billion from $1.2 billion at securitization. The Certificates are collateralized by 166 mortgage loans secured by commercial and multifamily properties. The pool includes three shadow rated investment grade loans, representing 18.8% of the pool, and a conduit component representing 81.2% of the pool. The loan exposures range in size from less than 1.0% of the pool to 8.2% of the pool, with the top 10 loan exposures representing 42.8% of the pool. Two loans representing 4.2% of the pool have defeased and are secured by U.S. Government securities. Three loans have been liquidated from the pool, resulting in aggregate realized losses of approximately $8.1 million. Nine loans representing 1.8% of the pool are in special servicing. Moody's has projected aggregate losses of approximately $5.1 million for all of the specially serviced loans. Moody's was provided with full-year 2003 operating results for approximately 96.0% of the performing loans in the pool. Moody's loan to value ratio -- LTV -- for the conduit component is 88.0%, compared to 82.9% at securitization. The downgrade of Classes J, K, L, M, and N is due to realized losses, anticipated losses on the specially serviced loans and LTV dispersion. Based on Moody's analysis, 16.6% of the pool has a LTV greater than 100.0%, compared to 0.0% at securitization. The largest shadow rated loan is the 730 North Michigan Loan, which consists of a pooled senior interest ($86.2 million - 8.2%) and a non-pooled subordinate interest ($31.8 million), which supports Classes NM-1 and NM-2. The total loan is $118.0 million. The loan is secured by a 202,000 square foot retail center located along the "Magnificent Mile" in Chicago, Illinois. Major tenants include: (1) CompUSA; (2) Polo/Ralph Lauren (Moody's senior unsecured rating Baa2); (3) American Girl Place (an affiliate of Mattel, Inc.; Moody's senior unsecured rating Baa2); and (4) Banana Republic (an affiliate of The Gap, Inc; Moody's senior unsecured rating Ba2). The property has been 100.0% occupied since securitization and is performing in line with Moody's expectations. Moody's current shadow rating is Baa2, the same as at securitization. The second shadow rated loan is the Two Rodeo Drive Loan ($75.0 million - 7.1%), which is secured by a 130,000 square foot specialty shopping center located in Beverly Hills, California. Major tenants include Tiffany & Co., Gianni Versace, and McCormick & Schmicks. The property's occupancy declined in 2002 and as of June 2004 the property's occupancy was approximately 80.0%, compared to 100.0% at securitization. Ownership has embarked on a major upgrade and marketing program and has recently executed several renewal and new leases at rental levels higher than at securitization. In spite of the drop in occupancy, tenant sales for 2003 increased 18.0% over 2002. Moody's current shadow rating is A2, the same as at securitization. The third shadow rated loan is the Glendale Center Loan ($36.5 million - 3.5%) which defeased and is secured by U.S. Government securities. The top three conduit loans represent 13.4% of the outstanding pool balance. The largest loan is the First Union Building Loan ($51.6 million - 4.9%), which is secured by a commercial condominium unit consisting of 627,000 square feet in two adjacent office buildings located in the CBD of Philadelphia, Pennsylvania. The property's occupancy has been stable since securitization at approximately 95.0%. The largest tenant is First Union National Bank (merged with Wachovia Bank, N.A.; Moody's senior unsecured rating Aa2), which occupies approximately 72.0% of the property on a lease that expires in July 2010. Moody's LTV is 79.4%, compared to 85.1% at securitization. The second largest conduit loan is the 8000 Marina Boulevard Office Building Loan ($45.6 million - 4.3%), which is secured by a 194,000 square foot Class-A office building located approximately 8 miles south of San Francisco, California. The property's performance has been impacted by lease expirations and weak market conditions. At securitization the property was 100.0% occupied with average in-place rents of approximately $49.00 per square foot. Currently the property is 85.0% occupied and market rents are estimated at $25.00 per square foot. Moody's LTV is in excess of 100.0%, compared to 86.2% at securitization. The third largest conduit loan is the CNN Building Loan ($44.7 million - 4.2%), which is secured by a 292,000 square foot office building located in Washington, D.C. The property has maintained 100.0% occupancy since securitization. The building serves as the regional headquarters of the CNN cable network (parent company Time Warner Inc.; Moody's senior unsecured rating Baa1), which occupies approximately 29.0% on a lease that expires in December 2010. Moody's LTV is 75.8%, compared to 81.9% at securitization. The pool's collateral is a mix of: * office (36.3%), * retail (34.4%), * multifamily (14.9%), * U.S. Government securities (4.2%), * industrial (3.8%), * hotel (3.6%), * mixed use (1.1%), * CTL (1.0%), and * healthcare (0.7%). The collateral properties are located in 36 states and Washington, D.C. The highest state concentrations are: * California (19.0%), * Illinois (14.7%), * Pennsylvania (7.7%), * New York (7.4%), and * Florida (5.9%). All of the loans are fixed rate. CSFB MORTGAGE: Fitch Puts Low-B Ratings on Five Cert. Classes ------------------------------------------------------------- Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2004-C3, are rated by Fitch Ratings as follows: -- $10,000,000 class A-1 'AAA'; -- $62,126,000 class A-2 'AAA'; -- $209,402,000 class A-3 'AAA'; -- $102,918,000 class A-4 'AAA'; -- $694,474,000 class A-5 'AAA'; -- $338,144,000 class A-1-A 'AAA'; -- $1,639,437,484 class A-X* 'AAA'; -- $1,509,166,000 class A-SP* 'AAA'; -- $45,084,000 class B 'AA'; -- $14,345,000 class C 'AA-'; -- $28,690,000 class D 'A'; -- $16,395,000 class E 'A-'; -- $20,493,000 class F 'BBB+'; -- $16,394,000 class G 'BBB'; -- $22,542,000 class H 'BBB-'; -- $8,198,000 class J 'BB+'; -- $6,147,000 class K 'BB'; -- $8,198,000 class L 'BB-'; -- $6,148,000 class M 'B+'; -- $6,147,000 class N 'NR'; -- $2,050,000 class O 'B-'; -- $22,542,484 class P 'NR'. * Notional Amount and Interest Only Class N and class P are not rated by Fitch Ratings. Classes A-1, A-2, A-3, A-4, A-5, A-1-A, B, C, and D, are offered publicly, while classes A-X, A-SP, E, F, G, H, J, K, L, M, N, O, and P are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 174 fixed-rate loans having an aggregate principal balance of approximately $1,639,437,484, as of the cutoff date. For a detailed description of Fitch's rating analysis, see the report titled 'Credit Suisse First Boston Mortgage Securities Corp., Series 2004-C3', dated Aug. 5, 2004 available on the Fitch Ratings web site at http://www.fitchratings.com/ DELAWARE RIBBON: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Delaware Ribbon Manufacturers, Inc. 2531 North Trenton Avenue Philadelphia, Pennsylvania 19125 Bankruptcy Case No.: 04-31556 Type of Business: The company manufactures gift ribbons and bows. Chapter 11 Petition Date: August 25, 2004 Court: Eastern District of Pennsylvania (Philadelphia) Judge: Bruce I. Fox Debtor's Counsel: Aris J. Karalis, Esq. Maureen P. Steady, Esq. Ciardi, Maschmeyer & Karalis, P.C. 1900 Spruce Street Philadelphia, Pennsylvania 19103 Tel: (215) 546-4500 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Flagship Converters, Inc. $213,616 Diversified Flock Products, Inc. $188,359 Bedford Weaving, Inc. $108,785 Amspak $137,308 Vision Focus Enterprise Co., Ltd. $86,794 Milliken & Company $85,417 Yong Li Decorations $67,296 Acme Corrugated Box Co., Inc. $53,698 Norman Well Textiles, Inc. $52,958 Ruain Chungiu Arts & Gifts $48,228 Sun Brite Dye Company $43,000 Mao Jain Textile $42,758 Topocean Consolidation Service $42,234 Crown Roll Leaf, Inc. $38,732 Crystal Textile $31,379 Keystone Health Plan East $26,387 Indiana Ribbon, Inc. $19,842 Coral Dyeing & Finishing Corp. $17,398 Nova Label Co., Inc. $15,234 Ivy Graphics, Inc. $12,623 DENALI CAPITAL: S&P Puts BB Rating on $8 Million Class D Notes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to Denali Capital CLO IV Ltd./Denali Capital CLO IV (Delaware) LLC's $368 million notes. Denali Capital CLO IV Ltd./Denali Capital CLO IV (Delaware) LLC is a CLO backed primarily by loans. The ratings are based on: -- Adequate credit support provided in the form of subordination and excess spread; -- Characteristics of the underlying collateral pool, consisting primarily of larger syndicated and middle market loans; -- Scenario default rates of 30.93% for the class A notes, 23.89% for the class B notes, 20.30% for the class C notes and 14.98% for the class D notes; and break-even loss rates (all calculated assuming a 2.65% weighted average spread on collateral) of 38.30% for the class A notes, 32.80% for the class B notes, 25.50% for the class C notes, and 23.11% for the class D notes; -- Weighted average rating of 'BB-' for the portfolio; -- Weighted average maturity for the portfolio of 5.47 years; -- S&P default measure (DM) of 2.67%; -- S&P variability measure (VM) of 1.68%; -- S&P correlation measure (CM) of 1.40; and -- Rated overcollateralization -- ROC -- of 110.09% for class A notes, 107.07% for class B notes, 102.48% for class C notes, and 103.25% for class D notes. Interest on the class B, C, and D notes may be deferred up until the legal final maturity of August 2016 without causing a default under these obligations. The ratings on the notes, therefore, address the ultimate payment of interest and principal. Ratings Assigned Denali Capital CLO IV Ltd./Denali Capital CLO IV (Delaware) LLC Class Rating Amount ----- ------ ------ A AAA $312,000,000 B A 26,000,000 C BBB 22,000,000 D BB 8,000,000 DLJ MORTGAGE: S&P Raises Class B-4 Cert. Rating a Notch to B+ ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of DLJ Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates from series 1996-CF1. The raised ratings reflect significant principal paydown and the stable performance of the seasoned pool, as well as credit enhancement levels that provide adequate support through various stress scenarios. As of the Aug. 12, 2004 remittance report, the collateral pool consisted of 28 loans with an aggregate principal balance of $132.6 million, down significantly from 93 loans totaling $470.1 million at issuance. The master servicer, GMAC Commercial Mortgage Corp., provided Dec. 31, 2003 net cash flow -- NCF -- debt service coverage -- DSC -- figures for 100% of the pool. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.28x, down slightly from 1.36x at issuance. To date, the trust has experienced three losses (totaling $5.5 million) and all of the loans in the pool are current, with the exception of one loan (10.9 million, 8%), which is more than 90 days delinquent and is discussed below. The top 10 loans have an aggregate outstanding balance of $95.5 million (72%). The weighted average DSC for the top 10 loans has decreased to 1.26x from 1.34x at issuance. The decreased DSC occurred because of the decline in performance of the third-, fourth-, and fifth-largest loans, which are discussed below and are either with the special servicer, Lennar Partners, Inc., or on GMAC Commercial's watchlist. Standard & Poor's reviewed property inspections provided by GMAC Commercial for all of the assets underlying the top 10 loans and all were characterized as "excellent" or "good." According to Lennar, there is only one specially serviced loan ($10.9 million, 8%), the aforementioned delinquent loan. It is the third-largest loan in the pool and is secured by a 409-room Holiday Inn in Irving, Texas, which was built in 1973 and renovated in 1980. The hotel has not been able to recover from the weak regional economy or the decline in business travelers and has been hurt by increased competition in the Dallas - Fort Worth Airport South submarket. For the 12 months ending Dec. 31, 2003, DSC and occupancy were 0.12x and 54%, respectively. Lennar is pursuing foreclosure. An appraisal reduction amount of $6.2 million is in effect based on a $6 million appraisal of the hotel dated May 7, 2004. GMAC Commercial's watchlist consists of 12 loans with an aggregate outstanding balance of $40.7 million (31%). The Madison Hotel in Morristown, New Jersey is the fourth-largest loan with a scheduled balance of $9.5 million (7%). Due to the loss of seminar groups to competitive properties, the borrower is renovating the hotel securing the loan to offer updated technology and convert some rooms into conference space. For the 12 months ending Dec. 31, 2003, DSC and occupancy were 0.06x and 60%, respectively. The fifth-largest loan ($8.9 million, 7%) is secured by a leasehold interest in 235,692 sq. ft. retail asset located in Greenville, South Carolina. The loan was placed on the watchlist after Service Merchandise (50,000 sq. ft.) vacated its space in 2002. While the borrower is negotiating a lease for the space, the DSC and occupancy for the three months ending March 31, 2004 were 0.87x and 70%, respectively. In addition to the previously discussed loans, three loans totaling $6.7 million (5%) are on the watchlist and are secured by retail assets formerly occupied by Eagle Food Centers Inc., which filed for bankruptcy and vacated each asset. While one property was able to release the space vacated by Eagle Food Centers Inc., the remaining two locations remain dark. The trust collateral is located across 13 states with Michigan (19%), Texas (18%), and California (14%) accounting for more than 10% of the pool balance. Property concentrations greater than 10% of the pool balance are found in retail (37%), office (21%), lodging (18%), and multifamily (14%) property types. Standard & Poor's stressed various loans with credit issues as part of its pool analysis. The resultant credit enhancement levels support the raised ratings. Ratings Raised DLJ Mortgage Acceptance Corp. Commercial mortgage pass-thru certs series 1996-CF1 Rating Class To From Credit Enhancement ----- -- ---- ------------------ A-3 AAA AA+ 80.92% B-1 AAA A 57.91% B-2 AAA BBB+ 50.82% B-3 AA BB 27.74% B-4 B+ B 10.92% DONINI INC: Inks Food Brokerage Agreement with Premier Marketing ---------------------------------------------------------------- Donini, Inc., (OTCBB: DNNI) entered into a brokerage and sales agreement with Premier Marketing International, Ltd. The agreement calls for Premier Marketing to serve as exclusive broker and sales representative for the Company's frozen pizza products. The territory will initially include Eastern Canada and will expand to Western Canada when sales targets are met. Peter Deros, President and CEO of the company, stated "We are gratified that an organization as strong as Premier Marketing has agreed to partner with Donini on the distribution of its frozen pizza line." "We are excited about the opportunity to work with Donini on these products," noted Andre Lepine, President and founder of Premier Marketing. "It is our belief that the quality of these products, coupled with Donini's current food service brand equity, will translate into a significant share of a major retail frozen food category. Consumers will quickly embrace and identify the Donini Brand as a "restaurant quality" frozen pizza." "We anticipate great successes from our partnership with Premier Marketing," Mr. Deros added. "The minimum sales anticipated per this agreement are 1,500,000 units next calendar year and 3,000,000 units in the following year. This will result in substantive revenues to Donini and secure our position as a high- quality producer of branded pizza products." About Premier Marketing Established since 2001 Premier Marketing International Ltd. has quickly built a strong reputation as an effective and professional Brokerage organization. The company's senior management team with its 50 plus years of combined experience offers a unique blend of strategic planning and focused sales development efforts. The carefully selected and limited number of Principals provide a well balanced portfolio of quality products which enables the company to make an effective use of resources and manage effort priorities. The Company's acquisition last year of a larger Montreal based food brokerage company further enhances PMI's coverage and ability to deliver as a value added brokerage organization. About the Company With its headquarters in Montreal, Quebec, Donini, Inc. is incorporated in the State of New Jersey and, through its wholly- owned subsidiary Pizza Donini Inc. and its subsidiaries, Pizado Foods (2001) Inc., Pizza Donini.Com Inc. and Doninico Inc., is the franchisor, manufacturer and distributor of frozen ready-made pizza, frozen and refrigerated sauces and pizza dough to franchise, retail and wholesale customers, and the operator of a call center for home delivery of pizza and other food products and operate company owned restaurants. The Company's franchise outlets in Quebec, Canada operate under the trade name "Pizza Donini", which name is also primarily used for the distribution of the Company's frozen pizza to the food service industry. Donini's February 29, 2004, balance sheet shows the company's liabilities exceed its assets by $1,030,904. DORADO MARINE INC: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Dorado Marine, Inc. P.O. Box 427 Ozona, Florida 34660 Bankruptcy Case No.: 04-16765 Type of Business: The Debtor provides fishing and commercial boats. See http://www.doradomarine.com/ Chapter 11 Petition Date: August 24, 2004 Court: Middle District of Florida (Tampa) Judge: Alexander L. Paskay Debtor's Counsel: David W. Steen, Esq. David W. Steen, P.A. 602 South Boulevard Tampa, FL 33606-2630 Tel: 813-251-3000 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-Largest Creditors. DP8 LLC: Signs-Up Schian Walker as Bankruptcy Attorneys ------------------------------------------------------- DP8, LLC asks the U.S. Bankruptcy Court for the District of Arizona for authority to employ Schian Walker, PLC as its bankruptcy counsel. Schian Walker will: a) give the Debtor legal advice with respect to its reorganization; b) represent the Debtor in connection with the negotiations involving secured and unsecured creditors; c) represent the Debtor at the meeting of creditors, confirmation hearing and other hearings set by the Court in the Debtor's bankruptcy case; and d) prepare necessary applications, motions, answers, orders, reports or other legal papers necessary to assist in the Debtor's reorganization. The attorneys and paraprofessionals presently designated to represent the Debtor in this case and their current standard hourly rates are: Professional Designation Rates ------------ ----------- ----- Dale C. Schian Member $300 Mark C. Hudson Associate 215 Lisa B. Querard Associate 150 Debbi Stephens Paralegal 115 Mr. Schian assures the Court that his firm is "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. Headquartered in Mesa, Arizona, DP8 LLC, a real estate developer, filed for chapter 11 protection on July 30, 2004 (Bankr. Ariz. Case No. 04-13428). Dale C. Schian, Esq., at Schian Walker PLC represents the Debtor in its restructuring efforts. When the Debtor filed for protection, it listed $13,626,000 in total assets and $3,663,678 in total debts. ELITE MODEL: Sells Substantially All Assets to Creative World ------------------------------------------------------------- Alan M. Jacobs, Chairman of the Board and Chief Restructuring Officer of Elite Model Management Corporation (Elite New York), the famous agency that created "supermodels" in the 1980s and 1990s, sold substantially all of its assets to Creative World Management LLC, pursuant to a binding purchase agreement approved by the Bankruptcy Court for the Southern District of New York on August 24, 2004. Creative is an entity owned by the Trump Group, a New York and Florida-based investment company, controlled by Eddie and Jules Trump (no relation to Donald Trump). Mr. Jacobs is President of AMJ Advisors LLC, a financial, restructuring and bankruptcy services advisory firm. Carl Marks Capital Advisors LLC served as financial advisor and Kramer, Levin, Naftalis & Frankel LLP was counsel to Elite New York. John Casablancas opened the Elite Agency in Paris in 1972 and Elite New York in 1974. Eddie and Jules Trump outbid ID Models boss Paolo Zampolli and financier Jeffrey Epstein to bag the company, according to the New York Post. The sale does not affect the parent company in Switzerland, a report at Vogue.com relates. The agency created the supermodel category and has worked with supermodels such as Cindy Crawford, Claudia Schiffer, Naomi Campbell and Nastassja Kinski. A number of Hollywood stars such as Brooke Shields, Demi Moore and Cameron Diaz, also started their careers at Elite, and Lauren Bush, President George W. Bush's niece, and former supermodel Paulina Porizkova remain on its roster. Headquartered in New York, New York, Elite Model Management New York -- http://www.elitemodel.com/-- is a modeling agent with more than 750 fashion models working at about 30 agencies in cities such as Los Angeles, Milan, New York, and Paris. It operates an international network of fashion agencies, a worldwide model search, product licensing operations and a fashion model showcase. The Company filed for chapter 11 protection on (Bankr. S.D.N.Y. Case No. 04-10845) on February 11, 2004, to gain relief from a number of pending lawsuits. Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel, LLP, represents the Debtor in its restructuring efforts. Assistant Secretary and General Counsel Edward R. Curtin told the Bankruptcy Court that as of December 31, 2003, the Company's books and records reflected assets totaling approximately $4.5 million and liabilities totaling approximately $7 million. FEDERAL-MOGUL: Plan Proposes to Compromise T&N Pension Obligations ------------------------------------------------------------------ Federal-Mogul's Plan of Reorganization provides that the U.K. Debtors' obligations under the T&N Retirement Benefits Scheme (1989) will be compromised. The payments under the T&N Pension Scheme are projected to be reduced to a percentage of the total claim related to the Scheme. The independent pension plan trustee has not yet accepted the proposed compromise of the T&N Pension Scheme stated in the Plan, and negotiations continue over the terms of a compromise that might be acceptable. If a compromise cannot be reached, the Plan provides that all obligations under the T&N Pension Scheme will be treated as unsecured claims against the applicable U.K. Debtors that are liable for the pension plan obligations. The claims will be paid at a reduced level in accordance with the terms of the Plan for payment of unsecured claims and in accordance with U.K. pension regulations. In a recent Form 10-Q filing with the Securities and Exchange Commission, Federal-Mogul Corporation's Executive Vice President and Chief Financial Officer, G. Michael Lynch, relates that the U.K. Administrators took the unilateral action of withdrawing certain of the U.K. Debtors from participating in the T&N Pension Scheme in mid-July 2004. The U.K. Administrators indicated that the action was taken to: -- preserve the contributions made by current employees of certain U.K. Debtors into the T&N Pension Scheme; and -- protect the other creditors of the U.K. Debtors in the event the independent pension plan trustee rejects the treatment afforded the T&N Pension Scheme in the Plan. Federal-Mogul anticipates that industrial actions could take place in the near term at one or more of its U.K. facilities as a result of: -- the negotiations involving the future of the T&N Pension Scheme; and -- the possibility that certain Scheme participants will receive a reduced pension benefit when the U.K. Debtors' emerge from Administration. Federal-Mogul is working diligently to avoid the industrial actions and is simultaneously establishing contingency plans to mitigate the effect of the industrial actions on its UK operations should the actions occur. Meeting Held to Resolve Pension Scheme Issues Federal-Mogul Corporation (OTC Bulletin Board: FDMLQ) hosted a meeting among representatives of its U.K. workforce, the Creditors Committee, the Company, the U.K. Administrators, the Trustee of the T&N Pension Scheme and Carl Icahn with the goal of resolving the remaining Pension Scheme issues. The Company believes that much progress was made toward airing the open issues and, with the assistance of Mr. Icahn, attempting to find solutions that would be satisfactory to all parties. Mr. Icahn stated that, "We presented a proposal that we believe will save jobs of Federal-Mogul's U.K. workforce and avoid a wind- up of the Pension Scheme." *** Forbes Magazine ranks Carl Celian Icahn, 68, as one of the *** world's richest people, with a $5.8 billion net worth. *** Mr. Icahn reportedly owns nearly $1 billion of Federal-Mogul *** bonds. U.K. Unions Not Satisfied Joint unions representing Turner and Newall employees and pensioners in the U.K. said they are disappointed that US bond holders for Federal-Mogul have not improved on their offer of $130 million at the pensions crisis meeting held in New York this week. Alexander Forbes, the independent trustee for the UK Turner and Newall pension scheme, is now considering if the offer made by the major US Federal-Mogul shareholders is workable. The unions have meetings planned with all the interested parties in the coming week and have appealed to members not to take any precipitative action until the outcome of those discussions is known. The UK trade union representatives brokered a meeting between Federal-Mogul's major US bond holder, Carl Icahn, the UK independent trustee and the UK administrator, Kroll in New York earlier this week in an attempt to find a formula to bail out of the scheme. Previously Federal Mogul had offered to pay an additional GBP65 million on top of their annual pension contributions of GBP7million but the independent trustee had turned it down, saying that minimum annual contributions of GBP29 million were needed on top of their existing contribution rate of 11.4% for the next 8 years. Up to 20,000 deferred pensioners could face losses of up to 70% of their pensions and 20,000 existing pensioners will not get inflation-linked rises if the pension scheme is wound up. The UK pension scheme faces a GBP300 million shortfall although wind up will cost GBP875 million and could result in the company's full wind up. Turner and Newall are owned by US parent company Federal-Mogul which has been in Chapter 11 voluntary administration under law since 1998. The company is preparing to come out of administration later this year. Turner and Newall have 11 plants across the UK, employing 4,000 people. A further 36,000 people are either deferred or active pensioners. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRST VIRTUAL: Common Stock Begins Trading on Pink Sheets --------------------------------------------------------- First Virtual Communications, Inc.'s (Pink Sheets: FVCC) common stock is now quoted for trading on the Pink Sheets(R) under the symbol FVCC. The Pink Sheets is a centralized quotation service that collects and publishes market-maker quotes for over-the-counter securities in real time. The Pink Sheets is neither a Securities and Exchange Commission-registered stock exchange nor a NASD broker- dealer. Additional information regarding the Pink Sheets is available at http://www.pinksheets.com/ As reported in the Troubled Company Reporter on May 21, 2004, First Virtual Communications received a letter from Nasdaq on May 18, 2004 noting the failure of the Company to file its Quarterly Report on Form 10-Q for the period ended March 31, 2004 by the filing deadline of May 17, 2004, a violation of Marketplace Rule 4310(c)(14). As a result, the Company's securities are subject to delisting from The Nasdaq SmallCap Market and, at May 20, 2004, the Company's trading symbol was changed from "FVCX" to "FVCXE". The Company has requested a hearing before a listing qualifications panel to review this determination by Nasdaq Staff. Any delisting action will be stayed pending the panel's decision. While there can be no assurance that the panel will grant the Company's request for continued listing, the Company's management is actively working to maintain the listing. On April 30, 2004, the Company announced that the Audit Committee of its Board of Directors had engaged independent counsel to conduct an investigation after the Company became aware of several irregular sales transactions involving its sales operations in China. The Company will not file its Quarterly Report until its auditors have completed their review for the three months ended March 31, 2004. That review will not be finished until the ongoing investigation is completed. About First Virtual Communications First Virtual Communications is a premier provider of infrastructure and solutions for real time rich media communications. Headquartered in Redwood City, California, the Company also has operations in Europe and Asia. More information about the company can be found at http://www.fvc.com/ * * * Liquidity and Capital Resources In its Form 10-K for the fiscal year ended December 31, 2003, First Virtual Communications reports: "Since inception, the Company has financed its operations primarily through private and public placements of equity securities, revenue from sales of the Company's products and services and to a lesser extent through certain credit facilities. As of December 31, 2003, the Company had cash, cash equivalents and short-term investments of $12.2 million and working capital of $5.0 million. "Management believes that the Company's existing cash and investments, together with the funds provided pursuant to its credit facility with its bank are adequate to fund the Company's operations through the first quarter of 2005. However, the Company's cash requirements depend on several factors, including the rate of market acceptance of its products and services, the ability to expand and retain its customer base and other factors. If the Company fails to achieve its planned revenue or expense targets, management believes that it has the plans, intent and ability to curtail capital and operating spending to ensure that cash and investments will be sufficient to meet the Company's cash requirements through March 31, 2005. "In order to aggressively pursue business opportunities, the Company expects to seek equity investments from existing or potential strategic partners in the future. Should the Company sell additional equity, the sale may result in dilution to the Company's current stockholders. The Company also expects to seek additional capital from the public and/or private equity markets that may result in dilution of the Company's current stockholders. There can be no assurance that any financing will be available at acceptable terms or at all." FLEMING COS: Continental Holds $91K Admin & $753K Unsecured Claims ------------------------------------------------------------------ On September 8, 2003, Continental 19 Fund Ltd. Partnership filed Claim No. 8988 for $346,232 on account of alleged outstanding rents and lease rejection damage claims in the chapter 11 cases of Fleming Companies, Inc., and its debtor-affiliates and. Also, Continental XI Fund Ltd. Partnership filed Claim No. 8987 for $390,439 on account of alleged outstanding rents and lease rejection damages. On January 15, 2004, Continental 19 amended its claim with Claim No. 17665 for $370,409. Claim No. 17665 is an administrative claim for outstanding rents and lease rejection damages. In the same manner, Continental XI amended Claim No. 8987 with Claim No. 17664 for $474,229. The Debtors objected to Claim Nos. 8988 and 8987. Continental contacted the Debtors to alert them that Claim Nos. 8988 and 8987 have both been amended. To resolve the Claims Objection, the parties agree that: (a) Claim Nos. 8988 and 8987 will be disallowed in their entirety; (b) Claim No. 17665 will be classified and treated as: -- Continental 19 will have an allowed administrative claim for $27,290; and -- Continental 19 will have an allowed unsecured claim for $343,119; and (c) Claim No. 17664 will be reclassified and treated as: -- Continental XI will have an allowed administrative claim for $38,670, which will be treated and satisfied in accordance with the Plan; -- Continental XI will have an additional allowed administrative claim for $25,288, which will be paid immediately; and -- Continental XI will have an allowed unsecured claim for $410,142. 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. The Debtors emerged from Chapter 11 on August 23, 2004 and is not known as Core-Mark Holding Company, Inc. (Fleming Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLINTKOTE MINES: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Flintkote Mines Limited aka Mines Flintkote Limited Three Embarcadero Center, Suite 1190 San Francisco, California 94111-4047 Bankruptcy Case No.: 04-12440 Type of Business: The Debtor is a subsidiary of Flintkote Company and is engaged in the mining of base-precious metal. Chapter 11 Petition Date: August 25, 2004 Court: District of Delaware (Delaware) Judge: Judith K. Fitzgerald Debtor's Counsel: James E. O'Neill, Esq. Laura Davis Jones, Esq. Pachulski, Stang, Ziehl, Young & Jones 919 North Market Street, 16th Floor PO Box 8705 Wilmington, Delaware 19899-8705 Tel: 302-652-4100 Fax: 302-652-4400 Estimated Assets: $1 Million to $50 Million Estimated Debts: More than $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Randy Bono, Esq. Asbestos Personal $26,270,650 The Simmons Firm, LLC Injury 707 Birkshire Boulevard PO Box 521 East Alton, Illinois 62024 Charles A. Waters, Esq. Asbestos Personal $13,771,500 Waters & Krauss Injury 3219 McKinney Avenue Suite 3000 Dallas, Texas 75204 Pam Wise, Esq. Asbestos Personal $7,977,500 Wise & Julian Injury 3555 College Avenue PO Box 1108 Alton, Illinois 62002 David M. McClain, Esq. Asbestos Personal $4,500,000 Kazan & McClain Injury 171 Twelfth Street 3rd Floor Oakland, California 94607 Mike Kaeske, Esq. Asbestos Personal $3,668,500 Kaeske Reeves LLP Injury 6301 Gaston Avenue Suite 735 Dallas, Texas 75214 R. Dean Hartley, Esq. Asbestos Personal $3,514,500 Hartley & O'Brien Injury 827 Main Street Wheeling, West Virginia 26003 Russel W. Budd, Esq. Asbestos Personal $2,930,400 Baron & Budd Injury 3102 Oak Lawn Avenue Suite 1100 Dallas, Texas 75219-4281 Glen W. Morgan, Esq. Asbestos Personal $2,880,000 Reaud, Morgan & Quinn Injury 801 Laurel Beaumont, Texas 77701 Scott M. Hendler Asbestos Personal $2,735,800 Hendler Law Firm Injury 816 Congress Avenue Suite 1230 Austin, Texas 78701 James W. Bedortha, Esq. Asbestos Personal $2,490,650 Goldberg, Persky, Injury Jennings & White, PC 1030 Fifth Avenue 3rd Floor Pittsburgh, Pennsylvania 15219-6295 John I. Kittle, Esq. Asbestos Personal $2,298,750 Mazur & Kittel Injury 30665 Northwestern Highway Farmington Hills, Michigan 48334 Denman H. Heard, Esq. Asbestos Personal $1,750,000 Watts & Heard LLP Injury Meilie Esperson Building 815 Walker Street 16th Floor Houston, Texas 77002 John M. Deakle, Esq. Asbestos Personal $1,744,175 The Deakle Law Firm Injury 802 Main Street PO Box 2072 Hattiesburg, Mississippi 39403 Alan R. Brayton, Esq. Asbestos Personal $1,719,748 Brayton Purcell Injury 222 Rush Landing PO Box 6169 Novato, California 94948-6169 Joseph F. Rice, Esq. Asbestos Personal $1,632,900 Motley Rice LLC Injury 28 Bridgeside Boulevard Mount Pleasant, South Carolina 29464 Mark H. Iola, Esq. Asbestos Personal $1,525,000 Stanley, Mandel & Iola Injury 3000 Town Center Suite 3130 Southfield, Michigan 48075 Tom B. Scott, Esq. Asbestos Personal $1,445,000 Scott & Scott Injury PO Box 2009 Jackson, Mississippi 39215-2009 Doug McManany, Esq. Asbestos Personal $1,400,000 Mathis & Adams PC Injury 622 Drayton Street PO Box 9790 Savannah, Georgia 31401 T. Roe Frazer II, Esq. Asbestos Personal $1,096,875 Frazer & Davidson, PA Injury 500 East Capitol Street Jackson, Mississippi 39201 John F. Dillon, Esq. Asbestos Personal $885,000 John F. Dillon, PLC Injury 81174 Jim Loyd Road Folsom, Louisiana 70437 FRANCHISE FINANCE: Moody's Junks 11 Note Classes & Puts Low-B on 5 ------------------------------------------------------------------ Moody's Investors Service downgrades 25 classes of securities issued in three franchise loan securitizations sponsored by Franchise Finance Corporation of America. Franchise Finance was acquired by GE Capital Franchise Finance Corporation, a subsidiary of General Electric Capital Corporation, in 2001. The complete ratings actions are as follows: Issuer: FFCA Secured Lending Corporation Secured Franchise Loan Trust Certificates, Series 1999-1 * $80,743,773 Class A-1a Notes, downgraded to Aa3 from Aaa; * $140,000,000 Class A-1b Notes, downgraded to Aa3 from Aaa; * $6,945,984 Class A-2 Notes, downgraded to Aa3 from Aaa; * $19,719,000 Class B-1 Notes, downgraded to Baa1 from Aa3; * $1,024,000 Class B-2 Notes, downgraded to Baa1 from Aa3; * $11,831,000 Class C-1 Notes, downgraded to Baa3 from A1; * $614,000 Class C-2 Notes, downgraded to Baa3 from A1; * $6,500,000 Class D-1 Notes, downgraded to Ba2 from A3; * $337,000 Class D-2 Notes, downgraded to Ba2 from A3; * Class IO Notes, downgraded to Aa3 from Aaa; Issuer: FFCA Secured Lending Corporation Franchise Loan Grantor Trust 1999-2 * $23,308,585 Class A-1a Notes, downgraded to Baa1 from A3; * $62,300,000 Class A-1b Notes, downgraded to Baa3 from A3; * $19,735,602 Class A-2 Notes, downgraded to Ba1 from A3; * $28,330,000 Class B-1 Notes, downgraded to Caa2 from Ba2; * $5,390,000 Class B-2 Notes, downgraded to Caa2 from Ba2; * $11,330,000 Class C-1 Notes, downgraded to Ca from Ba3; * $2,160,000 Class C-2 Notes, downgraded to Ca from Ba3; * $11,330,000 Class D-1 Notes, downgraded to C from Caa1; * $2,160,000 Class D-2 Notes, downgraded to C from Caa1; * $11,330,000 Class E-1 Notes, downgraded to C from Caa3; * $2,150,000 Class E-2 Notes, downgraded to C from Caa3; * Class IO Notes, downgraded to Baa1 from Aa3; Issuer: FFCA Secured Loan Owner Trust/Grantor Trust 2000-1 * $16,250,000 Class B Notes, downgraded to Ba2 from Baa3; * $14,218,000 Class C Notes, downgraded to B3 from B1; * $10,156,000 Class D Notes, downgraded to Caa3 from Caa1; * $5,000,000 Class E Notes, rating confirmed at Ca; Issuer: FFCA Secured Loan Owner Trust 2000-1 * $5,156,000 Class F Notes, rating confirmed at Ca. The 1999-1 securities were placed on review on March 15, 2004 based in part on the financial situation of Uni-Marts, Inc., a gas and convenience operator with units located in rural areas. The borrower comprises 10% of the 1999-1 pool. Uni-Marts, Inc., which continues to make current payments on its obligations, is currently marketing under-performing units and the loans are currently in special servicing. As of the August 2004 distribution date, total delinquencies for the pool comprise 12.7%, with loans in special servicing totaling nearly 22.6% of the pool. The delinquencies are predominately related to the convenience and gas loans in the portfolio. The downgrades consider the expected recoveries on the distressed borrowers in addition to the possibility of future defaults in the pool. Securities from the 1999-2 transaction are downgraded based on the high percentage of delinquencies and problem loans and ultimate writedowns on loans to affiliates of E-Z Serve and Clark Retail Enterprises. For both borrowers, properties have been sold and current principal shortfalls total $34 million for Clark and $26 million for EZ Serve. The pool may receive additional recoveries on unsecured claims filed in the EZ Serve bankruptcy case. Delinquencies as of the August servicing report were 27%. The 2000-1 transaction has pool delinquencies of 34% as of the August 2004 distribution date. As in 1999-2, the transaction has an exposure to Clark and EZ Serve, with principal shortfalls of $8.6 million and $29.9 for the two borrowers, respectively. Other large specially serviced loans include affiliates of Sydran Holdings, Pubs Property, and Uni-Marts, all three of which continue to make monthly payments (in Sydran's case, interest only payments). The ratings action considered the potential recoveries on the specially serviced loans. The three transactions have the benefit of environmental insurance policies from American International Group, Inc., designed to mitigate environmental risk in the gas and convenience sector in the event of a borrower default. The 1999-1 and 1999-2 deals originally principally covered the lower of the cleanup cost or the loan balance, while the 2000-1 transaction principally included policies that insured the loan balance of a defaulted borrower with environmental contamination. According to the servicer, on February 6, 2004, AIG filed a demand for arbitration with the American Arbitration Association. On March 24, 2004, GEFF responded to AIG's arbitration demand and filed a counterclaim demanding that AIG pay all of the amounts due on the claims. GE Capital Franchise is awaiting the appointment of three independent arbitrators. Based on the disputed claims, there is substantial uncertainty regarding ultimate recovery and timing of payments from the insurance policies. The Class A-1 and A-2 securities issued in the 2000-1 transaction are insured by MBIA Insurance Corporation and are not affected by the ratings action. In the 1999-2 securitization, the A-1c securities are insured by MBIA. With over $11 billion in serviced assets, GE Capital Franchise provides financing primarily in the restaurant, hospitality, branded beverage, storage, and automotive industries. FRANCHISE PICTURES: Files for Bankruptcy after Losing Fraud Case ---------------------------------------------------------------- Intertainment AG, Ismaning (Munich), has been informed, shortly after the presentation of the final judgment in the fraud case brought against U.S. film producer Franchise Pictures and others, that Franchise Pictures and nearly all subsidiary companies convicted in the lawsuit have filed for bankruptcy. As a result of this predictable step, the companies have placed themselves under the protection of American insolvency law. This means that Intertainment will assert its claims against Franchise Pictures and the subsidiary companies resulting from the lawsuit as part of the insolvency proceedings. It is possible that Elie Samaha, the CEO of Franchise Pictures, will also file for personal bankruptcy. Samaha was -- like Franchise Pictures and the subsidiary companies -- found guilty of defrauding Intertainment. Following the judgment, Intertainment is entitled to receive $121.7 million, with all the convicted parties being jointly liable for $92.7 million. Regardless of this latest development, Intertainment will continue with its preparations for the arbitral proceedings scheduled for January 2005 against the other parties involved in the Franchise Pictures fraud. These include Comerica Bank, and the insurance companies Film Finances and others. As part of the proceedings, Intertainment is claiming -- as in the case of the Franchise lawsuit -- damages in excess of 100 million dollars. Headquartered in Los Angeles, California, Franchise Pictures LLC is an independent motion picture production and distribution company founded by Elie Samaha and Andrew Stevens, two of the more prolific producers in the entertainment industry. Franchise Pictures and twenty debtor-affiliates filed for chapter 11 protection on August 18, 2004 (Bankr. C.D. Cal. Case No. 04-27996). David L. Neale, Esq., at Levene Neale Bender Rankin & Brill, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, each debtor entity listed less than $50,000 in total assets and more than $100 million in total debts. FRANCHISE PICTURES: Case Summary & Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Franchise Pictures LLC 8228 Sunset Boulevard Los Angeles, California 90046 Bankruptcy Case No.: 04-27996 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- 3000 Miles Productions Inc. 04-28020 Carter Productions LLC 04-28023 Seraph Productions Inc. 04-28024 VLN Productions Inc. 04-28025 Suite Productions Inc. 04-28027 Heightened Productions Inc. 04-28028 Phoenician Entertainment LLC 04-28029 Valentine Productions Inc. 04-28033 Rangers Productions Inc. 04-28036 Franchise Films LLC 04-28038 Auggie Rose Productions Inc. 04-28041 Franchise Pictures Inc. 04-28042 Battlefield Productions LLC 04-28043 Nine Yards Productions Inc. 04-28044 Franchise Entertainment LLC 04-28045 Split Card Films Inc. 04-28048 Pledge Productions Inc. 04-28049 Alex and Emma Productions Inc. 04-28051 Champs Productions Inc. 04-28054 Conprod Inc. 04-28058 Type of Business: The Debtor is a film producer. Chapter 11 Petition Date: August 18, 2004 Court: Central District of California (Los Angeles) Judge: Maureen Tighe Debtors' Counsel: David L. Neale, Esq. Levene Neale Bender Rankin & Brill 1801 Avenue of the Stars #1120 Los Angeles, California 90067 Tel: 310-229-1234 Estimated Estimated Assets Debts --------- --------- Franchise Pictures LLC $0 to $50,000 More than $100 M 3000 Miles Productions Inc. $0 to $50,000 More than $100 M Carter Productions LLC $0 to $50,000 More than $100 M Seraph Productions Inc. $0 to $50,000 More than $100 M VLN Productions Inc. $0 to $50,000 More than $100 M Suite Productions Inc. $0 to $50,000 More than $100 M Heightened Productions Inc. $0 to $50,000 More than $100 M Phoenician Entertainment LLC $0 to $50,000 More than $100 M Valentine Productions Inc. $0 to $50,000 More than $100 M Rangers Productions Inc. $0 to $50,000 More than $100 M Franchise Films LLC $0 to $50,000 More than $100 M Auggie Rose Productions Inc. $0 to $50,000 More than $100 M Franchise Pictures Inc. $0 to $50,000 More than $100 M Battlefield Productions LLC $0 to $50,000 More than $100 M Nine Yards Productions Inc. $0 to $50,000 More than $100 M Franchise Entertainment LLC $0 to $50,000 More than $100 M Split Card Films Inc. $0 to $50,000 More than $100 M Pledge Productions Inc. $0 to $50,000 More than $100 M Alex and Emma Productions Inc. $0 to $50,000 More than $100 M Champs Productions Inc. $0 to $50,000 More than $100 M Conprod Inc. $0 to $50,000 More than $100 M A. Franchise Pictures, LLC's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Morgan Creek Productions $5,000,000 10351 Santa Monica Blvd., Suite 200 Los Angeles, California 90026 Alschuler Grossman Stein & Kahane $1,500,000 1620 26th Street, 3rd Floor North Santa Monica, California 90404 Plan B. Productions $1,300,000 2100 S. Sawtelle Blvd., 17th Fl. New York, New York 10019 Quinn Emanuel Urquhart et al. $714,694 865 S. Figeroa St., 10th Fl. Los Angeles, California 90017 Stein & Flugge LLP $543,617 6100 Wilshire Boulevard, Ste. 1250 Los Angeles, California 90048 Dennis Dreith, Adm, Film Musicians $500,000 c/o Brian Cella Cella, Lange & Cella 1600 S. Main Plaza, Ste. 180 Walnut Creek, California 94596 Bryan Cave LLP $241,260 MPL Communications $185,000 Coudert Bros. $114,116 Technicolor $92,586 Tenon Ltd. $89,003 Tiny Pink Pig Productions $80,000 Fotokem $74,394 Beausoliel Productions $73,750 United Airlines Travel Pass $58,178 Ascent Media $48,881 American Federation of Musicians Unknown Director's Guild of America Unknown IATSE General Office Unknown B. 3000 Miles Productions' 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Comerica Bank $6,471,150 Comerica Tower at Detroit Center 500 Woodward Avenue, M/C 3391 Detroit, Michigan 48226 Dennis Dreith, Adm, Film Musicians $500,000 c/o Brian Cella Cella, Lange & Cella 1600 South Main Plaza, Suite 180 Walnut Creek, California 94596 IATSE General Office $87,718 American Federation of Musicians $44,715 Directors Guild of America Unknown Los Angeles Headquarters Screen Actors Guild Unknown Writers Guild of America, West Unknown C. Carter Productions' 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Morgan Creek $5,000,000 4000 Warner Boulevard, Building 76 Burbank, California 90026 Writers Guild of America, West $120,609 Directors Guild of America $89,388 Los Angeles Headquarters IATSE General Office $72,498 Screen Actors Guild $36,183 D. Seraph Productions' 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Morgan Creek $5,000,000 4000 Warner Boulevard, Building 76 Burbank, California 90026 Writers Guild of America, West $81,923 Directors Guild of America $81,923 Los Angeles Headquarters IATSE General Office $56,816 American Federation of Musicians Unknown Screen Actors Guild Unknown E. VLN Productions' 5 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany IATSE General Office $11,400 Writers Guild of America, West $8,529 American Federation of Musicians Unknown Screen Actors Guild Unknown F. Suite Productions' 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Screen Actors Guild $1,728 IATSE General Office $411 American Federation of Musicians $393 Directors Guild of America Unknown Los Angeles Headquarters Writers Guild of America, West Unknown G. Heightened Productions' 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Morgan Creek $5,000,000 4000 Warner Boulevard, Building 76 Burbank, California 90026 Comerica Bank $2,880,294 Comerica Tower at Detroit Center 500 Woodward Avenue, M/C 3391 Detroit, Michigan 48226 Writers Guild of America, West $60,155 Directors Guild of America $60,155 Los Angeles Headquarters IATSE General Office $27,474 American Federation of Musicians Unknown Screen Actors Guild Unknown H. Phoenician Entertainment's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany I. Valentine Productions' 5 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Writers Guild of America, West $24,104 IATSE General Office $16,540 Directors Guild of America $2,751 Los Angeles Headquarters American Federation of Musicians Unknown J. Rangers Productions' 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Screen Actors Guild $11,205 American Federation of Musicians Unknown Directors Guild of America Unknown Los Angeles Headquarters IATSE General Office Unknown Writers Guild of America, West Unknown K. Franchise Films' Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany L. Auggie Rose Productions' 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany IATSE General Office $31,463 Screen Actors Guild $23,839 Writers Guild of America, West $7,946 American Federation of Musicians $5,183 Directors Guild of America Unknown Los Angeles Headquarters M. Franchise Pictures, Inc.'s 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Dennis Dreith, Adm., Film Musicians $500,000 c/o Brian Cella Cella, Lange & Cella 1600 S. Main Plaza, Suite 180 Walnut Creek, CA 94696 N. Battlefield Productions' 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Morgan Creek Productions $5,000,000 Attn: Howard Kaplan 4000 Warner Blvd., Bldg. 76 Burbank, CA 91522 Writers Guild of America, West $38,945 IATSE General Office $36,410 American Federation of Musicians Unknown Director's Guild of America Unknown Screen Actors Guild Unknown O. Nine Yards Productions' 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Morgan Creek Productions $5,000,000 Attn: Howard Kaplan 4000 Warner Blvd., Bldg. 76 Burbank, CA 91522 Dennis Dreith, Adm., Film Musicians $500,000 c/o Brian Cella Cella, Lange & Cella 1600 S. Main Plaza, Suite 180 Walnut Creek, CA 94696 IATSE General Office $91,608 Writers Guild of America, West $77,495 Director's Guild of America $77,495 American Federation of Musicians $47,327 Screen Actors Guild Unknown P. Franchise Entertainment's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Q. Split Card Films' 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Morgan Creek Productions $5,000,000 Attn: Howard Kaplan 4000 Warner Blvd., Bldg. 76 Burbank, CA 91522 Dennis Dreith, Adm., Film Musicians $500,000 c/o Brian Cella Cella, Lange & Cella 1600 S. Main Plaza, Suite 180 Walnut Creek, CA 94696 IATSE General Office $91,608 Writers Guild of America, West $77,495 Director's Guild of America $77,495 American Federation of Musicians $47,327 Screen Actors Guild Unknown R. Pledge Productions' 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Morgan Creek Productions $5,000,000 Attn: Howard Kaplan 4000 Warner Blvd., Bldg. 76 Burbank, CA 91522 Comerica Bank $1,720,666 Corporate Headquarters Comerica Tower at Detroit Center 400 Woodward Ave. M/C 3391 Detroit, MI 48226 Writers Guild of America, West $48,795 Director's Guild of America $48,795 IATSE General Office $35,144 American Federation of Musicians Unknown Screen Actors Guild Unknown S. Alex and Emma Productions' 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Dennis Dreith, Adm., Film Musicians $500,000 c/o Brian Cella Cella, Lange & Cella 1600 S. Main Plaza, Suite 180 Walnut Creek, CA 94696 IATSE General Office $284,448 1430 Broadway, 20th Floor New York, NY 10018 Screen Actors Guild $215,517 Writers Guild of America, West $71,839 Director's Guild of America $71,839 American Federation of Musicians $39,532 T. Champs Productions' 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Writers Guild of America, West $246,563 Director's Guild of America $246,563 IATSE General Office $144,977 American Federation of Musicians Unknown Screen Actors Guild Unknown U. Conprod's 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Intertainment AG $106,000,000 Osterfeldstrasse 84 85737 Ismaning, Germany Screen Actors Guild $64,739 Writers Guild of America, West $21,966 Director's Guild of America, West $21,965 American Federation of Musicians $18,208 IATSE General Office Unknown GREENSBURG COUNTRY: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Greensburg Country Club Route 130 Pleasant Valley Road Greensburg, Pennsylvania 15601 Bankruptcy Case No.: 04-31168 Type of Business: The Debtor is a private golf course located in Greensburg, Pennsylvania. Chapter 11 Petition Date: August 25, 2004 Court: Western District of Pennsylvania (Pittsburgh) Debtor's Counsel: Paul J. Cordaro, Esq. Campbell & Levine LLC 1700 Grant Building Pittsburgh, PA 15219 Tel: 412-261-0310 Fax: 412-261-5066 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Sysco Trade Creditor $69,925 Verdicon Trade Creditor $15,368 E.H. Griffith Inc. Trade Creditor $14,800 Lesco Inc. Trade Creditor $13,184 Krigger & Company Trade Creditor $12,754 Herbein + Company Accountants $9,475 La Mantia Produce Trade Creditor $8,836 Coen Oil Company Trade Creditor $8,720 John V. Heineman Comp. Trade Creditor $7,301 Ideal Soap & Chem. Co. Trade Creditor $5,933 Allegheny Power Electric Service $5,844 Walker Supply Trade Creditor $4,680 Dominion Peoples Gas Service $4,596 Allegheny Lawn Products Trade Creditor $4,478 Shelco Seafood Co. Trade Creditor $4,238 Turner Dairy Farms Inc. Trade Creditor $4,150 Hodges Rash Trade Creditor $4,005 Simplot Partners $3,644 West End Builders Supply Trade Creditor $3,570 Hillendale Farms of PA Trade Creditor $3,355 HAWAIIAN AIRLINES: Parent & Trustee Agree on Joint Reorg. Plan -------------------------------------------------------------- Joshua Gotbaum, Trustee for Hawaiian Airlines, and the airline's parent, Hawaiian Holdings, Inc., (Amex: HA) agreed to submit a joint plan of reorganization for the airline. If this plan is confirmed by the bankruptcy court, it would take Hawaiian out of bankruptcy and offer creditors payment in full for their claims. The proposed plan is to be filed with the bankruptcy court on Monday. "This plan provides value both to shareholders and creditors of Hawaiian Airlines in a consensus proposal that will make it easier and faster to exit bankruptcy. It offers creditors payment in full for their claims while providing capital for Hawaiian's future growth," Mr. Gotbaum said. "The approval of this proposed plan will confirm Hawaiian Airlines' successful turn-around. Hawaiian's bankruptcy may be the first ever in the airline industry that ends with creditors receiving payment in full for their claims. It is a testimony to the hard work both of Hawaiian Holdings and the more than 3,300 people who make up the airline." Larry Hershfield, Chairman of Hawaiian Holdings, said, "We are gratified that the Trustee and the equity holders of Hawaiian Airlines have agreed to submit a joint plan. We look forward to Hawaiian Airlines emerging from bankruptcy at the earliest possible date so that we can focus all of our efforts on taking full advantage of the exciting opportunities that lie ahead. We believe Hawaiian's emergence will also benefit the State of Hawaii and the Hawaiian economy, as we begin to take advantage of those opportunities." Mr. Hershfield is Chairman of Ranch Capital, which is the managing member of RC Aviation, LLC, which recently acquired a substantial equity interest in Hawaiian Holdings. Pursuant to the proposed plan, RC Aviation has committed to invest more than $160 million to purchase claims and reorganize the airline. Under the proposed plan, Hawaiian Airlines' aircraft lessors, its largest creditors, would receive 100 percent of their approved claim, either in a combination of 50 percent cash and 50 percent stock or, alternatively, by accepting a long-term note of Hawaiian. Other creditors would also be offered full payment of their claims, either in cash or in a combination of 50 percent cash and 50 percent stock, whichever they choose. Under the plan, Mark Dunkerley, Hawaiian Airlines' president and chief operating officer, would become chief executive officer. No other significant changes in management are contemplated. Hawaiian Holdings would resume control of the airline. The board of Hawaiian Holdings, including Mr. Hershfield and former American Airlines CEO Donald Carty, is expected to become the board of Hawaiian Airlines. Mr. Hershfield said the boards of both Hawaiian Airlines and Hawaiian Holdings may be expanded to include additional independent directors, both from the industry and from Hawaii. Mr. Hershfield added, "Our next immediate task is to attempt to reach a consensual agreement with each of Hawaiian's labor groups, and to that end, we hope to continue our meetings with each in the coming weeks. Hawaiian's employees have been a large part of the reason for Hawaiian's success at a time when much of the rest of the industry is suffering, and they are an essential part of Hawaiian's future." Hawaiian's Official Committee of Unsecured Creditors is reviewing the proposed plan. The proposed plan, the plans that have been filed by third parties, and other plans that may be filed, will be reviewed in coming months by US Bankruptcy Court Judge Robert Faris. About Hawaiian Airlines Hawaiian Airlines, the nation's number one on-time carrier, is recognized as one of the best airlines in America. Business travelers recently surveyed by Conde Nast Traveler rated Hawaiian Airlines as having the best in-flight service and meals of any U.S. carrier. In addition, Hawaiian is ranked as the nation's fifth best airline overall by Travel + Leisure, ahead of every other carrier flying to Hawaii. Celebrating its 75th year of continuous service, Hawaiian Airlines is Hawaii's biggest and longest-serving airline, and the second largest provider of passenger air service between Hawaii and the mainland U.S. Hawaiian offers nonstop service to Hawaii from more mainland U.S. gateways than any other airline. Hawaiian also provides approximately 117 daily jet flights among the Hawaiian Islands, as well as service to Australia, American Samoa and Tahiti. Headquartered in Honolulu, Hawaii, Hawaiian Airlines, Inc., -- http://hawaiianair.com/ -- is a subsidiary of Hawaiian Holdings, Inc. (Amex and PCX: HA). The Company provides primarily scheduled transportation of passengers, cargo and mail. Flights operate within the South Pacific and to points on the west coast as well as Las Vegas. Since the appointment of a bankruptcy trustee in May 2003, Hawaiian Holdings has had no involvement in the management of Hawaiian Airlines and has had limited access to information concerning the airline. The Company filed for chapter 11 protection on March 21, 2003 (Bankr. D. Hawaii Case No. 03- 00817). HILTON HOTELS: Moody's Reviews Low-B Ratings for Possible Upgrade ----------------------------------------------------------------- Moody's Investors Service placed the ratings of Hilton Hotels Corporation on review for possible upgrade. The review for upgrade is prompted by the company's improving credit profile as a result of debt reduction and earnings growth, as well as a favorable demand outlook for the lodging industry. Moody's review will focus on the sustainability of future lodging demand, the likelihood that credit measures will improve further, the level of secured debt in the company's capital structure, and the company's commitment to maintaining an improved financial profile in the context of its strategic and financial policy objectives. Ratings placed on review for possible upgrade: * Senior Implied rating at Ba1; * Issuer rating at Ba1; * Senior unsecured notes at Ba1; * Senior unsecured shelf at (P) Ba1; * Subordinate shelf at (P) Ba2; * Preferred stock shelf at (P) Ba3; * Commercial paper at Not Prime. Based in Beverly Hills, California, Hilton Hotels Corporation is a leading hotel company that generated revenues of $3.8 billion during its 2003 fiscal year. IMPAC MEDICAL: Nasdaq Threatens to Halt Stock Trading on Sept. 2 ---------------------------------------------------------------- IMPAC Medical Systems, Inc., (Nasdaq: IMPC) received a Nasdaq Staff Determination on August 24, 2004 indicating that its securities are subject to delisting from the Nasdaq National Market at the opening of business on September 2, 2004 as a result of the delayed filing of its Quarterly Report on Form 10-Q. Pursuant to Marketplace Rule 4310(c)(14), the Company's Form 10-Q for the quarter ended June 30, 2004 was originally due August 16, 2004. The Company intends to request a hearing before a NASDAQ Listing Qualifications Panel to review the Staff Determination. There can be no assurance the Panel will grant the Company's request for continued listing. The Company's stock will continue to be listed while the appeal is pending. Effective August 26, 2004, the fifth character "E" will be added to the Company's ticker symbol to signify the delinquent filing. About IMPAC Medical Systems Inc. IMPAC Medical Systems, Inc., is a leading provider of specialized IT solutions that streamline both clinical and business operations to help improve the process of delivering quality patient care. With open integration to multiple healthcare data and imaging systems, IMPAC offers a comprehensive IT solution that includes specialized electronic charting, full-featured practice management, clinical laboratory management, and outcomes reporting. Supporting over 1,700 installations worldwide, IMPAC delivers practical solutions that deliver better overall communication, process efficiency and quality patient care. For more information about IMPAC Medical Systems' products and services, call 650-623-8800 or visit http://www.impac.com/ * * * As reported in the Troubled Company Reporter on August 19, 2004, IMPAC Medical Systems, Inc., (Nasdaq: IMPC) received notice from the Company's independent auditor, Deloitte & Touche LLP, that it had resigned due to a disagreement with management concerning its application of Statement of Position 97-2, "Software Revenue Recognition," with respect to the timing of its recognition of certain revenues in its restated financial statements for the fiscal years ended September 30, 2001 through 2003 filed in April 2004. This disagreement arose during the review of the fiscal 2004 third quarter results, and consequently, Deloitte was unable to complete the quarterly review. As a result, the Company has delayed the filing of its Form 10-Q for the quarter ended June 30, 2004. The Company intends to engage other auditors to perform the third quarter review as soon as possible in order to file the Form 10-Q for the quarter ended June 30, 2004. As reflected in the restatement, the Company relied on the principle of constructive cancellation in determining the period for revenue recognition with respect to approximately 40 sales agreements wherein products aggregating less than 10% of the stated sales price of the contracts had not been in fact delivered and the Company believed would never be delivered. Deloitte indicated that it had not been provided sufficient evidence to support the Company's approach. The Company's former independent auditors, PwC, continue to stand behind management's application of SOP 97-2 during the restatement. The total of approximately $6.7 million of previously reported revenue that would be deferred in the event of a restatement would be recognized in a future period when there is additional documentation that the contract has been completed. The Company notes that it has been fully paid for the $6.7 million of revenue in question and it believes its customers are using the related products which were delivered and installed in all circumstances more than eighteen months ago and in some cases, more than three years ago. IMPAC's reported cash flow is not impacted by this issue. INTERNATIONAL WIRE: Court Confirms Reorganization Plan ------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York confirmed International Wire Group, Inc.'s plan of reorganization on August 25, 2004. The confirmation order clears the way for the consummation of the plan. The Company anticipates that this will occur prior to September 30, 2004. "This announcement underscores the strong support that International Wire has enjoyed from its financial partners throughout this process," said Joseph Fiamingo, International Wire's chief executive officer. "To have reached this point in such a short time after our initial filing would not have been possible without their faith in our business plan and our future. Holders of our debt and equity securities voting on the plan unanimously voted in favor of the plan of reorganization." "International Wire's customers have also been supportive during this process. We look forward to fulfilling the commitment to a stronger balance sheet that we laid out several months ago," Mr. Fiamingo said. The recapitalization will involve the exchange of approximately $305 million principal amount of International Wire's senior subordinated indebtedness into $75 million principal amount of new 10% senior subordinated notes and 96% of International Wire's common stock. The Company has completed the tabulation of elections made by holders of the Company's 11 3/4% senior subordinated notes and 14% senior subordinated notes under the terms of the plan of reorganization. The distributions to such holders, based on the elections received and the application of the proration provisions of the plan, will be as follows: (1) Holders of 11-3/4% senior subordinated notes electing pro rata treatment or making no election will receive, in respect of each $1,000 principal amount of such notes so held, 31.4668 shares of Company common stock and $245.8343 principal amount of Company 10% notes. (2) Holders of 11-3/4% senior subordinated notes electing to receive all Company common stock in lieu of the pro rata distribution will receive, in respect of each $1,000 principal amount of such notes so held, 34.2473 shares of Company common stock and $211.7731 principal amount of Company 10% notes. (3) Holders of 11-3/4% senior subordinated notes electing to receive all Company 10% notes in lieu of the pro rata distribution will receive, in respect of each $1,000 principal amount of such notes so held, $631.3024 principal amount of Company 10% notes. (4) Holders of 14% senior subordinated notes will receive, in respect of each $1,000 principal amount of such notes so held, 31.9927 shares of Company common stock and $249.9432 principal amount of Company 10% notes. Upon completion of the restructuring, International Wire's debt (excluding accrued and unpaid interest) will decline from approximately $391 million to approximately $181 million and interest will be reduced by approximately $31 million annually. International Wire Group, Inc., designs, manufactures and markets bare and tin-plated copper wire and insulated copper wire products for other wire suppliers and original equipment manufacturers. The Company manufactures and distributes its products in 20 facilities strategically located in the United States, Mexico, France, Italy and the Philippines. The company filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-11991) on March 24, 2004. Alan B. Miller, Esq., at Weil, Gotshal & Manges, LLP, represents the debtor in its restructuring efforts. When the Company filed for bankruptcy protection, it listed total assets of $393,000,000 and total debts of $488,000,000. KAISER: Retirees Comm. Wants to Retain ABD Insurance as Consultant ------------------------------------------------------------------ Pursuant to Sections 1114(b)(2), 1103(a) and 328(a) of the Bankruptcy Code, the Official Committee of Retired Salaried Employees in Kaiser Aluminum Corporation's chapter 11 proceedings ask the United States Bankruptcy Court for the District of Delaware for permission to retain ABD Insurance & Financial Services, Inc. The Committee wants to retain ABD as its retiree benefits consultant. The Committee asks that the retention be approved nunc pro tunc to March 4, 2004. Retirees Committee Chairman John E. Daniel explains that the Committee wants ABD to identify and evaluate the Retirees' options for replacement medical and prescription drug insurance coverage. ABD will gather data concerning various options, will explore the feasibility of, and compare the advantages and disadvantages of the options, and will make recommendations to the Retirees Committee with respect to the options and their anticipated costs. Terri Ezaki will serve as ABD's project leader for the Engagement. Ms. Ezaki has been an employee benefits broker and consultant for 10 years and has placed medical coverage for both active and retiree employees during her tenure. Ms. Ezaki is licensed as a Life Agent in the state of California. Debtors Respond Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that in early March 2004, ABD Insurance & Financial Services, Inc., assisted the Official Committee of Retired Salaried Employees in considering options relevant to benefits that might be provided under the Voluntary Employee Benefits Association. According to Mr. DeFranceschi, the $30,000 the Retirees Committee paid to ABD Insurance for the previous services constitutes an Initial VEBA Expense. As previously reported, the Court authorized Kaiser Aluminum & Chemical Corporation and Kaiser Bellwood Corporation to proceed with implementation of an agreement reached with the Retirees Committee to modify retiree benefits for salaried retirees represented by the Retirees Committee. Pursuant to the Agreement, effective June 1, 2004, retiree benefit plans covering salaried retirees represented by the Retirees Committee were terminated. In return, these retired salaried employees became eligible to receive retiree benefits under the VEBA, which is to be funded by KACC as set forth in the Agreement. Among other obligations, the Agreement provides that KACC will pay, during the first calendar year of the Agreement, all of the expenses of the Retirees Committee in connection with administering the VEBA up to $500,000. The Debtors do not object to the ABD Retention Application or the request for reimbursement of the ABD Fees, which have already been paid. However, the Debtors want to make it clear that the ABD Fees constitute an Initial VEBA Expense and that payment of those fees will reduce the $500,000 maximum amount of Initial VEBA Expense payable by KACC. 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: Taps Friedman Hirschen as Environmental Counsel ------------------------------------------------------------- The King Service, Inc., asks the U.S. Bankruptcy Court for the Northern District of New York for authority to employ Friedman, Hirschen, Miller & Campito, PC, as its special counsel for environmental matters. The Debtor is currently a defendant in an action filed by Niagara Mohawk Power Corporation demanding the Company contribute to the cost of environmental cleanup in Troy, New York. The Debtor's primary counsel, Whiteman, Osterman & Hanna, has made known its intention to withdraw from the case. Since the litigation is quite complex, a substantial amount of work will be required to continue the Debtor's defense and develop a counterclaim on behalf of the Debtor. Richard P. Feirstein, Esq., and Jeffrey N. Miller, Esq., will be principally engaged in this matter. Messrs. Feirstein and Miller are both experts in environmental matters and litigation. The attorneys will be paid on a quarterly basis. Friedman Hirschen does not disclose its current hourly rates in papers filed with the Bankruptcy Court. Headquartered in Troy, New York, The King Service, operates a 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. MANDALAY RESORT: Will Hold 2nd Qtr. Conference Call on Sept. 2 -------------------------------------------------------------- Mandalay Resort Group (NYSE: MBG) will announce its second quarter earnings on September 2, 2004. The company will conduct a conference call via telephone and Webcast on September 2, at 1:30 p.m. Pacific Time. The call will be broadcast live via the internet at http://www.ccbn.com/A recording of the conference call will be available on the company's website at http://www.mandalayresortgroup.com/from 3:30 p.m. Pacific Time on September 2, 2004 through 3:30 p.m. Pacific Time on September 7, 2004. Those parties interested in listening to the conference call via telephone should dial 415- 537-1934. A telephone replay of the conference call will be available beginning at 3:30 p.m. Pacific Time on September 2, 2004 and ending at 3:30 p.m. Pacific Time on September 7, 2004. To access the rebroadcast, dial 800-633-8284 for domestic calls or 402-977-9140 for international calls and enter code 21205986. Mandalay Resort Group owns and operates 11 properties in Nevada: Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in Las Vegas; Circus Circus-Reno; Colorado Belle and Edgewater in Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass in Henderson. The company also owns and operates Gold Strike, a hotel/casino in Tunica County, Mississippi. The company owns a 50% interest in Silver Legacy in Reno, and owns a 50% in and operates Monte Carlo in Las Vegas. In addition, the company owns a 50% interest in and operates Grand Victoria, a riverboat in Elgin, Illinois, and owns a 53.5% interest in and operates MotorCity in Detroit, Michigan. * * * As reported in the Troubled Company Reporter's June 9, 2004 edition, Fitch Ratings has placed these long-term debt ratings on Rating Watch Negative: MGM MIRAGE --Senior secured debt 'BB+'; --Senior subordinated debt 'BB-'. Mandalay Resort Group --Senior unsecured debt 'BB+'; --senior subordinated debt 'BB-'. The action follows the June 4, 2004 announcement that MGM MIRAGE made an offer to purchase Mandalay Resort Group for $68 per share, or approximately $4.9 billion in cash plus the assumption of $2.8 billion in debt. MICROAGE INC: Publishes Notice of Impending Final Distribution -------------------------------------------------------------- IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ARIZONA ______________________________ : In Re: : Proceedings Under Chapter 11 : MICROAGE, INC., a Delaware : Case No. 00-03833, 00-3840 corporation, et al., : through No. B-00-03850-ECF-CGC : Debtors. : NOTICE OF IMPENDING FINAL : DISTRIBUTION EIN or SSN: 86-0321346 : ______________________________: On April 13, 2000, MicroAge, Inc. and its affiliated companies, including MicroAge Technologies Services, L.L.C., MicroAge Computer Centers, Inc., MCCI Holding Company, MicroAge L & D, L.L.C., MTS Holding Company, ECAdvantage, Inc., Pinacor, Inc., MicroAge of California, Inc., Quality Integration Services, L.L.C., Complete Distribution, Inc., and Pinacor Logistics Services, Inc. filed voluntary petitions in the United States Bankruptcy Court for the District of Arizona ("Bankruptcy Court") for relief under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code") at case numbers 00-03833 and 00-3840 through 003850-ECFCGC. On September 29, 2000, MicroAge Teleservices, L.L.C. filed its voluntary petition at case number 00-10615. On March 29, 2001 Eleris, Inc. filed its voluntary petition at case number 01-03837. (MicroAge Technologies Services, L.L.C., MicroAge Computer Centers, Inc., MCCI Holding Company, MicroAge L & D, L.L.C., MTS Holding Company, ECAdvantage, Inc., Pinacor, Inc., MicroAge of California, Inc., Quality Integration Services, L.L.C., Complete Distribution, Inc., Pinacor Logistics Services, Inc., MicroAge Teleservices, L.L.C., and Eleris, Inc. are collectively referred to herein as "MicroAge"). On May 8, 2001, the Bankruptcy Court approved that certain "Debtors' Amended Disclosure Statement Dated May 8, 2001" ("Disclosure Statement"). According to the liquidation analysis contained in the Disclosure Statement at exhibit "F," the Debtors anticipated and projected that distributions under the "Debtors' First Amended Plan of Reorganization" ("Plan") to Class 5 general unsecured claims would be between 19.8 and 28.1 cents on the dollar. On July 10, 2001, the Bankruptcy Court confirmed the Plan. MicroAge was reorganized and substantively consolidated by Order of the Bankruptcy Court entered July 11, 2001. MicroAge made its initial distribution under the Plan to the holders of allowed Class 5 general unsecured claims (Allowed Unsecured Claims) in the amount of 11.8% on October 26, 2001; thereafter distributions were made for 7.8% on February 24, 2002, and 3.8% on June 26, 2002. Consequently, to date, distribution on Allowed Unsecured Claims totaled 23.4%, or 23.4 cents on the dollar. Since the last interim distribution on June 26, 2002, MicroAge has engaged in extensive litigation primarily concerning avoidance actions under Chapter 5 of the Bankruptcy Code and objections to claims, including Class 5 general unsecured claims (collectively, the "Litigation"). MicroAge has now finally litigated, resolved, or settled all of the Litigation. MicroAge was significantly more successful in the Litigation than previously anticipated. Although MicroAge has initiated but not yet completed the extensive data review and analysis necessary to calculate the final amount payable to holders of allowed Class 5 general unsecured claims under the Plan, MicroAge's preliminary analysis indicates that the Final Distribution, when combined with the earlier distributions, will materially and significantly exceed the projections contained in the Disclosure Statement and may result in a payment of a substantial portion remaining on each Allowed Unsecured Claim. Pursuant to that certain "Under Seal Order re Transfer of Claims," after the date of this Notice, any person or entity attempting to acquire or purchase an allowed Class 5 general unsecured claim from its holder of record must: (i) provide the holder of the allowed Class 5 general unsecured claim a copy of this Notice prior to consummating any acquisition or sale of the allowed Class 5 general unsecured claim; and (ii) prior to recognition of the purported transfer of any allowed Class 5 general unsecured claim by the Bankruptcy Court, the acquirer must provide evidence of compliance with section (i) of this Notice as an additional requirement of RULE 3001(d)[sic.], FEDERAL RULES OF BANKRUPTCY PROCEDURE. DATED, this 25th day of August, 2004. SNELL & WILMER L.L.P. By /s/ SDJ - #018420 ------------------------------- Donald L. Gaffney Steven D. Jerome One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070 E-Mail: dgaffney@swlaw.com sjerome@swlaw.com Attorneys for MicroAge, Inc. MICROAGE INC: Wants to Restrict Who Gets Final Distributions ------------------------------------------------------------ Reorganized MicroAge, Inc., asks the U.S. Bankruptcy Court for the District of Arizona for authority to restrict the final distribution to creditors under the company's confirmed chapter 11 Plan to creditors who received prior distributions. This request, and requests to keep recent pleadings out of public view, Steven D. Jerome, Esq. at Snell & Wilmer, L.L.P., MicroAge's counsel, says "is made to protect the interests of holders of allowed general unsecured claims from unknowingly selling their claims for significantly less than they would receive from the Final Distribution under the . . . confirmed Plan of Reorganization." Janice L. Rogalla, Esq., at Snell & Wilmer, L.L.P., another lawyer representing the Reorganized Debtors, reminds Judge Case that MicroAge confirmed its consolidated First Amended Plan of Reorganization on July 10, 2001. The Plan provided for an orderly collection and liquidation of the corporate estates, including the prosecution and resolution of estate causes of action. On October 26, 2001, MicroAge made its initial and First Interim Distribution pursuant to the Plan in the amount of 11.8% to all holders of allowed unsecured claims. On February 24, 2002, MicroAge made a Second 7.8% Interim Distribution to all holders of allowed unsecured claims. On June 26, 2002, MicroAge made a Third 3.8% Interim Distribution. On August 2, 2004, MicroAge filed a "Motion For Order Authorizing Redistribution of Unclaimed Funds" to correct its master mailing list by eliminating claimants who had failed to acknowledge or cash prior distribution checks. During the weeks following the filing of the Redistribution Motion, MicroAge received information that creditors may have recently been contacted for the purposes of purchasing their claims. Based on the current record, MicroAge intends to make its final distribution and close these estates within the next few months. Additional transfers of claims at this late date may create confusion and inordinate administrative expenses, MicroAge tells the Court. The Debtors direct Judge Case's attention to Bankruptcy Rule 3021, which provides: Except as provided in Rule 3020(e), after a plan is confirmed, distribution shall be made to creditors whose claims have been allowed, to interest holders whose interests have not been disallowed, and to indenture trustees who have filed claims under Rule 3003(c)(5) that have been allowed. For purposes of this rule, creditors include holders of bonds, debentures, notes, and other debt securities, and interest holders include the holders of stock and other equity securities, of record at the time of commencement of distribution, unless a different time is fixed by the plan or the order confirming the plan. The Debtor notes that commencement of distributions occurred almost three years ago. The Debtors point to the "retained power over plan administration" section in Article XIII of the First Amended Plan as further authority for the Court to restrict who gets paid, as well as Bankruptcy Rule 3020(d), which says, "Notwithstanding the entry of the order of confirmation, the court may issue any other order necessary to administer the estate." This extensive authority, MicroAge argues, permits the Court to ensure the efficiency and fairness of the final distribution of the estate distributions by issuing an Order restricting the final distribution under the Plan to creditors who received prior distributions, subject to correcting scrivener errors, and to prohibit the filing of any further filings of claim transfers under Rule 3001(e). MIRANT CORP: Appoints Michele Burns as Chief Restructuring Officer ------------------------------------------------------------------ Mirant's (Pink Sheets: MIRKQ) Board of Directors appointed M. Michele Burns, 46, chief restructuring officer. Ms. Burns will continue to report to Chief Executive Officer, Marce Fuller and will maintain her role as executive vice president and chief financial officer. In her additional role, Ms. Burns will serve as the company's primary representative in the bankruptcy process. She and her team will continue to develop the company's plan of reorganization and capital structure, and prepare the company to emerge from Chapter 11. "Michele has the full confidence of our Board of Directors and bankruptcy committees," said Ms. Fuller. "Assuming that we continue with the progress we've made in our restructuring, and Mirant's bankruptcy committees accept our plan of reorganization, the company should emerge from Chapter 11 in the first half of 2005." Since her arrival in May, Ms. Burns has also been building a finance team to position the company for emergence from Chapter 11, and more fully enable her to lead the company's restructuring. Last week, Lamar Chesney, 55, joined the company as senior vice president, finance. He will lead Mirant's supply chain management and International finance functions, and prepare the company for emergence from bankruptcy. Prior to joining Mirant, Mr. Chesney held various executive finance positions with Delta Air Lines and The Coca-Cola Company. Mirant also hired Steve Astren, 57, as vice president, tax. He will report to Burns and lead all of Mirant's tax functions. Prior to joining Mirant, Mr. Astren was a partner at Deloitte & Touche. In June, Terry Thompson, 31 joined Mirant as vice president of restructuring. Mr. Thompson's focus is on the development of the plan of reorganization and working with the various committees associated with Mirant's Chapter 11 case. 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 CORP: Gets Court Nod to Implement Employee Severance Plan ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas permitted Mirant Corporation and its debtor-affiliates to: (a) implement the Key Employee Retention Program Severance Plan; (b) continue the General Severance Plan currently in effect for non-Key Employees; (c) modify the Change in Control Documents; and (d) modify the severance waiver to exclude claims arising under Retention Agreements. KERP Severance Plan As reported in the Troubled Company Reporter on July 28, 2004, under the KERP Severance Plan, until one year after the Debtors' emergence from Chapter 11, Management Council Key Employees are entitled, upon termination without cause, to a severance payment totaling 24 months' base salary plus target Short-Term Incentive and 24 months of medical benefits. Under the KERP Severance Plan, non-Management Council Key Employees are entitled, upon termination without cause, to participate in the General Severance Plan the Court previously approved until one year after the Debtors' emergence from Chapter 11. The Debtors believe that the availability of the KERP Severance Plan during the year after emergence from Chapter 11 provides an additional level of security as the Debtors approach their emergence from Chapter 11. Any amounts paid under the KERP Severance Plan are in addition to amounts paid to a severed employee under the terms of Phase I and Phase II of the KERP. Modification of Change in Control Benefits Prior to the Petition Date, Robin E. Phelan, Esq., at Haynes and Boone, LLP, in Dallas, Texas, relates that the Debtors implemented the Mirant Services LLC Change in Control Severance Plan and the Mirant Services LLC Executive Change in Control Severance Plan. The Change in Control Severance Plans were designed to provide severance benefits to the Debtors' employees whose employment is terminated subsequent to a change in control of Mirant. In addition, prior to the Petition Date, the Debtors implemented the Amended and Restated Mirant Corporation Change in Control Benefit Plan Determination Policy. The CIC Determination Policy governs the determination of a "change in control" of Mirant and the benefits to be provided to employees under certain benefit plans in the event of a Change in Control. Besides establishing the definition of Change in Control, the CIC Determination Policy provided for the vesting and payment of accrued obligations and benefits under the Incentive Plan, Non-Qualified Benefit Plans, Supplemental Compensation Plan, Retention Agreements and Change in Control Agreements. Furthermore, a number of senior employees, some of whom are Key Employees, are parties to prepetition change in control agreements with the Debtors that provide for benefits that are in excess of entitlements under the Change in Control Severance Plans. The Debtors estimate that there are contingent claims against the Debtors arising under the Change in Control Documents totaling in excess of $110,000,000 in the aggregate. About $22,000,000 of the aggregate claim represents Key Employees' contingent claims against the Debtors arising under the Change in Control Documents. As part of the global resolution of various outstanding employee compensation and benefit issues identified by the Examiner and as a condition precedent to implementation of the KERP and the KERP Severance Plan with respect to any particular employee and modification of the current General Severance Plan, the Debtors will modify or otherwise terminate the Change in Control Documents to eliminate any liability that may be triggered by the Debtors' Chapter 11 cases or transactions in connection with the Debtors' emergence from Chapter 11. Continuation of General Severance Plan In addition to living with the day-to-day uncertainty regarding their own job security during the Debtors' Chapter 11 cases, Mr. Phelan says that the Debtors' employees also possess very real and personal concerns about their job security upon and after the Debtors' emergence from Chapter 11. The Debtors have discussed these concerns with the Examiner and have determined that providing a greater degree of certainty with respect to employee obligations is in the best interests of the Debtors as well as their employees. The Debtors believe that it is appropriate that, in connection with the modification of the Change in Control Documents, they continue the General Severance Plan currently in effect for employees until one year after the Debtors' emergence. The Debtors believe that the availability of the current General Severance Plan through the year after emergence from Chapter 11 provides an additional level of certainty as the Debtors approach emergence and that the Debtors' employees value the certainty substantially more than they value any contingent obligations owing under the Change in Control Documents. Thus, while payments to a severed employee under the previously approved General Severance Plan or the KERP Severance Plan will reduce any distribution that the employee is otherwise entitled to receive on account of an allowed claim under any employment or severance agreement, the receipt of enhanced severance will be in lieu of entitlement to treatment as an administrative claim, any claim a severed employee may have on account of any Retention Agreements, employment agreements, severance agreements or employee benefit plans. Modification of Severance Waivers Pursuant to the Court's order, dated November 19, 2003, employees are not required to waive claims arising under "employment and/or severance agreements" as a condition precedent to receiving enhanced severance under the Debtors' General Severance Plan so that they do not have to weigh the probability of a successful recovery on contractual claims against the certainty of receiving a relatively reduced severance payment while facing unemployment. While the Debtors did not previously expressly include Retention Agreements within the definition of "employment agreement" as used in the November 19th Order, thereby requiring severed employees to waive claims arising under their Retention Agreements to receive enhanced severance, the Debtors believe that it is appropriate that the term "employment agreement" be expanded to include Retention Agreements, so that severed employees under the General Severance Plan as well as the KERP Severance Plan are not similarly compelled to weigh the probability of a distribution on account of a contractual claim under the Retention Agreements against the certainty of receiving the enhanced severance. Moreover, the Debtors have determined that waiving claims against active employees for the recovery of amounts arising from the Initial Funding is fair and reasonable and benefits the Debtors' estates. Although no litigation currently exists between the parties, the threat of litigation exists in light of the contentions by certain parties that the Initial Funding was inappropriate and represents an avoidable transfer. Nevertheless, the Debtors believe that the uncertainties and costs associated with litigating the claims will outweigh the benefits, if any, that would be derived from a successful avoidable transfer action. Retention Agreements Prior to the Petition Date, the Debtors were parties to various retention agreements with certain of their employees, including certain of the Key Employees. On the Petition Date, the Debtors sought and obtained Court authority to make payments under the Retention Agreements on an interim basis for 50 days. With the expiration of the initial 50-day period, the Debtors ceased paying the employees under their Retention Agreements. Accordingly, it is likely that employees who are parties to the Retention Agreements have claims against the Debtors for unpaid amounts arising under the Retention Agreements. As part of their ongoing contract assessment analysis, the Debtors anticipate that they will reject the Retention Agreements. The Debtors believe that the KERP will replace the function of the Retention Agreements and assist the Debtors in retaining employees entitled to participate in the KERP in a manner that is more consistent with the Debtors' current goals and circumstances than the terms of the Retention Agreements. Nevertheless, to avoid a potential windfall as a result of the implementation of the KERP to any Key Employee who also is party to a Retention Agreement, any distributions based on allowed claims under the Retention Agreements arising from payments accruing after January 14, 2004 under the terms of the Retention Agreements will be reduced by the amount of any of the Remaining Payments and any payments under Phase II of the KERP paid to that Key Employee. Mr. Phelan contends that employees should not be compelled to relinquish prepetition claims under Retention Agreements simply because they need money currently to support their families while they are unemployed. The Debtors believe that it is appropriate that the term "employment agreement" as used in the November 19th Order be expanded to include Retention Agreements, so that severed employees are not compelled to weigh the probability of a distribution on account of a contractual claim against the certainty of receiving the enhanced severance. As provided in the November 19th Order, any distributions an employee ultimately receives on account of an allowed claim arising under a Retention Agreement will be reduced by the amount of the severance payment. 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) MORGAN STANLEY: S&P Affirms Low-B Ratings on Three Cert. Classes ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of Morgan Stanley Capital I, Inc.'s commercial mortgage pass-through certificates from series 1999-LIFE1. Concurrently, the ratings are affirmed on seven other classes from the same transaction. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. They also reflect the stable performance of the seasoned pool. As of the Aug. 16, 2004 remittance report, the collateral pool consisted of 96 loans with an aggregate principal balance of $558.7 million, down from 97 loans totaling $594 million at issuance. The master and special servicer, Wells Fargo Bank N.A., provided Dec. 31, 2003 net cash flow -- NCF -- debt service coverage (DSC) figures for 93% of the pool. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.68x, up from 1.63x at issuance. To date, the trust has experienced no losses and all of the loans in the pool are current, with the exception of one loan ($9.8 million, 2%), which is in foreclosure. The top 10 loans have an aggregate outstanding balance of $198.3 million (36%). The weighted average DSC for the top 10 loans increased to 2.08x, up from 1.98x at issuance. The improved DSC occurred despite the decline in performance of the sixth- largest loan, which is on Wells Fargo's watchlist. Standard & Poor's reviewed property inspections provided by Wells Fargo for all of the assets underlying the top 10 loans, and all were characterized as "excellent" or "good." According to Wells Fargo, there is only one specially serviced loan ($9.8 million, 2%), the aforementioned loan in foreclosure. Three industrial buildings in or around Detroit, Michigan totaling 260,000 rentable square feet -- RSF -- serve as collateral for the loan. The principal of the borrower, who was also one of two tenants in the three buildings, filed for bankruptcy in 2002 and vacated the properties. Currently, only a temporary tenant occupies one building. While repairing the properties for some deferred and necessary maintenance, Wells Fargo is attempting to sell the assets and obtain an updated appraisal. The loan could suffer significant losses upon disposition due to the total advancing on the loan, which is currently $3.1 million. Wells Fargo's watchlist consists of 35 loans with an aggregate outstanding balance of $146.5 million (26%). The Center at Ramsey in Ramsey, New Jersey is the fifth-largest loan in the pool with a scheduled balance of $13.2 million (2%). United Parcel Service (46% RSF) had a lease expiration of Aug. 31, 2004, but renewed for an additional five years. The sixth-largest loan (12.9 million, 2%) in the pool is secured by a 150,350 RSF office building located in the West Village section of New York, New York. The loan was placed on the watchlist after a large tenant vacated. Following a loan assumption earlier this year, the new borrower has signed new leases to bring occupancy roughly to 100%. In addition to the preceding loans, 17 loans ($54.5 million, 10%) are on the watchlist and are secured by industrial assets with upcoming lease expirations or low occupancies. The trust collateral is located across 26 states and only California (13%), New York (12%), and Florida (11%) account for more than 10% of the pool balance. Property concentrations greater than 10% of the pool balance are found in retail (30%), industrial (26%), office (22%), and multifamily (17%) property types. Standard & Poor's stressed various loans with credit issues as part of its pool analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Morgan Stanley Capital I, Inc. Commercial mortgage pass-thru certs series 1999-LIFE1 Rating Class To From Credit Enhancement ----- -- ---- ------------------ B AAA AA 17.81% C AA- A 13.56% D A A- 11.96% E BBB+ BBB 9.57% F BBB BBB- 8.24% Ratings Affirmed Morgan Stanley Capital I, Inc. Commercial mortgage pass-thru certs series 1999-LIFE1 Class Rating Credit Enhancement ----- ------ ------------------ A-1 AAA 21.53% A-2 AAA 21.53% H BB+ 6.11% J BB 4.79% K BB 3.99% L B+ 2.92% X AAA N/A N/A -- Not applicable. NATIONAL CENTURY: Avidity Wants to Recover Preferential Transfers ----------------------------------------------------------------- Thomas E. Patterson, Esq., at Klee, Tuchin, Bogdanoff & Stern, in Los Angeles, California, relates that NPF XII, Inc., National Century Financial Enterprises, Inc. debtor-affiliate, obtained financing for its activities through the issuances of notes under and pursuant to that certain NPF XII, Inc., Health Care Receivables Securitization Program Notes Master Indenture, dated as of March 10, 1999, among NPF XII, National Premier Financial Services, Inc., as servicer, and Bank One, N.A., as indenture trustee. The Master Indenture contemplated that notes could be issued under the Master Indenture, or pursuant to one or more supplemental indentures providing for the issuance of a series of notes. NPF XII, NPFS and Bank One entered into that certain Seventh Supplemental Indenture dated December 27, 2000, to provide for the issuance of certain Series 2000-4 Notes. The Series 2000-4 Notes were to be issued by NPF XII as variable funding notes -- each Note was issued in a maximum face amount, but without necessarily a concurrent advance by the holder of the Note. Advances could then be made by the holder of the Note subsequent to the issuance, up to the maximum face amount of the Note. Under the Seventh Supplemental Indenture, the maximum amount of Series 2000-4 Notes that could be issued was $600,000,000. The Note Purchase Agreement NPF XII, as issuer, NPFS, Credit Suisse First Boston New York Branch, as agent and as managing agent, Alpine Securitization Corp., as Conduit Purchaser, and CSFB New York, as Committed Purchaser, entered into a Note Purchase Agreement on December 27, 2000. Pursuant to the Note Purchase Agreement, NPF XII agreed to issue, and CSFB New York and Alpine agreed to purchase a Series 2000-4 Note. The maximum amount of the Series 2000-4 Note that CSFB New York and Alpine committed to purchase was set initially at $100,000,000. CSFB New York and Alpine agreed to fund advances up to $100,000,000. NPF XII as issuer, NPFS, CSFB New York as agent, managing agent and Committed Purchaser, and Alpine as Conduit Purchaser entered into several amendments to the Note Purchase Agreement: * Amendment Agreement No. 1 on February 1, 2001, * Amendment Agreement No. 2 on February 9, 2001, * Amendment Agreement No. 3 on March 1, 2001, and * Amendment Agreement No. 4 on September 2, 2002. The Fourth Amendment increased both the maximum amount of the Series 2000-4 Notes to be purchased under the Note Purchase Agreement and the maximum amount that CSFB New York and Alpine committed to advance under the Note Purchase Agreement by $75 million, from $222,549,020 to $297,549,020. On September 4, 2002, NPF XII received a $75,000,000 advance from CSFB purportedly under the Series 2000-4 Note and the Fourth Amendment. Subsequently, NPF XII made several transfers: (1) On September 6, 2002, NPF XII transferred $1,000,000 to CSFB New York for and on account of a purported Arrangement Fee related to the CSFB Advance under and pursuant of the Fourth Amendment and the terms of that certain Supplemental Fee Letter, dated as of September 4, 2002, by and among NPF XII, NPFS, Alpine and CSFB New York. (2) On September 13, 2002, NPF XII transferred $25,000,000 to or for the benefit of CSFB New York, CSFB Cayman and Alpine in partial repayment of the CSFB Advance. (3) On September 25 2002, NPF XII transferred $50,000,000 to or for the benefit of CSFB New York and CSFB Cayman and Alpine in partial repayment of the CSFB Advance. (4) On October 1, 2002, NPF XII transferred to or for the benefit of CSFB $64,458, representing accrued interest on the CSFB Advance during September 2002. (5) On October 1, 2002, NPF XII transferred to or for the benefit of CSFB $44,625, representing certain fees accrued under the Supplemental Fee Letter. CSFB, CSFB New York, CSFB Cayman and Alpine are affiliated entities that are, or have been, involved in a common arrangement, venture or scheme with respect to the Series 2000-4 Note, the precise contours of which are unknown to Avidity Partners, LLC. As part of this venture, common arrangement or scheme, CSFB, CSFB New York, CSFB Cayman and Alpine are sharing or have shared the economic interest associated with the Series 2000-4 Note and any payments received on account of that Note. Mr. Patterson reports that CSFB New York filed one or more proofs of claim against NPF XII on behalf of itself and certain affiliates, including CSFB and CSFB Cayman. The Proofs of Claim seek payment on account of the unpaid portion of the Series 2000- 4 Note and various fees and expenses allegedly due and owing to CSFB New York on account of the Series 2000-4 Note. In connection with the Proofs of Claim, CSFB New York states that CSFB Cayman is the holder of the Series 2000-4 Note on account of which the Second Transfer and the Third Transfer were made. Avidity Partners, LLC, as trustee of the CSFB Claims Trust, alleges that on or after August 20, 2002, NPF XII transferred its property to or for CSFB's benefit, including the First Transfer, the Second Transfer, the Third Transfer, the Fourth Transfer and the Fifth Transfer, together with other transfers as may have been made. Each of the Transfers was made on account of an antecedent debt owed by NPF XII. The CSFB Claims Trust is a representative of the NPF XII estate. The CSFB Claims Trust Agreement was executed on the Effective Date, thereby transferring the CSFB Claims to the CSFB Claims Trust and appointing the CSFB Claims Trust to pursue the CSFB Claims for the benefit of the estate. At the time the Transfers were made to or for the benefit of CSFB, Mr. Patterson notes, CSFB was a creditor of NPF XII. Mr. Patterson asserts that the Transfers enabled CSFB to receive more than it would have received if: (a) NPF XII's Chapter 11 case had been a Chapter 7 case; (b) the Transfers had not been made; and (c) CSFB received payment of the debt pursuant to the provisions of the Bankruptcy Code. Mr. Patterson contends that Avidity may avoid the Transfers. The avoided Transfers are automatically preserved for the benefit of NPF XII's estate pursuant to Section 550 of the Bankruptcy Code. Avidity may recover from CSFB, as initial transferee of the Transfers, or as the entity for whose benefit the Transfers were made, for the benefit of NPF XII's estate, the Transfers or, if the U.S. Bankruptcy Court for the District of Ohio so orders, the value of the Transfers. In either event, Avidity may recover prejudgment interest, costs and attorneys' fees. Accordingly, Avidity asks the Court to: (a) avoid all Transfers shown to be preferential; (b) preserve those Transfers for the benefit of NPF XII's estate; (c) order CSFB to pay the value of each avoided Transfers, together with prejudgment interest and costs, including attorney's and expert's fees; and (d) pursuant to Section 502(d) of the Bankruptcy Code, order that: -- no further distributions be made on account of the CSFB Proofs of Claim under the Plan; and -- CSFB return and disgorge any and all distributions received on account of the CSFB Proofs of Claim unless and until CSFB has paid to Avidity all sums ordered to be paid. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader in healthcare finance focused on providing medical accounts receivable financing to middle market healthcare providers. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones, Day, Reavis & Pogue represents the Debtors in their restructuring efforts. (National Century Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTEL NETWORKS: Providing Wireless Services to T-Mobile USA ------------------------------------------------------------ T-Mobile USA, Inc., a wholly owned subsidiary of T-Mobile International, the mobile arm of Deutsche Telekom AG (NYSE:DT), awarded a wireless contract extension to Nortel Networks (NYSE:NT)(TSX:NT) to provide GSM (Global System for Mobile Communications), GPRS (General Packet Radio Service), EDGE (Enhanced Data Rates for GSM Evolution) and packet core wireless data network upgrades and associated professional services. The extension calls for Nortel Networks to deploy wireless network core and radio access products in strategic T-Mobile USA markets including New York, Chicago, Dallas, Denver, Detroit, Phoenix and Milwaukee. GSM/GPRS/EDGE-ready infrastructure will enhance T- Mobile USA's network quality and capacity in strategic markets; and will enhance its ability to provide a common user experience across a portfolio of advanced mobile services like visual communications, two-way text messaging, instant messaging, Web browsing and gaming. "The wireless network deployments will enable T-Mobile USA to leverage Nortel Networks presence across our national network to provide greater capacity and quality in a very cost-effective manner," said Sue Swenson, chief operating officer, T-Mobile USA. "In addition to positioning us to support our growing subscriber base, Nortel Networks is helping us deliver on our Get More(R) promise to our customers and helping us ensure those customers have a consistent, reliable, quality experience." "We are excited to support T-Mobile USA in meeting the needs of its growing network and are pleased they continue to rely on Nortel Networks to deliver their Get More(R) promise to subscribers," said Pascal Debon, president, Wireless Networks, Nortel Networks. "Our wireless solutions deliver carrier-grade reliability, enabling T-Mobile USA to reduce its capital and operating costs while empowering it to deliver a quality experience overall." Nortel Networks has supported GSM network planning and deployment for T-Mobile USA since the company's inception as VoiceStream Wireless in 1995. Wireless data network infrastructure available for deployment by T-Mobile USA under the extended agreement will include products from Nortel Networks GSM/GPRS/EDGE radio access portfolio, Base Station Controllers (BSC) and circuit/packet core equipment including Mobile Switching Center/Call Server (MSC/CS) and Nortel Networks Alteon Switched Firewalls and Application Switches. Nortel Networks is also the primary provider of Home Location Register (HLR) infrastructure for T-Mobile USA's national wireless network. Nortel Networks has designed, installed and launched more than 300 wireless networks in over 50 countries. Nortel Networks was the industry's first supplier with wireless networks operating in all advanced radio technologies (GSM/GPRS/EDGE, CDMA2000 1X and 1xEV- DO, UMTS and WLAN), and is the only end-to-end provider of all next generation wireless solutions. About T-Mobile USA, Inc. Based in Bellevue, Washington, T-Mobile USA, Inc. is a member of the T-Mobile International group, the mobile telecommunications subsidiary of Deutsche Telekom AG (NYSE:DT). T-Mobile operates the largest GSM/GPRS 1900 voice and data network in the country, reaching over 253 million people including roaming and other agreements. In addition, T-Mobile operates the largest carrier owned Wi-Fi wireless broadband network in the country, available in more than 4,700 public access locations including Starbucks coffeehouses, Borders Books and Music, FedEx Kinko's Office and Print Centers, Hyatt Hotels and Resorts, airports and selected American Airlines Admirals Clubs, Delta Air Lines Crown Rooms, United Airlines Red Carpet Clubs and US Airways Clubs. Through its Get More(R) promise, T-Mobile provides customers with more minutes, more features and more service. For more information, visit the company web site at http://www.t-mobile.com/ 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 Nortel 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, Nortel'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. NORTHWEST AIRLINES: Sues Sabre Travel for Breach of Contract ------------------------------------------------------------ Northwest Airlines (Nasdaq: NWAC) filed a lawsuit against Sabre Travel Network (NYSE: TSG) in the U.S. District Court for the District of Minnesota. In a news release issued on Aug. 24, Sabre announced that it instituted measures that will make it more difficult for travel agents to view Northwest flights and sell Northwest tickets. The airline's suit alleges that Sabre's bias action against Northwest flights in the airline schedules it provides to travel agents are in breach of the contact Sabre signed with Northwest in July of 2003. That agreement specifically prohibits the bias imposed by Sabre yesterday. "Sabre has clearly breached our contract with the actions they initiated on Aug. 24," said Al Lenza, vice president of distribution and e-commerce. The federal lawsuit seeks damages to compensate Northwest for the impact on its business resulting from Sabre's actions. "The bias they have imposed against Northwest flights are denying the flying public a fair and complete choice of both schedules and fares," Mr. Lenza added. On Aug. 24, Northwest Airlines announced steps to align its distribution costs with those of the low-cost carriers it increasingly is competing with for customers. * * * As reported in the Troubled Company Reporter on July 30, 2004, Standard & Poor's lowered its ratings on Northwest Airlines Corp. and its Northwest Airlines, Inc., subsidiary, including lowering the corporate credit rating to 'B' from 'B+'. The 'B+' bank loan rating was not lowered, and a recovery rating of '1' assigned, reflecting strong collateral protection for that facility. Some enhanced equipment trust certificates were lowered by more than one notch, reflecting evaluation of collateral coverage and other protections for individual securities. "The downgrade of Northwest's corporate credit rating is due to concerns that the airline's ongoing efforts to lower its labor costs, while likely to achieve some savings, may nonetheless leave it at a competitive labor cost disadvantage over the long term," said Standard & Poor's credit analyst Philip Baggaley. "In addition, Northwest, like other U.S. airlines, is under pressure from high fuel prices and rising price competition in the domestic market, which have delayed and weakened an anticipated recovery in earnings and cash flow," the credit analyst continued. The revised ratings reflect a weak airline industry revenue environment, substantial debt and pension obligations, and a need to lower its relatively high labor costs. However, the airline's credit profile benefits from substantial liquidity, with $2.9 billion of unrestricted cash, and ongoing cost-cutting efforts. Northwest's management is seeking to negotiate concessions from the airline's labor groups, but faces a challenge in persuading unions to accept needed cost-saving changes, given the company's ample near-term liquidity. The pilot union is considered to be most receptive to these proposals, and has already made an offer to cut compensation, though not to the extent sought by management. The $975 million credit facility available to Northwest Airlines, Corp., and Northwest Airlines, Inc., is rated one notch higher than the corporate credit rating. The recovery rating is '1', indicating a high expectation of full recovery of principal in the event of bankruptcy. The facility, which consists of a $725 million revolving credit facility due October 2005 and a $250 million 364-day revolving credit facility expiring October 2004 (renewable annually, but any amounts outstanding upon nonrenewal would be due October 2005), is secured by Northwest Airlines, Inc.'s Pacific routes and certain aircraft. The routes, which include valuable rights to serve restricted markets such as Japan and China, and routes that are for cargo flying, should be attractive to other U.S. airlines. Standard & Poor's discounted the appraised values of these routes in its simulated default scenario to replicate the conditions under which these routes might be repossessed and sold. The credit facility is secured also by certain aircraft, but their value is believed to be minimal. Even after the discounts applied in a simulated default scenario, amounts drawn under the credit facility should be repaid. The long-term rating outlook is negative. Ratings could be lowered if the company does not make significant progress in lowering its high labor costs and renewing its $975 million of bank credit facilities. Pressure on operating results due to industrywide factors such as high fuel prices or renewed terrorist attacks could also prompt a downgrade. NORTHWEST AIRLINES: Proposed Fees Would Violate Worldspan Pacts --------------------------------------------------------------- Northwest Airlines' plan to charge United States and Canadian travel agencies a "Shared GDS Fee" on Northwest travel in the U.S. would violate agreements Worldspan, L.P. has with Northwest. Northwest's proposed "Shared GDS Fee" would also amount to a hidden fare increase to consumers and corporations and undermine a healthy and competitive agency distribution channel that provides comprehensive choices in air travel. Worldspan remains committed to vigorously protecting the interests of its traditional and online travel agency customers who play a vital role serving consumers, corporations and the travel industry. Worldspan is shocked by Northwest's announcement. Based on its agreements with Northwest, Worldspan firmly believes that the fees Northwest says it intends to bill to travel agencies cannot be charged to Worldspan's traditional or online travel agencies. Northwest's position that they need to lower their distribution costs is precisely what led Worldspan to enter into a long-term agreement with Northwest in September of 2003 to help them do just that. Worldspan intends to remain in full compliance with its agreements with Northwest, and expects Northwest to do the same. Worldspan is prepared to take all appropriate steps to enforce its agreements with Northwest and prevent breaches of these agreements. Worldspan is a leader in travel technology services for travel suppliers, travel agencies, e-commerce sites and corporations worldwide. Utilizing some of the fastest, most flexible and efficient networks and computing technologies, Worldspan provides comprehensive electronic data services linking approximately 800 travel suppliers around the world to a global customer base. Worldspan offers industry-leading Fares and Pricing technology such as Worldspan e-Pricing(R), hosting solutions, and customized travel products. Worldspan enables travel suppliers, distributors and corporations to reduce costs and increase productivity with technology like Worldspan Go!(R) and Worldspan Trip Manager(R) XE. Worldspan is headquartered in Atlanta, Georgia. Additional information is available at http://www.worldspan.com/ Northwest Airlines is the world's fifth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,500 daily departures. Northwest and its travel partners serve nearly 750 cities in almost 120 countries on six continents. * * * As reported in the Troubled Company Reporter on July 30, 2004, Standard & Poor's lowered its ratings on Northwest Airlines Corp. and its Northwest Airlines, Inc., subsidiary, including lowering the corporate credit rating to 'B' from 'B+'. The 'B+' bank loan rating was not lowered, and a recovery rating of '1' assigned, reflecting strong collateral protection for that facility. Some enhanced equipment trust certificates were lowered by more than one notch, reflecting evaluation of collateral coverage and other protections for individual securities. "The downgrade of Northwest's corporate credit rating is due to concerns that the airline's ongoing efforts to lower its labor costs, while likely to achieve some savings, may nonetheless leave it at a competitive labor cost disadvantage over the long term," said Standard & Poor's credit analyst Philip Baggaley. "In addition, Northwest, like other U.S. airlines, is under pressure from high fuel prices and rising price competition in the domestic market, which have delayed and weakened an anticipated recovery in earnings and cash flow," the credit analyst continued. The revised ratings reflect a weak airline industry revenue environment, substantial debt and pension obligations, and a need to lower its relatively high labor costs. However, the airline's credit profile benefits from substantial liquidity, with $2.9 billion of unrestricted cash, and ongoing cost-cutting efforts. Northwest's management is seeking to negotiate concessions from the airline's labor groups, but faces a challenge in persuading unions to accept needed cost-saving changes, given the company's ample near-term liquidity. The pilot union is considered to be most receptive to these proposals, and has already made an offer to cut compensation, though not to the extent sought by management. The $975 million credit facility available to Northwest Airlines, Corp., and Northwest Airlines, Inc., is rated one notch higher than the corporate credit rating. The recovery rating is '1', indicating a high expectation of full recovery of principal in the event of bankruptcy. The facility, which consists of a $725 million revolving credit facility due October 2005 and a $250 million 364-day revolving credit facility expiring October 2004 (renewable annually, but any amounts outstanding upon nonrenewal would be due October 2005), is secured by Northwest Airlines, Inc.'s Pacific routes and certain aircraft. The routes, which include valuable rights to serve restricted markets such as Japan and China, and routes that are for cargo flying, should be attractive to other U.S. airlines. Standard & Poor's discounted the appraised values of these routes in its simulated default scenario to replicate the conditions under which these routes might be repossessed and sold. The credit facility is secured also by certain aircraft, but their value is believed to be minimal. Even after the discounts applied in a simulated default scenario, amounts drawn under the credit facility should be repaid. The long-term rating outlook is negative. Ratings could be lowered if the company does not make significant progress in lowering its high labor costs and renewing its $975 million of bank credit facilities. Pressure on operating results due to industrywide factors such as high fuel prices or renewed terrorist attacks could also prompt a downgrade. OMNI FACILITY: Gets Nod to Obtain $5.3 Million of DIP Financing --------------------------------------------------------------- Omni Facility Services, Inc., sought and obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to obtain secured postpetition financing and use its lenders' cash collateral. The Debtors have authority to borrow up to $5,300,000 under a DIP Financing Facility from Heller Financial, Inc., as administrative agent for the Company's Prepetition Lenders, and continue to use the lenders' cash collateral to finance their post-chapter 11 working capital needs. When the Debtors filed for bankruptcy protection, they owed the Prepetition Lenders not less than $43,800,000 in unpaid principal plus accrued and unpaid interest, fees. To secure the Prepetition Indebtedness, the Debtors granted the Lenders security interests in and liens on substantially all of their existing and after-acquired assets including, without limitation, all equipment, inventory, documents, accounts, chattel paper, instruments, investment property and general intangibles. The Debtors assure the Court that the Prepetition Liens are valid, binding, enforceable and perfected, with priority over all other liens except any Priority Prepetition Liens, and are not subject to avoidance or subordination pursuant to the Bankruptcy Code. The Debtors believe that substantially all of their cash, including cash in their deposit accounts, whether as original collateral or proceeds of other Prepetition Collateral, constitutes Prepetition Collateral and is therefore cash collateral within the meaning of Section 363(a) of the Bankruptcy Code. The Debtors' need for financing is critical. In the absence of the DIP Facility and authority to use Cash Collateral, the continued operation of the Debtors' businesses would not be possible, and serious and irreparable harm is inevitable. The Debtors' authority to continue using the Lenders' cash collateral expires on December 15, 2004. The Debtors supplied the Court with weekly budget through mid-September projecting: 6-Aug 13-Aug 20-Aug 27-Aug ----- ------ ------ ------ Operating Disbursements 3,185 2,335 2,421 2,464 Operating Cash Flow 212 1,062 39 ($4) Total Disbursements 237 60 60 60 Net Cash Flow (25) 1,002 (21) (64) Borrowing Base 13,200 12,036 11,583 11,045 DIP Availability 170 159 179 212 DIP Loan/Cash Collateral Balance 3,517 2,515 2,537 2,601 3-Sep 10-Sep 17-Sep ----- ------ ------ Operating Disbursements 3,457 2,489 2,489 Operating Cash Flow (92) 876 (52) Total Disbursements 595 60 60 Net Cash Flow (687) 816 (112) Borrowing Base 12,910 11,879 11,638 DIP Availability 585 606 641 DIP Loan/Cash Collateral Balance 3,288 2,471 2,584 To adequately protect the Lenders against any diminution in the value of their collateral, the Debtors grant them continuing, valid, binding, enforceable and perfected postpetition security interests and replacement liens on the Collateral. As further adequate protection of their interests, the Lenders are granted a superpriority claim with priority over all administrative expense claims and unsecured claims against the Debtors, now existing or hereafter arising. All mandatory prepayments required pursuant to the Prepetition Credit Facility on account of asset sales, insurance recoveries or condemnation claims will be made to Heller Financial. For the duration of the DIP Facility, the Debtors will: (a) insure the Prepetition Collateral in amounts and for the risks, and by the entities, as required under the Prepetition Credit Facility and (b) maintain the cash management system in effect as of the Petition Date. Headquartered in South Plainfield, New Jersey, Omni Facility Services, Inc. -- http://www.omnifacility.com/-- provides architectural, janitorial, landscaping, and electrical services. The Company filed for chapter 11 protection on June 9, 2004 (Bankr. S.D.N.Y. Case No. 04-13972). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $80,334,886 in total assets and $100,285,820 in total debts. OWENS CORNING: Bondholders Press for an Asbestos Claims Bar Date ---------------------------------------------------------------- In connection with the request of the Official Committee of Unsecured Creditors of the chapter 11 cases of Owens Corning and its debtor-affiliates, Richard W. Riley, Esq., at Duane Morris, LLP, in Wilmington, Delaware, on behalf of the Ad Hoc Committee of Bondholders, notes that there has been significant media attention recently to the Johns Hopkins study published by certain researchers who examined a random sample of radiographs. The study shows that 96% of the radiographs presumably showed lung abnormalities according to initial readings by physicians retained by asbestos plaintiffs' counsel. Of the sample examined by the researchers, only 4.5% of the radiographs were actually found to demonstrate lung abnormalities. A free copy of the Johns Hopkins study is available at: http://bankrupt.com/misc/chest_radiographic_interpretations_and_asbestos.pdf "The researchers' conclusion is striking," Mr. Riley says. "The study is one more bit of information that calls into question the validity of certain of the non-malignant asbestos claims asserted against the Debtors and underscores the need for a process that will enable the claims to be tested." The Committee's request for an asbestos-related personal injury claims bar date was reported in the Troubled Company Reporter on April 28, 2003, and August 4, 2004. Mr. Riley maintains that the bar date process will provide a sound basis for the estimation proceedings that will ultimately determine the Debtors' present and the future asbestos personal injury liabilities for purposes of a plan or reorganization. Objections (1) Future Asbestos Claimants' Representative James J. McMonagle, the legal representative for future claimants, asserts that the issuance of a bar date order for present asbestos personal injury claims: (a) is not mandatory; (b) would serve no valid purpose; and (c) would impose exorbitant costs and delays to the severe detriment of deserving asbestos personal injury claimants who have already waited too long to be compensated for their injuries. Sharon M. Zieg, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, argues that nothing in the Bankruptcy Code mandates the imposition of a bar date for all claims. The Creditors Committee has not cited any Bankruptcy Code provision in support of its position, but merely cited Rule 3003 of the Federal Rules of Bankruptcy Rules. Bankruptcy Rule 3003 does not oblige the Court to impose an additional bar date for present asbestos personal injury claims. Granting the bar date request would result in an egregious waste of resources and an interminable and prejudicial delay that would severely diminish the assets available for the Section 524(g) trust. It will also threaten the ability of both current asbestos personal injury claimants and persons who will assert to justly recover on their claims and demands. Mr. McMonagle insists that the interests of all parties will be protected in the claims estimation process. Mr. McMonagle suggests that oral arguments be held on the Bar Date request and on the objections to the Bar Date request. Accordingly, Mr. McMonagle asks the Court to deny the Bar Date request in all respects. (2) Baron & Budd Claimants Certain asbestos personal injury claimants represented by Baron & Budd joins in Mr. McMonagle's Objection and Response. (3) Asbestos Claimants Committee Marla R. Eskin, Esq., at Campbell & Levine, LLC, in Wilmington, Delaware, asserts that a bar date for asbestos claims is not necessary for determining the amount of the Debtors' asbestos liability for four reasons: (a) It would be wholly impractical to undertake the tens of thousands of individual jury trials necessary to adjudicate objections to the individual claims presented in the proofs of claims; (b) Estimation under Section 502(c)(1) of the Bankruptcy Code explicitly provides an alternative road to allowance where it is impractical to adjudicate individual claims; (c) The proofs of claim are not necessary to establish a "register" of Asbestos Claimants Eligible to Vote because: -- the protection sought by the Bank Debt Holders would waste an incalculable amount of the Court's time and the Debtors' resources without affecting the ultimate outcome of the vote in Owens Corning's case; -- the Bankruptcy Code and Bankruptcy Rules do not require that asbestos personal injury claimants either meet a Bar Date or file Proof of Claim forms to be eligible to vote; -- the Bankruptcy Code and Bankruptcy Rules provide for temporary allowance of claims for voting purposes, a process that does not entail a Bar Date or Proof of Claim forms; and -- the Bankruptcy Court has properly recommended that the Ballot Forms for Asbestos Personal Injury Claims be deemed Proof of Claim forms for voting purposes; and (d) The proposed proof of claim forms are excessive and burdensome. It attempts to bypass discovery and subvert the procedural right of claimants. The Bank Debt Holders' definition of who must file a claim is unfair. The proof of claim should not require information bearing on claims against other defendants. Ms. Eskin explains that in a mass tort case like Owens Corning with hundreds of thousands of pending claims and a need to take account of future claims as well, estimation is the only practical course. A Section 502(c) estimate is not a finding or a fixing of the exact amount of the claim, but rather a reasonable approximation of the claim or claims in question. The court's estimation options include: (i) accepting the claim at face value; (ii) estimating it at zero in which case its discharge is waived under Section 1141(d); and (iii) arriving at an independent estimation by whatever means is appropriate. To value the Debtors' liability for claims pending on the Petition Date, the expert would typically: (i) group the pending claims into disease categories; (ii) discount the total number of pending claims by the Debtors' historical percentage of claims dismissed without payment; and (iii) then multiply the remaining "likely to be paid" claims by the average resolution amount for each particular disease category. In contrast, a bar date would serve no useful purpose for determining the Debtors' aggregate asbestos liability. Estimation is an approximation, and necessarily involves comparing a known or established quantum of data to the thing being estimated. There are only two possible "quantum of data" from which to estimate the liability to present and future claimants: (i) the numbers and types of claims filed over the Debtors' 20-year history of similar asbestos personal injury cases in the tort system and the values of these cases resolved under settlement criteria and methodology that the Debtors determined were most likely to minimize its overall liability; or (ii) whatever numbers of claims might be filed in response to a Bar Date Order, which have never been evaluated, litigated, or reduced to any liquidated value. To establish a "known" value for the 200,000-plus Bar Date claims, the Court would be required either to try each case to verdict or to: -- analyze and evaluate at the very least a statistically valid sample of the claims; -- apply the Bank Debt Holders' "liability filters" as they apply to each individual claim; and -- value the claims that pass through the filter by comparison to jury verdicts in similar claims, if they could be found, or try the sample cases to juries in the Bankruptcy Court. "This process would take years, if it could be done at all," Ms. Eskin says. In an estimation proceeding, the Bank Debt Holders can present their own view of the Debtors' potential asbestos liability through experts of its choosing. From the estimation process, the Court can determine the asbestos personal injury share of the overall unsecured claims, and the percentage of their "full" value to be paid claimants in the various categories. The resulting estimate does not, however, entitle any individual claimant to payment. It simply provides an accurate approximation of the total amount of the Debtors' potential asbestos personal injury liabilities, both present and future, that will be channeled to the trust for evaluation and payment. The use of estimation, rather than individual adjudication, is particularly appropriate because there will be a Section 524(g) injunction. Thus, asbestos claimants will not receive a distribution from the bankruptcy estate, but from the Section 524(g) trust, which will evaluate their claims and, in appropriate cases, pay them. (4) Owens Corning The Debtors assert that the Bar Date Motion unnecessarily seek to delay, and impose unnecessary expenses on, the estimation of asbestos claims and demands. There is no need to establish a bar date and require detailed proofs of claim to collect more information about asbestos claims before an estimation can occur. The Official Committee of Unsecured Creditors' expert, Dr. Frederick Dunbar, and other estimation experts retained in the Debtors' case have previously estimated the Debtors' aggregate asbestos liabilities based solely on their claims history. So, there is no need for an asbestos bar date or asbestos proof of claim form. Norman L. Pernick, Esq., at Saul Ewing, LLP, in Wilmington, Delaware, contends that the only potential use for the asbestos proof of claim is for voting purposes. Thus, if the Court believes that a bar date must be set, it should be set coterminous with the voting deadline and for voting purposes. The Bar Date should not be for purposes of allowing or disallowing claims. This will help avoid the deluge of claims, which would otherwise be filed out of fear of being precluded from pursuing a claim. The detailed proofs of claim proposed by the Bank Debt Holders are simply not required for voting purposes. Moreover, the Bank Debt Holders failed to provide any justification for why asbestos claimants should be subjected to a more onerous proof of claim form than that required by Rule 3001(a) of the Federal Rules of Bankruptcy Procedure and filed by other creditors in the Debtors' cases. Bankruptcy Rule 3001(a) merely requires that a proof of claim be a written statement of the claim substantially conforming to Official Form 10. The asbestos ballots already reviewed by the Court meet that requirement, and if proofs of claim are required, it should suffice. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. At June 30, 2004, the Company's balance sheet shows $7.3 billion in assets and a $4.3 billion stockholders' deficit. (Owens Corning Bankruptcy News, Issue No. 82 Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC GAS: Says Confirmation Order Should've Stopped 31 Lawsuits ------------------------------------------------------------------ Pursuant to the Confirmation Order, as of the Confirmation Date, all creditors of Pacific Gas and Electric Company were enjoined from: (a) commencing or continuing any action against PG&E with respect to a claim that arose before the Confirmation Date; and (b) collecting or enforcing a judgment on any Claim, except as otherwise provided in the Plan. On April 12, 2004, the Plan Effective Date, PG&E was discharged from any and all Claims that arose before the Confirmation Date. Lisa A. Turbis, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, in San Francisco, California, tells the Court that 31 plaintiffs have commenced and are pursuing lawsuits against PG&E in courts throughout California that are subject to both the discharge and the injunction imposed by the Plan and the Confirmation Order. The claims on which the Lawsuits are based arose before the Confirmation Date. Ms. Turbis asserts that by prosecuting or otherwise allowing the Lawsuits to proceed against PG&E, the Plaintiffs have failed to comply with the Confirmation Order and Section 524(a)(2) of the Bankruptcy Code. PG&E's informal efforts to obtain dismissals of the Lawsuits have been unsuccessful. Accordingly, PG&E asks the Court to enforce the Confirmation Order by compelling the Plaintiffs to dismiss their Lawsuits against PG&E or face sanctions. Creditors Object (A) DeSilva Gates Construction and DeSilva Gates Steven M. Marden, Esq., at Burnham Brown, in Oakland, California, asserts that DeSilva Gates Construction, LLP, and DeSilva Gates, doing business as Gallagher & Burke, did not receive notice of the deadline to file claims in Pacific Gas and Electric Company's Chapter 11 case -- which PG&E now contends operate to bar DeSilva's cross-complaints against it in the California state court. Mr. Marden points out that in In re Levine v. Maya Constr. Co., 78 F.3d 1395, 1399 (9th Cir. 1996), the Ninth Circuit held that the failure to give notice to a creditor of the deadlines prevents the creditor's claims from being discharged by the confirmation of the reorganization plan. Thus, Mr. Marden contends, enforcing the Confirmation Order would deny DeSilva due process. (B) Sensor Scan, Inc. On behalf of the United States government and the State of California, Sensor Scan filed a complaint against Pacific Gas and Electric Company before the U.S. District Court for the Northern District of California. The Complaint is based on alleged billing by PG&E of public entities for electricity that was not provided by PG&E. As a Qui Tam action, the Complaint was filed under seal. Sensor Scan also filed a claim in connection with the Qui Tam action on behalf of the U.S. government and California, which were listed as creditors. After the seal was lifted by Judge Patel in the Qui Tam action, Sensor Scan did not serve the complaint on PG&E because of the bankruptcy stay. Rather, Sensor Scan contacted PG&E and then faxed the Complaint and order lifting the seal to PG&E on April 2, 2003. Unknown to Sensor Scan, PG&E was at the same time objecting to Sensor Scan's Claim, contending that it was untimely because it was a non-governmental entity claim. Sensor Scan's counsel had moved its office since filing the Claim. The counsel, however, had an order with the post office to forward mails to the new address. Also, the counsel's fax numbers and phone numbers never changed. Hence, if any notice was returned by the Post Office, PG&E could have easily contacted Sensor Scan's counsel. Moreover, Sensor Scan's April 2, 2003 letter to PG&E and the proof of service on the order lifting the seal attached to that letter both had the counsel's correct address. According to Peter A. Urhausen, Esq., at Gibbons & Conley, in Walnut Creek, California, Sensor Scan did not know that its Claim was disallowed until it received a letter from PG&E on May 14, 2004. Sensor Scan also had no notice of PG&E's objection to the late claim until it received a letter from PG&E on May 28, 2004. Curiously, PG&E sent both letters to the subsequent address of Sensor Scan's counsel. Mr. Urhausen relates that the Sensor Scan secretary in charge of filing notices of change of address apparently failed to file one with the Bankruptcy Court, although she did file a notice of change of address with the Northern District Court in connection with the Qui Tam action. The attorneys involved in the case failed to make sure the notice was filed. Against this backdrop, Sensor Scan asks Judge Montali to deny PG&E's request as to the Qui Tam action. Mr. Urhausen asserts that PG&E's request to enforce the Confirmation Order does not specifically address the Qui Tam action. Sensor Scan has no claim against PG&E other than on behalf of the governmental entities, as a relator in the Qui Tam action. Sensor Scan is not a "plaintiff." The real parties-in- interest are the U.S. government and California. Mr. Urhausen also points out that the Qui Tam action contains claims on behalf of the U.S. government and California. Neither the order on PG&E's objection to Sensor Scan's claim or the order confirming the Plan require a dismissal of the U.S. government's and California's claims. Consequently, the orders do not require dismissal of the Qui Tam action. PG&E's request should also be denied because: (a) PG&E's claims objection did not address the U.S. government's and California's claims, which are the only claims underlying the Qui Tam action; (b) PG&E made no attempt to serve the Claims objection or order on the U.S. government or California; (c) Sensor Scan did not receive notice of PG&E's March 28, 2003 Objection to Sensor Scan's Claim or the April 28, 2003 order until May 2004; (d) PG&E's request for confirmation of its Plan and the Court's November 22, 2003 order confirming the Plan did not list Sensor Scan's Claim as one of the claims disallowed, but instead Schedule 1.1 of PG&E's Composite Plan Supplement listed the Sensor Scan action as the pending claim that would proceed as if the bankruptcy proceedings had not occurred; (e) PG&E purportedly mailed notice of its Claims objection to the former address of Sensor Scan's counsel, despite actual knowledge of the new address and the fact that the counsel's phone and fax numbers never changed; (f) Sensor Scan's failure to file a normal Notice of Change of Address was based on a secretarial oversight and constitutes excusable neglect, and has not prejudiced PG&E; and (g) PG&E's objection to Sensor Scan's Claim was on its face without merit, unless it does not apply to the U.S. government's or California's claims. (C) Randal S. Hensley Mr. Hensley filed a wrongful termination and discrimination lawsuit against PG&E in the Fresno County Superior Court on May 7, 2002. On December 19, 2002, PG&E filed a Notice of Stay of Action in the Lawsuit. On April 15, 2004, PG&E filed a Notice of Termination of Automatic Stay in the Lawsuit. As evidenced in the December 19 Notice and April 15 Notice, including several other documents, Mr. Hensley points out that PG&E is aware that he intends to hold PG&E liable. Mr. Hensley has been suffering from a mental disability and has been unable to contact or get an attorney to help file any formal claim. Accordingly, Mr. Hensley asks the Court to: (a) allow his claim as an informal claim; (b) deem Mr. Henley to have filed an informal claim; and (c) deny PG&E's request to enforce the Confirmation Order. (D) Robert Rust and Nancy Rust On April 2, 2001, four days before the Petition Date, Robert Rust fell from a PG&E-owned and maintained utility pole while in the course and scope of his employment with the Utility, then known as Pacific Bell. On March 22, 2002, Mr. and Mrs. Rust filed a complaint in the Superior Court of the County of San Francisco seeking damages for personal injuries and loss of consortium. No further activity was undertaken in the State Court Action until May 4, 2004, when a different attorney representing PG&E filed an Answer in the State Court Action without any request from Mr. and Mrs. Rust, or the State Court, that it do so. PG&E then propounded discovery requests, which were withdrawn when yet a different attorney for PG&E filed the Utility's request to enforce the Confirmation Order. Given the proximity of Mr. Rust's accident to the Petition Date and that Mr. and Mrs. Rust did not even seek counsel in the State Court Action until March 2002, Mr. and Mrs. Rust admit that any claim filed would have been late in any event. Furthermore, because their claim arises from an accident for with PG&E will vigorously oppose the imposition of liability, Mr. and Mrs. Rust believe that any previously filed claim would have been contingent and for an unliquidated amount. Any claim filing would necessarily have required Mr. and Mrs. Rust to liquidate their claim in the State Court. Accordingly, Mr. and Mrs. Rust seek Judge Montali's permission to liquidate their Claim in the State Court. Mr. and Mrs. Rust believe that PG&E will not suffer any legal prejudice. PG&E has already engaged counsel to defend it, and has already answered the State Court Action. PG&E Responds On PG&E's behalf, Barbara Gordon, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, in San Francisco, California, asserts that the objections lack merit and should be overruled: (A) DeSilva Gates Construction and DeSilva Gates DeSilva Gates Construction and Gallagher & Burke were each notified of the commencement of PG&E's Chapter 11 case on May 7, 2001. Subsequently, DeSilva was also served with the notice of the Claims Bar Date. At DeSilva's attorneys' request, PG&E sent all notices to Burnham Brown's business address. Additionally, Burnham Brown requested that Gallagher & Burke be included on the mailing matrix in care of its attorneys. Ms. Gordon contends that DeSilva fails to provide evidence of non-receipt of the Bar Date Notice other than Mr. Marden's conclusory declaration, which is devoid of any factual support for his contentions. Accordingly, DeSilva's unsupported and dubious assertion that it did not receive the Bar Date Notice is insufficient to rebut the presumption that DeSilva received the Notice. (B) Sensor Scan, Inc. Sensor Scan states that it "has no claim against PG&E other than on behalf of the governmental entities as a relator in this Qui Tam action." That being the case, Ms. Gordon asserts that Sensor Scan has no claim at all, as both the claims of the U.S. government and the State of California have been discharged. The Court disallowed the U.S. government's Claim on May 10, 2004. Additionally, although California filed numerous claims in PG&E's Chapter 11 case, California did not file a claim with respect to the Qui Tam action. Thus, the Sensor Scan litigation should be dismissed. (C) Randal S. Hensley Ms. Gordon reminds Judge Montali that an informal proof of claim must: (a) be in writing; (b) be filed with the court or delivered to one of the officials listed in Rule 5005(c) of the Federal Rules of Bankruptcy Procedure, within the established period for filing claims; (c) contain an explicit demand showing the nature and amount of the claim against the estate; (d) evidence an intent to hold the debtor or the bankruptcy estate liable. Additionally, a writing allegedly constituting an informal claim must be presented to the Court's attention, or served on the trustee, or its legal equivalent, the debtor, within the period for filing claims. Ms. Gordon points out that in In re Kenitra, Inc., 53 B.R. 152, 154-55 (Bankr. D. Ore. 1985), the Oregon court held that a complaint filed in another court cannot constitute an informal proof of claim because it has not been brought to the attention of any party connected with the bankruptcy case within the period for filing claims. Ms. Gordon also contends that a complaint alone cannot constitute an informal claim because it does not evidence the claimant's intent to hold the estate liable. On two separate occasions, PG&E caused a proof of claim to be sent to Mr. Hensley, and inexplicably, Mr. Hensley failed to file any of the sent proofs of claim. Mr. Hensley's contention that he was unable to file a claim or seek assistance in filing the claim is particularly dubious in light of his ability to file his opposition to PG&E's request to enforce Confirmation Order and appropriate Certificate of Service. Should the Bankruptcy Court consider the filing of the State Court Action as an informal claim, Ms. Gordon points out that the filing was made after the September 5, 2001 Claims Bar Date. Furthermore, Mr. Hensley fails to explain why he did not "amend" the informal claim by filing one of the two proofs of claim sent to him. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. Pacific Gas and Electric emerged from chapter 11 protection on April 12, 2004, paying all creditors 100 cents-on- the-dollar plus post-petition interest. (Pacific Gas Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., 215/945- 7000) PAXSON COMMS: Liquidity Troubles Prompt S&P's B- Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Paxson Communications Corp. to 'B-' from 'B' due to the lack of convincing progress toward completing a strategic transaction that would boost liquidity. The outlook is negative. The West Palm Beach, Florida-based television station owner and operator had approximately $978.8 million of debt outstanding on June 30, 2004. "The rating action reflects Standard & Poor's concerns that Paxson has not executed a strategic transaction, including either an investment by a strategic partner or an outright sale of the company, that assures long-term liquidity," said Standard & Poor's credit analyst Alyse Michaelson. In the absence of a viable longer-term strategy, concerns related to the cash flow generating capabilities of Paxson's assets, its onerous debt burden with certain debt requiring cash interest in 2006, and the redemption request by the National Broadcasting Company, Inc., have intensified. Liquidity is far from sufficient to fund NBC's roughly $575 million redemption request, although the redemption request cannot trigger a default. Cash balances of around $100 million, elevated by 2003 and early 2004 asset sales, provide near-term liquidity but are insufficient to cover likely free cash flow deficits for more than two years. Deficits are expected to widen in mid-2006 when cash interest expenses will increase by $60 million annually, causing total cash interest expenses to more than double. Piecemeal asset sales are likely to represent an essential source of liquidity in light of free cash flow deficits and the absence of a strategic transaction. Although an improving ad environment could help Paxson sell assets at better cash flow multiples, pricing could be less robust than expected if buyers perceive that Paxson is shedding assets under mounting financial pressure. The rating on Paxson reflects the significant business and financial risks related to the company's start-up television network. Paxson's challenges are compounded by the competitive television broadcasting environment comprised of well capitalized rivals and the lack of a relaxation of TV duopoly and newspaper/broadcaster limits that has hampered its ability to complete a strategic transaction. High financial risk also results from acquisition related debt and expensive debt-like preferred stock, weak EBITDA, and negative discretionary cash flow. These factors are only partially offset by the company's valuable programming distribution platform and station asset values. PEGASUS SATELLITE: Court Approves Final DirecTV-NRTC Settlement --------------------------------------------------------------- The U.S. Bankruptcy Court approved the final settlement of legal disputes Pegasus Satellite Television had brought against National Rural Telecommunications Cooperative. The Court approved a dismissal with prejudice of all claims Pegasus brought against NRTC and DIRECTV and included a general release to NRTC. This is the last step in finalizing the agreement between NRTC and DIRECTV that was announced June 1 and settles all litigation among the parties. "NRTC is pleased with the Court's decision," said Bob Phillips, President and CEO of NRTC. "NRTC and its members can now focus on delivering programming from the leading satellite television service and increasing the value of the service to subscribers with innovations such as DIRECTV local-into-local service, digital video recording, and high-definition programming." "Members who currently provide DIRECTV service are now able to quantify the terrific value they have built in their businesses over the last decade, while still continuing to provide high- quality local service," continued Mr. Phillips. "And now, with the June 1 agreement, all NRTC members can enter the business and provide DIRECTV services in their communities and beyond," Phillips said. The settlement approval allows DIRECTV to proceed with its plan to acquire all of the DBS assets of Pegasus and eliminates the litigation liability NRTC had faced pertaining to the June 1 deal. "With these issues resolved, NRTC looks forward to delivering DIRECTV satellite services and WildBlue satellite broadband Internet access bundled on one dish," Mr. Phillips said. NRTC and its members will begin offering WildBlue broadband Internet service in rural areas early next year. About NRTC NRTC leads and supports more than 1,200 member organizations by delivering telecommunications solutions to strengthen member businesses, promote economic development and improve the quality of life in rural America. The rural utilities that make up NRTC offer services to more than 30 million rural households in the United States. For more information, visit http://www.nrtc.coop/ Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite Communications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS) television. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Me. Case No. 04-20889) on June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,762,883,000 in assets and $1,878,195,000 in liabilities. PENINSULA GAMING: S&P Lowers Credit & Debt Ratings One Notch to B ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on Peninsula Gaming LLC to 'B' from 'B+' and removed the ratings from CreditWatch where they were placed on Aug. 19, 2004. The outlook is stable. Total debt outstanding as of June 30, 2004, was about $274 million. Dubuque, Iowa-based Peninsula owns and operates the Diamond Jo Casino, a riverboat located in Dubuque, and Old Evangeline Downs, a pari-mutuel horse racetrack and casino -- racino -- in Opelousas, Lousiana. Diamond Jo Casino's EBITDA for the six months ended June 30, 2004, declined about 7% year over year to $7.4 million due in part to increased competition from an Indian casino that re-opened in December 2003 and the addition of 250 gaming machines at its closest competitor, Dubuque Greyhound Park. "Despite the Diamond Jo Casino's comparatively better performance, the Dubuque Greyhound Park is expected to open a significant expansion in May 2005, and will likely pressure operating results in the intermediate term," said Standard & Poor's credit analyst Peggy Hwan. Old Evangeline Downs opened its first phase of development, the casino portion of its racino, in December 2003, three months earlier than expected. For the second quarter ended June 30, 2004, Old Evangeline Downs generated EBITDA of $3.9 million. EBITDA for fiscal 2004 is expected to be materially lower than Standard & Poor's original expectation. Management recently announced several efforts to address various operational issues that have contributed to these disappointing results, such as significant changes in management, more targeted marketing programs, and a change to the mix of games on the slot floor. Ms. Hwan added, "These represent material steps, which underscore the depth of the operational challenges at this property, and it will likely take several quarters for [Old Evangeline Downs'] operations in Louisiana to realize the benefit of these changes." PG&E NATIONAL: NEG & ET Holdings Object to $6.8MM Hoffman Claims ---------------------------------------------------------------- In the normal course of its business before the Petition Date, NEGT Energy Trading Holdings Corporation hired energy traders. In addition to a base salary, the energy traders received discretionary short-term incentive plan awards and supplemental incentive awards for the year 2001. According to Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, LLP, in Baltimore, Maryland, the supplemental incentive award payments for 2001 were structured in that the recipient received up to $500,000 of the supplemental incentive award in March 2002. Any amounts in excess of $500,000 were to be paid in equal installments in October 2002 and October 2003. Pursuant to the contemplated structure, ET Holdings paid supplemental incentive awards as scheduled in March 2002 and October 2002. The scheduled October 2003 payments, however, have not yet been made. ET Holdings acknowledges that the payments are due, and does not object to proofs of claim based on the scheduled October 2003 payment obligation. ET Holdings did not award any supplemental incentive awards for the years 2002 and 2003. Therefore, ET holdings, together with National Energy & Gas Transmission, Inc., objects to any proofs of claim based on purported supplemental incentive awards for those years. Adam Hoffman's Claims Adam Hoffman was a trader employed by ET Holdings. Mr. Hoffman filed two claims, both asserting $6,805,670. Claim No. 102 was asserted against ET Holdings, while Claim No. 103 was asserted against NEG. Additionally, Mr. Hoffman filed a complaint in the Circuit Court of Maryland for Montgomery County against NEG and ET Holdings. The Complaint was stayed after the Petition Date. Based on the allegations set forth in the Complaint, Mr. Hoffman contends that he is entitled to a supplemental incentive award for the year 2001, as well as alleged supplemental incentive awards for the years 2002 and 2003. In addition, Mr. Hoffman seeks "treble damages" pursuant to the Maryland Wage Payment and Collection Act. Claim Against ET Holdings For the year 2001, Mr. Fletcher relates that ET Holdings made a $1,000,000 supplemental incentive award to Mr. Hoffman. Pursuant to its supplemental incentive award payment structure, ET Holdings paid Mr. Hoffman $500,000 in March 2002, and $253,791 in October 2002. ET Holdings did not pay Mr. Hoffman the remaining $250,000 for his year 2001 supplemental incentive award. ET Holdings concedes that Mr. Hoffman is owed that amount. Mr. Hoffman also alleges that he is owed a $1,000,000 supplemental incentive award for the year 2002 and a $1,000,000 supplemental incentive award for the year 2003. But because all supplemental incentive awards were discretionary in nature, Mr. Fletcher contends that the Maryland Wage Payment and Collection Act is inapplicable to Mr. Hoffman's claims. Therefore, ET Holdings object to the "treble damages" Mr. Hoffman seeks. Claim Against NEG Although Mr. Hoffman was employed and paid by ET Holdings, he also filed a claim against NEG. Mr. Fletcher asserts that Mr. Hoffman must look solely to ET Holdings for the payment of any amount owed to him. In the Complaint, Mr. Hoffman alleges that NEG caused ET Holdings "to transfer to NEG, among other funds, the monies available to pay [Mr. Hoffman] and other traders," and that "NEG did not provide fair consideration to [ET Holdings] in exchange for a distribution of [ET Holding's] funds to NEG." Based on this allegation, Mr. Hoffman concludes that the "distribution of the available cash to NEG was or will be a fraudulent conveyance as to Mr. Hoffman and the other traders who are owed supplemental compensation. . . ." Mr. Fletcher argues that Mr. Hoffman lacks standing to bring a claim against NEG. The harm Mr. Hoffman alleges he suffered as a result of the alleged fraudulent transfer is a generalized harm suffered by ET Holdings. Mr. Hoffman failed to state any particularized harm he suffered, as distinguished from other ET Holdings creditors. Mr. Fletcher points out that in In re Enron Corp., 2003 Bankr. Lexis 330 at 11 (Bankr. S.D.N.Y. 2003) (citing St. Paul Fire and Marine Ins. Co. v. PepsiCo, Inc., 884 F.2d 688, 700 (2d Cir. 1989)), the New York court held that it is an established principle of bankruptcy law that "[w]here a claim is generalized, with no particularized injury stemming from it and where the claim may be brought by any creditor, the trustee or debtor-in- possession is the appropriate party to assert the claim." Given this, Mr. Hoffman states that only ET Holdings can assert the claim, not Mr. Hoffman. Mr. Hoffman's claims against NEG fail as a matter of law. As a result, NEG and ET Holdings ask the Court to: (a) reduce Mr. Hoffman's $6,805,670 claim against ET Holdings to $250,000; (b) fix and allow the Reduced Claim as a general unsecured non-priority claim; and (c) disallow Mr. Hoffman's claim against NEG. 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) PURE TECH: U.S. Patent Office Grants P-Wave(R) Technology Patent ---------------------------------------------------------------- The United States Patent Office has granted the first patent relating to Pure Technologies, Ltd.'s (TSX-V: PUR) P-Wave(R) electromagnetic pipe inspection technology. Related patent applications are pending in the U.S. and other countries. Pure Technologies expects that the patent will help to solidify its position as a leading provider of non-destructive inspection technologies for prestressed concrete pipelines in North America and overseas. Pure Technologies is an international technology company, which has developed patented and proprietary technologies for management and surveillance of critical infrastructure. Applications for these technologies include bridges, pipelines, nuclear power plants, high-rise buildings, parking structures and other structures throughout the world. Pure designs and supplies the systems and provides continuing remote monitoring and technical support from its headquarters in Calgary, Canada, its subsidiary in the United States, and a strategic partnership overseas. At June 30, 2004, Pure Technologies stockholders' deficit narrowed to $8,821,000. At December 31, 2003, the company's equity deficit was pegged at $9,884,000. QWEST COMMS: Subsidiary Pays $569 Million Cash for 7.20% Notes -------------------------------------------------------------- Qwest Communications International, Inc.'s (NYSE:Q) wholly owned subsidiary, Qwest Corporation, purchased for cash approximately $569 million aggregate principal amount of 7.20 percent notes due November 1, 2004, under its previously announced tender offer for approximately $750 million of outstanding notes. A total of approximately $569 million, representing approximately 76 percent of the outstanding, in principal amount of QC notes maturing in 2004 were tendered prior to 5:00 p.m. on August 24, 2004, (the Early Participation Payment Deadline), and have been accepted for payment. Holders who tendered by such time received total consideration of $1,009.40 per $1,000 principal amount of notes accepted for purchase, consisting of a purchase price of $989.40 per $1,000 principal amount of notes and an early participation payment of $20 per $1,000 principal amount of notes. The settlement was completed Wednesday, Aug. 25, and interest was paid up to, but not including, Wednesday. The offer is scheduled to expire at midnight EDT, on Wednesday, September 8, 2004, unless extended (the Expiration Time). Holders who validly tender their notes after the Early Participation Payment Deadline and prior to the Expiration Time will receive the purchase price of $989.40 per $1,000 principal amount of notes accepted for purchase plus interest accrued up to, but not including, the date on which payment for the notes is made. Notes tendered after the Early Participation Payment Deadline may not be withdrawn. Lehman Brothers and Goldman, Sachs & Co. are the dealer managers for the offer. Questions regarding the offers may be directed to Lehman Brothers, Liability Management Group at (800) 438-3242 (toll-free) and (212) 528-7581, or Goldman, Sachs & Co., Credit Liability Management Group, at (800) 828-3182 (toll-free) and (212) 357-3019. About Qwest Qwest Communications International, Inc., (NYSE:Q) is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, visit the Qwest Web site at http://www.qwest.com/ Qwest's June 30, 2004, balance sheet shows a stockholders' deficit totaling $1,909,000,000 -- swelling 53% from the $1,251,000,000 shareholder deficit reported at March 31, 2004. R.J.REYNOLDS: Moody's Affirms Ba2 Sr. Sec. & B2 Sr. Unsec. Ratings ------------------------------------------------------------------ Moody's Investors Service affirmed the ratings of RJ Reynolds Tobacco Holdings and changed the outlook to negative from stable, due to a recent ruling by a Canadian court ordering payment by a subsidiary of Japan Tobacco of C$1.4 billion in owed taxes, for which RJ Reynolds might need to indemnify Japan Tobacco in the future; and to the upcoming start of a trial potentially leading to significant damages brought by the US Department of Justice against the industry, including RJ Reynolds Tobacco Company and Brown & Williamson. Ratings affirmed: * Guaranteed senior secured debt, at Ba2; and * Non-guaranteed senior unsecured debt, at B2. The first factor driving the outlook change is the increased possibility that RJ Reynolds might ultimately have to make a substantial payment under an indemnity agreement with Japan Tobacco. In 1999, RJ Reynolds sold its international tobacco business to Japan Tobacco. As part of this transaction, RJ Reynolds and its subsidiary RJR Tobacco agreed to indemnify Japan Tobacco against liabilities, costs and expenses arising out of the imposition or assessment of any tax with respect to the companies sold arising prior to the sale. On August 13, 2004 a Quebec Superior Court ordered JTI-MacDonald, a subsidiary of Japan Tobacco formerly held by RJ Reynolds, to pay C$1.4 billion (USD 1.1 billion) in allegedly owed taxes. Quebec alleges that JTI-Macdonald participated in the contraband trade in cigarettes in order to avoid taxes from 1990 through 1998. In that operation, various Canadian companies allegedly shipped cigarettes to American subsidiaries. The cigarettes were then allegedly sold to smugglers and smuggled back into Canada. In 2003 the Canadian federal government filed a similar and parallel claim in superior court in Ontario against RJ Reynolds and Japan Tobacco. Moody's notes that at this stage -- in spite of the court-ordered payment -- it appears that no Canadian court has yet determined wheher the alleged facts did occur. On August 24, 2004, JTI-MacDonald sought bankruptcy protection under Canada's Companies Creditors Arrangement Act, arguing that a lockbox mechanism ordered by the Quebec Superior Court would have deprived it of approximately 40% of its Canada-wide revenues, and led to its rapid impossibility to pay off its creditors. The Act provides for initial protection from legal proceedings for up to 30 days, which can be extended at the discretion of the bankruptcy judge. It is unclear whether JTI-MacDonald will pursue appeal of the decision from within the protection of the bankruptcy court, or whether it will seek and obtain a settlement with the Province of Quebec. In a press release dated August 25, 2004, Japan Tobacco has indicated that it will seek reimbursement from RJ Reynolds under the indemnity agreement of any payment its subsidiary might have to make due to the court order. The second factor driving the outlook change is the upcoming September 21,2004 start of the trial brought by the US Department of Justice against the tobacco industry, including RJ Reynolds Tobacco Company and Brown & Williamson. Under an agreement as part of the purchase of its operating assets, RJ Reynolds has committed to indemnify Brown & Williamson for all future legal payments. In a recent pre-trial ruling, the judge that will preside over trial has declined to cap the level of disgorgement payments that might be required of the industry if it was found liable. Although this decision could be reversed by the District of Columbia Court of Appeals during trial, it increases the possibility of a high ultimate payment by RJ Reynolds and potentially constrains financial flexibility. These negative developments occur at a time when RJ Reynolds' operating performance is improving, and the company stands to reap substantial benefits from its merger with B&W. On a standalone basis (before merger with B&W), RJ Reynolds' operating profit in the second quarter of 2004 increased to $257 million from $195 million in the second quarter of 2003 (before charges), as cost reduction initiatives taken last year started to improve profitability. Moody's expects that merger-related synergies could contribute to further significant improvement in debt metrics (possibly bringing debt/EBIT before charges from 2.39 in 2003 to approximately 1 within two years), although free cash flow benefits should be dampened by $700-800 million in cash restructuring payments through 2006 and by a recently decided increase in the dividend payment ratio policy from 50% to 75% of net earnings. Nonetheless, Moody's considers that the net positive effect on operating metrics expected from the merger is currently more than offset by the increased potential liability stemming from RJ Reynolds' indemnity agreement with Japan Tobacco and from the Department of Justice case. An increase in the possibility of future payments under the indemnity agreement or adverse rulings or verdict in the Department of Justice case could place pressure on the ratings. A reduction in the indemnity-related risk and an improvement in the legal climate could eliminate this pressure, and could even contribute to upward pressure, if the cash flow benefits from the merger are not offset by possible passage in Congress of regulation of the industry by the Food and Drug Administration at terms unfavorable to RJ Reynolds. R.J. Reynolds Tobacco Holdings, headquartered in North Carolina, is a subsidiary of Reynolds American and is the parent company of R.J. Reynolds Tobacco Company. R. J. Reynolds Tobacco Company is the second largest tobacco company in the United States. RELIANCE: Liquidator Wants to Pay $375MM to Guaranty Associations ----------------------------------------------------------------- M. Diane Koken, the Insurance Commissioner of the Commonwealth of Pennsylvania, in her capacity as Liquidator of Reliance Insurance Company, asks the Commonwealth Court of Pennsylvania to approve her Second Proposal to distribute assets to State Guaranty Associations. Ann B. Laupheimer, Esq., at Blank Rome, LLP, in Philadelphia Pennsylvania, explains that once an insolvent insurer like RIC is placed in liquidation, State Guaranty Associations are compelled to perform their statutory function of paying certain covered claims pursuant to statutory limitations in each state. Once a Guaranty Association paid a covered claim that would otherwise have been an obligation of the insolvent insurer, the Guaranty Association becomes subrogated to the claim of the insured or the claimant, and steps into the shoes of the policyholder for purposes of the priority of distribution. Based on the payment of covered claims, Guaranty Associations in the RIC estate will become the largest Class (b) policyholder claimants of the estate. Pursuant to Section 221.36 of the Pennsylvania Statute, the Liquidator must seek authority from the Commonwealth Court to disburse assets out of the insolvent insurer's marshaled assets to any guaranty association. Section 221.36 requires the proposal to include: (a) A reserve for administrative expenses and secured claims; (b) Disbursement of assets marshaled to date and the prospect of future disbursement as assets become available; (c) Equitable allocation to the various guaranty associations; (d) Securing by the Liquidator of an agreement to return assets under certain circumstances to ensure pro rata distributions among members of the same creditor class; and (e) Potential reports by the guaranty associations. The Liquidator proposes to distribute $375,000,000 in cash to the Guaranty Associations. In setting this amount, the Liquidator considered the nature of the estate's assets. The Liquidator reserved sufficient assets to pay her administrative expenses as well as the class (a) expenses of the Guaranty Associations. According to Ms. Laupheimer, the Second Proposal provides the Guaranty Associations, security funds or entities performing substantially equivalent functions with early access to available RIC funds to pay covered policyholder claims. The Second Proposal also provides the framework for future early access distributions. The Liquidator may make future distributions as additional funds are collected and become available. After consultation with the representatives of the Guaranty Associations related with the National Conference of Insurance Guaranty Funds, the Liquidator decided to use "paid loss and ALAE" data in the allocation formula for distribution in the Second Proposal, rather than claims payments made or to be made. The allocation formula will take into consideration amounts already received from the First Distribution. After consultation with the representatives of the Life and Health Insurance Guaranty Associations, the Liquidator determined that, given amounts already paid to these Guaranty Associations in the First Distribution, no Life and Health Insurance Guaranty Associations will be eligible to receive an allocation under the Second Proposal. Fifty-three states stand to receive cash distributions: State Amount ----- ------ Alabama $6,688,773 Alaska 1,582,448 Arizona 1,282,338 Arkansas 307,214 California 39,174,424 Colorado 4,333,668 Connecticut 8,631,219 Delaware 1,196,314 District of Columbia 1,463,147 Florida 48,608,156 Georgia 6,412,613 Hawaii 1,034,878 Idaho 312,517 Illinois 9,109,869 Indiana 1,221,600 Iowa 2,088,920 Kansas 2,890,403 Kentucky 3,171,112 Louisiana 8,852,927 Maine 1,159,122 Maryland 4,863,223 Massachusetts 2,234,224 Michigan 8,602,575 Minnesota 2,770,863 Mississippi 6,843,090 Missouri 5,928,348 Montana 208,332 Nebraska 984,230 Nevada 776,596 New Hampshire 1,864,615 New Jersey 21,123,111 New Mexico 64,903 New York 69,192,697 North Carolina 9,284,659 North Dakota 100,963 Ohio 1,654,166 Oklahoma 3,182,281 Oregon 2,844,810 Pennsylvania 25,662,176 Puerto Rico 0 Rhode Island 1,759,840 South Carolina 6,031,300 South Dakota 260,723 Tennessee 5,400,780 Texas 27,620,815 Utah 1,330,013 Vermont 774,543 Virgin Islands 0 Virginia 5,163,482 Washington 6,510,833 West Virginia 453,109 Wisconsin 1,839,614 Wyoming 147,424 ------------ Total $375,000,000 ============ Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) RHYNO CBO: Fitch Junks $127M Class A-3 & $37M Class B Notes ----------------------------------------------------------- Fitch Ratings affirms the rating of one class of notes issued by RHYNO CBO 1997-1, Ltd./Corp. (RHYNO CBO 1997-1), which closed Aug. 19, 1997. These rating actions are effective immediately: -- $106,449,142 class A-2 notes affirmed at 'AAA'. The rating for the $127,000,000 class A-3 remains at 'CC'. In addition, the rating for the $37,000,000 class B remains at 'C'. RHYNO CBO 1997-1 is a collateralized bond obligation managed by Bear Stearns Asset Management. The collateral of RHYNO CBO 1997-1 is composed of high yield bonds invested in corporate bonds and emerging markets corporate debt. Payments are made semi-annually in March and September and the reinvestment period ended in September 2001. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and its portfolio management strategy. According to the Aug. 2, 2004 trustee report, the portfolio includes $49.74 million (26.18%) in defaulted assets. The deal also contains 34.99% assets rated 'CCC+' or below, excluding defaults. The class A OC test is failing at 86.1% with a trigger of 141% and the class B OC test is failing at 73.9% with a trigger of 120%. This transaction is currently in an event of default due to the failure to maintain an OC test at least equal to 90% of the OC trigger. This event has not been cured and the trading ability of the current asset manager has been limited. The ratings of the class A-2 and A-3 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 stated maturity date. The rating of the class B notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the stated maturity date. Fitch will continue to monitor RHYNO CBO 1997-1 closely to ensure accurate ratings. RIVERSIDE FOREST: Tolko Offers C$29 Per Share to Buy Company ------------------------------------------------------------ Tolko Industries Ltd., a privately owned B.C. based forest products company, extended an unsolicited offer this week to purchase all the outstanding shares of Riverside Forest Products Limited (TSX:RFP) for C$29.00 per share in cash. Tolko is the 2nd largest shareholder of Riverside, holding 1.758 million or 18.6% of the approximately 9.4 million Riverside shares outstanding. The total value of the transaction is estimated at C$340 million based on the net debt outstanding of Riverside as of June 30, 2004. On August 12, 2004, Mr. J. Allan Thorlakson, Tolko's President and Chief Executive Officer, met with Mr. Gordon Steele, Chairman, President and Chief Executive Officer of Riverside, to propose a negotiated transaction that would benefit shareholders of both companies. After engaging in a number of discussions since August 12, Tolko has concluded there is no basis on which to continue such negotiations and is, therefore, announcing its intention to make this offer to shareholders. This offer represents a premium of 38% over the weighted average trading price of Riverside's shares on the Toronto Stock Exchange for the 20 trading days ending August 12, 2004, the date on which Mr. Thorlakson and Mr. Steele first met to discuss Tolko's proposal. "We are making this offer because we are convinced that our people and physical assets, when combined with Riverside's people and physical assets, will yield a stronger, more competitive world- class forest products company with greater growth prospects than each of the companies could achieve alone," said Mr. Thorlakson. "Our all cash offer represents a significant premium of 38% and provides Riverside's shareholders with an immediate value maximization opportunity in a stock that has been characterized by low trading volumes." "Although Tolko was founded in BC 50 years ago and remains a BC- based business, we have made substantial investments in other Western provinces over the last number of years. However, today's business climate in BC has encouraged us to refocus our priorities in this province." Full details of the offer will be included in the formal take-over bid and related documents, which are expected to be filed with securities regulators on August 31, 2004 and which will be mailed to Riverside shareholders as soon as Riverside provides Tolko with a list of its shareholders. It is anticipated that the offer will be open for acceptance until 9:00 pm (Vancouver time) on October 6, 2004, unless it is withdrawn. Completion of the offer will be subject to sufficient shares being tendered to the offer so that, combined with the 18.6% Tolko already owns, Tolko would own at least 75% of Riverside's common shares, on a fully diluted basis. If that condition is met, and Tolko acquires common shares tendered to the offer, Tolko intends to acquire the remaining shares in accordance with applicable laws. The offer will also be subject to other usual conditions, including receipt of all necessary regulatory approvals, no material adverse change of Riverside and waiver of Riverside's shareholder rights plan. Tolko's obligation to purchase Riverside's common shares is not conditional upon any financing arrangement as Tolko has accepted a fully underwritten commitment from a Canadian chartered bank to provide financing for the transaction. Tolko has retained RBC Capital Markets to act as its financial advisor and to act as dealer manager under the offer. About Tolko Industries Ltd. Founded in 1961, Tolko is a privately-owned forest products company employing over 2,400 people. Tolko has ten manufacturing divisions in British Columbia, Alberta, Saskatchewan and Manitoba, and produces dimension lumber, specialty kraft paper, plywood, oriented strand board, wood chips and engineered wood products which are sold to world markets. Tolko has held its position in Riverside since 2000. Tolko is amalgamated under the Canada Business Corporations Act. Its head office is located at 3203- 30th Avenue, Vernon, British Columbia, (PO Box 39) V1T 2C6. Tolko's telephone number is 250-545-4411 and its Web site is at http://www.tolko.com/ RIVERSIDE FOREST: Says Tolko's Offer is Inadequate -------------------------------------------------- Riverside Forest Products Limited (TSX: RFP) confirmed that it received an unsolicited letter from Tolko Industries Ltd in which Tolko expresses an interest in purchasing all Riverside shares that it does not currently own for $29 per share. Riverside's Board of Directors and its financial advisors have reviewed Tolko's proposal. The Board has concluded the proposal significantly undervalues Riverside and would not be in the best interests of the company or its shareholders. In response to Tolko's letter, Riverside said that its Board of Directors has retained: * BMO Nesbitt Burns and * Bear Stearns & Co. Inc. as its financial advisors and has directed them to study strategic alternatives for maximizing value to Riverside shareholders. Riverside has informed Tolko it is amenable to pursuing further discussions of its interest as part of that process. Riverside's Board of Directors has also appointed a Special Committee comprised of the company's three independent directors, George L. Malpass, who will chair the committee, Hamish C. Cameron and John F. Ellett. The Special Committee, which is charged with overseeing the strategic review process, has retained CIBC World Markets and the Vancouver law firm of Getz Prince Wells as independent financial and legal counsel, respectively. Gordon W. Steele, Riverside Forest Products Chairman, President and Chief Executive Officer, said, "After giving extensive and serious consideration to Tolko's proposal, the Board has concluded that it significantly undervalues the company and would not be in the best interests of Riverside's shareholders. We are committed to maximizing shareholder value and have directed our financial advisors to explore other strategic alternatives available to the company. While there can be no assurance we will achieve a value-enhancing transaction in the near-term, shareholders should know that our board will be guided by the Special Committee and is committed to doing the right thing." Riverside Forest Products Limited is the fourth largest lumber producer in British Columbia with 1.2 Bbf of annual capacity and an annual allowable cut of 3.1 million cubic metres. The company is also the second largest plywood and veneer producer in Canada. RIVERSIDE FOREST: S&P Places B+ Credit & Debt Ratings on Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' long-term corporate credit and senior unsecured debt ratings on Kelowna, B.C.-based Riverside Forest Products Ltd. on CreditWatch with developing implications following the company's announcement that it would reject an unsolicited takeover offer from privately held Tolko Industries Ltd. "The ratings could be lowered, raised, affirmed, or withdrawn depending on how the situation evolves," said Standard & Poor's credit analyst Daniel Parker. "Riverside's unsecured notes contain a provision that requires the company to make an offer to repurchase all the outstanding notes in the event of a change of control. It is unclear whether Tolko's offer will be successful and what the effect will be on the outstanding notes," Mr. Parker added. Standard & Poor's uses a consolidated methodology and would consider the credit profile of any successful acquisitor in determining the effect on the credit ratings on Riverside. At this stage, it is too early to determine the impact on the ratings. The ratings on Riverside reflect its narrow product concentration in cyclical wood products, its vulnerability to foreign exchange risk, and its acquisition strategy. Partially offsetting these risks are the company's low-cost position in the manufacturing of lumber and plywood, some vertical integration in fiber and energy, and good liquidity. Riverside is the tenth-largest lumber producer and fifth-largest plywood and veneer producer in North America. The company is concentrated in the production of wood-based construction products, demand for which relies heavily on the cyclical residential construction market. Despite healthy demand supported by peak housing activity in the past several years, both the lumber and panels segments have experienced extreme price volatility. Standard & Poor's will continue to monitor the situation. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com/ All ratings affected by this rating action can be found on Standard & Poor's public Web site at http://www.standardandpoors.com/under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. S&P put its B+ rating on a $150 million issue of 7-7/8% Senior Notes due 2014 on August 2, 2004. Moody's Investors Service put its single-B rating on the senior debt issue on February 9, 2004. SARDONYX ASSOCIATES: Case Summary & Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Sardonyx Associates LP aka The Woodlands dba Peridot Place 313 Castle Shannon Boulevard Pittsburgh, Pennsylvania 15234 Bankruptcy Case No.: 04-08642 Chapter 11 Petition Date: August 23, 2004 Type of Business: Owns or operates a long-term care assisted living facility located in Cape Coral, Florida. See http://www.peridotenterprises.com/ Court: Middle District of Florida (Jacksonville) Judge: Jerry A. Funk Debtor's Counsel: Albert H. Mickler, Esq. Mickler & Mickler 5452 Arlington Expressway Jacksonville, FL 32211 Tel: 904-725-0822 Total Assets: $5,381,000 Total Debts: $6,577,203 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ City of Cape Coral Sewer assessment $42,957 Robert & Carol Hertz Loan to partnership $25,000 Bruce Yarwood Loan to partnership $24,879 US FoodService Open account $14,678 Healthcare Mgmt. Group Open account $12,116 Goldsmith Grout & Lewis PA Legal services $10,806 Theodore & Gladys Ewes Loan to partnership $10,000 Sprint Yellow Pages Open account $7,029 H L Graves Air Conditioning Services $5,478 Sysco Food Services Open account $5,135 Lee County Electric Coop Electric account $4,100 Florida Assisted Living Open account $3,534 Affiliation Medline Open account $3,250 Oak Creek Aviaries Open account $3,043 SCI Open account $2,862 Florida UC Fund Unemployment comp. $2,841 Wilcox Supplies- Lee County Open account $2,797 FHCA Open account $2,731 SunChoice Medical Supply Open account $2,361 Wiltshire, Whitley et al Accounting services $1,750 SCHLOTZSKY'S: Look for Bankruptcy Schedules by October 2 -------------------------------------------------------- Schlotzsky's, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Western District of Texas for more time to file their schedules of assets and liabilities, statements of financial affairs, list of equity security holders, and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The 15-day period afforded to them under Rule 1007 of the Federal Rules of Bankruptcy Procedure isn't sufficient. The Debtors tell the Court that they need until October 2, 2004, to produce accurate and coherent Schedules and Statements. The Debtors explain that their businesses are extensive and they have a limited number of people available to prepare the Schedules. The same staff members are also being called on to provide information to parties-in-interests in their chapter 11 cases. The Debtors add that the additional time is necessary to bring their records and books current through the petition date and to collect the data needed for the preparation and filing of schedules. Headquartered in Austin, Texas, Schlotzky, Inc., operates a chain of restaurants. The Debtors filed for chapter 11 protection on August 3, 2004 (Bankr. W.D. Tex. Case No. 04-54504). Amy Michelle Walters, Esq., and Eric Terry, Esq., at Haynes & Boone, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $111,692,000 in total assets and $71,312,000 in total debts. SOLUTIA INC: Gets Court Nod to Pay Letter of Credit Claims ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York lifted the automatic stay of Section 362 of the Bankruptcy Code to allow Solutia, Inc., to pay certain claims related to fully secured letters of credit by allowing a set-off against and payment from the cash collateral securing those claims. Citibank Letters of Credit As reported in the Troubled Company Reporter on July 20, 2004, before the Petition Date, Citibank issued 13 letters of credit, 12 of which were issued for Solutia's account and one of for the account of Solutia UK, Ltd., a non-debtor subsidiary of Solutia. As of the Petition Date, the estimated aggregate face amount of the Citibank L/Cs was $75,200,000. The account parties' obligations to Citibank under the Citibank L/Cs are secured by funds maintained in an account with Citibank, Account No. 3055- 7563. As of the Petition Date, the Citibank L/C Account held about $76,600,000 in funds, and Citibank had a perfected lien on, and right of set-off against, the funds in that account. Pursuant to a January 20, 2004 Court Order, all of the Citibank L/Cs, except for one, were deemed to be issued under the DIP Loan Agreement and secured by the collateral package securing all of the Debtors' obligations under the DIP Loan Agreement. Because separate collateral was provided, Citibank released and transferred to Solutia about $48,700,000 from the Citibank L/C Account, leaving $28,000,000 as collateral. Citibank accrued claims for fees, costs and expenses in connection with the Citibank L/Cs. As of the June 30, 2004 Accrual Date, the Citibank L/C Fees totaled more than $267,000, made up of more than $205,000 in letter-of-credit fees and more than $62,000 in other costs and expenses. On January 9, 2004, one of the Citibank L/Cs, No. NY-00928- 30033349, for which Solutia is the Account Party, was drawn by the beneficiary, Toray Industries Inc., for $26,900,000. The draw on the Toray L/C gave rise to a reimbursement claim by Citibank against Solutia in that amount, which is secured by the funds in the Citibank L/C Account. Since the Toray L/C Draw Date, interest has accrued and continues to accrue on the claim. As of the Accrual Date, the accrued interest totaled $800,000. Interest continues to accrue on the claim at the rate of $4,400 per day. As of the Accrual Date, the total accrued amount of the Toray Claim and the Citibank L/C Fees was about $27,900,000, and about $28,000,000 remained in the Citibank L/C Account. Chase and HSBC Letters of Credit Before the Petition Date, The Chase Manhattan Bank, NA, issued 13 letters of credit and HSBC Bank USA issued one letter of credit, all for Solutia's account. As of the Petition Date, the estimated aggregate face value of the Chase/HSBC L/Cs was $35,500,000. Citibank is the collateral agent for Chase and HSBC with respect to the Chase/HSBC L/Cs and it maintains a Citibank account, Account No. 3051-5371, to secure obligations for certain designated letter of credit obligations, including all obligations related to the Chase/HSBC L/Cs and obligations relating to these other letters of credit: -- three letters of credit issued by Citibank for which Solutia was the account party; -- 11 letters of credit issued by KBC Bank, N.V.; and -- certain letters of credit issued by HSBC for which non- debtor subsidiaries of Solutia were the account parties. As of the Petition Date, the Designated L/C Account held about $52,000,000, and Citibank had a perfected lien on, and right of set-off against, the funds in the account for the benefit of the issuers of the Designated L/Cs. Shortly after the Petition Date, Citibank released to Solutia $13,000,000 of the collateral from the Designated L/C Account in connection with certain transactions authorized by the Financing Order related to the Additional Citibank L/Cs. Citibank has released to Solutia an additional $10,000,000 from the Designated L/C Account to reflect that, after the cancellation of certain underlying letters of credit, the collateral in that account far exceeded the claims it was securing, leaving about $28,800,000 of collateral in the Designated L/C Account for the benefit of Citibank and the issuers of the remaining Designated L/Cs. The obligations secured by the collateral in the Designated L/C Account include: A. As of the Accrual Date: (a) the estimated aggregate face amount of the Chase/HSBC L/Cs was about $23,600,000; (b) claims accrued by Chase and HSBC before the Petition Date for fees, costs and other expenses in connection with the Chase/HSBC L/Cs, total $317,000, with $270,000 owing to Chase and $47,000 owing to HSBC; and (c) claims accrued by Chase and HSBC after the Petition Date for fees, costs and expenses in connection with the Chase/HSBC L/Cs, total $668,000 with $529,000 owing to Chase and $139,000 owing to HSBC; B. Before the Additional Citibank L/Cs were deemed issued under the DIP Loan Agreement, Citibank had accrued claims for fees, costs and expenses in connection with the Additional Citibank L/Cs. As of the Accrual Date, the Additional Citibank L/C Claims totaled at least $201,000, consisting of at least $142,000 in letter-of-credit fees and $59,000 in other costs and expenses; and C. As of the Accrual Date, the estimated aggregate face amount of the Europe L/Cs was $2,400,000. The Non-Debtors continue to pay fees and satisfy other obligations in connection with the Europe L/Cs in the ordinary course of their businesses. Specifically,the Court lifted the automatic stay to allow the Debtors to pay: (a) the Citibank L/C Claims by permitting Citibank to realize on, and set off against, funds in the Citibank L/C Account, and to apply those funds in full and final payment of the Citibank L/C Claims; and (b) any remaining Citibank L/C Claims, the Additional Citibank L/C Claims, the Prepetition Chase/HSBC L/C Fees and the Postpetition Chase/HSBC L/C by permitting Citibank to realize on, and set off against, funds in those amounts in the Designated L/C Account, and to apply those funds in full and final payment of the remaining Citibank L/C Claims, the Additional Citibank L/C Claims, the Prepetition Chase/HSBC L/C Fees and the Postpetition Chase/HSBC L/C Fees. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOTAV LTD: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Sotav, Ltd. 9720 Deerlake Court Jacksonville, Florida 32246 Bankruptcy Case No.: 04-08571 Chapter 11 Petition Date: August 20, 2004 Type of Business: Sports bar. See http://southstreettavern.com/ Court: Middle District of Florida (Jacksonville) Judge: Jerry A. Funk Debtor's Counsel: Bryan K. Mickler, Esq. Law Offices Mickler & Mickler 5452 Arlington Expressway Jacksonville, Florida 32211 Tel: 904-725-0822 Total Assets: $2,888,000 Total Debts: $2,214,462 Debtor's 2 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ South Street Tavern Initial contribution $175,000 Gartner, Brock et al. Legal fees $8,600 STANDARD MOTOR: Seeks New Accountant Following KPMG's Resignation ----------------------------------------------------------------- Standard Motor Products, Inc., (NYSE:SMP), an automotive replacement parts manufacturer and distributor, reported that its independent accountants, KPMG LLP, resigned as of August 19, 2004. The Company issued this statement: "In connection with the audits of our consolidated financial statements for fiscal years ended December 31, 2002 and December 31, 2003 and the subsequent interim period through June 30, 2004, there have been no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to KPMG's satisfaction, would have caused KPMG to make reference thereto in its opinions thereon. Additionally, the audit reports of KPMG on our consolidated financial statements for fiscal years ended December 31, 2002 and December 31, 2003 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles." "Additionally, KPMG had not previously advised management or our Audit Committee of its intention to resign. The Audit Committee has commenced an immediate search for a new independent accountant, including requesting proposals from other accounting firms." Mr. James J. Burke, Standard Motor Products' Chief Financial Officer, commented, "KPMG has indicated to us that its resignation related primarily to its view as to the progress-to-date with our level of documentation under Section 404 of the Sarbanes-Oxley Act of 2002. Our Section 404 project encompasses the assignment of internal resources as well as the previous engagement of another 'Big Four' accounting firm as an independent consultant to assist us. Due to our simultaneous integration of the acquired Engine Management Division of Dana Corporation and our Sarbanes-Oxley Act compliance activities, we expect some increased administrative costs in the third and fourth fiscal quarters of 2004." "Throughout the current year, we have had continued discussions with KPMG regarding their 2004 audit fee proposal and were unable to reach consensus on the fee. Although we regret KPMG's decision to resign as our independent accountants, KPMG's resignation does not in any way affect the reliability of our audited financial statements." About Standard Motor Standard Motor is a manufacturer and distributor of automotive aftermarket parts, with leading niche market positions for engine management and temperature control products. * * * As reported in the Troubled Company Reporter on May 27, 2004, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit and 'B-' subordinated debt ratings on Long Island City, New York-based Standard Motor Products Inc. The ratings were removed from CreditWatch, where they were placed with negative implications on March 17, 2004. The outlook is negative. Standard Motor had $296 million of total debt outstanding at March 31, 2004. "The affirmation reflects our expectations that the company will remain on target in generating cost savings from the integration of Dana Corp.'s Engine Management division, with no further operating challenges in the company's other businesses," said Standard & Poor's credit analyst Linli Chee. SUNRISE CDO: Fitch's B- Rating on $14.79M Notes on Watch Negative ----------------------------------------------------------------- Fitch Ratings placed these classes of notes issued by Sunrise CDO I Ltd., as issuer, and Sunrise CDO I Inc., as co-issuer on Rating Watch Negative: -- $45,100,000 class B second priority senior secured floating rate notes due Jan. 29, 2037 'BBB'; and -- $14,785,797 class C third priority secured floating-rate notes due Jan. 29, 2037 'B-'. The transaction, a static balance sheet collateralized debt obligation, is supported by a diversified portfolio of asset- backed securities, residential mortgage-backed securities, commercial mortgage-backed securities, CDOs, and domestic and emerging market corporate debt. Fitch is currently reviewing the effect of the deterioration in the credit quality of Sunrise's collateral pool on the class B and C notes. According to its July 23, 2004 trustee report, 8.67% of the portfolio represented defaulted, deferred interest PIK, or written-down securities per Sunrise's governing documents. An additional 5.14% of the portfolio was rated 'CCC' or below. The portfolio default and rating performance has increased the risk to the class B and C notes to a point where the risk may no longer be consistent with their respective ratings. Fitch is analyzing the transaction in detail. Appropriate action will ensue upon completion of its analysis. For further information on Fitch's process for resolving CDOs placed on Rating Watch, refer to the Feb. 6, 2002 special report, 'Fitch Ratings' Approach to CDO Rating Actions,' available on the Fitch Ratings web site at http://www.fitchratings.com/,along with deal information for these transactions. TANGO INC: Sets Guidelines for Potential Acquisition Targets ------------------------------------------------------------ Sameer Hirji, CEO of Tango Incorporated (OTCBB:TNGO) established guidelines for Tango Wear's acquisition targets. He announced that Tango's goal is to acquire emerging brands that have a potential for significant, sustained and long-term growth. Tango plans to identify new brands and acquire a 25% or more equity interest, as well as lock in a two to five year manufacturing contracts from such brands. The Company believes that over the next five years Tango Wear has the potential to grow to $10 million to $15 million a year by executing a strategy that would enable it to acquire several brands, each earning $2 million to $5 million per annum. Mr. Hirji said, "The apparel market has done well over the last year, and we foresee significant growth in the future. Tango will be at the Magic Convention in Las Vegas next week, looking for new and exciting brands to purchase. We feel that with our current assets and corporate positioning, Tango could potentially acquire and build an exciting new line of clothing. We are looking at several brands that have tremendous growth potential." Tango will also be exhibiting its Long Hard Ride clothing line next week. The Company believes that the exposure Long Hard Ride will generate at the Convention will enable the brand to gain a significant market share in the clothing industry, and get a strong foothold in the "authentic surf brand" clothing line. 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 reported that, as of April 31, 2003 and 2004, its auditors expressed substantial doubt about the company's ability to continue as a going concern in light of continued net losses and working capital deficits. THREE PROPERTIES: Section 341(a) Meeting Slated for September 9 --------------------------------------------------------------- The United States Trustee for Region 6 will convene a meeting of Three Properties, Ltd.'s creditors at 1:00 p.m., on September 9, 2004, at 515 Rusk Avenue, Suite 3401, in Houston, Texas. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Prairie View, Texas, Three Properties, operates an apartment complex. The Company filed for chapter 11 protection on August 2, 2004 (Bankr. S.D. Tex. Case No. 04-40811). Eric J. Taube, Esq. at Hohmann, Taube & Summers, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed below $50 thousand in estimated assets with $10 million in estimated debts. TRICOM S.A.: Names Gerald Gitner Independent Non-Exec. Director --------------------------------------------------------------- Tricom, S.A. (OTC: TRICY) appointed Mr. Gerald L. Gitner to the Company's Board of Directors as an independent non-executive director. Mr. Gitner has had substantial experience as a director, having served on the boards of numerous public and private companies, as well as non-profit entities. Mr. Gitner is Chairman of D. G. Associates, Inc. and a private investor. Mr. Gitner is presently the non-executive Chairman of Kitty Hawk, Inc., which operates an overnight express cargo network and an all-cargo airline headquartered in Dallas, Texas. He served as Chairman of the Board of Trans World Airlines, Inc., from 1997 to 2002 and as its CEO from 1996 to 1999. His past experiences include the founding of an investment bank and serving as its chairman. He also co-founded and co-chaired a private leasing company, specializing in wide-bodied aircraft, from 1990 to 1997. Mr. Gitner is a past Vice Chairman of Pan American World Airways, Inc., and CEO of Pan American World Services, Inc., Mr. Gitner was President and co-founder of People Express Airlines, Inc., from 1980 to 1982. He also served as President and CEO of Atasco USA, a private aviation concern involved in commercial aircraft leasing and servicing. Mr. Gitner was educated at Boston University, where he graduated cum laude and was elected to Phi Alpha Theta, the national history honor society. He is a founding member of the Board of Advisors of the Economics Department of Boston University and a member of the Dean's Advisory Council for the College and Graduate School of Arts and Sciences at Boston University. He is a past member of Boston University's Board of Trustees and a past member of the Chancellor's Council at the University of Missouri-St. Louis. Mr. Gitner served as a member of the Board of Trustees of Rochester Institute of Technology and the American College of Management and Technology from 1999 to 2004. Following Mr. Gitner's appointment, the Company's board of directors consists of the following twelve individuals: Ricardo Valdez Albizu, Thomas Canfield, Carlos Castillo, Hector Castro Noboa, Anibal de Castro, James Deane, Gerald Gitner, Arturo Pellerano, Rosangela Pellerano, Roberto Saladin, Adriano Tejada and Valeriano Valerio. About Tricom Tricom, S.A. is a full-service communications services provider in the Dominican Republic. The Company offer local, long-distance, mobile, cable television and broadband data transmission and Internet services. Through Tricom USA, the Company is one of the few Latin American-based long-distance carriers that is licensed by the U.S. Federal Communications Commission to own and operate switching facilities in the United States. Through its subsidiary, TCN Dominicana, S.A., the Company is the largest cable television operator in the Dominican Republic, based on its number of subscribers and homes passed. * * * Financial Restructuring Update As previously announced, the Company is continuing negotiations with its secured and unsecured lenders, which include an ad hoc committee of holders of its 11-3/8% Senior Notes due 2004, regarding an agreement on a consensual financial restructuring of its balance sheet. Although there is no assurance that such an agreement will occur, the Company is optimistic that these negotiations will lead to a consensual agreement in the near term. The Company's future results and its ability to continue operations will depend on the successful conclusion of the restructuring of its indebtedness. Since these negotiations are ongoing, the treatment of the Company's existing secured and unsecured creditors, as well as the interest of its existing shareholders, is uncertain at this time. However, the financial restructuring could possibly result in the conversion of at least all or a substantial portion of the Company's outstanding 11-3/8% Senior Notes and unsecured commercial bank debt into equity in a manner that would reduce substantially, or eliminate, the value of the Company's current equity. Accordingly, investors in the Company's debt and equity securities may be substantially diluted or lose all or substantially all of their investment in the Company's securities. TRUE TEMPER: S&P Rates Bank Debt at B & Sub. Debt at CCC+ --------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on sports equipment manufacturer True Temper Sports, Inc., to 'B' from 'B+'. In addition, True Temper Sports' subordinated debt rating was lowered to 'CCC+' from 'B-'. The downgrade reflects the company's lower-than-expected second- quarter earnings, its revised earnings guidance, its increased leverage, and its elevated inventory levels. Because of these operating challenges, Standard & Poor's believes that True Temper Sports will take longer than previously expected to reduce its debt. The outlook is negative. Total debt outstanding at Memphis, Tennessee-based True Temper Sports as of June 30, 2004, was approximately $235 million. True Temper Sports, the largest global golf club shaft manufacturer, suffered weaker performance in the second quarter as its customers delayed the launch of several new products requiring True Temper Sports equipment. In addition, graphite shaft sales decreased, and a product mix shift away from premium steel shafts to lower priced steel shafts caused a slight decrease in the company's average unit selling price, further weakening results. True Temper Sports implemented some cost-control initiatives that should lessen the financial impact on the company; however; it still expects EBITDA to decrease for the year. Furthermore, total lease-adjusted debt to EBITDA has increased to more than 7x, compared with 3.8x last year, and funds from operations to total debt has decreased to 8% from 16.8% during the same period. "The ratings on golf club shaft designer, manufacturer, and marketer [True Temper Sports] reflect the company's narrow business focus, its leveraged financial profile, and the discretionary nature of golf equipment sales," said Standard & Poor's credit analyst Paul Blake. "Somewhat mitigating these factors are the company's leading market position in steel golf club shafts and its low-cost manufacturing capabilities." Golf club shafts represented 95% of the company's sales for the three months ended June 27, 2004. Besides being the largest global manufacturer of golf club shafts, a niche segment of the golf equipment industry, the company is also the market leader in steel golf club shafts, with an estimated 68% share, more than four times that of its next-largest competitor. In the highly fragmented graphite shaft market, where it focuses primarily on the premium-price segment, True Temper Sports is the second- largest player, and had a market share of about 9% as of 2003. Moreover, True Temper Sports is the only golf club shaft manufacturer with significant scale in both steel and graphite shafts. This, along with the company's low-cost production capabilities, provides True Temper Sports with a competitive advantage in the golf shaft market. However, the discretionary nature of golf equipment sales remains a rating concern, as a downturn in the economy could lead to a decrease in consumer spending on such products. U.S. CANADIAN: Inks Land Use Pact for Property in Rachael, Nevada ----------------------------------------------------------------- U.S. Canadian Minerals, Inc., (OTCBB: UCAD) has signed a land use contract for property in Rachael, Nevada, upon which it also has an option to purchase. This transaction allows U.S. Canadian Minerals to begin cleanup and maintenance of the property during the period that preparations are being completed for possible exercise of 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 substation with a long-term low-cost power supply contract. As reported in the Troubled Company Reporter on August 24, 2004, U.S. Canadian Minerals 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., U.S. Canadian Minerals was previously granted an option to purchase this property from Nevada Minerals, Inc., for $2,000,000 This transaction clears the way for U.S. Canadian Minerals to consider the exercise of such option and the launching of operations on the property. U.S. Canadian Minerals is currently negotiating a land use agreement for access and use prior to exercising the option. 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, U.S. Canadian Minerals is looking to expand and develop mining properties throughout the world. U.S. Canadian Minerals 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. UAL CORP: Fee Review Committee Issues Jan. to Mar. 2004 Report -------------------------------------------------------------- The UAL Corporation Fee Review Committee, formed to monitor fees requested by professionals, reviewed the Fifth Interim Fee Applications, and, where appropriate, asked for further information from the Professionals about certain identified issues. In addition, at the U.S. Trustee's request, the Professionals who seek compensation based on an hourly basis submitted to the U.S. Trustee electronic files containing those Professionals' time tickets so that the U.S. Trustee could review and analyze the files to identify certain issues as set forth in the billing guidelines. Kirkland & Ellis took voluntary reductions for time billed by law clerks totaling $12,314. Kirkland took initial reductions in fees relating to the OurHouse litigation totaling $218,741 and $6,871 in expenses. At the U.S. Trustee's request, Meckler Bulger reduced its fees by $3,263, and LeBouef Lamb reduced its fees by $3,263. Sonnenschein, Nath & Rosenthal withdrew $22,846 of its fees and $961 of its expenses in its January 2004 Fee Application, $16,378 in fees and $24,713 in expenses in its February 2004 Fee Application, and $10,704 in fees and $24,364 in expenses in its March 2004 Fee Application. In January 2004, Vedder Price took initial voluntary reductions in fees for partners billing under 3 hours totaling $2,638 and others billing under 5 hours totaling $1,548. In January 2004, Vedder withdrew $3,625 in cab fare expenses, $1,470 in secretarial overtime, and $191 in meal and refreshment expenses. Michael P. O'Neil, Esq., at Sumner, Bernard & Ackerson, in Indianapolis, Indiana, advises the Court that the Fee Review Committee has voted and recommends that the payment of fees and reimbursement of expenses as requested by the Professionals in the Fifth Interim Fee Applications be allowed in these amounts: Professional Fees Requested Expenses Total ------------ -------------- -------- ----- Cognizant $111,625 $14,242 $125,867 Deloitte & Touche 840,861 0 840,861 FTI Consulting 154,524 1,748 156,271 Huron Consulting Group 2,747,227 68,756 2,815,983 Jenner & Block 149,223 1,380 150,603 Katten Muchin 791,924 22,645 814,569 Kirkland & Ellis 6,982,458 217,230 7,199,688 KPMG 2,427,955 69,344 2,497,299 Leaf Group 23,243 0 23,243 LeBouef Lamb 26,168 1,108 27,276 Mayer Brown Row & Maw 504,753 156,747 661,500 Meckler Bulger 141,306 1,452 142,758 Paul Hastings 24,243 1,625 25,868 Piper Rudnick 172,825 960 173,785 Segal Company 46,698 1,770 48,468 Sonnenschein Nath 2,616,442 68,393 2,684,835 Sperling & Slater 334,065 19,469 353,534 Vedder Price 1,760,373 69,121 1,829,494 * * * As reported in the Troubled Company Reporter on April 16, 2004, the Fee Review Committee members reviewed the Third Interim Fee Applications, and, where appropriate, asked for further information from the Professionals about certain identified issues. In addition, at the U.S. Trustee's request, Professionals who seek compensation based on an hourly basis submitted to the U.S. Trustee electronic files containing those Professionals' time tickets so that the U.S. Trustee could review and analyze the files to identify certain issues as set forth in the Billing Guidelines. Michael P. O'Neil, Esq., at Sumner, Bernard & Ackerson, in Indianapolis, Indiana, advises the Court that the Fee Review Committee has voted and recommends that the payment of fees and reimbursement of expenses as requested by the Professionals in the Third Interim Fee Applications be allowed in these amounts: Professional Fees Requested Expenses Total ------------ -------------- -------- --------- Deloitte & Touche $844,534 $3,448 $847,982 Huron Consulting Group 2,526,376 75,174 2,601,550 Kirkland & Ellis 6,982,579 462,761 7,445,340 KPMG 2,242,710 57,201 2,299,911 Paul Hastings 25,866 2,024 27,890 Piper Rudnick 47,874 1,581 49,455 Sonnenschein Nath 2,717,167 145,387 2,862,554 Vedder Price 1,725,558 59,408 1,783,966 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) UNIFLEX, INC: Gets Court Approval to Pay Employee Benefits ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved Uniflex, Inc.'s request to pay prepetition employee claims and benefits and to continue to pay postpetition employee benefits. The Debtor is allowed to pay up to $323,774 of employees' wages, commissions and salaries that accumulated before the Company filed for chapter 11 protection. Headquartered in Hicksville, New York, Uniflex, Inc. -- http://www.uniflexbags.com/-- makes custom-printed plastic bags and other plastic packaging for promotions and advertising. The Company filed for chapter 11 protection on June 24, 2004 (Bank. Del. Case No. 04-11852). Peter C. Hughes, Esq., at Dilworth Paxson LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it estimated debts and assets of over $10 million. UNITED AGRI: Further Extends Senior Debt Tender Offer to Sept. 3 ---------------------------------------------------------------- UAP Holding Corp. and United Agri Products, Inc., are each extending the expiration date for the previously announced offers to purchase for cash any and all of: * UAP Holdings' outstanding $125,000,000 principal amount at maturity of 10-3/4% Senior Discount Notes due 2012 and * United Agri Products' outstanding $225,000,000 principal amount of 8-1/4% Senior Notes due 2011. The tender offers by the Companies, each previously scheduled to expire at 5:00 p.m., New York City Time, on Tuesday, August 24, 2004, will now expire at 5:00 p.m., New York City Time, on Friday, September 3, 2004, unless further extended. As of 5:00 p.m., New York City Time, on August 24, 2004, all $125,000,000 aggregate principal amount at maturity of the 10-3/4% Discount Notes and all $225,000,000 aggregate principal amount of the 8-1/4% Notes have been validly tendered and have not been withdrawn in the offers to purchase and consent solicitations. Each Company's tender offer is conditioned on, among other things: (a) the consummation of UAP Holdings' offering of Income Deposit Securities and (b) United Agri Products amending its existing revolving credit facility and entering into a new senior secured second lien term loan facility, the net proceeds of both of which will be used, among other things, to pay the considerations for the Notes purchased in the tender offers. Information regarding the pricing, tender and delivery procedures and conditions to the tender offer and consent solicitation are contained in the Offer to Purchase and Consent Solicitation Statement dated April 26, 2004, as supplemented by the Supplement thereto dated May 6, 2004 and the accompanying Letter of Transmittal and Consent. UBS Investment Bank is acting as dealer manager for the tender offers and consent solicitations. MacKenzie Partners, Inc. is acting as information agent. Questions about the tender offers may be directed to the Liability Management Group of UBS Investment Bank at (888) 722-9555 x4210 (toll free) or (203) 719- 4210 (collect), or to MacKenzie Partners, Inc., at (212) 929-5500 (collect) or (800) 322-2885 (toll free). Copies of the Offer Documents and other related documents may be obtained from the information agent. The tender offer and consent solicitation are being made solely on the terms and conditions set forth in the Offer Documents. Under no circumstances shall this press release constitute an offer to buy or the solicitation of an offer to sell the Notes or any other securities of the Companies. It also is not a solicitation of consents to the proposed amendments to the indentures and registration rights agreements. No recommendation is made as to whether holders of the Notes should tender their Notes or give their consent. About the Companies UAP Holdings is a holding company with no significant assets or operations other than the ownership of 100% of the stock of United Agri Products. United Agri Products is the largest private distributor of agricultural and non-crop inputs in the United States and Canada. It markets a comprehensive line of products including crop protection chemicals, seeds and fertilizers to growers and regional dealers. In addition, as part of its product offering, United Agri Products provides a broad array of value- added services including crop management, biotechnology advisory services, custom blending, inventory management and custom applications of crop inputs. United Agri Products maintains a comprehensive network of approximately 350 distribution and storage facilities and five formulation and blending plants, strategically located throughout the United States and Canada. * * * As reported in the Troubled Company Reporter's May 13, 2004 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on crop protection and agriculture distributor United Agri Products, Inc., to 'B' from 'B+'. It also lowered the rating on UAP's existing $500 million senior secured revolving credit facility to 'B+' from 'BB-'. The lower ratings reflect the company's anticipated more aggressive financial profile after its parent company, UAP Holdings Corp., proposed a $625 million issuance of income deposit securities (IDS). At the same time, Standard & Poor's assigned a rating of 'CCC' to the senior subordinated notes of UAP Holdings Corp. The ratings on UAP Holdings' existing senior discount notes have been lowered to 'CCC+' from 'B-', while the ratings on United Agri Products' senior unsecured notes have been lowered to 'B-' from 'B'. However, these ratings will be withdrawn upon issuance of the income deposit securities, which will be used to retire the debt. UAP Holdings' proposed $625 million IDS issuance will consist of common stock and subordinated notes. The new bank loan and subordinated debt ratings are based on preliminary offering statements and are subject to review upon final documentation. The ratings on both UAP and UAP Holdings have been removed from CreditWatch, where they were placed April 13, 2004. "Standard & Poor's believes that the IDS structure reflects a more aggressive financial policy," said Standard & Poor's credit analyst Ronald Neysmith. "Previously, UAP did not pay dividends on its common stock. However, as a result of the IDS offering, UAP will be distributing roughly 75% of its cash flow as interest and dividends, thereby materially reducing financial flexibility." VHJ ENERGY: Turns to Gale Wilson for Accounting Services -------------------------------------------------------- VHJ Energy LLC asks the U.S. Bankruptcy Court for the District of Wyoming for permission to employ Gale Wilson, CPA, as its accountant during its chapter 11 restructuring. The Debtor relates that it needs assistance in tax accounting and in preparing financial statements and reports. Mr. Wilson is well qualified to that, having been in the accounting practice since 1986. Mr. Wilson will be paid $90 per hour for his services. The Debtor assures the Court that Mr. Wilson has no connection with the Company, its creditors or any other party-in-interest in the chapter 11 case. Headquartered in Buffalo, Wyoming, VHJ Energy LLC is engaged in methane gas production. The Company filed for chapter 11 protection on July 13, 2004 (Bankr. Wyo. Case No. 04-21360). Paul Hunter, Esq., in Cheyenne, Wyoming, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $239,745 in total assets and $7,402,469 in total debts. WASTE SERVICES: Senior Lenders Waive Covenants Until October 5 -------------------------------------------------------------- Waste Services, Inc. (Nasdaq: WSII), the successor to Capital Environmental Resource Inc., received a waiver from its senior lenders of non-compliance with certain financial covenants contained in its senior credit agreement. The waiver extends through October 5, 2004. Prior to that date, the company intends to negotiate permanent revisions to the credit facility. During the interim period, the company's access to the revolving credit facility will be limited to $10 million in excess of the amounts currently outstanding. David Sutherland-Yoest, Chairman and Chief Executive Officer, stated "We are pleased with the support we have received from our lenders and will be pursuing appropriate long term amendments to the covenants in our credit agreement. We are also extremely pleased that our new Fort Bend landfill near Houston has commenced operations today." Waste Services, Inc., entered into a $160,000,000 AMENDED AND RESTATED CREDIT AGREEMENT on April 30, 2004, with LEHMAN BROTHERS INC., as Arranger; LEHMAN COMMERCIAL PAPER INC., as Administrative Agent and a Lender; CANADIAN IMPERIAL BANK OF COMMERCE, as Canadian Agent and a Lender; CIBC INC., as a Lender; CIBC WORLD MARKETS CORP., as Syndication Agent; and BANK OF AMERICA, N.A., as Documentation Agent. The Credit Agreement requires Waste Services to comply with three key financial covenants: (A) Waste Services promises that its Consolidated Leverage Ratio as at the last day of any period of four consecutive fiscal quarters will not exceed: For the Four Fiscal Quarters Total Leverage Ratio Ending Will Not Exceed -------------- -------------------- FQ2 2004 5.50 : 1.00 FQ3 2004 5.50 : 1.00 FQ4 2004 5.25 : 1.00 FQ1 2005 5.00 : 1.00 FQ2 2005 4.75 : 1.00 FQ3 2005 4.50 : 1.00 FQ4 2005 4.25 : 1.00 FQ1 2006 4.25 : 1.00 FQ2 2006 4.25 : 1.00 FQ3 2006 4.25 : 1.00 FQ4 2006 4.00 : 1.00 FQ1 2007 4.00 : 1.00 FQ2 2007 4.00 : 1.00 FQ3 2007 4.00 : 1.00 FQ4 2007 4.00 : 1.00 FQ1 2008 4.00 : 1.00 FQ2 2008 4.00 : 1.00 FQ3 2008 4.00 : 1.00 FQ4 2008 4.00 : 1.00 FQ1 2009 4.00 : 1.00 FQ2 2009 4.00 : 1.00 FQ3 2009 4.00 : 1.00 FQ4 2009, and thereafter 3.75 : 1.00 (B) Waste Services promises that it will maintain a Consolidated Senior Secured Leverage Ratio that does not exceed: For the Four Consolidated Senior Secured Fiscal Quarters Leverage Ratio Ending Will Not Exceed -------------- --------------------------- FQ2 2004 2.50 : 1.00 FQ3 2004 2.50 : 1.00 FQ4 2004 2.25 : 1.00 FQ1 2005 2.25 : 1.00 FQ2 2005 2.25 : 1.00 FQ3 2005, and thereafter 2.00 : 1.00 (C) Waste Services promises that its Consolidated Interest Coverage Ratio will not fall below: For the Four Fiscal Quarters Minimum Consolidated Ending Interest Coverage Ratio --------------- ----------------------- FQ2 2004 2.50 : 1.00 FQ3 2004 2.50 : 1.00 FQ4 2004 2.75 : 1.00 FQ1 2005 2.75 : 1.00 FQ2 2005 3.00 : 1.00 FQ3 2005 3.00 : 1.00 FQ4 2005 3.00 : 1.00 FQ1 2006 3.00 : 1.00 FQ2 2006 3.00 : 1.00 FQ3 2006 3.00 : 1.00 FQ4 2006, and thereafter 3.25 : 1.00 In his bank financing transaction, Waste Services, Inc., obtained legal advice from: William J. Wiegmann, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 Telephone:(212) 848-8204 Telecopy: (212) 848-7179 and the Lenders obtained legal counsel from: Christopher R. Plaut, Esq. Latham & Watkins LLP 885 Third Avenue, Suite 1000 New York, New York 10022 Telephone: (212) 906-1200 Telecopy: (212) 751-4864 Waste Services, Inc. is a multi-regional integrated solid waste services company that provides collection, transfer, disposal and recycling services in the United States and Canada. The company's web site is http://www.wasteservicesinc.com/ * * * As reported in the Troubled Company Reporter on August 20, 2004, Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on Waste Services, Inc., to 'B-' from 'B+' and its senior subordinated debt rating to 'CCC' from 'B-'. Simultaneously, Moody's Investors Service cut its ratings WSII's $160 million guaranteed senior secured credit facility due 2011 to Caa1; downgraded its rating on the company's $160 million issuance of guaranteed senior subordinated notes due 2014 to Ca; lowered Waste Service's Senior Implied Rating to Caa1 and chopped the company's Senior Unsecured Issuer Rating to Caa3. WEIRTON STEEL: U.S. Govt. Objects to Debtors' Liquidation Plan -------------------------------------------------------------- The United States government, on behalf of the United States Environmental Protection Agency, complains that Weirton Steel Corporation's Plan of Liquidation fails to comply with Section 1129(a) of the Bankruptcy Code because it contains provisions that are inconsistent with the Bankruptcy Code, forbidden by law, and impermissibly impairs the environmental rights and interest of the Government. Nathaniel Douglas, Esq., at U.S. Department of Justice, in Washington, D.C., asserts that these Plan provisions are objectionable: A. Release of Authorized Agent and Former Officers and Directors of the Debtor The provision is inconsistent with Section 524(e) of the Bankruptcy Code, which provides that "discharge of a debt of the debtor does not affect the liability of any other entity . . . for such debt." The Plan provides no information describing the particular environmental liability of non-debtors for conduct of the business during the bankruptcy case that is intended to be released. Mr. Douglas contends that any person that the Plan intends to provide a release for environmental liability and the legal basis for the release should be clear from the Plan. B. Exculpation The Exculpation is overbroad and could be misconstrued to cut off the rights of the Government, Mr. Douglas remarks. For instance, the language could be misconstrued as disallowing valid administrative expense claims against the Debtor to the extent that they relate to any act or omission "arising under the Chapter 11 case" or concerning the "administration of the Plan." C. Discharge of Claims and Termination of Equity Interest Given that the Debtor is a liquidating corporation, Mr. Douglas relates that the discharge language provided under the Plan violates Section 1141(d)(3) of the Bankruptcy Code. Section 1141(d)(3) provides that: "[T]he confirmation of a plan does not discharge a debtor if (A) the plan provides for the liquidation of all or substantially all of the property of the estate; (B) the debtor does not engage in business after consummation of the plan; and (C) the debtor would be denied a discharge under Section 727(a) of this title if the case were a case under chapter 7 of this title." Subsections (A), (B) and (C) all apply to the Debtor. Thus, pursuant to Section 1141(d)(3), the Debtor is not entitled to a discharge. The Government also understands that the West Virginia Department of Environmental Protection is engaged in settlement discussions with the Debtor regarding the Shiloh Landfill. In the event that no final settlement is reached between the DEP and Weirton, then the Plan would not address the Debtor's off-site environmental liability with respect to the Shiloh Landfill. In that case, the Government asserts that the Debtor should modify the Plan to provide for compliance with the environmental laws as to the Shiloh Landfill. Ultimately, the Government believes that Weirton should: (a) remove the discharge language as to any liability to governmental entities; (b) exempt liability to governmental entities under environmental laws; and (c) provide an exemption for any allowed administrative expense claim. 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) * BOOK REVIEW: From Industry to Alchemy: Burgmaster, A Machine Tool Company ------------------------------------------------- Author: Max Holland Publisher: Beard Books Paperback: 352 pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/158798153X/internetbankrupt Review by Gail Owens Hoelscher From Industry to Alchemy tells the story of people caught in the middle of global competition, the institutional restraints within which smaller companies had to operate after the Second World War, the rise of Japanese industry, and the conglomeration frenzy of the 1980s. The author's goal in writing this book was to chronicle the decline in American manufacturing through the story of that company. Burgmaster was the culmination of the dream of a Czechoslovakian immigrant, Fred Burg, who described himself as a "born machinist." After coming to America in 1911, he learned the tool-and-die trade, becoming so adept that he "could not only drill the hole, but also make the drill." A life-long inventor, he designed an electric automatic transmission that was turned down by GM's Charles Kettering; GM came out with a hydraulic version six years later. Forced by finances to work in retailing, after World War II he retired, moved to California and set up a machine-tool shop with his son and son-in-law to manufacture the turret drill, his own design. With the help of the Korean War, and a previous shortage of machine tools, business took off. It was a hands-on operation from the start and remained that way. Burg once fired an engineer who didn't want to handle a machine part because his hands would get dirty. Management spent time on the shop floor, listening to employee ideas. Burg lived and breathed research and development, constantly fiddling to devise new machines and make old ones better. Between 1955 and 1962, sales grew 13-fold and employees from 62 to 272. Burg Tool was featured on Richland Oil Company's broadcast Success Stories. By 1965, however, Fred Burg was getting old and the three partners knew that Burgmaster needed to fund another expensive, risky expansion to fill back orders or lose market share. Although companies had made offers before, Houdaille, a company named for the Frenchman who invented recoilless artillery during World War I, seemed a good match. The two had similar origins, it seemed. Houdaille had begun an ambitious acquisition program, and saw Burgmaster fitting into an unfilled niche. With a merger, new capacity would be financed, and "Burgmaster would continue to operate under present management, personnel and policies but as a Houdaille division." What comes next is management by numbers rather than hands-on decisionmaking; alienation of skilled blue-collar workers; pushing aside of management; squelching of innovation; foreign and domestic competition; bitter trade disputes; leveraged buyouts; the politics of U.S. trade policy; Japan- bashing; and the inevitable liquidation of Burgmaster and loss of livelihood of more than 400 employees. This book was originally titled When the Machine Stopped: A Cautionary Tale from Industrial America," published in 1989. It was named by Business Week as one of the ten best business books of 1989. The Chicago Tribune said that "anyone who wants to understand American business must read When the Machine Stopped.Holland has written the best business book in years." The author explains trade regulations, the machine-tool industry, and detailed corporate buyouts with equal clarity. This down-to-earth book provides valuable insight into the changes within an industry. It combines fascinating, creative characters; number crunchers; growing corporate disdain for manufacturing; and tangible consequences of Washington and Wall Street gone crazy. Max Holland is a writer and research fellow at the Miller Center of Public Affairs at the University of Virginia. His father worked for 29 years as a tool-and-die maker, union steward, and machine shop foreman for Burgmaster. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Bernadette C. de Roda, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon and Peter A. Chapman, Editors. Copyright 2004. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***