/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040906.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, September 6, 2004, Vol. 8, No. 190 Headlines ADELPHIA BUSINESS: Wins Post Newsweek Station Contract ADELPHIA COMMS: Asks Court to Extend Deadline to Remove Actions ADELPHIA COMMUNICATIONS: Wants More Time to Decide on Leases AK STEEL: Appoints Anthony C. Perry Purchasing Director AMERIDEBT: Wants to Hire Bryan Cave as Special Counsel AQUILA INC: Debt Restructuring Won't Affect Fitch's B- Rating BANC OF AMERICA: Fitch Puts Low-B Ratings on Classes 2-B-4 & 2-B-5 BRIDGEPORT HOLDINGS: Plan Voting Deadline is Thurs., Sept. 9 CABLEVISION SA: Section 304 Petition Summary COVANTA: District Court Allows Sempra to Withdraw Covanta Claim DIAMOND BRANDS: Resolves IRS' $39.7 Million Claim for $7 Million DIGITAL LIGHTWAVE: Transfers Securities Trading to Nasdaq Smallcap ENRON: IPG Supports Extending Examiner's Term After Emergence FACTORY 2-U: Completes Asset Sale to Factory 2-U Acquisition FARMLAND DAIRIES: Wants to Employ Pederson & Webb as Executives FEDERAL-MOGUL: Honda Chooses Sparta Facility as Benchmark Site FIRST UNION: S&P Raises Double-B Ratings & Affirms Single-B FOSTER WHEELER: Equity-for-Debt Swap Minimum Threshold is Waived GADZOOKS INC: Reports August Same Store Sales Increase of 17.3% HALLIBURTON: Provides Update on Nigerian Project Investigation HAWAIIAN AIRLINES: Sets New Record for On-Time Flights in July HAYES LEMMERZ: 5 Directors Disclose Acquisition of Hayes Shares HRI-OILFIELD LP: Case Summary & 66 Largest Unsecured Creditors HVC LIZARD CHOCOLATE: Case Summary & Largest Unsecured Creditors I2 TECHNOLOGIES: Names Michael Diament to Board of Directors IMPATH: Securities Claimants' Proofs of Claim Must be in by Wed. INSIGHT MIDWEST: S&P Cuts $1.975B Facility Rating to BB INTEGRATED ELECTRICAL: Gets Default Notice From Trustee JEUNIQUE INT'L: Wants to Employ White Nelson as Accountants KEY ENERGY: Lenders Agree to Wait Until Dec. 31 for Financials KINETICS GROUP: Moody's Reviewing Single-B & Junk Ratings KMART HOLDING: To Get 30% of Sears Sales Proceeds on Sept. 30 MICROFINANCIAL INC: Repays $5.6 Million of Outstanding Bank Debt MIRANT NEW YORK: Court Approves Ramapo Settlement Agreement NATIONAL CENTURY: JPMorgan Appeals Order Allowing Rule 2004 Exam NET PERCEPTIONS: Nasdaq Delisted Shares on Sept. 3 NEW WORLD: Brings-In Kirkland & Ellis as Bankruptcy Co-Counsel NEW WORLD: U.S. Trustee Objects to Success Fee for Jeffries & Co. NORTHWESTERN CORP: Commences Resolicitation of Amended Reorg. Plan NRG ENERGY: Court OKs Nelson Asset Sale to Invenergy for $19.5MM NVR INC: Moody's Raises Low-B Ratings to Lower Medium Grade OWENS CORNING: Court Approves Comm.'s Limited Retention of NERA OWENS CORNING: Michael Pope Wants Advisors to Disgorge Fees PARTITIONS PLUS: Case Summary & 20 Largest Unsecured Creditors PAYLESS SHOESOURCE: S&P Lowers Credit Rating One Notch to BB- PEGASUS COMMUNICATIONS: Appeals Nasdaq Delisting Notice PENN TRAFFIC: Selling New York Properties for $33.3 Million PENN TRAFFIC: Selling Pennsylvania Properties for $17.8 Million PG&E NATIONAL: Wants Court OK on Project Cos.' Claims Settlement QUESTERRE ENERGY: Terrenex Reports on CCAA Plan's Liquidity Option QUIGLEY COMPANY: Looks to Chapter 11 to Resolve Asbestos Liability QUIGLEY COMPANY: Case Summary & 20 Largest Unsecured Creditors RCN CORP: Management Estimates Liquidation Value at $646,100,000 RYLAND: Moody's Affirms Low-B Ratings & Raises Sr. Implied to Baa3 SK GLOBAL: Confirmation Objections Must be Filed by Wednesday SK GLOBAL AMERICA: Creditors' Ballots Must be in by Wednesday SPHERION: Moody's Withdraws Single-B Ratings Following Redemption SOLUTIA INC: Court Approves Joint Prosecution/Defense Agreement TALCOTT NOTCH: S&P Affirms BB- Rating on Class A-4 Notes TECHNEGLAS INC: Files for Chapter 11 Protection in S.D. Ohio TECHNEGLAS INC: Case Summary & 43 Largest Unsecured Creditors US AIRWAYS: James Schear Returns as New Restructuring VP WORLD ACCESS: Liquidation Plan Objection Deadline is Sept. 13 WORLDCOM INC: Settles Fishel Company's $1.3 Million Claim * G. Moran Leads Expansion of Alvarez & Marsal's New York Practice * Kamakura Reports U.S. Corporate Credit Quality Declines in Aug. * Win a New Car Donated to Charity by AlixPartners & Questor * BOND PRICING: For the week of September 6 - September 10, 2004 ********* ADELPHIA BUSINESS: Wins Post Newsweek Station Contract ------------------------------------------------------ TelCove, formerly known as Adelphia Business Solutions, Inc., won the opportunity for the next five years to provide 10 Meg Intercity Ethernet services that connect several television stations owned by Post Newsweek Stations, the broadcasting arm of The Washington Post Company. The contract was awarded to TelCove over the incumbent provider, which was unable to match TelCove's cost-effective solution. Post Newsweek Stations was interested in centralizing services for five of its stations: * WDIV TV-4 and KRPC TV-2, NBC affiliates in Detroit, Michigan, and Houston, Texas; * WPLG TV-10, an ABC affiliate in Miami, Florida; * WKMG TV-6, a CBS affiliate in Orlando, Florida; and * WJXT TV-4, an independent station in Jacksonville, Florida. The broadcasting company expects to launch new software that will enable all of the television stations to share resources that will allow for the transporting of data, video, and proprietary software for scheduling commercials, invoicing for commercials, and exchanging television shows. TelCove's Ethernet product provides expandable capabilities that would allow for the centralization and sharing of those communications and other services among all five stations. Connecting the TV stations via TelCove's premium network allows them to use one provider and one network for their services, another determining factor in the awarding of the contract to TelCove. An additional benefit Post Newsweek Station will realize with TelCove's Ethernet product is scalable bandwidth, so that the stations can increase their requirements at a moment's notice, eliminating weeks or even months for the installation of additional hardware or waiting on answers to requests for additional capital to meet growth. Since all five stations are on TelCove's network, the Ethernet services also fall under TelCove's 100% Service Level Agreement, assuring 100% network availability or compensation for any downtime. Other factors that weighed heavily in Post Newsweek Station choosing TelCove were the full solutions portfolio TelCove offers including its Internet, Data, and Voice services, its extensive infrastructure, and its ability to provide managed and unmanaged disaster recovery services. "I'm very pleased and excited to establish a large cost effective WAN for our broadcast operations," said Marcus Williams, vice president and chief engineer for WDIV/TV-4, a Post Newsweek Station. "Our first projects will include centralized accounting and traffic systems. In the near future, we have the option to add e-mail, news content, and graphics. The large bandwidth allows Post Newsweek Station to install disaster recovery sites within its network of televisions." "TelCove's Ethernet services are the perfect solution for the secure and cost-effective transporting of all of the stations' large, high resolution files," said Ed Gallagher, TelCove's regional vice president. "As always, we will support Post Newsweek Station with the customer service we are so well-known for; from our experienced engineers and technicians to the account team that prides itself on understanding the customer's business communications needs now and staying on top of its future requirements." Headquartered in Coudersport, Pa., Adelphia Business Solutions, Inc., now known as TelCove -- http://telcove.com/-- is a leading provider of facilities-based integrated communications services to businesses, governmental customers, educational end users and other communications services providers throughout the United States. The Company filed for Chapter 11 protection on March 27, 2002 (Bankr. S.D.N.Y. Case No. 02-11389) and emerged under a chapter 11 plan on April 7, 2004. Judy G.Z. Liu, Esq., at Weil, Gotshal & Manges LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $2,126,334,000 in assets and $1,654,343,000 in debts. The Company emerged from bankruptcy on April 7, 2004. ADELPHIA COMMS: Asks Court to Extend Deadline to Remove Actions --------------------------------------------------------------- Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, relates that since February 25, 2004, Adelphia Communications Corp. and its debtor-affiliates have undertaken a dual track emergence strategy by pursuing a reorganization plan as well as a marketing effort and sale process. In connection with the sale process, the ACOM Debtors employed Sullivan & Cromwell, LLP, as special mergers and acquisition counsel. The ACOM Debtors are also in the process of retaining UBS Securities, LLC, and Allen & Company as financial advisors. On August 9, 2004, the ACOM Debtors announced a preliminary timetable for the sale process. With still several hundred pending civil actions and proceedings, Ms. Chapman tells the U.S. Bankruptcy Court for the Southern District of New York that an extension of the ACOM Debtors' deadline to file notices of removal of the State Court Actions may be necessary to give the Debtors more time to review the State Court Actions. Pursuant to Rule 9027(a) of the Federal Rules of Bankruptcy Procedure, the ACOM Debtors ask the Court to extend their Removal Deadline until the later of: (a) March 21, 2005; or (b) 30 days after entry of an order terminating the automatic stay with respect to a particular action sought to be removed. Ms. Chapman explains that the extension would afford the ACOM Debtors the opportunity to make fully informed decisions on the removal of State Court Actions without prematurely waiving the automatic stay. The extension would also ensure that the Debtors do not forfeit valuable rights under 28 U.S.C. Section 1452. Ms. Chapman assures the Court that the rights of the ACOM Debtors' adversaries would not be prejudiced by the extension. Any party to a State Court Action that may ultimately be removed may seek to have it remanded to the state court pursuant to 28 U.S.C. Section 1452(b). Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMUNICATIONS: Wants More Time to Decide on Leases ------------------------------------------------------------ Adelphia Communications Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to further extend their deadline to assume or reject all unexpired non-residential real property leases until December 13, 2004. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, explains that much work still remains to be done before the ACOM Debtors can either emerge from Chapter 11 as a stand-alone entity or complete a sale process. Requiring the ACOM Debtors to make significant lease decisions now would be impractical. Ms. Chapman assures the Court that the extension would not prejudice the lessors because: -- the ACOM Debtors are substantially current on their prepetition rent obligations under the unexpired leases; -- the Debtors intend to continue to perform timely all of their obligations under the unexpired leases; and -- in all instances, the individual lessor may, for cause shown, ask the Court to fix an earlier date by which the Debtors must assume or reject an unexpired lease. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) AK STEEL: Appoints Anthony C. Perry Purchasing Director ------------------------------------------------------- AK Steel (NYSE: AKS) named Anthony C. Perry to the new post of director of purchasing. Mr. Perry joined AK Steel in June as manager of cokemaking for the company's Middletown Works. In his new post, he will report to John F. Kaloski, vice president, operations, who gains the additional responsibility for the corporation's purchasing and transportation functions. "Tony Perry is an outstanding addition to the AK Steel management team, and his breadth of steel industry knowledge and experience will serve our company well," said James. L. Wainscott, president and CEO of AK Steel. "Tony's working relationships with the supplier community and his strong leadership skills position him well to lead our purchasing organization and the development of long-term procurement strategies," Mr. Wainscott said. Mr. Perry joined AK Steel following 34 years of service with U.S. Steel Corporation. In addition to his corporate and plant-level purchasing experience, Mr. Perry has extensive management experience in operations, environmental controls and maintenance. Mr. Perry holds a Bachelor of Science degree from Bluefield State College in West Virginia. Headquartered in Middletown, Ohio, AK Steel produces flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as tubular steel products. * * * As reported in the Troubled Company Reporter on July 23, 2004, Standard & Poor's Ratings Services revised its outlook on integrated steel producer AK Steel Corp. to stable from negative. Standard & Poor's also affirmed its 'B+' corporate credit and senior unsecured debt ratings on the company and its parent, AK Steel Holding Corp. The Middleton, Ohio-based company has about $1.3 billion in total debt. "The outlook revision reflects the expectation that improved steel industry conditions will remain sustainable well into 2005, which, together with management actions to reduce financial risk, have somewhat reduced pressures on the company as it seeks to renegotiate with its large unions," said Standard & Poor's credit analyst Paul Vastola. Although Standard & Poor's remains concerned that union issues are still in flux at AK Steel, these improvements have reduced the likelihood that management could be pressured to take more drastic actions to close a gap with its peers, most of whom have substantially improved their financial profiles by shedding onerous legacy liabilities in bankruptcy. The ratings on AK Steel reflect its challenged business position due to: * its relatively small and high-cost position as an integrated steelmaker; * its limited diversity and high exposure to the automotive market; * its challenge to offset rapidly escalating input costs under its fixed-price contracts; and * burdensome legacy costs. These factors overshadow the company's good position in its markets, its high concentration of value-added products and its fair liquidity. AMERIDEBT: Wants to Hire Bryan Cave as Special Counsel ------------------------------------------------------ AmeriDebt, Inc., asks the U.S. Bankruptcy Court for District of Maryland, for permission to continue employing Bryan Cave, LLP, as its special litigation counsel in its chapter 11 proceeding. The Debtor tells the Court that Bryan Cave has been representing it in various lawsuits in Missouri before the filing of this case. As such, the Firm is well-versed in the affairs of the Debtor and can represent it efficiently. The attorneys who will provide professional services to the Debtor and their present hourly rates are: Professional Rate ----------- ---- Edward L. Dowd, Jr. 495 James F. Bennett 325 Robert F. Epperson 280 John J. Sardar 230 Bryan Cave does not have any interest adverse to the Debtor or its estate. Headquartered in Germantown, Maryland, AmeriDebt, Inc. -- http://ameridebt.org/-- is a credit counseling company. The Company filed for chapter 11 protection (Bankr. D. Md. Case No. 04-23649) on June 5, 2004. Stephen W. Nichols, Esq., at Deckelbaum Ogens & Raftery, Chartered, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $8,387,748 in assets and $12,362,695 in liabilities. AQUILA INC: Debt Restructuring Won't Affect Fitch's B- Rating ------------------------------------------------------------- The recent announcement by Aquila, Inc., that the company intends to retire its existing $430 million secured facility, rated 'B+', and enter into two new unsecured, working capital facilities totaling $300 million has no near-term effect on Aquila's existing 'B-' senior unsecured rating. The Rating Outlook for Aquila is currently Stable. This transaction, in combination with the company's recent convertible and equity issuances plus cash on hand, is expected to reduce Aquila's aggregate debt outstanding by approximately $230 million. Once completed, Fitch notes that the two new unsecured credit facilities, a $200 million term loan and a $100 million revolving credit facility, both with final maturities in 2009, would be rated 'B-' in line with Aquila's existing unsecured debt. For further discussion of ILA's current rating and Rating Outlook, see the Fitch press release 'Fitch Rates Aquila's PIES 'B-', Affirms Existing Ratings & Revises Outlook to Stable,' dated Aug. 19, 2004, available on the Fitch Ratings web site at http://www.fitchratings.com/ BANC OF AMERICA: Fitch Puts Low-B Ratings on Classes 2-B-4 & 2-B-5 ------------------------------------------------------------------ Banc of America Funding Corporation mortgage pass-through certificates, series 2004-2, are rated by Fitch Ratings as follows: Group 1 certificates: -- $115,506,399 classes 1-CB-1, 1-CB-R, 1-CB-PO, and 1-CB- IO, 'AAA' ('Group 1 senior certificates'); -- $1,479,000 class 1-B-2, 'A'; -- $863,000 class 1-B-3, 'BBB'. Group 2 certificates: -- $134,097,020 classes 2-A-1, 2-A-IO, and 2-A-R, 'AAA'; ('Group 2 senior certificates') -- $2,947,000 class 2-B-1, 'AA'; -- $561,000 class 2-B-2, 'A'; -- $421,000 class 2-B-3, 'BBB'; -- $281,000 class 2-B-4, 'BB'; -- $140,000 class 2-B-5, 'B'. Group 3 certificates: -- $399,721,060 classes 3-A-1 through 3-A-17, 3-A-IO, 3-A-R1, 3-A-R2, and 3-A-R3, 'AAA' ('Group 3 senior certificates'). Groups 1 through 3 certificates: -- $6,766,826 class 30-PO, 'AAA' (consisting of classes 1-30-PO, 2-30-PO, and 3-30-PO components). The 'AAA' rating on the group 1 senior certificates reflects the 6.25% subordination provided by: * the 2.65% class 1-B-1, * the 1.20% class 1-B-2, * the 0.70% class 1-B-3, * the 0.75% privately offered class 1-B-4, * the 0.55% privately offered class 1-B-5, and * the 0.40% privately offered class 1-B-6. Classes 1-B-2 and 1-B-3 are rated 'A' and 'BBB', respectively, based on their respective subordination. Classes 1-B-1, 1-B-4, 1- B-5, and 1-B-6 are not rated by Fitch. The 'AAA' rating on the group 2 senior certificates reflects the 3.25% subordination provided by: * the 2.10% class 2-B-1, * the 0.40% class 2-B-2, * the 0.30% class 2-B-3, * the 0.20% privately offered class 2-B-4, * the 0.10% privately offered class 2-B-5, and * the 0.15% privately offered class 2-B-6. Classes 2-B-1, 2-B-2, 2-B-3, and the privately offered classes 2- B-4 and 2-B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their respective subordination. The class 2-B-6 certificates are not rated by Fitch. The 'AAA' rating on the group 3 senior certificates reflects the 2.90% subordination provided by: * the 1.70% class 3-B-1, * the 0.45% class 3-B-2, * the 0.30% class 3-B-3, * the 0.20% privately offered class 3-B-4, * the 0.15% privately offered class 3-B-5, and * the 0.10% privately offered class 3-B-6. lasses 3-B-1 through 3-B-6 are not rated by Fitch. Fitch believes the amount of credit enhancement will be sufficient to cover credit losses. The ratings also reflect: (i) the high quality of the underlying collateral purchased by Banc of America Funding Corporation; (ii) the integrity of the legal and financial structures; and (iii) the servicing capabilities of: a. Wells Fargo Home Mortgage, Inc. (WFHM) (rated 'RPS1' by Fitch); b. CitiMortgage, Inc. (rated 'RPS1' by Fitch); c. National City Mortgage, Co. (rated 'RPS3+' by Fitch); and d. Washington Mutual Bank, FA (rated 'RPS2+' by Fitch). The trust is comprised of three loan groups of conventional, fixed-rate mortgage loans that are secured by first liens on one- to four-family residential properties. The three loan groups respectively collateralize the three bond groups. The class 30-PO consists of three separate components for distribution purposes that are not severable. The class 1-CB-PO represents the right to receive a portion of principal received with respect to the mortgage loans in loan group 1 only. Loan group 1 consists of 751 mortgage loans that have original terms to maturity of approximately 30 years. The aggregate unpaid principal balance of the pool is $123,228,549 as of August 1, 2004 (the cut-off date), and the average principal balance is $164,086. The weighted average original loan-to-value ratio -- OLTV -- of the loan pool is approximately 66.45%; approximately 7.85% of the mortgage loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 6.116% and the weighted average FICO score is 727. Cash-out and rate/term refinance loans represent 37.44% and 27.35% of the loan pool, respectively. The states that represent the largest geographic concentration of mortgaged properties are: * California (31.37%), * Massachusetts (13.29%), * Illinois (5.27%), and * Florida (5.18%). All other states represent less than 5% of the outstanding balance of the pool. Loan group 2 consists of 323 seasoned mortgage loans that have original terms to maturity of approximately 10 to 30 years. The aggregate unpaid principal balance of the pool is $140,333,542 as of cut-off date, and the average principal balance is $434,469. The weighted average original loan-to-value ratio (OLTV) of the loan pool is approximately 67.01%; approximately 1.34% of the mortgage loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 6.832% and the weighted average FICO score is 734. On a weighted average basis, the pool is aged 32 months since origination. Cash-out and rate/term refinance loans represent 20.43% and 43.55% of the loan pool, respectively. The states that represent the largest geographic concentration of mortgaged properties are: * California (43.72%), * Texas (9.46%), * Florida (8.51%), and * Virginia (5.15%). All other states represent less than 5% of the outstanding balance of the pool. Loan group 3 consists of 754 mortgage loans that have original terms to maturity of approximately 20 and 30 years. The aggregate unpaid principal balance of the pool is $416,882,541 as of cut-off date, and the average principal balance is $552,895. The weighted average original loan-to-value ratio of the loan pool is approximately 63.24%; approximately 3.77% of the mortgage loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 5.895% and the weighted average FICO score is 730. Cash-out and rate/term refinance loans represent 13.42% and 54.83% of the loan pool, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (48.51%) and Texas (6.61%). All other states represent less than 5% of the outstanding balance of the pool. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ Banc of America Funding, a special purpose corporation, purchased the mortgage loans from various sellers and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. Wells Fargo Bank, N.A. will serve as master servicer and securities administrator. Wachovia Bank, N.A. will serve as trustee. Elections will be made to treat the trust as separate real estate mortgage investment conduits for federal income tax purposes. BRIDGEPORT HOLDINGS: Plan Voting Deadline is Thurs., Sept. 9 ------------------------------------------------------------ The United States Bankruptcy Court for the District of Delaware approved the Disclosure Statement explaining Bridgeport Holdings Inc. and its debtor-affiliates' First Amended Plan of Distribution submitted by the Official Committee of Unsecured Creditors. Creditors' ballots, voting to accept or reject the plan, must be received on September 9 at 4:00 p.m. by: Bankruptcy Services, LLC 757 Third Avenue, Third Floor New York, New York 10017 Attn: Bridgeport Holdings Inc. Balloting Center The Honorable Peter J. Walsh will convene a Plan Confirmation Hearing on Sept. 20, 2004, at 9:30 a.m., in Wilmington. Objections to confirmation of the Plan must be in writing and filed with: Clerk of the Bankruptcy Court 824 Market Street, 3rd Floor Wilmington, Delaware 19801 together with proof of service and must: (a) state the name and address of the objecting party and the amount of its claim or the nature of its interest in the Debtors' chapter 11 case, (b) state with particularity the provision/s of the Plan objected to and, for any objection asserted, the legal and factual basis for such objection, (c) provide proposed language to remedy the objection and (d) be served on: Counsel for the Debtors: Brendan Linehan Shannon, Esq. Young Conaway Stargatt & Taylor, LLP The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, Delaware 19899-0391 - and - Robert T. Schmidt, Esq. Kramer Levin Naftalis & Frankel 919 Third Avenue New York, New York 10022 Counsel for the Committee of Unsecured Creditors: Williams H. Sudell, Esq. Daniel B. Butz, Esq. Morris Nichols Arsht & Tunnell 1201 Market Street, Suite 1501 Wilmington, Delaware 19899-1347 Office of the United States Trustee: David M. Klauder, Esq. 844 King Street, Suite 2207 Wilmington, Delaware 19801 Copies of the Plan and Disclosure Statement have been filed with the Bankruptcy Court and may be obtained at http://www.deb.uscourts.gov/and by parties in interest upon written request to: Daniel B. Butz Morris, Nichols, Arsht & Tunnell 1201 North Market Street P.O. Box 1347 Wilmington, Delaware 19899-1347 Bridgeport Holdings Inc. filed for chapter 11 protection on September 10, 2003 (Bankr. Del. Case No. 03-12825). The Debtors' lawyers are Brendan Linehan Shannon, Esq. and Matthew Barry Lunn, Esq. of Young, Conaway, Stargatt & Taylor. CABLEVISION SA: Section 304 Petition Summary -------------------------------------------- Petitioner: Board of Directors of the Debtor Debtor: Cablevision SA Cuba 2370 C1428AEL Buenos Aires Argentina Case No.: 04-15697 Type of Business: The Debtor provides cable television and internet access services throughout Argentina. Section 304 Petition Date: September 1, 2004 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Petitioner's Counsel: Madlyn Gleich Primoff, Esq. Clifford Chance US LLP 31 West 52 Street New York, NY 10019 Tel: 212-878-8187 Fax: 212-878-8375 Estimated Assets: $10 Million to $100 Million Estimated Debts: $10 Million to $100 Million COVANTA: District Court Allows Sempra to Withdraw Covanta Claim --------------------------------------------------------------- In August 2002, Sempra Energy Trading Corp. filed Claim No. 2220 asserting a contingent and unliquidated claim against Debtor Ogden New York Services, Inc. The Claim arises out of a power sales agreement between the parties. In a rider attached to the Claim, Sempra alleged that Covanta's Chapter 11 petition constituted an event of default under the Power Sales Agreement and that Sempra was exercising its rights to terminate the Agreement. The rider asserted that Sempra was "filing this proof of claim as a protective proof of claim in a contingent, unliquidated amount because Covanta has challenged Sempra's termination of the Power Sales Agreement notwithstanding the fact that it is a forward contract not subject to the automatic stay provisions of the Bankruptcy Code. . . ." In August 2003, Covanta Union, Inc., commenced an adversary proceeding against Sempra arising out the Power Sales Agreement. Covanta Union alleged that Sempra made impermissible offsets against amounts owed to Covanta for power delivered. Covanta Union sought to recover $713,017 in damages for Sempra's breach of contract and breach of guarantee. Covanta Union asserted that the Bankruptcy Court maintained jurisdiction over the adjudication of its complaint. Sempra denied Covanta Union's allegations and argued that the Complaint involved a non-core proceeding and that the reference to the Bankruptcy Court should be withdrawn pursuant to 28 U.S.C. Section 157(d). Sempra also demanded a jury trial. Ogden filed a request in its bankruptcy case to transfer Sempra's Claim to Covanta Union's proceeding. As a result, even though Sempra filed the Claim only in the Ogden case, Covanta Union may take the position that the Claim may only be withdrawn pursuant to a motion. In September 2003, Sempra asked the Bankruptcy Court for permission to withdraw its Claim, without prejudice, to preserve its right to a jury trial in the Adversary Proceeding. Sempra's counsel, Eric Snyder at Siller Wilk, in New York, argued that the withdrawal of the Claim would not substantially prejudice Covanta Union because: (a) the Claim was filed one year before Covanta Union responded in any way to the filing of the Claim.; (b) Sempra seeks to withdraw the Claim by motion well in advance of trial or adjudication of the Claim; (c) Covanta Union extended neither the time nor money in connection with the Claim; (d) there is no proof that any of Covanta Union's legal rights are threatened or that the withdrawal of the Claim affects Covanta Union's ability to prosecute its claims against Sempra or the administration of its Chapter 11 estate; and (e) legal prejudice does not result merely because Covanta might have to try the Adversary Proceeding in front of an jury rather than to the Bankruptcy Court. Mr. Snyder pointed out that pursuant to the Second Circuit's decision in Germain v. Connecticut National Bank, 988 F.2d 1323 (2d Cir. 1993), the filing of the Claim, by itself, does not act as a waiver of Sempra's right to seek a jury trial in the Adversary Proceeding. Sempra also filed a request to withdraw reference to the Bankruptcy Court. The request remains pending before the U.S. District Court for the Southern District of New York. Covanta Union has not yet filed a response and the request is not fully briefed. Bankruptcy Court Denies Sempra's Request Covanta Union opposed Sempra's request, contending that by filing the Claim, Sempra waived its right to have a jury resolve their dispute. Vincent E. Lazar, Esq., at Jenner & Block, in Chicago, Illinois, argued that: -- Sempra is not entitled to withdraw the Claim because withdrawal will not revive Sempra's waived right to a jury trial due to its filing of the Claim; -- Sempra's voluntary waiver of its right to a jury trial is irrevocable; -- Withdrawal of the Claim is not appropriate. Sempra waited 12 months to file its withdrawal request. The Claim is also subject to a dispute. Moreover, both the Claim and the Adversary Proceeding pertain to the claims resolution process and directly involve the administration of Covanta Union's estate. At Covanta Union's request, Judge Blackshear denies Sempra's request. Sempra Takes an Appeal In November 2003, Sempra took Judge Blackshear's decision to the District Court for review. District Judge John G. Koeltl presided over the case. District Court Reverses Decision In determining whether a proof of claim can be withdrawn without prejudice, Judge Koeltl considered the factors used in Zagano v. Fordham Univ., 900 F.2d 12,14 (2nd Cir. 1990): 1. The plaintiff's diligence in bringing the motion; 2. Any undue vexatiousness on plaintiff's part; 3. The extent to which suit has progressed, including the defendant's efforts and expense in preparation for trial; 4. The duplicative expense of relitigation; and 5. The adequacy of plaintiff's explanation for the need to dismiss. Accordingly, Judge Koeltl finds that the Bankruptcy Court erred as a matter of law and abused its discretion in applying the Zagano factors and in denying Sempra's request. While Sempra waited over a year before filing a request to withdraw the Claim, Judge Koeltl notes that Covanta Union did not attempt to explain how the delay prejudiced it in any way. Judge Koeltl rules that withdrawal of Sempra's Claim will not affect Covanta Union's ability to pursue the claims asserted in the Adversary Proceeding. Even if Covanta Union is ultimately required to try those claims before a jury, that possibility does not constitute legal prejudice. Rather than attempting to show any prejudice, Judge Koeltl observes that Covanta Union continued to argue that Sempra irrevocably waived its right to a jury trial and, thus, has no reason for withdrawing the Claim. Judge Koeltl points out that it is not clear whether Sempra irrevocably waived any right to a jury trial and if the Claim has implicated Covanta Union's claims allowance process or could affect the hierarchy of creditor claims. The Claim, according to its terms, was "protective" in nature and does not on its face assert a right to participate in the distribution of the Debtor's estate. It is also not clear if the Claim necessarily converted Covanta Union's Complaint -- which seeks damages based on an alleged breach of contract and breach of guarantee -- into an equitable dispute. Under the circumstances, Judge Koeltl finds that Sempra has a non-frivolous argument that withdrawing its Claim could preserve its right to a jury trial in the Adversary Proceeding. Judge Koeltl also makes it clear that he need not decide and is not deciding whether Sempra will be able to preserve any right to a jury trial by withdrawing the Claim. However, Judge Koeltl says, Sempra has a legitimate interest in seeking the withdrawal of its Seventh Amendment right, even if it is ultimately determined that the right has been forfeited. Pursuant to Rule 3006 of the Federal Rules of Bankruptcy Procedure, Judge Koeltl reverses the Bankruptcy Court's decision and permits Sempra to withdraw its Claim without prejudice. The case is remanded for further proceeding. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIAMOND BRANDS: Resolves IRS' $39.7 Million Claim for $7 Million ---------------------------------------------------------------- As previously reported in the Troubled Company Reporter, the U.S. Bankruptcy Court for the District of Delaware confirmed Diamond Brands Operating Corp. and its debtor-affiliates' chapter 11 plan on December 10, 2002. In an informal confirmation objection, the Internal Revenue Service alleged that the restructuring transactions contemplated in the Plan would give rise to unbudgeted administrative claims. Judge Walsh approved a Stipulation resolving the Government's objection by delaying any distribution to general unsecured creditors until the dispute with the IRS is resolved. The Debtors filed their 2003 tax returns and the IRS initiated an expedited audit of the company's 2001, 2002 and 2003 tax returns. At the conclusion of the audit, the IRS said the Debtors owed $39.7 million for: -- failing to report $88 million of deferred income (called an "excess loss amount" or "ELA" which springs to life when a parent corporation takes more money out of a subsidiary than it put it) triggered by the conversion of DBOC into a single-member LLC (one of the restructuring transactions under the Plan); and -- improperly deducting $25.5 million of accrued interest on prepetition indebtedness during the postpetition period because the Debtors were not obligated to pay that interest under Sec. 502 of the Bankruptcy Code. The Debtors, in turn, filed objections to these administrative priority tax claims, arguing that its tax returns, as filed, were correct. Lots of conversations between the Debtors and the Department of Justice ensured. Those talks culminated in a settlement agreement under which the Debtors will pay the IRS $6 million in exchange for a complete release of all tax claims for the tax years through and including 2003. The Debtors tell Judge Walsh that the settlement is a good deal because it avoids all of the costs, risks and delays associated with litigation. The Debtors point out that the $6 million settlement payment plus the $947,332 payment the Debtors sent the IRS with their 2003 tax return is very close to what they estimated they'd owe the Government in the Disclosure Statement circulated to all creditors when they voted to accept the Plan. The Debtors will ask Judge Walsh for his stamp of approval on the IRS settlement pact at a hearing on Sept. 29, 2004. Richard Jacobus, Esq., at the Department of Justice in Washington, represents the IRS in this matter. After payment of the $6 million settlement to the Government, the estate will be left with approximately $10.75 million to distribute to general unsecured creditors. Diamond Brands Incorporated, based in Cloquet, Minnesota, employed 600 workers manufacturing and marketing wooden matches, toothpicks, clothespins, and plastic cutlery under the nationally recognized Diamond and Forster brand names, which have been in existence since the 1880s. Diamond filed for chapter 11 protection on May 22, 2001 (Bankr. D. Del. Case Nos. 01-01825 through 01-01828). Timothy R. Pohl, Esq., and Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represent the Debtors. Diamond confirmed a Joint Plan of Reorganization under which Jarden Corporation (NYSE: JAH) acquired substantially all of Diamond Brands' business assets and assumed certain liabilities in a transaction valued at approximately $90 million in early 2003. DIGITAL LIGHTWAVE: Transfers Securities Trading to Nasdaq Smallcap ------------------------------------------------------------------ Digital Lightwave, Inc.'s (Nasdaq:DIGL) board of directors approved the transfer of the listing of the Company's securities to the Nasdaq SmallCap Market from the Nasdaq National Market. The Company filed the transfer application with The Nasdaq Stock Market on September 3, 2004. The board approved the change in securities market listing in anticipation of a delisting notification from the Nasdaq National Market. The Company was notified August 4, 2004, of the possibility of delisting from the Nasdaq National Market due to the market value of its securities falling below the minimum $50 million requirement for continued inclusion in the Nasdaq National Market. As of that date, the market value of the Company's listed securities was approximately $42.3 million. Jim Green, President and CEO of the Company, stated that, "We believe the decision to transfer the listing of the Company's securities to the Nasdaq SmallCap Market is in the best interests of our stockholders. The liquidity provided by the Nasdaq SmallCap Market is similar to that of the Nasdaq National Market. Additionally, the lower administration costs associated with the Nasdaq SmallCap Market are more appropriate given the current size and scope of the Company." Review and approval of the transfer application by the Nasdaq Stock Market will be conducted during the month of September. It is anticipated there will not be any disruption in the trading of the Company's securities during the transfer process. About Digital Lightwave, Inc. Based in Clearwater, Florida, Digital Lightwave, Inc. provides the global communications networking industry with products, technology and services that enable the efficient development, deployment and management of high-performance networks. The Company's customers -- companies that deploy networks, develop networking equipment, and manage networks -- rely on its offerings to optimize network performance and ensure service reliability. The Company designs, develops and markets a portfolio of portable and network-based products for installing, maintaining and monitoring fiber optic circuits and networks. Network operators and telecommunications service providers use fiber optics to provide increased network bandwidth to transmit voice and other non-voice traffic such as internet, data and multimedia video transmissions. The Company provides telecommunications service providers and equipment manufacturers with product capabilities to cost-effectively deploy and manage fiber optic networks. The Company's product lines include: Network Information Computers, Network Access Agents, Optical Test Systems, and Optical Wavelength Managers. The Company's wholly owned subsidiaries are Digital Lightwave (UK) Limited, Digital Lightwave Asia Pacific Pty, Ltd., and Digital Lightwave Latino Americana Ltda. At June 30, 2004, Digital Lightwave, Inc.'s balance sheet showed a $20,478,000 stockholders' deficit, compared to a $21,140,000 deficit at December 31, 2003. ENRON: IPG Supports Extending Examiner's Term After Emergence ------------------------------------------------------------- Enron North America Corporation Examiner, Harrison J. Goldin, asked the U.S. Bankruptcy Court for the Southern District of New York to extend the powers and duties afforded to him pursuant to the Plan through the post-Effective Date period until the earlier to occur of: (a) a final order closing Enron's cases; or (b) a final order determining that his services are no longer needed because all or substantially all issues affecting ENA have been resolved and substantially all distributions to ENA creditors have been made. Independent Producers Group, The Southern Ute Indian Tribe, doing business as Red Willow Production Company, and the Dunhill Group support Harrison J. Goldin's request to continue his role as examiner for Enron North America Corporation after the effective date of Enron's reorganization plan. The IPG believes that without the ENA Examiner's continued vigilance, the unjust treatment witnessed by ENA creditors prior to Mr. Goldin's appointment is likely to return. Among the issues IPG identifies that need the ENA Examiner's watchful eye are: * the critical asset valuations and determinations regarding the allocation of settlement and sales proceeds among the Debtor estates; * the suitability of complex settlements between the Debtors and other parties that affect the ENA estate; and * the applicability of certain subordination provisions contained in debentures and other types of securities the Debtors issued to intercompany claims, including ENA's multibillion dollar claim against Enron. The Dunhill Group consists of: * Devon Energy Corporation, * Equiva Trading Company, * Forest Oil Production, * Hilcorp Energy I, LP, * KCS Energy, Inc., * Magnum Hunter Resources, Inc., * Petro-Hunt, LLC, * Southwest Royalties, Inc., * Spinnaker Exploration Company, * Noble Gas Marketing, Inc., and * Pioneer Natural Resources USA, Inc. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. The Company filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01- 16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 123; Bankruptcy Creditors' Service, Inc., 215/945-7000) FACTORY 2-U: Completes Asset Sale to Factory 2-U Acquisition ------------------------------------------------------------ Factory 2-U Stores, Inc. (Pink Sheets:FTUSQ) has completed the previously announced sale of substantially all of its assets to Factory 2-U Acquisition, LLC, a company formed by an affiliate of National Stores, Inc., The Alamo Group, Garcel, Inc. d/b/a/ The Great American Group and The Ozer Group LLC. The Purchaser has acquired, among other assets, inventory and lease obligations for the Company's stores and distribution center for approximately $28.5 million, subject to adjustment based on the Company's actual inventory. The transaction was approved Thursday, Sept. 2, by the United States Bankruptcy Court in Wilmington, Delaware. Following going out of business sales to liquidate the stores' current inventory, it is contemplated that a substantial number of the Company's current stores will continue to be operated by the Purchaser and a substantial number of the Company's associates will be employed by the Purchaser. The Purchaser has acquired the assets associated with 172 stores, including 25 stores in Arizona, 50 stores in southern California, 51 stores in northern California, 6 stores in Nevada, 6 stores in New Mexico, 10 stores in Oregon, 15 stores in Texas and 9 stores in Washington. Headquartered in San Diego, California, Factory 2-U Stores, Inc. -- http://www.factory2-u.com/-- operates a chain of off-price retail apparel and housewares stores in 10 states, mostly in the western and southwestern US, sells branded casual apparel for the family, as well as selected domestics, footwear, and toys and household merchandise. The Company filed for chapter 11 protection on January 13, 2004 (Bankr. Del. Case No. 04-10111). M. Blake Cleary, Esq., and Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $136,485,000 in total assets and $73,536,000 in total debts. FARMLAND DAIRIES: Wants to Employ Pederson & Webb as Executives --------------------------------------------------------------- Farmland Dairies, LLC, a Parmalat USA Corporation and its debtor- affiliate, requires additional senior management to work in concert with James A. Mesterharm, the Chief Restructuring Officer, and Martin J. Margherio, the President and Chief Operating Officer, to implement restructuring initiatives and effectively manage its business and financial operations. In this regard, Farmland asks Judge Drain for permission to employ: -- Mikael B. Pederson, as Executive Vice-President, effective as of August 2, 2004; and -- Teresa E. Webb, as Chief Financial Officer, effective as of August 16, 2004. The appointment of Mr. Pederson and Ms. Webb will provide Farmland with additional experienced senior level management necessary to contribute to its reorganization as a going concern. Services to be Provided Mr. Pederson will be responsible for managing Farmland's milk production business. This includes administration of employees and supervision of daily operations. Ms. Webb will be responsible for oversight of Farmland's finances, strategic accounting, and business development. Qualifications Mr. Pederson has a wealth of experience in the business of production and distribution of milk and related dairy products. Mr. Pederson began his career in the milk production and distribution business over 25 years ago with Beatrice Foods, where he served as Plant Superintendent at Meadow Gold Dairies in Clarksburg, West Virginia. In 1982, he joined Crowley Foods, LLC, a dairy manufacturing company headquartered in Binghamton, New York. During his tenure at Crowley, Mr. Pederson served in various capacities including Plant Manager, Division Manager, Vice President and General Manager of Kemps Foods, Inc., a wholly owned subsidiary of Crowley. In July 1995, he was appointed Vice- President of Operations. Mr. Pederson was instrumental in three key acquisitions for Crowley, which helped propel the once local fluid milk processor into a diversified regional food company with estimated 2003 sales of $577,000,000. In addition, Mr. Pederson is actively involved in local community affairs and serves as a member of the board of directors of the American Civic Association. Ms. Webb is a certified public accountant with nearly 20 years of accounting experience in the milk production and distribution business. Following employment at several large accounting firms, Ms. Webb joined Crowley as a staff accountant in 1984. She was later promoted to Corporate Controller, and in September of 1992, she was named Vice-President of Finance and Chief Financial Officer. During her tenure at Crowley, Ms. Webb was a key participant in nine acquisitions of dairy businesses. In addition, Ms. Webb was appointed President of Kemps, and along with Mr. Pederson, was responsible for the restructuring of Kemps and a turn around of $2,000,000 in annual losses to annual profits of $3,300,000. Ms. Webb also is a member of the board of directors of United Health Services and The Broome Community College Foundation, and also serves on the Broome County IDA Loan Committee. Disclosure of Conflict In September 2001, Crowley was purchased by National Dairy Holdings, LP. Thereafter, Mr. Pederson retained his position as Vice-President of Operations of Crowley. In January 2002, Ms. Webb was named Vice-President Finance and Corporate Controller of NDH. In April 2004, HP Hood, LLC, purchased Crowley and Marigold Foods from NDH, at which time Ms. Webb resigned her position with NDH and was named Senior Vice-President of Hood. On June 18, Mr. Pederson resigned his position at Crowley and joined NDH as Vice-President. On July 14, 2004, Debtor Milk Products of Alabama, LLC, executed an asset purchase agreement with NDH for the sale of Milk Products' business operations in Decatur. On August 5, the Bankruptcy Court approved bidding procedures and authorized, among other things, the payment of a break-up fee and expense reimbursement to NDH in connection with the sale. Mr. Pederson attests that he had no involvement in the negotiation or documentation of the purchase agreement during his employment at NDH. Terms of Retention The salient terms of Mr. Pederson's and Ms. Webb's employment agreements are: (1) The initial term of employment will be two years; (2) Mr. Pederson will be paid a $205,000 base salary. He will be eligible for an annual bonus up to a maximum amount equal to 70% of the Base Salary. The amount and payment terms of the Bonus will be determined solely by Farmland; (3) Ms. Webb will be paid a $237,000 base salary. She will be eligible for an annual bonus up to a maximum amount equal to 70% of the Base Salary. The amount and payment terms of the Bonus will be determined solely by Farmland; and (4) If Mr. Pederson's or Ms. Webb's employment is terminated without cause by Farmland or with good reason by Mr. Pederson or Ms. Webb, the Executives will be eligible to receive, subject to execution of a separation agreement and release, severance pay in the form of continued payment of their Base Salary for 12 months following the date of termination. "Cause" means: -- The willful failure or refusal by the Executive to perform her duties or responsibilities, other than due to disability; -- Dishonesty in the performance of the Executive's duties or responsibilities to Farmland; -- The Executive's willful failure or refusal to follow the reasonable and lawful directions of any Farmland officer or employee properly supervising the Executive; -- Any material violation of Farmland's policies and procedures by the Executive; -- The Executive's engaging in misconduct that may be injurious to Farmland including, but not limited to, damage to its reputation or standing in its industry; -- The Executive's having been indicted, convicted of, or entered a plea of guilty or nolo contendere to any crime that constitutes a felony or a misdemeanor involving moral turpitude; -- The material breach by the Executive of any written covenant or agreement with Farmland not to disclose any information pertaining to the company; or -- The breach by the Executive of any material provision of the Employment Agreement, or any material provision of Farmland's policies, rules or regulations. "Good Reason" means: -- The Executive's assignment to a position that in Farmland's judgment is not an executive position -- although duties may differ without giving rise to a termination by the Executive for Good Reason; -- The relocation of the Executive's principal place of employment in Wallington, New Jersey, to a location more than 60 miles from its present site, unless the relocation does not increase the Executive's commute by more than 20 miles, except for required travel on Farmland's business to an extent substantially consistent with the Executive's business travel obligations; or -- Farmland's failure to obtain an agreement from its successor, if any, to assume and agree to perform the Employment Agreement. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04- 11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Honda Chooses Sparta Facility as Benchmark Site -------------------------------------------------------------- Federal-Mogul's Sparta, Tennessee, facility was chosen by Honda of America recently to serve as a Benchmark Site for the automaker. Sparta was chosen for this honor based on its superior on-time delivery record and exceptional customer service. "We are very excited to be chosen," said Jim Winningham, plant manager for the Sparta facility. "Our people have worked very hard to make this plant as efficient as possible. Obviously, our hard work has paid off." Being a benchmark site means the facility has systems in place that assure efficient identification of specific orders resulting in high-quality products and an exceptional on-time record. A benchmark site also needs to be willing to share some of its practices with other non-competing Honda suppliers. Honda conducted an audit of only 11 of its 364 suppliers. Nine were chosen as benchmark suppliers. The audited plants were selected based on the level of quality they deliver and their customer service practices. During each audit, Honda looks for robust labeling systems that ensures the correct part and quantity is delivered to each Honda facility. It also looks for systems and procedures that demonstrate continuous improvement activities leading to a superior on-time delivery record. "One of the main things we look for is the attitude of the people," said Kent Fahrion from Honda's purchasing division. "The team in Sparta showed a 'can-do' attitude and demonstrated the teamwork needed to achieve such a high level of performance." Honda will bring non-competing suppliers to the Sparta facility for a tour of the plant and a presentation on how Sparta is able to maintain its high performance levels. Sparta will serve as a benchmark site for one year. The Sparta facility manufactures automotive miniature lamps and ships to both OE customers and the aftermarket. In June alone, the plant shipped more than 10 million units. Sparta supplies Honda with wedge lamps and grab rail lamp assemblies. 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. FIRST UNION: S&P Raises Double-B Ratings & Affirms Single-B ----------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 11 classes of First Union National Bank Commercial Mortgage Trust's commercial mortgage pass-through certificates series 2001-C4. Concurrently, ratings are affirmed on seven other classes from the same transaction. The rating actions reflect credit enhancement levels that provide adequate support through various stress scenarios, as well as the stable performance of the pool. As of the Aug. 13, 2004 remittance report, the collateral pool consisted of 135 loans with an aggregate principal balance of $936 million, down from 137 loans totaling $978.6 million at issuance. The master servicer, Wachovia Bank N.A., provided Dec. 31, 2003 net cash flow -- NCF -- debt service coverage -- DSC -- figures for 89% of the pool. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.45x, up from 1.34x at issuance. To date, the trust has experienced two losses totaling $73,766, and all of the loans in the pool are current with the exception of two loans (12.9 million, 1% of the pool), which are discussed below. The top 10 loans have an aggregate outstanding balance of $252.3 million (27%). The weighted average DSC for the top 10 loans has increased significantly to 1.63x from 1.37x at issuance, excluding the second-largest loan for nonreporting. The increased DSC occurred despite modest declines in the performance of the third- and seventh-largest loans. Standard & Poor's reviewed property inspections provided by Wachovia for all of the assets underlying the top 10 loans and all were characterized as "excellent" or "good". According to the special servicer, Lennar Partners Inc., there are three specially serviced loans ($13.7 million, 1%). A loan of $9.7 million is secured by a 252-unit multifamily property in Las Vegas, Nevada. While a loan assumption at par is under review by Lennar, a foreclosure sale is scheduled in the event that the assumption is not completed. An appraisal reduction amount -- ARA -- of $730,776 is in effect based on a $10.3 million appraisal dated Jan. 13, 2003. The second loan with Lennar is a $3.1 million loan secured by a 60,580-sq.-ft. anchored retail center 10 miles south of Salt Lake City, Utah, and is REO. The loan is with the special servicer after Fleming Foods, Inc., the parent company of Food 4 Less, filed for bankruptcy. Food 4 Less subsequently vacated 50,120 sq. ft. (83% rentable sq. ft.) in December 2002. Lennar is currently negotiating with several potential tenants. An appraisal reduction amount of $435,924 is in effect based on a $3.3 million appraisal dated March 1, 2004. The third loan ($831,487, less than 1%) with the special servicer is secured by a 23-unit multifamily property in Lakewood, New Jersey, approximately 10 miles inland from Atlantic City. The loan was transferred to Lennar due to imminent default. A loan assumption is under review by Lennar at a purchase price significantly above the current loan balance. Wachovia's watchlist consists of 29 loans with an aggregate outstanding balance of $186 million (20%). The largest loan ($42.7 million, 5%) in the pool is on the watchlist due to low occupancy and is secured by two class A office towers in downtown Detroit, Michigan General Motors Corp. (GM, BBB/negative outlook) assumed the lease for potential expansions by GM or to sublease to its vendors. The lease expires on Oct. 31, 2021, 12 years after the loan's maturity. As neither necessity materialized and the office market in Detroit weakened, GM was unable to sublease a large portion of the space. As of Dec. 31, 2003, the occupancy was only 50%, with one entire tower vacant. GM continues to make timely lease payments, including any rent escalations, and the property received a rating of "excellent" on an inspection dated July 28, 2004. One loan ($15.2 million, 2%) is secured by a 176,322-sq.-ft. office property in Troy, Michigan. The property is occupied by GM and Saturn Corp., a division of GM. The loan was placed on the watchlist after GM notified the borrower that it would vacate the entire building upon the Nov. 30, 2004 lease expirations. Releasing the property has been challenging due to a soft office market and because most interested potential tenants seek either vacant buildings or build-to-suit arrangements. The remaining loans on the watchlist appear due to current or potentially low occupancies. The trust collateral is located across 30 states with only California (18%) accounting for more than 10% of the pool balance. Property concentrations greater than 10% of the pool balance are found in: * multifamily (34%), * retail (30%), and * office (26%) property types. Standard & Poor's stressed various loans with credit issues as part of its pool analysis. The resultant credit enhancement levels support the upgrades. Ratings Raised First Union National Bank Commercial Mortgage Trust Commercial mortgage pass-thru certs series 2001-C4 Rating Class To From Credit Enhancement (%) ----- -- ---- ---------------------- B AAA AA 19.86 C AA+ AA- 18.55 D AA A+ 17.24 E AA- A 15.41 F A+ A- 14.11 G A BBB+ 12.80 H A- BBB 10.97 J BBB+ BBB- 9.40 K BBB- BB+ 7.83 L BB+ BB 5.48 M BB BB- 4.70 Ratings Affirmed First Union National Bank Commercial Mortgage Trust Commercial mortgage pass-thru certs series 2001-C4 Class Rating Credit Enhancement (%) ----- ------ ---------------------- A-1 AAA 23.78 A-2 AAA 23.78 N B+ 3.95 O B 3.20 P B- 2.71 IO-I AAA N/A IO-II AAA N/A N/A - Not applicable. FOSTER WHEELER: Equity-for-Debt Swap Minimum Threshold is Waived ---------------------------------------------------------------- The minimum threshold related to Foster Wheeler Ltd.'s (OTCBB:FWLRF) equity-for-debt exchange has been waived for one class of securities. Specifically, Foster Wheeler will close the exchange offer if it receives 60% of the aggregate liquidation amount of the 9.00% Preferred Securities, rather than 75% as originally contemplated. Foster Wheeler is extending its exchange offer until 5:00 p.m., New York City time, on September 10, 2004. Legal Details The securities proposed to be exchanged are as follows: (1) Foster Wheeler's Common Shares, its Series B Convertible Preferred Shares, and warrants to purchase Common Shares for any and all outstanding 9.00% Preferred Securities, Series I issued by FW Preferred Capital Trust I (liquidation amount $25 per trust security) and guaranteed by Foster Wheeler Ltd. and Foster Wheeler LLC, including accrued dividends; (2) Foster Wheeler's Common Shares and Preferred Shares for any and all outstanding 6.50% Convertible Subordinated Notes due 2007 issued by Foster Wheeler Ltd. and guaranteed by Foster Wheeler LLC; (3) Foster Wheeler's Common Shares and Preferred Shares for any and all outstanding Series 1999 C Bonds and Series 1999 D Bonds (as defined in the Second Amended and Restated Mortgage, Security Agreement, and Indenture of Trust dated as of October 15, 1999 from Village of Robbins, Cook County, Illinois, to SunTrust Bank, Central Florida, National Association, as Trustee); and (4) Foster Wheeler's Common Shares and Preferred Shares and up to $150,000,000 of Fixed Rate Senior Secured Notes due 2011 of Foster Wheeler LLC guaranteed by Foster Wheeler Ltd. and certain Subsidiary Guarantors for any and all outstanding 6.75% Senior Notes due 2005 of Foster Wheeler LLC guaranteed by Foster Wheeler Ltd. and certain Subsidiary Guarantors; and solicitation of consents to proposed amendments to the indenture relating to the 9.00% Junior Subordinated Deferrable Interest Debentures, Series I of Foster Wheeler LLC, the indenture relating to the 6.50% Convertible Subordinated Notes due 2007 and the indenture relating to the 6.75% Senior Notes due 2005. As of 5:00 p.m. on September 2, 2004, holders have tendered the following dollar amounts and percentages of the following original securities: (1) 9.00% Preferred Securities, $86,997,500 (49.7%); (2) 6.50% Convertible Subordinated Notes, $209,828,000 (99.9%); (3) Robbins Series C Bonds due 2024, $56,640,660 (73.4%), Robbins Series C Bonds due 2009, $12,027,818 (99.2%), and Robbins Series D Bonds, $35,488,159 based on the balance due at maturity (99.1%); and (4) 6.75% Senior Notes, $183,868,000 (91.9%). A copy of the prospectus relating to the New Notes and other related documents may be obtained from the information agent: Georgeson Shareholder Communications Inc. 17 State Street, 10th Floor New York, N.Y. 10014 Georgeson's telephone number for bankers and brokers is 212-440-9800 and for all other security holders is 800-891-3214. Direct any questions regarding the exchange offer and consent solicitation to the dealer manager: Rothschild Inc. 1251 Avenue of the Americas, 51st Floor New York, N.Y. 10020 Tel. No. 212-403-3784 The exchange agent for the exchange offer is the Bank of New York, London Branch. Investors and security holders are urged to read the following documents filed with the SEC, as amended from time to time, relating to the proposed exchange offer because they contain important information: (1) the registration statement on Form S-4 (File No. 333-107054) and (2) the Schedule TO (File No. 005-79124). These and any other documents relating to the proposed exchange offer, when they are filed with the SEC, may be obtained free at the SEC's Web site at http://www.sec.gov/or from the information agent as noted above. The foregoing reference to the exchange offer and any other related transactions shall not constitute an offer to buy or exchange securities or constitute the solicitation of an offer to sell or exchange any securities in Foster Wheeler Ltd. or any of its subsidiaries. About the Company Foster Wheeler, Ltd., is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research, plant operation and environmental services. At June 25, 2004, Foster Wheeler Ltd.'s balance sheet showed an $856,601,000 stockholders' deficit, compared to an $872,440,000 deficit at December 26, 2003. GADZOOKS INC: Reports August Same Store Sales Increase of 17.3% --------------------------------------------------------------- Gadzooks, Inc. (OTC Pink Sheets: GADZQ) said sales for the four weeks of fiscal August ended August 28, 2004 totaled $15.9 million. Comparable store sales increased 17.3 percent for the August period. Total sales for the first 30 weeks of fiscal 2004 were $113.6 million. Since the Company essentially completed the liquidation of all of its male merchandise in June of 2003, August of 2004 represents only the second month in the Company's history as a female-only store where same store sales comparisons are meaningful. The Company reported a 20.7 percent increase in same store sales for July 2004. "We are by no means finished with all the changes needed to position our Company correctly," said Jerry Szczepanski, Chairman and Chief Executive Officer. "But we continue to make good progress on our new format." Headquartered in Carrollton, Texas, Gadzooks, Inc. -- http://www.gadzooks.com/-- is a mall-based specialty retailer providing casual apparel and related accessories for youngsters, between the ages of 14 and 18. The Company filed for chapter 11 protection on February 3, 2004 (Bankr. N.D. Tex. Case No. 04-31486). Charles R. Gibbs, Esq., and Keith Miles Aurzada, Esq., at Akin Gump Strauss Hauer & Feld, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $84,570,641 in total assets and $42,519,551 in total debts. HALLIBURTON: Provides Update on Nigerian Project Investigation -------------------------------------------------------------- Halliburton (NYSE: HAL) said that, as a result of its own continuing investigation into matters relating to the TSKJ Nigerian Bonny Island project, information has recently been uncovered suggesting that, at least 10 years ago, the members of TSKJ considered payments to Nigerian officials. Halliburton also confirmed that, commencing in 1995, TSKJ entered into a series of agency agreements in connection with the Nigerian project; however, Halliburton's on-going investigation has not found any evidence confirming that payments to Nigerian officials were ever made to obtain or retain business. Halliburton is notifying the other owners of TSKJ of the recently uncovered information. TSKJ is a private limited liability company registered in Madeira, Portugal whose members are Technip SA of France, Snamprogetti Netherlands B.V., which is an affiliate of ENI SpA of Italy, JGC Corporation of Japan, and Kellogg Brown & Root (as successor to the January 1999 merger of M.W. Kellogg into Brown & Root), each of which owns 25% of the venture. As part of its continuing cooperation with governmental authorities, Halliburton, which acquired M.W. Kellogg as part of its 1998 acquisition of Dresser Industries, has also promptly provided this information to the United States Department of Justice, the Securities and Exchange Commission and the French magistrate investigating these matters, and is currently in the process of transmitting it to the appropriate Nigerian officials. "There is much that we presently do not know. But we will continue aggressively to investigate this matter regardless of how old this conduct may be, even though so far the new information appears to relate to conduct that took place almost entirely before Halliburton acquired M.W. Kellogg," said Halliburton in a prepared statement. Halliburton also confirmed its understanding that TSKJ has suspended the receipt of services from and payments to TSKJ's agent, Tri-Star Investments, and is considering the institution of legal proceedings to recover all amounts previously paid to Tri- Star. HAWAIIAN AIRLINES: Sets New Record for On-Time Flights in July -------------------------------------------------------------- Hawaiian Airlines set a phenomenally high standard of aviation excellence for punctuality in July, as the U.S. Department of Transportation reported that 97 percent of its flights arrived on time. In addition, Hawaiian ranked #1 in the industry for its quality of service in handling passengers' luggage, and for fewest consumer complaints with an unbeatable figure -- zero. What makes Hawaiian's performance even more remarkable is that it was accomplished during the company's busiest month to date in 2004. During July, no airline did a better job filling seats than Hawaiian with an 88.3 percent load factor that led all carriers nationwide. "Hawaiian is proving month after month to be the best airline operating in America -- by far," said Mark Dunkerley, Hawaiian's president and chief operating officer. "Not only are we setting records for punctuality but we are also leading the nation when it comes to baggage handling performance and the fewest number of complaints about our service. "To accomplish this during a peak travel month is another testament to the hard work and dedication of our employees," Mr. Dunkerley noted. The DOT's monthly Air Travel Consumer Report placed Hawaiian at the top of the industry on-time rankings for the ninth consecutive month, dating back to November 2003 when the company started reporting monthly statistics. On-time service, according to DOT standards, requires a flight to arrive within 15 minutes of schedule. Hawaiian's 97 percent on-time performance in July also marked the fourth straight month the company has set a new industry standard for punctuality, following record-setting on-time results in April, 94.9 percent; May, 95.2 percent; and June 95.3 percent. Further emphasizing Hawaiian's consistency of on-time superiority, 93 percent of its flights year-to-date have arrived as scheduled - - a seven-month average that is collectively better than any single month by any other carrier in 2004. The remaining top five airlines for on-time service in July following Hawaiian were SkyWest Airlines, 84.4 percent; Alaska Airlines, 78.8 percent; JetBlue Airways, 78.4 percent; and AirTran Airways, 77.6 percent. The industry average for all reporting airlines was 75.9 percent, which is 21.1 percentage points behind Hawaiian. Customer Service Second to None Along with setting ever-higher standards for on-time service, Hawaiian ranked at the top in the other categories reported by DOT in July: mishandled baggage reports, consumer complaints, and flight cancellations. Hawaiian had the nation's best record when it came to handling luggage with only 2.62 mishandled baggage reports per 1,000 passengers. The company also topped the industry in the "Consumer Complaints Rankings" as the DOT received zero complaints from the 534,000 passengers served in July. In addition, Hawaiian had only seven flight cancellations -- representing only 0.2 percent -- out of its 4,445 flights during July, giving it the second-best record among all carriers. The DOT's Air Travel Consumer Report for July is available online at http://www.airconsumer.ost.dot.gov/reports/atcr04.htm 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). HAYES LEMMERZ: 5 Directors Disclose Acquisition of Hayes Shares --------------------------------------------------------------- In separate filings with the Securities and Exchange Commission, Hayes Lemmerz International, Inc. directors Laurence M. Berg, Dr. William H. Cunningham, George T. Haymaker, Henry D.G. Wallace and Richard Wallman disclose their acquisition of 2,424 shares each of the company's common stock, par value $0.01 per share, on July 28, 2004. Currently, each of the Hayes Lemmerz directors beneficially owned 4,849 shares of Hayes Lemmerz Common Stock. According to Patrick C. Cauley, Hayes Lemmerz's Attorney-in-fact, each director was granted 2,424 of Restricted Stock Units pursuant to the Hayes Lemmerz International, Inc. Long Term Incentive Plan. Each Restricted Stock Unit is convertible into one share of common stock or the fair market value of a share as determined by the Compensation Committee of Hayes Lemmerz's Board of Directors. Mr. Cauley relates that on July 28, 2004, the 2,424 Restricted Stock Units were converted into an equal number of shares. The remaining 2,424 Restricted Stock Units of each director will be converted into cash or shares on July 28, 2005. (Hayes Lemmerz Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 215/945-7000) HRI-OILFIELD LP: Case Summary & 66 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: HRI-Oilfield, L.P. 5910 North Central Expressway, Suite 1050 Dallas, TX 75206-5125 Bankruptcy Case No.: 04-39367 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Heartland Intermodal, Inc. 04-39373 Partech, LLC 04-39378 Heartland Rig International, LLC 04-60350 Type of Business: The Debtor manufactures and designs offshore and land drilling rigs, workover rigs, oilfield equipment, and transportation products for sale worldwide. Chapter 11 Petition Date: September 1, 2004 Court: Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtor's Counsel: Jason Neal Bramlett, Esq. Gardere, Wynne & Sewell 1601 Elm Street, Suite 3000 Dallas, TX 75201 Tel: 214-999-3000 Fax: 214-999-4667 Estimated Assets Estimated Debts ---------------- --------------- HRI-Oilfield, L.P. $1 M to $10 M $1 M to $10 M Heartland Intermodal, Inc. $500,000 to $1 M $1 M to $10 M Partech, LLC $1 M to $10 M 500,000 to $1 M Heartland Rig $1 M to $10 M $1 M to $10 M International, LLC A. HRI-Oilfield, L.P.'s 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Varco Note $593,816 12950 W. Little York Roa Houston, TX 77041 Control Flow Inc. $121,061 Internal Revenue Service $116,100 AGA $77,987 KPMG LLP $75,950 VARCO $43,833 Crady Jewitt & McCulley, LLP $41,312 ECCO Electrical & Instrumentation $34,642 AIG $30,000 Odrill/MCM, Inc. $25,991 Incopro Corporation $24,680 OEM $22,433 Lowell Reed Consulting Services, LLC $10,955 Premier Place Associates, L.P. $9,931 Germanischer Lloyd $9,881 Shelby Frink $8,440 Arthur C. Teichgraeber $7,892 Gosselink Lloyd $6,696 Mooney Investments $6,499 B. Heartland Intermodal, Inc.'s 7 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Maersk $1,100,000 6000 Carnegie Charlotte, NC 28209 Goodman Factors $365,000 3010 LBJ Freeway #140 Dallas, TX 75234 Tesi $86,621 Crady Jewitt & McCulley $7,026 Connick & Connick $4,015 ADP $199 Ceridian $160 C. Heartland Intermodal, Inc.'s 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ New Century Fabricators Inc. $173,570 Acadian Contractors Inc. $94,260 L&L Crane $87,570 Polar Rig Specialties $62,472 TCB Industries, Inc. $57,256 ASCO $41,048 Total Safety $33,196 Jo-De Equipment Rental $30,422 Parker Drilling Company $28,827 Charter Supply $24,615 Channel Specialty $24,102 Grand Isle Shipyard $21,491 W.W.L. Industry $20,036 Maxtec $19,282 Broussard Brothers $17,342 Ace Transportation $15,301 Sigma Coatings $14,421 Townsend International $14,250 Ameron $13,100 Power Systems $12,438 D. Heartland Rig International's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Tyres International $356,702 619 East Tallmadge Ave. Arkon, OH 44310 Dana-Spicer Traier Prod. $262,941 1235 Commerce Dr. Lugoff, SC 29078 Champion Coating Inc. $148,512 Westair Cryogencis Co. $124,194 JB Enterprises Inc. $112,738 Texas Workforce Commission $110,000 Pacific Coast Retreaders $106,782 O'Neal Metals (Texas) $101,756 Hutchens Industries Inc. $94,816 Truck Lite Inc. $81,947 Sealco $72,928 Fedex Freight East $70,625 China Industries, USA, Inc. $67,560 Holland USA $65,450 Valspar $61,656 CMP Coatings, Inc. $60,683 General Bearing Corp. $52,353 American Block Co. $51,000 Les Aciers Robond Inc. $47,972 Conner Steel Products, Inc. $42,865 HVC LIZARD CHOCOLATE: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: HVC Lizard Chocolate, LLC 219 Redfield Parkway, Suite 101 Reno, Nevada 89509 Bankruptcy Case No.: 04-52638 Chapter 11 Petition Date: September 2, 2004 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd. 417 West Plumb Lane Reno, NV 89509 Tel: 775-786-7600 Fax: 775-786-7764 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jona Ventures, LLC Convertible Note $547,662 5 Hidden Spring Lane Rye, NY 10580 Dynamic Chocolates Goods/Services $525,003 11871 Hammersmith Way Richmond, B.C. V7A 5ES CANADA Gross-Given Promissory Note $400,000 Manufacturing Co. 75 W. Plato Blvd. St. Paul, MN 55107 Rand Display, Inc. Goods/Services $124,881 259 Cedar Lane Teaneck, NJ 07666-3400 South Beach Beverage Company Royalties $98,000 H & N Packaging, Inc. Goods/Services $76,237 Quality Distribution Goods/Services $68,106 Wallace Goods/Services $61,217 Cherrydale Farms Goods/Services $57,413 8 Days a Week Goods/Services $53,709 Sweeney & Sweeny Goods/Services $27,512 Performance Media Goods/Services $25,991 Heissner, William Goods/Services $25,431 EPS Doublet Goods/Services $25,071 Mid-America Gourmet Goods/Services $24,990 I2 TECHNOLOGIES: Names Michael Diament to Board of Directors ------------------------------------------------------------ i2 Technologies, Inc. (OTC:ITWO), a leading provider of closed- loop supply chain management solutions, named Michael Diament to the Company's Board of Directors as of August 31, 2004. Mr. Diament is a portfolio manager for Q Investments, an affiliate of R(2) Investments, LDC, the entity that completed a $100 million equity investment in i2 in June 2004. Pursuant to the terms of that transaction, R(2) Investments has the right to elect two members to i2's Board of Directors. Mr. Diament joins Pranav Parikh as R(2) Investments' second designee. Mr. Diament also currently serves on the Board of Directors of Magellan Health Services, Inc. and served on the Board of Directors of WilTel Communications Group, Inc. until November 2003. Mr. Diament has a masters in business administration from Columbia Business School and a bachelor of arts degree from Washington University. "Michael Diament represents the seventh member of a robust Board of Directors that combines diverse backgrounds and a wealth of experiences from throughout the business world," said i2 chairman and chief executive officer Sanjiv Sidhu. "We welcome Michael's presence on the Board and look forward to his contributions." In addition to Sidhu and Parikh, Mr. Diament joins current Board members Harvey B. Cash, Richard Clemmer, Robert Crandall and Michael McGrath. About i2 i2 is a leading provider of closed-loop supply chain management solutions. The company designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. i2's worldwide customer base consists of some of the world's market leaders -- including seven of the Fortune global top 10. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at http://www.i2.com/ At June 30, 2004, i2 Technologies, Inc.'s balance sheet showed a $197,902,000 net stockholders' deficit, compared to a $296,938,000 deficit at December 31, 2003. IMPATH: Securities Claimants' Proofs of Claim Must be in by Wed. ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York set Wednesday, September 8, 2004, at 5:00 p.m., as the deadline for potential plaintiff class members, in any putative securities class action lawsuits against IMPACT, Inc. and its debtor- affiliates, to file their proofs of claim. Any person or entity who purchased, converted, exchanged or otherwise acquired or sold IMPATH common stock during the period February 24, 2000, through July 29, 2003, and seeks to pursue remedies under the federal securities laws or common law must file a proof of claim. Claim forms must be received on or before the Securities Bar Date at: * If sent by mail: United States Bankruptcy Court Southern District of New York IMPATH Claims Processing center Bowling Green Station P.O. Box 85 New York, New York 10274 * If sent by messenger or overnight courier: United States Bankruptcy Court Southern District of New York Bowling Green Station New York, New York 10004-1408 A proof of claim tailored for the Securities Bar Date can be obtained by contacting the IMPACT Claims Processing Center at (212) 681-9600. A filed proof of claim must: (i) be written in English; (ii) be denominated U.S. dollars; and (iii) conform substantially with the proof of claim form tailored for the Securities Bar Date. Any writings on which the claim is based should be attached to the proof of claim. The Securities Actions pending in the U.S. District Court for the Southern District of New York include, without limitation: Case Case No. ---- -------- Adler v. IMPATH, et al. 03-CV-6484 Altman v. IMPATH, et al. 03-CV-5670 Casden v. IMPATH, et al. 03-CV-7358 Corwin v. IMPATH, et al. 03-CV-5800 Epstein v. IMPATH, et al. 03-CV-5737 Ferrari v. IMPATH, et al. 03-CV-5667 Heyer v. IMPATH, et al. 03-CV-6418 Isenberg v. IMPATH, et al. 03-CV-7200 Jackson v. IMPATH, et al. 03-CV-6703 Lacoff v. IMPATH, et al. 03-CV-6073 MacDonald v. IMPATH, et al. 03-CV-6689 Nomm v. IMPATH, et al. 03-CV-5902 Oliver Eng v. IMPATH, et al. 03-CV-7490 Rolnick v. IMPATH, et al. 03-CV-6083 Wolbrom v. IMPATH, et al. 03-CV-6123 Headquartered in New York, New York, IMPATH Inc., together with its subsidiaries, is in the business of improving outcomes for cancer patients by providing patient-specific diagnostic and prognostic services to pathologists and oncologists, providing products and services to biotechnology and pharmaceutical companies, and licensing software to hospitals, laboratories, and academic medical centers. The Debtors filed for chapter 11 protection on September 28, 2003 (Bankr. S.D.N.Y. Case No. 03-16113) George A. Davis, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. INSIGHT MIDWEST: S&P Cuts $1.975B Facility Rating to BB ------------------------------------------------------- Standard & Poor's Ratings Services lowered its secured bank loan rating on Insight Midwest Holdings LLC's $1.975 billion facility to 'BB' from 'BB+'. In addition, the loan was assigned a recovery rating of '2', indicating the expectation for a substantial (80%- 100%) recovery of principal in the event of a default. Given cable TV subscriber losses experienced by many of the cable operators over the past several quarters because of aggressive marketing by direct broadcast satellite -- DBS -- players, Standard & Poor's now incorporates the assumption of subscriber losses in the bank loan analysis for Holdings' secured facility. Ratings for cable TV company Insight Midwest L.P., including the 'BB' corporate credit rating, were affirmed. Ratings on 50% owner/operator Insight Communications, Inc., including the 'B-' corporate credit rating, also were affirmed. The outlook is negative. At June 30, 2004, Insight had total debt outstanding of $2.8 billion. "Despite a near-investment-grade business risk, Insight Midwest's ratings are constrained by the company's aggressive debt profile," said Standard & Poor's credit analyst Catherine Cosentino. Debt to annualized EBITDA for the six months ended June 30, 2004 was relatively high for the rating, at about 6.1x, exclusive of intercompany debt, but inclusive of management fees. Standard & Poor's recognizes that these fees are somewhat discretionary in nature because they are paid to parent Insight. Insight Midwest has been able to increase overall operating cash flows through its strategy of increasing penetration of cable modem and digital cable services, in conjunction with continuing to implement rate increases. Overall operating cash flows on a year-over-year basis grew by 13% for the first six months of 2004, and 8.9% for 2003, although a material acceleration in losses to DBS competitors could challenge Insight Midwest's ability to maintain and grow operating cash flow. Insight Midwest is a 50/50 joint venture owned by Insight and Comcast Corp. subsidiary Comcast Cable Holdings, LLC. The partnership agreement provides that at any time after Dec. 31, 2005, either Comcast or Insight will have the right to cause a split-up of Insight Midwest, subject to a limited right of postponement held by the non-initiating partner. However, the ratings assume that any change in ownership of Insight Midwest is accomplished in a manner that does not weaken the credit profiles of either Insight or Insight Midwest. INTEGRATED ELECTRICAL: Gets Default Notice From Trustee ------------------------------------------------------- Integrated Electrical Services, Inc. (NYSE: IES) has received notice from the trustee for a series of its senior subordinated notes under an indenture dated May 29, 2001, with CUSIP number 45811EAE3 totaling $110 million, that a default has occurred because IES failed to file its fiscal 2004 Third Quarter Report on Form 10-Q with the Securities and Exchange Commission. IES has 30 days to obtain a waiver from a majority in interest of its subordinated note holders to resolve the default, and IES is in the process of seeking those waivers. The August 16, 2004 waiver from the lenders under its credit facility was effective until the earlier of December 15, 2004 or the date IES received notice from either the trustee or 25% of the holders of its senior subordinated notes that a default has occurred. That waiver expired upon receipt of notice from the trustee. As a result, IES is in default on its credit facility. IES is in the process of seeking a waiver of this default from the banks under its credit facility. The company currently has $29 million in cash. The company currently anticipates that its delayed Third Quarter Report on Form 10-Q will be filed concurrently with the filing of its year-end financial statements. Integrated Electrical Services, Inc. is the leading national provider of electrical solutions to the commercial and industrial, residential and service markets. The company offers electrical system design and installation, contract maintenance and service to large and small customers, including general contractors, developers and corporations of all sizes. * * * As reported in the Troubled Company Reporter on August 19, 2004, Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on Houston, Texas-based Integrated Electrical Services, Inc., to 'BB-' from 'BB', and its subordinated debt rating to 'B' from 'B+'. The ratings remain on CreditWatch with negative implications, where they were placed on June 23, 2004. "We are maintaining the CreditWatch listing because the company recently announced that it will not be able to file its June 30 fiscal third quarter 10-Q on time and that it has withdrawn its earnings expectations for fiscal 2004," said Standard & Poor's credit analyst Heather Henyon. "As a result, it is unlikely that Integrated Electrical will be able to meet our prior expectations of funds from operations to total debt of around 20% or total debt to EBITDA in the 3x-3.5x range for several quarters. Furthermore, the delay in filing could cause a default under the company's debt agreements." An internal investigation has uncovered internal control and financial reporting issues at two subsidiaries on a couple of complex projects. Integrated Electrical' external auditors will do further testing to see if these issues were isolated incidents or if there is a systemic problem, which could have an adverse effect on the credit profile. Standard & Poor's will meet with management to discuss the controls, organizational reporting lines, policies and training that Integrated Electrical is putting in place to improve its accounting and reporting procedures. In addition, Standard & Poor's will review any potential amendment or waiver needed by Integrated Electrical, as well as the company's prospects in the near to intermediate term. JEUNIQUE INT'L: Wants to Employ White Nelson as Accountants ----------------------------------------------------------- Jeunique International, Inc., asks the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, for permission to employ White, Nelson & Co. LLP as its accountants. The Debtor tells the Court that White Nelson did prepetition work for the Company and, as a result, the Firm is intimately familiar with the Debtor's business and financial affairs. The Debtor submits that it will be disruptive and costly to find new accountants. Thomas Kretschmar is primarily responsible for providing professional services to the Debtor. Mr. Kretschmar, as a partner, will charge the Debtor $325 an hour. Other professionals and their billing rates are: Senior Manager 275 Manager 175 Senior Staff 110 Junior Staff 90 To the best of the Debtor's knowledge, White Nelson is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in City of Industry, California, Jeunique International -- http://www.jeunique.com/-- filed for chapter 11 protection (Bankr. C.D. Cal. Case No. 04-22300) on June 1, 2004. Mark S. Horoupian, Esq., at Sulmeyer Kupetz A P.C., represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed over $10 Million in estimated assets and over $50 Million in estimated liabilities. KEY ENERGY: Lenders Agree to Wait Until Dec. 31 for Financials -------------------------------------------------------------- The lenders under Key Energy Services, Inc.'s (NYSE: KEG) $175 million revolving credit facility have amended the terms of the facility to extend their waiver of non-compliance with covenants requiring delivery of audited financial statements. The revolving credit facility lenders have agreed to extend to December 31, 2004, the date by which the Company must deliver audited financial statements for 2003 and quarterly unaudited financial statements for the first three quarters of 2004. As announced on April 7, 2004, the lenders had previously agreed to a similar amendment and waiver which extended through September 30, 2004. Accordingly, the Company continues to be able to borrow under the revolving credit facility and obtain letters of credit, including amounts that may be required to retire its 5% subordinated convertible notes on September 25, 2004. The remaining principal amount of these notes is $18.7 million, and the Company intends to repay them on the maturity date. Under the terms of the latest amendment, until the later of: (1) the delivery of final audited financial statements for the year ended December 31, 2003 and unaudited quarterly financial statements for the first three quarters of 2004, or (2) the date on which the senior secured debt of the Company is rated BB- or higher by Standard & Poor's or Ba3 or higher by Moody's, applicable interest rate margins for LIBOR and base rate loans will not be reduced below 2.25% and 0.75%, respectively, and applicable commitment fee rates will not be reduced below 0.375%. This amendment also provides that it will be an event of default if the Company determines that the write-downs, write-offs, charge-offs or other adjustments to be recorded in connection with expected restatements of its financial statements will exceed $200 million. The terms of the amendment are otherwise similar to those set forth in the prior amendment announced on April 7, 2004. The Company will pay waiver fees to the lenders and an administrative fee to the administrative agent in consideration of the amendment. In addition, the Company's three equipment financing lessors have agreed to extend to December 31, 2004, the date by which the Company must deliver audited annual financial statements to such parties, thereby eliminating the Company's non-compliance as a default or cross-default trigger until such date. As previously announced, the Company has amended its agreement with its workers compensation carrier to eliminate any requirements to provide financial statements or maintain financial covenants. Key Energy Services, Inc. is the world's largest rig-based, onshore well service company. The Company provides diversified energy operations including well servicing, contract drilling, pressure pumping, fishing and rental tool services and other oilfield services. The Company has operations in all major onshore oil and gas producing regions of the continental United States and internationally in Argentina, Canada and Egypt. * * * As reported in the Troubled Company Reporter on August 19, 2004, Standard & Poor's Ratings Services' 'B' corporate credit rating on Key Energy Services Inc. remains on CreditWatch with developing implications. Midland, Texas-based Key had about $485 million of total debt outstanding as of June 30, 2004. S&P's CreditWatch update follows the company's recent announcement that it is seeking extensions from its senior bank lenders to file restatements of its 2003 and 2004 financial results because it will miss the Sept. 30 deadline. "The CreditWatch with developing implications addresses the conflicting potential resolutions of the company's current situation," said Standard & Poor's credit analyst Brian Janiak. "Failure to receive waivers and extensions on its $175 million credit facility would cause the company to be in default." "Conversely, the likelihood of Key receiving consent waivers from its senior secured lenders would provide the company with more time to resolve its financial predicament, and the timely completion of the 10-K filing would likely result in higher ratings," Mr. Janiak continued. KINETICS GROUP: Moody's Reviewing Single-B & Junk Ratings --------------------------------------------------------- Moody's Investors Service placed the ratings of The Kinetics Group, Inc., under review for possible downgrade. Moody's action reflects increased concern surrounding the company's deteriorated financial condition and material uncertainty regarding its attempts to complete a comprehensive capital restructuring. Since late 2003, the company has pursued a legal, operational and capital structure reconfiguration. However due to volatile equity market conditions, the company has been unable to execute a targeted summer 2004 initial public offering of one of its core operating subsidiaries, Celerity Group, Inc., with proceeds targeted to fund the final and most substantial phase of Kinetics' planned restructuring. At the same time, the company's consolidated operating performance, cash flow generation and liquidity have remained challenged. Due to ongoing uncertainties regarding alternative recapitalization scenarios, in particular the extent to which the rating profile may have been or potentially could be weakened from such organizational as well as financial restructuring actions, this rating review has been initiated. The ratings being placed on review consist of the following: (i) B3 rating on The Kinetics Group, Inc.'s $55 million guaranteed senior secured revolving credit facility, due 2006; (ii) B3 rating on The Kinetics Group, Inc.'s $17 million guaranteed senior secured term loan facility, due 2006; (iii) B3 senior implied rating; and (iv) Caa1 senior unsecured issuer rating. At the conclusion of the review, the ratings as well as relative notching will be confirmed or downgraded based upon a complete assessment of the company's operating performance, cash flow generation and capital structure. The latter two points represent the primary areas of concern as it relates to the perceived impairment in the company's ratings. The Kinetics Group, Inc., headquarter in Milpitas, California, is a leader in: * the design and manufacture of high performance gas and chemical delivery process modules integral to equipment used in the manufacture of semiconductors; and * turnkey chemical delivery process systems and operating services utilized by electronics, pharmaceutical and biotechnology manufacturers. KMART HOLDING: To Get 30% of Sears Sales Proceeds on Sept. 30 ------------------------------------------------------------- Kmart Holding Corporation (Nasdaq: KMRT) provided an update regarding the previously disclosed transaction with Sears, Roebuck and Co. (NYSE: S). As reported in the Troubled Company Reporter on July 6, 2004, Kmart and Sears entered into an agreement that provided for the sale of up to 54 stores by Kmart to Sears for up to $621 million in cash. The exact number of locations to be sold was subject to certain conditions under the agreement. Kmart will now sell 45 stores for cash proceeds totaling $524.45 million, subject only to customary closing conditions. The sale of up to another 6 stores remains subject to certain additional conditions required to be met within the next 15 days. The cash proceeds from these 6 additional stores would total up to $65.25 million. Julian C. Day, President and Chief Executive Officer of Kmart, said, "The stores we are retaining from the originally announced transaction are operating profitably. As has always been contemplated, Kmart will continue to operate those stores for which certain conditions related to the assignment of the store leases to Sears have not been met. We look forward to providing continued service to our customers at these locations." Kmart will continue to operate the stores that will be sold to Sears until March or April 2005. Sears has agreed to consider offering employment to any Kmart employee who desires a position at the converted stores. Specific locations of the stores affected will be available once the transaction is finalized in the coming weeks. Kmart expects to receive 30% of the final sales proceeds from Sears no later than September 30, 2004. The remaining 70% of the final sales proceeds will be received by Kmart when Sears has taken occupancy of the properties, which shall occur no later than April 15, 2005. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- is the nation's second largest discount retailer and the third largest merchandise retailer. Kmart Corporation currently operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02- 02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. MICROFINANCIAL INC: Repays $5.6 Million of Outstanding Bank Debt ---------------------------------------------------------------- MicroFinancial Incorporated (NYSE-MFI) continues to reduce its outstanding debt obligations. On September 1, the Company repaid approximately $5.6 million of outstanding debt on its senior credit facility. As of September 2, 2004, the senior credit facility debt balance was $11.0 million, as compared to an expected $14.6 million for the same period, as stated in the bank agreement. In addition, the securitized debt obligation has been paid in full. Richard Latour, President and Chief Executive Officer stated, "We continue to surpass our required repayments and other financial expectations of our bank agreement. This includes surpassing our lender's target debt balance by approximately $3.6 million through September 2, 2004 and reducing our total interest bearing debt year to date by approximately $47.6 million." About Microfinancial MicroFinancial Inc. (NYSE: MFI), headquartered in Woburn, MA, is a financial intermediary specializing in leasing and financing for products in the $500 to $10,000 range. The company has been in operation since 1986. Default & Waivers In its Form 10-Q for the quarterly period ended June 30, 2004, filed with the Securities and Exchange Commission, MicroFinancial Inc. reports: "The Company utilizes its credit facilities to fund the origination and acquisition of leases that satisfy the eligibility requirements established pursuant to each facility. On August 22, 2000, the Company entered into a $192 million credit facility with nine banks, expiring on September 30, 2002. As of September 30, 2002, the credit facility failed to renew and the Company began paying down the outstanding balance. As a result of the failure to renew, the Company was forced to suspend essentially all new contract originations until a new source of financing was obtained or at such time that the senior credit facility has been paid in full. At December 31, 2002, the Company was in default of certain of its debt covenants in its credit facility. The covenants that were in default with respect to the credit facility, require that the Company maintain a fixed charge ratio in an amount not less than 130% of consolidated earnings, a consolidated tangible net worth minimum of $77.5 million plus 50% of net income quarterly beginning with September 30, 2000, and compliance with the borrowing base. On April 14, 2003, the Company entered into a long-term agreement with its lenders. This long-term agreement waives the defaults described above, and in consideration for this waiver, requires the outstanding balance of the loan to be repaid over a term of 22 months beginning in April 2003 at an interest rate of prime plus 2.0%. Based on the amortization schedule in the new agreement, as subsequently amended in June and November 2003, as of June 30, 2004, the Company is obligated to repay $26.1 million, representing the remaining balance outstanding at June 30, 2004, plus applicable interest, over the next twelve months." MIRANT NEW YORK: Court Approves Ramapo Settlement Agreement ----------------------------------------------------------- THE U.S. Bankruptcy Court for the Northern District of Texas approved the settlement between Mirant New York, Inc. -- a Mirant Corporation debtor-affiliate --, The Town of Ramapo, The Ramapo Central School District, The Assessor of the Town of Ramapo, The Board of Assessment Review of the Town of Ramapo, and the County of Rockland. Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas, relates that in July 1999, the Debtors purchased the Ramapo Power Plant, along with certain other power plants in New York State, from O&R and Consolidated Edison Company of New York, Inc. The Debtors paid $2,100,000 for the Ramapo Power Plant. The Ramapo Power Plant is capable of generating 37.9 megawatts of electricity at peak operations. The Ramapo Power Plant is located in the Town of Ramapo, New York. Thus, the Ramapo Power Plant is subject to yearly ad valorem taxes by the Ramapo Tax Authorities. In the years following the Debtors' purchase, the Ramapo Power Plant has been taxed on these equalized assessments of value: Year Assessed Value ---- -------------- 2000 $17,175,744 2001 20,844,911 2002 22,188,540 2003 25,844,212 As reported in the Troubled Company Reporter on August 4, 2004, there were no capital improvements on the Ramapo Power Plant between 2000 and 2003. For each year from 2000 to 2003, the Ramapo Tax Authorities levied real property taxes against the Ramapo Power Plant in excess of $600,000. In 2003, those taxes accounted for 46.9% of the Ramapo Power Plant's operating expenses, without regard to fuel costs. In light of what the Debtors saw to be an enormous disparity between the book value of the Ramapo Power Plant established in the 1999 purchase and the assessed value in subsequent years, Mirant NY timely commenced tax certiorari proceedings in New York state court challenging the valuation by the Ramapo Tax Authorities. In the Ramapo State Proceedings, Mirant NY claimed a reduction in the assessed values of the Ramapo Power Plant, which would result in refunds totaling $393,114. Given certain factors, including the lack of any significant incentives for the Ramapo Tax Authorities to move the Ramapo State Proceedings forward with any deliberation, the Ramapo State Proceedings did not materially progress in state court after their filing. Mr. Peck reports that from 2000 to 2002, the Ramapo State Proceedings were not assigned to a judge who would eventually hear the cases, no discovery had taken place, and no motions were filed. Also, the Ramapo State Proceedings were placed on suspension while Mirant and the Town of Haverstraw, New York negotiated and executed a settlement agreement presumably resolving a similar real property tax dispute. Mirant believed that the Haverstraw Settlement would serve as a model settlement for the Ramapo State Proceedings. However, Haverstraw reneged within a week of signing the Haverstraw Settlement. Mirant sought to enforce the Haverstraw Settlement, but in April 2003, the New York Appellate Division reversed the trial court decision and refused to enforce the Haverstraw Settlement. To ensure the efficient administration of the Debtors' bankruptcy estates and to provide accelerated visibility to the ongoing financial viability of their generation assets in New York, Mr. Peck recalls that on September 30, 2003, the Debtors filed the 505 Motion, requesting the Bankruptcy Court to determine the Debtors' correct New York real property tax liabilities related to the New York Power Plants, including the Ramapo Power Plant. The Ramapo Tax Authorities opposed the Court's exercise of jurisdiction over the 505 Motion. On January 8, 2004, the Court established its jurisdiction over the 505 Motion, and ruled that it would exercise that jurisdiction. The January 8 Order was crafted to allow the Ramapo State Proceedings to proceed to trial in New York provided, among other things, that they could be timely adjudicated. In any event, the Court ensured a timely adjudication of the Debtors' tax disputes with Ramapo under the 505 Motion by scheduling a trial beginning on September 20, 2004. On February 17, 2004, the Ramapo Tax Authorities sought leave to file an interlocutory appeal from the January 8 Bankruptcy Court Order. The Debtors opposed the Ramapo Interlocutory Motion. On April 30, 2004, after "[h]aving carefully considered the motions, responses, and replies" the Honorable Terry R. Means of the United States District Court for the Northern District of Texas denied the Ramapo Interlocutory Motion, finding it "premature." To preserve its rights under the Bankruptcy Code, including its setoff rights under Section 558 of the Bankruptcy Code, Mirant NY did not pay its 2003 tax bills of $663,279 issued by the Ramapo Tax Authorities, comprised of: (1) County/Town tax bills issued for the tax period January 1, 2003 to December 31, 2003, totaling $169,843; and (2) the School District tax bills issued for the tax period July 1, 2003 to June 30, 2004, totaling $493,436. On April 1, 2004, the County paid the $663,279 of Unpaid 2003- 2004 Ramapo Taxes to the Town and the School District. Under the January 8 Order, the dispute between the Debtors andthe Ramapo Tax Authorities are to be tried either by the Bankruptcy Court or the New York Court no later than September 2004. Given the Court's directive, the Debtors immediately began to prepare for trial in state court. Shortly thereafter, Mirant NY and the Town engaged in extensive and extended settlement negotiations to resolve the Ramapo State Proceedings. The parties agree that: (a) The pending 2000, 2001, 2002 and 2003 real property tax disputes are resolved; (b) The Debtors and the Ramapo Tax Authorities establish a value for real property tax purposes for the Ramapo Power Plant through 2006, the maximum look-forward permitted by law; (c) The equalized assessed value for the Ramapo Power Plant is reduced by more than 83%, from $25,844,212 to $4,379,652; (d) The tax assessments of the Ramapo Power Plant is reduced based on the "Original Assessments" as they appear on the New York tax assessment rolls: 2003 Assessment: Original Revised Parcel Assessment Assessment Difference ------ ---------- ---------- ---------- SBL#47.15-1-6 $4,552,273 $800,000 $3,752,273 SBL#600.119-10 404,647 40,000 364,647 2002 Assessment: Original Revised Parcel Assessment Assessment Difference ------ ---------- ---------- ---------- SBL#47.15-1-6 $4,552,273 $4,097,040 $455,233 SBL#600.119-10 404,647 364,182 40,465 2001 Assessment: Original Revised Parcel Assessment Assessment Difference ------ ---------- ---------- ---------- SBL#47.15-1-6 $4,552,273 $4,097,040 $455,233 SBL#600.119-10 404,647 364,182 40,465 2000 Assessment: Original Revised Parcel Assessment Assessment Difference ------ ---------- ---------- ---------- SBL#47.15-1-6 $4,552,273 $4,097,040 $455,233 SBL#600.119-10 404,647 364,182 40,465 (e) The Ramapo Tax Authorities owe Mirant NY $168,605 in refunds for the years 2000, 2001 and 2002; (f) Ramapo will waive all penalties and interests resulting from Mirant NY's non-payment of 2003 taxes, provided Mirant NY makes payment, by way of offset, within 30 days from the service of a revised tax bill based on the Settlement Agreement; (g) The Debtors are excluded from all liability relating to the taxes, penalties, interest and costs associated with the O&R substation adjacent to the Ramapo Power Plant; (h) The Tax Authority Entities release the Mirant Entities from the filed proofs of claim and any tax, penalty, interest or charge levied prior to 2004 on the Ramapo Power Plant, including the Unpaid 2003-2004 Ramapo Taxes; (i) The Mirant Entities release the Tax Authority Entities from all claims in the Ramapo State Proceedings and the 505 Action, including all conflicts of interest claims against counsel for the Town; and (j) The Actions are dismissed pursuant to a stipulation which has already been approved by the New York State Court, subject to the Court's approval of the Settlement Agreement. The Court also dismisses the portion of the 505 Action in relation to the Ramapo Property. 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) NATIONAL CENTURY: JPMorgan Appeals Order Allowing Rule 2004 Exam ---------------------------------------------------------------- JPMorgan Chase Bank, former Indenture Trustee, notifies the Bankruptcy Court that it will take an appeal of Judge Calhoun's Order authorizing the Unencumbered Asset Trust to conduct its second round of Rule 2004 discovery to the United States District Court for the Southern District of Ohio, Eastern Division. As reported in the Troubled Company Reporter on September 2, 2004, the U.S. Bankruptcy Court for the Southern District of Ohio gave its permission to the Unencumbered Assets Trust, the successor-in- interest to certain rights and assets of National Century Financial Enterprises, Inc., and its debtor-affiliates, to direct the production of documents from 24 additional third party entities that may be in possession of information relevant to the Trust's evaluation of potential estate claims. According to Sydney Ballesteros, Esq., at Gibbs & Bruns, in Houston, Texas, the 24 entities were the custodial holders of payments or disbursements relating to NCFE securities within the preference period of the bankruptcy. The custodians therefore have relevant information relating to the identity of the beneficial owners of the NCFE securities. This information will help the Trust identify and determine whether certain preference claims exist and should be brought on behalf of the Debtors' estate. As reported in the Troubled Company Reporter on July 20, 2004, the 24 third party entities are: (1) ABN Amro Incorporated/Bond Trading, (2) Bear Sterns Securities Corp., (3) Boston Safe Deposit and Trust Co., (4) Brown Brothers Harriman & Co., (5) Citibank, (6) Credit Suisse First Boston, LLC, (7) Deutsche Bank Securities, Inc., (8) Deutsche Bank Trust Co. (Bankers Trust Co.), (9) First National Bank of Omaha, (10) Harris Trust and Savings Bank, (11) Investors Bank & Trust Co., (12) JP Morgan Chase Bank, (13) JPM/CCS2, (14) JPM/JPMSI, (15) LaSalle Bank National Assn., (16) M&I Marshall & Ilsley Bank, (17) Mercantile-Safe Deposit & Trust Co., (18) Northern Trust Co., (19) Salomon Brothers (Citigroup Global Markets, Inc./Salomon), (20) State Street Bank and Trust Co., (21) The Bank of New York, (22) Wachovia Bank, N.A., (23) Wells Fargo Bank Minnesota, N.A., and (24) WestLB AG. 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. S.D. Ohio Case No. 02-65235). The healthcare finance company prosecuted its Fourth Amended Plan of Liquidation to confirmation on April 16, 2004. Paul E. Harner, Esq., at Jones Day represents the Debtors. (National Century Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) NET PERCEPTIONS: Nasdaq Delisted Shares on Sept. 3 -------------------------------------------------- Nasdaq had notified Net Perceptions, Inc. (Nasdaq: NETP) on September 1, 2004, of the Nasdaq Listing Qualifications Panel's decision, following a hearing on July 29, 2004, that the Company's securities will be delisted from Nasdaq effective with the open of business on Friday, September 3, 2004. The decision follows the Company's appeal to the Panel of the previously disclosed determination of the Nasdaq Listing Qualification Staff that, based upon the Staff's discretionary authority granted by Nasdaq Marketplace Rules 4300 and 4330(a)(3), the Company's securities would be delisted on July 1, 2004, unless the Company appealed the Staff's decision. The Staff had noted its belief "that the Company is not currently engaged in active business operations and is therefore a public shell." The Company's appeal to the Panel stayed delisting until the receipt of the Panel's decision. "We are disappointed with the Panel's decision, which we believe is not in keeping with a policy to foster public company capital formation in a free market society," said Warren B. Kanders, the Company's Executive Chairman of the Board. "The Company believes it is in full compliance with all Nasdaq rules and regulations. Our mission has been and will continue to be to seek to redeploy the Company's assets to enhance stockholder value by engaging in a suitable acquisition transaction," Mr. Kanders continued. The Company is considering appealing the Panel's decision to the Nasdaq Listing and Hearing Review Council but any such appeal will not stay the delisting of the Company's common stock. If and when a suitable transaction is consummated, the Company intends to list its securities on an appropriate national exchange. The Company intends to coordinate with a market-maker in the Company's securities in order to initiate trading of the Company's common stock on the OTC Bulletin Board (the "OTCBB"). Because the delisting of the Company's securities from Nasdaq is being made pursuant to Marketplace Rules 4300 and 4330(a)(3), the Company's securities are not eligible for immediate quotation on the OTCBB and application for listing must be made by a market-maker using the standard OTCBB listing procedures. Following any clearance of an OTCBB application, the Company will disclose when trading will commence on the OTCBB and whether the Company's ticker symbol has been modified. As previously disclosed in the Company's Form 10-Q for the quarter ended June 30, 2004, changes in ownership of the Company's securities may result in a substantial limitation or loss of the Company's ability to utilize its net operating loss carry-forwards under Internal Revenue Code Section 382. Net Perceptions, formerly a provider of analytic predictive solutions software, is seeking to redeploy its assets and use its cash, cash equivalents and non-cash assets to enhance stockholder value. The Company continues to generate revenue through the licensing of its source code. * * * As reported in the Troubled Company Reporter on March 25, 2004, Net Perceptions, Inc.'s proposal to approve and adopt a plan of complete liquidation and dissolution of the Company did not receive the affirmative vote of a majority of the total number of shares outstanding as of the record date for the special meeting required to approve the proposal. Of the 15,773,134 shares represented in person or by proxy at the reconvened special meeting, 13,810,233 shares voted in favor of the proposal, 1,925,694 shares voted against and 37,207 shares abstained. NEW WORLD: Brings-In Kirkland & Ellis as Bankruptcy Co-Counsel -------------------------------------------------------------- New World Pasta Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Pennsylvania for permission to employ Kirkland & Ellis LLP, to serve as co-counsel with Saul Ewing LLP, nunc pro tunc to June 25, 2004. Kirkland & Ellis is expected to: a) give the Debtors advice with respect to their powers and duties as debtors-in-possession in the continued management and operation of their businesses and properties; b) attend meetings and negotiate with representatives of creditors and other parties in interest; c) take all necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defend any action commenced against the Debtors and represent the Debtors' interests in negotiations concerning all litigation in which the Debtors are involved, including, but not limited to, objections to claims filed against the estates; d) prepare all motions, applications, answers, orders, reports and papers necessary to the administration of these cases and to the Debtors' estates; e) take any necessary action on behalf of the Debtors to obtain confirmation of the Debtors' plan of reorganization; f) represent the Debtors in connection with obtaining postpetition loans; g) give the Debtors advice in connection with any potential sale of assets; h) appear before the Court and any appellate courts and protect the Debtors' interests with regard to the same; i) consult with the Debtors regarding tax matters; and j) perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with these cases. The professionals who will provide services for the Debtors and their hourly rates are: Professional Designation Rate ------------ ----------- ---- James H.M. Sprayregen Partner 765 Andrew M. Kaufman Partner 685 Matthew N. Kleiman Partner 645 Yosef J. Riemer Partner 630 Edward O. Sassower Senior Associate 485 Javier Schiffrin Associate 405 Jeffrey R. Johnson Associate 405 Michael J. Frishberg Associate 405 Sudwiti Chanda Associate 360 Susan A. Arbeit Associate 320 Rhonda Lopera Paralegal 210 Jacob Goldfinger Paralegal 180 Amber Cerveny Paralegal 130 Tiffany Wood Paralegal 130 Tract McCollum Paralegal 130 Leila Catto Paralegal 105 Kirkland will work closely with Saul Ewing to ensure no duplication of efforts. To the best of the Debtors' knowledge, Kirkland & Ellis is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is the leading dry pasta manufacturer in the United States. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. M.D. Penn. Lead Case No. 04-02817) on May 10, 2004. Eric L. Brossman, Esq., at Saul Ewing LLP, et al. represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $426,174,000 in assets and $430,952,000 in liabilities. NEW WORLD: U.S. Trustee Objects to Success Fee for Jeffries & Co. ----------------------------------------------------------------- United States Trustee Roberta DeAngelis filed an objection with the U.S. Bankruptcy Court for the Middle District of Pennsylvania arguing against the proposed payment of a back-end or success fee to Jeffries & Company, Inc. The Official Unsecured Creditors' Committee in New World Pasta Company's chapter 11 cases selected Jeffries to serve as its financial advisor in the Debtors' restructuring. The U.S. Trustee complains that Jeffries & Co. and the Committee propose that the Court won't be able to review payment of a back- end or success fee under Section 330 of the Bankruptcy Code if the engagement is approved. At this early stage, Ms. DeAngelis argues, Court approval of any success fee without review as to its reasonableness is not in the best interest of the Debtors or their Creditors. Ms. DeAngelis asks the Court to deny this provision buried in the retention papers presented to the Court. Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is the leading dry pasta manufacturer in the United States. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. M.D. Penn. Case No. 04-02817) on May 10, 2004. Eric L. Brossman, Esq., at Saul Ewing LLP, represents the Company in its restructuring efforts. When the Debtor filed for protection it listed $426,174,000 in assets and $430,952,000 in liabilities. NORTHWESTERN CORP: Commences Resolicitation of Amended Reorg. Plan ------------------------------------------------------------------ NorthWestern Corporation (Pink Sheets: NTHWQ) has been authorized by the U.S. Bankruptcy Court for the District of Delaware to begin a resolicitation of certain creditor groups of the Company's Second Amended and Restated Plan of Reorganization. In addition, the Court set Oct. 6, 2004, for the continuation of its confirmation hearing of its amended Plan. NorthWestern filed with the Bankruptcy Court a Second Amended and Restated Plan of Reorganization and Disclosure Statement reflecting a settlement agreement the Company reached with Harbert Management Corp. and Wilmington Trust. Under the terms of the agreement, Harbert Management Corp. and other holders of NorthWestern's Trust Originated Preferred Securities, and other subordinated creditors who so choose, will be eligible to receive, pro rata, 8 percent of equity and warrants exercisable for an additional 13 percent of the common stock in the reorganized NorthWestern. Senior unsecured debtholders and general unsecured creditors of the Company will receive approximately 92 percent of the reorganized NorthWestern's equity, based on the agreement. The Company said it will send resolicitation packages and ballots to Class 7 (Unsecured Note Claims), Class 8(a) (Unsecured Subordinated Note Claims represented by the TOPrS Notes), Class 8(b) (Unsecured Subordinated Note Claims represented by the QUIPS Notes) and Class 9 (General Unsecured Claims). Each holder of a voting claim is entitled to vote to accept or reject the Company's amended Plan. Ballots will be mailed out to eligible voters no later than Sept. 8, 2004, and the completed ballots must be received by the tabulation agent on or before 5:00 p.m. (PDT) on Sept. 29, 2004. Parties with questions about the resolicitation process should contact the balloting agent: Kurtzman Carson Consultants, LLC 12910 Culver Boulevard, Suite I Los Angeles, CA 90066-6709 Attention: Christopher Schepper The toll-free telephone number is (866) 381-9100 About NorthWestern Headquartered in Sioux Falls, South Dakota, NorthWestern Corporation -- http://www.northwestern.com/-- provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 608,000 customers in Montana, South Dakota and Nebraska. The Debtors filed for chapter 11 protection on September 14, 2003 (Bankr. Del. Case No. 03-12872) (Walsh, J.). Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, and Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker, LLP, represent the Debtors in their restructuring efforts. On the Petition Date, the Debtors reported $2,624,886,000 in assets and liabilities totaling $2,758,578,000. NRG ENERGY: Court OKs Nelson Asset Sale to Invenergy for $19.5MM ---------------------------------------------------------------- Debtors LSP-Nelson Energy, LLC, and NRG Nelson Turbines, LLC, own a partially constructed, 1,180 megawatt gas-fired, combined cycle electric generating facility, situated on approximately 90 acres of land at 1311 Nelson Road in Nelson, Illinois. The Nelson Project's construction is 65% complete. As previously reported in the Troubled Company Reporter on July 8, after engaging in extensive marketing efforts, the Nelson Debtors, in consultation with the Agent, on the Lenders' behalf, have determined that the sale of all of the Nelson Assets to one or more buyers, subject to higher and better offers in accordance with certain auction and bidding procedures would yield the greatest recovery for their estates and creditors. Accordingly, the Nelson Debtors asked the Court to approve the sale of the Nelson Assets, free and clear of liens, claims and encumbrances to the Successful Bidder. Natural Gas Objects Patricia Williams Prewitt, Esq., in Houston Texas, relates that Natural Gas Pipeline Company of America and Debtor LSP-Nelson Energy, LLC, are parties to a facility agreement dated December 13, 2000. Pursuant to the Agreement, Natural Gas constructed certain pipeline lateral, measurement, and interconnection facilities, which connect Nelson's gas-fired electric power generation station facilities in Lee County, Illinois, to Natural Gas' interstate natural gas pipeline system. As of August 10, 2004, the Nelson Facility is not connected to any natural gas pipeline other than Natural Gas' pipeline system. The availability and use of the Interconnection Facilities is, therefore, critical to Nelson's business in operating the Nelson Facility. If a potential purchaser intends to operate the Nelson Facility, the purchaser must assume the Facility Agreement if it intends to operate the Nelson Facility. Ms. Prewitt tells the Court that Nelson has defaulted on its payment obligations under the Facility Agreement and owes Natural Gas $912,304 under the Facility Agreement, together with accrued interest of at least $85,000 due and owing. Ms. Prewitt also notes that Natural Gas, at all times has been and continues to be, ready, willing and able to fully perform all of its continuing obligations to the Debtor under the Facility Agreement. The Facility Agreement is expressly governed by and subject to all provisions of Natural Gas' FERC Gas Tariff, which has been filed with, and approved by, the Federal Energy Regulatory Commission. Thus, Ms. Prewitt states, Natural Gas has no regulatory or contractual obligation to provide natural gas transportation service to Nelson, to any third party natural gas suppliers of Nelson, or to any purchaser of the Nelson Facility or the Facility Agreement, unless Natural Gas has first been reimbursed for all costs and expenses associated with the construction of the Interconnection Facilities. Ms. Prewitt asserts that Nelson's defaults under the Facility Agreement must be cured, including payment of the past due amounts. The defaults cannot be cut off pursuant to Section 363 of the Bankruptcy Code by a sale of the Nelson Facility. In addition, Natural Gas has an easement and right of way pursuant to section 4.01 of the Facility Agreement that cannot be cut off by a sale, without compensation to Natural Gas for these valuable property rights. The Facility Agreement provides that any party who purchases all or substantially all of the properties of Nelson will be subject to the obligations of its predecessor in title under the Facility Agreement. Therefore, the purchaser of the Nelson Facility will be subject to Nelson's obligations to Natural Gas under the Facility Agreement, including the $912,304 past due amount plus at least $85,000 in accrued interest. Nelson has expressly agreed to provide Natural Gas 10 days' notice of an intent to assume or reject the Facility Agreement so that Natural Gas would have an opportunity to object. Natural Gas objects to any sale that occurs with less than 10 days' notice of Nelson's intention to assume or reject the Facility Agreement. Natural Gas also asks the Court to find that its rights under the Facility Agreement, including its right of way and easement, is not affected by any approved sale of the Nelson facility. Natural Gas also demands adequate assurance of future performance if the Facility Agreement is assumed. Invenergy's $19,500,000 Offer Tops Bid Debtors LSP-Nelson Energy, LLC, and NRG Nelson Turbines, LLC, conducted an auction to sell their Assets on August 11, 2004. At the conclusion of the Auction, Invenergy Investment Company, LLC, emerged as the successful bidder. Accordingly, the Debtors entered into an asset purchase agreement with Invenergy. The salient terms of the Purchase Agreement are: A. The Nelson Assets Invenergy will purchase substantially all of the Debtors' Assets, free and clear of all Encumbrances other than the Assumed Liabilities, under Section 363 of the Bankruptcy Code. A complete list of the Nelson Assets is available at: http://bankrupt.com/misc/thenelsonassets.pdf Until the closing of the sale, Invenergy will have the option to exclude any asset, right or property from the sale, provided that the Purchase Price will not be reduced as a result of the exclusion. B. Contract Assumption and Assignment The Nelson Debtors will assign to Invenergy certain executory contracts. Invenergy will be responsible for paying all amounts required to cure any defaults or other amounts payable under Section 365(b) of the Bankruptcy Code arising under each Nelson Contract. Invenergy will use reasonable good faith efforts to establish, to the satisfaction of the Bankruptcy Court, that is capable of providing adequate assurance of future performance under the Nelson Contracts. C. Purchase Price Invenergy will pay an aggregate purchase price of $19,500,000 in immediately available funds. Invenergy has deposited $1,500,000 as Good Faith Deposit, representing 10% of the purchase price, by wire transfer to J.P. Morgan Chase, the escrow agent. The Good Faith Deposit will be non-refundable except pursuant to the provisions of the escrow agreement and the Bidding Procedures Order, and provided that Invenergy's liability for any breach of Invenergy's obligation to purchase the Nelson Assets will not exceed $4,000,000 in the aggregate. At the Closing, Invenergy will pay $18,000,000 to the Nelson Debtors by transferring the amount into escrow as requested by the Nelson Debtors, plus the release of the Good Faith Deposit. D. Closing The sale and purchase of the Nelson Assets and assignment of Nelson Contracts will take place at a closing to be held at the offices of Kirkland & Ellis, LLP, on August 30, 2004, provided that all other closing conditions are satisfied on or before that date. E. Delivery On the Closing Date: (a) The Nelson Debtors will deliver to Invenergy: * the Bill of Sale and other instruments as may be reasonably requested by Invenergy to transfer the Nelson Assets to Invenergy or evidence the transfer on the public records; * their executed counterpart to the Assumption Agreement; * other documents required to be delivered pursuant to the Purchase Agreement; and (b) Invenergy will deliver to the Nelson Debtors: * its executed counterpart to the Assumption Agreement; and * other documents required to be delivered pursuant to the Purchase Agreement. (c) Invenergy will transfer to the Nelson Debtors, by transferring into escrow as requested by the Nelson Debtors, the Closing Payment. Debtors Settle Natural Gas' Objection The Nelson Debtors resolve Natural Gas' objection by way of stipulation. In consideration of Natural Gas' withdrawal with prejudice of its Objection, the Debtors, Invenergy and Natural Gas stipulate that: (a) Natural Gas will be granted an easement and right of way, as described in Sections 4.01 and 4.02 of the Facility Agreement. The easements will be unimpaired by the sale of the Nelson Assets and the Nelson Debtors' rejection of the Facility Agreement; and (b) The Nelson Debtors will recharacterize Natural Gas' $952,629 claim as a general unsecured claim. The Nelson Debtors reserve the right to challenge the amount of the Natural Gas Claim at a later date. Sale & Stipulation Approved At the Sale Hearing, Judge Beatty finds that the sale of the Nelson Assets is in the best interests of the Debtors, their estates, their creditors, and all parties-in-interest. Moreover, Invenergy's offer is the highest and best offer received by the Debtors, and the terms of the sale are fair and reasonable. Accordingly, Judge Beatty authorizes Debtors to sell the Nelson Assets on the terms and condition set forth in the Asset Purchase Agreement, free and clear of liens, claims and encumbrances to Invenergy. The Court overrules all objections to the Nelson Debtors' request that have not been withdrawn or waived. Judge Beatty also approves the Debtors' stipulation with Natural Gas. NRG Energy, Inc. owns and operates a diverse portfolio of power- generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, P.C., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq. at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. (NRG Energy Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) NVR INC: Moody's Raises Low-B Ratings to Lower Medium Grade ----------------------------------------------------------- Moody's Investors Service raised the ratings of NVR, Inc., including its senior implied and issuer ratings to Baa3 from Ba1 and the rating on its senior notes to Baa3 from Ba1. NVR's ratings were removed from review where they had been placed on June 4, 2004. The ratings outlook is stable. The upgrade and stable ratings outlook reflect Moody's belief: (1) that the NVR business model is sustainable in a robust and very competitive micro environment; (2) that the company will continue to manage its aggressive share repurchase program in a balance sheet neutral manner; (3) that the company's small net worth relative to its peer group is appropriate for its business model; and (4) that the proportion of profits coming from the Baltimore and Washington, D.C. markets will continue to decline. The ratings incorporate NVR's: * strong returns and interest coverage, * healthy free cash flow generation, * progress in geographic diversification, * the industry's highest inventory turnover rate and lowest debt to capitalization ratio, and * conservative land policies. At the same time, the ratings also consider the company's aggressive share repurchase program, remaining concentration in the Baltimore and Washington D.C. markets, constraints on geographic expansion into new markets in which its very successful business model would be transferable, and the cyclical nature of the homebuilding industry. The ratings changes are: -- Senior implied rating is raised to Baa3 from Ba1; -- Senior unsecured issuer rating is raised to Baa3 from Ba1; -- $200 million of 5% senior notes due 6/15/2010 is raised to Baa3 from Ba1; Neither the company's bank debt, which Moody's does not rate, nor its senior notes carry subsidiary guarantees because NVR conducts all business (except its financial services business) at the NVR, Inc. level. Four constraints on NVR's ratings in the past were: * the sustainability of its business model-primarily the optioning of 100% of its lot requirements-in an economically robust, hotly competitive local market; * its size; * the aggressive share repurchase program; and * the Baltimore and Washington, D.C. concentration levels. NVR has a stated policy of not owning and developing raw land. The company controls 100% of its lot requirements by optioning all land until ready to construct a pre-sold home. It then takes down only fully entitled, fully infrastructured, ready-to-build-on lots. This results in the fastest inventory turnover, by far, in the industry. However, Moody's was always concerned that this operating model could potentially leave the company vulnerable to a supply squeeze in a fiercely competitive market in which large rivals might be willing to purchase, rather than option, available land. This has not occurred. The Washington, D.C. market, for example, has been extremely strong for a number of years and many of the top 10 homebuilders have entered or expanded into this market in the last decade. Yet NVR continues to grow and prosper in this market. It has been in the area for a long time, has an excellent reputation with land developers, is apparently willing to option land at full prices, and has been able to replicate this model in other markets as well. Some of NVR's homebuilder peer group have net worths exceeding $3 billion. This compares to the $511 million figure for NVR at June 30, 2004. However, given an operating model that eschews investments in land inventory, which is the biggest single investment for all of the other homebuilder, a $500 million equity base is of sufficient size to handle growth expectations and to cover any potential loss from walking away from uneconomical lot options. NVR's share repurchase program is very aggressive compared to those of the other homebuilders. However, the NVR business model results in sizable, consistent, and growing free cash flow generation, the excess of which is returned to shareholders via the repurchase program but generally without harming debt leverage. In fact, NVR's debt leverage, the lowest in the industry, has generally improved over the past five years, although there was a blip up in 2003 from the senior note offering. NVR's geographic concentration in the Baltimore and Washington, D.C. market areas has been reduced in recent years. These two market areas accounted for 71% of closings in 1994 but have since been reduced to 42%, not from throttling back the growth in these markets but from successful expansion in other markets. The company produces the strongest financial ratios in the industry. In 2003, NVR generated EBIT interest coverage of 52x, return on assets (EBIT/assets) of 52%, return on equity of 85%, homebuilding debt/capitalization of 29.2%, and homebuilding debt/EBITDA of 0.3x. The company consistently generates strongly positive free cash flow, which is rare for a homebuilding company, which typically has to plow ever-larger amounts of money into land and work-in-process inventory. Free cash flow was $206 million in 1999, $189 million in 2000, $144 million in 2001, $369 million in 2002, and $543 million in 2003. Gross margins reached a healthy 24.7% in 2003, ranking the company third in its investment grade peer group. This is all the more surprising because NVR forgoes any profits to be had from land development. At the same time, NVR's ratings consider that the company has engaged, and will likely continue to engage, in a very aggressive share repurchase program, with future share buybacks dependent on free cash flow. NVR repurchased $102 million of its common stock in 1999, $54 million in 2000, $224 million in 2001, $362 million in 2002, and $460 million in 2003, for a total of $1.2 billion, which was 2.4 times the company's stockholders' equity balance as at December 31, 2003. Nonetheless, from 1999 to 2003 the company's homebuilding debt/capitalization ratio declined from 43% to 29%. Despite the company's reduced sales concentration in the Baltimore and Washington D.C. market areas, NVR still relies on those geographic areas for a substantially larger proportion of its overall profits. Although it has been very successful to date in expanding its business model into other, largely nearby, markets, Moody's believes that this model may not be transferable into all markets in which the company might have an interest and may limit expansion opportunities. The company does not intend to seek expansion opportunities in markets where it would be required to purchase land. To date, this has not limited expansion opportunities. Going forward, the ratings outlook will depend on NVR's maintaining its strong financial profile, continuing to manage its share repurchase program in at least a balance sheet neutral manner, and adding to the size of its equity base. Headquartered in McLean, Virginia, NVR, Inc., constructs and sells single-family detached homes, townhouses, and condominium buildings through three divisions: Ryan Homes, NVHomes, and Fox Ridge Homes, with 2003 revenues and net income of $3.7 billion and $420 million, respectively. OWENS CORNING: Court Approves Comm.'s Limited Retention of NERA --------------------------------------------------------------- Judge Fitzgerald of the U.S. Bankruptcy Court for the District finds that the application of the Official Committee of Unsecured Creditors in the chapter 11 cases of Owens Corning and its debtor- affiliates is premature, to the extent that National Economic Research Associates was to provide services regarding criteria in the trust distribution procedures in connection with objections to present asbestos personal injury claims, because no Asbestos Claims Bar Date has been set. The Court denies NERA's retention for services beyond estimation. Judge Fitzgerald directs the Commercial Committee's counsel to draft and circulate a proposed order on NERA's retention reflecting the Court's ruling. Futures Representative Objects According to Sharon M. Zieg, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, the proposed order fails to indicate that any testimony to be provided by NERA should be clearly limited to the services approved by the Order. In addition, the proposed order does not mention that the denial of NERA's retention for services beyond estimation is without prejudice to renewal only after a bar date is set for present asbestos personal injury claims. As reported in the Troubled Company Reporter on March 15, 2004, the Commercial Committee sought the Court's authority to retain National Economic Research Associates, Inc., as asbestos claims consultant, nunc pro tunc to January 9, 2004, pursuant to Sections 1103(a) and 328(a) of the Bankruptcy Code. The Commercial Committee previously engaged Letitia Chambers of Chambers Associates, now known as Navigant Consulting, to provide asbestos claims estimation advice and services. Ms. Chambers left Navigant Consulting to take on a high position with the government of New Mexico. Because of Ms. Chamber's new employment, the Commercial Committee determined that it is desirable to supplement Navigant Consulting with the services of National Economic Research. William H. Sudell, Jr., Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, informs the Court that the Commercial Committee selected National Economic Research as an asbestos claims consultant because of its extensive and diverse experience, knowledge and reputation in the field of economics, including in the asbestos claims field, and because the Commercial Committee believes that National Economic Research is well-qualified to provide the asbestos claims consulting services and expertise that are required by the Commercial Committee in these Chapter 11 cases. National Economic Research's experience includes providing consulting services, advice and expert testimony on asbestos claims issues in the bankruptcy proceedings of: (1) Babcock & Wilcox Co., et al., (2) National Gypsum Company, (3) Combustion Engineering, Inc., and (4) Dow Corning. National Economic Research provides expert services regarding the exposure to, and the identification and treatment of, asbestos claims. National Economic Research is expected to help the Commercial Committee by: (1) estimating costs associated with liquidating future asbestos claims; (2) estimating the costs under a plan resolving the claims; (3) developing claims procedures to be used in financial models of payments and assets of a claims resolution trust; (4) testifying before the Court, if necessary; and (5) performing any other necessary services as the Commercial Committee or the Commercial Committee's counsel may request from time to time with respect to any asbestos- related issue. 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) OWENS CORNING: Michael Pope Wants Advisors to Disgorge Fees ----------------------------------------------------------- In view of Professor Francis McGovern's resignation as Court- appointed advisor effective June 30, 2004, and upon representation made by the counsel for C. Judson Hamlin and David Gross that they are no longer acting in any capacity in the Debtors' bankruptcy proceedings, Michael Pope withdraws his request for disqualification and termination as moot. Mr. Pope, instead, asks the U.S. District Court for the District of Delaware to: (a) require Messrs. Hamlin, Gross and McGovern to disgorge the fees they or their firms, Purcell, Ries, Shannon, Mulcahy & O'Neill, Budd Larner, P.C., David Gross & Associates, or Saiber Schlesinger Satz & Goldstein, LLC, received as Court-appointed advisors, consultants or mediators; and (b) order Messrs. Hamlin, Gross and McGovern to promptly submit their final fee applications, but hold any payment in abeyance pending the Bankruptcy Court's adjudication of the request for disgorgement. As reported in the Troubled Company Reporter on July 6, 2004, Mr. Pope asserted that Messrs. Hamlin, Gross and McGovern should be disqualified and ordered to disgorge their fees because the United States Court of Appeals for the Third Circuit ruled that they operated under serious and substantial conflicts of interests. While serving as the District Court's "supposedly" neutral advisors, they were in fact advocating the interests of future asbestos claimants in a related proceeding and had an interest in creating -- and did create -- a precedent that was beneficial to the future claimants. Mr. McGovern, who was appointed to serve as advisor and mediator in the proceedings, failed to disclose his previous and ongoing close association with Joseph Rice, a domineering figure in many bankruptcy proceedings. With Mr. McGovern's assistance, Mr. Rice engineered settlement agreements that benefit him at the expense of asbestos personal-injury claimants. The Third Circuit rules that the conflicts of Messrs. Hamlin, Gross and McGovern were so serious that they tainted and ultimately required the recusal of District Judge Wolin. That ruling is tantamount to a determination that they breach their ethical duties as fiduciaries to the Court and to the parties. According to Mr. Pope, decisional law indicates that disqualification, termination and disgorgement of fees are the appropriate remedies where professional persons appointed under Section 327 of the Bankruptcy Code have conflicts of interest. 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) PARTITIONS PLUS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Partitions Plus of Wilmington, Inc. dba Partitions, Inc. dba Storm Protection Systems 5654 Carolina Beach Road Wilmington, North Carolina 28412 Bankruptcy Case No.: 04-06776 Type of Business: The Debtor installs interior walls, studs, wall finishes, insulation, ceiling tile, together with interior and exterior stucco finishes, and other related items. See http://www.stormprotectionsystems.com/ Chapter 11 Petition Date: September 1, 2004 Court: Eastern District of North Carolina (Wilson) Judge: J. Rich Leonard Debtor's Counsel: James Oliver Carter, Esq. Carter & Carter, PA 408 Market Street Wilmington, NC 28401 Tel: 910-763-3626 Fax: 910-343-8966 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ L&W Supply Corp. $1,527,665 d/b/a CK Supply P. O. Box 687 Kannapolis, NC 28082 Attn: Debbie Morse Curtis E. Palmer Loan from stockholder $332,134 5654 Carolina Beach Road Wilmington, NC 28412 Tucker Materials Special Forces job $245,562 Capitol Materials of $185,246 Savannah, Inc. Special Forces & General Subcontractor $135,863 Services LLC All Interior Supply, Inc. $103,783 H & E Equipment Services Special Forces job $102,696 Southeastern Architectural Account $100,372 Craco Manufacturing Inc. $92,186 Design Materials Inc. $62,875 Shenandoah Building Supply Account $50,085 Inc. NES Rentals Account $39,274 BB&T Bankcard Corp. - Credit Card $30,794 Partitions Neff Rental, Inc. Account $28,659 CM Drywall, LLC Special Forces job $25,480 Thomas Rutherfoord, Inc. Bonding Company $22,220 Hilti, Inc. Special Forces job $21,594 Excel Builders Inc. Subcontractor $20,800 B&H Drywall &/or Charles Subcontractor $19,600 "Butch" Hunt Boozer Lumber Special Forces job $17,318 PAYLESS SHOESOURCE: S&P Lowers Credit Rating One Notch to BB- ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Topeka, Kansas-based specialty footwear retailer Payless ShoeSource Inc. The corporate credit rating was lowered to 'BB-' from 'BB'. All ratings were removed from CreditWatch, where they were placed with negative implications on March 2, 2004. The outlook is negative. "The downgrade reflects a continuation of weak operating trends, resulting in subpar credit protection measures, and our expectation that Payless will remain challenged to achieve a sustainable improvement in operating performance due to increased competition," said Standard & Poor's credit analyst Ana Lai. "The ratings reflect Payless' participation in the highly competitive footwear retailing industry, inconsistent sales performance, and thin credit protection measures. These risks are partly offset by the company's good market position, significant economies of scale in sourcing and distribution, and adequate financial flexibility." Although Payless has shown some improvement in the current fiscal year following a very disappointing fiscal 2003 (ended Jan. 31, 2004), sales trends remain weak and inconsistent over the past few quarters. Comparable-store sales declined 0.9% in the second quarter ended July 31, 2004, reflecting an 8% decline in units sold, offset by an 8% increase in average retail price. This follows a 2.8% increase in the first quarter ended May 1, 2004, and a 1% decline in the fourth quarter ended Jan 31, 2004. Improved inventory management resulted in some recovery of profitability, however, with operating margins increasing to about 16.7% during the second quarter from 13% a year ago, mainly reflecting an increase in gross margins to about 31% due to fewer markdowns. As a result, EBITDA for second-quarter 2004 was $58 million, versus $35 million in the prior year. Payless' goal to achieve a 30% gross margin for fiscal 2004 depends on at least low single-digit positive same-store sales for the remainder of the year. Standard & Poor's believes that meeting this goal will be challenging given increased competitive pressures, particularly from mass merchants such as Wal-Mart Stores, Inc., and Target Corp. These mass merchants have been expanding their store bases at a faster pace and gaining market share from Payless. Further, profitability is vulnerable to the highly promotional footwear retail environment. Still, the company remains the largest specialty footwear retailer, and the chain benefits from an efficient distribution and sourcing infrastructure. PEGASUS COMMUNICATIONS: Appeals Nasdaq Delisting Notice ------------------------------------------------------- Pegasus Communications Corporation (Nasdaq:PGTV) received a Nasdaq staff determination on September 1, 2004, indicating that the company has failed to comply with one of the Nasdaq's requirements for continued listing on the Nasdaq National Market. As a result, beginning at the opening of trading on September 3, 2004, Nasdaq will append the character "E" after the company's trading symbol. On August 30, 2004, the company announced in a Form 8-K filed with the Securities and Exchange Commission that its independent accountants had not completed their review procedures with respect to the company's investment in limited partnership interests in Pegasus PCS Partners, LP, although the company did not become aware that the procedures were not completed until two days after it filed the Form 10-Q with the SEC. According to the Nasdaq staff determination received by the company, this circumstance is the equivalent of a delinquent SEC filing, which, in the staff's view, violates Nasdaq Marketplace rule 4310c(14) and may subject the company's Class A common stock to delisting from the Nasdaq National Market. Pegasus intends to request a hearing before a Nasdaq Listing Qualifications Panel to review the staff determination. The company expects that this hearing will take place no later than 45 days from the request for a hearing and that any potential delisting of its Class A common stock will be stayed pending a determination of the NASDAQ Listing Qualification Panel. The company said it expects to reach a conclusion with respect to the open accounting issue so that its independent accountants can complete their quarterly review procedures on that issue. On this basis, Pegasus intends to request the Nasdaq staff to withdraw the staff determination or request the Listing Qualifications Panel to permit continued listing of the company's Class A common stock. There can be no assurance that these requests will be granted. Pegasus Communications Corporation provides digital satellite television to rural households throughout the United States. We are the 10th largest pay television company in the United States and the only publicly traded cable or satellite company exclusively focused on service to rural and underserved areas. Pegasus owns and/or operates television stations affiliated with CBS, FOX, UPN and The WB networks. At June 30, 2004, Pegasus Communications Corporation's balance sheet showed $400,618,000 in total common stockholders' equity. PENN TRAFFIC: Selling New York Properties for $33.3 Million ----------------------------------------------------------- The Penn Traffic Company, through Keen Realty, LLC, is marketing for sale-leaseback these New York Properties in connection with its plan to emerge from Chapter 11: Property Type Address Land Size Building Size ------------- ------- --------- ------------- P&C Store Main Street 13.00 31,942 Camden, New York P&C Route 5 & Oxbow Road 5.56 50,895 Shopping Center Canastota, New York P&C Store 4410 E. Genesee St. 3.53 24,436 Dewitt, New York P&C Store Towne Center - Route 5 7.20 62,782 Fayetteville, New York Quality Market 20 Center Street 0.56 8,136 Store Frewsburg, New York P&C Store 385 E. Main Street 3.09 38,302 Gouverneur, New York P&C Store 3830 Rome Road 7.70 56,260 Pulaski, New York Quality Market Randolph Plaza 2.11 17,272 Store Randolph, New York P&C Store 87 E. State Street 7.00 33,350 Sherill, New York ------ -------- Total 49.75 323,531 Keen advises that the cap rate is 9%. "This sale-leaseback is a terrific opportunity for investors to obtain a quality real estate portfolio with a strong tenant, Penn Traffic. The reorganized company has new leadership that has stabilized the company and will grow it into the future," said Chris Mahoney, Keen Realty's Vice President. "We are encouraging prospective purchasers to submit their offers as soon as possible, as the company plans to move quickly with its exit from bankruptcy." A complete list of locations and offering terms are available upon request. Interested parties must act immediately. Keen Realty, LLC is a consulting firm specializing in providing real estate consulting services to companies and their creditors in bankruptcy and work-out scenarios. For 22 years, Keen Realty, LLC solved complex problems and evaluated and sold over 230 million square feet of real estate, leases and businesses in bankruptcies, workouts and restructurings, and repositioned nearly 13,000 retail properties across the country. Other current and recent clients of Keen include Arthur Andersen, Cooker Restaurants, Country Home Bakers, Cumberland Farms, Eddie Bauer, FILA, Fleming, Huffman Koos, Just for Feet, Parmalat, Pillowtex, Spiegel, and Warnaco. For more information regarding these available locations, please contact: Keen Realty, LLC 60 Cutter Mill Road, Suite 407 Great Neck, NY 11021 Telephone: 516-482-2700 x 229 Fax: 516-482-5764 e-mail: cmahoney@keenconsultants.com http://www.keenconsultants.com/ Headquartered in Rye, New York, Penn Traffic Company distributes through retail and wholesale outlets. The Group through its supermarkets carries on the retail and wholesale distribution of food, franchise supermarkets and independent wholesale accounts. The Company filed for chapter 11 protection on May 30, 2003 (Bankr. S.D.N.Y. Case No. 03-22945). Kelley Ann Cornish, Esq., at Paul Weiss Rifkind Wharton & Garrison, represent the Debtors in their restructuring efforts. When the grocer filed for protection from their creditors, they listed $736,532,614 in total assets and $736,532,610 in total debts. PENN TRAFFIC: Selling Pennsylvania Properties for $17.8 Million --------------------------------------------------------------- The Penn Traffic Company, through Keen Realty, LLC, is marketing for sale-leaseback these Pennsylvania Properties in connection with its plan to emerge from Chapter 11: Property Type Address Land Size Building Size ------------- ------- --------- ------------- BiLo Store 201 S. White Street 2.68 26,600 Brookville, Pennsylvania BiLo Store Main Street 5.10 49,403 Clarion, Pennsylvania BiLo 100 N. Main Street 5.58 84,140 Shopping Center DuBois, Pennsylvania BiLo Store Osborne & Conrad Street 1.07 19,152 Johnstown, Pennsylvania P&C Store 410 Elmira Road 7.46 37,915 Sayre, Pennsylvania Quality Markets 9 Leather Street 0.52 7,686 Store Sheffield, Pennsylvania BiLo Store 111 W. 13th Street 1.47 14,940 Tyrone, Pennsylvania Quality Markets 28 Railroad Avenue 0.63 16,714 Youngsville, Pennsylvania ------ -------- Total 24.51 254,656 Keen advises that the cap rate is 9%. "This sale-leaseback is a terrific opportunity for investors to obtain a quality real estate portfolio with a strong tenant, Penn Traffic. The reorganized company has new leadership that has stabilized the company and will grow it into the future," said Chris Mahoney, Keen Realty's Vice President. "We are encouraging prospective purchasers to submit their offers as soon as possible, as the company plans to move quickly with its exit from bankruptcy." A complete list of locations and offering terms are available upon request. Interested parties must act immediately. Keen Realty, LLC is a consulting firm specializing in providing real estate consulting services to companies and their creditors in bankruptcy and work-out scenarios. For 22 years, Keen Realty, LLC solved complex problems and evaluated and sold over 230 million square feet of real estate, leases and businesses in bankruptcies, workouts and restructurings, and repositioned nearly 13,000 retail properties across the country. Other current and recent clients of Keen include Arthur Andersen, Cooker Restaurants, Country Home Bakers, Cumberland Farms, Eddie Bauer, FILA, Fleming, Huffman Koos, Just for Feet, Parmalat, Pillowtex, Spiegel, and Warnaco. For more information regarding these available locations, please contact: Keen Realty, LLC 60 Cutter Mill Road, Suite 407 Great Neck, NY 11021 Telephone: 516-482-2700 x 229 Fax: 516-482-5764 e-mail: cmahoney@keenconsultants.com http://www.keenconsultants.com/ Headquartered in Rye, New York, Penn Traffic Company distributes through retail and wholesale outlets. The Group through its supermarkets carries on the retail and wholesale distribution of food, franchise supermarkets and independent wholesale accounts. The Company filed for chapter 11 protection on May 30, 2003 (Bankr. S.D.N.Y. Case No. 03-22945). Kelley Ann Cornish, Esq., at Paul Weiss Rifkind Wharton & Garrison, represent the Debtors in their restructuring efforts. When the grocer filed for protection from their creditors, they listed $736,532,614 in total assets and $736,532,610 in total debts. PG&E NATIONAL: Wants Court OK on Project Cos.' Claims Settlement ---------------------------------------------------------------- The Energy Trading Debtors ask the Court to approve their settlement agreements with: -- former wholly owned subsidiaries of GenHoldings I, LLC: (1) Athens Generating Company, LP, (2) Covert Generating Company, LLC, (3) Harquahala Generating Company, LLC, and (4) Millennium Power Partners, LP, and -- Power Services Company. Athens, Covert, Harquahala and Millennium operated generating facilities, or "Projects," owned by GenHoldings, an indirect, wholly owned, non-debtor subsidiary of National Energy & Gas Transmission, Inc. Power Services is a non-debtor subsidiary of NEG. Prepetition Agreements Before the Petition Date, NEGT Energy Trading - Power, LP, entered into an agreement with each of the Project Companies relating to the purchase and sale of energy and related resources. Pursuant to the Purchase and Sale Agreements, ET Power sold gas and other fuel products to the Projects and purchased electric capacity or energy generated by the Projects. In July 2003, ET Power informed the Project Companies that it would cease performance under the Purchase and Sale Agreements. On July 3, 2003, each of the Project Companies, hence, terminated its Purchase and Sale Agreement. In February 2001, NEGT Energy Trading - Gas Corporation entered into gas transportation contracts with El Paso Natural Gas Company with the intention of assigning the contracts to Harquahala at a later date. ET Gas assigned the El Paso Agreements to Harquahala on April 1, 2003. Each of the Project Companies entered into an agreement with Power Services in respect of the operation, maintenance and management of the Projects. Power Services contracted certain services under the OMMSAs to ET Power. ET Power maintains claims for reimbursement against the Project Companies for the services. Transfer of Projects Before the Petition Date, Societe Generale, as Administrative Agent for a syndicate of GenHoldings Lenders, agreed to finance 60% of the estimated $1,700,000,000 construction costs of the Projects. GenHoldings agreed to fund the remaining 40% of the construction costs through equity infusions into the Project Companies. NEG guaranteed GenHoldings' obligation to contribute equity pursuant to an Amended and Restated Guarantee and Agreement, dated March 15, 2002, in favor of Societe Generale. GenHoldings made a $450,000,000 initial equity contribution. NEG made its required equity payments until mid-2002, when its credit rating was downgraded. Due to the downgrade, under the GenHoldings credit documents, GenHoldings and NEG were obligated to fund 100% of project costs until the equity contribution obligation became satisfied. NEG caused the required equity infusions to be made in August and September 2002. In early October 2002, NEG announced that no further payments would be made. NEG determined that it did not have an interest in the Projects worth protecting for its estate and that its interest in the Projects were not necessary to a successful reorganization. On March 15, 2004, the Court approved the transfer of the Projects to Societe Generale or its designees. In connection with the transfer, Athens, Covert and Harquahala each transferred its Project and all related assets, liabilities, rights and obligations, to its new wholly owned subsidiary. The interests of the New Subsidiaries, together with the interests in Millennium -- the New Project Companies -- were then transferred to Societe Generale's designees. The transfer of the Projects have now been completed. As a result, the New Project Companies are no longer affiliated with the NEG Debtors. Settlement with the Project Companies On August 11, 2004, the ET Debtors, along with NEGT International, Inc., a non-debtor direct subsidiary of ET Holdings, entered into a Settlement Agreement and Mutual Release with the Project Companies to resolve all claims relating to: * the Purchase and Sale Agreements, * the EL Paso Agreements, and * the ET Labor Claims. The Project Companies agreed to pay the ET Debtors $1,080,000 as a final settlement of the disputed matters. In addition, the ET Debtors and the Project Companies mutually release each other from any claims they may have against the other with respect to the Disputed Matters. Settlement with Power Services On the same day, the ET Debtors also entered into a Settlement Agreement and Mutual Release with Power Services. The parties agreed to mutually release each other from any and all claims, including the ET Labor Claims. Assignment of Rights and Obligation to the New Project Companies In view of the transfer of the Projects, Paul M. Nussbaum, Esq., at Whiteford, Taylor & Preston, LLP, in Baltimore, Maryland, tells the Court that the rights and obligations of Athens, Covert, and Harquahala, including the rights and obligations under the Settlement Agreements, have been assigned to and assumed by the New Project Companies. 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. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) QUESTERRE ENERGY: Terrenex Reports on CCAA Plan's Liquidity Option ------------------------------------------------------------------ Terrenex Acquisition Corporation (TXA: TSX-V) reported on the liquidity option agreement between the Corporation and Questerre Energy Corporation (TSX: QEC) and its wholly owned subsidiary, Questerre Beaver River Inc. The Agreement was designed to facilitate the corporate restructuring of QEC and QBR. It provided a financial incentive for QEC and QBR's unsecured creditors to approve the respective plans of arrangement for the settlement of all outstanding claims. Under the Plans proposed by QEC and QBR, unsecured creditors will receive either the lesser of the amount of their claim or $2,000. Alternatively, unsecured creditors can elect instead to receive a cash dividend of $0.05 plus one common share of QEC for each dollar of their claims. The common shares of QEC will be subject to a hold period and released in two equal installments on the four and eight month anniversary of the date the Plans receive final Court approval. Pursuant to the Agreement, unsecured creditors who wish to maximize their immediate cash settlement, will receive an additional $0.07 for each dollar of their claim in exchange for forgoing the QEC common share they would have otherwise received. Terrenex has established a fund to finance this liquidity option up to a maximum of $668,500, representing the maximum number of common shares of QEC to be issued under the Plans multiplied by $0.07. In consideration for providing this liquidity option, Terrenex will receive 300,000 common shares of QEC. It will also be issued QEC common shares that, but for the election of the unsecured creditors to participate in the liquidity option, would have been issued to the creditors of QBR and QEC. These common shares that would be issued to Terrenex, will be subject to the same hold obligations were they issued to the creditors of QBR and QEC. The Agreement is subject to the receipt of all regulatory approvals and the satisfaction of all conditions precedent set forth in the respective plans of arrangement proposed by QEC and QBR. The Agreement is deemed a related party transaction as defined by OSC Rule 61-501. These transactions are exempt from the valuation and minority approval requirements of OSC Rule 61-501 pursuant to the exemptions contained in sections 5.5(7) and 5.7(5) of Rule 61-501 in that the transaction is subject to court approval under bankruptcy or insolvency law. On August 31, 2004, the Plans were approved by the requisite majority of the unsecured creditors of QEC and QBR. In accordance with the Agreement, Terrenex will now acquire up to a maximum of 9,550,000 QEC common shares that would otherwise have been issued to creditors of QEC and QBR and fund the liquidity option. The Corporation anticipates completing this acquisition prior to September 30, 2004. Prior to the completion of the acquisition of the QEC common shares pursuant to the Agreement, the Corporation intends to sell through the facilities of the Toronto Stock Exchange, up to 9,500,000 common shares of QEC. Other than these transactions, the Corporation has no current intention to increase or decrease its beneficial ownership of QEC. Terrenex, directly and indirectly, holds 9,522,421 Common Shares of QEC, representing approximately 21% of the issued and outstanding capital. All the Directors of Terrenex serve as directors or officers of Questerre. Questerre Energy Corporation is a Calgary-based independent resource company actively engaged in the exploration for and development, production and acquisition of large-scale natural gas projects in Canada. QUIGLEY COMPANY: Looks to Chapter 11 to Resolve Asbestos Liability ------------------------------------------------------------------ Pfizer Inc and its wholly owned subsidiary, Quigley Company, Inc., took steps Friday that, with court approval, they expect will resolve all pending and future claims against the companies in which claimants allege personal injury from exposure to Quigley products containing asbestos, silica, or mixed dust. Quigley was acquired by Pfizer in 1968 and sold small amounts of products containing sbestos until the early 1970s. Pfizer will take a charge of $369 million before-tax ($229 million after-tax) in the third quarter in connection with these matters. Specifically, the companies have taken three steps: 1) Reorganization plan: Quigley will file a Chapter 11 reorganization plan in the U.S. Bankruptcy Court for the Southern District of New York that must be approved by the court and confirmed by a vote of 75 percent of the claimants. In connection with that filing, Pfizer has entered into settlement agreements with lawyers representing more than 80 percent of the individuals with claims against the two companies that provide for a total of $430 million in payments. 2) Establishment of Trust: The reorganization plan will establish a trust for the payment of all remaining pending claims as well as any future claims alleging injury from exposure to Quigley products. Pfizer will contribute $405 million to the Trust over 40 years through a note, as well as approximately $100 million in insurance. Pfizer will also forgive a $30 million loan to Quigley. 3) Permanent injunction: If approved by the court, the reorganization plan will result in a permanent injunction directing all future claims alleging personal injury from exposure to Quigley products to the Trust. "The steps we announce today will, with court approval, establish a responsible and orderly process for the fair payment of these claims, while at the same time minimizing the costs, risks, and distractions of litigation that has spanned several decades," said Jeff Kindler, Executive Vice President and General Counsel, Pfizer. As of July 31, Pfizer and Quigley were named, along with numerous other defendants, in 171,611 lawsuits claiming personal injury allegedly caused by exposure to asbestos, silica or mixed dust. QUIGLEY COMPANY: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Quigley Company, Inc. 52 Vanderbilt Avenue New York, New York 10017 Bankruptcy Case No.: 04-15739 Type of Business: The Debtor develops, produces and markets a broad range of refractories and related products to customers in the iron, steel, glass and other industries. Chapter 11 Petition Date: September 3, 2004 Court: Southern District of New York (Manhattan) Judge: Allan L. Gropper Debtor's Counsel: Michael L. Cook, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 Estimated Assets: $155,187,000 Estimated Debts: $141,933,0000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Ytuarte, Estele Judgment currently $2,795,732 Attn: Natalie Duncan, Esq. on appeal Baron & Budd, P.C. Suite 1100 3102 Oak Lawn Ave. Dallas, Texas 75219 Estate of Luis Ytuarte Judgment currently $1,310,745 Attn: Natalie Duncan, Esq. on appeal Baron & Budd, P.C. Suite 1100 3102 Oak Lawn Ave. Dallas, Texas 75219 Estate of Jerry Freeman Judgment currently $1,304,948 Attn: Andy Waters, Esq. on appeal Waters and Kraus, LLP Suite 3000 3219 McKinney Avenue Dallas, Texas 75204 Geritz, William F. Settlement of $665,000 Attn: Matthew E. Kiely, Esq. litigation Parker, Dumler & Kiely, LLP 36 S. Charles Street, Suite 2200 Baltimore, Maryland 21201 Monk, William Lee Settlement of $476,000 Attn: Mike Kaeske, Esq. litigation Kaeske Law Firm 6301 Gaston Avenue, Suite 735 Dallas, Texas 75214 Hill, Lester Van Settlement of $450,000 Attn: Steven T. Baron, Esq. litigation Silber Pearlman LLP 5th Floor LB 32 2711 North Haskell Avenue, 5th Floor Dallas, Texas 75204 Anastasio, Edward Settlement of $420,000 Attn: Charles Ferguson, Esq. litigation Weitz & Luxenberg, P.C. 180 Maiden Lane New York, New York 10038 Bostic, Timothy Settlement of $350,000 Attn: Natalie Duncan, Esq. litigation Baron & Budd, P.C. 3102 Oak Lawn Avenue Suite 1100 Dallas, Texas 75219 Molinari, George E. Settlement of $280,000 Attn: Charles Ferguson, Esq. litigation Weitz & Luxenberg, P.C. 180 Maiden Lane New York, New York 10038 Curreri, Angelo Settlement of $266,000 Attn: Charles Ferguson, Esq. litigation Weitz & Luxenberg, P.C. 180 Maiden Lane New York, New York 10038 Mazza, Vincent J. $238,350 Iacoviello, Vito S. $238,350 Renow, Alex $210,000 Altimore, Louise $210,000 Drummond, James R. $210,000 Lindelsee, Lee $206,500 Mellendorf, Donald $157,500 Kearns, John N. $140,000 Taylor, Robert $140,000 Locke, James $122,500 RCN CORP: Management Estimates Liquidation Value at $646,100,000 ---------------------------------------------------------------- To confirm a chapter 11 plan of reorganization, Section 1129(a)(7) of the Bankruptcy Code requires that each holder of an impaired allowed claim or interest either: (i) accepts the plan or (ii) receives or retains under the plan property of a value, as of the effective date, that is not less than the value the holder would receive or retain if the debtor were liquidated under Chapter 7 of the Bankruptcy Code on the effective date. This is sometimes called the "Best Interest Test." RCN Corporation's management, with the assistance of The Blackstone Group, LP, prepared a liquidation analysis to estimate the proceeds that would be realized if the Debtors' estates were liquidated under Chapter 7. In a Chapter 7 liquidation, a Chapter 7 trustee is appointed and charged with reducing to cash any and all of the Debtors' assets. The Chapter 7 trustee would be required to either: -- sell the Debtors' cable operating subsidiaries as "going- concerns"; or -- shut down the Debtors' businesses, file the non-Debtor operating subsidiaries in affiliated Chapter 7 cases and sell the individual assets of the Debtors. The gross amount of cash available would be the sum of the proceeds from the disposition of the Debtors' assets, including cash held by the Debtors at the time of the commencement of the hypothetical Chapter 7 case. This amount is reduced by the amount of any claims secured by the assets, the costs and expenses of the liquidation, and the additional administrative expenses and priority claims that may result from the termination of the Debtors' business and the use of Chapter 7 for purposes of the hypothetical liquidation. Any remaining net cash would be allocated to creditors and stockholders in strict priority in accordance with Section 726 of the Bankruptcy Code. The Liquidation Analysis is based on these significant assumptions: (A) Net Proceeds Estimates were made of the cash proceeds that might be realized from the liquidation of the Debtors' assets. The Chapter 7 liquidation period is assumed to commence on the effective date and to average six months following the appointment of a Chapter 7 trustee. While some assets may be liquidated in less than six months, other assets may be more difficult to collect or sell, requiring a liquidation period substantially longer than six months. The Liquidation Analysis assumes that a Chapter 7 trustee would elect to shut down certain of the Debtors' markets and sell other markets, especially the Debtors' cash-flow positive cable operating subsidiaries, as going-concern enterprises. The Debtors conclude that this method of liquidation would maximize recoveries. David McCourt, RCN's Chairman and Chief Executive Officer, however, notes that there exists a risk that the Chapter 7 trustee would not elect to liquidate the operating subsidiaries as going-concerns and would instead sell the Debtors' assets in a piecemeal fashion. (B) Costs The Debtors' costs of liquidation under Chapter 7 would include the fees payable to a Chapter 7 trustee, as well as those that might be payable to attorneys and other professionals that the trustee may engage. Furthermore, the costs of liquidation would include any obligations and unpaid expenses incurred by the Debtors during the Chapter 11 cases and allowed in the Chapter 7 case, like compensation for attorneys, financial advisors, appraisers, accountants and other professionals, and costs and expenses of members of any statutory committee of unsecured creditors appointed by the United States Trustee pursuant to Section 1102 of the Bankruptcy Code and any other committee so appointed. (C) Distribution of Net Proceeds Mr. McCourt points out that any costs, expenses, fees and other claims that may arise in a Chapter 7 case would be paid in full from the liquidation proceeds before the balance of those proceeds would be made available to pay pre and post-Chapter 11 priority, secured and unsecured claims. Under the absolute priority rule, no junior creditor may receive any distribution until all senior creditors are paid in full with interest, and no equity holder would receive any distribution until all creditors are paid in full. The Debtors' management and Blackstone estimated the Debtors' Chapter 7 Liquidation Value to be $646,100,000. The management and Blackstone considered the effects that a Chapter 7 liquidation would have on the ultimate proceeds that would otherwise be available for distribution to creditors in a Chapter 11 case, including: (i) the increased costs and expenses of a liquidation under Chapter 7 arising from fees payable to a trustee and the trustee's professional advisors; and (ii) the erosion in value of assets in a Chapter 7 case in the context of the expeditious liquidation required under Chapter 7 and the "forced sale" atmosphere that would prevail. In this regard, the Debtors believe that the confirmation of their Plan would provide each holder of claims or interests with a recovery that is not less than the holder would receive pursuant to a Chapter 7 liquidation: Summary of Recoveries --------------------------- Description Class No. Under the Plan Chapter 7 ----------- --------- -------------- --------- Chapter 11 Administrative and Priority Tax Claims - 100.0% 100.0% Other Priority Claims 1 100.0% 100.0% Bank Claims 2 100.0% 100.0% Evergreen Claims 3 100.0% 100.0% Other Secured Claims 4 100.0% 100.0% RCN General Unsecured Claims 5 60.5% 9.4% Subsidiary General Unsecured Claims 6 100% 9.4% Preferred Interests 7 n.a. n.a. Equity Interests 8 n.a. n.a. Subordinated Claims 9 n.a. n.a. Warrants Interests 10 n.a. n.a. The Debtors believe that the value of the distributions from the liquidation proceeds to each class of allowed claims in a Chapter 7 case would be the same or less than the value of distributions under the Plan because the distributions in a Chapter 7 case may not occur for a substantial period of time. Distribution of the liquidation proceeds could be delayed for one year or more after the completion of the liquidation to resolve the claims and prepare for distributions. In the event litigation were necessary to resolve claims asserted in the Chapter 7 cases, the delay could be further prolonged and administrative expenses further increased. The effects of the delay on the value of distributions under the hypothetical liquidation have not been considered. The Liquidation Analysis does not include: -- liabilities that may arise as a result of potential litigation, certain new tax assessments or other potential claims; and -- potential recoveries from avoidance actions. The actual liquidation value of the Debtors could vary materially from the estimates provided. Allocation of Proceeds ($ in million) Estimated Estimated % Claim Recovery Recovery --------- --------- -------- Chapter 7 Administrative Claims Trustee Fees $19.4 $19.4 100.0% Chapter 7 Professional Fees 10.0 10.0 100.0% Wind-down Costs 45.8 45.8 100.0% --------- --------- -------- Total Administrative Claims $75.2 $75.2 100.0% ========= ========= ======== Proceeds Available for Payment of Remaining Claims $571.0 Secured Claims Bank Claims $408.0 $408.0 100.0% Evergreen Claims 33.5 33.5 100.0% --------- --------- -------- Total Secured Claims $441.5 $441.5 100.0% ========= ========= ======== Proceeds Available for Payment of Remaining Claims $129.5 Priority Claims Priority Taxes $10.0 $10.0 100.0% --------- --------- -------- Total Priority Claims $10.0 $10.0 100.0% ========= ========= ======== Proceeds Available for Payment of Remaining Claims $119.5 Unsecured Claims Senior Notes $1,188.5 $112.0 9.4% General Unsecured Claims 80.0 7.5 9.4% --------- --------- -------- Total Unsecured Claims $1,268.5 $119.5 9.4% ========= ========= ======== Proceeds Available for Distribution to Equity $0.0 Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) RYLAND: Moody's Affirms Low-B Ratings & Raises Sr. Implied to Baa3 ------------------------------------------------------------------ Moody's Investors Service raised the senior implied rating of The Ryland Group, Inc., to Baa3 from Ba1. At the same time, Moody's confirmed Ryland's issuer rating and ratings on its senior notes at Ba1 and rating on its senior subordinated notes at Ba2. The company's ratings are taken off review for upgrade, where they had been put on April 14, 2004, and the ratings outlook is stable. The upgrade to the senior implied rating reflects: * the continuing improvement in the company's financial profile, * a highly disciplined growth strategy that avoids acquisitions, * a conservative land policy, * tight cost controls, and * strong liquidity. At the same time, the ratings consider the size of The Ryland Group, Inc., relative to its peer group, the ongoing share repurchase program, and the cyclical nature of the homebuilding industry. The upgrade was limited at this time to Ryland's senior implied rating because the company's bank credit facility is structurally senior to its publicly-rated senior notes and senior subordinated notes. The bank credit facility (which Moody's does not rate) carries the guarantees of Ryland's operating subsidiaries; the publicly rated notes do not. Going forward, consideration for an upgrade of the company's publicly rated notes will rest on elimination of their structural subordination to the bank debt. The stable outlook reflects Moody's expectation that Ryland will continue to maintain capital structure discipline while pursuing its expansion opportunities. The ratings actions for Ryland are: -- Senior implied rating is raised to Baa3, from Ba1; -- Senior unsecured issuer rating is confirmed at Ba1; -- $100 million of 8% senior notes due 8/15/2006 is confirmed at Ba1; -- $150 million of 5.375% senior notes due 6/1/2008 is confirmed at Ba1; -- $147 million of 9.75% senior notes due 9/01/2010 is confirmed at Ba1; -- $143.5 million of 9.125% senior subordinated notes due June 15, 2011 is confirmed at Ba2. The company's financial results and profile have shown sustained improvement in recent years. At the same time as it has been reducing its homebuilding debt leverage (debt/cap and debt/EBITDA) to among the lowest in its peer group, Ryland has managed to increase its returns (ROE and ROA) to among the best in its group. For the year ended December 31, 2003, Ryland lowered its debt/cap to 39.6% and debt/EBITDA to 1.1x while raising its ROA (EBIT/Assets) to 22.2% and its ROE to 29.3%. EBIT interest coverage was a strong 8.3x as compared to 7.5x in the prior year. Margins, which were among the few metrics in which Ryland tended to lag its peer group in the past, have improved dramatically. From 1998 through 2003, gross margins have improved in an unbroken string, from 15.7% to 22.0%, while EBITDA margins have increased from 7.9% to 14.0%, putting Ryland near the middle of its new investment grade peer group. The company has had seven consecutive years of revenue and earnings growth, like many others in the homebuilding industry. A key difference, however, is that Ryland's growth was all organic, which reflected a conscious management decision to de-emphasize acquisitions, concentrate on internal growth, and manage the balance sheet so as to continue reducing its debt leverage. Ryland has a conservative land policy, very much in keeping with its growth policy. The years' supply of lots owned is the lowest in the homebuilding industry, and inventory turnover is the highest in the industry (in both cases, excluding NVR, which operates under a different model). The company's cost controls are strong as well. Its SG&A/revenue ratio is one of the lowest in the industry. Liquidity is very strong, as cash on hand at June 30, 2004 (its seasonal peak period of working capital usage) was $40 million while drawings under the company's $500 million revolver were zero. In addition, Ryland's assets are unencumbered, substantial headroom exists under its financial covenants, and the company faces no significant debt maturities before 2006. At the same time, Ryland's ratings reflect its relatively small net worth compared to most of its Ba1 and investment grade competition and the ongoing share repurchase program, which tends to limit the growth in the equity base somewhat. For the five- year period ended December 31, 2003, Ryland repurchased approximately $325 million of its common shares, which represented approximately 39% of its year-end 2003 net worth of $824 million. Going forward, consideration for an improvement in the company's outlook and ratings will include its maintaining its strong financial profile while boosting the size of its equity base. Factors that might stress the outlook and ratings include any actions or transactions that would decapitalize or stress the balance sheet, including a major share repurchase program, a large impairment charge, or accelerated growth financed largely with debt. Headquartered in Calabasas, California and founded in 1967, The Ryland Group, Inc. is one of the nation's leading builders of single family homes, currently operating in 27 markets across the United States, with 2003 revenues and net income of $3.4 billion and $242 million, respectively. SK GLOBAL: Confirmation Objections Must be Filed by Wednesday ------------------------------------------------------------- Objections, if any, to confirmation of the Plan of Liquidation of SK Global America, Inc. and its debtor-affiliates must be filed with the U.S. Bankruptcy Court for the Southern District of New York before 5:00 p.m. on Wednesday, September 8, 2004. Confirmation objections must: (i) be in writing; (ii) state with particularity the grounds and all evidences to support the objections; and (iii) be filed electronically with the Clerk of Court, with a courtesy copy delivered to Judge Blackshear's Chambers; and (iv) be served on: * Attorneys for the Debtors Togut Segal & Segal, LLP One Penn Plaza, Suite 3335 New York, New York, 10119 Attn: Scott E. Ratner, Esq. * Attorneys for SK Networks, Co., Ltd. Cleary Gottlieb Steen & Hamilton One Liberty Plaza New York, New York, 10006 Attn: James L. Bromley, Esq. * Attorneys for Cho Hung Bank McDermott, Will & Emery Rockefeller Plaza New York, New York, 10020 Attn: Stephen Selbst, Esq. * Attorneys for Korea Exchange Bank Nixon Peabody, LLP 437 Madison Avenue New York, New York, 10022 Attn: William S. Thomas, Esq. * Office of the United States Trustee 33 Whitehall Street, 21st Floor New York, New York, 10004 Attn: Greg M. Zipes As reported in the Troubled Company Reporter on July 1, 2004, embodied in the Plan, Moon Ho Kim, SK Global's President and Treasurer explains, are various compromises, settlements and concessions, which will result in creditors achieving a greater and more expeditious recovery than would otherwise be available under an alternative plan of reorganization or in a Chapter 7 liquidation. The Plan is intended to resolve all Claims against, and Equity Interests in, the Debtor, and provides a mechanism for the liquidation of all the Debtor's remaining assets and the Distribution of the proceeds to the Debtor's Creditors. The Plan contemplates the wind down of the Debtor's remaining operations, the liquidation of certain assets and distribution of Cash proceeds to certain Creditors. The Plan resolves disputes and avoids costly litigation over the extent and validity of the Secured Claims asserted by Cho Hung and KEB. In addition to satisfying the Secured Claims held by Cho Hung and compromising and settling the Junior Secured Claims held by KEB, the Plan provides for a 100% Distribution, in Cash, to holders of Allowed Administrative Expense Claims, Allowed Priority Claims and Allowed General Unsecured Claims. The Plan further contemplates the transfer of the Debtor's remaining assets to a liquidating trust to be formed and administered for the benefit of the Allowed Unsecured Liquidating Trust Claims and, to the extent applicable, Allowed KEB Junior Secured Claims. Upon the liquidation or transfer of its assets, the Debtor will dissolve in accordance with applicable state law. Debtor's Assets Under the Plan, all of the Debtor's assets will be utilized to make the Distributions to Creditors. The assets include the Debtor's Cash, accounts receivable and inventory. The assets under the Plan dedicated for Distributions to Creditors will be administered, liquidated and distributed either by the Debtor or through the Creditor Trust established as of the Effective Date. Substantially all of the Debtor's assets, except Cash on hand as of the Petition Date to the extent not traceable as proceeds, are subject to the Liens held by Cho Hung and KEB. In accordance with the terms and conditions of the Plan, Cho Hung, as holder of a first priority Secured Claim with Liens on substantially all of the Debtor's assets, will receive $89 million in Cash, plus interest, on the Effective Date. KEB, on the other hand, asserts Secured Claims of $77.4 million against the Debtor. As part of a compromise and settlement reached with KEB concerning the extent and validity of its Secured Claim, KEB will receive a $55 million distribution in Cash, payable in three equal installments. The Debtor will use its remaining Cash to: (a) fully satisfy Allowed Administrative Expense Claims, Allowed Priority Claims, and Allowed General Unsecured Claims, estimated at $11.6 million; and (b) provide initial funding for the Creditor Trust, which will be created on the Effective Date for the benefit of holders of Allowed Claims in Classes 5, 6, 7 and 8, and, to the extent applicable, Classes 1, 3 and 4. According to Mr. Moon, the Plan contemplates the liquidation of the Debtor's remaining assets through the Creditor Trust and Distributions of the proceeds of the liquidation to: -- fully satisfy KEB, on account of the second and third installments due on the Allowed KEB Junior Secured Claims, or to reimburse SK Networks to the extent it makes any of the installment payments due KEB; and -- satisfy, on a pari passu basis, the outstanding principal balance of FRN Unsecured Claims, Unsecured Bank Claims, SK Group Trade Claims and SKN Trade Claims. FRN Unsecured Claims refer to the Claims acquired by SK Networks against the Debtor, arising from the Debtor's issuance of "floating rate notes. Unsecured Bank Claims refer to the Foreign Unsecured Bank Claims and the Korean Unsecured Bank Claims. SK Group Trade Claims refer to all Claims held against the Debtor by members and affiliates of the SK Group, other than SK Networks and its subsidiaries, arising from the provision of goods or services to the Debtor before the Petition Date. SKN Trade Claims refer to all Claims held against the Debtor by SK Networks arising from the provision of goods or services to the Debtor before the Petition Date. Holders of SKN Affiliate Trade Claims and Equity Interests in the Debtor will receive no Distributions under the Plan. Headquartered in Fort Lee, New Jersey, SK Global America, Inc., is a subsidiary of SK Global Co., Ltd., one of the world's leading trading companies. The Debtors file for chapter 11 protection on July 21, 2003 (Bankr. S.D.N.Y. Case No. 03-14625). Albert Togut, Esq., and Scott E. Ratner, Esq., at Togut, Segal & Segal, LLP, represent the Debtors in their restructuring efforts. When they filed for bankruptcy, the Debtors reported $3,268,611,000 in assets and $3,167,800,000 of liabilities. SK GLOBAL AMERICA: Creditors' Ballots Must be in by Wednesday ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York set Wednesday, September 8, 2004, as the last day by which creditors' ballots accepting or rejecting the Plan of Liquidation of SK Global America, Inc. and its debtor-affiliates, must be received the Debtors' Voting Agent, Bankruptcy Service, LLC. Ballots must be delivered to: (1) If by overnight courier or personal delivery: SK Global Solicitation Agent Bankruptcy Services, LLC 757 Third Avenue, 3rd Floor New York, New York 10017 (2) If by regular mail: SK Global Solicitation Agent P.O. Box 5014 FDR Station New York, New York 10017 As reported in the Troubled Company Reporter on July 1, 2004, embodied in the Plan, Moon Ho Kim, SK Global's President and Treasurer explains, are various compromises, settlements and concessions, which will result in creditors achieving a greater and more expeditious recovery than would otherwise be available under an alternative plan of reorganization or in a Chapter 7 liquidation. The Plan is intended to resolve all Claims against, and Equity Interests in, the Debtor, and provides a mechanism for the liquidation of all the Debtor's remaining assets and the Distribution of the proceeds to the Debtor's Creditors. The Plan contemplates the wind down of the Debtor's remaining operations, the liquidation of certain assets and distribution of Cash proceeds to certain Creditors. The Plan resolves disputes and avoids costly litigation over the extent and validity of the Secured Claims asserted by Cho Hung and KEB. In addition to satisfying the Secured Claims held by Cho Hung and compromising and settling the Junior Secured Claims held by KEB, the Plan provides for a 100% Distribution, in Cash, to holders of Allowed Administrative Expense Claims, Allowed Priority Claims and Allowed General Unsecured Claims. The Plan further contemplates the transfer of the Debtor's remaining assets to a liquidating trust to be formed and administered for the benefit of the Allowed Unsecured Liquidating Trust Claims and, to the extent applicable, Allowed KEB Junior Secured Claims. Upon the liquidation or transfer of its assets, the Debtor will dissolve in accordance with applicable state law. Debtor's Assets Under the Plan, all of the Debtor's assets will be utilized to make the Distributions to Creditors. The assets include the Debtor's Cash, accounts receivable and inventory. The assets under the Plan dedicated for Distributions to Creditors will be administered, liquidated and distributed either by the Debtor or through the Creditor Trust established as of the Effective Date. Substantially all of the Debtor's assets, except Cash on hand as of the Petition Date to the extent not traceable as proceeds, are subject to the Liens held by Cho Hung and KEB. In accordance with the terms and conditions of the Plan, Cho Hung, as holder of a first priority Secured Claim with Liens on substantially all of the Debtor's assets, will receive $89 million in Cash, plus interest, on the Effective Date. KEB, on the other hand, asserts Secured Claims of $77.4 million against the Debtor. As part of a compromise and settlement reached with KEB concerning the extent and validity of its Secured Claim, KEB will receive a $55 million distribution in Cash, payable in three equal installments. The Debtor will use its remaining Cash to: (a) fully satisfy Allowed Administrative Expense Claims, Allowed Priority Claims, and Allowed General Unsecured Claims, estimated at $11.6 million; and (b) provide initial funding for the Creditor Trust, which will be created on the Effective Date for the benefit of holders of Allowed Claims in Classes 5, 6, 7 and 8, and, to the extent applicable, Classes 1, 3 and 4. According to Mr. Moon, the Plan contemplates the liquidation of the Debtor's remaining assets through the Creditor Trust and Distributions of the proceeds of the liquidation to: -- fully satisfy KEB, on account of the second and third installments due on the Allowed KEB Junior Secured Claims, or to reimburse SK Networks to the extent it makes any of the installment payments due KEB; and -- satisfy, on a pari passu basis, the outstanding principal balance of FRN Unsecured Claims, Unsecured Bank Claims, SK Group Trade Claims and SKN Trade Claims. FRN Unsecured Claims refer to the Claims acquired by SK Networks against the Debtor, arising from the Debtor's issuance of "floating rate notes. Unsecured Bank Claims refer to the Foreign Unsecured Bank Claims and the Korean Unsecured Bank Claims. SK Group Trade Claims refer to all Claims held against the Debtor by members and affiliates of the SK Group, other than SK Networks and its subsidiaries, arising from the provision of goods or services to the Debtor before the Petition Date. SKN Trade Claims refer to all Claims held against the Debtor by SK Networks arising from the provision of goods or services to the Debtor before the Petition Date. Holders of SKN Affiliate Trade Claims and Equity Interests in the Debtor will receive no Distributions under the Plan. Headquartered in Fort Lee, New Jersey, SK Global America, Inc., is a subsidiary of SK Global Co., Ltd., one of the world's leading trading companies. The Debtors file for chapter 11 protection on July 21, 2003 (Bankr. S.D.N.Y. Case No. 03-14625). Albert Togut, Esq., and Scott E. Ratner, Esq., at Togut, Segal & Segal, LLP, represent the Debtors in their restructuring efforts. When they filed for bankruptcy, the Debtors reported $3,268,611,000 in assets and $3,167,800,000 of liabilities. SPHERION: Moody's Withdraws Single-B Ratings Following Redemption ----------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings of Spherion Corporation to reflect the redemption of the company's rated debt securities. These ratings have been withdrawn: * $89.6 million convertible subordinated notes due 2005, previously rated B2 (withdrawn as of August 27, 2004); * Senior Implied, rated Ba3; * Issuer Rating, rated B1. Moody's withdrawal of Spherion Corporation's ratings reflects the company's redemption of its rated debt with proceeds from the sale of its discontinued operations and an expansion of its current credit facility. Spherion Corporation is primarily a staffing and professional recruitment company with headquarters in Ft. Lauderdale, Florida. SOLUTIA INC: Court Approves Joint Prosecution/Defense Agreement --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the Joint Prosecution/Defense Agreement among Solutia, Inc., Monsanto Company and Pharmacia Corporation. Solutia, Inc., Monsanto Company and Pharmacia Corporation have historically cooperated with each other in the prosecution and defense of these environmental matters: (1) United States v. Pharmacia Corporation, No. 99-63-GPM (S.D. Ill.); (2) Pharmacia Corporation. v. Clayton Chemical Acquisition, LLC, No. 02-CV-428-MJR (S.D. Ill.); (3) Solutia, Inc., v. McWane, Inc., No. CV-03-PWG-1345-E (N.D. Ala.); and (4) Allocation pursuant to a certain "Area 2 Sites Revised and Amended RI/FS Participation Agreement." The cooperation included the sharing of privileged material in furtherance of the Companies' joint defense or joint prosecution of the Environmental Matters. As reported in the Troubled Company Reporter on August 16, 2004, Husch & Eppenberger, LLC, has represented or is currently representing one or more of the Companies in the Environmental Matters. Husch also represented the Companies in various other legal matters. The Joint Prosecution/Defense Agreement Because the Environmental Matters present legal and factual issues common to the Companies, Solutia, Monsanto and Pharmacia want to continue cooperating in the prosecution and defense of the Environmental Matters. The Companies want to share confidential information concerning the Environmental Matters while maintaining the privileged and confidential nature of the shared information with respect to third parties. Ms. Labovitz asserts that the contemplated cooperation will reduce Solutia's total legal costs associated with the prosecution and defense of the Environmental Matters because the Companies will be able to avoid duplicative work. On July 9, 2004, Solutia, Pharmacia, Monsanto and Husch memorialized their agreement with respect to cooperating in the joint prosecution or joint defense of the Environmental Matters by entering into a Joint Prosecution/Defense Agreement. Settlements Ms. Labovitz relates that the Companies share the ultimate goal of reaching successful settlement of the Environmental Matters. Thus, pursuant to the Joint Prosecution/Defense Agreement, the Companies agree that, with respect to all Environmental Matters to which more than one Company is a party, the Companies will meet to (i) develop a strategy regarding settlements in the Environmental Matters and (ii) jointly select a settlement liaison counsel who will implement the agreed settlement strategy after obtaining the consent of all the Companies' counsel. Ms. Labovitz clarifies that the Joint Prosecution/Defense Agreement will not force Solutia to follow a particular settlement strategy. If any Company becomes dissatisfied with the settlement procedures or their implementation, and the Companies are unable to resolve the dispute after meeting and conferring in good faith, then each Company will be free to pursue settlement discussions on its own behalf without consultation with the other Companies. The successful settlement or joint prosecution of the Environmental Matters has the potential to bring a monetary recovery to Solutia's estate. Any proceeds recovered from the Environmental Matters will be deposited in an interest bearing escrow or trust account. The proceeds will ultimately be distributed pursuant to written allocation agreement among the Companies, if any, or otherwise after the final determination by a court of competent jurisdiction as to the distribution of the proceeds among the Companies. Legal Representation and Expenses In connection with the Joint Prosecution/Defense Agreement, Solutia will retain new counsel in the Environmental Matters, which will be substituted for Husch. Solutia agrees that Husch may continue to represent Monsanto and Pharmacia in the Environmental Matters. Husch will provide copies of the joint Solutia and Pharmacia files to Solutia's new counsel, and cooperate in effecting a smooth transition in Solutia's representation. Mr. Labovitz discloses that Solutia will not be responsible for paying any legal fees of Monsanto or Pharmacia. Each Company will bear its own attorney and other legal fees and, to the extent a Company wishes to rely on another Company's expert witness, each Company will bear its proportional cost of the experts' 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. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) TALCOTT NOTCH: S&P Affirms BB- Rating on Class A-4 Notes -------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-3B and A-3L notes issued by Talcott Notch CBO I Ltd., a high- yield arbitrage CBO transaction managed by General Re-New England Asset Management, on CreditWatch with positive implications. At the same time, the ratings on the class A-1L, A-2L, and A-4 notes are affirmed based on the credit enhancement available to support the notes. The ratings on the class A-3B, A-3L, and A-4 notes were previously lowered Jan. 8, 2003 and Aug. 25, 2003. The CreditWatch placements reflect factors that have positively affected the credit enhancement available to support the A-3B and A-3L notes since the last rating action in August 2003. The primary factor was an increase in the level of overcollateralization available to support the notes. Standard & Poor's will be reviewing the results of current cash flow runs generated for Talcott Notch CBO I Ltd. to determine the level of future defaults the rated notes can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement available. Ratings Placed on Creditwatch Positive Talcott Notch CBO I Ltd. Rating Class To From ----- -- ---- A-3B AA-/Watch Pos AA- A-3L AA-/Watch Pos AA- Ratings Affirmed Talcott Notch CBO I Ltd. Class Rating ----- ------ A-1L AAA A-2L AAA A-4 BB- Transaction Information Issuer: Talcott Notch CBO I Ltd. Co-issuer: Talcott Notch CBO I Ltd. (Delaware) Corp. Underwriter: Bear Stearns Cos. Inc. Trustee: JPMorgan Chase Transaction type: Arbitrage Corporate HY CBO Tranche Initial Prior Current Information Report Action Action ----------- ------- ------ ------- Date (MM/YYYY) 1/2000 8/2003 9/2004 Cl. A-1L note rtg. AAA AAA AAA Cl. A-2L note rtg. AAA AAA AAA Cl. A-3B note rtg. AAA AA- AA-/Pos Cl. A-3L note rtg. AAA AA- AA-/Pos Sr. class A O/C ratio 133.39% 119.6% 131.1% Sr. class A O/C ratio min. 120.0% 120.0% 120.0% Cl. A-4 note rtg. A- BB- BB- Cl. A O/C ratio 122.3% 109.7% 115.5% Cl. A O/C ratio min. 110.0% 110.0% 110.0% Portfolio Benchmarks Current -------------------- ------- S&P wtd. avg. rtg. (excl. defaulted) B+ S&P default measure (excl. defaulted) 3.70% S&P variability measure (excl. defaulted) 2.23% S&P correlation measure (excl. defaulted) 1.19% Oblig. rtd. 'BBB-' and above 15.02% Oblig. rtd. 'BB-' and above 42.61% Oblig. rtd. in 'CCC' range 9.15% Oblig. rtd. 'CC', 'SD', or 'D' 14.11% S&P Rated Current O/C (ROC) Rating Action --------- ------------- Cl. A-1L 377.82% (AAA) Cl. A-2L 153.57% (AAA) Cl. A-3B 107.47% (AA-/Watch Pos) Cl. A-3L 107.47% (AA-/Watch Pos) Cl. A-4 104.89% (BB-) For information on Standard & Poor's CDO Portfolio Benchmarks and Rated Overcollateralization -- ROC -- Statistic, see "ROC Report August 2004," published on RatingsDirect, Standard & Poor's Web- based credit analysis system, and on the Standard & Poor's Web site at http://www.standardandpoors.com/ Go to "Credit Ratings," under "Browse by Business Line" choose "Structured Finance," and under Commentary & News click on "More" and scroll down to the desired article. TECHNEGLAS INC: Files for Chapter 11 Protection in S.D. Ohio ------------------------------------------------------------ Techneglas, Inc., a subsidiary of Nippon Electric Glass Co. of Japan, filed for Chapter 11 protection in the United States Bankruptcy Court for the Southern District of Ohio. On August 5, Techneglas said it would cease manufacturing operations in its three North American operations in Columbus, Perrysburg and Pittston, Pennsylvania. The Pittstone plant closed on Aug. 3 laying off more than 600 employees. The Company continues to wind-down its operations blaming a decline in demand for glass television screens due to a high demand in new technologies like plasma, LCD and projection sets. Techneglas also has begun negotiations with its union, Glass, Molders, Potters, Plastics and Allied Workers, in Columbus and Pittston, over severance and health benefits, a Tribune Business News report said. The status of health and retirement benefits remains uncertain for many workers, according to officials with the Columbus union. Headquartered in Columbus, Ohio, Techneglas, Inc. -- http://www.techneglas.com/-- a subsidiary of Nippon Electric Glass Co. of Japan, manufactures television glass -- CRT panels, CRT funnels, solder glass and specialty glass -- dopant sources, glass resins and specialty bulbs. The Company filed for chapter 11 protection on September 1, 2004 (Bankr. S.D. Ohio Case No. 04- 63788). Brenda K. Bowers, Esq. and Robert J. Sidman, Esq. at Vorys, Sater, Seymour and Pease LLP, and Lisa M. Diem, Esq. at Kegler Brown Hill & Ritter, represent the Debtor in its restructuring efforts. When the Company filed for chapter 11 protection, it listed more than $100 Million in estimated total assets and debts. TECHNEGLAS INC: Case Summary & 43 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Techneglas, Inc. 727 East Jenkins Avenue Columbus, Ohio 43207 Bankruptcy Case No.: 04-63788 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Nippon Electric Glass America, Inc. 04-63847 Nippon Electric Glass Ohio, Inc. 04-63851 Type of Business: The Debtor manufactures television glass - CRT panels, CRT funnels, solder glass and specialty glass - dopant sources, glass resins and specialty bulbs. See http://www.techneglas.com/ Chapter 11 Petition Date: September 1, 2004 Court: Southern District of Ohio (Columbus) Judge: John E. Hoffman Jr. Debtors' Counsels: Brenda K. Bowers, Esq. Robert J. Sidman, Esq. Vorys, Sater, Seymour and Pease LLP 52 East Gay Street P.O. Box 1008 Columbus, OH 43215-1008 Tel: 614-464-6290 -- and -- Lisa M. Diem, Esq. c/o Kegler Brown Hill & Ritter Capitol Square, Suite 1800 65 East State Street Columbus, OH 43215 Tel: 614-462-5400 Fax: 614-464-2634 Estimated Assets Estimated Debts ---------------- --------------- Techneglas, Inc. More than $100 M More than $100 M Nippon Electric Glass $10 M to $50 M $1 M to $10 M America, Inc. Nippon Electric Glass $10 M to $50 M $10 M to $50 M Ohio, Inc. A. Techneglas, Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ The Bank of Tokyo-Mitsubishi Bank Loan $30,439,667 Ltd. (guaranteed by Japanese Corporate Finance Nippon Electric 227 West Monroe St., Glass, Inc.) Ste. 2300 Chicago, Illinois 60606 Sumitomo Mitsui Banking Letter of Credit $18,500,000 Corporation 277 Park Avenue New York, NY 10172 Omni Oxide LLC Trade $225,252 EXEL Transportation Services Trade $126,910 Hammond Lead Product Inc. Trade $96,532 BOC Gases Trade $83,701 Air Products and Chemicals, Trade $79,877 Inc. Osram Sylvania Inc. SPL Trade $70,898 EW Bowman Inc. Trade $54,889 Unimin Corp. SPL Trade $51,302 American Minerals Inc. Trade $45,476 Industrial Corp. Trade $45,218 Armand Products Co. Trade $44,611 Chori America Inc. Trade $37,715 Scioto Packing Inc. Trade $36,978 Pacific Industrial Trade $32,231 Development Corp. Packaging Corp. of America Trade $30,709 Feldspar Corp. Trade $30,341 TIPP Machine & Tools Inc. Trade $29,224 Pension Benefit Guaranty Trade Unknown Corp. B. Nippon Electric Glass America's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Nippon Electric Glass Co. Trade debt $5,545,355 Ltd. I-14, Miyahara 4 Chome Yodoga Wa-Ku, Osaka Japan 532-0003 Fujimi Corporation Trade debt $500,601 11200 SW Leveton Dr. Tualatin, OR 97062 Hess Pumice Products Trade debt $109,245 NEG (Malaysia) Trade debt $79,727 CBC (America) Corp. Trade debt $49,566 Unichem, Inc. Trade debt $34,741 Bank One Trade debt $20,046 KWE, Inc. Trade debt $19,148 GBC-General Binding Corp. Trade debt $9,809 Power Sprays Ltd. Trade debt $6,610 Optical Society of America Trade debt $3,800 Koch Logistics/Koch & Sons, Trade debt $3,309 Inc. Freight Exchange, Inc. Trade debt $2,575 Watkins Motor Lines, Inc. Trade debt $2,380 McGraw-Hill Companies Trade debt $2,119 Euro Marble & Granite, Inc. Trade debt $1,520 Chris Truck Lines Trade debt $1,275 Aries Freight Systems, LP Trade debt $1,250 Custom Manufacturing Company Trade debt $1,125 Bulkmatic Transport Co. Trade debt $963 C. Nippon Electric Glass Ohio's 3 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Japan Bank for Loan $4,551,030 International Cooperation 4-1, Ohtemachi 1-Chrome Chiyoda-ku, Tokyo 100-8144 Japan Thomson, Inc. Trade Debt $53,040 Transportes Juan Carlos Trade Debt $210 de Mexicali, SA de CV US AIRWAYS: James Schear Returns as New Restructuring VP -------------------------------------------------------- James P. Schear will return to US Airways in a new role as vice president of restructuring, effective immediately. Mr. Schear will report directly to US Airways President and Chief Executive Officer Bruce R. Lakefield. He will handle the company's organizational re-engineering responsibilities and priorities as identified by the senior management team. He also will work with members of management, employee task forces, advisors and partners to ensure that the company operates as efficiently as possible, and assist in transforming the processes and programs that follow best practices and new industry efficiencies. "Jim is a man with a wide range of credentials and experience, both in the private sector and in government. He is a natural leader and has in-depth knowledge of US Airways, and will be a great asset to our management team," said Mr. Lakefield. Mr. Schear joins US Airways from the FAA's Air Traffic Organization, where he was vice president of safety, responsible for safety direction and assurance in all facets of the National Airspace System and international leadership of the FAA's global safety efforts. He also was deputy for aviation operations for the Transportation Security Administration. In that role, he was responsible for an operational chain of 159 Federal Security Directors, and managed over 60,000 employees at 440 airports. Mr. Schear started his aviation career with Pacific Southwest Airlines in 1975, which was merged into US Airways in 1988. At US Airways, he served in a variety of management functions, including manager of flight operations and director of business planning -- flight operations. He is type-rated on the Electra, MD-80, DC-9, BAe-146, B-737, B-757 and B-767. Additionally, he was a check pilot and FAA designated examiner on the B-757 and B-767 aircraft. A career Naval aviator, Mr. Schear served 37 years combined in the U.S. Navy and Naval Reserve. He flew the P-3 both on active and reserve duty, retiring as a rear admiral in 2000. Mr. Schear is a U.S. Naval Academy graduate and holds a degree in engineering. He lives in Annapolis, Maryland, with his wife and four children. Headquartered in Arlington, Virgina, US Airways' primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc. and Airways Assurance Limited, LLC. The Company filed for chapter 11 protection on August 11, 2002 (Bankr. E.D. Va. Case No. 02-83984). Alexander Williamson Powell Jr., Esq. and David E. Carney, Esq. at Skadden, Arps, Slate, Meagher & Flom and Lawrence E. Rifken, Esq. at McGuireWoods LLP represent the Debtors in their restructuring efforts. WORLD ACCESS: Liquidation Plan Objection Deadline is Sept. 13 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois approved the Disclosure Statement with respect to World Access, Inc. and its debtor-affiliates' Revised Second Amended Plan of Liquidation on August 5, 2004. A hearing to consider confirmation of the Plan, is scheduled for September 21, 2004, at 2:00 p.m., before the Honorable Susan Pierson Sonderby in the U.S. Bankruptcy Court located at 219 South Dearborn Street, Room 642 in Chicago, Illinois. The fixed date for filing and serving objections to confirmation of the Plan is September 13, 2004 at 5:00 p.m. (Chicago time). Objections to Plan confirmation, if any, must: -- be in writing; -- be filed with the Clerk of the Bankruptcy Court; -- be served in accordance with Bankruptcy Rule 3020(b); -- state the name and address of the objecting party, the amount of its claim or the nature of its interest, and the nature of the objectoni and the legal basis therefore; and -- be served on: Counsel for the Debtors: Mark K. Thomas, Esq. Jenner & Block LLP One IBM Plaza Chicago, Illinois 60611 - and - James Craig Cifelli, Esq. Lamberth, Cifelli, Stokes & Stout, P.A. Atlanta Financial Center 3343 Peachtree Road, N.E. East Tower, Suite 550 Atlanta, Georgia 30326 Counsel for the Creditors' Committee: John H. Bae, Esq. Michael J. Edelman, Esq. Cadwalader, Wickersham & Taft LLP 100 Maiden Lane New York, New York 10038 - and - Harold L. Kaplan, Esq. Gardner Carton & Douglas LLP 191 North Wacker Drive, Suite 3700 Chicago, Illinois 60606-1698 Office of the United States Trustee: Kathryn Gleason, Esq. 227 West Monroe Street Suite 3350 Chicago, Illinois 60606 Copies of the Disclosure Statement and the Revised Second Amended Plan of Liquidation are available at: Poorman-Douglas Corporation 10300 Allen Blvd Beaverton, Oregon 97004 Attn: Balloting Agent Tel. No. (503) 277-7902 World Access, Inc. is focused on being a provider of bundled voice, data and Internet services to key regions of the world. The Company filed for chapter 11 protection on April 24, 2001 (Bankr. N.D. Ill. Case No. 01-14633). Mark K. Thomas, Esq. at Jenner & Block LLP and James Craig Cifelli, Esq. at Lamberth, Cifelli, Stokes & Stout, P.A. represent the Debtor. WORLDCOM INC: Settles Fishel Company's $1.3 Million Claim --------------------------------------------------------- Fishel Company filed Claim No. 15985 against Debtor MCI WorldCom Communications, Inc., as a secured claim for $1,367,793 on January 21, 2003. The Debtors asked the United States Bankruptcy Court for the Southern District of New York to disallow and expunge Fishel's claim on the grounds that: (a) Fishel failed to attach sufficient supporting documents; and (b) Fishel failed to identify the alleged collateral securing the debt asserted, attach evidence that the alleged secured claim is properly perfected, and state the value of the alleged collateral. Judge Gonzalez approves the parties' stipulation, which provides that: (a) The Debtors will pay a portion of the Claim for $655,291 pursuant to the Confirmed Plan to cure Contract No. 1823; (b) Fishel will be allowed a Class Three Other Secured Claim for $279,658; (c) Fishel will be allowed a Class Six General Unsecured Claim for $426,843; (d) The Cure Claim, Class Three Other Secured Claim and Class Six General Unsecured Claim will be paid by the Debtors to Fishel in accordance with the Confirmed Plan; and (e) Fishel's other claims will be deemed withdrawn with prejudice to any future action. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (Worldcom Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) * G. Moran Leads Expansion of Alvarez & Marsal's New York Practice ------------------------------------------------------------------ Alvarez & Marsal, a leading global professional services firm, announced that Gary Moran, a consulting industry veteran, has joined the Business Consulting Group of Alvarez & Marsal as a Managing Director. He will lead the New York expansion of the Business Consulting Group, which serves companies across industries with good market positions and solid financials with a suite of management-focused services that complement A&Ms deep- rooted operational and financial expertise. With more than 23 years of consulting experience, Mr. Moran specializes in assisting chief financial officers, controllers, treasurers, and finance executives in improving the effectiveness and efficiency of their finance organizations. His primary areas of focus include finance organization strategy development, shared service design and implementation, planning-to-reporting design and optimization as well as performance management and cost reduction. Mr. Moran also has significant experience in large- scale merger integration, company-wide business transformations and finance technology selection and implementation. Gary brings an outstanding background in business consulting and finance to Alvarez & Marsal and significant experience in helping companies balance compliance with improvement amidst an environment of heightened regulatory scrutiny,said Tom Elsenbrook, an A&M Managing Director and head of the firms Business Consulting Group. As more and more financial executives seek to determine the long-term impact of Sarbanes-Oxley and work to identify opportunities to leverage their recently required compliance spending to achieve greater efficiencies and effectiveness, Garys expertise has become in increasingly high demand. Over the course of his career, Mr. Moran has advised numerous Global 1000 companies in a variety of industries including manufacturing, consumer products, retail, financial services and business services. Prior to joining A&M, he was a Managing Director at BearingPoint and served as the partner in charge of the finance and operations practice at Andersen Business Consulting. Mr. Moran earned a masters degree from Binghamton University and is a member of the New York State Society and American Institute of Certified Public Accountants. He is a frequent speaker on the topics related to financial excellence, shared services and the Sarbanes-Oxley Act. The Business Consulting Group of Alvarez & Marsal provides services including: Strategy and Corporate Solutions, such as post-merger integration, cost management, business development and marketing; Finance Solutions, such as finance strategy, shared services, business process outsourcing advisory, financial process improvement, business planning and performance management; Information Technology Strategy and Integration, such as software evaluation and selection and ERP optimization; Human Resources Solutions, such as HR operational improvement, compensation and performance management, talent management and organizational effectiveness solutions; and Supply Chain Solutions, such as strategic sourcing, procure to pay process improvement, warehouse and inventory management and transportation and logistics. About Alvarez & Marsal Founded in 1983, Alvarez & Marsal is a global professional services firm that helps businesses and organizations in the corporate and public sectors navigate complex business and operational challenges. With professionals based in locations across the US, Europe, Asia, and Latin America, Alvarez & Marsal delivers a proven blend of leadership, problem solving and value creation. Drawing on its strong operational heritage and hands-on approach, Alvarez & Marsal works closely with organizations and their stakeholders to help navigate complex business issues, implement change and favorably influence results. For more information about the firm, please visit http://www.businessconsulting.alvarezandmarsal.com/or contact Rebecca Baker, Chief Marketing Officer at 212-759-4433. * Kamakura Reports U.S. Corporate Credit Quality Declines in Aug. ----------------------------------------------------------------- Kamakura Corporation reported that its monthly index of troubled companies in the United States jumped 0.8% in August to 14.0% of the public company universe. This is the highest level of troubled companies since November 2003. Kamakura classifies any company with a default probability of more than one percent as troubled. "In August we saw a spike in the troubled company index in mid- month with a slight decline at the end of the month," commented Dr. Donald R. van Deventer, Kamakura Chairman and Chief Executive Officer. "As of the end of the month, the number of companies with default probabilities between 1% and 5% remained unchanged at 7.9% of the universe. In the 5% to 100% default probability range, however, we saw a jump of 0.8% in the number of troubled companies. We continue to maintain our view from last month that we have passed the 'sweet spot' of the credit cycle, although we expect some volatility in the troubled company index from here on." Kamakura reported that 2.2 percent of the U.S. corporate universe had default probabilities between 5 and 10 percent and 1.4 percent of the universe had default probabilities between 10 and 20 percent. The company said that 2.3 percent of the U.S. public company universe had default probabilities over more than 20 percent. Kamakura is offering free trials of its KRIS default probability service to qualified institutions. For more information on Kamakura's free trial offer please contact Kamakura at info@kamakuraco.com. More information can also be found on the Kamakura Corporation web site http://www.kamakuraco.com/and in "Credit Risk Models and the Basel Accords" (John Wiley & Sons, 2003) by Kamakura's van Deventer and Kenji Imai and available on http://www.amazon.com/ About Kamakura Corporation Kamakura Corporation is a leading provider of risk management information, processing and software. Kamakura has been a provider of daily default probabilities for listed companies since November, 2002. Kamakura launched its private firm modeling product in January 2004. Kamakura is also the first company in the world to develop and install a fully integrated credit risk, market risk, asset and liability management, and transfer pricing system. Kamakura has clients ranging in size from $3 billion in assets to $1 trillion in assets. Kamakura's risk management software is currently used in the United States, Germany, Canada, the United Kingdom, Australia and many countries in Asia. * Win a New Car Donated to Charity by AlixPartners & Questor ------------------------------------------------------------ The American Cancer Society is holding a raffle on Oct. 2 at the Cattle Barons Ball in Detroit to give away three new cars: * a Chevy SSR, * a C6 Corvette, and * a Cadillac CTS-V. AlixPartners and Questor donated the Chevy SSR. The Cattle Barons Ball is an annual fund-raising gala for the American Cancer Society. A $100 ticket puts your name in the hopper and buys three chances to win. No more than 10,000 tickets will be sold, so the odds of winning one car are 3:10,000. Rumor has it that the organizers are having difficulty selling tickets. A smaller pool of tickets, obviously, improves the odds of winning. Winners can choose the color, other options from a menu of choices, and pay for additional upgrades. You don't need to go to the Ball to win. For more information about how to help support the American Cancer Society, contact: Donna Courage AlixPartners LLC 2000 Town Center, Suite 2400 Southfield, MI 48075 Telephone (248) 262 8473 There's probably a long list rules and disclaimers that the Attorney General for the States of Michigan and elsewhere think should be appended to this announcement. AlixPartners, LLC is recognized internationally for solving complex operating, financial, litigation, and transactional challenges, creating value, and restoring corporate performance. It has offices in Chicago, Dallas, Detroit, Dusseldorf, London, Los Angeles, Milan, Munich, and New York. For further information, go to http://www.alixpartners.com/ Questor Management Company, LLC, with offices in Southfield, Michigan and New York, manages the Questor Partners Funds, which have more than $1.1 billion of committed equity capital. Questor's objective is to acquire corporate orphans or underperforming businesses that are in transition and offer the potential for superior returns with the application of appropriate levels of capital and management expertise. Since it was founded in 1995, the company has successfully completed more than 20 acquisitions worldwide, including the purchase of Geologistics, one of the world's largest global freight forwarding and logistics services providers, Teksid Aluminum, a global leader in aluminum castings, from Fiat and coal assets formerly owned by United States Steel Corporation. See http://www.questor.com/ * BOND PRICING: For the week of September 6 - September 10, 2004 ---------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Amercan Airline 4,250% 09/23/23 74 American & Foreign Power 5.000% 03/01/30 71 AMR Corp. 4.500% 02/15/24 68 AMR Corp. 9.000% 08/01/12 65 AMR Corp. 9.000% 09/15/16 67 AMR Corp. 10.200% 03/15/20 60 Atlantic Coast 6.000% 02/15/34 64 Burlington Northern 3.200% 01/01/45 56 Calpine Corp. 7.750% 04/15/09 61 Calpine Corp. 8.500% 02/15/11 62 Calpine Corp. 8.625% 08/15/10 63 Comcast Corp. 2.000% 10/15/29 41 Continental Airlines 4.500% 02/01/07 71 Cummins Engine 5.650% 03/01/98 75 Delta Air Lines 7.700% 12/15/05 46 Delta Air Lines 8.000% 06/03/23 37 Delta Air Lines 8.300% 12/15/29 28 Inland Fiber 9.625% 11/15/07 48 Kulicke & Soffa 0.500% 11/30/08 70 Level 3 Comm. Inc. 2.875% 07/15/10 67 Level 3 Comm. Inc. 6.000% 09/15/09 54 Liberty Media 3.750% 02/15/30 65 Mirant Corp. 2.500% 06/15/21 62 Mirant Corp. 5.750% 07/15/07 62 National Vision 12.000% 03/30/09 62 Northern Pacific Railway 3.000% 01/01/47 55 Northwest Airlines 7.875% 03/15/08 70 Northwest Airlines 8.700% 03/15/07 74 Northwest Airlines 9.875% 03/15/07 72 Primus Telecom 3.750% 09/15/10 61 Univ. Health Services 0.426% 06/23/20 59 ********* 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 ***