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/raid1/www/Hosts/bankrupt/TCR_Public/041006.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, October 6, 2004, Vol. 8, No. 216 Headlines AAIPHARMA INC: Board Mourns Director John M. Ryan's Death AAMES FINANCIAL: To Discuss Merger on Oct. 26 Stockholders' Mtg. ADAMSON APPAREL: Case Summary & 20 Largest Unsecured Creditors ADVANCED AUTO: Moody's Affirms Ba2 Senior Implied Rating AIR CANADA: Merrill Lynch Wants Title to Boeing Aircraft AIRGATE PCS: Moody's Assigns B2 Rating to $175M Senior Notes ALLIED HOLDINGS: Amex Accepts Plan for Listing Compliance AMERICAN ENERGY: Forms New Subsidiary to Invest in Commodities ARGONAUT GROUP: S&P Affirms BB+ Counterparty Credit Rating ASSISTED LIVING: Gets Indications of Interest in Potential Sale AUTOFEST GROUP LLC: Voluntary Chapter 11 Case Summary BAC SYNTHETIC: Fitch Junks Ratings on Class D & E Notes BANC OF AMERICA: Fitch Gives Class X-B-5 Certs. Single-B Rating BE AEROSPACE: 18.4M Share Offering Cues S&P to Affirm B+ Rating BRIDALS BY KAUFMAN'S: Case Converting to Chapter 7 Liquidation BROOKFIELD PROPERTIES: S&P Puts BB+ Rating on C$150M Pref. Shares CALPINE CORP: Fitch Downgrades Senior Unsecured Notes CENTENNIAL COMMS: Completes $19.5 Million AT&T Spectrum Purchase CLARK GROUP INC: Case Summary & 79 Largest Unsecured Creditors CLEARLY CANADIAN: Extends Funding Under Quest Capital Bridge Loan COVANTA ENERGY: Oct. 26 Fixed as Administrative Claims Bar Date CWMBS INC: Fitch Places B Rating on Class 1-B3 Trust Certificate DEL GLOBAL: Inks Final Settlement Pact Resolving RFI Investigation DENNINGHOUSE INC: CCAA Monitor Says It's Found a Buyer EAGLEPICHER HOLDINGS: Revises Full F.Y. 2004 Earnings Guidance ENRON CORP: Vitro Wants $1 Million Admin. Expense Claim Paid ENTERPRISE PRODUCTS: Closes $2 Billion Private Debt Placement EXIDE TECHNOLOGIES: Angelo Gordon Discloses 6.9% Equity Stake FOSTER WHEELER: Appoints Franco Anselmi CEO of Asian Operations GALEY & LORD: U.S. Trustee Meeting with Creditors on Oct. 28 GLOBALSTAR CAPITAL: Reminds Noteholders Rights Expire on Oct. 12 GNI GROUP: Court Denies Employment Application to Teach a Lesson GOLF TRUST: Amex Accepts Plan to Remedy Recent Filing Delinquency HARVEST OPERATIONS: Moody's Puts B3 Rating on $200M Senior Notes I2 TECHNOLOGIES: Court Approves Settlement of Shareholder Lawsuits INTEGRATED HEALTH: Asks Court to Make Class 4 & 6 Distribution INTERMET CORPORATION: Wants to Hire Foley & Lardner as Counsel INTERMET CORPORATION: Gets Interim Okay to Use Cash Collateral JEUNIQUE INT'L: Committee Hires Marshack Shulman as Counsel JEUNIQUE INT'L: Hires Phoenix-Issa as Valuation Consultant KAISER ALUMINUM: Judge Fitzgerald Okays Glencore Overbid Agreement KERASOTES SHOWPLACE: Moody's Puts B1 Ratings on Sr. Bank Loans KEYSTONE: Files Reorganization Plan & Disclosure Statement KMART CORP: Robert Norton Discloses Selling 7,131 Shares of Stock KOLLEL MATEH: Case Summary & 7 Largest Unsecured Creditors NEWCASTLE CDO: Moody's Assigns Ba2 Rating on $20.5M Fixed Notes NORTH OAKLAND: Moody's Reviews Ba1 Rating for Possible Downgrade NORTHROP GRUMMAN: Fitch Raises Convertible Stock Rating to BB+ OGLEBAY NORTON: Judge Rosenthal Declines to Confirm Debtors' Plan OMNI FACILITY: ValleyCrest Completes Landscape Assets Acquisition OMNI FACILITY: Wants Plan Filing Period Extended to Dec. 6 OWENS CORNING: Judge Fullam Says Yes to Substantive Consolidation PILLOWTEX CORP: Asks Court to Okay Hiring BDO Seidman as Auditor POLYPORE INC: S&P Junks Subordinated Debt Rating RCN CORP: Wants Court Okay to Hire Kasowitz as Special Counsel RELIANCE GROUP: Bank Committee Releases RFSC Plan Voting Results REMOTE DYNAMICS: Nasdaq Affords Grace Period to Regain Compliance RESIDENTIAL ASSET: Moody's Shaves Two Certificate Class Ratings SALEM COMMS: Inks Pact with Univision to Exchange Radio Assets SOUTHERN STATES: Moody's Places B3 Rating on Senior Unsec. Notes SPECTRASITE INC: Robert Katz & Richard Masson Resign From Board SPIEGEL INC: Modifies Automatic Stay for Lederers to Pursue Suit SUMMIT PROPERTIES: S&P Puts BB+ Rating on $170M Senior Notes SUMMIT PROPERTIES: Inks Merger Pact with Camden Property Trust TROPICAL SPORTSWEAR: Sells South Pacific Division for $3 Million TXU GAS: Moody's Withdraws Ratings Following Atmos Purchase UAL CORP: Inks Out-of-Court Settlement with Guilford UAL CORP: Files 6th Reorganization Status Report UNITED AIRLINES: Takes Further Steps to Lower Distribution Costs UNIVERSAL ACCESS: Committee Hires Winston & Strawn as Counsel US AIRWAYS: Asks Court for Interim Wage & Benefits Reduction VIATICAL LIQUIDITY: Committee Wants Reed Smith as Counsel WASTE SERVICES: Completes Amendment to Senior Credit Facility * CLLA Awards 2004 Lawrence P. King Award to Prof. David Epstein * Michael Good Moves Restructuring Practice to Coudert Brothers * Ryan Senter Joins Alvarez & Marsals as Director * Wilson Sonsini Goodrich & Rosati Expands Its New York Presence * Upcoming Meetings, Conferences and Seminars ********* AAIPHARMA INC: Board Mourns Director John M. Ryan's Death --------------------------------------------------------- aaiPharma Inc. (NASDAQ: AAII) announced the passing of John M. Ryan, a member of the Company's Board of Directors, of Long Meadow, Massachusetts. Dr. James Martin, Chairman of aaiPharma's Board of Directors, stated, "John Ryan was a respected colleague and a man of impeccable integrity, and his sage advice was invaluable. The Board and the Company will deeply miss him." Mr. Ryan served as a director of aaiPharma since 1996, and chaired the audit committee and compensation committee for several years. About aaiPharma aaiPharma Inc. is a science-based pharmaceutical company focused on pain management, with corporate headquarters in Wilmington, North Carolina. With more than 25 years of drug development expertise, the Company is focused on developing and marketing branded medicines in its targeted therapeutic areas. aaiPharma's development efforts are focused on developing improved medicines from established molecules through its research and development capabilities. For more information on the Company, including its product development organization AAI Development Services, please visit aaiPharma's website at http://www.aaipharma.com/ * * * As reported in the Troubled Company Reporter on Oct. 4, aaiPharma Inc. will not make the October 1, 2004 interest payment on its 11.5% Senior Subordinated Notes due 2010, and will use the 30-day grace period provided under the Notes for failure to pay interest to enter into discussions with an ad hoc committee formed by certain holders of the Notes. An aggregate interest payment of $10.0 million was due on the Notes on Oct. 1, 2004. Failure to make the interest payment by October 31, 2004, would constitute an event of default under the Notes, permitting the trustee under the Notes or the holders of 25% of the Notes to declare the principal and interest thereunder immediately due and payable. The Company believes there is a likelihood that it will be in default of certain financial covenants under its senior credit facility, and is in ongoing active discussions with its lender to seek waivers and/or consents for these potential defaults. Standard & Poor's Ratings Services previously affirmed its 'CCC' corporate credit and 'CC' subordinated debt ratings on aaiPharma, Inc. At the same time, Standard & Poor's removed the ratings on the Wilmington, North Carolina-based specialty pharmaceutical company from CreditWatch. S&P's outlook on aaiPharma is negative. "The low speculative-grade ratings reflect the company's improved but still limited liquidity given the lack of visibility of aaiPharma's profitability and cash flow generation," said Standard & Poor's credit analyst Arthur Wong. AAMES FINANCIAL: To Discuss Merger on Oct. 26 Stockholders' Mtg. ---------------------------------------------------------------- Aames Financial Corporation (OTCBB:AMSF) will hold a special meeting of stockholders in connection with its proposed reorganization into a real estate investment trust. The special meeting will be held at the City Club, 333 South Grand Avenue, 54th Floor, Los Angeles, California 90071, on Tuesday, October 26, 2004 at 9:00 a.m., California time. The company's board of directors has designated September 28, 2004, as the record date for determining which stockholders are entitled to receive notice of and vote at the special meeting. At the special meeting, stockholders will be asked to approve and adopt an agreement and plan of merger dated as of July 21, 2004, which will effect the reorganization, and to approve new equity incentive plans for Aames Financial and Aames Investment Corporation, a wholly owned subsidiary of Aames Financial. Holders of a majority of the voting power of Aames Financial's outstanding stock must vote in favor of the merger agreement and the equity incentive plans. In addition, a majority of the voting power of the outstanding preferred stock voting as a single class must also vote in favor of the merger agreement. Participants in Solicitation Aames Financial, Aames Investment, their respective directors, and certain of their respective executive officers may be considered participants in the solicitation of proxies in connection with the proposed reorganization. You may find information relating to their interests, including security holdings or otherwise, in the proxy statement/prospectus sent to stockholders in connection with the reorganization. At June 30, 2004, Aames Financial operated 99 retail branches, including the National Loan Centers, and five regional wholesale operations centers throughout the United States. * * * As reported in the Troubled Company Reporter's April 1, 2004 edition, Fitch Ratings upgraded Aames Financial Corp's. subordinated debt due 2006 to 'CCC' from 'CC'. Concurrent with this action, Fitch has withdrawn the company's senior debt rating of 'CCC' as the company has repaid its senior debt. The Rating Outlook is Stable. Fitch's rating action reflects the company's improved operating performance and liquidity, brought on by more disciplined loan origination and the robust mortgage environment. Since implementing new standards in 2000, the company has achieved better realization on its whole loan sales. Coupled with the robust mortgage environment, Aames has been able to generate solid earnings, relative to historical levels over the last year. While the company's liquidity profile has improved, it remains highly reliant on short-term warehouse facilities, and this is reflective of the current rating. ADAMSON APPAREL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Adamson Apparel Inc. 525 7th Avenue Suite 701 New York, New York 10018 Bankruptcy Case No.: 04-30799 Chapter 11 Petition Date: September 29, 2004 Court: Central District of California (Los Angeles) Judge: Ernest M. Robles Debtor's Counsel: David B. Golubchik, Esq. Levene Neale Bender & Rankin LLP 1801 Avenue Of The Stars #1120 Los Angeles, CA 90067 Tel: 310-229-1234 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Worldfit International Trade $937,989 Rm. 410-411 Pacific Center 28 Hankow Road Tsim Sha Tsui Kowloon, HK China Worldmark Agents Limited Trade $907,967 Rm. 1005, Allied Kajima Bldg., 138 Gloucester Rd. Wanchai, HK China Victory Century Ind. Ltd. Trade $797,479 Unit 512 5/F Tower Cheung Sha Wan Plaza 833 Cheung Kowloon, HK China Humane, Inc. Trade $639,359 c/o Kevin Weber 530 Seventh Ave., Ste. 1502 New York, NY 10018 Ying Ying Liu Trade $274,061 Macau Shen Da Garmet Almirante Lacerda Nos. 131-133. 7,"A-B" Macau, China Downtown Button & Supply Trade/Arbitration $254,280 6087 S. Triangle Dr. judgment Los Angeles, CA 90040 Green 1466 Broadway LLC Trade $250,128 c/o SL Green Management 420 Lexington Ave. New York, NY 10170 Minha Garment Enterprise Trade $228,902 Hakos Knitts, Inc. Trade $132,570 In-Style Co. Trade $128,866 Jiangsu Animal By Product Trade $99,168 Matrix Funding Corp. Trade $97,456 Minolta Business Solution Trade $83,385 Greystone Security Trade $61,513 Irvine Photo Graphics, Inc. Trade $60,104 Pacific-Net Logistics, Inc. Trade $54,877 Halo Holdings, LC Trade $42,179 Wels, Julie Trade $33,142 JBS Zippers Trade $32,924 Shanghai Jinyl Int'l Trade $32,839 ADVANCED AUTO: Moody's Affirms Ba2 Senior Implied Rating -------------------------------------------------------- Moody's Investors Service affirmed the Ba2 senior implied rating, the B1 senior unsecured issuer rating and the SGL-2 speculative grade liquidity rating of Advance Auto Parts, Inc. Moody's also assigned a rating of Ba2 to Advance Stores Inc.'s amended senior secured bank credit facility. The rating outlook remains positive. Moody's ratings actions: Advance Auto Parts, Inc. * Senior implied rating affirmed at Ba2 * Senior unsecured issuer rating affirmed at B1 * Speculative Grade Liquidity Rating continued at SGL-2 Advance Stores, Inc. * $160 million Senior secured bank facility, maturing September 2009 assigned at Ba2 * $150 million Senior secured term loan, maturing September 2009 assigned at Ba2 * $185 million Senior secured term loan, maturing September 2010 assigned at Ba2 * $175 million Senior secured term loan, maturing September 2010 assigned at Ba2 The ratings affirmation incorporates Advance's plans to borrow $175 million via a delayed draw term loan to repurchase stock over the next 12 months, and that results from continued improvements in operating performance will culminate in improved debt protection measures as a result of aggressive reductions in debt. For the first six months of 2004, Advance generated revenues of: (a) $2.03 billion, (b) reflecting a year-over-year increase of 10.8%, and (c) a gross profit margin of 46.4%, a year-over-year increase of 43 basis points. This continued improvement in operating performance has resulted in the generation of $164 million in operating cash flow, and enabled Advance to reduce its debt by $110 million at second quarter end. This brings total debt reductions for the past six quarters to approximately $401 million. The Ba2 senior implied rating considers Advance's position as: (a) a leading retailer of auto parts and supplies in the U.S. market, with a solid number two position in a fragmented, though consolidating, industry; (b) its improving credit metrics, which firmly positions it within its rating category, even after adjusting for the full amount of the impending share repurchases; and (c) its prospects for continued growth, both organically and via acquisition. The rating also considers: (a) Advance's historically acquisition-based growth strategy, (b) its relative geographic concentration in the Southeast, (c) risks inherent in new store openings, and (d) the intensely competitive market. The positive outlook remains as Moody's expects Advance to continue to improve its operating performance and aggressively reduce debt. The rating could be raised if performance continues to improve, with requisite incremental debt reduction and sustained improvement in credit metrics. Downward rating pressure would result if Advance were to become more aggressive with respect to financial policy and returns to shareholders, if the company were to make a large, debt-weighted acquisition, or if operating performance were to weaken substantively resulting in a significant weakening of its credit metrics. The Ba2 rating on the senior secured bank credit facility reflects its priority position in the capital structure, with a secured position in all assets, as well as upstream and downstream guarantees. The rating is at the senior implied level because it currently represents all the outstanding debt of Advanced Auto Parts Inc. The B1 senior unsecured issuer rating reflects the effective subordination of senior unsecured obligations to the senior secured bank facility of Advanced Stores, Inc. While asset coverage is currently ample with coverage of 1.64 times, including the $40 million outstanding under the vendor financing program on a conservatively discounted basis at second quarter ended July 17, 2004, this situation could weaken in the event of even a moderately sized acquisition. The SGL-2 speculative grade liquidity rating reflects the expectation that Advance will: (a) maintain good liquidity, and (b) that its internally generated cash flow and cash on hand will be sufficient to fund its working capital, capital expenditure and debt amortization requirements for the next 12 months. The company's $160 million revolving credit facility is expected to remain largely undrawn and to be used only for seasonal needs and letter of credit support. At second quarter end July 17, 2004, the revolver reflected a zero balance and outstanding letters of credit of $37.6 million. Covenant cushions under the revolver are expected to remain ample. Advance Auto Parts, Inc is headquartered in Roanoke, Virginia, and is the parent company of Advance Stores Company, Inc., which operates the second largest U.S. auto parts retail chain with 2,583 stores as of quarter ended July 3, 2004. Sales for the most recent fiscal year ended January 3, 2004 were approximately $3.5 billion. AIR CANADA: Merrill Lynch Wants Title to Boeing Aircraft -------------------------------------------------------- Canadian Airlines International, Ltd., owed $200,000,000 to Kreditanstalt fur Wiederaufbau pursuant to a term loan agreement dated April 10, 1990. CAIL used the loan proceeds to finance the purchase of a Boeing 747-475 aircraft. In connection with Air Canada's acquisition of CAIL in July 2000, Air Canada asked KfW to restructure the CAIL loan. In implementing the integration of CAIL into Air Canada, CAIL sold its interest in the aircraft to 885480 Alberta, Ltd., which was subsequently continued under the Canadian Business Corporations Act as 3846091 Canada, Ltd. In December 2000, 3846091 Canada sold its beneficial interest, and CAIL sold its legal title, in the aircraft to KfW. 3846091 Canada assumed the CAIL loan and used the proceeds of the aircraft sale to repay the CAIL loan. KfW sold its right, title and interest in and to the aircraft back to 3846091 Canada on a deferred payment basis, pursuant to an Aircraft Installment Sale Agreement. As security for the payment and performance by 3846091 Canada of its obligations under the AISA, 3846091 Canada assigned to KfW all of its interest in the aircraft pursuant to an Aircraft Security Agreement and a Mortgage dated December 29, 2000. CAIL, Air Canada and 3846091 Canada merged in January 2001. consequently, Air Canada became bound by 3846091 Canada's rights and obligations under the AISA and the Original Security Agreement. Subsequently, certain amendments were made to the AISA and to the Original Security Agreement pursuant to a Master Amending Agreement dated January 1, 2001. Effective November 13, 2003, Air Canada repudiated the AISA with respect to the aircraft and any ancillary agreements. Air Canada surrendered to KfW all of its rights, title and interest in and to the aircraft to satisfy its debt to KfW. KfW properly registered its security interest against Air Canada with respect to the aircraft in British Columbia, Alberta, Ontario, Quebec, and the District of Columbia. Under an Assignment and Assumption Agreement and a Purchase and Sale Agreement, both dated February 24, 2004, KfW sold and assigned to Merrill Lynch Credit Products, LLC, its rights and obligations under the AISA. Accordingly, the security registrations against Air Canada have been assigned to Merrill Lynch. Pursuant to the CCAA Court's Discharge Order, any registrations that are not properly registered or are no longer required to be registered in each of the Canadian provinces and territories and in the District of Columbia have been removed from the Personal Property Registers and the Register of Personal and Moveable Real Rights, as applicable. Merrill Lynch is the only party with a security interest in the aircraft in each of the relevant jurisdictions. Merrill Lynch intends to complete realization of the aircraft. Merrill Lynch asks the CCAA Court to transfer ownership of the aircraft from Air Canada to Merrill Lynch or its transferee, free and clear of liens, charges and encumbrances. Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada\'s only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada\'s CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors\' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. (Air Canada Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIRGATE PCS: Moody's Assigns B2 Rating to $175M Senior Notes ------------------------------------------------------------ Moody's Investors Service assigned a B2 rating to the proposed $175 million of senior secured floating rate notes due 2011 of AirGate PCS, Inc., and affirmed the company's other ratings as detailed below. The rating outlook is positive. The affected ratings are: * Senior implied rating B3 (affirmed) * Issuer rating Caa1 (affirmed) * $175 million senior secured floating rate notes due 2011 -- B2 (assigned) * $159 million 9.375% senior subordinated secured notes due 2009 -- Caa1 (affirmed) * $141 million senior secured credit facility due 2007/08 -- WR (withdrawn) The senior implied rating of B3 reflects the operating risks facing AirGate and other affiliates of Sprint PCS as the US wireless market matures, as well as the still significant debt leverage of the company. The rating outlook improvement to positive reflects the strong EBITDA growth the company has enjoyed since Moody's last rating action in March 2004, and the expectation that EBITDA will continue to grow as margins expand due to the recent changes to the management and services agreements with Sprint PCS. The B2 rating on the proposed new senior secured notes reflects their priority position in the capital structure, while the Caa1 rating on the 9.375% subordinated notes due 2009 reflect their more junior status. AirGate plans on raising $175 million of 7-year senior secured floating rate notes with the proceeds used to permanently repay its existing senior credit facility ($134.5 million), call its remaining 13.5% senior subordinated discount notes due 2009 ($1.9 million), and hold the remainder in cash for general corporate purposes ($34 million). The transaction will eliminate mandatory amortization requirements of the company as well as take out its restrictive covenants. The transaction extends the company's maturity schedule until 2009 when $159 million of 9.375% second lien notes come due, followed by the proposed senior secured notes in 2011. The company will utilize the large cash position for cash needs (given the absence of a revolver) as well as for future technological and network build out. Moody's notes the risk with this capital structure is that the company may not be quick to reduce the amount of debt on the balance sheet in the absence of a mandatory amortization schedule. The company has stated its intention to begin repaying the 9.375% notes when they are callable on January 1, 2006 and the new notes are callable two years from the date of issuance. Furthermore, AirGate's management has voiced their intention not to use its cash for acquisitions in the future. The company's new business plan calls for substantially higher capital expenditures than the $15 million per year level assumed in the March 2004 rating action. As AirGate only has access to 10 MHz of spectrum in its markets, capital expenditures are likely to remain high as network usage continues to grow and the company returns to a more aggressive subscriber growth strategy. Over the past 12 months, AirGate's management has done a very good job of managing its operations to generate cash and are now past the balance sheet restructuring regime it was operating under. With the successful completion of the senior secured notes, and the amendments to the company's affiliation agreements with Sprint PCS, the company will now have sufficient financial and operating flexibility to focus on reinvigorating sales, subscriber growth and improving churn, while also, improving its financial results, notably its operating margin. In Moody's opinion, financial and operational improvements may not come easily given that competition remains fierce in all of the AirGate's markets- namely from Cingular, Alltel and Triton PCS. The company's business plan also contemplates increasing ARPU (through new products such as Vision and data) in fiscal 2004 and 2005, which will prove difficult especially when combined with better subscriber growth. For the ratings to improve, Moody's must be more confident that AirGate can continue to improve its financial performance and grow its market share of subscribers in light of stiff competition, thus consistently generating double-digit free cash flow to total debt. The ratings could be lowered should AirGate be unable to continue improving its financial performance or subscriber growth and quality fall below expected levels. Based in Atlanta, AirGate PCS is a network partner of Sprint PCS with a franchise territory in the Southeastern US covering over 7 million people. AirGate PCS had LTM revenues of $334 million. ALLIED HOLDINGS: Amex Accepts Plan for Listing Compliance --------------------------------------------------------- The American Stock Exchange notified Allied Holdings, Inc. (Amex: AHI) that it accepted Allied's plan to regain compliance with Section 1003(d) of the Amex Company Guide. Allied submitted the plan to the Amex on September 17, 2004, in response to the Amex's letter, dated September 9, 2004, advising the Company that it is not in compliance with the Amex's continued listing standards as set forth in Section 1003(d) of the Amex Company Guide. The Amex notice requested that Allied submit a plan by Sept. 17, 2004, advising the Amex of any action it has taken, or will take, to bring the Company into compliance with Section 1003(d) of the Amex Company Guide within a maximum of 60 days of the Company's receipt of the notice. As a result of the Amex staff's acceptance of the plan, Allied's listing is being continued in accordance with an extension. Allied will be subject to periodic review by the Amex staff for compliance with its plan during the 60-day extension period. The Amex notice was prompted by Allied's failure to timely file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 primarily as a result of management's continued review of the classification of certain items in its consolidated statements financial statements relating to the Company's financing of insurance premiums. The Company is working diligently to complete its Quarterly Report on Form 10-Q and contemplates that it will file the Form 10-Q with the Securities and Exchange Commission on or before October 25, 2004, the expiration of the 60-day plan period. The Amex notice states that if Allied is not in compliance with the continued listing standards at the conclusion of the plan period, or does not make progress consistent with the plan during the plan period, the Amex may initiate delisting proceedings as appropriate. In that event, the Company may appeal a staff determination to initiate delisting proceedings in accordance with applicable Amex rules. About Allied Holdings Allied Holdings, Inc. is the parent company of several subsidiaries engaged in providing distribution and transportation services of new and used vehicles to the automotive industry. The services of Allied's subsidiaries span the finished vehicle continuum, and include car-hauling, intramodal transport, inspection, accessorization and dealer prep. Allied, through its subsidiaries, is the leading company in North America specializing in the delivery of new and used vehicles. * * * As reported in the Troubled Company Reporter on Aug. 26, Standard & Poor's Ratings Services lowered its senior unsecured debt rating on Allied Holdings, Inc., to 'CCC+' from 'B-'. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on the company and revised the rating outlook to negative from stable. The Decatur, Georgia-based automobile hauling company has about $300 million of lease-adjusted debt. "The downgrade of the company's $150 million senior unsecured notes and outlook change reflect Allied's poor financial performance during the first half of 2004 and management's expectation of a full-year loss. These factors have resulted in additional borrowings under its secured bank facility and a gradual increase in the proportion of secured debt and other secured claims, such as letters of credit drawn under the company's bank facility, that would rank ahead of senior unsecured creditors in the event of bankruptcy," said Standard & Poor's credit analyst Kenneth L. Farer. The rating actions are not related to the company's announcement last week that it would delay filing its second-quarter 2004 10Q report. During the first half of 2004, the company reported higher operating costs associated with fuel prices, employee and retiree benefits, higher-than-expected maintenance costs, and increased insurance reserves. These higher costs resulted in operating income of only $3.2 million for the first half of 2004, compared with $5.8 million for the same period of 2003, and a reduction in key credit measures including EBITDA interest coverage of 1.9x and funds from operations to debt of 14%. Year-over-year costs during the second half of 2004 will be negatively affected by higher fuel prices and the contractual increase in benefit contributions. Ratings on Allied Holdings reflect its: * weak financial flexibility, * aggressively leveraged capital structure, * concentrated end-customer base, and * participation in the capital-intensive trucking industry. Allied's dominant position as the largest North American motor carrier of new vehicles partially offsets these negative credit aspects. Although Allied's specialized fleet delivers approximately 60% of new vehicles in North America, it faces competition from other specialty carriers for short-distance trips and major railroads for long-distance trips. The company also faces continued pricing pressure from the large auto manufacturers, which represent over 85% of the company's revenues. Ratings could be lowered if credit measures deteriorate further due to revenue pressures from decreased automobile production volumes or continued high operating costs and if liquidity becomes further constrained. AMERICAN ENERGY: Forms New Subsidiary to Invest in Commodities -------------------------------------------------------------- American Energy Production, Inc. (OTCBB:AMEP) has begun the process of forming a new subsidiary, Strategic Investments Fund Inc. (pending verification of name), which will become a wholly owned subsidiary of American Energy Production Inc. Strategic Investments Fund Inc.'s purpose will be to invest in commodities such as oil and natural gas that the Company can hedge against its current oil and natural gas production of it two wholly owned subsidiaries Bend Arch Petroleum Inc. and Production Resources Inc. The Company will take advantage of the volatility in the world oil and natural gas markets. The fund will also be able to profit from any future price swings in oil and natural gas. As with any investments these results cannot be guaranteed however, Strategic Investments Fund Inc. will have consultants with years of experience to manage and invest at the appropriate times. Charles Bitters, President of American Energy Production Inc. stated, "Along with our aggressive plans to drill and complete as many oil and natural gas wells as possible in the next few years to take advantage of these high oil and natural gas prices, we feel this is a important step in utilizing all of our assets by forming an Investment Company." About CFSG Consulting For Strategic Growth I, Ltd. takes the position of Corporate Development Consultant with public and private companies. Working side by side with management, CFSG assists client companies in exposing their story to the Wall Street community. This is accomplished through the use of Executive Summaries, Corporate Profiles, Fact Sheets, CEO Interviews, Research Reports, Position Papers, one-on-one cluster group meetings, in addition to presentations to CFSG's database of quality volume investors. Consulting For Strategic Growth I, Ltd. has a July 7, 2004 agreement with AMEP to provide consulting, business advisory, investor relations, public relations and corporate development services to the Company for an initial six-month period. In connection with these services, CFSG prepares press releases, corporate profiles, and other publications on behalf of and regarding the Company. In accordance with this agreement, AMEP pays a cash retainer and issues shares of common stock and warrants each month for these services. Independent of CFSG's receipt of stock compensation, CFSG may choose to purchase the common stock of the company and thereafter liquidate those securities at any time it deems appropriate to do so. To request additional information about the company or to schedule an upcoming meeting in New York please contact Ms. Meryl Orshan of CFSG at 1-800-625-2236. About American Energy Production, Inc. American Energy Production, Inc. -- http://www.americanenergyproduction.com/ -- was founded in 2000 and in 2003 upon the acquisition of certain oil and gas assets, the company entered a new development stage becoming a Business Development Company in January 2004. Activities during this stage include acquisition of subsidiaries, additional assets, developing and implementing a plan to extract oil and gas, acquiring certain rights to and utilizing an oil recovery additive, completing initial sales of oil and gas, and raising capital. The company has determined that its operating model best approximates that of an investment company and intends to make investments into developing businesses in oil and gas related industries. * * * Going Concern Doubt In its Form 10-Q for the quarterly period ended June 30, 2004, filed with the Securities and Exchange Commission, American Energy Production, Inc. reports: "As reflected in the accompanying financial statements, the Company has a net loss of $4,003,511 and net cash used in operations of $261,143 for the six months ended June 30, 2004 and a working capital deficiency of $391,345 and a deficit accumulated during the development stage of $5,713,905 at June 30, 2004. The Company is also in default on certain notes to banks and is in the development stage with minimal revenues. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. "The time required for us to become profitable is highly uncertain, and we cannot assure you that we will achieve or sustain profitability or generate sufficient cash flow from operations to meet our planned capital expenditures, working capital and debt service requirements. If required, our ability to obtain additional financing from other sources also depends on many factors beyond our control, including the state of the capital markets and the prospects for our business. The necessary additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock. "We cannot assure you that we will generate sufficient cash flow from operations or obtain additional financing to meet scheduled debt payments and financial covenants. If we fail to make any required payment under the agreements and related documents governing our indebtedness or fail to comply with the financial and operating covenants contained in them, we would be in default. The financial statements do not include any adjustments to reflect the possible effects on recoverability and classification of assets or the amounts and classification of liabilities which may result from the inability of the Company to continue as a going concern." ARGONAUT GROUP: S&P Affirms BB+ Counterparty Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Argonaut Group Inc. (NASDAQ:AGII) and its insurance company affiliates to positive from stable. Standard & Poor's also said that it affirmed its 'BB+' counterparty credit rating on the holding company and its 'BBB+' counterparty credit and financial strength ratings on the operating companies. "The outlook was revised because of Argonaut's more diversified business mix, continuously improving in underwriting results, and conservative investment strategy," explained Standard & Poor's credit analyst John Iten. "Offsetting factors include capitalization that, though much improved, was still somewhat weak for the rating at year-end 2003 as well as some drag on earnings from losses on business the company has exited," Mr. Iten added. Standard & Poor's expects underwriting results to continue improving in 2004 and 2005, driven by strong results in excess and surplus lines and a decrease in the earnings drag from legacy issues related to Argonaut's runoff workers' compensation book. Premium growth will slow in 2005 but should continue to benefit from the generally favorable pricing environment in casualty excess and surplus lines and the impact of past renewal rights transactions. Despite the strain of new business volume, capital adequacy is expected to improve significantly in 2004, because of earnings and because the company has raised additional capital through trust-preferred issues. ASSISTED LIVING: Gets Indications of Interest in Potential Sale --------------------------------------------------------------- Assisted Living Concepts, Inc. (OTCBB:ASLC), a national provider of assisted living services, has received indications of interest for the potential acquisition of the Company submitted by a number of third parties. As previously announced, the Company established a Special Committee of its Board of Directors to explore various strategic alternatives with the goal of maximizing stockholder value, and the Special Committee retained Jefferies & Company, Inc., as its financial advisor. Following marketing efforts conducted by Jefferies, the Special Committee received several indications of interest with respect to the potential purchase all of the Company's outstanding shares in a cash transaction. The Special Committee is continuing to review these indications of interest and discuss them with the third parties. There can be no assurance that any business combination will be approved by the Special Committee and recommended to the full board of directors, or if approved by the Special Committee, will be approved by the full board, or that a definitive merger or other business combination agreement will be executed or consummated. Recognizing that a transaction with a third party may not be completed, the Special Committee is also continuing to review other strategic alternatives available to the Company, including, among other things, refinancing, sale-leaseback of Company properties, special dividend to Company stockholders and remaining as an independent public corporation. Stockholder Rights Plan The Company also announced that its board of directors has adopted a stockholder rights plan in which preferred stock purchase rights will be distributed as a dividend at the rate of one right for each share of common stock of the Company held by stockholders of record as of the close of business on September 30, 2004. The rights plan is similar to those adopted by many other public companies and is designed to deter coercive takeover tactics, including the accumulation of shares in the open market or through private transactions, and to prevent an acquirer from gaining control of the Company without offering a fair price to all of the Company's stockholders. The rights are intended to enable all stockholders to maximize the value of their investment in the Company. The rights will not prevent a takeover attempt, but are intended to encourage anyone seeking to acquire the Company to negotiate with the board prior to attempting a takeover. The rights plan was adopted in order to help assure, among other things, that any strategic alternatives the Company is currently reviewing would be made available to all of the Company's stockholders. The rights will expire on October 1, 2014. Each right under the rights plan will initially entitle stockholders to purchase a fraction of a share of preferred stock for $60. The rights generally will be exercisable only if a person or group acquires beneficial ownership of 20% or more of the Company's common stock or commences a tender or exchange offer upon consummation of which the person or group would beneficially own 20% or more of the Company's common stock. Under the terms of the stockholder rights plan, existing stockholders as of October 1, 2004 who beneficially own 20% or more of the Company's common stock are grandfathered unless they acquire additional shares. Once exercisable, the rights entitle all stockholders, except the acquiring person or group, to acquire shares of the Company or an acquiring person having a value of twice the exercise price of the right. Assisted Living Concepts, Inc. -- http://www.assistedlivingconcepts.com/- - operates 177 owned and leased assisted living residences with 6,838 units for older adults who need help with the activities of daily living, such as eating, bathing, dressing and medication management. In addition to housing, the Company provides personal care, support services, and nursing services according to the individual needs of its residents, as permitted by state law. This combination of housing and services provides a home-like setting and cost efficient alternative that encourages independence for individuals who do not require the broader array of medical and health services provided by skilled nursing facilities. The Company currently has residences in Oregon, Washington, Idaho, Nebraska, Iowa, Arizona, Texas, New Jersey, Ohio, Pennsylvania, Indiana, Louisiana, Michigan and South Carolina. At June 30, 2004, Assisted Living's balance sheet showed a $14,034,000 working capital deficit, compared to an $11,729,000 deficit at December 31, 2003. AUTOFEST GROUP LLC: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Autofest Group LLC dba Yorktown Mitsubishi 3495 Crompond Road Yorktown Heights, New York 10598 Bankruptcy Case No.: 04-23513 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Yorktown Chevrolet LLC 04-23514 Type of Business: The Company is a dealer of Mitsubishi and Chevrolet cars and trucks. Chapter 11 Petition Date: October 1, 2004 Court: Southern District of New York (White Plains) Judge: Adlai S. Hardin Jr. Debtor's Counsel: Anthony F. Giuliano, Esq. Pryor & Mandelup, LLP 675 Old Country Road Westbury, New York 11590 Tel: (516) 997-0999 Fax: (516) 333-7333 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,000 to $500,000 The Debtor did not file a list of its largest unsecured creditors. BAC SYNTHETIC: Fitch Junks Ratings on Class D & E Notes ------------------------------------------------------- Fitch Ratings has downgraded one class and affirmed four classes of notes issued by BAC Synthetic CLO 2000-1 Limited, a synthetic balance sheet collateralized loan obligation established by Bank of America Securities CLO Corporation II to provide credit protection on a $10 billion portfolio of investment grade, corporate debt obligations. The following ratings actions have been taken: -- $100,000,000 class D notes downgraded to 'C' from 'CC'; -- $265,000,000 class A notes affirmed at 'AAA'; -- $250,000,000 class B notes affirmed at 'A+'; -- $100,000,000 class C notes affirmed at 'BBB-'; -- $25,000,000 class E notes affirmed at 'D'. Under the terms of the transaction, Bank of America had the option to terminate the transaction beginning October 14, 2003, and on each April and October 14 thereafter. Bank of America has elected to terminate the swap on October 14, 2004. Consequently, Bank of America will settle all net losses to date on the reference assets that experienced credit events. At this time, Fitch believes that the class D notes will likely only receive $.874 on the dollar and Fitch intends to downgrade class D to 'DD' at the time of the call to reflect the actual loss of principal on October 14, 2004, when the notes are called. Class E was completely written down on October 14, 2003. Class A, B, and C have sufficient credit enhancement to affirm their respective ratings. BANC OF AMERICA: Fitch Gives Class X-B-5 Certs. Single-B Rating --------------------------------------------------------------- Banc of America Mortgage Securities, Inc., series 2004-8, mortgage pass-through certificates, is rated 'AAA': Groups 1, 3, and 4 certificates (senior certificates): -- $352,811,500 classes * 1-A-1 through 1-A-20, * 1-B-IO, * 1-A-R, * 1-A-MR, * 1-A-LR, * 3-A-1, * 4-A-1, * 15-IO, * 20-IO, and * 15-PO. -- $6,429,000 class X-B-1 'AA'; -- $1,653,000 class X-B-2 'A'; -- $919,000 class X-B-3 'BBB'; -- $735,000 class X-B-4 'BB'; -- $367,000 class X-B-5 'B'. Group 2 certificates: -- $47,696,000 classes 2-A-1 through 2-A-4 'AAA' (group 2 senior certificates) Group 5 certificates: -- $105,429,759 classes 5-A-1, 5-B-IO, 5-IO, and 5-PO ('group 5 senior certificates') 'AAA'. Certificates of groups 1 and 2: -- Class 30-IO (consisting of classes 1-30-IO and 2-30-IO components) 'AAA'; Certificates of all groups: -- $4,730,275 class X-PO consisting of five components rated 'AAA': * classes 1-X-PO; 2-X-PO; 3-X-PO; 4-X-PO; and 5-X-PO). The 'AAA' ratings on the groups 1, 3, and 4 senior certificates reflect the 2.90% subordination provided by: * the 1.75% class X-B-1, * the 0.45% class X-B-2, * the 0.25% class X-B-3, * the 0.20% privately offered class X-B-4, * the 0.10% privately offered class X-B-5, and * the 0.15% privately offered class X-B-6. Classes rated based on their respective subordination: * X-B-1 'AA', * X-B-2 'A', * X-B-3 'BBB', * X-B-4 'BB', * X-B-5 'B', and * X-B-6 is not rated by Fitch. The 'AAA' ratings on the group 2 senior certificates reflects the 4.25% subordination provided by: * the 2.45% class 2-B-1, * the 0.70% class 2-B-2, * the 0.40% class 2-B-3 certificates, * the privately offered 0.30% class 2-B-4, * the privately offered 0.25% class 2-B-5, * the privately offered 0.15% class 2-B-6, and * 2-B-1 through 2-B-6 are not rated by Fitch. The 'AAA' ratings on the group 5 senior certificates reflects the 1.80% subordination provided by: * the 1.20% class 5-B-1, * the 0.20% class 5-B-2, * the 0.15% class 5-B-3 certificates, * the privately offered 0.10% class 5-B-4, * the privately offered 0.05% class 5-B-5, * the privately offered 0.10% class 5-B-6, and * 5-B-1 through 5-B-6 are not rated by Fitch. The ratings also reflect the quality of the underlying collateral, the primary servicing capabilities of Bank of America Mortgage, Inc. rated 'RPS1' by Fitch, and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The transaction is secured by five pools of mortgage loans: * Loan groups 1, 3, and 4 collateralize the groups 1, 3, and 4 certificates; * Loan group 2 collateralizes the group 2 certificates; * Loan group 5 collateralizes the group 5 certificates. The groups 1, 3, and 4 collateral consists of 697 recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with original terms to stated maturities ranging from 180 to 360 months. The weighted average original loan-to-value ratio -- OLTV -- for the mortgage loans in the pool is approximately 68.14%. The average balance of the mortgage loans is $527,092, and the weighted average coupon of the loans is 6.099%. The weighted average FICO credit score for the group is 745. Second homes constitute 9.48%, and there are no investor-occupied properties. Rate/term and cashout refinances represent 23.94% and 16.49%, respectively, of the groups 1, 3 and 4 mortgage loans. The states that represent the largest geographic concentration of mortgaged properties are California (49.87%) and Florida (8.19%). All other states constitute fewer than 5% of properties in the group. The group 2 collateral consists of 100 recently originated, conventional, fixed-rate, fully amortizing, first lien, single- family residential mortgage loans with original terms to stated maturity ranging from 300 to 360 months. The weighted average OLTV for the mortgage loans in the pool is approximately 67.97%. The average balance of the mortgage loans is $506,520, and the weighted average coupon of the loans is 6.229%. The weighted average FICO credit score for the group is 740. Second homes constitute 5.68%, and there are no investor-occupied properties. Rate/term and cashout refinances represent 24.28% and 23.43%, respectively, of the groups 2 mortgage loans. All of the mortgaged properties in group 2 are located in the State of California. The group 5 collateral consists of 257 recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to two-family residential mortgage loans, with original terms to stated maturity ranging from 120 to 360 months. The weighted average OLTV for the mortgage loans in the pool is approximately 65.43%. The average balance of the mortgage loans is $417,792, and the weighted average coupon of the loans is 6.735%. The weighted average FICO credit score for the group is 734. Second and investor-occupied homes constitute 7.08% and 2.03%, respectively. Rate/term and cashout refinances represent 51.03% and 20.29%, respectively, of the group 5 mortgage loans. The states that represent the largest geographic concentration of mortgaged properties are: * California (38.95%), * Florida (12.48%), * Texas (8.21%), and * Virginia (7.59%). All other states constitute fewer than 5% of properties in the group. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com. Banc of America Mortgage Securities, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as multiple separate real estate mortgage investment conduits -- REMICs. Wells Fargo Bank, National Association will act as trustee. BE AEROSPACE: 18.4M Share Offering Cues S&P to Affirm B+ Rating --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on BE Aerospace Inc. to stable from negative. At the same time, Standard & Poor's affirmed its ratings, including the 'B+' corporate credit rating, on the company. About $880 million of debt is outstanding. "The outlook revision is based on a meaningful improvement in BE Aerospace's very weak financial profile following an equity offering of 18.4 million shares of its common stock (including overallotments) at $9 per share," said Standard & Poor's credit analyst Roman Szuper. "The rating action also incorporates expectations that the firm's earnings and cash generation will continue to gradually strengthen, benefiting from recovering air traffic, somewhat better performance of its airline customers, and modest recovery in the business jet market," the analyst added. The proceeds from this offering, along with up to $50 million of cash on hand, are intended to redeem 9.5% $200 million senior notes due 2008. Still, credit protection measures will remain weak, with debt to capital in the low-80% area, debt to EBITDA around 7.5x, and EBITDA interest coverage below 1.5x on a pro forma basis; a noticeable improvement is anticipated over the intermediate term. The ratings on Wellington, Florida-based BE Aerospace reflect: -- risks associated with difficult, albeit improving, conditions in the airline industry, -- the firm's primary customer base; -- high debt levels; -- unprofitable operations; and -- subpar credit profile. Those factors are partly offset by the company's position as: -- largest participant in the commercial aircraft cabin interior products market, -- leading share of the business on corporate jets, -- major presence in aftermarket distribution of aerospace fasteners, -- efficient operations, and -- sufficient liquidity. The firm's large -- $4.5 billion -- installed base typically generates demand for generally higher-margin recurring retrofit, refurbishment, and spare parts -- about 60% of revenues, with the balance from products installed on new aircraft. Gradually improving conditions in the airline and business jet sectors, BE Aerospace's leading market shares, a lower cost structure, and expected better earnings should gradually strengthen key credit protection measures to levels consistent with the ratings. BRIDALS BY KAUFMAN'S: Case Converting to Chapter 7 Liquidation -------------------------------------------------------------- The Honorable Bernard Markovitz entered an order Friday converting Bridals By Kaufman's chapter 11 proceeding to a chapter 7 liquidation, subject to reconsideration if any objection is filed this week. The century-old, 21-store retail chain couldn't obtain DIP financing or strike any deal with its secured creditors to access cash collateral. The Debtor closed its retail stores a couple of days before filing for bankruptcy protection, triggering a lawsuit in the Commonwealth Court of Pennsylvania by the Attorney General. Judge Markovitz allowed the stores to open for a short four-day period late last month to allow brides who'd paid for their dresses to retrieve the garments if they were in the stores. Wedding dress and bridal gown retailer Bridals By Kaufman's aka Kaufman's Wedding World aka Wedding World filed for chapter 11 protection (Bankr. W.D. Pa. Case No. 04-32015) on Sept. 10, 2004. Salene R. Mazur, Esq., at Campbell & Levine LLC, represents the Debtor. Total assets and debts were in the $1 to $10 million range. BROOKFIELD PROPERTIES: S&P Puts BB+ Rating on C$150M Pref. Shares ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'P-3(High)' Canadian national scale and 'BB+' global scale preferred share ratings to Brookfield Properties Corp.'s C$150 million -- with an underwriter's option of up to an additional C$50 million -- 5.20% cumulative class AAA redeemable preferred shares, series K. At the same time, Standard & Poor's affirmed its ratings outstanding on the company, including the 'BBB' long-term issuer credit rating. The outlook is stable. "Brookfield benefits from the strong quality of its assets, its long-term leases to good quality tenants, a debt maturity schedule that matches the long-term nature of the lease schedule, and adequate financial flexibility," said Standard & Poor's credit analyst Ronald Charbon. These credit strengths are mitigated by: -- a high degree of concentration in the New York, New York, market; -- a more highly levered balance sheet compared with those of its peers; -- moderate coverage levels; and -- an encumbered commercial property portfolio The proceeds from the preferred share issue primarily will be used to pay down existing floating-rate preferred shares and to reduce credit lines. The company's fixed-charge coverage is expected to remain relatively unchanged from its 2003 year-end level of 1.52x. The AAA class of preferred shares is subordinate to Brookfield's class A and class AA preferred shares. Nevertheless, Standard & Poor's generally does not distinguish between different series of subordinated obligations unless there is a specific reason to believe that deferral of payment is more likely. In the case of Brookfield, the prior-ranking preferred shares are not of a size to affect the likely payment of the AAA class. Brookfield has a portfolio of 47 commercial properties of above- average asset quality largely in central business district locations that contain about 46 million square feet of space. Brookfield also operates a real estate service business. Although Brookfield is a Canadian-domiciled corporation, the company is headquartered in New York, and an increasing proportion of funds from operations -- FFO -- are generated from properties located in the U.S. The key markets where the company is active are: -- New York; -- Toronto, Ontario; -- Boston, Massachusetts; -- Calgary, Alta; -- Denver, Colorado; and -- Minneapolis, Minnesota Brookfield's portfolio is 93.9% leased at rents, which are currently about 4% below market--a cushion that has been eroding as the current softening of the commercial office markets is putting downward pressure on rents. There is also some concentration to the portfolio, as 24 properties represent the bulk of total book value and New York City contains 11.3 million square feet of space in the Brookfield portfolio and contributes about 52% of FFO. Nevertheless, the overall lease maturity schedule is manageable, with less than 4% of office space expiring in each of 2004, 2007, and 2009. In 2005 and 2008, expiries peak at 6.1% and 6.0%, respectively, and 2006 expiries are 4.7%. The company's average lease term is 10 years, with New York-based tenants at 12 years. CALPINE CORP: Fitch Downgrades Senior Unsecured Notes ----------------------------------------------------- Fitch Rates Calpine Corp.'s: -- $785 million first priority senior secured notes due 2014 'BB-'; -- $736 million senior unsecured convertible notes due 2014 'CCC+'; -- outstanding second priority senior secured notes 'B+'; -- outstanding senior unsecured notes to 'CCC+' from 'B-'. Calpine's outstanding High Tides trust preferred securities are unchanged at 'CCC'. The Rating Outlook for Calpine remains Stable. The 'BB-' rating for Calpine's first priority secured debt reflects the substantial collateral protection provided by the underlying assets securing these obligations. The notes are secured by first priority liens on substantially all of the assets owned directly by Calpine, including natural gas reserves and certain generating facilities. The underlying value of Calpine's remaining 472 billion cubic feet equivalent -- Bcfe -- of proved natural gas reserves alone provides meaningful coverage of note principal even under a stressed valuation scenario. Fitch notes that Calpine is required to offer to prepay first priority note principal in the event any assets comprising the security package are divested. The lowering of Calpine's second priority secured notes and senior unsecured debt reflects weaker-than-anticipated consolidated cash flow from operations, as well as reduced recovery prospects for these creditor classes. Specifically, these securities are subordinated to a moderately higher level of first priority debt (i.e. $785 million versus $500 million, including letters of credit). In addition, due to Calpine's recent sale of 341 Bcfe of Canadian- and Rockies-based gas reserves and subsequent re-issuance of first priority debt at a higher level, there is very little residual value from gas reserves available to second lien creditors. Accordingly, ultimate recovery has become more dependent on the residual value of less liquid merchant power plant assets. An additional factor diluting asset coverage for unsecured creditors is Calpine's plan to prepay outstanding trust preferred securities, with proceeds derived from the recent convertible debt issuance, which ranks pari passu with Calpine's existing senior unsecured noteholders. From an operational standpoint, Calpine's cash flow performance remains below expectations. For the 12-month period ended June 30, 2004, operating EBITDA generated by Calpine's core power producing activities dwindled to approximately $1.2 billion despite bringing a significant level of new plant capacity on-line during the period. Although nonrecurring gains on recent asset sales and contract monetizations have offset part of the shortfall in operating performance, these transactions have left Calpine with greater exposure to both higher gas prices and merchant power sales. The Stable Rating Outlook reflects Calpine's successful track record of dealing with ongoing debt maturities and the company's reasonable prospects to meet its year-end 2004 available liquidity target of $3.0 billion. Fitch anticipates that Calpine will dedicate a meaningful portion of net proceeds generated from this liquidity program to repurchase outstanding senior unsecured notes, with a particular focus on obligations maturing in 2008 and beyond. Importantly, Calpine's remaining construction program should not result in a significant cash drain, as most remaining projects are backed by long-term contracts and consequently should be permanently funded with nonrecourse project financing. Fitch will continue to monitor Calpine's progress in executing upon its planned liquidity program and will revisit Calpine's current outlook in the event the company falls materially short of its debt reduction plans. CENTENNIAL COMMS: Completes $19.5 Million AT&T Spectrum Purchase ---------------------------------------------------------------- Centennial Communications Corp. (NASDAQ:CYCL) completed its option exercise and purchased 10MHz of spectrum from AT&T Wireless, covering an aggregate of approximately 4.1 million population equivalents contiguous to its existing properties in Michigan and Indiana. The total price of the spectrum purchase was approximately $19.5 million. In addition, the Company also completed its sale of the Indianapolis and Lafayette, Indiana licenses it acquired from AT&T Wireless to Verizon Wireless for $24 million in cash. "This targeted expansion substantially improves our competitive advantage and Midwest footprint, while leveraging the strength of our brand and superior customer experience," said Michael J. Small, Chief Executive Officer. "The new territory is an attractive growth opportunity in its own right and enables us to better market our services to more of our existing footprint. It represents the natural evolution of our successful efforts to improve our retail margins in a fashion that positions us for future growth." Transaction Highlights -- Net effect of both transactions is approximately 2.2 million incremental POPs acquired and $4.5 million cash received -- 1.4 million POPs to be built in Midwest cluster by calendar year-end 2005, no current plans to build-out remaining licenses -- The Company expects start up adjusted operating income losses relating to the new build will be approximately $10 million over the next two years -- The Company expects capital expenditures relating to the new build will be approximately $35 million over the next two years A map showing the location of the acquired licenses and Centennial's existing footprint is available on the Investor Relations section of Centennial's website at: http://media.corporate-ir.net/media_files/NSD/CYCL/presentations/map.pdf About Centennial Centennial Communications Corporation is one of the largest independent wireless telecommunications service providers in the United States and the Caribbean with approximately 19.5 million Net Pops and over one million wireless subscribers. Centennial's U.S. operations have approximately 8.3 million Net Pops in small cities and rural areas. Centennial's Caribbean integrated communications operation owns and operates wireless licenses for approximately 11.2 million Net Pops in Puerto Rico, the Dominican Republic and the U.S. Virgin Islands, and provides voice, data, video and Internet services on broadband networks in the region. Welsh, Carson Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial. For more information regarding Centennial, please visit the Company's Web sites at: * http://www.centennialwireless.com/ * http://www.centennialpr.com/and * http://www.centennialrd.com/ At May 31, 2004, Centennial Communications' balance sheet showed a $548,641,000 stockholders' deficit, compared to a $567,343,000 deficit at May 31, 2003. CLARK GROUP INC: Case Summary & 79 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Clark Group, Inc. fdba Clark Sprinkler Fabrication of NCA, Inc. fdba Clark Sprinkler Fabrication of Pennsylvania, Inc. fdba Clark Sprinkler Fabrication, Inc. fdba Clark Sprinkler Supply Company fdba Clark Sprinkler Supply of Pennsylvania, Inc. dba Nationwide Fire Supply fdba Cook Fire Supply, Inc. dba Clark Sprinkler Supply Company, NW fdba Fire Protection Supply, Inc. fdba Johnson Fire Supply, Inc. fdba Management Controls of Missouri, Inc. fdba Missouri Fire & Security, Inc. fdba Missouri Fire Systems, Inc. fdba Missouri Kansas Fire Supply, Inc. fdba Ryan Fire Supply fdba Southern Sprinkler Supply, Inc. 2086 Westport Center Drive PO Box 28488 Saint Louis, Missouri 63146 Tel: (314) 569-2184 Bankruptcy Case No.: 04-52536 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Clark Sprinkler Fabrication of KC-MO, Inc. 04-52555 Firefox Supply Corporation 04-52559 Clark Sprinkler Fabrication of Indiana, Inc. 04-52560 Type of Business: The Company provides a comprehensive line of fire protection products, the highest quality service and expert knowledge on fire protection products. See http://www.clarksprinkler.com/ Chapter 11 Petition Date: October 1, 2004 Court: Eastern District of Missouri (St. Louis) Judge: James J. Barta Debtor's Counsel: Bonnie L. Clair, Esq. Summers, Compton, Wells & Hamburg, PC 8909 Ladue Road Saint Louis, Missouri 63124 Tel: (314) 991-4999 Fax: (314) 991-2413 Total Assets Total Debts ------------ ----------- Clark Group, Inc. $10 M to $50 M $10 M to $50 M Clark Sprinkler Fabrication of KC-MO, Inc. $500,000 to $1 M $10 M to $50 M Firefox Supply Corporation $500,000 to $1 M $10 M to $50 M Clark Sprinkler Fabrication of Indiana, Inc. $500,000 to $1 M $1 M to $10 M A. Clark Group, Inc.'s 20 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Allied Tube & Conduit Trade Payable $1,377,740 Department Ch 10415 Palatine, Illinois 60055 Tyco Fire Products Trade Payable $1,237,628 451 North Cannon Avenue Lansdale, Pennsylvania 19446 Anvil International, Inc. Trade Payable $698,646 Department Ch Box 10414 Palatine, Illinois 60055-0414 State Pipe & Supply Trade Payable $279,878 File 55618 Los Angeles, California 90074 Hickman Pipe LLC Trade Payable $196,136 944 Indian Peak Road Rolling Hills, CA 90274 Board Of Equalization Sales Tax $169,643 PO Box 3360 Jefferson City, Missouri 65105 Ames Company, Inc. Trade Payable $134,133 PO Box 60601 Charlotte, NC 28260 Wheatland Tube Company Trade Payable $106,356 Bull Moose Tube Company Trade Payable $61,600 PO Box 955211 Saint Louis, Missouri 63195 Sierra Craft Trade Payable $78,991 Spears Manufacturing Co. Trade Payable $77,055 Wilkins Regulator Co. Trade Payable $68,442 Elkhart Brass Mfg. Co. Trade Payable $57,771 System Sensor Trade Payable $51,956 Pennsylvania Department of Sales Tax $49,098 Revenue Fire Protection Products Trade Payable $47,893 Fire Link Trade Payable $47,645 Wilson Supply Trade Payable $44,997 Kidde Fire Fighting Trade Payable $45,579 Water Products Trade Payable $43,730 B. Clark Sprinkler Fabrication of KC-MO, Inc.'s 20 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Allied Tube & Conduit Trade Payable $183,850 Department Ch 10415 Palatine, Illinois 60055 Hickman Pipe LLC Trade Payable $168,025 944 Indian Peak Road Rolling Hills, CA 90274 Anvil International, Inc. Trade Payable $124,009 Department Ch Box 10414 Palatine, Illinois 60055-0414 Tyco Fire Products Trade Payables $65,990 Wheatland Tube Co Trade Payable $46,759 Ames Trade Payable $27,130 Argco Trade Payable $14,554 Mid-States Supply Co., Inc. Trade Payable $13,603 Wilkins Trade Payables $10,779 Elkhart Manufacturing Co. Trade Payable $7,667 Spears Trade Payable $6,678 Potter Electric Signal Trade Payable $5,653 Bavco Trade Payable $5,601 Fire Protection Products Inc. Trade Payable $5,092 Milwaukee Valve Co., Inc. Trade Payable $4,464 Missouri-Kansas Supply Co. Trade Payable $4,416 Spx Valves & Controls/Cbm Trade Payable $4,347 System Sensor Trade Payable $4,093 Hot Box Trade Payable $2,741 Iowa Fittings Company Trade Payable $2,553 C. Firefox Supply Corporation's 19 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Anvil International, Inc. Trade Payable $232,252 Department Ch Box 10414 Palatine, Illinois 60055-0414 Allied Tube & Conduit Trade Payable $178,711 Department Ch 10415 Palatine, Illinois 60055 Scott Sandbox Arbitration Case $173,000 c/o Michael I. Leonard, Esq. Meckler, Bulger & Tilson 123 North Wacker Drive Suite 1800 Chicago, Illinois 60606 Tyco Fire Products Trade Payables $28,353 Elkhart Manufacturing Co. Trade Payable $16,122 Gladstone Group Lessor of Premises $13,749 Illinois Department of Sales Tax $13,297 Revenue Potter Electric Signal Trade Payable $6,265 Fire Protection Products Inc. Trade Payable $4,167 Talco Fire Systems Trade Payables $2,435 Richmond & Associates, Inc. Trade Payable $1,725 Ames Company, Inc. Trade Payable $829 Jenny Products Trade Payables $793 Milwaukee Valve Co., Inc. Trade Payable $426 United Brass Trade Payables $401 System Sensor Trade Payable $394 M K Morse Company Trade Payable $321 Firematic Sprinkler Devices Trade Payable $95 Larsens Manufacturing Co. Trade Payable $58 D. Clark Sprinkler Fabrication of Indiana, Inc.'s 20 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Allied Tube & Conduit Trade Payable $172,903 Department Ch 10415 Palatine, Illinois 60055 Wheatland Tube Trade Payable $141,807 PO Box 92690 Chicago, Illinois 60675 Anvil International Inc. Trade Payable $96,272 Department Ch-Box 10414 Palatine, Illinois 60055-0414 Hickman Pipe LLC Trade Payable $93,760 Reliable Auto Spark/Lombar Trade Payable $18,743 Simplex Grinnell Fabrication Trade Payable $13,919 Plant McJunkin Corporation Trade Payable $11,746 Ohio Department of Taxation Sales Tax $10,301 Indiana Department of Sales Tax $8,246 Revenue Illinois Department of Sales Tax $7,959 Revenue Wilkins Regulator Co. Trade Payable $5,898 Threaded Rod Company Trade Payable $5,311 Ames Co., Inc. Trade Payable $4,727 Complete Finish Trade Payable $4,680 Argco Trade Payable $3,858 Tyco Fire Products Trade Payable $2,296 R&R Pipe Valve Trade Payable $1,372 Comptroller of Maryland Sales Tax $1,164 State of Michigan Sales Tax $929 Department of Treasury Napac Inc. Trade Payable $826 CLEARLY CANADIAN: Extends Funding Under Quest Capital Bridge Loan ----------------------------------------------------------------- Clearly Canadian Beverage Corporation (OTCBB:CCBC) (TSX:CLV) has elected to extend its loan facility with Quest Capital Corp. As referred to in Clearly Canadian's previous news releases, the Company acquired bridge loan funding in the amount of Cdn$1,350,000 from Quest Capital Corp. The bridge loan was for an initial term of 6 months (maturing October 4, 2004) with the Company having the right to extend the loan for a further 6 months. During the initial 6 months of the loan, the Company paid down the loan by Cdn $685,253, thus leaving the current principal balance of Cdn$664,747 which, as a result of the extension, will now be due on April 4, 2005. As consideration for the extension of the loan, Clearly Canadian has issued 370,000 shares to Quest Capital Corp. Of these, 202,500 shares are held in escrow and will be returned to the Company for cancellation if the bridge loan has been repaid in full on or before November 18, 2004. Concurrently with the extension of the Quest loan, a separate loan provided to the Company by certain directors and officers for Cdn$500,000 has also been extended for a further 6 months (maturing April 4, 2005). In connection with such extension, the Company will issue an aggregate of 165,000 shares to the directors and officers who provided such loan facility. At this time, the Company is also pursuing additional private financing to support the Company's operations and to allow for more aggressive marketing and selling efforts for its beverage products, and thereafter, the Company may also still proceed with a public offering of its securities. About Clearly Canadian Based in Vancouver, British Columbia, Clearly Canadian markets premium alternative beverages, including Clearly Canadian(R) sparkling flavored water, Clearly Canadian O+2(R) oxygen-enhanced water beverage and Tre Limone(R) sparkling lemon drink which are distributed in the United States, Canada and various other countries. Additional information on Clearly Canadian may be obtained on the world wide web at http://www.clearly.ca/ * * * Going Concern Doubt In its Form 20-F for the fiscal year ended December 31, 2003, filed with the Securities and Exchange Commission, Clearly Canadian Beverage Corporation reported a working capital deficit of $2,660,000 at December 31, 2003, compared to a working capital surplus of $24,000 at December 31, 2002. Due to the Company's recurring losses from operations, net deficit and lack of working capital for the Company's planned business activities, there is substantial doubt as to the Company's ability to continue as a going concern. The Company has recognized the decrease in working capital and cash resources in recent years and has taken steps intended to improve its working capital position. In that respect, in 2001 the Company appointed McDonald Investments Inc. as its investment banker and financial advisor to evaluate various strategic options, including possible divestitures of certain assets as well as acquisition opportunities. To this end, in April 2001, the Company's U.S. subsidiary, CC Beverage, completed the sale of its home and office water business assets. The total sales proceeds were $4.8 million, which was used to pay down certain debt obligations and improve the Company's working capital position. Also, in February 2002, the Company's U.S. subsidiary, CC Beverage, finalized the sale of certain production facility assets and a bottling plant lease located in Burlington, Washington, as well as its Cascade Clear water business and its private label co- pack business to Advanced H2O, Inc. of Bellevue, Washington. AH2O acquired CC Beverage's production facility assets for $4,348,600, which purchase price included $2,130,000 in cash, the assumption of long-term indebtedness of approximately $2,155,000 and the assumption of certain capital equipment leases of $63,600. The proceeds from the sale of the various assets to AH2O were used for general working capital purposes, to reduce debt and to provide additional funding for the marketing and distribution of the Company's beverages. COVANTA ENERGY: Oct. 26 Fixed as Administrative Claims Bar Date --------------------------------------------------------------- As previously reported, Covanta Lake II, Inc., asked the United States Bankruptcy Court for the Southern District of New York to establish a deadline for filing administrative claims against its estate. Covanta Lake II proposes 5:00 p.m., prevailing Eastern Time on October 20, 2004, to be the last date upon which all applications for: (a) actual and necessary costs and expenses incurred pursuant to Sections 503(b), 507(a)(1), 507(b) or 1114(e)(2) of the Bankruptcy Code; or (b) any substantial contribution claim by any creditor or party-in-interest for reasonable compensation for services rendered pursuant to Sections 503(b)(3), (4), or (5), must be filed with the Bankruptcy Court. Administrative Expense Claims exclude: * claims for fees by the United States Trustee; * postpetition trade liabilities incurred and payable in the ordinary course of business by Covanta Lake II; or * fees and expenses incurred by: -- retained professionals; -- persons that Covanta Lake II employs or those who serves as its independent contractors in connection with its reorganization efforts; or -- fees and expenses incurred by Southeast Bank, National Association, the indenture trustee for the Series 1993A Recovery Industrial Development Refunding Revenue Bonds issued by Lake County, Florida, under an Indenture Trust dated October 1, 1993. * * * Judge Blackshear sets October 26, 2004, as Covanta Lake II, Inc.'s Administrative Expense and Substantial Contribution Claims Bar Date. 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. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) CWMBS INC: Fitch Places B Rating on Class 1-B3 Trust Certificate ---------------------------------------------------------------- CWMBS, Inc.'s reperforming loan REMIC trust certificates, series 2004-R1, are rated: -- Classes 1A-F, 1A-S, 2A, 3A, and PT (senior certificates, $599,537,011) 'AAA'; -- Classes 1M ($2,588,000) and 2M ($1,433,000) 'AA'; -- Classes 1B-1 ($2,189,000) and 2B-1 ($1,211,000) 'A'; -- Classes 1B-2 ($1,792,000) and 2B-2 ($1,212,000) 'BBB'; -- Privately offered class 1-B3 ($2,986,000) 'B'. The 'AAA' rating on the classes 1A-F and 1A-S senior certificates reflects the 3.00% subordination provided by: * the 0.65% class 1M, * the 0.55% class 1B-1, * the 0.45% class 1B-2, * the 0.75% privately offered class 1B-3, * the 0.25% privately offered class 1B-4 (not rated by Fitch), and * the 0.35% privately offered class 1B-5 (not rated by Fitch). Collectively, these classes represent the Category One pool. The 'AAA' rating on the classes 2A, 3A, and PT senior certificates reflects the 3.15% subordination provided by: * the 0.65% class 2M, * the 0.55% class 2B-1, * the 0.55% class 2B-2, * the 0.45% privately offered class 2B-3 (not rated by Fitch), * the 0.40% privately offered class 2B-4 (not rated by Fitch), and * the 0.55% privately offered class 2B-5 (not rated by Fitch). Collectively, these classes represent the Category Two pool. In addition, the ratings on the certificates reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing), rated 'RMS2+' by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The certificates represent an ownership interest in a group of reperforming, fully amortizing mortgage loans. The pool consists of fixed-rate mortgage loans totaling $618,421,552, as of the cut- off date, September 1, 2004, secured by first liens on one- to four-family residential properties. The loans are insured by the Federal Housing Administration or partially guaranteed by the U.S. Department of Veterans Affairs or the Rural Housing Service. As of the cut-off date of September 1, 2004, the Category One mortgage loans had a weighted average coupon -- WAC-- of 7.027%, weighted average remaining term -- WAM -- of 310 months, and an average principal balance of $87,369. The Category One loans represent 82.1% FHA insured loans and 14.6% and 3.3% VA- and RHS- guaranteed, respectively. The three states that represent the largest portion of mortgage loans for Category One are: * Texas (11.5%), * Florida (7.7%), and * Georgia (6.5%). As of the cut-off date of Sept. 1, 2004, the Category Two mortgage loans had a weighted average coupon -- WAC -- of 7.138%, weighted average remaining term -- WAM -- of 307 months, and an average principal balance of $89,364. The Category Two loans represent 85.2% FHA insured loans and 14.8% VA guaranteed loans. The three states that represent the largest portion of mortgage loans for Category Two are: * Texas (14%), * Georgia (6.6%), and * California (6.2%). None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as a real estate mortgage investment conduit -- REMIC. DEL GLOBAL: Inks Final Settlement Pact Resolving RFI Investigation ------------------------------------------------------------------ Del Global Technologies Corp. entered into a settlement agreement on September 30, 2004 with the U.S. Government regarding settlement of the civil and criminal aspects of the previously announced U.S. Department of Defense investigation of Del Global's subsidiary, RFI Corporation. In connection with this settlement, Del Global paid fines and restitution to the U.S. Government of $5.0 million and RFI will enter this week a criminal guilty plea to a single count conspiracy charge pursuant to the settlement agreement. The settlement is subject to court approval. There can be no assurance that the court will approve the settlement. In addition, Del Global has engaged in negotiations with the Defense Logistics Agency, its primary government customer, regarding Del Global's present responsibility and its ability to continue to contract with the U.S. Government. Del Global is hopeful that an administrative resolution of this issue can be achieved that would allow Del Global to continue doing business with the Government. No assurance can be given that Del Global and the Defense Logistics Agency will be able to resolve the issue in this manner. In addition, Del Global and the U.S. Government must execute a written compliance agreement. No assurance can be given that the Company and the U.S. Government will enter into any such agreement. Walter F. Schneider, President and CEO of Del Global, commented, "We are delighted to bring this matter to a close and, in doing so, remove another layer of investor uncertainty." Asset Sales In addition, Del Global reported on the progress of the previously announced strategic alternatives review. Del Global said it has sold its High Voltage Power business to Spellman High Voltage Electronics Corporation for a purchase price of approximately $3.1 million, plus the assumption of approximately $0.8 million of liabilities. This sale was completed on October 1, 2004. Del Global has signed a non-binding letter of intent with a financial buyer for the sale of Del Global's RFI Corporation subsidiary and has signed a non-binding letter of intent with a financial buyer for the sale of Del Global's Medical Systems Group. Del Global intends to call a special meeting of stockholders to seek approval under New York law for the sale of the Medical Systems Group in the event a definitive agreement is entered into for such sale. There can be no assurance that these non-binding letters of intent will result in the consummation of the sale of RFI or the Medical Systems Group or that the strategic alternatives process initiated by Del Global will lead to any other transactions. Del Global may seek stockholder approval of a plan of liquidation, however, the Board of Directors of Del Global has not yet approved any plan of liquidation. Any proceeds that may be received by stockholders of Del Global as a result of any plan of liquidation may be greater or less than the current market price of the common stock of Del Global. About the Company Del Global Technologies Corp. is primarily engaged in the design, manufacture and marketing of cost-effective medical imaging and diagnostic systems consisting of stationary and portable x-ray systems, radiographic/fluoroscopic systems, dental imaging systems and proprietary high-voltage power conversion subsystems for medical and other critical industrial applications. Through its RFI subsidiary, Del Global manufactures electronic filters, high voltage capacitors, pulse modulators, transformers and reactors, and a variety of other products designed for industrial, medical, military and other commercial applications. DENNINGHOUSE INC: CCAA Monitor Says It's Found a Buyer ------------------------------------------------------ Denninghouse Inc. (TSX: DEH), operator of Buck or Two and Quebec- based Dollar Ou Deux stores across Canada, said the CCAA Monitor, RSM Richter, has now identified what it believes to be the best offer for Denninghouses's franchise operations. Neither Denninghouse nor RSM Richter identified the stalking-horse bidder for the 300-store retail chain. On August 16, 2004, the Ontario Superior Court of Justice issued an order granting the Company protection pursuant to the Companies' Creditors Arrangement Act. RSM Richter Inc. was appointed the CCAA Monitor. Pursuant to a sale process approved by the terms of the Initial Order, prospective buyers were required to submit offers to the Monitor by September 20, 2004. The Monitor received a number of offers by the deadline. On September 27, 2004, the Monitor made a recommendation to the Independent Board of Directors as to the best offer and following consideration of the key aspects of the various offers; the Independent Board confirmed its agreement with the Monitor's recommendation. The Monitor intends to work with the party that submitted this offer over the next several weeks to close a transaction. The Monitor has advised that the prospective purchaser's offer, as currently drafted, envisions that the entire franchise network would be acquired and continued. This process includes seeking the Court's approval of the recommended transaction. Obtaining the Court's approval and closing the transaction is projected to take three to four weeks. For further information about the sale process, contact: Adam Zalev RSM Richter Inc. Telephone (416) 932-6005 - or - William (Bill) Thomas Executive Vice President & Chief Financial Officer Denninghouse Inc Telephone (905) 738-3180 wthomas@denninghouse.com The results of the Court approved sales process has revealed a range of values for the assets of the Company which suggest that there is no value to support equity in the Company, taking into account its outstanding liabilities to its creditors. About Denninghouse Inc. Denninghouse Inc. operates stores in 10 provinces under the Buck or Two, Dollar Ou Deux banners. The stores sell thousands of items, generally at fixed price points of $2.00 or less with selective value items above $2.00, and offer wide categories of products and everyday items at value prices. The Company and certain of its subsidiaries has voluntarily sought and obtained protection pursuant to the Companies' Creditors Arrangement Act on Aug. 16, 2004. RSM Richter Inc. (Richter) was appointed the CCAA Monitor. EAGLEPICHER HOLDINGS: Revises Full F.Y. 2004 Earnings Guidance -------------------------------------------------------------- EaglePicher Holdings, Inc. and EaglePicher Incorporated are revising downward their earnings guidance for the second half and full fiscal year 2004. EaglePicher expects to generate revenues of between $710 and $715 million for the year ended November 30, 2004, $5 to $10 million below its prior guidance, and Adjusted EBITDA of $86 to $90 million, down from its prior guidance of $96 to $100 million. In addition, its Net Debt for its full fiscal year is expected to be $395 to $405 million, up from its prior forecast of $375 to $380 million. On a preliminary, unaudited basis, third quarter revenues were $179 million, $2 million above prior guidance, and third quarter Adjusted EBITDA was $18.3 million, down $2.2 million from prior guidance of $20.5 million. Net Debt as of August 31, 2004 is expected to be approximately $402 million. The lower than expected third quarter and forecasted full year Adjusted EBITDA amounts are primarily due to: (i) further delays and operational issues in starting up its China sourcing network and closing two U.S. production facilities in its Hillsdale Segment; (ii) recently announced fourth quarter production cutbacks by U.S. automotive OEM's, and additional significant metal price increases in the third quarter, which are expected to continue through the end of its fiscal year, impacting its Hillsdale and Wolverine segments; (iii) temporary hurricane related plant closures in its Wolverine segment; (iv) additional losses in its EaglePicher Horizon joint venture due to the continued delay in launching its product line; (v) delays in implementing automated battery production capacity that are impacting sales and operational efficiency in its Power segment; and (vi) higher severance and legal expenses. The increase in forecasted Net Debt is due to the lower forecasted earnings described above and the delays in reducing inventory bottlenecks in its Power segment due to the unavailability of the planned automation production capacity. Further Information and Q3 2004 Earnings Conference Call The Company will be filing its third quarter Form 10-Q on or about October 15, 2004, which will contain a more detailed discussion of its financial condition and results of operations and Management's Discussion and Analysis of Financial Condition and Results of Operations. On Wednesday October 20, 2004, EaglePicher will also host a conference call to discuss its progress and performance for the quarter and the outlook for the future, followed by a question and answer session. The conference call, which will include forward- looking statements, is scheduled to begin at 11:00 am Eastern Time (8:00 am Pacific). The conference call may be accessed by dialing (888) 288-0246 or +1 (706) 679-3901 for international callers a few minutes prior to the scheduled start time. Callers should ask for the EaglePicher Third Quarter Investor Call hosted by Tom Scherpenberg, Vice President and Treasurer. A copy of the presentation materials will also be available on its internet web site prior to the start of the call at http://www.eaglepicher.com/under About EaglePicher / Investor Relations / Presentations / Q3 2004 Investor Call Presentation. A replay of the conference call will be available following the call. The replay can be accessed by dialing (800) 642-1687 or +1 (706) 645-9291 for international callers. The conference ID number for the replay is 1307540. About the Company EaglePicher Incorporated, founded in 1843 and headquartered in Phoenix, Arizona, is a diversified manufacturer and marketer of innovative, advanced technology and industrial products and services for space, defense, environmental, automotive, medical, filtration, pharmaceutical, nuclear power, semiconductor and commercial applications worldwide. The company has 4,000 employees and operates more than 30 plants in the United States, Canada, Mexico, the U.K. and Germany. Additional information on the company is available on the Internet at http://www.eaglepicher.com/ EaglePicher Holdings, Inc. is the parent of EaglePicher Incorporated. EaglePicher(TM) is a trademark of EaglePicher Incorporated. At May 31, 2004, EaglePicher Holdings' balance sheet showed an $89,680,000 stockholders' deficit, compared to a deficit of $90,207,000 at November 30, 2003. ENRON CORP: Vitro Wants $1 Million Admin. Expense Claim Paid ------------------------------------------------------------ Vitro Corporativo, S.A. de C.V. and Enron North America are parties to an ISDA Master Agreement dated as of February 6, 2001. Vitro and ENA entered into several swap, option and other financially settled derivative transactions. Enron Corp. guaranteed ENA's obligations to Vitro under the Transactions pursuant to: (a) a Guaranty Agreement dated as of February 6, 2001, in the amount of $10,000,000; and (b) an amended Guaranty Agreement dated as of May 24, 2001, in the amount of $25,000,000. Robin Keller, Esq., at Stroock & Stroock & Lavan, LLP, in New York, tells the Court that Enron and ENA benefited significantly from the Transactions, which would not have occurred without the guarantees from Enron to Vitro. Enron and ENA entered into the Transactions as part of their continuing trading business and it was against this business that Enron and ENA were able to borrow billions of dollars during the critical summer before the bankruptcy filings. Enron and ENA received substantial amounts from Vitro on those Transactions when the market favored Enron; however, when Enron and ENA filed petitions under Chapter 11 on December 2, 2001, they owed Vitro more than $15 million, on which they will pay pennies on the dollar. "Although Vitro cannot say with certainty without discovery, it is likely, given the nature of Enron's energy trading business, that Enron had hedged the Transactions in their entirety and in fact suffered no economic loss from the Transactions even though Vitro asserts claims in the bankruptcy," Mr. Keller says. Following the bankruptcy filings of Enron and ENA, Vitro terminated all outstanding Transactions under the Master Agreement and calculated its gains, losses and costs with respect to the Transactions. On October 11, 2002, Vitro filed: (i) Proof of Claim No. 11291 against Enron under the Guaranty Agreements for $16,350,168, plus unliquidated fees and expenses, and for additional amounts "as a result of the fraudulent inducement and misrepresentations of Enron"; and (ii) Proof of Claim No. 11292 against ENA for $16,350,168, plus unliquidated fees and expenses, and for additional amounts "arising as a result of fraudulent inducement and misrepresentations by and acts and omissions by debtor". Following the bankruptcy filings, Enron and ENA contacted Vitro, and initiated a process seeking to resolve disputes over the termination damages asserted by Vitro, and to liquidate Vitro's claims. After an exchange of information and negotiations over a period of many months, Vitro, Enron and ENA entered into a Letter Agreement dated August 26, 2003, pursuant to which the parties agreed, that Vitro would have allowed claims totaling $15,780,283 with respect to both the Enron Proof of Claim and the ENA Proof of Claim. Under the Settlement Agreement, Enron and ENA explicitly agreed: "To implement the foregoing, each of ENA and EC [Enron] shall: (i) submit a filing to the Bankruptcy Court in the form of an Omnibus Objection pursuant to which each respective Proof of Claim is reduced to $15,780,282.94; and (ii) agree not to object to such amount but to allow it. It is understood that the aggregate amount to be received by Vitro with respect to the Proofs of Claim cannot exceed $15,780,282.94." After the execution of the Settlement Agreement, Vitro assigned all of its right, title and interest in the Proofs of Claim to Stonehill Institutional Partners, L.P., and Stonehill Institutional Management, LLC, under an Assignment of Claim Agreement dated October 4, 2003. Notices of Transfer of Claims were properly filed by Stonehill. Under the terms of the Assignment Agreement, Vitro represented and warranted to Stonehill that those claims were "valid unsecured claims, not subject to any right or claim of set-off, reduction, recoupment, avoidance, disallowance, subordination, preference, or any other defense of any kind that has been asserted by [the] Debtors or any other party to reduce the amount of the Claim or to impair its value," a logical conclusion to draw given months of discussion regarding the Allowed Claims with Enron's claims resolution representatives and senior officers. Vitro further agreed that, until the Settlement Agreement was approved by the Court, "to the extent the Claim is disallowed, reduced, impaired, subordinated, or not paid when other pari passu claims against the Debtors are paid" that Vitro would be liable to Stonehill for "proportional repayment of the above Purchase Price." In the event the Settlement Agreement was not approved by the Court after a certain point, Vitro was obligated to repay the Purchase Price or a portion of the Purchase Price within ten business days after receipt of Stonehill's written request. Repayment was to include interest from the date of demand by Stonehill for repayment through the date that repayment was made. Subsequently, on December 1, 2003, with no prior notice or contact of any kind, Enron filed suit against Vitro and Stonehill, seeking to avoid the Guarantee Agreements as fraudulent transfers. The effect of the action, if successful, would be the complete disallowance of the Enron Proof of Claim, which would require Vitro to refund all or a portion of the purchase price to Stonehill. In fact, in a letter dated August 10, 2004, Stonehill has given notice to Vitro that if Enron's lawsuit is not resolved promptly, it plans to demand repayment of the greater of: (i) $1,067,976, representing the percentage of the purchase price attributable to the reduced or disallowed portion of the Enron Allowed Claim, and (ii) damages equal to the cost to Stonehill of purchasing a similar guaranty claim not subject to defects. Vitro and Stonehill timely answered the complaint, and Vitro asserted a counterclaim, stating that Enron breached its postpetition agreement by: (a) failing to submit the Enron Settlement Agreement to the Bankruptcy Court for approval; (b) failing to "submit a filing to the Bankruptcy Court in the form of an Omnibus Objection pursuant to which each respective Proof of Claim is reduced to $15,780,282.94"; and (c) reneging on its promise, with respect to the Enron Allowed Claim, to "agree not to object to such amount but to allow it." "Given that the Reorganization Plan has been approved and distributions are projected to commence as soon as this year, and given that there is no real dispute over the validity and amount of Vitro's claims except for a meritless attack on the Enron Guaranty, and given that Vitro sought to obtain a prompt recovery through sale of its claims based on a reasonable and appropriate reliance on Enron's settlement of the claims and its obligation to proceed in good faith to confirm that settlement, [the] Court must exercise its equitable powers to compensate Vitro for injury suffered as a result of Enron's postpetition wrongdoing," Mr. Keller asserts. Vitro does not ask the Court to compel Enron and ENA to perform on the settlement, but simply to compensate Vitro for the loss it has suffered as a result of Enron's breach of its obligation to move forward to confirm the settlement it agreed to. By this motion, Vitro asks Judge Gonzalez to allow it an administrative expense claim of not less than $1.067 million, plus out-of-pocket legal and other costs in an amount to be determined, and direct immediate payment of that amount to Vitro. 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. 126; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENTERPRISE PRODUCTS: Closes $2 Billion Private Debt Placement ------------------------------------------------------------- Enterprise Products Partners L.P.'s (NYSE:EPD) operating subsidiary, Enterprise Products Operating L.P., has closed on the Rule 144A private placement of $2.0 billion of senior unsecured notes. The net proceeds of approximately $1.98 billion were used to reduce the amount of debt outstanding under Enterprise Operating's $2.25 billion 364-day revolving acquisition credit facility that was used to partially fund the merger with GulfTerra Energy Partners, L.P. on September 30, 2004. The amount of credit commitments under the acquisition credit facility was permanently reduced by the amount of the net proceeds. The $2.0 billion of debt securities were issued in four separate series: Principal Issue Fixed-Rate Amount Price Coupon Maturity ------------ ------- ---------- ---------------- $500 million 99.922% 4.000% October 15, 2007 $500 million 99.719% 4.625% October 15, 2009 $650 million 99.914% 5.600% October 15, 2014 $350 million 99.674% 6.650% October 15, 2034 Enterprise has guaranteed the notes through an unsecured and unsubordinated guarantee. These notes, which include registration rights, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act. Enterprise Products Partners L.P. is the second largest publicly traded energy partnership with an enterprise value of approximately $14.0 billion, and is a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs and crude oil. Enterprise transports natural gas, NGLs and crude oil through 31,000 miles of onshore and offshore pipelines and is an industry leader in the development of midstream infrastructure in the Deepwater Trend of the Gulf of Mexico. Services include natural gas transportation, gathering, processing and storage; NGL fractionation (or separation), transportation, storage, and import and export terminaling; crude oil transportation and offshore production platform services. For more information, visit Enterprise on the Web at http://www.epplp.com/ * * * As reported in the Troubled Company Reporter on Sept. 24, 2004, Standard & Poor's Rating Services affirmed its 'BB+' corporate credit rating on Enterprise Products Partners L.P. At the same time, Standard & Poor's assigned its 'BB+' senior unsecured rating to Enterprise Products' subsidiary Enterprise Products Operating L.P.'s proposed (in aggregate) $2.0 billion note issues. The notes will be issued in four tranches, due 2007, 2009, 2014 and 2034. The outlook is stable. As of June 30, 2004, the Houston, Texas- based company had about $4.2 billion of debt outstanding, pro forma for the proposed and other recent financings. Proceeds from the issuances will be used to permanently finance acquisition-related bank debt related to Enterprise Products' pending merger with GulfTerra Energy Partners L.P. The $6.1 billion merger (total consideration, including GulfTerra's debt) is expected to close on or near Sept. 30, 2004. The rating on Enterprise Products reflects its integrated energy midstream operations, which benefit from a considerable amount of fee-based revenue from pipeline operations, favorable asset positioning, and a long-standing strategic alliance with Shell Oil Co. Offsetting these positive attributes are the high cash flow volatility the partnership faces stemming from its sizeable natural gas processing and fractionation operations. Enterprise Products does not issue debt but does guarantee the debt of Enterprise Products Operating, therefore Enterprise Products carries the same rating as Enterprise Products Operating. "The stable outlook reflects the expectation that Enterprise Products will not engage in significant merger and acquisition activity until it has sufficiently integrated the operations of GulfTerra, should its merger proceed as expected," said Standard & Poor's credit analyst John Thieroff. "In the longer term, an upgrade to investment grade will depend on successful integration, a demonstrated reduction in earnings volatility, and continued deleveraging," continued Mr. Thieroff. EXIDE TECHNOLOGIES: Angelo Gordon Discloses 6.9% Equity Stake ------------------------------------------------------------- Angelo, Gordon & Co., L.P., Michael L. Gordon and John M. Angelo beneficially own 1,667,604 shares of the common stock of Exide Technologies, representing 6.9% of the outstanding common stock of Exide. The firm holds sole voting and dispositive powers, while Mr. Gordon and Mr. Angelo share voting and dispositive powers over the stock held. John M. Angelo, holds the stock in his capacities as a general partner of AG Partners, L.P., the sole general partner of Angelo, Gordon, and as the chief executive officer of Angelo, Gordon; and Michael L. Gordon, holds the stock in his capacities as the other general partner of AG Partners, L.P., the sole general partner of Angelo, Gordon, and as the chief operating officer of Angelo, Gordon. Headquartered in Princeton, New Jersey, Exide Technologies is the world-wide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. FOSTER WHEELER: Appoints Franco Anselmi CEO of Asian Operations --------------------------------------------------------------- Foster Wheeler Ltd. (OTCBB:FWLRF) named Franco Anselmi as chief executive officer of Foster Wheeler Asia Pacific, effective November 1, 2004. Mr. Anselmi will succeed Gareth Attwood, who will be assuming the position of senior project director on one of Foster Wheeler's major international projects. "The Asia Pacific region has always been a key market for Foster Wheeler, where we have built an impeccable track record for executing safe, successful projects," said Raymond J. Milchovich, chairman, president and CEO of Foster Wheeler Ltd. "Franco will provide the experience and leadership to deliver the company's full potential in this region." Mr. Anselmi most recently has been responsible for project management, process design, engineering, procurement and construction in the company's execution centers in Italy, France, Spain and Turkey as director of contract operations for Foster Wheeler Continental Europe. He also has extensive project execution experience gained as project director for major projects in Europe and Asia. In the late 1980s, Mr. Anselmi established Foster Wheeler's Singapore operation, which has gone on to develop a reputation for EPC project execution excellence, and he served as its managing director for four years. He holds a degree in chemical engineering. "Gareth has been instrumental in guiding the development of our Thailand operations into one of the region's largest and most cost-effective EPC operations," said Mr. Milchovich. "During the last year, Gareth has led the establishment of Foster Wheeler Asia Pacific, which has combined our engineering centers in Thailand, Singapore, Malaysia and China under one leadership, fully focused on providing clients in this strategically important region with a complete, cost-effective and responsive local service. We are grateful to him for his excellent work." 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. The Company's pro- forma financial statements contained in the Prospectus detailing its recent successful equity-for-debt exchange projects a $400 million reduction in total debt and a concomitant increase in shareholder equity. * * * As reported in the Troubled Company Reporter on Sept. 24, 2004, Standard & Poor's Ratings Services lowered its corporate credit rating on Foster Wheeler Ltd. to 'SD' from 'CCC-'. At the same time, Standard & Poor's lowered its senior unsecured and subordinated debt ratings on the Clinton, New Jersey -based engineering and construction company to 'D' from 'CC'. The senior secured bank loan ratings were affirmed but will be withdrawn shortly, once the company's new bank facility is closed. "The rating actions follow the company's announcement that it has completed its equity-for-debt exchange offer. Since Foster Wheeler was able to exchange several of its debt securities for other financial instruments that, in aggregate, appear to have a much lower value than par, we view the exchange as coercive and, thus, a default," said Standard & Poor's credit analyst Joel Levington. The corporate credit rating of 'SD' reflects the fact that Foster Wheeler's senior secured bank facility was not part of the exchange offer, and the company remains current on that obligation with respect to interest. "When that facility is replaced with another bank deal, we will withdraw the rating," Mr. Levington said. The exchange offer was necessitated by several years of poor operating performance -- involving, among other things, bidding disciplines, change-order management, and risk and control policies -- all of which led to significant negative cash generation and charges in excess of $1 billion. GALEY & LORD: U.S. Trustee Meeting with Creditors on Oct. 28 ------------------------------------------------------------ The U.S. Trustee for Region 21 will convene a meeting of Galey & Lord, Inc., and its debtor-affiliates' creditors at 12:00 p.m., on October 28, 2004, at the Office of the U.S. Trustee, The Forum, Room 1-D, 2 Government Plaza, Rome, Georgia 30162. This is the first meeting of creditors required under U.S.C. Sec 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Atlanta, Georgia, Galey & Lord, Inc., a leading global manufacturer of textiles for sportswear, including denim, cotton casuals and corduroy, and its debtor-affiliates filed for chapter 11 protection on August 19, 2004 (Bankr. N.D. Ga. Case No. 04-43098). Jason H. Watson, Esq., and John C. Weitnauer, Esq., at Alston & Bird LLP, and Joel H. Levitin, Esq., at Dechert LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $533,576,000 in total assets and $438,035,000 in total debts. GLOBALSTAR CAPITAL: Reminds Noteholders Rights Expire on Oct. 12 ---------------------------------------------------------------- Globalstar Capital Corp. reminds holders of Series A Rights and Series B Rights that such rights must be exercised, if at all, on or prior to 4:00 p.m., New York City time on October 12, 2004. If Series A Rights and Series B Rights are held in the name of a broker or other nominee, the broker or nominee may have set an earlier deadline. On June 17, 2004, the United States Bankruptcy Court for the District of Delaware confirmed the First Modified Fourth Amended Joint Plan Under Chapter 11 Bankruptcy of Globalstar, L.P. and its subsidiaries GCC, Globalstar Services Company, Inc., and Globalstar, LLC. The Plan, a copy of which is posted on http://www.globalstar.com/became effective on June 29, 2004. Globalstar LLC (formerly known as New Operating Globalstar LLC), a Delaware limited liability company, has previously acquired the assets of the Debtors and now operates the business previously operated by the Debtors. Pursuant to the Plan, holders of allowed general unsecured claims may be entitled to purchase additional membership interest units in New Globalstar through the exercise of Series A Rights and Series B Rights. Series A Rights are exercisable to purchase, in the aggregate, 1,512,000 membership interest units for $8.0 million. Series B Rights are exercisable to purchase, in the aggregate, 250,000 membership interest units for $4.0 million. A summary of the Series A Rights and Series B Rights can be found on pages 43-48 of the Disclosure Statement, a copy of which is posted on http://www.globalstar.com/ Questions regarding the exercise of Series A Rights or Series B Rights may be directed to: Cory Branden Wells Fargo Telephone 612-316-2335 Forms for the exercise of Series A Rights and Series B Rights are available at http://www.globalstar.com/ About the Company Globalstar is the world's most widely used global mobile satellite telecommunications service, offering both voice and data services from virtually anywhere in over 100 countries around the world. The Debtors filed for chapter 11 protection on February 15, 2002 (Bankr. Del. Case No. 02-10504-PJW). The Honorable Peter J. Walsh confirmed Globalstar's First Modified Fourth Amended Joint Plan on June 17, 2004, and the company emerged from chapter 11 on June 29, 2004. Paul Leake, Esq., and Scott J. Friedman, Esq., at Jones Day and Brendan Linehan Shannon, Esq., at Young Conaway Stargatt & Taylor, LLP, represented the Debtors in their restructuring. GNI GROUP: Court Denies Employment Application to Teach a Lesson ---------------------------------------------------------------- Randy W. Williams, the Chapter 7 Trustee overseeing the liquidation of The GNI Group, Inc., and its debtor-affiliates, filed a routine application to employ am auctioneer in connection with the sale of a parcels of real estate located in Harris County, Texas. A Lesson About Rule 2014 The Honorable Wesley W. Steen denied the request, without prejudice, and took the opportunity to teach the parties about what Rule 2014 of the Federal Rules of Bankruptcy Procedure requires. The text of Judge Steen's Order reads: The trustee has filed an application to approve employment of a professional. Rule 2014(a) of the Federal Rules of Bankruptcy Procedure requires certain disclosures in BOTH (i) the application to employ, and (ii) the verified statement accompanying the application. The specific language of the rule is: The application shall state . . . to the best of the applicant's knowledge, all of the person's connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee. The application shall be accompanied by a verified statement of the person to be employed setting forth the person's connections with the debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee. The Court has reviewed the applicable documents in this case and cannot conclude that the proper disclosure has been made. The application contains the appropriate disclosures, but the verified statement does not include all of the required disclosures. Therefore, the application is DENIED without prejudice to filing an amended motion with the proper disclosure of all connections between the applicant and the debtor, creditors, any other party in interest, their attorneys and accountants, and the United States Trustee or any person employed in the office of the United States Trustee. The Court strongly recommends that both the application to employ and the accompanying verified statement use the precise language of the rule. Attempts to use variations of that language are usually inadequate: * Reference to "no adverse interest" etc. (the statutory test) is inadequate because the FRBP require disclosure of "connections," leaving to the court the conclusion of whether a "connection" connotes an "adverse interest." * Many applications fail to disclose whether there are connections with debtors or creditors' attorneys and accountants. * Substitution of language (such as disclosing "professional relationships" instead of "connections") is insufficient because the former is not as broad as the disclosure required by the rule. The only failsafe language is the language of the rule, such as: "To the best of the Applicant's [or Professional's] knowledge, there are no connections . . . [insert precise language of rule] . . . EXCEPT . . . Therefore the application is denied without prejudice for failure to comply with Rule 2014. Counsel should consider amending his forms to track the language of the rule precisely and reapplying immediately. * * * Back to GNI Group's Liquidation The two Harris County parcels the trustee wants to sell are owned by Gulf Nuclear, Inc., and located at: * 202 Medical Center Boulevard and * 9320 Tavenor Road. Hospital Corporation of America has offered $60,000 for the Medical Center property. The Trustee wants to hire Venuebid, Inc., dba Tranzon VenueBid in Houston as his broker. The Trustee doesn't have any bids for the Tavenor property. The United States Environmental Protection Agency advised the Trustee on Feb. 25, 2004, that all radioactive material on these two parcels has been removed and all clean-up work is completed. If the Trustee can sell these properties, the Debtors cases can be closed. The Trustee abandoned all of Gulf Nuclear, Inc.'s other real estate assets because those properties were contaminated with radioactive material. The GNI Group, Inc., and six debtor-affiliates filed for chapter 11 protection on September 12, 2000 (Bankr. S.D. Tex. Case No. 00- 38458). On September 17, 2004, the Debtors converted their cases to chapter 7 liquidation proceedings and Randy W. Williams, Esq., at Thompson & Knight LLP, was appointed as the Chapter 7 Trustee. On Sept. 20, 2001, the Bankruptcy Court approved a sale of most of the estates' assets to the so-called Lyons Entities, with the exception of assets belonging to Gulf Nuclear of Louisiana, Inc. GNI reported $68,590,000 in assets and $43,700,000 in liabilities when it sought bankruptcy protection. GOLF TRUST: Amex Accepts Plan to Remedy Recent Filing Delinquency ----------------------------------------------------------------- Golf Trust of America, Inc. (AMEX:GTA) received a letter from the American Stock Exchange on September 30, 2004, notifying the Company that it was not in compliance with Section 1003(d) of the Amex Company Guide. The Amex Letter noted that the Company had not filed by amendment to its July 29, 2004 Form 8-K certain required financial statements and pro forma financial information by its due date, September 28, 2004. The Amex Letter acknowledged receipt of a plan of compliance and supporting documentation submitted by the Company pursuant to Amex Company Guide Section 1009 and stated that Amex had determined that, in accordance with Section 1009 of the Amex Company Guide, the Plan makes a reasonable demonstration of the Company's ability to regain compliance with the continued listing standards by the end of the Plan period, which Amex determined to be November 15, 2004. Consequently, the Amex Letter stated that the Company's listing on Amex is being continued pursuant to an extension, subject to certain conditions, including, among others, ongoing communication with Amex and periodic review of the Company's compliance with the Plan by Amex. The Amex Letter stated that by November 15, 2004, the Company must be in compliance with Amex's continued listing standards by amending the July Form 8-K to include the financial statements and pro forma information respecting the Innisbrook Resort. Additionally, the Amex Letter noted that failure to regain compliance by November 15, 2004, would likely result in the Amex staff initiating delisting proceedings pursuant to Section 1009 of the Amex Company Guide. Further, Amex stated that notwithstanding the terms of the Amex Letter, Amex may initiate delisting proceedings as appropriate in the public interest, and that Amex may also initiate delisting proceedings in the event that the Company does not show progress consistent with the Plan. About the Company Golf Trust of America, Inc., formerly a real estate investment trust, is now engaged in the liquidation of its interests in golf courses in the United States pursuant to a plan of liquidation approved by its stockholders. After the sale, the Company owns an interest in three properties (7.0 eighteen-hole equivalent golf courses). Additional information regarding Golf Trust of America, Inc., is available in Golf Trust's filings with the Securities and Exchange Commission and on the Company's website at http://www.golftrust.com/ * * * As reported in the Troubled Company Reporter on Sept. 30, Golf Trust of America, Inc. expects that the filing of its amended Form 8-K relating to the Westin Innisbrook Golf Resort will be delayed. The Company filed a Form 8-K on July 29, 2004, describing certain events related to the settlement of a number of issues involving the Resort. As described in that Form 8-K, a subsidiary of the Company took ownership of the Resort pursuant to a settlement agreement among the parties as described therein following the default of Golf Host Resorts, Inc., on the $79 million loan made by Golf Trust of America, L.P., an affiliate of the Company, to the Borrower. The Company's July Form 8-K stated that the required financial statements and pro forma financial information related to the transactions described therein would be filed by Sept. 28, 2004, as required by applicable federal securities laws. In order to file the required financial statements and pro forma information related to the transactions, the Company must allocate the implicit purchase price of the Resort and the related entities acquired. Allocating the implicit purchase price requires the Company to record all of the assets and liabilities of the Resort and the related entities acquired on the opening balance sheets of the legal entities established for the purpose of holding the assets and liabilities of the Resort and the related entities. As part of the process of allocating the implicit purchase price of the Resort and related entities acquired, management determined that it was necessary to review and update, if necessary, the estimate of the Resort's fair value. The Resort's fair market value is currently estimated to be $44.2 million based on a study that was commissioned in July of 2003, as described more fully in the Company's public filings. The Company engaged its financial advisors to update the study of the fair value of Resort's real estate and the Resort's intangible value. Pursuant to the Company's management agreement with Westin, Westin will submit to the Company by not later than November 1, 2004, a proposed operating plan and budget for 2005 together with annualized projections of certain financial categories for the two operating years thereafter and a five-year plan for the Resort. Therefore, the Company's management has elected to delay the filing of the amendment to the July Form 8-K so that the Company's management and financial advisors have the benefit of this information in updating the study of fair value of the Resort completed in July of 2003. The Company believes that this information will enable the Company to communicate more accurate information to its stockholders when it files by amendment the financial statements and pro forma financial information related to the transactions described in the July Form 8-K. As consistently stated in the Company's prior filings with the Securities and Exchange Commission, its assessment of the Resort's fair value may decline at some future date, based on facts and circumstances prevailing at that time, and that the asset may be written-down in the future. The Company expects to file an amendment to the July Form 8-K to include the required financial statements and pro forma financial information prior to such time as its Form 10-Q for the third quarter of 2004 must be filed. HARVEST OPERATIONS: Moody's Puts B3 Rating on $200M Senior Notes ---------------------------------------------------------------- Moody's assigned a B2 senior implied rating to Harvest Operations Corp., a B3 rating to its pending US$200 million of 7-year senior unsecured notes, and an SGL-3 liquidity rating. Harvest Energy Trust wholly-owns Harvest Operations. The notes and Harvest Operations' C$370 million of secured bank facilities receive guarantees from Harvest Energy Trust, Harvest Operations subsidiaries (except Red Earth Partnership which holds 13% of reserves), and Harvest Operations' sister affiliate Harvest Sask. Energy Trust. Harvest Energy Trust's assets consist mainly of indirect net profits interests in oil and gas reserves held by Harvest Operations Corp., Harvest Sask. Energy Trust, and their subsidiaries. Proceeds will refund C$182.5 million of secured bank debt and a C$70 million bridge loan, incurred as partial funding for the Storm Energy (C$189 million) and Encana reserve (C$526 million) acquisitions. As a point of clarification, per the Canadian convention, Harvest Energy Trust reports its gross reserves and production before royalties paid to its government. Per U.S. GAAP and FAS 69 reserve accounting, HTE holds a lower 69.1 mmboe of net proven reserves (of which 62.1 mmboe is net proven developed or PD reserves) generating 32,725 boe/day of net production. Harvest Energy Trust's reserves were calculated using forecasted prices and costs rather than flat prices and costs as used in FAS 69 and SEC reporting. Year-end 2004 reserves will provide an opportunity to reconcile the U.S. and Canadian methods and update capital productivity measures. The ratings are restrained by: (i) comparatively small size; (ii) short intra-year duration of ownership of much of the property base; (iii) very mature nature and high water cut for most of its properties; (iv) modest pro-forma unit cash flow cover (roughly 140%) of its C$13.85/boe in net reserve replacement costs (elevated by recent acquisitions); (v) high leverage of C$8.74/boe of net PD reserves (US$6.82/boe net PD reserves); (vi) relatively short reserve life of 5.2 years on net PD reserves; (vii) potential leveraged acquisitions and need to accommodate a growth-by-acquisition strategy; (viii) high cash flow payout inherent to its unit trust structure, coupled with the depleting nature of oil and gas reserves; and (ix) modest potential for Harvest Energy Trust's properties to generate full organic reserve replacement. The ratings benefit from: (i) adequate liquidity and cash flow support from an expected supportive price environment; (ii) a substantially strengthened property base from recent acquisitions that added diversification (bulk of production is spread across 10 fields), greater scale, and exploitation opportunity; (iii) a high proportion of reserves in well-known regions with long production histories (though many generate very high water cuts); (iv) incremental exploitation potential on the high 90% of properties operated by Harvest Energy Trust; (v) a high degree of ownership (21%) by the Chairman and his demonstrated willingness and capacity to invest new second secured funding for acquisitions; (vi) the Chairman's prior participation in building and successfully selling an exploration and production company; and (vii) downside support from 49% of 2005 production being hedged with puts and calls. The notes are one rating notch below the senior implied rating due to substantial existing and expected effective subordination to senior secured bank debt. However, asset coverage is also cushioned to a degree by C$105 million of subordinated debt junior to the rated notes. We expect growth to be driven by acquisitions funded by Harvest Energy Trust's C$370 million of committed secured bank revolver maturing June 29, 2005. Moody's believes that roughly C$210 million of the revolver will be available and undrawn after placement of the notes. The SGL-3 liquidity rating reflects: (i) adequate cash flow coverage of full-cycle costs, (ii) financial obligations, (iii) capital spending needs, and (iv) significant distributions of free cash flow to unit holders, cushioned by Harvest Energy Trust's option during cash flow weakness to reduce substantial cash distributions to unit holders. Harvest Energy Trust also exhibits: (i) adequate undrawn external liquidity, sensitized for the risk of elevated acquisition borrowings followed by negative borrowing base revisions during weak prices; (ii) good covenant coverage; (iii) but weak alternative liquidity since Harvest Energy Trust's assets are already pledged to its banks. The SGL-3 rating reflects that pro-forma leveraged unit cash flow cover of reserve replacement capital spending is only adequate at 140%, considering the current up-cycle price environment. Reserve replacement costs have risen as Harvest Energy Trust has acquired larger and higher operating margin properties. Also, in a low price environment and/or with higher reserve replacement costs, Harvest Energy Trust's internal coverage of operating costs, interest expense, sustaining capital spending (Moody's measure is C$170 million), and significant cash distributions to unit holders may need to be supplemented by new units issues (equity) and/or secured revolver borrowings. Committed back-up external liquidity is currently good, with roughly C$210 million undrawn and available under the secured revolver. However, revolver availability is governed by a borrowing base recalculated every 6 months and availability could be reduced during lower prices when cash flow cover of full-cycle costs is also diminished. Harvest Energy Trust is also acquisitive so we anticipate significant borrowings under the revolver. To ensure ample back-up up liquidity, Harvest Energy Trust will need to pro-actively fund acquisitions with adequate new units offerings. Bank covenant coverage is good. There are only two principal bank loan covenants, including: EBITDA/Interest of 3.5x and a current ratio of 1.0:1. The company amply meets these covenants, though we would expect negative borrowing base revisions to have greater impact on borrowing capacity. At Harvest Energy Trust's current scale of operations, Moody's estimates that its full-cycle cost structure pro-forma's in the range of C$25.90/boe (US$20.20/net boe). Harvest Energy Trust reports average pro-forma realized unit prices for the twelve months ended June 30, 2004 of C$31.72/boe of net production (US$24.75/boe), rendering modest cost coverage of 140% in spite of strong prices. However, realizations relative to benchmark prices were hurt partly by hedging losses, which should be reduced for 2005 as those hedges run off, and partly by heavy oil production (roughly 35% of pro-forma production) at a time when price differentials between light and heavy oil were particularly wide. Moody's estimates pro-forma full-cycle costs of approximately C$25.90/net boe, including approximately: -- C$8.70/boe of production costs, -- C$0.80 of G&A expense, -- $2.55/boe of interest expense, and -- C$13.85/boe of reserve replacement costs on net reserves. Thus, Harvest Energy Trust's pro-forma up-cycle unit cash flow coverage of unit interest expense is in the range of 8x to 9x, with post-interest unit cash flow cover of sustaining unit reserve replacement costs in the range of 140%. Moody's estimates that Harvest Energy Trust's consolidated capital structure upon its September 2, 2004 closing of the Encana acquisition (pro-forma for the notes) includes: -- C$160 million of senior secured bank debt, -- C$268 million-equivalent of the new US$200 million notes, -- C$105 million of convertible subordinated debentures (gradually converting to equity units), -- C$10 million of second secured parent company equity bridge notes due to Caribou Capital, and -- C$347 million of equity capital. The stable rating outlook incorporates the expectation that prices will remain supportive of Harvest Energy Trust's full-cycle costs and potential acquisitions will at least be adequately equity funded. Weakness in the rating outlook or ratings could result if: (a) Harvest Energy Trust is not able to sustain net production above 29,500/net boe to 31,500/net boe per day (34,700 boe/day to 37,000 boe/day gross) versus pro-forma second quarter 2004 production of 32,725 net boe/day; (b) prices weaken sufficiently to materially affect Harvest Energy Trust's ability to internally fund sustaining capex; (c) year-end 2004 reserve replacement costs are materially higher than expected; or (d) if Harvest Energy Trust executes materially leveraging acquisitions. The outlook or ratings could improve if Harvest Energy Trust materially reduces leverage on PD reserves and materially grows net reserves and net production at acceptable leveraged full-cycle costs, including net reserve replacement costs. This could be spurred by material acquisitions amply funded with equity to reduce leverage and support the relative price and execution risk within future acquisitions. Harvest Energy Trust went public in December 2002 as a Canadian unit investment trust. By definition, it makes substantial cash contributions to unit holders from defined free cash flow. Exploration and production -- E&P -- is a depleting asset business needing constant successful reinvestment of cash flow for reserve replacement. For the unit trust model to work for E&P firms, the new units market overall needs to be receptive, and individual E&P's in particular need consistent new issue access to fund acquisitions and capital spending and distributions in excess of free cash. Harvest Energy Trust is headquartered in Calgary, Alberta, Canada. I2 TECHNOLOGIES: Court Approves Settlement of Shareholder Lawsuits ------------------------------------------------------------------ The United States District Court for the Northern District of Texas has entered an order and final judgment approving the previously announced settlement of the consolidated shareholder class action and derivative lawsuits involving i2 Technologies, Inc. (OTC:ITWO). The settlement, which was announced on May 10, 2004, does not reflect any admission of wrongdoing by i2 or its directors or officers. The time to take an appeal from the order expires on or about Nov. 1, 2004. Approximately 0.015 percent of potential class members who claim to have purchased a total of approximately 0.3 percent of shares of i2 stock eligible to participate in the class action excluded themselves from the settlement. Under the settlement agreement, the total settlement amount is $84.85 million, which includes $43 million to be covered by i2 insurance policies and $41.85 million paid by i2 in the second quarter of 2004. i2 established an accrual of $42 million relating to the possible settlement of the lawsuits in the fourth quarter of 2003. 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. INTEGRATED HEALTH: Asks Court to Make Class 4 & 6 Distribution -------------------------------------------------------------- IHS Liquidating, LLC, seeks the United States Bankruptcy Court for the District of Delaware's permission to make interim distributions to the holders of allowed claims in Classes 4 and 6 under the Plan. IHS Liquidating has about $58,000,000 in funds in its bank accounts, of which $35,000,000 is being held in reserve on account of Excluded Administrative Expense Claims, Priority Tax Claims, Other Priority Claims, Other Secured Claims and the expense reserve for the estimated costs of administering the Debtors' Chapter 11 cases to conclusion. IHS Liquidating also anticipates at least $25,000,000 in additional distributable value through the disposition and monetization of certain other limited assets. IHS Liquidating believes that it will ultimately be able to distribute at least $50,000,000 to the holders of Allowed Class 4 and Class 6 Claims. Based on the progress made to date in IHS Liquidating's claims resolution and asset liquidation efforts, IHS Liquidating believes that it would be feasible to make an initial $20,000,000 interim distribution to the holders of Allowed Class 4 and 6 Claims at or near the end of 2004. The $20,000,000 distribution would constitute 40% of the anticipated aggregate distribution to the holders of Allowed Claim in Classes 4 and 6. The remaining 60% will be monetized and held in IHS Liquidating's Distribution Reserve Account for future distributions. According to Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, two potential disputed creditor groups may object to the first interim distribution: (i) C. Taylor Pickett, Daniel Booth, and Ronald Lord, former IHS officers, based on their disputed Administrative Expense Claims regarding alleged indemnification rights; and (ii) Abe Briarwood Corp., based on an informal demand for purchase price adjustments due to alleged breaches of the Stock Purchase Agreement. The Former Officers' Claims In June 2003, Messrs. Picket, Booth, and Lord sought a $40,000,000 reserve on account of contingent indemnification obligations asserted against the IHS Debtors. The Former Officers filed Administrative Claims with respect to these indemnification claims. The disputed contingent indemnification claims arise from the Former Officers' alleged wrongdoing as asserted against them in a lawsuit captioned Don G. Angell, et al. v. Elizabeth B. Kelly, C. Taylor Pickett, Daniel J. Booth, and Ronald L. Lord, Case No. 1:01 CV00435. The suit is pending before the U.S. District Court for the Middle District of North Carolina. In September 2004, the District Court dismissed all claims against Mr. Lord. He is, therefore, no longer entitled to any indemnification from IHS. The District Court also dismissed all claims against Messrs. Pickett and Booth other than fraud, negligent misrepresentation, and unfair and deceptive trade practices. With respect to Mr. Booth's claim, IHS Liquidating acknowledges its indemnification obligation to Mr. Booth pursuant to his postpetition employment agreement with IHS. However, no postpetition agreement was entered into with Mr. Picket. Hence, any indemnity claim that Mr. Pickett may have would amount, at best, to a General Unsecured Claim. IHS Liquidating also does not believe that the Former Officers will have any valid indemnity claims, whether on an administrative or general unsecured basis, once the Angell Lawsuit is completed. If the Former Officers are held liable for fraud or intentional wrongdoing, IHS Liquidating is barred as a matter of Delaware law from indemnifying them. If the Former Officers are found liable for negligence or an unintentional tort, IHS' indemnification obligations will be covered by IHS' $90,000,000 directors and officers' liability insurance policy, which is more than sufficient to satisfy these obligations. Briarwood's Claims On June 21, 2004, Briarwood made an informal demand to IHS Liquidating for payment in excess of $39,000,000 on account of alleged breaches and purchase price adjustments under the Stock Purchase Agreement. IHS Liquidating believes that Briarwood's claims are meritless. Sufficient Funds IHS Liquidating believes that it has sufficient funds to justify a $20,000,000 distribution to unsecured creditors. However, to the extent that either Briarwood or the Former Officers contend that the distribution is inappropriate while their contingent disputed claims remain unresolved, IHS Liquidating asks the Court either to: (1) estimate Briarwood's or the Former Officers' claims at the November 10, 2004, hearing in an aggregate amount that will still allow IHS Liquidating to make a $20,000,000 distribution to unsecured creditors at this time; or (2) find that the value of assets remaining in IHS Liquidating after the $20,000,000 distribution constitutes a sufficient reserve for the Former Officers and Briarwood. Headquartered in Owings Mills, Maryland, Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the Debtors in their restructuring efforts. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERMET CORPORATION: Wants to Hire Foley & Lardner as Counsel -------------------------------------------------------------- Intermet Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, for permission to employ Foley & Lardner LLP as their counsel during their chapter 11 restructuring process. Foley & Lardner did prepetition work for the Debtors in nearly all aspects of their businesses. In particular, the Firm negotiated and documented the company's Prepetition Credit Facility, Senior Notes and the corresponding indenture. As a result of all the prepetition services, Foley & Lardner is intimately familiar and knowledgeable of the Debtors' industry, business operations, finances, restructuring options and strategy. As Intermet's bankruptcy counsel, Foley & Lardner will: a) analyze the Debtors' current financial and legal situation; b) prepare and file on behalf of the Debtors all necessary and appropriate petitions, applications, motions, pleadings, draft orders, notices and other documents, including amendments thereto, and reviewing all financial and other reports to be filed in these chapter 11 cases; c) advise the Debtors concerning their powers and duties as debtors-in-possession in the continued operation of their businesses and management of their property; d) advise and assist the Debtors in the negotiation and documentation of, financing agreements, debt restructurings, cash collateral arrangements and related transactions; e) advise the Debtors with regard to their relationships with secured and unsecured creditors and equity security holders, past, present and future, negotiate with such creditors and security holders, and their representatives and legal counsel, as necessary, take such legal action or actions as may be necessary or advisable in the best interests of the Debtors; f) review the nature and validity of liens asserted against the property of the Debtors and advise the Debtors concerning the enforceability of such liens; g) negotiate and assist in the drafting and preparation of leases, security instruments, and other contracts as may be in the best interests of the Debtors; h) represent the Debtors at the meeting of creditors, confirmation hearing, and such other hearings as may occur; i) advise the Debtors concerning the actions that it might take to collect and to recover property for the benefit of the Debtors' estates; j) assist and counsel the Debtors in connection with the formulation, negotiation, preparation, acceptance, confirmation, and implementation of a plan of reorganization in these chapter 11 proceedings; k) prepare on behalf of the Debtors, a Disclosure Statement, and assist the Debtors in conducting a prepetition solicitation of acceptances of a plan of reorganization; l) advise and prepare responses to, applications, motions, pleadings, notices, and other papers that may be filed and served in these chapter 11 cases; m) represent the Debtors in adversary proceedings and other contested matters; n) perform all other legal services for or on behalf of the Debtors that may be necessary or prudent in the administration of their chapter 11 cases and the reorganization of the Debtors' business, including giving advise and assistance to the Debtors with respect to debt restructurings, stock or asset dispositions, claims analysis and disputes, and legal issues involving general corporate, bankruptcy, labor, employee benefits, securities, tax, finance, real estate, and litigation matters, and utilizing paraprofessionals, law clerks, associates, and other partners of the firm of Foley & Lardner as may be prudent and economical under the circumstances. The professionals and paraprofessionals to provide professional services to the Debtors and their hourly billing rates are: Standard Agreed Professional Rate Rate ------------ --------- ------- Barbatano, Salvatore A. $510 $460 Benfield, Linda E. 430 400 Birmingham, John F., Jr. 385 325 Daugherty, Patrick D. 500 415 Dickinson, Lloyd J. 500 450 Eisele, Laura J. 385 335 Hilfinger, Steven H. 475 375 O'Neill, Judy A. 460 395 Prager, Mark L. 625 535 Trentacosta, John R. 420 365 Wronski, Andrew J. 375 325 Salvatore A. Barbatano, Esq., assures the Court that the Firm and its professionals do not hold interests materially adverse to the Debtors and their estates despite having represented some of Intermet's creditors in the past. Headquartered in Troy, Michigan, Intermet Corporation -- http://www/intermet.com/-- is one of the largest producers of ductile iron, aluminum, magnesium and zinc castings in the world. It also provides machining and tooling services for the automotive and industrial markets specializing in the design and manufacture of highly engineered, cast automotive components for the global light truck, passenger car, light vehicle and heavy-duty vehicle markets. The Company along with its debtor-affiliates filed for chapter 11 protection on September 29, 2004 (Bankr. E.D. MI. Case Nos. 04-67597 through 04-67614). When the Debtor filed for protection from its creditors, it listed $735,821,000 in total assets with $592,816,000 in total debts. INTERMET CORPORATION: Gets Interim Okay to Use Cash Collateral -------------------------------------------------------------- The Honorable Marci B. McIvor of the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, approved Intermet Corporation and its debtor-affiliates' use of their Lenders' cash collateral while they are negotiating the terms of postpetition DIP financing. The Debtors need to access the Lenders' cash collateral to pay their payroll and other direct operating expenses and to obtain goods and services needed to carry on their day-to-day businesses. The use of the cash collateral is vital to avoid immediate and irreparable harm to the Debtors' estates. On January 8, 2004, Intermet and its debtor-affiliates entered into a Credit Agreement with The Bank of Nova Scotia acting as the Administrative Agent and Issuer of a group of Lenders. The Agreement provided the Debtors $120 million in term loans and $90 million in revolving loans. As of petition date, the loans reached an aggregate principal amount of $161 million and the letters of credit amounting to $23 million. The Debtors tell Judge McIvor that a valid and enforceable first priority security interest in all of the company's personal and intangible property secures the Debtors' obligations to repay the Bank Debt. The Lenders and the Agent agree to allow the Debtors use of cash collateral in accordance with a weekly budget through October 15, 2004, projecting: Week Ending ----------- 9/30-10/1 10/8 10/15 --------- ---- ----- Total Cash Receipts $1,839,000 $15,969,000 $10,815,000 Total Disbursements --- 16,709,000 12,641,000 ---------- ----------- ----------- Cumulative Net Cash $1,839,000 $1,099,000 ($728,000) ========== =========== =========== To protect the interests of the Lenders, adequate protection is granted by providing valid, binding, enforceable and perfected replacement postpetition liens of the same validity, extent and priority. The Debtors will also make interest payments to the Bank when due. Richard G. Mason, Esq., at Wachtell, Lipton, Rosen & Katz, represents The Bank of Nova Scotia, the Prepetition Agent. Headquartered in Troy, Michigan, Intermet Corporation -- http://www/intermet.com/-- is one of the largest producers of ductile iron, aluminum, magnesium and zinc castings in the world. It also provides machining and tooling services for the automotive and industrial markets specializing in the design and manufacture of highly engineered, cast automotive components for the global light truck, passenger car, light vehicle and heavy-duty vehicle markets. The Company along with its debtor-affiliates filed for chapter 11 protection on September 29, 2004 (Bankr. E.D. MI. Case Nos. 04-67597 through 04-67614). When the Debtor filed for protection from its creditors, it listed $735,821,000 in total assets with $592,816,000 in total debts. JEUNIQUE INT'L: Committee Hires Marshack Shulman as Counsel ----------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California gave the Official Committee of Unsecured Creditors appointed in Jeunique International, Inc.'s chapter 11 case permission to employ Marshack Shulman Hodges & Bastian LLP, as its general counsel. Marshack Shulman will: a) advise the Committee with respect to its rights, power, duties and obligations as the Official Committee of Creditors holding unsecured claims of the Debtors' bankruptcy case; b) prepare pleadings, applications and conduct examinations incidental to the administration of the bankruptcy case and to protect the interests of the unsecured creditors of the Debtor's estate; c) advise and represent the Committee in its connection with all applications, motions or complaints filed during the course of the administration of the bankruptcy case ; d) develop the relationship of the Committee with the Debtor in its bankruptcy proceeding; e) advise and assist the Committee in presentation of a plan of reorganization by the Debtor or other entity pursuant to Chapter 11 of the Bankruptcy Code and concerning other matters related to it; and f) perform other legal services incident and necessary foe the smooth administration of the Debtor's bankruptcy case. James C. Bastian Jr., Esq., a Partner at Marshack Shulman, is the lead attorney representing the Committee. Mr. Bastian reports that Marshack Shulman will not receive a retainer but will bill the Debtor a carve out expense fee not to exceed $5,000 per month for all fees and expenses incurred by the Committee for the Firm's legal services. Associates who will provide assistance will bill the Debtor from $285 to $215 per hour and paralegals will charge from $200 to $100 per hour. Mr. Bastian reports Marshack Shulman professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Leonard M. Shulman Partner $385 Ronald S. Hodges Partner 385 James C. Bastian, Jr. Partner 350 J. Ronald Ignatuk Partner 350 Michael J. Petersen Partner 350 Mark Bradshaw Partner 300 Richard A. Marshack Counsel 395 A. Lavar Taylor Counsel 395 Robert S. Horwitz Counsel 350 John Pitkin Counsel 350 Richard A. Hayes Counsel 350 Marshack Shulman does not represent any interest adverse to the Committee, the Debtor or its estate. Headquartered in City of Industry, California, Jeunique International, Inc., -- http://www.juenique.com/-- is a Direct Selling Company that develops and markets beauty and health products and fashion apparel. The Company filed for chapter 11 protection on June 1, 2004 (Bankr. C.D. Cal. Case No. 04-22300). Mark S. Horoupian, Esq., at Sulmeyer Kupetz A P.C., represents the Debtor 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. JEUNIQUE INT'L: Hires Phoenix-Issa as Valuation Consultant ---------------------------------------------------------- Jeunique International, Inc. sought and obtained permission to hire Phoenix-Issa Strategic Partners, LLC, dba Ballenger Cleveland & Issa, LLC, as its valuation consultant. The Debtor is in the process of formulating a Plan of Reorganization and as such, must obtain a valuation of its assets on a going concern basis and on a liquidating process. The professionals who will render valuation services to the Debtor and their hourly billing rates are: Professional Rates ------------ ----- J. Michael Issa $395 Christopher A. Wheel $325 Other Consultants $225 to $300 The Firm will charge the Debtor a flat fee of $9,750. Phoenix-Issa does not hold any interest materially adverse to the Debtor and its estate. 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. KAISER ALUMINUM: Judge Fitzgerald Okays Glencore Overbid Agreement ------------------------------------------------------------------ Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, relates that Glencore AG has offered to purchase the QAL Interests at an initial price substantially higher than Comalco's offer. However, selecting Glencore as the stalking horse bidder would cause substantial delay in the sale process. Comalco, given its right of first opportunity with respect to QAL, has took the position that Kaiser Aluminum and its debtor-affiliates will need to recommence the five-month notice procedures should the Debtors enter into an agreement to sell the QAL Interests to another party. After consulting the Official Committee of Unsecured Creditors, the Debtors concluded that the best way to maximize the value received for the QAL Interests would be to enter into: -- a purchase agreement with Comalco that would subject the QAL Assets to an auction process at the earliest possible time, and make clear that all notice and preemption rights of Comalco with respect to its RFO have been fully satisfied; and -- an agreement with Glencore pursuant to which Glencore, for a fee, would be contractually bound to submit a significantly higher qualified bid before the October 25, 2004 bid submission deadline that would establish a substantially higher minimum price, in advance of an auction, than that submitted by Comalco. Glencore has agreed to submit an overbid, subject to certain conditions. On September 22, 2004, the Debtors and Glencore signed a letter agreement pursuant to which Glencore will require its wholly owned subsidiary, Pegasus Queensland Acquisition Pty Limited, to submit a Qualified Bid with a minimum bid price that includes a Base Share Price of $400,000,000. Pegasus will submit the Threshold Qualified Bid after the Court sets bidding standards for the sale. Pegasus may terminate its obligations pursuant to the Threshold Qualified Bid if the hearing to consider approval of the sale does not occur by November 19, 2004, or an order approving the sale is not entered by November 22, 2004. In consideration of Glencore's agreement, the Debtors will pay Glencore $7,680,000. Mr. DeFranceschi notes that the Overbid Agreement would guarantee that, even if no other bid was received for the QAL Interests, the Assets would be sold at a fair price. At the Debtors' request, Judge Fitzgerald approves the Overbid Agreement with Glencore. The Debtors are authorized to pay the Threshold Qualified Bid Fee. Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) KERASOTES SHOWPLACE: Moody's Puts B1 Ratings on Sr. Bank Loans -------------------------------------------------------------- Moody's Investors Service assigned B1 ratings for the proposed $300 million of senior secured credit facilities being arranged for Kerasotes Showplace Theatres, LLC. The rating outlook is stable. This is the first time that Moody's publicly assigned ratings for Kerasotes. Ratings assigned: Kerasotes Showplace Theatres, LLC * Senior Implied Rating -- B1 * Issuer Rating -- B3 * Rating Outlook -- Stable * $200 Million Senior Secured Term Loan due 2011 -- B1 * $100 Million Senior Secured Revolving Credit Facility due 2010 -- B1 The ratings reflect concerns about: (a) the company's relatively small scale in comparison to its peers and competitors; (b) concentration of cash flow generating assets in a relatively small number of properties; and (c) geographic concentration of its theater base in the upper Midwest. Also of some concern is the more leveraged balance sheet and correspondingly reduced financial flexibility which management will be operating under proforma for the proposed shareholder dividend, which is additive to the recent ownership change to a more financially-oriented sponsor (and notwithstanding maintenance of operational and board control in the hands of the founding Kerasotes family members). However, the company's comparatively less leveraged balance sheet relative to its rated industry peer group, reasonably good operating performance and relatively modern and improving base of assets in markets with somewhat limited competition lend support to the assigned ratings. In particular, the B1 senior implied rating incorporates Moody's expectation that the company will maintain its fairly conservative financial profile even though it will continue to build new theaters (which are viewed mostly as replacements for smaller, older existing theaters as opposed to more aggressive expansionary theaters in new markets). Moreover, Moody's also acknowledges the comparatively high proportion of owned, rather than leased, properties under the Kerasotes umbrella, which contrasts with most other rated exhibitors. Moody's believes that this provides some incremental credit support in that underperforming theaters can presumably be closed down more quickly in a downside scenario. The stable rating outlook reflects Moody's expectation that management will perform in line with its forecast and leverage will remain in the low 4x range over the next several years. Moody's considers the expansionary capital expenditures somewhat discretionary, and management should be able to moderate spending if necessary as a means of enhancing financial flexibility given any prospective unforeseen downturn in operating performance. Continued spending if the expansion yields significantly lower than anticipated cash flow could pressure the ratings downward, nonetheless. Moody's will also closely monitor future dividends to the company's equity sponsors; while the facilities limit such payments, Moody's recognizes that such covenants can (and are) often modified or amended outright. A significant decline in the company's leverage due to rapid free cash flow generation could provide ratings upside. Kerasotes operates primarily in suburban and rural markets and is the only operator in over 90% of its markets, which importantly ensures essentially unfettered access to all film product. Kerasotes benefits from this limited competition and remains somewhat protected from the structural overcapacity which continues to negatively impact many of its peers. Moody's believes that entree of competitors into Kerasotes markets on a widespread basis is unlikely, though the occurrence of increased competition could pressure the ratings downward if this proves to be an incorrect assumption. Notwithstanding the strength of its operations, the lack of cash flow diversity relative to its peers is a relevant and recognized risk. Kerasotes derives about 60%- to-70% of its revenue and EBITDA from just over 20 of its 76 theaters, which are located primarily in Illinois and Indiana. Any erosion in these markets due to the aforementioned competition and/or market specific events is a concern. Furthermore, with just 76 theaters and 500-to-600 screens, Kerasotes lacks some of the scale and corresponding benefits of diversity that many of the larger operators with thousands of screens enjoy. Proforma for the proposed transaction, Kerasotes' leverage will rise to about 4.4x on an adjusted debt-to-EBITDAR basis (although the capitalization of rents is not nearly as significant for Kerasotes in comparison to its peers given the large amount of owned properties and correspondingly much lower rent payments), up from the mid-2x range during the past two years. Owned theaters for Kerasotes represent about 60%, 70%, and 80% of total theaters, screens, and cash flow, respectively. The ratings draw strength from the security in these properties. Moody's expects that cash flow growth will help offset the cash absorptive nature of the company as incremental drawdowns under the revolving credit facility are made to construct new theaters, and thereby help maintain this level of financial leverage in the mid-4x range over the next couple of years, prior to experiencing a deleveraging trend as free cash flow growth resumes again when new theater construction slows somewhat. Moody's notes that at least some of the new build capital expenditure plans are truly discretionary and could be scaled back if necessary. Additionally, a significant portion of the growth plans involve rebuilding in existing markets and increasing the number of screens per theater which should allow management to realize both operating efficiencies and increased revenue through this shift to bigger multiplexes. Management's experience in existing markets is also deemed to lessen the risk of self-cannibalization. Kerasotes will use the proceeds from the proposed transaction to pay a second special dividend ($100 million) to its equity sponsors, including new majority owner Providence Equity Partners (Providence), as well as to repay existing bank debt and to fund theater expansion, as mentioned. The bank debt is rated at the same B1 level as the senior implied rating as it constitutes the preponderance of the company's capitalization, with only junior equity capital beneath it. The bank group does benefit, however, from a security interest in the company's assets, as well as upstream guarantees from all subsidiaries. Moody's deems this important in order to preclude structural subordination of the debt to any senior claims at the individual theater operating companies. Kerasotes Showplace Theatres, LLC, operates motion picture theaters in the Midwestern and upper Midwestern regions of the United States, including Illinois, Indiana, Iowa, Ohio, Missouri and Minnesota. The company currently has 562 screens in 76 locations. KEYSTONE: Files Reorganization Plan & Disclosure Statement ---------------------------------------------------------- Keystone Consolidated Industries, Inc. (OTC Pink Sheets: KESNQ) filed a Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Eastern District of Wisconsin in Milwaukee. The Plan of Reorganization provides, among other things: -- assumption of the previously negotiated amendment to the collective bargaining agreement with the Independent Steel Workers Alliance; -- liabilities due to pre-petition secured creditors would be reinstated in full against the new, reorganized Keystone; -- all of the Company's common and preferred stock outstanding at the petition date would be cancelled; -- pre-petition unsecured creditors would receive common stock of the new reorganized Keystone; -- one of the Company's Debtor-In-Possession lenders, EWP Financial, LLC, (EWP Financial LLC is an affiliate of Contran Corporation, the Company's pre-petition majority shareholder) would convert a portion of its credit facility into 100% of a new issue of preferred stock having, among other things, voting rights representing 51% of the combined voting power of the new preferred and common stock voting together as a single class on all matters (except any proposed redemption of the new preferred stock) including election of directors. The new preferred stock would have restricted transferability for two years and would be redeemable after five years for cash upon the vote of the holders of a majority of the new common stock; -- the operations of Sherman Wire Company will be reorganized as a wholly-owned subsidiary of the new reorganized Keystone; -- the Company's pre-petition subsidiaries, Sherman Wire of Caldwell, Inc., J.L. Prescott Company, and DeSoto Environmental Management, Inc. would be liquidated, and; -- the Plan of Reorganization assumes the Company will obtain Bankruptcy Court approval for final relief permanently reducing healthcare related payments to certain retiree groups and such agreement will be assumed by the new reorganized Keystone. Confirmation of the Plan of Reorganization remains subject to approval of the Disclosure Statement, at a hearing to be scheduled, obtaining the requisite vote of the Company's creditors, satisfying other confirmation requirements and approval of the Bankruptcy Court as well as obtaining sufficient exit financing to refinance the balance of the Company's Debtor-In- Possession loans. As previously announced, the Company has negotiated and obtained Court approval of an amendment to the collective bargaining agreement with the Independent Steel Workers Alliance. Keystone believes the filing of the Plan of Reorganization and Disclosure Statement is another major step forward in the Company's efforts to complete a successful restructuring and the Company and its advisors will continue to work diligently in an effort to achieve its goal of exiting the bankruptcy process around the end of the year. Headquartered in Dallas, Texas, Keystone Consolidated Industries, Inc., makes carbon steel rod, fabricated wire products, including fencing, barbed wire, welded wire and woven wire mesh for the agricultural, construction and do-it-yourself markets. The Company filed for chapter 11 protection on February 26, 2004 (Bankr. E.D. Wisc. Case No. 04-22422). Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., and David L. Eaton, Esq., at Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $196,953,000 in total assets and $365,312,000 in total debts. KMART CORP: Robert Norton Discloses Selling 7,131 Shares of Stock ----------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Robert L. Norton discloses that on September 2, 2004, he disposed of 7,131 shares of Kmart Holding Corporation common stock. The restricted stock was forfeited and cancelled pursuant to Mr. Norton's agreement with Kmart. Kmart announced on June 24, 2004, that Mr. Norton would fill a newly created position as senior vice president with overall responsibility for Kmart's stores. 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. (Kmart Bankruptcy News, Issue No. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000) KOLLEL MATEH: Case Summary & 7 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Kollel Mateh Efraim, LLC 751 Second Avenue, 1st Floor New York, New York 10017 Bankruptcy Case No.: 04-16410 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Nassau Equities 99-43087 Chapter 11 Petition Date: October 4, 2004 Court: Southern District of New York (Manhattan) Judge: Blackshear Debtor's Counsel: Mark A. Frankel, Esq. Backenroth Frankel & Krinsky, LLP 489 Fifth Avenue New York, New York 10017 Tel: (212) 593-1100 Fax: (212) 644-0544 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 7 largest unsecured creditors: Entity Claim Amount ------ ------------ Helen-May Holdings, LLC $1,260,000 27 Maple Avenue Jeffersonville, New York 12748 All Refrigeration and Equipment $230,000 44 New Utrecht Avenue Brooklyn, New York 11219 SOS Communications $90,000 1281 36th Street Brooklyn, New York 11218 Heavenly Kosher Cuisine $46,000 5860 Dobbin Street Brooklyn, New York 11222 Mark Terkiltaub $15,000 Michael Halberstam $10,000 Carol Weingert $1,700 NEWCASTLE CDO: Moody's Assigns Ba2 Rating on $20.5M Fixed Notes --------------------------------------------------------------- Moody's Investors Service announced that it assigned ratings to the notes issued by Newcastle CDO V, Limited: * Aaa to the US $388,000,000 Class I Floating Rate Notes Due 2039, * Aa2 to the US $23,500,000 Class II Deferrable Floating Rate Notes Due 2039, * A2 to the US $23,000,000 Class III Deferrable Floating Rate Notes Due 2039; * Baa2 to the US $8,000,000 Class IV-FL Deferrable Floating Rate Notes Due 2039 and the US $12,000,000 Class IV-FX Deferrable Fixed Rate Notes Due 2039, and * Ba2 to the US $20,500,000 Class V Deferrable Fixed Rate Notes Due 2039. The transaction was brought to market by Banc of America Securities LLC. Moody's indicated that these ratings reflect its evaluation of the characteristics of the underlying collateral pool (consisting primarily of Commercial Mortgage Backed Securities, REIT Debt Securities and Asset-Backed Securities), the transaction's structure under various default scenarios and stress-test analyses, the legal structure, and the collateral manager, Newcastle Investment Corp. NORTH OAKLAND: Moody's Reviews Ba1 Rating for Possible Downgrade ---------------------------------------------------------------- Moody's Investors Service has placed North Oakland Medical Center's Ba1 rating on Watchlist for possible downgrade, affecting $40 million of outstanding Series 1993 bonds. This action follows the receipt of six-month interim 2004 financial statements that reflect a continuation of operating losses and a decline in liquidity leading to a weakened balance sheet from fiscal year 2002. Also contributing to this action is the lack of receipt of fiscal year 2003 audited financial statements, which is due in part to the investigation and resolution of internal matters. We anticipate rendering a rating decision within the next 90 days. NORTHROP GRUMMAN: Fitch Raises Convertible Stock Rating to BB+ -------------------------------------------------------------- Fitch Ratings has affirmed the 'BBB' ratings on Northrop Grumman Corporation's senior unsecured debt and bank facility. The 'BBB' rating also applies to the senior unsecured debt of Northrop Grumman's subsidiaries, including Litton Industries and Northrop Grumman Space & Mission Systems Corporation (formerly TRW Inc.). Fitch has raised the rating on Northrop Grumman's convertible preferred stock to 'BBB-' from 'BB+'. The Rating Outlook has been revised to Positive from Stable for all classes of debt. Approximately $6 billion of securities is affected by these rating actions. The revision to the Rating Outlook reflects continued growth in revenues and free cash flow, additional debt reduction, and improvement in Northrop Grumman's credit protection measures. Fitch expects Northrop to follow a balanced cash deployment strategy, including both debt reduction and share repurchases. Northrop Grumman's ratings are supported by: -- the company's status as a top-tier defense contractor; -- high levels of U.S. defense spending; -- solid organic revenue growth; -- a healthy liquidity position; -- continued debt reduction; and -- an experienced management team with a successful track record of acquisition integration. Concerns focus on the performance of several programs and uncertainty regarding the U.S. Navy's budget plans. Liquidity at June 30, 2004, was approximately $2.7 billion, consisting of $559 million of cash and full availability under the $2.5 billion credit facility, offset by $398 million of short-term debt and current maturities. The bulk of the maturing debt in 2004 consists of $350 million of bonds due later in October. Northrop also has $250 million of bonds, which are callable this month. The company's cash resources will be augmented in November 2004 by the issuance of equity worth $690 million, related to the equity purchase contracts that are part of Northrop's outstanding equity security units -- ESUs. Cash resources could be further boosted if Northrop monetizes any of the securities received in the sale of TRW Automotive. Fitch estimates that these TRW securities (debt and equity) have a market value of at least $800 million. Northrop Grumman's debt-to-EBITDAP ratio for the last 12 months ended June 30, 2004 was 2.1 times (x), an improvement from 2.2x at the end of 2003. Interest coverage for the last 12 months was 6.0x up from 5.3x in 2003. Fitch expects further improvement in these credit statistics in 2004 as a result of additional debt reduction, lower interest expense, and EBITDAP growth. In November 2001, Northrop Grumman issued $690 million of Equity Security Units. These are two part securities. The first part of each unit consists of a contract to purchase $100 of Northrop stock on Nov. 16, 2004 (total inflow will be $690 million). The second part consists of a senior note due in 2006 with a principal amount of $100. These senior notes, which are included in total debt, were remarketed in August 2004, and the interest rate was reset to 4.1% from the original 5.25% rate. OGLEBAY NORTON: Judge Rosenthal Declines to Confirm Debtors' Plan ----------------------------------------------------------------- The Honorable Joel B. Rosenthal denied confirmation of the Second Amended Joint Plan of Reorganization filed by Oglebay Norton Company and its debtor-affiliates on July 23, 2004, in the United States Bankruptcy Court for the District of Delaware. Unsecured commercial creditors liked the Plan. The Plan proposed to reinstate their claims or pay them in full in cash. The holders of the Company's Senior Subordinated Notes supported the Plan. The Plan proposed to swap those bonds for an equity stake the Reorganized Company, delivering about a quarter-on-the-dollar in value to the noteholders. Current shareholders were slated to receive warrants to purchase new equity in exchange for their existing shares. Tort Claimants Balked A group of around 100,000 personal injury tort claimants didn't like the Plan at all. The toxic tort claimants hold asbestos and silica-related injury claims and sued the Debtors before they filed for chapter 11 protection on February 23, 2004. Judge Rosenthal rejected the Debtors' proposal for generic "pass- through" treatment for the asbestos and silica tort claims, rather than a concrete, supportable proposal to resolve and pay these claims. "We obviously are disappointed with the ruling [today], but we are gratified that the judge overruled all other objections related to the plan," said Michael D. Lundin, president and chief executive officer of the company. "Management continues to believe that our proposed plan of reorganization provides the best outcome for all stakeholders and would enable Oglebay Norton to emerge as a strong company with a new capital structure." Exclusivity Intact At the Debtors' behest, Judge Rosenthal approved an extension of the company's exclusive plan filing period afforded under 11 U.S.C. Sec. 1121 through October 20, 2004. Judge Rosenthal granted a concomitant extension of the company's exclusive period to solicit acceptances of a plan through December 20, 2004. Headquartered in Cleveland, Ohio, Oglebay Norton Company, mines, processes, transports and markets industrial minerals for a broad range of applications in the building materials, environmental, energy and industrial market. The Company and its debtor- affiliates filed for chapter 11 protection on February 23, 2004 (Bankr. D. Del. Case Nos. 04-10559 through 04-10560). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $650,307,959 in total assets and $561,274,523 in total debts. OMNI FACILITY: ValleyCrest Completes Landscape Assets Acquisition ----------------------------------------------------------------- ValleyCrest Companies, a privately held landscape organization with more than $700 million in revenue, has closed the previously announced acquisition of Omni Landscape Group. Omni's parent company, Omni Facility Services, filed for Chapter 11 protection from the U.S. Bankruptcy Court in June 2004. Under terms of the agreement, ValleyCrest has purchased substantially all of the assets of Omni Landscape Group. The company has become part of ValleyCrest's landscape maintenance division and will operate under the name ValleyCrest Landscape Maintenance. The acquisition expands ValleyCrest's operations in: -- Georgia, -- Pennsylvania, -- Maryland, -- Virginia, -- New York, and -- New Jersey, giving customers in these markets access to the extensive capabilities of one of the nation's leading landscape organizations. ValleyCrest expects the transaction to add approximately $50 million in revenue and 700 people to its team. Richard A. Sperber, President of ValleyCrest Companies, indicated that the union opens a new range of growth possibilities between firms that share similar cultures with an intense focus on quality work, superior customer service and career development. "This union brings together incredibly bright and talented people and we're excited to have the Omni people on our team," he said. "Our combined expertise will set us apart in the market and demonstrate our commitment to delivering outstanding service to our customers." Mr. Sperber emphasized that by joining forces with ValleyCrest, Omni's customers will not only retain the high levels of service they are accustomed to but will also gain access to enhanced resources. "In addition," he added, "we plan to take advantage of their reputation as a leader in turf management by learning from their success and business practices." Overall management of the integration is the responsibility of Roger J. Zino, President, ValleyCrest Landscape Maintenance. "First and foremost, we're going to take care of the people," said Mr. Zino. "From the beginning, we've been impressed by Omni's great teamwork, their customer focus, and the alignment of their values with our own," he said. "This is a talented and enthusiastic group of people and we know they'll have great careers with ValleyCrest moving forward." Mr. Zino also announced that ValleyCrest Landscape Maintenance will expand its leadership team with the addition of George Morrell, founder of Atlanta's Morrell Landscaping (acquired by Omni Facility Services in 1999), who has been named Vice President, and former Omni president, Mark Allen, who will lead the company's Northeast Region with responsibility for its operations and growth. "Mark and George know how to deliver high quality landscape maintenance and have extremely relevant experience on a strategic level," said Mr. Zino. "We're excited to welcome them as important additions to our senior team." About ValleyCrest Companies ValleyCrest Companies is privately held, with a workforce of more than 8,000 people nationwide and annual revenue in excess of $700 million. ValleyCrest Companies has five businesses: ValleyCrest Landscape Development, the nation's largest landscape construction company, ValleyCrest Landscape Maintenance, the nation's leading landscape maintenance provider, ValleyCrest Golf Course Maintenance, the nation's premier provider of golf course maintenance services, Valley Crest Tree Company, the largest mover and producer of containerized specimen trees in the western United States with over 800 acres of growing grounds and a supplier of garden art pottery and foliage, and U.S. Lawns, the fastest growing network of landscape maintenance franchises nationwide. About Omni Facility Headquartered in South Plainfield, New Jersey, Omni Facility Services, Inc. -- http://www.omnifacility.com/-- provides architectural, janitorial, landscaping, and electrical services. The Company filed for chapter 11 protection on June 9, 2004 (Bankr. S.D.N.Y. Case No. 04-13972). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $80,334,886 in total assets and $100,285,820 in total debts. OMNI FACILITY: Wants Plan Filing Period Extended to Dec. 6 ---------------------------------------------------------- Omni Facility Services, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for an extension, until Dec. 6, 2004, of the exclusive period during which the company -- and nobody else -- can file a plan of reorganization. The Debtors also ask for an extension of their time to solicit acceptances of that plan through Feb. 4, 2005. Omni and its affiliates operate five separate business groups. They tell the Court they are in the process of selling the assets in these five business groups on a going concern basis to minimize deterioration of enterprise value. The Debtors explain that, at this juncture, it would be premature to formulate a plan of reorganization or liquidation without the opportunity to weigh their options in selling their business groups as well as determining the extent of claims asserted by creditors. The Debtors' assure the Court that the prepetition lenders, postpetition lenders and the Official Committee of Unsecured Creditors are in favor of extending the exclusive periods. Headquartered in South Plainfield, New Jersey, Omni Facility Services, Inc. -- http://www.omnifacility.com/-- provides architectural, janitorial, landscaping, and electrical services. The Company filed for chapter 11 protection on June 9, 2004 (Bankr. S.D.N.Y. Case No. 04-13972). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $80,334,886 in total assets and $100,285,820 in total debts. OWENS CORNING: Judge Fullam Says Yes to Substantive Consolidation ----------------------------------------------------------------- In a non-fatal blow to the holders of Owens Corning's bank debt, Judge Fullam released his decision yesterday that the Debtors' estates should be substantively consolidated. The Banks, led by Credit Suisse First Boston, have argued that a ruling that Owens Corning's estates should be substantively consolidated will deprive them of nearly $1 billion in value. Substantial Identity Judge Fullam finds that "there is indeed substantial identity between the parent debt . . . and its . . . subsidiaries. All of the subsidiaries were controlled by a single committee, from a central headquarters, without regard to the subsidiary structure. * * * No subsidiary exercised control over its own finances." Separate Creditworthiness "There can be no doubt that the Banks relied on the overall credit of the entire Owens Corning enterprise," Judge Fullam says. "Each Bank's commitment was to the entire enterprise [and] Owens Corning's financial reporting was done on a consolidated basis. * * * In short, there is simply no basis for a finding that . . . the Banks relied upon the separate credit of any of the subsidiary guarantors." The cross-guarantees, Judge Fullam reasons, also militate in favor of substantive consolidation. This Isn't the Final Chapter Judge Fullam makes it clear that though substantive consolidation is justified, this does not mean that the Banks must be treated pari passu with all other unsecured claims. Judge Fullam suggests there may be a middle-of-the-road approach to treating the Banks claims in the context of a consensual chapter 11 plan. A copy of Judge Fullam's 8-page ruling is available at no charge at: http://bankrupt.com/misc/OWC_Substantive_Consolidation.pdf 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. PILLOWTEX CORP: Asks Court to Okay Hiring BDO Seidman as Auditor ---------------------------------------------------------------- Pillowtex Corp. and its debtor-affiliates seek the Court's authority to employ BDO Seidman LLP, as auditor of their employee benefit plans, nunc pro tunc to August 9, 2004. Specifically, BDO will audit: * the Pillowtex Corporation 401(k) Plan for Hourly Employees; * the Pillowtex Corporation 401(k) Plan for Salaried Employees; and * the Pillowtex Corporation Employee Medical Benefit Plan, as of and for the year ended December 31, 2003, and the year ending December 31, 2004. Gilbert R. Saydah, Jr., Esq., at Morris Nichols Arsht & Tunnell, in Wilmington, Delaware, relates that the Debtors originally planned to engage their former benefit plan auditor to perform the audits. The Debtors decided to turn to BDO because the prior auditor's fee proposal was significantly higher than BDO's. Since each of the Benefit Plans had more than 100 participants at the beginning of 2003, the United States Department of Labor and the Employee Retirement Income Security Act, as amended, require audits of the Plans as of and for the year ended December 31, 2003. The Debtors also expect that audits will be required as of and for the year ending December 31, 2004, for the 401(k) Plan for Hourly Employees and the 401(k) for Salaried Employees because each Plan had more than 100 participants at the beginning of 2004. The Debtors will pay $60,000 as compensation for BDO's services and reimburse the Firm's expenses related to the 2003 Benefit Plan audit. The expenses will be charged at actual costs incurred. BDO's compensation for any 2004 Benefit Plan audit will be determined at a later date, and will be subject to review pursuant to Section 330 of the Bankruptcy Code. Historically, the audit fees attributable to the 401(k) Plans were paid directly by the 401(k) Plans. As part of their Chapter 11 cases, the Debtors terminated the 401(k) Plans in October 2003 and substantially all of the 401(k) Plans' assets have been distributed to the plan participants. The 401(k) Plans, therefore, do not have enough assets to pay the audit fees. The Debtors' Benefit Plans have been administered through a committee comprised of employees. As a result of the layoff of substantially all of the Debtors' employees, there are only two remaining employees who serve on the committee. The Debtors require the services of both employees to govern and manage their affairs and help oversee the administration of their assets. Mr. Saydah informs Judge Walsh that if the audits are not performed, it is possible that a regulatory authority or some other interested party may seek to hold the remaining members of the committee liable for the failure to perform the audits. This could lead to penalties under the ERISA and the Internal Revenue Code of 1986, as amended. If the penalties were imposed, one of the two employees, who is a Pillowtex officer, would most likely seek indemnification from the Debtors pursuant to the indemnification provision in Pillowtex's Certificate of Incorporation and Bylaws, and pursuant to his separate indemnification agreement with the Debtors. The Debtors have consulted the Official Committee of Unsecured Creditors and its advisors regarding the proposed BDO engagement. The Creditors Committee supports the Debtors' employment of BDO. Susan A. Lister, partner at BDO, says that the Firm has extensive familiarity with the fields of accounting, auditing and taxation, as well as the accounting practices in insolvency matters in the bankruptcy courts in Delaware and in other states. Therefore, the Firm is well suited to provide auditing services to the Debtors. Ms. Lister assures Judge Walsh that she, nor any other members of BDO, had any connections with the Debtors, any other party-in- interest, or the United States Trustee in matters upon which the Firm is to be engaged. Ms. Lister, however, discloses that BDO: (a) represented the Creditors Committee in connection with the Debtors' initial Chapter 11 bankruptcy; and (b) is currently retained as the accountants to the Creditors Committee in connection with the Debtors' current cases. The Debtors believe that BDO's role as accountants to the Creditors Committee does not create a conflict on their proposed retention as auditor since the creditors' and the Debtors' interests are aligned in complying with the standard statutory audit requirements at the lowest possible cost. BDO also previously performed and is currently performing assurance, tax or other services for certain creditors and parties-in-interests. Fees for those services, however, represent less than 1% only of BDO's annual revenues and relate to matters totally unrelated to the Debtors' cases. Ms. Lister further points out that from time to time BDO has been retained and likely will continue to be retained by certain Pillowtex creditors. BDO intends to use commercially reasonable efforts to limit any engagements to matters unrelated to the Debtors' Chapter 11 cases. Ms. Lister ascertains that BDO does not represent any interest adverse to the Debtors or their estates. BDO is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sold top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a chapter 11 plan, and filed a second time on July 30, 2003 (Bankr. Del. Case No. 03-12339). The second chapter 11 filing triggered sales of substantially all of the Company's assets. David G. Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at Morris Nichols Arsht & Tunnel, represent the Debtors. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) POLYPORE INC: S&P Junks Subordinated Debt Rating ------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Polypore Inc. to 'B' from 'B+'. In addition, Standard & Poor's assigned its 'B' corporate credit rating to Polypore International Inc., the parent company of Polypore Inc., and its 'CCC+' rating to Polypore International's $193 million discount notes due Oct. 1, 2012. Standard & Poor's also lowered its rating on Polypore Inc.'s senior secured debt to 'B' from 'B+', and its rating on Polypore Inc.'s subordinated debt to 'CCC+' from 'B-'. Ratings on Polypore Inc. were removed from CreditWatch, where they were placed on June 10, on the announcement of the proposed IPO issuance of common stock by Polypore International. The outlook is stable. "The rating actions reflect the company's postponement of its previously announced plans for a common stock offering and, instead, the issuance of debt to redeem preferred stock and fund a distribution to the financial sponsor," said Standard & Poor's credit analyst Nancy Messer. Moreover, the company's recapitalization actions follow the loss of its largest customer in the health care segment and a slowdown in the China market that will weaken near-term operating performance. Charlotte, North Carolina-based Polypore is a global manufacturer of microporous membranes, a filtration technology used by makers of energy storage devices -- batteries -- and separations equipment found in health-care markets. The power markets account for about 50% of sales, health care 30%, and electronics 15%. Polypore is a wholly owned, indirect subsidiary of Polypore International which is controlled by the private equity firm Warburg Pincus LLC. Of the net proceeds of the discount notes, $150 million will be used to redeem the series A preferred stock of Polypore International held by Warburg Pincus and the balance will pay a dividend to the common stock holders. At close of the Polypore International $193 million discount notes issuance, the consolidated company had about $1.025 billion of total debt outstanding and adjusted total debt to EBITDA of more than 6x on trailing 12 months EBITDA as of June 30, 2004. The ratings reflect Polypore's very aggressive financial policy that more than offsets its strong niche business positions in various expanding industrial end markets. Reflected in the rating is the highly competitive industry in which Polypore operates, exposure to supplier concentration, and a weak financial profile. Several business factors mitigate these challenges, including: -- revenues that should benefit from sales growth potential exceeding GDP, -- end-market diversity, -- geographic diversity, -- proven technological expertise, and -- certain barriers that restrict entry to the industry. Upside rating potential is limited by Polypore's aggressive leverage and reduced EBITDA expectations in the intermediate term. Downside rating risk is limited by the expectation for free cash flow generation, resulting from good ongoing demand growth in Polypore's end markets, that should enable near-term debt reduction. RCN CORP: Wants Court Okay to Hire Kasowitz as Special Counsel -------------------------------------------------------------- RCN Corp. and its debtor-affiliates seek the Court's authority to employ Kasowitz, Benson, Torres & Friedman, LLP, as special conflicts counsel, effective as of September 15, 2004. Kasowitz Benson will provide legal representation on matters that the Debtors' primary bankruptcy counsel, Skadden Arps Slate Meagher & Flom, LLP, cannot provide due to a conflict, adverse interest, or other connection. Additionally, Kasowitz Benson is retained in connection with a significant claim asserted against the Debtors' estates as to which the Firm has particular expertise. Kasowitz Benson is a law firm of more than 160 attorneys and has been actively involved in numerous major Chapter 11 cases. Deborah M. Royster, RCN Corporation's Senior Vice President, General Counsel and Corporate Secretary, tells Judge Drain that Kasowitz Benson is well qualified to serve as special conflicts counsel in the Debtors' Chapter 11 cases. The Debtors will compensate Kasowitz Benson for its services based on the Firm's customary hourly rates: Members $475 - 775 Counsel and Associates 200 - 525 Paraprofessionals 90 - 200 The Firm will also be reimbursed for its actual and necessary expenses incurred. Kasowitz Benson will also render services on behalf of RCN's non- debtor affiliates. These services will be billed directly to the Non-Debtor Affiliates and not to the Debtors' estates. In circumstances where the services are rendered to both the Debtors and the Non-Debtor Affiliates, which are for the benefit of both, Kasowitz Benson will allocate a proportional amount of its fees and expenses for the services to the Non-Debtor Affiliates, and will only seek payment from the Debtors' estates of that portion allocated to the Debtors. Aaron H. Marks, a member of Benson Kasowitz, assures the Court that the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, and does not hold any interest adverse to the Debtors' estate. 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. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) RELIANCE GROUP: Bank Committee Releases RFSC Plan Voting Results ---------------------------------------------------------------- On behalf of the Official Unsecured Bank Committee, Elizabeth Feld, Esq., at White & Case, LLP, in New York, relates that, in accordance with the solicitation procedures approved by the Bankruptcy Court, creditors entitled to vote on the Second Amended Plan of Reorganization of Reliance Financial Services Corporation were instructed to return their ballots to White & Case. Ms. Feld was the attorney at White & Case responsible for collecting and tabulating any ballots received. As of the July 7, 2004 Voting Record Date, holders of Claims in Classes 2, 4a and 4b were entitled to vote to accept or reject the Plan. For a ballot to be counted as valid, the ballot must have been properly completed and executed by the holder of a claim or that holder's authorized representative, and must have been received by the 4:00 p.m. (Eastern time) deadline on August 16, 2004. The tabulation of ballots indicate that all Voting Class accept the Plan: Amount % of Amount Amount % of Amount Class Accepting Voted Rejecting Voted ----- --------- ----------- --------- ----------- 2 $149,755,704 100.00% $0 0.00% 4a 0 0.00% 0 0.00% 4b 288,000,000 100.00% 0 0.00% Number % of Amount Number % of Amount Class Accepting Voted Rejecting Voted ----- --------- ----------- --------- ----------- 2 9 100.00% 0 0.00% 4a 0 0.00% 0 0.00% 4b 1 100.00% 0 0.00% REMOTE DYNAMICS: Nasdaq Affords Grace Period to Regain Compliance ----------------------------------------------------------------- Remote Dynamics, Inc. (Nasdaq:REDI), a leading provider of telematics-based management solutions for commercial fleets, received a written notice from the Nasdaq Listing Qualifications Department that for the previous 30 days, the bid price for the company's common stock had closed below the minimum $1.00 per share requirement for continued inclusion under Marketplace Rule 4310(C)(4). In accordance with Marketplace Rule 4310(C)(4), the company was provided 180 calendar days, or until Mar. 30, 2005, to regain compliance. In order to regain compliance, the company must demonstrate a closing bid price for its common stock of $1.00 per share or more for a minimum of 10 consecutive business days. The written notice further provided that if compliance with the $1.00 minimum bid price requirement cannot be demonstrated by the company by Mar. 30, 2005, the Staff will grant the company an additional 180 calendar days to regain compliance, if at that time, the company meets The Nasdaq SmallCap Market initial listing requirements as set forth in Marketplace Rule 4310c, except for the $1.00 minimum bid price requirement. The written notice provided that if the company has not regained compliance with the $1.00 minimum bid price requirement during the second 180 day compliance period, but again satisfies The Nasdaq SmallCap Market initial listing requirements as set forth in Marketplace Rule 4310c, except for the $1.00 minimum bid price requirement at the end of such period, the company would be afforded an additional compliance period up to its next shareholder meeting to regain compliance, provided that the company commits: (1) to seek shareholder approval for a reverse stock split at or before its next shareholder meeting; and (2) promptly thereafter effects the reverse stock split. Such shareholder meeting must occur within 2 years following Oct. 1, 2004. If the company fails to regain compliance with $1.00 minimum bid requirement during the third compliance period and is not eligible for an additional compliance period, the Staff would notify the company at that time that the company's securities would be delisted and the company would have the right to appeal such delisting to the Listing Qualifications Panel which stays the effect of the delisting pending a hearing on the matter before the Panel. About Remote Dynamics, Inc. Remote Dynamics, Inc. -- http://www.remotedynamics.com/-- markets, sells and supports state-of-the-art fleet management solutions that contributes to higher customer revenues and improved operator efficiency. Combining the technologies of the global positioning system (GPS) and wireless vehicle telematics, the company's solutions improve the productivity of mobile workers by providing real-time position reports, route information and exception based reporting designed to highlight mobile workforce inefficiencies. Based in Richardson, Texas, the company also markets, sells and supports a customized, GPS-based fleet management solutions for large fleets like SBC Communications, Inc., which has approximately 30,000 installed vehicles now in operation. At May 31, 2004, Remote Dynamics' balance sheet showed a $14,693,000 stockholders' deficit compared to a $19,490,000 in positive equity at August 31, 2003. RESIDENTIAL ASSET: Moody's Shaves Two Certificate Class Ratings --------------------------------------------------------------- Moody's Investors Service has upgraded four certificates and downgraded three certificates, from Residential Asset Mortgage Products, Inc. Trust asset-backed securitization deals from Series 2002-RS2 and Series 2002-RS3. Each transaction consists of a fixed rate pool (Group I) and adjustable rate pool (Group II). These pools are made up of mortgage loans that are not eligible for inclusion in Residential Funding Corporation's core loan program securitization because they do not satisfy the underlying guidelines for those programs. The mortgage loans were originated by affiliates of Residential Funding Corporation and serviced by HomeComings Financial Network, Inc., a wholly owned subsidiary of Residential Funding Corporation. The Class M-I-1 and M-I-2 fixed rate certificates from Series 2002-RS2 and RS3 deals were upgraded based on the substantial build-up in credit support. The projected pipeline losses are not expected to significantly affect the credit support for these certificates. The seasoning of the loans and low pool factor reduce loss volatility. The most subordinate fixed rate and the two most subordinate adjustable rate certificates from Series 2002-RS2 deal have been downgraded because existing credit enhancement levels are low given the current projected losses on the underlying pools. Losses are higher than expected and projected loss could cause eventual erosion of the overcollateralization. Complete rating actions are: Issuer: Residential Asset Mortgage Products, Inc. Upgrades: -- Series 2002-RS2; Class M-I-1, upgraded to Aaa from Aa2 -- Series 2002-RS2; Class M-I-2, upgraded to Aa3 from A2 -- Series 2002-RS3; Class M-I-1, upgraded to Aaa from Aa2 -- Series 2002-RS3; Class M-I-2, upgraded to Aa2 from A2 Downgrades: -- Series 2002-RS2; Class M-I-3, downgraded to Ba2 from Baa2 -- Series 2002-RS2; Class M-II-2, downgraded to Baa1 from A2 -- Series 2002-RS2: Class M-II-3, downgraded to Ba3 from Baa2 SALEM COMMS: Inks Pact with Univision to Exchange Radio Assets -------------------------------------------------------------- Univision Communications Inc. (NYSE: UVN), the leading Spanish- language media company in the United States, has reached an agreement with Salem Communications, Inc., to exchange the assets of: -- WIND-AM (560 KHz, licensed to Chicago, Illinois), -- KOBT-FM (100.7 MHz, licensed to Winnie, Texas), -- KHCK-AM (1480 KHz, licensed to Dallas, Texas), and -- KOSL-FM (94.3 MHz, licensed to Jackson, California), serving the Chicago, Northern Houston, Dallas, and Sacramento markets, respectively, for the assets of: -- WZFS-FM (106.7 MHz, licensed to Des Plaines, Illinois), and -- KSFB-FM (100.7 MHz, licensed to San Raphael, California), serving the Chicago and Northern San Francisco markets, respectively. The asset exchange provides an opportunity for Univision Radio to strengthen its radio station portfolio with facilities that are more closely aligned with its strategic and financial performance objectives. Univision Radio intends to transfer its Regional Mexican "Radio Exitos" music format from WIND-AM to WZFS-FM. KSFB- FM will combine with Univision Radio's KEMR-FM to more fully cover the multi-county San Francisco and San Jose markets with a simulcast of its Regional Mexican "Viva" format. The exchange of the Chicago and Dallas AM stations will not affect the coverage of RadioCadena Univision, the Company's recently launched AM Network, which is broadcast over other AM stations owned by Univision Radio in those markets. McHenry T. Tichenor, Jr., President of Univision Radio, commented, "We are very pleased to have struck a deal that will improve our strong competitive positions in San Francisco and Chicago, the fourth and fifth largest Hispanic radio markets in the United States. These moves reflect our commitment to deploy our resources to areas where we believe they will yield the greatest returns." The transaction, which is subject to regulatory approval and other closing conditions, is expected to close in the first quarter of 2005. Univision Communications anticipates taking a charge of up to approximately $2.5 million related to severance and the closing of the Sacramento facilities in the fourth quarter or 2005 first quarter. The parties to the transaction intend to treat the exchange as a "like-kind" exchange for federal tax purposes. Univision Communications Inc. is the premier Spanish-language media company in the United States. Univision is headquartered in Los Angeles with television network operations in Miami and television and radio stations and sales offices in major cities throughout the United States. * * * As reported in the Troubled Company Reporter on Sept. 16, Standard & Poor's Ratings Services revised its outlook on Salem Communications Corp. to stable from negative, based on the company's improving financial profile. The 'B+' long-term corporate rating on the company was affirmed. The Camarillo, California-based radio broadcasting company had total debt outstanding of approximately $284.4 million at June 30, 2004. "The outlook revision recognizes Salem's lower leverage following an approximately $66 million equity-financed reduction of debt," said Standard & Poor's credit analyst Alyse Michaelson. Pro forma debt to EBITDA was 5.65x at June 30, 2004, compared with leverage closer to 7x prior to the financing. Credit measures have also strengthened through steady growth in EBITDA, notwithstanding radio advertising's muted recovery. Salem has a comfortable cushion of financial covenant compliance under the 7.25x leverage covenant contained in its bank agreement. The company is expected to continue its growth plans prudently in order to accommodate a tightening leverage covenant on Dec. 31, 2004, and again at year-end 2005. The rating and outlook incorporate the expectation that Salem's ongoing acquisition activity will proceed at a more reasonable pace than it has historically and will be financed in a manner that preserves debt to EBITDA in the 5x-6x range. Salem began generating discretionary cash flow in 2003, converting approximately 36% of EBITDA into discretionary cash flow, which could be used to help fund acquisitions or reduce debt. The rating on Salem reflects: * high financial risk from debt-financed radio station acquisitions, * a short track record of generating discretionary cash flow, and * its niche religious programming focus. These factors are partially offset by: * the company's expanding large-market radio station clusters, * increasing scale, * stable cash flow from block programming time sales, and * good asset value. SOUTHERN STATES: Moody's Places B3 Rating on Senior Unsec. Notes ---------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to the prospective senior unsecured note issue of Southern States Cooperative, Inc., a B2 senior implied rating, and an SGL-2 speculative grade liquidity rating. Proceeds from the prospective $100 million note issue will refinance existing debt. The ratings outlook is stable. Southern States' ratings reflect material leverage on highly competitive, low margin businesses that are exposed to heavy seasonality and other agricultural risks. The ratings also consider, however, that Southern States provides needed products to its customer base and that its regional scale provides an effective distribution infrastructure enabling its suppliers to reach a large and fragmented user base. Southern States' ratings also draw support from its good liquidity position as reflected in the SGL-2 rating, particularly given the cooperative's exposure to uncontrollable agricultural risks that can result in earnings variations. The unsecured notes are notched down from the senior implied rating to reflect their effective subordination to the company's senior secured credit facility. The notes are guaranteed by subsidiaries. Moody's assigned the following ratings to Southern States: * $100 million guaranteed senior unsecured notes, due 2012 -- B3, * Senior implied rating -- B2, * Unsecured issuer rating -- Caa1, * Speculative grade liquidity rating -- SGL-2, * Ratings outlook -- Stable. Moody's does not currently rate Southern States' existing corporate debt, and Moody's will not be rating the company's prospective $165 million senior secured five-year revolving credit. Southern States' ratings are restrained by high leverage relative to free cash flow, which leaves only modest financial flexibility for downside earnings volatility. The company operates in highly competitive, fragmented businesses, with low margins and returns. Its earnings are concentrated in three months of the year and are susceptible to variation from uncontrollable agricultural risks. Factors such as weather, commodity prices, animal diseases, and governmental policies and regulations can lead to reduced plantings, shorter planting seasons, or lower animal feed requirements, which, in turn, can negatively affect Southern States' sales and earnings. Working capital requirements are material. Southern States' ratings are supported by: (a) its long operating history, (b) established distribution network, and (c) consistent customer base. As an agricultural supply cooperative, many of Southern States' customers also are cooperative members/owners. The products sold by Southern States are largely non-discretionary to its customer base, and, although the markets are highly fragmented, the company has leading positions in its region for its primary products. The company's customer relationships and regional infrastructure enable it to function effectively as a distributor of products for its major suppliers. The company's sales and earnings also benefit from product diversity (fertilizer, feed, crop chemicals, petroleum products, other farm products). In addition, the ratings take into account the major restructuring of operations over the past few years to restore profitability and reduce debt. The SGL-2 rating reflects Southern States' good liquidity position upon closing the prospective $165 million revolving credit. Moody's expects the company to cover its cash needs internally over the next year, although high seasonality will require revolver drawings on an interim basis during the year. The prospective revolver, which is governed by a monthly borrowing base, provides sufficient long term excess committed availability. Moody's does not expect the level of the company's utilization to trigger the facility's financial covenant, which becomes effective when availability declines to below $25 million. The company's assets are secured, limiting alternate sources of liquidity, although the company could sell discrete businesses (such as propane) without affecting the rest of its operations. The stable ratings outlook reflects Moody's expectation that Southern States has sufficient financial and operating flexibility to weather normal pressures from unfavorable agricultural market conditions. If unusually severe conditions constrain liquidity and push the company into a material cash flow deficit, the ratings could be downgraded. The ratings could be positively impacted over time if the company can sustain improved profitability from its strategic growth initiatives and decrease average leverage to below 4x EBITDA. Southern States' pro forma debt at 6/30/04 is $143.5 million, but average outstandings during the year are higher due to the company's seasonality. Moody's estimates adjusted pro forma leverage of about 5.5x LTM (6/30/04) EBITDAR, taking into account operating leases, receivables financed with recourse, and average debt balances over the year. Estimated pro forma FCF/Average Adjusted Debt is about 5%, but would approach breakeven in a year impacted by unfavorable market conditions. The company has an off balance sheet pension liability which it plans to fund over the next five years from operating cash flow. The company is an agricultural supply cooperative, but has not paid patronage refunds in cash since 1998, except in very limited circumstances. Moody's does not expect payments to resume unless profitability is sustained at a much increased level. The cooperative equity base restrains the ability to raise equity capital and increases reliance on debt. The company's adjusted EBITDA margins are low, at about 3%. Pro forma coverage of interest and rentals after capital spending is about 2.1x. Southern States Cooperative, Inc., has headquarters in Richmond, Virginia. The company reported revenues of $1.3 billion in FY04 (ending 6/30/04). It supplies agricultural products and services in ten states, with sales largely concentrated in Virginia, Kentucky, North Carolina, Maryland and Georgia. SPECTRASITE INC: Robert Katz & Richard Masson Resign From Board --------------------------------------------------------------- SpectraSite, Inc. (NYSE: SSI), one of the largest wireless tower operators in the United States, reduced the size of its Board of Directors from ten members to eight members. Robert Katz and Richard Masson, each of whom is affiliated with former significant shareholders of the Company, have resigned from the company's Board of Directors. Robert Katz is associated with Apollo Management, L.P., and Richard Masson is associated with Oaktree Capital Management, LLC. Affiliates of Apollo Management V, L.P., and certain funds managed by Oaktree Capital Management, LLC, were the Company's largest shareholders when the Company emerged from restructuring on February 10, 2003, and Messrs. Katz and Masson were named members of SpectraSite's Board of Directors at that time. Since then, Apollo Management and Oaktree Capital Management have liquidated their ownership positions in the company in three secondary offerings, the last of which was completed on May 10, 2004. In describing the departure of Messrs. Katz and Masson, Stephen H. Clark, President and CEO of SpectraSite stated, "Rob Katz and Richard Masson have been instrumental to SpectraSite's success over the last two years. However, since their firms no longer maintain an ownership position in the Company, we fully understand their decision. Given the expansion of our Board of Directors that took place in June of this year, I am confident in saying that SpectraSite has never been in a stronger position from a Board of Directors and a governance standpoint." On June 22, 2004, SpectraSite named six new members to its Board of Directors. After giving effect to the departure of Messrs. Katz and Masson, SpectraSite's Board of Directors will consist of eight members, six of whom are independent directors. About SpectraSite, Inc. SpectraSite, Inc. -- http://www.spectrasite.com/-- based in Cary, North Carolina, is one of the largest wireless tower operators in the United States. At June 30, 2004, SpectraSite owned or operated approximately 10,000 revenue producing sites, including 7,604 towers and in-building sites primarily in the top 100 markets in the United States. SpectraSite's customers are leading wireless communications providers, including AT&T Wireless, Cingular, Nextel, Sprint PCS, T-Mobile and Verizon Wireless. * * * As reported in the Troubled Company Reporter on Sept. 15, Standard & Poor's Ratings Services raised its ratings on Cary, North Carolina-based wireless tower operator SpectraSite, Inc. and its related entities. The corporate credit rating was raised to 'B+' from 'B'. The rating on SpectraSite Communications Inc.'s bank loan was raised to 'BB-' from 'B+'. A recovery rating of '1' was assigned to the bank loan, indicating a high expectation for full recovery of principal in the event of a default. The rating on SpectraSite's senior unsecured debt (which was raised to 'B-' from 'CCC+') is two notches lower than the corporate credit rating due to the large amount of bank debt in the capital structure relative to the company's overall asset base. The ratings outlook is positive. At June 30, 2004, the company had total debt outstanding of about $640 million. "The upgrade reflects the company's successful track record of consistently increasing operating cash flows from SpectraSite's wireless tower business since February 2003, when the company emerged from bankruptcy," said Standard & Poor's credit analyst Catherine Cosentino. "This has translated into ongoing improvement in its financial profile." Primarily through increases in wireless tower revenues and operating cash flow of about 12% and 21%, respectively, on a year- over-year basis for the second quarter of 2004, the company was able to lower its overall debt to annualized EBITDA metric to about 4x for the three months ended June 30, 2004, from about 5x for the comparable period in 2003 (including operating lease adjustments). Such revenue growth has been accomplished through increased co-location on the company's towers, as well as contract price escalations for existing tenants. Moreover, with the completion of the SBC purchase commitment, the company is positioned to accomplish even further improvement in its overall financial profile. SPIEGEL INC: Modifies Automatic Stay for Lederers to Pursue Suit ---------------------------------------------------------------- On November 16, 1999, Richard Lederer, together with his wife, Renee, commenced an action in the Supreme Court of the State of New York, County of New York, seeking, inter alia, compensation for injuries sustained when Mr. Lederer was struck on the head by a wood beam on September 11, 1997, while he was working on an Eddie Bauer, Inc., retail store undergoing construction located at 600 Madison Avenue, in New York. On September 11, 2003, Mr. Lederer filed two proofs of claim -- Claim Nos. 1627 and 1651 -- against Eddie Bauer for $10,500,000. The Lederers have not filed proofs of claim against any other Debtor. The Debtors have engaged in productive discussions with the Lederers' attorneys. Both parties agree that: (a) The automatic stay will be modified solely to permit the parties to prosecute and defend against the Litigation and to take actions necessary to exercise their rights in the Litigation, provided, however, that the Lederers may enforce or execute on any settlement or judgment entered by a court of competent jurisdiction, or other disposition of the underlying claims in the Litigation only to the extent the claims are covered by proceeds from any of the Debtors' applicable liability insurance policies and subject to any coverage defenses in the applicable insurance policies and set-off by applicable self-insured retention or deductible amounts, and only to the extent permitted by the settlement, judgment, or other disposition. The Lederers will not have allowed claims pursuant to Section 502 of the Bankruptcy Code or otherwise against the Debtors or their estates and will have no right to share in any distribution from the Debtors or their estates, whether under a reorganization plan or otherwise. Moreover, any proceeds of the Debtors' applicable liability insurance policies will not include any amounts payable pursuant to any insuring agreement that obligates or requires the Debtors to reimburse, fund or otherwise pay an amount directly or indirectly to any third party as a condition or consequence of the defense, settlement, judgment or other disposition of the Litigation. (b) The Lederers will not engage in any efforts to collect any amount from the Debtors, any person indemnified by the Debtors, or any person listed as an additional insured under the Debtors' liability insurance policies. Neither the Debtors nor any of the Indemnities will be required to make any payment or distribution to the Lederers on account of any claim asserted by the Lederers or on account of any proof of claim or request that either Mr. Lederer or his wife has filed or asserted, or may file or assert, against any of the Debtors in their Chapter 11 cases. The Proofs of Claim and any other Bankruptcy Claims that have been filed or asserted by the Lederers are, therefore, withdrawn. The Lederers agree that, in addition to withdrawing all proofs of claim previously filed or asserted against the Debtors by or on behalf of the Lederers, the Lederers will not file any other proofs of claim against the Debtors. (c) The Lederers waive any and all claims for recovery against the Debtors and the Indemnities, other than their claim against the insurance proceeds. The Lederers further waive any right to prosecute any claim for punitive damages against the Debtors, any Indemnitee, or the Debtors' insurers whether or not this claim is currently asserted. The Lederers further specifically agree that any settlement of the Litigation will include a general release of all claims against the Debtors and the Indemnities. (d) Nothing in the Stipulation will affect: * the parties' rights to prosecute or defend against the merits of the allegations asserted in the Litigation and any subsequent appellate proceedings with respect to the Litigation; or * the Debtors' rights to seek contribution or indemnification from any co-defendant or any other entity. (e) The Lederers will irrevocably waive any rights to seek further relief from the automatic stay. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and 1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) SUMMIT PROPERTIES: S&P Puts BB+ Rating on $170M Senior Notes ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings and outlook on Camden Property Trust (Camden; BBB/Stable) following the company's announcement that it intends to acquire Summit Properties Incorporated for roughly $1.9 billion, including assumed debt. Roughly $1.1 billion of Camden's senior notes are impacted by the affirmation. Additionally, Standard & Poor's placed its 'BBB-' corporate credit and 'BB+' senior unsecured note ratings on Summit on CreditWatch with positive implications, affecting $170 million of senior notes. Though Camden appears to be paying a full price for Summit's high quality assets, the transaction is being financed in a prudent fashion, and post-closing portfolio diversity and asset quality will improve for the combined entity. Leverage could rise modestly and secured debt levels will increase more significantly, but both measures are expected to remain within acceptable parameters for Camden's current rating. Integration risk should be somewhat limited, given Summit's smaller operating platform and Camden's experience of successfully absorbing prior acquisitions. Under terms of the agreement, Camden will acquire each Summit share for an average of $31.37, representing a 13.5% premium over Summit's closing stock price. Summit shareholders will be able to elect either cash or 0.6687 Camden shares subject to a limit of $434 million in cash and 14.1 million Camden common shares. This results in a 60/40 equity-to-cash financing. Camden intends to finance the cash portion through a combination of asset sales and contributions to joint ventures for expected net proceeds in the $350 million to $500 million area. Depending on the timing of the asset sales and joint venture formation, Camden has obtained a backup bridge loan. Camden will also assume roughly $750 million of debt, including about $500 million of mortgage debt. The transaction is expected to close in early 2005, and is subject to shareholder approval, as well as customary closing conditions. The acquisition adds a high quality portfolio of more than 14,000 stabilized units in the Washington D.C. metro area, Southeast Florida, Atlanta, Charlotte, and Raleigh, resulting in a pro-forma combined portfolio of more than 66,000 units located in 13 states. Physical occupancy for both portfolios was roughly 94% at June 30, 2004. Furthermore, Camden also acquires a development pipeline, primarily in Washington, D.C., Southeast Florida, and Raleigh. The combination enhances Camden's asset quality, given Summit's comparatively younger, higher quality communities, and improves Camden's geographic diversification. The acquisition gives Camden immediate exposure in the coveted, more supply constrained Washington, D.C. and Southeast Florida markets. Furthermore, the acquisition, combined with planned asset sales, will reduce Camden's exposure in its largest existing markets of Las Vegas, Houston, Dallas, and Tampa. Leverage is expected to remain fairly stable due to the sizeable equity component of the acquisition financing. Coverage measures are expected to deteriorate modestly due to Summit's lower coverage metrics that are impacted by a component of costly preferred units in its capital structure, as well as the drag from development. As of June 30, 2004, Camden's debt service coverage was 2.5x and fixed charge coverage was 2.2x. On a combined basis, these metrics are projected to decline 10 to 20 basis points in 2005, which is still adequate for the assigned rating. Camden expects these measures return to historical levels in 2006. Total coverage of all obligations including common stock is expected to remain adequate at just over 1x. Finally, debt maturities over the next two years for the combined entity appear very manageable; Summit recently repaid a $50 million August 2004 maturity, and has two smaller $25 million note senior notes coming due in 2005 and 2006. Camden has no senior notes maturing in 2005 and roughly $175 million coming due in 2006. While the acquisition is conservatively financed, secured debt levels will rise with the combination, but not to alarming levels, given Camden historically low levels of secured debt on its balance sheet. Secured debt-to-undepreciated assets will roughly double to 14% in the first quarter of 2005 from 7% at June 30, 2004. Encumbered NOI will commensurately increase from roughly 20% to 24%. Camden's intent is to reduce secured debt levels over time, as mortgages mature or prepayment is economical. It is expected that Summit's outstanding senior unsecured notes will be assumed by Camden and that they will be pari-passu with Camden's existing senior notes. Ratings Affirmed Camden Property Trust Rating ------ Corporate Credit BBB/Stable Senior Unsecured Debt BBB Ratings Placed On Creditwatch Positive Summit Properties Inc./Summit Properties Partnership L.P. Rating ------ To From -- ---- Corporate Credit BBB-/Watch Pos BBB-/Stable Senior Unsecured Debt BB+/Watch Pos From BB+ SUMMIT PROPERTIES: Inks Merger Pact with Camden Property Trust -------------------------------------------------------------- Camden Property Trust (NYSE:CPT) and Summit Properties Inc. (NYSE:SMT) have executed a definitive merger agreement pursuant to which Summit will be merged with and into a wholly owned subsidiary of Camden. The total transaction value, including the assumption of Summit debt, is approximately $1.9 billion, or $31.37 per Summit share, based on the closing price of Camden's shares on Oct. 1, 2004. "This strategic merger takes both Camden and Summit to the next level in size and potential," said Richard J. Campo, chairman and CEO of Camden. "This merger creates the fifth largest multifamily public company in the U.S. with a $5.7 billion total market capitalization and a $2.9 billion equity market cap." "This is good news for our stockholders and our Associates," said Steve LeBlanc, CEO of Summit. "Our stockholders will receive a premium over the current share price as well as a 26% increase in annual dividends for those electing Camden shares in the merger. Our Associates will have the benefit of working with a dynamic, growing organization that, like Summit, has a long tradition of excellence." D. Keith Oden, president and COO of Camden, sees this move as the perfect geographic and product alignment. "It is hard to imagine a company that is a better fit than Summit. Their five core markets - Washington, D.C., Southeast Florida, Atlanta, Raleigh and Charlotte - are projected to be in the top 26 employment growth markets for the next five years, and the only shared market with Camden is Charlotte, N.C. We believe that this will be the best platform in the industry from which to produce future FFO growth." Under the terms of the merger agreement, Summit stockholders may elect, on a share-by-share basis, to receive either $31.20 in cash or 0.6687 of a Camden common share at the closing. These elections are subject to reallocation so that the aggregate amount of cash issued in the merger to Summit's stockholders will equal approximately $434.4 million. The merger agreement may be terminated by Summit if the value of the share consideration payable to Summit stockholders decreases to below $39.31 per Camden share, during a period leading up to the merger, unless Camden elects to increase the exchange ratio to maintain this value. The limited partners in Summit's operating partnership will be offered, on a unit-by-unit basis, the opportunity to redeem their partnership units for $31.20 in cash per unit or to remain in the partnership following the merger at a unit valuation equal to 0.6687 of a Camden common share. The Boards of both companies have approved the transaction, which remains subject to approval by the holders of Camden and Summit common shares and by the holders of limited partnership interests in Summit's operating partnership. Camden will pay approximately $434.4 million and issue approximately 14.0 million new Camden common shares and operating partnership units in the transaction (assuming that all of the holders of operating partnership units elect to remain in the partnership following the merger). The merger is currently expected to close in the first quarter of 2005. The merger agreement also calls for two of Summit's current directors, Messrs. William B. McGuire Jr. and William F. Paulsen, to join the Camden board following the merger. Camden currently expects to form a joint venture and transfer to the venture multifamily properties with an estimated value of $450 million to $500 million. Camden anticipates that it will retain a minority interest in the venture and continue to provide property management services for the properties transferred to the venture. Alternatively, Camden may sell these properties to third party purchasers. Camden will use a portion of the proceeds from these transactions to fund the cash portion of the merger consideration. Deutsche Bank and Locke Liddell & Sapp LLP advised Camden in the transaction. J.P. Morgan Securities Inc. and Goodwin Procter LLP advised Summit in the transaction. Additionally, Banc of America Securities LLC advised Camden with respect to financing on this transaction, with Bank of America, N.A. providing a $500 million bridge loan financing commitment. About Camden Property Trust Camden Property Trust is a real estate company engaged in the ownership, development, acquisition, management and disposition of multifamily apartment communities. For additional information regarding Camden, please contact Camden's Investor Relations Department at 800-922-6336 ext. 2787 or 713-354-2787, or visit Camden's Web site at http://www.camdenliving.com/ About Summit Properties Summit Properties Inc. is a real estate investment trust that focuses on the operation, development, and acquisition of luxury apartment communities. For additional information regarding Summit, please contact Summit at 704-334-3000, email Summit at email@summitproperties.com, or visit Summit's Web site at http://www.summitproperties.com/ * * * Standard & Poor's Ratings Services affirmed its ratings and outlook on Camden Property Trust (Camden; BBB/Stable) following the company's announcement that it intends to acquire Summit Properties Incorporated for roughly $1.9 billion, including assumed debt. Roughly $1.1 billion of Camden's senior notes are impacted by the affirmation. Additionally, Standard & Poor's placed its 'BBB-' corporate credit and 'BB+' senior unsecured note ratings on Summit on CreditWatch with positive implications, affecting $170 million of senior notes. TROPICAL SPORTSWEAR: Sells South Pacific Division for $3 Million ---------------------------------------------------------------- Tropical Sportswear Int'l Corporation (Nasdaq:TSIC), a designer, producer and marketer of high-quality branded and retailer private branded apparel, has sold its South Pacific division to the division's current senior management for $3.0 million. The division, which has annual sales of approximately $8.0 million, sells products marketed under the Farah(R) and Savane(R) brands to department stores and specialty retailers in Australia and New Zealand. The transaction includes a sub-license agreement for the use of the two trademarks. In connection with the sale, TSI expects to record a non-cash loss of approximately $3.5 million during its fiscal fourth quarter. "As TSI moves forward with its new business strategy, we continue to look for opportunities to further improve our operations and position the company for long-term success," said CEO Michael Kagan. "The Farah(R) and Savane(R) brands are popular among consumers in the South Pacific region," said Paul Box, Managing Director. "This transaction presented a win-win opportunity for both parties, and we are looking forward to continuing to work with TSI through our sub-license agreement." Management Changes Frank Maccarrone has resigned as the company's chief operating officer. He was primarily responsible for sourcing activities. Bill Johnsen, a director at Alvarez & Marsal who has extensive operational experience in a variety of industries, will assume the responsibilities until a new head of sourcing is identified. "TSI is working to put in place the talent necessary to take the company to the next level and chart a course for a bright future," said CEO Michael Kagan. "We are pleased that Bill Johnsen, who has been working with TSI for the past several months, will be overseeing our sourcing activities on an interim basis as we seek a strong, experienced individual to head this part of our operations long-term." Tropical Sportswear Int'l Corporation (Nasdaq:TSIC) is a designer, producer and marketer of high-quality branded and retailer private branded apparel products that are sold to major retailers in all levels and channels of distribution. Primary product lines feature casual and dress-casual pants, shorts, denim jeans, and woven and knit shirts. Major owned brands include Savane(R), Farah(R), Flyers(TM), The Original Khaki Co.(R), Bay to Bay(R), Two Pepper(R), Royal Palm(R), Banana Joe(R), and Authentic Chino Casuals(R). Licensed brands include Bill Blass(R) and Van Heusen(R). Retailer national private brands that we produce include Puritan(R), George(TM), Member's Mark(R), Sonoma(R), Croft & Barrow(R), St. John's Bay(R), Roundtree & Yorke(R), Geoffrey Beene(R), Izod(R), and White Stag(R). TSI distinguishes itself by providing major retailers with comprehensive brand management programs and uses advanced technology to provide retailers with customer, product and market analyses, apparel design, and merchandising consulting and inventory forecasting. * * * In its Form 10-Q for the quarterly period ended April 3, 2004, filed with the Securities and Exchange Commission, Tropical Sportswear International Corporation reports: "On December 15, 2003, we paid the semi-annual interest payment of $5.5 million to the holders of our senior subordinated notes. On December 16, 2003, availability under our Facility fell below $20 million, triggering financial covenants which we violated. This caused us to be in technical default under the Facility. On January 12, 2004, we amended the Facility with Fleet Capital, which among other things reduced aggregate borrowings to $70 million. The default under the Facility was waived on January 12, 2004 by the terms of the Amended Facility. Although our Amended Facility provides for borrowings of up to $70 million, the amount that can be borrowed at any given time is based upon a formula that takes into account, among other things, our eligible accounts receivable and inventory, which can result in borrowing availability of less than the full amount. Additionally, the Amended Facility contains a $10 million availability reserve base and higher rates of interest than the Facility. The $10.0 million availability reserve base was met as of April 3, 2004 and through the date of this filing. The Amended Facility also contains monthly financial covenants of minimum EBITDA levels, which began February 2004, and a consolidated fixed charge coverage ratio and consolidated EBIT to consolidated interest expense ratio which begin March 2005. The fiscal 2004 minimum EBITDA levels are cumulative month amounts beginning in the second quarter of fiscal 2004. The minimum EBITDA threshold for fiscal 2004 ranges from $1.8 million for the two months ending February 29, 2004 to $11.8 million for the nine months ending October 2, 2004. We were in compliance with the EBITDA covenants as of April 3, 2004, and had $13.2 million available for borrowing under the Amended Facility. While we believe our operating plans, if met, will be sufficient to assure compliance with the terms of the Amended Facility, there can be no assurances that we will be in compliance through fiscal 2004." TXU GAS: Moody's Withdraws Ratings Following Atmos Purchase ----------------------------------------------------------- Moody's Investors Service has withdrawn all of TXU Gas Company and its supported companies' debt and preferred ratings (Baa3 sr. uns., Ba1 subordinated, Ba2 preferred stock, (P)Baa3/(P)Ba1shelf) following the defeasance of all of those obligations. Retirement of these obligations was required under "change of control" provisions in TXU Gas's debt indentures and was triggered by the closing of the sale of substantially all its assets to Atmos Energy Corporation on October 1, 2004. Adequate funds to defease these obligations have been placed with trustees, and TXU Gas's obligations under them have been satisfied and discharged. Headquartered in Dallas, Texas, TXU Gas Company, is a subsidiary of TXU Corporation, a diversified energy company. UAL CORP: Inks Out-of-Court Settlement with Guilford ---------------------------------------------------- UAL Corporation and its debtor-affiliates frequently buy and sell aircraft. In 2002, the Debtors, Guilford Transportation Industries, Inc., and Griffin Title & Escrow, Inc., entered into an Aircraft and Simulators Purchase and Sale Agreement, under which the Debtors would sell Guilford 24 used Boeing 727-222A Aircraft with related auxiliary power units, used engines and other parts, plus three used 727 flight simulators. In 2002, Guilford took delivery and paid for the first 22 Aircraft. However, Guilford refused delivery of, and did not pay for, the Remaining two Aircraft. In response, on December 11, 2003, the Debtors filed Adversary Proceeding No. 03-A-04753, captioned United Air Lines, Inc. v. Guilford Transportation Industries, Inc., et al. The Debtors alleged that Guilford breached the Agreement by refusing to take delivery and pay for the Remaining Aircraft. The Debtors sought $1,300,000 in damages based on the contract price for the Remaining Aircraft. Guilford denied the allegations and filed a Counterclaim. Guilford argued that the Debtors failed to provide necessary documents to secure Federal Aviation Administration certification for the Aircraft. Due to this oversight, the Aircraft remain grounded. Also, Guilford alleged that the Debtors' employees tampered with the simulators prior to delivery. Guilford asked the Debtors to pay more than $200,000 in compensation. Since the beginning of this dispute, the parties have been in negotiations to settle out of court. James H.M. Sprayregen, Esq., at Kirkland & Ellis, in Chicago, Illinois, tells the Court that both sides have reached a settlement that will allow the Debtors to recover a dollar amount similar to what the Debtors would have claimed as damages at trial. The Settlement removes all trial risk, reducing costs that would be incurred by continued prosecution of the Adversary Complaint. Under the Settlement, Guilford will also pay the Debtors $300,000 in cash. Guilford will release $310,000 to the Debtors, which is in an escrow account that previously held the $3,240,000 initial down payment for the transaction. The Debtors will provide Guilford with assistance in securing FAA certification for the Aircraft, including providing personnel to meet with regulatory officials or other entities. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Files 6th Reorganization Status Report ------------------------------------------------ The Bankruptcy Court has advised UAL Corporation and its debtor- affiliates to work cooperatively with all their stakeholders, including the Official Committee of Unsecured Creditors and the labor unions. The Court recognized that the chances for a successful reorganization are dramatically increased when all stakeholders work together and engage in open, constructive, and transparent dialogue. In response, the Debtors pledge "full commitment to a heightened spirit" of interaction between interested parties. The Debtors say that all parties, save one, agree that negotiations should evolve before addressing a multi- month extension of exclusivity. The Association of Flight Attendants is absent from the Debtors' list of cooperative parties. To increase cooperation, a Creditors Committee Working Group was formed, which is comprised of Committee members from various constituencies -- the ALPA, the PBGC, Deutsche Lufthansa, and Stark Investments. The Committee Working Group was created to interact directly with the Debtors' senior management to identify and evaluate additional costs savings and to work towards development of a viable and financeable business plan. To secure exit financing without the involvement of the Air Transportation Stabilization Board, the Debtors "will require hundreds of millions of dollars in additional cost reductions -- indeed, in the neighborhood of $500 million -- on top of the savings that would be realized even if the Company were to terminate and replace its pension plans." The Committee Working Group has formed six Subcommittees: (1) Exit Financing; (2) United Express; (3) Aircraft Maintenance; (4) United's Network; (5) United's Business Model; and (6) Other Cost/Revenue Improvements. The Subcommittees are comprised of principals and business professionals with restructuring and airline experience, including 14 different business and legal professional advisors. The Debtors will be challenged to procure exit financing, particularly given the insidious pressure created by record high fuel costs and an unforgiving pricing environment. "This relentless pressure is not going to change in the near term, which means United has much more to do, and many tough decisions ahead." Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNITED AIRLINES: Takes Further Steps to Lower Distribution Costs ---------------------------------------------------------------- United Airlines (OTC Bulletin Board: UALAQ) has taken another step toward lowering its distribution costs as part of the company's ongoing restructuring efforts. Starting Monday, Oct. 4, United will use Orbitz' Supplier Link Technology that will enable Orbitz to book tickets directly with United's reservation system instead of through a global distribution system. By bypassing a GDS, United can eliminate the fee it typically pays for tickets issued through a GDS, making Orbitz one of United's lowest-cost distribution channels. "Using Orbitz' Supplier Link Technology is just one of the strategic initiatives United has underway to help us reduce our sales and distribution costs," said John Tague, United's executive vice president - Marketing, Sales and Revenue. "We are extremely committed and serious about shifting our distribution to the lowest-cost channels in order to stay competitive for our customers." Mr. Tague said that United is implementing and reviewing other initiatives that will help United reduce its sales and distribution costs as part of the company's overall, ongoing restructuring efforts. These initiatives include: -- analysis of next-generation technologies that will bring long overdue competition to the travel distribution marketplace; -- improvements to existing low-cost distribution channels; -- the creation of new distribution channels that deliver value to the customer; and -- the renegotiation of existing distributor and supplier contracts. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. UNIVERSAL ACCESS: Committee Hires Winston & Strawn as Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois gave the Official Committee of Unsecured Creditors of Universal Access Holdings Inc., and its debtor-affiliates permission to employ Winston & Strawn LLP, as its counsel. Winston & Strawn will: a) consult with the Debtors' professionals or representatives concerning the administration of their bankruptcy cases; b) prepare and review pleadings, motions and correspondences; c) appear and be involved in proceedings held before the Bankruptcy Court; d) provide legal counsel to the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors, the operation of the Debtors' businesses and other matters related to their cases; e) examine and investigate claims asserted against the Debtors; f) confer and negotiate with the Debtors, other parties in interest, and their respective attorneys and other professionals concerning the Debtors' businesses and properties, chapter 11 plan, claims, liens, and other aspects of the Debtors' cases; g) confer and assist the Debtors in the sale of the Debtors' assets; h) negotiate with the Debtors, and other parties in interest involved in the sale of the Debtors' assets, the allocation of the purchase price for such sale, and the deposition of the proceeds from the sale; i) examine, investigate and prosecute preference claims, fraudulent conveyance claims and other claims under Sections 544 through 550 of the Bankruptcy Code; and j) provide the Committee with other legal services, including to those enumerated in Section 1103(c), as the Committee may request. Winston & Strawn's fees and expenses will be paid by the Debtors' estates. David W. Wirt, Esq., and David Neier, Esq., are the lead attorneys representing the Committee. Mr. Wirt will bill the Debtors $400 per hour for his services and Mr. Neir will charge $420 per hour. Mr. Wirt reports Winston & Strawn's professionals bill: Designation Hourly Rate ----------- ----------- Partners $325 - 695 Counsel & Associates 160 - 440 Paraprofessionals 105 - 175 Winston & Strawn does not represent any interest adverse to the Committee, the Debtors or their estate. Headquartered in Chicago, Illinois, Universal Access Global Holdings, Inc. -- http://www.universalaccess.com/-- provides network infrastructure services and facilitates the buying and selling of capacity on communications networks. The company, and its debtor-affiliates, filed for a chapter 11 protection on August 4, 2004 (Bankr. N.D. Ill. Case No. 04-28747). John Collen, Esq., and Rosanne Ciambrone, Esq., at Duane Morris LLC, represent the Company. When the Debtor filed for protection from its creditors, it listed $22,047,000 in total assets and $24,054,000 in total debts. US AIRWAYS: Asks Court for Interim Wage & Benefits Reduction ------------------------------------------------------------ Pursuant to Section 1113(e) of the Bankruptcy Code, US Airways and its debtor-affiliates ask the Court for interim relief from their Collective Bargaining Agreements with: (1) Air Line Pilots Association, International; (2) Association of Flight Attendants-Communications Workers of America; (3) Communication Workers of America; (4) International Association of Machinists and Aerospace Workers; and (5) Transport Workers of America Locals 546 and 547. The Debtors are in extreme financial distress. Unless industry conditions further deteriorate, the Debtors have sufficient cash to operate through January 2005. However, if they do not accumulate cash during the next five months, there is a high probability of irreparable harm to their asset base, material downsizing, massive layoffs and liquidation. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, explains that the Debtors must accrue roughly $200,000,000 in additional cash by early 2005. The only way to reduce cash outflow is to immediately implement $38,000,000 in monthly wage and benefit reductions. Accordingly, the Debtors have asked their Unions for immediate interim modifications in their CBAs that would reduce wages by 23%, reduce certain retirement contributions and make other modifications to work rules. These modifications, along with $5,000,000 in monthly non-labor cost savings, will allow the Debtors to maintain their business operations through the end of the first quarter of 2005. The Debtors hope that, prior to the October 7, 2004, hearing, they can obtain the consent of the Unions. If they cannot, the Debtors will have only one way to achieve the costs savings that are essential to their short-term survival -- by asking the Court to impose the interim modifications through Section 1113(e). The proposed modifications are less than the total labor cost reductions that the Debtors will need to survive in the long term. If the implementation of the interim wage and benefits reduction is delayed, the Debtors will need wage and benefit reductions, at a later date, of an unfeasible magnitude. While the interim modifications are in effect, the Debtors will pursue permanent modifications to their labor agreements that will enable the Debtors to reorganize successfully. The Debtors recognize the hardships that the modifications will impose on employees. But the short-term demands of wage and benefit reductions will pale in comparison to the hardship that will ensue if the Debtors must cease their business operations. The Debtors have "a realistic, credible plan to transform US Airways into a viable competitor," Mr. Leitch asserts, but they must begin this journey immediately, or they will almost certainly fail. There are two reasons for a projected decline in cash in early 2005: -- $260,000,000 in aircraft debt and lease payments are due in January and February 2005. If the Debtors fail to make these payments, they will lose the aircraft, jeopardizing the Transformation Plan and rendering the Debtors unable to continue their business operations; and -- The Debtors will experience the industry-wide seasonal drop-off in passenger revenue. The Debtors' low point for cash during the year typically occurs in March, as the slow first quarter ends. Starting in April 2005, the Debtors project a modest cash accumulation, at least for several months. Therefore, the Debtors need to accumulate sufficient cash to get through the slow first quarter of 2005. After the Debtors make the $260,000,000 aircraft payments in early 2005, their unrestricted cash balance will fall to around $300,000,000 -- a level so low that there could be a withdrawal of credit from trade creditors or booking away by passengers. This would further drain the Debtors' cash. Faced with this prospect, the Debtors would have no choice but to refrain from making aircraft lease and debt payments. Instead, they would probably commence massive downsizing, layoffs, asset sales and an orderly shutdown of the airline's operations. If the Debtors implement the necessary labor cost reductions, including obtaining $5,000,000 per month in non-union labor cash savings, and then promptly reach agreements with each of the Unions on permanent modifications to the CBAs -- or failing such agreements, obtain permanent relief under Section 1113(c) -- the Debtors will have sufficient cash to survive. Then the Debtors will have the time to implement the Transformation Plan, which is the key to their emergence from Chapter 11 as a viable competitor. Mr. Leitch informs the Court that no constituency will be exempted. The Debtors have already made, and continue to make permanent reductions to management and administrative employee ranks, in addition to a $40,000,000 annual cost saving program. Management and administrative payroll is projected to be further reduced over the next 30 days. The Debtors have an interim agreement with the ATSB Lenders, permitting the Debtors to use cash collateral through October 15, 2004. This interim agreement contains minimum cash balance requirements. If the Debtors fall below these minimum cash balance requirements, the ATSB Lenders are authorized by the interim cash collateral order to exercise remedies that could put the Debtors out of business. Mr. Leitch outlines the specifics of the proposed labor cost reduction: (a) Pay and Pension Reductions -- All represented employees will take a 23% pay reduction. The Debtors will seek to conform retirement plans to the levels provided to comparable America West employee groups. (b) Minimum Aircraft -- Minimum aircraft requirements under the CBAs will be modified. The alterations to minimum aircraft obligations will continue existing productivity rules and allow the Debtors to furlough employees if the aircraft fleet is reduced below 279 mainline jet aircraft. (c) Limited Outsourcing -- The Debtors will outsource work if necessary, including outsourcing to: * avoid incurrence of any additional heavy/base maintenance obligations; * address out of the ordinary course of business attrition; or * address work slow-downs or other service disruptions caused by employee groups. The proposed interim cost reduction is a last resort. The Debtors do not have any other options to achieve savings of the necessary magnitude. If the interim reduction is not granted, cash reserves will fall so low that the Debtors will likely be forced into an operating shutdown and an irreversible liquidation. According to Mr. Leitch, the Debtors' proposal "is not a matter of reducing costs to finance a reorganization, rather, a matter of reducing costs to avoid the cessation of business operations and a corresponding liquidation." Mr. Leitch emphasizes that a liquidation will result in the loss of jobs for 34,000 employees, the cessation of 3,300 flights a day, a disruption to almost 1,000,000 passengers per week and no recovery for unsecured creditors. In contrast, if the Debtors are given the opportunity to implement the Transformation Plan, the prospects for a better outcome are greatly enhanced. US Airways must transform, or it will fail. The interim cost reduction is a necessary step toward that transformation. Debtors' Statement ARLINGTON, Virginia -- September 24, 2004 -- US Airways Group, Inc. today filed a motion seeking interim relief from the company's collective bargaining agreements with the Air Line Pilots Association (ALPA), Association of Flight Attendants (AFA), Communications Workers of America (CWA), International Association of Machinists and Aerospace Workers (IAM), and certain units of the Transport Workers Union (TWU), under Section 1113(e) of the U.S. Bankruptcy Code. The motion was filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, which is overseeing US Airways' Chapter 11 restructuring. In its motion, the company emphasized that the request for interim relief is made in order to maintain US Airways as a going concern and "preserve approximately 34,000 jobs, preserve air service to hundreds of communities, build the cash reserves needed for the winter, give customers comfort that there is adequate cash for continued operations, and ultimately, avoid the threat of liquidation." "We have had constructive discussions this past week with all of our labor groups and we will continue to seek consensual agreements with our unions, pending the Court's ruling on the motion," said Bruce R. Lakefield, US Airways president and chief executive officer. "Nevertheless, we must move quickly to secure cost reductions, build cash reserves and send the signal to our financial partners and our customers that we will actively manage this restructuring and not allow the company to be swept up in speculation about our future." The interim relief request seeks $38 million per month in cost reductions from labor groups, effective immediately upon the Court's approval. In addition, US Airways will implement capital expenditure reductions and a series of actions to be announced shortly to reduce non-labor and management costs and generate an additional $5 million per month of savings. These actions do not require court authorization. Headquartered in Arlington, Virginia, 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. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq. at Arnold & Porter LLP, and Lawrence E. Rifken, Esq. and Douglas M. Foley, Esq. at McGuireWoods LLP represent the Debtors in its restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) VIATICAL LIQUIDITY: Committee Wants Reed Smith as Counsel --------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Viatical Liquidity LLC's chapter 11 case asks the U.S. Bankruptcy Court for the Southern District of California for permission to employ Reed Smith LLP as its counsel. The Committee believes Reed Smith is well qualified to represent it in the Debtor's bankruptcy case because of the Firm's expertise in the field of creditors' rights and business reorganizations under chapter 11 of the Bankruptcy Code. Reed Smith is expected to: a) advise the Committee with respect to its duties and powers in the Debtor's bankruptcy case; b) consult with the Debtor concerning the administration of its Bankruptcy Case; c) assist the Committee in its investigation of the acts, conducts, assets, liabilities, and financial condition of the Debtor, the operation of the Debtor's business, and the desirability of the continuation of the Debtor's business, and any other matters relevant to the case and the formulation of a Plan of Reorganization; d) prepare all necessary motions, applications, answers, orders, reports, or other papers in connection with the administration of the Debtor's estate; e) review any proposed plan and disclosure statement, and participate with the Debtor or others in the formulation or modification of a plan, or propose a Committee plan if appropriate; and f) perform other legal services as may be required and in the interest of the Committee. The Committee proposes that Reed Smith receive a $5,000 retainer. Robert C. Shenfeld, Esq., Partner at Reed Smith will be the lead attorney representing the Committee Mr. Shenfeld reports that Reed Smith's professionals bill: Designation Hourly Rate ----------- ----------- Partners $ 440 - 515 Associates 225 - 375 Litigation Assistant 100 - 150 To the best of the Committees' knowledge, Reed Smith is "disinterested" as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in San Diego, California, Viatical Liquidity, LLC, a company engaged in the insurance industry, filed for chapter 11 protection on June 18, 2004 (Bankr. S.D. Calif. Case No. 04-05472). Gary B. Rudolph, Esq., at Sparber Rudolph Annen represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $119,083,608 in total assets and $47,538,071 in total debts. WASTE SERVICES: Completes Amendment to Senior Credit Facility ------------------------------------------------------------- Waste Services, Inc. has completed an amendment to its $160 million senior credit facility that adjusts its financial covenants to reflect the company's current business plan. The amendment increases the current floating interest rate 125 basis points to 450 basis points over the London InterBank Offered Rate. David Sutherland-Yoest, Chairman and Chief Executive Officer, stated, "We are pleased with the support from our senior lending group during this process and believe that this permanent amendment to our senior credit facility will provide the flexibility and liquidity necessary to execute our business plan." Waste Services, Inc. is a multi-regional integrated solid waste services company that provides collection, transfer, disposal and recycling services in the United States and Canada. The company's web site is http://www.wasteservicesinc.com/ * * * As reported in the Troubled Company Reporter on August 20, 2004, Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on Waste Services, Inc., to 'B-' from 'B+' and its senior subordinated debt rating to 'CCC' from 'B-'. Simultaneously, Moody's Investors Service: * cut its ratings WSII's $160 million guaranteed senior secured credit facility due 2011 to Caa1; * downgraded its rating on the company's $160 million issuance of guaranteed senior subordinated notes due 2014 to Ca; * lowered Waste Service's Senior Implied Rating to Caa1; and * chopped the company's Senior Unsecured Issuer Rating to Caa3. * CLLA Awards 2004 Lawrence P. King Award to Prof. David Epstein ---------------------------------------------------------------- The Bankruptcy Section of the Commercial Law League of America announced that David Epstein, Professor of Law at the Dedman School of Law of Southern Methodist University, has been selected to receive the 2004 Lawrence P. King Award for Excellence in the Field of Bankruptcy. This award is presented to recognize that lawyer, judge, teacher or legislator who exemplifies the best in scholarship, advocacy, judicial administration or legislative activities in the field of bankruptcy as epitomized by Professor King. The award will be presented to Professor Epstein at the National Conference of Bankruptcy Judges on October 11 2004 in Nashville, Tennessee at the 16th Annual CLLA Breakfast. David G. Epstein has been teaching, practicing, and lecturing on bankruptcy for over 30 years. Professor Epstein currently teaches contracts, property, and secured transactions at the Dedman School of Law of Southern Methodist University. He has served as the Charles E. Tweedy, Jr. Chair of Law at the University of Alabama, was a partner in the law firm of King & Spalding, Dean of the Emory Law School and the University of Arkansas Law School, tenured professor at Emory, Arkansas, the Universities of Texas and North Carolina and visiting professor at the University of Michigan, University of Illinois, University of Chicago, Brigham Young University, University of Houston, Washington University, Georgia State, Harvard, NYU & Georgetown. Professor Epstein is a co-author of Bankruptcy, a three-volume treatise for judges and lawyers; and of three best-selling Law School textbooks, Debt: Bankruptcy and Related Laws, Basic Commercial Law, and Business Reorganization under the Bankruptcy Code; and the author of Bankruptcy and Other Debtor-Creditor Laws in a Nutshell. "Professor Epstein is known and respected by lawyers and judges nationwide. It is safe to say that Professor Epstein's law school textbooks have been used by many, if not most, of the law students in this country over the past 10 years. His influence cannot be understated. The CLLA is proud to celebrate such an achievement, " commented Mary K. Whitmer, President of the Commercial Law League of America. This award was established to celebrate the life and achievements of Professor Lawrence King, who died in April 2001. Professor King spent more than 40 years as a fulltime faculty member of New York University School of Law, his alma mater. In addition to his teaching, he served as a consultant to the Commission of Bankruptcy Laws of the United States, which lead to the enactment of the Bankruptcy Code of 1978. He also served over 20 years on the Advisory Committee on Bankruptcy Rules of the Judicial Conference of the United States. He was a Senior Advisor to the National Bankruptcy Review Commission. In addition, Professor King was editor-in-chief of the treatise Collier on Bankruptcy. Past recipients of this award have included Professor Elizabeth Warren and The Honorable Joe Lee. Founded in 1895, the Commercial Law League of America -- http://www.clla.org/-- is the nation's oldest organization of attorneys and other experts in credit and finance actively engaged in the field of commercial law, bankruptcy and reorganization. The CLLA has long been associated with the representation of creditor interests, while at the same time seeking fair, equitable and efficient administration of bankruptcy cases for all parties in interest. The Bankruptcy Section of the CLLA is made up of approximately 1,000 bankruptcy lawyers and bankruptcy judges from virtually every state in the United States. Its members include practitioners with both small and large practices, who represent divergent interests in bankruptcy cases. The CLLA has testified on numerous occasions before Congress as experts in the bankruptcy and reorganization fields. * Michael Good Moves Restructuring Practice to Coudert Brothers --------------------------------------------------------------- As of September 14, 2004, Michael D. Good, Esq., moved his practice to the Los Angeles Offices of Coudert Brothers, LLP. "My working relationship with the firm began a few years ago when I had the opportunity to work 'across the table' from a number of Coudert lawyers during a local Chapter 11 engagement," Mr. Good relates. "At the time, I was impressed with the consistency and depth of Coudert's legal talent, with the sophistication of Coudert's legal practice, and with the firm's culture of professionalism and civility. Over time, my relationship with the firm has grown to the place where I have elected to forego merely working 'across the table' from Coudert, and instead work on the same side." "With 30 offices in 18 countries, I am excited about the opportunities that Coudert's global platform provides for my growing practice," Mr. Good says, "and hope to incorporate my present relationships as an integral part of that growth." Mr. Good's new contact information is: Michael D. Good, Esq. Coudert Brothers, LLP 333 S. Hope Street, 23rd Floor Los Angeles, CA 90071 Telephone: (213) 229-2900 Direct Line: (213) 229-2959 Facsimile: (213) 229-2999 email: goodm@coudert.com Michael Good is resident in the Los Angeles office of Coudert Brothers, LLP. He practices in the firm's Financial Restructuring and Insolvency group, and is also a member of the firm's Asia Pacific Restructuring and Insolvency Team. Mr. Good has represented a wide variety of corporate debtors, creditors' committees, individual creditors and other parties in interest in numerous reorganization and liquidation proceedings under the United States Bankruptcy Code, as well as in out-of-court restructurings. Prior to joining Coudert Brothers, Mr. Good was associated with a prominent California bankruptcy boutique -- Winthrop Couchot Professional Corporation, located in Newport Beach, California. After obtaining his J.D. from Pepperdine University, Mr. Good completed a judicial clerkship for the Hon. Mitchel R. Goldberg in the United States Bankruptcy Court for the Central District of California (Riverside Division). In private practice, Mr. Good has authored educational materials and articles on various aspects of bankruptcy law. His publications include "Surviving Seminole: How to Deal with State Tax Liabilities in Bankruptcy without the Benefit of Bankruptcy Code Section 106(a)," published as the lead article in the 1999 winter edition of California Bankruptcy Journal. In 2004, Mr. Good was named in the "Rising Stars" edition of Super Lawyers, a publication that ranks California practitioners, under age 40, based upon peer voting and an independent analysis of credentials, practice, and market reputation. Mr. Good is a graduate of the University of Pennsylvania, with a B.A. in European History from the University's College of Arts and Sciences and minors in Marketing and Entrepreneurial Management from the Wharton Business School. He also is a former Lieutenant in the U.S. Navy, completing his active duty service with a tour of duty in the 1991 Persian Gulf conflict. He, his wife, and their two children are residents of, and active in, Los Angeles' South Bay community. * Ryan Senter Joins Alvarez & Marsals as Director ------------------------------------------------- Alvarez & Marsal, a global professional services firm, announced that Ryan Senter has joined the firms Business Consulting Group as a Director in the Dallas office. With over nine years of management consulting experience, Mr. Senter specializes in helping companies in myriad industries improve their finance operations. He brings a depth of expertise in architecting processes, designing and implementing shared service organizations, service performance management, and business intelligence solutions. Prior to joining A&M, Mr. Senter was a Senior Manager in the Finance and Performance Management practice at Accenture, focusing on business performance improvement and cost reduction strategies. Senter also served as Global Vice President of Change Management for LSG Sky Chefs Inc., an international in-flight services firm in Frankfurt, Germany and Irving, Texas, where he had overall management responsibility for capital projects, cost reduction strategies, and financial management. A certified management accountant (CMA) and a member of the Institute of Management Accountants (IMA), Mr. Senter earned a bachelor of science degree from the University of Mississippi. He resides in Fort Worth, Texas. 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. Founded in 1983, Alvarez & Marsal is a global professional services firm that helps businesses 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 outcomes. For more information about the firm, please visit <http://www.alvarezandmarsal.com/>www.alvarezandmarsal.com * Wilson Sonsini Goodrich & Rosati Expands Its New York Presence ---------------------------------------------------------------- Wilson Sonsini Goodrich & Rosati, the premier provider of legal services to technology and growth enterprises worldwide, welcomes Glenn C. Colton and Meredith E. Kotler to the firm as litigation partners and will be based in the New York office. Prior to joining the firm, Mr. Colton and Ms. Kotler served as Assistant United States Attorneys in the Southern District of New York, where they gained extensive experience trying a wide variety of civil and criminal cases and arguing appeals. Their practice focuses on complex civil litigation, including commercial and securities litigation, and government and internal investigations. "We are committed to growing our East Coast presence," said Larry Sonsini, chairman and CEO. "Glenn and Meredith bring a new expertise to the New York office that will further complement our strong litigation practice nationally." Glenn Colton served in the civil and criminal divisions of the United States Attorney's Office. During his nearly decade-long tenure, he was lead or co-lead counsel in approximately 25 trials and argued numerous appeals before the United States Court of Appeals for the Second Circuit. Mr. Colton has handled a broad range of civil cases, including securities, tax, bankruptcy, constitutional, employment, intellectual property, civil rights, and fraud matters. He also has handled a broad range of criminal cases, including corruption, white collar crime, violent crime, organized crime, narcotics offenses, and firearms trafficking. Colton has been a faculty instructor at the Department of Justice's National Advocacy Center and the FBI Academy at Quantico. He received his law degree from the New York University School of Law, and a bachelor's degree in accounting from the State University of New York at Binghamton, where he graduated summa cum laude. Meredith Kotler served in the civil division of the United States Attorney's Office for six and a half years, and as the Deputy Chief Appellate Attorney for the last year and a half of her tenure. She has argued 17 appeals before the Second Circuit, supervised the briefing and argument in approximately 40 appeals, and litigated dozens of applications for preliminary injunctions and other emergency relief in federal district court. Ms. Kotler has handled a broad range of civil cases from the pre-complaint stage through trial and appeal, including challenges to administrative and regulatory action, as well as constitutional, tax, telecommunications, bankruptcy, employment, civil rights, international law, and labor matters. She graduated cum laude from Harvard Law School and received her B.A., summa cum laude, from Princeton University. "With their exceptional breadth and depth of experience, Glenn and Meredith bring outstanding expertise to the firm's already formidable litigation practice, especially in light of their trial and appellate work," said Bruce Vanyo, senior partner in the firm's securities litigation practice. Mr. Colton and Ms. Kotler join New York partners Selim Day, Len Jacoby, and Robert Sanchez in a diverse practice with expertise in mergers and acquisitions, corporate finance, corporate law and governance, venture capital, intellectual property and corporate partnering, life sciences, and litigation. Wilson Sonsini Goodrich & Rosati's broad range of services and legal disciplines are focused on serving the principal challenges faced by management and boards of directors of business enterprises. The firm is nationally recognized as a leader in corporate governance, public and private offerings of equity and debt securities, mergers and acquisitions, securities class action litigation, intellectual property litigation, joint ventures and strategic alliances, and technology licensing and other intellectual property transactions. The firm, which is headquartered in Palo Alto, California, has offices in Austin, New York, Reston, Salt Lake City, San Diego, San Francisco, and Seattle. For additional information, please visit http://www.wsgr.com/ * Upcoming Meetings, Conferences and Seminars --------------------------------------------- October 9-10, 2004 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC Annual Fall Conference Nashville, Tennessee Contact: 1-703-449-1316 or http://www.iwirc.com/ October 10-13, 2004 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Seventh Annual Meeting Nashville, Tennessee Contact: http://www.ncbj.org/ October 15-18, 2004 TURNAROUND MANAGEMENT ASSOCIATION 2004 Annual Convention Marriott Marquis, New York City Contact: 312-578-6900 or http://www.turnaround.org/ November 29-30, 2004 BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT The Eleventh Annual Conference on Distressed Investing Maximizing Profits in the Distressed Debt Market The Plaza Hotel - New York City Contact: 1-800-726-2524; 903-592-5168; or dhenderson@renaissanceamerican.com December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800 or http://www.abiworld.org/ March 9-12, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Spring Conference JW Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900 or http://www.turnaround.org/ April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ June 2-4, 2005 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities and Bankruptcy Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ July 14 -17, 2005 AMERICAN BANKRUPTCY INSTITUTE Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800 or http://www.abiworld.org/ July 27- 30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, S.C. Contact: 1-703-739-0800 or http://www.abiworld.org/ October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or http://www.turnaround.org/ November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, Texas Contact: http://www.ncbj.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, Calif. Contact: 1-703-739-0800 or http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo 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 ***