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/raid1/www/Hosts/bankrupt/TCR_Public/041011.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, October 11, 2004, Vol. 8, No. 220 Headlines AIRGATE PCS: Prices $175 Million Sr. Secured Floating Rate Notes AMERICAN INTERNATIONAL: Case Summary & Largest Unsecured Creditors AMERICAN RESTAURANT: Gets Okay to Draw $2.5 Million Under DIP Loan ASTROPOWER INC.: Judge Walrath Approves Disclosure Statement AT&T CORP: Projects $7 Billion Debt Load at Year-End BABCOCK & WILCOX: Chapter 11 Plan Awaits District Court Approval BGB NETWORK INC: Case Summary & 20 Largest Unsecured Creditors BODY TECH PARK: Case Summary & 20 Largest Unsecured Creditors BOISE CASCADE: Moody's Rates Senior Secured Debt at Ba3 BORDEN CHEM: Bakelite Acquisition Plan Spurs S&P's 'B+' Rating BUSH INDUSTRIES: Hires Miller Mathis as Valuations Adviser CHOICE ONE: S&P Rating Tumbles to D After Bankruptcy Filing CANWEST MEDIA: Affiliate Launches Hollinger Trust Debt Offering CHOICE ONE: Hires Financial Balloting as Special Noticing Agent CHOICE ONE: Needs to Access $20 Mil. of DIP Financing CORAM HEALTHCARE: Judge Walrath Confirms Chapter 11 Trustee's Plan COSAN S.A.: Moody's Assigns Ba3 Rating on $150M Guaranteed Notes COUNTRYWIDE HOME: Moody's Places Ba2 Rating on Class B-3 CROWN CENTRAL: Moody's Junks Ratings to Ca with Negative Outlook DII INDUSTRIES: Asks Court to Approve 9900 Westpark Sale Deal DRESSER-RAND: Moody's Puts B3 Rating on $420 Million Sr. Sub. Debt DSL.NET INC: Closes $5 Million Financing with Laurus Funds FAIR GROUNDS: Names Ben Huffman Director & Racing Secretary FORT WASHINGTON: S&P Raises Sr. Debt Rating to 'BB+' From 'BB-' GADZOOKS, INC.: Has Until Oct. 31 to File a Chapter 11 Plan GAP INC.: Moody's Affirms Long Term Debt Ratings at Ba1 GERDAU AMERISTEEL: Moody's Puts B2 Rating on $405M Sr. Notes GLACIER FUNDING: S&P Puts Low-B Ratings on $500M Notes & Shares GLOBAL CROSSING: Court Sets Oct. 22 as AGX Admin. Claims Bar Date GMAC COMMERCIAL: S&P Junks Class K Mortgage Pass-Through Certs. GRAFTECH INTL: Updates Earnings Estimates & Strategic Initiatives HARVEST ENERGY: Prices $250 Million 7-7/8% Senior Notes HAWAIIAN AIRLINES: Judge Faris OKs Trustee's Disclosure Statement INTERMET CORPORATION: Wants to Hire JP Morgan as Noticing Agent INTERSTATE BAKERIES: Gets Interim Okay on Reclamation Procedures INTERSTATE BAKERIES: Employs Ordinary Course Professionals JEUNIQUE INT'L: Has Until Oct. 18 to Make Lease-Related Decisions JILLIAN'S ENT: Absence of Purchaser Cues Rochester Club Closure KAISER ALUMINUM: Wants to Reject Mead Works Contracts LAKE LAS VEGAS: Moody's Places Ba3 Rating on Sr. Secured Debt LANTIS EYEWEAR: Court Extends Exclusive Period Until Dec. 21 LERNOUT & HAUSPIE: KPMG Settles Lawsuit for $115 Million MIRANT CORP: Asks Court to Approve Outsourcing Pact to Cut Costs MOONEY AEROSPACE: Judge Walrath Approves Disclosure Statement NATIONAL MENTOR: S&P Puts Single-B Ratings on Notes and Loans NEIGHBORCARE INC: Reiterates Rejection of Omnicare Tender Offer PAN AMERICAN: S&P Puts 'B' Rating on Proposed $100 Million Bonds PEMSTAR INC: Revolver Amendment Requires $7 Mil. Quarterly EBITDA PRESIDENT CASINOS: Columbia Sussex Wins Bid for St. Louis Biz QUIGLEY COMPANY: Committee Wants to Give Judge Beatty the Boot ROPER INDUSTRIES: Acquisition Plan Prompts S&P to Revise Outlook SCHOOL FITNESS: Involuntary Chapter 11 Case Summary SOLUTIA INC: Wants Lease Decision Deadline Extended to Feb. 14 SOUTHWEST HOSP: U.S. Trustee Picks 7-Member Creditors Committee SOUTH STREET: S&P Junks 3 Classes of 1999-1 Notes SPHERION CORP: Names Roy Krause Chief Executive Officer & Director SPIEGEL INC: Deutsche Bank Claim Will Be Allowed For $24,575,433 STANDARD PARKING: Terminates Consulting Agreement with Warshauer STELCO INC: Awarded Int'l. Automotive Quality Certification SURGICARE INC: Stockholders Okay Change of Control & Name Change TOUCH AMERICA: Judge Carey Confirms Liquidating Chapter 11 Plan UAL CORP: Asks Court to Deny USTA's Admin. Expense Payment Request UNIFAB INT'L: Major Stockholders Push to Take Company Private VERESTAR, INC.: Wants Plan-Filing Period Stretched to Jan. 17 VIATICAL LIQUIDITY: U.S. Trustee Adds 4 Members to Committee VISTA HOSPITAL: Files for Chapter 11 Petition in S.D. Texas VISTA HOSPITAL: Case Summary & 20 Largest Unsecured Creditors WACHOVIA COMMERCIAL: Fitch Puts Low-B Ratings on 6 Certificates WORLDCOM INC: Judge Gonzalez Approves San Luis Settlement Pact * BOND PRICING: For the week of October 11 - October 15, 2004 ********* AIRGATE PCS: Prices $175 Million Sr. Secured Floating Rate Notes ---------------------------------------------------------------- AirGate PCS, Inc. (Nasdaq: PCSA), a PCS Affiliate of Sprint, has agreed to sell $175 million First Priority Senior Secured Floating Rate Notes due 2011 at par value. The notes will bear interest at a rate equal to three-month LIBOR plus 3.75%, reset quarterly. The notes will be secured on a first priority basis by liens on substantially all of AirGate's assets, with certain exceptions, and will be guaranteed on a senior secured basis by each of its subsidiaries. The notes are being offered: (i) in the United States, to qualified institutional buyers as defined in Rule 144A under the Securities Act and (ii) outside the United States, to persons who are not U.S. persons, as defined in Regulation S under the Securities Act, in offshore transactions in reliance on Regulation S. AirGate plans to use the proceeds of the offering to repay and terminate its $131.2 million senior credit facility, to redeem its $1.8 million remaining 13-1/2% Senior Subordinated Discount Notes due 2009 and for general corporate purposes. This press release does not constitute a redemption notice with respect to the 13-1/2% Senior Subordinated Discount Notes due 2009. About AirGate PCS AirGate PCS, Inc. is the PCS Affiliate of Sprint with the right to sell wireless mobility communications network products and services under the Sprint brand in territories within three states located in the Southeastern United States. The territories include over 7.4 million residents in key markets such as Charleston, Columbia, and Greenville-Spartanburg, South Carolina; Augusta and Savannah, Georgia; and Asheville, Wilmington and the Outer Banks of North Carolina. * * * As reported in the Troubled Company Reporter on Oct. 6, 2004, 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. AMERICAN INTERNATIONAL: Case Summary & Largest Unsecured Creditors ------------------------------------------------------------------ Lead Debtor: American International Petroleum Corporation 4646 Highway 3059, Old Town Road Lake Charles, Louisiana 70601 Bankruptcy Case No.: 04-52479 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- American International Refinery, Inc. 04-52478 Type of Business: The Company is situated on 87 acres of land adjacent to a river accessible from the Gulf of Mexico, facilitating transportation via barge. It has an independently appraised replacement value of approximately $86 million. The refinery 's products include jet fuel, diesel fuel and naphtha. Chapter 11 Petition Date: October 7, 2004 Court: Western District of Louisiana (Opelousas) Judge: Schiff Debtors' Counsel: Robin B. Cheatham, Esq. Dean W. Ferguson, Esq. Adams & Reese LLP 4500 One Shell Square New Orleans, Louisiana 70139 Tel: (504) 581-3234 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million A. American International Petroleum Corporation's 19 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ EOP - Brookhollow Ltd Judgement $166,000 Partnership ITOCHU Specialty Judgement $155,000 Chemicals, Inc. 444 Madison, LLC Judgement $137,913 Hein & Associates, LLP Professional services $90,000 Internal Revenue Service Tax penalties $64,840 Chris Golightly, et al. Case settlement $61,000 William R. Smart Director fees $49,767 Donald G. Rynne Director fees $32,000 CSC Trade Debt $26,000 Michael Dodge Employee wages $23,922 KCSA Judgement $23,489 Canon Business Solutions Trade Debt $23,000 Premium Assignment Corp. Trade Debt $22,000 Michael Dodge Employee wages $20,192 John H. Kelly Director fees $15,000 Estate of Deborah Gaytan Medical expenses claim $13,783 Nevada Secretary of State Permits & licenses $12,000 Barnes & Cascio LLP Professional services $11,218 D. Pryor, C. Gatlin, et al. Judgement $10,440 B. American International Refinery, Inc.'s 19 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ ITOCHU Specialty 2004 Judgement $155,000 Chemicals, Inc. Louisiana Department of Permits & licenses $104,725 Environmental Quality Thompson & Knight Professional services $100,198 Louisiana Department of $73,368 Revenue EPA Judgement $63,064 Chris Golightly, et al. 2004 Case Settlement $61,000 Novorossiysk Shipping Judgement $53,182 Calcasieu Parish School $50,000 Systems Nodier Obluda Engineering Judgement $39,035 Service, Inc. Lake Charles Harbor & Term Judgement $34,811 District Entergy Utilities $32,643 Caleb Brett U.S.A., Inc. Trade Debt $28,195 Asphalt Transport Judgement $28,000 Miller Environmental Trade Debt $28,000 Buckner Rental Service, Inc Judgement $24,570 Allen R. Lyons, Jr. Employee wages & $18,830 Expenses Stanley M. Casto Employee wages $17,649 and expenses Redfish Rental, Inc. Judgement $15,000 Service & Pump Compressor Trade Debt $13,609 AMERICAN RESTAURANT: Gets Okay to Draw $2.5 Million Under DIP Loan ------------------------------------------------------------------ The Honorable Thomas B. Donovan of the U.S Bankruptcy Court for the Central District of California authorized American Restaurant Group, Inc., to draw, on an interim basis pending a Final DIP Financing Hearing, up borrow up to $2.5 million under a $30 million DIP Financing Facility extended by Wells Fargo Foothill (the Debtors' prepetition secured lender). Judge Donovan also put his stamp of approval on an agreement allowing the Debtors continued use of cash collateral securing repayment of $17 million Wells Fargo previously loaned to the company. Judge Donovan will convene a Final DIP Financing hearing on Oct. 22, 2004, to consider whether the Debtors should be allowed to draw the full $30 million under the DIP Facility. Judge Donovan will also consider entry of a permanent cash collateral agreement. Objections to these financing pacts, if any, must be filed and served by Oct. 15, 2004. As previously reported in the Troubled Company Reporter, American Restaurant reached an agreement with members of an ad hoc committee of holders of over 70% of its Secured Notes on the terms of a comprehensive financial restructuring to be implemented through a pre-negotiated Plan of Reorganization that will substantially deleverage the Company's balance sheet from approximately $202 million to approximately $23 million. The Plan calls swapping approximately $162 million of Secured Notes, accrued interest, and various other obligations for approximately 98% of the common stock of the reorganized Company. American Restaurant's annual cash interest costs will narrow to approximately $19 million. Wells Fargo Foothill provided a commitment letter to the Company for $40 million of new financing upon the consummation of the Plan. Headquartered in Los Altos, California, American Restaurant Group, Inc., through its subsidiaries operating as Stuart Anderson's, specializes in U.S.D.A. Choice fresh-cut steak; seasoned, seared, and slow-roasted prime rib; and a variety of seafood entrees complete with 'all the fixin's'. The company and its debtor- affiliates filed a chapter 11 petition on Sept. 28, 2004 (Bankr. C.D. Cal. Case No. 04-30732). Thomas R. Kreller, Esq., at Milbank, Tweed, Hadley & Mccloy represents the Debtors in their restructuring efforts. When the Debtor filed for bankruptcy protection, it estimated $1 million to $10 million of assets and more than $100 million in total debts. ASTROPOWER INC.: Judge Walrath Approves Disclosure Statement ------------------------------------------------------------ The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware put her stamp of approval on a Disclosure Statement explaining the details underpinning AstroPower, Inc.'s chapter 11 plan. The Plan is co-proposed by the Debtor and its Official Unsecured Creditors Committee. The Plan provides for the liquidation and distribution of all of the Debtor's assets to all holders of Allowed Claims. Distributions to secured creditors will be made in order of lien priority. With a Court-approved Disclosure Statement in hand, the Debtor and the Committee can now solicit votes in favor of the Plan from creditors who'll recover a fraction of what they're owed. Creditors who are paid in full or made whole under a chapter 11 plan don't get to vote, because they are deemed to have accepted the Plan. Creditors or shareholders who don't recover anything under a chapter 11 plan don't get to vote either, because they are deemed to have rejected the plan. Earlier this year, General Electric purchased substantially all of AstroPower's assets for about $18.5 million and Aplicaciones Tecnicas de la Encergia purchased some assets located in Spain for EUR3 million. AstroPower says it's sitting on about $11 million in cash today and can derive additional value -- maybe millions -- from litigation a trust formed under the plan will pursue. AstroPower's Liquidating Plan provides that: * Administrative Claims; * Federal State and Local Tax Claims; * Other priority Claims; and * Secured Claims; will be paid in full. AstroPower projects that unsecured creditors will recover about 18% based on the amount of cash currently on hand and up to 77% if the trust succeeds in all litigation. The Debtor will print and mail copies of its Plan, Disclosure Statement and ballots to creditors as soon as possible. Creditors must return their ballots by Nov. 16, 2004. Judge Walrath will convene a hearing to consider confirmation on Dec. 2, 2004. Headquartered in Wilmington, Delaware, AstroPower Inc., produced the world's largest solar electric (photovoltaic) cells and a full line of solar modules. The Company filed for chapter 11 protection on February 1, 2004 (Bankr. Del. Case No. 04-10322). Derek C. Abbott, Esq. at Morris, Nichols, Arsht & Tunnell, represents the Debtor. When the Company filed for protection from its creditors, it estimated debts and assets of more than $100 million. AT&T CORP: Projects $7 Billion Debt Load at Year-End ---------------------------------------------------- AT&T Corp. (NYSE: T) announced a series of restructuring actions as the company continues its transformation in the rapidly changing communications industry. $11.4 Billion Writedown The company said that the previously announced review of its assets will result in an asset impairment charge in the third quarter of 2004. The asset impairment results from sustained pricing pressure and the evolution of services toward newer technologies in the business market as well as changes in the regulatory environment, which led to a shift away from traditional consumer services. As a result, AT&T will take a non-cash charge of approximately $11.4 billion in the third quarter of 2004 to recognize the asset impairment. This action will reduce AT&T's depreciation expense by approximately $1.0 billion in the second half of 2004. Workforce Reduction AT&T also said that as a result of its decision to stop marketing traditional residential services, as well as corporate transformation initiatives, it will significantly exceed its previously estimated workforce- reduction target of 8 percent in 2004. The company now expects to reduce total headcount by more than 20 percent in 2004. Approximately three quarters of the employees affected in 2004 have already been notified or departed earlier this year. As a result of ongoing workforce reductions, the company will record a restructuring charge in the third quarter of approximately $1.1 billion. "In response to recent regulatory developments and a highly competitive market, we have made some tough decisions to reduce our workforce and cut costs," said AT&T Chairman and CEO Dave Dorman. "Ongoing investments in our network and systems around the world have allowed us to significantly improve customer-service metrics while driving industry-leading productivity." AT&T's acceleration of workforce reductions and other cost-cutting initiatives are having a positive impact on profitability across the business. The company is also beginning to benefit from lower marketing expense as it scales back its traditional consumer operation. As a result, the company said it anticipates a significant improvement in consumer operating margin, excluding restructuring charges, in the third quarter of 2004 when compared with the second quarter of 2004. Despite industry pricing pressure and its ongoing transformation, AT&T expects to continue to generate significant cash flow in line with its previously established targets for 2004. AT&T is on course to finish the year with net debt of under $7.0 billion, a reduction of almost 50 percent over the past two years. Citing strong cash flow generation, the company said it sees ample flexibility to invest in the business, maintain a strong balance sheet and continue to return value to its shareholders. AT&T's dividend represented about a quarter of the company's free cash flow during the first half of 2004. The company said it is presently evaluating further uses of surplus cash flow as it nears the completion of its 2004 debt-buyback program. About AT&T AT&T Corp. (NYSE "T") -- http://www.att.com/-- has been known for unparalleled quality and reliability in communications. Backed by the research and development capabilities of AT&T Labs, the company is a global leader in local, long distance, Internet and transaction-based voice and data services. * * * As reported in the Troubled Company Reporter on Aug. 5, 2004, Standard & Poor's Ratings Services lowered its long-term corporate credit and senior unsecured debt ratings on AT&T Corp. to 'BB+' from 'BBB'. In addition, the short-term rating was lowered to 'B' from 'A-3'. The ratings were removed from CreditWatch, where they were placed with negative implications on April 28, 2004, due to (1) continued weakening in the company's business risk profile as reflected in first-quarter 2004 results and (2) the potential for steeper revenue declines and compressing operating margins. The outlook is negative. As of June 30, 2004, total debt outstanding was approximately $11.2 billion, unadjusted for operating leases and other postretirement employee benefits(OPEBs), or about $7.9 billion net of cash, restricted cash, and foreign currency fluctuation. "The ratings downgrade reflects the company's continued challenging business risk profile due to the telecom industry's transformation and the resultant long-term impact on the company's financial profile," explained Standard & Poor's credit analyst Rosemarie Kalinowski. "We anticipate that competition will intensify from other large long-distance carriers, the regional Bell operating companies (RBOCs), and cable TV companies in the near-to-intermediate term, further affecting AT&T's weak operating margins." These factors are mitigated somewhat in the short term by AT&T's solid balance sheet and liquidity position. BABCOCK & WILCOX: Chapter 11 Plan Awaits District Court Approval ---------------------------------------------------------------- The Honorable Judge Jerry A. Brown of the United States Bankruptcy Court for the Eastern District of Louisiana issued his findings of fact, conclusions of law and recommendations regarding confirmation of The Babcock & Wilcox Company Chapter 11 Joint Plan of Reorganization and the associated settlement contained therein. As a wholly owned subsidiary of McDermott International Inc. (NYSE:MDR), B&W filed for Chapter 11 bankruptcy in New Orleans, Louisiana, on Feb. 22, 2000, as a result of asbestos-related claims. The Plan will now proceed to the Honorable Judge Sarah S. Vance of the United States District Court. Judge Vance is expected to review Judge Brown's findings and recommendations, which review may include conducting hearings related to any objections to confirmation of the Plan. After completing her review, it is anticipated that Judge Vance would issue an order granting or denying confirmation of the Plan. Once Judge Vance's order is issued, any appeals would proceed to the Fifth Circuit Court of Appeals and thereafter possibly to the United States Supreme Court. The Plan will not become effective until all appeals have been exhausted and certain conditions are either satisfied or waived, including the entry of a final order of confirmation. Additionally, McDermott's Board of Directors must give its approval to the Plan and associated settlement within a thirty-day period prior to the Plan becoming effective. The Board will consider numerous factors when contemplating approval, including any developments associated with national legislation on the proposed Fairness in Asbestos Injury Resolution Act. Due to the variables involved, McDermott is unable to anticipate the likely timeline as to when, or if, the Plan would become effective. Effective Feb. 22, 2000, B&W was deconsolidated from McDermott's reported financial statements. During the 2002 fiscal year, McDermott wrote-off its remaining investment in B&W and accrued in its financial statements the anticipated liability associated with implementing the Plan which is marked-to-market on a quarterly basis. For additional detail, please reference McDermott's annual report for the year ended Dec. 31, 2003, filed on Form 10-K with the Securities and Exchange Commission. For more information on B&W, please visit its Web site at http://www.babcock.com/Additional information can be obtained on B&W's reorganization and Chapter 11 proceedings at http://www.babcock.com/pgg/pr/reorganization.html/ About Babcock & Wilcox Babcock & Wilcox Company is a subsidiary of McDermott International, a leading worldwide energy services company. McDermott's subsidiaries provide engineering, fabrication, installation, procurement, research, manufacturing, environmental systems, project management and facilities management services to a variety of customers in the energy industry, including the U.S. Department of Energy. Babcock & Wilcox Company, together with its debtor-affiliates, filed for Chapter 11 protection on February 22, 2000, (Bankr. E.D. La. Case No. 00-10992). Jan Marie Hayden, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., represents the debtors in their restructuring efforts. BGB NETWORK INC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: BGB Network Inc. aka Arrow Die Cutting Inc aka Visual Plastics Inc 2700 West Roosevelt Road Broadview, Illinois 60155 Bankruptcy Case No.: 04-37036 Type of Business: The Debtor is a member of Graphic Finishing Industries of Illinois. Chapter 11 Petition Date: October 6, 2004 Court: Northern District of Illinois (Chicago) Judge: Jacqueline P. Cox Debtor's Counsel: Miriam R Stein, Esq. Arnstein & Lehr 120 South Riverside Plaza, Suite 1200 Chicago, Illinois 60606 Tel: 312-876-7100 Total Assets: $0 to $50,000 Total Debts: $1,370,397 Debtor's 20 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Robert Eiserman Loan to corporation $127,000 Sentry Life Insurance Group Insurance coverage $87,868 Pension Department Mighty Pac, Inc. Trade Debt $80,000 Excel Container Company Trade Debt $77,840 David Goldman Loan to corporation $75,000 Santanna Electric Trade Debt $71,000 litigation pending Salem Baptist Church $60,000 Elite Staffing Trade Debt $59,118 Hagglund Masonry & Building-litigation $51,000 Tuckpointing pending Quantum Color Trade Debt $41,000 litigation pending American Express Credit card charges $37,330 for building BFI Garbage collection- $33,510 litigation pending CSJB Welfare Fund NLRB matter $32,200 Imagine Trade Debt $30,827 litigation pending Atlas Sales & Rentals, Inc. Building debt $30,539 United Healthcare of Insurance coverage $28,173 Illinois United Parcel Service Trade Debt $28,000 Lorette Dies Inc. Trade Debt $25,769 Funderburk Roofing, Inc. Renovations to building- $25,000 lawsuit pending Door Systems Renovation to building- $23,511 in litigation BODY TECH PARK: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Body Tech Park City, Inc. P.O. Box 981447 Park City, Utah 84098 Bankruptcy Case No.: 04-36156 Type of Business: The Debtor operates a gym. Chapter 11 Petition Date: October 5, 2004 Court: District of Utah (Salt Lake City) Judge: Glen E. Clark Debtor's Counsel: Jeanmarie A. Stinson, Esq. Stinson Guelker 400 South 455 East, Suite 40 Salt Lake City, UT 84111 Tel: 801-604-4600 Fax: 877-572-7752 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Carrie Nelson Loan from $400,000 1698 Sun Peak Drive Ex-Shareholder, Park City, UT 84098 Disputed. Wells Fargo Home Equity Contested. $173,979 P.O. Box 4116 MAC # P6053-022 Portland, OR 97208 MBNA America Credit. Disputed. $62,241 IDEA MBNA America Credit. Disputed. $62,000 Chase Platinum Mastercard Credit. Disputed. $46,238 Sean Egan, Esq. Legal Services, $35,000 disputed value. Contested. Utah State Tax Commission Possible Withholding $9,095 Taxes, also Sales Tax. Contested. Summit Insurance LLC Insurance. Disputed. $3,252 John S. Brunt, Architect Services. Disputed. $2,500 Tanner and Company Disputed. $2,500 DEX Media Advertising. Disputed $1,824 America Honda Finance Two Honda Acura $1,803 Corporation RSXs, VIN Nos. JH4DC538848 005494 and JH4DC538X4S004119. Also Honda Acura TSX, VIN JH4CL95884C02412 Utah Power Utilities. Disputed. $1,764 S.F. City Lights, Inc. Disputed. $1,495 Fitness & Wellness Insurance Insurance. Disputed. $1,332 Agency Park City Magazine Magazine. Disputed. $810 Quality Linen Services. Disputed. $803 The Park Record Advertising. $729 Disputed. Nicholas & Co. Food Services $634 Risk Management Alternatives Collections for $631 Nextel Cellular Phone BOISE CASCADE: Moody's Rates Senior Secured Debt at Ba3 ------------------------------------------------------- Moody's Investors Service assigned the ratings to Boise Cascade, LLC. Ratings assigned: -- Senior implied rated Ba3 -- Senior unsecured issuer rating rated B1 -- $1.33 billion guaranteed senior secured term loan B due 2011 rated Ba3 -- $1.225 billion guaranteed term loan C due 2010, rated Ba3 -- $350 million revolving credit facility due 2010, rated Ba3 -- $250 million guaranteed senior unsecured notes, due 2012 rated B1 -- $400 million guaranteed senior subordinated notes due 2014 rated B2 Speculative Grade Liquidity rating rated SGL-2 The outlook is stable. The Ba3 senior implied rating reflects: (a) the company's high debt level (pro forma for the transaction), (b) the commodity focus and associated pricing volatility of the company's core paper and forest products, (c) the significant competitive pressures in the paper and forest products industry, steadily increasing input costs, and (d) the uncertainty in regards to the planned monetization of timberlands. However the ratings also reflect Boise's relatively good market position in: (a) several of its products, (b) improved operating performance in manufactured wood products in 2004, (c) an improving pricing outlook for the company's paper products, (d) relatively good liquidity, and (e) a trend towards a higher mix of more value added products. The ratings also incorporate the sizeable amount of contributed equity and the benefit provided by various agreements between Boise and OfficeMax as part of the pending transaction. Madison Dearborn Partners -- MDP -- is acquiring the paper, building products, distribution, and timber operations of Boise Cascade Corporation for approximately $3.63 billion (excluding fees, expenses, and purchase adjustments). The acquisition will be funded with approximately $3.2 billion in debt and contributed equity of $440 million from MDP and Boise management and $175 million from OfficeMax. Boise's products will include: * uncoated free sheet (UFS), * containerboard, * newsprint, and market pulp (Paper Solutions), * engineered wood products (EWP), * plywood, and industrial lumber (Building Solutions Manufacturing); distribution (Building Solutions Distributions), and * timberlands. Boise estimates it is the fourth largest producer of UFS in North America with 9.9% of the market and although commoditization and industry over capacity has lead to a difficult competitive environment for UFS, the company continues to shift its focus towards more value added products such as specialty papers. Boise currently produces about 374,000 tons of specialty paper, which accounts for approximately 27% of production. The paper segment should also benefit from OfficeMax's agreement to purchase from Boise, at market prices, its full requirement for white paper for eight years with the potential for a four year phase down period thereafter. The Additional Consideration Agreement also calls for OfficeMax to pay Boise $710,000 for every dollar that annual average market prices for cut-size paper are below $800/ton and for Boise to pay OfficeMax the same consideration for every dollar above $920. This agreement would have generated an additional $40 million in cash flow if it were in place for the twelve months ended June 2004. A more value added focus in the building solutions manufacturing segment with EWP, such as LVL and wood I-joists, should also help to mitigate margin deterioration going forward. Boise believes its North American market position for EWP to be approximately 20%. As part of the transaction Boise will also acquire 2.2 million acres of timberlands with a recent appraisal value range of $1.5 billion to $1.9 billion. Management intends to monetize these timber assets over the near to medium term with the proceeds used to reduce debt. Under the proposed bank agreement any proceeds from the sale of timber properties will first be used to repay the term loan C and with no less than 50% of any proceeds in excess of $1.65 billion going to the term loan B and up to 50% to equity holders subject to meeting certain pro forma consolidated leverage tests. Leverage will be substantial following the acquisition, with pro forma Debt to adjusted EBITDA of over six times for the twelve months ended June 2004. Although the company expects to monetize timberland to repay secured debt, the ultimate level of debt reduction will largely be driven by the timing of timberland sales, which remain uncertain. In addition, despite a shift to more valued added products, the recent improvement in operating performance was largely driven by significantly higher pricing for more commodity type products such as plywood, lumber, and particleboard as the residential construction market continues to remain strong. Prices and volumes for the majority of Boise's products have been flat to slightly declining for the past three years and only in the first half of 2004 have prices for the majority of EWP and commodity wood products improved. Operating margins also remain under pressure as higher energy and raw material costs remain persistently high. Boise is largely dependent on external sources for the majority of its energy needs and although the majority of its energy requirements are contracted, pricing remains market based. Costs will also increase in proportion to the monetization of timberlands as Boise supplied approximately 47% of its wood needs internally. Boise also faces considerable competition in most of its markets from a number of companies, some of which are larger and possess greater financial flexibility. Boise competes with companies that include International Paper, Weyerhaeuser, Georgia Pacific and Smurfit Stone in the paper segment and Weyerhaeuser, Louisiana Pacific, and Georgia Pacific for building products. The Ba3 senior secured debt rating reflects the value of the collateral securing the bank debt, but also incorporates the sizeable amount of secured debt to total debt (approximately 80% at the close of the transaction), which indicates the risk attributable to senior secured lenders will not be significantly different from the risk associated with the senior implied rating. The bank debt benefits from a first priority security interest in all tangible and intangible assets and unconditional joint and several guarantees from the entire restricted group of companies. The restricted group includes all companies with the exception of two special purpose vehicles -- SPV -- that will issue the timber installment notes to the seller. The B1 senior unsecured and B2 senior subordinated ratings both benefit from the same guarantees provided to the bank lenders, which are unconditional and joint and several. However, the B1 senior unsecured rating also incorporates the existence of effective subordination to a significant amount of secured debt while the subordinated notes are contractually subordinated to both secured and senior unsecured debt. The SGL-2 speculative grade liquidity rating reflects Moody's opinion that Boise will possess good liquidity over the following 12 months. Moody's expects the company will be able to fund all cash needs, with the exception of extraordinary capex, from internal sources, although free cash flow levels will be modest. However, Moody's does not anticipate any covenant restrictions in regards to revolver borrowings over the next twelve months. Revolver credit facility borrowings are expected to be $49 million with an additional $84 million of letters of credits following the transaction resulting in availability of approximately $200 million. The SGL-2 rating also incorporates the absence of any alternate source of available liquidity, with all tangible and intangible assets of the company encumbered by the bank revolver. The stable outlook reflects Moody's expectations that Boise's credit metrics and liquidity will improve significantly over the near term, due to improved pricing, better product mix, and the associated debt reduction from the sale of timberlands. Moody's anticipates leverage moderating towards the four times level with coverage exceeding three times and retained cash flow (before working capital) to total debt in the mid-teens, while liquidity remains good. Factors that would positively impact the ratings would be a sustained improvement in credit metrics due from the achievement of anticipated cost savings and operational improvements, or a longer term improvement in the pricing outlook for the majority of its products. However, deterioration in operating performance or persistently high debt levels would negatively impact the ratings and/or outlook. After the transaction closes, all paper, building products and distribution assets will be held in separate operating subsidiaries that will be wholly owned by Boise, while the timberlands will be at a subsidiary that will be owned by a separate and distinct holding company, Boise Land & Timber Corp. These two holding companies, Boise and Timber Corp., will be owned by two additional holding companies which in turn will be majority owned by Forest Products Holdings, LLC, a company majority owned by MDP. The proposed notes will be offered and sold in a privately negotiated transaction without registration under the Securities Act of 1933, under circumstances reasonably designed to preclude a distribution in violation of the Act. The issuance has been designed to permit resale under Rule 144A. Boise Cascade, LLC, headquartered in Boise, Idaho, is an integrated manufacturer of wood and paper products, and a major distributor of building materials. BORDEN CHEM: Bakelite Acquisition Plan Spurs S&P's 'B+' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit rating and other ratings for Borden Chemical Inc. on CreditWatch with negative implications, citing the company's announcement of a sizable acquisition. Columbus, Ohio-based Borden Chemical has over $850 million of total debt outstanding. "The CreditWatch placement follows the company's announcement of an agreement to acquire Bakelite AG from Rutgers AG," said Standard & Poor's credit analyst Peter Kelly. Germany-based Bakelite had sales in 2003 of $610 million. The purchase price is within the range of ?175 million to ?200 million, subject to certain adjustments. The transaction is subject to regulatory reviews and is expected to close in the first half of 2005. The proposed combination would be a meaningful strategic initiative for Borden, as it would broaden the company's product portfolio and technology base, and expand the company's end market and geographic diversification. On a pro forma basis, Borden will have sales of almost $2.1 billion. The company expects to finance the transaction with cash and additional borrowings. Standard & Poor's will meet with Borden management to review the acquisition and the company's business and financial strategies. Attention will be paid to the strength of the businesses being acquired, the financial profile of Borden pro forma for the acquisition, and the company's commitment to improving credit protection measures. A review could result in a modest downgrade or, if the strategic and financial benefits of this transaction are compelling, an affirmation of the existing ratings. Borden Chemical is a leading producer of formaldehyde-based thermosetting resins for the forest products industry, as well as resins for industrial applications. BUSH INDUSTRIES: Hires Miller Mathis as Valuations Adviser ---------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York gave Bush Industries, Inc., permission to employ Miller Mathis & Co., LLC, as its valuation advisors and experts. Miller Mathis will: a) review and analyze the Debtor's assets and the operating and financial strategies of the Debtor; b) review and analyze the business plans and financial projections prepared by the Debtor, including the testing of assumptions and comparing those assumptions to historical and industry trends; c) review and analyze the Debtor's assets and operating projections to ascertain a value for the Debtor's operation and its assets; d) determine a range of values for the Debtor and any securities that the Debtor offers or proposes to offer to the Debtor's creditors in connection with a Plan of Reorganization; e) participate in hearings before the Bankruptcy Court relating to proposed transactions for a plan of reorganization and provide relevant testimony for the plan; and f) render other valuation advisory services as the Debtor may request. H. Sean Mathis, Managing Director at Miller Mathis, discloses that the Firm received a $100,000 advisory fee. The Firm has been paid a $50,000 advance payment, while the remaining $50,000 balance will be paid upon completion of the Firm's assignment to the Debtor. Mr. Mathis adds that Miller Mathis will bill the Debtor an additional fee of $15,000 in the event the Firm is required to testify in depositions or in Court with regard to its expert opinion. Miller Mathis does not have any interest adverse to the Debtor or its estate. Headquartered in Jamestown, New York, Bush Industries, Inc., -- http://www.bushindustries.com/-- is engaged in the manufacture and sale of ready-to-assemble furniture under the Bush, Eric Morgan and Rohr trade names and production of after market accessories for cell phones. The Company filed for chapter 11 protection on March 31, 2004 (Bankr. W.D.N.Y. Case No. 04-12295). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $53,265,106 in total assets and $169,589,800 in total debts. CHOICE ONE: S&P Rating Tumbles to D After Bankruptcy Filing ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Rochester, New York-based competitive local exchange carrier Choice One Communications Inc. to 'D' from 'CCC-', following the company's filing for prepackaged Chapter 11 bankruptcy. Choice One's difficulties stemmed from a combination of aggressive leverage and the weak fundamentals of the CLEC business: -- the commodity nature of services, and -- intense competition At the time of the bankruptcy filing, total debt was about $656 million (about $686 million after adjusting for operating leases). The reorganization plan calls for converting a substantial portion of the debt into common stock. CANWEST MEDIA: Affiliate Launches Hollinger Trust Debt Offering --------------------------------------------------------------- CanWest Media Inc., a wholly-owned subsidiary of CanWest Global Communications Corp. said an affiliate of CanWest has commenced an offer to exchange a new series of 8% Senior Subordinated Notes due 2014 for any and all of the outstanding 12-1/8% Senior Notes due 2010 issued by Hollinger Participation Trust. The New Notes will, following settlement of the exchange offer and related transactions, be obligations of CanWest, ranking equally in right of payment with CanWest's existing and future senior subordinated unsecured debt. The exchange offer will expire at 5:00 p.m., New York City time, on Nov. 15, 2004 (subject to extension). Tenders of Trust Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on Nov. 5, 2004 (subject to extension). The exchange offer will be settled on the third business day following the expiration date or as soon as practicable thereafter. In the exchange offer, holders of Trust Notes are being offered US$1,200 principal amount of New Notes for each US$1,000 principal amount of Trust Notes validly tendered and accepted for exchange. US$30 principal amount of the New Notes offered for each US$1,000 principal amount of Trust Notes exchanged constitutes an early tender payment that will only be paid with respect to Trust Notes validly tendered prior to Oct. 29, 2004 (subject to extension). No additional payment will be made in respect of any accrued and unpaid interest on the Trust Notes accepted for exchange. Holders of Trust Notes that tender in the exchange offer will be required to grant consents and instructions authorizing certain amendments to the trust agreement governing the Trust Notes and to the indenture governing the Fixed Rate Subordinated Debentures due 2010 of 3815668 Canada Inc. (in which the Trust holds a participation interest). As a result of these instructions and consents, it is anticipated that immediately following the completion of the exchange offer, if successful, the Trust will be wound up and liquidated and holders of Trust Notes that have not been tendered and accepted in the exchange offer will receive a final cash distribution from the Trust equal to the par value of their Trust Notes plus accrued interest. In addition, concurrently with the exchange offer, CanWest intends to offer additional New Notes in a placement for cash pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. CanWest intends to enter into a purchase agreement for the cash offering shortly following the deadline for withdrawal of tenders in the exchange offer and to settle the cash offering on the same day as the exchange offer. Consummation of the exchange offer is subject to a number of conditions, including the receipt of valid and unrevoked tenders and consents representing more than 66-2/3% in aggregate outstanding principal amount of the Trust Notes. In addition, the successful completion of the cash offering and obtaining all necessary waivers and/or consents under existing credit facilities to permit the issuance of the New Notes are conditions to settlement of the exchange offer. The offering of the New Notes in the exchange offer is only made, and copies of the exchange offer documents will only be made available to, holders of Trust Notes that have certified certain matters including their status as "qualified institutional buyers" or non "U.S. persons", as such terms are defined in accordance with Rule 144A and Regulation S under the U.S. Securities Act, and, if resident in Canada, as to certain matters confirming their eligibility to acquire New Notes in accordance with an exemption from the registration and prospectus requirements of applicable Canadian provincial or territorial securities laws. Copies of the certification and the offering documents can be obtained from the information agent, Global Bondholder Services Corporation, at 866- 470-3900 or 212-430-3774. The New Notes have not been and will not be registered under the U.S. Securities Act or any state securities laws. Therefore, the New Notes may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and any applicable state securities laws. The New Notes have not been and will not be qualified for sale under the securities laws of any province or territory of Canada. Therefore, any transfer or resale of the New Notes in Canada, or to, from or for the account of any person resident in Canada, will be subject to restrictions under applicable Canadian provincial or territorial securities laws. About the Company CanWest Media, the holding company for CanWest Global Communications ' entertainment assets, has operations in television broadcasting, newspapers, radio broadcasting, cable channels, and Internet websites. The company has interests in Canada, Australia, New Zealand, Northern Ireland and the Republic of Ireland. * * * As reported in the Troubled Company Reporter on Oct. 1, 2004, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and '2' recovery rating to Winnipeg, Man.-based CanWest Media Inc.'s C$911 million senior secured term E loan due August 2009. The loan is rated the same as the long-term corporate credit rating. The '2' recovery rating indicates the expectation of a substantial recovery of principal (80%-100%) in the event of a default or bankruptcy. At the same time, Standard & Poor's affirmed its 'B+' long-term corporate credit rating on CanWest Media. The outlook is stable. Proceeds from the new term E loan were used to repay CanWest Media's previous term D loan. The company had about C$2.3 billion in total debt outstanding at May 31, 2004. "The ratings on CanWest Media reflect its weak credit measures, high debt leverage, and competitive operating environment," said Standard & Poor's credit analyst Lori Harris. These factors are partially offset by the company's leading Canadian market position and business diversity afforded by its newspaper publishing and television broadcasting assets, which alleviates the effect of the advertising revenue and newsprint price cycles. CHOICE ONE: Hires Financial Balloting as Special Noticing Agent --------------------------------------------------------------- Choice One Communications Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to employ Financial Balloting Group LLC as their noticing agent. Financial Balloting's retention will be limited to the distribution of notices to the Debtors' Senior Lenders, the Subordinated Noteholders and holders of any debt and equity interests required as part of the confirmation process to their Plan of Reorganization. The Debtors estimate that they have about 8,500 stockholders. Jane Sullivan, Executive Director at Financial Balloting, will be the primary individual who's responsible for handling the Debtors' notices. Choice One will pay Financial Balloting: a) $0.50 - $0.65 per holder of debt or equity securities; b) $1.75 - $2.25 per Disclosure Statement mailing; and c) $3,500 for mailings to street name holders of public equity securities. Professionals at Financial Balloting will charge the Debtors these hourly rates: Designation Rate ----------- ---- Executive Director $375 Director $325 Senior Case Analyst $275 Staff Assistant $200 According to Ms. Sullivan, Financial Balloting does not hold or represent any interest adverse to the Debtors' estates. Headquartered in Rochester, New York, Choice One Communications, Inc. -- http://www.choiceonecom.com/-- is an Integrated Communications Provider offering voice and data services including Internet solutions, to businesses in 29 metropolitan areas (markets) across 12 Northeast and Midwest states. Choice One reported $323 million of revenue in 2003, and provides services to more than 100,000 clients. The Company and its 18 debtor- affiliates filed for chapter 11 protection on October 5, 2004 (Bankr. S.D.N.Y. Case No. 04-16433). Jeffrey L. Tanenbaum, Esq., and Paul M. Basta, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they reported $354,811,000 in total assets and $1,078,478,000 in total debts on a consolidated basis. CHOICE ONE: Needs to Access $20 Mil. of DIP Financing ----------------------------------------------------- Choice One Communications, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to enter into a Postpetition Credit Agreement with a group of lenders led by General Electric Capital Corp. acting as the administrative agent, and a Postpetition Swap Agreement with the Wachovia Bank, N.A. The Debtors need the financing to fund their day-to-day operations including the payment of wages and other employee benefits, and the acquisition of supplies and equipment that are vital to their businesses as well as payment of certain costs relating to their chapter 11 cases. The Debtors submit that they don't have sufficient available sources of working capital and financing to carry on the operations of their businesses without postpetition financing. The absence of postpetition financing at this time will result in immediate and irreplaceable loss of business, jeopardizing the Debtors' restructuring efforts and their ability to preserve the value of their estates. Prepetition Secured Credit Agreement Under a Prepetition Secured Credit Agreement, a group of lenders led by GE Capital, together with Wachovia, provided the Debtors with loans and advances, and other financial accommodations to fund their operations. The parties entered into an interest swap transaction in the notional amount of $125 million with respect to specified fixed and floating rate payments effective February 8, 2001, and terminating on February 8, 2006. As of the Petition Date, the Debtors owe an aggregate principal amount outstanding of approximately $410 million plus interest and fees. The Debtors are also obligated under the Subordinated Notes for $250 million plus accrued and unpaid interest. All of the cash and cash equivalents held and anticipated to be received by the Debtors in the ordinary course of business constitute cash collateral to the prepetition financing parties. During the first semester, the Debtors were unable to make certain payments due under the Prepetition Credit Agreement constituting events of default. As a result, the Lenders and the Debtors entered into a Lock Up Agreement on August 31, 2004. Under the Agreement, the Lenders will forebear from exercising their rights under the Prepetition Credit Agreement and support the restructuring efforts of the Debtors. The Agreement will terminate if within five business days after the Petition Date, the Debtors will not be able to obtain interim Court approval of the postpetition financing. Postpetition Credit Agreement The Postpetition Credit Agreement provides for a $20 million revolving credit facility. To secure all of the Debtors' obligations to the postpetition financing parties, valid, enforceable and fully perfected security interests in liens and mortgages will be granted. Postpetition Swap Agreement The Postpetition Swap Agreement between the Debtors and the Wachovia Bank enables the financial arrangement to "pass-through" as a post-confirmation agreement where valid, effective and enforceable post-confirmation liens and security interests remains the same as the prepetition liens. Headquartered in Rochester, New York, Choice One Communications, Inc. -- http://www.choiceonecom.com/-- is an Integrated Communications Provider offering voice and data services including Internet solutions, to businesses in 29 metropolitan areas (markets) across 12 Northeast and Midwest states. Choice One reported $323 million of revenue in 2003, and provides services to more than 100,000 clients. The Company and its 18 debtor- affiliates filed for chapter 11 protection on October 5, 2004 (Bankr. S.D.N.Y. Case No. 04-16433). Jeffrey L. Tanenbaum, Esq., and Paul M. Basta, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they reported $354,811,000 in total assets and $1,078,478,000 in total debts on a consolidated basis. CORAM HEALTHCARE: Judge Walrath Confirms Chapter 11 Trustee's Plan ------------------------------------------------------------------ The Honorable Mary F. Walrath confirmed the Second Amended Plan of Reorganization proposed by Arlin Adams, the Chapter 11 Trustee overseeing the restructuring of Coram Healthcare Corp. and Coram, Inc. Judge Walrath overruled most of the objections raised by the Official Committee of Equity Security Holders, led by Sam Zell, who wanted a competing plan of reorganization confirmed. A full-text copy of Judge Walrath's 65-page Opinion confirming the Trustee's Plan is available at no charge at: http://www.deb.uscourts.gov/Opinions/2004/Coram_10504.pdf After considering the "divergent evidence" presented at the Confirmation Hearing valuing the Debtors between $150 and $376 million, Judge Walrath concludes that the value of the Debtors is less than $317 million. The economic highlights of the Trustee's Plan are: (A) In exchange for a $56 million contribution to Coram's estate, Coram's Noteholders will obtain a full release of all claims against them and receive 100% of the equity in Reorganized Coram; (B) Coram's unsecured creditors receive payment in full, in cash, with post-petition interest, funded by litigation proceeds from estate claims against Dan Crowley, certain outside directors and PricewaterhouseCoopers; (C) Reorganized Coram retains $10 million of working capital; and (D) Old Equity is cancelled and Old Shareholders will receive a $40 cash payment and any amount left over from the litigation proceeds used to pay unsecured creditors. Judge Walrath denied confirmation of two plans of reorganization for Coram finding that an undisclosed relationship between Cerberus and Coram management, brought to light by the Equity Committee, tainted the plan process. Judge Walrath also declined to approve some releases called for in the Trustee's plan. Coram Healthcare Corporation is a provider of infusion-therapy services. The Company filed for chapter 11 protection on August 8, 2000 (Bankr. D. Del. Case No. 00-03299). Christopher James Lhuiler, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, represent the Debtors. Kenneth E. Aaron, Esq., at Weir & Partners LLP, and Barry E. Bressler, Esq., at Schnader Harrison Segal & Lewis LLP, represent the Chapter 11 Trustee in these proceedings. Richard Levy, Esq., at Jenner & Block, LLC, represents the Equity Committee led by Sam Zell. Michael Cook, Esq., at Schulte, Roth & Zabel, represents Cerberus Capital, L.P., the target of RICO and other claims asserted by the Equity Committee. COSAN S.A.: Moody's Assigns Ba3 Rating on $150M Guaranteed Notes ---------------------------------------------------------------- Moody's Investor Service assigned the ratings for Cosan S.A. Industria e Comercio: -- US$ 150 million in Guaranteed Senior Unsecured Notes due 2009: Ba3 -- Global Local Currency Scale Issuer Rating: Ba3 -- Global Local Currency Scale Senior Implied Rating: Ba2 -- Brazilian National Scale Issuer Rating: Baa1.br -- Brazilian National Scale Senior Implied Rating: A1.br The rating outlook is stable. This is the first time that Moody's assigned a rating for Cosan, Brazil's largest sugar and alcohol producer. The assigned ratings assume that Cosan will receive proceeds of at least US$ 150 million from its proposed issuance of Guaranteed Senior Unsecured Notes due 2009 and use such proceeds to amortize existing secured debt obligations. The assigned ratings reflect: (a) Cosan's large scale and world low-cost-producer position, (b) the fact that approximately 60% of the company's revenues are from exports, (c) management's conservative approach to hedging its future sugar sales and (d) the company's adequate debt protection measurements over a normal sugar and ethanol pricing cycle. The assigned ratings also reflect Moody's view that, over the long term, Cosan should benefit from demographic trends leading to increased per capita consumption of sugar in emerging market countries, which are the largest importers of sugar. Finally, the assigned ratings reflect Moody's expectation that Cosan will post a significant reduction in capital expenditures in 2004/2005 due to the conclusion of major investments at its Da Barra mill, resulting in a level of capital expenditures largely in line with its depreciation expense. However, the ratings also consider: (a) the above-average historical volatility of sugar prices, when compared to other commodities, (b) Cosan's lack of diversification, given that sugar and ethanol prices have remained highly correlated, (c) the company's higher effective leverage when Cosan's land leases are capitalized, (d) Cosan's relatively small size in terms of revenues, when compared to international industry peers and acquisition risk in the fragmented Brazilian sugar industry. Moody's is concerned that the company could financially overextend itself to make an acquisition that it deems to be strategic, especially if such an acquisition were to be followed by a period of below-expected sugar prices. This risk is mitigated by Cosan's disciplined approach to acquisitions, its track record for successful acquisitions and the expectation that the risk of future acquisitions may be shared with equity investors and international strategic partners. Moody's believes that the large scale of the Brazilian Central South region sugar industry, along with its low-cost-producer position, expansion potential and unregulated nature, has transformed it into the leading price-maker in the international sugar market, allowing it to significantly influence world free market sugar prices. The cost advantage of Brazil's Central South region is based on the proximity of mills to the sugar cane plantations, the large size of its mills, advantages related to soil quality and climate and better capacity utilization rates resulting from the large ethanol market in Brazil. The ratings additionally consider that more than 70% of Cosan's total debt is secured in nature, primarily collateralized by sugar cane inventories. In analyzing Cosan's debt structure, Moody's considered management's intention to reduce secured debt to a level of less than 20% of total debt over the 12-18 month period subsequent to the note issuance by using the proceeds from the rated issuance to amortize existing secured obligations and by refinancing existing secured debt with senior unsecured obligations. In addition, Moody's believes that the loss expectation for Cosan's secured and senior unsecured creditors would not be significantly differentiated, due to the difficulty of transporting perishable sugar cane to another mill. The Ba3 foreign currency rating, a function of Cosan's Ba2 senior implied global local currency rating, reflects the company's operating strengths and position in the Brazilian sugar market, but also incorporates the element of convertibility risk, or the likelihood that the Brazilian government might declare a general debt moratorium to counter a foreign currency crisis. The foreign currency bond rating considers the probability of a sovereign foreign currency default implied by the governments B1 foreign currency bond rating and the likelihood that, in the event of such a default, the government would impose a general foreign currency payments moratorium. Considered in Cosan's Ba3 foreign currency rating is the possibility that Cosan, as a major exporter with significant foreign currency revenues, might be exempt from a corporate debt moratorium, if such a moratorium were to be imposed. The Ba3 rating also reflects the guarantees provided by Cosan's operating subsidiaries, Usina de Barra S.A. -- Acucar e Alcool (guarantees 100% of principal) and FBA -- Franco Brasileira S.A. Acucar e Alcool (guarantee limited to 20% of principal). The Ba3 and Baa1.br issuer ratings refer to the risk of debt issued by Cosan without a guarantee from the operating company subsidiaries. The issuer ratings are principally constrained by structural subordination caused by the significant percentage (approximately 35-40%) of total debt and cash flow located at Cosan's operating subsidiaries. Moody's expects that operating subsidiary creditors would have to be satisfied before Cosan's senior unsecured creditors could realize any value from subsidiary cash flow or assets. The stable outlook is based upon Moody's expectations that Cosan will maintain a competitive cost position and continue to post strong retained cash flow in relation to its indebtedness, even if sugar prices remain near the depressed levels posted during the 2003/2004 harvest. The outlook also assumes that retained cash flow will remain strong because of the controlling shareholder's intention to receive only the minimum level of dividends required by Brazilian corporate law (25% of adjusted net income). Finally, the outlook incorporates Moody's expectation that Cosan will reduce its level of secured debt to a level of 15-20% of total debt during the 12-18 month period following the note issuance. Cosan's ratings or the outlook could be raised if the company is able to increase its scale without deterioration in expected debt protection measures and benefit from a reduced level of correlation between sugar and ethanol prices, resulting in a more diversified sales base. This reduced level of correlation could be driven by increased sales of hydrous alcohol directly to fuel distributors, which is more likely to be correlated with petroleum prices than anhydrous alcohol, which is sold to refiners to be blended with gasoline. An improvement in the ratings or the outlook could also result from a significant increase in the percentage of total world sugar production that trades in unregulated markets and a resulting sustainable decrease in price volatility (currently approximately 30% of sugar production is sold in the unregulated market). However, Cosan's ratings or the outlook could be lowered if: * Cosan's cost position deteriorates, * its exports reduce as a percentage of sales, or * the company initiates an aggressive expansion or acquisition program that results in increased leverage. A lowering in the ratings or the outlook could also result from a change in Moody's expectation with regard to the secured debt component of Cosan's capitalization, with a higher level of secured debt than expected or the commitment of a significant level of non-sugar cane assets for collateral. During the year ending April 30, 2004, Cosan had consolidated net revenues of R$ 1.6 billion, up 16% from the previous year, with an operating margin of 15.1%. Retained cash flow of R$ 263 million was equal to 27% of total debt, while EBIT coverage of net financial expenses was 1.7x. The company had total adjusted debt of R$ 987 million, not including self-liquidating PESA (special program for asset recovery) obligations. The PESA financing was originated when the Brazilian federal government guaranteed agricultural financing, as part of its policy of withdrawing subsidies for the agricultural sector in the 1990's. The maturity date of the financing was changed to 2018/2020 and agricultural producers received federal government notes with a present value equal to the refinanced debt. Cosan S.A. Industria e Comercio, headquartered in Sao Paulo, Brazil, crushed more than 26 million tons of sugar cane in 2003/2004 in twelve mills located in the Central South region of Brazil, with sugar production of 2.2 million tons and alcohol production of 851 million liters. COUNTRYWIDE HOME: Moody's Places Ba2 Rating on Class B-3 -------------------------------------------------------- Moody's Investors Service assigned a rating of Aaa to the senior certificates issued in the Countrywide Home Loans Mortgage Pass- Through Trust Series 2004-HYB6 securitization of an Alt A quality, hybrid adjustable-rate mortgage loans. Moody's also assigned a rating of Aa1 to the Class A-4 senior certificates of the same transaction. In addition, ratings ranging from Aa2 to Ba2 were assigned to subordinate certificates in the transaction. Tamara Zaliznyak, a Moody's analyst, said the ratings are based on: (a) the credit support provided through subordination, (b) the integrity of the cash flows, and (c) the legal structure, as well as Countrywide's ability as the master servicer of mortgage loans. The pool of loans backing Series 2004-HYB6 transaction consists of 30-year hybrid adjustable rate loans which pay fixed interest rated for the first 60 months and then adjust based on a specific index. The loans secured by first liens on one- to four-family residential properties. The credit characteristics of the underling loans are of an Alt A quality. The pool has weighted average FICO score of 707 and weighted average LTV of 74.62%. Two-four family homes represent about 2.5% of the total pool, while second homes and investment properties represent about 3.5% and 4.09% respectively. The high percentage of loans with reduced or no documentation (more than 70%) is typical for Alt A pools. About 7.4% of the loans have average balance above one million. The high balance loans could experience higher loss severities in the event of default because these properties are less liquid, especially under the stressed economic environment Interest only loans represent about 82%. The high percentage of IO loans is typical for Countrywide's hybrid pools. These loans require monthly payments of only accrued interest for the first three, five or seven years respectively. The risk associated with such loans is higher since these loans have no scheduled amortization through their initial interest period. However, as interest only period approaches its end, these loans might be refinanced to avoid higher monthly payments to fully amortize the loan. The transaction incorporates a "super senior" structure within its senior classes. Class A-4 (mezzanine senior class) will take loss priority over its respective super-senior classes Class A-1, Class A-2 and Class A-3. The incremental risk posed by an increase in severity to Class A-4 certificates (due to their small size) was a consideration in the Aa1 rating of those certificates. Countrywide Home Loans Servicing LP will be the master servicer of the mortgage loans. Countrywide is considered to be a highly capable servicer of prime quality mortgage loans. Countrywide Home Loans Servicing LP was established by Countrywide in February 2000 to service loans originated by Countrywide. Moody's assigned Countrywide Home Loans Inc. servicer rating of SQ1. Moody's highest servicer rating for servicing Prime/Alt-A loans. The complete rating actions are as follows: Seller: Countrywide Home Loans, Inc. Depositor: CWMBS, Inc. Issuer: CHL Mortgage Pass-Through Trust 2004-HYB6 -- $22,500,000 Class A-1, rated Aaa -- $450,000,000 Class A-2, rated Aaa -- $75,000,000 Class A-3, rated Aaa -- $19,182,000 Class A-4, rated Aa1 -- Interest Only Class X, rated Aaa -- $100 Class A-R, rated Aaa -- $14,243,000 Class M, rated Aa2 -- $9,697,000 Class B-1, rated A2 -- $5,757,000 Class B-2, rated Baa2 -- $2,727,000 Class B-3, rated Ba2 CROWN CENTRAL: Moody's Junks Ratings to Ca with Negative Outlook ---------------------------------------------------------------- Moody's downgraded Crown Central Petroleum Corporation's ratings and left the outlook negative. The downgrade reflects Crown's substantially weakened earnings power and less than adequate asset cover for the bonds that resulted from asset sales which included everything except the company's two refineries. While the retail and terminal asset sales generated substantial cash and refining margins over the first half of the year were robust, ongoing operational needs, particularly working capital needed to fund increasingly higher-cost crude supplies have increased significantly Crown's cash requirements. The downgrade also reflects the significant underfunded status of the company's pension plan, which may have a priority claim on the company's cash. The eventual funding of the pension plan could use a significant portion of available cash before any redemption of the bonds occurs. The Ca ratings also reflect the low to high ranges of potential values that could be realized for the refineries when they are finally sold. The company is still in the process of trying to sell its Pasadena and Tyler refineries, and could have the sales completed over the next two quarters. However, even if sold and in light of the claim by the Pension Benefits Guaranty Corporation to fund the company's underfunded pension plan, the timing of the sales are uncertain and the eventual values realized are highly unlikely to cover the original par value of the notes by themselves and would need to be supplemented by whatever cash balances and net working capital is available at the time the bonds are redeemed. The Pension Benefits Guaranty Corporation (which operates the federal insurance program for defined benefits plans) has contacted Crown regarding the under-funded status of its pension plan as it continues to unwind the business. At Dec. 31, 2003, the plan was reportedly underfunded by approximately $56.7 million under GAAP accounting. However, the Pension Benefits Guaranty Corporation notified Crown that its calculations of a contingent unsecured claim against Crown is very substantially higher (approximately $121 million), based on its terminated status calculation. While this situation is still being resolved, the Pension Benefits Guaranty Corporation settlement could usurp a significant amount of cash, bringing into question the portion of refinery sale proceeds that would be relevant to the bonds. The negative outlook reflects: (i) the current credit trends, highlighted by the reduced earnings and cash flow generating capabilities of Crown owing to asset sales, (ii) the increasing liquidity needs to fund throughput supplies during a period of historically high crude oil prices, and (iii) the inherent volatility in refining margins. Moody's ratings actions for Crown are as follows: * Downgraded to Ca from Caa2 - Crown's senior implied rating. * Downgraded to Ca from Caa3 - Crown's $125 million 10.875% senior unsecured notes due 2005 * Downgraded to Ca from Caa3- Crown's senior unsecured issuer rating Crown's liquidity situation had initially benefited from asset sales. However since June 30, 2004, when the company reported approximately $100 million of cash on hand, the increasing cost of throughput oil and the company's decision to prepay for its supplies with cash has effectively caused most of the cash to be tied up in working capital. Moody's recognizes that by using cash to prepay for crude supplies, the company has limited its reliance on the secured credit facility (approximately $9 million of L/C usage), leaving the remaining $66 million of the credit facility free for backup liquidity. However, with the continued rise in crude oil prices to historical highs and the credit facility maturing on December 1, 2004, with another extension likely to depend on the progress made towards the completion of the refinery sales, liquidity could be strained. Operationally, Crown actually showed an operating profit for the first half of 2004 based on the surprising strength of refining margins during the quarter. However, despite continued strong margins and substantial cash balances from asset sales, Crown is currently only operating its Tyler refinery for its own account while entering into a processing agreement for 100% of Pasadena's capacity through December 1, 2004. Notwithstanding the opportunity cost of foregoing robust margins which have remained solid this year, this processing agreement has resulted in Crown not having to purchase its own crude to run through Pasadena, thereby reducing some working capital needs while covering the unit's cash operating costs and providing a modest positive cash flow. Conversely, the Tyler refinery is running at near capacity and reportedly generating positive cash flow, though its margins may be squeezed and it could be a user of cash in lower margin environments. Crown Central Petroleum is headquartered in Baltimore, Maryland. DII INDUSTRIES: Asks Court to Approve 9900 Westpark Sale Deal ------------------------------------------------------------- KBR Technical Services, Inc., asks the United States Bankruptcy Court for the Western District of Pennsylvania for permission to enter into a Purchase and Sale Agreement for a real property located at 9900 Westpark in Houston, Texas, with Boxer Property Management Corporation. The principal terms of the Agreement are: (a) Land and Improvements KBR Technical will convey to Boxer the property located at 9900 Westpark, in Houston, Texas. (b) Purchase Price On closing, Boxer will pay to KBR Technical $2,525,130 in cash, as purchase price for the Property. (c) Leaseback Boxer will leaseback the Property to Kellogg Brown & Root, Inc., for a six-month period at a $91,428 fixed base rent per month and will grant KBR an option to extend the lease for an additional 10-year term. (d) Liens, Claims, and Encumbrances All Property will be sold, conveyed, and assigned to Boxer at closing free and clear of all liens, claims, and encumbrances. KBR Technical, at its own cost will be obligated to cure, remove, or insure by closing all judgment liens, mechanics' and materialmans' liens, and other monetary liens against the Property, other than the liens for taxes and assessments that are not delinquent. (e) As Is, Where Is Under the terms of the Agreement, Boxer has agreed that the sale of the Property will be on an "as is, where is" basis and has waived the benefit of any representations or warranties pertaining to environmental hazards or conditions related to the Property. Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart, LLP, in New York, relates that KBR Technical used the Property as additional office space for its business operations. Recently, KBR Technical's management decided to consolidate its various business operations and locations of operation, thus maximizing the utilization of all of its office space and reducing unnecessary overhead costs. As a result, KBR Technical decided to sell the Property and to relocate all employees and current business operations related to the Property to its Clinton Drive and Jefferson facilities. KBR Technical's management believes that this consolidation will accomplish the company's ultimate goal of maximizing existing office space and will eliminate the undue costs associated with operating an underutilized property. The Property is not needed by KBR Technical for any of its own present or anticipated future business purposes, and the Property was not anticipated to add any strategic or monetary value to KBR Technical's business operations. The consummation of the Agreement will benefit KBR Technical by allowing it to consolidate its business operations and to eliminate the incurrence of unnecessary and burdensome costs associated with operating the underutilized Property. In addition, the leaseback arrangement is invaluable to KBR because it provides the company with much needed additional time to complete certain projects and to relocate the KBR employees that are performing specified duties on the Property. Accordingly, it makes good business sense for KBR Technical to enter into the Agreement with Boxer with respect to the Property. Mr. Rich informs the Court that KBR Technical and Boxer are not affiliated entities. There has been no relationship between the parties other than the negotiation of the terms of the Agreement and this negotiation has been ongoing for over a two-month period. Once KBR Technical made the decision to sell the Property it contacted a real estate brokerage firm to handle the marketing and sale of the Property. This process was consistent with sale and marketing procedures that KBR Technical had historically implemented in the sale of its real property. KBR Technical pursued the consummation of the Agreement with Boxer because it believed that the Agreement most effectively secured a fair and reasonable price for the Property. Boxer's purchase price offer is the only offer received in connection with the sale of the Property. The sales comparables and recent market statistics made available to KBR Technical reflected that the purchase price offered by Boxer was consistent with the recent sales of buildings within the same geographic region and that were in similar structural condition. Furthermore, KBR Technical believes that the purchase price for the Property is fair because it reflected the virtually identical price per square foot that was obtained in the recent sale of a neighboring property also located at 9950 Westpark. KBR Technical contends that it will be materially, adversely, and irreparably impaired if its transaction with Boxer is not approved and if the terms of the Agreement are not consummated. In particular, the costs of operating the underutilized Property will continue to rise and will unduly drain KBR Technical's assets and overburden its estate. Headquartered in Houston, Texas, DII Industries, LLC, is the direct or indirect parent of BPM Minerals, LLC, Kellogg Brown & Root, Inc., Mid-Valley, Inc., KBR Technical Services, Inc., Kellogg Brown & Root Engineering Corporation, Kellogg Brown & Root International, Inc., (Delaware), and Kellogg Brown & Root International, Inc., (Panama). KBR and its subsidiaries provide a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. DII and its debtor-affiliates filed a prepackaged chapter 11 petition on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $6.255 billion in total assets and $5.295 billion in total liabilities. (DII & KBR Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) DRESSER-RAND: Moody's Puts B3 Rating on $420 Million Sr. Sub. Debt ------------------------------------------------------------------ Moody's rated Dresser-Rand Group Inc.'s pending senior subordinated notes, guaranteed solely by domestic subsidiaries, and secured bank facilities. In a leveraged acquisition, Dresser- Rand Holdings LLC, through an intermediate holding company, will acquire Dresser-Rand Group from Ingersoll-Rand for $1.2 billion (includes $73 million of beginning cash) plus roughly $48 million in transaction costs. Dresser-Rand Holdings is owned by private equity funds managed by First Reserve Corp. Dresser-Rand Group is a longstanding international services and manufacturing firm serving the international turbine and compression needs of the oil and gas production, gas processing and transmission, refining, petrochemicals, and industrial processing sectors. With a stable outlook, we assigned the ratings: -- B3 on Dresser-Rand Group's pending $420 million of 10 year senior subordinated notes. -- B1 Senior Implied Rating and B2 Senior Unsecured Issuer Rating. -- B1 on Dresser-Rand Group's $300 million senior secured 5 year bank revolver. -- B1 on Dresser-Rand Group's $400 million senior secured 7 year term loan. -- SGL-3 Liquidity Rating. Overall, the ratings are restrained by: (a) the execution and performance risk inherent to a leveraged high-multiple $1.250 billion acquisition of a services-dominated, (b) asset-light international business holding a very high $1 billion of pro-forma intangible assets and (c) goodwill. Dresser-Rand Group will need to quickly show it can attain the adjusted and forecasted earnings, cash flow, and liquidity power estimated by First Reserve Corp. and used to underpin the leveraged acquisition price tag. This question should be resolved over the next twelve months. The services side of the business now generates substantially all of Dresser-Rand Group's reported income. While improving, manufacturing generated a first-half 2004 operating loss after overhead. Dresser-Rand Group reported: (a) $63 million of 2002 EBITDA ($57 million, as adjusted per Dresser-Rand Group management, First Reserve Corp., and third party auditor estimates), (b) $58 million of 2003 EBITDA ($110 million, adjusted per above), and (c) $80 million of EBITDA in the twelve months ended June 30, 2004 ($138 million, adjusted per above). Dresser-Rand Group holds only $93 million in fixed assets, roughly $100 million of net working capital, excluding cash, and a very large $1 billion of pro-forma intangible assets and goodwill. We do not expect significant fixed asset step-up. As recently as 2000, IR acquired Halliburton's 51% of Dresser-Rand Group (Halliburton acquired Dresser, Inc.) for $543 million and stepped- up Dresser-Rand Group's fixed assets to the degree possible at that time. The ratings benefit from: (a) a degree of stability provided by after-market parts and services client alliances and mission critical natures of DRG products and services; (b) improving earnings and bookings trends; (c) improving margins aided by shifts in business mix; (d) supportive sector trends; (e) industry-seasoned management; (f) DRG's established role in the manufacturing and after- market servicing of an industry-leading installed base of high-end compressors and steam and gas turbines; (g) a $430 million cash equity cushion should DRG underperform its forecasts; and (h) the debt reduction bias embedded in the bank covenants. Bank covenants limit capital spending to $20 million per year unless permitted under accrued capacity under the Available Investment Basket and debt and interest coverage covenants reduce over time. The ratings also benefit from: (a) modest capital spending needs; (b) liquidity deemed Adequate, per the SGL-3 rating; (c) comprehensive indemnifications provided by the seller and its reported full-funding of pension and retirement obligations; (d) a material degree of customer-funded working capital; and (e) that visible actual EBITDA appears to cover pro-forma interest, capital spending, and expected incremental working capital funding by at least 1.1:1. Still, the degree to which EBITDA moves above modest reported levels will drive how soundly the debt structure is covered by asset and enterprise value and debt service is covered by cash flow. Specifically, the ratings are restrained by: Dresser-Rand Group's need to demonstrate it can generate the significantly higher pro- forma adjusted EBITDA levels projected by the sponsor; in comparison, the low EBITDA reported as recently as 2003; a very low proportion of tangible assets and correspondingly high amount of debt relying on intangible asset values; a degree of cyclicality, and a softening EURO. Also, the petroleum sector is several years into an up-cycle which may increase the odds of a correction that could reduce oilfield services activity. Notably, the notes face a material degree of structural subordination but are notched two levels under the senior implied rating. The notes do receive senior subordinated guarantees from Dresser-Rand Holdings and most U.S. subsidiaries, but non- guarantors generated 115% of 2003 operating income (guarantors generated a loss), 51% of 2003 revenue, and held 46% of Dresser- Rand Group's assets. Guarantors did swing to first-half 2004 profit, generating 84% of operating income which, itself, began recovering from roughly break-even in first-half 2003. If Dresser-Rand Group roughly attains its adjusted earnings expectations, and the guarantors continue generating a majority of cash flow, the notes should remain two notches under the senior implied rating rather than the three notches used for material structural subordination of parent senior subordinated notes. Pro-forma Debt/Actual EBITDA for the twelve months ended June 30, 2004 would be high at 10.25x, but substantially lower to the degree Dresser-Rand Group's stand-alone results validate the estimated EBITDA adjustments. Depending on Dresser-Rand Group's stand-alone ability to validate the $138 million EBITDA estimate for the twelve months ended June 30, 2004, Debt/EBITDA could then be as low as in the range of 6x, Pro-forma Debt/Capital approximates 66%. Pro-forma EBITDA/Interest for the twelve months ended June 30, 2004 is no lower than 1.4x (based on actual reported EBITDA and roughly $55 million of interest) and no higher than 2.47x (if adjusted EBITDA of $138 million is valid). Capital spending burdens appear to be very modest. Net of cash balances, First Reserve Corp. is paying 14x actual EBITDA and 8.2x its estimate of adjusted EBITDA for the twelve months ended June 30, 2004. While we expect EBITDA to improve from actual results, time and performance are needed to gauge the degree of upside DRG can deliver post-acquisition. In the first half ended June 30, 2004, virtually all operating income came from the services business while its new units manufacturing segment, improving from operating losses, moved to roughly break-even. In addition, prior EBITDA levels benefited from the strengthening Euro relative to the U.S. dollar, exposing current levels of EBITDA to Euro weakness. To achieve its acquisition economics, First Reserve Corp. and Dresser-Rand Group will need to sustain a successful manufacturing turnaround and deliver EBITDA in the range of adjusted run-rate and forecasted EBITDA. The SGL-3 liquidity rating reflects adequate liquidity overall. In Moody's view, cash flow coverage of debt service, capital spending, and working capital needs is Adequate. If Dresser-Rand Group generates cash flow in the range of forecasts, cash flow coverage would still likely remain in the adequate range (rather that good) until very high acquisition debt is materially reduced via the cash flow sweep to reduce debt service in preparation for in weaker markets. Back-up liquidity is adequate. Though the revolver will initially be undrawn, roughly $180 million of letters of credit would be outstanding, leaving $120 million of borrowing availability. That availability appears to be adequate given the still uncertain level of cash flow coverage of obligations and letter of credit needs as a standalone leveraged business. Revolver covenant coverage is only adequate, given uncertain EBITDA levels and earnings power in an independent Dresser-Rand Group. The two covenants, as defined, initially require EBITDA/Cash Interest to exceed 1.750:1 and Debt/EBITDA to initially be no higher than 6.85:1. These ratios rely initially on adjusted EBITDA. Alternative liquidity is weak, given that all assets are already pledged to the banks and the asset structure holds a very low proportion of tangible assets. The B1 Senior Implied Rating, the rating of the senior secured notes at the senior implied rating level, and the notching of the senior subordinated notes below the senior implied rating The secured facilities are aided considerably by their first security in the equity stock of subsidiaries, intercompany notes, all tangible and intangible assets, by the large cushion of $820 million in junior capital, and by the priority debt amortization of the $400 million term loan. However, the lack of a borrowing base governor on revolver borrowings and (reflecting the service dominant nature of the business) very modest tangible asset cover of secured debt content prevent notching the bank facilities above the senior implied rating. The pro-forma capital structure consists of the $400 million term loan, $420 million of senior subordinated notes, and $430 million cash equity. Actual EBITDA for the twelve months ended June 30, 2004 was $80 million ($90 million excluding employee costs that will be retained by seller Ingersoll-Rand), while First Reserve Corp. and Dresser-Rand Group management estimate adjusted EBITDA for that period to be $138 million. Reflecting the services dominated nature of Dresser-Rand Group's business, pro-forma assets are light on tangible assets. Principal pro-forma assets include: * $73 million in cash, * $200 million in receivables, * $144 million in net inventory (net of $53 million of progress payments and a $32 million inventory reserve), * $93 million in property, plant, and equipment, and * a large $1 billion of goodwill and intangible assets. After deducting $260 million of current liabilities, combined net current and fixed asset coverage of the term loan would be a low 64%. Dresser-Rand Group Inc. is headquartered in Olean, New York. DSL.NET INC: Closes $5 Million Financing with Laurus Funds ---------------------------------------------------------- DSL.net, Inc. (AMEX: BIZ), a leading nationwide provider of broadband communications services to businesses, has completed a $5.0 million financing with Laurus Master Fund, Ltd., a New York City-based institutional fund that specializes in providing financing to growing, small-cap companies. The financing consists of a $4.25 million two-year convertible term note and a $750,000 revolving credit facility. This indebtedness bears an annual interest rate of between 6% and 7% that decreases as the market price of DSL.net's common stock increases. The note and credit facility are convertible, at the option of the holders, into DSL.net common stock at a conversion price of $0.28 per share. In conjunction with the financing, the Company issued warrants to Laurus Funds for the purchase of approximately 1.14 million shares of DSL.net common stock at an exercise price of $0.35 per share. "We intend to use these funds to pursue strategic opportunities, including subscriber-line acquisitions and other corporate transactions," said Kirby G. "Buddy" Pickle, chief executive officer of DSL.net. "It also represents the successful completion of a third important strategic goal that we set our sights on earlier in the year. These included simplifying the Company's capital structure through the conversion of our Series X preferred stock, obtaining a listing for our common stock on the American Stock Exchange and securing financing to pursue strategic opportunities." The financing is secured by certain of the Company's accounts receivable. In exchange for the subordination of a prior lien on these accounts receivable, the Company issued warrants to its senior secured noteholders to purchase approximately 19.2 million shares of DSL.net common stock. These warrants are exercisable only upon stockholder approval and solely in the event of a qualifying change of control of the Company, at an exercise price equal to the per-share transaction value of the Company's common stock. The use of the financing proceeds is subject to approval of representatives of the Company's senior secured noteholders. About DSL.net DSL.net, Inc. is a leading nationwide provider of broadband communications services to businesses. The Company combines its own facilities, nationwide network infrastructure and Internet Service Provider (ISP) capabilities to provide high-speed Internet access, private network solutions and value-added services directly to small- and medium-sized businesses or larger enterprises looking to connect multiple locations. DSL.net product offerings include T-1, DS-3 and business-class DSL services, virtual private networks (VPNs), frame relay, Web hosting, DNS management, enhanced e-mail, online data backup and recovery services, firewalls and nationwide dial-up services, as well as integrated voice and data offerings in select markets. For more information, visit http://www.dsl.net/e-mail info@dsl.net, or call 1-877-DSL-NET1 (1-877-375-6381). * * * As reported in the Troubled Company Reporter's April 22, 2004 edition, DSL.net, Inc. (NASDAQ: DSLN), a leading nationwide provider of broadband communications services to businesses, disclosed that in compliance with Nasdaq Marketplace Rule 4350(b)(1)(B), that the independent audit report filed with the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2003, included a qualification for a going concern. The disclosure in this press release is required under the above Nasdaq rule and does not represent any change to the Company's recently filed Annual Report on Form 10-K. FAIR GROUNDS: Names Ben Huffman Director & Racing Secretary ----------------------------------------------------------- Churchill Downs Incorporated (Nasdaq: CHDN) named D. Ben Huffman director of racing and racing secretary for Fair Grounds Race Course in New Orleans, Lousiana. The announcement was made by Donald R. Richardson, CDI's senior vice president of racing. Mr. Huffman will assume his new position as soon as CDI completes the purchase of Fair Grounds, which is scheduled to occur on or before Oct. 15, 2004. The U.S. Bankruptcy Court, Eastern District of Louisiana, authorized the sale of Fair Grounds to CDI on Sept. 24 when it approved the bankruptcy reorganization plan submitted by CDI; Fair Grounds Corp., principal owner of the racetrack; and the Louisiana Horsemen's Benevolent and Protective Association. Mr. Huffman will report to Randall Soth, who was recently named president and general manager of Fair Grounds, pending the completion of CDI's acquisition of the historic racetrack and its affiliated off-track betting network. Mr. Huffman, a 35-year-old native of Louisville, Kentucky, served as director of racing and racing secretary at Fair Grounds during the 2003-2004 racing season will continue in his current posts as racing secretary for both the Fall and Spring Meets at Keeneland Race Course in Lexington, Ky., and as a placing judge for portions of Churchill Downs' Fall and Spring Meets that do not conflict with his live racing schedule at Fair Grounds. "I am very excited to return to Fair Grounds and to expand upon my professional relationship with the management team at Churchill Downs Incorporated," said Mr. Huffman. "Fair Grounds already offers an attractive racing product, and I look forward to working with Louisiana horsemen and my team in the racing office as we build on that tradition. Fair Grounds should be a show place for winter racing, with competitive stakes and purse programs, and a stable area that meets the needs of our horsemen. CDI is committed to making the improvements necessary to return Fair Grounds racing to national prominence, and I welcome the chance to be part of the team that makes that happen." "Ben is one of the best racing secretaries in the horse racing industry, and we are thrilled to have him accept this important role at Fair Grounds," said Mr. Richardson. "He has an excellent track record with horsemen and the kind of experience we need to make Fair Grounds racing the preferred wintertime product for horse racing fans across the nation. "We also realize that Ben is an important part of the Kentucky racing circuit, and we are pleased to know that Ben's position at Fair Grounds will still allow him to serve as Keeneland's racing secretary and as a racing official at Churchill Downs." Assisting Mr. Huffman in the Fair Grounds racing office will be Jason M. Boulet and David Heitzman, who will serve as co-assistant racing secretaries. Mr. Boulet will also serve as stakes coordinator. "Jason and David have been exceptional to work with and will be an important part of my team at Fair Grounds," said Mr. Huffman. "They both have tons of talent and a strong knowledge of the Louisiana horse industry. I look forward to working with them as we prepare for what should be an exciting 2004-2005 live racing season in New Orleans." Mr. Huffman's professional and personal background is rooted in horse racing. His father, William G. (Blackie) Huffman, and his uncle and brother are Thoroughbred trainers. Ben Huffman worked for his father as an assistant trainer before becoming a racing official. Prior to accepting his current post at Keeneland in 2002, Mr. Huffman served as racing secretary for CDI's Ellis Park from 1999 to 2001, and as assistant racing secretary at the Henderson, Ky., track in 1998. He served as assistant racing secretary at Turfway Park in Florence, Kentucky, from 1994 to 2001, and as co-assistant racing secretary at the famed Saratoga Race Course in Saratoga Springs, New York, during the 1996 and 1997 racing seasons. His first job in a racing office was as a claims clerk at Ellis Park in 1990. Mr. Huffman attended Western Kentucky University and the University of Louisville. Mr. Huffman and his wife, Christi, live in Kentucky and have two daughters. About Churchill Downs Churchill Downs Incorporated, headquartered in Louisville, Kentucky, owns and operates world-renowned horse racing venues throughout the United States. The Company's racetracks in California, Florida, Illinois, Indiana and Kentucky host 114 graded-stakes events and many of North America's most prestigious races, including the Kentucky Derby and Kentucky Oaks, Hollywood Gold Cup and Arlington Million. CDI racetracks have hosted nine Breeders' Cup World Thoroughbred Championships -- more than any other North American racing company. CDI also owns off-track betting facilities and a television production company, and has interests in telecommunications and racing services companies that support CDI's network of simulcasting and racing operations. CDI trades on the Nasdaq National Market under the symbol CHDN and can be found on the Internet at http://www.churchilldownsincorporated.com/ About Fair Grounds Headquartered in New Orleans, Louisiana, Fair Grounds, filed for chapter 11 protection on August 15, 2003 (Bankr. E.D. La. Case No. 03-16222). Clayton T. Huff, Esq., Greta M. Brouphy, Esq., et al., at Heller, Draper, Hayden, Patrick & Horn represent the Debtor in its restructuring efforts. When the Debtor filed for protection it listed above $10 million in estimated assets and debts. Fair Grounds filed its Third Amended Plan of Reorganization with the Bankruptcy Court on September 8, 2004. * * * As reported in the Troubled Company Reporter on Sept. 27, 2004, The U.S. Bankruptcy Court, Eastern District of Louisiana, approved Churchill Downs Incorporated's $47 million acquisition of the Fair Grounds Race Course. CDI, the Fair Grounds Corporation, the Louisiana Horseman's Benevolent and Protective Association and other parties involved are expected to close the transaction on or before Oct. 15, 2004. Should the acquisition close successfully on or before Oct. 15, 2004, Fair Grounds and its 10 off-track betting facilities would become the seventh racetrack operation owned by CDI. Fair Grounds' upcoming 82-day meet will run from Nov. 25, 2004, through March 27, 2005. FORT WASHINGTON: S&P Raises Sr. Debt Rating to 'BB+' From 'BB-' --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the senior and second priority senior notes issued by Fort Washington CBO I, a high-yield arbitrage CBO transaction managed by Fort Washington Investment Advisors Inc. The upgrade of the transaction reflects an increase in the level of overcollateralization available to support the senior and second priority senior notes since the last rating action on April 24, 2003. Since the last rating action, the transaction has paid down a total of $78.936 million to the senior notes, $30.967 million of which was paid most recently on the June 2004 payment date. Additionally, there has been a slight improvement in the credit quality of the collateral pool since the last ratings review. Standard & Poor's has reviewed the results of current cash flow runs generated for Fort Washington CBO I Ltd. to determine the level of future defaults the rated notes can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. Standard & Poor's will continue to monitor the performance of the transaction in light of its de-levering, to ensure that the ratings assigned reflect the credit enhancement available to support its rated notes. Ratings Raised And Off Watch Positive Fort Washington CBO I Rating ------ To From -- ---- Senior AA A/Watch Pos 2nd priority senior BB+ BB-/Watch Pos Transaction Information Issuer: Fort Washington CBO I Co-issuer: Fort Washington CBO Corp. I Current manager: Fort Washington Investment Advisors Inc. Underwriter: Goldman Sachs Trustee: JPMorganChase Bank Transaction type: High-yield arbitrage CBO Tranche Initial Last Rating Current Information Report Action Action ----------- ------- ----------- ------- Date (MM/YYYY) 07/2000 04/2003 10/2004 Senior note rating AA A AA Senior note bal. $192.5mm $179.285mm $100.349mm 2nd Prior. sr. nt rtg BBB- BB- BB+ 2nd Prior. sr. nt bal. $16.25mm $16.25mm $16.25mm Senior par value test 125.6% 116.2% 134.5% Senior par value min. 117.0% 117.0% 117.0% 2nd prior. par val test 115.8% 106.6% 115.8% 2nd prior. par val min 111% 111% 111% Portfolio Benchmarks Current -------------------- ------- S&P Wtd. Avg. Rtg. (excl. defaulted) B S&P Default Measure (excl. defaulted) 4.99% S&P Variability Measure (excl. defaulted) 3.28% S&P Correlation Measure (excl. defaulted) 1.10 Wtd. Avg. Coupon (excl. defaulted) 9.07% Oblig. Rtd. 'BBB-' and above 11.75% Oblig. Rtd. 'BB-' and above 34.89% Oblig. Rtd. 'B-' and above 77.86% Oblig. Rtd. in 'CCC' range 15.40% Oblig. Rtd. 'CC', 'SD' or 'D' 6.74% Obligors on Watch Neg. (excl. defaulted) 2.59% S&P RATED OC (ROC) Current ------------------ ------- Senior notes 110.00% (AA) 2nd priority sr. notes 106.02% (BB+) GADZOOKS, INC.: Has Until Oct. 31 to File a Chapter 11 Plan ----------------------------------------------------------- Gadzooks, Inc., sought and obtained an extension of its exclusive period to file a plan of reorganization through Oct. 31, 2004. The retailer also secured a concomitant extension of its exclusive period to solicit acceptances of that plan from creditors through Jan. 31, 2005. Gadzooks told the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, that it is negotiating with the Official Committee of Unsecured Creditors and Official Committee of Equity Holders. The Company hopes to file a consensual plan by the end of the month. Gadzooks relates that Financo, Inc., the company's financial advisor, has obtained enough capital commitments to fund a chapter 11 plan. But more cash would help. Gadzooks indicates it may sell its assets. Headquartered in Carrollton, Texas, Gadzooks, Inc. -- http://www.gadzooks.com/-- is a mall-based specialty retailer providing casual apparel and related accessories for youngsters, between the ages of 14 and 18. The Company filed for chapter 11 protection on February 3, 2004 (Bankr. N.D. Tex. Case No. 04- 31486). Charles R. Gibbs, Esq., and Keith Miles Aurzada, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $84,570,641 in total assets and $42,519,551 in total debts. GAP INC.: Moody's Affirms Long Term Debt Ratings at Ba1 ------------------------------------------------------- Moody's Investors Service affirmed the long-term debt ratings and speculative grade liquidity rating of Gap, Inc., following the company's announcement of a $500 million share repurchase program. The affirmation reflects Gap, Inc.'s ability to fund the share repurchase from cash on hand while still maintaining strong cash balances, generate strong operating cash flow, and maintain solid credit metrics. Gap, Inc.'s prudent financial policies and strong operating cash flows over the past few years has resulted in sizable unrestricted cash balances -- approximately $3 billion at July 31, 2004 -- which more than cover the proposed program. In addition, the company is expected to: * generate sufficient operating cash flow to cover all its working capital, capital expenditures, * the announced $500 million share repurchase program, * and debt reductions. While comparable store sales have been weaker than historically over the past four months, Gap, Inc. has maintained strong operating cash flow and healthy margins through its more disciplined approach to merchandising. Gap, Inc.'s ratings reflect: (a) the dominant brand names, (b) strong liquidity, (c) solid asset base, and (d) debt protection measures that provide a cushion at this rating level. The ratings also reflect the more prudent financial policies and business discipline. The ratings are currently constrained by: (a) the relative newness of the management team, (b) the intense competition and volatility of apparel retailing, and (c) the potential pressure on the management team to quickly return value to shareholders at the expense of debtholders interests. The positive outlook reflects the expectation that the company will sustain its improvements in operating performance and conservative financial strategy. It is Moody's expectation that there will be further reduction in leverage over the next 12 months. While demonstration of a disciplined approach to its growth strategy will be a key factor, an upgrade will also require the company to consistently maintain free cash flow available for debt service above $1 billion, adjusted debt to EBITDAR below 3.0x, and unrestricted cash on balance sheet above $2 billion. Given the positive outlook, a downgrade is currently unlikely; however, the ratings could move downward if the company's operating performance deteriorates or if it aggressively increases leverage to spend on capital expenditures, acquisitions, or share repurchases. Gap, Inc.'s speculative grade liquidity rating of SGL-1 reflects very good liquidity. The company's primary sources of liquidity are: (i) net positive cash flow from operations, (ii) its high level of unrestricted cash ($3.0 billion at July 31, 2004), and (iii) its undrawn $750 million revolving credit facility. Moody's expects Gap, Inc. to meet all of: (i) its capital expenditures, (ii) the $500 million announced share repurchase program, and (iii) debt paydowns from internal sources of cash. Gap, Inc. assets are unencumbered providing an additional source of financial flexibility. The ratings are affirmed: Gap, Inc.: -- Senior implied rating of Ba1; -- Senior unsecured notes, global notes and convertible bonds of Ba1; -- Issuer rating of Ba1 -- Speculative grade liquidity rating of SGL-1. Gap (Japan) K.K.: -- Senior notes guaranteed by Gap, Inc. of Ba1. Headquartered in San Francisco, Gap, Inc. operates 3,038 stores under the Gap, Old Navy, and Banana Republic brands. Gap, Inc. had annual revenues of approximately $15.9 billion in the fiscal year ended February 1, 2004. GERDAU AMERISTEEL: Moody's Puts B2 Rating on $405M Sr. Notes ------------------------------------------------------------ Moody's Investors Service placed the ratings of Gerdau Ameristeel Corporation under review for possible upgrade in response to much- improved steel market conditions and the company's announcement of a common share offering, which, if successful, will finance the acquisition of certain assets of North Star Steel from Cargill, Incorporated. Moody's review will likely continue until the conclusion of the later of the share offering and the North Star acquisition. The ratings were placed under review for possible upgrade: * US$405 million of 10.375% senior unsecured notes due 2011, currently B2, * senior implied rating -- B1, and * senior unsecured issuer rating -- B3. On September 9, 2004, Gerdau announced it had reached agreement with Cargill to purchase the land, fixed assets and working capital of four long steel product mills and four downstream facilities for US$266 million in cash plus the assumption of substantially all of the liabilities of the businesses being acquired. The transaction is expected to close before the end of 2004. For the fiscal year ended May 31, 2004, the North Star businesses had sales of US$697 million and EBITDA of US$63 million. On October 5, 2004, Gerdau announced that it was planning a 70 million common share offering, which would raise approximately US$300 million in proceeds. The offering of common shares is not conditional upon the closing of the North Star acquisition and is expected to conclude before the North Star acquisition. Moody's review will focus on the pro forma capitalization of Gerdau and the earnings and cash flow potential of the company. With the dramatic recovery of steel market fundamentals over the last 12 months, Gerdau's credit ratios have vastly improved from those recorded in 2003. The addition of the North Star assets, which are a good fit for Gerdau and represent a relatively low acquisition price considering current steel market conditions, will augment Gerdau's cash flow and expand its market share in long products. If Gerdau funds the majority of the purchase of North Star with equity, a one-notch upgrade of its ratings is quite likely. The ratings outcome associated with a successful equity offering in the absence of the North Star acquisition would likely be similar, but would depend on the company's expected use of proceeds. Gerdau Ameristeel Corporation, headquartered in Tampa, Florida, produces rebar, merchant bar, structural shapes, and flat-rolled sheet at 11 North American minimills, and conducts downstream steel fabricating operations at 32 facilities. GLACIER FUNDING: S&P Puts Low-B Ratings on $500M Notes & Shares --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Glacier Funding CDO II Ltd./Glacier Funding CDO II Inc.'s $500 million floating-rate notes and preference shares due 2039. The preliminary ratings are based on information as of Oct. 7, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of excess spread and subordination to be provided by the notes junior to the respective classes and by the preference shares; -- The cash flow structure, which is subject to various stresses requested by Standard & Poor's; -- The experience of the collateral manager; -- The coverage of interest rate risks through hedge agreements; and -- The legal structure of the transaction, which includes the bankruptcy remoteness of the issuer. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned Glacier Funding CDO II Ltd./Glacier Funding CDO II Inc. Class Rating Amount (mil. $) ----- ------ --------------- A-1 AAA 325.00 A-2 AAA 70.00 B AA 65.75 C BBB 20.25 D BB 4.00 Preference shares BB- 12.75 GLOBAL CROSSING: Court Sets Oct. 22 as AGX Admin. Claims Bar Date ----------------------------------------------------------------- Judge Bernstein of the United States Bankruptcy Court for the Southern District of New York fixes Oct. 22, 2004, at 5:00 p.m., as the last day to file administrative claims against Asia Global Crossing, Ltd., and its debtor-affiliates arising during the period from Nov. 17, 2002, through June 11, 2003. The Administrative Bar Date will not apply to: (1) any person or entity holding a claim that arose prior to the Petition Date; (2) any professional retained by the AGX Trustee for the payment of fees and the reimbursement of expenses; (3) any person or entity that has previously filed with the Clerk of the Bankruptcy Court an Administrative Claim that arose during the Administrative Period; (4) any person or entity whose Administrative Claim has previously been allowed by the Court; (5) any person or entity whose Administrative Claim has been paid in full by any of the Debtors or the Trustee; and (6) any person or entity holding an Administrative Claim for which a specific deadline has previously been fixed by the Court. Any holder or purported holder of an Administrative Claim required to file a proof of claim by the Administrative Bar Date that fails to timely file that proof of claim will be forever barred from asserting that administrative claim against the AGX Debtors. The AGX Debtors and their estates will be forever discharged from any and all indebtedness or liability with respect to that administrative claim. The AGX Trustee will give notice of the Administrative Bar Date by mailing, via first class mail, the Administrative Bar Date Notice along with the Administrative Claim Form to all individuals and entities included as creditors in: (a) the AGX Debtors' schedules of assets and liabilities and statements of financial affairs; (b) the schedules of unpaid debts incurred since the Petition Date; and (c) the Bankruptcy Court's claims registry maintained for each of the Debtors' cases. The AGX Trustee will publish notice of the Administrative Bar Date in a form substantially similar to the Administrative Bar Date Notice once, approximately 25 days prior to the Bar Date in the national editions of The Wall Street Journal and The New York Times. And since the AGX Debtors' books and records indicate that they engaged professionals postpetition on an international basis, including in places like Hungary and Bermuda, a similar Notice will also be published in The International Herald Tribune and in two Bermudan newspapers -- The Bermuda Sun and The Royal Gazette. AGX, which is a Bermudan company, is currently the subject of "winding up" proceedings there, thus, the AGX Trustee believes that this additional notice is appropriate. Moreover, because the AGX Debtors' principal offices were located in Los Angeles, California, and their books and records reveal that they conducted business with various vendors and agencies in this area, the Notice will also be published in The Los Angeles Times. Headquartered in Florham Park, New Jersey, Global Crossing Ltd. -- http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. The Company filed for chapter 11 protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02- 40188). When the Debtors filed for protection from their creditors, they listed $25,511,000,000 in total assets and $15,467,000,000 in total debts. Global Crossing emerged from chapter 11 on Dec. 9, 2003. Global Crossing owns Asia Global Crossing, Ltd., which filed for Chapter 11 protection on Nov. 17, 2002 (Bankr. S.D.N.Y. Case No. 02-15749). Asia Global Crossing's chapter 11 cases were converted to chapter 7 on June 11, 2003. (Global Crossing Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) GMAC COMMERCIAL: S&P Junks Class K Mortgage Pass-Through Certs. --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three classes of GMAC Commercial Mortgage Securities Inc.'s mortgage pass-through certificates from series 2000-C2. Concurrently, one rating has been raised and nine other ratings from the same series are affirmed. The lowered ratings primarily reflect anticipated losses related to the specially serviced assets. The raised and affirmed ratings reflect subordination levels that adequately support the ratings. As of September 16, 2004, the trust collateral consisted of 125 loans with an aggregate outstanding principal balance of $730.2 million, down from 128 loans amounting to $773.8 million at issuance. The master servicer, GMAC Commercial Mortgage Corporation (GMACCM), provided recent net cash flow debt service coverage (DSC) figures for 93.7% of the pool. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.40x, up from 1.35x at issuance. The pool has experienced three losses to date amounting to $7.5 million (1.0%). Additional trust collateral consists of a Freddie Mac Multifamily Gold Participation Certificate -- Freddie Mac PC, which represents 100.0% beneficial ownership interest in a discrete pool of two cross-defaulted, cross-collateralized mortgage loans secured by five properties in New Jersey. Under the terms of the certificate, Freddie Mac ('AAA') guarantees the timely debt service payments and the ultimate repayment of principal upon maturity. The Freddie Mac PC balance is $87.3 million (12.0%), down from $89.5 million at issuance, and this certificate is excluded from DSC figures, property concentrations, and geographic stratifications throughout the analysis. The top 10 loans, excluding the Freddie Mac PC, have an aggregate outstanding balance of $193.7 million (26.5%) and reported a 2003 weighted average DSC of 1.44x, up from 1.31x at issuance. The eighth-largest loan did not report any 2003 financial data so the first-half 2004 DSC figure was used in this calculation. As part of its surveillance review, Standard & Poor's reviewed recent property inspections provided by GMACCM for assets underlying the top 10 loans and all but one of these assets were characterized as "good" or "excellent". The sixth-largest loan is secured by 25 properties and one of these properties was deemed "fair". There is one top 10 loan in special servicing, and two of the top 10 loans are on GMACCM's watchlist. There are seven assets with an aggregate balance $53.2 million (7.3%) that are with the special servicer, also GMACCM. As of the latest remittance report, three of these loans were 90-plus days delinquent, two assets were REO, and two loans were current. The fifth-largest loan, with an outstanding balance of $18.1 million (2.5%), is secured by a 364,000-sq.-ft. office building in Corpus Christi, Texas. This asset was 90-plus days delinquent as of August 2004 and became REO subsequent to the latest remittance report. A recent appraisal of the property suggests that losses on this asset, if any, should be minimal. In addition, several unsolicited offers have been made for the assets that are comparable with the valuation figure. The second-largest asset in special servicing is a $8.6 million loan secured by a 99,000-sq.-ft. retail property in Sterling Heights, Michigan. It was brought current and returned to the master servicer subsequent to the latest payment period. Another retail property, located in Meriden, Connecticut, has an outstanding balance of $7.7 million (1.1%) and $1.2 million in additional advances. Ames had occupied over 40.0% of this 189,000-sq.-ft. facility, and the property's performance has been adversely affected by the Ames bankruptcy. A new anchor tenant has not yet been found and year-end 2003 occupancy was 48.0%. Standard & Poor's anticipates a substantial loss upon the ultimate resolution of this property. The remaining specially serviced assets have balances below $7.0 million. Standard & Poor's expects minimal losses on the $6.8 million (0.9%) industrial property in Las Vegas, Nevada and on the 4.9 million (0.7%), REO, multifamily asset in Everett, Washington. Higher loss rates are expected on the $3.8 million (0.5%) REO lodging asset in Mobile, Alabama and on the $3.4 million (0.5%) office property in Alpharetta, Georgia. There are no other delinquent loans in the pool. The master servicer's watchlist consists of 43 loans with an aggregate balance of $191.5 million (26.2%) and includes two of the top 10 loans. The sixth-largest loan has an outstanding balance of $18.0 million and is secured by a 78,000-sq.-ft. portfolio of retail assets in Nantucket, Massachusetts. This loan appears on the watchlist because the first-quarter 2004 DSC was 0.76x. This is likely due to seasonal issues, and is comparable to the first-quarter 2003 DSC of 0.72x. The collateral properties reported 100.0% occupancy at year-end 2003 and posted a full-year 2003 DSC of 1.68x. The seventh-largest loan, with an outstanding balance of $15.8 million, is secured by a 412-unit multifamily asset in Rochester, Minnesota. This loan reported a year-end 2003 DSC of 0.92x, down from 1.01x in 2002. During this same period, occupancy decreased to 83.4% from 90.6%. The remaining loans on the watchlist appear primarily due to DSC or occupancy issues. The collateral in this transaction is located across 28 states with concentrations in California (20.5%), Texas (6.0%), and New Jersey (5.1%). Property concentrations are found in retail (31.9%), office (26.1%), and multifamily (19.7%) assets. Standard & Poor's stressed the specially serviced loans on the watchlist and other loans with credit issues in its analysis. The resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Lowered GMAC Commercial Mortgage Securities Inc. Mortgage pass-thru certificate series 2000-C2 Rating ------ Class To From Credit Enhancement (%) ----- -- ---- ---------------------- J B B+ 2.9 K CCC B- 1.8 L CCC- CCC 1.2 Rating Raised GMAC Commercial Mortgage Securities Inc. Mortgage pass-thru certificate series 2000-C2 Rating ------ Class To From Credit Enhancement (%) ----- -- ---- ---------------------- B AA+ AA 17.3 Ratings Affirmed GMAC Commercial Mortgage Securities Mortgage pass-thru certificate series 2000-C2 Class Rating Credit Enhancement (%) ----- ------ ---------------------- A-1 AAA 21.5 A-2 AAA 21.5 C A 13.4 D A- 12.0 E BBB 9.3 F BBB- 8.0 G BB 4.5 H BB- 3.7 X AAA - GRAFTECH INTL: Updates Earnings Estimates & Strategic Initiatives ----------------------------------------------------------------- GrafTech International Ltd. (NYSE:GTI) reported updates on strategic initiatives, tax planning activities and preliminary Q3 2004 and 2004 full year earnings estimates. 3rd Quarter Overview -- Updates third quarter earnings guidance to $0.11 to $0.13 per share and 2004 annual guidance to $0.45 to $0.50 per share excluding the tax charge noted below and special items, mainly due to higher operating expenses for infrastructure growth for AET, global work processes, information systems and Sarbanes-Oxley compliance efforts in addition to continued high energy costs. -- Increased the probability of future lower cash taxes by approving tax elections to accelerate the use of certain tax assets, resulting in an estimated $50 million non-cash tax charge. -- Shipped over 55 thousand metric tons in the seasonally weak third quarter, 10% higher than in the 2003 third quarter. -- Increased graphite electrode production capacity to an annual run rate of over 230,000 metric tons, three months ahead of schedule, a 50,000 metric ton increase from end of 2001. Commenced programs targeting 250,000 metric tons of graphite electrode capacity exiting 2005, including required capital expenditures. -- Raised prices for standard size (melter) graphite electrodes used in large electric arc steel melting furnaces to $3,150 per metric ton, effective for new orders as of October 1, 2004; Increased specialty graphite prices globally between 5%-6.5%, effective for 2005 shipments. -- Contracted for approximately 95% of 2005 needle coke requirements and locked in price on approximately 90% of that volume. -- Received notice that Unocal intends to sell certain coke production assets at its Lemont, IL facility (90,000 MT) on or around December 31, 2004 and that the buyer does not intend to use the assets for needle coke production. This could result in a shortage of quality needle coke in the market place. -- Received first Dell application approval; SpreaderShieldT product was approved for use in Dell's new ultra lightweight laptop. Craig Shular, Chief Executive Officer of GTI, commented, "Our team is never pleased with higher costs; however, the investments in resources, global work processes and information technology systems are critical up front costs to enable us to deliver larger, more sustainable cash flow. Through these investments, we are building a stronger platform to achieve our vision of a 300,000 metric ton global graphite electrode network and to accelerate the commercialization of our advantaged technologies." Graphite Electrodes Growth of Advantaged Production Platform In September 2004, GTI set a new graphite electrode production record from its six plants, reaching an annual production run rate of over 230,000 metric tons as part of GTI's ongoing programs to grow marketshare. This is a 28% increase from approximately 180,000 metric tons of annual capacity at the end of 2001. GTI successfully completed, ahead of schedule, its productivity initiatives in Spain, making the Pamplona facility, at 55,000 metric tons of capacity annually, the largest in Europe and the second largest in the world, next to our Monterrey, Mexico facility (60,000 metric tons annually). Building on this success, GTI's Board of Directors approved the implementation of programs that target annual graphite electrode capacity of at least 250,000 metric tons exiting 2005 from GTI's advantaged production network. We have commenced these activities, and they will primarily impact GTI's plants in S. Africa and France. These efforts, in addition to other previously announced productivity initiatives, will increase GTI's capital expenditures to approximately $55-$60 million for the 2004 full year. Coke Supply Unocal, a leading supplier of needle coke with operations in Lemont, Illinois and Seadrift, Texas, recently announced plans to sell certain coke production assets in Lemont on or around December 31, 2004 and that the buyer does not intend to use the assets for needle coke production. Unocal stated that, if this transaction is consummated, it will no longer produce needle coke in Lemont and would, therefore, plan to ramp up production of petroleum needle coke at the Seadrift facility. GTI believes the Lemont closure could result in a shortage of quality petroleum needle coke in the marketplace. GTI has purchased virtually no needle coke from Unocal over the last several years. GTI, the world's largest purchaser of needle coke, buys the majority of its needle coke requirements under long-term supply arrangements. GTI has contracted for 95% of its 2005 needle coke volume and has locked in price on approximately 90% of that volume. Electronic Thermal Management GTI's electronic thermal management (ETM) SpreaderShield(TM) product continues to gain new approvals in demanding portable applications. SpreaderShield products were approved for two new ultra lightweight portable laptops for Dell and Samsung. Including these two new approvals, GTI has achieved 6 product approvals in ultra lightweight laptops. Electronic thermal management net sales were approximately $3 million in the 2004 third quarter as compared to a half million dollars in the 2003 third quarter. As previously disclosed, GTI is targeting approximately $12 million of net sales for ETM in 2004 as compared to $2 million in 2003. GTI has accelerated the hiring of various resources, including marketing, sales and product development personnel. GTI has a formal targeted hiring plan to grow the Advanced Energy Technology team from approximately 140 employees to close to 200 employees over the next 18 months. These resources will focus on the continued growth of the ETM business as GTI continues to leverage its successes to penetrate new customers and applications and identify new market opportunities. Global Business Processes and Sarbanes-Oxley Compliance GTI continues to implement global business and work process transformations, including finance and accounting, procurement, order fulfillment, and corresponding enhancements in our internal control structure, including testing and remediation as required by Section 404 of the Sarbanes-Oxley Act. As previously disclosed, GTI is currently in the process of implementing an enterprise-wide information technology system. Implementation is being undertaken in phases and completion is planned by the end of 2005. During the 2004 third quarter, GTI completed implementation in France and Switzerland. During 2003 and the 2004 first half, implementation in Spain and the United States was completed. GTI also completed the implementations of global advanced planning and scheduling systems, global treasury and electronic banking systems and global shared service centers in Mexico and Canada. These events are changing how transactions are processed and the individuals or locations responsible for transaction processing. These programs are essential for supporting and accelerating our planned growth, both in electronic thermal management and other global businesses. The combined efforts of the transformation activities and Sarbanes-Oxley compliance are significant and have resulted in modifications to GTI's implementation plans that have and will result in higher systems implementation costs of about $2-$3 million. These higher implementation costs occur primarily from the third quarter of 2004 through the first quarter of 2005. The aggregate incremental costs for internal and external services associated with Sarbanes-Oxley compliance efforts are expected to be approximately $4 million, higher than the previously disclosed estimate of up to $3 million. Tax Planning To increase the probability of future lower cash taxes, GTI's Board recently approved the implementation of a tax planning strategy that accelerates the utilization of certain tax assets. The strategy accelerates approximately $270 million of taxable income to the U.S. through a standard election (commonly referred to as "Check the Box") that results in the utilization of approximately $60 million of tax assets, of which approximately $50 million are foreign tax credits. The accounting impact of this change in tax planning results in the recognition of non-cash tax expense of an estimated $50 million in the 2004 third quarter. Updated Outlook As a result of higher operating expenses for infrastructure growth for AET, global work processes, information systems and related Sarbanes-Oxley compliance, as well as continued high energy costs across all lines of business, GTI is adjusting its 2004 third quarter earnings estimate to a range of $0.11 to $0.13 per share, before restructuring charges, Other Income/Expense, net, EU antitrust fine reduction and the tax charge mentioned above. 2003 third quarter earnings per share, before such items, was $0.04 per share. Also, GTI now expects 2004 full year earnings before such items to be approximately $0.45 to $0.50 per share. This guidance excludes the future impact of 13.6 million shares underlying GTI's contingent convertible debt which, as previously disclosed, would reduce 2004 diluted earnings per share guidance by approximately $0.04-$0.05 per share. Cash flow from operations improved from the 2004 second quarter, as net debt is expected to be approximately $620 million even after making $20 million of semi-annual interest payments, primarily related to our Senior Notes. GTI also completed approximately $5 million of asset sales during the quarter. Cash at the end of the 2004 third quarter was approximately $60 million. Conference Call GTI plans to report full 2004 third quarter earnings and host an earnings call on October 28, 2004 at 11:00 a.m. EDT. The dial-in number is 800-240-6709 for domestic and 303-262-2190 for international. The conference call will be recorded and replay will be available for 72 hours following the call by dialing 800- 405-2236 for domestic and 303-590-3000 for international, pass code 11011318#. If you are unable to listen to the call or replay, the call will be archived and available for replay within one day of the original broadcast on our website at www.graftech.com under the Investor Relations section. About the Company GrafTech International Ltd. is one of the world's largest manufacturers and providers of high quality synthetic and natural graphite and carbon based products and technical and research and development services, with customers in about 60 countries engaged in the manufacture of steel, aluminum, silicon metal, automotive products and electronics. We manufacture graphite electrodes and cathodes, products essential to the production of electric arc furnace steel and aluminum. We also manufacture thermal management, fuel cell and other specialty graphite and carbon products for, and provide services to, the electronics, power generation, semiconductor, transportation, petrochemical and other metals markets. We are the leading manufacturer in all of our major product lines, with 13 state of the art manufacturing facilities strategically located on four continents. GRAFCELL(R), GRAFOIL(R), and eGRAF(R) are our registered trademarks. For additional information on GrafTech International, call 302-778- 8227 or visit our website at http://www.graftech.com/For additional information on our subsidiary, Advanced Energy Technology Inc., call 216-529-3777. At June 30, 2004, GrafTech International Ltd.'s balance sheet showed a $61 million stockholders' deficit, compared to a $128 million deficit at December 31, 2003. HARVEST ENERGY: Prices $250 Million 7-7/8% Senior Notes ------------------------------------------------------- Harvest Energy Trust's (TSX: HTE.UN) wholly-owned subsidiary, Harvest Operations Corp., has agreed to sell, on a private placement basis in the United States, US$250 million of senior notes due Oct. 15, 2011. The senior notes will bear interest at an annual rate of 7-7/8% and will be sold at a price of 99.3392% of their principal amount. The senior notes will be unconditionally guaranteed by Harvest Energy Trust and all of its other wholly-owned subsidiaries. Closing of the senior notes offering is expected to occur on Oct. 14, 2004, and is subject to satisfaction of customary closing conditions. Harvest intends to use the net proceeds of the offering to repay in full Harvest's bank bridge facility associated with the recent acquisition of the EnCana assets and partially repay outstanding balances under Harvest's revolving credit facility. The senior notes have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act. * * * As reported in the Troubled Company Reporter on Oct. 5, 2004, Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Calgary, Alta.-based Harvest Energy Trust and its 'B-' senior unsecured debt rating to the proposed $200 million seven-year bond to be issued by Harvest Operations Corporation, a wholly owned subsidiary of Harvest Energy Trust. The debt is fully guaranteed by the trust and all its wholly owned subsidiaries. The proposed bond issue is rated two notches below the corporate credit rating, as the priority debt, ranking ahead of the $200 million, accounts for more than 30% of the trust's asset base. The outlook is stable. "With a limited number of internal growth prospects, reserve replacement and growth for Harvest is expected to continue to come through further acquisitions, exposing the trust to future capital expenditures and limiting opportunities for Harvest to improve its ratings," said Standard & Poor's credit analyst Michelle Dathorne. "Nevertheless, we expect Harvest should be able to generate some free cash flow for debt reduction, given the current strong hydrocarbon price environment, and the trust's fixed payout distribution policy. In addition, Harvest's policy of hedging a high proportion of its production will limit the trust's exposure to falling hydrocarbon prices," Ms. Dathorne added. HAWAIIAN AIRLINES: Judge Faris OKs Trustee's Disclosure Statement ----------------------------------------------------------------- The Honorable Robert J. Faris of the U.S. Bankruptcy Court for the District of Hawaii approved the Disclosure Statement explaining the Joint Plan of Reorganization co-proposed by Joshua Gotbaum, the chapter 11 Trustee overseeing Hawaiian Airlines' chapter 11 case, the Official Committee of Unsecured Creditors, Hawaiian Holdings, Inc., HHIC, Inc., and RC Aviation LLC. The plan will now be transmitted to the carrier's creditor for a vote. The Plan Proponents will be looking for acceptances from creditors holding at least two-thirds of the dollars and more than one-half of the number of claims in each class. The Plan proposes to pay all creditors in full. Creditors' ballots must be returned by Dec. 15, 2004, to be counted. The Plan Proponents will return to Judge Faris on Jan. 25, 2005, to lay out their case that the Joint Plan complies with the 13 requirements set forth in 11 U.S.C. Sec. 1129, and should be confirmed. Headquartered in Honolulu, Hawaii, Hawaiian Airlines, Inc., -- http://hawaiianair.com/-- is a subsidiary of Hawaiian Holdings, Inc. (Amex and PCX: HA). The Company provides primarily scheduled transportation of passengers, cargo and mail. Flights operate within the South Pacific and to points on the west coast as well as Las Vegas. Since the appointment of a bankruptcy trustee in May 2003, Hawaiian Holdings has had no involvement in the management of Hawaiian Airlines and has had limited access to information concerning the airline. The Company filed for chapter 11 protection on March 21, 2003 (Bankr. D. Hawaii Case No. 03-00817). Joshua Gotbaum serves as the chapter 11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum is represented by Tom E. Roesser, Esq., and Katherine G. Leonard at Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. INTERMET CORPORATION: Wants to Hire JP Morgan as Noticing Agent --------------------------------------------------------------- Intermet Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, for permission to employ JP Morgan Trust Co. as their noticing and soliciting agent. Robert Belts, Chief Executive Officer of Intermet, explains that they need an independent third party because of the large number of creditors that they have. Mr. Belts estimates their creditors to be more than a thousand. JP Morgan is expected to: a) assist the Debtors to accomplish the process of receiving, docketing, maintaining, photocopying and transmitting proofs of claim in these cases; b) forward ballots, disclosure statements and related solicitation materials to creditors; and c) accurately record and tabulate numerous ballots that are returned by the creditors. Victoria Pavlick, at JP Morgan, will lead the team of professionals to provide service to the Debtors. JP Morgan does not disclose its fees nor does JP Morgan make any disclosure in the papers filed with the Bankruptcy Court about whether or not it is disinterested. 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. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represents the Debtors. When the Debtors filed for protection from their creditors, they listed $735,821,000 in total assets and $592,816,000 in total debts. INTERSTATE BAKERIES: Gets Interim Okay on Reclamation Procedures ---------------------------------------------------------------- Interstate Bakeries and its debtor-affiliates ask the United States Bankruptcy Court for the Western District of Missouri, Kansas Division, to establish procedures for the resolution and payment of valid reclamation claims. J. Gregory Milmoe, Esq., at Skadden Arps Slate Meagher & Flom, LLP, in New York, contends that a global set of reclamation procedures is appropriate in the Debtors' Chapter 11 cases. The Debtors need to maintain normal business operations and avoid costly and distracting litigation relating to the Reclamation Claims. If the Debtors are unable to establish a global set of reclamation procedures to resolve the Reclamation Claims, they will be faced with the prospect of simultaneously defending multiple reclamation adversary proceedings at a time when the Debtors need to focus on critical aspects of the reorganization process. The Debtors believe that many of the Reclamation Claims that may arise could be valid, in whole or in part, subject to certain defenses that the Debtors may have to the demands. In addition, while the Debtors do not concede that any of the elements necessary to prove a right of reclamation have been or will be shown by any of their vendors, the Debtors seek to adopt a uniform reclamation procedures so that litigation regarding Reclamation Claims will not interfere with their reorganization efforts while safeguarding the rights of Sellers. The Debtors ask the Court to prohibit Sellers and other third parties from independently reclaiming or interfering with the delivery or possession of Goods purportedly subject to a reclamation claim. The Debtors want the Sellers that have valid claims enjoined and restrained from pursuing payment on reclamation claims through means other than the Reclamation Procedures. The Debtors will implement these procedures for reconciling Reclamation Claims: (A) Reclamation Demands (1) All Sellers seeking to reclaim goods from the Debtors will be required to submit a demand: * before 10 days after receipt of the goods by the Debtors; or * if the 10-day period expires after the Petition Date, before 20 days after receipt of the goods by the Debtors. (2) A Reclamation Demand must set forth with specificity the goods for which reclamation is sought and the basis for the Reclamation Claim, and comply with any other requirements under applicable law. (3) Any Seller who fails to timely submit a Reclamation Demand will be deemed to have waived its right to payment on any purported Reclamation Claim. (4) Within 10 days of the Debtors' receipt of a Reclamation Demand, the Debtors will serve a copy of the Order establishing the Reclamation Procedures by regular mail on the Reclamation Claimant. The Reclamation Claimant will have 15 days from the date of mailing of the Order within which to file an objection to the Reclamation Procedures, provided, however, the Reclamation Claimant must file an objection within 45 days of the entry of the Reclamation Procedures Order. The Order will become final with respect to any party that does not timely file an objection as specified. An objection will be heard at the next regularly scheduled omnibus hearing. (B) The Statement of Reclamation (1) Within 90 days after the Petition Date or receipt of a timely Reclamation Demand, whichever is later, the Debtors will provide the Seller with a copy of the Reclamation Procedures Order and a statement of reclamation. (2) The Statement of Reclamation will set forth the extent and basis, if any, in which the Debtors believe the underlying Reclamation Claim is not legally valid. In addition, the Statement of Reclamation will identify any defenses that the Debtors choose to reserve, notwithstanding any payment of the Reconciled Reclamation Claim. (3) Sellers who are in agreement with the Reconciled Reclamation Claim as contained in the Statement of Reclamation may indicate their assent on the Statement of Reclamation and return the Statement no later than 60 days after the date the Debtors delivered the Statement of Reclamation to the Debtors' representative as set forth in the statement with copies to: Skadden, Arps, Slate, Meagher & Flom, LLP 333 West Wacker Drive, Suite 2100 Chicago, Illinois 60606 Attn: J. Eric Ivester, Esq. (4) Sellers who are in disagreement with the Reconciled Reclamation Claim as contained in the Statement of Reclamation must indicate their dissent, including any changes to the Statement of Reclamation, and return the statement of dissent by the Reconciliation Deadline to the Debtors' representative, with copies to Skadden. A Statement of Dissent returned must be accompanied by: * to the extent that the date of receipt or delivery of the Reclamation Demand is challenged in the Statement of Reclamation, a copy of the Reclamation Demand together with any evidence of the date when Reclamation Demand was sent and received; * the identity of the Debtor that ordered the products and the identity of the Seller from whom the goods were ordered; * any evidence demonstrating when the goods were shipped and received; * copies of the Debtor's and Seller's purchase orders and invoices, together with a description of the goods shipped; and * a statement identifying which information on the Debtors' Statement of Reclamation is incorrect, specifying the correct information and stating any legal basis for the objection. (5) The failure of a Dissenting Seller to materially comply with the Statement of Dissent requirement will constitute a waiver of the Dissenting Seller's right to object to the proposed treatment and allowed amount of the Reclamation Claim. (6) Any Seller who fails to return a Statement of Dissent or a Statement of Reclamation by the Reconciliation Deadline, or who returns a Statement of Dissent or a Statement of Reclamation by the Reconciliation Deadline but fails to indicate assent or dissent, will be deemed to have assented to the Reconciled Reclamation Claim. (C) Fixing the Allowed Amount of a Reclamation Claim (1) The Reclamation Claims of all Sellers who: (i) return the Statement of Reclamation by the Reconciliation Deadline and indicate their assent to the Reconciled Reclamation Claim as contained in the Statement of Reclamation; (ii) fail to return the Statement of Reclamation by the Reconciliation Deadline; and (iii) return the Statement of Reclamation by the Reconciliation Deadline but who fail to indicate either assent or dissent, will be deemed an Allowed Reclamation Claim in the amount of the Reconciled Reclamation Claim. (2) The Debtors are authorized to negotiate with all Dissenting Sellers and to adjust the Reconciled Reclamation Claim either upward or downward to reach an agreement regarding the Dissenting Seller's Reclamation Claim. The Debtors are also authorized to include any Reserved Defenses as part of any agreement. In the event the Debtors and a Dissenting Seller are able to settle on the amount and treatment of the Dissenting Seller's Reclamation Claim, the Reclamation Claim will be deemed an Allowed Reclamation Claim in the settled amount. (3) In the event that no consensual resolution of the Dissenting Seller's Reclamation Demand is reached within 60 days after the Reconciliation Deadline, the Debtors will file a motion for determination of the Dissenting Seller's Reclamation Claim. The Dissenting Seller's Reclamation Claim, if any, will be deemed an Allowed Reclamation Claim as fixed by the Court in the Determination Hearing or as agreed to by the Debtors and the Dissenting Seller prior to a determination by the Court in the Determination Hearing. (D) Treatment of Allowed Reclamation Claims (1) The Debtors may at any point in the Reclamation Procedures satisfy in full any Reclamation Claim or Allowed Reclamation Claim by paying the amount requested or allowed, or by making the goods available for pick-up by the Seller or Dissenting Seller. (2) All Allowed Reclamation Claims for which the Debtors choose not to make the goods available for pick-up will be paid in full as an administrative expense pursuant to a confirmed reorganization plan, or earlier, in whole or in part, in the Debtors' sole discretion. The Debtors propose to reconcile and pay Allowed Reclamation Claims pursuant to the Reclamation Procedures without the need for further Court order. In the event that an Allowed Reclamation Claim, in whole or in part, is paid earlier than the effective date of a confirmed reorganization plan, any payments will be subject to any Reserved Defenses. Reserved Defenses will be deemed waived by the Debtors on the earlier of the effective date of a confirmed plan or the date which is one year after the last payment of an Allowed Reclamation Claim. This date may be extended by agreement of the parties, by the Court, or at the Debtors' request. Release of Reclamation Rights The satisfaction of an Allowed Reclamation Claim pursuant to the Reclamation Procedures will constitute a waiver, release, discharge and satisfaction of any and all rights and claims that the holder of the Allowed Reclamation Claim has ever had, or later can, will or may have, against the Debtors arising from, or in connection with, the goods constituting the basis for the Allowed Reclamation Claim, and of any other reclamation rights for the same goods that the holder of the Allowed Reclamation Claim has asserted against the Debtors. By payment and acceptance under the Reclamation Procedures, the Debtors and the holder of the Allowed Reclamation Claim will be deemed to agree that the Debtors do not in any way waive any claims they may have against any Seller relating to preferential or fraudulent transfers, or other potential avoidance actions, claims, counterclaims or offsets with respect to the Seller. Rather, the Debtors expressly reserve their rights to pursue the preferential or fraudulent transfers, or other potential avoidance actions, claims, counterclaims or offsets with respect to the Seller, and any and all other claims, actions or offsets they may seek to advance against any Seller in the future other than those arising specifically in connection with the Allowed Reclamation Claim. The Debtors specifically reserve the right to object on any grounds to any claim filed by the Seller. Mr. Milmoe notes that nothing contained in the Debtors' Request will be deemed: (a) an admission as to the solvency or insolvency of the Debtors as of the Petition Date; or (b) the assumption or rejection of an executory contract. The Debtors propose that the holder of an Allowed Reclamation Claim, by accepting payment in accordance with the Reclamation Procedures, be deemed to warrant that it has not assigned any of its rights to its Reclamation Claim, unless the Debtors have received written notice of the assignment before any payment. In this case, the assignee will be treated as the holder of the Allowed Reclamation Claim. * * * Judge Venters grants the Debtors' Request on an interim basis. The Court will convene a hearing on November 3, 2004, to consider final approval of the Reclamation Procedures. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, 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 $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Employs Ordinary Course Professionals ---------------------------------------------------------- Interstate Bakeries and its debtor-affiliates customarily employ the services of various attorneys, accountants, technology consultants, appraisers, leasing agents, escrow and closing agents, property managers, brokers, actuaries, environmental and other consultants, insurance advisors and other professionals to represent them in matters arising in the ordinary course of business. Although the Debtors believe that many of the Ordinary Course Professionals may not be "professional persons" as contemplated by Section 327 of the Bankruptcy Code, and, therefore, no retention is necessary, out of an abundance of caution, the Debtors ask the United States Bankruptcy Court for the Western District of Missouri, Kansas Division, for authority to employ the Ordinary Course Professionals. The Debtors want to avoid any disruption in the professional services required in the day-to-day operation of their business. Specifically, the Debtors seek the Court's permission to: (a) employ Ordinary Course Professionals without the necessity of a separate, formal application approved by the Court for each Ordinary Course Professional; and (b) compensate the Ordinary Course Professionals for postpetition services rendered, subject to certain limits, without the necessity of additional Court approval. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom, LLP, in Chicago, Illinois, relates that even if the automatic stay and other issues in the Debtors' Chapter 11 cases may decrease the Debtors' need for certain Ordinary Course Professionals' services, the Debtors cannot now quantify or qualify that need. Moreover, it is impractical and inefficient for the Debtors and the Court to address the proposed employment of Ordinary Course Professionals on an individual basis. Payment of Fees and Expenses The Debtors propose to pay, without formal application to the Court by any Ordinary Course Professional, 100% of the interim fees and disbursements to each of the Ordinary Course Professionals at the Debtors' receipt of an appropriate invoice setting forth in reasonable detail the nature of the services rendered after the Petition Date, so long as the interim fees and disbursements do not exceed $45,000 per month in the aggregate per Ordinary Course Professional, and no more than $750,000 per Ordinary Course Professional for the duration of the Debtors' Chapter 11 cases. Payments to a particular Ordinary Course Professional will be subject to Court approval pursuant to an application for an allowance of compensation and reimbursement of expenses under Sections 330 and 331, if the payments exceed $45,000 per month or $750,000 for the entire Chapter 11 cases for that Ordinary Course Professional. Submission of Rule 2014 Affidavits In lieu of filing separate employment applications, the Debtors will require each Ordinary Course Professional who is an attorney to file with the Court and serve an Affidavit of Proposed Professional and Verified Statement in accordance with Rule 2014 of the Federal Rules of Bankruptcy Procedure on: (a) the counsel for the Debtors: Skadden, Arps, Slate, Meagher & Flom, LLP 333 West Wacker Drive Chicago, Illinois 60606 Attn: J. Eric Ivester, Esq. Samuel S. Ory, Esq. -- and -- Stinson Morrison Hecker, LLP 1201 Walnut, Suite 2800 Kansas City, Missouri 64106-2150 Attn: Paul M. Hoffman (b) the Office of the United States Trustee; (c) the steering committee for the Debtors' prepetition lenders and counsel for JPMorgan Chase Bank, as agent for the prepetition lenders; (d) the agents for the Debtors' DIP financing facility and their counsel; (e) U.S. Bank National Association, as Trustee for Interstate Bakeries Senior Subordinated Convertible Notes and its counsel; and (f) the counsel to the Official Committee of Unsecured Creditors. After receipt of each affidavit, the Notice Parties will have 20 days to object to the employment. Objections, if any, must be served on the Ordinary Course Professional and the Notice Parties on or before the Objection Deadline. If any objection cannot be resolved within 20 days of service, the matter will be scheduled for hearing before the Court at the next regularly scheduled omnibus hearing or other date otherwise agreeable to the Ordinary Course Professional, the Debtors and the objecting party. If no objection is submitted by the Objection Deadline or if any objection submitted is timely resolved, the Ordinary Course Professional's employment will be deemed approved without further Court order. Statement of Ordinary Course Professional The Debtors further propose to file a statement with the Court every 120 days, or at any other period as the Court directs, and serve the Statement on the Notice Parties. The Statement will include these information for each Ordinary Course Professional: (a) The name of the Ordinary Course Professional; (b) The aggregate amount paid as compensation for services rendered and reimbursement of expenses incurred by the Ordinary Course Professional during the 120 days; and (c) A general description of the services rendered by each Ordinary Course Professional. The Debtors want to avoid any later controversy about their employing and paying the Ordinary Course Professionals during the pendency of their Chapter 11 cases. The Debtors will seek specific Court authority under Section 327 to employ any other professionals involved in the actual administration of their Chapter 11 cases. Although certain of the Ordinary Course Professionals may hold unsecured claims, the Debtors do not believe that any of the Ordinary Course Professionals have an interest materially adverse to their estates, creditors, or shareholders. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, 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 $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000) JEUNIQUE INT'L: Has Until Oct. 18 to Make Lease-Related Decisions ----------------------------------------------------------------- The Honorable Maureen A. Tighe of the U.S. Bankruptcy Court for the Central District of California extended, until October 18, 2004, the period within which Juenique International, Inc., can elect to assume, assume and assign, or reject its unexpired nonresidential property leases and executory contracts. The Debtor tells the Court that it intends to assume the lease on its international corporate headquarters, located at 19501 East Walnut Drive in City of Industry, California, as part of its proposed plan of reorganization. Since the plan has not been finalized and confirmed, the Debtor believes it is necessary to assume the lease only if the plan is confirmed so it will be in the best position to address the significant pre-petition arrearages, which must be resolved prior to assumption of the lease. The extension will give the Debtor more time to determine and evaluate if the lease on its headquarters is necessary for its continued and reorganized operations. The Debtor assures Judge Tighe that the lessor and landlord of its headquarters property, the Nobbs Family Trust, will not be harmed by the extension of the lease decision period. The Debtor is current on all post-petition rent obligations to the landlord. 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. JILLIAN'S ENT: Absence of Purchaser Cues Rochester Club Closure --------------------------------------------------------------- Jillian's Entertainment Holdings Inc. closed its Rochester, New York, club after being unable to find a buyer for the location. The chain of multi-venue entertainment spots has sale agreements for substantially all its other assets. The Rochester location is the only Jillian's club to have closed since the company filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code last May 23. The Rochester club, which opened in 1999 in the High Falls historic district near downtown, has experienced declining revenues, said Gregory S. Stevens, Jillian's chief financial officer. During the Chapter 11 proceedings, which included an auction held September 21, the Rochester Jillian's drew interest but no buyer. The U.S. Bankruptcy Court in Louisville has approved the sale of most of Jillian's assets to Dave & Buster's Inc. (NYSE: DAB) and Gemini Investors III, L.P. for $64.8 million. Jillian's, which has its headquarters in Louisville, has owned, operated and/or licensed 35 clubs in 20 states. Headquartered in Louisville, Kentucky, Jillian's Entertainment Holdings, Inc. -- http://www.jillians.com/-- operates more than 40 restaurant and entertainment complexes in about 20 states. The Company filed for chapter 11 protection on May 23, 2004 (Bankr. W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at Frost Brown Todd LLC and James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets of more than $100 million and estimated debts of over $50 million. KAISER ALUMINUM: Wants to Reject Mead Works Contracts ----------------------------------------------------- Kaiser Aluminum & Chemical Corporation and Kaiser Aluminum Technical Services, Inc., ask the U.S. Bankruptcy Court for the District of Delaware for authority to reject certain executory contracts and unexpired leases relating to the smelter operations and the Automated Systems Group business at the Debtors' facility in Mead, Washington. Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that from time to time before the Petition Date, KACC and Kaiser Technical Services entered into contracts and leases with various parties for the provision of services or the purchase or lease of goods relating to the ASG Business or the Debtors' operations at the Mead Works. In May 2004, the Debtors obtained Court permission to sell the Mead Works and the ASG Business. The Debtors also assumed and assigned certain executory contracts and leases associated with the Mead Works and the ASG Business. KACC and Kaiser Technical Services now want to reject those contracts and leases that were not assumed and assigned as part of the Mead Works Sale. KACC and Kaiser Technical Services have determined that the rejection of the Excluded Contracts is warranted. As a result of the Mead Works Sale, neither KACC nor Kaiser Technical Services require the goods and services provided by, or will be able to supply product or services under, the Excluded Contracts. 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, represent the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) LAKE LAS VEGAS: Moody's Places Ba3 Rating on Sr. Secured Debt ------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Lake at Las Vegas Joint Venture including a Ba3 to the proposed senior secured first lien term loan and a B1 to the proposed senior secured second lien term loan, a B1 senior implied rating, and a B2 issuer rating. The ratings outlook is stable. Net proceeds from the $460 million of term loans will be largely used to provide a return of capital to the private equity holders. As such, these term loan proceeds effectively return to the owners several years of future cash flows that will be substantially in excess of the track record demonstrated prior to this year. If these expectations about future cash flows should not be met, debt service payments could be jeopardized. The stable ratings outlook reflects Moody's assessment that Lake Las Vegas has reached the inflection point in its development cycle and should be in a position to harvest cash flows rather than continue to pour massive infrastructure spending into the community. The ratings incorporate: (a) the short demonstrated track record of the project and limited historical audited financials provided by the company, (b) the location and geographic and demographic concentration of the development, market risk, indications of speculative excess in the Las Vegas market, and (c) the negative net worth of the company after adjusting for the dividend to the owners. At the same time, the ratings acknowledge: (a) the strength of the Las Vegas housing market, (b) the successful track record of the owners in prior large developments, (c) the substantial infrastructure investment already made in the project, (d) the significant over collateral in the structure, (e) the unique attributes of the development's water rights and 320-acre private lake, and the level of project acceptance achieved to date. The rating assignments are listed below: * Ba3 on $360 million of senior secured first lien term loans due October 15, 2009 * B1 senior implied rating * B1 on $100 million of senior secured second lien term loans due October 15, 2010 * B2 senior unsecured issuer rating Although prior owners began development of Lake Las Vegas in 1964 and the current owners took over the project in 1988, revenue and cash flow generation did not achieve critical mass until this year. Audited financial statements for the prior two years show rather insignificant performance. Going forward, revenue and cash flow projections effectively extrapolate 2004's performance out into the future. Should these projections fall significantly short, amortization of the term loans could come under pressure. The Lake Las Vegas development is located 17 miles east of the Las Vegas strip and is geared to a more affluent, vacation/retirement/second home demographic slice of the market. The challenge for the project will be to lure homeowners and hotel guests away from the strip, where much of the excitement is and where high rise towers geared to the affluent buyer are being built, and out to a somewhat remote resort location. As well, the company's revenue base is derived from a single site in one city, which makes geographic concentration an issue. The company faces considerable market risk in that future potential lot sales are all speculative. There are no mandatory take-or-pay land sale contracts as in some other land development projects. The Las Vegas housing market has experienced very rapid price appreciation in recent years, most significantly in the past twelve months. As a result, speculative buying and flipping have increased, leading to an increase in the number of resales on the market that are competing with new home sales and causing at least one homebuilder -- Pulte -- to have to give back some of its recent price increases in order to drive cancellation rates back down to more normal levels. Although the owners will still derive significant residual values at the back end if things go according to plan, they are currently withdrawing more than the accumulated equity capital of the company. Moody's would feel more comfortable if they still had substantial skin left in the game. On the plus side, Las Vegas has consistently been one of the strongest residential housing markets in the country with lot supply being constrained by the timing of land sales by the Bureau of Land Management, which is the dominant land owner in the area. The owners of Lake Las Vegas, Ron Boeddeker and certain Bass family interests through their jointly owned company, Transcontinental Land Company, have successfully developed other large projects in the past, such as the McCormick Ranch in Scottsdale, AZ, Lake Arrowhead, and Waikoloa on Hawaii's Big Island. The owners and third parties have made substantial infrastructure, retail, and residential investment in the project. To date, over $590 million of partner (Transcontinental) capital, $700 million of homebuilder, retail village and hotel capital, and $325 million of capital invested by homebuyers in the various Lake Las Vegas communities have been invested since inception. The company estimates that it needs to make approximately $85 million of additional infrastructure investment to realize more than $1 billion of net value remaining in the development. Pro forma for the $460 million of term loan proceeds, a dividend to the owners of $398 million, repayment of $43 million of existing bank debt, $8 million of deferred interest and fees associated with existing debt, and $11 million of estimated transaction fees and expenses, first lien debt/net value would be approximately 33%, first and second lien combined debt/net value would be 42%, and total debt/net value would be 46%. Substantial collateral protection exists for the first lien term loan, permitting the notching up above the senior implied rating. Lake Las Vegas is a 3592-acre resort and destination community and is one of the larger master-planned communities in Las Vegas. Its claim to uniqueness, however, is derived from the private lake and dam which support the water needs of the community. The private dam, which stands 18 stories high and stretches over 1.25 miles, is approximately the size of the Hoover dam. This lake and water supply are unlikely ever to be duplicated as water rights of this magnitude are no longer available in the water-constrained Las Vegas Valley or other regions in the West. While the project has been in development over many years and still has much in the way of unsold land to market, there has been some project acceptance achieved to date. It has managed to attract a Hyatt Regency Hotel, which opened in 1999, and a Ritz- Carlton, which opened in 2003, and it has sold roughly 30% of the developable land to date. The term loan facilities will have a borrowing base calculated at: * 80% against lots under sale contract, * 65% against lots under option contract, and * 50% against entitled land not under contract. There will be a 50% excess cash flow sweep and a dividend basket of up to 50% of excess cash flow so long as total debt/operating cash flow is less than 2.5x. Other expected covenants are: * a total debt/net value limitation of 55%, * total debt/operating cash flow of 3.5x that steps down to 3.0x in 2006 and to 2.5x in 2008, and * operating cash flow/cash interest of 3.0x. Required amortization of the first lien term loan is 1% per annum for the first four years with a 96% bullet in the fifth year. Headquartered in Las Vegas, NV, Lake at Las Vegas Joint Venture and its co-borrower, LLV-1, LLC, own and operate the Lake Las Vegas Resort, a 3592-acre master planned residential and resort destination located 17 miles east of the Las Vegas strip. Projected revenues and operating cash flow for the twelve month period that will end on December 31, 2004 are approximately $226 million and $165 million, respectively. LANTIS EYEWEAR: Court Extends Exclusive Period Until Dec. 21 ------------------------------------------------------------ The Honorable Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York gave Lantis Eyewear Corporation and its Official Committee of Unsecured Creditors an extension, through and including December 21, 2004, to file a chapter 11 plan. The Debtor and the Committee have until February 19, 2005, to solicit acceptances of that plan from the Debtor's creditors. The Debtor reminds the Court that on August 4, 2004, it approved the sale of substantially all of the Debtor's assets to HIG Recovery Fund II, Inc., pursuant to an Asset Purchase Agreement and as part of its liquidation efforts. The sale closed on August 18, 2004. Because of the sale's importance to the Debtor's liquidation efforts, the Debtor and the Committee had to wait until the sale transaction was completed before trying to formulate a joint liquidating plan. The Debtor and the Committee add that they will not be able to finalize and file their plan until after all applicable bar dates have passed. The bar date for all unsecured creditors to file proofs of claim passed on July 12, 2004, but the bar date for governmental entities will not pass until November 15, 2004. The passing of all bar dates is necessary to give the Debtor an opportunity to study all the claims against it. Headquartered in New York, New York, Lantis Eyewear Corporation -- http://www.lantiseyewear.com/-- is a leading designer, marketer and distributor of sunglasses, optical frames and related eyewear accessories throughout the United States. The Company filed for chapter 11 protection on May 25, 2004 (Bankr. S.D.N.Y. Case No. 04-13589). Jeffrey M. Sponder, Esq., at Riker, Danzig, Scherer, Hyland & Perretti, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $39,052,000 in total assets and $132,072,000 in total debts. LERNOUT & HAUSPIE: KPMG Settles Lawsuit for $115 Million -------------------------------------------------------- Accounting firms KPMG Bedrijfsrevisoren of Belgium and KPMG LLP of the United States have agreed to pay a total of $115 million to settle a shareholder lawsuit stemming from the collapse of Lernout & Hauspie Speech Products, N.V., a Belgian software company. The payment by the KPMG Defendants represents one of the largest combined recoveries from accounting firms in a securities class action, according to Berman DeValerio Pease Tabacco Burt & Pucillo, one of three law firms representing co-lead plaintiffs in the case. Investors who purchased Lernout & Hauspie common stock on the Nasdaq Stock Market, purchased Lernout & Hauspie call options, or sold Lernout & Hauspie put options on any U.S.-based options exchange from Apr. 28, 1998, through and including Nov. 9, 2000, are eligible to file claims to share in the settlement proceeds. The settlement requires court approval before becoming final. "Lernout & Hauspie used almost every accounting trick in the book to scam investors, which led to the company's demise," said Berman DeValerio partner Jeffrey C. Block. "The recovery is a win for investors, particularly considering the company went bankrupt." The lawsuit, pending in U.S. District Court for the District of Massachusetts, claimed that Lernout & Hauspie and its top executives used deceptive accounting practices to artificially inflate the company's reported revenues by an astounding 64 percent - or a total of $377 million - over a two-and-a-half-year period. The settlement ends litigation against the KPMG Defendants. The case is continuing against other defendants, including Lernout & Hauspie's former top officers, who are currently facing criminal charges in Belgium. For more information about this case, visit http://www.bermanesq.com/ Berman DeValerio is co-lead counsel in the case, along with the law firms of Shalov Stone & Bonner LLP and Cauley Bowman Carney & Williams, PLLC. The firms represent a group of individual investors as lead plaintiffs. Lernout & Hauspie Speech Products and its debtor-affiliates filed for Chapter 11 protection on November 29, 2000, (Bankr. Del. Case No. 00-04398). Judge Wizmur confirmed the Creditors' Committee's Plan of Liquidation for Lernout & Hauspie Speech Products, N.V., on May 29, 2003. Robert J. Dehney, Esq., Gregory W. Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell and Luc A. Despins, Esq., Matthew S. Barr, Esq., and James C. Tecce, Esq., at Milbank, Tweed, Hadley & McCloy LLP represent the Debtors. Ira S. Dizengoff, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer & Feld LLP, and Francis A. Monaco, Esq., and Joseph J. Bodnar, Esq., at Monzack and Monaco, represented the software company's Creditors' Committee. MIRANT CORP: Asks Court to Approve Outsourcing Pact to Cut Costs ---------------------------------------------------------------- The employees currently handling the accounts payable, payroll, and other financial services for Mirant Corporation and its debtor-affiliates are employed by Mirant Services, LLC. Mirant Services has 18 employee positions in the Accounts Payable Department. These employees are currently disbursed through the business units, with the core group located at Mirant's headquarters in Atlanta, Georgia. Mirant Services also has four employee positions in the Payroll Department, all of whom are located at the Headquarters. Mirant Services expends $1,500,000 annually to perform the Payroll and Accounts Payable Services, including, among other things, employee salaries and administrative and management costs. The Corporate Overhead Initiative After their bankruptcy filing, the Debtors established a cross- functional team to assess and implement opportunities to streamline overhead through cost reductions and process improvement. As part of their Corporate Overhead Initiative, which was presented to the Creditors' Committees, the Debtors determined that outsourcing the Payroll and Accounts Payable Services would benefit the Debtors by centralizing operations, reducing management and administrative costs relating to the Payroll and Accounts Payable Services, and standardizing the Debtors' financial practices. Michelle Campbell, Esq., at White & Case, LLP, in Miami, Florida, explains that outsourcing: * frees up employee time and energy to devote to core business activities; * reduces the burden on administrative, human resources, and technology support services to hire, train and manage staff and develop necessary infrastructure; and * is a means of significantly reducing overhead costs, due to economies of scale, operational flexibility, competitive advantages and superior supplier expertise. Companies providing outsourcing services also have expertise, technology and other resources not available to a small, in-house department. The Debtors contacted 13 vendors to discuss outsourcing the Payroll and Accounts Payable Services. The Debtors assessed each vendor on multiple factors. At the conclusion of this investigation, the Debtors determined that Outsource Partners International, Inc., was most qualified to provide the Payroll and Accounts Payable Services. The Outsourcing Agreement Pursuant to a Finance and Administration Services Agreement, dated September 15, 2004, Outsource Partners will perform Payroll and Accounts Payable Services for the Debtors. Outsource Partners' services will not include services related to those provided by Mirant Americas Energy Marketing, LP. The Agreement provides that: (a) Accounts Payable will be centralized at the Headquarters, where invoice scanning, approvals, error resolution, and payment will occur. To provide these services, Outsource Partners will hire four of Mirant Service's existing employees, at comparable compensation levels, and base these employees at the Headquarters. All data entry will be sent to Outsource Partners' site in Bangalore, India, where it will identify five employees in India to provide requisite financial services for Mirant Services. (b) Outsource Partners will perform all of the functions currently performed by the Payroll Department, operating at the Headquarters. Outsource Partners will hire one of Mirant Service's existing employees, at comparable compensation levels. (c) Mirant Services will pay Outsource Partners an aggregate of $235,724 in 2004, and $887,263 in 2005, which includes all costs and expenses related to salaries, benefits, bonuses and incentives, administrative costs, and Outsource Partners' management fee and mark-up. (d) Outsource Partners will invoice Mirant Services twice monthly for the estimated costs of salaries, benefits, administrative costs and Outsource Partners' management fee for the subsequent period. At the end of each month, Outsource Partners will invoice Mirant Services for the actual cost of expenses and any other amount outstanding. Outsource Partners will separately invoice Mirant Services for any additional duties performed by Outsource Partners that are not within the scope of the Agreement. (e) The term of the Agreement is three years, with provisions providing for early termination or an extension of the term. Pursuant to a separate agreement, Mirant Services will pay Outsource Partners a $127,750 system automation fee, broken down into monthly installments paid between September and December 2004. The system automation services provided by Outsource Partners will benefit Mirant Services by creating an application for the approval and coding of invoices that will be easily accessible, as well as provide complete and accurate financial information. Ms. Campbell informs Judge Lynn that the Outsourcing Agreement will result in an annual savings of $500,000 to Mirant Services. By this motion, the Debtors ask the United States Bankruptcy Court for the Northern District of Texas for permission to enter into the Agreement with Outsource Partners, retroactive to September 15, 2004. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. The Company filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590). Thomas E. Lauria, Esq., at White & Case LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOONEY AEROSPACE: Judge Walrath Approves Disclosure Statement ------------------------------------------------------------- The Honorable Mary F. Walrath put her stamp of approval on Mooney Aerospace Group, Ltd.'s Disclosure Statement explaining its Chapter 11 plan. With a court-approved Disclosure Statement in hand, the Debtor can now transmit that document to its creditors and ask them to vote to accept the company's plan. The Debtor anticipates dropping copies of the plan, disclosure statement and ballots in the mail by Oct. 18, 2004. Creditors' ballots must be returned by Nov. 30. The Court has scheduled a Confirmation Hearing on Dec. 14. The Debtor's Plan provides that Allen Holding & Finance Ltd. will get a 50% stake in the Reorganized Company in exchange for the return of Mooney Airplane Co., which it purchased in May 2004 when it assumed $21 million in secured debt and invested $4 million in the company. Mooney's unsecured creditors and bondholders get a 46% equity stake in the Reorganized Debtor. The remaining 4% slice of the new equity pie is split 50/50 between current preferred and common shareholders. A full-text copy of the Disclosure Statement explaining the Plan is available for a fee at: http://www.researcharchives.com/download?id=040812020022 Headquartered in Kerrville, Texas, Mooney Aerospace Group, Ltd. -- http://www.mooney.com/-- is a general aviation holding company that owns Mooney Airplane Co., located in Kerrville, Texas. The Company filed for chapter 11 protection on June 10, 2004 (Bankr. Del. Case No. 04-11733). Mark A. Frankel, Esq., at Backenroth Frankel & Krinsky LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $16,757,000 in total assets and $69,802,000 in total debts. NATIONAL MENTOR: S&P Puts Single-B Ratings on Notes and Loans ------------------------------------------------------------- Standard & Poor's Ratings Services assigned to special-needs services provider National Mentor Inc.: -- its 'B+' corporate credit rating -- its 'B-' senior subordinated debt rating to the company's proposed $150 million senior subordinated notes due in 2012, and -- its 'B+' senior secured debt rating and '2' recovery rating to the company's proposed $80 million revolving credit facility due in 2010, and to its $170 million term loan B due in 2011. Standard & Poor's expects National Mentor to use the proceeds from the term loan and note offerings, as well as about $17 million of on-hand cash and approximately $1 million of revolving credit facility borrowings, to: -- refinance its existing $160 million term loan B, -- refinance $57 million of holding company debt, -- redeem about $116 million of preferred stock, and -- fund related transaction costs After the transaction, National Mentor will have approximately $336 million of total debt outstanding. The outlook is stable. "The low-speculative-grade ratings on Boston, Massachusetts-based National Mentor Inc. reflect the company's narrow business focus, its exposure to potential changes in government reimbursement, and its aggressive capital structure," said Standard & Poor's credit analyst Jesse Juliano. "These concerns are only partially mitigated by National Mentor's position as the second-largest special-need services provider, its low fixed-cost business model, its relatively conservative growth strategy, and a favorable long-term industry environment." National Mentor provides home and community-based services, including behavioral health, rehabilitation, and developmental disability related services, to mentally retarded or developmentally disabled (MR/DD) individuals, at-risk or troubled youths, and people with acquired brain injuries. The company offers its services across 29 states, through more than 1,800 programs, to approximately 18,500 clients. National Mentor competes with other large care providers such as Res-Care Inc. and numerous smaller local operators. National Mentor receives more than 90% of its revenue from Medicaid and various state agencies. While the company is diversified across 29 states, numerous county governments, and various contracting agencies, it is highly vulnerable to changes in reimbursement policy. If state budgets are stretched, as many were in 2003 and 2004, reimbursement for National Mentor's services could be reduced or increase at a slower rate than the rate by which costs increase. This could be particularly troubling for the company, given its already relatively thin EBITDA margins (in the low-teens area) and its significant debt obligations. However, large reimbursement reductions seem unlikely for now. Reimbursement in 2003 and 2004 was flat to slightly lower due to strained state budgets. Also, MR/DD advocacy groups tend to be very active, and states are dissuaded from reducing spending because they would lose some of the federal match funding for Medicaid. NEIGHBORCARE INC: Reiterates Rejection of Omnicare Tender Offer --------------------------------------------------------------- NeighborCare, Inc. (Nasdaq: NCRX) has received a letter from Omnicare proposing a meeting with NeighborCare to discuss Omnicare's (NYSE: OCR) unsolicited tender offer. Following a meeting of NeighborCare's Board of Directors, John J. Arlotta, NeighborCare's Chairman, President, and Chief Executive Officer, said: "The NeighborCare Board does not believe that further discussions, beyond those held previously, would be productive. NeighborCare has rejected Omnicare's offer three times and nothing has changed. The Board continues to believe that implementing our business plan is the best option for NeighborCare, its shareholders, customers and other constituents." About NeighborCare, Inc. NeighborCare, Inc. (Nasdaq: NCRX) is one of the nation's leading institutional pharmacy providers serving long term care and skilled nursing facilities, specialty hospitals, assisted and independent living communities, and other assorted group settings. NeighborCare also provides infusion therapy services, home medical equipment, respiratory therapy services, community-based retail pharmacies and group purchasing. In total, NeighborCare's operations span the nation, providing pharmaceutical services in 32 states and the District of Columbia. Visit our website at http://www.neighborcare.com/ * * * As reported in the Troubled Company Reporter's May 26, 2004 edition, Standard & Poor's Ratings Services placed its ratings on Omnicare Inc., including the 'BBB-' corporate credit ratings, on CreditWatch with negative implications after the long-term care pharmacy provider disclosed an all-cash offer to purchase competitor NeighborCare Inc. At the same time, the ratings on NeighborCare, including the 'BB-' corporate credit rating, were also placed on CreditWatch with negative implications, as the pro forma combination is likely to have a markedly weaker financial profile than NeighborCare. The purchase price of $1.5 billion includes the assumption or repayment of a $250 million NeighborCare debt issue. Estimating the effect of additional debt and not assuming any cost savings, total debt to EBITDA is expected to rise to over 4x, while funds from operations to total debt will fall to less than 15%. "We expect to meet with Omnicare management to determine what cash flow benefits can be realized and the ultimate nature of the financial structure of the combined company before resolving the CreditWatch listing," said Standard & Poor's credit analyst David Lugg. PAN AMERICAN: S&P Puts 'B' Rating on Proposed $100 Million Bonds ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to Argentina-based oil and gas company Pan American Energy LLC Sucursal Argentina's (the Branch) upcoming issuance of five-year $100 million bonds. "Since the bonds will be guaranteed by Pan American Energy LLC (PAE), the Branch's sole owner, the rating on the current issue relies on PAE's ratings," said Standard & Poor's credit analyst Pablo Lutereau. "The Branch is PAE's most important subsidiary, accounting for 77% of the production during 2003 and 55% of the reserves as of December 2003." The ratings on Argentina-based oil and gas producer Pan American Energy LLC (PAE) reflect its heavy concentration in the Republic of Argentina, exposing the company to the risks of operating under a highly uncertain and rapidly changing economic and regulatory environment and a significant need for capital expenditures to develop its large reserve base. The ratings also incorporate the company's: -- relatively large reserve base, -- low operating costs, -- moderate financial policy, and -- a very sound financial performance despite the Argentine crisis since 2001 The stable outlook reflects Standard & Poor's expectations that PAE will maintain strong coverage ratios during the next few years, even with lower crude oil prices in the international markets. In addition, the current outlook incorporates some additional intervention from the Government, which nevertheless does not completely jeopardize the profitability and cash flow generation ability of the company. PEMSTAR INC: Revolver Amendment Requires $7 Mil. Quarterly EBITDA ----------------------------------------------------------------- As previously reported in the Troubled Company Reporter, PEMSTAR Inc. (Nasdaq:PMTR) inked amendments to its $90 million revolving credit agreement among: * itself, Turtle Mountain Corporation and Pemstar Pacific Consultants Inc., as Borrowers; * Gentlelife, Inc., fka Kinderlife Instruments Inc., as Guarantor; * Congress Financial Corporation (a subsidiary of Wachovia Bank N.A.), as administrative and collateral agent for itself and any other Lenders; and * Fleet Capital Corporation, as Documentation Agent for the Lenders. The amendment, for which PEMSTAR paid a $150,000 fee to the Lenders: * extends the agreement by one year to April 24, 2007; * reduces the interest rate spread 75 basis points (estimated to save up to $300,000 annually); * decreases the annual unused line fee PEMSTAR pays for NOT borrowing under the facility from 0.50% to 0.375%; and * reduces the level of the banks' reserved collateral by $3,000,000. The Amendment lowers the level of unused borrowings that must be available for EBITDA covenants not to apply from $13 million to $10 million. Specifically, the Amendment provides that: (a) In the event, any time on or after September 1, 2004, Excess Availability under the facility is less than $10,000,000, PEMSTAR's Consolidated EBITDA for the fiscal quarter ending December 31, 2004, and for each quarter thereafter for each quarter will be no less than $7,000,000; and (b) In the event, any time on or after September 1, 2004, Excess Availability under the facility is less than $10,000,000, PEMSTAR's Consolidated EBITDA (excluding Foreign Subsidiaries) for the fiscal quarter ending December 31, 2004, and for each quarter thereafter for each quarter will be no less than $2,550,000. In combination, these changes will make borrowing under eligible collateral more available for Company borrowings in the normal course. About PEMSTAR PEMSTAR Inc. -- http://www.pemstar.com/-- provides a comprehensive range of engineering, product design, manufacturing and fulfillment services to customers on a global basis through facilities strategically located in the United States, Mexico, Asia, Europe and South America. The company's service offerings support customers' needs from product development and design, through manufacturing to worldwide distribution and aftermarket support. PEMSTAR has over one million square feet in 16 locations worldwide. PRESIDENT CASINOS: Columbia Sussex Wins Bid for St. Louis Biz ------------------------------------------------------------- President Casinos, Inc. (OTC:PREZQ.OB) said Columbia Sussex was the winning over bidder for the Company's St. Louis casino operations under the terms of Section 363 of the United States Bankruptcy Code. The agreement is for a purchase price of $57 million, subject to certain closing adjustments. A hearing to approve the auction results and sale to the winning bidder is scheduled before the United States Bankruptcy Court for the Eastern District of Missouri on Wednesday, Oct. 13. The sale is also contingent upon licensing approval of Columbia Sussex by the Missouri Gaming Commission. The closing is anticipated to occur in the Spring of 2005. It is anticipated that the operation will continue in St. Louis with the new owners. In the interim, casino operations and management will remain business as usual. President Casinos, Inc., owns and operates dockside gaming facilities in Biloxi, Mississippi and downtown St. Louis, Missouri, north of the Gateway Arch. At May 31, 2004, President Casinos, Inc.'s balance sheet shows a stockholders' deficit of $52,899,000 compared to a deficit of $52,349,000 at February 29, 2004. QUIGLEY COMPANY: Committee Wants to Give Judge Beatty the Boot -------------------------------------------------------------- In a bold move, the Official Committee of Unsecured Creditors (comprised of asbestos claimants) appointed in Quigley Company, Inc.'s chapter 11 case, filed a motion asking the Honorable Prudence Carter Beatty to recuse herself from further participation in the Debtor's bankruptcy case pursuant to Section 455 of the Judiciary Procedures Code "because of personal bias and prejudice against the Committee's constituency." The Committee was offended by comments Judge Beatty made from the bench at the First Day Hearing in Quigley's case. She questioned: -- the extent of the Debtor's asbestos-related liability, -- the legitimacy of asbestos-related claims, and -- the number of legitimate claimants. Judge Beatty suggested that claimants might have to prove their claims. When lawyers at Weitz & Luxenberg told Judge Beatty they represented 20% of claimants against Quigley, she asked, "Haven't I seen the name of your firm on subway train ads, looking for more people?" A full-text copy of the Committee's Recusal Motion and Memorandum of Law is available at no charge at: http://bankrupt.com/misc/102-A.pdf and a transcript of the First Day Hearing the Committee finds offensive is available at no charge at: http://bankrupt.com/misc/102-B.pdf Elihu Inselbuch, Esq., Peter Van N. Lockwood, Esq., Walter B. Slocombe, Esq., Albert G. Lauber, Esq., and Preston Burton, Esq., at Caplin & Drysdale, Chartered, represent the Committee. Judge Beatty will hold a hearing to consider the Committee's motion at 2:30 p.m. on Oct. 22, 2004, in Manhattan. Objections, if any, must be filed and served by Oct. 12. Headquartered in Manhattan, Quigley Company is a subsidiary of Pfizer, Inc., which used to produce and market a broad range of refractories and related products to customers in the iron, steel, glass and other industries. The Company filed for chapter 11 protection on September 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to resolve legacy asbestos-related liability. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. Pfizer has agreed to contribute $405 million to an Asbestos Claims Settlement Trust over 40 years through a note, contribute approximately $100 million in insurance, and forgive a $30 million loan to Quigley. Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represents the Company in its restructuring efforts. ROPER INDUSTRIES: Acquisition Plan Prompts S&P to Revise Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB+' corporate credit and other ratings on Roper Industries Inc. on CreditWatch with developing implications, meaning that the ratings could be raised or lowered. Roper, a diversified industrial company, has announced that it will acquire TransCore Holdings Inc. from an investor group led by KRG Capital Partners L.L.C. in a transaction valued at approximately $600 million. TransCore is a provider of technologies and related services in areas such as: -- radio frequency identification (RFID), -- satellite-based communication, -- mobile asset tracking, -- security applications, and -- comprehensive toll system and processing services The purchase is expected to be funded: -- cash on hand, -- additional borrowings, and -- raising approximately $250 million of cash through the issuance of common stock However, the size of each of the components of this financing is subject to prevailing market conditions. The transaction is expected to close by the end of the year. The completed acquisition could have a mildly positive effect on ratings, as the company is trending toward investment-grade statistics. "If the deal were transacted with the equity cited, a likely outcome would be a positive outlook," said Standard & Poor's credit analyst John Sico. "On the downside, ratings could be lowered, although by no more than one notch, if the transaction were not funded with the equity contemplated," the analyst noted. Duluth, Georgia-based Roper Industries Inc. is a diversified industrial company providing engineered products and solutions for global niche markets with sales of about $1 billion. It benefits from technological leadership, high profit margins, and low capital expenditures because of its light asset base. Standard & Poor's will meet with management to discuss the company's business strategy and financial policies and await the outcome of the financing of the transaction before taking any further rating action. SCHOOL FITNESS: Involuntary Chapter 11 Case Summary --------------------------------------------------- Alleged Debtor: School Fitness Systems L.L.C. 165 North 1330 West #C-2 Orem, Utah 84057 Involuntary Petition Date: October 7, 2004 Case Number: 04-36363 Chapter: 11 Court: District of Utah (Salt Lake City) Judge: William T. Thurman Petitioners' Counsel: George B. Hofmann, Esq. Parsons Kinghorn & Harris 111 East Broadway, 11th Floor Salt Lake City, UT 84111 Tel: 801-363-4300 Fax: 801-363-4378 List of Petitioners: Petitioners Claim Amount ----------- ------------ Jordan School District $2,148,288 D. Burke Jolley 9361 South 300 East Sandy, UT 84070 Granite School District $2,084,514 David E. Garrett 340 East 3545 South Salt Lake City, UT 84115 Alpine School District $1,956,459 Robert W. Smith 575 North 100 East American Fork, UT 84003 R. Kimball Mosier $1,371,364 Parsons Kinghorn Peters 111 East Broadway, Suite 1100 Salt Lake City, UT 84111 SOLUTIA INC: Wants Lease Decision Deadline Extended to Feb. 14 -------------------------------------------------------------- M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher, LLP, in New York, relates that though Solutia, Inc., and its debtor- affiliates continue to review and analyze their unexpired non- residential real property leases, they will not be able to decide whether to assume or reject all of them before the current deadline. The process of evaluating all of the Unexpired Leases in connection with their business plan remains time consuming. In this regard, the Debtors ask the United States Bankruptcy Court for the Southern District of New York to further extend the time within which they may assume or reject unexpired leases, to and including Feb. 14, 2005, without prejudice to their ability to request a further extension. Ms. Labovitz explains that the Debtors must carefully assess the business operations related to the Unexpired Leases as part of their business plan. For certain of the Unexpired Leases, the decision to assume, assume and assign or reject is central to the Debtors' business operations and to any reorganization plan. For others, the decision is complicated because certain Unexpired Leases are closely linked to other operating contracts, necessitating a review of those contracts at the same time as the related leases. Furthermore, the Debtors must also consider whether each Unexpired Lease is valuable to their estates and whether each lease is appropriately priced for its market. This process entails research in numerous markets because of the wide geographical spread of the Unexpired Leases. The Debtors do not want to make premature assumption or rejection decisions with respect to an Unexpired Lease that may result in the Debtors incurring a substantial administrative claim or the loss of a valuable lease. The Debtors want to continue to address the process in a rational and practical manner that will benefit the Debtors' estates, their creditors and all other parties-in-interest. Ms. Labovitz assures that Court that the Debtors have been avoiding undue delay in deciding whether to assume or reject each of the Unexpired Leases, and are moving as quickly as practical to evaluate each lease and file an appropriate motion with the Court. Ms. Labovitz also attests that the lessors under the Unexpired Leases will not be prejudiced by the extension because: (a) the Debtors have performed and will continue to perform in a timely manner their undisputed postpetition date obligations under Unexpired Leases; (b) no lessor will be damaged by the requested extension in a way that is not compensable under the Bankruptcy Code; and (c) any lessor may ask the Court to fix an earlier date by which the Debtors must assume or reject its lease in accordance with Section 365(d)(4) of the Bankruptcy Code. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOUTHWEST HOSP: U.S. Trustee Picks 7-Member Creditors Committee --------------------------------------------------------------- The United States Trustee for Region 21 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in Southwest Hospital and Medical Center, Inc.'s chapter 11 case: 1. Maxim Healthcare Services, Inc. Attn: Jeremy Smith, Regional Controller 7080 Samuel Morse Drive Columbia, Maryland 21046 Phone: 410-910-1590, Fax: 410-910-1721 2. Georgia Gwinnett Medical Service, Inc. Attn: Pat Holt 115 Vintage Club Court Duluth, Georgia 30097 Phone: 404-628-6710, Fax: 770-803-9860 3. Fulton Emergency Physicians, LLC Attn: Ross Greenberg P.O. Box 5661 Athens, Georgia 30604 Phone: 706-354-5770, Fax: 706-354-5769 4. Progressive Nursing Staffers Attn: James Narron 7001 Kilworth Lane Springfield, Virginia 22151 Phone: 703-750-3991, Fax: 703-750-1875 5. Productivity Network Innovations, LLC Attn: Thomas M. Westerkamp 9051 Park Avenue Houma, Louisiana 70363 Phone: 985-876-0197, Fax: 985-876-0299 6. Medical Care Associates, Inc. Attn: Gari Russel 3500 Kensington Road Decatur, Georgia 30034 Phone: 404-299-6111, Fax: 404-294-5426 7. RLS Med-Support, Inc. Attn: Steven W. Greenberg 4635 Riversound Drive Snellville, Georgia 30039 Phone: 404-993-7643, Fax: 770-979-5441 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the U.S. Bankruptcy Court for the Northern District of Georgia to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Atlanta, Georgia, Southwest Hospital and Medical Center, Inc., operates a hospital. The Company filed for chapter 11 protection on September 9, 2004 (Bankr. N.D. Ga. Case No. 04-74967). G. Frank Nason, IV, Esq., at Lamberth, Cifelli, Stokes & Stout, PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $10 million in assets and more than $10 million in debts. SOUTH STREET: S&P Junks 3 Classes of 1999-1 Notes ------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-1LB and A-1 notes issued by South Street CBO 1999-1 Ltd., a high-yield arbitrage CBO transaction managed by Colonial Asset Management, on CreditWatch with positive implications. The CreditWatch placements reflect factors that have positively affected the credit enhancement available to support the notes since the ratings were previously lowered October 7, 2003. These factors include paydowns of approximately $52.922 million to the class A notes since the last rating action, including approximately $21.823 million on the most recent payment date of July 1, 2004. On the last payment date, the class A-1LA notes were completely paid down. Standard & Poor's will be reviewing the results of current cash flow runs generated for South Street CBO 1999-1 Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared to the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement available. Ratings Placed On Creditwatch Positive South Street CBO 1999-1 Ltd. Rating ------ Class To From ----- -- ---- A-1LB BBB-/Watch Pos BBB- A-1 BBB-/Watch Pos BBB- Other Outstanding Ratings South Street CBO 1999-1 Ltd. Class Rating ----- ------ A-2L CC A-2 CC A-3 CC Transaction Information Issuer: South Street CBO 1999-1 Ltd. Co-issuer: South Street CBO 1999-1 (Delaware) Corp. Current manager: Colonial Asset Management Underwriter: Bear Stearns & Co. Inc. Trustee: J.P. Morgan Chase Transaction type: High-yield Arbitrage CBO Tranche Initial Last Current Information Report Action Action ----------- ------- ------ ------- Date (MM/YYYY) 07/1999 10/2003 10/2004 Class A-1LA Notes Rtg. AAA AAA NR Class A-1LA Notes Bal. $85.00mm $38.31mm $0 Class A-1LB Notes Rtg. AAA BBB- BBB-/Watch Pos Class A-1LB Notes Bal. $10.00mm $10.00mm $7.75mm Class A-1 Notes Rtg. AAA BBB- BBB-/Watch Pos Class A-1 Notes Bal. $55.00mm $55.00mm $42.64mm Class A-2L Notes Rtg. AAA CC CC Class A-2L Notes Bal. $24.00mm $24.00mm $24.00mm Class A-2 Notes Rtg. AAA CC CC Class A-2 Notes Bal. $36.00mm $36.00mm $36.00mm Class A-3 Notes Rtg. A- CC CC Class A-3 Notes Bal. $45.50mm $45.50mm $45.50mm Class A OC Ratio 119.83% 77.73% 64.59% Class A OC Ratio Min. 114.0% 115.0% 115.0% Portfolio Benchmarks Current -------------------- ------- S&P Wtd. Avg. Rtg.(excl. defaulted) B S&P Default Measure(excl. defaulted) 5.02% S&P Variability Measure (excl. defaulted) 3.61% S&P Correlation Measure (excl. defaulted) 1.07 Wtd. Avg. Coupon (excl. defaulted) 9.39% Wtd. Avg. Spread (excl. defaulted) n/a Oblig. Rtd. 'BBB-' and Above 0.00% Oblig. Rtd. 'BB-' and Above 15.56% Oblig. Rtd. 'B-' and Above 49.22% Oblig. Rtd. in 'CCC' Range 13.66% Oblig. Rtd. 'CC', 'SD' or 'D' 37.12% Obligors on Watch Neg (excl. defaulted) 4.04% S&P RATED OC (ROC) Current ------------------ ------- Class A-1LB notes 104.66% (BBB-/Watch Pos) Class A-1 notes 104.66% (BBB-/Watch Pos) SPHERION CORP: Names Roy Krause Chief Executive Officer & Director ------------------------------------------------------------------ Spherion Corporation (NYSE:SFN) named Roy G. Krause chief executive officer and elected to the board of directors. He will also continue to serve as president of the Company. Steven S. Elbaum, chairman, commented, "As president of Spherion since July 2003 and since he joined the Company in 1995 as chief financial officer, Roy has demonstrated the leadership, experience and execution strengths that strongly support his appointment as chief executive officer. We expect that Spherion's restructuring actions of the past 18 months, successful implementation of a new enterprise wide system, clear strategic focus and operational execution will result in Spherion becoming a growing leader in the North American staffing and recruiting market and building long- term value for shareholders, customers and employees." Spherion President and Chief Executive Officer Roy Krause said, "I am proud to serve as CEO and look forward to capitalizing on the opportunities that lie ahead for Spherion. We have made significant progress to focus the Company on the North American staffing and recruiting market and achieved solid revenue growth in the first half of 2004. I am pleased with our accomplishments and want to thank the management team and employees of Spherion for their focus on client service and continued progress on operational improvements during this period of leadership transition." Mr. Krause, 58, was appointed president and chief operating officer of Spherion Corporation in July 2003, after serving as executive vice president and chief financial officer since 1995. Prior to joining Spherion, he served as executive vice president and chief financial officer for HomeBanc Mortgage Corporation and HomeBanc Federal Savings for 15 years. Krause received a Bachelor of Science degree from The Ohio State University and a master's of business administration from Georgia State University. About Spherion Spherion Corporation is a leader in the staffing industry in North America, providing value-added staffing, recruiting and workforce solutions. Spherion has helped companies improve their bottom line by efficiently planning, acquiring and optimizing talent since 1946. To learn more, visit http://www.spherion.com/ * * * As reported in the Troubled Company Reporter on Sept. 6, 2004, Moody's Investors Service has withdrawn the ratings of Spherion Corporation to reflect the redemption of the company's rated debt securities. These ratings have been withdrawn: * $89.6 million convertible subordinated notes due 2005, previously rated B2 (withdrawn as of August 27, 2004); * Senior Implied, rated Ba3; * Issuer Rating, rated B1. Moody's withdrawal of Spherion Corporation's ratings reflects the company's redemption of its rated debt with proceeds from the sale of its discontinued operations and an expansion of its current credit facility. SPIEGEL INC: Deutsche Bank Claim Will Be Allowed For $24,575,433 ---------------------------------------------------------------- Spiegel, Inc., Deutsche Bank AG, New York - Cayman Islands Branches, and Deutsche Bank AG, New York Branch, as servicer for Swing Street, stipulate that Deutsche Bank will be allowed a secured claim against Spiegel for $24,575,433. On September 30, 2003, Deutsche Bank New York filed a proof of claim -- Claim No. 2726 -- against Spiegel for $24,597,800. Spiegel's books and records show Deutsche Bank New York as having a claim for $24,575,433. Deutsche Bank New York has assigned 86.67% its Claim to Swing Street. 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) STANDARD PARKING: Terminates Consulting Agreement with Warshauer ---------------------------------------------------------------- Standard Parking Corporation (NASDAQ:STAN), one of the nation's largest providers of parking management services, terminated a Consulting Agreement dated March 30, 1998, with Sidney Warshauer, a former owner of Standard Parking, as the result of Mr. Warshauer's death earlier this month. The Company will take a one-time non-cash charge to amortization expense in the fourth quarter of 2004 reflecting the write-off of the net unamortized balance of Mr. Warshauer's covenant not to compete, which will result in a net increase in amortization expense of $0.49 million for the quarter. Beginning in the fourth quarter of 2004, the Company's obligation to make quarterly cash payments of $0.14 million to Mr. Warshauer will cease, and beginning in 2005 the Company will no longer incur any amortization expense related to Mr. Warshauer's agreement. The Company also learned of the death in September of Robert Hill, a retired former executive of the Company. Because the Company is the beneficiary under a life insurance policy on Mr. Hill's life, the Company expects to receive death benefit proceeds of $0.3 million and therefore intends to record a gain, net of the policy's cash surrender value, of $0.24 million in the third quarter of 2004 as a reduction of general and administrative expenses. Commentary James A. Wilhelm, the Company's President and Chief Executive Officer, stated "We are saddened by the deaths of both of these fine gentlemen. Bob Hill was a long-time colleague who played a key role in the Company's growth. Mr. Warshauer was a second- generation owner of Standard Parking and, as importantly, our friend and patriarch for many years." Financial Outlook The above events do not affect, and the Company reaffirms, the earnings per share guidance previously announced on Aug. 12, 2004. At that time, the Company announced that it expected reported net earnings per share for the 2004 year to be in the range of $0.25 to $0.35 per weighted average diluted share. The Company also announced at that time that net earnings per share for the second half of 2004, free of IPO-related impacts, were expected to be in the range of $0.65 to $0.75 per weighted average diluted share. Finally, the Company's August 12th release also estimated that on a pro forma basis, assuming that the Company's IPO took place as of December 31, 2003, earnings per share were expected to be in the range of $0.84 to $0.91 per pro forma diluted share. Detailed calculations of the pro forma adjustments can be found in the tables accompanying the August 12th release. Standard Parking Corporation -- http://www.standardparking.com/-- with approximately 11,000 employees, is one of the largest operators of paid parking facilities in North America, managing over 1,900 airport and urban parking facilities in close to 300 cities spanning 43 states and three Canadian provinces. * * * As reported in the Troubled Company Reporter's June 14, 2004 edition, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on parking provider Standard Parking Corp. Standard & Poor's also affirmed its 'CCC+' subordinated debt rating on the company's 9.25% senior subordinated notes due 2008. The ratings affirmation follows the company's recently completed initial public offering of 4.5 million shares of its new Class A common stock. All ratings have been removed from CreditWatch, where they were placed Feb. 10, 2004. In addition, Standard & Poor's assigned its 'B' bank loan rating and '3' recovery rating to Standard Parking's new $90 million senior secured credit facility due 2007. The bank loan is rated the same as the corporate credit rating; this and the '3' recovery rating indicate that lenders can expect meaningful recovery of principal in the event of a default or bankruptcy. The outlook on Chicago, Illinois-based Standard Parking is stable. Standard & Poor's estimates that Standard Parking had about $118.9 million of total debt outstanding pro forma for the May 2004 closing of its IPO. STELCO INC: Awarded Int'l. Automotive Quality Certification ----------------------------------------------------------- Stelco Inc. (TSX:STE) has been awarded ISO/TS 16949:2002 Quality Management System certification for its Cold Rolled and Coated Products Division. ISO/TS 16949 is a new international quality management system standard developed by the International Automotive Task Force (IATF) and the Japan Automobile Manufacturers Association (JAMA) in conjunction with the international standards community. By meeting this standard, Stelco demonstrates its ability to consistently provide product that meets customer requirements, and enhance customer satisfaction through continual improvement of our processes, products and services. Colin Osborne, Chief Operating Officer, said, "This significant certification recognizes our longstanding and future commitment to provide automotive customers with high quality steel products and services. It also acknowledges the tremendous skill and dedication of our personnel in meeting the needs of our customers in this important sector. I want to commend each one of our employees for the commitment and hard work that has resulted in this prestigious designation. "This certification also reflects one of the key elements of the strategy for the new Stelco that can be achieved if we successfully complete our Court- supervised restructuring. The four-point strategy we unveiled in July includes focusing on the production of high quality products for value-added markets including the automotive and other sectors." About Stelco Stelco Inc. is a large, diversified steel producer. Stelco is involved in major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. This news release may contain forward-looking information with respect to the Corporation's business operations, financial performance and conditions. Actual results may differ from expected results for a variety of reasons including factors discussed in the Corporation's Management's Discussion and Analysis section of the Corporation's 2003 Annual Report. To learn more about Stelco and its businesses, please refer to our Web site at http://www.stelco.ca/ SURGICARE INC: Stockholders Okay Change of Control & Name Change ---------------------------------------------------------------- SurgiCare Inc. (AMEX:SRG), a Houston-based ambulatory surgery company, said its stockholders approved the previously announced plan to restructure SurgiCare in a series of transactions that will result in a change in control of SurgiCare through the acquisition of three new businesses and issuance of new equity securities for cash and contribution of outstanding debt. Stockholders also approved a one-for ten reverse stock split and name change to Orion HealthCorp Inc. The Company held its special meeting in lieu of an annual meeting of stockholders Thursday night at its corporate headquarters in Houston. At the meeting, 59% of the total outstanding shares were represented in person or by proxy. Of the thirteen proposals put to a vote, the transaction documents required that stockholders approve Proposals One through Eleven in order for the transactions to be consummated. Each of Proposals One through Eleven were approved by at least 94% of the voting shares. After the transactions are complete, existing SurgiCare common stock in the hands of its stockholders will be converted to a new Class of Class A common stock of Orion. Stockholders also approved two new classes of Class B and Class C common stock to be issued in connection with the mergers and investments to be made. Merger with Integrated Physicians Services Inc. SurgiCare will merge with Integrated Physician Services Inc. and issue stock in exchange for contribution of certain IPS debt. The IPS equityholders and certain IPS debtholders will receive an aggregate of approximately 4.45 million shares of Orion Class A common stock. This number approximately equals the total number of shares of SurgiCare common stock outstanding on a fully-diluted basis prior to closing the IPS merger. Of these shares of Class A common stock, an aggregate of approximately 1.49 million shares will be issued to Brantley Venture Partners III L.P. and Brantley Capital Corporation in exchange for contribution of debt in an aggregate amount of approximately $4.25 million, including accrued interest as of Sept. 2, 2004, and approximately $593,000 of debt in respect of accrued dividends. The approximately 2.96 million remaining shares of Class A common stock will be issued to the IPS equityholders in connection with the IPS merger. Merger with Dennis Cain Physician Services Inc. and Medical Billing Services Inc. SurgiCare will merge with Dennis Cain Physician Services Inc., and Medical Billing Services Inc. In the merger, equityholders of DCPS and MBS will receive an aggregate of $3.5 million in cash, $500,000 principal amount of promissory notes of SurgiCare, and approximately 1.57 million shares of Orion Class C common stock (or, if the fair market value of SurgiCare common stock, based on the average of the high and low price per share over the five trading days immediately prior to closing, is greater than or equal to $0.70 (prior to the reverse stock split), an aggregate of $2.9 million in cash, promissory notes of SurgiCare in the aggregate principal amount of $500,000 and approximately 1.83 million shares of Orion Class C common stock). The purchase price is subject to retroactive adjustment based on the financial results of Orion's new subsidiary, DCPS/MBS, in the two years following the DCPS/MBS merger. In addition, 75,758 shares of Orion Class A common stock will be reserved for issuance at the direction of the DCPS and MBS equityholders and, under certain circumstances, the MBS and DCPS equityholders may receive other payments. Infusion of Capital From Brantley Partners IV, LP Orion will issue approximately 11.44 million shares of its Class B common stock to Brantley Partners IV Ltd or its assignees. Brantley IV will purchase the shares of Class B common stock for cash equal to $10 million plus the Base Bridge Interest amount (which, as of Sept. 2, 2004, was $99,052). A portion of such cash investment will be used to pay indebtedness owed to Brantley IV's wholly-owned subsidiary by IPS and SurgiCare including the accrued interest thereon. As of Sept. 2, 2004, the aggregate amount of such debt, including accrued interest thereon, is approximately $4.9 million, which will result in net cash proceeds to SurgiCare of approximately $5.19 million. SurgiCare has filed an application with the American Stock Exchange to continue listing of the Orion Class A Common stock after completion of the transactions under the symbol "ONH." Board of Directors At the meeting, SurgiCare stockholders also reelected the existing members of its board of directors to serve until the closing of the transactions and elected a new board of directors for Orion, to begin service upon completion of the transactions. "We are very pleased with the results of the stockholder vote," stated Keith G. LeBlanc, chief executive officer. "It is anticipated that the closing of the deal will occur prior to Oct. 31, 2004. We are excited that our "restructure" phase is behind us and look forward to growing the Company." About the Company SurgiCare, Inc., was incorporated in Delaware on February 24, 1984 as Technical Coatings Incorporated. On September 10, 1984, its name was changed to Technical Coatings, Inc. Immediately prior to July 1999, TCI was an inactive company. On July 11, 1999, TCI changed its name to SurgiCare Inc., and at that time changed its business strategy to developing, acquiring and operating freestanding ambulatory surgery centers. On July 21, 1999, SurgiCare acquired all of the issued and outstanding shares of common stock of Bellaire SurgiCare, Inc. in exchange for the issuance of 9.86 million shares of common stock, par value $.005 per share and 1.35 million shares of Series A Redeemable Preferred Stock, par value $.001 per share, of SurgiCare to the holders of Bellaire's common stock. For accounting purposes, this reverse acquisition was effective July 1, 1999. At June 30, 2004, Surgicare, Inc.'s balance sheet showed a $42,441 stockholders' deficit, compared to $4,688,994 of positive equity of at December 31, 2003. TOUCH AMERICA: Judge Carey Confirms Liquidating Chapter 11 Plan --------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware confirmed Touch America Holdings Inc.'s liquidating Chapter 11 plan. As previously reported, on December 23, 2003, Touch America sold substantially all of its Internet services, private line, and dark fiber assets to 360networks, a Vancouver, Canada based corporation for $28,000,000. On December 23, 2003, Touch America also sold certain dark fiber assets to Qwest Communications, Inc. for $8,000,000. With the exception of certain wireless services, Touch America ceased operations as of February 29, 2004. Touch America's plan projects that general unsecured will see recoup more than 60% of what they're owed. The company has recently settled some litigation claims that bring substantial value into the estate. Those additional funds, however, aren't sufficient for value to flow to the Debtor's shareholder constituency. Headquartered in Butte, Montana, Touch America Holdings, Inc., through its principal operating subsidiary, Touch America, Inc., developed, owned, and operated data transport and Internet services for commercial customers. The Company filed for chapter 11 protection on June 19, 2003 (Bankr. D. Del. Case No. 03-11915). Maureen D. Luke, Esq. and Robert S. Brady, Esq. at Young Conaway Stargatt & Taylor, LLP represent the Debtor. When the Company filed for bankruptcy protection, it listed $631,408,000 in total assets and $554,200,000 in total debts. UAL CORP: Asks Court to Deny USTA's Admin. Expense Payment Request ------------------------------------------------------------------ The United States Tennis Association, Inc., previously asked the United States Bankruptcy Court for the Northern District of Illinois to compel UAL Corporation and its debtor-affiliates to pay its administrative expense for certain material benefits the Debtors realized before rejecting their executory contracts. The USTA is the national governing body for tennis in the United States and owns the exclusive rights to all activities related to the annual U.S. Open tennis tournament held at USTA National Tennis Center, in Flushing, New York. The USTA is a New York State not-for-profit organization that qualifies as an exempt organization under Section 501(c)(6) of the Internal Revenue Code. The USTA establishes rules of play and standards of sportsmanship, sanctions and conducts tournaments and competitions. The USTA conducts its business through a national headquarters and staff located in White Plains, New York, and through 17 geographic sectional associations. The USTA and the Debtors entered into a Sponsorship Agreement effective January 1, 2001. The Agreement was to run until December 31, 2005. Pursuant to the Agreement, the Debtors were to pay the USTA $1,400,000 in cash, 50% on January 1, 2004, and 50% on June 1, 2004. In addition, the Debtors were to provide "value in kind," namely air travel credits, frequent flyer benefits and airport club memberships. For 2004, the Debtors were to provide the USTA with $265,000 of value in kind. Debtors Return Serve James H.M. Sprayregen, Esq., at Kirkland & Ellis, asserts that the Sponsorship Agreement required the Debtors to pay the USTA for all services provided in 2004. Since the Debtors realized only a small percentage of the USTA's services, it is entitled to an administrative expense for half the agreed-upon amount. The Debtors would have received the greatest benefit from publicity during the 2004 U.S. Open, the 2004 Arthur Ashe Day and the 2004 Olympics. However, none of these events had occurred when the Debtors rejected the USTA Sponsorship Agreement. The USTA's Request cites only a few benefits received by the Debtors, namely advertisements in publications with uncertain circulation. Noticeably, the USTA does not ascribe a value to these "benefits." Due to the rejection, the Debtors never received the overwhelming majority of stipulated benefits. In fact, because the Debtors took advantage of so few benefits during 2004, the USTA was able to enter into a new sponsorship agreement with Continental Airlines on identical terms. Mr. Sprayregen states that the USTA has not provided, nor can it provide, evidence that the benefits received were worth "anywhere near $700,000." Therefore, the Court should deny the Request. 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) UNIFAB INT'L: Major Stockholders Push to Take Company Private ------------------------------------------------------------- UNIFAB International, Inc. (OTC: UFAB) said Midland Fabricators and Process Systems, LLC, the owner of 90.1% of the outstanding shares of UNIFAB's common stock, intends to take UNIFAB private pursuant to the Louisiana short form merger law. Since the Louisiana statute permits the holder of a 90% interest in a Louisiana corporation to use this type of merger to cash out other shareholders, the transaction requires no action on the part of UNIFAB's board of directors or shareholders. Midland will pay $.20 per share to all other UNIFAB shareholders. As part of the merger transaction, shareholders who are not willing to accept the merger price will have the right to exercise their dissenters rights under Louisiana law. William A. Hines, the chief executive officer of Midland, stated, "Now that UNIFAB stock is thinly traded on the over-the-counter market, we believe the costs of being a public entity outweigh the benefits of being public, particularly considering the enhanced costs associated with compliance with the Sarbanes-Oxley Act." Midland has filed a Schedule 13E-3 with the Securities and Exchange Commission describing the terms of the proposed transaction. UNIFAB expects Midland to mail a copy of the Schedule 13E-3 to all UNIFAB shareholders in the coming weeks and to consummate the merger twenty days after the Schedule is mailed. UNIFAB International, Inc. is a custom fabricator of topside facilities, equipment modules and other structures used in the development and production of oil and gas reserves. In addition, the Company designs and manufactures specialized process systems and refurbishes and retrofits existing jackets and decks. At June 30, 2004, UNIFAB International's balance sheet showed a $4,720,000 stockholders' deficit, compared to $2,111,000 in positive equity at December 31, 2003. Going Concern Doubt As reported in the Troubled Company Reporter's April 7, 2004 edition, UNIFAB International, Inc. (NASDAQ: UFAB) reports, as required by Nasdaq Marketplace Rule 4350(b), that the Company's independent auditor issued its audit report on the Company's financial statements for the year ended December 31, 2003. The report includes a "going concern qualification," which is an explanatory paragraph relating to the Company's ability to continue as a going concern, and states that the Company's recurring losses from operations, negative working capital position, and difficulties in meeting its financial obligations and funding its operations raise substantial doubt about the Company's ability to continue as a going concern. The qualification is due, in part, to the Company's dependence upon Midland Fabricators and Process Systems, LLC, its majority shareholder, for its working capital requirements. Under an informal arrangement with the Company, Midland has agreed to provide financial support and funding for working capital or other needs at Midland's discretion, from time to time. During the year ended December 31, 2003, Midland advanced $5.9 million to the Company for working capital, which is classified as a current liability at December 31, 2003. If Midland does not make available such additional funding to the Company when needed in the future, the Company could be unable to satisfy its working capital requirements and meet its obligations in the ordinary course of business. VERESTAR, INC.: Wants Plan-Filing Period Stretched to Jan. 17 ------------------------------------------------------------- Verestar, Inc., out of an abundance of caution, asks the U.S. Bankruptcy Court for the Southern District of New York, pursuant to 11 U.S.C. Sec. 1121, for an extension of its exclusive periods to propose a chapter 11 plan and solicit acceptances of that plan from creditors. Specifically, the Debtor asks that its exclusive period to file a plan be extended through Jan. 17, 2005, and that its exclusive solicitation period be extended through Mar. 18, 2005. Verestar agreed to sell its assets to SES AMERICOM earlier this year for $18.5 million in cash and the Court blessed that transaction. The Debtor filed a chapter 11 plan and disclosure statement on Sept. 29, 2004, outlining its proposal to distribute those sale proceeds to creditors in order of their statutory priority. The Honorable Allan L. Gropper will convene a hearing on Nov. 9, 2004, to consider the adequacy of the company's Disclosure Statement. If the judge finds that it provides adequate information allowing creditors to make informed decisions about whether to vote to accept or reject the plan, he'll approve the document for distribution to creditors. The Court will hold a hearing to consider the merits of the plan, and whether it should be confirmed, at a later date. Headquartered in Fairfax, Virginia, Verestar, Inc., -- http://www.verestar.com/-- is a provider of satellite and terrestrial-based network communication services. The Company and two if its affiliates filed for chapter 11 protection on December 22, 2003 (Bankr. S.D.N.Y. Case No. 03-18077). Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher LLP represents the Debtors. When the Company filed for protection from its creditors, it listed assets and debts of more than $100 million each. VIATICAL LIQUIDITY: U.S. Trustee Adds 4 Members to Committee ------------------------------------------------------------ The U.S. Trustee for Region 15 added four members to the Official Committee of Unsecured Creditors in Viatical Liquidity, LLC's chapter 11 case. The current members serving on the Committee are: 1. Dr. Frank J. Greskovich, II 4320 Montelvo Drive Pensacola, Florida 32504 Tel: 850-433-7580, Fax: 850-438-3581 2. Arthur C. Hawkins 7701 Winter North East Albuquerque, New Mexico 87110 Tel: 505-255-2405, Fax: 505-255-2405 3. Dr. Charles G. Harger 124 Cold Springs Drive Georgetown, Texas 78628 Tel: 832-368-3132, Fax: 512-233-2567 4. Katherine S. Henry, MD 16424 Fallkirk Drive Dallas, Texas 75248 Tel: 972-404-1458, Fax: 972-404-1754 5. Raymond & Christie Miller 1503 East 20th Street Spokane, Washington 99203 6. Robert and Agnete Winters Attn: Robert W. Winters, MD 11 East 87th Street, Apartment SC New York, New York 10128 Tel: 917-492-2045 7. Benny R. Cleveland, MD 523 Cordillera Trace Boerne, Texas 78006-4203 Tel: 830-336-4588, Fax: 830-229-5171 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the U.S. Bankruptcy Court for the Southern District of California to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in San Diego, California, Viatical Liquidity, LLC, is engaged in the insurance industry. The Company 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. VISTA HOSPITAL: Files for Chapter 11 Petition in S.D. Texas ----------------------------------------------------------- Vista Hospital of Baton Rouge, LLC, an indirect majority-owned subsidiary of Dynacq Healthcare Inc. (Pink Sheets:DYII), filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. VHBR will continue to operate its business and manage its property as a "debtor in possession" under the jurisdiction of the bankruptcy court. VHBR operates Vista Surgical Hospital of Baton Rouge, a 35-bed facility with four surgical suites. The Baton Rouge Facility's primary areas of practice include bariatric surgery, orthopedic surgery, general surgery, pain management and cosmetic surgery. VHBR filed for bankruptcy protection because VHBR is unable to pay the alleged damages sought by, and the costs of defending against, a lawsuit filed by Liljeberg Enterprises International, L.L.C. in September 2003 against both Dynacq and VHBR in the Twenty Fourth Judicial District Court for the Parish of Jefferson, State of Louisiana (case number 598-564). The lawsuit alleges that the plaintiff is owed damages in excess of $1,000,000 for costs of goods and services rendered for pharmacy operations at the Baton Rouge Facility under a contract which plaintiff had entered into with VHBR. The plaintiff has asserted claims for breach of contract, fraud, negligence, fraudulent misrepresentation, negligent misrepresentation, civil conspiracy and gross negligence. Although the Company believes the bankruptcy filing automatically stays the lawsuit, Dynacq and VHBR intend to continue to vigorously defend against the allegations made in the lawsuit but cannot predict the ultimate outcome of the claims asserted in the lawsuit or whether such claims will have a material adverse effect on their financial condition. Although VHBR intends to propose a plan of reorganization to fully pay all creditors, Dynacq cannot predict the outcome of the Chapter 11 proceeding or whether the proceeding will have a material adverse effect on Dynacq's financial condition. Headquartered in Houston, Texas, Vista Hospital of Baton Rouge, LLC, operates a hospital facility in Baton Rouge, Louisiana. The Company filed for chapter 11 protection on Oct. 8, 2004 (Bankr. S.D. Tex. Case No. 04-44533). Basil A Umari, Esq., at Andrews & Kurth represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of between $1 million to $10 million. VISTA HOSPITAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Vista Hospital of Baton Rouge, LLC dba Vista Surgical Hospital of Baton Rouge dba Vista Surgical Hospital 10304 I-10 East, Suite 369 Houston, Texas 77029 Bankruptcy Case No.: 04-44533 Type of Business: The Company operates a hospital facility in Baton Rouge, Louisiana. It does not own the facility. Chapter 11 Petition Date: October 8, 2004 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtor's Counsel: Basil A Umari, Esq. Andrews & Kurth 600 Travis, Suite 4200 Houston, Texas 77002 Tel: 713-220-3831 Fax: 713-238-7325 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 largest unsecured creditors: Entity Claim Amount ------ ------------ Allegiance Cardial Health $40,971 Johnson & Johnson Health Care $24,218 Entergy $22,676 WL Gore & Associates, Inc. $8,000 Cardinal Health $7,384 SSI, Inc. $6,795 Zimmer US, Inc. $5,110 Karl LeBlanc, M.D. $5,000 Datex Ohmeda Inc. $4,773 National Rehab Partners Inc. $3,835 Guaranty Broadcasting $3,631 Karl Storz Endoscopy-America $3,488 Conoco Food Service-Harahan $3,051 Baxter Healthcare Corporation $3,037 Doc's Laundry & Linen Service $2,944 American Nursing Services $2,850 GE Capital $2,678 Ochsner Clinic Foundation $2,500 Xspedius $2,234 Hill Rom $1,743 WACHOVIA COMMERCIAL: Fitch Puts Low-B Ratings on 6 Certificates --------------------------------------------------------------- Fitch Ratings affirms Wachovia Commercial Mortgage Securities, Inc.'s commercial mortgage pass-through certificates, series 2003- C4: --$68.4 million class A-1 'AAA'; --$245.4 million class A-1A 'AAA'; --$374.1 million class A-2 'AAA'; --Interest-only class X-C 'AAA'; --Interest-only class X-P 'AAA'; --$34.6 million class B 'AA'; --$11.1 million class C 'AA-'; --$22.3 million class D 'A'; --$12.3 million class E 'A-'; --$12.3 million class F 'BBB+'; --$12.3 million class G 'BBB'; --$12.3 million class H 'BBB-'; --$20.1 million class J 'BB+'; --$8.9 million class K 'BB'; --$6.7 million class L 'BB-'; --$6.7 million class M 'B+'; --$1.1 million class N 'B'; --$4.5 million class O 'B-'. Fitch does not rate the $22.3 million class P certificates. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the September 2004 distribution date, the pool has paid down 1.9% to $875.1 million from $891.8 million at issuance. To date, there have been no loan payoffs or realized losses within the transaction. There are also no delinquent or specially serviced loans. Wachovia Bank, N.A., as master servicer, collected year-end 2003 financials for 96.7% of the transaction. Among those properties that reported, the weighted average debt service coverage ratio increased to 1.54 times from 1.47x at issuance for the same loans. WORLDCOM INC: Judge Gonzalez Approves San Luis Settlement Pact -------------------------------------------------------------- Prior to the Petition Date, MCI WorldCom Network Services, Inc., and MFS Globenet, Inc., were involved in various disputes with the County of San Luis Obispo arising from the installation and maintenance of telecommunication facilities by the MCI Parties, among others. Specifically, AT&T Communications of California, Inc., AT&T Corp., and the MCI Parties, as plaintiffs, and the County of San Luis Obispo, the San Luis Obispo County Board of Supervisors, and Victor Holanda are parties in four prepetition actions: * MCI WorldCom Network Services, Inc. et al. v. County of San Luis Obispo, et al., United States District Court, Central District of California, Case No. CV-02-2604-RSWL; * AT&T Communications of California, Inc. v. County of San Luis Obispo, et al., United States District Court, Central District of California, Case No. CV-01-7575-RWSL; * MCI WorldCom Network Services, Inc., et al. v. County of San Luis Obispo, et al., California Superior Court, County of San Luis Obispo, Case No. CV020850; and * AT&T Communications v. County of San Luis Obispo, et al., California Superior Court, County of San Luis Obispo, Case No. CV021175. The Actions resulted from San Luis County's application of Chapter 1.10 of the County Code and County Ordinance Nos. 2924 and 2998 to the Plaintiffs' installation and maintenance of certain telecommunication facilities in the San Luis County roads right- of-way pursuant to certain encroachment permits. The Actions also relate to the application of the Ordinances to the Plaintiffs and to the transpacific cable network consortiums located in San Luis County: (1) The Japan-U.S. Cable Network, which is owned by a consortium and administered and operated by the MCI Parties pursuant to a certain "Construction and Maintenance Agreement," dated July 31, 1998, as amended; (2) The Southern Cross Cable Network, which is owned by a consortium and administered and operated by the MCI Parties pursuant to a certain "Landing Party Agreement," dated October 3, 1998, as amended; and (3) The China-U.S. Cable Network, which is administered and operated by AT&T pursuant to a certain "Construction and Maintenance Agreement," dated December 11, 1997, as amended. The MCI Parties commenced the Actions on behalf of themselves and of Japan-U.S. Cable and Southern Cross Cable to dispute the Ordinance fees. San Luis County filed cross-complaints. To avoid significant expense and the uncertainty of litigation, MCI, AT&T and San Luis negotiated a settlement to resolve the disputes. The Settlement provides that: (a) MCI and AT&T will collectively pay to San Luis County $3,500,000, less a credit owing to MCI and AT&T for overpayment of certain deposits equal to $328,768, for a $3,171,232 total settlement payment; (b) The Payment is due and payable within 10 days after the latter occurrence of four precedent conditions: (1) The San Luis Obispo Board of Supervisors' approval of the Settlement; (2) The Bankruptcy Court's approval of the Settlement; (3) The San Luis County Board's repeal of the Telecommunication Ordinance; and (4) The San Luis County Board's repeal of the Fee Ordinance; (c) MCI and AT&T and San Luis County will dismiss all causes of action and claims in connection with the Actions with prejudice within 10 days of receipt of the Payment; (d) Certain encroachment agreements between San Luis County and the Debtors will become effective as of the Payment Date. The Encroachment Agreements generally provide that the MCI Parties will in no event be obligated to pay San Luis County any rental or non-cost based fees for any of their telecommunications facilities in San Luis County's road right-of-way through December 31, 2010; (e) San Luis County will not seek to enforce against the MCI Parties, or their successors and assigns, any ordinance that may later be enacted that would impair any contractual rights granted to them under the Encroachment Agreements, which will remain in effect until December 31, 2010; and (f) The MCI Parties will be entitled, at their option, to the benefits of any future agreements or practices entered into between San Luis County and any other telecommunications carrier regarding the use of San Luis County's road right-of-way. At the Debtors' request, Judge Gonzalez approves the terms of the Settlement Agreement. Any proofs of claim filed by or on behalf of San Luis County relating to the Actions, including Claim Nos. 18298 and 18297, are expunged and extinguished. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (Worldcom Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) * BOND PRICING: For the week of October 11 - October 15, 2004 ------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Comm. 3.250% 05/01/21 29 Adelphia Comm. 6.000% 05/01/21 29 American & Foreign Power 5.000% 03/01/30 71 American Airline 4.250% 09/23/23 67 AMR Corp. 4.500% 02/15/24 64 AMR Corp. 9.000% 08/01/12 60 AMR Corp. 9.000% 09/15/16 60 AMR Corp. 10.200% 03/15/20 54 Applied Extrusion 10.750% 07/01/11 62 Bank New England 8.750% 04/01/99 13 Burlington Northern 3.200% 01/01/45 57 Calpine Corp. 4.750% 11/15/23 68 Calpine Corp. 7.750% 04/15/09 62 Calpine Corp. 7.785% 11/15/23 66 Calpine Corp. 8.500% 02/15/11 62 Calpine Corp. 8.625% 08/15/10 63 Comcast Corp. 2.000% 10/15/29 43 Continental Airlines 4.500% 02/01/07 71 Continental Airlines 5.000% 06/15/23 73 Delta Air Lines 7.700% 12/15/05 42 Delta Air Lines 7.711% 09/18/11 52 Delta Air Lines 7.779% 11/18/05 41 Delta Air Lines 7.900% 12/15/09 30 Delta Air Lines 8.000% 06/03/23 30 Delta Air Lines 8.300% 12/15/29 26 Delta Air Lines 8.375% 12/10/04 72 Delta Air Lines 9.000% 05/15/16 24 Delta Air Lines 9.250% 03/15/22 24 Delta Air Lines 9.750% 05/15/21 26 Delta Air Lines 10.000% 08/15/08 32 Delta Air Lines 10.125% 05/15/10 27 Delta Air Lines 10.375% 02/01/11 29 Dobson Comm. Corp. 8.875% 10/01/13 65 Dobson Comm. Corp. 10.875% 07/01/10 73 Evergreen In'tl Avi. 12.000% 05/15/10 62 Federal-Mogul Co. 7.500% 01/15/09 30 Foamex L.P. 9.875% 06/15/07 75 Horizon PCS Inc. 13.750% 06/15/11 40 Iridium LLC/CAP 14.000% 07/15/05 10 Inland Fiber 9.625% 11/15/07 45 Kaiser Aluminum & Chem. 12.750% 02/01/03 17 Kulicke & Soffa 0.500% 11/30/08 72 Level 3 Comm. Inc. 2.875% 07/15/10 68 Level 3 Comm. Inc. 6.000% 09/15/09 54 Level 3 Comm. Inc. 6.000% 03/15/10 52 Level 3 Comm. Inc. 9.125% 05/01/08 74 Level 3 Comm. Inc. 11.250% 03/15/10 72 Liberty Media 3.750% 02/15/30 65 Liberty Media 4.000% 11/15/29 70 Mirant Corp. 2.500% 06/15/21 64 Mirant Corp. 5.750% 07/15/07 64 Mississippi Chem. 7.250% 11/15/07 62 Missouri Pacific RR 4.750% 01/01/30 74 National Vision 12.000% 03/30/09 62 Northern Pacific Railway 3.000% 01/01/47 56 Northwest Airlines 7.875% 03/15/08 65 Northwest Airlines 8.700% 03/15/07 73 Northwest Airlines 9.875% 03/15/07 75 Northwest Airlines 10.000% 02/01/09 67 Northwest Airlines 10.500% 04/01/09 75 O'Sullivan Ind. 13.375% 10/15/09 46 Owens Corning 7.000% 03/15/09 49 Owens Corning 7.500% 05/01/05 51 Owens Corning 7.500% 08/01/18 48 Pegasus Satellite 12.375% 08/01/06 65 Pen Holdings Inc. 9.875% 06/15/08 51 Primus Telecom 3.750% 09/15/10 56 Primus Telecom 8.000% 01/15/14 73 RCN Corp. 10.000% 10/15/07 51 RCN Corp. 10.125% 01/15/10 53 RCN Corp. 11.125% 10/15/07 51 Reliance Group Holdings 9.000% 11/15/00 18 Syratech Corp. 11.000% 04/15/07 64 Trico Marine Service 8.875% 05/15/12 46 Triton Pcs. Inc. 8.750% 11/15/11 71 Triton Pcs. Inc. 9.375% 02/01/11 74 Tower Automotive 5.750% 05/15/24 63 United Air Lines 9.125% 01/15/12 5 United Air Lines 10.670% 05/01/04 6 Univ. Health Services 0.426% 06/23/20 58 US West Capital 6.500% 11/15/18 74 US West Capital Fdg. 6.875% 07/15/28 72 Westpoint Stevens 7.875% 06/15/08 1 ********* 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. 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