/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/041014.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 14, 2004, Vol. 8, No. 223 Headlines AAIPHARMA INC: Obtains Waiver on Senior Credit Facility ACCESS CARE: President & His Wife to Collect $200,000 Per Year ADELPHIA COMMUNICATIONS: Hires Dechert LLP as Special Counsel AIR CANADA: Settles Matters Raised by Pilots Association AMCAST INDUSTRIAL: Steel Partners Discloses 7.3% Equity Stake AMERICAN SKIING: Launches Sr. Debt Offer & Consent Solicitation AMERICAN TOWER: Fitch Assigns B+ Rating to Unsecured Notes AMES: Wants to Sell Rocky Hill Property to T. Briggs for $3.7 Mil. ARCHANGEL DIAMOND: Management Baffled by Unusual Trading Activity ASG CONSOLIDATED: Moody's Junks $125 Million Senior Discount Notes ASG CONSOLIDATED: S&P Assigns B- Rating to Planned $125 Mil. Notes ATLANTIC MUTUAL: Moody's Reviews B1 Rating on Surplus Notes AVADO BRANDS: Has Until January 31 to Decide on Leases AVADO BRANDS: Court Grants Extension of Exclusivity Period AVAYA INC: Will Release 4th Quarter 2004 Results on Oct. 26 BANC OF AMERICA: Fitch Places Low-B Ratings on Six Cert. Classes BBMF CORP: Inks JPY300 Million Purchase Agreement with Atlus Co. BEAR STEARNS: S&P Places Low-B Ratings on Six Certificate Classes BOMBARDIER: Doubts Spur Fitch to Put B Ratings on Watch Negative CARBIZ INC: Closes Issuance of $1,030,922 Convertible Debenture CATHOLIC CHURCH: Tucson Disclosure Statement Hearing on Oct. 25 CHAPCO CARTON: Hires Kugman Associates as Financial Advisor COMMERCE ONE: Seeks Court Nod to Walk Away from 5 Useless Leases CONGOLEUM: Wants Plan-Filing Period Stretched to Feb. 23, 2005 CROWN PARTNERS: Taps Lopez Blevins as Principal Accountant DS WATERS: S&P Affirms B- Corporate Credit & Sr. Bank Loan Ratings EMPIRE GLASS CO: Case Summary & 20 Largest Unsecured Creditors ENRON: Wants Court Nod on U.S. Asset Sellers' Proceeds Allocation ENRON: Selling Colima Property to Dynamica for $500,000 EVERGREEN: Pioneer Wants to Buy Sr. Sub. Notes for 101% EXIDE TECH: Taps J. Timothy Gargaro as New Chief Financial Officer FEDERAL-MOGUL: Wants to Enter Into a $1.4 Billion Exit Facility FIRSTPLUS FINANCIAL: Creditor Trust's Report Dated Sept. 30, 2004 FITNESS GALLERY: Voluntary Chapter 11 Case Summary GLACIER FUNDING: Fitch Places BB Rating on $4M 5th Priority Notes HOME INSURANCE: Canadian Claims Must be Filed by Tomorrow INTERSTATE BAKERIES: Employs Alvarez & Marsal as Managers INTERWAVE COMMS: Comments on Auditors' Going Concern Doubt JAFRA WORLDWIDE: Inks Restated Credit Pact with Lenders JARDEN CORP: Moody's Puts B1 Rating on Planned $1.05B Facility JARDEN CORPORATION: S&P Affirms B+ Corporate Credit Rating JWS CBO: Fitch Upgrades Rating on $23.25M Class D Notes to 'BB-' KAISER ALUMINUM: Wants to Settle Mead Environmental Claims KIEL BROS.: Has Exclusive Right to File Plan through Dec. 13 LAIDLAW INT'L: Will Release 2004 4th Quarter Results on Nov. 10 LEVI STRUASS: Aug. 29 Balance Sheet Upside Down by $1.3 Billion LIBERATE TECH: Posts $12.3 Million Net Loss in First Quarter LNR PROPERTY: Declares Quarterly Cash Dividends M&M ROOFING INC: Case Summary & 20 Largest Unsecured Creditors MAXIM CRANE: CEO Wants an Alternative Plan of Reorganization MICROCELL TELECOM: TELUS Did Not Extend Stock Purchase Offer MIRANT CORP: Asks Court to Approve Columbia Gas Settlement Accord NATIONAL CENTURY: Court Allows Trust to Get Bankers Trust Docs NETWORK INSTALLATION: Wins Multiple Project Orders NEXTWAVE TELECOM: Wants Exclusivity Extended Through Oct. 22 NEWAVE INC: Inks New Marketing Agreement with Traffix Inc. NORDICTRACK: Court Dismisses Chapter 11 Case NORTHWEST AIRLINES: Names New Executive Sr. Management Team NOVA CHEMICALS: Will Release 2004 3rd Quarter Results on Oct. 20 OLD UGC: Court Conditionally Approves Disclosure Statement OMNI FACILITY: Navistar Objects to Transfer of its Collateral OWENS CORNING: Objects to Mobil Oil Environmental Claim PACIFIC GAS: Moves for Summary Judgment on San Francisco Claim PAN AMERICAN: Fitch Puts 'B+' Rating on Planned $100 Million Issue RAMP CORP: Ability to Continue as a Going Concern is in Doubt REFCO GROUP: Taps Heidrick & Struggles to Hunt for New CFO RIVERSIDE FOREST: Tolko Asks Securities Commission to Halt Trading SEISMIC ENTERTAINMENT: Voluntary Chapter 7 Case Summary SHOWCASE AUTO: Has Until Dec. 13 to Make Lease-Related Decisions TANGO INC: Plans to Expand Capacity at Portland Location TENET HEALTHCARE: Selling 3 Massachusetts Hospitals to Vanguard THIRTEENTH FLOOR: Case Summary & 13 Largest Unsecured Creditors TIRO ACQUISITION: Case Summary & 20 Largest Unsecured Creditors UAL CORP: Reports September 2004 Traffic Results URS CORPORATION: Wins $286 Million 10-Year U.S. Navy Contract US AIRWAYS: Lenders Consent to Cash Collateral Use Until Jan. 14 VITESSE SEMICONDUCTOR: Moody's Affirms Single-B Ratings WOMEN FIRST: Mutual Pharm. Says Bactrim Sale Order is Bogus WOMEN FIRST: Committee Hires Klehr Harrison to Probe Wyeth-Ayerst WORLDCOM INC: Balks at Springcreek's Call to Lift Automatic Stay ********* AAIPHARMA INC: Obtains Waiver on Senior Credit Facility ------------------------------------------------------- aaiPharma Inc. (NASDAQ: AAII) and its senior secured lenders have entered into an amendment to its senior secured credit facility to, among other things, adjust financial covenants. aaiPharma's senior secured lenders have waived compliance with certain financial covenants in the senior secured credit facility for the quarter ended Sept. 30, 2004 and the quarter ending Dec. 31, 2004 provided that aaiPharma meets minimum consolidated EBITDA thresholds. The Company will promptly file the amendment on a Current Report on Form 8-K. The Company remains in ongoing active discussions with its senior lenders and intends to continue discussions with an ad hoc committee formed by certain holders of its senior subordinated notes. About the Company aaiPharma Inc. is a science-based pharmaceutical company focused on pain management, with corporate headquarters in Wilmington, North Carolina. With more than 25 years of drug development expertise, the Company is focused on developing and marketing branded medicines in its targeted therapeutic areas. aaiPharma's development efforts are focused on developing improved medicines from established molecules through its research and development capabilities. For more information on the Company, including its product development organization AAI Development Services, please visit aaiPharma's website at http://www.aaipharma.com/ * * * As reported in the Troubled Company Reporter on Oct. 4, aaiPharma Inc. did not make the Oct. 1, 2004, interest payment on its 11.5% Senior Subordinated Notes due 2010, and will use the 30-day grace period provided under the Notes for failure to pay interest to enter into discussions with an ad hoc committee formed by certain holders of the Notes. An aggregate interest payment of $10.0 million was due on the Notes on Oct. 1, 2004. Failure to make the interest payment by October 31, 2004, would constitute an event of default under the Notes, permitting the trustee under the Notes or the holders of 25% of the Notes to declare the principal and interest thereunder immediately due and payable. The Company believes there is a likelihood that it will be in default of certain financial covenants under its senior credit facility, and is in ongoing active discussions with its lender to seek waivers and/or consents for these potential defaults. Standard & Poor's Ratings Services previously affirmed its 'CCC' corporate credit and 'CC' subordinated debt ratings on aaiPharma, Inc. At the same time, Standard & Poor's removed the ratings on the Wilmington, North Carolina-based specialty pharmaceutical company from CreditWatch. S&P's outlook on aaiPharma is negative. "The low speculative-grade ratings reflect the company's improved but still limited liquidity given the lack of visibility of aaiPharma's profitability and cash flow generation," said Standard & Poor's credit analyst Arthur Wong. ACCESS CARE: President & His Wife to Collect $200,000 Per Year -------------------------------------------------------------- Access Care, Inc., in compliance with Local Bankruptcy Rule 4002-1, advises the U.S. Bankruptcy Court for the Eastern District of Pennsylvania of its intention to pay Jack Zarra, its President, and Shirley Zarra, serving as Vice President and Secretary, these amounts during the course of the company's chapter 11 restructuring: Mr. Zarra Mrs. Zarra --------- ---------- Weekly Salary $2,443.22 $1,163.46 Monthly Car Allowance 650.00 0.00 plus "the normal and customary benefits provided to all employees, including health insurance." The total, though not explicitly stated, tops $200,000 annually. Kenneth E. Aaron, Esq., at Weir & Partners LLP, relates that these salary payments are consistent with what the Debtor paid Mr. and Mrs. Zarra during the 90-day period prior to the company's chapter 11 filing. As Access Care's President, Mr. Zarra is responsible for all aspects of the company's daily operations, including, but not limited to, marketing, sales, client relations, and company administration. As Access Care's Vice President and Secretary, Mrs. Zarra manages, among other things, accounting functions. Access Care, Inc., filed for chapter 11 protection (Bankr. E.D. Pa. Case No. 04-30771) on August 6, 2004. Kenneth E. Aaron, Esq., Bonnie R. Golub, Esq., and Jeffrey S. Cianciulli, Esq., at Weir & Partners LLP, represent the Debtor. The company estimated its debts and assets at more than $1 million and less than $10 million when it sought chapter 11 protection. ADELPHIA COMMUNICATIONS: Hires Dechert LLP as Special Counsel ------------------------------------------------------------- Adelphia Communications Corporation and its debtor-affiliates seek the authority of the U.S. Bankruptcy Court for the Southern District of New York to employ Dechert, LLP, as their special counsel. Dechert, an international law firm, provides general representation to its clients in numerous areas, including corporate matters, litigation, tax and government practices. Dechert has significant expertise in large-scale litigation and has received commendation for successfully litigating numerous high-stakes civil cases. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, relates that the ACOM Debtors employed Dechert on January 6, 2003, as an ordinary course professional. Ms. Chapman explains that it is necessary for the ACOM Debtors to retain Dechert as their special counsel because they: -- anticipate that Dechert will soon begin to exceed the monthly cap for ordinary course professionals; and -- seek to expand the scope of Dechert's services. The ACOM Debtors want Dechert to continue to represent them with respect to a commenced litigation against Deloitte & Touche, LLP, as well as to provide: (a) representation with a potential dispute between the ACOM Debtors and ADcom Information Services; (b) representation with a pending and potential dispute litigation adverse to the ACOM Debtors; (c) assistance in investigations and corporate compliance issues; (d) assistance in general corporate matters, including compliance with securities laws; and (e) assistance in the creation of a uniform corporate document retention policy. The ACOM Debtors will pay Dechert on an hourly basis, and will reimburse actual and necessary expenses incurred. Dechert's current standard hourly rates are: Attorneys $235 - 725 Paralegals 80 - 160 Dechert's rates are subject to periodic, ordinary course adjustments. Dechert's books and records show that it has received $206,721 and is owed $116,423 for services rendered and expenses incurred in these Chapter 11 cases. Dechert Partner Robert C. Heim tells the Court that based on information provided to him by the ACOM Debtors and the conflicts- check review that Dechert performed, the firm's attorneys: -- do not represent a party adverse to the ACOM Debtors in the Deloitte Litigation; -- do not and will not represent any party or hold any interest adverse to the ACOM Debtors with respect to the matters on which the firm is to be retained; and -- have no connection with any potential parties-in-interest that would affect the firm's ability to represent the ACOM Debtors in these cases. Mr. Heim discloses that Dechert represents The Bank of New York, as indenture trustee under that certain subordinated indenture dated January 23, 2001, which was later modified. Furthermore, Dechert is representing, on a confidential basis, a certain client with respect to a potential investment in the ACOM Debtors. The ACOM Debtors consented to Dechert's representation of The Bank of New York and the M&A Client. Likewise, The Bank of New York and the M&A Client consented to Dechert's representation of the Debtors in the Deloitte Litigation and as special counsel. Headquartered in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Settles Matters Raised by Pilots Association -------------------------------------------------------- Ernst & Young, Inc., reports that on Sept. 17, 2004, Air Canada and the Air Canada Pilots Association reached a mediated resolution regarding three issues raised by the Union. The parties were assisted by the Ontario Superior Court of Justice and Martin Teplitsky, Q.C. Mr. Teplitsky issued a consent award with respect to the ACPA's concerns. According to Murray A. McDonald, President of Ernst & Young, the ACPA presented three issues which the Union was not reasonably assured would be resolved by September 30, 2004: (1) Two Grievances regarding Aeroplan The ACPA has two Aeroplan grievances that remain unresolved. Both are crucial to the employment security of the ACPA's members. Both seek determinations under collective agreement provisions confirmed in the ACPA's restructured collective agreement. (2) Creation of Additional Specialty Companies Under a provision in the ACPA's collective agreement, Air Canada needs the ACPA's consent to create "specialty companies". When the new corporate structure is established pursuant to the Plan, new "specialty companies" in addition to Aeroplan will be created. Air Canada had not sought the ACPA's consent to their creation. (3) Respect for Restructured Collective Agreement Air Canada recently suggested that the Plan and Sanction Order might have extinguished certain of the ACPA's rights under its restructured collective agreement, and even under the Canada Labour Code. The ACPA does not agree. The first Aeroplan grievance is dated July 10, 2001, bearing the title "Policy Grievance Regarding Flying Associated with Redemption of Aeroplan Points" which states that: "The redemption of Aeroplan points results in flying performed by or on behalf of the Company. The Association files this policy grievance as a violation of Article 1 of the Collective Agreement for all such flying that is not performed by Air Canada pilots." The remedies requested include "an order that the Company has violated the Collective Agreement", "an order that the Company cease and desist from such violation" as well as an undefined claim for compensation. The second Aeroplan grievance is dated April 25, 2002, which states: "The Company has violated the Collective Agreement -- in particular, but not limited to Article 1 -- by creating a specialty company known as Aeroplan without the express consent of the Association." The remedies sought include a declaration "that Air Canada integrate Aeroplan back into Air Canada" and CN$1,000,000 in damages. The Aeroplan grievances were both filed before the CCAA Petition Date. The Monitor is not aware of any grievance having been filed by the ACPA or any of its members with respect to Air Canada's corporate structure. As a result of the settlement, the ACPA delivered to the Monitor an executed Clean Slate Certification, which will be held in escrow by the Monitor until closing. The execution and delivery of Clean Slate Certificates by the Applicants' labor unions in Canada before the Plan Implementation Date is a condition under the Applicants' Restated Standby Purchase Agreement with Deutsche Bank Securities, Inc. Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. (Air Canada Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMCAST INDUSTRIAL: Steel Partners Discloses 7.3% Equity Stake ------------------------------------------------------------- Amcast Industrial Corporation reported that, as of the close of business on Aug. 11, 2004, Steel Partners II beneficially owned 682,008 shares of the Company's common stock, constituting approximately 7.3% of the shares outstanding. As the general partner of Steel Partners II, Partners LLC may be deemed to beneficially own the 682,008 shares owned by Steel Partners II, constituting approximately 7.3% of the shares outstanding. As the sole executive officer and managing member of Partners LLC, which in turn is the general partner of Steel Partners II, Mr. Warren G. Lichtenstein may be deemed to beneficially own the 682,008 shares owned by Steel Partners II. Mr. Lichtenstein has sole voting and dispositive power with respect to the 682,008 shares owned by Steel Partners II by virtue of his authority to vote and dispose of such shares. The aggregate purchase price of the 682,008 shares owned by Steel Partners II is $2,523,503, including brokerage commissions. The shares owned by Steel Partners II were acquired with partnership funds. Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. The remaining businesses include Aluminum Wheels, Squeeze-Cast Components and Lee Brass. The Company serves the automotive, construction, and industrial sectors of the economy. At May 30, 2004, Amcast Industrial Corporation reports a stockholders' deficit of $40,094,000, compared to a deficit of $41,935,000 at Aug. 31, 2003. AMERICAN SKIING: Launches Sr. Debt Offer & Consent Solicitation --------------------------------------------------------------- American Skiing Company (OTC: AESK) has commenced a tender offer and consent solicitation for any and all of its $120 million principal amount of 12% Senior Subordinated Notes due in 2006. The total consideration (including the consent payment described) in connection with the offer is $1,015.63 per $1,000 principal amount plus accrued but unpaid interest for the Notes. The terms and conditions of the tender offer are set forth in an Offer to Purchase and Consent Solicitation Statement dated Oct. 12, 2004. In conjunction with the tender offer, American Skiing Company is soliciting the consent of holders of Notes to eliminate substantially all of the restrictive covenants and certain events of default under the indenture for the Notes. The consent payment of $20.00 per $1,000 principal amount of the Senior Subordinated Notes will be paid only for the Notes tendered prior to the Consent Date, which will be 5:00 p.m., New York City time, on Oct. 22, 2004, unless extended. Holders who tender their Notes into the tender offer after the Consent Date will receive the consideration described above less the consent payment amount. Notes may not be tendered without delivering consents to the amendments to the indenture for the Notes as described above. The tender offer commenced Tuesday will expire at 12:00 AM, midnight, New York City time, on Nov. 8, 2004, unless extended. Closing of the tender offer is subject to: (i) the consummation of any necessary debt financing to fund the total consideration for the Notes tendered and to refinance the existing credit facility of American Skiing Company; (ii) the receipt of the requisite consents from the holders of the Notes; and (iii) certain other customary conditions. If the conditions set forth above are met and American Skiing Company accepts the tendered Notes, holders who tender Notes prior to the Consent Date will receive payment for their Notes on or promptly after the date on which American Skiing Company closes its new credit facility, and all other tendering holders will receive payment on or promptly after the Expiration Date. A person owning $61,695,000 aggregate principal amount of Notes has agreed to tender its Notes and consent to the indenture amendments prior to the Consent Date. The Information Agent is Georgeson Shareholder Communications, Inc. Copies of documents may be obtained from Georgeson Shareholder Communications, Inc. at (212) 440-9800 or toll-free at (888) 264-6999. This news release is neither an offer to purchase nor a solicitation of an offer to sell the Notes. The offer is being made only by reference to the Offer to Purchase and Consent Solicitation Statement and related applicable Consent and Letter of Transmittal dated Oct. 12, 2004. About American Skiing Company Headquartered in Park City, Utah, American Skiing Company (OTC: AESK) is one of the largest operators of alpine ski, snowboard and golf resorts in the United States. Its resorts include Killington and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire; Steamboat in Colorado; and The Canyons in Utah. More information is available on American Skiing Company's Web site at http://www.peaks.com/ * * * As reported in the Troubled Company Reporter on July 15, 2004, Standard & Poor's Ratings Services revised its rating outlook on ski resort operator American Skiing Company to developing from negative. The developing outlook reflects improvement in credit measures from the restructuring of the company's real estate facilities and higher real estate sales, but also the company's significant refinancing risk as the majority of its debt will mature in 2006. In addition, the 'CCC' corporate credit rating on the Park City, Utah-based company was affirmed. As of April 25, 2004, American Skiing had total debt outstanding of $299.6 million. The restructuring involved the contribution of certain developmental land parcels into a new business venture called SP Land Company LLC in return for extinguishment of debt. In conjunction, Oak Hill Capital Partners contributed $25 million in debt from the company's real estate subsidiary as additional paid- in capital to American Skiing, resulting in a total reduction of $80.4 million in real estate debt and related accrued interest and fees. These changes will be reflected in the company's fiscal year-end financial statements. "With real estate defaults cured, a successful refinancing would likely result in a one-notch upgrade," said Standard & Poor's credit analyst Andy Liu. "Lack of progress in refinancing, especially in light of the business and financial risks of the ski resort business and the need to anticipate market conditions, will likely lead to a downgrade before 2006." AMERICAN TOWER: Fitch Assigns B+ Rating to Unsecured Notes ---------------------------------------------------------- Fitch Ratings initiated coverage of American Tower Corporation and assigned a 'B+' rating to its unsecured notes. Additionally, Fitch assigns a 'BB-' rating to American Towers Inc. senior subordinated debt and a 'BB' rating to American Towers' senior secured credit facility. The Rating Outlook for all ratings is Positive. Approximately $3.2 billion of debt securities are affected by these actions. The rating and Outlook reflect the risks associated with the high leverage and Fitch's expectations that American Tower will continue to meaningfully improve its credit profile over the next 18 months. The improvement in free cash flow will be driven by organic revenue growth relating to healthy wireless industry demand and reduced interest expense through debt reduction/refinancings. In addition, American Tower's cash flows derive support from the predictable long-term contracts associated with its leasing business and the expected sustainability of low capital investment as American Tower leverages the considerable scale advantages inherent within the tower business model. A key consideration in the rating is the expected growth in revenue associated with continuing demand for new collocations, as well as the stability related to its recurring revenue base. Fitch believes the predictable and contractual nature of American Tower's recurring revenue significantly reduces the volatility risk to its cash flow. Expectations are for wireless operators to build approximately 15,000 cell sites in 2004, roughly the same number of cell sites deployed in 2003, as carriers focus on improving network quality due to competitive reasons and increasing network capacity in response to strong subscriber growth. Minute of use growth has surged at rates greater than 20% over the past three years as mobile subscribers increased their reliance on wireless services due to the big bucket minute plans that have stimulated wireline substitution. Additionally, 3G data deployments by wireless operators should drive the need for site augmentations and new cell sites, although over the near term, Fitch does not expect tower operators to benefit materially from the initial deployment of 3G wireless data networks. Fitch believes American Tower will gain its fair share of revenue growth associated with these new tower lease-up opportunities. While consolidation among wireless operators remains a risk to the tower industry, Fitch does not expect the effect to be material to American Tower. With over 45,000 cell sites between AT&T Wireless and Cingular once the acquisition completes, the need to build new cell sites is reduced, and Fitch expects Cingular will decommission a modest number of cell sites as the company integrates the two networks. However, cell site decommissioning costs are high, estimated on average to be over $50,000 per site, including contractual lease obligations, effectively creating a hurdle for aggressive site decommissioning. Additionally, American Tower's exposure to overlapping cell sites is small in the case of the Cingular/ AT&T Wireless combination, estimated at 400 cell sites, or 1.5% of American Tower revenues. The timing of further consolidation in the wireless industry is also highly uncertain due to technology and ownership positions. Given the wireless growth opportunities, operating performance should continue to strengthen as American Tower leverages its operational scale to increase tower margins in excess of 70% by 2005. Free cash flow should similarly increase during this timeframe to greater than $200 million. Over the past 18 months, American Tower has aggressively focused on improving its capital structure to improve financial flexibility and lengthen maturities with total refinancings of $2.8 billion. Fitch expects the company to use its growing free cash flow to continue to reduce debt and take advantage of refinance opportunities, thereby further reducing interest expense over the next 24 months by at least $40 million. American Tower's liquidity is solid, owing to its free cash flow, cash balance of approximately $200 million at the end of the second quarter, $400 million of undrawn revolver capacity associated with its $1.1 billion credit facility, which matures in 2011, and a material degree of margin under its credit facility covenants. The company's maturity and put schedule is very manageable with $5 million in 2005, $43 million in 2006, and $56.5 million in 2007. It should be noted that the company has $275 million of 5% convertible notes maturing in 2010 that will likely be put to the company in 2007. Expectations are for American Tower to sustain capital investment at relatively low levels due to the longevity and low maintenance capital spending associated with tower assets. Likewise, American Tower will likely limit discretionary capital spending given their disciplined financial requirements when building new tower sites. In addition, Fitch believes acquisition risk is modest given the scale in its operations as the largest U.S. tower operator. Accordingly, American Tower's leverage, while still high, improved significantly with debt to LTM EBITDA of 7.7 times (x) at the end of the second quarter 2004, compared with 11.0x at the end of 2002. By the end of 2005, Fitch expects net debt to LTM EBITDA to be less than 6.0x, which management has indicated is within their target leverage range of 4x-6x. In Fitch's estimation, the stability of the tower industry compares favorably to the cable industry with similar revenue and cash flow expectations, as well as having superior margin, competitive factors, and churn and capital spending characteristics. The 'BB' rating of American Towers' credit facility, which is two notches above American Tower's unsecured debt, reflects the superior position in the capital structure and the excellent recovery prospects. Secured debt levels are a modest 21% of total debt, a significant decrease from 2002 levels when the secured debt to total debt was 44%. The credit facility is secured by liens on substantially all the assets of the company, borrowers, and restricted subsidiaries, as well as upstream guarantees from those subsidiaries. AMES: Wants to Sell Rocky Hill Property to T. Briggs for $3.7 Mil. ------------------------------------------------------------------ In August 2002, the U.S. Bankruptcy Court for the Southern District of New York authorized Ames Department Stores, Inc., to conduct going out of business sales. The GOB Sales have been completed and the Debtors have vacated their retail store locations and disposed the leases for the stores. As a result of their wind-down efforts, the Debtors no longer need the commercial real property with a corporate office building located at 2418 Main Street in Rocky Hill, Connecticut. Neil Berger, Esq., at Togut, Segal & Segal, in New York, relates that the Debtors have actively sought a purchaser for the Rocky Hill Property. The Property consists of 12.7 acres of land and the office building contains 228,000 square feet of space. Thomas Briggs has made an offer for the Property and, it is the best substantive offer made, as of October 1, 2004. Pursuant to a purchase agreement, Mr. Briggs agreed to buy the Property on these terms: (a) Assets to be purchased: * The Land and the Improvements and all easements, tenements, hereditaments, rights, licenses, privileges and appurtenances belonging or relating thereto, together with all right, title and interest of Debtor Ames Realty in and to any streets, roads, alleys or other public ways adjoining or serving the Land, including Ames Realty's rights to any land lying in the bed of any street, road, alley or other public way, open or proposed, and any strips, gores, culverts and rights- of-way adjoining or serving the Land. * All equipment and furnishings and all other tangible personal property owned by Ames Realty and located on the Premises on the Closing Date. (b) A $3,700,000 Purchase Price, payable in cash: * A $100,000 deposit has been delivered by Mr. Briggs to Ames Realty as a good faith deposit with the execution of the Purchase Agreement; and * The $3,600,000 balance will be paid in cash at the Closing, subject to prorations and adjustments as may be provided under the Purchase Agreement. Accordingly, the Debtors ask the Court to approve the sale of the Rocky Hill Property to Thomas Briggs, subject to higher and better offers. Mr. Berger relates that the Purchase Agreement is the product of significant arm's-length negotiation among the parties. The sale of the Property to Mr. Briggs or to another successful bidder that submits a higher offer will provide the greatest return to the Debtors' estates and creditors. The Sale will also eliminate further administrative costs to maintain the Property. The only recorded lien against the Property is a mortgage in favor of Kimco Funding, LLC, under the Revolving Credit, Guaranty and Security Agreement dated as of September 27, 2002, between the Debtors and Kimco. Kimco has consented to the sale of the Property to Mr. Briggs or to an entity that may submit a higher offer, and will release of its Liens against the Property. The Liens will transfer to the net proceeds of the sale. The Debtors also ask Judge Gerber to exempt the Sale from stamp or similar taxes under Section 1146(c) of the Bankruptcy Code. Form and Manner of Notice The Debtors have more than 5,000 creditors. Mr. Berger notes that it would be unduly burdensome to provide all of the Debtors' creditors with copies of the prefixed Scheduling Order, the Sale Motion and all of its exhibits. The Debtors propose to serve a copy of the Scheduling Order, once entered by the Court, the Sale Motion and all exhibits, including the Purchase Agreement, by regular, first-class mail on: * the Statutory Creditors' Committee; * Mr. Briggs; * Kimco; * the taxing authorities where the Property is located; * all known creditors asserting a lien, interest or other encumbrance on the Property; * all parties that have made written expressions of interest to the Debtors regarding the Property; and * the U.S. States Trustee. In compliance with Rules 2002 and 6004 of the Federal Rules of Bankruptcy Procedure and after consulting with Kimco and the Committee, the Debtors propose to provide additional notice of the Scheduling Order and the Hearing by publishing a notice. The Scheduling Order and Sale Notice will advise interested parties that written offers for the Property must be timely submitted in conformity with the Scheduling Order, and will make certain that the market will test the sufficiency of the consideration to be paid for the Property. Objections, if any, to the proposed sale or the Purchase Agreement must be made in writing and conform to the requirements of the Bankruptcy Code, the Bankruptcy Rules, and the Local Bankruptcy Rules and be electronically filed with copies delivered directly to the Court's Chambers, and served on: * the Debtors, * Rolando de Aquiar, Ames President, * Mr. Briggs, by its attorney, * the Committee, by its attorneys, * Kimco, by its attorneys, and * the U.S. Trustee, so as to be received no later than October 22, 2004. The Court will convene the Sale Hearing on October 27, 2004. Headquartered in Rocky Hill, Connecticut, Ames Department Stores, Inc., is a regional discount retailer that, through its subsidiaries, currently operates 452 stores in nineteen states and the District of Columbia. Ames Department Stores filed for chapter 11 protection on August 20, 2001 (Bankr. S.D.N.Y. Case No. 01-42217). Albert Togut, Esq., Frank A. Oswald, Esq. at Togut, Segal & Segal LLP and Martin J. Bienenstock, Esq., and Warren T. Buhle, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $1,901,573,000 in assets and $1,558,410,000 in liabilities. (AMES Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARCHANGEL DIAMOND: Management Baffled by Unusual Trading Activity ----------------------------------------------------------------- During the course of last week, there was an unusually high level of trading in the shares of Archangel Diamond Corporation and a significant increase in the Corporation's share price, the reasons for which are unclear to the Corporation. Management is unaware of any material change in the business and affairs of the Corporation, including the previously advised status of the claims being pursued by the Corporation in the Colorado and Stockholm courts. However, the Corporation continues to explore every avenue to resolve the dispute over the Verkhotina licence through discussion and negotiation, which the Corporation believes to be in the best interests of shareholders. As reported in the Troubled Company Reporter on Jul. 28, 2004, Archangel Diamond filed a petition for writ of certiorari with the Colorado Supreme Court. This follows the denial by the Colorado Court of Appeal of Archangel Diamond's Motion for Reconsideration, which was filed after the Court of Appeal, by judgment dated March 25, 2004, affirmed the ruling of the Denver District Court dismissing Archangel's claims against Arkhangelskgeoldobycha -- AGD -- and LUKoil for lack of personal jurisdiction. The Colorado Supreme Court is expected to rule within approximately 90 days of the date of filing of the writ on whether or not to accept the petition, i.e., by approximately October 16, 2004. If the petition is accepted, the Supreme Court will then consider de novo ADC's appeal against the ruling of the Denver District Court dismissing Archangel's claims against AGD and LUKoil for lack of personal jurisdiction. Archangel Diamond Corporation is an international diamond exploration company that currently owns a 40% interest in Almazny Bereg, a Russian international open joint stock company, which conducts exploration on the Verkhotina license area in the Oblast of Arkhangel'sk in northwestern Russia. De Beers Consolidated Mines Ltd. recently stated in a technical assessment study based on all exploration work completed through November 3, 1999, that the Grib Pipe, located within the Verkhotina license area, has an estimated resource of approximately 98 million tonnes of kimberlite to a depth of 500 meters, containing some 67 million carats of recoverable +1 mm diamonds at an average mining grade of 69 carats per hundred tonnes and an average life-of-mine revenue value of US$79 per carat. For the past three years, Archangel has persistently sought political and legal assistance in an effort to cause its Russian joint venture partner to transfer the Verkhotina Diamond License, pursuant to underlying contracts, to Almazny Bereg. As of June 30, 2004, Archangel Diamond's stockholders' deficit widened to $1,168,275, compared to a $704,570 deficit at Dec. 31, 2003. ASG CONSOLIDATED: Moody's Junks $125 Million Senior Discount Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Caa1 rating to the prospective senior discount note issue of ASG Consolidated LLC, an intermediate holding company parent of American Seafoods Group LLC. Moody's also affirmed American Seafood's senior secured and subordinated ratings, and the enterprise's senior implied rating. The ratings outlook is stable. Gross proceeds of $125 million from the holding company discount note will fund a $79 million dividend to existing shareholders, redeem $38 million of mezzanine obligations, and pay fees and other expenses. The senior discount note will not pay cash interest for the first four years, and will accrete to approximately $172 million by the time it becomes cash pay. Moody's ratings actions were: -- ASG Consolidated LLC * $125 million senior discount note, due 2011 -- Caa1 assigned, -- American Seafoods Group LLC * $75 million senior secured revolving credit, maturing 2007 -- Ba3 affirmed, * $90 million senior secured term loan A, maturing 2007 -- Ba3 affirmed, * $280 million senior secured term loan B, maturing 2009 -- Ba3 affirmed, * $175 million senior subordinated notes, due 2010 -- B3 affirmed, * Senior Implied Rating (moved to ASG Consolidated LLC) -- B1 affirmed, * Unsecured Issuer Rating (moved to ASG Consolidated LLC) -- Caa1 assigned, * Rating Outlook -- Stable. The rating assigned to the prospective ASG Consolidated company discount note reflects its structural subordination to substantial debt and other liabilities at American Seafood. The affirmation of American Seafoods' existing ratings considers the negative impact on the enterprise's credit profile from the prospective note issue and dividend of proceeds, which will add to debt, increase pro forma leverage to 5.6-5.8x adjusted EBITDA, and become an accreting debt liability over the next four years. The ratings affirmations, however, also take into account Moody's expectation that American Seafoods will generate sufficient free cash flow to allow modest debt and leverage reduction during the next four years and will retain adequate financial flexibility to accommodate variations in earnings. American Seafoods' ratings are limited by high levels of debt and leverage. Moody's expects that the company's controlling shareholders will continue to periodically recapitalize to pay cash distributions, which will keep leverage at high levels over time. In addition, the prospective holding company notes will not pay cash interest for the first four years, but will be an accreting debt liability at the rate of about $15 to $20 million per year, restraining the potential pace of de-leveraging accomplished through pay-down of other debt. American Seafoods' ratings are also limited by the commodity nature of its products. The company's revenues and earnings are exposed to volatility from pricing fluctuations in response to overall market supply versus demand levels, variation in the quality of fish harvested and yield and quality of products processed, and seasonality of harvesting and sales, particularly for roe sold into Japan, one of its highest margin products. Approximately 25% of the company's revenues are denominated in yen, with the currency exposure largely hedged on an annual basis. The ratings also take into account that American Seafoods has substantial concentration on a single fishery (Bering Sea pollock), which has limited growth potential because statutes and regulations limit increases in pollock quota volumes. The ratings consequently consider the likelihood of acquisition activity and investment to continue to grow beyond primarily pollock operations. In addition, the ratings recognize the inherent natural and food safety risks affecting the business, including disease, weather, the health and size of the fish population, and product liability. The ratings are supported by American Seafoods' leading position in the Bering Sea pollock fishery. The company benefits from: (i) a relatively reliable supply of fish, (ii) favorable regulations governing the fishery, and (iii) resulting barriers to entry. Pollock-based products account for the majority of American Seafood's revenues and the bulk of its earnings. Current statutes and regulations governing the Bering Sea pollock fishery limit catcher-processor quota allocations to nineteen specifically named vessels, seven of which are owned and operated by American Seafoods. American Seafoods' quota allocation is nearly 2.5 times larger than the second largest operator, giving it a 45% catcher- processor market share. Its large share of the fishery quota and the favorable regulatory framework have enabled American Seafoods to improve the efficiency of its operations. In addition, the Bering Sea pollock fishery has been well managed and is expected to provide a relatively stable volume of allowed catch. Pollock has a wide range of product applications and accounts for the largest portion of fish consumption globally, which has been growing modestly. The company has a diverse customer base and has been expanding its distribution reach. Diversification initiatives to date have been relatively modest in scale. The stable ratings outlook is based on Moody's expectation that leverage can be gradually reduced from free cash flow even if earnings are moderately weaker than during the last couple of years. Material reduction in leverage (to levels below to 4.5x EBITDA) could support positive ratings actions, but Moody's expects that if leverage were to be reduced, the shareholders would likely re-leverage to fund additional distributions. If leverage increases much above 5.8x, either from earnings weakness or additional shareholder distributions, the ratings would be pressured. These factors also pressure the ratings: (i) changes in the regulations governing the Bering Sea pollock fishery, (ii) reduction in quota allocations from community development groups when current contracts expire at the end of 2005, or (iii) significant increases in the cost of maintaining access to the quota allocations. The recapitalization would increase American Seafoods' enterprise debt to $626 million (pro forma at 9/30/04), from $501 million at 9/30/04. Moody's estimates that pro forma leverage would increase to about 5.6x to 5.8x adjusted EBITDA. Pro forma book equity would be a deficit of about $187 million, reflecting the dividend, expected write-down of Southern Pride Catfish goodwill, and the write-off of fees and expenses related to the cancelled income securities transaction. Free cash flow after interest expense, capital spending and tax distributions to shareholders would be in the range of 7-8% of outstanding debt, indicating some ability to de-leverage through debt pay-down over the next four years unless earnings are pressured further. LTM EBITDA less capital spending would cover pro forma interest expense 1.7x (2.4x for cash interest expense). Overall, liquidity appears adequate, although the amendment to the leverage covenant of the credit agreement provides a narrow EBITDA cushion at current EBITDA levels. The company is exposed to rising interest rates on its credit facilities up to a LIBOR level of 5%, when its exposure on $93.5 million of principal is capped. The company has liquidity requirements associated with its yen hedging activities, for which it has issued $17 million of letters of credit under its revolver, and seasonal swings in working capital and earnings. At September 30, 2004, during a seasonally heavy working capital period, the company had approximately $45 million of availability under its revolver commitment. The Ba3 rating on American Seafood's senior secured credit facilities reflects their beneficial position in the capital structure, contractually and effectively ahead of the senior subordinated notes, and structurally ahead of the holding company discount notes. The facilities benefit from subsidiary and parent guarantees and are secured by all the capital stock and a perfected security interest in substantially all the assets of American Seafoods Group LLC and its subsidiaries, including American Seafoods' fishing rights and license agreements. Moody's expects sufficient collateral coverage in a distressed scenario. Coverage would partially rely on the market value of the company's fishery rights, which is supported by the statutes and regulations governing the Bering Sea pollock fishery. The B3 rating on the senior subordinated notes is notched down to reflect their effective and contractual subordination to ASG's senior secured debt. The notes are guaranteed by subsidiaries of American Seafoods Group LLC. The Caa1 rating on the holding company discount notes reflects their structural subordination to the senior secured and senior subordinated debt at American Seafoods Group LLC. Coverage of the notes from remaining asset values is unlikely in a distressed scenario. Enterprise value coverage would rely on realization of a relatively high multiple of earnings. American Seafoods Group LLC has headquarters in Seattle, Washington. The company had revenues of $411 million in 2003. ASG CONSOLIDATED: S&P Assigns B- Rating to Planned $125 Mil. Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B-' rating to Seattle, Washington-based ASG Consolidated LLC's proposed $125 million senior discount notes due 2011. Standard & Poor's also assigned its 'B+' corporate credit rating to ASG Consolidated, the sole equity owner of American Seafoods Group LLC. In addition, Standard & Poor's lowered its ratings on American Seafoods, including its corporate credit rating to 'B+' from 'BB-', and removed them from CreditWatch where they were initially placed on June 5, 2003. The outlook is stable. About $610 million of lease-adjusted total debt is expected to be outstanding at closing. "The downgrade reflects [American Seafood's] increased consolidated debt burden resulting from the proposed transaction, as well as a very aggressive financial policy reflecting the dividend and the attempted, and now cancelled, transaction involving Income Deposit Securities," said Standard & Poor's credit analyst Paul Blake. ASG Consolidated's new discount notes will add $94 million of incremental debt that weaken credit protection measures on a consolidated basis. Furthermore, the additional debt limits the company's ability to weather potential operating challenges and also reduces the likelihood for future deleveraging. Approximately $38 million of the proceeds from the new notes will be used to repurchase all the outstanding preferred equity and notes held by Wasserstein & Co., an equity sponsor. The rest will be used to pay a dividend to equity holders and cover transaction fees. For analytical purposes, Standard & Poor's views ASG Consolidated and American Seafood as one economic entity. The new ratings are based on preliminary terms and are subject to review upon final documentation. ATLANTIC MUTUAL: Moody's Reviews B1 Rating on Surplus Notes ----------------------------------------------------------- Moody's Investors Service placed the insurance financial strength and surplus note ratings of Atlantic Mutual Insurance Company and its rated affiliates on review for possible downgrade. The rating agency stated that the rating action reflects a number of recent events and trends, including: (i) the commutation of one of the company's reinsurance agreements, (ii) lower than expected earnings due to restructuring charges and catastrophe losses, and (iii) lower than expected statutory capital. Elaborating on its rationale to review the ratings for possible downgrade, Moody's noted that the commutation of one of the company's reinsurance agreements will negatively impact statutory surplus by $64.5 million in the third quarter of 2004, as disclosed in the company's second quarter statutory filing. While Moody's has considered this reinsurance agreement to be a form of debt, due to its retrospective funding nature, and does not consider the commutation a reduction in economic capital, the rating agency believes that the reduction in statutory surplus places the company in a less favorable position with respect to regulatory capital, and thus creates greater regulatory risk. This risk is especially pronounced with respect to the payment of interest on the company's surplus notes, which require regulatory approval. The rating agency also noted that while Atlantic Mutual has replaced its previous reinsurance coverage with another, more comprehensive cover, the new reinsurance agreement requires the company to retain an increased level of adverse loss reserve development risk. In addition, the company has reported significant adverse reserve development over the past several years. During the review process, Moody's will focus on: (i) the group's capital adequacy position, (ii) its future earnings trends, and (iii) the prospects for its ongoing personal lines business. With respect to earnings trends, Moody's believes that earnings will continue to be volatile as the company transitions from a multi-line writer to a much smaller personal lines writer. Moody's expects that it will conclude its review upon completion of third party reserve reviews, and after considering the ongoing earnings potential of the group. These ratings were placed on review for possible downgrade: -- Atlantic Mutual Insurance Company: * surplus notes at B1, * insurance financial strength at Baa3; -- Centennial Insurance Company * insurance financial strength at Baa3; -- Atlantic Lloyd's Insurance Company of Texas * insurance financial strength at Baa3. Atlantic Mutual Insurance Company, based in New York, reported a year to date statutory net loss of $18.1 million as of June 30, 2004 and policyholders' surplus of $322.3 million as of June 30, 2004. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to punctually repay senior policyholder claims and obligations. AVADO BRANDS: Has Until January 31 to Decide on Leases ------------------------------------------------------ The Honorable Judge Steven A. Felsenthal of the U.S. Bankrupty Court for the Northern District of Texas gave his stamp of approval to Avado Brands, Inc., and its debtor-affiliates' application to extend, until Jan. 31, 2005, their time to decide whether to assume, assume and assign, or reject unexpired nonresidential real property leases pursuant to Section 365(d)(4) of the Bankruptcy Code. The Debtors submit that at this point in their restructuring, they are not yet in a position to make final determinations about which of the leased premises will be necessary to their business plans and which unexpired leases should be assumed, assigned or rejected to maximize value of their estates. Avado and its affiliates stress that premature assumption or rejection would disrupt sales and other revenue-generating activities and would impair their ability to administer and reorganize their businesses. Headquartered in Madison, Georgia, Avado Brands, Inc., owns and operates two proprietary brands comprised of 102 Don Pablo's Mexican Kitchens and 37 Hops Grillhouse & Breweries. The Company and its debtor-affiliates filed a voluntary chapter 11 petition on February 4, 2004 (Bankr. N.D. Tex. Case No. 04-31555). Deborah D. Williamson, Esq., and Thomas Rice, Esq., at Cox & Smith Incorporated, represent the Debtors in their restructuring efforts. Miller Buckfire Lewis Ying & Co., LLC, is providing financial advisory services. DDJ Capital is Avado's DIP lender. When the Debtors filed for protection from its creditors, they listed $228,032,000 in total assets and $263,497,000 in total debts. AVADO BRANDS: Court Grants Extension of Exclusivity Period ---------------------------------------------------------- Avado Brands, Inc., and its debtor-affiliates sought and obtained an extension from the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, of their exclusive period to file a plan of reorganization through Dec. 15, 2004. The Debtors also have the exclusive right to solicit acceptances of that Plan through Feb. 15, 2005. Judge Steven A. Felsenthal granted the extension to give the Debtors more time to ascertain the potential success of their new business plans. The Debtors launched new business strategies which include remodeling their Don Pablo restaurants and re- imaging their Hops brand. The initial results of the Debtors business plans are very positive and show gross sales increases. The Debtors convinced the Court that the extension will enable the restaurant operator to complete further progress and smooth the path to a successful plan of reorganization. Headquartered in Madison, Georgia, Avado Brands, Inc., owns and operates two proprietary brands comprised of 102 Don Pablo's Mexican Kitchens and 37 Hops Grillhouse & Breweries. The Company and its debtor-affiliates filed a voluntary chapter 11 petition on February 4, 2004 (Bankr. N.D. Tex. Case No. 04-31555). Deborah D. Williamson, Esq., and Thomas Rice, Esq., at Cox & Smith Incorporated, represent the Debtors in their restructuring efforts. Miller Buckfire Lewis Ying & Co., LLC, is providing financial advisory services. DDJ Capital is Avado's DIP lender. When the Debtors filed for protection from its creditors, they listed $228,032,000 in total assets and $263,497,000 in total debts. AVAYA INC: Will Release 4th Quarter 2004 Results on Oct. 26 ----------------------------------------------------------- Avaya, Inc., (NYSE: AV) plans to report fiscal fourth quarter and fiscal year 2004 results after the market close on Tuesday, Oct. 26, 2004. Avaya also will host a conference call to discuss its financial results at 5:00 p.m. Eastern District Time on Oct. 26, 2004. A listen-only broadcast of the conference call and presentation notes can be accessed on the company's Web site at http://www.avaya.com/investors Any person may listen to a replay of the conference call beginning at 8:00 p.m. EDT on October 26 through November 2, by dialing 800-642-1687 within the United States and 706-645-9291 outside the United States. The replay access code is 1070386. Avaya, Inc., designs, builds and manages communications networks for more than 1 million businesses worldwide, including 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. Visit the Avaya Web site at http://www.avaya.com/ * * * As reported in the Troubled Company Reporter on May 4, 2004, edition, Standard & Poor's Rating's Services revised its outlook on the rating of Avaya Inc. to positive from stable. The 'B+' corporate credit and senior secured debt and 'B' senior unsecured debt ratings were affirmed. The outlook revision reflects improved profitability in recent quarters combined with reduced debt, improving debt protection metrics and increased balance sheet liquidity. BANC OF AMERICA: Fitch Places Low-B Ratings on Six Cert. Classes ---------------------------------------------------------------- Banc of America Commercial Mortgage Inc., series 2004-4, commercial mortgage pass-through certificates are rated by Fitch Ratings: -- $33,000,000 class A-1 'AAA'; -- $48,000,000 class A-2 'AAA'; -- $240,000,000 class A-3 'AAA'; -- $225,000,000 class A-4 'AAA'; -- $107,000,000 class A-5 'AAA'; -- $272,199,171 class A-6 'AAA'; -- $202,345,000 class A-1A 'AAA'; -- $1,296,027,783 class XC* 'AAA'; -- $1,264,855,847 class XP* 'AAA'; -- $35,640,764 class B 'AA'; -- $11,340,243 class C 'AA-'; -- $21,060,451 class D 'A'; -- $9,720,209 class E 'A-'; -- $16,200,347 class F 'BBB+'; -- $11,340,243 class G 'BBB'; -- $16,200,347 class H 'BBB-'; -- $6,480,139 class J 'BB+'; -- $6,480,139 class K 'BB'; -- $6,480,139 class L 'BB-'; -- $3,240,069 class M 'B+'; -- $3,240,069 class N 'B'; -- $4,860,105 class O 'B-'; -- $16,200,348 class P 'NR'; -- $103,000,000 class BC 'NR'; -- $2,270,791 class DM-A 'A+'; -- $4,778,618 class DM-B 'A'; -- $3,845,294 class DM-C 'A-'; -- $4,093,378 class DM-D 'BBB+'; -- $4,366,269 class DM-E 'BBB'; -- $3,952,582 class DM-F 'BBB-'; -- $3,693,068 class DM-G 'BBB-'. * Notional amount and interest only. Classes A-1, A-2, A-3, A-4, A-5, A-6, A-1A, XP, B, C, and D are offered publicly, while classes XC, E, F, G, H, J, K, L, M, N, O, P, BC, DM-A, DM-B, DM-C, DM-D, DM-E, DM-F, and DM-G are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 108 fixed-rate loans having an aggregate principal balance of approximately $1,296,027,784, as of the cutoff date. BBMF CORP: Inks JPY300 Million Purchase Agreement with Atlus Co. ---------------------------------------------------------------- BBMF Corporation (f/k/a eChex Worldwide Corp.) signed an agreement to purchase the mobile distribution business of Atlus Co., Ltd., a corporation organized and existing under the laws of Japan, for an aggregate purchase price of 300,000,000 Japanese Yen. Completion and delivery was scheduled to take place on Sept. 30, 2004. Under the Agreement, the Company has been granted an exclusive, worldwide license to use Atlus' game contents, characters and the Atlus trademark (with the exception of certain mobile game contents, which license BBMF has received on a non-exclusive basis) pursuant to the Agreement. Atlus will receive from BBMF a percent of revenue earned from game distribution. The Acquired Assets were valued based on their current fair market value as mutually agreed by the parties. The source of the funds to be paid by the Company under the Agreement will be the Company's internal cash. Change of Accountants BBMF Corporation has changed the nature of its business operations since undergoing its reorganization on Apr. 1, 2004, as disclosed by the Company in its Form 8-K filed with the Securities and Exchange Commission. The Company has, therefore, received notice that effective as of Aug. 12, 2004, Mr. Michael F. Cronin, CPA, has resigned as the independent auditor of the Company. Mr. Cronin has informed the Company that the reasons for his actions are not related to any disagreements between the Company and Mr. Cronin on matters of accounting principles, financial statement disclosure or auditing scope or procedures. Mr. Cronin's reports on the Company's consolidated financial statements for each of the past two fiscal years did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles. On August 12, 2004, the Board of Directors appointed BDO McCabe Lo & Company to serve as the Company's auditors for the quarter ending June 30, 2004, and until further changes are necessary. The change in auditors is effective immediately. BDO had previously served as auditors for Kesrich (Hong Kong) Limited, which is the primary operating subsidiary of BBMF Group Inc., a company organized under the law of the British Virgin Islands. BBMF Group is a wholly owned subsidiary of the Company. BDO therefore provided audited balance sheets for Kesrich as of Dec. 31, 2003 and 2002, and the related statements of operations, stockholders' deficit and cash flows for the year ended December ECHEX 31, 2003, the period from April 6, 2001 (Kesrich's date of inception) to December 31, 2002 and the period from April 6, 2001 to December 31, 2003. These audited financial statements were previously filed with the Commission in an amended Current Report on Form 8-K, for the events beginning April 1, 2004, as filed with the Commission on June 15, 2004. Mr. Cronin was not consulted on any of the aforementioned issues. About Atlus Atlus Co., Ltd., is primarily engaged in the business of development and sales of software products for video games, on- line computer games and mobile games, and of operation of mobile game sites for mobile phones. Atlus is currently a shareholder of the Company and will own approximately 9.4% of the Company's outstanding shares after completion of the private placement. About BBMF BBMF Corp. (f/k/a eChex Worldwide Corp.) develops and distributes mobile games and other mobile applications. The Company focuses on JAVA mobile games and downloads games in JAVA, BREW, WAP and SMS. BBMF also develops and distributes mobile Karaoke, ringtones, and truetones. The Company markets worldwide. At June 30, 2004, BBMF Corp.'s balance sheet showed a $1,313,842 stockholders' deficit, compared to a $599,181 deficit at Dec. 31, 2003. BEAR STEARNS: S&P Places Low-B Ratings on Six Certificate Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Bear Stearns Commercial Mortgage Securities Trust 2004- TOP16's $1.16 billion commercial mortgage pass-through certificates series 2004-TOP16. The preliminary ratings are based on information as of October 12, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: (1) the credit support provided by the subordinate classes of certificates, (2) the liquidity provided by the trustee, (3) the economics of the underlying loans, and (4) the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-4, B, C, D, and X-2 are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.99x, a beginning LTV of 78.6%, and an ending LTV of 67.2%. Preliminary Ratings Assigned Bear Stearns Commercial Mortgage Securities Trust 2004-TOP16 Class Rating Amount (mil. $) ----- ------ --------------- A-1 AAA 20,000,000 A-2 AAA 60,000,000 A-3 AAA 100,000,000 A-4 AAA 100,000,000 A-5 AAA 80,000,000 A-6 AAA 676,075,000 B AA 20,231,000 C AA- 13,005,000 D A 13,005,000 E A- 15,895,000 F BBB+ 10,115,000 G BBB 11,560,000 H BBB- 10,115,000 J BB+ 2,891,000 K BB 4,335,000 L BB- 5,780,000 M B+ 1,445,000 N B 1,445,000 O B- 2,890,000 P N.R. 7,225,259 X-1* AAA 1,156,012,259** X-2* AAA 1,108,051,000** * Interest-only class ** Notional amount N.R. - Not rated BOMBARDIER: Doubts Spur Fitch to Put B Ratings on Watch Negative ---------------------------------------------------------------- Fitch Ratings placed Bombardier's and Bombardier Capital's ratings on Rating Watch Negative. Fitch currently rates Bombardier's and Bombardier Capital's senior unsecured debt and credit facilities 'BBB-', commercial paper programs 'F3', and Bombardier's preferred stock 'BB+'. Due to the existence of a support agreement and demonstrated support by the parent, Bombardier Capital's ratings are linked to those of Bombardier. These ratings cover approximately $6.1 billion of debt and preferred stock. The Negative Rating Watch is based on significant uncertainties present in Bombardier's regional jet -- RJ -- operations and transportation unit -- BT, as well as continuing weak operating margins. Fitch believes that it will be able to resolve the Negative Rating Watch in the next three to six months. Fitch is concerned that further production rate reductions are possible in Bombardier's RJ operations due to low backlog levels (1.5 years worth of production), poor order visibility, and backlog risks related to the weak financial conditions of several large airline customers, including Delta Airlines, US Airways, United Airlines, and Independence Air. Delta is currently formulating a restructuring plan that could lead to a bankruptcy filing. Other concerns related to Bombardier's RJ operation include competitive pressures from Embraer's new 70-100 seat aircraft family, the cash requirements of a possible 100-seat aircraft program, and the weak aircraft financing market. The fiscal 2006 (F2006) production rate that Bombardier announced last week for CRJ200's was already incorporated into Fitch's ratings, but Fitch had expected production of CRJ700's and CRJ900's to be higher. Further production rate reductions will not necessarily lead to negative rating actions, but will be evaluated on the basis of several factors including how Bombardier manages the reductions and the timing and magnitude of the reductions. RJ production reductions will also be evaluated in the context of Bombardier's overall business, given that business jet improvements and the BT restructuring could offset the impact of lower RJ deliveries. Margin improvement continues to be a key credit issue for Bombardier's debt ratings. Margins at BT were 2.8% in the second quarter, and the company has estimated that margins will be approximately this level for the next six quarters. At Bombardier Aerospace, margins were negative (-0.6%) for the second consecutive quarter, but improved sequentially. Bombardier Aerospace's margins continue to be pressured by sales incentives, foreign currency, increased depreciation and amortization related to new business jet programs, and higher interest expense allocation due to the debt issuance earlier this year. Given Bombardier's level of debt compared to revenues, relatively modest improvement in margins will drive noticeable improvement in credit protection measures. However, failure to improve margins or the discovery of additional problem contracts at BT will likely lead to a rating action. Other general rating concerns include low free cash flow, the potential need for further restructuring actions, the uncertain timing of margin improvement, the impact of exchange rate fluctuations on financial results and planning, and the sizable pension deficit. General factors supporting the ratings include Bombardier's liquidity position, the improvement in the business jet market, better-than-expected free cash flow in the first half of F2005, significant progress on the multi-year restructuring plan, leading market positions, the more conservative strategy at Bombardier Capital, the large backlog at BT, new senior management, and the cost cutting actions at both Bombardier Aerospace and BT. Bombardier's liquidity remained strong at the end of the second quarter, with $2.2 billion of cash and $1.6 billion of credit facility availability. An additional $600 million is available under Bombardier Capital's credit facilities. Fitch notes that approximately $1.2 billion of the cash on hand at Bombardier is related to advances and subordinated loans extended by Bombardier Capital to the parent. Fitch expects Bombardier to pay down some of the advances in the third quarter so that Bombardier Capital can retire approximately $500 million of maturing debt. Fitch anticipates that some additional Bombardier Capital advances will be repaid in Q3 to fund increased assets, which declined temporarily last quarter due to seasonal factors. Fitch expects Bombardier to be cash positive in the second half and for the year despite likely increases in capital expenditures and restructuring outflows during the next two quarters. Bombardier is seeing improved demand and better pricing for its business jets, consistent with industry-wide conditions. Orders were up significantly in the first half of the year, and deliveries will likely exceed the company's plan this year. The magnitude of the apparent recovery in Bombardier's business jet operations is greater than the expectations incorporated into Fitch's ratings of Bombardier, and the recovery could offset some of the risk related to Bombardier's RJ operation. CARBIZ INC: Closes Issuance of $1,030,922 Convertible Debenture --------------------------------------------------------------- Carl Ritter, Chief Executive Officer of Carbiz, Inc., ("CZ" TSX:V) reported the closing of a brokered 5% convertible debenture financing, pursuant to which an aggregate of $1,030,922 principal amount of Debentures were issued. Carbiz seeks to use the proceeds of the Financing to accelerate the expansion of its credit center business. As was previously announced, Carbiz also seeks to list its common shares for trading on the United States Over-The-Counter Bulletin Board. Pursuant to the terms of the Financing, upon listing on the OTCBB and concurrently delisting from the TSX Venture Exchange, the principal amount of the Debentures and all accrued interest will be automatically converted into units of Carbiz at a conversion price of CDN$0.22 per Unit. Each Unit will consist of one common share, one class A common share purchase warrant and one-half of one class B common share purchase warrant. Each Class A Warrant may be exercised to acquire one common share at a price of CDN$0.23 per share on or before the date that is five years from the date of issuance of the Class A Warrant. Each whole Class B Warrant may be exercised to acquire one common share at a price of CDN$0.30 per share on or before the date that is five years from the date of issuance of the Class B Warrant. In consideration for the services provided by the placement agent for the Financing, the Agent received a cash commission equal to 10% of the gross proceeds raised by the Agent. The Agent is also entitled to receive a cash fee equal to 2% of the gross proceeds from the subsequent exercise within twelve months from the Conversion Date of any Class A Warrants or Class B Warrants that were issued upon conversion of Debentures placed by the Agent. In addition, the Agent will receive that number of Agent's units that is equal to 10% of the number of Units to be issued on the Conversion Date in respect of Debentures placed by the Agent. Each Agent's Unit will consist of one Agent's first common share purchase warrant and one-Agent's second common share purchase warrant. Each Agent's First Warrant may be exercised to acquire one common share at a price of CDN$0.22 per share on or before the date that is five years from the Conversion Date. Each Agent's Second Warrant may be exercised to acquire one common share at a price of CDN$0.23 per share on or before the date that is five years from the Conversion Date. Carbiz is a recognized leader in software and business consulting to the used-car industry. In 2004, the Carbiz began leveraging its industry knowledge and software products into company-owned credit centers, which are used-car dealerships that offer financing to customers with poor credit. Carbiz opened its first credit center in Palmetto, Florida in May 2004 and plans to open a second credit center in St. Petersburg, Florida in November 2004 and seeks to open a third credit center in the Tampa, Florida area in early 2005. Each credit center originates, funds, manages and collects loans for vehicles sold to customers. "We expect that Florida will be our focus for expansion in the near future," said Richard Lye, President of Carbiz. "The success of our credit center business is based on a philosophy of treating credit-challenged customers with dignity and respect. We combine this customer-friendly approach with interest rates below the industry average, which encourages customer loyalty and results in successful collections that translate to the Carbiz's bottom line." Based in Sarasota, Florida and Toronto, Canada, Carbiz is a leading provider of Internet and software solutions to the North American automotive industry. Carbiz's suite of business solutions includes dealer software products focused on the finance, sub-prime finance and "buy-here, pay-here" markets. Carbiz has 40 full-time employees and provides finance solutions, lead generation, Internet capability and training services. Carbiz supports more than 3,000 dealers with a recurring revenue model, in addition to individual product sales. Carbiz also provides a tax refund service and refund anticipation loans at a facility in Clearwater, Florida that employs 90 people on a seasonal basis. For the six-month period ending July 31, 2004, Carbiz reported $2.3 million in revenues, down $165,000 from a year earlier, and a $1.1 million net loss. The Company's July 31, 2004, balance sheet shows $1.2 million in total assets and liabilities exceeding assets by $626,000. CATHOLIC CHURCH: Tucson Disclosure Statement Hearing on Oct. 25 --------------------------------------------------------------- Judge Marlar will convene a hearing at 10:00 a.m. on Oct. 25, 2004, to review the Disclosure Statement filed by the Roman Catholic Church of the Diocese of Tucson. At that hearing, Judge Marlar will determine whether the Disclosure Statement contains adequate information as required by Section 1125 of the Bankruptcy Code to enable creditors to make informed decisions about whether to vote to accept or reject the Diocese's Plan of Reorganization. If Judge Marlar finds that the disclosure document is adequate, he will approve it for distribution to the Diocese's creditors. Objections to the adequacy of the Diocese's Disclosure Statement, if any, must be filed and served by October 20, 2004. Only timely filed and served written objections will be considered. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP represent the Portland Archdiocese in its restructuring efforts. Portland's Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHAPCO CARTON: Hires Kugman Associates as Financial Advisor ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois gave Chapco Carton Company permission to employ Kugman Associates, Inc., as its financial advisor. Kugman Associates will: a) give Chapco Carton a complete financial evaluation and analysis of advisable restructuring alternatives; b) assist Chapco Carton in determining its financial needs and objectives in connection with its powers and duties as debtor in possession in the continued management of its property and operation of its business; c) review and recommend improvements, as necessary, in Chapco Carton's operation of its business, including preparation of bids and implementation of costing controls in connection with the performance of Chapco Carton's obligations under existing and prospective contracts; d) assist Chapco Carton in the negotiation, formulation and determination of a feasible plan of reorganization; e) aid Chapco Carton in exploring the means of obtaining additional debt or equity financing; and f) take other actions and as may be necessary on behalf of Chapco Carton in connection with its chapter 11 case. Dale G. Marcus, a Principal and Executive Vice-President at Kugman Associates, discloses that the Debtor paid a $147,500 retainer. Mr. Marcus will bill the Debtor $305 per hour for his services. Mr. Marcus reports Kugman Associates' professionals bill: Professional Designation Hourly Rate: ------------ ----------- ----------- Brent L. Kugman Principal/President $305 William Bryant Principal/Vice-President 275 James McCarthy Principal/Vice-President 270 Debra Percy Senior Consultant 200 Christine Farkas Senior Consultant 185 Kugman Associates does not represent any interest adverse to the Debtor or its estate. Headquartered in Bolingbrook, Illinois, Chapco Carton Company -- http://www.chapcocarton.com/-- manufactures, sells and distributes folding cartons used for retail packaging in food, candy, office supplies and automotive parts industries. The Company filed for chapter 11 protection on July 13, 2004 (Bankr. N.D. Ill. Case No. 04-26000). Chad H. Gettleman, Esq., at Adelman Gettleman & Merens, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $15,232,256 in assets and $19,220,379 in liabilities. COMMERCE ONE: Seeks Court Nod to Walk Away from 5 Useless Leases ---------------------------------------------------------------- Commerce One Inc. and its debtor-affiliate ask the U.S. Bankruptcy Court for the Northern District of California, San Francisco Division, for permission to reject certain nonresidential real property leases. The Debtors want to reject three burdensome leases and sub-leases: Property Location Currently Subleased to ----------------- ---------------------- Atlanta, Georgia Ellis Dawns Properties Ann Arbor, Michigan Gene Codes Corporation Austin, Texas Vieo, Inc. Prior to the Petition Date, the Debtors entered into agreements with Equity Office Properties, the lessor of the Debtors' San Francisco and Santa Monica locations, to terminate the San Francisco lease, assign the Santa Monica lease, and vacate both locations by October 31, 2004. As those two leases will expire by their own terms on October 31, 2004, the Debtors are not seeking their rejection. Headquartered in San Francisco, California, Commerce One, Inc. -- http://www.commerceone.com/-- provides software services that enable businesses to conduct commerce over the Internet. Commerce One, Inc., and its wholly owned subsidiary, Commerce One Operations, Inc., filed for chapter 11 protection on Oct. 6, 2004 (Bankr. N.D. Calif. Case Nos. 04-32820 and 04-32821). Doris A. Kaelin, Esq., and Lovee Sarenas, Esq., at the Law Offices of Murray and Murray, represent the Debtors. When the Debtors filed for bankruptcy, they listed $14,531,000 in total assets and $12,442,000 in total debts. CONGOLEUM: Wants Plan-Filing Period Stretched to Feb. 23, 2005 -------------------------------------------------------------- Congoleum Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey to extend their exclusive periods during which to file a chapter 11 plan and solicit acceptances of that plan from creditors. Specifically, pursuant to 11 U.S.C. Sec. 1121, the Debtors ask the Court to stretch their exclusive period to file a chapter 11 plan through Feb. 23, 2005, and give them until Apr. 25, 2005, to solicit acceptances of their plan from creditors. Congoleum indicates that its prepackaged chapter 11 plan will be modified. The Company is negotiating with their creditor constituencies and the negotiations are complex. The Bankruptcy Court will convene a hearing to consider Congoleum's request on Nov. 1, 2004. Headquartered in Mercerville, New Jersey, Congoleum Corporation -- http://www.congoluem.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No. 03-51524). Domenic Pacitti, Esq., at Saul Ewing, LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. CROWN PARTNERS: Taps Lopez Blevins as Principal Accountant ---------------------------------------------------------- Crown Partners, Inc., engaged Lopez, Blevins, Bork & Associates, L.L.P., as its principal accountant following the dismissal of Malone & Bailey, PLLC, its independent auditors. The decision to change accountants was recommended by the Audit Committee of the Company's Board of Directors and approved by the Board of Directors. Going Concern Doubt Malone & Bailey's report dated May 17, 2004, on the Company's financial statements as of Dec. 31, 2003, raised substantial doubt about its ability to continue as a going concern due to its recurring losses and its need to raise additional capital. At June 30, 2004, Crown Partners' balance sheet showed a $481,706 stockholders' deficit. DS WATERS: S&P Affirms B- Corporate Credit & Sr. Bank Loan Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services removed its 'B-' corporate credit and senior secured bank loan ratings on DS Waters LP and its subsidiary DS Waters Enterprises LP from CreditWatch. At the same time, Standard & Poor's affirmed the ratings. The outlook is negative. The ratings were originally placed on CreditWatch on March 25, 2004, following DS Waters' weaker-than-expected performance for fiscal 2003. Standard & Poor's estimates that the Atlanta, Georgia-based privately owned bottled water producer and distributor had about $397 million of total debt and about $325 million of 12% pay-in- kind preferred stock outstanding at July 2, 2004. "The rating affirmation reflects DS Waters' recently approved credit facility amendment and committed future financial support from Groupe Danone, which provided relief from existing tight bank covenants," said Standard & Poor's credit analyst David Kang. The amendment provides adequate financial cushion in the covenants for the next nine quarters. DS Waters' revolving credit facility has also been reduced from $150 million to $100 million, and pricing on both the revolver and term loan has increased. Furthermore, Danone has formally agreed to provide a maximum of $100 million of future back-stop support under certain conditions. If financial statements for the quarter ending Sept. 30, 2006, are not delivered on or before Nov. 15, 2006, Danone will pay $100 million to repay the term loans. If DS Waters delivers financial statements for the quarter ending Sept. 30, 2006, with a leverage ratio greater than 3x, Danone will be required to repay a portion of the term loans to reduce the leverage ratio to 3x. In return for its contribution, Danone will receive up to $100 million PIK preferred stock that is not redeemable or cash payable prior to May 7, 2010. This new support payment obligation expires Nov. 16, 2006. EMPIRE GLASS CO: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Empire Glass Companies, Inc. 3844 East University Drive, Suite C-4 Phoenix, Arizona 85034 Bankruptcy Case No.: 04-17740 Type of Business: The Debtor provides windshield repair and replacement products and services. See http://www.empireglassinc.com/ Chapter 11 Petition Date: October 8, 2004 Court: District of Arizona (Phoenix) Judge: Charles G. Case II Debtor's Counsel: Don C. Fletcher, Esq. Cavanagh Law Firm 1850 North Central Avenue, #2400 Phoenix, AZ 85004 Tel: 602-322-4000 Fax: 602-322-4100 Total Assets: $500,000 to $1 Million Total Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Autostock [not provided] P.O. Box 3877 Seattle, WA 98124 LOF [not provided] 4370 Alum Creek Drive Columbus, OH 43207 Mygrant Glass Company [not provided] 3271 Arden Road Hayward, CA 94545 Qwest [not provided] P.O. Box 29013 Phoenix, AZ 85038 Enterprise Fleet Services [not provided] 1444 W. Auto Drive Tempe, AZ 85284 Beshears Wallwork Bellamy [not provided] 2700 North Central Avenue, 12th Fl. Phoenix, AZ 85004 Safelite [not provided] P.O. Box 533203 Cincinnati, OH 45263 Nelson Lambson & Co. [not provided] 77 West University Dr. Mesa, AZ 85201 GTS Services, LLC [not provided] P.O. Box 676375 Dallas, TX 75267 Firebird Fuel Co. [not provided] P.O. Box 52400 Phoenix, AZ 85072 ADCO Products, Inc. [not provided] P.O. Box 930855 Atlanta, GA 31183 Unishippers [not provided] P.O. Box 95414 New Orleans, LA 70195 Nextel Communications [not provided] P.O. Box 17990 Denver, CO 80217 GraphicPac, Inc. [not provided] 2399 North 16th St. Phoenix, AZ 85016 AT&T Wireless [not provided] P.O. Box 78110 Phoenix, AZ 85062 Airborne [not provided] P.O. Box 91001 Seattle, WA 98111 Advanced Telemanagement Group, Inc. [not provided] 8912 Pinnacle Peak Road, Ste. 423 Scottsdale, AZ 85255 American Express [not provided] Box 0001 Los Angeles, CA 90096 Dex Media West LLC [not provided] 334 Denver, CO 80271 Somner & Maca Industries, Inc. [not provided] 5501 West Ogden Ave. Cicero, IL 60804 ENRON: Wants Court Nod on U.S. Asset Sellers' Proceeds Allocation ----------------------------------------------------------------- In April 2002, Enron Corp. and certain of the other Debtors' predecessors-in-interest sought and obtained the Court's approval of the sale of substantially all of the U.S. and European manufacturing assets relating to the Enron Wind Business. After a competitive auction process, the Debtor Sellers and General Electric Company, acting through GE Power Systems Business, entered into an Amended and Restated Purchase and Sale Agreement dated April 10, 2002. Martin A. Sosland, Esq., at Weil Gotshal & Manges LLP, in New York, relates that the proceeds received by the Debtor Sellers in respect of the Transferred Assets were to be allocated among the Debtor Sellers and their Chapter 11 estates upon further Court order. The Initial Allocation Order On May 6, 2002, the Court approved the Debtors' proposed allocation of the Purchase Price. Pursuant to the Initial Allocation Order, $121.1 million of the Purchase Price was allocated to the U.S. Asset Sellers and $203.9 million was allocated to the European Asset Sellers. Any post-closing Purchase Price Adjustment was to be allocated to entities that transferred the assets to which that post-closing Purchase Price Adjustment was attributable, consistent with the terms of the Purchase Agreement. The District Court Order On March 31, 2003, the Initial Allocation Order was subsequently reversed by an order of the United States District Court for the Southern District of New York. The Debtors appealed the District Court Order to the Second Circuit Court of Appeals. The Agreed Allocation Order On May 2, 2003, the Debtors and ZWHC, LLC, asked the Court to approve a settlement agreement regarding post-closing Adjustment with General Electric Company pursuant to Section 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure. On June 23, 2003, the Court entered an agreed order authorizing and approving a settlement by and among Enron Corp., Enron Wind LLC, and certain Enron Wind LLC subsidiaries, on the one hand, and General Electric Company, on the other hand, regarding post- closing Adjustment. The Agreed Allocation Order provides that: * $25 million of the proceeds paid by GE pursuant to the Purchase Agreement and received by Enron Wind would be segregated for the benefit of third party creditors with claims against the U.S. Asset Sellers; * $120,760,307 of the Purchase Price was allocated to the European Asset Sellers; * $89,633,492 of the Purchase Price was allocated to the U.S. Asset Sellers; and * the Debtors will withdraw their appeal of the District Court Order. Proposed Allocation of the U.S. Asset Sellers' Proceeds The Debtors propose to further allocate the proceeds received by the U.S. Asset Sellers under the Agreed Allocation Order among the U.S. Asset Sellers' chapter 11 estates in this manner: Debtor Allocation ------ ------------ Enron Wind Energy Systems $74,900,000 Enron Wind Systems 5,900,000 Enron Wind Constructors 5,600,000 Enron Wind Development 3,000,000 Enron Wind Maintenance 200,000 ----------- Total $89,600,000 =========== The proposed allocation is consistent with the asset allocation set forth in the Debtors' Disclosure Statement for the Fifth Amended Joint Plan, Mr. Sosland notes. The Debtors believe that the Proposed Allocation is consistent with agreements reached with creditors holding the majority of the remaining non-affiliate claims against the U.S. Asset Sellers. Thus, the Debtors ask Judge Gonzalez to approve the proposed allocation. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. The Company filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01- 16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON: Selling Colima Property to Dynamica for $500,000 ------------------------------------------------------- In May 2000, Enron Equipment Installation Company and Enron Equipment Procurement Company obtained mortgages secured by a 51- acre parcel of undeveloped property known as Fraccion "C" de la Ex-Hacienda de Santiago, Peninsula de Santiago, Manzanillo in Colima, Mexico. Pursuant to an Agreement of Acknowledgement of Debt and Promise to Establish a Trust dated August 3, 2000, Grupo Tribasa, S.A. de C.V., acknowledged and agreed that it owed and would pay EEIC and EEPC $4,750,000 plus interest. In accordance with the Acknowledgment Agreement, Tribasa's wholly owned subsidiary, Grupo Turistico de Colima, S.A. de C.V., transferred the Colima Property to GE Capital Bank, Sociedad Anonima Institucion de Banca Multiple, in its capacity as trustee for the benefit of EEIC and EEPC, pursuant to an irrevocable trust agreement. The Beneficiaries are authorized to sell the Colima Property and to use the proceeds from the sale to pay the Debt. The Marketing Efforts Martin A. Sosland, Esq., at Weil Gotshal & Manges LLP, in New York, relates that the Colima Property was appraised in 2001 at $2.7 million and was listed for sale with Cushman & Wakefield de Mexico. Cushman actively marketed the Property but there were no indications of interest at or near the appraised value of the Property. Since the initial marketing effort, a major earthquake struck the Manzanillo region in 2003, which resulted in loss of life. The earthquake depressed the tourism market in the region and drove down real estate prices. The Colima Property was appraised for a second time in February 2003, for between $1,350,000 and $2,160,000. EEIC, EEPC and Cushman continued to market the Property. In March 2004, EEIC and EEPC was offered $340,000 for the Property. In addition to the purchase price, the prospective purchaser agreed to pay about $200,000 in accrued taxes and assume the responsibility of removing squatters from the Property. Using this offer, EEIC, EEPC and Cushman continued to market the Property and on May 12, 2004, received an offer for $500,000 from Dynamica Desarrollos Sustentables, S.A. De C.V. According to Mr. Sosland, Dynamica submitted the highest and best offer for the Property. The Purchase Agreement On September 15, 2004, EEIC, EEPC and Dynamica executed a Purchase Agreement. Pursuant to the Purchase Agreement, the Beneficiaries will direct GE Capital to sell and convey all rights and interests in the Colima Property to Dynamica. The salient terms of the Purchase Agreement are: A. Purchase Price The purchase price for the Property will be $500,000 plus the amount of the Mexican real estate taxes or "impuestos prediales" in arrears or due on the Property. Dynamica previously placed into escrow a $100,000 earnest money deposit. B. As-Is Purchase The Property is being sold in an "as is" condition and "with all faults" as of the effective date of the Purchase Agreement. C. Costs EEIC and EEPC will bear these costs: -- fees and expenses of their counsel and any outstanding costs, taxes or expenses related to the transfer of the Property from Grupo Turistico to GE Capital; -- brokerage fees and commissions due to Cushman; -- trust fees accrued with or owed to GE Capital; and -- any fees related to the release of the mortgages on the Property. By this motion, EEPC asks the Court for authority to sell the Colima Property, free of liens, claims and encumbrances, to Dynamica pursuant to the terms of the Purchase Agreement. Given the prior marketing of the Colima Property, the Sale must be approved as a private sale, Mr. Sosland points out. EEPC believes that selling its interests in the Property will result in maximizing the value for its estate and will result in a greater return to creditors than if the Property were not sold. The Purchase Agreement was negotiated at arm's length after and through the marketing process and the Purchase Price represents the fair market value for EEPC's and EEIC's interests in the Property. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. The Company filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01- 16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 127; Bankruptcy Creditors' Service, Inc., 15/945-7000) EVERGREEN: Pioneer Wants to Buy Sr. Sub. Notes for 101% ------------------------------------------------------- Pioneer Natural Resources Company (NYSE:PXD) commenced a change of control offer to purchase any or all of the 5.875% Senior Subordinated Notes due 2012, originally issued by Evergreen Resources, Inc., a Colorado corporation, pursuant to the Indenture dated March 10, 2004, by and between Pioneer, as successor to Evergreen, and Wachovia Bank, National Association, as trustee. The Change of Control Offer expires at 5:00 p.m., New York City time, on Wednesday, Nov. 10, 2004, unless extended by Pioneer at its sole discretion. As reported in the Troubled Company Reporter on Sept. 30, 2004, Pioneer Natural Resources Company and Evergreen Resources, Inc., completed their $2.1 billion merger in which Evergreen has become a subsidiary of Pioneer and Evergreen stockholders will receive new shares of Pioneer common stock and cash. The transaction was completed after both Pioneer and Evergreen obtained the required stockholder approvals for the transaction at special meetings held on Sept. 30. Pioneer will continue to be headquartered in Dallas and will retain Evergreen's Denver offices as its base of operations in the Rockies. As a result of that merger, a Change of Control of Evergreen has occurred. Also, as a result of subsequent mergers involving Pioneer and certain of its subsidiaries, Pioneer became the successor to Evergreen as the sole obligor under the Indenture and the Notes. The Notes are now general unsecured obligations of Pioneer that are subordinated to its existing and future senior debt. Pursuant to the Indenture, when a Change of Control occurs, each holder of the Notes has the right to require Pioneer as successor to Evergreen to repurchase any or all of that holder's Notes. In accordance with the Indenture, Pioneer is offering to purchase any or all Notes (in principal amounts of $1,000 or an integral multiple thereof) at a purchase price in cash equal to 101% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest up to, but not including, the date of purchase. In addition to the Change of Control Offer, Pioneer is soliciting consents to amendments to the Indenture. The proposed amendments will: -- eliminate the subordination of the right of payment on the Notes to the payment in full of all existing and future senior indebtedness of Pioneer; -- amend restrictive covenants applicable to the Notes so that they are the same as the restrictive covenants in Pioneer's senior notes that were originally issued as high-yield notes; and -- amend the provisions of the Notes that suspend the restrictive covenants when the Notes have certain investment grade ratings so that those provisions are the same as the suspension and permanent-elimination provisions in Pioneer's senior notes that were originally issued as high-yield notes. Approval of the Proposed Amendments will require the consent of a majority in outstanding principal amount of the Notes. The Consent Solicitation expires at 5:00 p.m., New York City time, on Friday, October 29, 2004, unless extended by Pioneer at its sole discretion. Pioneer believes that the holders of the Notes will benefit from the elimination of the subordination provisions provided in the proposed amendments, if they are approved. Elimination of the subordination provisions of the Notes will result in the Notes' ranking equally in right of payment with Pioneer's existing and future unsecured senior debt as well as ranking senior in right of payment to all future subordinated debt of Pioneer. The Notes currently do not have an investment grade rating primarily because they are subordinated to Pioneer's senior debt. At October 1, 2004, Pioneer's publicly traded senior notes were rated Baa3 by Moody's Investors Services, Inc. and BBB- by Standard & Poor's Ratings Group, Inc., both of which are considered investment grade ratings. If the subordination provisions of the Notes are eliminated, the Notes are expected to receive the same ratings that Pioneer's publicly traded senior notes have at that time. If those ratings continue to be investment grade at that time, it is expected that the Notes would experience an increase in trading price. The ratings and trading prices of the Notes will depend on many factors, including our financial condition and results of operations and general market and economic conditions. No assurance can be given that the Notes will receive investment grade ratings if the proposed amendments are adopted or that the market price of the Notes will increase. The Change of Control Offer and Consent Solicitation are not dependent on each other. Holders of the Notes may tender their Notes in the Change of Control Offer without also delivering their consent in the Consent Solicitation, or holders may deliver their consent in the Consent Solicitation without tendering their Notes in the Change of Control Offer, or they may both tender the Notes and deliver consent, or take neither action. The terms of the Change of Control Offer and Consent Solicitation are described in the Notice of Change of Control, Offer to Purchase, and Consent Solicitation Statement of Pioneer, dated as of October 12, 2004. Wachovia Bank, National Association is the exchange agent for the Change of Control Offer and tabulation agent for the Consent Solicitation. D.F. King & Co., Inc. is the information agent for the Change of Control Offer and Consent Solicitation. Credit Suisse First Boston LLC is Pioneer's financial advisor for the Consent Solicitation. Requests for copies of the Notice and questions regarding the Change of Control Offer and Consent Solicitation may be directed to: Wachovia Bank, National Association (704) 590-7413 -- or -- D.F. King & Co., Inc. (212) 269-5550 -- or -- Pioneer Natural Resources Company (972) 444-9001. Holders of the Notes may also contact Credit Suisse First Boston LLC at (800) 820-1653 (US toll-free) with questions regarding the Consent Solicitation. This announcement is not an offer to purchase or a solicitation of consent with respect to any securities. The Change of Control Offer and Consent Solicitation will be made solely by the Notice. If the Consent Solicitation would constitute the offer of a new security, Pioneer is making the Consent Solicitation in reliance on the exemption from the registration requirements of the Securities Act of 1933 afforded by Section 3(a)(9) thereof. Pioneer is a large independent oil and gas exploration and production company with operations in the United States, Argentina, Canada, Equatorial Guinea, Gabon, South Africa and Tunisia. Pioneer's headquarters are in Dallas, Texas. For more information, visit Pioneer's website at http://www.pioneernrc.com/ * * * Evergreen Resources (S&P, $200M Sr. Sub. Notes, BB+) is an independent energy company engaged in the exploration, development, production, operation and acquisition of unconventional natural gas properties. Evergreen is one of the leading developers of coal bed methane -- CBM -- reserves in the United States. Evergreen's current operations are principally focused on developing and expanding its coal bed methane project located in the Raton Basin in southern Colorado. Evergreen has initiated a CBM project in Alaska and is also in the process of acquiring unconventional natural gas prospects in the Forest City Basin of eastern Kansas, the Piceance Basin of western Colorado, the Uintah Basin of eastern Utah, and Canada. EXIDE TECH: Taps J. Timothy Gargaro as New Chief Financial Officer ------------------------------------------------------------------ Exide Technologies (NASDAQ: XIDE), a global leader in stored electrical-energy solutions, announced the appointment of J. Timothy Gargaro as Executive Vice President and Chief Financial Officer. Ian Harvie, who has served as Interim CFO, will resume his duties as Vice President and Controller. Mr. Gargaro comes to Exide with more than 20 years of financial leadership experience with Tier 1 suppliers to the automotive industry. Prior to joining Exide, Mr. Gargaro was Chief Financial Officer and Executive Vice President at Oxford Automotive Inc. Earlier, he was Chief Financial Officer and Senior Vice President at Delco Remy International Inc. Mr. Gargaro's experience also includes a series of increasingly more senior positions with Lear Corporation (NYSE: LEA), including Vice President Finance - Europe, Vice President Finance - Daimler Chrysler Division and Vice President Finance - Ford Division. "I am very excited to welcome Tim to the new Exide," said Craig H. Muhlhauser, President and CEO of Exide Technologies. "His vast experience with leading automotive suppliers will be invaluable in helping us to develop closer relationships with our customers so that we can position both them and Exide for even greater success. Just as important, Tim's experience leading financial and organizational restructurings, plus his knowledge of Six Sigma and other process methodologies, will help us to accelerate our drive to become a more efficient and cost-effective organization. "The new Exide is committed to regaining our position as the undisputed industry leader, and Tim will play a crucial role in helping the Company to attain that goal," Mr. Muhlhauser said. Mr. Gargaro said, "I am tremendously excited to join the new Exide and build on the company's successes to date. Exide has excellent market positions around the globe and a strong foundation for future growth. I look forward to working with Craig during his transition, the Company's leadership team and the Board of Directors." Mr. Gargaro holds a bachelor's degree in accounting and economics from the University of Detroit and an executive MBA from Michigan State University. He is a Certified Public Accountant in Michigan. Headquartered in Princeton, New Jersey, Exide Technologies is the world-wide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. FEDERAL-MOGUL: Wants to Enter Into a $1.4 Billion Exit Facility --------------------------------------------------------------- Michael P. Migliore, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, PC, in Wilmington, Delaware, relates that in April 2004, the financial advisors to the proponents of the reorganization plan for Federal-Mogul Global, Inc., and its affiliates began a marketing and solicitation program to identify lenders interested in funding the exit financing facility contemplated by the Plan. The financial advisors contacted 15 potential lending sources, including Citicorp USA, Inc. Citicorp, together with a syndicate of other lenders, signified interest to fund not only the Debtors' exit financing, but also to provide a replacement DIP facility in the interim on terms more favorable to the Debtors than the Existing DIP Facility. Citicorp's proposals offered the Debtors a unique opportunity to address their ongoing financial needs comprehensively and in a manner that would facilitate the Debtors' transition out of Chapter 11. As a result, the Debtors and Citicorp entered into a commitment letter on October 1, 2004, whereby Citicorp, acting as administrative agent for a syndicate of lenders, agreed to provide exit financing. Citigroup Global Markets, Inc., will act as sole lead arranger and sole bookrunning manager for the Exit Facility. The Debtors seek the Court's authority to enter into the Exit Financing with Citicorp. The Debtors seek permission to execute a commitment letter and fee letter with Citicorp. The salient terms of the proposed Exit Financing are: Borrower: Reorganized Federal-Mogul Corporation Guarantor: All of Reorganized Federal-Mogul Corporation's direct and indirect domestic subsidiaries plus any of its direct or indirect parent. Amount & Type of Facility: $1.433 billion in the aggregate, divided into: -- a $500 million senior secured asset-based revolving credit facility with letter of credit and swingline sublimits to be agreed upon; and -- a $933 million senior secured term credit facility, to include a $105 million synthetic letter of credit facility. Maturity: * Revolving Credit Facility: Five years from the closing date of the Replacement Financing. * Term Loan Facility: Seven years from the closing date on the Exit Financing. Unless the Tranche A Term Loans are refinanced at least six months prior to their final maturity date and the terms of the debt financing like Tranche A Term Loans require no principal payment thereof prior to at least six months after the final maturity date of the Exit Term Facility, the final maturity date of the Exit Term Facility will be reduced to six years from the Exit Closing Date. The Tranche A Term Loans, one of the considerations necessary to consummate the Plan accounts for $1.3 billion in aggregate principal amount, to be provided by certain prepetition creditors of the Company. Purpose of Facilities: (1) To refinance the DIP Facility; (2) To make certain cash payments or otherwise satisfy the allowed claims, in each case pursuant to the Plan; (3) To pay transaction costs and expenses associated with the Reorganization; and (4) To provide working capital and for other general corporate purposes. Availability: * Exit Revolver Facility: Subject to a borrowing base, to consist of: (i) 85% of eligible accounts receivable; and (ii) eligible inventory subject to various advance rates as have been previously provided by the Agent to the Company. Eligible criteria for each component of the borrowing base will be as agreed. In addition, the borrowing base will be subject from time to time to various reserves to be agreed on. The borrowing base and assets comprising it will be subject to reporting and other provisions set forth in the Existing DIP Facility. * Exit Term Facility: In a single draw on the Exit Closing Date. U.K. Debtors: In the event that the U.K. Debtors are not part of the Reorganization pursuant to the Plan, the Exit Facility will continue to be available to the Company. In that event, the Exit Documents will: (a) permit the Borrower or any of its subsidiaries to acquire all or a portion of the stock or assets of any U.K. Debtor in a controlled realization, provided that availability under the Exit Revolver Facility, after giving effect to the consummation of the acquisition and the effectiveness of any bridge financing arranged for purposes of consummating the acquisition and the effectiveness of any bridge financing arranged for purposes of consummating the acquisition, will be at least $250 million; (b) provide for mandatory prepayment of the Exit Term Facility with the proceeds received by the Company or any of its domestic subsidiaries from any sale or other disposition of all or any portion of the U.K. Debtors or their assets to a third party; and (c) contain limitations on loans or advances that may be made to the U.K. Debtors prior to their acquisition by the Borrower or any of its subsidiaries or their sale or other disposition to a third party. Any U.K. Bridge Financing will be subordinated in right of payment to the Exit Facilities and will be on terms and conditions reasonably satisfactory to the Agent. Collateral: All obligations under the Exit Facilities will be secured by a perfected first priority lien on all or substantially all of the assets of the Borrower and each Guarantor, except that: (i) no more than 66% of the voting equity interests of any foreign subsidiary held by the Borrower or any Guarantor will be required to be pledged; and (ii) if the Borrower or any of its subsidiaries consummates the U.K. Acquisition, any U.K. Bridge Financing may be secured by a first priority lien on the right of the Borrower or any of its subsidiaries, other than the U.K. Debtors to receive the proceeds of the U.K. Acquisition and on any proceeds that are received. The Collateral will not be subject to any other liens other than exceptions to be agreed on, which will include an exception for: (x) a junior lien on the Collateral securing the Tranche A Term Loans; (y) a junior lien on the Collateral securing the New PIK Notes and the Surety Notes; and (z) a junior lien on the Collateral securing any U.K. Bridge Financing, subject in each case to intercreditor arrangements to be agreed on. The Company will deliver new or updated Phase I environmental reports with respect to certain real properties to be agreed on by the Company and the Agent. Various Intercreditor Arrangements: The Lenders and the holders of the Tranche A Term Loans, the New PIK Notes and the Surety Notes will enter into an intercreditor agreement with terms and conditions satisfactory to the Lenders. Prior to the granting of any junior lien on the Collateral securing the U.K. Bridge Financing, the Lenders will also enter into an intercreditor agreement with the holders of any U.K. Bridge financing. The Lenders participating in the Exit Revolver Facility and in the Exit Term Facility will agree that, between themselves, the application of the proceeds from any sale on foreclosure of the Collateral, including any sale of the Collateral on a liquidation of the relevant debtor or while the relevant debtor is subject to a Chapter 11 proceeding, that consists of: (a) fixed assets will be applied first, to the repayment of the obligations under the Exit Term Facility, until all the obligations have been repaid in full or cash collateralized to the satisfaction of the holders, and thereafter, to the repayment of the obligations under the Exit Revolver Facility, until all the obligations have been repaid in full or cash collateralized to the satisfaction of the holders; and (b) any assets other than fixed assets will be applied first, to the repayment of the obligations under the Exit Revolver Facility, until all the obligations have been repaid in full or cash collateralized to the satisfaction of the holders, and thereafter, to the repayment of the obligations under the Exit Term Facility, until all the obligations have been repaid in full or cash collateralized to the satisfaction of the holders. Exit Closing Date: The date of the initial funding of the Exit Facilities. Interest Rates & Commitment Fees: * Revolving Credit Facility: LIBOR plus 2.25%, or Base Rate plus 1.25%, plus a commitment fee of 0.50% per annum on unused amounts. After a period of time to be agreed upon, the interest rate margins and the commitment fee will be determined on the basis of a pricing grid. In addition, a letter of credit participation fee at a rate equal to the interest rate margin applicable to LIBOR Loans, a letter of credit fronting fee of 0.125% per annum on the face amount of each letter of credit processing fees. * Exit Term Facility: (a) (1) LIBOR plus 2.25%, if the Exit Facility is rated BB- or higher by Standard & Poor's Rating Group and Ba3 or higher by Moody's Investor Services, Inc.; (2) LIBOR plus 2.50% if the Exit Facility is rated: (x) BB- or higher by S&P and B1 or higher by Moody's; or (y) B+ or higher by S&P and Ba3 or higher by Moody's, and (3) otherwise, LIBOR plus 2.75%; or (b) the Base Rate plus in each case a margin 1% lower than the applicable LIBOR margin. In addition, a letter of credit fronting fee of 0.125% per annum on the face amount of each letter of credit and letter of credit processing fees to be agreed upon. Scheduled Amortization: * Exit Revolver Facility: None * Exit Term Facility: Annual amortization of 1% of the amount of Exit Term Facility on the Exit Closing Date, payable in four equal quarterly installments, with the balance payable at final maturity. Mandatory Prepayments: * Exit Revolver Facility: None * The Exit Term Facility: Will be prepaid with: (a) 100% of the proceeds from the sale or other disposition of assets by the Borrower and its subsidiaries; (b) 100% of the proceeds from issuances of debt, other than: (A) subordinated debt: (x) maturing at least six months after the final maturity date of the Exit Term Facility; (y) having a weighted average life that is longer than the weighted average life of the debt that the subordinated debt has refinanced; and (z) not requiring any principal payments thereof to six months after the final maturity date of the Exit Term Facility; and (B) the U.K. Bridge Financing; (c) 100% of adjusted excess cash flow with stepdowns in the percentage based on target leverage to be agreed on; and (d) 66 and 2/3% of the adjusted EBITDA variance with stepdowns in the percentage based on target leverage to be agreed on. It is understood that 33% and 1/3% of the adjusted positive EBITDA variance will be retained by the Company. Financial Covenants: A. Consolidated Senior Leverage Ratio will not be greater than 3.90 to 1.00 B. Consolidated Debt Service Coverage Ratio will not be less than 1.10 to 1.00. C. The Debtors covenant with the Lenders that Consolidated EBITDA will be no less than: -- $590,000,000 for each period of four consecutive fiscal quarters ending Dec. 31, 2004, March 31, 2005, June 30, 2005, September 30, 2005, and December 31, 2005; -- for the period of four consecutive fiscal quarters ending: Minimum EBITDA -------------- March 31, 2006 $603,750,000 June 30, 2006 $617,500,000 September 30, 2006 $631,250,000 December 31, 2006 $645,000,000 March 31, 2007 $658,750,000 June 30, 2007 $672,500,000 September 30, 2007 $686,250,000 December 31, 2007 $700,000,000 March 31, 2008 $706,250,000 June 30, 2008 $712,500,000 September 30, 2008 $718,750,000 -- $725,000,000 for each period of four consecutive fiscal quarters ending Dec. 31, 2008, and the last day of each fiscal quarter thereafter. D. The Debtors further covenant to limit Capital Expenditures to: Maximum CapEx ------------- For fiscal year 2005 $326,700,000 For fiscal year 2006 $328,800,000 For fiscal year 2007 $321,000,000 and each fiscal year thereafter The unused portion of the amount of capital expenditures permitted to be made in each fiscal year may be carried forward to and made during the immediately following fiscal year. Commitment Termination: The Lenders' Exit Financing commitment is good until December 31, 2004. If the Exit Facility is approved by the Court on or before December 31, the Exit Commitment will terminate on the earliest of: (a) the date the definitive documentation evidencing the Exit Facility becomes effective; (b) the consummation of any Chapter 11 plan of reorganization other than the Plan; (c) the completion of the Reorganization without the funding of the Exit Facility; (d) the dismissal or conversion to proceedings under Chapter 7 of the Bankruptcy Code of any of the Cases or the appointment in any of the Cases of a Trustee or Examiner; (e) April 30, 2005, 5:00 p.m., New York City time; (f) the date on which the DIP Commitment is terminated, other than as a result of the execution of the DIP Documents; and (g) the date on which any of the conditions to the Exit Commitment and in the Exit Term Sheet will become incapable of being satisfied prior to the otherwise applicable expiration of the Exit Commitment. If the Approval Order will at any time cease to be in full force and effect or will be reversed, modified or stayed, in each case after December 31, 2004, Citicorp may, in its sole discretion, terminate the Exit Commitment, without further obligation. Citigroup Global's undertakings with respect to the Exit Facility will terminate concurrently with any termination of the Exit Commitment. Non-refundable Fees: The Debtors will pay: * Upfront Fees: (a) For the account of Citicorp Global, an upfront fee equal to the greater of (i) $_____[redacted] and (ii) the total amount of the Exit Term Facility multiplied by a fraction, the numerator of which is $_____[redacted] and the denominator of which $_____[redacted], payable in full on the Exit Closing Date. (b) For the account of Citicorp Global, an upfront fee equal to the greater of (i) $_____[redacted] and (ii) the total amount of the Exit Revolver Facility multiplied by a fraction, numerator of which is $_____[redacted] and the denominator of which is $_____[redacted], payable in full on the Exit Closing Date. The upfront fee will be reduced dollar-for- dollar by the amount of the upfront fee with respect to the DIP Facility actually paid. * Commitment Fees: For the account of Citicorp, a commitment fee at the rate of [redacted]% per annum on the aggregate amount of the Exit Term Facility, whether or not the Exit Term Facility is funded. The commitment fee will be payable in full on the Exit Closing Date. * Administrative & Collateral Monitoring Fees: For the account of Citicorp, an administrative fee of $_____[redacted] per annum, and a collateral agent under the Exit Facility, a collateral monitoring fee of $_____[redacted] per annum, payable quarterly in advance, computed from the Exit Closing Date to the date of termination of the commitments under the Exit Facility and the repayment in full of all amounts outstanding. The initial quarterly payment of each fee will be reduced dollar-for- dollar. Conditions to Closing: (1) Entry of a final non-appealable order confirming the Plan that contains a final, non-appealable channeling injunction satisfying the requirements of Section 524(g) of the Bankruptcy Code; (2) The effectiveness of the Plan and reorganization of the Debtors pursuant to the terms of the Plan; and (3) The terms and conditions of the restructuring of those portions of Federal-Mogul Corporation's prepetition bank debt that are not being satisfied out of the proceeds of the Exit Financing. Citigroup is represented by Davis Polk & Wardwell. The Debtors will reimburse Citigroup for reasonable fees and expenses of Davis Polk. The Debtors will pay a separate fee to Jefferies & Company, Inc., the financial advisors to the Official Committee of Unsecured Creditors, for acting as syndication advisor with respect to the proposed Exit Financing. The Court will convene a hearing on October 22, 2004, to consider approval of the Debtors' request. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRSTPLUS FINANCIAL: Creditor Trust's Report Dated Sept. 30, 2004 ----------------------------------------------------------------- The Trustee for the FPFI Creditor Trust, created for the benefit of certain creditors of FirstPlus Financial, Inc., pursuant to the Third Amended Plan of Reorganization confirmed by the U.S. Bankruptcy Court for the Northern District of Texas on April 25, 2000, delivered his report, dated September 30, 2004, to Trust Beneficiaries last week: FPFI Creditor Trust Report to Beneficial Holders September 30, 2004 Over the past four years, the Trust has had to work through a number of difficult issues in order to allow the Trust to make cash distributions to beneficiaries this fiscal year. What follows is a brief summary of what has transpired in connection with administration of the Trust for fiscal year 2004. FirstPlus Bank -- As previously reported, the bank began liquidation on October 30, 2001, and completed liquidation on December 15, 2003. Although the bank had approximately $22 million in assets, various parties asserted claims against the bank in excess $100 million. These claims had to be resolved before the bank could be dissolved. After intense negotiation with all the parties, a settlement was reached that allowed for the final dissolution of the bank. This settlement allowed for the Trust to receive $6.4 million on account of the equity interest conveyed to the Trust by Group under the plan of reorganization. Pursuant to the terms of the court-approved settlement, the Trust was required to hold $1 million in a reserve account to pay certain document storage and retention expenses and was allowed to distribute $5.4 million, which occurred in April, 2004. US Bank ND Indemnification Claim -- Under the Plan of Reorganization, US Bank was entitled to an Indemnification Claim in an unliquidated amount. During the negotiations to settle the liquidation of the FirstPlus Bank, the Trustee was able to reach a settlement with US Bank to fix the size of this Indemnification Claim in the amount of $10 million. The Trust paid that amount in April, 2004, and as a result, the Indemnification Claim is no longer an impediment to future distributions of payments from the Cash Flow Note to the Trust's beneficiaries. Class Action Lawsuits Against the Securitizations -- As previously reported, beginning in May, 2000, various class action lawsuits were filed in a number of states seeking damages from the securitization trusts that were to provide the cash flow to fund payments to the Trust for repayment of the secured and unsecured claims under the Plan. Over the past four years more that 80 class action lawsuits were filed in 14 states against 12 different securitizations. As of the date of this letter the Trust is in settlement negotiations with Plaintiffs representing class action lawsuits in 12 states. The Trustee is hopeful that the settlement agreement will be finalized in the near future. Distributions -- The Trust made its first distribution on April 30, 2004, from the available proceeds of the FirstPlus Bank liquidation discussed above. The Trust made a second distribution on July 30, 2004. The second distribution was from Estate Cash (as that term is defined in the Plan) that has been held in reserve by the Trust to assure that the Trust can pay expenses of the Trust operation. The Trustee determined that he could reduce the level of reserves and made the funds available for distribution. The Trustee remains hopeful that no less than annual distributions will be made until all residuals are collected unless the Court does not extend the life of the Trust (see below). IRS Issues -- On September 29, 2004, the IRS notified the Trust that a special ruling for a change of accounting for four of the REMIC securitization trusts has been approved. This ruling was requested in the fall of 2000. This will allow the preservation of over $44 million in NOL's that will be used to offset future taxes due from FirstPlus. That will allow additional income to be distributed to the beneficiaries of the Trust over the next several years. FPFI Creditor Trust -- In November, 2004 the Trustee will be seeking an extension of the term of the Trust to allow for the full collection of all the residual assets that FirstPlus Financial Inc. owns. If the extension is not granted the Trustee will be directed to sell the remaining assets of FirstPlus and make a final distribution prior to May 10, 2005. The Trustee believes that if the Trust is force to sell the remaining assets, ultimate recoveries for creditors may be substantially reduced. [The] annual financial report for the FPFI Creditor Trust [is available at http://www.fpficreditorstrust.com/at no charge]. After all the negotiations and hard fought legal battles that have occurred over the past four years, I am very pleased to be in a position to make distributions to the beneficiaries and I am hopeful this will continue on at least an annual basis from here on out. Sincerely David T. Obergfell Trustee, FPFI Creditor Trust FITNESS GALLERY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Fitness Gallery, Inc. 14647 South 50th Street, Suite 100 Phoenix, Arizona 85044 Bankruptcy Case No.: 04-17746 Type of Business: The Debtor sells and services residential and commercial fitness equipment. See http://www.fitnessgallery.com/ Chapter 11 Petition Date: October 8, 2004 Court: District of Arizona (Phoenix) Judge: Sarah Sharer Curley Debtor's Counsel: Michael Woolfenden, Esq. 4639 North 24th Place Phoenix, AZ 85016 Tel: 602-508-1997 Fax: 602-954-0839 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-Largest Creditors. GLACIER FUNDING: Fitch Places BB Rating on $4M 5th Priority Notes ----------------------------------------------------------------- Fitch rates these notes issued by Glacier Funding CDO II, Ltd. and Glacier Funding CDO II, Inc.: -- $325 million class A-1 first priority senior secured floating-rate notes 'AAA'; -- $70 million class A-2 second priority senior secured floating-rate notes 'AAA'; -- $65.8 million class B third priority senior secured floating-rate notes 'AA'; -- $20.3 million class C fourth priority Mezzanine secured floating-rate notes 'BBB'; -- $4 million class D fifth priority Mezzanine secured floating-rate notes 'BB'. The ratings on the class A-1, A-2, and B notes address the full and timely payment of interest, as well as the stated balance of principal by the legal final maturity date, as per the governing documents. The rating on the class C and D notes address the ultimate and compensating interest payments, as well as the stated balance of principal by the legal final maturity date, as per the governing documents. The ratings are based upon: (1) the capital structure of the transaction, (2) the quality of the collateral, and (3) the overcollateralization and interest coverage tests provided for within the transaction documents. Additionally, the ratings address the experience and capabilities of Terwin Money Management LLC as the collateral manager. Terwin's experience managing CDOs includes two prior cash flow CDOs, Glacier Funding CDO I and Cascade Funding CDO I, which closed in March 2004 and July 2004, respectively. The proceeds of the notes will be used to purchase a diversified investment portfolio expected to be approximately: * 59% in subprime residential mortgage-backed securities -- RMBS, * 24% in prime RMBS, and * 7% in commercial mortgage-backed securities -- CMBS. The collateral supporting the structure will have a maximum Fitch- weighted average rating factor -- WARF -- of 4.25 ('BBB'), and Terwin will have 120 days in which to ramp up the portfolio. The substitution period will end on Feb. 12, 2007. The notes have a stated maturity of March 2042, and quarterly payments on the notes will begin on Feb. 14, 2004. This transaction includes a structural feature that will allow excess interest, exceeding an equity cap of 11%, to be used to pay down principal on the class C notes. Upon the breach of a coverage test as outlined in the security agreement, the notes will start the process of paying down principal sequentially beginning with class A-1 principal. The collateral manager will purchase all investments for the portfolio on behalf of the co-issuers, which are special purpose companies incorporated under the laws of the Cayman Islands and Delaware, respectively. The collateral manager will manage the portfolio in accordance with specific investment restriction as outlined in the governing documents. For more information n this transaction, see the presale report 'Glacier Funding CDO II' dated Sept. 24, 2004, available on the Fitch Ratings web site at http://www.fitchratings.com/ HOME INSURANCE: Canadian Claims Must be Filed by Tomorrow --------------------------------------------------------- THE HOME INSURANCE COMPANY (CANADIAN BRANCH) IN LIQUIDATION ("HOME CANADA") NOTICE Home Canada was ordered wound-up under the provisions of the Winding-up and Restructuring Act (Canada) on June 26, 2003, and Deloitte & Touche Inc. was appointed its liquidator (the "Liquidator"). Home Canada's policies of insurance have been transferred to Lombard General Insurance Company ("Lombard"). The Liquidator hereby gives notice that the Court has fixed Friday, October 15, 2004, as the last day to assert claims against Home Canada. Take note that failure to give notice of a claim by October 15, 2004, may result in distributions being made without regard to that claim. Further take notice that a Statement of Claimants and Creditors shall be filed in the Office of the Superintendent of Financial Institutions pursuant to section 168(1) of the Winding-up and Restructuring Act, R.S.C., not less than 30 days after the last day fixed for sending in claims. Please note that if you were a policyholder or claimant under a Home Canada policy, you do not have to file a claim with the Liquidator for Lombard to deal with you. However, you should file a claim if you assert that you have a claim that may not have been fully satisfied or recognized by Lombard's assumption of your Home Canada policy, or otherwise wish to assert a claim against Home Canada. For further information or for a claim form, please write to: Glynis Bass Deloitte & Touche Inc. Liquidator of Home Canada TD Centre, Suite 1900 79 Wellington Street W P.O. Box 29 Toronto, Ontario M5K 1B9 (905) 754-0150 (facsimile) gbass@deloitte.ca (electronic mail). This notice is being given pursuant to an Order of the Ontario Superior Court of Justice dated August 5, 2004. DELOITTE & TOUCHE INC. Liquidator of Home Canada INTERSTATE BAKERIES: Employs Alvarez & Marsal as Managers --------------------------------------------------------- Pursuant to Section 363(b) of the Bankruptcy Code, the Interstate Bakeries Corporation and its debtor-affiliates ask the Court for authority to enter into an engagement agreement with Alvarez & Marsal, LLC, providing for, among other things, the appointment of Antonio C. Alvarez, II, as the Debtors' Chief Executive Officer, and John K. Suckow as the Debtors' Chief Restructuring Officer. Alvarez is a nationally recognized business turnaround and crisis management company that specializes in providing turnaround, crisis management and restructuring advisory services to public and private companies in financial and operational distress. The firm is made up of over 250 professionals possessing experience in a wide range of industries. Working closely with client management, the firm's professionals help develop and implement comprehensive turnaround programs that increase value through improving operations and asset performance, refocusing business models and restructuring debt. The firm's typical assignments involve: * stabilizing operations and financial crisis, * analyzing operating economics and cash management and flow dynamics, * developing detailed actions plans to lower break-even levels and improve operating leverage and cash flow, * restructuring financial obligations to match cash flow potential, * redesigning business models to be more competitive, and * advocating the client's turnaround strategy to various constituencies. The Debtors contend that Alvarez' expertise in management, financing and accounting, combined with the firm's understanding of the complex interests of stakeholders in a bankruptcy proceeding, will help the Debtors develop practical solutions for every phase of their restructuring process and in resolving competing claims and interests of management, creditors and equity stakeholders during the Debtors' Chapter 11 cases. Alvarez' professionals have served as advisors to both debtors and creditors in Chapter 11 proceedings and assisted clients to successfully navigate the numerous complexities of Chapter 11 bankruptcies. The firm's professionals are also experienced in analyzing and testifying regarding restructuring and related Chapter 11 issues. Alvarez' reorganization services include, but are not limited to, assisting debtors to: * develop, negotiate and implement reorganization plans, * review and implement potential operational improvements, * enhance profits, * refinance and recapitalize, * conduct due diligence, * explore and analyze exit strategies, * prepare disclosure statements, and * manage relations with all stakeholders. In late August, the Debtors retained Alvarez to assist them to, among other things, evaluate potential restructuring alternatives. Since then, the firm has worked closely with the Debtors' management and other professionals and has become well acquainted with the Debtors' operations, debt structure, business and operations and related matters. The firm, besides developing knowledge of the Debtors' financial and business operations, has worked with the Debtors on numerous matters, including, among others: (1) assisting the Debtors in developing short term cash flow forecasts and liquidity plans that are communicated to the Debtors' board of directors and creditors; (2) providing advice and assistance to the Debtors in the process of obtaining new financing or modifications to its existing arrangements, including, at the Debtors' direction, preparing materials, identifying potential lenders, contacting lenders, negotiations with potential lenders; (3) assisting the Debtors in developing contingency plans for a possible Chapter 11 filing; and (4) participating in board meetings as determined by the Debtors or their board of directors to be appropriate, and providing periodic status reports regarding the Debtors' restructuring efforts to their board of directors. Mr. Alvarez is a Senior Managing Director and co-founder of the firm. Mr. Alvarez has worked as a turnaround consultant and crisis manager for more than twenty years. He has experience in a variety of industries, including, among others, retailing, apparel wholesale, manufacturing, healthcare, and oil field services. Most recently, he served as strategic advisor to Levi Strauss & Co., a global retail and apparel company. Mr. Alvarez previously served as: -- CEO of Warnaco, Inc., Wherehouse Entertainment, Inc., Phar- Mor, Inc., Long Manufacturing, Inc. and Coleco Industries, Inc.; -- President and Chief Operating Officer of Republic Health Corporation; -- Restructuring Advisor in Charter Medical Corporation and Resorts International, Inc.; -- Director on the Boards of Warnaco, Republic Health Corporation and Resorts International, Inc.; -- financial Vice President of Norton Simon, Inc., responsible for all planning, operations control and business strategies; and -- a partner in a public Big Eight accounting firm. Mr. Suckow is a Managing Director of Alvarez, who has more than 23 years of financial restructuring and business experience. He has advised management teams, boards of directors, secured lenders, and other creditor groups in a variety of ways, ranging from financial advisor to interim management in several industry sectors, including manufacturing, distribution, healthcare, telecommunications, publishing, and retail. Additionally, he has represented strategic and financial buyers in over 25 acquisitions and served as an expert witness on several occasions in state and federal court. Mr. Suckow's diverse restructuring experience includes American Pad & Paper, Ames Department Stores, Inc., ANC Rental, Beatrice Canada, Fleming Companies, Inc., Magellan Health Services, Inc., Mercury Stainless/Washington Steel, Microcell Telecommunications, Peter J. Schmitt, and Singer NV. Additionally, Mr. Suckow also served as an advisory partner on over 50 other restructuring assignments. Before joining Alvarez, Mr. Suckow was the Managing Partner of a Big Five Restructuring practice, responsible for all facets of the business, including the oversight of 180 full-time restructuring professionals. The Engagement Letter The Debtors and Alvarez entered into an Engagement Letter, dated August 27, 2004, as amended and restated on September 21, 2004, designating Mr. Alvarez, as the Debtors' Chief Executive Officer, Mr. Suckow, as the Debtors' Chief Restructuring Officer, and other professionals of the firm to act as executive officers of the Debtors or their subsidiaries. "In accordance with the Engagement Letter, Messrs. Alvarez and Suckow, as the principal [Alvarez] professionals responsible for the provision of services to the Debtors, will be available on a full-time basis and will be focused on all aspects of the Debtors' operational issues," Ronald B. Hutchinson, Chief Financial Officer of Interstate Bakeries Corporation, says. "Messrs. Alvarez and Suckow will act under the direction, control and guidance of the Debtors' Board of Directors." The Debtors believe that Messrs. Alvarez and Suckow and the resources, capabilities, and experience of the firm's other employees is crucial to the Debtors' successful restructuring. Messrs. Alvarez and Suckow and the other Alvarez Employees fulfill a critical need that complements the services offered by the Debtors' other restructuring professionals. Services To Be Rendered As Restructuring Managers, Messrs. Alvarez and Suckow will: (a) coordinate all professionals hired by the Debtors to avoid duplication of services with other professionals retained in their Chapter 11 cases; (b) develop short term cash flows and liquidity plans for the Debtors; (c) develop employee retention plans; (d) develop business plans, including operating and cash flow projections; (e) provide testimony, as required by the court; (f) once the business plan is completed, working closely with the investment banker, develop proposed reorganization plans; and (g) perform other activities as directed by the CEO and approved by the Board of Directors. Professional Compensation In exchange for its services, Alvarez will receive: (a) a $150,000 monthly fee for the services of Mr. Alvarez; (b) payment of fees based on these hourly rates for Mr. Suckow, and other Alvarez Employees: Professionals Hourly Rates ------------- ------------ Managing Directors $500 - 650 Directors 375 - 450 Associates 275 - 350 Analysts 200 - 250 (c) reimbursement of all reasonable out-of-pocket expenses, including but not limited to travel costs, lodging, meals, research, telephone and facsimile, courier, overnight mail, and copy expenses. All fees and expenses will be billed and payable on a monthly basis, or at the firm's discretion. Alvarez will be entitled to incentive compensation on 5% of the value created, the definition of which will be agreed to with the Board of Directors within 90 days after signing the Engagement Letter. Under all circumstances other than a liquidation of the Debtors, the firm's incentive compensation will be at least $3,085,000, payable on the earlier of: -- consummation of the Debtors' reorganization plan; -- a sale of all or a substantial portion of the Debtors' assets in one or more transactions; or -- the Debtors' liquidation. Messrs. Alvarez and Suckow and the firm's Employees will continue to draw their salaries and receive health and other personal benefits from the firm, thus relieving the Debtors of any payroll expense. Indemnification As part of the overall compensation payable to Alvarez under the terms of the Engagement Letter, the Debtors agree to indemnify Messrs. Alvarez and Suckow and the firm's Employees to the same extent as the most favorable indemnification the Debtors extend to its officers and directors. Disinterestedness Mr. Suckow attests that Alvarez has no connection with, and holds no interest adverse to, the Debtors, their creditors, or any other party-in-interest, or their attorneys or accountants, or the Office of the United States Trustee or any person employed in the Office of the United States Trustee, in the matters for which the firm is proposed to be retained except as disclosed by the firm. Prepetition Payments Alvarez received a $500,000 prepetition retainer. Estimated fees and expenses of $440,000 were incurred through the Petition Date and were applied against the Retainer before the commencement of the Debtors' Chapter 11 cases. The Prepetition Payments represent the advisory fees for the period August 27, 2004, through the Petition Date, plus the reimbursement of out-of- pocket expenses for the period. Alvarez received an additional payment of about $190,000, leaving a remaining retainer of about $250,000, which will be credited against any amounts due at the termination of the Engagement Letter and returned after full satisfaction of all obligations under the Engagement Letter. 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) INTERWAVE COMMS: Comments on Auditors' Going Concern Doubt ---------------------------------------------------------- interWAVE(R) Communications International, Ltd. (Nasdaq: IWAV), a pioneer in compact wireless voice communications systems, commented about the going concern uncertainty explanatory paragraph contained in the Company's independent auditors' report, which was included in the Company's report on Form 10-K filed with the Securities and Exchange Commission yesterday, and also confirmed it is in ongoing discussions to be acquired. Erwin F. Leichtle, president and chief executive officer of interWAVE, commented, "We understand that our auditors' explanatory paragraph is focused on the Company's cash needs for this fiscal year ending June 30, 2005, based on our historical recurring losses from operations, and makes reference to disclosures we already have had in our annual and quarterly filings during the last two fiscal years. The Company has recognized for some time now the need to add funding to our business," Mr. Leichtle expanded, "and we continue to pursue a number of fronts to ensure that we are able to achieve this, including ongoing discussions to be acquired. While we have historically managed well with our limited cash balances, our ability to continue to grow has been hampered, and those limited cash balances can make our operating difficult should we have an 'off' quarter. We are optimistic in our ability to execute with adequate funding." He continued, "We were able to raise $5.3 million in the past year from private investment. With that funding, the Company was able to achieve an increase in revenues of 48% year-over-year, even while increasing our gross margin to 48% from 25% and reducing our operating expense run rate by 22%. We grew our annual revenues to $44.5 million in fiscal 2004, up from $30.0 million in fiscal 2003." Cal Hoagland, interWAVE's chief financial officer, stated, "As we indicated in our Form 10-K filing, we are focused on continuing to increase revenues, operating margins and driving down expenses." He continued, "Achieving profitability and positive cash flow is our near-term goal." About interWAVE interWAVE Communications International, Ltd. (Nasdaq: IWAV) is a global provider of compact network solutions and services that offer the most innovative, cost effective and scaleable network architectures allowing operators to "reach the unreached." interWAVE's solutions provide economical, distributed networks that minimize capital expenditure while accelerating customers' revenue generation. These solutions feature a product suite for the rapid and simple deployment of end-to-end compact cellular systems and broadband wireless data networks. interWAVE's highly portable mobile, cellular networks and broadband wireless solutions provide vital and reliable wireless communications capabilities for customers in over 50 countries. interWAVE's U.S. subsidiary is headquartered at 2495 Leghorn Street, Mountain View, California, and can be contacted at iwv.com or at (650) 314-2500. JAFRA WORLDWIDE: Inks Restated Credit Pact with Lenders ------------------------------------------------------- Jafra Worldwide Holdings entered into a Restated Credit Agreement as Guarantor and Parent of the Borrowers thereunder, with Jafra Cosmetics International, Inc. and Distribuidora Comercial Jafra, S.A. de C.V., the lenders named therein and The Bank of New York as administrative agent and collateral agent and City National Bank as syndication agent. The Restated Credit Agreement provides for a revolving credit facility of up to an aggregate of $60,000,000 at any one time outstanding, which can be increased by the Company to $90,000,000 under certain circumstances. Borrowings under the Restated Credit Agreement mature on August 16, 2008. Each Borrower, the Company and certain other subsidiaries of the Company guaranteed the obligations of the other Borrowers. The obligations under the Restated Credit Agreement are secured by substantially all of the assets of the Company, the Borrowers and certain other subsidiaries of the Borrowers, including a pledge of certain shares of capital stock of the Borrowers and their subsidiaries. At June 30, 2004, Jafra Worldwide's balance sheet showed a $62,357,000 stockholders' deficit, compared to a $55,389,000 deficit at Dec. 31, 2003. JARDEN CORP: Moody's Puts B1 Rating on Planned $1.05B Facility -------------------------------------------------------------- Moody's Investors Service assigned a prospective (P) B1 rating to Jarden Corporation's proposed $1.050 billion loan facility and kept the company's existing debt ratings on review pursuant to the company's pending acquisition. The new facility will consist of: (1) an $850 million term loan, which will be used to: (a) fund Jarden's recently announced acquisition of American Household, Inc., and (b) to refinance existing Jarden and American Household debt; and (2) a $200 million revolving credit. Under the terms of the acquisition, Jarden will pay $745.6 million for American Household and assume American Household debt of approximately $148 million. American Household is the former Sunbeam Corporation, whose primary operating subsidiaries are The Coleman Company, Inc., and Sunbeam Products, Inc., which produce the Coleman, Campingaz, Mr. Coffee, Oster, and Sunbeam branded consumer products, among others. Should all aspects of the transaction be completed as presently structured, including the new loan facility, the acquisition price, and the $350 million equity investment from Warburg Pincus (in the form of $300 million of preferred shares and $50 million of common shares), upon closing Moody's would expect that the ratings will be downgraded by one notch and the current bank facility ratings withdrawn. These ratings are expected to be assigned: * $850 million senior secured term loan facility, due 2012 -- B1; * $200 million senior secured revolving credit facility, due 2010 -- B1. These ratings remain on review (since September 27, 2004): * Senior implied rating of Ba3; * $180 million 9-3/4% senior subordinated notes due 2012 of B2; * Senior unsecured issuer rating of B1; * $70 million senior secured revolving credit facility due 2007 of Ba3; * $50 million senior secured term loan A due 2007 of Ba3; * $150 million senior secured term loan B due 2008 of Ba3; * $100 million add-on term loan B due 2008 of Ba3. The proposed and expected rating actions reflect: (i) the risks associated with the large, (ii) primarily debt financed, (iii) acquisition in terms of integration challenges, and (iv) weaker credit metrics. Note that American Household has been a highly distressed company in the past and turning around the brands to the level where the high acquisition multiple could be effectively managed could be a challenge. The American Household transaction, though beneficial in expanding Jarden's product offering, will be the issuer's most ambitious to date as the company's combined proforma revenue will be an annualized run rate of approximately $2.7 billion vs. Jarden's current annualized revenues of approximately $900 million and comes soon after the closing of the company's acquisition of United Sates Playing Cards (in June). The company's present products tend to have large, or even dominant, market shares, while the products being acquired face greater competition. The acquisition price represents a multiple of 7.5 X American Household's LTM 6/30/04 adjusted EBITDA of $118 million. The 7.5 X signifies a higher multiple than Jarden's previous acquisitions and results in a Debt to EBITDA of approximately 3.6 X at closing. The ultimate de-leveraging of the company to less than 2 X at year-end 2007 is dependent on operating margin improvement, as well as on sales growth. While Moody's believes that American Household's recent low EBIT margins can be improved upon, it is noted that the pace at which this improves may be slower than management plans given the sheer number of products involved. Jarden's planned cost synergies are projected to produce rapid EBIT margin improvement back to historical levels in a 3 to 5 year period. Prospective (P) B1 rating on the $1.050 billion new senior secured bank facilities recognizes their senior and majority position, and that these facilities will be guaranteed by domestic and foreign subsidiaries and secured by all of the assets and properties of the borrower and guarantors. However, the rating also recognizes the lack of coverage on a tangible asset basis and the potential for enterprise value to erode in a distress scenario. It is understood that the credit agreement will include covenants concerning: * maximum total leverage, * maximum senior debt leverage, * minimum fixed charge coverage, and * maximum capital expenditures Moody's expects that these will be set at prudent, but not overly restrictive, levels. Headquartered in Rye, New York, Jarden Corporation is a provider of niche, branded household consumer products. In North America, Jarden is the market leader in several targeted categories, including playing cards, cordage, home canning, branded retail plastic cutlery, kitchen matches, toothpicks, and home vacuum packaging. Jarden also is the largest producer of zinc strip in the US, and sole source supplier of copper plated zinc penny blanks to both the U.S. and Canadian Mint. The company's reported revenues were approximately $587 million for the fiscal year ended December 2003. JARDEN CORPORATION: S&P Affirms B+ Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services removed its ratings on Jarden Corp., including its 'B+' corporate credit rating, from CreditWatch. At the same time, Standard & Poor's affirmed the ratings on the Rye, New York-based houseware manufacturer. The outlook is stable. The ratings were originally placed on CreditWatch on September 20, 2004, following the company's announcement that it had agreed to acquire small-appliance and outdoor equipment manufacturer American Household Inc. At the same time, Standard & Poor's assigned its 'B+' bank loan rating and '3' recovery rating to Jarden's proposed $1.1 billion senior credit facility due 2009, indicating the expectation of a meaningful (50%-80%) recovery of principal in the event of a default. Proceeds from this bank loan, along with $350 million of equity contributed by Warburg Pincus, a private equity firm, will be used to refinance existing bank debt and to acquire American Household Inc. for about $890 million. The ratings are based on preliminary offering statements and are subject to review upon final documentation. Pro forma for the acquisition of American Household Inc., total debt outstanding at Jarden is expected to be about $1.0 billion. "The acquisition of American Household Inc., Jarden's largest to date, nearly doubles the size of the company, and management will be challenged to integrate the operations," said Standard & Poor's credit analyst Martin Kounitz. JWS CBO: Fitch Upgrades Rating on $23.25M Class D Notes to 'BB-' ---------------------------------------------------------------- Fitch Ratings upgrades one class of notes issued by JWS CBO 2000-1, LTD. These rating actions are effective immediately: -- $31,500,000 class C notes affirmed at 'BBB'; -- $23,250,000 class D notes upgraded to 'BB-' from 'B+'. JWS CBO is a collateralized bond obligation managed by Stonegate Capital Management, L.L.C., which closed July 18, 2000. JWS CBO is composed of primarily corporate high yield bonds. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates relative to the minimum cumulative default rates required for the rated liabilities. The class D notes were downgraded on July 31, 2002 and subsequently affirmed on July 9, 2003. The collateral has continued to improve since the last rating action. The class A/B, class C, and class D overcollateralization -- OC -- tests have improved by a minimum of 100 bps while maintaining the weighted average spread requirement as of the most recent trustee report available dated Sept. 16, 2004. All OC tests are currently passing their required trigger levels. Defaulted assets in the portfolio have decreased since the last downgrade review from 4.15% to 2.57%. Assets rated 'CCC+' or lower increased slightly since the last downgrade rating action from 14.6% to 17.5% of the portfolio. The weighted average coupon has remained stable from 9.86% to 9.82% to the most recent trustee report and the weighted average margin has decreased slightly from 5.75% to 5.30%. The ratings of the class C and D notes address the ultimate payments of interest and principal by the legal final maturity date. As a result of this analysis, Fitch has determined that the current ratings assigned to the class D notes no longer reflect the current risk to noteholders and have subsequently improved. The rating on the class D notes has been returned to the original rating. Fitch will continue to monitor and review this transaction for future rating adjustments. For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004, available on Fitch's web site at http://www.fitchratings.com/ KAISER ALUMINUM: Wants to Settle Mead Environmental Claims ---------------------------------------------------------- Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that from 1947 until 2004, Kaiser Aluminum & Chemical Corporation owned and operated an aluminum smelter located in Mead, Washington, known as the Mead Aluminum Reduction Works. On May 18, 2004, the Court approved the sale of the Mead Smelter to CDC Mead, LLC. According to Mr. DeFranceschi, excluded from the sale to CDC Mead was a site that comprises a 25-acre consolidated and covered pile of spent potlining, solid waste rubble and anode butt tailings, and a 25-acre wet scrubber sludge bed -- the Mead SPL Site. Cyanide and fluoride contamination exists in soil and groundwater below the Mead SPL Site, and a groundwater plume containing fluoride and cyanide extends northwest from the Mead SPL Site for 2.5 miles to where it enters the Little Spokane River. In 1983, due to this contamination, the United States Environmental Protection Agency placed the Mead SPL Site on the Superfund National Priorities List as the Kaiser Aluminum -- Mead Works -- site. The EPA designated KACC as a potentially responsible party for the contamination under the Comprehensive Environmental Response, Compensation, and Liability Act. Similarly, the State of Washington, Department of Ecology designated KACC as a potentially liable party under Washington's Model Toxics Contract Act. Mr. DeFranceschi relates that both the EPA and the Department of Ecology asserted claims against KACC in respect of the contamination at the Mead Smelter and the Mead SPL Site. Specifically, the EPA filed Claim No. 7135 asserting, among other claims: (a) a $149,853 general unsecured claim on behalf of the EPA for past response costs; and (b) a protective claim with respect to the Debtors' alleged injunctive obligation to perform future work to clean up the Mead Smelter and the Mead SPL Site, which the EPA estimated would cost $22,000,000. Washington, at the request of the Department of Ecology, filed Claim No. 7181 asserting, among other claims, a protective claim regarding the Debtors' alleged injunctive obligation to perform future remedial actions in connection with releases or threatened releases of hazardous substances into the environment from the Mead Smelter and the Mead SPL Site, which the Department of Ecology estimate would also cost $22,000,000. On October 27, 2003, the Court entered an order approving a consent decree among the Debtors, the United States, the States of California, Rhode Island and Washington, and the Puyallup Tribe of Indians that settled, without admission of liability, several environmental claims and causes of action. The October 27 Consent Decree does not apply to the Mead SPL Site or the Mead Smelter, which the October 27 Consent Decree defined as a "Reserved Site." The Consent Decree Following negotiations over several months, on August 13, 2004, the Debtors, the EPA and the Department of Ecology entered into a consent decree. The Consent Decree settles, without admission of liability, the Mead Environmental Claims and the Debtors' prepetition environmental liabilities in connection with the Mead SPL Site. The salient terms of the Consent Decree are: (a) KACC will convey the Mead SPL Site to a custodial trust. A full-text copy of the Custodial Trust Agreement is available for free at: http://bankrupt.com/misc/Consent_Decree_Custodial_Trust_Agreement.pdf (b) KACC is required to make payments to fund insurance and certain future work at the Mead SPL Site. Generally, the payments will fund: -- short-term work to reduce the potential for water infiltration; -- long-term groundwater monitoring and maintenance of contaminant source controls; and -- insurance against the contingency that groundwater remediation may be required in the future; (c) The payments to be made at the time of the transfer of the Mead SPL Site are: -- $2,250,000 to the Custodial Trust. The Consent Decree provides that those funds are to be used to carry out the tasks set forth in a Scope of Work. The funded SOW tasks are in addition to the tasks funded through an insurance policy; and -- $4,600,000, plus applicable taxes totaling $110,400, to American International Specialty Lines Insurance Company to procure an insurance policy. The Insurance Policy provides the funding necessary to complete tasks specified in the Remedial Action Plan. The RAP is an exhibit to the SOW, segregated from other tasks in the SOW to readily identify the tasks that the Insurance Policy funds. A full-text copy of the Scope of Work and the Remedial Action Plan is available for free at: http://bankrupt.com/misc/Consent_Decree_Scope_of_Work.pdf The Insurance Policy has an $18,000,000 policy limit and a 30-year term. It names the Custodial Trust as the named insured and both the Department of Ecology and the EPA as additional insured; (d) KACC will record an easement granting the Custodial Trust access to an area downgradient from the Mead SPL Site for environmental monitoring and any future remedial actions. A full-text copy of the Easement Agreement is available for free at: http://bankrupt.com/misc/Mead_Consent_Decree_Easement_Agreement.pdf (e) The EPA and the Department of Ecology have agreed not to sue the Debtors or their successors and officers with respect to the Mead SPL Site or any release of hazardous substances from the Mead SPL Site, subject only to a limited reservation of rights to bring an action based on: -- future actions of the Debtors creating new environmental liabilities; -- criminal liability; or -- failure to meet a requirement of the Consent Decree; (f) The Debtors are entitled to protection to the maximum extent provided by CERCLA and MTCA against any actions or claims for contribution by other liable parties for any existing or future response costs with respect to the Mead SPL Site; (g) Although the Debtors are not obligated to pursue insurance recovery for environmental liabilities or property damage, by virtue of the Consent Decree or otherwise, if after the effective date of a reorganization plan KACC pursues and recovers insurance proceeds for property damage insurance for environmental costs incurred or to be incurred with respect to the Mead Smelter or the Mead SPL Site, KACC will retain 60% of the recovery in excess of KACC's costs of pursuing the recovery and the remaining 40% will be allocated to the Custodial Trust; (h) In clarification of the treatment of the Mead Smelter and surrounding Debtors-associated properties in relation to the October 27 Consent Decree, the Mead Smelter and all other properties located in or about Mead, Washington, previously owned by KACC will be deemed "Additional Sites." Any other properties located in or about Mead, Washington that are owned by KACC at or at any time after confirmation of a reorganization plan that includes KACC, will be deemed "Debtor-Owned Sites"; (i) Daniel J. Silver will serve as the Custodial Trustee; (j) The Consent Decree provides direction to the Custodial Trust regarding the tasks to be carried out with the funds being provided by KACC, both directly and through the Insurance Policy; and (k) The parties to the Consent Decree agree that the portions of the United States' Claim No. 7135, except the EPA's $149,853 claim for past response costs, and Washington's Claim No. 7181 that assert liabilities with respect to the Mead Smelter or the Mead SPL Site will be deemed satisfied and withdrawn. Logan & Company, Inc., the Debtors' claims and noticing agent, should be authorized and empowered to withdraw those portions of the claims as satisfied. By this motion, the Debtors ask the Court to: (1) approve the Consent Decree pursuant to Rule 9019 of the Bankruptcy Code; (2) approve the Custodial Trust Agreement; and (3) appoint Daniel J. Silver as Custodial Trustee of the Custodial Trust. Mr. DeFranceschi notes that there are certain parties not party to a consent decree between KACC, the EPA, and Washington who filed Claim Nos. 1224 and 1558, which also related to the Mead SPL Site. These parties assert liabilities related to KACC's contractual obligation to pay certain individual property water bills and a small water withdrawal fee in connection with the contamination of groundwater below the Mead SPL Site. Claim Nos. 1224 and 1558 are not affected by the Consent Decree. 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. 51; Bankruptcy Creditors' Service, Inc., 215/945-7000) KIEL BROS.: Has Exclusive Right to File Plan through Dec. 13 ------------------------------------------------------------ The Honorable Basil H. Lorch, III, of the U.S. Bankruptcy Court for the Southern District of Indiana granted Kiel Bros. Oil Co.'s request for an extension of its exclusive periods, pursuant to 11 U.S.C. Sec. 1121, to file a chapter 11 plan and solicit acceptances of that plan from creditors. The Debtor didn't get the extension into 2005 that it originally requested. Rather, Judge Lorch extended the Debtor's exclusive period during which to file a chapter 11 plan through Dec. 13, 2004. The 30-day reduction was at the behest of National City Bank of Indiana, the Debtor's prepetition secured lender and DIP financier. As previously reported in the Troubled Company Reporter, Kiel held an auction on Sept. 20 and received many bids for its 210 convenience store and wholesale fuel supply business. National City supports the Debtors efforts to close the multiple transactions that emerged from that auction. National City understands that Kiel Bros. is also trying to sell the entire business in one transaction. National City doesn't support that plan because it will take too much time and the Debtor is unlikely to have enough cash available to finance operations through the closing of a larger transaction. Headquartered in Columbus, Indiana, Kiel Bros. Oil Company, Inc., operates a chain of Tobacco Road convenience stores and has a wholesale fuel supply business. The Company filed for chapter 11 protection on June 15, 2004 together with its affiliate KP Oil, Inc. (Bankr. S.D. Ind. Case No. 04-92128). Jay Jaffe, Esq., at Baker & Daniels represents the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debts and assets of over $10 million. LAIDLAW INT'L: Will Release 2004 4th Quarter Results on Nov. 10 --------------------------------------------------------------- Laidlaw International (NYSE:LI), will release financial results for its fiscal fourth quarter and fiscal full year 2004, ending August 31, 2004, on Wednesday, November 10, 2004 after market close. The company will hold a conference call hosted by senior management to discuss the financial results on Thursday, November 11, 2004 at 10:00 a.m. (Eastern). A web cast of the conference call will be accessible at Laidlaw International's website http://www.laidlaw.com/ To participate in the call, dial: * 888-889-5602 - (US and Canada) * 973-935-8599 - (International) A replay will be available immediately after the conference call through December 11, 2004. To access the replay, dial 877-519- 4471 (U.S and Canada) or 973-341-3080 (International); access code: 5270493. Additionally, the web cast will be archived on the Company's website. Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc., -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. LEVI STRUASS: Aug. 29 Balance Sheet Upside Down by $1.3 Billion --------------------------------------------------------------- Levi Strauss & Co. (LS&CO.) reported financial results for the third quarter ended Aug. 29, 2004, and filed its third-quarter 2004 Form 10-Q with the Securities and Exchange Commission. Results for the quarter, compared to the same quarter in the prior year, reflected continued improvements in: -- gross profit; -- selling, general and administrative expense; and -- net income on expected lower net sales. Third-quarter 2004 net sales were $995 million compared to $1,084 million for the third quarter of 2003, representing a decrease of $89 million or 8.2 percent on a reported basis and 10.2 percent on a constant-currency basis. The expected sales decrease was due primarily to the impact of approximately $65 million in initial product shipments in the third quarter of 2003 to fill retail shelves at 3,000 U.S. Wal-Mart stores for the launch of the Levi Strauss Signature(TM) brand. In addition, actions the company has taken this year that helped improve its profitability contributed to the overall sales decrease during the quarter, including: -- licensing or exiting unprofitable and underperforming businesses in order to focus on more profitable core-product assortments, resulting in approximately $24 million in reduced sales; and -- a planned reduction in closeout sales to off-price retail channels in 2004, decreasing sales by approximately $19 million. The sales declines were partially offset by the continued growth of the company's Asia Pacific business, which generated an 11.5 percent net sales increase on a constant currency basis. "We're doing what we said we'd do," said Phil Marineau, chief executive officer. "We set out to improve our profitability this year and that's what we've done so far. Our business is healthier and more competitive today than when we began the year. In addition to strengthening the financial performance of the company, we are increasing consumer demand for our products through new marketing and product innovation." Third-Quarter 2004 Results -- Gross profit was $456 million, or 45.9 percent of net sales, compared to $397 million, or 36.7 percent of net sales in the third quarter of 2003. Gross profit in the 2004 period benefited from: -- improved management of returns, allowances and product transition costs; -- increased sales of premium-priced products in Europe and Asia; -- lower product sourcing costs; and -- stronger foreign currencies. Year-to-date gross margin was 43.8 percent of net sales. The gross margin improvement during the third quarter resulted from the unusually favorable mix of more profitable core products, as well as the company's product rationalization efforts. -- Selling, general and administrative expense decreased to $301 million from $343 million in the third quarter of 2003. Lower SG&A expense was attributable primarily to a $14 million reduction in advertising expense, an approximately $9 million decrease in post-retirement healthcare expense and an approximately $19 million reduction in other SG&A expenses. The company is reporting long-term incentive compensation expense separately from SG&A expense in both the current and prior year period because of the substantial impact of a $129.1 million net reversal of long-term incentive compensation expense in the 2003 period. -- Advertising expense decreased 19.6 percent to $57 million, or 5.7 percent of net sales, compared to $70 million, or 6.5 percent of net sales in the 2003 period. -- Post-retirement healthcare expense was a net benefit of approximately $7.4 million compared to a $1.5 million expense in the prior year period. The improvement reflects the impact of our headcount reductions and previously reported post-retirement medical plan changes for certain employees and retired participants. -- Lower other SG&A reflects the cost reductions related to reorganization initiatives, partially offset by higher annual incentive expense and a foreign currency translation increase. -- Long-term incentive compensation expense for the quarter was $10.7 million compared to a $129.1 million net reversal in the 2003 period. The reversal was made in the prior year as a result of lower than expected incentive payouts due to the decline in the company's performance during the second half of 2003. -- Restructuring charges, net of reversals, were $28.1 million in the third quarter of 2004 versus restructuring charges, net of reversals, of $2.6 million in the 2003 period. The third-quarter 2004 charges were primarily associated with the closure of manufacturing plants in Spain and Australia as well as headcount reductions in the United States and Europe as the company continued to streamline operations. -- Operating income for the quarter decreased 33 percent to $128.6 million, or 12.9 percent of revenue, compared to $191 million, or 17.6 percent of revenue, for the same period of 2003. Operating income was primarily impacted by the reversal of long-term incentive compensation accruals during the third quarter of 2003 described above and increased restructuring charges during the same period in 2004, partially offset by increased gross profit and lower SG&A. -- Income tax expense for the quarter was $17.8 million, compared to $135.5 million in the 2003 period. The third- quarter 2003 tax expense included a provision of approximately $223 million related to an additional valuation allowance against deferred tax assets. -- Net income for the third quarter of 2004 increased to $46.6 million compared to a net loss of $4.3 million for the third quarter of 2003. The improvement was due primarily to higher gross profit, lower SG&A expense and lower tax expense, partially offset by the impact of the reversal of long-term incentive compensation accruals in 2003 and increased restructuring charges this year. As of August 29, 2004, total debt, less cash, stood at $2.0 billion compared to $2.1 billion at the end of fiscal year 2003. As of October 10, 2004, the company had total available liquidity of approximately $562.2 million, consisting of approximately $317.0 million in liquid short-term investments and approximately $245.2 million in net available borrowing capacity under its revolving credit facility. "Our results -- improved gross profit, lower SG&A, improved cash flow and a stronger balance sheet -- were consistent with our strategy to focus our brands and drive a more profitable business. Accordingly, we have rationalized our sales base and taken a rigorous look at reducing expenses by business and function across the entire company," said Jim Fogarty, chief financial officer. "For example, during the third quarter we continued to streamline our U.S. and European organizations, announced our intent to close our Australian manufacturing plant at the end of November and reached an agreement with employee and union representatives on the terms of the closure of our two Spanish factories." Levi Strauss & Co. is one of the world's leading branded apparel companies, marketing its products in more than 110 countries worldwide. The company designs and markets apparel for men, women and children under the Levi's(R), Dockers(R) and Levi Strauss Signature(TM) brands. At Aug. 29, 2004, Levi Strauss' balance sheet showed a $1,327,557,000 stockholders' deficit, compared to a $1,393,172,000 deficit at November 30, 2003. LIBERATE TECH: Posts $12.3 Million Net Loss in First Quarter ------------------------------------------------------------ Liberate Technologies (Pink Sheets: LBRT), a leading provider of software for digital cable systems, reported financial results for its first fiscal quarter ended Aug. 31, 2004. Liberate's revenues for its first fiscal quarter were $1.1 million, compared to $1.5 million for the same quarter of the prior fiscal year. The net loss for the quarter was $12.3 million, compared to a loss of $12.6 million, for the same quarter of the prior fiscal year. The loss in the current year includes a charge of $4.4 million for excess facilities related to the Company's former headquarters in San Carlos, California. As of August 31, 2004, Liberate had cash and cash equivalents of $210.0 million, a decrease of $5.9 million during the quarter. In addition to cash and cash equivalents, the Company had $10.9 million in restricted cash held as security for office leases. "We continue to push ahead with our goals of restructuring the Company and growing revenues," said David Lockwood, Chairman and CEO of Liberate. "We are pleased with the commitments to our technology that have been made by Cox, NTL and Telewest. While we are disappointed with the dismissal of our bankruptcy case and have appealed the ruling, we are making progress on our restructuring efforts. We are delighted that the SEC staff has completed its investigation into the events that led to the restatement of our financial statements and has recommended no enforcement action against the Company. In addition, during the quarter, we made progress toward resolving the shareholder class- action litigation." Condensed Consolidated Financial Statements Basis of Presentation Because the Chapter 11 bankruptcy case was still pending as of Aug. 31, 2004, Liberate have prepared the attached unaudited condensed consolidated financial statements in accordance with the provisions of Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code", which does not significantly change the application of accounting principles generally accepted in the United States. However, it does require that the financial statements for periods including and subsequent to filing the Chapter 11 petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. At August 31, 2004, Liberate Technologies' balance sheet shows: Total Current Assets $215,625,000 Total Assets 231,101,000 Total Current Liabilities 12,976,000 Total Liabilities 53,948,000 Total Equity $177,153,000 Headquartered in San Mateo, California, Liberate Technologies provides software and services for digital cable systems. The Company filed for chapter 11 protection on April 30, 2004 (Bankr. D. Del. Case No. 04-11299, transferred, May 12, 2004, to Bankr. N.D. Calif., Case No. 04-31394). When the Company filed for bankruptcy protection, it listed $257,000,000 in total assets and more than $21,700,000 in total debts. Liberate filed a proposed Plan of Reorganization providing for the payment of 100% of valid creditor claims. The Landlord for the company's former San Carlos headquarters complained that the Debtor's attempt to reject the lease under 11 U.S.C. Sec. 365 and cap his rejection claim under Sec. 506 of the Bankruptcy Code was an abuse of the system. Seeing more cash than debt, the Honorable Thomas E. Carlson agreed, and dismissed the solvent debtor's chapter 11 case on Sept. 8, 2004. Liberate is appealing that ruling (N.D. Calif. Case No. 04-03854). Crista L. Morrow, Esq., Desmond J. Cussen, Esq., Fred L. Pillon, Esq., Jonathan Landers, Esq., and Jayesh Sanatkumar Hines-Shah, Esq., at Gibson Dunn & Crutcher LLP, represent Liberate. The disgruntled landlord, Circle Star Center Associates, L.P., is represented by Douglas J. McGill, Esq., Andrew C. Kassner, Esq., and Michael W. McTigue, Jr., at Drinker Biddle & Reath LLP, and Michael P. Brody, Esq., James R. Stillman, Esq., and Diane K. Hanna, Esq., at Ellman Burke Hoffman & Johnson. James L Lopes, Esq., Janet A. Nexon, Esq., and Jason Gerlach, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, represent an ad hoc equityholders' committee. LNR PROPERTY: Declares Quarterly Cash Dividends ----------------------------------------------- LNR Property Corporation (NYSE:LNR) declared a quarterly cash dividend of $0.0125 per common share and $0.01125 per Class B common share. Both dividends are payable on Nov. 16, 2004 to shareholders of record at the close of business on Nov. 5, 2004. LNR has approximately 29.9 million shares outstanding, 20.1 million of which are common stock and 9.8 million are Class B common stock. LNR Property Corporation [NYSE: LNR] is a real estate investment and management company headquartered in Miami Beach, Florida, USA, with assets of $3.1 billion and equity of $1.1 billion at May 31, 2004. * * * As reported in the Troubled Company Reporter on Sept. 1, 2004, Moody's Investors Service placed LNR Property Corporation's Ba3 senior subordinate ratings on review for possible downgrade following the announcement by LNR of its agreement to be acquired by Riley Property Holdings, an entity controlled by Cerberus Capital Management L.P. and its real estate affiliate Blackacre Institutional Capital Management. Cerberus will own 75% of the newly formed Riley, with LNR's management and Stuart Miller (LNR's Chairman) and his family purchasing the other 25%. Cerberus has arranged debt financing to help fund this acquisition, which should close in late 2004 or early 2005. Cerberus Capital Management is a New York City-based global private investment firm, which, together with its affiliates, manages in excess of $14 billion of unlevered capital. According to Moody's, the transaction is designed to provide LNR with greater financial and operational flexibility. At the same time, Moody's expects the transaction to be highly leveraged, putting additional pressure on LNR's fixed charge coverage and effective leverage. LNR's permanent capital structure is uncertain at this time. On a positive note, LNR's management will retain their roles, and Moody's expects this management team to continue its successful track record. M&M ROOFING INC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: M&M Roofing Inc aka M&M Windows & Siding 760 Holbrook Road Glenwood, Illinois 60425 Bankruptcy Case No.: 04-37301 Type of Business: The Company provides full-service roofing, siding, soffit, fascia, windows, and gutter work for residential, commercial and industrial customers throughout Chicago and Indiana. See http://www.mmroof.com/ Chapter 11 Petition Date: October 7, 2004 Court: Northern District of Illinois (Chicago) Judge: Bruce W. Black Debtor's Counsel: Bruce C Scalambrino, Esq. Scalambrino & Arnoff 33 North Lasalle Street, Suite 1210 Chicago, Illinois 60602 Tel: 312-629-0545 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 ------ --------------- ------------ Mayes, Ronald Potential claim under the $91,663 Fair Labor Standards Act Hammonds, Kevin D. Potential claim under the $88,976 Fair Labor Standards Act Webb, Gary Potential claim under the $85,062 Fair Labor Standards Act Gutierrez, Adrian Potential claim under the $81,849 Fair Labor Standards Act Luth, Ronald Potential claim under the $72,546 Fair Labor Standards Act Camarena, Miguel Potential claim under the $53,690 Fair Labor Standards Act Snedan, David Potential claim under the $46,469 Fair Labor Standards Act Martinez, Jose Potential claim under the $45,476 Fair Labor Standards Act Perez, Hector Potential claim under the $44,685 Fair Labor Standards Act Sanchez, Hugo Potential claim under the $41,210 Fair Labor Standards Act Trembczyinski, Stephen Potential claim under the $41,110 Fair Labor Standards Act Pewitt Jr., William R. Potential claim under the $38,754 Fair Labor Standards Act Hom, Gayle Potential claim under the $38,310 Fair Labor Standards Act Horta, Arturo Potential claim under the $37,791 Fair Labor Standards Act Szymaszek, Joshua J. Potential claim under the $33,321 Fair Labor Standards Act Sandala, Joshua Potential claim under the $32,644 Fair Labor Standards Act Gutierrez, Raul Potential claim under the $29,399 Fair Labor Standards Act Sprague, Richard Potential claim under the $27,669 Fair Labor Standards Act Haun, Thomas R. Potential claim under the $27,691 Fair Labor Standards Act Climer, Rick G. Potential claim under the $26,656 Fair Labor Standards Act MAXIM CRANE: CEO Wants an Alternative Plan of Reorganization ------------------------------------------------------------ Albert C. Bove, President of Maxim Crane LLC and its debtor- affiliates asks the U.S. Bankruptcy Court for the Western District of Pennsylvania for permission to propose an alternative Plan of Reorganization co-authored by creditor AmQuip Corporation. Mr. Bove agrees to AmQuip's proposal to buy all of the Debtors' assets, subject to better and higher offers, contrary to the Plan proposed by the Debtors. Mr. Bove was the Chief Executive Officer when the Joint Plan of Reorganization was filed by the Debtors and its affiliates in August this year. Mr. Bove and AmQuip do not believe that the Joint Plan will effectuate a successful restructuring. Instead, confirmation of the Plan will leave the Debtors cashless within 12 months and the company will lose their key operations managers. The alternative Plan, Mr. Bove stresses, can result in a real cash return to creditors and will preserve employees' jobs. Headquartered in Pittsburgh, Pennsylvania, Maxim Crane Works, LLC -- http://www.maximcrane.com/-- is a full service crane rental company. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. W.D. Pa. Case No. 04-27861) on June 14, 2004. Douglas Anthony Campbell, Esq., at Campbell & Levine, LLC, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated debts and assets of over $100 million. MICROCELL TELECOM: TELUS Did Not Extend Stock Purchase Offer ------------------------------------------------------------ TELUS Corporation (TSX: T, T.A; NYSE: TU) did not extend its offers to purchase all of the issued and outstanding publicly traded shares and warrants of Microcell Telecommunications Inc. As a result, the offers expired yesterday, Oct. 12, 2004, 9 p.m., Toronto time. TELUS Corporation did not take up and pay for any shares or warrants of Microcell that remain deposited to its offers as of the expiry time. TELUS also cancelled a commitment from the Royal Bank of Canada to provide a Cdn.$500 million credit facility, which was to be available for general corporate purposes following the completion of the offers. TELUS is Canada's second largest telecommunications company with more than Cdn$7 billion of annual revenue, more than 4.8 million network access lines and more than 3.6 million wireless subscribers. The company provides subscribers across Canada with a full range of telecommunications products and services utilizing next-generation Internet-based technologies, including data and voice services through TELUS Communications Inc. and wireless services through TELUS Mobility. Microcell Telecommunications, Inc., is a major provider, through its subsidiaries, of telecommunications services in Canada dedicated solely to wireless. Microcell offers a wide range of voice and high-speed data communications products and services to over 1.2 million customers. Microcell operates a GSM network across Canada and markets Personal Communications Services -- PCS -- and General Packet Radio Service -- GPRS -- under the Fido(R) brand name. Microcell has been a public company since October 15, 1997, and is listed on the Toronto Stock Exchange. * * * As reported in the Troubled Company Reporter on Sept. 23, 2004, Moody's Investor's Service continues to review for possible upgrade the Caa1 Senior Implied and Ca Issuer ratings of Microcell Telecommunications, Inc., and the B3 First Priority Senior Secured and Caa2 Second Priority Senior Secured ratings of Microcell Solutions, Inc. The review, which initially commenced in May 2004 following the C$1.1 billion cash bid for Microcell by TELUS Corporation, will now consider the announcement that Rogers Wireless Communications, Inc., Rogers Communications, Inc., and Microcell have entered into an agreement under which Wireless will make a C$1.4 billion cash bid for Microcell's securities. The agreement is subject to regulatory approvals and Microcell shareholder acceptance. The review will consider the potential for either of the TELUS or Wireless bids to be completed, and Microcell's debt to be fully repaid. MIRANT CORP: Asks Court to Approve Columbia Gas Settlement Accord ----------------------------------------------------------------- Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas, relates that, with respect to the rejection of Mirant Corporation and its debtor-affiliates of their prepetition contracts with Columbia Gas Transmission Corporation, the Debtors commenced negotiations with Columbia to reach a compromise that would benefit the Debtors' estates and avoid litigation concerning any claims that Columbia could assert as a result of the rejection of the Contracts. Subsequently, the parties successfully reached a compromise. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to approve their Settlement Agreement with Columbia. The principle terms of the Settlement Agreement are: (a) Columbia will receive an allowed general unsecured claim against Debtor Hudson Valley Gas Corporation for $11,209,777 -- the Gross Rejection Claim; (b) Columbia will apply $1,895,423 in cash proceeds from the letter of credit issued by Wachovia Bank on behalf of Mirant Americas Retail Energy Marketing, LP, Mirant Americas Energy Marketing, LP, and Hudson Valley for the benefit of Columbia and certain affiliates, to the Gross Rejection Claim; (c) After application of the proceeds of the Letter of Credit, Columbia will have a $9,314,354 allowed, general, prepetition, unsecured claim against Hudson Valley, provided that Columbia: -- withdraws Claim No.7678, which was asserted against MAEM in connection with the Contracts; and -- file a proof of claim asserting the $9,314,354 Allowed Claim against Hudson Valley within 30 days after the Court approves the Settlement; (d) Columbia waives its right to assert any administrative claim which may have come due under the Contracts from and after July 14, 2003, to June 23, 2004; (e) The parties exchange mutual releases of claims arising under, or relating to, the Contracts; and (f) The Settlement does not compromise, discharge or otherwise affect any other disputes between the Debtors and Columbia. 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. Mirant Corporation 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) NATIONAL CENTURY: Court Allows Trust to Get Bankers Trust Docs -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Ohio grants the request of the Unencumbered Assets Trust, the successor-in- interest to certain rights and assets of National Century Financial Enterprises, Inc., and its debtor-affiliates, to obtain certain documents from Bankers Trust Company. As reported in the Troubled Company Reporter on Aug. 11, 2004, the Trust believed that Bankers Trust Company may have information that is relevant to the acts, conduct or property of the estates of the Debtors or to the Debtors' liabilities and financial condition, which may affect the administration of the Debtors' bankruptcy estate. Bankers Trust was the former trustee for certain of NCFE's NPF vehicles before JPMorgan Chase Bank and Bank One, N.A., became NCFE's Indenture Trustees. Sydney Ballesteros, Esq., at Gibbs & Bruns, in Houston, Texas, points out that as a former trustee of NCFE, Bankers Trust has relevant information relating to the evaluation of available assets and determining what assets and what claims may belong to the Debtors' estates. Ms. Ballesteros asserted that to discharge its duties properly, the Trust is entitled to seek and obtain discovery regarding matters relating to the acts, conduct, property, liabilities and financial condition of the Debtors' estates. The Trust did not seek authority to take oral examination of Bankers Trust, Ms. Ballesteros clarifies. However, once it has reviewed the documents produced, the Trust reserves the right to file an additional motion under Rule 2004 of the Federal Rules of Bankruptcy Procedure to take oral examination of Bankers Trust. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the Debtors in their restructuring efforts. (National Century Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) NETWORK INSTALLATION: Wins Multiple Project Orders -------------------------------------------------- Network Installation Corp. (OTC Bulletin Board: NWKI - News), a provider of IT communications solutions, was awarded multiple project orders valued at a minimum of $110,000 with the potential for an additional $100,000. Network Installation was awarded a project order for the deployment of a Wi-Fi network at Tustin Union School District in Orange County, California. Additional new projects also include the installation of IT platforms for Poway Union School District in San Diego, Cambridge Schools in Citrus Heights, Calif. and Rancho Cordova, Calif. - based Octagon Risk Services, Inc. "We continue to experience substantial growth in the K-12 market," stated Network Installation CEO Michael Cummings. He added, "Our pipeline in this sector is robust and we believe will remain one of our core markets for the foreseeable future." According to online IT market data and advisory firm IDC, both higher education and K-12 schools will focus significant investment on network infrastructure and wireless as they expand the reach of their current networks. "IDC research shows that schools are prepared to make key IT investments in the coming years and that spending on systems infrastructure, particularly networking, will lead the way," said Shawn P. McCarthy, program manager, U.S. IT Opportunity: Government and Education at IDC. About Network Installation Corp. Network Installation Corp. provides communications solutions to the Fortune 1000, Government Agencies, Municipalities, K-12 and Universities and Multiple Property Owners. These solutions include the design, installation and deployment of data, voice and video networks as well as wireless networks and Wi-Fi. Through its wholly-owned subsidiary Del Mar Systems International, Inc., the Company also provides integrated telecom solutions including Voice over Internet Protocol (VoIP) applications. To find out more about Network Installation Corp. (OTC Bulletin Board: NWKI), visit our website at http://www.networkinstallationcorp.net/ The Company's public financial information and filings can be viewed at http://www.sec.gov/ * * * Going Concern Doubt In its Form 10-QSB for the quarterly period ended June 30, 2004, filed with the Securities and Exchange Commission, Network Installation Corporation reports that it has accumulated deficit of $6,576,914, is generating losses from operations, and has a negative cash flow from operations. The continuing losses have adversely affected the liquidity of the Company. The Company faces continuing significant business risks, including but, not limited to, its ability to maintain vendor and supplier relationships by making timely payments when due. NEXTWAVE TELECOM: Wants Exclusivity Extended Through Oct. 22 ------------------------------------------------------------ NextWave Telecom, Inc., Nextwave Personal Communications and their debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for a short 10-day extension of their exclusive plan filing period. "The Debtors intend to continue working round the clock to complete their discussions" necessary to finalize transactions and business alternatives that will underpin a chapter 11 plan to emerge from chapter 11 and leave all creditors unimpaired. The Debtors have previously indicated that they intend to pay unsecured creditors in full, in cash, with postpetition interest. The Debtors have told the Court time and again that their estates are in a strong and attractive position. The Debtors are confident that they are in a position to propose a Plan that not only pays creditors in full, but also provides value to equity holders. The remaining challenge, the Debtors point out, is to maximize value for equity holders. The Debtors are wrapping-up the transactions that will provide equity holders with the best value in a most advantageous fashion. Deborah L. Schrier-Rape, Esq., reminds the Court that the estates were insolvent by billions of dollars when Nextwave filed for bankruptcy protection. While the road to reorganization has been challenging and uncertain, the Debtors are confident that the estates are now poised to have almost $1 billion in cash and unencumbered assets. "The recent sale of the New York, Tampa and Sarasota licenses are evidence of the substantial value inherent in the Retained Licenses," Ms. Schrier-Rape said. The Debtors believe that it is prudent to take some additional time to ensure that the best approach to reorganization is followed. The Debtors said that it is in the best interest of the estates to allow additional time for the conclusion of current negotiations and receipt of regulatory approval for the New York and Florida Sales. "This will help to ensure that the Plan is the optimal plan for the Debtors and their interest holders," Ms. Schrier-Rape adds. Headquartered in Greenwich, Connecticut, NextWave Telecom, Inc. -- http://www.nextwavetel.com/-- was formed in 1995 to provide broadband wireless and other mobile communications services to consumer and business markets. The Company filed for chapter 11 protection on December 23, 1998 (Bankr. S.D.N.Y. Case No. 98-23303). The Debtors did battle with the Federal Communications Commission all the way to the U.S. Supreme Court to maintain control of the spectrum licenses it bought at an FCC auction but couldn't afford to pay for at the time. Deborah Lynn Schrier- Rape, Esq., in Dallas, Texas, and lawyers at Andrews & Kurth, LLP, represent the Debtors in their restructuring efforts. NEWAVE INC: Inks New Marketing Agreement with Traffix Inc. ---------------------------------------------------------- NeWave, Inc. (OTC Bulletin Board: NWAV) signed a new marketing agreement with direct internet marketer Traffix, Inc. Under the agreement, Traffix will market a variety of internet-based, value enhancing products and services to NeWave members. Traffix will also provide advertising for NeWave subsidiary OnlineSupplier. Aaron Gravitz President of NeWave Media stated, "The agreement with Traffix represents a significant growth opportunity for NeWave. Each party will provide the other with a qualified and highly targeted market segment that when penetrated should be extremely effective and create compelling results in terms of new business generated." About Traffix, Inc. Traffix is a direct marketing company that generates sales and targeted leads for its clients primarily from its on-line media properties. It owns a variety of websites, and manages a database of millions of permission based, on-line consumers. Traffix also operates proprietary, direct-to-consumer businesses including iMatchup.com, one of the most popular on-line dating sites, and ClickHelp, a live computer technical support service. For more information about Traffix, Inc. visit the website at http://www.traffixinc.com/ About NeWave, Inc. NeWave is a direct marketing company which utilizes the internet to maximize the income potential of its customers, by offering a fully integrated turnkey ecommerce solution. NeWave's wholly-owned subsidiary Onlinesupplier.com, offers a comprehensive line of products and services at wholesale prices through its online club membership. Additionally, NeWave's technology allows both large complex organizations and small stand-alone businesses to create, manage, and maintain effective website solutions for e-commerce. To find out more about NeWave (OTCBB: NWAV), visit our websites at http://www.newave-inc.com/or http://www.onlinesupplier.com/ The Company's public financial information and filings can be viewed at http://www.sec.gov/ * * * As reported in the Troubled Company Reporter's June 8, 2004, edition, Kabani & Company's report on the Company's consolidated financial statements for the fiscal years ended December 31, 2003, and December 31, 2002, included an explanatory paragraph expressing substantial doubt about NeWave's ability to continue as a going concern. NORDICTRACK: Court Dismisses Chapter 11 Case -------------------------------------------- Patricia Simonelli, a Deputy Clerk in the Office of the U.S. Bankruptcy Clerk for District of Massachusetts, advises creditors and other parties-in-interest that the Honorable Henry J. Boroff entered an Order dismissing the chapter 11 case involving NT Liquidation, Inc. (f/k/a NordicTrack) on Sept. 7, 2004. In December 1998, ICON Health & Fitness, Inc., inked an agreement to acquire NordicTrack's inventory, trademarks and other intellectual property for just under $10 million plus up to $3 million of additional consideration from future royalties. ICON was the exclusive manufacturer of NordicTrack treadmills prior to NordicTrack's bankruptcy filing. NordicTrack was the Minneapolis-based company famous for a home fitness machine simulating cross-country skiing. NordicTrack filed for chapter 11 protection (Bankr. D. Mass. Case No. 98-48196) on Nov. 5, 1998, closed 300 retail stores and laid off its workforce. NordicTrack is a wholly owned subsidiary of CML Group, Inc. "Consumer interest in the whole skiing thing dwindled for all the fitness equipment companies," John Agoglia, associate editor of Health & Fitness Business, a twice-monthly newsletter and six- times- a-year magazine based in Manhattan, told a Westchester Business reporter at the time of the collapse. NordicTrack saw its net income tumble -- from $84.8 million in the year ended July 31, 1994, to a loss of $58.6 million in 1997. Sales shrank 47 percent between the 1995 and 1997 fiscal years to $267.7 million. Parent CML saw its net income fall from $51.7 million in fiscal 1994, to a loss of $18.9 million in 1995 and a $127.4 million loss for the year ended July 31. For the year ended July 31, the company lost $85.65 million on sales that slid 30 percent, to $186.3 million. NORTHWEST AIRLINES: Names New Executive Sr. Management Team ----------------------------------------------------------- Northwest Airlines (NASDAQ: NWAC) announced its new executive team structure following the naming on Oct. 1 of Doug Steenland, president, to the additional position of chief executive officer. "The executive management structure completes the leadership transition announced last week. It will allow me to work closely with our experienced management team as we continue to reshape Northwest for success in a very dynamic marketplace," Mr. Steenland said. The new executive team reporting to Mr. Steenland includes: * As announced last week, Andy Roberts, formerly senior vice president of technical operations, who now becomes executive vice president of operations with responsibility for technical operations, engineering, flight operations/systems operations control, customer service and materials management. * Tim Griffin, executive vice president of marketing and distribution, who has assumed additional responsibility for sales and customer relations. * Phil Haan, previously executive vice president of international, sales, and information services, who is now executive vice president of international, alliances and information technology. He also becomes chairman of NWA Cargo. He is responsible for the airlines alliances, cargo, information services, and in-flight services activities. * Bernie Han, who continues as executive vice president and chief financial officer. * Barry Simon who will be joining Northwest on Oct. 20 as executive vice president & general counsel. Simon will be responsible for the airlines legal, facilities and airport affairs functions. * Mike Becker, senior vice president of human resources, Robert Brodin, senior vice president of labor relations, Ken Hylander, chief safety officer, Mary Carroll Linder, senior vice president of corporate and brand communications, and Andrea Fischer Newman, senior vice president of government affairs. "Our experienced management team will continue to implement the strategy we have developed for Northwest's success in this very challenging environment," Mr. Steenland added. Operations Last week, Northwest announced that Andy Roberts, senior vice president of technical operations since August of 2001, would become executive vice president of operations. Mr. Roberts joined Northwest in September of 1997 as managing director of the Minneapolis/St. Paul engine operation, where he had responsibility for the airlines large engine maintenance facility and technical support shops. He later became vice president of materials management operations, where he was responsible for the acquisition and distribution of the materials required by the line and base maintenance organizations. Prior to joining Northwest, Mr. Roberts held a variety of positions in the aviation maintenance industry. He received an honors degree in engineering production from the University of Birmingham and a postgraduate diploma in manufacturing engineering from Coventry City Polytechnic. He serves as chairman of the board of Aeroexchange and serves on the board of Special Olympics Minnesota. As a result of Mr. Roberts promotion, the following operations executives have been given new duties: * Kris Bauer has been named senior vice president of technical operations and will report to Roberts. Bauer has been with Northwest Airlines since 1996 and has held several management positions in operations, planning and finance and most recently as vice president of base maintenance operations. Kris obtained his Bachelor of Science degree in Aerospace Engineering at the University of Kansas and his Masters of Business Administration at Cornell University. * John Bendoraitis has been promoted to vice president and will replace Kris Bauer as vice president of base maintenance operations. John has been with Northwest since 1984 and has held a number of management positions, most recently as managing director, Minneapolis/St. Paul line maintenance operations. John obtained his Bachelor of Arts degree in business administration at Metropolitan State University and his Masters of Business Administration at the University of St. Thomas. * Dale Wilkinson has been promoted to vice president of materials management. Dale has been with Northwest since 1995 and has held positions in technical procurement and contracting and most recently as managing director of procurement and contracts for technical operations and corporate purchasing. Dale obtained his Bachelor of Arts in accounting from North Carolina State University and his Masters of Business Administration from the University of North Carolina. Legal Barry Simon joins Northwest from The Seabury Group, an investment bank and consulting firm that specializes in the transportation industry, where he served as managing director for the past year. Previously, he was a senior executive at Continental Airlines and its affiliated companies from 1982 until 2003. His responsibilities included international, legal, and corporate development in addition to serving as general counsel. He also served as general counsel for Teleprompter Corporation. Mr. Simon graduated magna cum laude from Princeton University with a Bachelor of Arts degree and received his law degree from Yale University Law School. About the Company Northwest Airlines is the world's fifth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo, and Amsterdam, and approximately 1,500 daily departures. Northwest is a member of SkyTeam, a global airline alliance partnership with Aeromexico, Air France, Alitalia, Continental Airlines, CSA Czech Airlines, Delta Air Lines, KLM Royal Dutch Airlines, and Korean Air. SkyTeam offers customers one of the worlds most extensive global networks. Northwest and its travel partners serve more than 900 cities in more than 160 countries on six continents. In 2003, consumers from throughout the world recognized Northwests efforts to make travel easier. Northwests WorldPerks program was named the most popular North American frequent flyer program by readers of TIME Asia in the 2003 TIME Readers Travel Choice Awards. A 2003 J.D. Power and Associate study of airports ranked Minneapolis/St. Paul and Detroit, home to Northwests two largest hubs, in second and fourth place among large domestic airports in overall customer satisfaction. At June 30, 2004, Northwest Airlines Corp.'s balance sheet showed a $2,421,000,000 stockholders' deficit, compared to a $2,011,000,000 deficit at Dec. 31, 2003. NOVA CHEMICALS: Will Release 2004 3rd Quarter Results on Oct. 20 ---------------------------------------------------------------- NOVA Chemicals Corporation will release their 2004 Third Quarter Earnings result on October 20, 2004. Earnings Release: Wednesday, October 20, 2004 7:30 a.m. EDT (6:30 a.m. CDT; 5:30 a.m. MDT; 4:30 a.m. PDT) Conference Call: Wednesday, October 20, 2004 1:00 p.m. EDT (12:00 p.m. CDT; 11:00 a.m. MDT; 10:00 a.m. PDT) Dial-In Number: 416.405.9328 Live Web Cast: Option 1 - The web cast link will be available at: http://www.novachemicals.com/ Investor Relations - Events/Presentations - 2004 Third Quarter Earnings Report Conference Call or Option 2 - The webcast can be accessed live at http://www.vcall.com/(ticker symbol NCX). Instant Replay: A replay of the conference call will be available at 416.695.5800 (passcode #3099681) through Wednesday, Oct. 27, 2004. These are the schedules for upcoming Earnings Release Dates: -- 4th Quarter 2004 - January 26, 2005 -- 1st Quarter 2005 - April 20, 2005 -- 2nd Quarter 2005 - July 20, 2005 -- 3rd Quarter 2005 - October 19, 2005 * * * NOVA Chemicals (S&P, BB+ Long-Term Corporate Credit Rating, Positive) produces ethylene, polyethylene, styrene monomer and styrenic polymers, which are used in a wide range of consumer and industrial goods. NOVA Chemicals manufactures its products at 18 operating facilities located in the United States, Canada, France, the Netherlands and the United Kingdom. The company also has five technology centers that support research and development initiatives. NOVA Chemicals Corporation shares trade on the Toronto and New York stock exchanges under the trading symbol NCX. Visit NOVA Chemicals on the Internet at http://www.novachemicals.com/ OLD UGC: Court Conditionally Approves Disclosure Statement ---------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York gave conditional approval to Old UGC, Inc. and UnitedGlobalCom, Inc.'s First Amended Disclosure Statement filed on Oct. 5, 2004. The Court finds that the Disclosure Statement contains adequate information of a kind and in sufficient detail to enable creditors to make an informed judgment whether to accept or reject the Plan. Any objections to final approval of the Disclosure Statement must be in writing and supported with sworn affidavits, and submitted to the Clerk of the Court with a courtesy copy delivered to Judge Lifland's Chambers. The objection should be received at 4:00 pm on or before November 5, 2004, by: i) the Debtor's counsel: Cooley Godward LLP Attn: Robert L. Eisenbach III, Esq. One Maritime Plaza 20th Floor San Francisco, California 94111 Kronish Lieb Weiner & Hellman LLP Attn: Jay R. Indyke, Esq. & Richard Kanowitz, Esq. 1114 Avenue of the Americas New York, New York 10036 ii) counsel for UnitedGlobalCom, Inc.: Skadden, Arps, Slate, Meagher & Flom LLP Attn: Van C. Durrer, Esq. & Kurt Ramlo, Esq. 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071 iii) counsel for the statutory creditor's Committee: Mayer, Brown Rowe & Maw LLP Attn: Kenneth E. Noble, Esq. 1675 Broadway New York, New York 10019 iv) United States Trustee: Attn: Paul Schwartzberg, Esq. 33 Whitehall Street, 21st Floor New York, New York 10004 Headquartered in Denver, Colorado, Old UGC, Inc.-- http://www.UnitedGlobalcom.com/-- is one of the largest broadband communications providers outside the United States and provides full range of video, voice, high-speed Internet, telephone and programming services. The Company filed for chapter 11 protection on January 12, 2004 (Bankr. S.D.N.Y. Case No. 04-10156). David A. Levine, Esq., at Cooley Godward, LLP and Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $846,050,022 in total assets and $1,371,351,612 in total debts. OMNI FACILITY: Navistar Objects to Transfer of its Collateral ------------------------------------------------------------- F. Matthew Jackson, Esq., at Deily, Mooney & Glastetter, LLP, counsel for Navistar Financial Corporation, tells the U.S. Bankruptcy Court for the Southern District of New York that it objects to the assumption and assignment of certain executory contracts and unexpired leases to Valley Crest Companies. Navistar Financial is a secured creditor of Omni holding a claim to three of the Debtors' International 4700 Tractors. The primary concern of the Company is the assumption and assignment of its collateral to Valley Crest. Navistar stresses that its agreement with the Debtor is not an "executory contract" and therefore, may not be assumed and assigned without its consent. Navistar urges the Court to deny any transfer, assumption or assignment of its collateral until such time that it has approved the purchasing entity. Headquartered in South Plainfield, New Jersey, Omni Facility Services, Inc. -- http://www.omnifacility.com/-- provides architectural, janitorial, landscaping, and electrical services. The Company filed for chapter 11 protection on June 9, 2004 (Bankr. S.D.N.Y. Case No. 04-13972). Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $80,334,886 in total assets and $100,285,820 in total debts. OWENS CORNING: Objects to Mobil Oil Environmental Claim ------------------------------------------------------- J. Kate Stickles, Esq., at Saul Ewing, LLP, in Wilmington, Delaware, relates that Owens Corning and its debtor-affiliates manufactured and sold fiberglass tanks for the underground storage of petroleum and water between 1965 and 1995. The Debtors sold their underground storage tank business to Fluid Containment, Inc., now known as Containment Solutions, Inc. Under the transaction, the Debtors retained liability for warranty and product-related claims with respect to their manufactured USTs. Nam Ha and Hue Phong, on behalf of Mobil Oil SS#11-FYE, filed Claim No. 8259, in an unknown amount, against "Owens Corning Tanks" concerning a Mobil Oil service station located in Fremont, California. Nam Ha asserts that in 1995 they "purchased a service station which had contaminated soil monitored by environmental Engineering Company." Ms. Stickles tells Judge Fitzgerald that Nam Ha fails to disclose: (a) when the alleged environmental testing at the Site was conducted; (b) whether the monitoring disclosed soils contaminated above or below mandate cleanup levels; or (c) whether any contaminated soil detected at that time was removed or allowed to remain in place. Nam Ha does not assert that any alleged investigation has established the cause of any underground storage tank manufactured by Owens Corning. Nam Ha also fails to allege that they have incurred any actual damages as a result of the alleged contamination. Instead, they claim that "[i]t is unknown what future costs, if any, will occur." The Debtors ask the Court to expunge and disallow Claim No. 8259 because it is not accompanied by any supporting documents and, therefore, is entirely unsubstantiated. In addition, Nam Ha presented no evidence: -- establishing that there is any environmental contamination at the Site; -- that the contamination resulted from the failure of an underground storage tank manufactured by Owens Corning; or -- that the Claimants have incurred or will incur any costs with respect to any contamination. If the alleged soil monitoring was in fact completed prior to 1995, as suggested in the Disputed Claim, Nam Ha offers no explanation as to why any required environmental remediation has not long since been accomplished, and any associated costs already incurred. Ms. Stickles informs the Court that the Debtors requested clarification of the nature of the claim and supporting documentation from Nam Ha's counsel, but no response was received. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Owens Corning filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At June 30, 2004, the Company's balance sheet shows $7.3 billion in assets and a $4.3 billion stockholders' deficit. (Owens Corning Bankruptcy News, Issue No. 85, Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC GAS: Moves for Summary Judgment on San Francisco Claim -------------------------------------------------------------- Pacific Gas and Electric Company wants the Court to issue a summary judgment declaring that the Hunter's Point Power Plant Encroachment component of the City and County of San Francisco's prepetition Claim No. 12640, and its administrative expense claims, are either: * invalid and must be disallowed in their entirety; or * invalid and must be limited in amount. Keith D. Kessler, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, in San Francisco, California, relates that the parts of the Claim relating to the Hunter's Point Claim seek alleged damages, in the form of unpaid rental value or mesne profits from Feb. 15, 1994, through April 12, 2004, for encroachment by PG&E's Hunter's Point Power Plant on parts of certain never- developed "paper streets" to which San Francisco holds title in public trust. The paper streets consist mainly of four strips of land that were once designated, in the late 19th century, to become public streets. San Francisco claims that the Hunter's Point Plant has encroached without consent on the paper streets and other land ever since 1929, and that this encroachment now covers 91,949 square feet. Of the 91,949 square feet: -- 78,591 square feet contains Ingalls St., Custer Ave., Davidson Ave., and India St.; -- 13,253 square feet is now occupied by a jetty; and -- 105 square feet is used for a footbridge. San Francisco claims $1,725,136 in unpaid rent and interest for the alleged encroachment from February 15, 1994 -- the date of a letter from PG&E discussing the paper streets, which San Francisco treats as equitably tolling any statutes of limitation -- through April 12, 2004. Mr. Kessler notes that San Francisco apparently bases its Claim on the legal theories of trespass, public nuisance, "mesne profits," and assumpsit and unjust enrichment. PG&E has asserted several defenses to, and noted several factual errors in, the Claim, each of which warrants the entry of an order summarily adjudicating that the entire claim, or at least a part of it, is invalid as a matter of law. According to Mr. Kessler, the defenses are of three types: -- consent or waiver; -- statute of limitations; and -- failure to state a prima facie claim. The factual errors involve overstatements of the area and duration of the encroachment. Mr. Kessler explains that the consent or waiver defenses apply to whatever legal theory underlies the claim. Waiver bars any recovery, while consent bars any recovery for the time after July 9, 1998. On that date, San Francisco and PG&E entered a written agreement in which San Francisco, while knowing that the Hunter's Point Plant encroaches on its paper streets, expressly authorized PG&E to continue occupying and operating the Hunter's Point Plant in exchange for several forms of valuable consideration other than rent. Because the Claim requires an unauthorized or wrongful encroachment, it is barred at least from and after July 9, 1998, for the encroachment has since then been authorized by contract. By entering that contract, moreover, San Francisco waived any claims for rent, future or past. With respect to the statute of limitation defense, Mr. Kessler states that it applies in some way to whatever cause of action underlies the Claim -- which was filed on October 3, 2001. The applicable statute either bars: (a) the entire claim -- if it is for permanent trespass; (b) that part for the period before October 3, 1998 -- if it is for continuing trespass; or (c) that part for the period before October 3, 1996 -- if it is for mesne profits. Mr. Kessler points out that the possibility that the claim is for mesne profits is barred by PG&E's third defense -- the failure to state a valid prima facie claim. While San Francisco mentioned mesne profits in opposing PG&E's objection, it has not identified the elements of a cause of action entitling it to that somewhat- obscure remedy, let alone shown how the present facts satisfy those elements. For other reasons, PG&E's occupancy of the paper streets cannot constitute a public nuisance. To the extent the Claim is based on either theory, it should be disallowed as prima facie insufficient. In addition to asserting affirmative defenses, PG&E asks the Court to summarily adjudicate, based on undisputed facts, that the Hunter's Point Plant does not occupy the entire area alleged, and has not done so for the entire time alleged. While the errors the argument asserts are factual, PG&E states that it can establish those errors by undisputed evidence. Specifically, PG&E possesses declarations establishing that: (a) those portions of the four paper streets included in the asserted encroachment are actually located outside the Hunter's Point Plant's fenced perimeter; (b) the jetty, excluding the footbridge, has never been occupied or used by PG&E; and (c) the area occupied by the footbridge has only been occupied or used before the bridge's construction in 2002. Undergrounding and Streetlight Component of Claim PG&E also seeks to resolve two components under San Francisco's Claim, which concerns: (a) the "Undergrounding" item under the "1997 Master Agreement" -- this claim asserts attorney's fees that San Francisco allegedly incurred because of PG&E's failure to finish undergrounding 42 miles' worth of overhead utilities, by the purported deadline in the parties' Master Agreement; and (b) claim 10(c)(streetlights) in the "Indemnity Claims" item under the "Franchise Agreement And Administrative Code Chapter 11" -- this claim asserts San Francisco's $80,000 projected cost of conducting a district-by- district inspection of streetlights installed by PG&E, pursuant to the Master Agreement, to determine if any of the lights are defective. PG&E wants the Court to declare that the two component claims are invalid as a matter of law and should be disallowed, either in whole or in part. With respect to the undergrounding claim, Mr. Kessler explains that San Francisco fails to identify any reason why, assuming arguendo that the Master Agreement did require PG&E to complete 42 miles of undergrounding by January 1, 2002, San Francisco would be entitled to recover attorney's fees incurred as a result of any delay. San Francisco claims those fees as part of its alleged damages, but it identifies neither any part of the Master Agreement, nor any ordinance, statute, or other law, entitling it to recover them. The "American Rule" regarding attorney's fees thus bars that portion of the undergrounding claim, and PG&E seeks an order limiting it accordingly. As to the streetlights-inspection claim, San Francisco identifies no part of the Master Agreement, and no other legal authority, obliging PG&E to pay for the inspection San Francisco proposes -- or for any inspection. Moreover, San Francisco has only conducted a small portion of the citywide inspection whose total projected cost it seeks to recover, despite the lapse of nearly three years since it filed its claim. PG&E, thus, asks the Court to declare that: -- the claim is invalid in its entirety because San Francisco has failed to establish its prima facie basis; or -- all parts of the claim, other than a $3,177 alleged cost of inspection actually made, must be immediately disallowed as speculative, with the $3,177 to remain in dispute. Headquartered in San Francisco, California, Pacific Gas and Electric Company -- http://www.pge.com/-- a wholly owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combination natural gas and electric utilities in the United States. The Company filed for Chapter 11 protection on April 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the Debtors in their restructuring efforts. On June 30, 2001, the Company listed $23,216,000,000 in assets and $22,152,000,000 in debts. Pacific Gas and Electric emerged from chapter 11 protection on April 12, 2004, paying all creditors 100 cents-on- the-dollar plus post-petition interest. (Pacific Gas Bankruptcy News, Issue No. 84; Bankruptcy Creditors' Service, Inc., 215/945-7000) PAN AMERICAN: Fitch Puts 'B+' Rating on Planned $100 Million Issue ------------------------------------------------------------------ Fitch Ratings assigned a senior unsecured foreign currency rating of 'B+' to Pan American Energy LLC, as well as the proposed issuance of US$100 million by Pan American Energy LLC, Argentine Branch (Argentine Branch) under its US$1 billion global medium- term note program. The notes will be guaranteed by Pan American Energy. The proceeds from the issuance will be used for capital expenditures in Argentina and extending the existing debt profile. The Rating Outlook is Stable. The rating reflects: (1) Pan American Energy's strong and expanding asset base of hydrocarbon reserves, (2) its position as the second largest hydrocarbon producer in Argentina, strong U.S. dollar revenues from exports of oil and gas, ability to retain a material amount of export revenues offshore, (3) benefits related to its ownership by BP plc (Fitch rated 'AA+'), (4) strong credit protection measures, (5) conservative financial position, and manageable debt maturity profile. The rating also reflects: (1) concentration of assets in Argentina, which remains in default in its sovereign debt obligations, (2) potential for increased interference in Argentine export taxes or remittance requirements, (3) political concerns in Bolivia, (4) inherent risks of commodity price volatility, and (5) small size relative to BP's consolidated operations. The Argentine Branch, rated 'AA(arg)' on the national scale by Fitch, has historically been the primary Pan American Energy subsidiary both in terms of assets and revenues and the entity that assumes the financial debt for the whole group. The company has demonstrated its success in navigating the Argentine environment to date. Pan American Energy's ability to generate sufficient cash flow to repay dollar denominated debt coupled with its right to maintain 70% of export proceeds outside Argentina has mitigated the risks associated with having the majority of its assets and cash generating activities concentrated in Argentina. Due to the combination of maintaining 70% of its export revenues abroad and the company's prudent financial strategy, Pan American Energy never failed to meet scheduled debt services despite currency controls imposed during the height of the Argentine crisis. Nevertheless, a material level of uncertainty exists surrounding the future Argentine political and economic environment. The Argentine Ministry of Economy increased taxes on exports in August 2004, establishing a sliding tax scale based on WTI prices, which essentially limits upside cash flow benefits from hydrocarbon exports. Pan American Energy may be subject to additional government interference such as further changes in retention rates and taxes or imposing transferability or exchange controls on hard currency, which could reduce U.S. dollar cash flow available to meet financial obligations. At this time, the likelihood or level of further interference is uncertain, although these risks could ease should the Argentine government reach an agreement with creditors and the International Monetary Fund -- IMF. Oil revenues account for approximately 82% of total revenues and provide a significant source of U.S. dollars and dollar-related cash flow. Off-take risk is mitigated through contracts for export sales with strong credit quality off-takers. In the local market, off-takers include mainly Shell among others. Historically, Pan American Energy's main cash generating assets were located in Argentina. Oil production at Cerro Dragon (San Jorge Basin) accounts for more than 75% of total production while gas production is geographically more diversified. Pan American Energy also benefits from BP and Bridas' expertise in both the oil and gas businesses. Reserve replacement and production costs are generally lower than industry averages and have been improving over time (both around US$1.6/boe), resulting in a high EBITDA margin (averaging above 60% over the past five years). Pan American Energy's growth strategy is focused on exploration and production -- E&P, primarily in the development of the existing portfolio. The company has been drilling approximately 200 wells per year and is currently at its peak of production. The company is expected to continue with its development strategy. Pan American Energy has historically maintained a three-year reserve replacement ratio between 3.3 times (x) and 7.5x, and, as of the 2003 fiscal year-end, average reserve life reached 21 years (15 oil and 27 gas). Total financial debt at June 2004 was approximately $686 million, with a total financial debt-to-EBITDA of 0.6x and debt-to-total capital of 16%. While Pan American Energy's leverage may increase in the future, the company's financial strategy is to maintain a conservative capital structure in the current environment. Pan American Energy's current debt profile includes short-term debt of US$178 million and total long-term debt (including current portion of long-term debt) of US$508 million. Core borrowing facilities are generally held at the Argentine Branch level. Given Pan American Energy's conservative balance sheet, the company is expected to continue to issue debt on a periodic basis to refinance maturities, extend the average life of its debt and maintain a relatively stable debt-to-capitalization ratio. The company faces maturities of approximately US$170 million in 2005 and US$90 million in 2006. Short-term cash needs should be adequately covered through cash balances, cash from operations plus access to working capital financing. The proposed issuance is expected to be used for capital expenditures in Argentina and extend debt maturities. Pan American Energy has demonstrated its ability to access financial markets and refinance outstanding debt, which has been supported by a combination of conservative capital structure, increasing levels of cash generation, and a manageable debt amortization schedule. During 2002 and 2003, at a time when financial and capital markets were closed for most Argentine companies, Pan American Energy was able to raise funds multiple times for refinancing and working capital purposes. Credit protection measures have historically been strong, although somewhat volatile, driven by fluctuations in international crude prices. For the six-month period through June 2004, Pan American Energy reported a total EBITDA of US$446 million, compared with a total EBITDA of US$336 million for the same period in 2003, reflecting increased production of oil, gas, and liquid petroleum gas -- LPG and higher prices. The company reported an EBITDA-to- interest ratio of 24.3x. Continued growth in oil production and additional contribution from the gas business, as well as cost controls, have allowed the company to improve cash flow. Pan American Energy's upstream activities dominate cash flow and include a healthy mix of stable on-shore Argentine fields and high potential Bolivian and off-shore Argentine fields. The benefits of the company's mid-downstream assets are largely strategic. Pan American Energy's main asset outside Argentina is its 50% interest in Empresa Chaco in Bolivia, which accounts for approximately 7% of the combined production, representing almost US$80 million of revenue (at 50% ownership) and an estimated EBITDA of approximately US$30 million per year. Fitch remains concerned about the political landscape in Bolivia and potential changes to the hydrocarbon law. However, any likely change is not expected to affect the ratings of Pan American Energy. Pan American Energy is owned 60% by BP and 40% by Bridas and has been the vehicle for the exploration and production of oil and gas and mid- and downstream gas activities in the southern cone. RAMP CORP: Ability to Continue as a Going Concern is in Doubt ------------------------------------------------------------- Ramp Corporation (f/k/a Medix Resources, Inc.) reported that it has experienced substantial recurring losses to date which raise substantial doubt about its ability to continue as a going concern. At June 30, 2004, the Company had a working capital deficit of $7,375,000. Management continues to pursue fund-raising activities, including private placements, to continue to fund the Company's operations until such time as revenues are sufficient to support operations. There can be no assurances that additional funds will be raised or that the Company will ever be profitable. Ramp has reported net losses of $31,321,000, $9,014,000 and $10,636,000 for the years ended Dec. 31, 2003, 2002 and 2001, respectively, and $15,955,000 for the six months ended June 30, 2004. At June 30, 2004, the Company had an accumulated deficit of $87,482,000. The Company relies on investments and financings to provide working capital. While management believes the Company can continue to sell its securities to raise the cash needed to continue operating until cash flow from operations can support its business, there can be no assurance that this will occur. There can be no assurance that additional investments in Ramp's securities or other debt or equity financings will be available to it on favorable terms, or at all, to adequately support the development and deployment of its technology. Failure to obtain such capital on a timely basis could result in lost business opportunities. Ramp's independent accountants have advised management and the Audit Committee that there were material weaknesses in Ramp's internal controls and procedures during fiscal year 2003, which management believes have continued through the fiscal period ended June 30, 2004. The Company has taken steps and has a plan to correct the material weaknesses. Progress was made in both the first and second quarters, however management believes that if these material weaknesses are not corrected, a potential misapplication of generally accepted accounting principles or potential accounting error in the Company's consolidated financial statements could occur. Enhancing its internal controls to correct the material weaknesses has, and will, result in increased costs to the Company. About the Company Ramp Corporation (f/k/a Medix Resources, Inc.) develops and markets healthcare connectivity software centered around its CarePoint Suite of healthcare communication technology products for electronic prescribing of drugs, laboratory orders and results, Internet-based communication, data integration and transaction processing through a handheld device or browser, at the patient point-of-care. The Company's products enable communication of healthcare information among physicians' offices, pharmacies, hospitals, pharmacy benefit managers, health management organizations, pharmaceutical companies and health insurance companies. Its technology is designed to provide access to safer, better healthcare and more accurate and less expensive patient point-of-care information gathering and processing. REFCO GROUP: Taps Heidrick & Struggles to Hunt for New CFO ---------------------------------------------------------- Refco Group, Ltd, LLC said Robert C. Trosten, Executive Vice President and Chief Financial Officer, will be leaving the company to pursue other opportunities. At the same time, Refco also stated that it has engaged Heidrick & Struggles to assist in hiring a new chief financial officer. Phillip R. Bennett, Chairman and CEO of Refco, said, "Rob has brought tremendous energy and skill to the leadership of Refco's financial operations, and played a leading role in our recent transforming recapitalization. We're grateful for Rob's many contributions as well and his dedication and hard work. We wish him the best in his future endeavors." Mr. Trosten said, "Much of the work that I anticipated when I came to Refco is now complete, and the company is on a strong financial path. Although I leave behind many friends and a great company, I am excited about the challenges that lie ahead for me." About Refco Group, Ltd. Refco Group, Ltd., LLC -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco Group's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London, Frankfurt, Paris and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. * * * As reported in the Troubled Company Reporter on July 14, 2004, Standard & Poor's Ratings Services assigned its 'BB-' long-term counterparty credit rating to Refco Group Ltd., its 'BB-' rating to the firm's $800 million senior secured bank term loan and $75 million senior secured revolving credit facility, and its 'B' rating to the firm's $600 million senior subordinated notes due 2012. The outlook is stable. The proceeds from the note issuance and the senior secured bank loan, with the addition of an equity investment from Thomas H. Lee Partners L.P., will be used to recapitalize the firm, including the buyout of certain shareholders. "The ratings are based on Refco's strong and well-established franchise as one of the leading firms in futures and options brokerage, prime brokerage, U.S. Treasury, and foreign exchange markets," said Standard & Poor's credit analyst Tom Foley. The firm also has a strong and well-seasoned management team and a good earnings track record. Offsetting these strengths is the weak capitalization, pro forma for the recapitalization, with respect to tangible equity. RIVERSIDE FOREST: Tolko Asks Securities Commission to Halt Trading ------------------------------------------------------------------ Tolko Industries Ltd. applied to the BC Securities Commission for an order cease trading the common share purchase rights issued under a shareholders rights plan adopted by Riverside Forest Products Limited on Oct. 5, 2004. The hearing will be held on Oct. 18, 2004. Trevor Jahnig, Tolko's Vice-President of Finance & CFO said: "The shareholders' rights plan should be terminated so that the rights of all shareholders are protected." As reported in the Troubled Company Reporter on Oct. 05, 2004, Tolko Industries asked the British Columbia Supreme Court to declare that the shareholder rights plan of Riverside Forest is null and void and of no force and effect in another attempt to ensure the successful closure of its bid to overtake Riverside Forest. The basis of the petition is the fact that, with an authorized capital of only 25,000,000 common shares of which 9,434,987 have been issued, Riverside cannot issue the enormous number of shares required under the rights plan if the plan is triggered. Riverside would have to be able to issue in excess of 76,000,000 additional common shares and they are unable to do so. As reported in the Troubled Company Reporter on Oct. 07, 2004, the Board of Directors of Riverside Forest Products Limited has approved the adoption, subject to regulatory approval, of a limited duration shareholder rights plan in response to Tolko Industries' petition. The Limited Duration Plan was adopted as a precautionary measure, to protect shareholders' interests if Tolko's technical objection to Riverside's existing shareholder rights plan prevails. The Limited Duration Plan will come into effect only if the existing rights plan is nullified by the Court, either at the hearing scheduled on Oct. 5 or at some other time. The purpose of the Limited Duration Plan is to give Riverside's shareholders the benefits afforded by the existing rights plan, by encouraging the fair treatment of Riverside shareholders, providing them with time to consider the alternatives before them, and discouraging creeping take-overs. As reported in the Troubled Company Reporter on Oct. 08, 2004, Tolko Industries extended the expiry of its Aug. 31, 2004 offer to acquire all of the outstanding common shares of Riverside Forest Products Limited to 9:00 pm (Vancouver time) on Oct. 22, 2004. Tolko Industries is a family-owned forest products company based in the interior of British Columbia in Vernon. Tolko manufactures and markets specialty forest products to world markets. The Company was incorporated in 1961 and has grown to more than 2,400 employees in 10 manufacturing divisions and three sales and marketing offices in British Columbia, Alberta, Saskatchewan and Manitoba. Tolko has been a shareholder of Riverside since 2000. Riverside Forest Products Limited is the fourth largest lumber producer in British Columbia with over 1.0 Bbf of annual capacity and an annual allowable cut of 3.1 million cubic metres. The company is also the second largest plywood and veneer producer in Canada. * * * As reported in the Troubled Company Reporter on Oct. 08, 2004, Moody's Investors Service affirmed Riverside Forest Products Limited's B2 senior unsecured rating and changed the outlook to developing. The rating action follows the announcement that Riverside has signed a definitive agreement with International Forest Products Limited -- Interfor -- pursuant to which Interfor will make an offer to acquire up to 100 percent, but a minimum of 51%, of Riverside. The offer is for $39 in cash and Interfor Class A shares, to a maximum of $184 million in cash, or $35 in cash and shares plus a Contingent Value Right to receive any U.S. softwood duty refunds received by Riverside on or before December 31, 2007. If successful, the transaction will close by year-end. As reported in the Troubled Company Reporter on August 27, 2004, Standard & Poor's Ratings Services placed its 'B+' long-term corporate credit and senior unsecured debt ratings on Kelowna, B.C.-based Riverside Forest Products Ltd. on CreditWatch with developing implications following the company's announcement that it would reject an unsolicited takeover offer from privately held Tolko Industries Ltd. SEISMIC ENTERTAINMENT: Voluntary Chapter 7 Case Summary ------------------------------------------------------- Debtor: Seismic Entertainment Productions, Inc. dba Plum Crazy Bar & Grill dba Club Vibe 11 Farmington Road Rochester, New Hampshire 03867 Bankruptcy Case No.: 04-13523 Type of Business: The Debtor operates a restaurant. Chapter 7 Petition Date: October 4, 2004 Court: District of New Hampshire (Manchester) Judge: J. Michael Deasy Debtor's Counsel: Mark D. Hanlon, Esq. Hanlon & Zubkus 27 North Main Street Rochester, NH 03867 Tel: 603-332-8499 Fax: 603-332-5571 Estimated Assets: Unstated Estimated Debts: $0 to $50,000 The Debtor did not file a list of its 20 largest unsecured creditors. SHOWCASE AUTO: Has Until Dec. 13 to Make Lease-Related Decisions ---------------------------------------------------------------- The Honorable Thomas Holman of the U.S. Bankruptcy Court for the Eastern District of California extended, until Dec. 13, 2004, the period within which Showcase Auto Plaza, can elect to assume, assume and assign, or reject its unexpired nonresidential real property leases. The Debtor tells the Court that it is a party to two non- residential property leases: Lessor Property Leased Monthly Lease Payment ------ --------------- --------------------- Leonard Lovalvo 3737 McHenry Avenue $34,500 Modesto, California Oasis 5001 McHenry Avenue 7,716 1819 S. Walnut St. Modesto, California Turlock, Calif. 95380 The Debtor reports that it continues to operate and market its car dealership business for sale on an expedited basis as part of its reorganization process. An agreement to sell the assets of the business and assign the car dealerships has been reached. The Debtor intends to assume and assign the property leases as part of the sale package to sell the assets of the business once the Court approves the sale package. The Debtor explains that the extension will provide more time to resolve several conditions and issues in connection with the closing of the sale package for the assets of the business. The Debtor adds that if the Court does not approve the sale package, the Debtor's assets may be sold on a piecemeal basis and it may reject the nonresidential property leases. The Debtor assures Judge Holman that it is current on all lease payments to both Oasis and Leonardo Lovalvo. The Debtor adds that it has reached an agreement with Leonardo Lovalvo for the deferral of its monthly rent that exceeds $17,000 for the first few months of the commencement of its chapter 11 case. Headquartered in Modesto, California, Showcase Auto -- http://www.showcaseautoplaza.com/-- sells automobiles and provides auto service and repair. The Company filed for chapter 11 protection on July 15, 2004 (Bankr. E.D. Calif. Case No. 04-92709). Donald W. Fitzgerald, Esq., at Felderstein Fitzgerald Willoughby & Pascuzzi LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $10 million. TANGO INC: Plans to Expand Capacity at Portland Location -------------------------------------------------------- Tango Incorporated's (OTCBB:TNGO) Board of Directors has approved a plan to acquire an additional $500,000 worth of new equipment to maintain pace with the growth of the Company. The Board believes that the additional capacity will handle up to an additional $200,000 a month in revenue, while costing approximately $50,000 a month for financing and labor costs to run the machines. Tango plans to pay for the additional equipment by securing equipment lease financing, which should set the payments for finance charges for all the equipment at around $9,500 a month for a period of 60 months. Tango also expects that obtaining this additional equipment will increase its abilities and maintain its edge in specialty printing, thereby achieving its corporate mission of being a leader in the printing business. A large portion of the investment will be made into machines from TAZ America. Tango uses TAZ equipment because of its reliability and consistency. Tango's corporate plans include using only TAZ equipment, thereby reducing maintenance/repair costs, getting equipment consistency and reducing overall operating costs. "We believe this investment is in line with the goals established earlier this year when we initiated our turnaround strategy. We have increased sales, rebuilt our management team, invested into new software systems to streamline the operations, recruited world class talent for our Art Department and laid a foundation for building one of the leading screen printers in the world. This additional equipment represents Tango's ability to start crossing certain barriers and achieving certain thresholds, and could potentially be a major milestone in building a world-class operation and producing strong profitability," said Todd Violette, Chairman and COO. About Tango Tango Incorporated is a leading garment manufacturing and distribution company, with a goal of becoming a dominant leader in the industry. Tango pursues opportunities, both domestically and internationally. Tango provides major branded apparel the ability to produce the highest quality merchandise, while protecting the integrity of their brand. Tango serves as a trusted ally, providing them with quality production and on-time delivery, with maximum efficiency and reliability. Tango becomes a business partner by providing economic solutions for development of their brand. Tango provides a work environment that is rewarding to its employees and at the same time has an aggressive plan for growth. Tango is currently producing for many major brands, including Nike, Nike Jordan and RocaWear. * * * Going Concern Doubt In its Form 10-QSB for the quarterly period ended April 30, 2004, filed with the Securities and Exchange Commission, Tango Inc. reported that, as of April 31, 2003 and 2004, its auditors expressed substantial doubt about the company's ability to continue as a going concern in light of continued net losses and working capital deficits. TENET HEALTHCARE: Selling 3 Massachusetts Hospitals to Vanguard --------------------------------------------------------------- Tenet Healthcare Corporation (NYSE:THC) said several of its subsidiaries have signed a definitive agreement to sell three acute care hospitals in Massachusetts to a subsidiary of Vanguard Health Systems, Inc. The hospitals are: -- 348-bed Saint Vincent Hospital at Worcester Medical Center in Worcester; and -- 420-bed, two-campus MetroWest Medical Center, consisting of: -- Leonard Morse Hospital in Natick, and -- Framingham Union Hospital in Framingham. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $167 million. The company expects to use the proceeds of the sale for general corporate purposes. Vanguard, which is based in Nashville, Tenn., owns and operates 16 acute care hospitals and complementary facilities and services in Chicago, Ill.; Phoenix, Ariz.; Orange County, Calif.; and San Antonio, Texas. The company's strategy is to develop locally branded, comprehensive health care delivery networks in urban markets. Vanguard has committed to continue to operate the three facilities as acute care hospitals. Vanguard also has committed to offer employment to substantially all employees of the three hospitals and intends to offer employees substantially the same salary and benefit packages that are currently in place. Additionally, Vanguard has agreed to recognize any existing collective bargaining units. The sale is expected to be completed by Dec. 31, subject to regulatory approvals and certain other closing conditions. "Each of these three hospitals is an important resource in its community and we are pleased to be able to transfer ownership to a well-established hospital company like Vanguard whose management has acute care hospital operating experience in Massachusetts," said W. Randolph Smith, president of Tenet's former Western Division, who is overseeing the company's previously announced divestiture program. "This agreement fulfills our commitment to the Worcester and MetroWest communities to find a qualified buyer who will continue to operate these hospitals as acute care facilities. And this transaction marks another major milestone in our divestiture program." The three Massachusetts hospitals are among 27 hospitals Tenet announced it was divesting on Jan. 28, 2004. With Tuesday's announcement, Tenet has either entered into definitive agreements to sell, or completed the divestiture of, 18 of the 27 facilities. Discussions and negotiations with potential buyers for the remaining nine hospitals slated for divestiture are ongoing. Below is a summary of previously announced transactions: -- In June, Tenet completed the sale of Brownsville Medical Center in Brownsville, Texas, to Valley Baptist Health System. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $68 million. -- In July, Tenet entered into a definitive agreement to sell four hospitals in the East Los Angeles area to AHMC Inc. Estimated net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $95 million. That transaction is expected to be complete by Oct. 31. -- Also in July, Tenet returned 232-bed Doctors Medical Center - San Pablo in San Pablo, Calif., to the West Contra Costa Health Care District, the entity from which the company had been leasing the facility. -- In August, Tenet announced it was transferring ownership of three West Los Angeles-area hospitals to Centinela Freeman HealthSystem, a new community-based health care delivery network in Los Angeles. In agreement with the new owner, terms of the transaction were not immediately disclosed. That transaction is expected to be complete by Oct. 31, subject to regulatory approvals. -- Also in August, Tenet completed the sale of Doctors Hospital of Jefferson in Metairie, La., to East Jefferson General Hospital. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $33 million. -- In September, Tenet entered into a definitive agreement to sell 225-bed Midway Hospital Medical Center in Los Angeles to Physicians of Midway, Inc. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $11 million. The transaction is expected to conclude following completion of normal regulatory requirements. -- Also in September, Tenet entered into a definitive agreement to sell four acute care hospitals in Orange County, Calif., to Costa Mesa-based Integrated Healthcare Holdings, Inc. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $72 million. The transaction is expected to be complete by Nov. 30, subject to customary regulatory approvals. About the Company Tenet Healthcare Corporation, through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. Tenet can be found on the World Wide Web at http://www.tenethealth.com/ * * * As reported in the Troubled Company Reporter on June 21, 2004, Standard & Poor's Ratings Services said that the ratings and outlook on Tenet Healthcare Corp. (B/Negative/--) will not be affected by an increase in the size of the company's new senior unsecured note issue due in 2014, to $1 billion from $500 million. Tenet used $450 million of the proceeds to repay debt due in 2006 and 2007, and the balance will be retained in cash reserves. Despite the additional debt and interest costs, Standard & Poor's considers the additional liquidity provided by the cash, as well as the effective extension of maturities, to be offsetting factors. The ratings already consider expectations of weak operating performance and cash flow over the next year while the negative outlook incorporates the risk of ongoing litigation and investigations related to the hospital chain's operations. THIRTEENTH FLOOR: Case Summary & 13 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Thirteenth Floor Entertainment Centers, LLC fdba Premier Health and Fitness, LLC P.O. Box 34396 Louisville, Kentucky 40232 Bankruptcy Case No.: 04-36349 Type of Business: The Debtor operates a Fitness Gym. Chapter 11 Petition Date: October 4, 2004 Court: Western District of Kentucky (Louisville) Judge: Thomas H. Fulton Debtor's Counsel: Bruce D. Atherton, Esq. Atherton & Associates LLC 624 W. Main Street, Suite 500 Louisville, KY 40202 Tel: 502-595-8500 Fax: 502-595-8506 Total Assets: $0 to $50,000 Total Debts: $1 Million to $10 Million Debtor's 13 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Scarborough Mechanical Services, Inc. $268,574 4615 Bittersweet Road Louisville, KY 40218 Hourstborne-Shelbyville Road $200,624 Studio "A" Architecture $65,658 Sisco HVAC Contractor, Inc. $43,610 DeGrella Tile, Inc. $38,934 Cordish Company $62,910 Louisville Underlayment, Inc. $21,225 Precision Door & Glass $17,955 Craigs Printing $7,420 Minuteman Press $4,657 Kerr Grulich $4,450 Three D's Inc. $2,585 Adams Cabinetry $2,250 TIRO ACQUISITION: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Tiro Acquisition LLC c/o Dailey Capital Management LP 2507 Post Road Southport, Connecticut 06890 Bankruptcy Case No.: 04-12938 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Tiro Industries, LLC 04-12939 Nadeon, LLC 04-12940 Type of Business: The Company develops, manufactures, and packages hair care and other products for professional salons. See http://www.tiroinc.com/ Chapter 11 Petition Date: October 12, 2004 Court: District of Delaware (Delaware) Judge: Peter J. Walsh Debtor's Counsel: James E. O'Neill, Esq. Laura Davis Jones, Esq. Pachulski, Stang, Ziehl, Young & Jones 919 North Market Street, 16th Floor P.O. Box 8705 Wilmington, Delaware 19899-8705 Tel: 302-652-4100 Fax: 302-652-4400 Total Assets Total Debts ------------ ----------- Tiro Acquisition LLC $10 Mil. to $50 Mil. $10 Mil. to $50 Mil. Tiro Industries, LLC $10 Mil. to $50 Mil. $10 Mil. to $50 Mil. Nadeon, LLC $10 Mil. to $50 Mil. $10 Mil. to $50 Mil. Tiro Industries, LLC's 20 largest unsecured creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Brenntag Great Lakes Trade Debt $1,021,772 2130 Energy Park Drive Saint Paul, Minnesota 55108 Victorial Industrial Trade Debt $924,087 One Kimberly Road Unit 1818 Miramar Tower Tsim Sha Taul Kowloon, Hong Kong Kauffman Container Trade Debt $626,442 1227 East Hennepin Avenue Minneapolis, Minnesota 55414 TricorBraun Trade Debt $551,047 One West Water Street #260 Saint Paul, Minnesota 55107 ISP Technologies Trade Debt $505,115 1361 Alps Road Wayne, New Jersey 07470 Technical Propellants Trade Debt $406,210 6440 East Collins Road Morris, Illinois 60450 CCL Container Trade Debt $358,644 One Llodio Drive Hermitage, Pennsylvania 16148 Wella Manufacturing Trade Debt $315,237 4650 Oakley's Lane Richmond, Virginia 23231 Silgan Plastics Trade Debt $283,414 2 Powell Lane PennYan, New York 14527 Central Container Trade Debt $281,162 PO Box 43310 Minneapolis, Minnesota 55443 Spentech Plastic Corporation Trade Debt $267,918 5791 Eastport Boulevard Richmond, Virginia 23231 U.S. Can Company Trade Debt $230,380 Eyelet Crafters Trade Debt $230,260 Koch Logistics Trade Debt $226,027 CCL Plastic Packaging Trade Debt $193,810 Seaquist Perfect Trade Debt $192,941 Cognis Corporation Trade Debt $182,772 Pitney, Hardin Trade Debt $159,901 Excel Staffing Trade Debt $147,580 Chem Central Trade Debt $131,386 UAL CORP: Reports September 2004 Traffic Results ------------------------------------------------ With its flights averaging 77.5% full in September, United Airlines has broken its load-factor record for the month, as it has in each of the last six months. United's total scheduled revenue passenger miles (RPMs) increased in September 2004 by 11.1% on a capacity increase of 7.3% available seat miles (ASMs) vs. the same period in 2003. United is the world's second largest airline, operating more than 3,500 flights a day on United, United Express and Ted to more than 200 U.S. domestic and international destinations from its hubs in Los Angeles, San Francisco, Denver, Chicago and Washington, D.C. United is the world's largest international carrier (measured by revenue passenger miles) with key global air rights in the Asia- Pacific region and Europe. United is also a founding member of Star Alliance, which provides connections for our customers to more than 700 destinations in over 130 countries worldwide. United's nearly 62,000 employees reside in every state in the U.S and in many countries around the world. 2004 2003 Percent September September Change -------- -------- ------- Scheduled Service Only: Revenue Plane Miles 65,159,000 61,610,000 5.8% Number Of Departures 50,420 48,761 3.4% Revenue Passengers 5,707,000 5,125,000 11.4% Revenue Passenger Miles (000): North America 5,741,844 5,028,368 14.2% Pacific 1,899,486 1,742,184 9.0% Atlantic 1,388,777 1,304,343 6.5% Latin America 236,480 266,418 -11.2% System 9,266,587 8,341,313 11.1% Available Seat Miles (000): North America 7,697,049 7,094,357 8.5% Pacific 2,370,965 2,127,265 11.5% Atlantic 1,580,223 1,529,646 3.3% Latin America 309,285 389,968 -20.7% System 11,957,522 11,141,236 7.3% Passenger Load Factor (Percent): North America 74.6 70.9 3.7% Pacific 80.1 81.9 -1.8% Atlantic 87.9 85.3 2.6% Latin America 76.5 68.3 8.2% System 77.5 74.9 2.6% Cargo Ton Miles (000): Freight 148,751 111,397 33.5% Mail 28,004 30,717 -8.8% System 176,755 142,114 24.4% Total System Inc Charter (000): Revenue Passenger Miles 9,351,762 8,387,793 11.5% Available Seat Miles 11,058,460 11,199,171 7.7% Revenue Psgr. Km. 15,049,791 13,498,475 11.5% Available Seat Km. 19,405,680 18,022,826 7.7% Total Revenue Ton Miles 1,111,931 980,893 13.4% Total Avail. Ton Miles 1,905,627 1,760,661 8.2% Total Rev. Ton Km. 1,612,543 1,422,348 13.4% Total Avail. Ton Km. 2,782,215 2,570,565 8.2% Year To Date ----------------------- Percent 2004 2003 Change -------- -------- ------- Scheduled Service Only: Revenue Plane Miles 597,847,000 562,166,000 6.4% Number Of Departures 464,391 450,015 3.2% Revenue Passengers 53,681,000 49,596,000 8.2% Revenue Passenger Miles (000): North America 55,352,906 50,615,732 9.4% Pacific 17,298,904 13,351,426 29.6% Atlantic 11,608,034 10,533,639 10.2% Latin America 2,571,556 2,808,646 -8.4% System 86,831,400 77,309,443 12.3% Available Seat Miles (000): North America 70,901,448 66,606,511 6.4% Pacific 20,510,565 17,631,544 16.3% Atlantic 13,972,066 13,266,293 5.3% Latin America 3,291,276 3,842,248 -14.3% System 108,675,355 101,346,596 7.2% Passenger Load Factor (Percent): North America 78.1 76.0 2.1% Pacific 84.3 75.7 8.6% Atlantic 83.1 79.4 3.7% Latin America 78.1 73.1 5.0% System 79.9 76.3 3.6% Cargo Ton Miles (000): Freight 1,157,703 1,134,539 2.0% Mail 268,038 285,865 -6.2% System 1,425,741 1,420,404 0.4% Total System Inc Charter (000): Revenue Passenger Miles 87,345,197 77,853,827 12.2% Available Seat Miles 109,300,272 102,013,148 7.1% Revenue Psgr. Km. 140,564,626 125,290,164 12.2% Available Seat Km. 175,896,928 164,169,759 7.1% Total Revenue Ton Miles 10,160,285 9,206,063 10.4% Total Avail. Ton Miles 17,223,832 16,061,976 7.2% Total Rev. Ton Km. 14,732,398 13,349,904 10.4% Total Avail. Ton Km. 25,146,795 23,450,485 7.2% 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. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) URS CORPORATION: Wins $286 Million 10-Year U.S. Navy Contract ------------------------------------------------------------- URS Corporation's (NYSE:URS) EG&G Division has been awarded an indefinite delivery/ indefinite quantity contract by the U.S. Navy to provide engineering, technical and logistics services at the Navy's Fleet Technical Support Center, Atlantic in Hampton Roads, Virginia. Under the terms of the contract, as the Navy issues specific task orders, EG&G will provide mechanical and electrical engineering support; logistics, industrial and installation services; assessment and maintenance of shipboard systems and equipment; and training services. The 10-year contract has a maximum value to URS of $286 million. Commenting on the contract win, Martin M. Koffel, Chairman and Chief Executive Officer of URS, said: "This is another significant win for our EG&G Division, which underscores our leading position in providing sophisticated engineering, technical and logistics services to the U.S. military. We look forward to working with the Navy on this important assignment." About the Company URS Corporation -- http://www.urscorp.com/-- offers a comprehensive range of professional planning and design, systems engineering and technical assistance, program and construction management, and operations and maintenance services for surface transportation, air transportation, rail transportation, industrial process, facilities and logistics support, water/wastewater treatment, hazardous waste management and military platforms support. Headquartered in San Francisco, the Company operates in more than 20 countries with approximately 27,000 employees providing engineering and technical services to federal, state and local governmental agencies as well as private clients in the chemical, manufacturing, pharmaceutical, forest products, mining, oil and gas, and utilities industries. * * * As reported in the Troubled Company Reporter on August 20, 2004, Moody's upgraded URS Corporation's ratings to reflect the company's reduced debt balances, improved credit metrics, and expectations that revenues and margins will support further improvement in the company's cash flows. The company's rating outlook has been changed from positive to stable. Moody's has upgraded these ratings: * $225 million senior secured revolving credit facility, due 2007, upgraded to Ba2 from Ba3; * $84 million senior secured term loan A, due 2007, upgraded to Ba2 from Ba3; * $270 million senior secured term loan B, due 2008, upgraded to Ba2 from Ba3; * $130 million 11.5% senior unsecured notes, due 2009, upgraded to Ba3 from B1; * $20 million 12.25% senior subordinated notes, due 2009, upgraded to B1 from B2; * Senior Implied, upgraded to Ba2 from Ba3; * Senior Unsecured Issuer, upgraded to Ba3 from B1; * Speculative Grade Liquidity Rating, upgraded to SGL-1 from SGL-2. The ratings upgrade: (1) reflects the company's improved balance sheet; (2) strong operating performance; and (3) the expectation that the company's services will continue to enjoy stable demand. In its third fiscal quarter, URS used the net proceeds of an equity offering, cash on hand and additional borrowings under its credit facility to redeem $70 million of its 11.5% senior notes and $180 million of its 12.25% senior subordinated notes. As a result of these redemptions, the company's overall debt balance decreased by over $180 million to about $594 million. This is a significant improvement over the $955 million debt balance at October 31, 2002. The company's ratings also benefit from: (1) a stable customer base; (2) recurring revenues; (3) a $3.9 billion backlog at April 30, 2004; and (4) expected increases in defense and homeland security spending. The ratings are constrained by the challenges the company faces in growing its state and local revenues due to state budget deficits and delays in funding of state and local infrastructure projects. Revenues from the company's private clients are also under pressure due to reduced levels of capital spending and cost- cutting measures by the company's private clients. In 2002, URS purchased EG&G for $500 million for a purchase multiple that equates to just under 10 times its fiscal 2003's EBITDA. This acquisition transformed URS as EG&G represents around 32% of total revenues. Going forward, Moody's does not expect the company to make large debt-financed acquisitions as URS has publicly stated that it wants to maintain a debt to capitalization ratio below 40%. A change in policy due to an acquisition or other transaction, however, would pressure the ratings. A decrease in the company's revenues, operating margins and free cash flow generation would also pressure the rating. US AIRWAYS: Lenders Consent to Cash Collateral Use Until Jan. 14 ---------------------------------------------------------------- Phoenix American Financial Services, Inc., as Loan Administrator, the Air Transportation Stabilization Board, and Bank of America, N.A., as Tranche B Lender, gave permission to US Airways, Inc., and its debtor-affiliates to use the Cash Collateral until January 14, 2005. The Debtors are not authorized to use any of the Cash Collateral to purchase or otherwise acquire aircraft without the prior written consent of the ATSB Lender Parties. That prohibition, however, does not prevent the Debtors from making payments relating to any aircraft or engine acquired by the Debtors before the Petition Date. The Debtors agree that the ATSB Loan Obligations will be entitled to superpriority administrative expense claim status, subject and subordinate only to the Carve-out and a fund composed of 40% of the Unencumbered Chapter 5 Avoidance Proceeds. At all times during the Final Cash Collateral Period, the Debtors covenant with the ATSB Lender Parties that they will maintain Unrestricted Cash in amounts measured as of the close of business: (A) Friday of each week, not less than the weekly minimums of Unrestricted Cash as: For the Week Ending Weekly Minimum Unrestricted Cash ------------------- -------------------------------- 10/22/04 $754,419,000 10/29/04 $762,568,000 11/05/04 $776,756,000 11/12/04 $684,852,000 11/19/04 $713,839,000 11/26/04 $723,214,000 12/03/04 $656,025,000 12/10/04 $659,802,000 12/17/04 $636,329,000 12/24/04 $653,213,000 12/31/04 $648,395,000 01/07/05 $575,000,000 01/14/05 $550,000,000 and, (B) of each day from and after January 2, 2005, through the end of the Final Cash Collateral Period, not less than $500,000,000. At no time may the Debtors have cash or cash equivalents of more than $35,000,000 located in deposit, investment or other accounts other than in primary deposit accounts, securities accounts, commodity accounts and investment property controlled by the Collateral Agent. The Debtors further covenant that as of the last day of each fiscal month cumulative Consolidated EBITDAR will not be less than: Minimum Cumulative Period Consolidated EBITDAR ------ -------------------- September and October 2004 ($209,800,000) September, October and November, 2004 ($212,900,000) Unless the ATSB Lender Parties otherwise consent in writing, the Debtors will limit Capital Expenditure during any fiscal month of the Final Cash Collateral Period to: Maximum Capital Period Expenditures ------ --------------- September 1 - October 31, 2004 $16,886,000 September 1 - November 30, 2004 $22,800,000 September 1 - December 31, 2004 $25,800,000 Except as represented by the Carve-Out, neither the Debtors, the Committee, any other official committee appointed in US Airways' cases, nor any subsequently appointed trustee for any of the Debtors, will assert a claim for costs or expenses of the administration of any of the Debtors' bankruptcy cases or any future proceeding or case which may result therefrom, including liquidation in bankruptcy or other proceedings under the Bankruptcy Code, to be charged against the Prepetition Collateral or the Replacement Collateral -- or assessed against the any ATSB Lender Party pursuant to Section 506(c) of the Bankruptcy Code or otherwise. The ATSB Lender Parties expressly reserve their rights to consent to or contest the Debtors' request to use Cash Collateral and the other Prepetition Collateral after the Final Cash Collateral Period. The Debtors expressly reserve their rights to seek authorization for use of Cash Collateral after the Final Cash Collateral Period over the objection of the ATSB Lender Parties. The Debtors ask the Court to approve these new terms. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 67; Bankruptcy Creditors' Service, Inc., 215/945-7000) VITESSE SEMICONDUCTOR: Moody's Affirms Single-B Ratings ------------------------------------------------------- Moody's Investors Service revised Vitesse Semiconductor Corporation's outlook to stable from negative and affirmed all existing ratings for the company. The outlook change reflects a prominent reduction in the company's liquidity risk resulting from its recent private placement of $90 million convertible subordinated debentures and modestly improved operating performance. In the most recent June quarter, the company managed to minimize its unprofitable results, engage in more efficient working capital management and generate slightly positive free cash flow. Moody's expects that this trend will continue through 2005. Combined with estimated pro forma September 2004 liquidity of $210 million, the company possesses a materially improved position to handle the March 2005 maturity of $135 million convertible debentures. The rating affirmation at the B1 level reflects the company's still unstable operating performance, countered by this solidified liquidity position and reduced financial risk. These following ratings were affirmed: * Senior Implied Rating of B1; * Long-Term Issuer Rating of B1; and * $135.4 million 4% convertible subordinated debentures due March 2005, rated B3. In mid-September, Vitesse announced the successful placement of a private $90 million 1.50% convertible subordinated debentures issue maturing 2024. Net proceeds, together with on-hand liquidity of approximately $120 million and sustained access to the existing $40 million revolving credit facility, provides the company with more than sufficient liquidity to meet the March 2005 convertible debt maturity. In addition, accounting for the company's expectation for a sequential 14% Q4 sales decline to $52 million (largely due to an approximate 30% drop in computer storage chip sales tied to deferred orders), Moody's believes the company will generate at worst break-even free cash flow with no resulting impairment to on-hand liquidity through the September 2005 period. While from a refinancing and overall financial risk perspective, Vitesse has successfully mitigated certain rating concerns, the company continues to operate within a highly volatile environment dictated by imprecise telecommunications infrastructure demand dynamics. To lessen this business risk profile, the company has successfully diversified into somewhat more stable, positive trending end markets which include storage, enterprise network and metropolitan communications (in aggregate, these contribute 85% of total revenues while long haul has been lowered to 15% from 55% in 2001). Compounding these more attractive demand qualities, the company's increased liquidity cushion (pro forma for the private placement and March 2005 refinancing) provides a firmer basis for the affirmed B1 rating. Following the scheduled March 2005 debt refinancing, Vitesse is projected to report materially reduced total leverage and substantially increased interest coverage. These core credit metric improvements reflect the pro forma reduction in total debt outstanding, lowering in the associated coupon and steady pick-up in projected TTM Adj. EBITDA (Moody's forecast) heading into 2005. Headquartered in Camarillo, California, Vitesse Semiconductor is a leader in the design, development, manufacture and marketing of high-performance integrated circuits utilized by the storage, enterprise, metro and long-haul communication end markets. For the last twelve months ended June 2004, the company generated approximately $210 million in net sales and $27 million in Adjusted EBITDA (excludes non-recurring and unusual charges). WOMEN FIRST: Mutual Pharm. Says Bactrim Sale Order is Bogus ----------------------------------------------------------- Women First Healthcare Inc. entered into an Asset Purchase Agreement with Sun Pharmaceutical Industries, Inc., on Aug. 31, 2004, to sell its Bactrim(TM) assets free and clear under Sec. 363 of the Bankruptcy Code. The Debtor filed a Sale Motion on Sept. 2 and Judge Walrath entered a Sale Order on Sept. 22. Mutual Pharmaceutical Co., Inc., says it never received notice of the sale, never had an opportunity to respond or object, and the sale transaction is flawed. Mutual says that a Jan. 24, 2002, Manufacturing & Supply Agreement gives it the exclusive right to use the Bactrim name and sell the product in the United States. Moreover, under the terms of the 2002 Agreement, Mutual says, it owns all of the Bactrim inventory Sun thinks it bought. Mutual asks Judge Walrath to reconsider and vacate the Sept. 22 Sale Order. Martin J. Weis, Esq., at Dilworth Paxson LLP, represents Mutual. A hearing on the matter is scheduled on Nov. 18, 2004. Headquartered in San Diego, California, Women First HealthCare, Inc. -- http://www.womenfirst.com/-- is a specialty pharmaceutical company dedicated to improve the health and well- being of midlife women. The Company filed for chapter 11 protection on April 29, 2004 (Bankr. Del. Case No. 04-11278). Robert A. Klyman, Esq., at Latham & Watkins LLP, and Michael R. Nestor, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor represent the Debtor in its restructuring efforts. Kirt F. Gwynne, Esq., at Reed Smith LLP, represents the Official Committee of Unsecured Creditors. When the Company filed for protection from its creditors, it listed $49,089,000 in total assets and $73,590,000 in total debts. WOMEN FIRST: Committee Hires Klehr Harrison to Probe Wyeth-Ayerst ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave the Official Committee of Unsecured Creditors of Women First Healthcare, Inc., permission to employ Klehr, Harrison, Harvey, Branzburg & Ellers LLP, as its special counsel. The Committee tells the Court that they hired Klehr Harrison as special counsel for the specific purpose of analyzing and prosecuting any claims of the Debtor's estate against Wyeth-Ayerst Laboratories's alleged secured status and its claims to certain disputed trademarks. Wyeth-Ayerst is a private business unit of Wyeth Pharmaceuticals Inc., one of the Debtor's unsecured creditors. The Committee reminds the Court that on July 30, 2004, it entered an order: a) approving bidding procedures for the proposed sale of the Debtor's assets; b) approving a break-up fee and expense reimbursement; c) establishing the deadline by which parties may object to proposed assumption and assignment of assumed contracts and assert claims for cure amounts; e) approving the form and manner of notice of the sale; and f) scheduling an auction and final hearing to approve the asset sale. The Committee explains that one of its members, AmeriSource Bergen Corporation, filed an objection to the proposed sale of the Debtor's assets under an Asset Purchase Agreement between the Debtor and Wyeth-Ayerst because it called for a payment of $900,000 to Wyeth-Ayerst for five pharmaceutical product lines trademarks that are purportedly owned by Wyeth-Ayerst. But AmeriSource Bergen and other Committee members dispute the ownership of these trademarks. They believed that these trademarks are really owned by the Debtor's estate. The Committee adds that the complex issues surrounding the disputed proposed payments to Wyeth-Ayerst for alleged trademark and security interests requires the services of Klehr Harrison, which has specialized expertise in commercial litigation and business law Morton R. Branzburg, Esq., a Partner at Klehr Harrison, is the lead attorney representing the Committee. Mr. Branzburg will bill the Debtor's estate $435 per hour for his services. Mr. Branzburg reports Klehr Harrison's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Andrew O. Schiff Partner $330 Michael W. Yurkewiez Associate 250 Anita Hahn Paralegal 120 Klehr Harrison does not have any interest adverse to the Committee, the Debtor or its estate. Headquartered in San Diego, California, Women First HealthCare, Inc. -- http://www.womenfirst.com/-- is a specialty pharmaceutical company dedicated to improve the health and well- being of midlife women. The Company filed for chapter 11 protection on April 29, 2004 (Bankr. Del. Case No. 04-11278). Michael R. Nestor, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $49,089,000 in total assets and $73,590,000 in total debts. WORLDCOM INC: Balks at Springcreek's Call to Lift Automatic Stay ---------------------------------------------------------------- Springcreek Investment, LLC, asks Judge Gonzalez to lift the automatic stay so it may proceed with a pending civil action against the Debtors. Glenn P. Green, Esq., at Lowther Johnson, LLC, in Springfield, Missouri, relates that the Action is currently pending in the Circuit Court of Greene County, Missouri, as Case No. 101-CC- 0049. The Action seeks judgment for damages against the Debtors for improper and fraudulent billing practices. Springcreek is currently precluded by Section 362 of the Bankruptcy Code from pursuing its claim in the State Court. Mr. Green contends that Springcreek will be prejudiced if it is unable to pursue legal relief in Missouri. Springcreek would incur extensive costs due to additional travel and legal expenses if forced to litigate the case in New York. Springcreek also asks the Bankruptcy Court to rule that no part of the costs of the proceedings will be charged against it. In the alternative, Springcreek ask Judge Gonzalez to remove the Missouri litigation into the bankruptcy case and allow it to proceed. Debtors Object Mark A. Shaiken, Esq., at Stinson Morrison Hecker, LLP, Kansas City, Missouri, contends that the automatic stay was terminated when the Debtors' Plan became effective and was replaced by the discharge injunction under Section 524(a) of the Bankruptcy Code. Thus, there is no longer an automatic stay with respect to which relief could be granted. Mr. Shaiken also asserts that the Plan discharged all debts of the Debtors and further released the Debtors of all claims that arose before the April 20, 2004, Effective Date. The Plan is binding on all creditors, including Springcreek. Even if the stay was in effect, it should not be lifted. Mr. Shaiken points out that Springcreek did not cite nor argue the factors in In re Sonnax Indus., Inc., 99 B.R. 591 (D. Vt. 1989), aff'd, 907 F.2d 1280 (2nd Cir. 1990), which govern the decision of whether the stay should be lifted to litigate a matter in a non- bankruptcy forum. Springcreek has the burden of persuasion with respect to the Sonnax factors and since the factors are not even mentioned, let alone argued, Springcreek's request can and should be summarily denied. The Debtors note that the State Court Action has not proceeded. Very little discovery has been taken and no witnesses have been deposed. It is Springcreek's burden to show that the State Court could resolve the issues fully, finally, and more expeditiously than the Bankruptcy Court could. The Debtors would also be harmed by the resolution of Springcreek's Claim in Missouri. The Debtors have filed numerous claim objections in their bankruptcy cases. While the cost to the Debtors of litigating one of those claims in a forum other than before the Bankruptcy Court would not likely be unduly burdensome, if all of the claim objections that involved non-bankruptcy law and contract claims were litigated throughout the country rather than before the Bankruptcy Court, the additional cost to the Debtors would be substantial and the administrative nightmare presented to the Debtor would be significant. It is for this reason, Mr. Shaiken says, that claims against the Debtors are resolved in the venue where the bankruptcy case is filed, and only in the most extraordinary of circumstances should the stay be lifted to permit litigation in a foreign forum. 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) ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo and Peter A. Chapman, Editors. Copyright 2004. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***