/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/041104.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, November 4, 2004, Vol. 8, No. 241 Headlines 32006 SOUTH COAST HIGHWAY: Voluntary Chapter 11 Case Summary A.B. DICK: Court Approves $40 Mil. Presstek Bid to Acquire Company AFFINIA GROUP: S&P Puts 'BB' Rating on Planned $425M Bank Facility ALLEGHENY ENERGY: Refinances & Pays Down Supply Term Loans AMERICAN HOMEPATIENT: Sept. 30 Balance Sheet Upside-Down by $29MM ATA AIRLINES: Wants Court Nod to Assume Clearinghouse & ARC Pacts ATA HOLDINGS: Gets Nasdaq Delisting Notice Following Bankruptcy BANC OF AMERICA: Fitch Places Low-B Ratings on Classes B-4 & B-5 BANC OF AMERICA: Fitch Rates Classes 30-B-4 & 30-B-5 at Low-B BAY COVE: Moody's Affirms Ba2 Rating on $5.4 Million Bonds BLOUNT INT'L: Sept. 30 Balance Sheet Upside-Down by $282.5 Billion BMC INDUSTRIES: Committee Hires Larkin Hoffman as Counsel BOYDS COLLECTION: Moody's Junks $34.4M Senior Subordinated Notes BRUNSWICK ENTERPRISES: Voluntary Chapter 11 Case Summary BURLINGTON INDUSTRIES: Gets Court Nod on EPA Settlement Pact CANWEST MEDIA: S&P Puts B- Rating on Planned $748M Sr. Sub. Notes CATHOLIC CHURCH: Tucson Honoring Workers' Compensation Claims COMDISCO HOLDING: Settles M. Henriquez's & G. Howard's Claims CORONET FOODS: Case Summary & 20 Largest Unsecured Creditors CPC DEVELOPMENT: Case Summary & 9 Largest Unsecured Creditors DAN RIVER: Gets Financing Commitments to Back Chapter 11 Exit DII/KBR: Wants to Hire Mesirow LLC as Restructuring Accountants DIMON INC: To Webcast 2nd Qtr. Earnings Release on Nov. 9 DIMON INCORPORATED: Moody's Confirms Single-B Ratings DOUBLECLICK: S&P Places 'B' Corporate Credit Rating on CreditWatch DRAIN DOCTOR INC: Voluntary Chapter 11 Case Summary DURA AUTOMOTIVE: S&P Slices Corporate Credit Rating to 'B+' ELAN FINANCE: Moody's Rates Planned $850M Sr. Unsec. Debt at B3 ENRON CORP: Asks Court to Approve Corestaff Settlement Agreement FOXMEYER CORP.: Trustee Turning $2.3 Mil. Over to U.S. Trustee FRIEDMAN'S INC: Expects to Default Under Credit Loan Covenants FRIEDMAN'S INC: Names Richard Hettlinger Chief Financial Officer GAS TRANSMISSION: S&P's Rating Jumps to 'A-' from 'CC' GENTEK INC: Retains Goldman Sachs to Assist in Possible Sale GMAC COMM'L: Moody's Rates Four Classes Low-B & Junks Two Classes GREAT PLAINS: Declares $0.415 Per Share Quarterly Dividends GUARDIAN SECURITY: Case Summary & 20 Largest Unsecured Creditors HCA INC: Stock Purchase Plan Cues Moody's to Downgrade Ratings HEALTH NET: S&P Pares Rating to 'BB+' from 'BBB-' After Review HELLER EQUIPMENT: Unexpected Recoveries Lift S&P's Ratings HERBST GAMING: S&P Puts B- Rating on Planned $150M Sr. Sub. Notes HOLLINGER INC: Conrad Black Departs as Chairman & CEO INSTRON CORP: S&P's Withdraws B & CCC+ Ratings INTERSTATE GENERAL: Refinances Approx. $7.4 Million Debt K&F IND: Moody's Rates Sr. Sec. Loans B2 & Junks Sr. Sub. Notes KAISER ALUMINUM: Asks Court to Approve Amended USWA Agreements L-3 COMMUNICATION: Moody's Puts Ba3 Rating on $650M Sr. Sub. Notes LAIDLAW INT'L: Begins Trading on Philadelphia Stock Exchange LONG BEACH: Fitch Rates Six Classes Low-B & Junks Two Classes MARINER HEALTH: Launches Cash Tender Offer for 8-1/4% Sr. Sub Debt MOREHEAD MEMORIAL: Moody's Slices Long-Term Bond Rating to Ba1 NATIONAL ENERGY: Wants Court to Reduce Vallieres' Claim to $1.2MM NEIGHBORCARE INC: Completes Quest Total Care Pharmacy Purchase NORAMPAC INC: Invests $17.5 in Two Ontario Corrugated Box Plants NORTHWEST AIRLINES: Moody's Rates Planned $975M Facilities at B1 NORTHWESTERN CORP: Fitch Withdraws Default Ratings After Emergence NRG ENERGY: Names Nahla Azmy Investor Relations Director OAK GROVE RESORTS: Voluntary Chapter 11 Case Summary OAKWOOD HOMES: Likely Default Prompts S&P to Junk Three Classes OMEGA HEALTHCARE: Closes $78.8 Million New Investment Deals PRIME HOSPITALITY: Moody's Removes Low-B Ratings After Acquisition QWEST COMMS: Names Loretta Armenta President for New Mexico Unit RADIANT COMMS: Equity Deficit Widens to CDN$2,434,532 at Sept. 30 RIVERSIDE FOREST: Al Thorlakson Steps Up as CEO & President SAVVIS COMMS: Sept. 30 Balance Sheet Upside-Down by $43.6 Million PACIFIC GAS: Can Ask Deutsche Bank to Release COTP Escrow Fund PILLOWTEX CORP: Asks Court OK on $150,000 Manchester Break-Up Fee RCN CORP: Court Approves Solicitation & Voting Procedures SOUND PARTS INC: Case Summary & 30 Largest Unsecured Creditors SPIEGEL INC: Lederers Can Pursue $10.5MM Suit Against Eddie Bauer TOMMY HILFIGER: Special Committee Hires Debevois & FTI as Advisors TOMMY HILFIGER: Delayed 10-Q May Trigger Covenant Defaults TORPEDO SPORTS: Annual Report Will Be Delayed UAL CORP: Toni Polverinni Agrees to Reduce Claim to $5 Million UNION WADDING: Receiver Taking Bids to Sell as Turn-Key Operation UNIVERSAL HOSPITAL: Equity Deficit Narrows to $89.5M at Sept. 30 US UNWIRED: Sept. 30 Balance Sheet Upside Down by $233.6 Million VARTEC TELECOM: Hires Vinson & Elkins as Bankruptcy Counsel VARTEC TELECOM: Want Access to $30 Million of DIP Financing VARTEC TELECOM: Lease Rejection to Cost Lexington $4.7 Million WCI COMMUNITIES: S&P Lifts Corporate Credit Rating to BB from BB- WINSTAR COMMS: Trustee Wants Court Approval on Lucent Settlement WORLDCOM INC: To Release 3rd Quarter 2004 Financials Today WORLDCOM: Wisconsin Commission Asks Court to Allow $841,150 Claim ZENDA CAPITAL: Gets Ontario Securities Commission's Default Status * Angus Phang Joins Mintz Levin's IP Section in London Firm ********* 32006 SOUTH COAST HIGHWAY: Voluntary Chapter 11 Case Summary ------------------------------------------------------------ Debtor: 32006 South Coast Highway LLC 410 Broadway, 2nd Floor Laguna Beach, California 92651 Bankruptcy Case No.: 04-16735 Chapter 11 Petition Date: November 1, 2004 Court: Central District of California (Santa Ana) Judge: John E. Ryan Debtor's Counsel: John A. Saba, Esq. 32221 Camino Capistrano #B-104 San Juan Capistrano, California 92675 Tel: (949) 489-2150 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor has no unsecured creditors who are not insiders. A.B. DICK: Court Approves $40 Mil. Presstek Bid to Acquire Company ------------------------------------------------------------------ Presstek, Inc. (Nasdaq: PRST), a manufacturer and marketer of environmentally responsible high tech digital imaging solutions for the graphic arts and laser imaging markets, reported the approval of its bid to acquire A.B.Dick Company. In July 2004, A.B.Dick filed for Chapter 11 bankruptcy protection. At the same time, Presstek entered into an asset purchase agreement with A.B.Dick pursuant to which Presstek would acquire A.B.Dick's business and assets through U.S. Bankruptcy Code Section 363 asset sale provisions. Presstek's Chief Financial Officer Moosa E. Moosa said, "Presstek's bid, valued at approximately $40 million, was accepted by A.B.Dick and approved by the U.S. Bankruptcy Court [yesterday]. The transaction is expected to close on November 5, 2004." Presstek's President and Chief Executive Officer Edward J. Marino said, "We are delighted that our bid for A.B.Dick has been successful. A.B.Dick is a company with a solid reputation and long tradition of service and support to its customers. As we work to integrate Presstek's high technology business with A.B.Dick's market leading organization, our goal will be to form a solid customer-oriented, printing-solutions company. We are looking forward to a bright future together delivering valuable solutions to our customers to help their businesses prosper." As previously reported in the Troubled Company Reporter, Presstek, Inc., has offered $40 million to purchase substantially all of the assets of A.B. Dick Company and its wholly owned subsidiaries. On Sept. 15, 2004, the United States Bankruptcy Court for the District of Delaware approved uniform bidding and auction procedures for the proposed disposition. The Debtors' Assets are to be sold free and clear of all liens, claims, encumbrances, and interests, save and except to the liens of the Debtors' prepetition and postpetition lenders. About Presstek Presstek, Inc. is a leading manufacturer and marketer of environmentally responsible high tech digital imaging solutions to the graphic arts and laser imaging markets. Presstek's patented DI(R), CTP and plate products provide a streamlined workflow in a chemistry-free environment, thereby reducing printing cycle time and lowering production costs. Presstek solutions are designed to make it easier for printers to cost effectively meet increasing customer demand for high-quality, shorter print runs and faster turnaround while providing improved profit margins. Presstek subsidiary Precision Lithograining Corporation is a manufacturer of high quality digital and conventional printing plate products, including Presstek's award-winning, chemistry-free Anthem plate. Presstek subsidiary Lasertel, Inc., manufactures semiconductor laser diodes for Presstek's and external customers' applications. For more information on Presstek, visit http://www.presstek.com/ call 603-595-7000 or email: info@presstek.com Headquartered in Niles, Illinois, A.B.Dick Company -- http://www.abdick.com/-- is a global supplier to the graphic arts and printing industry, manufacturing and marketing equipment and supplies for the global quick print and small commercial printing markets. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Del. Lead Case No. 04-12002) on July 13, 2004. Frederick B. Rosner, Esq., at Jaspen Schlesinger Hoffman, and H. Jeffrey Schwartz, Esq., at Benesch, Friedlander, Coplan & Aronoff LLP represent the Debtors in their restructuring efforts. Richard J. Mason, Esq., at McGuireWoods, LLP, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed over $10 million in estimated assets and over $100 million in estimated liabilities. AFFINIA GROUP: S&P Puts 'BB' Rating on Planned $425M Bank Facility ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Toledo, Ohio-based Affinia Group Inc. At the same time, a 'BB-' senior secured bank loan rating and a '3' recovery rating were assigned to the company's proposed $425 million first-lien secured bank facility, indicating the expectation of a meaningful recovery of principal (50%-80%) in the event of a default. In addition, Standard & Poor's assigned a 'B' rating to the company's $300 million senior subordinated notes, due 2014, to be issued in accordance with SEC Rule 144A with registrations rights. The outlook is stable. Proceeds from the new credit facility and debt offering, $100 million of funding from a $125 million accounts receivable securitization facility, a pay-in-kind -- PIK -- subordinated seller note with a $50 million fair market value ($74.5 million face amount) issued by Affinia Group Holdings Inc., along with a $350 million cash equity contribution will be used to finance the $1.05 billion (including $50 million of fees and expenses) purchase of the automotive aftermarket business of Dana Corp. (BB/Watch Pos/--) by affiliates of The Cypress Group LLC (unrated). Affinia will also provide $25 million of funding for Beck Arnley Worldparts Corp. (unrated), which will become an unrestricted subsidiary. The purchase price multiple is about 5.9x pro forma June 2004 last-12-month adjusted EBITDA. "We expect free cash flow to be earmarked for debt reduction, enabling Affinia to strengthen credit measures to levels commensurate for the ratings," said Standard & Poor's credit analyst Daniel DiSenso. With annualized sales of about $2.1 billion, Affinia's product portfolio consists of: * brake components (48% of total sales); * filtration products (28%); * chassis components (9%); and * distribution operations (16%). Management's growth plan is expected to be organically driven, with focus on expanding presence in the economy brand niche segment of the market and further penetrating the original equipment service -- OES -- market. Acquisitions are not expected to receive a high priority, and debt-financed acquisitions are not factored into the ratings. The proposed $125 million revolving facility, due 2010, and $300 million term loan B, due 2011, are rated 'BB-'. ALLEGHENY ENERGY: Refinances & Pays Down Supply Term Loans ---------------------------------------------------------- Allegheny Energy, Inc.'s (NYSE:AYE) subsidiary, Allegheny Energy Supply Company, LLC, has repaid $200 million of its term loans and has refinanced the remaining $1.04 billion of its term loans. Allegheny Energy expects to save approximately $15 million per year in interest expense through the combination of the repayment of principal and a lower interest rate. The remaining loan will bear interest at a rate of LIBOR plus 2.75% per annum, and will mature on March 8, 2011. The Company used approximately $150 million of proceeds from the recent private placement of its common stock and $50 million of cash on hand at Allegheny Energy Supply to complete the $200 million repayment. "This refinancing is another step in improving the financial condition of Allegheny Energy and is itself a testimony to the progress we've already made," said Paul Evanson, Chairman and Chief Executive Officer. "We remain on track toward achieving our goal of $1.5 billion of debt reduction by the end of 2005." Since December 1, 2003, Allegheny Energy has reduced debt by approximately $900 million. Further debt reductions will come from free cash flow and proceeds from asset sales. As previously announced, Allegheny Energy has entered into contracts to sell its West Virginia gas operations, its Lincoln generation facility and a portion of its interest in the Ohio Valley Electric Corporation. Citigroup Global Markets Inc. is the lead arranger for the refinancing. Headquartered in Greensburg, Pennsylvania, Allegheny Energy is an energy company consisting of two major businesses, Allegheny Energy Supply, which owns and operates electric generating facilities, and Allegheny Power, which delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. More information about Allegheny Energy is available at http://www.alleghenyenergy.com/ * * * As reported in the Troubled Company Reporter on Sept. 14, 2004, Fitch Ratings revised the Rating Outlook of Monongahela Power Company to Stable from Negative. Approximately $838 million of debt securities are affected. At the same time, Fitch has affirmed the existing ratings of Allegheny Energy, Inc. and subsidiaries. The Rating Outlooks for all issuers in the Allegheny Energy group are Stable. The revision of Monongahela's Outlook to Stable is based on the successful execution of additional coal supply contracts for 2005 and 2006, the return to service of baseload coal-fired generation units at the Hatfield's Ferry and Pleasants plants prior to the start of peak seasonal demand, and the expectation that operating and maintenance expenses will trend down. The new coal supply contracts increase the hedged percentage of 2005 and 2006 coal supply needs to 90% and 50%, respectively, and alleviate near term commodity price risk. The all-in average prices for the locked in portion of coal supply are approximately $34 for 2005 and Fitch estimates it will be approximately $36.10 for 2006, which are well below the current spot market price of Appalachian coal. While the restoration of the major coal-fired units to service ended the cash losses associated with purchasing replacement power at higher cost, the company continues to be at risk for any future outages under Monongahela's current retail tariffs. Monongahela is unable to recover the costs of replacement supply in either West Virginia or Ohio, and no near-term change is expected. A successful closing of the recently announced sale of Mountaineer Gas would be positive for credit quality. Mountaineer Gas has been a persistent drag on profitability and the proceeds from any sale are anticipated to be used for debt reduction. However, the closing of the transaction is subject to material regulatory contingencies. The affirmation of the 'BB-' senior unsecured rating and Stable Rating Outlook of the group parent, Allegheny, reflects the new management's ongoing progress in restructuring efforts and debt reduction and adequate parent company liquidity, as well as the high consolidated leverage and weak cash flow coverage ratios. Allegheny's rating reflects Fitch's expectation that Allegheny would continue to provide support to the leveraged Allegheny Energy Supply subsidiary as well as the cash flow from the stronger, more stable regulated utility subsidiaries. Execution of the remainder of the $1.5 billion debt reduction plan by year- end 2005, improvement in cash flow generation at Supply, improvements in plant operating performance and expense control, and rate relief would improve credit quality. Credit concerns include the risks of extended plant outages, rising environmental compliance costs, adverse regulatory or judicial decisions, and commodity price exposure (2006 and beyond). AMERICAN HOMEPATIENT: Sept. 30 Balance Sheet Upside-Down by $29MM ----------------------------------------------------------------- American HomePatient, Inc. (OTCBB:AHOM) reported net income of $3.0 million and revenues of $83.5 million for the third quarter ended September 30, 2004. For the nine months ended September 30, 2004, the Company reported net income of $5.0 million and revenues of $251.6 million. The Company's net income of $3.0 million for the third quarter of 2004 compares to net income of $0.4 million for the third quarter of 2003 representing an increase of $2.6 million. The Company's net income of $5.0 million for the first nine months of 2004 compares to net income of $9.3 million for the first nine months of 2003. Net income for the first nine months of 2003 excluded approximately $10.0 million in non-default interest expense that would have been paid had the Company not sought bankruptcy protection. Net income for the first nine months of 2003 included approximately $3.8 million of reorganization items compared to $0.5 million for the same period in 2004. The Company's revenues of $83.5 million for the third quarter of 2004 represent a decrease of $0.4 million, or 0.5%, from the third quarter of 2003. The Company's revenues of $251.6 million for the first nine months of 2004 represent an increase of $2.3 million, or 1.0%, over the first nine months of 2003. Revenues in the current quarter and first nine months of 2004 were reduced by approximately $1.8 million, or 2.2%, and $5.6 million, or 2.2%, respectively, as a result of an approximate 15.8% reduction in the Medicare reimbursement rates for inhalation drugs effective January 1, 2004. The sale of inhalation drugs comprised approximately 12% of the Company's total revenues for the third quarter and first nine months of 2004. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a non-GAAP financial measurement that is calculated as net income excluding interest, taxes, depreciation and amortization. EBITDA for the third quarter of 2004 and for the third quarter of 2003 was $14.6 million and $11.3 million, respectively. For the third quarter of 2004, adjusted EBITDA (calculated as EBITDA excluding reorganization items) was $15.0 million or 18.0% of revenues. For the third quarter of 2003, adjusted EBITDA was $12.2 million or 14.5% of revenues. EBITDA for the first nine months of 2004 and for the first nine months of 2003 was $39.2 million and $31.9 million, respectively. For the first nine months of 2004, adjusted EBITDA was $39.8 million or 15.8% or revenues. For the first nine months of 2003, adjusted EBITDA was $35.6 million or 14.3% of revenues. Bad debt expense for the third quarter of 2004 decreased by approximately $0.3 million compared to the third quarter of 2003. Bad debt expense for the first nine months of 2004 increased by approximately $0.9 million compared to the first nine months of 2003. Bad debt expense in the current year has been impacted by disruptions in cash collections resulting from the inability of certain third-party payors to effectively process electronic claims due to the implementation of the new HIPAA Transaction and Code Sets. Also impacting bad debt expense has been payment delays associated with certain state Medicaid programs. Bad debt expense improved in the third quarter of 2004 compared to the third quarter of 2003 due to improved cash collections of patient receivables in the third quarter of 2004 compared to the third quarter of 2003. Certain intermediaries have begun processing claims in a more timely manner, which has improved collections in the third quarter of 2004. Total operating expenses decreased by approximately $3.1 million in the third quarter of 2004 compared to the third quarter of 2003 and decreased by approximately $4.4 million in the first nine months of 2004 compared to the same period in 2003. These decreases are primarily the result of the Company's initiatives to reduce personnel costs in its branches and billing centers. Inhalation Drug Reimbursement Update As previously announced by the Company, healthcare providers and patients had expressed concern that the inhalation drug reimbursement reductions scheduled for January 2005 could force providers to exit the market and create patient access issues for these critical drugs. On October 8, 2004, CMS indicated that, based on a recent GAO report and other public sources, a reasonable monthly dispensing fee would be in the range of $55.00 to $64.00. The Medicare fee schedule for inhalation drugs has not yet been finalized, but based on that range the Company expects to continue in the inhalation drug business. The Company appreciates the efforts of the Department of Health and Human Services (HHS), the Center for Medicare & Medicaid Services (CMS), congressional leaders, and members of the current Administration in trying to solve the patient access problem. About the Company American HomePatient, Inc. is one of the nation's largest home health care providers with 280 centers in 35 states. Its product and service offerings include respiratory services, infusion therapy, parenteral and enteral nutrition, and medical equipment for patients in their home. American HomePatient, Inc.'s common stock is currently traded in the over-the-counter market or, on application by broker-dealers, in the NASD's Electronic Bulletin Board under the symbol AHOM or AHOM.OB. At Sept. 30, 2004, American HomePatient's balance sheet showed a $29,189,000 stockholders' deficit, compared to a $34,249,000 deficit at Dec. 31, 2003. ATA AIRLINES: Wants Court Nod to Assume Clearinghouse & ARC Pacts ----------------------------------------------------------------- All full-service air carriers are components of an interdependent industry based on a network of agreements that govern virtually all aspects of air travel and airline operations. Without agreements for coordination between airlines and airline services, efficient service by the airline industry to the traveling public would be virtually impossible. The agreements facilitate cooperation among airlines and other industry service providers with respect to critical activities as making reservations and transferring passengers, packages, baggage and mail between airlines. Among the agreements crucial to the ATA Airlines and its debtor- affiliates' reorganization are: A. Clearinghouse Agreements James M. Carr, Esq., at Baker & Daniels in Indianapolis, Indiana, informs the Court that the mutual payment obligations related to interline agreements and other related agreements are reconciled through one or both of two clearinghouses -- the International Air Transport Association Clearinghouse and the Airlines Clearing House, Inc. ACH conducts settlements primarily for participating carriers based in the United States and other countries in the Western Hemisphere. ICH conducts settlements primarily for carriers based in other countries. ACH and ICH, in turn, are parties to an interclearance agreement pursuant to which settlements are made between members of ACH and ICH. The Debtors' business relies on their participation in and compliance with the ACH and ICH Clearinghouse agreements and related agreements. Interline agreements, Mr. Carr relates, take two principal forms -- multilateral and bilateral. The multilateral agreements involve multiple parties agreeing to the same set of industry rules, procedures, regulations, and recommended practices, with respect to many issues, including, orderly and prompt settlement of transactions between international air operators and among third parties including passenger, travel agent, and counterparties to cargo agreements. The primary multilateral agreements linking the Debtors to the interline network are their agreements with the International Air Transport Association and the Air Transport Association of America, and the Clearinghouse Agreements. On a monthly basis, each Clearinghouse aggregates billings from its other participants to the Debtors, and from the Debtors to its other participants, and calculates a net balance. Once the net balance is calculated, each Clearinghouse notifies the Debtors of the result. For any given month, the Debtors may be required to make net payment to the Clearinghouses or they may be entitled to receive net payments to, or they may be entitled to receive net payments from other participants in ACH or ICH. The Debtors make net settlements for interline payments through ACH and ICH, and are generally a net payor. For the 12 months ended September 30, 2004, net settlement payments to ACH were approximately $36,910,000. Net settlement payments to ICH were approximately $696,000. B. ARC Agreements and Bank Settlement Plans The Debtors are parties to certain agreements involving the Airline Reporting Corporation. The ARC is comprised of an aggregation of two types of contractual agreements: (a) the Carrier Services Agreement, which is an agreement between the ARC and a participating carrier; and (b) the Agent Reporting Agreement, which is an agreement between the ARC and the parties to the CSA and travel agents. The Debtors are parties to both the CSA and the ARA. The ARC operates as a clearinghouse through the Area Settlement Plan. The ASP remits monies owed from travel agencies to carriers, which are offset for any refund claims the travel agency is owed. In addition, the ASP remits to travel agencies refund claims they are owed and bills credit card transactions on behalf of the carriers. The majority of travel agents located in the United States are members of the ARC. The ARC Agreements are the mechanism through which travel agents and airlines settle accounts for tickets sold, tickets accepted for exchange, or tickets refunded by travel agents. Under the ARC Agreements, all participating travel agents' obligations to and claims against the carriers are reconciled against one another and the net amounts due to the airlines are paid in lump sums. The BSPs, like the ASP, are essentially clearinghouses, Mr. Carr informs the Court. They remit to carriers funds owed from travel agencies, which are offset for any refund claims the travel agency is owed. In addition, the BSPs remit to travel agencies refund claims they are owed and bill credit card transactions on behalf of the carriers. The Debtors participate in the Mexican BSP, with average monthly sales of $203,988. C. UATP Agreement According to Mr. Carr, the Universal Air Travel Plan is an aggregation of standard contracts among airlines that permit individuals to pay for tickets purchased from a travel agent or airline using the credit of the airline issuing a UATP card to the purchaser. Pursuant to the Amended and Restated UATP Participation Agreement, dated April 13, 2001, the Debtors are an authorized ticketor for the UATP card. UATP cards are issued to corporate sub scribers, whose employees as cardholders, may purchase air transportation on the Debtors' airline or any other airline who is a ticketor or contractor under the UATP Agreement. Each UATP contractor is responsible for administering their UATP program -- including subscriber account approval, card issuance, billing, servicing and collection of payments. The Debtors are a Ticketing Airline only, and as such sell tickets to a UATP cardholder but do not purchase tickets with a UATP card. The accounts of all Contractor Airlines and Ticketing Airlines are settled by netting out charge purchases made on their UATP cards. As a Ticketing Airline, the net for the Debtors is always a receivable absent any large refunds due. The recent monthly average net trade receivable balance due and owing the Debtors was approximately $329,000. The Debtors' participation as a Ticketing Airline accounts for less than 1% of the Debtors' sales paid for with credit cards. D. Interline Cargo Claims Agreement The Debtors are parties to the Multilateral Agreement for Interline Cargo Claims which establishes the structure of the Debtor's relationships with other carriers and their agents and relevant payment terms relating to cargo claims. Participation in the Interline Cargo Claims Agreement, Mr. Carr says, results in net revenue to the Debtors of approximately $10,000 per month. E. ATPCO Agreements The Airline Tariff Publishing Company facilitates the publication of airline tariff filings that are communicated by ATPCO to ticket vendors. Under agreements with ATPCO, the Debtors rely on ATPCO to publish and update vendor databases on pricing issues. This process is crucial to the Debtors' marketing and ticket sale efforts. By this motion, the Debtors seek the Court's authority to assume and continue to perform their obligations under: -- the Clearinghouse Agreements, -- the ARC Agreements and Bank Settlement Plans, -- the UATP Agreement, -- the Interline Cargo Claims Agreements, and -- the ATPCO Agreements Mr. Carr points out that the services under these agreements, including the clearinghouse functions, the Airline Reporting Corporation functions and global reservations services, are, in effect, essentially industry-wide "utility" services for which there are no readily available alternatives. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel- efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA HOLDINGS: Gets Nasdaq Delisting Notice Following Bankruptcy --------------------------------------------------------------- ATA Holdings Corp. (ATAHQ), the parent company of ATA Airlines, Inc., received written notification from the NASDAQ Stock Market indicating that due to the Company's announced filing for protection under Chapter 11 of the U.S. Bankruptcy Code, and in accordance with Marketplace Rules 4300 and 4450(f), NASDAQ determined that the Company's securities will be delisted from the NASDAQ Stock Market at the opening of business on Nov. 5, 2004, unless the Company requests a hearing in accordance with the Marketplace Rule 4800 Series. Since the Company does not intend to request such a hearing, the Company's securities will not be immediately eligible to trade on the OTC Bulletin Board because of the pending Chapter 11 proceedings. Although the Company's securities are not immediately eligible for quotation on the OTC Bulletin Board, the securities may become eligible if a market maker makes application to register in and quote the securities in accordance with SEC Rule 15c2-11. The Company is not aware that a market maker intends to make such an application. As a result of the Chapter 11 filing, the fifth character "Q" has been appended to the Company's trading symbol. Accordingly, the trading symbol for the Company's securities was changed from ATAH to ATAHQ at the opening of business on October 29, 2004. The Company's securities may be traded on the Pink Sheets following the delisting by NASDAQ. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel- efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago-Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. BANC OF AMERICA: Fitch Places Low-B Ratings on Classes B-4 & B-5 ---------------------------------------------------------------- Banc of America Mortgage Securities, Inc., series 2004-J mortgage pass-through certificates, are rated by Fitch Ratings as follows: -- $603,633,100 classes 1-A-1, 1-A-2, 1-A-R, 1-A-LR, 2-A-1, 2- A-2, 3-A-1 and 4-A-1 (senior certificates) 'AAA'; -- $10,943,000 class B-1 'AA'; -- $4,376,000 class B-2 'A'; -- $1,876,000 class B-3 'BBB'; -- $1,563,000 class B-4 'BB'; -- $938,000 class B-5 'B'. The 'AAA' rating on the senior certificates reflects the 3.45% subordination provided by: * the 1.75% class B-1, * the 0.70% class B-2, * the 0.30% class B-3, * the 0.25% privately offered class B-4, * the 0.15% privately offered class B-5, and * the 0.30% privately offered class B-6. The ratings on class B-1, B-2, B-3, B-4 and B-5 certificates reflect each certificates respective level of subordination. The ratings also reflect the quality of the underlying mortgage collateral, the primary servicing capabilities of Bank of America Mortgage, Inc. (rated 'RPS1' by Fitch) and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The transaction consists of four groups of adjustable interest rate, fully amortizing mortgage loans, secured by first liens on one- to four-family properties, with a total of 1,188 loans and an aggregate principal balance of $625,204,751.52 as of October 1, 2004 (cut-off date). The four loan groups are cross-collateralized. The group 1 collateral consists of 3/1 hybrid ARM mortgage loans. After the initial fixed interest rate period of three years, the interest rate will adjust annually based on the sum of One-Year CMT index and a gross margin specified in the applicable mortgage note. Approximately 59.92% of group 1 loans require interest-only payments until the month following the first adjustment date. As of the cut-off date, the group has an aggregate principal balance of approximately $126,337,979 and an average balance of $519,909. The weighted average original loan-to-value ratio -- OLTV -- for the mortgage loans is approximately 73.63%. The weighted average remaining term to maturity -- WAM -- is 359 months and the weighted average FICO credit score for the group is 732. Second homes and investor-occupied properties comprise 9.13% and 1.62% of the loans in group 1, respectively. Rate/Term and cashout refinances account for 18.51% and 22.11% of the loans in group 1, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (60.79%) and Florida (10.02%). All other states represent less than 5% of the outstanding balance of the group. The group 2 collateral consists of 5/1 hybrid ARM mortgage loans. After the initial fixed interest rate period of five years, the interest rate will adjust annually based on the sum of One-Year CMT index and a gross margin specified in the applicable mortgage note. Approximately 66% of group 2 loans require interest-only payments until the month following the first adjustment date. As of the cut-off date, the group has an aggregate principal balance of approximately $387,531,165.20 and an average balance of $520,176. The weighted average OLTV for the mortgage loans is approximately 72.29%. The WAM is 359 months and the weighted average FICO credit score for the group is 737. Second homes and investor-occupied properties comprise 11.19% and 1.98% of the loans in group 2, respectively. Rate/Term and cashout refinances account for 18.03% and 16.04% of the loans in group 2, respectively. The states that represent the largest geographic concentration of mortgaged properties are California (60.04%) and Florida (6.97%). All other states represent less than 5% of the outstanding balance of the pool. The group 3 collateral consists of 7/1 hybrid ARM mortgage loans. After the initial fixed interest rate period of seven years, the interest rate will adjust annually based on the sum of One-Year CMT index and a gross margin specified in the applicable mortgage note. Approximately 44.40% of group 3 loans require interest-only payments until the month following the first adjustment date. As of the cut-off date, the group has an aggregate principal balance of approximately $ 52,749,713.58 and an average balance of $512,133. The weighted average OLTV for the mortgage loans is approximately 71.92%. The WAM is 359 months and the weighted average FICO credit score for the group is 740. Second home properties comprise of 5.58% and none of the properties are investor-occupied. Rate/Term and cashout refinances account for 12.43% and 11.46% of the loans in group 3, respectively. The states that represent the largest geographic concentration of mortgaged properties are: * California (67.56%), * Florida (7.66%), and * Virginia (5.46%). All other states represent less than 5% of the outstanding balance of the group. The group 4 collateral consists of 10/1 hybrid ARM mortgage loans. After the initial fixed interest rate period of 10 years, the interest rate will adjust annually based on the sum of One-Year CMT index and a gross margin specified in the applicable mortgage note. Approximately 75% of group 4 loans require interest-only payments until the month following the first adjustment date. As of the cut-off date, the group has an aggregate principal balance of approximately $58,585,893 and an average balance of $603,978. The weighted average OLTV for the mortgage loans is approximately 69.39%. The WAM is 359 months and the weighted average FICO credit score for the group is 753. Second home properties comprise 7.10% and none of the properties are investor-occupied. Rate/Term and cashout refinances account for 28.21% and 8.16% of the loans in group 4, respectively. The states that represent the largest geographic concentration of mortgaged properties are: * California (61.24%), * Virginia (8.77%) and * Maryland (5.77%). All other states represent less than 5% of the outstanding balance of the pool. Approximately 50.33% of the group 1 mortgage loans, approximately 58.11% of the group 2 mortgage loans, approximately 67.18% of the group 3 mortgage loans, approximately 72.77% of the group 4 mortgage loans and approximately 58.68% of all of the mortgage loans were originated under the Accelerated Processing Programs. Loans in the Accelerated Processing Programs, which may include the All-Ready Home and Rate Reduction Refinance programs, are subject to less stringent documentation requirements. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ Banc of America Mortgage Securities, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as two separate real estate mortgage investment conduits (REMICs). Wells Fargo Bank, National Association will act as Trustee. BANC OF AMERICA: Fitch Rates Classes 30-B-4 & 30-B-5 at Low-B ------------------------------------------------------------- Banc of America Mortgage Securities, Inc., series 2004-9 mortgage pass-through certificates, is rated by Fitch Ratings as follows: * Group 1 certificates: -- $273,545,100 classes 1-A-1 through 1-A-11, 1-A-R, 1-A-LR and 30-IO, (group 1 senior certificates') 'AAA'; -- $5,516,000 class 30-B-1, 'AA'; -- $1,415,000 class 30-B-2, 'A'; -- $849,000 class 30-B-3, 'BBB'; -- $565,000 class 30-B-4, 'BB'; -- $425,000 class 30-B-5, 'B'. * Group 2 certificates: -- $50,035,478 classes 2-A-1, 2-A-2, 15-PO and 15-IO, ('group 2 senior certificates') 'AAA'; -- $667,000 class 15-B-1, 'AA'; -- $257,000 class 15-B-2, 'A'; -- $128,000 class 15-B-3, 'BBB'; * Group 3 certificates: -- $93,676,243 classes 3-A-1, 3-PO, 3-IO and 3-B-IO; ('group 5 senior certificates') 'AAA'; * and certificates of all groups: -- $179,475 class X-PO (consisting of 3 components: classes 1-X-PO, 2-X-PO and 3-X-PO), 'AAA'. The 'AAA' ratings on the group 1 senior certificates reflect the 3.25% subordination provided by: * the 1.95% class 30-B-1, * the 0.50% class 30-B-2, * the 0.30% class 30-B-3, * the 0.20% privately offered class 30-B-4, * the 0.15% privately offered class 30-B-5, and * the 0.15% privately offered class 30-B-6. Classes 30-B-1, 30-B-2, 30-B-3, 30-B-4, and 30-B-5 are rated 'AA,' 'A,' 'BBB,' 'BB,' and 'B,' respectively, based on their respective subordination. Class 30-B-6 is not rated by Fitch. The 'AAA' ratings on the group 2 senior certificates reflects the 2.50% subordination provided by: * the 1.30% class 15-B-1, * the 0.50% class 15-B-2, * the 0.25% class 15-B-3 certificates, * the privately offered 0.20% class 15-B-4, * the privately offered 0.15% class 15-B-5, and * the privately offered 0.10% class 15-B-6. Classes 15-B-4 through 15-B-6 are not rated by Fitch. The 'AAA' ratings on the group 3 senior certificates reflects the 2.50% subordination provided by: * the 1.75% class 3-B-1, * the 0.35% class 3-B-2, * the 0.15% class 3-B-3 certificates, * the privately offered 0.10% class 3-B-4, * the privately offered 0.05% class 3-B-5, and * the privately offered 0.10% class 3-B-6. Classes 3-B-1 through 3-B-6 are not rated by Fitch. The ratings also reflect the quality of the underlying collateral, the primary servicing capabilities of Bank of America Mortgage, Inc. (rated 'RPS1' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. The transaction is secured by three pools of mortgage loans. Loan groups 1, 2, and 3 collateralize the groups 1, 2 and 3 certificates, respectively. Except for the class X-PO certificates, the three loan groups are not cross-collateralized. The group 1 collateral consists of 543 recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with original terms to stated maturity ranging from 300 to 360 months. The weighted average original loan-to-value ratio -- OLTV -- for the mortgage loans in the pool is approximately 70.76%. The average balance of the mortgage loans is $$520,993 and the weighted average coupon -- WAC -- of the loans is 6.077%. The weighted average FICO credit score for the group is 746. Second homes comprise 12.28% and there are no investor-occupied properties. Rate/Term and cashout refinances represent 23.96% and 17.35%, respectively. The states that represent the largest geographic concentration of mortgaged properties are: * California (49.99%), * Florida (7.37%), * Illinois (5.35%) and * Virginia (5.05%). All other states comprise fewer than 5% of properties in the group. The group 2 collateral consists of 94 recently originated, conventional, fixed-rate, fully amortizing, first lien, single- family residential mortgage loans with original terms to stated maturity of 180 months. The weighted average OLTV for the mortgage loans in the pool is approximately 65.01%. The average balance of the mortgage loans is $546,052 and the WAC of the loans is 5.537%. The weighted average FICO credit score for the group is 746. Second homes comprise 10.04% and there are no investor- occupied properties. Rate/Term and cashout refinances represent 38.04% and 14.55%, respectively, of the groups 2 mortgage loans. The states that represent the largest geographic concentration of mortgaged properties are: * California (39.35%), * Texas (12.36%), * Florida (12.28%), * Georgia (7.39%) and * Virginia (6.47%). All other states comprise fewer than 5% of properties in the group. The group 3 collateral consists of 220 recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to two-family residential mortgage loans with original terms to stated maturity ranging from 180 to 360 months; the weighted average number of months since the origination of the loans is 26 months. The weighted average OLTV for the mortgage loans in the pool is approximately 67.89%. The average balance of the mortgage loans is $436,769 and the WAC of the loans is 6.696%. The weighted average FICO credit score for the group is 739. Second and investor-occupied homes comprise 6.46 % and 2.21%, respectively. Rate/Term and cashout refinances represent 32.36% and 25.89%, respectively, of the group 3 mortgage loans. The states that represent the largest geographic concentration of mortgaged properties are: * California (56.65%), * Florida (10.85%) and * North Carolina (5.32%). All other states comprise fewer than 5% of properties in the group. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available on the Fitch Ratings web site at http://www.fitchratings.com/ Banc of America Mortgage Securities, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as two separate real estate mortgage investment conduits -- REMICs. Wells Fargo Bank, National Association will act as trustee. BAY COVE: Moody's Affirms Ba2 Rating on $5.4 Million Bonds ---------------------------------------------------------- Moody's Investors Service affirmed the Ba2 long-term bond rating and stable outlook on Bay Cove Human Services' $5.4 million of outstanding Series 1998 bonds issued through the Massachusetts Health & Educational Facilities Authority. The Ba2 rating is attributable to Bay Cove's: -- position as a large human service provider of essential services in the Boston area -- steady growth in revenue, and -- stable break-even financial performance, although reductions in state funding have decreased operating margins over the previous years. The stable outlook incorporates our belief that Bay Cove will be able to leverage its market position as a provider of crucial services allowing it to maintain stable operations and improve the current liquidity level. Security The Series 1998 Bonds are secured by first mortgage liens on and security interests in certain real properties of Bay Cove, including the organization's main administrative building. There is a negative mortgage lien. Additionally, the bonds are secured by a lien on and security interest in the Department of Mental Retardation -- DMR -- Contract Receivables. The bonds are also secured by a pledge of the DMR contract for the sole benefit of the bond Trustee, under which payments are to be made to Bay Cove annually in an amount not less than 150% of the Maximum Annual Debt Service -- Pledged Provider Contract. Located in the Greater Boston area, Bay Cove provides a comprehensive array of residential and day services to individuals suffering from mental health, mental retardation, developmental disabilities, substance abuse and other issues. Bay Cove specializes in services to "dual-diagnosed" individuals with multiple disabilities, insulating the organization from funding cuts because the individuals it serves are often those with the most serious needs. Bay Cove has continued to grow over the past years, and now serves approximately 6,500 individuals a year at over 80 program and residential sites, considerably larger than the organization's size in 1998. As a result of its growth in volumes and program expansions, Bay Cove has increased its revenue each year, although with more modest growth after fiscal year 2000 when Massachusetts reduced funding for mental health services in the state. Revenue grew a lean 2% to $36.2 million in FY 2003 from $35.5 million in FY 2002. However, unaudited FY 2004 results report a 10.6% revenue growth to $40.1 million in the fiscal year that ended June 30, 2004, of which 2.9% is attributable to a rise in unrestricted contributions and the remaining 7.7% increase is attributable to operations. After four years of flat to modest rate increases in its contracts with state agencies, Bay Cove and other human service providers benefited in FY 2004 from an increased funding level for public health and mental health services. The FY 2005 state budget continues this trend and provides increases for the Department of Mental Retardation -- DMR, Medicaid and the Department of Public Health -- DPH, although funding for the Department of Mental Health -- DMH will remain flat. The state budget also includes a $20 million appropriation that will fund a 2% salary increase for human service providers who earn less than $40,000 annually, which will directly benefit Bay Cove next year. Although the state's FY 2004 and FY 2005 budgets have increased funding for these services, Bay Cove may still experience reductions in its program reimbursement if the state experiences severe budget shortfalls in future years, forcing the state to scale back on important social and health services across the board. Bay Cove's vulnerability to reductions in any one funding source is mitigated by the fact that its funding is derived from a number of separate governmental agencies, thereby protecting Bay Cove from funding cuts at any one state department. For FY 2004, Bay Cove received 30% of its funding from DMH, 26% of its funding from DMR, 15% from Medicaid claims, 9% from DPH, with the remaining balance derived primarily from private sources. An emerging source of private revenue for the organization has been fundraising and grants. In addition to completing a successful $3 million capital campaign for its early intervention program, Bay Cove has been increasing its unrestricted contributions as well. In 2004, Bay Cove generated $1.1million in unrestricted contributions, gifts, fundraising events and grants. This compares favorably with $328,000 in unrestricted grants and contributions in FY 2003, thus contributing to Bay cove's improved 2004 performance. Break-Even Operations Improve in Fiscal Year 2004 Bay Cove's break-even operations are a direct result of its market position, volume growth, and its ability to grow programs that the state has identified as essential services. An example is Massachusetts' Boulet Settlement that mandates the state to provide increased residential housing for the mentally retarded. In response, Bay Cove has created additional residential placements that will be funded by this effort. Bay Cove's strategic expansion of essential services for severely disabled individuals has allowed the organization to consistently break-even on operations even in years when its funding sources were challenged to maintain funding levels. Bay Cove has also managed to break-even by identifying economies of scale on some of their contracts. Bay Cove's 12-month FY 2004 statements report: -- an above-budget cash flow of $2 million (5.2% operating cash flow margin), -- a 5.4% increase above FY 2003's cash flow of $1.3 million (3.7% operating cash flow margin). Moody's note however, that although cash flow from operations increased, liquidity decreased in FY 2004 to $2.8 million (26.7 days cash-on-hand) from $3.3 million (34.3 days cash-on- hand) due to Bay Cove's $900,000 repayment of a mortgage. As a result of bolstered cash flows and a reduction in debt in FY 2004, debt-to-cash flow decreases to 5.0 times from a high 9.5 times in FY 2003. Key Financial Data and Statistics (based on management prepared FY 2004 results ending June 30, 2004; investment returns normalized at 6%) -- Total Operating Revenues: $40.1 million -- Net Revenue Available for Debt Service: $2.2 million -- Total Debt Outstanding: $8.6 million -- Maximum Annual Debt Service Coverage: 2.9 times -- Days Cash on Hand: 26.7 days -- Cash-to-Debt: 32.7% -- Debt-to-Cash Flow: 5.0 times -- Operating Cash Flow Margin: 5.2% The stable outlook incorporates Moody's belief that Bay Cove will be able to leverage its market position as a provider of crucial services allowing it to maintain stable operations and improve the current liquidity level. BLOUNT INT'L: Sept. 30 Balance Sheet Upside-Down by $282.5 Billion ------------------------------------------------------------------ Blount International, Inc. (NYSE: BLT) reported results for the third quarter ended September 30, 2004. Sales were $173.7 million, a 19.1% increase from $145.8 million in last year's third quarter. Operating income increased to $31.1 million, a 28.5% increase from operating income of $24.2 million in last year's third quarter. In August, the Company completed a successful refinancing that lowered outstanding debt and future interest costs. Related to this refinancing, the Company recognized a non-recurring charge of $42.8 million that contributed to a net loss of $31.8 million in this year's third quarter compared to a net loss of $36.2 million in last year's third quarter. The charge related to the refinancing was classified as "other expense" and included redemption premiums and a write-off of unamortized deferred financing fees related to the retired debt. Net loss for the third quarter of last year included a $39.7 million charge for a deferred tax valuation allowance. Pro-forma net income for the third quarter assuming that the refinancing transaction occurred as of June 30, 2004 was $13.7 million. Pro-forma net income was adjusted to remove the impact of the non-recurring refinancing charge, reflect the impact of the new capital structure on net interest expense and shares outstanding and assumes a 35% income tax rate. Net interest expense in this year's third quarter was $16.7 million compared to $17.2 million in the third quarter of 2003. Net interest expense included $4.2 million in incremental net interest expense incurred during the 30-day redemption period in connection with the retirement of the Company's former bonds. Pro- forma third quarter net interest expense was $9.1 million, exclusive of the incremental net interest expense associated with the redemption and assuming a full quarter impact of the refinancing. The Company believes that the pro-forma presentation of net income and net interest expense provides the investor with meaningful information on account of the magnitude and non- recurring nature of the refinancing that took place in August. This pro-forma information is reconciled to information presented under generally accepted accounting principles in the attached schedule. Subsequent to September 30th, the Company received $26.6 million in payments from the Internal Revenue Service, consisting of refund claims of $21.6 million and accumulated interest of $5.0 million. In reviewing these payments, the Company has determined that a significant portion of the interest for the payments should have been recorded as income in prior reporting periods. Based on this determination, the Company will restate its historical financial results to reflect additional interest income of $3.6 million in 2003 and $1.1 million in the first six months of 2004. The amounts included in this press release reflect the restated and increased income amounts for prior periods. Year-to-Date Results Sales through the first nine months of 2004 were $508.5 million compared to $399.9 million for the first nine months of last year, a 27.2% increase. Operating income totaled $86.8 million, a 40.5% increase from $61.8 million for the first nine months of last year. Net loss for the first nine months of this year was $15.8 million compared to a net loss of $34.4 million for the comparable period last year. This year's nine month net loss included a $42.8 million charge related to the refinancing transactions. Last year's net loss was inclusive of a $39.7 charge for the recognition of a deferred tax valuation allowance. Pro-forma net income was $38.1 million for the first nine months of 2004 assuming that the refinancing transaction occurred as of Jan. 1, 2004 and a 35% income tax rate. Commenting on the third quarter results, James S. Osterman, President and Chief Executive Officer, stated, "Our Company's performance in the third quarter continued to reflect robust market conditions in all three of our business segments. Year- over-year sales increased in this year's third quarter by at least 16% over last year's third quarter in each of our businesses, and Company-wide backlog increased by 16% from the end of the second quarter to $151.2 million. Along with the top line growth, operating income margins remained solid at 17.9% of sales, despite a challenging raw material market, especially steel. The outlook for the Company remains positive for the balance of this year and into next year as we fill orders to meet the demand created by recent storm activity, step up our international focus in the timber harvesting business and leverage the introduction of several new models in our lawnmower business. In addition to the strong operating performance, the refinancing transactions completed in August and cash flow from operations enabled the Company to reduce outstanding debt by $87.2 million during the third quarter to $520.4 million. The receipt of the outstanding tax refund and accumulated interest enabled us to further reduce outstanding debt during the month of October." Segment Results The Outdoor Products segment's third quarter sales were $109.8 million, a record level for the segment and 18.7% above last year's third quarter sales of $92.5 million. Segment contribution to operating income increased 16.7% to $28.0 million from $24.0 million in last year's third quarter. The increases in sales and profit were due to unprecedented worldwide demand for chainsaw products. The effect of hurricanes in the Southeastern United States and Caribbean further bolstered demand with order backlog increasing to $79.4 million in the third quarter from $77.3 million in the second quarter and $61.1 million in the third quarter of 2003. Segment sales for the first nine months of this year were $314.1 million, an 18.3% increase above last year's nine month total of $265.6 million. Segment contribution to operating income for the first nine months of 2004 was $80.4 million compared to $66.9 million for the same period last year. The Industrial and Power Equipment segment recorded net sales of $52.7 million in this year's third quarter, a 16.9% increase from last year's third quarter sales of $45.1 million. This segment's contribution to operating income in the third quarter was $6.0 million compared to $3.8 million in last year's third quarter. The year-over-year improvement in segment contribution to operating income reflects higher unit sales of timber harvesting equipment, partially offset by higher raw material costs. Demand for timber harvesting equipment remained high as evidenced by a 13.3% increase in order backlog during the third quarter to $59.8 million. Net sales for the first nine months were $159.8 million compared to $108.2 million in last year's first nine months, a 47.7% increase. Segment contribution to operating income for the first nine months was $15.6 million compared to $4.7 million for the comparable period last year. The Lawnmower segment recorded sales of $11.5 million in this year's third quarter, a 38.6% increase from last year's third quarter sales of $8.3 million. Unit volume sales continued to surpass last year's level due to the introduction of a new product line earlier in the year and significant enhancements to the 2005 product line that was introduced in the third quarter. Order backlog in the Lawnmower segment was $12.0 million at the end of the third quarter compared to $6.4 million at the end of last year's third quarter. Segment contribution to operating income in this year's third quarter was $0.6 million compared to a segment loss of $0.4 million in last year's third quarter. Segment contribution to operating income for the first nine months of this year was $1.9 million compared to a segment loss of $0.7 million for the comparable period last year. Filing of "Universal" Shelf Registration Statement The Company intends to file a "universal" Form S-3 shelf registration with the Securities and Exchange Commission in the near future. With its $138 million public equity offering on August 9th, 2004 and the resulting increase in the Company's market capitalization, the Company is eligible for such shelf registration filings. The filing will cover the registration of securities for potential offerings of common stock, preferred stock, warrants and debt instruments. Restatement of Prior Period Financial Statements On October 15, 2004, the Company received $26.6 million in payments from the Internal Revenue Service in payment of amounts due the Company for amended federal income tax returns and a carryback claim. The refund amount included the refund claims of $21.6 million and accumulated interest income of $5.0 million ($3.6 million and $1.1 million applicable to 2003 and the first six months of 2004, respectively). At December 31, 2003, the Company had recorded a refund claims receivable of $21.6 million but had not recorded interest income on the amounts refundable. The Company has determined that the failure to record interest income was an accounting error. The Company will restate its financial statements as of and for the year ended December 31, 2003 (including the interim periods December 31, 2003, September 30, 2003 and June 30, 2003) and the interim financial statements as of and for the interim periods ended June 30, 2004 and March 31, 2004 to record the portion of the $5.0 million of interest income applicable to each respective period. The amounts included in this press release have been restated for this accounting error. About the Company Blount International, Inc. is a diversified international company operating in three principal business segments: Outdoor Products, Industrial and Power Equipment, and Lawnmower. Blount International, Inc. sells its products in more than 100 countries around the world. For more information about Blount International, Inc., please visit our website at http://www.blount.com. At Sept. 30, 2004, Blount International's balance sheet showed a $282.5 billion stockholders' deficit, compared to a $393.7 billion deficit at Dec. 31, 2003. BMC INDUSTRIES: Committee Hires Larkin Hoffman as Counsel --------------------------------------------------------- The Honorable Robert J. Kressel of the U.S. Bankruptcy Court for the District of Minnesota approved the application of the Official Committee of Unsecured Creditors in BMC Industries, Inc., and its debtor-affiliates' chapter 11 cases to employ Larkin, Hoffman, Daly & Lindgren, Ltd. as its counsel. Larkin Hoffman will render professional services to the Committee in all matters relating to or which will arise out of and in the course of the administration of the Debtors' estates and for the benefit of the creditors of the estates. Thoman J. Flynn, Esq., the lead attorney in these proceedings will bill the Debtors at an hourly rate of $290. Mr. Flynn discloses that the Debtors will pay his law firm a $75,000 retainer. To the best of the Committee's knowledge, Mr. Flynn nor its Firm does not hold any interest materially adverse to the Debtors and their estates. Headquartered in Ramsey, Minnesota, BMC Industries Inc. -- http://www.bmcind.com/-- is a multinational manufacturer and distributor of high-volume precision products in two business segments, Optical Products and Buckbee Mears. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Minn. Case No. 04-43515) on June 23, 2004. Jeff J. Friedman, Esq., at Katten Muchin Zavis Rosenman, and Clinton E. Cutler, Esq., at Fredrikson & Byron, P.A., represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $105,253,000 in assets and $164,751,000 in liabilities. BOYDS COLLECTION: Moody's Junks $34.4M Senior Subordinated Notes ---------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of The Boyds Collection, LTD. due to soft operating performance in its retail segment, which is the company's primary growth vehicle to reduce exposure to the challenging wholesale gift and collectible markets. The outlook remains negative. These ratings were downgraded: * Senior implied rating, to B2 from B1; * $40 million senior secured revolving credit facility due April 21, 2005, to B2 from B1; * $28 million senior secured term loan facility a due April 21, 2005, to B2 from B1; * $34.4 million 9% senior subordinated notes due May 15, 2008, to Caa1 from B3; * Senior unsecured issuer rating, to B3 from B2. The ratings downgrade and negative outlook reflect year-over-year sales declines in Boyds' first retail store of around 13% in both 3Q04 and the year-to-date period. The soft retail operating performance, in only its second full-year of operation, is concerning given projected debt increases to fund additional stores, and the company's ongoing exposure to high competition and weak discretionary spending trends in the wholesale segment. Further challenges in the wholesale segment are present in Boyds' implementation of a salesforce restructuring initiative and the company's shifting focus toward lower margin gift items. Liquidity concerns are becoming increasingly problematic as the maturity date of Boyds' credit facility in April 2005 approaches. As the company relies on that facility for liquidity, it is crucial that the refinancing is executed in a timely and cost effective manner. The rating action is tempered: (1) by Boyds' strong collectibles heritage, with a reputation for high quality; (2) by the company's historical debt reduction, which has enabled strong coverage metrics and positive pre-capex cash flows despite earnings declines; (3) by the credible (albeit challenging) growth and cost- savings initiatives being implemented by the new management team ($3 million in annualized savings anticipated from salesforce restructuring); and (4) by initial signs of stabilizing sales trends in the company's wholesale segment after years of declines (3Q04 sales and quarter-end orders were positive). The ratings could be stabilized at the current levels if the company can resolve its near-term maturity issues and achieve sufficient profitability and cash flow gains in order to fund its growth initiatives. Alternatively, declines in profits and cash flows (particularly without a revision to its financial and growth strategies), and the inability to sustain borrowing access could lead to further rating downgrades over the coming quarters. Headquartered in McSherrytown, Pennsylvania, The Boyds Collection, Ltd. is a designer, importer and distributor of hand-crafted collectibles and other specialty giftware products. Net sales for the twelve months ended September 2004 were approximately $105 million. BRUNSWICK ENTERPRISES: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Brunswick Enterprises of Southwest Florida, Inc. dba J & M Air Conditioning 7091 Pinnacle Drive, Suite E Fort Myers, Florida 33907 Bankruptcy Case No.: 04-21346 Type of Business: The Company sells, installs and services air conditioning units in Lee, Collier and Charlotte counties in Southwest Florida. See http://www.jmairconditioning.com/ Chapter 11 Petition Date: November 2, 2004 Court: Middle District of Florida (Ft. Myers) Debtor's Counsel: Jeffrey W. Leasure, Esq. Jeffrey W. Leasure, PA PO Box 61169 Fort Myers, Florida 33906 Tel: (239) 275-7797 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. BURLINGTON INDUSTRIES: Gets Court Nod on EPA Settlement Pact ------------------------------------------------------------ As reported in the Troubled Company Reporter on Aug. 10, 2004, the United States of America, on behalf of the Environmental Protection Agency, filed Claim No. 1136 on July 18, 2000, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, for: -- at least $10,193,132 for unreimbursed environmental response costs incurred by the United States, on the EPA's behalf, at the: (1) Carolina Steel Drum Site in York County, South Carolina; (2) J Street Site in Harnett County, North Carolina; and (3) FCX-Statesville Site in Iredell County, North Carolina; and -- approximately $10,744,322 in potential future response costs incurred by the United States, on the EPA's behalf, at the Sites. Daniel D. DeFranceschi, Esq., at Richards, Layton & Finger, PA, in Wilmington, Delaware, relates that the EPA Claim asserts a general unsecured claim except to the extent that the United States, on the EPA's behalf, may be entitled to administrative priority for injunctive obligations or postpetition liabilities of the Burlington Debtor with respect to the property of the Estate. On November 19, 2002, the EPA sent a General Notice Letter to the Debtor asserting various claims against the Debtor and its estate regarding the Industrial Pollution Superfund Site located at or near 810 Poindexter Street, Jackson in Hinds County, Mississippi. The Settlement Agreement The BII Distribution Trust, as representative of the chapter 11 estate of Burlington Industries, Inc., and the Government have agreed to resolve their disputes. The principal terms of the Settlement Agreement are: (1) With regard to the IPC Superfund Site claims, the United States and the EPA will receive a $5,000 General Unsecured Claim to be paid as an Allowed General Unsecured Claim in Class 4 under the Plan. Any claim amount related to the IPC Superfund Site that exceeds $5,000 will be deemed to be withdrawn with prejudice. The United States will waive and release any further claims against the Debtor for the recovery of environmental response costs or any other costs, expenses, damages, and claims of any description under the CERCLA arising from the IPC Superfund Site, subject to the terms of the Settlement Agreement and the completion of the Public Notice Process; (2) The portion of the EPA Claim relating to the Carolina Steel Drum Site will be withdrawn with prejudice; (3) With regard to the J Street Site, the United States and the EPA will receive a $160,039 General Unsecured Claim, which will be paid as an Allowed General Unsecured Claim in Class 4 under the Plan. Any amount of the EPA Claim related to the J Street Site that exceeds $160,039 will deemed to be withdrawn with prejudice. The United States will waive and release any further claims against the Debtor for the recovery of environmental response costs or any other costs, expenses, damages and claims of any description under the CERCLA arising from the J Street Site, subject to the terms of the Settlement Agreement and the completion of the Public Notice Process. In addition, the Debtor will have no further obligation to comply with the Unilateral Administrative Order for the J Street Site; (4) With respect to the FCX-Statesville Site, Operable Unit 1, the United States and the EPA will receive a $665,381 General Unsecured Claim, which will be paid as an Allowed General Unsecured Claim in Class 4 under the Plan. Any amount of the EPA Claim related to the FCX-Statesville Site that exceeds $665,381 will be deemed to be withdrawn with prejudice. The United States will waive and release any further claims against the Debtor for the recovery of environmental response costs or any other costs, expenses damages and claims of any description under the CERCLA arising from the FCX-Statesville Site, Operable Unit 1, subject to the terms of the Settlement Agreement and the completion of the Public Notice Process. The Debtor will have no obligation to comply with or liability under the April 1, 1998 Consent Decree, subject to the terms of the Settlement Agreement. The United States will waive any present or future claim against the Debtor for Operable Unit 3; (5) The Debtor will pay the Allowed General Unsecured Claims in accordance with the Plan and by Electronic Funds Transfer to the United States' lockbox bank in accordance with instructions provided by the United States after execution of the Settlement Agreement; (6) Only the amount of cash received by the United States, on the EPA's behalf, from the Debtor pursuant to the Settlement Agreement for the Allowed General Unsecured Claims, and not the total amount of the allowed claims, will be credited by the EPA to its accounts for the Site. The credit will reduce the liability of non-settling potentially responsible parties to the EPA for the Site; (7) The United States will covenant not to bring a civil action or take administrative action against the Debtor pursuant to Section 106 and 107 of CERCLA relating to the Sites. This covenant not to sue is conditioned on the complete and satisfactory performance by the Debtor of its obligation under the Settlement Agreement and extends to any successor-in-interest of the Debtor or its Estate, including the Trust and any successor company emerging under the Chapter 11 cases as approved by the Bankruptcy Court and does not extend to any other person; and (8) The Debtor or its Estate, including the Trust and any successor company emerging under the Chapter 11 cases as approved by the Court, will covenant not to sue and agree not to assert any claims or causes of action against the United States with respect to the Sites, including but not limited to: -- any direct or indirect claim for reimbursement from the Hazardous Substance Superfund; -- any claims for contribution against the Unites States, its departments, agencies or instrumentalities; and -- any claims arising out or response activities at the Sites. The Settlement Agreement will be submitted for public comment via notice of the Settlement Agreement in the Federal Register. The United States reserves the right to withdraw or withhold its consent if the public comments regarding the Settlement Agreement disclose facts or consideration that indicate that the Settlement Agreement is inappropriate, improper or inadequate. The public will have 30 days to review and comment on the Settlement Agreement. After the United States has reviewed any comments, the Trust will file a certification that advises the Court of the results of the Public Notice Process and, if appropriate, seek Court approval of the Settlement Agreement. By this motion, the BII Trust asks the Court to approve the Settlement Agreement, if appropriate, after the completion of the Public Notice Process. Mr. DeFranceschi points out that if these matters were not resolved consensually, the Estate would be required to litigate the EPA Claim, which would require significant additional time and effort for further factual investigation and discovery, and ultimately, a trial on the merits. Substantial additional attorney's fees and expenses would be incurred as a result and there would be no certainty as to the outcome of that litigation. The Trust believes that the Settlement Agreement is fair and reasonable. In exchange for a release of all claims and liabilities asserted in the EPA Claim, the United States will be granted general unsecured claims for $830,420. Mr. DeFranceschi adds that approval of the Settlement Agreement will liquidate and bring finality to the Estate's obligations relating to the Sites. Moreover, the Settlement Agreement will allow the Trust to liquidate and resolve the Disputed Claim in excess of $20,000,000 represented by the EPA Claim. The Trust Advisory Committee has given its consent to the terms of the Settlement Agreement after written notice by the Distribution Trust Representative. * * * Judge Rosenthal approves the settlement. Headquartered in Greensboro, North Carolina, Burlington Industries, Inc. -- http://www.burlington-ind.com/-- was one of the world's largest and most diversified manufacturers of soft goods for apparel and interior furnishings. The Company filed for chapter 11 protection in November 15, 2001 (Bankr. Del. Case No. 01-11282). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, and David G. Heiman, Esq., at Jones Day, represent the Debtors. WL Ross & Co. LLC purchased Burlington Industries and then sold the Lees Carpets business to Mohawk Industries, Inc. Combining Burlington with Cone Mills, WL Ross created International Textile Group. Burlington's chapter 11 Plan confirmed on October 30, 2003, was declared effective on Nov. 10, 2003. (Burlington Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000) CANWEST MEDIA: S&P Puts B- Rating on Planned $748M Sr. Sub. Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' subordinated rating to Winnipeg, Manitoba-based CanWest Media Inc.'s proposed US$748 million 8% senior subordinated notes due Sept. 15, 2012, to be issued under Rule 144A with registration rights. The loan is rated two notches below the long-term corporate credit rating, reflecting its junior position in the company's capital structure. At the same time, Standard & Poor's affirmed its 'B+' long-term corporate credit rating. About US$631 million of the new subordinated notes will be issued in exchange for the Hollinger Participation Trust (the trust) senior notes due 2010, with the remainder to fund costs related to the completion of the exchange offer and windup of the trust. The outlook is stable. The company had about C$2.3 billion in debt outstanding at May 31, 2004. "The ratings on CanWest Media reflect its weak credit measures, high debt leverage, and competitive operating environment. These factors are partially offset by the company's leading Canadian market position and business diversity afforded by its newspaper publishing and television broadcasting assets, which help mitigate the effect of the advertising revenue and newsprint price cycles," said Standard & Poor's credit analyst Lori Harris. The company benefits from a favorable regulatory environment in Canada that limits foreign competition and ownership. Furthermore, CanWest Media's investment in Australia-based Network Ten has generated meaningful cash flow for the company given Network Ten's solid operating performance. CanWest Media's business diversity was demonstrated earlier in 2004, helping to offset segment cyclicality. Revenues decreased by 2% in the nine months ended May 31, 2004, compared with the same period a year earlier due to the divestiture of certain newspapers last year and weakness in advertising sales related to the company's Canadian television broadcasting operations (about 35% of total revenues). Pro forma, the revenue decline was partially offset by better performance in the company's Canadian newspaper division (55%) and international media operations (10%), which include interests in television and radio in Australia, New Zealand, and Ireland. The stable outlook reflects Standard & Poor's expectations that CanWest Media will maintain its solid business profile, particularly its broadcast television audience, newspaper readership, and circulation market shares. In addition, the company is expected to maintain credit ratios in line with its ratings in the medium term. CATHOLIC CHURCH: Tucson Honoring Workers' Compensation Claims ------------------------------------------------------------- Judge Marlar authorizes the Diocese of Tucson to continue to honor prepetition Worker's Compensation Claims totaling $43,411 per month. For Claims exceeding a $5,000 Self-Insured Retention, Tucson will pay the monthly amount but will be reimbursed by its Excess Insurance Carrier for the excess. In instances where no amount of monthly payment is shown, Tucson believes that either the amount has not yet been set or, in most cases, the amounts are nor regular monthly payments but may relate to payments for medical visits. Tucson also obtained permission to continue to honor $12,110 of Property Insurance Claims. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) COMDISCO HOLDING: Settles M. Henriquez's & G. Howard's Claims ------------------------------------------------------------- Comdisco Holding Company, Inc. (OTC:CDCO) reported the settlement of all claims and counterclaims between and among the Reorganized Debtor and creditors Manual Henriquez and Glen Howard. The settlement has been approved by the United States Bankruptcy Court in Chicago and payments to Henriquez and Howard have been made according to the parties' settlement agreement. Based on a preliminary investigation conducted in 2002, Comdisco believed in good faith that there was evidence to prove claims against Creditors Henriquez and Howard. However, following extensive pretrial discovery, Comdisco has withdrawn all claims of wrongdoing against Creditors. The Reorganized Company has determined that Creditors Henriquez and Howard are entitled to incentive compensation due for their past services at Comdisco Ventures. Accordingly, Henriquez and Howard will withdraw all claims for unpaid compensation. All claims in this case have been dismissed with prejudice. Both parties are pleased that the matter has been fully settled and resolved. About the Company Comdisco filed for chapter 11 protection on July 16, 2001 (Bankr. N.D. Ill. Case No. 01-24795), and emerged from chapter 11 bankruptcy proceedings on August 12, 2002. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money in an orderly manner the remaining assets of the corporation. Pursuant to Comdisco's plan of reorganization and restrictions contained in its certificate of incorporation, Comdisco is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Accordingly, within the next few years, it is anticipated that Comdisco will have reduced all of its assets to cash and made distributions of all available cash to holders of its common stock and contingent distribution rights in the manner and priorities set forth in the Plan. At that point, the company will cease operations and no further distributions will be made. John Wm. "Jack" Butler, Jr., Esq., Charles W. Mulaney, Esq., George N. Panagakis, Esq., Gary P. Cullen, Esq., N. Lynn Heistand, Esq., Seth E. Jacobson, Esq., Andre LeDuc, Esq., Christina M. Tchen, Esq., L. Byron Vance, III, Esq., Marian P. Wexler, Esq., and Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented Comdisco before the Bankruptcy Court. Evan D. Flaschen, Esq., and Anthony J. Smits, Esq., at Bingham Dana LLP, served as Comdisco's International Counsel. CORONET FOODS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Coronet Foods, Inc. P.O. Box 6688 Wheeling, West Virginia 26003 Bankruptcy Case No.: 04-03822 Type of Business: The Debtor supplies fresh-cut products to chain restaurants and retailers. See http://www.coronetfoods.com/ Chapter 11 Petition Date: October 29, 2004 Court: Northern District of West Virginia (Wheeling) Judge: L. Edward Friend II Debtor's Counsel: Charles J. Kaiser Jr., Esq. Denise Knouse-Snyder, Esq. Phillips, Gardill, Kaiser & Altmeyer PLLC 61 14th Street Wheeling, WV 26003 Tel: 304-232-6810 Fax: 304-232-4918 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ J. W. Long (Note Payable) $7,523,778 P.O. Box 3127 Palm Beach, FL 33480 Oella Capital, Inc. $3,951,551 P.O. Box 3127 Palm Beach, FL 33480 Coronet Foods, Inc. Western Div. $1,713,811 P.O. Box 6862 Wheeling, WV 26003 AIM Dedicated Logistics $941,952 1500 Trumbull Road Girard, OH 44420 Drifting Sunshine $436,304 111 East High Street Liberty, IN 47353 H.L. Real Estate (Rent) $340,000 P.O. Box 6688 Wheeling, WV 26003 Piedmonte $315,276 Produce, Farming & Marketing 16490 Telegraph Road Holley, NY 14470 Interest on J.W. Long Note $288,889 P.O. Box 3127 Palm Beach, FL 33480 Consumer Produce $226,644 Box USA $175,460 Earl Henderson Trucking $156,449 Manpower/Mancan $156,337 Van Dyke Farms $138,441 State Garden $119,763 Pacific Collier Fresh $105,982 Varsity Produce $100,413 Total Packaging $99,843 Fresh Veg. Tech. $92,374 Growers Express $90,990 Wcis Buy $80,246 CPC DEVELOPMENT: Case Summary & 9 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: CPC Development Company 999 West Riverside Avenue Spokane, Washington 99201 Bankruptcy Case No.: 04-07982 Chapter 11 Petition Date: October 29, 2004 Court: Eastern District of Washington (Spokane/Yakima) Judge: Patricia C. Williams Debtor's Counsel: Michael D. Currin, Esq. Witherspoon, Kelley, Davenport, Toole 422 West Riverside Avenue, Suite 1100 Spokane, WA 99201 Tel: 509-624-5265 Fax: 509-458-2717 Total Assets: $2,400,070 Total Debts: $6,595,661 Debtor's 9 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ RWR Management, Inc. Judgment $6,500,000 Secured Value: $2,400,000 Cowles Publishing Company Tax Advances $53,892 Spokane County Treasurer Property Taxes $28,378 RPS II, LLC Payroll Advances $13,234 ADT Security Systems Security Monitoring $86 Sonitrol of Spokane Security Contract $68 Avista Utilities $1 City of Spokane Utilities Utilities $1 Qwest Telephone $1 DAN RIVER: Gets Financing Commitments to Back Chapter 11 Exit ------------------------------------------------------------- Dan River Inc. (OTC:DVERQ) has received financing commitment letters from potential lenders for the funding required to emerge from Chapter 11 in January 2005. Dan River's Chairman and CEO, Joseph L. Lanier, Jr. said, "This is a significant milestone on the road to our emergence from Chapter 11 early next year." In addition, Dan River reported that on November 1, 2004 the Bankruptcy Court granted approval for the Company to use cash collateral to fund its current and ongoing operations and approved, on an interim basis, an additional new $10 million senior secured credit facility to be provided by certain of the Company's existing bondholders. The new $10 million facility will be in addition to and senior to the Company's existing $110 million Debtor-in-Possession (DIP) revolving credit facility and $35 million DIP term loan, which have been in place since the Company filed a voluntary petition to restructure its business and operations under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Georgia on March 31, 2004. Obligations under these facilities at the time of the bankruptcy filing were $118.4 million. Obligations as of November 1, 2004 were $99.5 million. Obligations under the existing DIP facilities are expected to remain outstanding but not increase until paid upon confirmation of the Company's plan of reorganization. A final hearing on the new $10 million credit facility will be held on December 9, 2004. The Company obtained the additional financing when it could not reach an agreement with its existing DIP lenders regarding certain non-financial covenants and the Company determined that it was in the best interest of creditors to seek alternative financing. Certain of the Company's bondholders agreed to provide the new $10 million facility which, as noted above, will be senior to the existing DIP credit facility. The use of cash collateral and the new $10 million senior secured credit facility are expected to provide adequate funding for the Company's operations through the conclusion of the Chapter 11 process. The Company has obtained a court date for the hearing on confirmation of its Plan of Reorganization on January 4, 2005, which is the last step required for emergence from bankruptcy. "We are pleased that the Court granted us access to our cash collateral and approved the new $10 million bondholder credit facility," Mr. Lanier said. "The new facility indicates the faith the bondholders have in the future of Dan River and it provides the liquidity and flexibility we need through the anticipated conclusion of our Chapter 11 case early next year. Headquartered in Danville, Virginia, Dan River Inc. -- http://www.danriver.com/-- is a designs, manufactures and markets textile products for the home fashions, apparel fabrics and industrial markets. The Company and its debtor-affiliates filed for chapter 11 protection on March 31, 2004 (Bankr. N.D. Ga. Case No. 04-10990). James A. Pardo, Jr., Esq., at King & Spalding represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $441,800,000 in total assets and $371,800,000 in total debts. DII/KBR: Wants to Hire Mesirow LLC as Restructuring Accountants --------------------------------------------------------------- The United States Bankruptcy Court for the Western District of Pennsylvania had previously authorized the DII Industries, LLC and its debtor-affiliates to employ KPMG, LLP, to perform restructuring accounting and tax accounting services. On September 16, 2004, KPMG, LLP, sold KPMG Corporate Recovery Services to Mesirow Financial Consulting, LLC. In connection with the sale, all of the KPMG Corporate Recovery professionals and staff assigned to the Debtors' Chapter 11 cases are now employed by Mesirow. Mesirow is a wholly owned subsidiary of Mesirow Financial Holdings, Inc., formed for the purpose of acquiring KPMG Corporate Recovery. The Debtors state that KPMG has undertaken the responsibilities described in the KPMG Order and until the KPMG Sale Closing Date, continued to render services to them within the scope of its engagement. To assure continuity in the rendering of services provided by the KPMG professionals prior to the Sale, the Debtors seek the Court's authority to employ Mesirow as their restructuring accountants in connection with their Chapter 11 cases, nunc pro tunc to September 16, 2004. The Debtors believe that Mesirow's professionals and staff have diverse experience and extensive knowledge in the fields of bankruptcy and restructuring. By virtue of their prior engagement while at KPMG, these professionals and staff are familiar with the Debtors' businesses, books, records and financial information, as well as the events occurring in the Debtors' reorganization cases. As the Debtors' needs for accounting services have not changed significantly since they employed KPMG, and because all of the KPMG Corporate Recovery members are now employed by Mesirow as of the Sale Closing, the Debtors anticipate that Mesirow will render virtually the same restructuring accounting services authorized under the KPMG Order, including, without limitation: (a) advice and assistance in preparation of reports or filings as required by the Court or the Office of the United States Trustee, including, but not limited to, schedules of assets and liabilities, statement of financial affairs, mailing matrix and monthly operating reports; (b) advice and assistance regarding financial information for distribution to creditors and other parties-in-interest, including, but not limited to, analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Court approval is sought; (c) assistance with implementation of bankruptcy accounting procedures as required by the Bankruptcy Code and generally accepted accounting principles; (d) assistance in preparing documents necessary for confirmation, including financial and other information; and (e) if necessary, assistance with claims resolution procedures, including analyses of creditors' claims by type and entity, provided, however, that: -- Mesirow will not assess the existence, validity, or magnitude of claims, or assist in the formulation of a reorganization plan to resolve claims, including any potential claim(s) held by Committees; and -- Mesirow will not assess the existence, validity, or magnitude of claims against the Debtors or their Estates, or negotiate the terms of the Plan with them. To the extent that KPMG continues to be employed by the Debtors in some capacity, Mesirow will coordinate any services performed at the Debtors' request with KPMG's services, as appropriate, to avoid duplication of effort. As in the case with KPMG, Mesirow's compensation for professional services rendered to the Debtors will be based on the hours actually expended multiplied by the applicable hourly billing rate, subject to a 10% discount. Subject to the 10% discount, the Debtors have agreed to pay Mesirow for professional services rendered at its normal and customary hourly rates: Senior Managing Directors/Managing Directors $590 - 650 Senior Vice-Presidents 480 - 570 Vice-Presidents 390 - 450 Senior Associates 300 - 360 Associates 190 - 270 Paraprofessionals 140 Mesirow will also be reimbursed for necessary out-of-pocket expenses incurred. Mesirow has not received a retainer from the Debtors. Thomas D. Bibby, Mesirow's Senior Managing Director, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). Moreover, Mesirow does not hold or represent an interest adverse to the Debtors' estates. Headquartered in Houston, Texas, DII Industries, LLC, is the direct or indirect parent of BPM Minerals, LLC, Kellogg Brown & Root, Inc., Mid-Valley, Inc., KBR Technical Services, Inc., Kellogg Brown & Root Engineering Corporation, Kellogg Brown & Root International, Inc., (Delaware), and Kellogg Brown & Root International, Inc., (Panama). KBR and its subsidiaries provide a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. DII and its debtor-affiliates filed a prepackaged chapter 11 petition on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $6.255 billion in total assets and $5.295 billion in total liabilities. (DII & KBR Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIMON INC: To Webcast 2nd Qtr. Earnings Release on Nov. 9 --------------------------------------------------------- DIMON Incorporated (NYSE:DMN) will report financial results for its second quarter ended September 30, 2004 at 4:00 PM Eastern Time on Tuesday, November 9, 2004. Following the release of its financial results, DIMON will hold a conference call with investors at 5:00 PM ET. The call will be broadcast live through the DIMON website; to listen to the call, please visit http://www.dimon.com/fifteen minutes in advance to register. A replay will also be available shortly after the call. DIMON Incorporated is the world's second largest dealer of leaf tobacco with operations in more than 30 countries. For more information on DIMON, visit the Company's website at http://www.dimon.com/ * * * As reported in the Troubled Company Reporter yesterday, Dimon has obtained the requisite majority of consents from the holders of each of its $200 million 9-5/8% Senior Notes due 2011 and its $125 million 7-3/4 % Senior Notes due 2013 and successfully completed the Company's previously announced consent solicitation. The consent solicitation expired at 5:00 p.m., New York City time, on Friday, October 29, 2004. The Company has also obtained a wavier from the requisite majority of lender banks under its $150 million syndicated credit facility of the cross defaults thereunder caused by the defaults under the Senior Notes indentures. In addition, the Company has obtained waivers of cross defaults under its operating credit lines that contained cross default provisions. DIMON INCORPORATED: Moody's Confirms Single-B Ratings ----------------------------------------------------- Moody's Investors Service confirmed the ratings of DIMON Incorporated and assigned a stable outlook, following the waivers and amendment granted by bondholders and banks of the company's technical defaults on its bonds and bank facilities. This concludes the review initiated on October 13, 2004. Ratings confirmed: * Issuer rating at B2 * Senior implied rating at B1 * $200 million senior notes due 2011 at B1 * $125 million senior notes due 2013 at B1 The ratings confirmation reflects the stabilization of liquidity brought by the waivers and amendments. On October 11, 2004, DIMON sought consent of waivers of previous defaults under the limitation on restricted payments covenant under the indentures related to the payment of dividends to holders of the company's common stock, and investments in a majority-owned subsidiary. Dividend payments have been made since December 2003 in violation of the indentures as a result of an apparent misunderstanding by company's management of the restrictions under the indentures. On November 1, 2004, DIMON obtained a waiver of the defaults under all debt, and an amendment under the indenture allowing it to make dividend payments not to exceed $3.525 million in any quarter without regard to a consolidated interest coverage ratio test until June 30, 2005. The ratings reflect the company's strong position in the leaf trading industry, conservativeness of its procurement policy, and solidity of its relationship with its clients. They also reflect the strong bargaining power of these clients, which induces margin pressure, the volatility of crop supplies, minimal worldwide demand growth for tobacco, and the company's high leverage. DIMON has an approximate 35% market share in the worldwide leaf trading industry, a diversified client base and diversified sourcing (covering all tobacco-growing areas of the world). The stable outlook reflects Moody's expectation of an improvement in DIMON's cash flow over performance in the first three quarters of fiscal 2005. At the end of the first quarter of 2005, retained cash flow (after working capital) minus capital expenditures was at $(19) million, reflecting a more difficult operating environment for DIMON in Brazil. Moody's expects that these metrics largely reflect timing issues and will significantly improve in its next two quarters once Brazilian procured and processed tobacco is shipped to clients, who have committed to make these purchases (as is usual practice in the industry). Should retained cash flow (after working capital) minus capital expenditures fail to become positive in the next two quarters, the ratings would come under pressure. Based in Danville, Virginia, DIMON is the world's second largest dealer of leaf tobacco with operations in more than 30 countries. At the end of the first quarter of facial year 2005, its total last twelve months revenue was $1.2 billion. DOUBLECLICK: S&P Places 'B' Corporate Credit Rating on CreditWatch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B' corporate credit rating on DoubleClick Inc. on CreditWatch with negative implications following the company's announcement that it has retained Lazard Freres & Co. to explore strategic options, including a sale of part or all of its businesses, recapitalization, extraordinary dividend, share repurchase or a spin-off. The announcement followed the company's downward revision of its 2004 operating outlook last week. The New York, New York-based online advertising technology provider had total debt outstanding of $135 million at September 30, 2004. "The CreditWatch listing is based on concerns that an extraordinary dividend or share repurchase could significantly erode DoubleClick's liquidity and business unit(s) sale could reduce revenue diversity," said Standard & Poor's credit analyst Andy Liu. While online advertising volume has increased over the past several quarters from the lows of 2001 and 2002, pricing on DoubleClick's ad serving service has been constrained by competition and stronger client leverage, postponing meaningful improvement in credit measures. In the meantime, the company has sufficient liquidity with about $500 million in cash and marketable securities and modestly positive discretionary cash flow to withstand normal business volatility. The rating could be negatively affected by an increase in the debt level, erosion of liquidity, or reduction in business diversity. Standard & Poor's will evaluate the effect of the company's chosen strategic option on its business diversity, capital structure, and liquidity in resolving the CreditWatch listing. DRAIN DOCTOR INC: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Drain Doctor, Inc. 2372 South Redwood Road West Valley City, Utah 84119 Bankruptcy Case No.: 04-37784 Type of Business: The Debtor provides plumbing and heating services. See http://www.draindoctorutah.com/ Chapter 11 Petition Date: November 2, 2004 Court: District of Utah (Salt Lake City) Judge: Glen E. Clark Debtor's Counsel: Franklin L. Slaugh, Esq. 880 East 9400 South, Suite 103 Sandy, UT 84094 Tel: 801-572-4412 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Creditors. DURA AUTOMOTIVE: S&P Slices Corporate Credit Rating to 'B+' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Rochester Hills, Michigan-based Dura Automotive Systems Inc. to 'B+' from 'BB-'. The ratings were removed from CreditWatch, where they were placed on September 15, 2004. The outlook is negative. "We took the action because of our expectation that the company will be unable to pay down its very high debt load and reduce financial risk in line with previous expectations," said Standard & Poor's credit analyst Martin King. "Dura's balance sheet is highly leveraged, and credit protection measures are weak for the rating. Should the company fail to generate sufficient free cash flow to reduce debt levels, or if liquidity becomes very constrained, ratings could be lowered." Dura, a manufacturer of automotive components, has total debt, including operating leases and off-balance-sheet accounts receivable financing, totaling $1.3 billion. Challenging industry conditions have caused Dura's earnings and cash flow generation to fall short of the levels expected at the beginning of the year. Reduced vehicle production, higher raw material costs, and intense pricing pressure from customers with deteriorating market shares are pressuring Dura's operating performance. Although sales increased 9% through the first nine months of 2004, this was partly because of an acquisition and foreign currency effects. Dura's liquidity position is adequate, with $175 million of cash on hand on September 30, 2004. Bank covenant restrictions, however, limited combined cash and borrowing availability to $138 million. Liquidity will likely become much more constrained by the end of the year when the company's financial covenants tighten. In addition, the planned termination of certain customer accounts receivable acceleration programs will require Dura to finance more of its working capital assets on its balance sheet. Dura's $325 million senior secured debt continues to be rated one notch above the corporate credit rating, reflecting the strong likelihood of 100% recovery of principal in the event of default or bankruptcy. ELAN FINANCE: Moody's Rates Planned $850M Sr. Unsec. Debt at B3 --------------------------------------------------------------- Moody's Investors Service assigned a rating of B3 to the proposed new senior unsecured debt offering of Elan Finance plc, an indirect subsidiary of Elan Corporation plc. The rating outlook is stable. The existing ratings of Elan remain under review for possible upgrade, and Moody's anticipates that they will be upgraded upon successful completion of the new debt offering and tender offer for 90% of the EPIL III notes. Moody's placed the ratings of Elan Corporation plc (Caa2 senior implied) under review for possible upgrade on October 29, 2004. The new senior notes are being sold in privately negotiated transactions without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issue has been designed to permit resale under Rule 144A. The B3 rating on Elan's new senior notes primarily reflects the improvement in Elan's liquidity assuming the debt offering and EPIL III tender are successful. Moody's anticipates that successful EPIL III refinancing removes the likelihood of a near- term default, which had been Moody's primary concern since the ratings were lowered to the Caa-category in November 2002. Moody's acknowledges that Elan has been successful in executing its turnaround and avoided a default on its LYONs in December 2003 and the EPIL II debt securities in June 2004. The company completed a number of asset sales and product divestitures, and exited the questionable joint ventures that were related to accounting questions. In addition, Elan recently announced it expects to settle the outstanding SEC investigation and shareholder class actions for approximately $55 million net of insurance recoverables, removing a key uncertainty. The B3 rating also recognizes the potentially significant opportunities provided by the product Antegren because of its apparent efficacy advantage over existing multiple sclerosis treatments, which together comprise a $4 billion market currently. Relative to the existing treatments, Antegren's Phase II data appears to indicate a more significant clinical effect, and Moody's expects that positive Phase III data will be reported in the near term. Elan and its partner BiogenIDEC will share equally in the earnings of Antegren. A second product in Elan's pipeline, Prialt for acute pain, may be launched in early 2005. In addition, Elan and BiogenIDEC continue Antegren in Phase III trials for Crohn's disease in the U.S. and in Phase II trials for rheumatoid arthritis. Despite these opportunities, Moody's remains concerned about Elan's high debt levels, the significant rate of cash use, and the extremely high reliance upon Antegren to eventually reverse the cash flow deficits. Pro forma for recent refinancing, we expect that Elan's debt will total approximately $2 billion, which is very high relative to the uncertain prospects for generating positive free cash flow. Moody's estimates a free cash flow deficit in the $350 million range for 2004, and that this rate could accelerate because it includes cash flows from products already divested and because the Antegren launch will be expensive. While Moody's believes the Antegren opportunity is large, factors that could influence its uptake include its method of administration (IV rather than self-injected), pricing and reimbursement, and competitor response. These factors make it difficult to estimate at what point Elan may become cash flow positive (Moody's believes it is unlikely before 2007). Elan's remaining core products, Azactam and Maxipime, face patent expirations in 2006 and 2008 respectively. Ratings assigned: * Elan Finance plc: -- B3 fixed-rate senior notes and floating rate senior notes totaling $850 million due 2011 (guaranteed by Elan Corporation plc and subsidiaries) Ratings remaining under review for possible upgrade: * Elan Corporation plc -- Caa2 senior implied, would likely move to B3 -- Caa2 issuer rating, would likely move to Caa1 * Athena Neurosciences Finance, LLC -- Caa2 senior notes of $650 million due 2008 (guaranteed by Elan Corporation plc), would likely move to B3 assuming subsidiary guarantees * Elan Pharmaceutical Investments III Ltd. -- Caa2 senior notes of $390 million due 2005 (guaranteed by Elan Corporation plc), would likely move to B3 The B3 rating on the new senior notes reflects guarantees from Elan Corporation plc as well as from each of its existing and future material restricted subsidiaries other than: (1) EPIL III; (2) certain subsidiaries of Elan representing less than 3% of Elan's assets, revenues, income; and (3) certain future foreign subsidiaries. Moody's views the subsidiary guarantees as significant because these subsidiaries hold the intellectual property for Antegren, Maxipime and Azactam, as well as certain fixed assets including manufacturing plants. Moody's anticipates upgrading the Athena notes to B3, based on the assumption that Elan will extend subsidiary guarantees to these notes. Moody's anticipates upgrading EPIL III to B3, based on: (1) the guarantee from Elan Corporation plc; (2) the expected tender offer for 90% of the EPIL III notes; and (3) the coverage provided by EPIL III's investment portfolio. The anticipated upgrade to Caa1 of the issuer rating reflects its unsecured, non-guaranteed position in Elan's capital structure. Moody's does not rate Elan's $460 million convertible notes due 2008. Elan is a specialty pharmaceutical company headquartered in Dublin, Ireland, with current areas of pharmaceutical focus in neurology, pain management and autoimmune diseases. ENRON CORP: Asks Court to Approve Corestaff Settlement Agreement ---------------------------------------------------------------- Enron Corp., Enron North America Corp., Enron Energy Services Operations, Inc., and Enron Net Works LLC want to settle disputes with Corestaff Support Services, Inc., Comensura, Inc., Corestaff Texas Associates LP, and Corestaff Services, LP. Martin A. Sosland, Esq., at Weil Gotshal & Manges LLP, in New York, relates that prior to the Petition Date, Enron non-debtor subsidiary Enron Supply Corp. and CoreStaff entered into a certain Service Agreement dated December 11, 2000. Under the Service Agreement, CoreStaff provided personnel to temporarily serve several Enron-related entities. When the Service Agreement was later amended and assigned to CoreStaff affiliate Comensura, effective June 25, 2001, the scope of services provided changed in a manner as to provide for: -- contract employee tracking and reporting; -- centralized contract management; and -- consolidated invoicing. Due to reduction of vendor markups in connection with contract staffing, the Service Agreement yielded an average annual savings in excess of $3 million to the Enron companies. Subsequent to the Petition Date, the Enron Debtors filed their Schedules of Assets and Liabilities reflecting sums owed to CoreStaff, some of which are disputed, totaling $1,379,846. On October 15, 2002, CoreStaff filed 12 claims relating to unpaid fees for staffing services in unsecured non-priority amounts: Claim No. Claim Amount Scheduled Amount --------- ------------ ---------------- 15210 $172,066 $154,174 15758 249,638 201,942 15759 15,170 2,776 15760 566,661 546,562 15762 14,483 9,331 15763 347,448 317,565 15764 20,986 16,810 15765 110 110 15996 28,773 13,982 15997 30,088 28,986 15761 489 Not Scheduled 15766 46 Not Scheduled ---------- $1,445,959 ========== On November 14, 2003, the Debtors filed an adversary proceeding against CoreStaff seeking to recover amounts paid to CoreStaff within the Debtors' 90-day preference period, or in the alternative, seeking to recover amounts paid to CoreStaff within the one-year period prior to the Petition Date as fraudulent transfers. The Adversary Proceeding sought to recover approximately $1.9 million from CoreStaff. Enron and Comensura recently negotiated a new Master Service Agreement effective through December 31, 2005. Mr. Sosland tells the Court that the terms and conditions under the New Agreement are equally favorable to those under the Service Agreement. The parties desire to compromise and settle all issues regarding the Scheduled Liabilities, the Claims and the Adversary Proceeding. The parties engaged in extensive, arm's-length and good faith negotiations and discussions concerning the settlement matters. The principal terms of the Settlement are: (a) The Debtors will cause the Adversary Proceeding to be dismissed with prejudice; (b) CoreStaff will withdraw the Claims by filing a Notice of Withdrawal; (c) The Debtors' schedules will be deemed amended to extinguish all Scheduled Liabilities; (d) Enron Supply and Comensura will terminate the Service Agreement; and (e) Comensura and Enron will enter into and execute the New Agreement. Mr. Sosland contends that the compromise and settlement constitutes the exchange of reasonably equivalent value between the parties and is reasonable and fair. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to approve the Settlement Agreement. 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. 128; Bankruptcy Creditors' Service, Inc., 15/945-7000) FOXMEYER CORP.: Trustee Turning $2.3 Mil. Over to U.S. Trustee -------------------------------------------------------------- Unable to locate 320 creditors owed $2,278,441, Bart A. Brown, Jr., the chapter 7 trustee overseeing the liquidation of FoxMeyer Corporation and its debtor-affiliates' estates, proposes to turn those funds over to the United States Trustee. Mr. Brown tells the Honorable M. Bruce McCullough that he's making the request pursuant to 11 U.S.C. Sec. 347. That section of the Bankruptcy Code, however, says that a chapter 7 trustee should turn unclaimed distributions over to the Court, to be held for 5 years and then absorbed into the U.S. Treasury. Mr. Brown's motion will come before Judge McCullough for a hearing on Nov. 18. Objections, if any, must be filed and served by Nov. 15. The FoxMeyer story is remarkable. FoxMeyer was the fourth-largest pharmaceutical distributor in the United States in 1996, with $5 billion in annual sales. When FoxMeyer's chapter 11 cases converted to chapter 7 proceedings, the estate had $16 million of cash on hand and creditors had filed claims totaling more than $6 billion. Many creditors sold their claims for less than 25 cents- on-the-dollar in 1997. More than seven years later, administrative, priority and secured claims are paid in full and unsecured creditors are slated to receive a total 64.4% distribution on account of their allowed claims. FoxMeyer Corporation, FoxMeyer Drug Company, and their subsidiaries, filed for chapter 11 protection on August 27, 1996 (Bankr. D. Del. Case Nos. 96-1329 through 96-1334). The estates were substantively consolidated and, on Nov. 8, 1996, substantially all of the pharmaceutical distributor's business operations were sold to McKesson Corporation. On March 18, 1997, the Debtors' chapter 11 cases were converted to chapter 7 liquidation proceedings and Mr. Brown was elected to serve as the Chapter 7 Trustee. FRIEDMAN'S INC: Expects to Default Under Credit Loan Covenants -------------------------------------------------------------- Friedman's Inc. (OTC: FRDM.PK), the Value Leader in fine jewelry retailing, anticipates a default under certain of the financial covenants contained in its amended and restated credit facility which it had entered into earlier this year. In particular, Friedman's expects that it will fail to meet cumulative EBITDA requirements for the period ending Oct. 30, 2004, constituting a default under its term loan, and will fail to meet a minimum ratio of Accounts Payable to Inventory as of Oct. 30, 2004, constituting a default under both its term loan and its revolving loan. Friedman's is currently in discussions with its senior lenders under the credit facility regarding the amendment of its covenants to eliminate the default. While there can be no assurance of obtaining the amendment, Friedman's believes that it will be able to obtain the requisite amendment from its senior lenders. "Since finalizing the new credit facility and the Trade Creditor Support Program, we have been working with our vendors to get the inventory levels back to more normalized levels," said Sam Cusano, CEO of Friedmans. "We know our vendors are working through various production processes, but until we get caught up, and as we implement a more prudent credit program, there will be continued pressure on sales and EBITDA. We appreciate our vendors and our lenders working with us through this difficult time." About the Company Founded in 1920, Friedman's Inc. is a leading specialty retailer based in Savannah, Georgia. The Company is the leading operator of fine jewelry stores located in power strip centers and regional malls. For more information, go to: http://www.friedmans.com/ Loan Renegotiated in September Friedman's completed the restructuring of its senior secured credit facility in September 2004. The new facility consists of a senior revolving loan of up to $67.5 million (maturing in 2006) and a $67.5 million junior term loan (maturing in 2007). Friedman's issued some warrants to Farallon Capital Management, L.L.C., in connection with that transaction. Friedman's also entered into a secured trade credit program providing security to vendors. Part of the deal allows Friedman's to stretch payment of invoices past due in July 2004 through 2005. The company's most recently published balance sheet -- dated June 28, 2003 -- shows $496 million in assets and $190 million in liabilities. The Company explains that its year-end closing process was delayed because of an investigation by the Department of Justice, a related informal inquiry by the Securities and Exchange Commission, and its Audit Committee's investigation into allegations asserted in a August 13, 2003, lawsuit filed by Capital Factors Inc., a former factor of Cosmopolitan Gem Corporation, a former vendor of Friedman's, as well as other matters. Ernst & Young has been working on a restatement of the company's financials. The company's signaled that a 17% or greater increase to allowances for accounts receivable can be expected. FRIEDMAN'S INC: Names Richard Hettlinger Chief Financial Officer ---------------------------------------------------------------- Friedman's Inc. (OTC: FRDM.PK), the Value Leader in fine jewelry retailing, has named Richard Hettlinger Chief Financial Officer. Mr. Hettlinger, a retail veteran with more than 30 years of experience, served as CFO most recently with The Walking Company. Mr. Hettlinger has also served as CFO of Paul Harris Stores, and three divisions of The May Department Stores: the Famous-Barr Company, L.S. Ayres and M. O'Neil Company, as well as serving as President and CEO of Heartland Industries. "Rick is an extremely experienced executive who brings not only many years as a financial expert but also many years as a retail executive," said Allan Edwards, Executive Chairman of the Board of Friedman's. "I know he will be a tremendous asset and addition to the management team we have assembled over the past several months." Mr. Hettlinger commented "I see a great opportunity for Friedman's. I know we face challenges, but I look forward to being part of the team that brings success back to Friedman's." About the Company Founded in 1920, Friedman's Inc. is a leading specialty retailer based in Savannah, Georgia. The Company is the leading operator of fine jewelry stores located in power strip centers and regional malls. For more information, go to: http://www.friedmans.com/ Friedman's completed the restructuring of its senior secured credit facility in September 2004. Friedman's completed the restructuring of its senior secured credit facility. The new facility consists of a senior revolving loan of up to $67.5 million (maturing in 2006) and a $67.5 million junior term loan (maturing in 2007). Friedman's issued some warrants to Farallon Capital Management, L.L.C., in connection with that transaction. Friedman's also entered into a secured trade credit program providing security to vendors. Part of the deal allows Friedman's to stretch payment of invoices past due in July 2004 through 2005. This week, Friedman's says it can't meet the covenants under the restructured loan facility. The company's most recently published balance sheet -- dated June 28, 2003 -- shows $496 million in assets and $190 million in liabilities. The Company explains that its year-end closing process was delayed because of an investigation by the Department of Justice, a related informal inquiry by the Securities and Exchange Commission, and its Audit Committee's investigation into allegations asserted in a August 13, 2003, lawsuit filed by Capital Factors Inc., a former factor of Cosmopolitan Gem Corporation, a former vendor of Friedman's, as well as other matters. Ernst & Young has been working on a restatement of the company's financials. The company's signaled that a 17% or greater increase to allowances for accounts receivable can be expected. GAS TRANSMISSION: S&P's Rating Jumps to 'A-' from 'CC' ------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on Gas Transmission Northwest Corp. from 'CC' to 'A-'. The outlook is negative. Gas Transmission's standalone credit quality reflects an above-average business profile and a somewhat weak financial profile. The credit rating on Gas Transmission is capped by the consolidated credit strength of TransCanada Pipelines Ltd. (TransCanada; A-/Negative/--), its 100% owner. On Nov. 1, 2004, TransCanada purchased GTN from National Energy & Gas Transmission Inc. for $1.7 billion in total proceeds. "The rating on [Gas Transmission] will be capped by the rating on TransCanada because Standard & Poor's generally takes the view that a weaker parent can siphon assets form a subsidiary during periods of financial distress or burden the subsidiary with liabilities," said credit analyst Michelle Dathorne. Gas Transmission's solid competitive position is based on low shipping tariffs, long-term firm contracts, a low cost structure, assets in excellent physical condition, and access to sizable Canadian natural gas reserves. This access helps maintain market share and promotes healthy long-term growth opportunities. Gas Transmission, which delivers about 30% of California's gas needs, is the only pipeline that transports Canadian gas into California. Gas Transmission operates at almost 100% reliability and consistently maintains a greater than 99% load factor. In addition, 99% of its load comes from contracts greater than one year. The average contract life is 13.3 years. Its customer base is predominantly made up of investment-grade entities; however, the shipper quality has deteriorated recently, and 23% of Gas Transmission's volumes derive from Pacific Gas & Electric Co. (BBB-/Stable/--). The negative outlook reflects the outlook on TransCanada. To the extent the ratings or outlook change on TransCanada, the ratings on Gas Transmission may be affected. The rating on TransCanada will cap the rating on Gas Transmission. GENTEK INC: Retains Goldman Sachs to Assist in Possible Sale ------------------------------------------------------------ GenTek (OTC Bulletin Board:GETI), having strengthened its balance sheet and repositioned its core businesses through a reorganization completed in November 2003 and the sale of KRONE in May 2004, has retained Goldman, Sachs & Co. to assist the diversified manufacturer in exploring strategic alternatives. These alternatives could include the possible sale of the company in its entirety. "As a result of GenTek's significantly improved operating performance, financial condition and prospects for continued growth, the board of directors has decided that now is the opportune time to explore our alternatives for enhancing shareholder value, potentially by selling the company as a whole to a buyer who can build on our accomplishments," said Richard R. Russell, president and chief executive officer. No decision has been made as to whether there will be a sale or any other transaction involving GenTek, and there is no assurance that any transaction will be completed as a result of this review. Headquartered in Hampton, New Hampshire, GenTek Inc. -- http://www.gentek-global.com/-- is a technology-driven manufacturer of communications products, automotive and industrial components, and performance chemicals. The Company filed for Chapter 11 protection on October 11, 2002 (Bankr. D. Del. Case No. 02-12986) and emerged on Nov. 10, 2003 under the terms of a confirmed plan that eliminated $670 million of debt and delivered 94% of the equity in Reorganized GenTek to the Company's secured lenders. Old subordinated bondholders took a 4% slice of the equity pie and prepetition unsecured creditors shared a 2% stake in the Reorganized Company. Old Equity Interests were wiped out. Mark S. Chehi, Esq., and D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring. When the Debtors filed for protection from its creditors, they listed $1,219,554,000 in assets and $1,456,000,000 in liabilities. GMAC COMM'L: Moody's Rates Four Classes Low-B & Junks Two Classes ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of eight classes and downgraded the ratings of six classes of GMAC Commercial Mortgage Securities, Inc., Series 2000-C1 Mortgage Pass-Through Certificates as follows: -- Class A-1, $59,388,777, Fixed, affirmed at Aaa -- Class A-2, $537,173,000, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $37,395,000, Fixed, affirmed at Aa2 -- Class C, 41,794,000, Fixed, affirmed at A2 -- Class D, $8,798,000, Fixed, affirmed at A3 -- Class E, $30,796,000, WAC, affirmed at Baa2 -- Class F, $15,398,000, WAC, affirmed at Baa3 -- Class G, $21,997,000, Fixed, downgraded to Ba2 from Ba1 -- Class H, $15,398,000, Fixed, downgraded to B1 from Ba2 -- Class J, $6,599,000, Fixed, downgraded to B2 from Ba3 -- Class K, $8,798,000, Fixed, downgraded to B3 from B1 -- Class L, $10,998,000, Fixed, downgraded to Caa3 from B2 -- Class M, $6,599,000, Fixed, downgraded to Ca from B3 As of the October 15, 2004 distribution date, the transaction's aggregate balance has decreased by approximately 8.2% to $808.0 million from $879.9 million at closing. The Certificates are collateralized by 130 mortgage loans secured by commercial and multifamily properties. The pool includes one shadow rated loan representing 5.2% of the pool and a conduit component representing 94.8% of the pool. The loans range from less than 1.0% of the pool to 5.7% of the pool with the top 10 loans representing 31.2% of the pool. Four loans, representing 5.0% of the pool, have defeased and have been replaced by U.S. Government securities. Five loans have been liquidated from the pool, resulting in aggregate realized losses of approximately $6.3 million. Six loans, representing 6.1% of the pool, are in special servicing. Moody's has estimated aggregate losses of approximately $13.6 million for all of the specially serviced loans. Moody's was provided with year-end 2003 operating results for 97.8% of the performing loans in the pool. Moody's loan to value ratio -- LTV -- for the conduit component is 89.8%, compared to 85.2% at securitization. The downgrade of Classes G through M is due to lower overall pool performance, realized and expected losses from the specially serviced loans and LTV dispersion. Based on Moody's analysis, 20.1% of the conduit pool has a LTV greater than 100.0%, compared to 1.0% at securitization. Four of the top ten loans are watchlisted by the master servicer including: * the second largest loan -- Equity Inns, * the 5th largest loan -- Freeman Webb Portfolio, * the 6th largest loan -- Minnesota Industrial Venture, and * the 7th largest loan -- Citation Club on Palmer Ranch. The 9th largest loan -- Fairlane Commerce Park and the 10th largest loan -- Concorde Place Apartments are in special servicing. The shadow rated loan is the Equity Inns Portfolio Loan ($42.0 million - 5.2%), which represents a 50.0% participation interest in two cross collateralized loans secured by a portfolio of 19 extended stay and limited service hotels. The properties are located in 13 states, total 2,453 guestrooms and are flagged by: * AmeriSuites (5), * Hampton Inn (6), * Homewood Suites (3), and * Residence Inn (5). The portfolio's financial performance has been impacted by weak market conditions in many of the cities in which the hotels are located. Moody's current net cash flow is $5.5 million, compared to $8.2 million at securitization. The portfolio's weighted average RevPAR for 2003 is $50.96, compared to $68.05 at securitization. Moody's current shadow rating is Ba3, compared to Baa3 at securitization. The top three conduit loans represent 13.6% of the outstanding pool balance. The largest conduit loan is the 80 Lafayette Street Loan ($46.4 million - 5.7%), which is secured by a 261-unit multifamily property located in New York City. The property is master leased to New York University, which uses the property for student housing. Moody's LTV is 78.5%, compared to 84.3% at securitization. The second largest conduit loan is referred to in the prospectus as the First Union Tower Loan ($35.9 million - 4.4%), which is secured by a 378,000 square foot Class A office building located in the CBD of Baltimore, Maryland. The property's occupancy has declined from 97.0% at securitization to 92.1% currently, with leases for approximately 21.0% of the property expiring by the end of 2006. The Baltimore CBD market occupancy has declined from 91.6% in 2000 to 83.4% as of the second quarter of 2004. The property's two largest tenants are Wachovia Bank (Moody's senior unsecured rating Aa2), which leases 27.3% of the building under a long-term lease expiring in 2016 and a regional law firm occupying 20.7% of the building. Moody's LTV is 77.4%, essentially the same as at securitization. The third largest conduit loan is the World Savings Center Loan ($28.3 million - 3.5%), which is secured by a 270,000 square foot Class A office building located in the CBD of Oakland, California. The property is 91.9% occupied, compared to 98.0% at securitization. The Oakland CBD market occupancy has declined from 97.1% in 2000 to 87.4% as of the second quarter of 2004. The building is anchored by World Savings and Loan Association (affiliate of World Savings Bank; Moody's senior unsecured rating Aa3), which occupies 54.5% of the building on a lease that expires in December 2007. Moody's LTV is 79.1%, essentially the same as at securitization. The pool's collateral is a mix of: * multifamily (32.0%), * office and mixed use (25.5%), * retail (18.5%), * industrial and self storage (12.7%), * hotel (6.3%), and * U.S. Government securities (5.0%). The collateral properties are located in 32 states. The highest state concentrations are: * New York (13.2%), * California (12.4%), * Florida (8.2%), * Texas (8.1%), and * Maryland (6.2%). All of the loans are fixed rate. GREAT PLAINS: Declares $0.415 Per Share Quarterly Dividends ----------------------------------------------------------- Great Plains Energy Incorporated's (NYSE: GXP) Board of Directors declared a quarterly dividend of $0.415 per share on its common stock. This action continues Great Plains Energy's indicated annual dividend level of $1.66 per share. The common dividend is payable, December 20, 2004, to shareholders of record as of November 29, 2004. The shares will begin to trade ex-dividend on November 24, 2004. The Board of Directors also declared regular dividends on the preferred stock, payable March 1, 2005, to shareholders of record on February 7, 2005. The shares will begin to trade ex-dividend on February 3, 2005. About the Company Great Plains Energy Incorporated (NYSE:GXP) headquartered in Kansas City, MO, is the holding company for Kansas City Power & Light Company, a leading regulated provider of electricity in the Midwest; and Strategic Energy LLC, a competitive electricity supplier. The Company's Web site is www.greatplainsenergy.com * * * As reported in the Troubled Company Reporter's June 8, 2004 edition, Standard & Poor's Ratings Services assigned its preliminary rating of 'BBB-' to Great Plains Energy Inc.'s senior and subordinated unsecured debt securities, and 'BB+' to the trust-preferred securities filed by the energy holding company under a $648.2 million shelf registration filed with the SEC on April 15, 2004. At the same time, Standard & Poor's affirmed the company's ratings, including the 'BBB' corporate credit rating. The affirmation incorporates the expectation that a significant portion of any debt issuance under the shelf will be used for debt refinancing or repayment. The outlook is stable. GUARDIAN SECURITY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Guardian Security Inc. 3100 South Valley View Boulevard Las Vegas, Nevada 89102 Bankruptcy Case No.: 04-21228 Type of Business: The Company provides security services. Chapter 11 Petition Date: November 2, 2004 Court: District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtor's Counsels: Matthew L Johnson, Esq. Lavelle & Johnson, P.C. 3016 West Charleston Boulevard, Suite 210 Las Vegas, Nevada 89102 Tel: (702) 822-2640 Total Assets: $69,300 Total Debts: $2,000,290 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service 941 Taxes $1,700,000 Ogden, Utah 84201 Enterprise Fleet Service Multiple Auto $28,900 8290 South Arville Leases Las Vegas, Nevada 89139 Richard Bouldin Loan to Business $25,839 5700 Sligo Street Las Vegas, Nevada 89130 Employment Security Division $17,237 Berkeley Regional Insurance Worker's Compensation $14,303 Insurance Primus Financial Chevy S-10 $13,722 Value of Security: $13,000 Primus Financial 2003 Chevy Malibu $12,600 Value of Security: $10,000 Triad Financial 2003 Chevy S-10 $12,500 Nuvell Credit Corporation 2003 Chevy S-10 $11,939 Value of Security: $9,000 Arco Gas Pro Fuel Account $6,500 Employment Development $5,995 Department - California Sprint PCS Cell Phone $5,879 DeSutter, Kerr & Associates Proposal Consultant & $5,000 Contract Preparation Premium Financial Liability Insurance $5,000 Littler Mendelson Attorney's Fees $4,500 Frontier Radios Radio Antenna $3,420 Chevron Gas Card $2,019 GC Services Limited Cellular Carrier $2,000 Parnership Shell Gas Card $1,900 SBC Reno, Nevada Phone $1,019 Service HCA INC: Stock Purchase Plan Cues Moody's to Downgrade Ratings -------------------------------------------------------------- Moody's Investors Service lowered the debt ratings of HCA Inc. (sr. unsecured notes to Ba2 from Ba1) following the company's announcement that it will purchase approximately $2.5 billion of its stock in a one-time transaction. The rating outlook is stable. This concludes Moody's review, which was initiated on October 13, 2004. At the same time, Moody's assigned an SGL-3 speculative grade liquidity rating to HCA. Ratings downgraded: * HCA Inc.: -- senior unsecured note ratings to Ba2 from Ba1; -- senior implied rating to Ba2 from Ba1; -- issuer rating to Ba2 from Ba1; -- senior shelf rating to (P) Ba2 from (P)Ba1. Rating assigned: * HCA Inc.: -- SGL-3 speculative grade liquidity rating. This rating action is based on Moody's concerns that: (1) the company is willing to increase leverage at a time when HCA and the sector are experiencing less favorable volume and uninsured patient trends; and (2) the possibility that HCA will need to rely on additional debt-financed share buybacks, which may keep debt at higher levels. In contrast to HCA's earlier share buyback programs, which have been smaller in size and have been executed over a period of time, Moody's believes that this one-time, "accelerated" stock purchase transaction represents higher risk to creditors because of the company's willingness to increase leverage during a period of less operational certainty. HCA continues to see softness in its admissions growth trend and a rising percentage of uninsured patients. Other risk factors include concentration risk in Texas and Florida, with recent storm damage estimated to lower earnings in fiscal 2004 and possibly beyond. Reliance on share buybacks in a lower earnings growth environment that offers limited acquisition opportunities reinforces Moody's concerns regarding future growth prospects for the for-profit hospital industry in general, but for HCA in particular, given its size and its focus on metropolitan markets. Moody's understand that this transaction is considered "one-time" in nature; however, because of the possibility of slower earnings growth and continued lack of acquisition targets, Moody's believe that HCA may need to continue a share buyback strategy to grow shareholder value in the future, which may cause cash flow to debt ratios to remain at lower levels over an extended period of time. Following this transaction, HCA's debt to capitalization ratio is expected to rise to about 70% and will not be consistent with management's previously articulated year-end 2005 target of lowering debt to capitalization to the high-40% to low-50% range. Further, operating and free cash flow to adjusted debt ratios will likely fall to an estimated 21% and 6%, respectively, during fiscal 2005. Positive factors incorporated in the Ba2 rating include HCA's position as the largest hospital company in the nation, with a large portfolio of hospitals providing it with scale and a relatively high level of market diversity. In addition, despite concentration in Texas and Florida, HCA has good market presence in both its eastern and western groups, with generally favorable local inpatient market shares. The stable rating outlook considers steps that management is taking to address industry-wide pressures and assumes that net income and earnings growth will improve. For example, the company has been focused on instituting better triage procedures within its emergency rooms. On the expense side, we understand that management is seeking to control labor costs and reduce costs associated with new technology. If HCA is able to show evidence of deleveraging and restraint in large share buyback programs, such that cash flow from operations and free cash flow to adjusted debt ratios can be sustained in the mid-20% range and 10-15% range, respectively, a return to a higher rating level could be considered. If HCA engages in very large acquisitions or share buyback initiatives, or if volume trends or reimbursement levels weaken significantly, causing cash flow to adjusted debt to fall below current levels, the ratings could be downgraded. The assignment of the SGL-3 rating reflects the company's adequate liquidity position and is heavily weighted by the need for HCA to refinance a $1.5 billion, six-month bank loan, which will be used to help fund its stock buyback transaction. Moody's believes that HCA will need to rely on other external sources of liquidity to repay this short-term loan. The company's Ba2 long-term ratings and stable outlook assume that HCA will be able to refinance this short-term debt within a very short period of time. Inability to refinance would have negative implications for HCA's long-term and SGL ratings. In terms of bank covenants, while HCA should be able to comfortably meet its interest coverage ratio test, a newly amended debt to capitalization covenant (set at 75%) may be fairly tight initially. The SGL-3 also considers HCA's good cash flow capabilities that should be sufficient to support ongoing operating needs, absent this refinancing. In addition, HCA's assets are largely unencumbered. (For further details, please refer to Moody's Speculative Grade Liquidity Assessment for HCA.) HCA Inc., headquartered in Nashville, Tennessee is the nation's largest acute care hospital company with 190 hospitals. HEALTH NET: S&P Pares Rating to 'BB+' from 'BBB-' After Review -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit rating on Health Net Inc. (NYSE:HNT) to 'BB+' from 'BBB-' and removed it from CreditWatch. Standard & Poor's affirmed or lowered its counterparty credit and financial strength ratings on Health Net's various operating subsidiaries and removed them from CreditWatch. The outlook on all these companies is negative. Standard & Poor's took these rating actions in connection with its assessment of Health Net's key competitive profile issues and diminished financial performance. "The ratings reflect our belief that Health Net's market profile has been and continues to be stressed by its diminished competitive standing in the Northeast relative to peers," explained Standard & Poor's credit analyst Joseph Marinucci. "We also believe that Health Net's earnings quality has been diminished by adverse business development in various health plan segments. Furthermore, cash flow is being pressured by lower profitability, TRICARE funding requirements, and changes related to payment methodology." Standard & Poor's now considers only Health Net's California operations as being core to the health plan group because of the unit's significant contribution to consolidated revenue, earnings, cash flow, and membership. All other health plan companies are now considered either strategic or nonstrategic because of their less well-developed market profiles and less-stable profitability trends. Factors in support of the revised ratings include Health Net's relatively conservative holding company metrics and well- established core market operations. Standard & Poor's also considers Health Net's Government Contracts Division to be significantly beneficial because it produces meaningful earnings and cash-flow diversity for the consolidated enterprise. The negative outlook reflects Standard & Poor's concerns about the less-predictable nature of Health Net's operating performance and the potential for sustained operational challenges. If Health Net were to materially underperform relative to Standard & Poor's revised 2004 expectations or experience additional financial or operational challenges in 2005, the ratings could be lowered further. HELLER EQUIPMENT: Unexpected Recoveries Lift S&P's Ratings ---------------------------------------------------------- Moody's Investors Service upgrades the ratings on asset-backed securities issued by Heller Equipment Receivables Trust 1999-2. The complete rating actions are as follows: Issuer: Heller Equipment Asset Receivables Trust 1999-2 * Class A-4 Notes, rating upgraded to Aa3 from A1; * Class B Notes, rating upgraded to A3 from Baa2; * Class C Notes, rating upgraded to Baa1 from Ba3; * Class D Notes, rating upgraded to Baa3 from B3; * Class E Notes, rating upgraded to B3 from Ca. The ratings upgrades are due to higher than expected recoveries since the last rating action. As of the January 2003 distribution date, cumulative gross losses totaled $25.8 million (7% of the original principal balance of the pool) with realized recoveries of $11.5 million. As of the October 2004 distribution date, cumulative gross defaults have increased slightly to $26.1 million, with total recoveries improving to $20.63 million. To date, recoveries on defaulted loans in the transaction have totaled 79% of the defaulted principal balance and additional recoveries are expected by the servicer. Notes from the 1999-2 transaction were initially placed on review for possible downgrade in October 2001. The review action was due to deterioration in credit performance of the pools and uncertainty regarding future recoveries. The pool has a concentration in the manufacturing and printing sectors, which were negatively impacted by the most recent recession. The Class A-4, B, C, D, and E notes in the 1999-2 transaction were downgraded in January 2002 and again in September 2002 due to credit deterioration. The contracts were originated by Heller Financial, Inc. In October 2001, Heller Financial was acquired by General Electric Capital Corporation (Aaa/Prime-1), which is a wholly owned subsidiary of General Electric Company (Aaa/Prime-1). HERBST GAMING: S&P Puts B- Rating on Planned $150M Sr. Sub. Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Herbst Gaming Inc.'s proposed $150 million senior subordinated notes. It is expected that proceeds from the notes will be used to fund the previously announced acquisition of Grace Entertainment Inc. and to pay fees and expenses. In addition, Standard & Poor's affirmed its 'B+' rating on the company's $175 million secured revolving credit facility and raised its recovery rating to '2' from '3', indicating Standard & Poor's assessment that lenders would experience a substantial (80%-100%) recovery of principal upon default. Concurrently, other ratings on the Las Vegas, Nevada-based slot machine route operator, including the 'B+' corporate credit rating, were affirmed. The outlook is stable. Pro forma for the Grace acquisition, about $544 million of debt was outstanding at September 30, 2004. "The higher bank loan recovery rating is due to the substantially larger asset base that the company now possesses resulting from the Grace acquisition, which was partially funded with subordinated debt," said Standard & Poor's credit analyst Peggy Hwan. HOLLINGER INC: Conrad Black Departs as Chairman & CEO ----------------------------------------------------- Hollinger Inc. (TSX: HLG.C; HLG.PR.B) reported the resignation of Conrad Black as Chairman, Chief Executive Officer and a director of Hollinger. Lord Black's resignation took effect at 10:00 a.m. (Eastern Standard Time) on November 2, 2004. Hollinger's principal asset is its approximately 68.0% voting and 18.2% equity interest in Hollinger International. Hollinger International is an international newspaper publisher with English-language newspapers in the United States and Israel. Its assets include the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. About the Company Hollinger's principal asset is its approximately 68.0% voting and 18.2% equity interest in Hollinger International. Hollinger International is an international newspaper publisher with nglish- language newspapers in the United States and Israel. Its assets include the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. Hollinger's principal asset is its approximately 68.0% voting and 18.2% equity interest in Hollinger International. Hollinger International is an international newspaper publisher with English-language newspapers in the United States and Israel. Its assets include the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. * * * As reported in the Troubled Company Reporter on August 31, 2004,as a result of the delay in the filing of Hollinger's 2003 Form 20-F (which would include its 2003 audited annual financial statements) with the United States Securities and Exchange Commission by June 30, 2004, Hollinger is not in compliance with its obligation to deliver to relevant parties its filings under the indenture governing its senior secured notes due 2011. $78 million principal amount of Notes are outstanding under the Indenture. On August 19, 2004, Hollinger received a Notice of Event of Default from the trustee under the Indenture notifying Hollinger that an event of default has occurred under the Indenture. As a result, pursuant to the terms of the Indenture, the trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the Notes will have the right to accelerate the maturity of the Notes. Approximately US$5 million in interest on the Notes was due on September 1, 2004. Hollinger has deposited the full amount of the interest payment with the trustee under the Indenture and noteholders will receive their interest payment in a timely manner. There was in excess of $267.4 million aggregate collateral securing the $78 million principal amount of the Notes outstanding. Hollinger also received notice from staff of the Midwest Regional Office of the U.S. Securities and Exchange Commission that they intend to recommend to the Commission that it authorize civil injunctive proceedings against Hollinger for certain alleged violations of the U.S. Securities Exchange Act of 1934 and the Rules thereunder. The notice includes an offer to Hollinger to make a "Wells Submission", which Hollinger will be making, setting forth the reasons why it believes the injunctive action should not be brought. A similar notice has been sent to some of Hollinger's directors and officers. INSTRON CORP: S&P's Withdraws B & CCC+ Ratings ---------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' corporate credit rating and 'CCC+' subordinated debt rating on Canton, Massachusetts-based Instron Corp. Instron designs, develops, and manufactures material- and structures-testing systems used primarily in R&D and quality control applications by Fortune 500 companies, government agencies, and universities. "We acted at the company's request," said Standard & Poor's credit analyst Heather Henyon. INTERSTATE GENERAL: Refinances Approx. $7.4 Million Debt -------------------------------------------------------- Interstate General Company L.P. (Amex: IGC; PCX) refinanced the debt of approximately $7,415,000, on its Towne Center South property and other parcels in St. Charles, Maryland. The debt was refinanced through First Bank and Trust Company of Illinois on September 23, 2004. This refinancing allowed the Company to cure its loan that was in default with Collateral Mortgage Capital, LLC and to reduce its monthly cash requirement for debt service payments. The St. Charles properties encumbered under this loan total approximately 94 saleable acres. This land was appraised during the refinancing process. The Cushman & Wakefield Illinois, Inc. appraisal, dated July 19, 2004, reports a market value of $23,150,000. The principal amount of the FB&T mortgage is $7.4 million. The following is a brief description of the loan terms and conditions: a) the term of the loan is 18 months, b) the interest rate is Prime plus 4.5%, with a floor of 8.5%, c) the loan provides an interest and tax reserve account totaling $1,060,000, which should cover interest and taxes for the term of the loan, and d) the loan requires that the lender be paid an exit fee ranging from one to two percent with each principal repayment. This loan matures on March 23, 2006. It is the Company's plan to retire the entire debt through land sales. The refinancing of the Brandywine property closed on October 12th, 2004. As part of the refinancing, the bank required that Interstate Business Corporation be the borrower as opposed to IGC. Therefore, in connection with the refinancing of the Brandywine property in Prince Georges County, Maryland, owned by Brandywine Investment Associates, LP, the Company sold its 99 percent general partner interest in St. Charles Associates, L.P., the general partner of BIA. The sale was to the Company's affiliate, IBC. The sale price was $5.4 million, plus 50 percent of IBC's general partner share of SCA's remaining cash flow. At closing, IGC received payment of $1.2 million (included in the foregoing selling price) from IBC in the form of a credit against working capital advances previously made by IBC to IGC. IGC will collect the remainder of the sales price as cash flow is available from the Brandywine project. The lender is M&T Mortgage Corporation. The refinancing paid off more than $7 million of indebtedness to Mercantile Mortgage Corporation, the previous lender. In connection with the refinancing, additional collateral was posted by IBC, having a value at the time of closing of approximately $7.5 million. The proceeds of the financing repaid about $2.7 million previously advanced by IGC to SCA/BIA. IGC has no continuing obligation to advance funds to SCA or BIA. Future development costs for Brandywine, not funded under the development loan, will be the obligation of IBC. Based on current projections of net revenues from the sale and development of the Brandywine property, IBC could realize a profit of approximately $800,000, payable in 2007 or later, as a result of its acquiring IGC's general partner interest in SCA. The independent directors of IGC approved the transaction between IGC and IBC after determining that the terms and conditions of the foregoing transactions were fair to IGC and at least as favorable to IGC as those available generally for substantially comparable transactions between unrelated parties. About the Company Interstate General Company L.P.. The Group's principal activities are to develop and sell residential and commercial land and to find innovative solutions for disposal of municipal waste. The real estate activities include community development, development and ownership of rental apartments and real estate management services. The Group also pursues waste disposal contracts with municipalities and government entities as well as industrial and commercial waste generators. Financial Position Mr. Wilson's January 20, 2004 letter to unitholders summarized IGC's current financial position. In short, with the exception of Puerto Rico, IGC is not able to fund waste project development efforts, pending outside project-by-project investor funding. IGC's first priority is to obtain an equity investor(s) for its Puerto Rico project. On the real estate side, IGC's two priorities are, (a) obtain an equity investor in its Brandywine project, and (b) complete land permitting for its Towne Center South apartment project and refinance the underlying 30-acre parcel. The Company received a "going concern" qualification in the opinion of its independent auditors for its 2002 financial statements. The Company has received a similar qualification in its independent auditor's opinion for its 2003 financial statements. The Company expects to incur further losses in 2004 and to be severely constrained financially unless and until an equity investor is obtained for its Brandywine project and development equity is obtained for its Puerto Rico waste project. K&F IND: Moody's Rates Sr. Sec. Loans B2 & Junks Sr. Sub. Notes --------------------------------------------------------------- Moody's Investors Service downgraded the senior implied rating of K&F Industries, Inc. to B2 from B1, and has assigned ratings to the company's proposed senior secured credit facilities and senior subordinated notes. The purpose of the proposed facilities is to partially fund the acquisition of K&F by Aurora Capital Group for $1.06 billion in cash, including re-financing of existing debt. Aurora and certain investors will contribute approximately $315 million in equity (PIK preferred and common stock) for the purchase. This completes a review for possible downgrade that was initiated on October 20, 2004. The downgrade reflects Moody's view that this recapitalization will result in K&F operating with a much more aggressively leveraged capital structure than in the past. This will considerably reduce the company's financial flexibility and credit metrics, and leave it more vulnerable to any downturn in the aircraft sector or an increase in competitive pressures. Pro forma for the transaction, EBIT/interest declines to around 2.0x from 2.4x (LTM Sept. '04) and debt/EBITDAR rises to 6.6x from 3.4x (LTM Sept. '04). Moody's recognizes that the management of K&F has demonstrated a strong track record of operating with high leverage and reducing debt over time, as evidenced in the period following the 1997 LBO. The rating agency believes, however, that over the intermediate-term the level of debt being taken on in this transaction will result in debt protection measures remaining weaker than historic levels. Notwithstanding less robust credit metrics, K&F should continue to benefit from important operating strengths. These include the company's position as one of the world's leading sole source suppliers of aircraft wheels, brakes and anti-skid systems, and aircraft fuel tanks, its large diversified customer base, its technological expertise, and capable management. The stable outlook reflects Moody's expectations that although leverage will remain high over the next few years, a healthy operating environment should result in a modest amount of free cash flow generation that could be applied to moderately reduce debt balances over time. The affected ratings include: * Senior implied rating downgraded to B2 from B1 * Unsecured issuer rating downgraded to B3 from B2 In addition, these ratings have been assigned: * $50 million senior secured revolving credit facilities due 2010, rated (P) B2 * $430 million senior secured term loan B due 2012, rated (P) B2 * $365 million senior subordinated notes due 2014, rated (P) Caa1 The ratings outlook is stable. The ratings on the existing bank credit facilities, which will remain in effect under their original terms until closing, have been confirmed. The company has indicated that these facilities will be fully repaid and cancelled upon closing of the transaction, at which time the ratings for these facilities will be withdrawn. In addition, the company intends to use proceeds from the transactions to retire the existing $145 million 9-1/4% senior subordinated notes due 2007 and $250 million 9.625% senior subordinated notes due 2010 by way of a tender offer. Since tender includes a consent solicitation that would strip holders of any remaining notes of essentially all covenant protection currently enjoyed under those notes' indentures, these ratings remain under review for possible downgrade. The ratings on these notes would be withdrawn if 100% of the outstanding amounts are successfully tendered and the issues are cancelled. However, if less than 100% of the outstanding amounts are tendered, Moody's would likely lower the ratings of any remaining notes after these transactions are completed to levels below that of the new senior subordinated notes. K&F's ratings had been placed on review for possible downgrade following the announcement that the company had signed a definitive agreement to sell the company to Aurora Capital Group. Moody's has reviewed the terms of the proposed financing associated with the transaction and has assessed the impact that the re-capitalization of the company will have on the future credit fundamentals of the company. Moody's recognizes that the company had successfully reduced debt after prior re- capitalization programs, but that the current transaction will employ a degree of leverage that is considerably higher than in the past. Also, through the acquisition by Aurora, the creation of a new management group leaves uncertainties as to the risk tolerance of management going forward, although this is mitigated by continued involvement of Bernard Schwartz and K&F management. Hence, Moody's believes that the new highly-levered capital structure will diminish the company's cash flow generation and the margin of protection in meeting its debt service requirements, increasing overall credit risk associated with the company, which is reflected in the rating downgrades. The ratings continue to consider the Company's modest size with respect to its pro-forma debt load (balance sheet debt will equal about 2x revenue and this does not include the preferred equity at the holding company), the high proportion of intangible assets (80% of pro forma total assets), the majority of which is goodwill, and the negative net worth position. However, the ratings are supported by the Company's record of consistently strong operating performance and track record of rapid debt reduction. As a leading manufacturer and supplier of aircraft braking systems, the company has successfully employed a business model that has secured strong returns on development investments on a number of smaller, high-cycle aircraft platforms over many years. Ratings could be subject to downward revision if competitive pressures increase in the aviation after market sector in which the company operates, slowing revenue growth and decreasing margins, or if the company were to substantially further increase debt levels, resulting in retained cash flow generation below 7% of total debt for a prolonged period of time. Conversely, the rating outlook could improve if stronger than expected operating performance were to allow the company to repay debt more quickly than expected, reducing debt to less than 5x EBITDA. Upon close of the proposed transactions, K&F's senior debt will double, from $395 million as of September 2004, to $795 million. This results in high balance sheet leverage, with debt representing about 89% of total capital (excluding the proposed $215 million PIK preferred shares at the holding company level). As this purchase essentially leaves the company's management and business operations unchanged, total debt increases from about 3.5x LTM EBITDA (as of September 2004) to over pro forma 6.5x (6.6x on a lease-adjusted basis). While operating income will not be greatly affected by the transactions, increased interest expense associated with the re-capitalization will affect net earnings and cash flows. Pro forma interest expense increases as a result of the transaction, which Moody's estimates results in interest coverage (EBIT/Interest) around 2.0x and free cash flow to debt well under 10%. In Moody's opinion, this illustrates substantial deterioration in credit protection owing to the increase in debt. The ratings continue to be supported by the company's record of consistently strong operating performance and debt reduction. Moody's believes this is largely due to the primary advantage of K&F's business model, whereby the company invests in the development of wheel and brake systems for various aircraft in the early phase of their production cycles, thus securing the company's position as sole-source provider of after market parts on those platforms under a stable and reliable pricing system, well into the full lives of such aircraft. Since the November 2002 re-capitalization, K&F has been able to reduce debt by $40 million (about 9%), having reduced debt more dramatically in the period between the prior recapitalization (1997) and 2002. Over the past five years the company's revenue base and EBITDA have remained steady, averaging about $356 million and $114 million per year respectively. LTM Sept. 2004 EBITDA was $115 million, compared to $107 million in FY 2003, reflecting improved results in the commercial aviation sector. The Company has maintained consistently high operating margins, as gross profit levels have ranged between 41% and 44% of sales over the past three years (42% in LTM Sept. 2004). CAPEX levels have been moderate, ranging between $5 million and $10 million over the last five years, less than 5% of revenues annually. Strong cash flows have enabled the company to reduce debt from $435 million as of December 2002 to $395 million as of September 30 2004. Debt/EBITDA reduced from 4.5x in upon close of the 2002 recapitalization to 3.5x in prior to this transaction. The ratings also positively reflect the Company's position as one of the world's leading sole source suppliers of aircraft wheels, brakes and anti-skid systems, and aircraft fuel tanks for commercial and military aircraft, and the significant aftermarket portion of the business. The Company serves a large diversified customer base, with an installed base of over 27,000 aircraft. The U.S. Government is the single largest client with 26% of 2003 sales on an installed base of about 11,000 aircraft. The ratings further consider the Company's technological expertise (only U.S. aircraft wheel and brake manufacturer to offer anti-skid brake systems), high barriers to entry, and the Company's focus on short haul/frequent take-off and landing aircraft, which require a higher level of replacement brake parts. The (P) B2 rating assigned to the $480 million senior secured credit facilities, the same as B2 the senior implied rating, reflects the senior position that these facilities hold in the new debt structure, although lacking the benefit of robust asset coverage. These facilities are guaranteed by all of the company's subsidiaries, and are secured on a first priority basis by all assets of the company and its subsidiaries. The company will have an estimated $1.4 billion in total assets on its balance sheet upon completion of the acquisition and associated re-financing. Intangible assets, mostly goodwill arising from the acquisition by Aurora Capital, will represent a large portion of this (approximately $1.1 billion), resulting in negative tangible equity. The remaining asset base is largely comprised of fixed assets ($62 million, mostly vessels) and accounts receivable ($41 million) and inventory ($50 million). Moody's notes that the company's assets may not provide adequate coverage to the senior secured facilities in the event of default, particularly if they are subject to a distressed sale scenario. The (P) Caa1 rating assigned to the $365 million senior subordinaed notes, similarly guaranteed by all of the company's subsidiaries, reflect the effective subordination of these notes to a substantial level of committed and drawn senior secured debt. K & F Industries, Inc., headquartered in New York City, is a leading manufacturer of wheels, brakes and brake control systems for commercial, general aviation and military aircraft through its subsidiary Aircraft Braking Systems Corporation. In addition, the company is the world's leading manufacturer of flexible bladder- type fuel tanks for aircraft through its subsidiary Engineered Fabrics Corporation. 2003 revenues totaled $343 million. KAISER ALUMINUM: Asks Court to Approve Amended USWA Agreements -------------------------------------------------------------- On February 5, 2004, the Court approved, on an interim basis, agreements to modify collective bargaining agreements and retiree benefits, which approved the agreements that Kaiser Aluminum & Chemical Corporation and Kaiser Bellwood Corporation negotiated with the United Steelworkers of America, AFL-CIO-CLC, the International Associations of Machinists & Aerospace Workers, and the Official Committee of Retired Salaried Employees to terminate salaried and hourly pension and retiree benefit plans for applicable retirees and dependents. Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, states that pursuant to the terms of the USWA Agreement, the applicable plans providing for Retiree Benefits would be terminated and the salaried hourly retirees would be provided with an opportunity for continued medical coverage through COBRA or for coverage pursuant to one or more Voluntary Employee Beneficiary Associations. In that regard, the VEBAs would be funded by KACC with: (a) an initial cash contribution, capped at $36,000,000, payable at emergence, but only to the extent that KACC's liquidity at that time exceeds $50,000,000; (b) a variable cash contribution of a percentage of KACC's adjusted pre-tax profit plus, potentially, a share of certain asset sale proceeds; and (c) a contribution upon the effective date of a reorganization plan, likely in the form of equity, based on KACC's residual value. Ms. Newmarch relates that the USWA Agreement also provided that for every calendar month that KACC remained in bankruptcy after June 1, 2004, KACC would make certain advances to the VEBAs, which would be credited against the initial cash contribution and, if necessary, the variable cash contribution. The allocable share of the contributions to the VEBAs, including the VEBA Advances, with respect to each retiree group is a negotiated percentage representing the proportion of that retiree group's retiree benefit claims to all retiree benefit claims. The USWA Agreement further provided for a termination of the applicable Pension Plans and the institution of replacement pension plans. Under the USWA Agreement, the Debtors' annual contributions to the new pension plans were to vary, depending on the age and years of service of the individual employee. In addition, with respect to the USWA-represented employees, the USWA Agreement required KACC to participate in the Steelworkers Pension Trust, the USWA's multi-employer defined benefit pension plan. On March 22, 2004, the Court approved the USWA Agreement on a final basis. The effectiveness of the Final Order, however, was expressly conditioned upon Court approval of an Intercompany Settlement Agreement. The Court approved VEBA modifications to the USWA Agreement, which, among other things, increased the aggregate monthly VEBA Advance and provided for one-time Initial VEBA Advance. The VEBA Modifications Order stated that it would not become effective until the Final Order became effective. According to Ms. Newmarch, both the Final Order and the VEBA Modifications Order expressly preserved the rights of the Pension Benefit Guaranty Corporation "with respect to the termination of the pension plans, including the right to later challenge any replacement pension plans in connection with the PBGC's policy regarding abusive follow-up plans." On June 1, 2004, the Court entered an order that made the USWA Agreement and the VEBA Modifications effective, subject to certain termination rights. Amended and Restated USWA Agreement Ms. Newmarch tells the Court that the Debtors and PBGC negotiated a settlement of certain issues resulting from the PBGC's opposition to certain features of the Replacement Defined Contribution Pension Plan, in conjunction with the Debtors' participation in the SPT, which did not comply with the PBGC Policies. Under the settlement, the Debtors proposed to make certain changes to the replacement pension plans and then negotiated modifications to the USWA Agreement. The Debtors and the USWA subsequently reached an agreement on the modifications, and the USWA ratified the modifications on September 29, 2004. The modifications, which resolve the PBGC's concerns regarding the replacement pension plans are embodied in the Amended and Restated Agreement and three letter agreements between KACC and the USWA. The principal terms of the Agreements are: (a) The Kaiser Aluminum Pension Plan and the Kaiser Aluminum Inactive Pension Plan will be terminated and assumed by the PBGC; (b) Employer contributions to the Defined Contribution Plan for active USWA employees previously covered by the Terminated Plans will be based on age alone, rather than a combination of age and service; (c) For certain active USWA-represented employees whose Pension Benefits would decrease as a result of the change in the Defined Contribution Plan, KACC will make an annual $400 cash payment each, subject to an annual $50,000 aggregate cap; (d) Certain retirees and dependents will have an additional period to elect continuation coverage consisting of the same benefit structure offered to COBRA participants, effective the later of: -- the month after the PBGC assumes the applicable Plan; or -- the first of the month after a valid election of Continuation Coverage; (e) As additional consideration in connection with the Amended and Restated Agreement, KACC will make an additional $1,000,000 payment to the VEBA upon the satisfaction of certain specified conditions, including, among others, the Court's approval and the effectiveness of the Amended and Restated Agreement, the Intercompany Settlement Agreement, and the Debtors' settlement with the PBGC; and (f) In connection with KACC's sale of its alumina refinery in Gramercy, Louisiana: -- any contribution with respect to employees of the Gramercy Facility that would have been made to the SPT will instead be made to the defined contribution pension plan, and KACC will have no obligation to make payment to the SPT with respect to any Gramercy Facility employee or the defined contribution pension plan after the closing date of the Gramercy Facility sale; and -- the age-based, fixed additional employer contribution to the defined contribution pension plan will be prorated for 2004 through the closing date of the Gramercy Facility Sale. By this motion, the Debtors ask the Court to approve the Amended and Restated USWA Agreement, including the Letter Agreements pursuant to Sections 1113 and 1114 of the Bankruptcy Code. 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. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) L-3 COMMUNICATION: Moody's Puts Ba3 Rating on $650M Sr. Sub. Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Ba3 ratings to L-3 Communication Corporation's (L-3) $650 million 5-7/8 % senior subordinated notes due 2015. The company's senior implied rating is Ba2, with a positive rating outlook. L-3 has a speculative grade liquidity rating of SGL-1. The ratings continue to reflect the company's strong operating performance during a period of rapid growth, through acquisitions as well as organically, in a strong defense and civilian security business environment. Ratings also recognize the company's ability to reduce debt over the past year, primarily through conversion of subordinated convertible notes to equity, while generating substantial levels of free cash flow. The SGL-1 speculative grade liquidity rating reflects the company's very good liquidity position (cash and committed credit availability), the absence of immediately maturing long term debt, the comfortable margins to its financial covenants and Moody's expectations that the company will continue to generate cash flow well in excess of interest and CAPEX over the next 12 months. The ratings also recognize the highly acquisitive nature of the company and the possibility that future acquisitions may reduce the Company's availability under the revolver. The positive ratings outlook reflects Moody's expectations that recently announced acquisitions will contribute to the company's profitability and operating cash flows over the near term, supporting further debt reduction, amidst a continued strong market environment. Ratings may be subject to upward revision if, after taking into account operating results from recent acquisition, the company demonstrates maintenance of free cash flow in excess of 20% of debt annually, as the company continues to decrease debt while maintaining its current acquisition pace. Conversely, ratings or their outlook could be adjusted downward if earnings or cash flows from acquired businesses were to fail to contribute significantly to the company's results, or if margins and growth on existing businesses were to fall, possibly resulting in leverage (debt/EBITDA) of over 4.0x or free cash flow falling to below 10% of debt over a prolonged period. The Ba3 rating assigned to the proposed notes, one notch below the L-3's senior implied rating, reflects the notes' junior position in claim to $750 million in senior secured credit facilities, which consists of a $500 million revolving credit facility that matures in 2006, and a $250 million 364-day revolving facility maturing February 2005. The proceeds will be used to prepay the company's existing $200 million 8% senior subordinated notes, which mature in 2008, as well as for general corporate purposes, including acquisitions. The company recently announced a September 2004 cash balance of about $367 million, which will not change dramatically as the result of these transactions. Combined with approximately $672 million in availability under L-3's senior secured credit facility, the company's liquidity position is estimated to be over $1 billion. Moody's anticipates that L-3, which has been actively acquiring companies in the defense sector with complementary business profiles ($580 million of purchases announced in 2004, through October), will continue to be acquisitive in the near term, and may pursue additional financing for future large acquisitions. The proposed offering of $650 million, which is more than three times the amount of debt being retired and represents one of the largest public debt offerings that the company has undertaken to date, results in a rather sizeable increase in debt. However, when considered in context with recent debt reduction initiatives by way of redeeming convertible notes for common stock, total debt will have only increased slightly from reported September 2004 levels. As of September 2004 total debt was $2.16 billion, essentially unchanged from June 2004 ($2.14 billion). In addition, the company initiated a full redemption of its $420 million senior subordinated "CODES" notes due 2011, converting such notes into 7.8 million shares of L-3 common stock through October 21, 2004. As the result of these transactions, including the new notes offering and retirement of the 2008 notes, L-3's total debt is estimated to increase only slightly, to about $2.19 billion, although at lower leverage (approximately 37% of total capital), by December 2004, with very little impact on the company's cash balances and no use of the bank credit facilities required. Pro forma leverage, before taking into account estimated earnings from recent acquisitions, is estimated to be less than 3x debt/EBITDA upon close of these transactions, versus 3.7x as of December 2003. EBIT/interest coverage is also expected to be strong, at over 5x. Also, while the company has undertaken almost $600 million in acquisitions announced through October 2004, free cash flow is estimated at a robust 20% of post- transactions debt, before considering contributions from acquired businesses. Moody's believes that this cash flow profile, which will likely be augmented once operating cash flows from acquired entities materialize, should give the company ample ability to substantially reduce debt in 2005. L-3 Communications Corporation, headquartered in New York City and a wholly-owned subsidiary of L-3 Communications Holdings, Inc., is a leading provider of Intelligence, Surveillance and Reconnaissance systems and products, secure communications systems, aircraft modernization, training and government services, and is a merchant supplier of a broad array of high technology products. Its customers include the Department of Defense, Department of Homeland Security, selected U.S. government intelligence agencies and aerospace prime contractors. L-3 had LTM September 2004 revenues of $6.5 billion. LAIDLAW INT'L: Begins Trading on Philadelphia Stock Exchange ------------------------------------------------------------ The Philadelphia Stock Exchange (PHLX) said it began trading three new options in October 26. Paxar Corp. (Nasdaq symbol: PXR/) has been allocated to LaBranche Structured Products, LLC. It will trade on the March expiration cycle with initial expiration dates of November, December, March and June. Position and Exercise limits have been set at 3,150,000 shares. Kellwood Co. (Nasdaq symbol: KWD) has been allocated to LaBranche Structured Products, LLC. Securities. It will trade on the March expiration cycle with initial expiration dates of November, December, March and June. Position and Exercise limits have been set at 2,250,000 shares. Laidlaw International, Inc., (Nasdaq symbol: LI) has been allocated to LaBranche Structured Products, LLC. Securities. It will trade on the February expiration cycle with initial expiration dates of February, May, August and November. Position and Exercise limits have been set at 3,150,000 shares. The Philadelphia Stock Exchange was founded in 1790. The PHLX trades 2,000 stocks, 1,500 equity options, 17 sectors index options and currency options and futures. For more information about the PHLX and its products, visit http://www.phlx.com/ 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. (Laidlaw Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 215/945-7000) LONG BEACH: Fitch Rates Six Classes Low-B & Junks Two Classes ------------------------------------------------------------- Fitch has taken rating actions on these Long Beach home equity issues: * Asset Backed Securities Corporation, Long Beach Home Equity Loan Trust, series 2000-LB1 Group 1 -- Classes AF5 and AF6 affirmed at 'AAA'; -- Class M1F affirmed at 'AA'; -- Class M2F downgraded to 'BBB-' from 'BBB+'; -- Class BF downgraded to 'C' from 'CC'. * Asset Backed Securities Corporation, Long Beach Home Equity Loan Trust, series 2000-LB1 Group 2 -- Class M1V affirmed at 'AA'; -- Class M2V downgraded to 'BBB' from 'A'; -- Class BV downgraded to 'BB-' from 'BBB-'. * Long Beach Mortgage Loan Trust, series 2000-1 -- Classes AF-3, AF-4 and AV-1 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BBB-' from 'A'; -- Class M-3 downgraded to 'CCC' from 'BBB-'. * Long Beach Mortgage Loan Trust, series 2001-1 -- Class A-1 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BBB' from 'A'; -- Class M-3 downgraded to 'BB' from 'BBB'. * Long Beach Mortgage Loan Trust, series 2001-2 -- Class A-1V affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BBB' from 'A'; -- Class M-3 downgraded to 'B' from 'BBB'. * Long Beach Mortgage Loan Trust, series 2001-3 -- Classes A-1 and A-2 affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded to 'BBB+' from 'A'; -- Class M-3 downgraded to 'B' from 'BBB'. * Long Beach Mortgage Loan Trust, series 2001-4 Group 1 -- Class I-A affirmed at 'AAA'; -- Class I-M2 downgraded to 'A-' from 'A'; -- Class I-M3 downgraded to 'B+' from 'BBB'. * Long Beach Mortgage Loan Trust, series 2001-4 Group 2 -- Classes II-A1 and II-A3 affirmed at 'AAA'; -- Class II-M1 affirmed at 'AA'; -- Class II-M2 affirmed at 'A'; -- Class II-M3 downgraded to 'BB-' from 'BBB'. The affirmations reflect credit enhancement consistent with future loss expectations and affect approximately $932 million of outstanding certificates detailed above. In addition, the affirmation on class A-1V in series 2001-2 reflects a guaranty provided by the Federal Home Loan Mortgage Corporation (Freddie Mac), whose financial strength is rated 'AAA' by Fitch. The affirmations on class A-1 in series 2001-3 and class I-A in series 2001-4 reflect a guaranty provided by the Federal National Mortgage Association (Fannie Mae), whose insurer financial strength is rated 'AAA' by Fitch. The negative rating actions are taken due to worse than expected performance of the underlying collateral in these deals and affect $623 million of outstanding certificates detailed above. No classes were upgraded in this review. In series 2000-LB1 Group 1, the high level of losses incurred has resulted in the full depletion of overcollateralization -- OC. As of the October 2004 distribution date, class BF incurred its second month write-down due to realized losses of $702,719. The six-month average monthly loss, after application of excess spread, is approximately $913,713. Current 90+ delinquencies (which, in all cases, include bankruptcies, foreclosures and real estate owned) equal 30.50%. In series 2000-LB1 Group 2, the high level of losses incurred has resulted in the decline of OC, to approximately $13,015,181, or 8.42% of the collateral balance, as of the October 2004 distribution date. The six-month average monthly loss, after application of excess spread, is approximately $1,406,721. Current 90+ delinquencies equal 41.66%. In series 2000-1, the high level of losses incurred has resulted in the decline of OC, to approximately $5,152,718, or 3.21% of the collateral balance, as of the October 2004 distribution date. Approximately 62.62% of the mortgage loans have mortgage insurance provided by MGIC down to 55% LTV. The six-month average monthly loss, after application of excess spread, is approximately $1,061,747. Current 90+ delinquencies equal 37.97%. In series 2001-1, the high level of losses incurred has resulted in the decline of OC, to approximately $5,127,663, or 3.82% of the collateral balance, as of the October 2004 distribution date. Approximately 60.88% of the mortgage loans (originally 69.82%) have mortgage insurance provided by MGIC down to 55% LTV. The six-month average monthly loss, after application of excess spread, is approximately $455,029. Current 90+ delinquencies equal 38.65%. In series 2001-2, the high level of losses incurred has resulted in the decline of OC, to approximately $9,068,652, or 2.69% of the collateral balance, as of the October 2004 distribution date. The six -month average monthly loss, after application of excess spread, is approximately $1,353,803. Current 90+ delinquencies equal 35.28%. In series 2001-3, the high level of losses incurred, combined with the October 2004 stepdown event, have resulted in the decline of OC, to approximately $6,911,145, or 3.00% of the collateral balance, as of the October 2004 distribution date. The six-month average monthly loss, after application of excess spread, is approximately $438,296. Current 90+ delinquencies equal 32.68%. In series 2001-4 Group 1, the high level of losses incurred has resulted in the decline of OC, to approximately $13,681,054, or 3.46% of the collateral balance, as of the October 2004 distribution date. The 6-month average monthly loss, after application of excess spread, is approximately $490,779. Current 90+ delinquencies equal 31.45%. In series 2001-4 Group 2, the high level of losses incurred has resulted in the decline of OC, to approximately $7,372,818, or 6.40% of the collateral balance, as of the October 2004 distribution date. The 6-month average monthly loss, after application of excess spread, is approximately $159,413. Current 90+ delinquencies equal 30.40%. Fitch will continue to closely monitor these deals. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings website at http://www.fitchratings.com/ MARINER HEALTH: Launches Cash Tender Offer for 8-1/4% Sr. Sub Debt ------------------------------------------------------------------ Mariner Health Care, Inc. (OTC Bulletin Board: MHCA) will be commencing a cash tender offer for all of its outstanding 8-1/4% Senior Subordinated Notes due 2013, in connection with its pending merger with National Senior Care, Inc. In conjunction with the tender offer, Mariner is also soliciting the consent of holders of the Notes to certain proposed amendments to the indenture under which the Notes were issued, which proposed amendments would eliminate substantially all of the restrictive covenants and certain events of default under the indenture governing the Notes. The tender offer and consent solicitation are being made pursuant to an Offer to Purchase and Consent Solicitation Statement and related Consent and Letter of Transmittal dated Nov. 2, 2004, each of which sets forth a more detailed description of the tender offer and consent solicitation. The tender offer will expire at 5:00 p.m. (EST) on Dec. 1, 2004, unless extended or terminated. The consent solicitation will expire at 5:00 p.m. (EST) on Nov. 16, 2004, unless extended or terminated. Under the terms of the tender offer, the price paid for each $1,000 principal amount of Notes validly tendered and accepted for purchase by Mariner will be determined on the next business day following the Consent Date based on the present value of the Notes as of the payment date, calculated in accordance with standard market practice, assuming each $1,000 principal amount of a Note would be paid at a price of $1,041.25 on December 15, 2008, the earliest redemption date of the Notes, discounted at a rate equal to 50 basis points over the yield on a 3.375% U.S. Treasury Note due December 15, 2008, minus a consent payment of $20 per $1,000 of principal amount of Notes. Holders who tender their Notes on or prior to the Consent Date will be entitled to receive the consent payment. Holders who tender their Notes after the Consent Date will not be entitled to receive the consent payment. Holders who properly tender also will be paid accrued and unpaid interest, if any, up to, but not including, the payment date. Holders who desire to tender their Notes must consent to the proposed amendments in their entirety and not selectively and may not deliver a consent without tendering their Notes. Any Notes tendered prior to the Consent Date may be withdrawn at any time on or prior to the Consent Date, but not thereafter, except as may be required by law. Any Notes tendered after the Consent Date may not be withdrawn, except as may be required by law. The closing of the tender offer and consent solicitation is subject to certain conditions, including, but not limited to: (i) the receipt of consents to the proposed amendments to the indenture from the holders of at least a majority of the outstanding principal amount of such Notes; and (ii) the consummation of the pending merger of Mariner with National Senior Care. Mariner has retained Credit Suisse First Boston LLC to serve as the exclusive Dealer Manager and Solicitation Agent for the tender offer and the consent solicitation. Requests for documents may be directed to Morrow & Co., Inc., the Information Agent, by telephone at (800) 607-0088 (toll-free). Questions regarding the tender offer may be directed to Credit Suisse First Boston LLC at (800) 820-1653 (toll-free) or (212) 538-0652 (collect). This press release is not an offer to purchase, a solicitation of an offer to sell or a solicitation of consent with respect to any securities. The offer is being made solely by the Statement and related Letter of Transmittal dated November 2, 2004. Mariner is headquartered in Atlanta, Georgia and certain of its subsidiaries and affiliates own and/or operate approximately 252 skilled nursing and two assisted living facilities as well as 12 long-term acute care hospitals representing approximately 32,000 beds across the country. Mariner Post-Acute Network, Inc., Mariner Health Group, Inc., and scores of debtor-affiliates filed for chapter 11 protection on January 18, 2000 (Bankr. D. Del. Case Nos. 00-113 through 00-301). Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., represents the Reorganized Debtors, which emerged from bankruptcy under the terms of their Second Amended Joint Plan of Reorganization declared effective on May 13, 2002. MOREHEAD MEMORIAL: Moody's Slices Long-Term Bond Rating to Ba1 -------------------------------------------------------------- Moody's Investors Service downgraded the long-term bond rating of Morehead Memorial Hospital to Ba1 from Baa3, affecting approximately $7 million of outstanding Series 1993 bonds. The outlook is revised to negative from stable. The downgrade is attributable to: (1) decline in liquidity to a weak 27 days cash on hand; (2) weak demographic area; (3) small medical staff; and (4) modest financial performance over the past two years. Morehead Memorial Hospital does benefit from a strong 69% primary market share and a recent improvement in reimbursement due to a Medicare reclassification. The negative outlook reflects our expectation that this small hospital will continue to experience volatility in its financial performance due to its small medical staff, a weak economy and large capital needs. Moody's notes that Morehead Memorial is pursuing FHA insurance in conjunction with a debt issuance of approximately $16.5 million, which would result in the refinancing of all Morehead's rated debt in February 2005 and the withdrawal of the bond rating. Security: The bonds are secured by an interest in all accounts of the hospital. Weak Liquidity Provides Minimal Financial Cushion Moody's believes that Morehead Memorial's weak and declining liquidity of approximately $5 million (27 days cash on hand) as of September 30, 2004 provides insufficient protection to warrant an investment grade rating. Liquidity declined from $7.7 million (43 days) as of September 30, 2003 due to a growth in accounts receivable related to HIPAA requirements and spending on capital needs. Morehead Memorial is facing a $16.5 million capital program to reconfigure and expand the hospital, which it hopes to finance through the FHA insurance program in February 2005. In the meantime, it has borrowed $3.2 million under short-term bank loans to finance this capital program. Two million dollars of loans are due in August 2005, while $1.2 million is repayable over five years. While management is confident that the FHA loan will come through, Moody's believe that its failure would place Morehead Memorial in a very difficult position. The hospital has raised approximately $700,000 in cash and another $1.8 million in pledges to defray the cost of the capital program (which we have not included in our liquidity calculations). Financial Performance in 2003 and 2004 Lags Historical Levels Morehead Memorial's operating cash flow declined from $4.1 million in 2002 to $2.9 million in 2003 and improved to $3.4 million in 2004. During the prior seven years MMH averaged operating cash flow of $4.3 million, while generating over $4 million in six of those years. The 2004 decline was due to the loss of a general surgeon, a shift in inpatient admits to observation visits, cuts in Medicare outpatient rates and a reduction in reimbursement for cancer drugs. In 2003, Morehead Memorial missed its budgeted operating cash flow of $5.5 million by 47%, while in 2004 it missed its budgeted cash flow of $6.1 million by 44%. Management is projecting operating cash flow of $5.6 million in 2005, largely due to a Medicare reclassification of Morehead Memorial's wage index, expected to increase revenues by $2.1 million. While the local economy appears to have recovered somewhat (unemployment hit a peak of over 10% last year), we still believe that area faces long-term economic challenges. Morehead Memorial is located only 15-20 miles from three comparably sized hospitals in Reidsville, North Carolina and Martinsville and Danville, Virginia, and 30-40 miles from three tertiary hospitals in Greensboro and Winston-Salem, North Carolina. Morehead Memorial has established a joint venture with Moses Cone Health System in Greensboro, North Carolina, providing Morehead Memorial with clinical coverage in cardiology. Nevertheless, we believe that the hospital still has limited ability to negotiate solid rate increases with commercial payers. We also believe that inflationary increases in pension and malpractice expenses will keep operating performance constrained. Small Hospital and Medical Staff Exacerbates Risk With revenues of $70 million and admissions of 6,100, Morehead Memorial is a relatively small hospital, subject to the risks typical of a hospital of this size. The active medical staff of 47 is small, with the top 10 admitters accounting for a very high 67% of total admissions. The loss of 5 physicians in 2003 contributed to the 16% decline in outpatient surgeries and a 3% decline in 2004 inpatient admissions. Morehead Memorial has since added a third general surgeon, which has resulted in a 10% increase in 2004 outpatient surgeries, however, Moody's believes the hospital will continue to experience volatility in its patient volumes due to high physician and staff turnover. Financial and Utilization Data (Audited year ending September 30, 2003/ management projected income statement for year ending September 30, 2004 and balance sheet as of August 31, 2004; investment returns normalized at 6%) -- Inpatient Admissions: 6,300/6,099 -- Total Operating Revenues: $67.1 million/$69.6 million -- Net Revenue Available for Debt Service: $3.8 million/ $4.2 million -- Total Debt Outstanding: $10.8 million/$11.8 million -- Maximum Annual Debt Service Coverage: 2.4 times/2.7 times -- Debt-to-Cash Flow: 3.3 times/3.2 times -- Days Cash on Hand: 43.3 days/27.4 days -- Cash-to-Debt: 71%/43% -- Operating Cash Flow Margin: 4.3%/4.9% The negative outlook reflects Moody's expectation that this small hospital will continue to experience volatility in its financial performance due to its small medical staff, a weak economy and large capital needs. Moody's notes that Morehead is pursuing FHA insurance in conjunction with a debt issuance of approximately $16.5 million, which would result in the refinancing of all Morehead's rated debt in February 2005 and the withdrawal of the bond rating. NATIONAL ENERGY: Wants Court to Reduce Vallieres' Claim to $1.2MM ----------------------------------------------------------------- Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, L.L.P., in Baltimore, Maryland, relates that in the normal course of its business prior to the filing of its chapter 11 case, NEGT Energy Trading Holdings Corporation f/k/a PG&E Energy Trading Holdings Corporation -- ET Holdings -- hired energy traders. In addition to a base salary, the energy traders also received discretionary short-term incentive plan awards and supplemental incentive awards for the year 2001. Any trader who was awarded a supplemental incentive award for the year 2001 was notified in March 2002 of the amount of his or her award. Any supplemental incentive award was paid in this manner: (a) up to $500,000 was paid in March 2002, and (b) any amount over $500,000 was deferred and was to be paid in equal installments with accrued interest in October 2002 and October 2003. Mr. Fletcher tells the Court that ET Holdings paid the portions of the supplemental incentive awards that were due in March 2002 and October 2002. The second deferred payments that were to be paid in October 2003 have not yet been made. ET Holdings acknowledges that these payments are due and does not object to proofs of claim based on the deferred amount that was to be paid in October 2003. According to Mr. Fletcher, ET Holdings did not award any discretionary supplemental incentive awards for the years 2002 or 2003. Therefore, ET Holdings objects to any proofs of claim based on purported supplemental incentive awards for those years. Benoit Vallieres was a trader employed by ET Holdings. Mr. Vallieres' employment with ET Holdings was terminated on March 13, 2003. Mr. Vallieres filed Claim No. 214 against two entities, National Energy & Gas Transmission, Inc., f/k/a PG&E National Energy Group, Inc. -- NEGT -- and ET Holdings, for $2,507,183. Mr. Vallieres also filed a complaint in the Circuit Court of Maryland for Montgomery County against NEGT and ET Holdings. That action was stayed after the Petition Date, and NEGT and ET Holdings were not required to answer the Complaint. Based on the allegations set forth in the Complaint, Mr. Vallieres contends that he is entitled to a supplemental incentive award for the year 2001, as well as an alleged supplemental incentive award for the year 2002. In addition, Mr. Vallieres seeks "treble damages" pursuant to the Maryland Wage Payment and Collection Act. NEGT and ET Holdings object to Mr. Vallieres' Claim and ask the Court to reduce and allow Mr. Vallieres' Claim as a general unsecured non-priority claim for $1,157,183 against ET Holdings. Claim Against ET Holdings For the year 2001, ET Holdings made a $2,732,000 discretionary supplemental incentive award to Mr. Vallieres. Pursuant to its supplemental incentive award payment structure, ET Holdings paid Mr. Vallieres: (a) $500,000 in March 2002, and (b) $1,132,925 -- $1,116,000 plus $16,925 interest -- in October 2002. ET Holdings did not pay to Mr. Vallieres the remaining $1,157,183 -- $1,116,000 plus $41,183 interest -- for his year 2001 supplemental incentive award. ET Holdings concedes that Mr. Vallieres is owed that amount. Mr. Vallieres also claims that he is owed a $1,350,000 supplemental incentive award for the year 2002. Because supplemental incentive awards were discretionary and ET Holdings never awarded any supplemental incentive awards to Mr. Vallieres or any of the other energy traders for 2002, ET Holdings objects to Mr. Vallieres' claims based on a purported supplemental incentive award for that year. Because all supplemental incentive awards were discretionary in nature, Mr. Fletcher asserts that the Maryland Wage Payment and Collection Act is inapplicable to Mr. Vallieres' claims. Therefore, ET Holdings objects to the "treble damages" which Mr. Vallieres seeks. Moreover, as the automatic stay prohibits ET Holdings from paying Mr. Vallieres' prepetition claims, the Maryland Wage Payment and Collection Act is inapplicable as a matter of bankruptcy law. Claim Against NEGT Although Mr. Vallieres was employed and paid by ET Holdings, he also maintains that he has a claim against NEGT. Mr. Vallieres must look solely to ET Holdings for payment of any amount owed to him. In the Complaint, Mr. Vallieres alleges that ET Holdings and NEGT caused ET Holdings "to transfer to NEG the monies available to pay [Mr.] Vallieres and the other traders the supplemental performance compensation they are due," and that "NEG did not provide fair consideration to [ET Holdings] in exchange for a distribution of [ET Holdings]'s funds to NEG." Based on this allegation, Mr. Vallieres concludes that "the distribution of the cash to NEG was or will constitute a fraudulent conveyance as to [Mr.] Vallieres." "Even assuming, arguendo, that these allegations are true -- which they are not -- [Mr.] Vallieres lacks standing to bring a claim against NEGT based on such allegations. The harm which [Mr.] Vallieres alleges was suffered as a result of the alleged fraudulent transfer is a generalized harm suffered by ET Holdings. [Mr.] Vallieres has failed to allege any particularized harm suffered by him, as distinguished from other creditors of ET Holdings," Mr. Fletcher says. It is an established principle of bankruptcy law that "[w]here a claim is generalized, with no particularized injury stemming from it and where the claim may be brought by any creditor, the trustee or debtor-in-possession is the appropriate party to assert the claim." Therefore, Mr. Fletcher argues, the claim can only be asserted by ET Holdings, and not Mr. Vallieres. Because Mr. Vallieres' claims against NEGT fail as a matter of law, the Vallieres Claim as against NEGT should be disallowed. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and emerged from bankruptcy on Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEIGHBORCARE INC: Completes Quest Total Care Pharmacy Purchase -------------------------------------------------------------- NeighborCare, Inc. (Nasdaq: NCRX) has closed the acquisition of Quest Total Care Pharmacy of Longview, Texas. Quest Pharmacy is a growing, long term care (LTC) pharmacy serving skilled nursing and assisted living facilities in Texas. The business being acquired currently generates revenue of approximately $16 million on an annualized basis and serves approximately 4,000 beds. Financial terms of the transaction were not disclosed. Charles W. Putnam, Chief Executive Officer of Quest Pharmacy said, "We are very pleased to be part of the NeighborCare family. When we evaluated various options for our business we quickly discovered that NeighborCare's outstanding reputation and unique approach to the institutional pharmacy market made them our clear choice for a partner. In addition, we were particularly impressed with NeighborCare's passion and commitment to customer service and support, a core value at Quest, and one that will continue with NeighborCare." Mr. Putnam added, "As part of the NeighborCare organization, we know that our customers will have best in class services and programs to serve their residents and achieve their business objectives." John J. Arlotta, NeighborCare's Chairman, President and Chief Executive Officer said, "I am very happy to welcome Quest Pharmacy into the NeighborCare family. Their facilities in Texas are a natural complement to our recent acquisition in Tyler, Texas, and meet our business objective of acquiring companies in highly desirable markets. This acquisition is part of our previously announced plans to grow our business both organically and through strategic acquisitions." About NeighborCare, Inc. NeighborCare, Inc. (Nasdaq: NCRX) is one of the nation's leading institutional pharmacy providers serving long term care and skilled nursing facilities, specialty hospitals, assisted and independent living communities, and other assorted group settings. NeighborCare also provides infusion therapy services, home medical equipment, respiratory therapy services, community-based retail pharmacies and group purchasing. In total, NeighborCare's operations span the nation, providing pharmaceutical services in 32 states and the District of Columbia. * * * As reported in the Troubled Company Reporter's May 26, 2004 edition, Standard & Poor's Ratings Services placed its ratings on Omnicare Inc., including the 'BBB-' corporate credit ratings, on CreditWatch with negative implications after the long-term care pharmacy provider disclosed an all-cash offer to purchase competitor NeighborCare Inc. At the same time, the ratings on NeighborCare, including the 'BB-' corporate credit rating, were also placed on CreditWatch with negative implications, as the pro forma combination is likely to have a markedly weaker financial profile than NeighborCare. The purchase price of $1.5 billion includes the assumption or repayment of a $250 million NeighborCare debt issue. Estimating the effect of additional debt and not assuming any cost savings, total debt to EBITDA is expected to rise to over 4x, while funds from operations to total debt will fall to less than 15%. "We expect to meet with Omnicare management to determine what cash flow benefits can be realized and the ultimate nature of the financial structure of the combined company before resolving the CreditWatch listing," said Standard & Poor's credit analyst David Lugg. NORAMPAC INC: Invests $17.5 in Two Ontario Corrugated Box Plants ---------------------------------------------------------------- The recent ratification of a new 3-year contract with the Independent Paperworkers' Union, Local 595, at the Norampac Etobicoke Division, has paved the way for Norampac Inc. to proceed with a $17.5 million investment, in two of its Ontario corrugated products converting facilities: Etobicoke and St.Marys Divisions. This investment project is in addition to the over $70 million the company has invested in its Ontario box plants over the last 4 years. -- Etobicoke Division: to become the largest specialty box plant in Canada The largest part of this investment, $13.5 million, will be slated for Norampac Inc., Etobicoke Division. This includes a large 86" x 220" Jumbo, two-color flexo with full in-line die cutting, folding, gluing and stitching. This high- speed state-of-the-art machine will replace 5 older pieces of equipment. The new jumbo press will be the largest and most versatile bulk box converting machine in Canada. The Etobicoke Division corrugator will be upgraded with two new single facers, cut-off knife and down stackers to add "AAC" triple wall capabilities, with overall improved board performance, at faster speeds. The plant will also add upgraded power conveyors, smart cars, and material handling equipment. The project shall be completed by March 2005. This high performance equipment will serve a targeted market in bulk bin packaging that includes: triple wall, double wall, and large single wall boxes used in the automotive, resin, furniture, food processing, fresh produce, chemical and appliance industries. Company officials appreciate the early contract renewal and recognize the built-in flexibility that the employees have demonstrated with the new agreement. The employees will make the biggest impact on the success of this project and they clearly have given the company their support, as the plant is being reconfigured to be the largest specialty box plant in Canada. -- St.Marys Division: new equipment Norampac, St. Marys Division, in South Western Ontario, will invest $4.0 million by adding new power conveyors and smart cars to fully automate the material handling needs of the plant, in conjunction with the installation of a curtain coater rotary die cutter being relocated from the Concord Division by December 2004. The total regional project will also include the transfer of some flexo and die cut business into the OCD Division in Mississauga, and the newest Norampac converting plant in Vaughan, Ontario, which will produce over 200 million square feet monthly. "Norampac recognizes the importance of these investments toward continuous improvements when it comes to providing their customers with superior quality and reliable service. With the new equipment, combined with the commitment from the employees, we are confident that customers' expectations will be exceeded!" said Marc-Andr, D,pin, Norampac Inc.'s President and Chief Executive Officer. Norampac owns eight containerboard mills and twenty-six corrugated products plants in Canada, the United States and France. With an annual production capacity of more than 1.6 million short tons, Norampac is the largest containerboard producer in Canada and the seventh largest in North America. Norampac, which is also a major Canadian manufacturer of corrugated products, is a joint venture company owned by Domtar Inc. (symbol: DTC-TSE) and Cascades Inc. (symbol: CAS-TSE). About the Company Norampac (S&P, BB+ Long-Term Corporate Credit Rating, Stable Outlook) owns eight containerboard mills and twenty-five corrugated products plants in the United States, Canada and France. With annual production capacity of more than 1.6 million short tons, Norampac is the largest containerboard producer in Canada and the 7th largest in North America. Norampac, which is also a major Canadian manufacturer of corrugated products, is a joint venture company owned by Domtar Inc. (symbol : DTC-TSX) and Cascades Inc. (symbol : CAS-TSX). NORTHWEST AIRLINES: Moody's Rates Planned $975M Facilities at B1 ---------------------------------------------------------------- Moody's Investors Service assigned a (P)B1 rating to Northwest Airlines, Inc. proposed $975 million guaranteed and secured Senior Credit Facilities. The Facilities will be provided in the form of a five-year term Tranche A Term Facility and a six-year term Tranche B Term Facility. The Facilities are intended to replace the company's $975 million bank line of credit. They contain support for creditors similar to that available in the existing line of credit including guarantees from Northwest Airlines Corporation and Northwest Airlines Holdings Corporation, and collateral including aircraft and Northwest Airlines, Inc.'s Pacific division route rights and slots. Covenant protection is expected to be at least as beneficial to debt holders under the new Facilities as it is to the holders of the existing bank line of credit. The (P)B1 provisional rating will be replaced by a permanent rating upon review of the final terms and conditions of the facilities. The ratings outlook for Northwest is Negative. The prospective rating assigned is base on the underlying credit quality of Northwest Airlines, Inc. (Senior Implied Rating B2) and the reduced severity of loss in liquidation that is expected to benefit debt holders due to the collateral provided. Although debt holders benefit from the aircraft portion of the collateral pool, Moody's considers the value of the route rights and slots as the primary source of support for the rating assigned. These rights provide Northwest with substantial advantages over other carriers in the rapidly growing Pacific market and would be of substantial value to other US airlines. Moody's notes that these rights can only be purchased by US airlines and that the most logical purchasers have limited incremental debt capacity. However, Moody's believes that the opportunity to acquire these rights, if presented, would solicit responses sufficient to support debt holder claims. Northwest Airlines, Inc. is headquartered in Eagan, Minnesota. NORTHWESTERN CORP: Fitch Withdraws Default Ratings After Emergence ------------------------------------------------------------------ NorthWestern Corp.'s outstanding senior secured debt obligations are upgraded to 'BB+' from 'CCC' by Fitch Ratings. In addition, Fitch has assigned a final 'BB+' rating to NorthWestern's $225 million Rule 144A senior secured notes due 2014 and $225 million senior secured credit facility. At the same time, Fitch withdraws NorthWestern's 'DD' senior unsecured debt rating and 'D' trust preferred rating as these securities have been converted into NorthWestern common equity pursuant to the terms of NorthWestern's 2nd Amended and Restated Plan of Reorganization. Details of securities impacted by today's action are listed below. The Rating Outlook for NorthWestern is Positive. On November 1, 2004, NorthWestern announced that its confirmed plan of reorganization became effective with the company emerging from Chapter 11. The rating action referenced above reflects NorthWestern's successful exit from bankruptcy and is consistent with Fitch's expected ratings outlined in a press release dated October 19, 2004. These outstanding debt securities are upgraded to 'BB+' from 'CCC': -- $13 million 7.25% secured medium-term notes due March 3, 2008; -- $5.4 million 7% first mortgage bonds due March 1, 2005; -- $55 million 7% general mortgage bonds due Aug. 15, 2003; -- $60 million 7.10% general mortgage bonds due Aug. 1, 2005; -- $150 million 7.30% first mortgage bonds due Dec. 1, 2006; -- $0.365 million 8.25% first mortgage bonds due Dec. 1, 2007; -- $1.4 million 8.95% first mortgage bonds due Feb. 1, 2022; -- $90.2 million 6.125% secured pollution control bonds (issued by Forsyth, MT Pollution Control Revenue) due May 1, 2023. These securities are assigned a final 'BB+' rating: -- $225 million 5.875% senior secured notes due Nov. 1, 2014; -- $125 million seven-year secured Term Loan B; -- $125 million five-year secured revolving credit facility. These ratings are withdrawn by Fitch: -- $470 million 8.75% senior notes due 2012 at 'DD'; -- $250 million 7.875% senior notes due 2007 at 'DD'; -- $105 million 6.95% debentures due 2028 at 'DD'; -- $65 million 8.45% cumulative quarterly income preferred securities (issued by Montana Power Capital I) due 2036 at 'D'; -- $32.5 million 8.125% trust preferred securities due 2025 (issued by NWPS Capital Financing I) at 'D'; -- $55 million 7.20% trust originated preferred securities (issued by NorthWestern Capital Financing I) due 2038 at 'D'; -- $100 million 8.25% trust preferred securities (issued by NorthWestern Capital Financing II) due 2031 at 'D'; -- $110 million's $100 million 8.10% trust preferred securities (issued by NorthWestern Capital Financing III) due 2032 at 'D'. NRG ENERGY: Names Nahla Azmy Investor Relations Director -------------------------------------------------------- NRG Energy, Inc. (NYSE:NRG) said Nahla A. Azmy has joined the Company as Director, Investor Relations. In her new role reporting to David Crane, President and Chief Executive Officer, Ms. Azmy will serve as a liaison between the Company's management and investors and the financial community. Ms. Azmy comes to NRG from Lehman Brothers, where she served as Vice President, Utilities and Power Equity Research. Prior to her eight years of equity research experience in this sector, Ms. Azmy held previous positions as a financial analyst and lending officer for a variety of financial institutions. Ms. Azmy received a Bachelor of Arts from Colgate University and a Masters of Business Administration from the New York University Stern School of Business. "Coming from the sell-side, Nahla brings a different vantage point as well as a considerable depth of experience to our Investor Relations team," said Mr. Crane. "As NRG is a complex company in an industry in rapid transition, Nahla will make a vital contribution in our continuous effort to communicate effectively with our external stakeholders and more generally, as a member of our management team." Ms. Azmy joins Katy Sullivan who has served as Manager, Investor Relations since March 2004 and will now report to Ms. Azmy. Prior to this role, Ms. Sullivan served as an analyst with NRG's Regulatory Affairs group and as a trader for the Company's Northeast region. She earned a Bachelor of Business Administration from the University of Wisconsin. NRG Energy, Inc. owns and operates a diverse portfolio of power- generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, P.C., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq. at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. (NRG Energy Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) OAK GROVE RESORTS: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Oak Grove Resorts, LLC 415 King Street, Suite 500 La Crosse, Wisconsin 54601 Bankruptcy Case No.: 04-17797 Type of Business: The Debtor is a real estate developer. Chapter 11 Petition Date: November 2, 2004 Court: Western District of Wisconsin (Eau Claire) Debtor's Counsel: Melvyn L. Hoffman, Esq. 312 South 3rd Street, Suite A P.O. Box 1503 La Crosse, WI 54602 Tel: 608-782-8098 Total Assets: $4,485,000 Total Debts: $2,416,000 The Debtor has no unsecured creditors who are not insiders. OAKWOOD HOMES: Likely Default Prompts S&P to Junk Three Classes --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four Oakwood Homes Corp.-related classes from four transactions. The lowered ratings reflect the unlikelihood that investors will receive timely interest and the ultimate repayment of their original principal investments. OMI Trust 2000-D reported an outstanding liquidation loss interest shortfall for its M-1 class on the October 2004 payment date. In addition, the ratings on class B-1 from Oakwood Mortgage Investors 1997-B, class B-1 from Oakwood Mortgage Investors 1998-B, and class M-2 from OMI 1999-D are being lowered to 'CC' in anticipation of liquidation loss interest shortfalls on the next payment date. Standard & Poor's believes that interest shortfalls for these deals will continue to be prevalent in the future, given the adverse performance trends displayed by the underlying pools of manufactured housing retail installment contracts originated by Oakwood Homes Corp., and the location of mezzanine and subordinate class write-down interest at the bottom of the transactions' payment priorities (after distributions of senior principal). Standard & Poor's will continue to monitor the outstanding ratings associated with these transactions in anticipation of future defaults. Ratings Lowered Oakwood Mortgage Investors Inc. Series 1997-B Rating Class To From ----- -- ---- B-1 CC CCC Oakwood Mortgage Investors Inc. Series 1998-B Rating Class To From ----- -- ---- M-2 CC CCC- OMI Trust 1999-D Rating Class To From ----- -- ---- M-2 CC CCC- OMI Trust 2000-D Rating Class To From ----- -- ---- M-1 D CCC- OMEGA HEALTHCARE: Closes $78.8 Million New Investment Deals ----------------------------------------------------------- Omega Healthcare Investors, Inc. (NYSE:OHI) has closed on $78.8 million of new investments, as well as the re-leasing of two skilled nursing facilities. The Company announced the closing of the purchase of fourteen SNFs and one assisted living facility on November 2, 2004, for a total investment of $72.3 million. Thirteen of the facilities are in Pennsylvania and two are located in Ohio. One additional facility located in West Virginia is expected to be purchased effective upon review and approval of the West Virginia Health Care Authority Certificate of Need Division. The West Virginia facility is a combined SNF and rehabilitation hospital. The facilities have been simultaneously leased back to the sellers, which are subsidiaries of Guardian LTC Management, Inc., under a new master lease effective November 2, 2004. Rent under the master lease is initially $7.4 million for the first lease year commencing November 2, 2004, with annual increases thereafter. The rent will increase to $8.2 million upon completion of the West Virginia facility closing. The term of the master lease is ten years and runs through October 31, 2014, followed by four renewal options of five-years each. The Company has received a security deposit equivalent to three months rent. The Company also announced the closing of a first mortgage loan on November 1, 2004, in the amount of $6.5 million on one SNF in Cleveland, Ohio. The operator of the facility is an affiliate of CommuniCare Health Services, Inc., an existing Omega tenant. The term of the mortgage is ten years and carries an interest rate of 11%. The Company has received a security deposit equivalent to three months interest. "We are very pleased to be doing business with quality regional operators like Guardian and CommuniCare. Both management teams deliver high quality patient care and have demonstrated a detailed understanding of their local markets," said Taylor Pickett, President and CEO of Omega. Facility Re-Leases Effective November 1, 2004, the Company re-leased two SNF's formerly leased by Sun Healthcare Group, Inc., both located in California. The first, representing 59 beds, was re-leased to a new operator under a single facility lease with a ten-year term and an initial annual lease rate of approximately $200,000. The second, representing 98 beds, was also re-leased to a new operator under a single facility lease with a three and a half year term and an initial annual lease rate of approximately $180,000. About the Company Omega is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At September 30, 2004, the Company owned or held mortgages on 205 skilled nursing and assisted living facilities with approximately 21,900 beds located in 29 states and operated by 39 third-party healthcare operating companies. * * * As reported in the Troubled Company Reporter on Sept. 14, 2004, Fitch Ratings upgraded its ratings on approximately $300 million of senior unsecured notes issued by Omega Healthcare Investors, Inc.'s to 'BB-' from 'B'. Additionally, Fitch upgraded its preferred stock rating to 'B' from 'CCC+' on Omega's two series of outstanding preferred securities. This includes the $118.5 million of 8.375% series D cumulative redeemable preferred securities issued in the first quarter of 2004. In all, approximately $168 million of preferred securities are affected by this upgrade. Fitch has revised the Rating Outlook PRIME HOSPITALITY: Moody's Removes Low-B Ratings After Acquisition ------------------------------------------------------------------ Moody's Investors Service withdrew all ratings for Prime Hospitality Corp. The rating withdrawal was prompted by the completion of the acquisition of Prime by an affiliate of the Blackstone Group and the expiration of the tender offer for all outstanding notes. As reported in the Troubled Company Reporter on Aug. 25, 2004, Moody's Investors Services placed the ratings of Prime Hospitably Corporation on review for possible downgrade. The ratings on review for possible downgrade are: -- Senior implied rated Ba3 -- Senior unsecured issuer rating rated B1 -- $200 million, 8.375% senior subordinated global notes, due May 1, 2012, rated B2. QWEST COMMS: Names Loretta Armenta President for New Mexico Unit ---------------------------------------------------------------- Qwest Communications International Inc. (NYSE:Q) reported that Loretta Armenta has been appointed Qwest president for New Mexico. Armenta will assume her new role on December 1, and report to Steve Davis, Qwest senior vice president of public policy. Armenta's broad responsibilities include representing Qwest's vision and values in New Mexico -- its Spirit of Service -- and working with community, government and civic leaders throughout the state. "Loretta's extensive business and public service background, coupled with her community involvement and role as a nationally recognized advocate for cultural diversity, make her an ideal choice to lead the New Mexico team," said Davis. "As a longtime New Mexican with deep connections to this state, Loretta brings an intimate knowledge of the state of New Mexico, its people, businesses and communities." Ms. Armenta joins Qwest following seven years as the president and CEO of the Albuquerque Hispano Chamber of Commerce. In that role, her responsibilities included strategic direction in the areas of promoting small-businesses; overseeing convention and tourism, marketing, government and civic affairs; and interacting with federal, state and local officials and civic leaders to further the mission of the chamber. Ms. Armenta also has held other posts within the chamber and has worked as a special agent at Prudential Financial Services, an account executive with KRDM Radio in Albuquerque, and as the state director and executive director for the New Mexico March of Dimes. "I view this as a wonderful opportunity and am excited to tackle this new challenge and further Qwest's Spirit of Service mission in the diverse communities throughout New Mexico," said Ms. Armenta. "I look forward to working with Qwest's incredible New Mexico employees to meet the needs of customers." Ms. Armenta has earned numerous degrees, including a certificate in executive management practices from the University of Florida, a certificate in total quality management from Dallas Catholic University and a certificate in executive management from the University of New Mexico. Ms. Armenta replaces John Badal in her new role. Qwest Communications International Inc. is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at http://www.qwest.com/ Qwest's June 30, 2004, balance sheet shows a stockholders' deficit totaling $1,909,000,000 -- swelling 53% from the $1,251,000,000 shareholder deficit reported at March 31, 2004. RADIANT COMMS: Equity Deficit Widens to CDN$2,434,532 at Sept. 30 ----------------------------------------------------------------- Radiant Communications Corp. (TSX Venture Exchange: RCX), one of Canada's largest independent providers of IP-based data communications and Internet services, reported its financial results for the third quarter ended September 30, 2004. Radiant's strong third-quarter revenue growth was based on its exceptional performance, particularly in the retail and financial services industries. Radiant's overall revenue grew 18% over the same quarter in 2003. Connectivity and hosting revenues, which consist primarily of long-term monthly recurring service contracts, increased by 28% over the third quarter of 2003 and increased by 9% over the second quarter of 2004. Delivering National Services for National Retailers Radiant continued to be very successful in servicing major, national retailers and in the third quarter increased its average number of new locations per connectivity customer to seventeen. Speaking at the IP World Canada conference in Toronto on October 6th, the Business Systems Manager for BURGER KING(R) gave an excellent overview of the value of their Radiant IP network and how it has improved customer service in their restaurants. BURGER KING(R) credited Radiant's technical capability and responsiveness as key reasons for selecting Radiant as their partner for IP networking services. They also gave the Company high marks for its ability to roll out a national service quickly and smoothly. Radiant's implementation for BURGER KING(R) was completed in partnership with TD Merchant Services. Radiant significantly improved its financial performance in the third quarter. EBITDA improved 68% from ($609,000) in the second quarter to ($193,000) in the third quarter. This improvement resulted from higher gross profits associated with strong quarterly revenue growth and a 10% or $310,000, reduction in operating costs. EBITDA in the third quarter of 2003 was ($170,000). "During the first half of 2004 Radiant invested in additional sales resources in the Ontario and Quebec markets as well as in developing several new managed service offerings such as Retail Connect and TurboSwitch payment gateway," says Jim Grey, Radiant's President and CEO. "These investments have provided a strong base for growth in the third quarter." As of September 30, 2004, stockholders' deficit widened to CDN$2,434,532 compared to a CDN$105,671 deficit at December 31, 2003. Recent Announcements In September, Radiant announced the provisioning of its 1,000th retail location in 2004. Many of these locations are for new customers; however, Radiant is also experiencing significant growth from within its existing base of customers. Established customers are requesting more security functions, increased network management services and additional application functionality, such as Radiant's new Retail Connect TurboSwitch payment gateway that routes debit and credit services to payment processors across Canada. In October, Radiant announced a $1 million secured credit facility with the Royal Bank of Canada and an ongoing partnership with them for our banking needs. In the fourth quarter Radiant will continue to focus on growing its customer base and its service offering, while controlling operating expenses and improving the overall performance of its business. About Radiant Established in 1996, Radiant Communications Corp. -- http://www.radiant.net/-- provides a single source for businesses requiring high-speed Internet connectivity, network security, web hosting, web development and marketing services. The company currently serves over 10,000 business customers primarily in Canada and the United States with a team of 125 employees nationwide. Radiant has developed an array of advanced Internet solutions designed to help companies harness the power of the Internet. These include high-speed DSL connectivity solutions such as Turbo DSL and secure Virtual Private Networks, high availability web hosting and content management solutions and ebusiness applications. Radiant has offices in Toronto, Montreal, Calgary, Edmonton and Vancouver. A copy of the Company's complete unaudited financial statements including notes thereto and management's discussion and analysis for the quarter ended September 30, 2004 can be viewed at http://www.radiant.net/and http://www.sedar.com/ RIVERSIDE FOREST: Al Thorlakson Steps Up as CEO & President ----------------------------------------------------------- Riverside Forest Products Limited (TSX: RFP) reported that effective October 29, 2004, all of its directors resigned and have been replaced by the following nominees of Tolko Industries Ltd.: * Al Thorlakson, * John Thorlakson, * Brad Thorlakson, * Peter Powell, * Michael Percy, and * Robert Chase. In addition, Gordon Steele and Gerald Raboch have stepped down as officers and Al Thorlakson has been appointed as President and Chief Executive Officer. 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. 8, 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. SAVVIS COMMS: Sept. 30 Balance Sheet Upside-Down by $43.6 Million ----------------------------------------------------------------- SAVVIS Communications Corporation (NASDAQ: SVVS), a global IT utility, reported that revenue for the third quarter of 2004 totaled $169.4 million, up 149% from $67.9 million in the third quarter of 2003. Results for the 2004 quarter included revenue attributable to the Cable & Wireless America operations acquired in March. Compared to the second quarter of 2004, revenue decreased 2%, largely due to the anticipated termination of transitional services for CWA's former parent. SAVVIS' gross margin for the third quarter of 2004 grew 94%, to $49.6 million from $25.5 million in the third quarter of 2003. Sequentially, gross margin grew 13% from $43.9 million in the second quarter of 2004, largely driven by reductions in network costs as a result of realized synergies from the acquisition in March. As a percentage of revenue, gross margin was 29% in the current quarter, versus 25% in the second quarter and 38% in the third quarter of 2003. SAVVIS' consolidated net loss for the current quarter was $32.9 million versus $23.7 million for the same quarter last year and an improvement from $60.0 million in the second quarter of 2004. The third-quarter 2004 loss included $3.7 million of costs specifically related to the integration of CWA operations, compared to $17.2 million of integration costs in the second quarter of 2004. Exceeding company projections, Adjusted EBITDA* was positive in the third quarter, at $5.1 million. Rob McCormick, SAVVIS' chairman and chief executive officer, said, "SAVVIS achieved significant milestones in the third quarter, including a record gross margin and an $11.5 million improvement in Adjusted EBITDA. We continued a very successful business integration, which is yielding greater expense synergies than originally projected, and continued to win new business at a healthy pace. In addition, SAVVIS received an important acknowledgement of our quality service, solid operational processes, and vision for the future with our placement in the Leader quadrant of the influential Gartner North American Web Hosting Magic Quadrant benchmark. "While our view of our core business is positive, the environment for the wholesale carrier market continues to deteriorate, which lowers our expectations for revenue for the fourth quarter," Mr. McCormick added. "The foundation of our successful business strategy, however, continues to be providing businesses with value-added, managed infrastructure services, incorporating virtualization, utility and automation. As we continue to transform information technology, SAVVIS is well positioned to create value for its stakeholders." Commenting on the outlook for the fourth quarter, Jeff Von Deylen, SAVVIS' chief financial officer, said, "With two full quarters of financial results of our merged business, we are refining our guidance for the fourth quarter of 2004. We expect to achieve revenue in a range of $162-167 million in the fourth quarter, reflecting the competitive pressure in the wholesale carrier market and higher churn among acquired hosting customers than initially anticipated. However, annualized expense synergies from the integration will be higher than the $100 million we had projected originally, totaling more than $120 million in recurring annual savings. We project that these savings, and our internal expense controls, will help drive continued growth in Adjusted EBITDA. We currently expect that in the fourth quarter, operating cash flow, before acquisition and integration-related costs, will be positive." Third Quarter Results Total revenue for the third quarter increased 149% year-over-year, driven by revenue associated with the CWA assets acquired in March 2004. Sequentially, revenue declined 2% from the second quarter, reflecting pricing pressure in the wholesale services market, the anticipated loss of revenue from CWA's former parent company, and a higher rate of churn in the acquired hosting business. Growth in Managed IP VPN revenue, up 9% sequentially, and an increase in usage-based revenue for digital content management services offset much of the decline in the wholesale market, reflected in Other Network Services. SAVVIS' services to wholesale carriers represent approximately 5% of total revenue. Diversified Revenue, defined as revenue from all customers except Reuters and Telerate, represents 82% of total revenue in the third quarter, consistent with the second quarter and up from 50% in the third quarter of 2003. Gross margin, defined as total revenue less data communications and operations expenses, was $49.6 million in the current quarter, compared to $25.5 million in the third quarter of 2003 and $43.9 million in the second quarter of 2004. As a percentage of revenues, gross margin was 29% in the current quarter, versus 38% in the third quarter of 2003 and up from 25% in the second quarter of 2004. Sequential-quarter growth in gross margin was driven largely by the realization of savings from the CWA integration. Sales, general, and administrative expenses for the quarter were $44.5 million as compared to $23.2 million for the same period last year and $50.4 million in the second quarter of 2004. As a percentage of revenue, SG&A was 26% in the current quarter, down from 34% of revenue in the same quarter of 2003 and 29% in the second quarter of 2004. The improvement in SG&A from the second quarter primarily reflected savings realized through the CWA integration. SAVVIS exceeded its financial guidance for break-even Adjusted EBITDA in the third quarter, generating positive Adjusted EBITDA of $5.1 million, reflecting the improvements in gross margin and SG&A. Net cash used in operating activities in the current quarter was $11.7 million, compared to $1.5 million a year ago and $25.8 million in the second quarter of 2004. The net cash used in operating activities included cash payments of $10.1 million of acquisition and integration-related costs to realize synergies in the third quarter 2004, and $21.9 million in the second quarter 2004. The balance sheet and cash position remain in line with management expectations, with $53.4 million in cash at September 30, 2004, and Days Sales Outstanding ("DSO") below 30 days. In the third quarter, as previously announced, SAVVIS pre-paid $7.5 million as part of its amended capital lease agreement with General Electric Capital Corporation, and began cash interest payments in October 2004. Under the amended terms, the interest rate was lowered from 12% to 9% for the first year after the repayment. SAVVIS will pay approximately $1.2 million of interest expense in the fourth quarter of 2004. Interest expense savings, as a result of the amended terms, will be approximately $2.7 million. The maturity date of the lease remains March 8, 2007. SAVVIS currently plans to incur approximately $5 million of integration expenses in the fourth quarter of 2004, for total integration expense in the year of approximately $30 million. Management currently expects that non-recurring cash payments for the acquisition and integration-related costs to realize synergies will total up to $45 million, $33.0 million of which was paid through September 30, 2004. The remaining cash payments are expected to occur in the next two quarters. Acquisition and integration-related costs include liabilities assumed under the CWA asset purchase agreement, rationalization and migration off of rejected vendor circuits, and staff reduction costs, including retention bonuses and severance expenses. Many of these initial expenses should result in long-term cost savings. As previously announced, SAVVIS entered into an asset purchase agreement with WAM!NET, a leading global provider of content management and delivery services, in August 2003. In the third quarter 2004, SAVVIS determined the final purchase price for those assets, according to its earn-out agreement, as $11.4 million, and issued 4.4 million shares of common stock in payment of approximately 50% of that amount. SAVVIS will pay the balance, less a $3.0 million initial payment made in August 2003, in cash in nine monthly installments of approximately $0.3 million each through April 2005. Year-to-Date Results For the nine months ended September 30, 2004, revenue totaled $450.5 million, up 146% from $183.5 million in the same period in 2003. Gross margin was $123.4 million for the year to date, an increase of 93% from the first nine months of 2003. Growth in both revenue and gross margin was primarily attributable to the CWA acquisition in March 2004. Net loss for the year to date was $127.1 million, compared to $78.3 million for the same period in 2003. Adjusted EBITDA for the first nine months of 2004 was negative $4.0 million, compared to negative $3.8 million in the same period in 2003. Operational Highlights: -- Industry analyst group Gartner, Inc. listed SAVVIS in the "Leader" quadrant in the new Gartner North American Web Hosting Magic Quadrant, published October 5, 2004. According to Gartner, vendors listed in the Leader quadrant are performing well today, have a clear vision of market direction, and are actively building competencies to sustain their leadership position in the market. -- SAVVIS installed new business, from both new and existing customers, representing annualized revenue of approximately $33 million. -- New customers signed include enterprises such as Archipelago, Monster Worldwide, and QBE Insurance Group. -- SAVVIS expanded relationships with existing customers including Microsoft, Shearman & Sterling LLP, and Yahoo! Financial Highlights: -- SAVVIS achieved record gross margin of $49.6 million on revenue of $169.4 million for the third quarter. -- Adjusted EBITDA of $5.1 million improved by $11.5 million from the second quarter. -- SAVVIS has laid the groundwork to realize over $120 million in integration-related annual cost savings. -- Current projection is for positive operating cash flow, before acquisition and integration-related payments, in the fourth quarter 2004. -- SAVVIS amended the terms of its capital lease agreement with General Electric Capital Corporation, pre-paying $7.5 million and beginning cash interest payments at a reduced interest rate of 9% for one year. -- The Bridge Estate distributed 42.9 million shares of SAVVIS common stock to Bridge's secured creditors. About the Company SAVVIS Communications (NASDAQ: SVVS) is a global IT utility services provider that leads the industry in delivering secure, reliable, and scalable hosting, network, and application services. SAVVIS' strategic approach combines the use of virtualization technology, a utility services model, and automated software management and provisioning systems. SAVVIS solutions enable customers to focus on their core business while SAVVIS ensures the quality of their IT infrastructure. With an IT services platform that extends to 47 countries, SAVVIS is one of the worlds' largest providers of IP computing services. For more information about SAVVIS, visit http://www.savvis.net. At Sept. 30, 2004, SAVVIS Communications' balance sheet showed a $43,647,000 stockholders' deficit, compared to a $927,000 deficit at Dec. 31, 2003. PACIFIC GAS: Can Ask Deutsche Bank to Release COTP Escrow Fund -------------------------------------------------------------- On September 5, 2001, California Independent System Operator Corporation filed Claim No. 8802 for $156,627,460. Claim No. 8802 is based on a number of obligations, including $38,510,291 for certain costs allegedly incurred by ISO associated with transmission schedules that flow over the California-Oregon Transmission Project. On April 12, 2004, PG&E established an escrow account with respect to certain disputed claims in Class 5, including $38,510,291 for the COTP Claim. Subsequently, the Federal Energy Regulatory Commission denied the ISO's petition for review regarding, among other things, its claim with respect to the COTP Claim, among other things. The ISO has sought rehearing of that Order. PG&E has objected to the COTP Claim and asked the Court to disallow the Claim to the extent of the COTP claim amount. In a Court-approved stipulation, PG&E and ISO agree to resolve the issues between them without further litigation: (a) PG&E is entitled to instruct Deutsche Bank Trust Company Americas, as escrow agent, to release the COTP Escrow Fund to PG&E. The release of the COTP Escrow Fund will not affect PG&E's obligation to pay all or a portion of the COTP Claim to the extent the COTP Claim is allowed as a result of a Final Order awarding the ISO any amount with respect to the COTP Claim; (b) The PG&E Objection is withdrawn without prejudice to PG&E's rights to file an objection to the COTP Claim at a later date; and (c) If PG&E does not file an objection to the COTP Claim within 60 days of receiving notice of a final order determining the COTP Claim, the COTP Claim will be deemed an allowed claim in the amount specified in that Final Order. 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. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000) PILLOWTEX CORP: Asks Court OK on $150,000 Manchester Break-Up Fee ----------------------------------------------------------------- As reported in the Troubled Company Reporter on Nov. 2, Fieldcrest Cannon, Inc., proposes to sell its real property and certain personal property located at One Lake Circle Drive in Kannapolis, North Carolina to Manchester Real Estate & Construction, LLC, subject to higher and better offers in accordance with the Global Bidding Procedures. Pillowtex Corporation, Fieldcrest and Manchester entered into a Letter of Intent on October 7, 2004. The Court approves the Debtors' supplemented Global Bidding Procedures for the sale of the Kannapolis Property. Pillowtex Corporation and its debtor-affiliates intend to auction the Kannapolis Property in accordance with the Global Bidding Procedures. The Kannapolis Property consists of real property and certain personal property located at One Lake Circle Drive in Kannapolis, North Carolina. Fieldcrest Cannon, Inc., proposes to sell the Kannapolis Property to Manchester Real Estate & Construction, LLC, for: -- $3,000,000 in cash; and -- a $1,500,000 convertible promissory note. Pillowtex Corporation, Fieldcrest and Manchester entered into a Letter of Intent on October 7, 2004. In the event that the Debtors consummate a sale of the Kannapolis Property to an alternative purchaser, the Debtors have agreed to pay Manchester a "break-up fee" equal to $150,000, which represents 3.33% of the Purchase Price. In recognition of Manchester's expenditure of time and resources, the modest amount of the Break-Up Fee and the benefits to the Debtors' estate of securing a stalking horse bid, the Debtors believe that the Break-Up Fee to be reasonable. The Letter of Intent does not provide for the reimbursement of out-of-pocket expenses incurred by Manchester. Judge Walsh authorizes the Debtors to pay to Manchester the Break-Up Fee not to exceed $150,000. Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sold top-of-the-bed products to virtually every major retailer in the U.S. and Canada. The Company filed for Chapter 11 protection on November 14, 2000 (Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a chapter 11 plan, and filed a second time on July 30, 2003 (Bankr. Del. Case No. 03-12339). The second chapter 11 filing triggered sales of substantially all of the Company's assets. David G. Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at Morris Nichols Arsht & Tunnel, represent the Debtors. On July 30, 2003, the Company listed $548,003,000 in assets and $475,859,000 in debts. (Pillowtex Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) RCN CORP: Court Approves Solicitation & Voting Procedures --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved RCN Corporation and its debtor-affiliates' motion to establish procedures for the solicitation and tabulation of votes to accept or reject their Reorganization Plan. The Court rules that: (a) The deadline for filing and serving motions pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure, seeking temporary allowance of Claims for the purpose of accepting or rejecting the Plan, will be November 18, 2004 at 4:00 p.m.; (b) The solicitation record date for purposes of determining (i) creditors and equity holders entitled to receive Non- Voting Packages, and (ii) creditors entitled to vote to accept or reject the Plan is October 7, 2004; and (c) To be counted, Ballots for accepting or rejecting the Plan must be received by the Voting Agent by 5:00 p.m. on November 30, 2004. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOUND PARTS INC: Case Summary & 30 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Sound Parts, Inc. 1219 Tallevast Road Sarasota, Florida 34243 Bankruptcy Case No.: 04-21241 Type of Business: The Company specializes in the design, development, and manufacturing of state-of-the- art electronic devices. Services also include professional application programming. See http://www.soundparts.com/ Chapter 11 Petition Date: November 1, 2004 Court: Middle District of Florida (Tampa) Judge: Alexander L. Paskay Debtor's Counsel: R. John Cole, II, Esq. R. John Cole, II, PA 46 North Washington Boulevard, Suite 24 Sarasota, Florida 34236 Tel: (941) 365-4055 Total Assets: $990,658 Total Debts: $1,361,613 Debtor's 30 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Resistance Technology, Inc. $159,156 1260 Red Fox Road Saint Paul, Minnesota 55112 Bronstein, Gewirtz & Grossman, LLC $101,340 60 East 42nd Street, Suite 4600 New York, New York 10165 Intech Industries $28,608 7180 Sunwood Drive Northwest Ramsey, Minnesota 55303 Microtronic US, Inc. $27,857 Indigo America, Inc. $27,597 Ashman Law Offices, LLC $26,882 Nelson Hesse $15,794 Pender Newkirk & Company $15,004 Star Micronics America $14,000 Deiter, Stephan & Durham $9,610 Hahn Loeser & Parks $4,998 Integral Media, Inc. $1,375 OnlineFarmer.com $1,100 Earwear, LLC $1,015 Stellar Marketing $928 DHL Express (USA), Inc. $917 SY Kessler Sales, Inc. $841 MCI $823 State Farm Insurance $823 Fisher Hearing Technologies $574 Women's Life Insurance Society $556 Postage By Phone $500 Estron A/S $271 Airport Commerce Center $105 Precision Laboratories $100 Pitney Bowes, Inc. $58 AIT Networks $49 Monitronics International $43 Crystal Springs Water Company $26 Henry Schein $1 SPIEGEL INC: Lederers Can Pursue $10.5MM Suit Against Eddie Bauer ----------------------------------------------------------------- On November 16, 1999, Richard Lederer, together with his wife, Renee, commenced an action in the Supreme Court of the State of New York, County of New York, seeking, inter alia, compensation for injuries sustained when Mr. Lederer was struck on the head by a wood beam on September 11, 1997, while he was working on an Eddie Bauer, Inc., retail store undergoing construction located at 600 Madison Avenue, in New York. On September 11, 2003, Mr. Lederer filed two proofs of claim -- Claim Nos. 1627 and 1651 -- against Eddie Bauer for $10,500,000. The Lederers have not filed proofs of claim against any other Debtor. The Debtors have engaged in productive discussions with the Lederers' attorneys. Both parties agree that: (a) The automatic stay will be modified solely to permit the parties to prosecute and defend against the Litigation and to take actions necessary to exercise their rights in the Litigation, provided, however, that the Lederers may enforce or execute on any settlement or judgment entered by a court of competent jurisdiction, or other disposition of the underlying claims in the Litigation only to the extent the claims are covered by proceeds from any of the Debtors' applicable liability insurance policies and subject to any coverage defenses in the applicable insurance policies and set-off by applicable self-insured retention or deductible amounts, and only to the extent permitted by the settlement, judgment, or other disposition. The Lederers will not have allowed claims pursuant to Section 502 of the Bankruptcy Code or otherwise against the Debtors or their estates and will have no right to share in any distribution from the Debtors or their estates, whether under a reorganization plan or otherwise. Moreover, any proceeds of the Debtors' applicable liability insurance policies will not include any amounts payable pursuant to any insuring agreement that obligates or requires the Debtors to reimburse, fund or otherwise pay an amount directly or indirectly to any third party as a condition or consequence of the defense, settlement, judgment or other disposition of the Litigation. (b) The Lederers will not engage in any efforts to collect any amount from the Debtors, any person indemnified by the Debtors, or any person listed as an additional insured under the Debtors' liability insurance policies. Neither the Debtors nor any of the Indemnities will be required to make any payment or distribution to the Lederers on account of any claim asserted by the Lederers or on account of any proof of claim or request that either Mr. Lederer or his wife has filed or asserted, or may file or assert, against any of the Debtors in their Chapter 11 cases. The Proofs of Claim and any other Bankruptcy Claims that have been filed or asserted by the Lederers are, therefore, withdrawn. The Lederers agree that, in addition to withdrawing all proofs of claim previously filed or asserted against the Debtors by or on behalf of the Lederers, the Lederers will not file any other proofs of claim against the Debtors. (c) The Lederers waive any and all claims for recovery against the Debtors and the Indemnities, other than their claim against the insurance proceeds. The Lederers further waive any right to prosecute any claim for punitive damages against the Debtors, any Indemnitee, or the Debtors' insurers whether or not this claim is currently asserted. The Lederers further specifically agree that any settlement of the Litigation will include a general release of all claims against the Debtors and the Indemnities. (d) Nothing in the Stipulation will affect: * the parties' rights to prosecute or defend against the merits of the allegations asserted in the Litigation and any subsequent appellate proceedings with respect to the Litigation; or * the Debtors' rights to seek contribution or indemnification from any co-defendant or any other entity. (e) The Lederers will irrevocably waive any rights to seek further relief from the automatic stay. * * * Judge Blackshear approves the stipulation. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) TOMMY HILFIGER: Special Committee Hires Debevois & FTI as Advisors ------------------------------------------------------------------ Tommy Hilfiger Corporation disclosed yesterday that that its Board of Directors has formed a Special Committee of independent directors, retained Debevoise & Plimpton LLP as legal counsel, and retained FTI Consulting, Inc. Mary Jo White, Esq., former U.S. Attorney for the Southern District of New York, leads Tommy Hilfiger's team of lawyers at Debevoise & Plimpton LLP. The Special Committee of the Board of Directors investigating matters arising out of the governmental probe consists of three independent directors: Clinton Silver, Mario Baeza, and Jerri DeVard. The Government Probe On September 23, 2004, Tommy Hilfiger U.S.A., Inc., a wholly owned subsidiary of Tommy Hilfiger Corporation, received a grand jury subpoena issued by the U.S. Attorney's Office for the Southern District of New York seeking documents generally related to domestic and/or international buying office commissions since 1990. Some of THUSA's current and former employees received subpoenas too. Several domestic and international subsidiaries of the Company pay buying office commissions to Tommy Hilfiger (Eastern Hemisphere) Limited, a British Virgin Islands corporation which is a wholly owned and consolidated subsidiary of the THC, pursuant to contracts to provide or otherwise secure through sub- agents certain services, including product development, sourcing, production scheduling and quality control functions. Tommy Hilfiger understands that the U.S. Attorney's Office investigation is focused on the appropriateness of the commission rate paid by the Company's subsidiaries to THEH, as well as other related tax matters. Securities Fraud Lawsuits Ten shareholder class action lawsuits were filed in the United States District Court for the Southern District of New York against the Company on the heels of this disclosure in late- September. The complaints allege that the value of the Company's stock was inflated artificially by allegedly understating the Company's tax liability and misrepresenting the Company's true effective tax rate. The complaints further allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The various plaintiffs seek to represent a class of shareholders who purchased Company common stock between November 3, 1999 and September 24, 2004. No substantive action has yet taken place in these cases, and the Company says it intends to defend itself vigorously against these claims. BB+ Rating from S&P In January 2004, Standard & Poor's Ratings Services lowered the corporate credit and senior unsecured debt ratings on Tommy Hilfiger USA Inc. to BB+. "The rating actions follow Standard & Poor's review of the company's fundamental business position within the fashion- oriented segment of the competitive apparel industry," credit analyst Susan Ding said at the time. "The company's operating environment is characterized by intense competition, softness at the retail level, and the continued loss of market share by department stores--the company's primary channel--to other retail venues." S&P noted earlier this year that, for the past several years, Tommy Hilfiger's revenues have remained relatively flat at about $1.8 billion, a lack of growth reflecting the intensely competitive industry conditions. It is also a result of weakness in the company's men's wholesale business, though this has been partially offset by growth in the European and U.S. women's segments. About the Company Tommy Hilfiger Corporation, through its subsidiaries, designs, sources and markets men's and women's sportswear, jeanswear and childrenswear under the Tommy Hilfiger trademarks. Through a range of strategic licensing agreements, the Company also offers a broad array of related apparel, accessories, footwear, fragrance and home furnishings. The Company's products can be found in leading department and specialty stores throughout the United States, Canada, Europe, Mexico, Central and South America, Japan, Hong Kong, Australia and other countries in the Far East, as well as the Company's own network of outlet and specialty stores in the United States, Canada and Europe. New York, N.Y.-based Tommy Hilfiger -- http://www.tommy.com/-- is a strong participant in the competitive, full-priced sector of the apparel market, distributing its clothing primarily through a concentrated group of department stores, including Dillard's Inc., Federated Department Stores Inc., and May Department Stores Co. Sales to these customers have historically accounted for more than 50% of wholesale revenue. Tommy Hilfiger Corporation's June 30, 2004, balance sheet shows $1.9 billion in assets, $184 million in current liabilities, $350 million of long-term debt, and $1.2 billion in shareholder equity. TOMMY HILFIGER: Delayed 10-Q May Trigger Covenant Defaults ---------------------------------------------------------- PricewaterhouseCoopers LLP, Tommy Hilfiger Corporation's independent public accountants, says that its review of the apparel company's second quarter financial statements can't be completed until after the Special Committee formed in response to a recent government probe has substantially completed its review. The delay in filing the financial information required in a Form 10-Q may result in the Company not being in compliance with its financial filing covenants in its public debt indenture. Says Any Defaults Can Be Cured The Company expects to cure any non-compliance in a timely fashion, and consequently expects that these securities will not become due as a result of the filing delay. However, if an acceleration of its public debt were to occur, the Company expects to use its available cash and possible alternative financing sources to satisfy its obligations. As of September 30, 2004, the Company had cash, cash equivalents and short-term investments totaling $428.9 million, and total indebtedness of $343.2 million. Bank Talks Begin In addition, the Company has initiated discussions with the banks for the Tommy Hilfiger U.S.A., Inc. credit facility to seek to obtain waivers relating to possible breaches or defaults that could otherwise arise under that facility as a result of the delay in furnishing quarterly financial information. As of September 30, 2004, the Company had used $87.6 million of the available borrowings under the THUSA credit facility to open letters of credit, but did not have any direct borrowings outstanding under that facility. BB+ Rating from S&P In January 2004, Standard & Poor's Ratings Services lowered the corporate credit and senior unsecured debt ratings on Tommy Hilfiger USA Inc. to BB+. "The rating actions follow Standard & Poor's review of the company's fundamental business position within the fashion- oriented segment of the competitive apparel industry," credit analyst Susan Ding said at the time. "The company's operating environment is characterized by intense competition, softness at the retail level, and the continued loss of market share by department stores--the company's primary channel--to other retail venues." S&P noted earlier this year that, for the past several years, Tommy Hilfiger's revenues have remained relatively flat at about $1.8 billion, a lack of growth reflecting the intensely competitive industry conditions. It is also a result of weakness in the company's men's wholesale business, though this has been partially offset by growth in the European and U.S. women's segments. About the Company Tommy Hilfiger Corporation, through its subsidiaries, designs, sources and markets men's and women's sportswear, jeanswear and childrenswear under the Tommy Hilfiger trademarks. Through a range of strategic licensing agreements, the Company also offers a broad array of related apparel, accessories, footwear, fragrance and home furnishings. The Company's products can be found in leading department and specialty stores throughout the United States, Canada, Europe, Mexico, Central and South America, Japan, Hong Kong, Australia and other countries in the Far East, as well as the Company's own network of outlet and specialty stores in the United States, Canada and Europe. New York, N.Y.-based Tommy Hilfiger -- http://www.tommy.com/-- is a strong participant in the competitive, full-priced sector of the apparel market, distributing its clothing primarily through a concentrated group of department stores, including Dillard's Inc., Federated Department Stores Inc., and May Department Stores Co. Sales to these customers have historically accounted for more than 50% of wholesale revenue. Tommy Hilfiger Corporation's June 30, 2004, balance sheet shows $1.9 billion in assets, $184 million in current liabilities, $350 million of long-term debt, and $1.2 billion in shareholder equity. TORPEDO SPORTS: Annual Report Will Be Delayed --------------------------------------------- Torpedo Sports USA, Inc., advised the Securities and Exchange Commission that it will not be able to file its annual report for the fiscal year ending July 21, 2004, on time. The company expects to file the report by Nov. 15, and expects to report a dramatic decline in revenues: Fiscal Year Ended July 31, 2004 July 31, 2003 ------------- ------------- Revenue $ 2,682,000 $ 6,075,000 Net Loss $ 2,705,000 $ 3,458,000 Through its wholly owned Canadian subsidiary Torpedo Sports Inc., the U.S. company manufactured and distributed outdoor recreational products for children for sale in the United States and Canada until May 6, 2004. On January 23, 2004, Torpedo filed in Canada, a notice of its intention to make a proposal to its creditors for the restructuring of its debts. The proposal procedure allowed Torpedo to continue (through May 6, 2004) to operate its business subject to protection of the secured interests of its lenders and suspended efforts by creditors to collect their debts while Torpedo reviewed and analyzed its financial condition. The analysis enabled the Company to determine if it was able to propose a plan to its creditors to resolve their indebtedness. On May 6, 2004, Torpedo declared bankruptcy in Canada with the intention to liquidate its assets. Torpedo ceased operations in May 2004. Torpedo Sports Inc.'s April 30, 2004, balance sheet shows a $3,512,598 stockholders' deficit. UAL CORP: Toni Polverinni Agrees to Reduce Claim to $5 Million -------------------------------------------------------------- On May 12, 2003, Toni Polverini filed Claim No. 39192, asserting certain worker's compensation rights and remedies connected to a stipulated worker's compensation award. The Award provided lifetime medical treatment to cure or relieve the effects of Ms. Polverini's work-related injury. UAL Corporation and its debtor- affiliates objected to Claim No. 39192. To avoid further litigation, the parties agree that a reasonable estimate of the present cash value of Ms. Polverini's Claim is $5,000,000. Ms. Polverini will not oppose a reduction in her Claim from $18,925,000 to $5,000,000 to decrease the liability on the Debtors' Claims Register. The Debtors do not concede the merits of Ms. Polverini's Claim. 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. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNION WADDING: Receiver Taking Bids to Sell as Turn-Key Operation ----------------------------------------------------------------- FOR SALE AS A TURNKEY OPERATION UNION WADDING COMPANY LEADING TEXTILE MANUFACTURER OF NON-WOVEN CHRISTMAS DECORATIONS AND OTHER NON-WOVEN INDUSTRIAL PRODUCTS Business and assets of Union Wadding Company, founded in 1791, leading manufacturer of non-woven Christmas decorations to major U.S. retailers, available for immediate sale as turnkey operation. Consumer products include artificial snow cover, Christmas tree skirts and drapes, and sparkling icicles sold under company label and private label brands in over 25,000 retail storefronts in U.S. and Canada. Industrial product lines incl. high-loft and needle punch non-woven roll goods used in padding, quilting and filtering products. * 343,000 sq. ft. +/- Multi-Story Fully Equipped Mill Complex, 6.46 +/- acres in Pawtucket, Rhode Island, consisting of manufacturing, warehouse and office space, loading docks, 3 freight elevators and numerous conveyor systems, and 17,000 sq. ft. +/- parking lot. Easy access to Interstate 95. * Machinery, Equipment, and Inventory -- spray bond and needle punch lines, packaging and sealing equipment, blending and bleach house equipment, office furnishings and equipment, material handling and plant support equipment. * 147,077 sq. ft. +/- Industrial Facility on 1.59 +/- acres in Chicago, Illinois, consisting of warehouse space with easy access to major expressways, including I-94, I-90, I-290, I-55 and I-355, convenient to downtown Chicago. * Over 200 Active Customers, including well-known major U.S. retailers. * 2003 Fiscal Year Revenues of $19,900,000 +/- FOR BID PACKAGE AND FURTHER INFORMATION CONTACT: Diane Finkle, Esq. Receiver Winograd, Shine & Zacks, P.C. 123 Dyer Street Providence, Rhode Island 02903 Telephone (401) 273-8300 Fax (401) 272-5728 E-Mail: dfinkle@wszlaw.com UNIVERSAL HOSPITAL: Equity Deficit Narrows to $89.5M at Sept. 30 ---------------------------------------------------------------- Universal Hospital Services, Inc., reported financial results for the third quarter ended September 30, 2004. Total revenues were $49.6 million for the third quarter of 2004, representing an 18.6% increase from total revenues for the same period of 2003. Gross margin increased by 14.9% to $20.4 million during the quarter. Through the first nine months of 2004, revenues increased by 17.0% to $147.9 million, and gross margin increased by 12.9% to $63.8 million. Net loss for the quarter was $1.0 million, compared to net income of $1.0 million for the same quarter last year. The net loss for the first nine months of 2004 is $0.3 million, compared to net income of $5.0 million last year. The change from last year is primarily due to increased interest expense related to our recapitalization in the fourth quarter of 2003. "Our third quarter results were in line with our growth expectations and depict consistent performance across the lifecycle of services including outsourcing, our AMPP and resident based programs, as well as strong momentum in our less capital intensive Equipment Sales and Remarketing and Service businesses" said President and CEO Gary Blackford. "In addition, our re-entry into the Bariatrics market earlier this year continues to produce solid results." Earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2004 were $16.6 million compared to $15.1 million for the prior year, a $1.5 million or 10.3% increase. For the first nine months of 2004 EBITDA was $51.8 million versus $47.9 million for the prior year, a $3.9 million or an 8.1% increase. At September 30, 2004, Universal Hospital's balance sheet showed an $89,504,000 stockholders' deficit, compared to an $89,903,000 deficit at December 31, 2003. About the Company Based in Bloomington, Minnesota, Universal Hospital Services, Inc. is the leading medical equipment lifecycle services company in the country. Universal Hospital offers comprehensive solutions that maximize utilization, increase productivity and support optimal patient care resulting in capital and operational efficiencies. UHS currently operates through 13 regional service centers and more than 70 district offices, serving customers in all 50 states and the District of Columbia. US UNWIRED: Sept. 30 Balance Sheet Upside Down by $233.6 Million ---------------------------------------------------------------- US Unwired Inc. (OTCBB:UNWR), a PCS Affiliate of Sprint (NYSE:FON), reported revenues of $152.8 million for the three-month period ended September 30, 2004. The Company posted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for the consolidated operations of $30.5 million for third quarter of 2004, $22.5 million of which was generated by the US Unwired consolidated group other than the Company's wholly owned subsidiary, IWO Holdings, Inc. "We continued to accelerate the positive momentum we established late last year despite the challenges that the hurricanes posed to us and the communities that we serve. At both US Unwired and IWO, we achieved new high marks for EBITDA performance during the quarter. We accomplished this while adding to our subscriber base at a rate three times that of the third quarter last year," said Robert Piper, US Unwired's President and Chief Executive Officer. "We are well positioned to finish the year at the high end of our annual operating guidance targets." During the third quarter of 2004, the Company purchased $48 million aggregate face amount of its 13 3/8% Senior Subordinated Discount Notes due 2009. Subsequently, the Company gave notice to redeem all remaining notes of the issue on November 1, 2004. The November 1st redemption was funded by $43.9 million in cash and retired the 13 3/8% Senior Subordinated Discount Notes issue. Together, the redemption and repurchases will eliminate approximately $89.2 million aggregate face amount of debt and further reduce the Company's annual interest expense by approximately $12 million. For the third quarter of 2004: * subscriber acquisition cost was $306; * monthly average minutes of use per subscriber were 923 with roaming and 704 without roaming; * total system minutes of use were approximately 2.1 billion, including 666 million roaming minutes; and * churn, net of 30-day returns, was 3.3% and average monthly revenue per PCS subscriber -- ARPU, including roaming, was $71.94. At September 30, 2004, the company had cash of approximately $167.4 million, $126.4 million of which was held by the US Unwired consolidated group other than the Company's wholly owned subsidiary, IWO Holdings, Inc. At September 30, 2004, US Unwired's balance sheet showed a $233,626,000 stockholders' deficit, compared to a $229,767,000 deficit at December 31, 2003. About Sprint Sprint is a global integrated communications provider serving more than 26 million customers in over 100 countries. With more than $26 billion in annual revenues in 2003, Sprint is widely recognized for developing, engineering and deploying state-of-the- art network technologies, including the United States' first nationwide all-digital, fiber-optic network and an award-winning Tier 1 Internet backbone. Sprint provides local communications services in 39 states and the District of Columbia and operates the largest 100-percent digital, nationwide PCS wireless network in the United States. For more information, visit http://www.sprint.com/ About US Unwired US Unwired Inc., headquartered in Lake Charles, Louisiana, holds direct or indirect ownership interests in five PCS Affiliates of Sprint: Louisiana Unwired, Texas Unwired, Georgia PCS, IWO Holdings and Gulf Coast Wireless. Through Louisiana Unwired, Texas Unwired, Georgia PCS and IWO Holdings, US Unwired is authorized to build, operate and manage wireless mobility communications network products and services under the Sprint brand name in 68 markets, currently serving over 650,000 PCS customers. US Unwired's PCS territory includes portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas, Massachusetts, New Hampshire, New York, Pennsylvania, and Vermont. For more information on US Unwired and its products and services, visit the Company's web site at http://www.usunwired.com/US Unwired is traded on the OTC Bulletin Board under the symbol "UNWR". VARTEC TELECOM: Hires Vinson & Elkins as Bankruptcy Counsel ----------------------------------------------------------- The Honorable Steven A. Felsenthal of the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, approved the retention of Vinson & Elkins LLP as bankruptcy counsel of Vartec Telecom Inc. and its debtor-affiliates. Vinson & Elkins will: (a) serve as attorneys of record for the Debtors in all aspects of these cases, including any adversary proceedings commenced in connection with these cases, and provide representation and legal advice to the Debtors throughout the cases; (b) assist in the formulation and confirmation of a chapter 11 plan and disclosure statement for the Debtors; (c) consult with the U.S. Trustee, any statutory committee and all other creditors and parties-in-interest concerning the administration of these cases; (d) take all necessary steps to protect and preserve the Debtors' estates; and (e) provide all other legal services required by the Debtors and assist the Debtors in discharging their duties as the debtors-in-possession in connection with these cases. Daniel C. Stewart, Esq., is the lead attorney in these proceedings, assisted by William L. Wallander, Esq., and Richard H. London, Esq. Mr. Stewart discloses that the Firm did prepetition work for the Debtors and, as a result, holds $350,000 in its retainer account. The current hourly rates of the Firm's professionals ranges from $425 to $590 for partners, $160 to $400 for associates and $125 to $175 for paraprofessionals. To the best of the Debtors' knowledge, Vinson & Elkin does not hold any interest materially adverse to the Debtors and their estates. Headquartered in Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- is a provider of local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81695). When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. VARTEC TELECOM: Want Access to $30 Million of DIP Financing ----------------------------------------------------------- VarTec Telecom, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas for authority to enter into a postpetition credit agreement and permission to continue using their secured creditors' cash collateral. The Debtors need a reliable source of financing to alleviate potential cash-flow difficulties that may arise and to reassure parties-in-interest of their continuing viability while operating in chapter 11. Without the financing, the Debtors' operations will cease and any going concern value of their businesses will be lost. The Debtors tell the Court that the Rural Telephone Finance Cooperative has agreed to provide $30 million of postpetition financing. The Debtors agree that the Lenders will have priority in payment over any and all administrative expenses or any creditor in these cases. Prior to the petition date, the Debtors already had a $154 million term loan and $70 million revolving credit from Rural Telephone. To secure the interests of the Lender, the Debtors propose to grant perfected first priority liens and security interests and highest available priority security interests pursuant to Sections 364(d)(1) and 364(c)(2) of the Bankruptcy Code. The Debtors urge Judge Felsenthal to approve the use of cash collateral and the DIP Financing as soon as possible to avoid irreparable harm to their estates. Headquartered in Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- is a provider of local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81695). Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins represent the Debtors. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. VARTEC TELECOM: Lease Rejection to Cost Lexington $4.7 Million -------------------------------------------------------------- Lexington Corporate Properties Trust (NYSE: LXP), a real estate investment trust, reported that VarTec Telecom, Inc., one of Lexington's current tenants, filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in the Northern District of Texas. VarTec leases a 249,452 square foot office property in Dallas, Texas. The lease expires in September 2015. The annualized base rental revenue from VarTec's lease is approximately $3.5 million. The base rental revenue on the Property accounted for approximately 2.6% of Lexington's total consolidated base rental revenue for the nine months ended September 30, 2004. Should VarTec reject the lease in connection with its bankruptcy and the Property is vacant, Lexington estimates that annual funds from operations will be reduced by approximately $4.7 million, due to lost rental revenue of approximately $3.5 million and estimated Property operating costs of approximately $1.2 million. As of September 30, 2004, Lexington's non-recourse mortgage note secured by the Property had an outstanding balance of $21 million. The note has a fixed interest rate of 7.49%, requires annual debt service of $2.0 million and is scheduled to mature in December 2012, when a balloon payment of $16.0 million is due. The lender holds a $2.5 million letter of credit issued by Lexington as collateral against the mortgage. In addition, the Property had a net book value of $28.9 million and Lexington had a deferred rent receivable, deferred loan costs and deferred lease costs of $1.6 million, $0.2 million and $1.3 million, respectively. About Lexington Lexington is a real estate investment trust that owns and manages office, industrial and retail properties net-leased to major corporations throughout the United States and provides investment advisory and asset management services to investors in the net lease area. Lexington common shares closed Monday, November 1, 2004, at $22.94 per share. Lexington pays an annualized dividend of $1.40 per share. Additional information about Lexington is available at http://www.lxp.com/ About VarTec Telecom, Inc. VarTec Telecom, Inc. is a provider of local and long distance service and is considered a pioneer in "dial around" long distance service. VarTec offers services to both residential consumers and small business customers in the United States and select countries around the world. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 1, 2004 (Bankr. N.D. Tex. Case No. 04-81694). Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they estimated more than $100 million in debts and assets. WCI COMMUNITIES: S&P Lifts Corporate Credit Rating to BB from BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on WCI Communities Inc. to 'BB' from 'BB-'. Additionally, the ratings on the company's existing $800 million senior subordinated notes are raised to 'B+' from 'B'. The outlook is revised to stable from positive. "The upgrades are supported by WCI's broadening product platform, good overall performance, and improved financial flexibility," said Standard & Poor's credit analyst Jeanne Sarda. "This builder's credit strengths are tempered by the risks associated with its geographic expansion plans, a moderate level of secured debt within its capital structure, and the fact that its debt coverage measures are currently lower than the peer average." The company's shift toward broader offerings, including more lower-priced units, should provide better earnings stability, and its geographic expansion will eventually help balance the seasonal nature of its income stream. Backlog is solid, providing good forward earnings visibility, as the record $1.9 billion at September 30, 2004 represents a substantial 124% of homebuilding revenues (for the trailing 12 months). Lastly, given that roughly half of WCI's customers are cash buyers, the company should be less affected by rising rates than some of its peers that are more heavily focused on the entry-level niche. WINSTAR COMMS: Trustee Wants Court Approval on Lucent Settlement ---------------------------------------------------------------- During the pendency of their Chapter 11 cases, Winstar Communications, Inc. sold several of its business divisions and various other assets to various third parties. The aggregate amount of the proceeds that the Debtors received during the pendency of their Chapter 11 cases from the Miscellaneous Asset sales was approximately $1,890,000. Lucent Technologies, Inc., was directed to provide the Debtors with all documentation purporting to establish that Lucent had a valid and perfected lien in a portion of the Miscellaneous Assets. Subsequently, Lucent asserted that it held a valid and perfected lien on certain of the Miscellaneous Assets and provided certain documentation to the Debtors. The Debtors and Lucent were unable to agree on the extent of Lucent's liens in the Miscellaneous Assets prior to January 24, 2002, the day the Court converted the Debtors' Chapter 11 cases to Chapter 7. As previously reported, the Debtors commenced an adversary proceeding against Lucent on the Petition Date -- Contract Adversary Proceeding -- for breach of their Supply and Credit Agreements based on Lucent's alleged failure to fund purchases and provide goods and services under the Supply Agreement. On September 26, 2002, Christine C. Shubert, the Chapter 7 Trustee overseeing the liquidation of Winstar Communications, Inc.'s estate, commenced an adversary proceeding against Lucent and two other defendants that asserted secured claims in the proceeds from the sale of the Debtors' assets to IDT Winstar Acquisition -- Lien Adversary Proceeding. Through the Lien Adversary Proceeding, the Trustee sought to: (i) require Lucent to prove the validity, priority and extent of its liens in the Acquired Assets; (ii) determine the validity, priority and extent of Lucent's alleged liens in the Acquired Assets, pursuant to Section 506 of the Bankruptcy Code; and (iii) determine the value of the collateral securing the liens, and the appropriate allocation of the Sale Proceeds, if any, that may be attributable to any valid secured claims that Lucent may hold, to the extent that Lucent is deemed to have valid, perfected liens that rightfully attach to the Sale Proceeds. After over one year of litigation and extensive negotiations, the Trustee and Lucent entered into a settlement agreement that resolved substantially all of Lucent's secured claims against the Debtors' estates and resulted in the dismissal of the Lien Adversary Proceeding. Pursuant to their November 2003 Settlement, the parties resolved all secured claims that Lucent asserted or may have against the Debtors' estates with respect to the Sale Proceeds in consideration for the parties' agreement that: * Lucent held a valid, properly perfected, first priority secured lien in a substantial portion of the Acquired Assets; * The Trustee would allocate $5,500,000 to Lucent's validly perfected lien, which represented the total value of Lucent's lien in the Acquired Assets at the time of the sale of substantially all of the Debtors' assets to IDT Corporation on December 18, 2001; * The Trustee would place $5,500,000 of the Sale Proceeds into an interest bearing escrow account to be maintained by the Trustee in respect of the lien; and * The Trustee would not release the funds to Lucent or any other party, except pursuant to a further final and non- appealable order of the Court, after notice and a hearing, or a written agreement by the parties directing the Trustee to distribute the funds. The parties further agreed that Lucent's claims against the Debtors' estates with respect to certain miscellaneous asset sales would remain unaffected by their settlement. The parties continued to negotiate and exchange information regarding the extent of Lucent's liens in the Miscellaneous Assets and whether a portion of the Miscellaneous Asset Sale Proceeds should be allocated to Lucent's liens, if any, based on the value of Lucent's collateral transferred as part of these asset sales. Miscellaneous Assets Stipulation The parties took contrary positions with respect to the extent of Lucent's validly, properly perfected, first priority lien in a portion of the Miscellaneous Assets, and whether a portion of the Miscellaneous Asset Sale Proceeds should be allocated to Lucent's liens. The parties engaged in extensive negotiations and exchanged information concerning the extent of Lucent's liens in the Miscellaneous Assets and the value of the collateral. After extensive negotiations, the parties agree that: (1) Lucent holds a valid, properly perfected, first priority secured lien in a substantial portion of the Miscellaneous Assets; (2) The Trustee will allocate $800,000 of the Miscellaneous Asset Sale Proceeds, plus interest, to Lucent's lien in the Miscellaneous Assets, which represents the total value of Lucent's lien at the time of the sale of the Miscellaneous Assets to various third-parties during the pendency of the Debtors' Chapter 11 cases; (3) After the Court approves the Stipulation, the Trustee will transfer $800,000 of the Miscellaneous Asset Sale Proceeds, plus interest, into the Escrow Account without releasing the funds to Lucent or any other party, except pursuant to a further final and nonappealable order of the Court, after notice and a hearing, or written agreement by the parties directing the Trustee to distribute the funds; (4) Lucent may ask the Court to compel the Trustee to distribute the $800,000 to Lucent in satisfaction of its lien in the Miscellaneous Assets on the earlier to occur of: (a) a resolution through the entry of a final and nonappealable order by the Bankruptcy or District Court or a resolution through a written agreement of the parties with respect to, Count Eleven of the Trustee's second amended complaint in the Contract Adversary Proceeding in a manner that some or all of Lucent's claims under the Lucent Credit Agreement, Supply Agreement or related agreements, are not subject to equitable subordination; or (b) a written agreement by the parties that Lucent may take the action; (5) After the $800,000 transfer into the Escrow Account, all of Lucent's secured proofs of claim relating to the Miscellaneous Assets will be permanently reduced to $800,000, and any deficiency claim will be deemed part of Lucent's unsecured proofs of claim; (6) Lucent will be deemed to hold an $800,000 allowed secured claim on account of Lucent's interest in the Miscellaneous Asset Sale Proceeds; (7) After the $800,000 transfer, Lucent will waive, release and forever discharge any and all secured claims that it has or may have against the Miscellaneous Asset Sale Proceeds, except the Allowed Miscellaneous Asset Sale Proceeds Secured Claim. Lucent will have a valid, properly perfected, first priority secured lien on account of the Allowed Miscellaneous Asset Sale Proceeds Secured Claim for $800,000 transferred to the Escrow Account; (8) Resolution of Lucent's secured claims against the Debtors' estates with respect to the Miscellaneous Assets pursuant to the Stipulation will have no effect on Lucent's rights; (9) All of Lucent's secured claims against the Debtors' estates have been resolved. The full and final resolution of all of Lucent's secured claims against the Debtors' estates will have no effect on the parties' causes of action and claims, defenses or arguments asserted in the Contract Adversary Proceeding; (10) Resolution of all Lucent's secured claims against the Debtors' estates will have no effect on the parties' rights, claims, defenses and arguments with respect to any rights that Lucent may have, if any, with respect to any general unsecured claims that Lucent may have asserted against the Debtors' estates; and (11) The Trustee will not use any estate funds in which Lucent has an interest pursuant to any Court order, stipulation, or settlement for any purpose without Lucent's prior written consent or further Court order; By this motion, the Trustee asks the Court to approve the Stipulation which fully and finally resolves any and all secured claims that Lucent has asserted or may hold against the Debtors' estates. The Trustee believes that absent approval of the Stipulation, the parties will be forced to resort to an adversary proceeding to determine the extent of Lucent's interest in the Miscellaneous Asset Sale Proceeds, which would likely require expert testimony with respect to the value of Lucent's collateral in the Miscellaneous Asset sales. The outcome of any litigation over Lucent's secured claims in the Miscellaneous Asset Sale Proceeds cannot be predicted with any certainty. Prosecution of an adversary proceeding would be very costly to the Debtors' estates due to the complexity of the issues and the amount of discovery that would be required to fully litigate and resolve them before the Court. Headquartered in New York, New York, Winstar Communications, Inc., provides broadband services to business customers. The Company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). The Debtors obtained the Court's approval converting their case to a chapter 7 liquidation proceeding in January 2002. Christine C. Shubert serves as the Debtors' chapter 7 trustee. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. (Winstar Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM INC: To Release 3rd Quarter 2004 Financials Today ---------------------------------------------------------- MCI, Inc. (Nasdaq: MCIP) will announce its third quarter 2004 financial results before market opens today, November 4, 2004. The Company will host a conference call at 8:30 a.m. EST to discuss its results. A live Webcast of the conference call will be available at http://www.mci.com/investor An archive of the presentation will be available for replay for 30 days. 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. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM: Wisconsin Commission Asks Court to Allow $841,150 Claim ----------------------------------------------------------------- Before the Petition Date, the Wisconsin Public Service Commission sent the WorldCom, Inc. and its debtor-affiliates assessments for $841,150 that was due under the Wisconsin Advanced Telecommunications Foundation Act. Peggy A. Lautenschlager, Attorney General of Wisconsin, relates that the 2001 Wisconsin Act 16 required all telecommunications providers to pay outstanding amounts originally solicited by the Wisconsin Advanced Telecommunications Foundation. Established in 1994, the Foundation was a governmental body, with which the Governor was authorized to appoint a majority of its directors. The Foundation was subject to open meeting and state ethics laws. The Foundation's purpose was to fund advanced telecommunications technology application provisions and to educate telecommunications users about advanced telecommunications services. The Foundation was to establish an endowment fund made up of $25.5 million solicited from telecommunications providers and from state appropriations. The Legislature authorized the state, local governments, schools, libraries, and health care information services to apply for funding for projects related to that purpose. Ms. Lautenschlager states that the 2001 Wisconsin Act 16 dissolved the Foundation and required all telecommunications providers to pay, within 30 days from when the Wisconsin Commission notified the provider of its obligation, all amounts previously solicited by the Foundation. The assessments were based on a percentage of the providers' intrastate gross revenues. All monies received under the 2001 Wisconsin Act 16 are to be distributed to the Wisconsin school districts. Providers Opposed the Assessments In a letter to the Wisconsin Commission dated November 12, 2001, the Debtors and several other telecommunications providers objected to the assessments on seven statutory grounds: (1) Prior to the enactment of 2001 Wisconsin Act 16, the telecommunications providers had been asked to make voluntary contributions; (2) The Debtors had not consented to pay the amounts; (3) The Wisconsin Commission was estopped from collecting the assessments; (4) The 2001 Wisconsin Act 16 converted voluntary contributions into a tax; (5) The 2001 Wisconsin Act 16 did not create adequate statutory authority for the Wisconsin Commission or the Foundation to tax telecommunications providers; (6) The 2001 Wisconsin Act 16 did not constitute the clear and express statutory language necessary to impose a tax; and (7) The calculation of the assessments was not accurate. The letter also raised objections under the Wisconsin Constitution that: -- the 2001 Wisconsin Act 16 created a "special or private law . . . for assessment or collection of taxes"; -- the 2001 Wisconsin Act 16 was a "private or local bill" invalid because it was included in the Budget Bill; -- the method used to calculate the assessments was an impermissible delegation of legislative power to grant tax exemptions; -- the 2001 Wisconsin Act 16 and the assessment itself imposed a non-uniform gross receipts tax; and -- the 2001 Wisconsin Act 16 denied the telecommunications providers a remedy for wrongs. The letter further asserted that that the 2001 Wisconsin Act 16 and the assessment violated the equal protection and due process clauses to the United States and the Wisconsin Constitutions. Administrative Proceeding The Wisconsin Commission commenced an administrative proceeding to hear the telecommunication providers' objections. On June 24, 2004, the Commissioners rejected all of the telecommunications providers' non-constitutional objections. The panel held that: (1) The Wisconsin Advanced Telecommunications Foundation Assessment constituted a tax as a matter of law; (2) The amounts solicited were reasonably, properly and lawfully determined; (3) The providers' equitable estoppel arguments were without merit; and (4) The amount of the bill was final because no provider filed a timely objection, setting out in detail objections to the amount of the bills. As an administrative body, the panel declined to rule on the merits of the telecommunication providers' objections based on state and federal constitutional law. On July 26, 2004, the Debtors and other providers filed appeals from the Commission's June 24, 2004 Order in the Wisconsin State Court, asking the Circuit Court to: (a) overturn the Final Order; and (b) make a determination on the constitutional claims that were raised, but not decided, in the Administrative Proceeding. The Wisconsin Commission Claim On December 12, 2002, the Wisconsin Commission filed Claim No. 3686 against the Debtors for amounts it calculated were due pursuant to the 2001 Wisconsin Act 16. Subsequently, the Debtors asked the Bankruptcy Court to expunge and disallow Claim No. 3686 on the grounds that: -- they disputed the debt; -- the proof of claim had no attached documentation; -- there was no itemization of the principal versus interest in the claim; and -- the claim was a fee rather than a tax under In re Chateaugay Corp., 53 F.3d 478. The Debtors and the Wisconsin Commission stipulated, and the Court ordered, on November 18, 2003, that the Administrative Proceeding could go forward with the Debtors' participation without violating the automatic stay. The Debtors and the Wisconsin Commission agreed that: (a) the forum for the determination of the Debtors' objections to the assessments under state law and the United States Constitution would be the Administrative Proceeding and any state court appeals flowing from that proceeding; and (b) the sole issue to be determined by the Bankruptcy Court was whether Claim No. 3686 was a tax within the meaning of the Bankruptcy Code. Claim No. 3686 is a Tax By this motion, the Wisconsin Commission asks Judge Gonzalez to allow Claim No. 3686 as a tax priority under Section 507(a)(8) of the Bankruptcy Code. Ms. Lautenschlager asserts that the Public Service Commission assessments fall squarely within the definition of " tax" as the Second Circuit has interpreted the term. In City of New York v. Feiring, 313 U.S. 283, 285 (1941), the Supreme Court has held that a tax priority "extends to those pecuniary burdens laid upon individuals or their property, regardless of their consent, for the purpose of defraying the expenses of government or of undertakings authorized by it." The Second Circuit refined that standard in In re Chateaugay. In In re Chateaugay, Ms. Lautenschlager relates, the debtor, a former coal mining company, challenged the federal government's claim to a tax priority for amounts due under the Coal Act. That act was one of a series of statutes converting mining companies' agreement to pay lifetime health benefits to minors into a statutory obligation. The Department of Health and Human Services assessed each company's obligation based on the cost of benefits for that company's assigned beneficiaries. In assessing whether those premiums constituted a tax, Ms. Lautenschlager says, the court adopted the four-factor test from In re Lorber Indus., 675 F.2d 1062, 1066 (9th Cir. 1982). The court considered whether the payments were: (1) an involuntary pecuniary burden, regardless of name, laid upon the individuals or property; (2) imposed by the Legislature; (3) for purpose purposes, including the purposes of defraying expenses of government or undertaking authorized by it; and (4) under the policy or taxing power of the state. The Public Service Commission's claim satisfies the four factors of that case. 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. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) ZENDA CAPITAL: Gets Ontario Securities Commission's Default Status ------------------------------------------------------------------ Zenda Capital Corp. (ZND - TSX Venture), is considered by the Ontario Securities Commission to be in default of its obligations for the filing of its financial statements for the year ended Dec. 31, 2003. This situation arises from the Company's use of an auditor who was not, at the time of his report, in compliance with the Canadian Public Accountability Board. The Company will refile the financial statements after they have been prepared by a public accounting firm that has entered into a participation agreement with the CPAB and is in compliance with any restrictions or sanctions imposed by the CPAB. The TSX Venture Exchange has neither approved nor disapproved of the contents of this press release. Zenda Capital Corp. is a junior exploration company that trades on Tier 2 of the TSX Venture Exchange (TSXV) with symbol ZND. Formerly known as Zenda Gold Corp., the Shareholders of the company have approved a return to the name of Zenda Gold Inc. to reflect the Corporation's commitment to the resource sector. * Angus Phang Joins Mintz Levin's IP Section in London Firm ----------------------------------------------------------- November 2, 2004 / Business Wire Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo, LLP announced that Angus Phang has joined the firm's London office as a Member in the Intellectual Property section. An experienced solicitor, Mr. Phang was previously a partner at Willoughby & Partners in Oxford where his practice concentrated on IP protection, enforcement and exploitation, non-contentious IT and eBusiness and IP asset management. Prior to joining Willoughby & Partners, Mr. Phang was a partner and the joint head of the technology group at Andersen Legal Garretts in the Thames Valley where he was responsible for the development of the firm's IP practice and where he worked with clients such as Office Depot, Timberland, and Motorola. "As we continue to expand our presence in Europe where we have established a premier intellectual property practice, the addition of Angus, a highly experienced solicitor, further enhances our ability to provide outstanding service to a growing number of companies," said Ivor Elrifi, a Member of the firm and Co-Chair of the IP Practice. " We are seeing an increasing need for IP assistance from both European companies who have U.S. IP issues and domestic clients who need help with foreign IP issues and we are now in a better position than ever to meet the needs of those clients." Mr. Phang is a member of the Society for Computers and Law, the Thames Valley Commercial Lawyers Association and INTA. He earned a BSc. (Hons) in Biochemistry from the University of Surrey and his law diploma from the University of Westminster. Mintz Levin's London office assists clients with many significant issues and challenges involved in the intellectual property arena. It provides comprehensive, practical advice to a wide range of emerging and established technology-based businesses in high technology, biotechnology and pharmaceuticals, manufacturing, nanotechnology, and telecommunications, as well as other industries. Mintz Levin's diverse clientele includes multinational corporations, universities, early-stage companies, and individual inventors. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC is a multidisciplinary law firm with over 450 attorneys and senior professionals in Boston, Washington D.C., Reston, VA, New York, New Haven, CT, Los Angeles and London. Mintz Levin is distinguished by its reputation for responsive client service and expertise in the areas of bankruptcy; business and finance; communications; employment; environmental; federal; health care; immigration; intellectual property; litigation; public finance; real estate; tax; and trusts and estates. Mintz Levin's international clientele range from privately held start- ups to Fortune 100 companies in a wide array of industries including biotechnology, venture capital, telecommunications, health care and high technology. Mintz Levin was one of the first law firms to develop complementary consulting capabilities to provide complete solutions to clients' problems, including investment/wealth management, government and public affairs and transactional insurance. More information is available at http://www.mintz.com/ ********* 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 ***