/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/041203.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, December 3, 2004, Vol. 8, No. 266 Headlines 24 HOUR FITNESS: S&P Puts B Rating on $480M Sr. Secured Facility ACTUANT CORP: Acquires A.W. Sperry Instruments for $12.5 Mil. Cash AMERICAN AIRLINES: Enhances Tulsa Bondholders' Collateral Position AMERICAN COMMERCIAL: Three Entities Object to Chapter 11 Plan AMERICAN EQUITY: S&P Rates Planned $175M Sr. Unsecured Debt BB+ APPLIED EXTRUSION: Hiring Bankruptcy Services as Claims Agent AVAYA INCORPORATED: Gets Requisite Consents to Amend Indenture AVENTINE RENEWABLE: Moody's Rates Planned $160M Sr. Sec. Notes B3 BENROCK INC: Case Summary & 20 Largest Unsecured Creditors BOMBARDIER INC: Posts $10 Million Net Income for 2004 3rd Quarter CALL-NET: S&P Downgrades Ratings to B- & Says Outlook is Negative CARE CONCEPTS: Shareholders OK Name Change to Interactive Brand CARTHAGE PALACE: Case Summary & 3 Largest Unsecured Creditors CCO HOLDINGS: Fitch Junks Proposed $500 Million Senior Notes CCO HOLDINGS: Moody's Rates Planned $500 Million Senior Notes B3 CCO HOLDINGS: S&P Junks Proposed $500M Senior Floating-Rate Notes CHESAPEAKE CORP: Moody's Puts B2 Rating on EUR100M Sr. Sub. Notes CHESAPEAKE ENERGY: Pricing $600 Million 6.375% Senior Notes CHESAPEAKE ENERGY: Fitch Rates $600M Senior Unsecured Notes BB CHESAPEAKE ENERGY: Moody's Rates $600M Senior Unsecured Notes Ba3 CHINA WORLD: Retains Anne McBride for Investor Relations Work CHIQUITA BRANDS: Declares $0.10 Per Share Quarterly Dividend CLEMROSE PROPERTIES: Case Summary & Largest Unsecured Creditor COMBUSTION ENGINEERING: 3rd Cir. Rejects Prepackaged Asbestos Plan CORAM HEALTHCARE: Emerges from Bankruptcy Protection CUMULUS MEDIA: Moody's Assigns Ba3 Rating to $75M Sr. Sec. Loan CWMBS INC: Fitch Puts Low-B Ratings on Classes B-3 & B-4 Certs. DALLAS AEROSPACE: Hires McGuire Craddock as Bankruptcy Counsel DALLAS AEROSPACE: U.S. Trustee Unable to Form Creditors' Committee DELTA AIR: Closing Financing Pacts with GE & American Express DII INDUSTRIES: Court Approves Domestic Settlement Agreement DYNEGY INC: Completes Sale of 50% Interest in Chesapeake Facility ELAN CORP: Completes Debt Offering & Consent Solicitation EQUIFIN: Audit Panel Looks for New Auditor After J.H. Cohn Resigns EQUIFIRST MORTGAGE: Fitch Rates Classes B-1 & B-2 Certs. Low-B FEDERAL-MOGUL: Court Approves Maremont Settlement Agreement FIRST HORIZON: Fitch Places Low-B Ratings on Classes B-4 & B-5 FREEPORT-MCMORAN: Moody's Ups Senior Unsecured Debt Rating to B1 GATEWAY EIGHT: Case Summary & 18 Largest Unsecured Creditors GOLDENEYE MANAGEMENT: Voluntary Chapter 11 Case Summary GOPHER STATE: Court Approves Bidding Procedures for All Assets GOPHER STATE: Employs Biditup Industrial as Selling Agent HUDSON BAY: S&P Rates Proposed $200 Mil. Senior Secured Notes B HUNTSMAN INTL: Raising $350 Million through Private Debt Offering ILLINOIS DEVELOPMENT: Moody's Pares Revenue Bonds' Rating to Ba3 ILLINOIS DEVT: Moody's Affirms Refunding Bonds' Ba1 Rating INTERDENT INC: S&P Rates Proposed $80M Senior Secured Notes B INTEREP NATIONAL: Moody's Junks $99M Senior Subordinated Notes INTERSTATE BAKERIES: U.S. Trustee Appoints Equity Committee INTERSTATE BAKERIES: Wants to Fix March 21 General Claims Bar Date KEWL CORP: Accolade Unit Acquires $546,328 Toronto Dominion Claim LA QUINTA PROPERTIES: Declares Dividend on 9% Preferred Stock KING PHARMACEUTICALS: Moody's Pares Ratings & May Lower Again MASTR ALTERNATIVE: Fitch Puts BB Rating on Class B-I-4 Certs. MEDIA GROUP: Wants Exclusive Plan-Filing Period Extended to Feb. 4 MEDIA GROUP: Has Until Jan. 4 to Make Lease-Related Decisions MERRILL LYNCH: Fitch Rates Classes B-1 & B-2 Certificates Low-B MERRILL LYNCH: Fitch Puts Low-B Ratings on Classes B-4 & B-5 METRIS MASTER: Fitch Ups Ratings on $84.53 Class C Notes to AAA METRIS MASTER: Moody's Lifts $84.53M Secured Notes' Rating to Aaa MILLENNIUM CHEMICALS: S&P Downgrades Ratings to B+ MORTGAGE ASSET: Fitch Puts BB+ Rating on Class B Certificates NHC COMMS: Oct. 29 Stockholders' Deficit Narrows to C$4 Million NSG HOLDINGS: S&P Lifts Rating on $160M Sr. Sec. Facility to B+ OMI CORP: S&P Rates Proposed $225M Senior Convertible Debt B+ ON SEMICONDUCTOR: Commencing Sr. Debt Offer & Consent Solicitation OWENS CORNING: Chinese Unit to Pay $4.8 Million Dividend PARMALAT USA: Former VP F. Ferrante Asks Court to Quash Subpoena PHOENIX COLOR: S&P Revises Outlook on B Rating to Negative PHOENIX QUAKE: Moody's Pares $85M Notes' Rating to B3 from Ba1 PLYMOUTH RUBBER: Applies for Voluntary AMEX Delisting PREMCOR REFINING: Fitch Says Ratings Unaffected by Encana Pact QUANTA SERVICES: Moody's Revises Outlook on Ratings to Negative REVLON CONSUMER: Moody's Downgrades Liquidity Rating to SGL-4 RICHMOND CITY: Moody's Confirms Ba3 Rating with Negative Outlook ROBOTIC VISION: First Creditors Meeting Slated for December 22 SALOMON BROTHERS: Fitch Puts Low-B Ratings on Four Cert. Classes SBA COMMS: 76% of Senior Noteholders Agree to Amend Indenture SOLA INTL: S&P Revises Outlook on BB- Rating to Negative SOLUTIA INC: European Subsidiary Amends Fiscal Agency Agreement STELCO INC: GMP Securities Won't Pursue "Stalking Horse" Bid TCW LEVERAGED: DDD-Rated Senior Secured Notes Paid in Full TENET HEALTHCARE: Subsidiary Completes Med. Center Sale to Midway TEXAS GENCO: S&P Rates Proposed $1.125B Senior Unsecured Notes B TRAILER BRIDGE: Closes $85 Million Senior Secured Debt Offering UNITED AIRLINES: Strike Ballots Mailed to United Flight Attendants US AIRWAYS: Court Disagrees with Teamster on Rule 2004 Discovery VERESTAR INC: FCC Gives Final Nod on $18.5 Million Acquisition WESTPOINT STEVENS: Wants Exclusive Filing Period Stretched to Feb. * BOOK REVIEW: Wildcatters: A Story of Texans, Oil & Money ********* 24 HOUR FITNESS: S&P Puts B Rating on $480M Sr. Secured Facility ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' bank loan rating, with a recovery rating of '3', to 24 Hour Fitness Worldwide Inc.'s amended $480 million senior secured credit facilities. The facilities include a $130 million add-on to the company's existing $275 million term loan B due 2009 and a $75 million revolving credit facility due 2008. The proceeds, together with cash on the balance sheet, will be used to retire $120 million in senior subordinated notes and $68.3 million in junior subordinated notes. The rating is the same as the corporate credit rating, which was affirmed along with all other existing ratings. At Sept. 30, 2004, 24 Hour Fitness had total debt outstanding, including redeemable preferred stock, of about $532 million. The outlook is positive. "The ratings reflect 24 Hour Fitness' debt-financed growth strategy, its high financial risk, and the competitive pressures of the fitness club industry. These considerations are partially offset by the company's geographic diversity and market-leading club clusters in several metropolitan areas," said Standard & Poor's credit analyst Andy Liu. San Ramon, California-based 24 Hour Fitness is the second-largest operator of fitness clubs in the U.S., with 329 clubs and 2.8 million members. Its geographical footprint of mid-market fitness clubs extends from the West Coast to the Southeast, with a concentration in California. California is 24 Hour Fitness' most important market; more than 50% of its clubs are located in that state. The company enjoys a 40% share of the California fitness market, with well-developed club clusters in San Francisco, Los Angeles, and San Diego. Outside of California, 24 Hour Fitness has strong club clusters in: * Las Vegas, Nevada; * Portland, Oregon; * Seattle, Washington; * Denver, Colorado; and * Dallas, Texas; and * Houston, Texas. These club clusters help lessen revenue volatility resulting from differing regional economic cycles. The company is looking to strengthen its market position with new builds in these markets and several other developing markets, including: * Kansas City, Missouri; * St. Louis, Missouri; * Salt Lake City, Utah; and * Austin, Texas. While 24 Hour Fitness has many strong market clusters, its clubs are still vulnerable to strong regional and niche competitors such as LA Fitness International LLC, Life Time Fitness Inc., and Equinox Holdings Inc. ACTUANT CORP: Acquires A.W. Sperry Instruments for $12.5 Mil. Cash ------------------------------------------------------------------ Actuant Corporation (NYSE:ATU) purchased all of the outstanding stock of A.W. Sperry Instruments, Inc., for approximately $12.5 million in cash. No other financial terms are being disclosed. The company employs approximately 35 employees at its Hauppauge, New York facility, where it designs, tests, assembles, packages, and markets meters to leading companies, including The Home Depot, Lowe's, MSC, and Rainbird. A.W. Sperry maintains a leading market position selling electrical test meters and instruments to the professional and do-it-yourself retail channels. Funding for this transaction was provided by Actuant's revolving credit facility. Robert Arzbaecher, President and Chief Executive Officer of Actuant, commented, "A.W. Sperry is a great example of a strategic product line acquisition for Actuant. It expands our electrical presence in both the retail and professional channels, and the transaction is immediately accretive to earnings." A.W. Sperry will report into the Gardner Bender business of Actuant's Tools & Supplies segment. Mark Goldstein, Executive Vice President of Actuant and Tools & Supplies Segment Leader, stated, "A.W. Sperry is a natural addition to Gardner Bender. Growing customer demand for product line consolidation, strong market and brand leadership, comprehensive product portfolio and innovative products are all factors that attracted Actuant to A.W. Sperry. Fred Malawista, President of A.W. Sperry, and his team have worked hard over the past 38 years to develop a strong brand franchise and position in the marketplace. We believe that by combining our respective product lines and development talents, we will be able to offer customers an unparalleled opportunity to grow their businesses. I look forward to working with Fred Malawista and his management team to ensure a smooth transition." About the Company Actuant Corporation, headquartered in Milwaukee, Wisconsin, is a diversified global provider of highly engineered position and motion control systems and branded tools end-users in a variety of industries. * * * As reported in the Troubled Company Reporter on Nov. 12, 2004, Standard & Poor's Ratings Services revised its outlook on Actuant Corp. to positive from stable. At the same time, S&P affirmed its rating on the Milwaukee, Wisconsin-based company. As reported in the Troubled Company Reporter on May 5, 2004, Standard & Poor's Ratings Services assigned its 'BB' rating to the $250 million senior revolving credit facility of Actuant Corp. (BB). AMERICAN AIRLINES: Enhances Tulsa Bondholders' Collateral Position ------------------------------------------------------------------ American Airlines, Inc., a wholly owned subsidiary of AMR Corporation (NYSE: AMR), disclosed that in connection with the remarketing of the $112,355,000 Trustees of the Tulsa Municipal Airport Trust Revenue Bonds, Refunding Series 2000A, it has enhanced, effective Dec. 1, 2004, the collateral provisions of the Series 2000A Bonds, and all other bonds of the Trustees which were issued under the same bond indenture. The bond proceeds were used to finance the construction or acquisition and installation of certain improvements at American's Tulsa maintenance base. The enhancements include modifications to the reletting rights available to the Bond Trustee and the granting of a leasehold mortgage to the Bond Trustee, both for the benefit of the bondholders. In addition to the Series 2000A Bonds, other outstanding bonds issued by the Trustees for the benefit of American, all of which were issued under the same bond indenture as the Series 2000A Bonds, include: -- $27,500,000 Tulsa Municipal Airport Trust Revenue Bonds, Series 1992, 7.35% coupon, maturing in 2011; -- $97,710,000 Tulsa Municipal Airport Trust Revenue Bonds, Series 1995, 6.25% coupon, maturing in 2020; -- $63,000,000 Tulsa Municipal Airport Trust Revenue Bonds, Refunding Series 2000B, 6.00% coupon, maturing in 2035; -- $27,500,000 Tulsa Municipal Airport Trust Revenue Bonds, Refunding Series 2001A, 5.375% coupon, maturing in 2035; and -- $125,205,000 Tulsa Municipal Airport Trust Revenue Bonds, Refunding Series 2001B, 5.65% coupon, maturing in 2035. About the Company American Airlines is the world's largest carrier. American, American Eagle and the AmericanConnection(R) regional carriers serve more than 250 cities in over 40 countries with more than 3,800 daily flights. The combined network fleet numbers more than 1,000 aircraft. American's award- winning Web site, AA.com, provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld Alliance(R), which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members serve more than 575 destinations in 135 countries and territories. American Airlines and American Eagle are units of the AMR Corporation. * * * As reported in the Troubled Company Reporter on Dec. 1, 2004, Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and its '1' recovery rating to an $850 million amended and restated senior secured credit facility available to AMR Corp. subsidiary American Airlines Inc. (B-/Stable/--). AMERICAN COMMERCIAL: Three Entities Object to Chapter 11 Plan ------------------------------------------------------------- Three entities object to confirmation of the Plan of Reorganization filed by American Commercial Lines LLC and its debtor-affiliates in their chapter 11 cases. A full-text copy of the Plan and the Disclosure Statement is available for a fee at: http://www.researcharchives.com/download?id=040812020022 Plan is Illegal, Says Alabama Port Authority The Alabama State Port Authority tells the U.S. Bankruptcy Court for the Southern District of Indiana that it is illegal for the State of Alabama to acquire an ownership interest in the reorganized company. The Plan classifies the Port Authority's $867,399.10 claim as a general unsecured claim, which will convert into shares in the Reorganized Company. Section 93 of the Alabama Constitution prohibits the State from holding any interest in a private or corporate enterprise. To resolve the problem, the Port Authority may elect to be a part of the Convenience Class. The election would reduce its claim to $668,000. The $668,000 claim, then, can be paid in cash pursuant to the Plan. But the Port Authority will not agree to the claim reduction. The Port Authority says it will, however, be amenable to reduce its claim if the Debtors will take responsibility for removing derelict leased barges. PBGC Wants Pension Plans Protected Pension Benefit Guaranty Corporation -- a federal government agency that guarantees the payment of certain benefit that have been promised to the workers and retirees who are covered under the Debtors' defined pension plans -- wants the Debtors to make a binding, unequivocal commitment to maintain its Pension Plan and comply with all applicable requirements. Although the Debtors suggested that the Pension Plans will continue post confirmation, the Plan do not make that explicitly clear. The PBGC wants the Plan or confirmation order to contain adequate provisions that protect the Pension Plans, their participants, and the PBGC. Brown Water Marine Wants Claim Separated Brown Water Marine Service, Inc., argues that the Plan fails to comply with Sections 1122(a) and 1123(a)(1) of the Bankruptcy Code because it improperly classifies Brown Water Marine's Critical Vendor Claim with other claims that are substantially dissimilar. The Plan currently classifies Brown Water Marine's claim as a Maritime Lien Claim. Brown Water Marine is a party to a Court- approved Critical Vendor Agreement. As a Critical Vendor Claimant, Brown Water Marine and the Debtors agreed that Brown Water Marine has a lien against all of the Debtors' assets. The "marshalling" raised in the Debtors' disclosure statement applies to other Maritime Lien Claimants but not to Brown Water Marine, because, in effect, all of the Debtors' assets have already been marshaled for the benefit of Brown Water Marine's secured claim. Because the claims are highly dissimilar, they must be separately classified. Absent separate classification, the Plan cannot be confirmed, Brown Water Marine contends. Confirmation Hearing A hearing to consider confirmation of the plan and the three objections is scheduled for Friday, December 10, at the U.S. Bankruptcy Court for the Southern District of Indiana, New Albany Division, 121 West Spring Street, New Albany, Indiana, at 10:00 a.m. At the confirmation hearing, the Debtors are expected to inform the Court of the results of the tabulation of ballots accepting and accepting the Plan. American Commercial Lines LLC, an integrated marine transportation and service company transporting more than 70 million tons of freight annually using 5,000 barges and 200 towboats in North and South American inland waterways, filed for chapter 11 protection on January 31, 2003 (Bankr. S.D. Ind. Case No. 03-90305). American Commercial is a wholly owned subsidiary of Danielson Holding Corporation (Amex: DHC). Suzette E. Bewley, Esq., at Baker & Daniels represents the Debtors in their restructuring efforts. As of September 27, 2002, the Debtors listed total assets of $838,878,000 and total debts of $770,217,000. AMERICAN EQUITY: S&P Rates Planned $175M Sr. Unsecured Debt BB+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' senior debt rating to American Equity Investment Life Holding Co.'s (AEL) proposed $175 million senior, unsecured convertible debt issue, which is due in 2024. There is an option to issue an additional $75 million. The proceeds of the issuance will support AEL's insurance operating company growth. "The rating reflects the company's better risk management, the senior team's enhanced capabilities, AEL's well-managed growth without damaging the relationship with its distribution force, improving earnings and interest coverage, improved capital at the operating companies, and strong liquidity," said Standard & Poor's credit analyst Jose Siberon. Despite all these positive factors, Standard & Poor's is concerned about the quality of capital and earnings at both the operating companies and the holding company because of the increasing financial leverage as well as the continued, but improved, aggressive asset/liability management and product concentration. The asset/liability management risk could cause volatility of the GAAP equity and deferred acquisition cost assets in a rising interest rate environment. As a result, the company's economic long-term profitability could be affected if interest rates rise rapidly in the near term or if the yield curve flattens. In 2004 and 2005, AEL is expected to continue to generate sustainable, controlled asset growth from its distribution channels while improving its profitability through improving gross spreads and maintaining expense discipline. APPLIED EXTRUSION: Hiring Bankruptcy Services as Claims Agent ------------------------------------------------------------- Applied Extrusion Technologies, Inc., and its debtor-affiliate ask the U.S. Bankruptcy Court for the District of Delaware for authority to retain Bankruptcy Services LLC as their noticing, claims and balloting agent. Bankruptcy Services will: (a) prepare and serve required notices in these chapter 11 cases, which may include: (1) notice of the commencement of these chapter 11 cases and the initial meeting of creditors pursuant to section 341(a) of the Bankruptcy Code; (2) notice of objections to claims; (3) notice of any hearings on the Debtors' solicitation and Disclosure Statement and confirmation of the Reorganization Plan (4) other miscellaneous notices to any entities, as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these cases; (b) prepare for filing with the Clerk's Office a certificate or affidavit of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was mailed and the date and manner of mailing; (c) receive, examine and maintain copies of all proofs of claim and proofs of interest filed; (d) create and maintain official claims registers by docketing all proofs of claims and proofs of interest which includes the following information: (1) name and address of the claimant or interest holder and any agent, if the proof of claim or proof of interest was filed by an agent; (2) date of receipt of the proof of claim or proof of interest by Bankruptcy Services or by the Court; (3) claim number assigned to the proof of claim or proof of interest; (4) amount and classification of claim; and (5) the applicable Debtor the claim or interest is asserted; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) transmit a copy of the claims registers to the Clerk's Office on a weekly basis, unless requested on a more or less frequent basis; (g) maintain an up-to-date mailing list for all entities that filed proofs of claims or proofs of interest and making the list available upon request; (h) provide access to the public copies of proofs of claim or proofs of interest without charge during regular business hours; (i) record all transfers of claims and provide notice of the transfers pursuant to Bankruptcy Rule 3001(e); (j) comply with federal, state, municipal and local statues, ordinances, rules, regulations, orders and other requirements; (k) promptly comply with conditions and requirements of the Court or the Clerk's Office; (l) provide for processing, noticing and administrative services of other claims requested by the Debtors; (m) oversee the distribution of solicitation materials to holders of claims or interest; (n) respond to mechanical and technical distribution and solicitation inquiries; (o) receipt, review and tabulation of ballots cast and determine its timeliness pursuant to the Bankruptcy Code, Bankruptcy Rules and procedures ordered by the Court; (p) certify results of the ballots to the Court; and (q) perform other related plan solicitation services as requested by the Debtors. The Debtors will pay BSI's customary hourly rates for services: Designation Hourly Rate ----------- ----------- Kathy Gerber $210 Senior Consultants $185 Programmer $130 - $160 Associate $135 Data Entry/Clerical $ 40 - $ 60 Schedule Preparation $225 and reimburse all expenses incurred by BSI. To the best of the Debtors' knowledge, Bankruptcy Services is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in New Castle, Delaware, Applied Extrusion Technologies, Inc. -- http://www.aetfilms.com/ -- develops & manufactures specialized oriented polypropylene (OPP) films used primarily in consumer products labeling and flexible packaging application. The Company and its debtor-affiliate filed for chapter 11 protection on Dec. 1, 2004 (Bankr. D. Del. Case No. 04-13388). Edward J. Kosmowski, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor and Sheldon K. Rennie, Esq., at Fox Rothschild O'Brien & Frankel LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $407,912,000 in total assets and $414,957,000 in total debts. AVAYA INCORPORATED: Gets Requisite Consents to Amend Indenture -------------------------------------------------------------- Avaya, Inc., (NYSE: AV) reported the final results of its previously announced cash tender offer and consent solicitation with respect to its $284,395,000 aggregate principal amount of 11-1/8% Senior Secured Notes due 2009. As of 5:00 p.m., New York City time on Dec. 1, 2004, which was the expiration date of the tender offer and consent solicitation, holders of the Notes had tendered $271,190,000 aggregate principal amount of the Notes (approximately 95.4% of the total outstanding principal amount). Holders of a sufficient number of Notes previously consented to amendments to the Indenture pursuant to which the Notes were issued. A supplemental indenture was executed by Avaya and The Bank of New York, as trustee and became effective on Nov. 16, 2004. The supplemental indenture eliminated substantially all restrictive covenants, the reporting requirements and certain events of default from the Indenture, as well as eliminated the requirement under the Indenture to provide security for the Notes and related provisions regarding the collateral. The company said $13,205,000 aggregate principal amount of Notes remain outstanding. About the Company Avaya, Inc., designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. For more information visit the Avaya website: http://www.avaya.com/ * * * As reported in the Troubled Company Reporter on Nov. 18, 2004, Standard & Poor's Ratings Services raised its rating on Basking Ridge, New Jersey-based Avaya Inc.'s senior unsecured debt to 'B+' from 'B' to reflect lower amounts of priority secured debt in Avaya's capital structure. On November 16, 2004, Avaya announced it had successfully tendered for $271 million of its outstanding $284 million of senior secured notes. Avaya maintains access to an undrawn $250 million senior secured credit facility, although the senior unsecured debt holders would not be materially disadvantaged. The corporate credit rating is affirmed, with a positive outlook. AVENTINE RENEWABLE: Moody's Rates Planned $160M Sr. Sec. Notes B3 ----------------------------------------------------------------- Moody's Investors Service assigned: * a B3 senior implied rating to Aventine Renewable Energy Holdings, Inc., * a B3 rating to the company's proposed $160 million senior secured floating rate notes, and * a speculative grade liquidity rating of SGL-2. Proceeds from the debt offering, combined with a $15 million drawdown under the secured credit facility will be used to pay a dividend of $107 million to existing shareholders and management option holders, and fund a $62.5 million plant expansion to the company's main ethanol plant in Pekin, Illinois. The rating outlook is stable. This is a first-time rating for the company. Ratings Assigned: * Senior Implied -- B3 * Guaranteed senior secured notes, $160 million due 2011 -- B3 * Senior Unsecured Issuer Rating -- Caa2 * Speculative Grade Liquidity rating -- SGL-2 The B3 ratings reflect significant uncertainty over the next 12 to 24 months with regard to the supply/demand balance in ethanol, substantial refinancing risk due to potential changes in the industry over the next 7 years, the presence of two major competitors with substantially greater resources, limited product and customer diversification, negative net worth, limited barriers to entry, and a significant level of operating leases. The ratings are supported by Aventine's moderately levered balance sheet with pro forma debt to EBITDA, adjusted for the debt offering and certain expenses, of 4.0 times for the LTM ended September 30, 2004, the company's position as the second largest marketer of ethanol in the US, elevated near-term margins due to the high price of oil and low price of corn, the strength of the farm lobby which will likely prevent any decline in existing demand for ethanol, and a guaranteed level of profit from contractual resale agreements with other ethanol producers. The stable outlook reflects the potential for a significant decline in profitability over the next 12 months due to new ethanol capacity coming on-stream and limited additional demand. Moody's concerns over new capacity additions are mitigated by the cash income from contractual resale agreements, as well as the company's lower-cost production at the Pekin facility due to its size and the economics of the wet-mill process which produce higher value by-products. The ethanol industry has grown rapidly over the past 5 years as its use in gasoline has increased. Beverage, food and industrial applications are projected to account for less than 400 million gallons of the more than 3 billion gallons of US ethanol demand in 2004. Both ethanol demand and capacity have expanded rapidly over the past two years as California, New York and Connecticut implemented bans on the use of MTBE -- methyl tertiary butyl ether, adding roughly 1.4 billion gallons of additional demand in 2004. MTBE was used as an additive to reach the 2% oxygen requirement in reformulated gasoline -- RFG; MTBE has been replaced in these states with an RFG containing 10% ethanol. Growth in ethanol demand will primarily be driven by the expansion of RFG into new markets as required under the Clean Air Act, or with new Congressional legislation that is likely to be included, in some form, in the Congressional energy bill. This energy bill is likely to be reintroduced in Congress sometime in 2005. Reliance on the terms of the Clean Air Act and its associated RFG oxygenate standard as the mechanism for further growth in ethanol demand and maintaining a stable ethanol supply/demand balance is a concern to Moody's. Currently, New York and California have initiated actions to overturn or get the Environmental Protection Agency to reconsider its prior ruling and grant waivers to the oxygen mandate. Both of these states have raised concerns over the efficacy of ethanol in reducing the measured levels of pollution. Additionally, Atlanta, which was supposed to start using RFG on January 1, 2005 (incremental 250 million gallons of ethanol demand), has received a stay from a Federal judge to delay the implementation of RFG in that region. Atlanta has called into question the efficacy of ethanol in reducing the levels of nitrous oxides generated by automobiles; the level of nitrous oxides in the region has forced the conversion to RFG under the Clean Air Act. Industry experts as well as EPA officials have recognized problems with the existing legislation. In an effort to address these concerns and still promote the use of ethanol in the US, the energy bill introduced into Congress in 2004 contained a provision to replace the oxygen mandate with a renewable fuels mandate. This legislation, which will likely be reintroduced in Congress in 2005, will set a minimum level for renewable fuels in 2005 and future targets. The energy bill in 2004 had provisions for 3.1 billion gallons in 2005, rising to 5 billion gallons in 2012. The specific terms contained in any new energy legislation will be critical to the industry's ability to handle the large amount of new ethanol capacity scheduled to come on-stream over the next 12 months (currently estimated at 500 -750 million gallons). In addition to the capacity coming on-stream in the US, three plants have been announced in the Caribbean and Central America (Trinidad, Costa Rica and Panama), which could add over 200 million gallons of capacity over the next two years. These plants would purify crude ethanol from Brazil or produce ethanol from cane sugar (a low-cost route to ethanol) and export it to the US, avoiding the 54-cent per gallon tariff on imported ethanol. Ethanol is typically priced at a premium to gasoline as marketers of gasoline receive a 5.2-cent per gallon (52 cents per gallon of ethanol used) tax credit for the use of ethanol. This tax incentive was recently extended to 2010. Consequently, the market price for ethanol is not tied to the price of corn, the primary raw material. Hence, the industry's margins will fall when crude oil prices decline or corn prices increase. If crude oil prices fall back to the low $30 per barrel level, ethanol margins will come under pressure even at today's low corn prices. Ethanol production from corn also yields several by-products. These by-products tend to offset the cost to produce ethanol and constitute less than 10% of Aventine's revenues. Despite concerns over the supply/demand balance for ethanol, Moody's believes that Aventine should remain more profitable that most other ethanol producers. The first reason is scale; Aventine's 100 million gallon Pekin plant is much larger than the industry average of 40-50 million gallons. Second is level of revenue derived from the marketing of ethanol produced by other companies, which provides enough volume to enable Aventine to negotiate long-term contracts on reasonable terms with the major gasoline retailers. The contractual nature of these arrangements provides a stable, but modest, income stream to defray fixed costs in the trough of the cycle. Third is the economics of the Pekin wet-mill plant whose utilities are largely supplied by coal-fired boilers. The production costs of ethanol at this facility should be in the lowest quartile in the US industry, especially when the new dry-mill facility comes on-stream in late 2006. The ratings reflect Moody's belief that the company's current operating margins are at or near a cyclical peak and that margins and free cash flow could decline significantly in 2005. The stable outlook reflects Moody's belief that operating performance will remain significantly above the financial covenants in the credit facility over the next 12-18 months. The ratings or outlook could be raised if new Federal legislation is enacted which clearly increases the ethanol requirements in gasoline to levels that would stabilize the supply/demand balance over the next several years and reduce the level of imported ethanol that is not subject to tariffs. Over the longer term, the rating for this company and the notes is likely to be limited due to Moody's concern over technological innovations that would reduce the cost of biomass plants to the point where they could compete on an economic basis with ethanol plants. The notching of the guaranteed senior secured notes (rated B3) at the level of the senior implied reflects the fact that the notes represent the vast majority of the company's capital. The company's obligations under the notes will be guaranteed by all operating subsidiaries and secured by a first lien on substantially all of the fixed assets at the company's Pekin, Illinois facility (a 100 million gallon wet-mill ethanol plant which is the company's main operating asset) and all monies remaining in the escrow account during the construction of a new 57 million gallon dry-mill ethanol plant. The notes will also have a secondary lien on all other assets - primarily working capital. Moody's believes that this secondary lien on working capital is of limited or no value due to the restrictive terms of the intercreditor agreement. The indenture for the notes also contains many standard covenants that protect bondholders. More specifically, the level of additional indebtedness is limited once the fixed charge coverage ratio falls below 2 times and the baskets for restricted payments and additional indebtedness is limited. The notes will not have a security interest in the company's 80% owned 40 million gallon dry-mill facility in Aurora, Nebraska. The company will also have access to a $60 million asset-based credit facility that will have a first lien on the company's working capital. This facility will be drawn to roughly $20 million coincident with the issuance of the notes. The borrower under the facility is the company's main operating subsidiary, Aventine Renewable Energy, Inc. The lenders' position is further supported by a secondary lien on the fixed assets at the Pekin, Illinois facility. Financial covenants include a fixed charge coverage ratio of 1.1 times when availability falls below $10 million and a limit on capital expenditures. As of September 30, 2004, and pro forma for this transaction, the company would have had roughly $27 million of additional borrowing capacity. Adjusted for the transaction, Moody's views Aventine's liquidity as good and therefore has assigned an SGL-2 rating. The SGL-2 rating reflects Moody's belief that the company will have approximately $20 million of outstandings under the credit facility and at least $35 million of additional borrowing capacity, given the debt repayment prior to November 19, 2004. Furthermore, financial performance is expected to remain well above the financial covenants in the credit facility over the next year (i.e., a covenant cushion of at least 30%). Aventine Renewable Energy Holdings, Inc, headquartered in Pekin, Illinois, produces ethanol. BENROCK INC: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Benrock, Inc. 6900 Alcoa Road Benton, Arkansas 72015 Bankruptcy Case No.: 04-24405 Type of Business: The Debtor provides marine equipment & supplies. Chapter 11 Petition Date: December 1, 2004 Court: Eastern District of Arkansas (Little Rock) Judge: James G. Mixon Debtor's Counsel: James E. Smith, Jr., Esq. 400 West Capitol Avenue, Suite 1700 Little Rock, AR 72201 Tel: 501-537-5111 Fax: 501-537-5113 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sierra International Trade debt $408,268 P.O. Box 8500-52648 Philadelphia, PA 19178 Telefliex Morse Trade debt $245,324 P.O. Box 8500-6865 Philadelphia, PA 19178 Michigan Wheel Corporation Trade debt $160,754 1501 Buchanan S.W. Grand Rapids, MI 49507 Johnson Outdoors Trade debt $154,652 Mercury Marine Trade debt $147,040 The Wise Co., Inc. Trade debt $100,506 Carver Industries, Inc. Trade debt $84,652 Kent Sporting Goods Co. Inc. Trade debt $79,170 CDI Electronics/Repair Corp. Trade debt $72,200 Garmin USA, Inc. Trade debt $59,920 Tempo Products Company Trade debt $50,727 NGK Spark Plugs Trade debt $50,592 Marine Electric Suppliers Trade debt $47,014 WISECO Performance Trade debt $43,434 ARCO Auto & Marine Prod., Trade debt $37,542 Inc. EZY-GLIDE, Inc. Trade Debt $36,007 T-H Marine Supplies, Inc. Trade debt $33,426 Tredit Tire & Wheel Co. Inc. Trade debt $32,434 Val-Test Marine Division Trade debt $27,671 Cook Manufacturing Corp. Trade debt $26,399 BOMBARDIER INC: Posts $10 Million Net Income for 2004 3rd Quarter ----------------------------------------------------------------- Bombardier, Inc., (TSX:BBD) reported its financial results for third quarter ended Oct. 31, 2004: -- Consolidated revenues of $3.6 billion -- Net income of $10 million -- Overall order backlog of $33 billion -- Ongoing business jet recovery -- Aircraft deliveries totalling 69 -- Aircraft orders totalling 86 -- Restructuring of Transportation taken to the next level -- Strong liquidity Bombardier, Inc., maintained profitability through the third quarter, despite an exceptionally challenging business environment in both the aerospace and transportation sectors. Financial results for the quarter showed consolidated earnings before taxes and before special items of $52 million, compared to $49 million the previous quarter. Special items amounted to $43 million and net income was $10 million. Consolidated revenues reached $3.6 billion compared to $3.9 billion. "The resurgence of the business aircraft market shows the benefit of diversification in our aircraft business," said Paul M. Tellier, President and Chief Executive Officer. "Our year-over- year improvements in cash management continue, and our liquidity remains strong with $5 billion in available capital resources. We are on track with what we believe is the right plan, although many of the benefits are admittedly still on the horizon. "We are making progress with our recovery plan despite the serious challenges our customers are facing - particularly the North American airlines," continued Mr. Tellier. "We are responding decisively to external factors affecting our business and we are proactive in managing the elements we can control. We are implementing significant changes to both our businesses to allow more flexibility and adjust to markets." The company intends to take its restructuring of Bombardier Transportation to the next level by reducing the net permanent workforce by an additional 2,200 employees. The enlarged plan increases the previously budgeted restructuring envelope by $25 million or 4%. Bombardier also announced it would further adjust the Bombardier CRJ200 aircraft production rate to match expected demand. Bombardier Aerospace Bombardier Aerospace improved its quarter-over-quarter performance despite reduced revenues from lower deliveries of commercial aircraft. Total aircraft deliveries for the year to date at 221 remain slightly ahead of fiscal 2004 with 217. New orders for the first nine months are also up, reaching 217 compared to 145 and were driven by a continued strengthening of the business aircraft market. A net total of 100 new business aircraft orders was recorded during that period, compared to 43 the previous year. Shortly after the end of the quarter, new orders were confirmed for 11 additional CRJ aircraft. The market for Bombardier Q-Series turboprops is picking up with 20 new orders in the quarter, including an order for 17 Bombardier Q300 aircraft from Air New Zealand. The adjustment in the production rate will bring the total CRJ200 aircraft deliveries to 54 in the next fiscal year. No additional workforce reductions will be required as the impact will be mitigated by the uptick in the business aircraft market. Earlier in the quarter, the company adjusted the CRJ production rate with a scheduled reduction of the Aerospace workforce of 2,000 over a nine-month period. The company expects to see the benefits of fleet commonality as airlines continue the move to aircraft sizes more suitable to market needs. Bombardier's CRJ family of 70- to 90-seat aircraft is well positioned in the evolving regional jet market, due to its best-in-class economics, today's focus on operating economy and the leverage gained from its large installed base of CRJ200 customers. Bombardier Transportation Bombardier Transportation continues to post positive results, but the unit is not yet performing to market expectations despite productivity improvements. Faced with lowered growth projections in the core European market for rolling stock, Bombardier Transportation proposed to extend its restructuring, increasing total net contemplated workforce reductions to 7,600 by April 2006, or 21% of Transportation's global workforce, 7,300 of which represent permanent positions. The additional proposed reductions are spread across 14 countries and 27 locations, but impact primarily Germany, the U.K. and Canada. Bombardier Capital Bombardier Capital continued its orderly and timely reduction of the wind-down portfolios. As at Oct. 31, 2004, these had been reduced by $344 million, or 37% since Jan. 31, 2004. The business continues to be profitable, contributing EBT of $10 million this quarter. Going forward "No one around here is underestimating the challenges that stand between us and our potential, but the view forward gives cause for encouragement," said Mr. Tellier. "We feel our plan is the right one and our job is to make yards the hard way - through faultless execution one play at a time. "In Transportation, the restructuring initiative is on track and cost efficient. Our goals are being met and productivity improvements continue. Management is still not satisfied with current performance and will continue to work on streamlining and efficiency improvement. "In Aerospace, we are closely monitoring the challenges in the commercial aircraft market and proactively adjusting production to demand. In the meantime, we will continue to benefit significantly from strong growth in the business jet market." About Bombardier Bombardier, Inc., a global corporation headquartered in Canada, manufactures innovative transportation solutions, from regional aircraft and business jets to rail transportation equipment. Its revenues for the fiscal year ended Jan. 31, 2004 were $15.5 billion US and its shares are traded on the Toronto, Brussels and Frankfurt stock exchanges (BBD, BOM and BBDd.F). News and information are available at http://ww.bombardier.com/ * * * As reported in the Troubled Company Reporter on Dec. 2, 2004, Standard & Poor's Ratings Services lowered its ratings on Bombardier, Inc., and its subsidiaries, including its long-term corporate credit rating to 'BB' from 'BBB-', due to continuing weak prospects for some of its key business segments. The outlook is negative. As reported in the Troubled Company Reporter on Nov. 15, 2004, Moody's Investors Service downgraded the senior unsecured debt ratings of Bombardier, Inc., and its wholly owned captive finance subsidiary, Bombardier Capital, Inc., to Ba2 from Baa3. A SGL-2 Speculative Grade Liquidity Rating and a Senior Implied Ratings were assigned to the company. The rating outlook is negative. As reported in the Troubled Company Reporter on Oct. 14, 2004, Fitch Ratings placed Bombardier's and Bombardier Capital's ratings on Rating Watch Negative. Fitch currently rates Bombardier's and Bombardier Capital's senior unsecured debt and credit facilities 'BBB-', commercial paper programs 'F3', and Bombardier's preferred stock 'BB+'. Due to the existence of a support agreement and demonstrated support by the parent, Bombardier Capital's ratings are linked to those of Bombardier. These ratings cover approximately $6.1 billion of debt and preferred stock. CALL-NET: S&P Downgrades Ratings to B- & Says Outlook is Negative ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Call-Net Enterprises, Inc., to 'B-' from 'B' on continued pricing pressures in long distance and expectations for increased competition in residential local services beginning in 2005. At the same time, Standard & Poor's lowered the ratings on Call-Net's 10.625% notes due Dec. 2008; US$223.1 million remains outstanding under the notes. The outlook remains negative. To date, Toronto, Ontario-based Call-Net has been able to largely offset pricing pressures in its long-distance segment through growth in local services, and bundling of local with long-distance services. "We expect that pricing competition in local services will become a factor in 2006 as the cable companies begin offering telephony service," said Standard & Poor's credit analyst Joe Morin. "Call-Net has been protected from price competition in local services as they currently compete only with the incumbent telecom operators, which are not permitted to lower rates under current regulatory restrictions," Mr. Morin added. The cable operators will likely enter the local market in 2005 at a price discount to the incumbent telcos, which will put pressure on Call-Net's pricing. In addition, with the trend towards bundling of different services by both cable and telecom operators, Call-Net will be challenged to compete effectively given its relatively limited offering, which does not currently include a high-speed Internet offering to residential customers. Call-Net may begin offering DSL services to residential customers in 2005, however the company has limited financial resources to make and aggressive push into high-speed Internet services. Intense pricing pressure in the long distance and wholesale data markets will also continue. Call-Net's weak business position is reflected in its size as a small operator within the highly competitive Canadian telecommunications market, accounting for less than 2% of total industry revenues. The ratings further reflect the company's low EBITDA margins, which at about 12% are materially lower than the 40%-45% range of its larger telecom and cable competitors. In the medium term, it is important the company improve its operating margins to generate sustainable free operating cash flow. Improving operating margins will prove difficult for the company in the face of long-distance pricing pressures (trying to eliminate repetition, but if distorts your meaning, disregard) and in local services from cable operators. The negative outlook reflects concerns with continued pricing pressures in the long-distance segment and the potential for increased competition in the local market in 2005. If the company's liquidity deteriorates materially, or if local telephone revenue growth does not keep pace with the declines in long distance revenues, the ratings could be lowered further. CARE CONCEPTS: Shareholders OK Name Change to Interactive Brand --------------------------------------------------------------- Care Concepts I, Inc., (AMEX:IBD) amended its articles of incorporation with the State of Delaware to change its name from Care Concepts I, Inc., to Interactive Brand Development, Inc., after 66-2/3 percent of shareholders voted to the amendment. The Company also completed the other amendments disclosed in the proxy statement filed with the US Securities and Exchange Commission on Form 14A. "Our investment in Penthouse Media Group and the PENTHOUSE brand is now our largest asset and our new name appropriately reflects this holding," said IBD Chief Operating Officer Steve Markley. "We trust that this name more clearly communicates to the investment community our business direction." Standard and Poors CUSIP Bureau has already issued CUSIP number 458404 10 0 for the common stock of IBD in connection with the Company's name change to Interactive Brand Development. Along with the PENTHOUSE investment, IBD's investments consist of an online auction website featuring leisure and entertainment products, an online auction website featuring adult lifestyle products, and ownership of one of the world's largest classic, brand-named animation art libraries. About the Company Care Concepts I, Inc., (AMEX:IBD - News) is a media and marketing holding company with significant consumer brand investments. The company owns interests in animation brands; adult entertainment brands; and in online auctions. The Company's brand investments include Penthouse Media Group, publisher of Penthouse Magazine, a brand-driven global entertainment business founded in 1965 by Robert C. Guccione. PMG's flagship PENTHOUSE(TM) brand is one of the most recognized consumer brands in the world and is widely identified with premium entertainment for adult audiences. PMG is operated by affiliates of Marc Bell Capital Partners, LLC as a global multimedia company encompassing Internet distribution through multiple websites, video production, broadcast, clubs and product licensing. * * * Auditors Express Doubt On January 15, 2003, Care Concepts dismissed Angell & Deering as its principal accountants and auditors. A&D's report on the Company's financial statements expressed substantial doubt about the Company's ability to continue as a going concern. On January 15, 2003, William J. Hadaway was hired to review the Company's 2002 financial statements. On October 30, 2003, Care Concepts dismissed WJH. WJH shared A&D's doubts. Effective October 30, 2003, the Company engaged the accounting firm of Jewett, Schwartz & Associates as its new independent accountants to audit the financial statements for the fiscal year ending December 31, 2003. CARTHAGE PALACE: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Carthage Palace Inc. 46 Avenue B New York, New York 10009 Bankruptcy Case No.: 04-17613 Type of Business: The Company owns and operates a restaurant. Chapter 11 Petition Date: December 1, 2004 Court: Southern District of New York (Manhattan) Judge: Prudence Carter Beatty Debtor's Counsel: Mark Crutchfield, Esq. Crutchfield & Associates, PLLC 41 Schermerhorn Street, #219 Brooklyn, New York 11201 Tel: (718) 504-3660 Fax: (718) 504-3660 Total Assets: $153,000 Total Debts: $1,657,200 Debtor's 3 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ James Atamanuk, Jr. and Lease $1,00,000 Anna Atamanuk 155 East 4th Street, Unit 9b New York, NY 10009 Tel: (212) 673-2278 Win Depot Restaurant $3,700 Equipment Center 42-38 Northern Boulevard Long Island City, New York 11101 Cashzone Check Cashing $1,523 Corporation 140 Garnd Street Suite 400 White Plains, New York 10601 CCO HOLDINGS: Fitch Junks Proposed $500 Million Senior Notes ------------------------------------------------------------ Fitch Ratings has assigned a 'CCC+' rating to a proposed offering of $500 million of senior floating-rate notes issued by CCO Holdings, LLC, and CCO Holdings Capital Corporation. CCO Holdings, LLC, is an indirect wholly owned subsidiary of Charter Communications, Inc. Charter Communications expects to use the proceeds from the offering to pay down debt and for general corporate purposes. Charter Communications' ratings reflect Fitch's expectation that the company will continue to generate negative free cash flow given the company's current operating profile and increasing cash interest requirements on debt that recently has or is scheduled to convert to cash interest payment in 2005. Additionally Fitch's ratings incorporate Charter Communications' highly levered balance sheet and the negative impact on basic subscriber metrics, revenue, and EBITDA growth stemming from the high business risks associated with Charter Communications' competitive operating environment. During the third quarter of 2004, the company lost approximately 58,600 basic subscribers, reflecting an erosion of 1% on a sequential basis and 2.6% relative to the third quarter of 2003. The subscriber loss, among the highest in the industry, continues to demonstrate the negative impact of the competitive pressure from the direct broadcast satellite -- DBS -- operators. During each of the first three quarters of 2004, the rate of year-over- year basic subscriber losses has accelerated. The basic subscriber deterioration coupled with slower growth of digital subscribers (indicative of the company's high digital penetration of 44.3% as of the end of the third quarter) and the limited ability to increase prices due to the competitive environment has resulted in weak video revenue growth relative to its peer group. Additionally, competitive pressures and rising programming costs have constrained Charter Communications' EBITDA growth and margin. During the third quarter of 2004, Charter Communications generated approximately $471 million of EBITDA, relatively flat compared with the third quarter of 2003 on a pro forma basis. EBITDA margins declined 230 basis points as increasing programming and operating costs more than offset the company's revenue growth. For the year-to-date period ended Sept. 30, 2004, Charter Communications reported a negative $256 million of free cash flow, primarily driven by increased cash interest expense. From Fitch's perspective, the company's ability to generate free cash flow over the near term is constrained by limited EBITDA growth prospects and the conversion of discount notes issued by subsidiaries of CHTR to cash pay interest. Fitch expects the cash interest expense to grow during the fourth quarter as the first cash interest payment on the 9.92% senior discount notes due 2011 was paid, and the 11.75% senior discount notes due 2010 begin to accrue cash interest in January 2005. The company's liquidity position is supported by the $958 million available under the company's secured credit facility, all of which is available for borrowing under the covenant structure. Charter Communications' leverage metric was 9.9 times on an LTM basis. In light of Fitch's expectation of limited near term EBITDA growth, Fitch does not expect any meaningful improvement of credit protection metrics. CCO HOLDINGS: Moody's Rates Planned $500 Million Senior Notes B3 ---------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to the proposed $500 million issuance of senior notes by CCO Holdings, LLC, an indirect minority-owned subsidiary of Charter Communications, Inc. Moody's also affirmed all existing ratings for the company and its subsidiaries. The rating outlook remains stable. Moody's expects that net proceeds from the proposed offering will be used for general corporate purposes initially, but ultimately to repay debt outstanding under the Charter Communications Operating, LLC, subsidiary revolving credit facility. As such, Moody's does not believe that the current financing alters the company's capital structure in any material way, and certainly does not address the longer-term fundamental concerns about the company's business operations relative to its excessively leveraged capitalization. The extra cash initially, and the anticipated increase in availability under the revolver as expected early next year, does enhance liquidity somewhat, although not by enough in the rating agency's estimation to warrant a higher liquidity rating. -- Charter Communications, Inc. * Senior Implied Rating -- Caa1 (affirmed) * Senior Unsecured Issuer Rating -- Ca (affirmed) * Speculative Grade Liquidity Rating -- SGL-3 (affirmed) * Rating Outlook -- Stable (unchanged) -- CCO Holdings, LLC * $500 million of Floating Rate Senior Notes due 2010 -- B3 (assigned) Moody's opinion of the credit risk for Charter and its subsidiaries remains essentially unchanged from that of the past two years, although similar to the very recent November 2004 convertible note issuance, the rating agency acknowledged the market support evidenced by one-off transactions over this period which have slowed the company's otherwise eroding liquidity profile and postponed the much larger restructuring that is still believed to be both necessary and forthcoming. The fundamental mismatch that remains between the company's liability structure and its business model is actually worsening over time, as competition grows, more financial flexibility is subsequently needed, and cash flow growth fails to keep pace with faster growing debt service costs. Notwithstanding marginally lower default risk following the aforementioned liquidity-enhancing transactions of the past 12-to-18 months, this fundamental mismatch continues to drive the Caa1 senior implied rating. In addition to the key rating and outlook drivers previously articulated in various press releases, the B3 rating for the proposed CCOH notes incorporates the structural aspects of this claim on a relative ranking basis against the company's many other obligations, including notable structural seniority to Caa1- and Ca-rated bonds representing approximately 50% of consolidated debt via closer proximity to the company's assets (and notwithstanding the absence of upstream guarantees from the operating subsidiaries), balanced by effective subordination to a still very large amount of B2-rated bank debt. Charter Communications is one of the largest domestic cable operators serving approximately 6 million subscribers. The company maintains its headquarters in St. Louis, Missouri with corporate offices also in Greenwood Village, Colorado. CCO HOLDINGS: S&P Junks Proposed $500M Senior Floating-Rate Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC-' rating to the proposed $500 million senior floating-rate notes of CCO Holdings LLC and CCO Holdings Capital Corp., both indirect subsidiaries of cable TV system operator Charter Communications, Inc. The notes will be issued under Rule 144A with registration rights and proceeds will be used to repay the outstanding balance on the revolving credit facility of Charter Communications Operating LLC. All existing ratings on Charter and subsidiaries, including the 'CCC+' corporate credit rating, were affirmed. The outlook is negative. St. Louis, Missouri-based Charter served almost 6.1 million basic cable TV subscribers and had about $18.5 billion in long-term debt outstanding as of Sept. 30, 2004. The transaction will modestly improve Charter's liquidity needed to fund negative discretionary cash flow, which was $427 million in the 12 months ended Sept. 30, 2004. The company is unlikely to generate meaningful free cash flow through the medium term given weak revenue growth and rising cash interest requirements on its discount notes. "The ratings on Charter reflect high financial risk from elevated leverage because of aggressive debt-financed acquisitions and capital expenditures, intense competitive pressure from satellite TV providers, and the uncertainty of discretionary cash flow generation ability sufficient to meet maturities in the 2006 and 2007 time frame," said Standard & Poor's credit analyst Eric Geil. "These factors constrain the rating despite the company's position as the still-dominant provider of pay TV services in its markets, a degree of cash flow stability from largely subscription-based revenues, and good system asset values." CHESAPEAKE CORP: Moody's Puts B2 Rating on EUR100M Sr. Sub. Notes ----------------------------------------------------------------- Moody's Investors Service rated Chesapeake Corporation's new EUR100 million Senior Subordinated Notes B2. Chesapeake intends to use the net proceeds from this issue to fund a tender offer of its $85.0 million 7.2% senior unsecured debentures due March 15, 2005, with the balance available for general corporate purposes which may include funding near term debt maturities. Should the tender offer be successful, Moody's will withdraw the applicable rating. Moody's also affirmed Chesapeake's Ba3 senior implied and B1 senior unsecured and issuer ratings. The outlook remains stable. Rating issued: * EUR100 million senior subordinated notes: B2 Ratings affirmed: * Outlook: Stable * Senior implied: Ba3 * Issuer: B1 * $85.0 million 7.2% senior unsecured notes due March 15, 2005: B1 * $31.25 million 6.25% senior unsecured IRB's due March 1, 2019: B1 * $18.75 million 6.375% senior unsecured IRB's due March 1, 2019: B1 * GBP75.0 million 10.375% senior subordinated notes due November 15, 2011: B2 Chesapeake's Ba3 senior implied rating is based on the company's relatively stable profit margins resulting from contractual relationships with key customers that allow raw material cost increases to be passed on. These contractual relationships also act to smooth out volume changes that result from customer migration among the large number of competitors in the European and U.K. consumer packaging markets. Consequently, the company's recent market positioning has been relatively stable. Chesapeake also has good liquidity arrangements, with a $250 million secured revolving credit facility that is committed through 2009. Financial covenants are not onerous, and no near term compliance issues are expected. However, competitive pressures and relatively low barriers to entry act to suppress profit margins. Accordingly, cash flow available for debt service has not been robust, and with a relatively high debt load, credit protection measures have not been strong. Moody's expects these competitive pressures to prevent margins from expanding, and therefore, cash flow available for debt service will continue to be relatively weak, as will the related credit protection metrics. Chesapeake competes in a number of small regional markets that are not widely followed, and the company does not report unit sales data. Consequently, there is very limited visibility of near-to-mid term sales, and forecasting future results is more difficult than would otherwise be the case. In addition, event risk related to potential acquisitions remains a concerns. Chesapeake is a U.S. based company with predominantly European operations, but has a publicly announced goal of increasing its U.S. presence over time. Consequently, results are subject to the impact of exchange rate fluctuations and there are risks that the capital structure may become more leveraged over time in order to finance acquisitions in support of its strategy. Chesapeake's bank credit facility is secured and benefits from upstream guarantees from operating subsidiaries. It also allows an additional $200 million of secured debt to be incurred. The company's senior unsecured debt does not benefit from either security or upstream guarantees. Accordingly, with some 40% of the debt structure, potentially 55% given the ability to secure an additional $200 million of structurally and contractually senior secured debt, the senior unsecured and issuer ratings are notched down from the senior implied rating to B1. Senior subordinated debt is contractually junior to the unsecured debt, and is further notched down to B2. Given the stability of the company's profit margins, the lack of significant cash flow available to reduce debt, and the lack of specific acquisition plans, near term ratings variability is not expected. Accordingly, the outlook is stable. Either or both of the rating or the outlook could be upgraded if event risk were contained, and, through a combination of permanent debt reduction or sustainable cash flow augmentation, Chesapeake were able to demonstrate an ability to generate average through-the-cycle RCF/TD in excess of 15% with FCF/TD nearing 10%. Reciprocally, developments that would cause Moody's estimates of average through-the-cycle RCF/TD to be approximately 10% or below, with FCD/TD below 5%, would result in a downgrade. So too would debt financed acquisition activity or a material deterioration in liquidity arrangements. Headquartered in Richmond, Virginia, Chesapeake is a leading international supplier of specialty paperboard and plastic packaging. CHESAPEAKE ENERGY: Pricing $600 Million 6.375% Senior Notes ----------------------------------------------------------- Chesapeake Energy Corporation (NYSE: CHK) has priced a private offering of $600 million of senior notes due June 15, 2015, which will carry an interest rate of 6.375%. The senior notes were priced at 99.056% of par to yield 6.50% to maturity. The senior notes being sold by Chesapeake have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The senior notes will be eligible for trading under Rule 144A. Chesapeake intends to use the net proceeds to fund its recently announced tender offer for all of its approximately $210 million outstanding 8.375% Senior Notes due 2008, to fund the recently announced acquisition of certain natural gas properties from Hallwood Energy Corporation, and to repay debt under its revolving bank credit facility. About the Company Chesapeake Energy Corporation is the sixth largest independent producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and producing property acquisitions in the Mid-Continent, Permian Basin, South Texas, Texas Gulf Coast and Ark-La-Tex regions of the United States. The company's Internet address is http://www.chkenergy.com/ CHESAPEAKE ENERGY: Fitch Rates $600M Senior Unsecured Notes BB -------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Chesapeake Energy's proposed senior unsecured notes. Additionally, Fitch affirmed the ratings of Chesapeake's senior secured revolving credit facility and hedge facility at 'BBB-' and its convertible preferred stock at 'B+'. The Rating Outlook for Chesapeake remains Stable. Chesapeake announced it was issuing $600 million of senior unsecured notes, with proceeds being used to redeem $210 million of 8.375% senior unsecured notes due 2008, to fund a $292 million purchase of assets and to reduce outstanding revolver debt. Additionally, Chesapeake announced it will issue common stock to tender for the remaining $200 million of 6% convertible preferred stock. This follows the Nov. 19, 2004, announcement that the company would convert all of its outstanding 6.75% cumulative convertible preferred stock to common stock. Chesapeake is purchasing from Hallwood Energy Corp. 134 billion cubic feet equivalent -- bcfe -- of reserves for $277 million and gathering assets for $15 million. The acquired assets are located in the Barnett Shale play, just south of Fort Worth, Texas and are 14% proved developed producing -- PDP. Management states that the low lease operating costs and production taxes associated with these properties somewhat mitigates the multiple ($2.05 per proved thousand cubic feet equivalent -- mcfe) on this purchase. Additionally, the company believes the purchase provides considerable exploration opportunities at very attractive costs. Fitch has a constructive view of the refinancing and asset purchase as they will extend debt maturities, reduce total dividend expenditures, and expand the company's presence in the Barnett Shale. Offsetting these items is the additional debt, the high multiple paid for the proved reserves, and the low amount of proved developed producing reserves acquired. Nevertheless, the transactions will do little to change the overall risk profile of Chesapeake. The ratings are supported by the size and quality of Chesapeake's reserves, the company's low risk reserve profile, and the conservative funding strategy employed to finance the growth in recent years. Pro forma for the previously mentioned transactions, Chesapeake will have 4.6 trillion cubic feet equivalent -- tcfe -- of proved reserves with a reserve life exceeding 12 years. Approximately 69% of its reserves are PDP and about 74% of its reserves are externally prepared by a third party. Approximately 72% of its reserves are in the very familiar Mid-Continent region, 15% in South Texas, and the remainder in the Permian Basin. Total debt after completion of the proposed debt offering will be about $3.1 billion, providing debt of approximately $0.67 per mcfe and debt of $0.99 per PDP mcfe. Equally important as the risk profile of Chesapeake's reserves is how it has funded its aggressive growth strategy. Two-thirds of Chesapeake's reserve growth in the past three years has come through acquisitions. Notably, it has funded these acquisitions in a relatively balanced manner through internally generated cash flow, as well as equity and debt issuances. Chesapeake has raised more than $1.8 billion of equity (common and preferred) while issuing $1.5 billion of debt in slightly less than four years. Chesapeake's reserve replacement success, credit profile, and dividend payments were also considered in the rating. Chesapeake's reserve replacement over the past three years was more than 400% and its organic replacement during the same period was about 141%, demonstrating the company's ability to grow through the drill-bit. Year to date, management states that its total reserve replacement in 2004 is more than 500% and its organic replacement is more than 225%. While the latest acquisitions will no doubt raise Chesapeake's average finding, development, and acquisition costs to more than $1.70 per mcfe, the low-lifting costs associated with those properties partially offset Fitch's concern. Chesapeake's latest twelve months -- LTM -- adjusted interest coverage exceeded 6.0 times and adjusted debt to EBITDA was 2.0x. In a mid-cycle price environment ($3.50 per mcf natural gas and $22 per barrel oil), Fitch estimates that Chesapeake could generate adjusted interest coverage greater than 4.0x and adjusted debt to EBITDA of less than 3.5x. The Stable Rating Outlook is based on several factors, including a continued conservative funding strategy for future acquisitions, a relatively unchanged risk profile with regard to its reserves, and stable lifting and finding costs. CHESAPEAKE ENERGY: Moody's Rates $600M Senior Unsecured Notes Ba3 ----------------------------------------------------------------- Moody's assigned a Ba3 rating to Chesapeake Energy's $600 million of 10-year senior unsecured notes, affirmed its Ba3 senior unsecured note, Ba3 senior implied, and SGL-2 liquidity ratings, and moved the outlook to positive from stable. Proceeds will fund: (a) a $292 million potentially important acquisition of Hallwood Energy's North Block properties in the non-core area of the Barnett Shale, Johnson County, Texas; (b) a tender for the 8.375% notes due 2008; and (c) repay roughly $85 million of bank debt. The properties consist mainly of a large prospect inventory of proven undeveloped, probable, and possible drilling locations across 18,000 acres. The proven reserve component is 22.33 mmboe of which only 3.2 mmboe is proven developed reserves. The high $19/boe paid for Hallwood's proven reserves (loaded for future drilling and development costs on existing proven reserves), and $66,000/boe paid for reported current daily production, indicate a debt funded acquisition that mainly intensifies CHK's Barnett drilling inventory and adds production potential. CHK still faces inherent capital needs and drilling, completion, reservoir, and production risk. CHK estimates that North Block drilling and completion costs will be $2.2 million per well. Acquisition economics are enhanced by the fact that production from the Barnett is tax advantaged, with a 1.3% severance tax on unconventional reservoir production versus 7.5% for conventional reservoir production elsewhere in Texas. Lifting costs also appear to be attractive. The ratings and positive outlook reflect continued progress building a large diversified reserve, production, and prospect base (mostly by acquisition) operating at strong up-cycle production margins and competitive operating costs before reserve replacement. However, reserve replacement costs have risen substantially. An extensive drilling inventory and durable 8 year PD reserve life reduce reinvestment risk. Before Hallwood, CHK's internal estimate of September 30, 2004, reserves indicates significant organic PD reserve gains that materially reduced leverage on PD reserves from escalated pro-forma levels per CHK's June 30, 2004, reserve estimate. Hallwood pushes that leverage back to mid-2004 pro-forma levels, but further reduction may come with fourth quarter reserve bookings. Adjusted leverage will also fall this quarter with up to $380 million of preferred stock converted to common, of which $180 million has already converted. An upgrade within 6 to 18 months would look at PD reserve trends relative to debt, a supportive outlook for prices in light of CHK's rising total full-cycle costs (reserve replacement in particular), moderation of total cost increases, and the acquisition and funding posture at that time. An important step will be review of FAS 69 data in CHK's year-end 2004 report as well as its CHK's internal and third party engineering. Unit reserve replacement costs continue to escalate as CHK aggressively acquires non-proven drilling locations. These costs would be higher but CHK's PUD bookings have taken PUD reserves from 26% of total reserves to a pro-forma 31%. Pro-forma 2004 three-year average all-sources reserve replacement costs are now $10+/boe, 2004 three-year average drillbit F&D costs are now $9+/boe, year-to-date 2004 all-sources F&D costs are now $11.50+/boe; and year-to-date 2004 drillbit F&D costs are $10.50+/boe. Leverage on PD reserves has risen since, often enough, acquisitions have contained low proportions of PD reserves and were often enough funded with debt or preferred stock. The SGL-2 rating reflects: (1) adequate cash flow cover of all projected items, including a budgeted $1.5 billion of 2005 capital spending; (2) very good cover of sustaining capital spending (roughly $650 million); (3) good back-up liquidity; very good covenant coverage; and (4) adequate alternative liquidity. The SGL-2 rating expects cash flow to be supported by strong 2005 natural gas prices. Also, CHK's funding strategy entails proportionately low sustained use of secured bank debt, relying on long-term note funding instead. Moody's estimates roughly $860 million of pro-forma annualized sustaining capital spending, preferred dividends, and interest expense (including capitalized interest). CHK has the option to reduce leverage on PD reserves, and possibly reduce unit reserve replacement costs, if it begins shifting its production growth focus to more aggressively harvesting its large prospect inventory (assuming good productivity on that reinvestment) and under-spends cash flow. This would be furthered it if reinstated a strategy of 50% common equity funding for acquisitions (particularly with higher proportions of PD reserves), and, over time, conversion of the remaining convertible preferred stock. More specifically, CHK's strengths include a diversified production and prospect base by number of producing and prospective well sites, by field, and by basin, though not by region (roughly 80% Mid-Continent). Production visibility is enhanced by a large diversified drilling inventory, widely diversified by basin, field, and producing well count. This spreads production, drilling, completion, and reservoir risk across many locations and geologic environments. Still, CHK's largest capital spending concentration is in higher risk deep Anadarko Basin plays (20% of 2005 capital spending). CHK's fourth quarter 2004 conversion of up to $380 million of preferred stock to common, its September 30, 2004, estimate of organic additions to proven and PD reserves, and expected fourth quarter organic PD reserve growth improve the odds (versus the situation indicated at mid-year 2004) that adjusted leverage on PD reserves could fall significantly below $6/PD boe. This also assumes unit cash flow cover of interest, preferred dividends, and sustaining capex is above 160% in the up-cycle or at least 125% in a materially lower price environment at the time. Though building a large, mid-Continent intensive, yet diversified reserve and prospect base, the rapid expansion by acquisition delayed an important stage of leverage reduction on PD reserves and an upgrade. This due to: (1) disproportionately low growth of funded lower risk PD reserves from acquisitions (as in the Hallwood); (2) acquisitions funded often enough with debt or preferred stock; (3) the inherent risks of CHK's fast pace and cumulative scale of acquisitions; and (4) the fact that the ratings anticipated new debt funded acquisitions with low proportions of PD reserves and production. Moody's do not expect debt reduction from cash flow in 2005, with outlays approximating cash flow. This puts the focus squarely on sufficient capital productivity to boost PD reserves relative to debt. CHK's ability to grow PD reserves faster than debt and preferred stock is inherently driven by: (1) productivity of capital and acquisition spending, as indicated by unit acquisition costs and unit organic finding and development costs; (2) the proportion of PD reserves in acquisitions; (3) the internal pace of converting of PUD reserves to PD reserves; (4) scale and proportion of annual PD reserve additions versus PUD reserve additions; and (5) the degree to which cash flow and common equity fund capital spending and acquisitions. Underlying that challenge, and given its strategically important aggressive accumulation of drilling locations, often entailing unconventional reserves, CHK still inherently faces the risks of: (1) moderating prices (weather and macro demand); (2) uneven results across the play due to reservoir rock heterogeneity, variance in permeability and natural gas in place, and varying hydraulic fracturing results; and (3) rising drilling and services costs. In our view, current hedging cannot substantially mitigate the risk of high cost acquisitions relying largely on drilling locations to meet expected acquisition economics. CHK budgets roughly $1.5 billion of 2005 capital spending, roughly $210 million of gross interest expense (including capitalized interest) and preferred stock dividends, and roughly $52 million in common dividends. Assuming $41/bbl West Texas Intermediate oil prices, less CHK's $2.75/bbl realized price differential, and $6/mcf natural gas prices (at 7:1 BTU price equivalence due to historically wide light/heavy oil price differentials), less CHK's $0.75/mcf price differential, EBITDA may be in the range of up to $1.85 billion. At $35 WTI and $5/mcf natural gas prices, Moody's estimates 2005 EBITDA in the $1.55 billion to $1.65 billion range. The outlook was reduced to stable in July 2004 on substantially escalated pro-forma leverage on pro-forma mid-year PD reserves, well above already full year-end 2003 leverage. This derived from acquisition debt and preferred stock and negligible organic PD reserve growth at mid-2004 (per CHK engineering), though such leverage moderated with CHK's September 30 engineering. Moody's expected continued high priced acquisitions also, with low proportions of PD reserves, lengthening the odds at the time that 2004 PD reserve growth could be fast enough relative to debt for an intermediate term upgrade. Pro-forma for the Hallwood acquisition, leverage on PD reserves is roughly $6.10/boe of PD reserves and roughly flat with our mid-2004 estimate. Moody's expects pro-forma November 30, 2004, debt to be in the range of $3.1billion to $3.2 billion, pro-forma PD reserves to be roughly 513.7 mmboe, pro-forma proven reserves to be roughly 765 mmboe, and future capital spending needed to bring all proven reserves to production to be approximately $1.750 billion. Total debt plus future capital needed bring all proven reserves to production equates to roughly $6.40/boe. Pro-forma combined interest expense and preferred dividends are roughly $4.50/boe per unit of production CHK's pending conversion of up to $380 million of preferred stock to common reduces Debt plus Preferred Stock divided by PD reserves to $7.12/PD mmboe and Debt plus 50% of Preferred Stock divided by PD reserves to $6.66/boe. Definitive de-leveraging awaits conversion of additional preferred stock to common and adequately productive 2004 and 2005 capital spending to boost PD reserves relative to debt and preferred stock. Chesapeake Energy Corporation is headquartered in Oklahoma City, Oklahoma. CHINA WORLD: Retains Anne McBride for Investor Relations Work ------------------------------------------------------------- China World Trade Corporation (OTC Bulletin Board: CWTD) has retained The Anne McBride Company, Inc. (AMcB), a full service financial communications and strategic consulting firm based in New York, to provide strategic investor relations and financial communications counsel. John Hui, CEO and Vice-Chairman of China World Trade Corporation stated, "Our partnership with The Anne McBride Company will allow us to implement our strategic growth and communications plan as we broaden our relationships with U.S. investment firms. We selected this communications firm because of its impressive track record of enhancing shareholder value for Chinese and other international growth companies listed in the U.S. We trust that working with The Anne McBride Company will allow us to gain the visibility among U.S. investors that we seek." "We welcome China World Trade Corporation as one of our clients because we see great growth potential for this diversified Company in the U.S. capital markets," remarked Anne McBride, Chairman and CEO of The Anne McBride Company, Inc. "Based on our long-standing successful record of working with many rapidly growing international companies, we are confident that we will facilitate the expansion of the Company's current and potential shareholder base." About China World Trade Corporation China World Trade Corporation has established its businesses into three distinct divisions, namely the club and business center; the business traveling services; and the business value-added services. The Club and Business Center Division is devoted to build the World Trade brand in China. Its objective is to open and operate business clubs in the major cities of China in association with the World Trade Center Association, in order to position the company as the platform to facilitate trade between China and the world market. CWTC currently operates the Guangzhou World Trade Center Club, consisting of over 4,000 square meters, and The Beijing World Trade Center Club, which is located at 2nd Floor, Office Tower II, Landmark Towers Beijing, 8 North Dongsanhuan Road, Beijing PRC, and consisting of 730 square meters. In addition, since the acquisition of CEO Clubs China Limited in May 2004, CEO Clubs will complement China World Trade Corporation's offerings by targeting higher profile leadership from larger companies than those normally associated with China World Trade Corporation. CEO Clubs has thirteen chapters in the US and China. It focuses on recruiting CEOs of companies with annual sales exceeding $2 million as members. The average club member has $20 million in annual sales. The Business Traveling Services Division will provide, through its operating arm, the New Generation Group, the necessary platform for China World Trade Corporation to focus on the high growth, travel related businesses. New Generation is the pioneer and one of the market leaders in the travel agency businesses through the operations of its ten subsidiaries in Southern China in ticketing sales for international and domestic flights as well as in-bound business travel. Being one of the leading consolidators of hotel accommodations and airline tickets in China, New Generation has already acquired the necessary licenses to operate as a ticketing and travel agent in the PRC. These licenses include 26 licenses as a ticketing agent for international and domestic flights for both cargo and passengers issued by the Civil Aviation Administration of China and the International Air Transport Association and three licenses as a domestic and international travel agent issued by the Administrative Bureau of Tourism of China. In addition, New Generation is also an authorized/licensed insurance agent in China to provide, in particular, accidental and life insurances. New Generation also provides premium "red carpet" airport based services to prestigious clients and will participate in the opening of the new airport in Guangzhou, the PRC. New Generation is believed to contribute a superior revenue base to the Company. The Business Value-Added Services Division concentrates on value-added services of credit cards and merchant related businesses as well as on consultancy services. Guangdong World Trade Link Information Services Limited, a subsidiary of CWTC, formed a partnership with the Agricultural Bank of China to manage the Company's co-brand credit card project. WTC Link is an active provider of CRM solution and services in China. It helps China Telecom to develop and manage the merchants' privilege VIP member services. WTC Link also formed a partnership with China Unionpay to develop the royalty systems for bank card holders in Guangdong Province, China. In addition, this Division also provides consultancy services to CWTC's members and clients in the financial services areas including mergers and acquisitions, corporate restructuring and financing. China World Trade has consolidated companies in industries of trade, travel and finance. These companies and acquisitions form a group which has the capability to provide value added services and strong cross-marketing opportunities for its members' utilization. For further information, visit: http://www.chinawtc.com/ * * * Going Concern Doubt In its Form 10-KSB for the fiscal year ended Sept. 30, 2003, China World's chartered accountants, Moores Rowland Mazars, expressed substantial doubt about the Company's ability to continue as a going concern due to its negative working capital and continued losses. These losses continue in the quarter with the Company reporting a $758,413 net loss in Sept. 2004. CHIQUITA BRANDS: Declares $0.10 Per Share Quarterly Dividend ------------------------------------------------------------ Chiquita Brands International, Inc.'s (NYSE: CQB) board of directors has authorized the initiation of a quarterly cash dividend of $0.10 per share on the company's outstanding shares of common stock. The first dividend is payable on Jan. 17, 2005, to shareholders of record as of the close of business on Jan. 3, 2005. This will be Chiquita's first dividend since emerging from Chapter 11 restructuring in March 2002. "The initiation of a regular quarterly cash dividend demonstrates our optimism in Chiquita's future as well as confidence in our ability to continue generating strong cash flows," said Fernando Aguirre, chairman and chief executive officer. "It also provides us with an opportunity to provide returns to our shareholders as we continue to build the long-term value of our company." Mr. Aguirre continued, "We believe the approved dividend policy will allow us to fund our future growth initiatives while simultaneously returning cash to shareholders. We will continue to use excess cash flow to pay off debt, fund potential acquisitions or other growth opportunities and execute our previously announced stock and warrant repurchase program. We believe this dividend, combined with our stock and warrant repurchase program, demonstrates the ongoing strength and stability of our company without compromising our strategy of pursuing profitable growth by making Chiquita a more consumer- and marketing-centric organization." While Chiquita intends to pay regular quarterly dividends for the foreseeable future, all subsequent dividends will be reviewed quarterly and declared by the board at its discretion. The company will hold its third annual analyst and investor day on Thursday, Dec. 2, 2004. The meeting will begin at 8 a.m. in the Starlight Roof of The Waldorf Astoria, 301 Park Avenue, New York. For telephone access, please contact one of the following numbers 10 minutes prior to the scheduled start time. In the United States and Canada, dial 1-877-502-9276. For all other locations, dial +913-981-5591. To listen to the live audio webcast of the conference call, please use the link on Chiquita's home page -- http://www.chiquita.com/ Archived versions of the call can also be accessed from this website link. About the Company Chiquita Brands International, Inc., markets, produces and distributes high-quality bananas and other fresh produce, which are sold under Chiquita(R) premium brands and related trademarks. The company is one of the largest banana producers in the world and a major supplier of bananas in Europe and North America. The company also distributes and markets fresh-cut fruit and other branded, value-added fruit products. Additional information is available at http://www.chiquita.com * * * As reported in the Troubled Company Reporter on Sept. 23, 2004, Moody's Investors Service assigned a B2 rating to the prospective senior unsecured note issue of Chiquita Brands International, Inc., and affirmed Chiquita's B1 senior implied rating. The outlook is stable. CLEMROSE PROPERTIES: Case Summary & Largest Unsecured Creditor -------------------------------------------------------------- Debtor: Clemrose Properties, Inc. PO Box 131 Chester, New Jersey 07930 Bankruptcy Case No.: 04-47852 Chapter 11 Petition Date: December 2, 2004 Court: District of New Jersey (Newark) General Counsel: Jeffrey A. Cooper, Esq. Carella, Bryne, Bain, Gilfillan, Cecchi, Stewart & Olstein, P.C. 5 Becker Farm Road Roseland, New Jersey 07068-1735 Tel: (973) 994-1700 Bankruptcy Counsel: Ramp & Pisani Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Fleet National Bank $1,060,000 c/o William F. Saldutti III, Esq. Dembo & Saldutti 102 Browning Lane, Building B Cherry Hill, New Jersey 08003 COMBUSTION ENGINEERING: 3rd Cir. Rejects Prepackaged Asbestos Plan ------------------------------------------------------------------ The United States Court of Appeals for the Third Circuit published its decision yesterday rejecting the prepackaged chapter 11 plan proposed in 2002 by Combustion Engineering, Inc., attempting to its asbestos-related liabilities, as well as claims against two other ABB, Ltd., units, ABB Lummus Global, Inc. and Basic, Inc. A full-text copy of the Third Circuit's 136-page opinion is available at no charge at: http://www.ca3.uscourts.gov/opinarch/033392p.pdf Three principal issues came to the Third Circuit on appeal: First, on the facts in Combustion Engineering's case, the petitioners questioned whether the Bankruptcy Court has "related to" jurisdiction over the derivative and non-derivative claims against the non-debtors Basic and Lummus? The Third Circuit says the factual findings in the Bankruptcy Court are insufficient. The Sec. 105 injunction in favor of Basic and Lummus is vacated. Second, the appellants opposing the Combustion Engineering plan asked the Third Circuit whether a non-debtor that contributes assets to a post-confirmation trust can take advantage of Sec. 105 of the Bankruptcy Code to cleanse itself of non-derivative asbestos liability? No, the Third Circuit says, a Sec. 105 channeling injunction can't extend to nonderivative third-party actions against a debtor's non-debtor friends. Third, the petitioners asked the Third Circuit to look at the two- trust structure and use of "stub claims" in the voting process -- which allowed certain asbestos claimants who were paid as much as 95% of their claims prepetition to vote to confirm a Plan under which they appear to receive a larger recovery than other asbestos claimants -- and decide whether that scheme is permitted under the Bankruptcy Code? The Third Circuit says the scheme may violate the Bankruptcy Code and the "equality among creditors" principle that underlies it. The Third Circuit remands this issue to the District Court for further development and review in considering any revised reorganization proposal. The Chapter 11 Filing ABB Ltd.'s U.S. subsidiary, Combustion Engineering, Inc., filed for chapter 11 protection on February 17, 2003, and delivered its prepackaged plan to the U.S. Bankruptcy Court for the District of Delaware that day to halt and resolve the tide of asbestos-related personal injury suits brought against the companies. Over the dozen years prior to the chapter 11 filing -- according to information obtained from http://www.LitigationDataSource.com-- the number of claims against Combustion Engineering, its affiliates, ABB and former joint venture partners, skyrocketed: Year Asbestos Claims Asserted Against CE ---- ----------------------------------- 1990 18,891 . 1991 19,000 . 1992 20,000 + 1993 21,000 + 1994 22,000 ++ 1995 23,842 +++ 1996 27,577 ++++++ 1997 28,976 +++++++ 1998 28,264 ++++++ 1999 33,961 ++++++++++ 2000 39,138 +++++++++++++ 2001 54,569 ++++++++++++++++++++++++ 2002 79,204 ++++++++++++++++++++++++++++++++++++++++ CE is named as a defendant in cases pending in multiple jurisdictions, with plaintiffs alleging injury as a result of exposure to asbestos in products manufactured or sold by CE or that was contained in materials used in CE's construction or maintenance projects. Combustion Engineering's History Combustion Engineering was formed in Delaware in 1912 as The Locomotive Superheater Co. and manufactured and sold superheaters for steam locomotives. From the 1930s forward, CE's core business is designing, selling and erecting power- generating facilities, including major steam generators. CE also services large steam boilers and related electrical power generating equipment. From the 1930s through the 1960s, asbestos insulation was used on many CE boilers. Development of the Plan Faced with escalating asbestos litigation costs and decreasing insurance coverage, an economic decline in its business, and ABB's financial woes, CE began exploring its options in late 2002. After considering several options, CE concluded that the best avenue for maximizing payments to both current and future claimants and enhancing the value of CE's estate was through a consensual restructuring. CE recognized that it could not propose a plan to effectively reorganize without the cooperation of ABB, Asea Brown Boveri and representatives of current and future asbestos claimants. Over a three-month period, CE, ABB and asbestos claimant representatives engaged in extensive negotiations to develop a strategy for permanently addressing CE-related asbestos claims. The negotiations culminated in the Prepackaged Chapter 11 Plan. Establishment of a 524(g) Trust The pre-packaged plan was negotiated with certain asbestos claimants' lawyers and approved by David T. Austern, Esq. (who serves as General Counsel for Claims Resolution Management Corporation in Fairfax, Virginia), the proposed representative for future claimants. The Plan contemplates establishment of a trust under 11 U.S.C. Sec. 524(g), entry of a channeling order directing present and future asbestos claimants to that trust for payment, and entry of an injunction prohibiting present and future claimants from seeking compensation from any source other than the trust. Valuation & Plan Funding Under the Plan, all of CE's value -- at the end of September 2002, CE's value was US$812,000,000 -- is delivered to the Sec. 524(g) Trust for the benefit of present and future claimants. In addition: (1) ABB contributes: (a) 30,298,913 shares of its stock, initially valued at $50,000,000, but with a current market value exceeding $81,000,000; (b) a financial commitment to pay $250,000,000 to the Trust in pre-agreed installments from 2004 to 2009 (guaranteed by certain ABB affiliates); (c) up to $100,000,000 more from 2006 through 2011 if certain performance benchmarks are achieved; and (d) the release of all claims and interest of the ABB group in insurance covering CE's asbestos personal injury claims; (2) Asea Brown Boveri contributes: (a) an indemnification of all of CE's environmental liabilities, which has a value of around $100,000,000; (b) a release of its indemnification rights against CE for asbestos claims asserted against Asea Brown Boveri after June 30, 1999; (c) a note evidencing Asea Brown Boveri's agreement to contribute almost $38,000,000 on account of the asbestos claims attributable to: -- Basic, Incorporated (CE acquired this acoustical plaster manufacturer in 1979) and -- ABB Lummus Global, Inc. (CE acquired this manufacturer of feed water heaters that used asbestos-containing gaskets in transactions stretching from 1930 to 1970); and (d) if Lummus is sold within 18 months of the Plan's Effective Date, an additional $5,000,000; and (3) Lummus and Basic release and assign all of their interests in insurance covering asbestos personal injury claims, including certain CE-shared policies. Accordingly, the total value of these contributions to the Trust range from $1,250,000,000 to $1,386,000,000, excluding any value attributable to the insurance policies, and subject to wide swings as the value of CE increases or decreases over time. Bankruptcy Professionals Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart LLP, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent Combustion Engineering. The Blackstone Group, L.P., provides CE with financial advisory services. David M. Bernick, Esq., at Kirkland & Ellis, provides legal advice to ABB. The CE Settlement Trust, holding the largest unsecured claim against CE's estate, is represented by Hasbrouck Haynes, Jr. CPA, at Haynes Downard Andra & Jones LLP. CORAM HEALTHCARE: Emerges from Bankruptcy Protection ---------------------------------------------------- Arlin M. Adams, the Chapter 11 Trustee for the Bankruptcy Estates of Coram Healthcare Corporation and its wholly owned subsidiary, Coram, Inc., disclosed that his Second Amended Joint Plan of Reorganization, as modified, became effective on Dec. 1, 2004. As a result, Coram Healthcare Corporation filed a certificate of dissolution with the State of Delaware on Dec. 1, 2004, and will now proceed toward winding-up its affairs. The reorganized Coram, Inc., has emerged from bankruptcy with: -- Goldman Sachs Credit Partners, L.P. -- Wells Fargo Foothill, Inc., and -- Cerberus Partners, L.P., collectively to receive 100% of the equity interests in exchange for: (i) cancellation of their previously held Coram, Inc. preferred stock and remaining outstanding unsecured indebtedness, and (ii) a $56.0 million contribution to the Bankruptcy Estates of Coram Healthcare Corporation and Coram, Inc., in the form of cash and the assumption of financial responsibility under a settlement agreement among the companies and the Internal Revenue Service. In accordance with the terms of the Chapter 11 Trustee's Second Amended Joint Plan of Reorganization, all outstanding shares of Coram Healthcare Corporation (CRHEQ.OB) common stock are deemed cancelled and extinguished as of Dec. 1, 2004, the effective date. Also, trading of Coram Healthcare Corporation common stock on the Over the Counter Bulletin Board maintained by the National Association of Securities Dealers, Inc., ceased as of the close of business on Dec. 1, 2004. Each holder of cancelled and extinguished Coram Healthcare Corporation common stock will be entitled to receive a distribution equal to its pro rata share of any remaining cash balance after the payment of all allowed administrative, priority and unsecured claims, retention of $10 million cash working capital, plus any net future proceeds from certain litigation claims, which have been brought or may be filed by the Chapter 11 Trustee on behalf of the Bankruptcy Estates, after payment of interest only at the federal post- judgment rate on the claims of unsecured creditors. The new Board of Directors of reorganized Coram, Inc., consists of Robert H. Fish, Curtis Lane and Steven L. Volla. Reorganized Coram, Inc., continues to operate under prior existing management. "The path to our reorganization has been a long and sometimes arduous one, but Coram's management and employees never lost sight of their mission along the way," said Allen J. Marabito, Principal Executive Officer of Coram Healthcare. "I want to thank our patients, customers, suppliers, employees and all healthcare professionals who supported us through this protracted process." "We are proud that through the entire reorganization proceeding, Coram provided the best specialized home infusion care available anywhere," Mr. Marabito continued. "We maintained high quality care, we maintained excellent working relationships with our vendors and suppliers and we continued the Coram tradition of excellence in all aspects of our business all the while growing significantly during this time. None of this would have been possible without the hard work and dedication of our more than 2,300 full-time equivalent employees across the nation and in Canada. They went through a lot and always put service to our patients and our customers first in everything they did." "I want to give a special thanks to our Chapter 11 Trustee, The Honorable Arlin M. Adams and his legal team at Schnader Harrison Segal & Lewis for permitting all of us to focus on the business of providing superior patient care in the home and enabling Coram to emerge as the national leader in specialized home infusion services." Coram Healthcare Corporation is a provider of infusion-therapy services. The Company filed for chapter 11 protection on August 8, 2000 (Bankr. D. Del. Case No. 00-03299). Christopher James Lhuiler, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, represents the Debtors. Kenneth E. Aaron, Esq., at Weir & Partners LLP, and Barry E. Bressler, Esq., at Schnader Harrison Segal & Lewis LLP, represent the Chapter 11 Trustee in these proceedings. Richard Levy, Esq., at Jenner & Block, LLC, represents the Equity Committee led by Sam Zell. CUMULUS MEDIA: Moody's Assigns Ba3 Rating to $75M Sr. Sec. Loan --------------------------------------------------------------- Moody's Investors Service assigned Ba3 ratings to Cumulus Media's $75 million senior secured term loan F and $75 million increase to its existing revolving credit facility. Proceeds from this transaction may be used to finance Cumulus' $100 million share repurchase program. Moody's also assigned Ba3 ratings to $415 million in senior secured term loans. This rating assignment incorporates Cumulus' amendment to its bank credit facilities, which redistributed debt between existing term loans. Moody's affirmed all existing ratings, and changed the outlook to positive. The ratings reflect Cumulus' strengthening balance sheet and interest coverage, as well as improving margins, and the positive outlook specifically incorporates Moody's belief that the company now produces sufficient free cash flow to quickly reduce any incremental leverage taken on to finance potential share repurchases and/or acquisitions. Moody's assigned these ratings: * Ba3 to the $75 million senior secured term loan F, * Ba3 to the $75 million incremental revolving credit facility, * Ba3 for the $195 million senior secured term loan A1, and * Ba3 for the $220 million senior secured term loan E. Moody's affirmed these ratings: * Ba3 for the existing $106.9 million revolving credit facility, * Ba3 senior implied rating, and * B2 senior unsecured issuer rating. Moody's withdrew the Ba3 ratings on the existing senior secured term loan facilities. The rating outlook is now positive. The positive outlook also incorporates our expectation that Cumulus will conservatively finance its acquisitions, with a mix of debt and equity, and maintain leverage of about 5 times debt- to-cash flow going forward. For the ratings to move higher, Moody's expects leverage below this level, absent acquisitions. Moody's notes that the company has benefited from its ability to use equity as currency to finance acquisitions and is likely to do so when transactions are accretive. With the current weakness in the equity market, Cumulus has stated its reluctance to use equity and will finance the $80 million in pending transactions with cash. Moody's also notes that the company has the ability to complete an additional $100 to $200 million in share repurchases under the terms of its bank credit facilities. To the extent that the company continues to use cash to finance additional share repurchases or acquisitions and this significantly increases leverage, a reversion to the former stable outlook may be warranted. Cumulus' aggressive acquisition strategy and the integration and financing risk associated with newly acquired stations, as well as potential share repurchases, temper the company's credit strengths. Moody's believes that current station operating margins, although improving, continue to lag the peer group as a result of Cumulus' mid-market and turnaround focus. The ratings also consider the highly competitive nature of Cumulus's radio markets and the cyclical nature of the advertising market, albeit offset somewhat by the company's strong market position. However, the ratings are supported by Cumulus': (1) leading presence in its markets (58 of 61 clusters rank #1 or #2 in terms of revenue or audience share); (2) small market focus; (3) willingness to use equity to finance acquisitions and reduce leverage; (4) the lack of market concentration (no individual market accounting for more than 7% of cash flow); (5) station's geographic and format diversity; and (6) heavier mix of more stable local advertising revenues (approximately 86% of revenues). The ratings also benefit from Cumulus' very modest interest burden associated with its low-cost senior secured bank debt. Moody's notes that Cumulus has mitigated its interest rate risk by hedging approximately $300 million of total debt at an interest rate of 2%. The ratings also rely on the company's enterprise value when compared with its debt burden. For the trailing twelve months ended 3Q'04, total debt-to-cash flow is about 4.7x and cash interest coverage is about 4.8x before capital expenditures. Pro forma for its pending acquisitions and a theoretical $100 million share repurchase, leverage would approximate 5.8x, and moderate by year-end as the company uses free cash flow to reduce debt. The transaction increases the revolving credit facility availability to $181 million providing the company with adequate cushion. The company has ample flexibility under its financial covenants and is unlikely to experience any liquidity pressure in the near-term. The Ba3 rating for the bank credit facilities reflects the credit profile of the company, as well as the benefits of the collateral package, including security interests in all assets and the stock of the U.S. subsidiaries, and the benefits of subsidiary guarantees. Cumulus Media, Inc., with 305 stations in 61 mid-size markets, is the second largest radio broadcaster in the U.S. based on station count, and the eighth largest based on revenues. CWMBS INC: Fitch Puts Low-B Ratings on Classes B-3 & B-4 Certs. --------------------------------------------------------------- Fitch rates CWMBS, Inc.'s mortgage pass-through certificates, series 2004-J9, CHL mortgage pass-through trust 2004-J9: -- $238,177,553 classes 1-A-1, 2-A-1 through 2-A-6, 3-A-1, 4-A-1, X-A, X-B, PO-A, PO-B, and A-R (senior certificates) 'AAA'; -- $4,934,600 class M 'AA'; -- $1,356,800 class B-1 'A'; -- $863,500 class B-2 'BBB'; -- $493,500 class B-3 'BB'; -- $370,100 class B-4 'B'. The 'AAA' rating on the senior certificates reflects the 3.45% subordination provided by: * the 2% class M, * the 0.55% class B-1, * the 0.35% class B-2, * the 0.20% privately offered class B-3, * the 0.15% privately offered class B-4, and * the 0.20% privately offered class B-5 certificates. Publicly offered classes rated based on subordination: * M 'AA', * B-1 'A', * B-2 'BBB', and Privately offered classes rated based on their subordination: * B-3 'BB'and * B-4 'B' The class B-5 is not rated by Fitch. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP, (rated 'RMS2+' by Fitch), a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The certificates represent ownership in a trust fund, which consists primarily of four separate mortgage loan groups. The senior certificates are collateralized primarily by a pool of conventional, fully amortizing 15- and 30-year fixed-rate mortgage loans secured by first liens on one- to two-family residential properties. Each of the senior certificates will receive interest and principal from its respective mortgage loan group. In certain circumstances relating to a pool experiencing either rapid prepayments or disproportionately high-realized losses, principal and interest collected from the one pool may be applied to pay principal or interest, or both, to the senior certificates of other pools in the trust. The subordinate certificates will be cross collateralized and will receive interest and principal from available funds remaining after paying senior principal and interest on all the senior certificates. The group 1 collateral consists of 30-year fixed-rate mortgage loans with an aggregate pool balance of $26,404,105, as of the cut-off date Nov. 1, 2004. The weighted average original loan-to- value -- OLTV -- ratio is 71.92% and the average loan balance is $498,191. Cash-out and rate/term refinance loans represent 21.41% and 29.02%, respectively. Second homes comprise 9.48% and there are no investor-occupied properties. The weighted average FICO credit score is approximately 748. The states that represent the largest geographic concentration of mortgaged properties are: * California (49.86%), * Florida (10.93%), and * Virginia (7.11%). All other states comprise fewer than 5% of properties in group 1. The group 2 collateral primarily consists of 30-year fixed-rate mortgage loans with an aggregate pool balance of $177,100,452, as of the cut-off date. The weighted average OLTV ratio is 74.72% and the average balance is $522,420. Cash-out and rate/term refinance loans represent 11.60% and 16.36% of the mortgage pool, respectively. Second homes account for 7.03% and there are no investor-occupied properties. The weighted average FICO credit score is approximately 741. The states that represent the largest geographic concentration of mortgaged properties are: * California (41.78%), * New York (10.67%), and * New Jersey (6.05%). All other states comprise fewer than 5% of properties in group 2. The group 3 collateral consists of 15-year fixed-rate mortgage loans with an aggregate pool balance of $22,799,781, as of the cut-off date. The weighted average OLTV ratio is 65.17% and the average balance is $506,662. Cash-out and rate/term refinance loans represent 26.63% and 32.71%, respectively. Second homes account for 10.39% and there are no investor-occupied properties. The weighted average FICO credit score is approximately 739. The states that represent the largest geographic concentration of mortgaged properties are: * Illinois (13.53%), * Texas (12.92%), * New Jersey (9.96%), and * Florida (5.97%). All other states comprise fewer than 5% of properties in group 3. The group 4 collateral consists of 15-year fixed-rate mortgage loans with an aggregate pool balance of $20,385,318, as of the cut-off date. The weighted average OLTV ratio is 70.04% and the average balance is $509,633. Cash-out and rate/term refinance loans represent 30.87% and 30.42%, respectively. Second homes account for 8.89% and there are no investor-occupied properties. The weighted average FICO credit score is approximately 741. The states that represent the largest geographic concentration of mortgaged properties are: * Georgia (19.71%), * Virginia (11.73%), * Tennessee (10.03%), * Florida (9.24%), * California (6.78%), and * New York (6.53%). All other states comprise fewer than 5% of properties in group 4. 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/ Countrywide Servicing will directly service all of the mortgage loans in loan group 1. Countrywide Servicing, Wachovia Mortgage, and Commercial Federal Savings Bank will directly service 83.29%, 15.61%, and 1.10%, respectively, of the mortgage loans in loan group 2. Countrywide Servicing and SunTrust Bank will directly service 84.64%, and 15.36%, respectively, of the mortgage loans in loan group 3. SunTrust Bank, Countrywide Servicing, Bank United, and National City Mortgage will directly service 55.98%, 33.38%, 8.07%, and 2.57%, respectively, of the mortgage loans in loan group 4. Countrywide Servicing will act as master servicer for all the loans. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust fund as multiple separate real estate mortgage investment conduits -- REMICs. The Bank of New York will act as Trustee. DALLAS AEROSPACE: Hires McGuire Craddock as Bankruptcy Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District Of Texas gave Dallas Aerospace, Inc., permission to employ McGuire, Craddock & Strother, P.C., as its general bankruptcy counsel. McGuire Craddock will: a) render legal advise to the Debtor with respect to its rights and duties as a debtor-in-possession in the continued operation of its business; b) appear in Court to protect the Debtor's interests; c) assist the Debtor in its chapter 11 requirements, including preparing its schedules, negotiating with its creditors and parties in interest, formulating a plan of reorganization, and drafting and responding to pleadings; and d) perform all other legal services that may be appropriate and necessary in the Debtor's chapter 11 case. John Mark Chevallier, Esq., a Shareholder at McGuire Craddock, is the lead attorney for the Debtor's restructuring. Mr. Chevallier discloses that the Firm received a $25,000 retainer. For his professional services, Mr. Chevallier will bill the Debtor $290 per hour. Mr. Chevallier reports McGuire Craddock's professionals bill: Designation Hourly Rate ----------- ----------- Partners $200 - $320 Associates $200 Paralegals $120 McGuire Craddock assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Carrollton, Texas, Dallas Aerospace, Inc., is a Texas-based aftermarket supplier of engines, engine parts, and engine management and leasing services, with facilities in Dallas, Texas, and Miami, Florida. The Company filed for chapter 11 protection on October 1, 2004 (Bankr N.D. Tex. Case No. 04-80663). When the Debtor filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $10 million to $50 million. DALLAS AEROSPACE: U.S. Trustee Unable to Form Creditors' Committee ------------------------------------------------------------------ William T. Neary, the United States Trustee for Region 6 reports to the U.S. Bankruptcy Court for the Northern District of Texas that no Official Committee of Unsecured Creditors has been formed in Dallas Aerospace, Inc.'s chapter 11 case. Mr. Neary explains that he convened the first meeting of creditors on November 9, 2004, for the specific purpose of organizing an unsecured creditors committee in the Debtor's chapter 11 case. Nobody showed up and nobody responded to Mr. Neary's post-meeting attempts to contact or convince other eligible creditors who did not attend the meeting to serve on a Committee. Headquartered in Carrollton, Texas, Dallas Aerospace, Inc., is a Texas-based aftermarket supplier of engines, engine parts, and engine management and leasing services, with facilities in Dallas, Texas, and Miami, Florida. The Company filed for chapter 11 protection on October 1, 2004 (Bankr N.D. Tex. Case No. 04-80663). John Mark Chevallier, Esq., at McGuire, Craddock & Strother, P.C., represents the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $10 million to $50 million. DELTA AIR: Closing Financing Pacts with GE & American Express ------------------------------------------------------------- Delta Air Lines (NYSE: DAL) has completed previously announced agreements with GE Commercial Finance and American Express Travel Related Services Company, Inc., to obtain approximately $1.1 billion in financing. Concurrent with entering into these definitive agreements, Delta borrowed a total of $830 million. GE Commercial Finance Agreements On Nov. 1, 2004, Delta disclosed that it had entered into a commitment letter with GE Commercial Finance to obtain $500 million of financing. The parties recently agreed to increase the GE Commercial Finance Facility to $630 million. As previously reported, the intermediate and long-term securities tendered in Delta's now completed debt exchange offer did not satisfy the minimum tender condition for that transaction, and Delta obtained the increase in the GE Commercial Finance Facility by using certain collateral originally reserved for the exchange of those securities. Delta borrowed a total of $580 million under the GE Commercial Finance Facility. This includes $330 million under a senior secured term loan (Term Loan) and $250 million under a $300 million senior secured revolving credit facility. The Credit Facility is subject to a $50 million reserve. The Term Loan is payable in 12 equal monthly installments beginning on Jan. 1, 2007, with the final installment due Dec. 1, 2007. The Credit Facility matures on Dec. 1, 2007. The Term Loan and the Credit Facility are secured by substantially all of Delta's remaining unencumbered assets, including a substantial portion of its accounts receivable. These agreements contain covenants, which require Delta to: -- maintain specified levels of unrestricted cash and cash equivalents; -- achieve certain levels of EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent); and -- not exceed specified levels of capital expenditures. The covenants also, among other things, include substantial restrictions on Delta's ability to incur or secure other debt, make investments, sell assets and pay dividends or repurchase stock. Amex Agreement On Oct. 25, 2004, Delta said it had entered into a commitment letter with Amex to obtain up to $600 million of financing, with $500 million of this amount being in the form of a prepayment of SkyMiles (Amex Facility) and up to $100 million being in the form of participating in loans under the GE Commercial Finance Facility. Delta received $250 million under the Amex Facility. Subject to certain conditions, the remaining $250 million prepayment of SkyMiles will be made on a date specified by Delta that is on or after Mar. 1, 2005. The SkyMiles prepayments will be credited in equal monthly installments toward SkyMiles purchases to be made by Amex during the 24-month period beginning with December 2005. Amex's right to recover the prepayments is secured on a senior basis by Delta's right to payment for purchased SkyMiles and related assets, and on a junior basis by the collateral securing the GE Commercial Finance Facility. The Amex Facility contains affirmative and negative covenants substantially the same as those in the GE Commercial Finance Facility. * * * As reported in the Troubled Company Reporter on Dec. 1, 2004, Standard & Poor's Ratings Services lowered its rating on the class B certificates issued by Delta Funding Home Equity Loan Trust 1999-2 to 'B' from 'BB+'. At the same time, ratings are affirmed on the remaining classes from the same series. The lowered rating reflects: -- erosion of credit support due to adverse collateral pool performance; -- current credit support for class B of 1.42% (prior to giving credit to excess spread), far below its original support level; -- overcollateralization that has been reduced to $964,360, well below its original o/c target of $4,830,000; -- realized losses that have exceeded excess interest cash flow by an average of 1.94x in the most recent six months; and -- serious delinquencies (90-plus days, foreclosure, and REO) during the same six-month period that averaged 21.36%. Standard & Poor's reviewed the results of stressed cash flow runs for the transaction and determined that the remaining credit support for the class was not consistent with the prior rating. Standard & Poor's will continue to monitor the performance of the transaction to ensure the assigned rating accurately reflects the risks associated with this security. DII INDUSTRIES: Court Approves Domestic Settlement Agreement ------------------------------------------------------------ More than 50 insurance companies signed a settlement agreement with the DII Industries, LLC, its debtor-affiliates and Halliburton Company to resolve: (i) all disputes among the parties under certain insurance policies and certain other policies issued or allegedly issued for policy periods incepting prior to or on December 31, 1992 -- Buyback Policies; (ii) all asbestos and silica-related disputes of the parties under certain insurance policies incepting after December 31, 1992; (iii) numerous lawsuits resulting from disagreements regarding the scope of coverage available under the Buyback Policies; and (iv) certain other disputes between the Participating Carriers and the Debtors including the disputes that have arisen postpetition. The Buyback Policies cover, among other things, asbestos-related liabilities arising out of the historical operations of Worthington and its successors, which coverage is subject to competing claims by Federal-Mogul Products, Inc., and Cooper Industries, Inc. The salient terms of the Domestic Settlement Agreement are: -- Each of the Participating Carriers will be obligated to make payments to DII Industries. Due to confidentiality concerns, the precise amount and timing of payments by individual Participating Insurers are not disclosed. The settlement amount, however, is substantial, is the result of extensive analysis and negotiation, and is consistent with the Debtors' other insurance-related settlements; -- The parties will exchange mutual releases; -- Halliburton and the Debtors agree to defend, indemnify, save, and hold harmless the Released Carriers, fully and without a cap, except with respect to certain claims; -- The Debtors and all Participating Carriers will dismiss with prejudice and without costs all claims against each other in each of the Coverage Actions; and -- The Participating Carriers will immediately discontinue the prosecution of, and withdraw, waive or dismiss with prejudice, any objections in the Bankruptcy Court and any appeals of any orders entered by the Bankruptcy Court. At the Debtors' request, the United States Bankruptcy Court for the Western District of Pennsylvania approves the Domestic Settlement Agreement. A full-text copy of the Domestic Settlement Agreement is available for free at: http://bankrupt.com/misc/Domestic_Settlement_Agreement.pdf The Participating Carriers include: -- Hartford Accident and Indemnity Company, First State Insurance Company, Hartford Casualty Insurance Company, New England Insurance Company, Nutmeg Insurance Company and Twin City Fire Insurance Company; -- Zurich American Insurance Company; -- Allianz AG; -- Allianz Global Risks U.S. Insurance Company formerly known as Allianz Insurance Company, and Allianz Underwriters Insurance Company formerly known as Allianz Underwriters, Inc.; -- Travelers Casualty and Surety Company and The Travelers Indemnity Company; -- Appalachian Insurance Company; -- Everest Reinsurance Company and Mt. McKinley Insurance Company; -- Employers Reinsurance Corporation; -- Westport Insurance Corporation, formerly known as Puritan Insurance Company; -- Continental Insurance Company; -- Century Indemnity Company, Pacific Employers Insurance Company, U.S. Fire Insurance Company, Central National Insurance Company of Omaha, St. Paul Mercury Insurance Company, and ACE Property and Casualty Insurance Company; -- One Beacon America Insurance Company; -- All insurers within the Fairfax Financial Holdings Limited organization; -- Stonewall Insurance Company; -- Evanston Insurance Company; -- Associated International Insurance Company; -- Providence Washington Insurance Company; -- Insco Limited; -- Mutual Marine Office, Inc.; -- Fireman's Fund Insurance Company; -- National Surety Corporation; -- Federal Insurance Company; -- Allstate Insurance Company; -- Sentry Insurance a Mutual Company; -- Northwestern National Insurance Company; -- General Electric Casualty Insurance Company and its predecessor Colonial Perm Insurance Company and Heritage Casualty Insurance Company as their reinsurer and attorney in fact; -- Royal Insurance Company; -- Yosemite Insurance Company; -- Swiss Reinsurance Company; -- American Re-Insurance Company; -- Executive Risk Indemnity, Inc.; and -- European General Reinsurance Company. 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. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) DYNEGY INC: Completes Sale of 50% Interest in Chesapeake Facility ----------------------------------------------------------------- Dynegy, Inc., (NYSE:DYN) has completed the sale of its 50 percent interest in the 310-megawatt Commonwealth Power Generation Facility in Chesapeake, Virginia, to Dominion Virginia Power, a subsidiary of Dominion (NYSE:D). The transaction resulted in proceeds of approximately $15 million. "The sale of Commonwealth represents one of the last significant divestitures of the company's minority-ownership power generation assets, which were identified in 2003 as an important component of the company's self-restructuring," said Bruce A. Williamson, Chairman, President and Chief Executive Officer of Dynegy, Inc. "Our focus going forward is on the operation of our strategically positioned power generation and natural gas liquids businesses. We believe the continued strengthening of the U.S. economy will create greater utilization and improved pricing for our power generation fleet, resulting in significant upside for our investors in the future." Dynegy has raised approximately $170 million in 2004 in connection with the sale of minority-ownership power generation assets. Other transactions have included the sale of Dynegy's interests in: -- Michigan Power qualifying facility -- QF; -- Oyster Creek (Texas) QF; -- Power generation facilities in Costa Rica and Jamaica; and -- Hartwell (Georgia) natural gas-fired peaking facility. Dynegy's ongoing power generation business consists of a geographically diverse fleet of baseload, intermediate and peaking power plants fueled by a mix of coal, fuel oil and natural gas. Located in 11 U.S. states, the portfolio is well positioned to capitalize on regional differences in power prices and weather- driven demand. The power generation business also manages commodity price risk associated with fuel procurement and delivers asset-backed products and services to the nation's wholesale energy system. About the Company Dynegy, Inc., provides electricity, natural gas and natural gas liquids to customers throughout the United States. Through its energy businesses, the company owns and operates a diverse portfolio of assets, including power plants totaling 11,885 megawatts of net generating capacity and gas processing plants that process approximately 1.8 billion cubic feet of natural gas per day. * * * Dynegy Holdings, Inc., carries Moody's Investors Service's Caa2 senior unsecured rating. ELAN CORP: Completes Debt Offering & Consent Solicitation --------------------------------------------------------- Elan Corporation, plc, and its wholly owned subsidiary, Elan International Services Ltd. accepted for payment a total of US$350,971,000 aggregate principal amount of Series B Guaranteed Notes and Series C Guaranteed Notes issued by Elan's wholly owned subsidiary, Elan Pharmaceutical Investments III, Ltd. This amount includes US$317,406,000 aggregate principal amount of Notes previously accepted for payment and paid for by EIS and Elan. The Notes were tendered and related consents delivered pursuant to the previously announced cash tender offer by EIS to purchase up to US$351 million (of $390 million) aggregate principal amount of Notes and the related consent solicitation by Elan. Final settlement was expected to occur on Nov. 30. The tender offer and consent solicitation expired at 12:00 midnight, New York City time, on Nov. 26, 2004. A total of US$372,182,000 aggregate principal amount of Notes were tendered and related consent delivered. In accordance with the terms of the tender offer and consent solicitation, EIS and Elan accepted for payment, on a pro rata basis, US$350,971,000 aggregate principal amount of Notes for total consideration of US$357,410,884, plus accrued and unpaid interest to, but not including, the applicable settlement date. The total consideration includes an aggregate early tender premium of US$4,489,884, paid only for Notes tendered prior to the early tender deadline at 12:00 midnight, New York City time, on Nov. 26, 2004, and an aggregate consent payment of US$1,950,000. Consent payments were made to all holders of Notes regardless of whether the holders tendered their Notes or delivered consents. Also, as a result of the receipt of the requisite consents from the holders of the Notes, Elan entered into an amendment to the guarantee agreement governing Elan's guarantee of the Notes and a consent agreement under the indenture governing the 6.50% Convertible Guaranteed Notes issued by Elan Capital Corp. Ltd. and guaranteed by Elan. The amendment to the EPIL III Guarantee Agreement eliminated many of the restrictive covenants contained in the EPIL III Guarantee Agreement and the consent agreement under the Convertible Note Indenture effectively permanently waived compliance with all of the restrictive covenants contained in the Convertible Note Indenture that restrict certain activities of Elan and its subsidiaries without the prior consent of a majority in aggregate principal amount of the outstanding Notes. The tender offer and consent solicitation were made solely on the terms and conditions contained in the Offer to Purchase and Consent Solicitation Statement, dated Oct. 28, 2004, and related documents. Morgan Stanley & Co. Incorporated acted as dealer manager in connection with the tender offer and solicitation agent in connection with the consent solicitation. Questions regarding the tender offer and consent solicitation should be directed to: Morgan Stanley Toll-Free: (800) 624-1808 Collect: (212) 761-1941 Attn: Francesco Cipollone The Depositary was The Bank of New York. About the Company Elan is a neuroscience-based biotechnology company that is focused on discovering, developing, manufacturing, selling and marketing advanced therapies in neurodegenerative diseases, autoimmune diseases and severe pain. Elan's (NYSE: ELN) shares trade on the New York, London and Dublin Stock Exchanges. * * * As reported in the Troubled Company Reporter on Nov. 25, 2004, Standard & Poor's Ratings Services raised the corporate credit and senior unsecured debt ratings on specialty pharmaceutical maker Elan Corp. to 'B' from 'B-'. The rating action reflects the Dublin, Ireland-based company's increased liquidity and anticipates the upcoming market launch of its very promising multiple sclerosis treatment Antegren, a drug that could generate annual sales well in excess of $1 billion. At the same time, Standard & Poor's raised its ratings on subsidiary Elan Finance plc's recently completed offering of $1.15 billion in senior unsecured notes to 'B' from 'B-'. These consist of $850 million in 7.75% fixed-rate notes due 2011 and $300 million in floating rate notes due 2011. In addition, Standard & Poor's raised the ratings on Elan Pharmaceutical Investments III Ltd.'s $390 million in subordinated notes to 'B' from 'CCC'. The senior unsecured debt rating on Elan Corp.'s $460 million in convertible notes was raised to 'CCC+' from 'CCC'. All the ratings have been removed from CreditWatch, where they were placed November 1, 2004, after the company announced it would issue senior unsecured notes to refinance a significant portion of the EPIL III notes and increase liquidity ahead of the planned Antegren launch. The recently completed debt offering and subsequent retirement of $351 million of EPIL III's notes adds roughly $800 million to the coffers of Elan Corp. The outlook is positive. EQUIFIN: Audit Panel Looks for New Auditor After J.H. Cohn Resigns ------------------------------------------------------------------ EquiFin, Inc.'s (OTC BB:EQUI) independent accountants, J.H. Cohn LLP, resigned as of Nov. 24, 2004, pursuant to a letter providing no explanation for the resignation and leaving the Company's Audit Committee and Management to believe that the Company no longer met JHC's criteria for client retention. The Audit Committee has commenced an immediate search for a new independent accountant and is in the process of requesting proposals from other accounting firms. There have been no disagreements with JHC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to JHC's satisfaction, would have caused JHC to make reference thereto in its opinions in connection with the audits of EquiFin's consolidated financial statements for fiscal years ended December 31, 2002, and December 31, 2003, and the subsequent interim periods through September 30, 2004. While JHC's report for the year ended December 31, 2003, did include an exploratory paragraph relating to EquiFin's ability to continue as a going concern, their audit reports on EquiFin's consolidated financial statements for fiscal year ended December 31, 2002, did not contain any adverse opinion or disclaimer of opinion and were not qualified nor modified as to uncertainty, audit scope or accounting principles. About the Company EquiFin, Inc., (AMEX:II AND II,WS) is a commercial finance company providing a range of capital solutions to small and mid-size business enterprises. * * * Going Concern Doubt In its Form 10-KSB for fiscal year ended December 31, 2003, filed with the Securities and Exchange Commission, Equifin, Inc.'s independent public accountants raise substantial doubt about the Company's ability to continue as a going concern. EQUIFIRST MORTGAGE: Fitch Rates Classes B-1 & B-2 Certs. Low-B -------------------------------------------------------------- EquiFirst Mortgage Loan Trust series 2004-3, $459.805 million home equity loan asset-backed certificates are rated: -- $343.21 million classes A-1, A-2, and A-3 'AAA'; -- $27.92 million class M-1 'AA+'; -- $9.15 million class M-2 'AA'; -- $14.08 million class M-3 'AA-'; -- $8.21 million class M-4 'A+'; -- $8.21 million class M-5 'A'; -- $8.21 million class M-6 'A-'; -- $8.21 million class M-7 'BBB+'; -- $8.21 million class M-8 'BBB'; -- $7.04 million class M-9 'BBB'; -- $4.22 million class M-10 'BBB-'; -- $6.10 million privately offered class B-1 'BB+'; -- $7.04 million privately offered class B-2 'BB'. The 'AAA' rating on the senior certificates reflects the 26.85% total credit enhancement provided by: * the 5.95% class M-1, * the 1.95% class M-2, * the 3% class M-3, * the 1.75% class M-4, * the 1.75% class M-5, * the 1.75% class M-6, * the 1.75% class M-7, * the 1.75% class M-8, * the 1.5% class M-9, * the 0.9% class M-10, * the 1.3% class B-1, * the 1.5% class B-2, and * the 2% initial and targeted overcollateralization -- OC. All certificates have the benefit of monthly excess cash flow to absorb losses. In addition, the ratings reflect the quality of the loans and the integrity of the transaction's legal structure, as well as the capabilities of Ocwen Federal Bank FSB as servicer and Deutsche Bank National Trust Company as the trustee. The mortgage loans consist of 3,250, fixed rate (19.68%) and adjustable rate (80.32%), first and second lien loans with an aggregate balance of $469,191,024 as of the cut-off date. As of origination, approximately 75.46% of the mortgage loans had loan-to-value ratios in excess of 80%. The weighted average combined loan-to-value ratio -- CLTV -- for the mortgage loans is approximately 90.26% and the weighted average remaining term to maturity is approximately 356 months. The weighted average coupon -- WAC -- is 7.085% and the average balance is $144,366. The three states that represent the largest portion of the mortgage loans are: * California (9.92%), * Virginia (6.96%), and * Florida (5.58%). FEDERAL-MOGUL: Court Approves Maremont Settlement Agreement ----------------------------------------------------------- In 1977, Ferodo America, Inc., then known as Nuturn Corp., purchased certain friction product manufacturing facilities and assets from Maremont Corporation. Ferodo is a subsidiary of T&N Industries, Inc, a Federal-Mogul Corporation debtor-affiliate. As part of the purchase agreement, Ferodo was added as an insured party to two insurance policies issued to Maremont. James E. O'Neill, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, in Wilmington, Delaware, informs the U.S. Bankruptcy Court for the District of Delaware that Ferodo and Maremont have a right to insurance under these policies: (1) Policy No. RDU3569701, which: -- was issued by Continental Casualty Company; -- has a policy period of January 1, 1978, through June 30, 1980; and -- has a $15 million total liability limit and a $5 million annual liability limit in excess of the first $1 million. (2) Policy No. 924818, which: -- was issued by First State Insurance Company; -- has a policy period of January 30, 1979, through June 30, 1980; -- has a $10 million total liability limit and a $5 million annual liability limit in excess of the first $1 million. Ferodo-Continental Agreement In April 1999, Ferodo and Continental agreed to resolve issues relating to Ferodo's access to the Continental Policy. The Ferodo-Continental Agreement requires Continental to pay a portion of Ferodo's costs due after January 1, 1999, pursuant to a formula based on Continental's share of the total asbestos insurance coverage available to Ferodo within a coverage block of June 1, 1977, through March 30,1986. Mr. O'Neill relates that the Ferodo-Continental Agreement incorporates most of the terms of the Wellington Agreement, which established a global, industry-wide facility for handling asbestos claims in which a number of asbestos producers. Under the Wellington Agreement, the insurers agreed to pay a portion of the claims against all participating producers in lieu of paying 100% of their own claims. Each participating asbestos producer was allocated based on a separate formula. Each producer's allocated costs then were spread over that producer's "Coverage Block," consisting of the producer's policies issued by participating carriers between the time the producer first became involved with the sale or manufacture of asbestos of asbestos- containing products and a date selected by the producer prior to 1985. As policies become exhausted, 100% of the liability was spread among the remaining policies in the coverage block. The participating carriers were to be partially reimbursed from proceeds collected from non-participating carriers. Maremont-Continental Agreement In April 1999, Maremont entered into an agreement with Continental. Maremont agreed to pay asbestos-related bodily injury claims against it according to the Wellington Agreement formula used in the Ferodo-Continental Agreement. Maremont-Ferodo Agreement In November 1999, Maremont entered into an agreement with Ferodo that established an allocation methodology for the shared policies, pursuant to which Continental and First State would pay claims on a "first come, first paid" basis according to the first date on which claims were billed to the insurance carriers. Billing Issues Before the Debtors filed for bankruptcy, Ferodo and Maremont were billing asbestos claims to Continental pursuant to the described agreements. Because Maremont had more available insurance coverage in its Coverage Block, Ferodo billed more to Continental than Maremont had billed. As of the Petition Date, Continental had paid $4,517,967 to Ferodo and $1,764,716 to Maremont. Therefore, from the $15 million total limits provided by the shared Continental Policy, $8,717,317 remains. Of the $10 million total limits provided by the First State Policy, $9,655,373 remains. Ferodo submitted an additional $2,077,824 and Maremont submitted $3,798,971 to Continental for costs incurred before the Petition Date in connection with asbestos claims. The amounts have not been paid. After the Petition Date, Continental stopped making payments to both Ferodo and Maremont. Because the "first come, first paid" mechanism for allocating payments from the remaining limits of the policies is inconsistent with automatic stay and the ordered distribution scheme of the Bankruptcy Code, Ferodo, Maremont and the counsel for the Committee of Asbestos Claimants negotiated a revised allocation of the remaining limits under the shared policies. After extensive negotiations, the Parties agree that: (a) Continental may pay Ferodo and Maremont the amounts that were billed for defense and settlement costs in connection with asbestos claims incurred before the Petition Date -- $2,077,824 to Ferodo and $3,798,971 to Maremont; (b) After the payments, the remaining limits of both the Continental Policy and the First State Policy will be allocated 70% to asbestos claims against Ferodo and 30% to asbestos claims to Maremont; (c) Ferodo's portion of the policies will become an asset that may be used in connection with the applicable trusts to satisfy the claims of asbestos claimants against Ferodo; and (d) Continental and First State may begin paying Maremont's claims immediately out of the 30% share of the remaining policy limits. The Continental Policy will be deemed exhausted as to Maremont upon payment of the remaining limits allocable to Maremont's claims. Mr. O'Neill clarifies that the Settlement Agreement is only between Ferodo and Maremont. Third parties, like Continental and First State, are not bound by the terms of the Settlement. At the Debtors' request, Judge Lyons approves the Settlement Agreement. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRST HORIZON: Fitch Places Low-B Ratings on Classes B-4 & B-5 -------------------------------------------------------------- Fitch rates First Horizon Asset Securities, Inc., mortgage pass-through certificates, series 2004-7: -- $234.6 million class I-A-1 through I-A4, I-A-PO, I-A-R, and II-A-1 'AAA'; -- $3,761,000 classes B-1 'AA'; -- $1,293,000 class B-2 'A'; -- $705,000 class B-3 'BBB'; -- $470,000 class B-4 'BB'; -- $235,000 class B-5 'B'. The class B-6 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 2.95% subordination provided by: * the 1.6% class B-1, * the 0.55% class B-2, * the 0.3% class B-3, * the 0.2% privately offered class B-4, * the 0.1% privately offered class B-5, and * the 0.2% privately offered class B-6 certificates. The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates are based on their respective subordination. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults, as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and the servicing capabilities of First Horizon Home Loan Corporation, currently rated 'RPS2' by Fitch. As of the cut-off date, Nov. 1, 2004, the trust will consist of two pool groups. The certificates whose class designation begins with I and II correspond to pools I and II, respectively. Group I consist of conventional, fully amortizing, 30-year fixed- rate mortgage loans secured by first liens on one- to four-family residential properties, with an aggregate principal balance of $212,030,174. The average principal balance of the loans in this pool is approximately $507,249. The mortgage pool has a weighted average original loan-to-value ratio -- OLTV -- of 71.25%. The weighted average FICO score is approximately 738. Rate/term and cash-out refinance loans account for 29.1% and 15.74% of the pool, respectively. The states that represent the largest portion of the mortgage loans are: * California (34.07%), * Virginia (10.03%), * Maryland (7.60%), and * Washington (5.77%). All other states represent less than 5% of the group I pool balance as of the cut-off date. Group II consists of conventional, fully amortizing, 15-year fixed-rate mortgage loans secured by first liens on one- to four- family residential properties mortgage loans, with an aggregate principal balance of $23,033,912. The average principal balance of the loans in this pool is approximately $523,498. The mortgage pool has a weighted average OLTV of 60.64%. The weighted average FICO score is approximately 750. Rate/term and cash-out refinance loans account for 29.22% and 26.09% of the pool, respectively. The states that represent the largest portion of the mortgage loans are: * California (28.43%), * Tennessee (17.01%), * Rhode Island (12.90%), * Massachusetts (8.75%), and * Virginia (8.11%). All other states represent less than 5% of the group II pool balance as of the cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com/ All of the mortgage loans were originated or acquired in accordance with First Horizon Home Loan Corporation's underwriting guidelines. The trust, First Horizon Mortgage Pass-Through Trust 2004-7, was created for the sole purpose of issuing the certificates. For federal income tax purposes, an election will be held to treat the trust as multiple real estate mortgage investment conduits -- REMICs. The Bank of New York will act as trustee. FREEPORT-MCMORAN: Moody's Ups Senior Unsecured Debt Rating to B1 ---------------------------------------------------------------- Moody's Investors Service raised Freeport-McMoRan Copper & Gold Inc's senior unsecured debt ratings to B1 from B2. In addition, the senior implied rating was raised to Ba3 from B2 and the rating on Freeport's rated preferred securities to B3 from Caa2. Freeport's SGL-1 rating was affirmed. The rating outlook is stable. The upgrade was prompted by the return to normal mining operations at the Grasberg open pit mine, which is owned by Freeport's 90.6% subsidiary, P.T. Freeport Indonesia -- PT-FI, and by anticipated strong cash flow and debt protection measurements. Freeport's 2004 results have been negatively impacted by a curtailment of production at PT-FI, resulting from two rock slides that occurred in the fourth quarter of 2003. The mine has returned to normal operations. The ratings reflect Freeport's status as a holding company, and are adjusted for structural differences in the debt and preferred securities. The ratings also consider challenges that may arise from doing business in Indonesia. The stable outlook reflects Moody's expectation that performance at Freeport will continue to rebound in the fourth quarter of 2004 and beyond from weak, slide-impacted results in the first half of 2004. Ratings raised are: * US$66.5 million 7.5% senior unsecured debentures due November 15, 2006, to B1 from B2 * US$4.5 million 7.2% senior unsecured debentures due November 15, 2026, to B1 from B2 * US$500 million 10.125% senior unsecured notes due February 1, 2010, to B1 from B2 * US$340 million 6.875% senior unsecured notes due February 1, 2014, to B1 from B2 * US$167 million gold denominated preferreds, series II due February 1, 2006 to B3 from Caa2 * US$25 million silver denominated preferreds due August 1, 2006, to B3 from Caa2 * Senior Implied, to Ba3 from B2 * Issuer Rating, to B1 from B2 Rating affirmed: * Speculative Grade Liquidity Rating, SGL-1 Freeport's B1 senior unsecured rating reflects the low cost, long life reserves at PT-FI, and considers the dividend stream available to Freeport from PT-FI. The rating also considers that the bulk of Freeport's earnings and cash flow come from a single mining district, the Grasberg open pit mine, which comprises approximately 80% of mill throughput, and DOZ underground orebody (20%), located in Papua, Indonesia. The rating also reflects the subordinated position of debt holders at the Freeport holding company to creditors at the operating company, PT-FI. The rating considers improved stability within the Indonesian operating environment, but continues to reflect the challenging conditions and political and economic uncertainty associated with Indonesia. The stable outlook reflects Moody's expectation that performance at PT-FI will rebound in the fourth quarter of 2004 and beyond from weak results in the first half of 2004 resulting from fourth quarter 2003 rock slides at PT-FI's Grasberg open pit mine. The company estimates its 2004 operating cash flow, assuming fourth quarter copper and gold prices of $1.30 per pound and $400 per ounce respectively, to approximate $190 million, down from $572 million in 2003. The company anticipates that production in 2005 will increase to approximately 1.5 billion pounds of copper and 2.9 million ounces of gold and return to more normal levels thereafter with average annual production of approximately 1.35 billion pounds of copper and 2.2 million ounces of gold expected for 2006-2008. Freeport does not anticipate major capital expenditures over the next several years, so it is Moody's assumption that as the mine returns to normal operation, greater levels of free cash flow will be available at PT-FI for dividends to Freeport and the Indonesian Government, which holds a 9.4% interest in PT-FI. Freeport has historically operated with high levels of debt and convertible and preferred securities in its capital structure, which continues to be the case, with debt and preferred securities totaling approximately $3 billion at September 30, 2004, including $1.1 billion in Convertible Perpetual Preferred stock. Given this level of debt and preferred securities in the capital structure, and the company's propensity to return excess cash to shareholders in the form of dividends and share buybacks, it is unlikely that the rating will increase from current levels, absent a meaningful change in the level of debt and preferred securities in the capital structure. The rating could be lowered if the company's financial profile exhibits higher levels of leverage or suffers further operating problems at its principal asset, the Grasberg open pit mine. At full operation, Freeport has a very low cost structure so it is unlikely that lower copper and gold prices alone would have a near-term negative impact on the company's rating. Headquartered in New Orleans, Louisiana, Freeport had revenues of $2.2 billion in 2003. GATEWAY EIGHT: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Gateway Eight Limited Partnership c/o The Congress Group, Inc. 33 Arch Street Boston, Massachusetts 02110 Bankruptcy Case No.: 04-19692 Type of Business: The Company is part of The Congress Group. It is a privately held real estate development, construction, property & asset management and investment company. See http://www.congressgroup.com/ Chapter 11 Petition Date: November 30, 2004 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: Macken Toussaint, Esq. Goodwin Procter LLP Exchange Place 53 State Street Boston, Massachusetts 02109 Tel: (617) 570-1000 Fax: (617) 523-1231 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 18 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ City of Providence Real Estate Taxes $56,767 c/o Tax Collection City Hall Second Floor 25 Dorrance Street Providence, Rhode Island 02903 Boston Financial Data Services Reimbursement for $31,570 Attn: Peter Jackson Security Service Two Heritage Drive Payments Quincy, Massachusetts 02171 Aid Maintenance Company Trade Debt $7,800 300 Roosevelt Avenue Pawtucket, Rhode Island 02860 Winchester Mechanical Trade Debt $4,680 Corporation, Inc. 215 Middlesex Turnpike Burlington, Massachusetts 01803 Bargman Hendrie & Trade Debt $3,084 Archetype, Inc. Adler Pollock & Sheehan Trade Debt $2,995 The Narragansett Bay Commission Utilities $1,839 Clarity Water Technologies LLC Trade Debt $928 ThyssenKrupp Elevator Trade Debt $876 Simplex Grinnell Trade Debt $789 Browning-Ferris Industries Trade Debt $783 Aladdin Electric Company, Inc. Trade Debt $450 Waltham Services, Inc. Trade Debt $296 Rise Engineering Trade Debt $200 The Home Page Trade Debt $192 State of Rhode Island Division Trade Debt $112 Of Occupational Safety Verizon Trade Debt $63 AT&T Trade Debt $24 GOLDENEYE MANAGEMENT: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Goldeneye Management, Inc. dba Burger King #6075 2219 Arlington Road Columbus, Michigan 48063-3505 Bankruptcy Case No.: 04-73665 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Sul-Stock #1, Inc. dba Burger King #3869 04-73663 Ewack Corporation dba Burger King # 12256 04-73666 Type of Business: The Companies are franchisees of Burger King. Chapter 11 Petition Date: November 29, 2004 Court: Eastern District Of Michigan (Detroit) Judge: Thomas J. Tucker Debtors' Counsel: Charles Milne, Esq. Cox, Hodgman & Giarmarco, P.C. 101 West Big Beaver Road, 10th Floor Troy, Michigan 48084 Tel: (248) 457-7113 Fax: (248) 457-7001 cmilne@chglaw.com http://www.chglaw.com/ GOPHER STATE: Court Approves Bidding Procedures for All Assets -------------------------------------------------------------- The Honorable Dennis D. O'Brien of the U.S. Bankruptcy Court for the District of Minnesota approved Gopher State Ethanol, LLC's bidding procedures and the form of the Asset Purchase Agreement for the substantial sale of all of its assets that are free and clear of liens, claims and interests. The Court ordered that an auction for the Debtor's assets will take place at 9:30 a.m., on January 21, 2005, at: Ravich Meyer Kirkman McGrath & Nauman 4545 IDS Center 80 South Eighth Street Minneapolis, Minnesota The Court orders that all qualified bidders must submit their qualified bids on or before the January 21 bid deadline. The Court ordered that in the event that no qualified bids are received by the bid deadline, the Debtor's selling agent, Biditup Industrial Assets, Inc., is authorized to conduct a public auction of the Debtor's assets. The public auction will be held on February 16, 2005, at 882 West Seventh Street, St. Paul, Minnesota. The Court will convene a sale hearing at 10:00 a.m., on January 24, 2005, to consider approval of the successful bid or bids from the January 21 auction. Headquartered in St. Paul, Minnesota, Gopher State Ethanol, LLC, manufactures ethanol. The Company filed for chapter 11 protection on August 11, 2004 (Bankr. D. Minn. Case No. 04-34706). Michael L. Meyer, Esq., at Ravich, Meyer, Kirkman, McGrath & Nauman, PA, represents the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed $12,019,824 in total assets and $36,759,602 in total debts. GOPHER STATE: Employs Biditup Industrial as Selling Agent --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota gave Gopher State Ethanol, LLC, permission to employ Biditup Industrial Assets, Inc., as its selling agent. Gopher State tells the Court that the employment of Biditup Industrial is necessary because management does not have the sufficient time and specific expertise to coordinate all aspects of the buyer solicitation process for the proposed sale of substantially all of its assets. Biditup Industrial would assist the Debtor in the proposed sale process of its assets and the holding of the proposed auction for the assets. Steven R. Mattes, President of Biditup Industrial, discloses that under the terms of the Exclusive Agency Agreement between the Firm and the Debtor, the Firm's compensation consist of: a) for a sale of the Debtor's real property, a buyer's premium equal to: (i) 1.5% for a gross sale price of $5 million, (ii) 3% for a gross sale price of $6 million, (iii) 4% for a gross sale price of $7 million, (iv) 5% for a gross sale price of $8 million, (v) 6% for a gross sale price of over $8 million; b) a Buyer's Premium of 10% for services in connection with any sale of the Debtor's personal property; c) for any sale of all of the Debtor's real property and personal property that are sold to a single buyer, a Buyer's Premium of 4% of the gross sale that is less than $10 million and 5% for a gross sale equal to or greater than $10 million. Biditup Industrial assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in St. Paul, Minnesota, Gopher State Ethanol, LLC, manufactures ethanol. The Company filed for chapter 11 protection on August 11, 2004 (Bankr. D. Minn. Case No. 04-34706). Michael L. Meyer, Esq., at Ravich, Meyer, Kirkman, McGrath & Nauman, PA, represents the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed $12,019,824 in total assets and $36,759,602 in total debts. HUDSON BAY: S&P Rates Proposed $200 Mil. Senior Secured Notes B --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' long-term corporate credit rating to Hudson Bay Mining and Smelting Co. Ltd. At the same time, Standard & Poor's assigned its 'B' rating to the proposed US$200 million senior secured notes issued by HudBay Mining and Smelting Inc., which will become obligations of Hudson Bay Mining on closing of the transaction. The outlook is stable. The ratings on Hudson Bay Mining reflect the company's very limited operating diversity, exposure to volatile metals prices, and aggressive capital structure. These weaknesses are offset somewhat by the recent development of a productive new ore body, which provides proven and probable reserves that should sustain current production for about 13 years. Hudson Bay Mining is a small, integrated zinc and copper producer based in Flin Flon, Man., which is being spun out by the U.K.-based mining group, Anglo American PLC. The key constraint to the ratings on HBMS is the company's limited operating diversity, which is underscored by two of the company's four mines that will account for 76% of its 2004 expected ore production, and this reliance will increase in the next several years. These two mines are expected to account for almost 90% of the company's ore production in 2006. Further exacerbating this risk is that substantially all of this ore is processed through the Flin Flon concentrator. In light of Hudson Bay Mining's limited operating diversity, the company's below-average cost position is a further limitation on the rating. The company's cost profile is characterized by small mines and processing facilities, reliance on externally sourced concentrate to maintain high operating rates, and margins that are low relative to its peers. In addition, Hudson Bay Mining's costs and margins are exposed to the risk of an appreciation of the Canadian dollar versus the U.S. dollar absent an offsetting appreciation of zinc and copper prices. The outlook is stable. Hudson Bay Mining's financial performance will benefit from buoyant copper and zinc markets in the next year. The company's moderate capital expenditure requirements, coupled with restrictions on the distribution of free operating cash until 2007, could produce a buildup in liquidity, which would be beneficial through the next trough in the metals price cycle. HUNTSMAN INTL: Raising $350 Million through Private Debt Offering ----------------------------------------------------------------- Huntsman International LLC intends, subject to market and other conditions, to raise approximately $350 million through a private offering of U.S. Dollar and Euro denominated senior subordinated notes. The company intends to use all of the net proceeds to redeem part of its outstanding 10-1/8% senior subordinated notes due 2009, subject to completion of the offering. About the Company Huntsman International LLC manufactures basic products for a variety of global industries including chemicals, plastics, automotive, footwear, paints and coatings, construction, high- tech, agriculture, health care, textiles, detergents, personal care, furniture, appliances and packaging. * * * As reported in the Troubled Company Reporter on June 17, 2004, Standard & Poor's Ratings Services assigned its 'B' senior secured bank loan rating and a recovery rating of '3' to Huntsman International LLC's proposed $1.74 billion of senior secured credit facilities, based on preliminary terms and conditions. The 'B' rating is at the same level as the corporate credit rating for Huntsman International Holdings LLC, the parent of Huntsman International; this and the '3' recovery rating indicate a meaningful (50%-80%) recovery of principal in the event of a default. At the same time, Standard & Poor's affirmed its existing ratings for Huntsman International Holdings LLC (B/Stable/--) and its affiliate, Huntsman International (B-/Stable/--). The outlook is stable. ILLINOIS DEVELOPMENT: Moody's Pares Revenue Bonds' Rating to Ba3 ---------------------------------------------------------------- Moody's Investors Service downgraded the rating of the Illinois Development Finance Authority's Section 8 Elderly Housing Revenue Refunding Bonds, Series 1995 A and B -- Pontiac Towers Project -- to Ba3 from Baa3. The $1.875 million of outstanding bonds continue to have a negative outlook. The steep downgrade is based on fiscal year 2003 debt service coverage that declined dramatically from one year ago. The significantly weakened financial position resulted in coverage that dropped to .72x as of fiscal year ending 2003 -- down from 1.03x in 2002, 1.12x in 2001 and from as high as 1.19x in 2000. Debt service coverage has been paid through the deferral of fees as well as certain owner contributions so that the Debt Service Reserve Fund has not been tapped. With bond maturity not until October 2009, it is not clear whether the owner and manager will be willing to continue to support the project financially for the remaining five years. The overall weak coverage is due in large part to the occupancy level that is approximately 90% -- well below average for a Section 8 property. Despite the unfavorable debt service coverage and occupancy level, the property maintains a sound physical inspection score of 85c (out of 100) by the Department of Housing and Urban Development's Real Estate Assessment Center. Pontiac Towers is an 111 unit apartment complex for the elderly and handicapped located in Pontiac, Illinois in Livingston County. Outlook The outlook on the bonds is negative due to the fact that Moody's does not believe that coverage will improve significantly and will likely continue to erode. According to a property management representative, more focus has been placed on marketing and credit standards are being relaxed so management is expecting an increase in the near term. Moreover, contract rents for this property exceed HUD Fair Market Rents -- FMR -- by approximately 23%. HUD has effectively frozen contract rents for those properties that exceed FMR. Therefore, the potential for increased revenues is remote. Key Statistics As of September 30, 2003 Audited Financial Statements Recent Occupancy: 90% REAC score: 85c HAP expiration: 2/18/2010 Debt Maturity: 10/1/2009 1 bedroom Contract Rent as % of 2005 HUD FMR: 123% Debt Service Coverage: .72x Debt per Unit: $16,892 Operating expenses per unit: $4,112 ILLINOIS DEVT: Moody's Affirms Refunding Bonds' Ba1 Rating ---------------------------------------------------------- Moody's Investors Service affirmed the Ba1 rating of the Illinois Development Finance Authority's Section 8 Elderly Housing Revenue Refunding Bonds, Series 1995 A and B -- Rome Meadows Project. The $755,000 of outstanding bonds have a stable outlook. The affirmation is based on the property's weak financial condition. Debt service coverage for fiscal year ending 12/31/2003 was .64x due in large part to the occupancy level that is approximately 84% - extraordinarily low for a Section 8 property. The opening of new tax credit property in the area caused a number of Rome Meadows residents to move away according to the property's manager. The manager and owner are related entities and have been deferring fees and paying certain bills rather than tap the debt service reserve fund. Moody's expects this to continue as the owner has a strong incentive to fund the operating gap as the debt matures in approximately 13 months. Once the debt has been paid in full, the owner will get a significant cash flow from the property without the burden of approximately $325,000 of annual debt service. Despite the unfavorable debt service coverage and occupancy level, the property maintains a very high physical inspection score of 99b (out of 100) by the Department of Housing and Urban Development's Real Estate Assessment Center. Rome Meadows is a 95-unit apartment complex for the elderly and handicapped located in Dix, Illinois in Jefferson County. Outlook The outlook on the rating is stable based on the very short nature of the bond maturity and the strong incentive for the owners to continue to defer fees and pay certain bills in order to retain the significant cash flow expected to be available once the bonds come due in 13 months. Key Statistics As of the December 31, 2003 Audited Financial Statements Recent Occupancy: 84% REAC score: 99b HAP expiration: 1/15/2006 Debt Maturity: 2/1/2006 1 bedroom Contract Rent as % of HUD 2005 FMR: 155% Debt Service Coverage: .64x Debt per Unit: $10,737 Operating expenses per unit: $4,973 Reserve and Replacement per unit: $178 Surplus Fund per unit: $16 INTERDENT INC: S&P Rates Proposed $80M Senior Secured Notes B ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to dental practice management services provider InterDent, Inc., the parent company of InterDent Service Corp. At the same time, Standard & Poor's assigned its 'B' senior secured debt rating to InterDent Service Corp.'s proposed $80 million second-lien senior secured notes due in 2011. Standard & Poor's does not rate InterDent Inc.'s $10 million first-lien senior secured revolving credit facility due in 2009. The outlook is stable. The company is expected to use the proceeds from the $80 million of senior secured notes and $3.5 million of pay-in-kind senior preferred stock to purchase financial sponsor DDJ Capital Management LLC's $47.5 million equity stake, retire about $30 million of existing debt, repay a small amount of capital leases and seller notes, and fund related fees and expenses. After the transaction, current minority owner Levine Leichtman Capital Partners will own 93.5% of the company, and InterDent's management team will own 6.5%. Pro forma for the transaction, InterDent will have approximately $84 million of total debt outstanding (including the preferred stock). "The low-speculative-grade ratings reflect InterDent's challenge to sustain operating improvements after emerging from bankruptcy protection last year and its relatively weak financial profile," said Standard & Poor's credit analyst Jesse Juliano. "These concerns are only partially offset by the revenue diversity from the company's 124 practices and its recent improvement in operating performance." El Segundo, California-based InterDent, Inc., operates in the extremely fragmented dental industry and provides management services to 124 affiliated dental practices in eight states. About 90 of the 124 practices operate under the Gental Dental brand. InterDent provides a variety of services to its affiliates, including those related to staffing, patient scheduling, accounting, purchasing, marketing, and information systems. Generally, InterDent owns and operates all of the assets of its affiliated practices. Dentists are employees of the practices and do not hold equity stakes in the company. In 2003, InterDent both filed for and exited from Chapter 11, and as a result lowered its debt burden by $137 million. This followed a period in the mid- to late-1990s when InterDent increased its obligations by embarking on debt-financed acquisitions for assets that did not perform as well as anticipated. In addition, the company's affiliates faced soft local economies and high dentist turnover prior to the bankruptcy. Thus, it was not expected to be able to make the principal payments on its debt at maturity. InterDent has not made an acquisition in the past four years, rather, it has focused on better managing its existing assets, in part by closing numerous underperforming centers. The company had 124 offices as of Sept. 30, 2004, versus 141 in 2001. INTEREP NATIONAL: Moody's Junks $99M Senior Subordinated Notes -------------------------------------------------------------- Moody's Investors Service downgraded Interep National Radio Sales, Inc., ratings to Ca based on the company's deteriorating operating performance which has lagged Moody's expectations since the termination of the Citadel contract in December 2003, challenges associated with decreasing costs in line with revenue losses, and the likelihood that performance will not improve in the near term given our expectations for only modest growth (at best) in the national advertising market in 2005. Importantly, the downgrade also reflects our belief that Interep's capital structure is unsustainable over the longer term, and that the company may be unable to refinance the entire $99 million of senior subordinated notes. The rating outlook has been changed to stable from negative. Moody's downgraded these ratings: * the $99 million of senior subordinated notes due 2008 to Ca from Caa2, * the company's senior implied rating to Ca from B3, and * Interep's issuer rating to Ca from B3. The outlook on all ratings is now stable. The ratings reflect: (1) Interep's high debt burden relative to cash generation, (2) insufficient coverage of interest and other fixed charges, (3) concentration of revenues and cash flows to a small number of broadcast groups (i.e. ten largest clusters represent over 60% of client stations), (4) reliance on one broadcast group (Infinity) for about 29% of revenues, (5) the continued consolidation of the radio industry, and (6) the resulting decrease in power over pricing and terms of rep contracts. The ratings are also constrained by the increasing business risk associated with the company's exposure to one main service offering -- providing national spot representation to radio broadcast groups. Core operating cash flow will remain vulnerable to the company's ability to maintain and expand the existing representation contract base. Moody's believes that in the near-term radio station groups will continue to require Interep's national spot representation services. However, the ratings also recognize: (1) Interep's national presence and market position, with 52% market share of national spot advertising in the top 10 markets, (2) strong relationships with advertisers, (3) geographic diversity associated with its contract portfolio (1800 stations), and (4) significant fees realized upon termination of contracts. Finally, broadcasters may be hesitant to employ Interep's only significant competitor, Katz Media, as it is a subsidiary of Clear Channel Communications, the largest radio station group in the country. The ratings also incorporate Moody's view of the underlying value of Interep's assets in the event of a default. While total contract termination value is meaningful (about $400 million as of June 2004), full recovery is uncertain since it would likely require successful collection of contract termination revenue. The stable outlook incorporates the company's weak credit metrics and an unsustainable capital structure. Moody's does not believe that the ratings will experience positive momentum in the near term. The company is exploring methods for reducing costs and alternative sources of capital funding. Interep's ratings reflect the high financial leverage and insufficient coverage of interest from its core EBITDA combined with a high degree of business risk. For the trailing twelve months ended 3Q'04, leverage is (Total Debt + Net Contract Buyouts)/Core EBITDA in excess of 10 times, and cash flow coverage of interest and capital expenditures is inadequate with (Core EBITDA - CapEx)/Interest of less than 1 times. Interep has approximately $99 million of senior subordinated notes outstanding and the ability to increase total debt through its unrated $10 million revolving credit facility. Moody's believes that the company has modest liquidity in the $15 million of cash balances as well as a $10 million revolving line of credit in order to fund operating shortfalls in the near-term. However, going forward, Interep will have to reduce costs in line with revenue declines in order to adequately cover fixed charges. The Ca rating on the senior subordinated notes reflects the likelihood of a material amount of impairment of principal in a default scenario. The issue benefits from subsidiary guarantees and the existence junior capital in the form of convertible preferred stock. Interep National Radio Sales, Inc., is the largest independent provider of advertising representation services to radio stations. It is headquartered in New York, New York. INTERSTATE BAKERIES: U.S. Trustee Appoints Equity Committee ----------------------------------------------------------- Charles E. Rendlen, III, the United States Trustee for Region 13, appoints five equity security holders to serve as members of the Official Committee of Equity Security Holders in Interstate Bakeries Corporation and its debtor-affiliates' Chapter 11 cases: (1) QVT Financial, LP Attn: Daniel A. Gold 527 Madison Avenue, 8th Floor New York, New York 10022 Tel: (212) 705-8800 Fax: (212) 705-8820 (2) Brandes Investment Partners Attn: Brent Fredberg 11988 El Camina Real San Diego, California 92130 Tel: (858) 523-3153 (3) EagleRock Capital Management, LLC Attn: Nader Tavakoli 551 Fifth Avenue, 34th Floor New York, New York 10176 Tel: (212) 692-5412 Fax: (212) 681-6096 (4) Fidelity Management & Research Attn: Nathan Van Duser 82 Devonshire Street, E31C Boston, Massachusetts 02109 Tel: (617) 392-8129 Fax: (617) 476-5174 (5) Atticus Capital, LLC Attn: Karl S. Okamoto 152 West 57th Street New York, New York 10019 Tel: (212) 373-0800 Fax: (212) 373-0801 Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Wants to Fix March 21 General Claims Bar Date ------------------------------------------------------------------ J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom, LLP, in Chicago, Illinois, tells the U.S. Bankruptcy Court for the Western District of Missouri that to finalize a comprehensive, viable go-forward business plan, Interstate Bakeries Corporation and its debtor-affiliates will require complete and accurate information regarding the nature, amount and status of all claims against them that will be asserted in their Chapter 11 cases. Establishing a deadline for filing proofs of claim will advance this process. Thus, the Debtors ask the Court to establish: (1) March 21, 2005, as the deadline for all persons and entities, including governmental units, to file a proof of claim in their Chapter 11 cases; (2) the later of the General Bar Date or 30 days after an affected claimant is served with notice that the Debtors have amended their Schedules of Assets and Liabilities and Statements of Financial Affairs, as the bar date for filing a proof of claim in respect of the amended scheduled claim; and (3) the later of the General Bar Date or 30 days after the effective date of any order authorizing the rejection of an executory contract or unexpired lease as the bar date by which a proof of claim relating to the Debtors' rejection of the contract or lease must be filed. Parties Required to File Proofs of Claim The Bar Dates would apply to all Persons or Entities, each as defined in Sections 101(41) and 101(15) of the Bankruptcy Code, that hold prepetition claims against the Debtors, including any Person or Entity: (a) whose Claim is listed in the Debtors' Schedules as "disputed," "contingent," or "unliquidated;" (b) that desires to participate in any of the Debtors' bankruptcy cases or share in any distribution in the Debtors' cases; (c) who believes its Claim is improperly classified in the Debtors' Schedules or listed in an incorrect amount; (d) that desires to have its Claim allowed in a classification or amount other than set forth in the Debtors' Schedules; and (e) whose Claim against a Debtor is not listed in the applicable Debtors' Schedules. These Persons or Entities would not need to file proofs of claim: * Any Person or Entity that agrees with the nature, classification, and amount of the Claim set forth in the Debtors' Schedules and those who have a Claim that is not listed as "disputed," "contingent," or "unliquidated" in the Debtors' Schedules; * Any Person or Entity that has already properly filed a proof of claim against the correct Debtor; * Any Person or Entity asserting a Claim that is allowable under Sections 503(b) and 507(a)(1) as an administrative expense of the Debtors' cases; * Any of the Debtors or any direct or indirect subsidiary of any of the Debtors that hold Claims against one or more of the other Debtors; * Any Person or Entity whose Claim against a Debtor previously has been allowed by, or paid pursuant to, a Court order; and * Any holder of equity securities of the Debtors solely with respect to the holder's ownership interest in or possession of equity securities, provided, however, that any holder who wish to assert a Claim against any of the Debtors based on transactions in the Debtors' securities, including, but not limited to, Claims for damages or rescission based on the purchase or sale of the securities, must file a proof of claim on or before the General Bar Date. The Debtors will retain the right to: -- dispute, or assert offsets or defenses against, any filed Claim or any Claim listed or reflected in the Debtors' Schedules as to nature, amount, liability, classification, or otherwise; or -- subsequently designate any Claim listed in the Debtors' Schedules as disputed, contingent, or unliquidated. However, if the Debtors amend their Schedules, then any affected claimant will have until the Amended Schedule Bar Date to file a proof of claim or to amend any previously filed proof of claim in respect of the amended scheduled Claim. Pursuant to Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure, the Debtors propose that any Person or Entity who untimely files its proof of claim in the Debtors' cases should be forever barred, estoppelled, and enjoined from: (a) asserting any Claim against the Debtors; (b) voting on, or receiving distributions under, any plan or plans of reorganization in the Debtors' cases in respect of the Claim. Bar Date Notice and Claim Filing Procedures Kurtzman Carson Consultants, LLC, the Debtors' noticing and claims agent, will serve on all known Entities holding potential prepetition claims: -- a notice of the Bar Dates; and -- a proof of claim form. Kurtzman will mail a notice of the Bar Dates and a proof of claim form, by first class U.S. mail, postage prepaid, to all known potential claimants. "The mailing of the Bar Date Notice under this time-frame will ensure that creditors receive considerably more than the minimum 20[-]day notice period established under Bankruptcy Rule 2002(a)(7)," Mr. Ivester asserts. The Debtors further propose that: * The Proof of Claim Form will list the creditor's name and state whether the creditor's Claim is listed in the Debtors' Schedules, the dollar amount of the Claim, the Debtor for which the creditor's Claim is scheduled, and whether the Claim is listed as disputed, contingent or unliquidated; * For any Proof of Claim Form to be validly and properly filed, a signed original of the completed Proof of Claim Form, together with accompanying documentation, must be delivered to the Claims and Noticing Agent at the address set forth on the Bar Date Notice, on the applicable Bar Date; * Creditors will be permitted to submit proofs of claim in person or by courier service, hand delivery or mail, but prohibited from making electronic submissions, including, but not limited to, facsimile and electronic mail submissions; * Proofs of claim will be deemed filed when actually received by the Claims and Noticing Agent; * If a creditor wishes to receive acknowledgment of receipt of the creditor's proof of claim, the creditor must submit a copy of the proof of claim and a self-addressed, stamped return envelope; * All Persons and Entities asserting Claims against more than one Debtor will be required to file a separate proof of claim form with respect to each Debtor; * If a creditor submits a Proof of Claim Form listing multiple Debtors, the Proof of Claim will be deemed filed and asserted against only the first Debtor; * Persons and Entities will be required to identify on each Proof of Claim Form the particular Debtor against which their Claim is asserted; and * Any Claims filed in the jointly administered case, Interstate Bakeries Corporation, Case No. 04-45814, will be deemed filed only against Interstate Bakeries Corporation. Publication Notice According to Mr. Ivester, the extensive nature of the Debtors' business creates the potential for the existence of many Claims of which the Debtors are unaware. This may include, for example, Claims of vendors who failed to submit an invoice to the Debtors, Claims of former employees, and Claims that, for various reasons, are not recorded on the Debtors' books and records. Accordingly, the Debtors believe that it is necessary to provide notice of the Bar Dates to Entities whose names and addresses are unknown to the Debtors. In addition, the Debtors believe that it is advisable to provide supplemental notice to known holders of Claims. Therefore, the Debtors intend to publish the Bar Date Notice, at a minimum, in these newspapers: -- The New York Times, -- The Wall Street Journal (National Edition), -- Kansas City Star, and -- USA Today. The Debtors also intend to publish notice of the Bar Date in the trade publication Milling and Baking News. "Given this time-frame and the proposed Bar Dates, creditors will have sufficient notice, time and opportunity to file their Claims against the Debtors' estates," Mr. Ivester says. The Debtors ask the Court to modify Bankruptcy Rule 2002(a)(7) so that notice of the Bar Dates will not be required to be furnished on any Person or Entity to whom the Debtors mailed a notice of the meeting of creditors under Section 341 of the Bankruptcy Code and received the notice returned by the applicable postal service marked "undeliverable as addressed," "moved -- left no forwarding address," or "forwarding order expired" or similar reason, unless the Debtors have been informed in writing by the Person or Entity of that Person's or Entity's new address. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) KEWL CORP: Accolade Unit Acquires $546,328 Toronto Dominion Claim ----------------------------------------------------------------- Kewl Corporation (TSX Venture Exchange: KL), reports that 1422575 Ontario, Inc., an affiliate of the Accolade Group, acquired from Toronto Dominion Bank, $546,328.27 of indebtedness owed by Kewl to the Toronto Dominion Bank. This debt represents all of the indebtedness of Kewl to the Toronto Dominion Bank. The terms of the debt remain unchanged, however, a portion of the security for the indebtedness has been released by Accolade. In connection with this acquisition of debt, Accolade is negotiating a proposed plan to reorganize Kewl's capital structure. The proposed transaction would involve an acquisition by Accolade of up to 9.9% of Kewl's common shares through a private placement. If completed, this private placement would make Accolade Kewl's largest shareholder. It is anticipated that following the acquisition Kewl will hold a special meeting of shareholders to approve a consolidation of Kewl's shares based on a ratio that would ensure that Accolade will be the only shareholder holding at least one common share of Kewl. Shareholders of Kewl holding less than one common share following the consolidation would be entitled to receive a cash payment for their shares. The amount to be paid for each share held prior to the consolidation would be determined by Kewl's board of directors. This proposed restructuring transaction is subject to receipt of the approval of Kewl's board of directors and all necessary regulatory approvals. In addition, the company will be required to obtain the approval of the shareholders of Kewl by way of a special resolution as well as approval, by way of an ordinary resolution, of Kewl's minority shareholders. Following the successful completion of the transaction it is anticipated that Kewl will de-list from the TSX Venture Exchange and cease to be a reporting issuer. As was previously announced The Ontario Superior Court of Justice (Bankruptcy and Insolvency) approved of an exchange of shares for debt with Kewl's unsecured creditors on the basis of one common share of Kewl for each $1.00 of unsecured debt. Kewl will issue up to approximately 2.2 million common shares pursuant to this exchange. It is anticipated that this exchange will be completed on or before December 18, 2004. Kewl Corporation is based in Barrie, Ontario and its shares are traded on the TSX Venture Exchange under the symbol KL. Kewl products are sold across Canada and are endorsed by some of the biggest names in professional hockey including Shayne Corson, Darcy Tucker, Ryan Smith, Travis Green and Bryan Marchment. LA QUINTA PROPERTIES: Declares Dividend on 9% Preferred Stock ------------------------------------------------------------- La Quinta Properties, Inc.'s Board of Directors declared a dividend of $0.5625 per depositary share on its 9% Series A Cumulative Redeemable Preferred Stock for the period from Oct. 1, 2004 to Dec. 31, 2004. Shareholders of record on Dec. 15, 2004, will be paid the dividend of $0.5625 per depositary share of Preferred Stock on Dec. 31, 2004. Dividends on the Series A Preferred Stock are cumulative from the date of original issuance and are payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year (or, if not a business date, on the next succeeding business day) at the rate of 9% of the liquidation preference per annum (equivalent to an annual rate of $2.25 per depositary share). About La Quinta Corporation La Quinta Corporation and its controlled subsidiary, La Quinta Properties, Inc. (NYSE: LQI), is one of the largest owner/operators of limited-service hotels in the United States. Based in Dallas, Texas, the Company owns, operates or franchises more than 560 hotels in 39 states under the La Quinta Inns(R), La Quinta Inn & Suites(R), Baymont Inns & Suites(R), Woodfield Suites(R) and Budgetel(R) brands. For reservations or more information about La Quinta Corporation, its brands or franchising program, please visit http://www.LQ.com/ * * * As reported in the Troubled Company Reporter on July 19, 2004, Fitch Ratings has affirmed the senior unsecured ratings of La Quinta at 'BB-' following LQI's recent announcement that it will acquire the limited service lodging business of Marcus Corporation for $395 million in cash. KING PHARMACEUTICALS: Moody's Pares Ratings & May Lower Again ------------------------------------------------------------- Moody's Investors Service downgraded the ratings of King Pharmaceuticals, Inc. (senior implied to Ba3 from Ba1). The ratings were placed under review for possible downgrade on May 7, 2004, and the direction of the review was changed to uncertain from possible downgrade on July 26, 2004. Following this rating action, King's ratings remain under review for possible further downgrade. The downgrade to Ba3 from Ba1 reflects: (1) recent news that King's 10-Q filing for the quarter ended September 30, 2004 will be late as the company reviews its reserves for product returns; (2) deterioration in King's revenue, earnings and cash flow during 2004; (3) uncertainty related to unresolved legal matters; and (4) Moody's belief that there is uncertainty as to whether King's pending acquisition by Mylan Laboratories Inc. will be completed. The Ba3 rating is based on Moody's assessment of King's stand-alone credit quality, and does not reflect an assessment of Mylan's credit quality. Moody's does not currently rate Mylan. King recently announced that its third quarter 10-Q filing will be delayed because it is considering whether any of its reserve for product returns accrued during the first nine months of 2004 should have been recognized in years prior to 2004. This action could result in a restatement of previously issued financial statements. The company has stated that it expects the third quarter 10-Q filing will be several weeks late. Until the 10-Q has been filed, Moody's believes there is uncertainty about the scope and magnitude of the items being reviewed and potentially subject to restatement. The late 10-Q has resulted in a breach of a covenant in King's $400 million credit agreement. Although King does not have any outstanding borrowings under the agreement, the covenant violation restricts King's ability to access funds. Inability to correct this deficiency in the near term could result in further negative rating action, contributing to Moody's rationale for leaving the ratings under review for possible downgrade. The late 10-Q could also result in a technical default of King's $345 million convertible notes. If the trustee of the convertible notes serves King a notice of default, King would have 60 days to correct the deficiency by filing its 10-Q. The downgrade to Ba3 also reflects much lower product sales and cash flow, stemming from high levels of inventory at pharmaceutical wholesalers. Moody's estimates cash flow from operations of $225 million for the 12 months ending Sept. 30, 2004 (assuming the cash flow number will not be restated), and free cash flow of $162 million. These figures compare to calendar year 2003 cash flow from operations of $437 million and free cash flow of $386 million. King's reported that wholesaler inventory levels had declined to 2.1 months, and that sales should begin to reflect underlying demand. King's preliminary third quarter 2004 results included an impressive rebound in cash flow from operations, to $140 million during the quarter. Moody's believes it is too early to determine whether wholesaler buying patterns have returned to normal levels, and whether this level of cash flow will be sustainable. Other factors considered in the downgrade include King's exposure to government investigations, for which the company has reserved approximately $65 million, and uncertainty that the acquisition by Mylan will be completed. Some Mylan shareholders have reacted negatively to the acquisition announcement, questioning the rationale and the value to Mylan. One of the conditions to closing the acquisition is that no restatement of any of King's financial statements has occurred or is reasonably likely to occur. In addition, the merger agreement can terminate if the merger has not been consummated by February 28, 2005. The acquisition remains subject to shareholder approval by both King and Mylan shareholders. Mitigating factors include King's low debt levels, a relatively diverse product portfolio, and the liquidity provided by approximately $248 million of unrestricted cash and marketable securities reported as of September 30, 2004. Following the rating action, King's ratings remain under review for possible downgrade. King's ratings could be downgraded if the 10-Q is not filed in the next several weeks, if the scope of issues involved in the review process expands, or if the trustee of King's convertible notes serves a notice of default. King's ratings could also face downward pressure if the Mylan deal does not close, and if operating performance further deteriorates. If the Mylan deal closes as planned, King's ratings resolution of the rating review would consider Mylan's capital structure and credit quality, the extent to which King's operations will be merged into Mylan's organizational structure, the position of King's debt in the new capital structure, and an evaluation of any support mechanisms related to King's debt. Ratings downgraded and remaining under review for possible further downgrade: * Senior Secured Revolving Credit Facility, $400 million due 2007: to Ba2 from Baa3; * Senior Unsecured Guaranteed Convertible Debentures, $345 million due 2021: to Ba3 from Ba1; * Senior Implied: to Ba3 from Ba1 * Senior Unsecured Issuer Rating: to B1 from Ba2 King Pharmaceuticals, Inc., headquartered in Bristol, Tennessee, manufactures, markets, and sells primarily acquired branded prescription pharmaceutical products. The company reported revenues of $1.5 billion for the full year ended Dec. 31, 2003. MASTR ALTERNATIVE: Fitch Puts BB Rating on Class B-I-4 Certs. ------------------------------------------------------------- Fitch Ratings rates MASTR Alternative Loan Trust 2004-12: -- $442.7 million classes 1-A-1, 1-A-X, 2-A-1, 2-A-X, 3-A- 1, 3-A-X, 4-A-1, 4-A-X, 5-A-1 through 5-A-6, 6-A-1 through 6-A-4, PO, A-X, A-LR, and A-UR ($429.0 million senior certificates) 'AAA'; -- $7,398,000 class B-I-1 'AA'; -- $3,021,000 class B-I-2 'A'; -- $1,876,000 class B-I-3 'BBB'; -- $1,354,000 privately offered class B-I-4 'BB'. The 'AAA' rating on the of group 1, 5, and 6 senior certificates reflects the 4.35% subordination provided by: * the 2.45% class B-1 (not rated by Fitch), * the 0.7% class B-2 (not rated by Fitch), * the 0.4% class B-3 (not rated by Fitch), * the 0.35% privately offered class B-4 (not rated by Fitch), * the 0.25% privately offered class B-5 (not rated by Fitch), and * the 0.2% privately offered class B-6 (not rated by Fitch) certificates. The 'AAA' rating on the of group 2, 3, and 4 senior certificates reflects the 7.75% subordination provided by: * the 3.55% class B-I-1, * the 1.45% class B-I-2, * the 0.9% class B-I-3, * the 0.65% privately offered class B-I-4, * the 0.65% privately offered class B-I-5 (not rated by Fitch), and * the 0.55% privately offered class B-I-6 (not rated by Fitch) certificates. Fitch believes the credit enhancement will be adequate to support mortgagor defaults, as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the master servicing capabilities of Wells Fargo Bank Minnesota, N.A., which is rated 'RMS1' by Fitch. The trust will consist of six asset groups. The certificates whose class designation begins with 1 through 6 correspond to groups 1 through 6, respectively. Additionally, the class A-X certificates represent interests in loan group 5 and group 6; and the class PO certificates represent interests in loan groups 1 through 6. The class A-LR and A-UR certificates represent interest in loan group 1. The class B certificates designated B-1 through B-6 represent subordination for groups 1, 5, and 6. In certain limited circumstances, principal and interest collected from loans in loan groups 1, 5, and 6 may be used to pay principal or interest, or both, to the senior certificates related to one or more of the other loan groups. The class B certificates designated B-I-1 through B-I-6 represent subordination for groups 2, 3, and 4. In certain limited circumstances, principal and interest collected from loans in loan groups 2, 3, and 4 may be used to pay principal or interest, or both, to the senior certificates related to one or more of the other loan groups. Groups 1, 5, and 6 in aggregate contain 524 fully amortizing 15- and 30-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate scheduled principal balance of $247,572,519. The average unpaid principal balance of the aggregate pool as of the cut-off date Nov. 1, 2004, is 476,394. The weighted average original loan-to-value ratio -- OLTV -- is 67.9%. The weighted average credit score of the borrowers is 713. Approximately 65.76% of the pool was originated under a reduced nonfull alternative documentation program. Second homes and investor occupancies represent 6.87% and 4.18% of the pool, respectively. The weighted average mortgage interest rate is 6.163%, and the weighted average remaining term to maturity is 333 months. The states that represent the largest portion of the aggregate mortgage loans are: * California (45.07%), * New York (13.76%), and * New Jersey (6.91%). All other states represent less than 5% of the groups 1, 5, and 6 aggregate balance as of the cut-off date. Groups 2, 3, and 4 in aggregate contain 1,563 fully amortizing 30- year fixed-rate mortgage loans secured by first liens on one to four-family residential properties with an aggregate scheduled principal balance of $208,381,420. The average unpaid principal balance of the aggregate pool as of the cut-off date Nov. 1, 2004, is $133,575. The weighted average OLTV ratio is 72.57%. The weighted average credit score of the borrowers is 715. Approximately 16.03% of the pool was originated under a reduced nonfull alternative documentation program. Investor properties constitute 100% of the loans. The weighted average mortgage interest rate is 6.419%, and the weighted average remaining term to maturity is 358 months. The states that represent the largest portion of the aggregate mortgage loans are: * California (19.94%), * Florida (7.36%), * New York (7.11%), * Massachusetts (6.08%), * New Jersey (5.97%), and * Pennsylvania (5.11%). All other states represent less than 5% of the groups 2, 3, and 4 aggregate balance as of the cut-off date. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com. MASTR, a special purpose corporation, deposited the loans into the trust, which issued the certificates. U.S. Bank National Association will act as trustee. For federal income tax purposes, elections will be made to treat the trust fund as multiple real estate mortgage investment conduits -- REMICs. MEDIA GROUP: Wants Exclusive Plan-Filing Period Extended to Feb. 4 ------------------------------------------------------------------ The Media Group, Inc., and its debtor-affiliates, ask the U.S. Bankruptcy Court for the District of Connecticut for an extension, through and including February 4, 2005, within which they can file a chapter 11 plan without interference from any other party-in- interest. The Debtors also ask the Court for more time to solicit acceptances of that plan from their creditors, until April 4, 2005. The Debtors give the Court three reasons to grant their request: a) since their bankruptcy filing, the Debtors have been focused on activities related to their chapter 11 reorganization by: (i) stabilizing their businesses and reducing their operating expenses, (ii) ascertaining the complexities and magnitude of significant disputed matters which characterize their restructuring efforts, and (iii) intensifying efforts to ascertain the magnitude of their liabilities and the true nature of their creditor constituency in order to formulate a plan of reorganization; b) the Debtors have been preoccupied in dealing with administrative tasks, including establishing debtor-in- possession requirements and moving to a new location; and c) the Debtors have been working diligently since the Petition Date in continuing to work with the Official Committee of Unsecured Creditors, representatives of various creditors, and other parties in interest in formulating a consensual plan of reorganization. The Court will convene a hearing at 10:00 a.m., on Tuesday, Dec. 7, 2004, to consider the Debtors' motion to extend their exclusive periods. Headquartered in Stamford, Connecticut, The Media Group Inc., distributes and markets automotive additives and general merchandise. The Company filed for chapter 11 protection on July 9, 2004 (Bankr. D. Conn. Case No. 04-50845). Douglas S. Skalka, Esq., at Neubert Pepe and Monteith, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $10,915,723 in total assets and $14,743,552 in total debts. MEDIA GROUP: Has Until Jan. 4 to Make Lease-Related Decisions ------------------------------------------------------------- The Honorable Alan H.W. Shiff of the U.S. Bankruptcy Court for the District of Connecticut extended, until January 4, 2005, the period within which The Media Group, Inc., and its debtor- affiliates, can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors tell the Court that they are parties to various nonresidential real property leases for the storage of their inventory, including their main storage facility located at 100 Mechanic Street, Pawcatuck, Connecticut 06379. The Debtors relate that the extension will give them more time to fully evaluate their rights and obligations under the leases and to determine whether assumption or rejection of the leases is in the best interest of their estates and of their creditors. The Debtors assure Judge Shiff that they are current on all postpetition obligations to the lessors under the leases and that the extension will not prejudice the lessors and other parties in interest. Headquartered in Stamford, Connecticut, The Media Group Inc., distributes and markets automotive additives and general merchandise. The Company filed for chapter 11 protection on July 9, 2004 (Bankr. D. Conn. Case No. 04-50845). Douglas S. Skalka, Esq., at Neubert Pepe and Monteith, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $10,915,723 in total assets and $14,743,552 in total debts. MERRILL LYNCH: Fitch Rates Classes B-1 & B-2 Certificates Low-B --------------------------------------------------------------- Fitch Ratings rates Merrill Lynch Mortgage Investors, Inc., $609.8 million mortgage pass-through certificates, series MLCC 2004-1: -- $594.2 million class 1-A, 2-A-1, 2-A-2 and 2-A-3 (senior certificates) 'AAA'; -- $6.73 million class M-1 certificates 'AA'; -- $4.59 million class M-2 certificates 'A'; -- $2.75 million class M-3 certificates 'BBB'; -- $918,000 privately offered class B-1 certificates 'BB'; -- $1.22 million privately offered class B-2 certificates 'B'. The 'AAA' rating on the senior certificates reflects the 3% subordination provided by: * the 1.10% class M-1, * the 0.75% class M-2, * the 0.45% class M-3, * the 0.15% privately offered class B-1, * the 0.20% privately offered class B-2, and * the 0.35% privately offered class B-6 (which is not rated by Fitch) certificates. Classes rated based on their subordination: * M-1 'AA', * M-2 'A', * M-3 'BBB, * B-1 'BB', * B-2 'B' and Fitch believes the credit enhancement will be adequate to cover credit losses. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the primary servicing capabilities of Cendant Mortgage Corporation, which is rated 'RPS1' by Fitch. Generally, with certain limited exceptions, distributions to the class 1-A certificates will be solely derived from collections on the pool 1 mortgage loans, distributions to the class 2-A certificates will be solely derived from collections on the pool 2 mortgage loans. Aggregate collections from both pools of mortgage loans will be available to make distributions on the class M and B certificates. When a pool experiences either rapid prepayments or disproportionately high realized losses, principal and interest collections from one pool may be applied to pay principal or interest, or both, to the senior certificates to the other pools. The trust consists of 1,427 conventional, fully amortizing, primarily 30-year adjustable-rate mortgage -- ARM -- loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $612,585,133 as of the cut-off date Nov. 1, 2004. Group 1 consists of 190 mortgage loans with an aggregate principal balance of $76,994,801 as of the cut-off date. Each of the mortgage loans are fixed-rate for a period of three years, after which they are indexed off the one-year LIBOR or one-year US Treasury. The average unpaid principal balance as of the cut-off-date is $405,236. The weighted average original loan-to-value -- OLTV -- ratio is 74.40% and the weighted average effective loan-to-value (LTV) ratio is 67.19%. The weighted average FICO is 729. Cash-out refinance loans represent 20.70% of the loan pool. The three states that represent the largest portion of the mortgage loans are: * California (20.18%), * New Jersey (10.13%) and * New York (8.94%). Group 2 consists of 1,237 mortgage loans with an aggregate principal balance of $ 535,590,331 as of the cut-off date. Each of the mortgage loans are fixed-rate for a period of five years, after which they are indexed off the one-year LIBOR or one-year US Treasury. The average unpaid principal balance as of the cut-off-date is $432,975. The weighted average OLTV ratio is 72.83% and the weighted average effective LTV ratio is 66.11%. The weighted average FICO is 727. Cash-out refinance loans represent 21.46% of the loan pool. The three states that represent the largest portion of the mortgage loans are: * California (18.60%), * New York (12.74%) and * Florida (12.04%). All of the mortgage loans were either originated by Merrill Lynch Credit Corporation pursuant to a private label relationship with Cendant Mortgage Corporation or acquired by Merrill Lynch Credit Corporation in the course of its correspondent lending activities and underwritten in accordance with Merrill Lynch Credit Corporation underwriting guidelines as in effect at the time of origination. Prior to the closing date, each originator sold all of its interest in the mortgage loans owned by it to Merrill Lynch Mortgage Lending, Inc. 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. Merrill Lynch Mortgage Investors, the depositor, will assign all its interest in the mortgage loans to the trustee for the benefit of certificate holders. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits -- REMICS. Wells Fargo Bank Minnesota, National Association will act as trustee. MERRILL LYNCH: Fitch Puts Low-B Ratings on Classes B-4 & B-5 ------------------------------------------------------------ Fitch Ratings rates Merrill Lynch Mortgage Investors, Inc., $996.5 million mortgage pass-through certificates, series MLCC 2004-F: -- $969 million class A-1A, A-1B, A-2, A-R, X-A, and the privately offered classes X-B (senior certificates) 'AAA'; -- $10.5 million class B-1 certificates 'AA'; -- $8 million class B-2 certificates 'A+'; -- $4.5 million class B-3 certificates 'BBB'; -- $2.5 million privately offered class B-4 certificates 'BB+'; -- $2 million privately offered class B-5 certificates are rated 'B+'. The 'AAA' rating on the senior certificates reflects the 3.1% subordination provided by: * the 1.05% class B-1, * the 0.80% class B-2, * the 0.45% class B-3, * the 0.25% privately offered class B-4, * the 0.20% privately offered class B-5, and * the 0.35% privately offered class B-6 (which is not rated by Fitch) certificates. Classes rated based on subordination: * B-1 'AA', * B-2 'A+', * B-3 'BBB', * B-4 'BB+', and * B-5 'B+' Fitch believes the credit enhancement will be adequate to cover credit losses. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures, and the primary servicing capabilities of Cendant Mortgage Corporation, which is rated 'RPS1' by Fitch. Generally, with certain limited exceptions, distributions to the class A-1 and A-R certificates (and to the component of the class X-A certificates related to pool 1) will be solely derived from collections on the pool 1 mortgage loans and distributions to the class A-2 certificates (and to the component of the class X-A certificates related to pool 2) will be solely derived from collections on the pool 2 mortgage loans. Aggregate collections from both pools of mortgage loans will be available to make distributions on the class X-B and B certificates. When a pool experiences rapid prepayments or disproportionately high realized losses, principal and interest collections from one pool may be applied to pay principal or interest, or both, to the senior certificates of the other pool. The aggregate trust consists of 2,831 conventional, fully amortizing, primarily 25-year adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $1,000,012,589 as of the cut-off date Nov. 1, 2004. Group 1 consists of 2,379 loans with an aggregate principal balance of $ 850,008,202 as of the cut-off date. Each of the mortgage loans are indexed off the one-month LIBOR or six-month LIBOR, and all of the loans pay interest only for a period of 10 years following the origination of the mortgage loan. The average unpaid principal balance as of the cut-off-date is $ 357,296. The weighted average original loan-to-value ratio --OLTV -- is 70.7%. The weighted average effective LTV is 66.28%. The weighted average FICO is 735. Cash-out refinance loans represent 39.49% of the loan pool. The three states that represent the largest portion of the mortgage loans are: * California (19.93%), * Florida (18.53%), and * New York (8.41%). Group 2 consists of 452 loans with an aggregate principal balance of $ 150,004,387 as of the cut-off date. Each of the mortgage loans are indexed off the six-month LIBOR, and all of the loans pay interest only for a period of 10 years following the origination of the mortgage loan. The average unpaid principal balance as of the cut-off-date is $331,868. The weighted average OLTV is 72.23%. The weighted average effective LTV is 68.36%. The weighted average FICO is 732. Cash-out refinance loans represent 42.75% of the loan pool. The three states that represent the largest portion of the mortgage loans are: * California (21.91%), * Florida (17.76%), and * New York (6.11%). All of the mortgage loans were either originated by Merrill Lynch Credit Corporation pursuant to a private label relationship with Cendant Mortgage Corporation or acquired by Merrill Lynch Credit Corporation in the course of its correspondent lending activities and underwritten in accordance with Merrill Lynch Credit Corporation underwriting guidelines. Any mortgage loan with an OLTV in excess of 80% is required to have a primary mortgage insurance policy. 'Additional collateral loans' included in the trust are secured by a security interest in the borrower's assets, which does not exceed 30% of the loan amount. Ambac Assurance Corporation provides a limited purpose surety bond that covers any losses in proceeds realized from the liquidation of the additional collateral. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com. Merrill Lynch Mortgage Investors, the depositor, will assign all its interest in the mortgage loans to the trustee for the benefit of certificate-holders. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits -- REMICs. Wells Fargo Bank Minnesota, National Association will act as trustee. METRIS MASTER: Fitch Ups Ratings on $84.53 Class C Notes to AAA --------------------------------------------------------------- Fitch Ratings upgrades the class A, class B, and class C securities of the below listed series issued from Metris Master Trust. The actions affect approximately $600 million of credit card backed securities. The securities are backed by a pool of Visa and MasterCard receivables originated by Direct Merchants Credit Card Bank, N.A. and sold to Metris Master Trust through Metris Receivables Inc. The rating actions do not affect any trust issued series that are insured by MBIA, Inc. Metris Master Trust, floating-rate asset-backed securities, series 2000-1: -- $447.51 million class A floating-rate securities upgraded to 'AAA' from 'A-'; -- $67.96 million class B floating-rate securities upgraded to 'AAA' from 'BBB'; -- $84.53 million class C floating-rate secured notes upgraded to 'AAA' from 'BB+'. The rating actions are due to a cash defeasance of the series in an amount equal to 100% of the aggregate outstanding invested amount of class A, B, and C. The defeasance eliminates servicing and receivable performance risks as the cash is held in the principal funding account (to cover principal) and the accumulation period reserve account (to cover interest) for the sole benefit of security holders. The securities are scheduled to be paid in February and March of 2005. Fitch's assessment also included investment and account restrictions, as well as the adequacy of separate interest and principal account sizing. METRIS MASTER: Moody's Lifts $84.53M Secured Notes' Rating to Aaa ----------------------------------------------------------------- Moody's Investors Service upgraded three classes of securities issued out of the Metris Master Trust and the Metris Secured Note Trust, Series 2000-1. The primary consideration for the upgrade was the defeasance of the outstanding invested amount of the bonds. Specifically, on November 29, 2004, Metris deposited $606.7 million to segregated principal and interest trust accounts for the sole benefit of Series 2000-1 bondholders. The Class A Certificates are expected to mature on the February 2005 distribution date. The Class B Certificates and the Secured Notes are expected to mature on the March 2005 distribution date. The complete rating actions are: -- Metris Master Trust 2000-1 * $447,514,000 Class A Floating Rate Asset Backed Certificates, Series 2000-1, upgraded to Aaa from Aa3 * $67,956,000 Class B Floating Rate Asset Backed Certificates, Series 2000-1, upgraded to Aaa from Baa2 -- Metris Master Secured Note Trust 2000-1 * $84,530,000 Floating Rate Secured Notes, upgraded to Aaa from Ba2 MILLENNIUM CHEMICALS: S&P Downgrades Ratings to B+ -------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Millennium Chemicals, Inc., to 'B+' from 'BB-' and removed the ratings from CreditWatch where they were placed with negative implications on March 29, 2004. At the same time, Standard & Poor's lowered its debt ratings on Millennium America, Inc., a wholly owned subsidiary of Millennium Chemicals and removed the ratings from CreditWatch. The outlook is stable. Hunt Valley, Maryland-based Millennium is a $1.9 billion diversified commodity chemicals company. The downgrade reflects the ownership of Millennium by the highly leveraged Lyondell Chemical Co. (B+/Stable/--) following the completion of a previously announced stock-financed combination. The transaction, valued at about $2.7 billion based on the value of the Lyondell shares, became effective following receipt of approval from both companies' shareholders. The ratings on Houston, Texas-based Lyondell and its majority owned subsidiary, Equistar Chemicals L.P., are unaffected by the announcement. Standard & Poor's affirmed its 'B+' corporate credit ratings and other ratings on Lyondell and Equistar. "The transaction closely aligns Millennium's credit risk with that of its new parent, Lyondell, despite management's intention to maintain Millennium as a separate legal entity for financial reporting purposes, and the lack of any contractual support for Millennium's debt obligations by Lyondell," said Standard & Poor's credit analyst Kyle Loughlin. Standard & Poor's notes that Lyondell will be the sole owner of Millennium and that Lyondell has effectively gained full control of Equistar, after considering the additional indirect ownership achieved via Millennium's 29.5% shareholding (Lyondell directly owns 70.5% of Equistar). Accordingly, future financial policy decisions that influence the credit ratings at both Millennium and Equistar ultimately reside with Lyondell's board and senior management team. Standard & Poor's has also reviewed the implications of the transaction on Millennium's existing debt issues, and believes that these instruments are likely to remain in the capital structure following the merger. Millennium's senior unsecured notes contain a change of control provision, however, allowing the notes to be redeemed at 101% of face value, but the market value of these notes is currently well above this level suggesting that they are likely to remain outstanding. MORTGAGE ASSET: Fitch Puts BB+ Rating on Class B Certificates ------------------------------------------------------------- Fitch Ratings rates Mortgage Asset Securitization Transactions, Inc., $91 million mortgage pass-through certificates series 2004- 02, Specialized Loan Trust 2004-02: -- $75,573,000 class A 'AAA'; -- $4,940,000 class M-1 'AA'; -- $4,235,000 class M-2 'A'; -- $3,764,000 class M-3 'BBB'; -- $1,270,000 class M-4 'BBB-'; -- $1,317,000 class B 'BB+'. Credit enhancement for the 'AAA' class A certificates reflects the 21.05% subordination provided by class M-1, M-2, M-3, M-4 and B, initial overcollateralization -- OC -- and monthly excess interest. Credit enhancement for the 'AA' class M-1 certificates reflects the 15.80% subordination provided by class M-2, M-3, M-4 and B, initial OC and monthly excess interest. Credit enhancement for the 'A' class M-2 certificates reflects the 11.30% subordination provided by class M-3, M-4 and B, initial OC and monthly excess interest. Credit enhancement for the 'BBB' class M-3 certificates reflects the 7.30% subordination provided by class M-4 and B, initial OC and monthly excess interest. Credit enhancement for the 'BBB-' class M-4 certificates reflects the 5.95% subordination provided by class B, initial OC and monthly excess interest. Credit enhancement for the 'BB+' class B certificates reflects initial OC and monthly excess interest. In addition, the ratings on the certificates reflect the quality of the underlying collateral, and Fitch's level of confidence in the integrity of the legal and financial structure of the transaction. The mortgage pool consists of fixed- and adjustable-rate mortgage loans secured by first and second liens on one- to four-family residential properties, with an aggregate principal balance of $94,113,807. As of the cut-off date, Nov. 1, 2004, the mortgage loans had a weighted average loan-to-value ratio -- LTV -- of 81.98%, weighted average coupon -- WAC -- of 6.670%, and an average principal balance of $152,782. Single-family properties account for approximately 69.53% of the mortgage pool, two- to four-family properties 5.83%, and condos 3.69%. Ninety two percent of the properties are owner occupied. The three largest state concentrations are: * Nevada (13.85%), * California (11.87%), and * Illinois (7.80%). 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. Mortgage Asset Securitization Transactions, Inc., deposited the loans into the trust, which issued the certificates, representing beneficial ownership in the trust. For federal income tax purposes, the Trust Fund will consist of multiple real estate mortgage investment conduits -- REMICs. Deutsche Bank National Trust Company will act as trustee. GMAC Mortgage Corporation, rated 'RSS1-' by Fitch, and Wells Fargo Bank N.A., rated 'RSS2' by Fitch, will act as servicers for this transaction, with Wells Fargo Bank N.A., rated 'RMS1' by Fitch, acting as master servicer. NHC COMMS: Oct. 29 Stockholders' Deficit Narrows to C$4 Million --------------------------------------------------------------- NHC Communications, Inc. (TSX: NHC) (NHCMF), reported results for the first quarter of fiscal 2005, ended October 29, 2004, prepared in accordance with Canadian generally accepted accounting principles. First Quarter Results For the quarter ended October 29, 2004, NHC recorded revenues of $9.35 million compared with $1.24 million recorded in the first quarter of fiscal 2004. Revenues for the first quarter of fiscal 2005 included sales of $0.04 million to one customer, as well as the positive impact associated with the recognition of $9.31 million in revenue previously deferred in accordance with the Company's accounting policy on revenue recognition. In accordance with this accounting policy, all of fiscal 2003 and fiscal 2004's shipments to its current principal customer, totaling $27.86 million, could only be allocated as deferred revenues on the Company's balance sheet since this customer had not completed the testing of the Company's new CMS Version 3.1.2 software, a management system that integrates into customers' operating support system which controls the ControlPoint(R) robotic main distribution frame. Nevertheless, during the fourth quarter of fiscal 2004, NHC received a formal confirmation from this customer that the required testing was completed and that the related contract milestones had been met. "A significant number of physical conversions in each central office of our principal customer were performed during the first quarter of fiscal 2005. We expect that the remaining physical conversions will be completed during the current fiscal year, and NHC will then be able to recognize additional revenues of approximately $15 million, along with the related cost of revenues of approximately $13 million," said Sylvain Abitbol, NHC's President and Chief Executive Officer. The Company reported a net loss in the first fiscal quarter of 2005 of $0.31 million or a loss of 1 cent per share. This is an improvement from the first fiscal quarter of 2004, when the Company had a net loss of $1.41 million or a loss of 4 cents per share. A $1.22 million contribution to gross profit associated with $9.31 million in revenue previously deferred less the related cost of revenues of $8.09 million, as well as lower spending for all operating expenses in the first fiscal quarter of 2005 as a result of the implementation of cost-cutting measures effective at the end of the second quarter of fiscal 2004, contributed to the smaller loss per share. Financing Activities During the first quarter of fiscal 2005, the Company completed a private placement with a third-party investor for gross proceeds of $2.65 million under terms previously disclosed. The number of issued and outstanding shares as at Oct. 29, 2004, was 41,481,463. For the first quarter of fiscal 2005, cash and cash equivalents increased by $1.18 million, mainly attributable to the cash provided by financing activities of $3.12 million, net of cash used by operating activities of $1.69 million. As at October 29, 2004, the Company's working capital efficiency was $4.45 million. However, this included an amount of $2.64 million representing the difference between the short-term portion of the deferred revenue of $15.72 million and the short-term portion of the deferred expenses of $13.08 million, and which difference is expected to be decreased from the working capital deficiency in the current fiscal year. Moreover, the Company expects that a private placement for gross cash proceeds of $1.56 million will be completed during the next quarter. In connection with this private placement, the Company would issue 1,200,000 common shares at a price of $1.30 per share to a third-party investor and would grant warrants to purchase up to 960,000 common shares at a price of $1.45 per share, each for a period of two years. At Oct. 29, 2004, NHC Communications' balance sheet showed a C$4,017,000 stockholders' deficit, compared to a C$6,140,000 stockholders' deficit at July 30, 2004. NHC plans to continue to finance its activities from additional long-term financing and from the collection of future sales to its customers. There can be no assurance that such additional funding will be available on acceptable terms. Should it fail to secure additional financing, the Company may not be able to continue as a going concern. About the Company NHC Communications, Inc., provides products and services enabling the management of voice and data communications for telecommunication service providers. NHC's ControlPoint(R) solutions utilize a high-performance software driven Element Management System controlling an automated, true any-to-any copper cross-connect switch, to enable incumbent local exchange carriers and other service providers to remotely perform the four key tasks that historically have required manual on-site management. These four tasks fundamental to all operations are loop qualification, deployment and provisioning, fallback switching and service migration of Voice and Data services including DSL and T1/E1. Using ControlPoint(R), NHC's customers avoid the risk of human error and dramatically reduce labour and operating costs. NHC maintains offices in Montreal, Quebec and Paris, France. "ControlPoint(R)" is a registered trademark of NHC Communications, Inc. NSG HOLDINGS: S&P Lifts Rating on $160M Sr. Sec. Facility to B+ --------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on NSG Holdings II's proposed $160 million senior secured bank facility to 'B+' from 'B'. Houston, Texas-based NSG Holdings II is a portfolio of U.S.-based power assets. The upgrade is due to the improved credit quality of Reliant Energy, the offtaker to the Vandolah project, which provides almost 60% of the distributions to NSG Holdings II. "The stable outlook on NSG Holdings II reflects our view that credit quality should not significantly deteriorate in the short term," said Standard & Poor's credit analyst Jodi Hecht. Standard & Poor's also said that there is no room for a ratings upgrade based on the concentration risk of the portfolio and its dependence on Reliant's creditworthiness. Reliant has significant maturities in 2009, potentially negatively impacting the distributions to NSG Holdings II. The bank facility consists of a $10 million revolving credit facility due 2009 and a $150 million term loan facility due 2011. Standard & Poor's recovery rating of '2' is affirmed, indicating the expectation of a substantial (80%-100%) recovery of principal in the event of default. NSG Holdings II is a wholly owned subsidiary of Northern Star Generation LLC, which is owned equally by AIG Highstar Generation LLC and a subsidiary of the Ontario Teachers' Pension Plan Board. OMI CORP: S&P Rates Proposed $225M Senior Convertible Debt B+ ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' senior unsecured rating to OMI Corporation's proposed $225 million senior convertible debt offering due 2024. The senior unsecured notes are rated two notches below the corporate credit rating due to the large amount of secured debt relative to assets. At the same time, Standard & Poor's affirmed its ratings, including the 'BB' corporate credit rating, on the tanker shipping company. The outlook is stable. Proceeds from the debt offering will be used to repurchase $72.5 million of stock with the balance to be used to reduce borrowings under the company's revolving credit facility. Pro forma for the notes offering and share repurchase, lease-adjusted debt to capital is expected to be approximately 58%, in-line with the current rating category. At Sept. 30, 2004, the shipping company had approximately $900 million of lease-adjusted debt. "Ratings on OMI Corporation reflect the company's significant, but carefully managed, exposure to the volatile tanker spot markets, an active new vessel construction and acquisition program, and participation in the competitive, volatile, highly fragmented, and fixed-capital-intensive bulk ocean shipping industry," said Standard & Poor's credit analyst Kenneth L. Farer. These negative factors are partly offset by OMI's favorable business position as a leading Suezmax and product tanker operator with strong market share in the Caribbean, Black Sea, and Mediterranean Sea. In addition, the company's average vessel age is young compared to the world fleet. OMI is engaged primarily in ocean transportation of crude oil and refined petroleum products. Since 1998, the company has been an internationally focused owner and operator of oil tankers. Over the past several years, OMI has disposed of older tonnage and expanded its fleet through new vessel construction and purchases funded with equity and secured financing. At Sept. 30, 2004, this renewal program had reduced the average age of OMI's fleet to 3 years, excluding vessels held for sale, from over 15 years in 1997. At Nov. 30, 2004, OMI's modern fleet consisted of 42 oceangoing vessels, totaling approximately 3.5 deadweight tons -- dwt, with another 12 double-hulled vessels to be delivered through 2006. OMI's revenue, earnings, and cash flow are expected to continue at strong rates over the near to intermediate term. Even if the tanker market weakens somewhat, credit measures should remain appropriate for the current rating. However, the company's significant commitments for new vessels, potential for acquisition activity, somewhat more aggressive financial policy, and participation in the competitive and cyclical tanker industry limits upside rating potential. ON SEMICONDUCTOR: Commencing Sr. Debt Offer & Consent Solicitation ------------------------------------------------------------------ ON Semiconductor Corp. (Nasdaq: ONNN) is commencing a cash tender offer for any and all outstanding: -- $195,000,000 aggregate principal amount of the 12 percent Senior Secured Notes due 2008; and -- $130,000,000 aggregate principal amount of the 12 percent Senior Secured Notes due 2010 previously issued by the company and Semiconductor Components Industries, LLC, on the terms and subject to the conditions set forth in its Offer to Purchase For Cash and Consent Solicitation Statement dated Dec. 1, 2004. ON Semiconductor is also soliciting consents for amendments to the indentures under which the Notes were issued and to the related security documents. Holders who tender their Notes will be required to consent to the proposed amendments and holders who consent will be required to tender their Notes. Consummation of the Offer is subject to the availability of financing and the satisfaction of a number of conditions. ON Semiconductor is planning to fund the purchase of the Notes with cash on hand and net proceeds of new borrowings under a proposed amendment and restatement of its senior secured credit facilities. The Offer for each series will expire at midnight, New York City time, on Dec. 29, 2004, unless extended or earlier terminated with respect to a series. Prior to satisfaction of the conditions to the Offer, ON Semiconductor may amend, extend or terminate the tender offer and consent solicitation at any time without making payments with respect thereto. Holders of Notes must tender their Notes at or prior to the Expiration Time to receive the tender offer consideration. The consent solicitation for each series will expire at 5 p.m., New York City time, on Dec. 14, 2004, unless extended. Holders of Notes must tender their Notes prior to the applicable Consent Payment Deadline to receive the total consideration. The consideration for each $1,000 principal amount of 2008 Notes tendered will be: (1) the present value on the expected Initial Optional Early Settlement Date of $1,060.00 (the amount payable on May 15, 2006, which is the first optional redemption date of the 2008 Notes) and the present value of the interest from the last interest payment date until May 15, 2006, discounted at a rate equal to the sum of: (i) the yield of 2.00 percent U.S. Treasury Note due May 15, 2006; and (ii) a fixed spread of 50 basis points minus (2) accrued and unpaid interest to but not including the expected Initial Optional Early Settlement Date, minus (3) an amount equal to the consent payment, referred to below. The 2008 reference yield will be calculated in accordance with standard market practice as of 2 p.m., New York City time, on Dec. 14, 2004, subject to extension. The consideration for each $1,000 principal amount of 2010 Notes tendered will be: (1) the present value on the expected Initial Optional Early Settlement Date of $1,060.00 (the amount payable on March 15, 2007, which is the first optional redemption date of the 2010 Notes) and the present value of the interest from the last interest payment date until March 15, 2007, discounted at a rate equal to the sum of: (i) the yield of the 2.25 percent U.S. Treasury Note due Feb. 15, 2007 and (ii) a fixed spread of 50 basis points minus (2) accrued and unpaid interest to but not including the expected Initial Optional Early Settlement Date minus (3) an amount equal to the consent payment referred to below. The 2010 reference yield will be calculated in accordance with standard market practice as of 2 p.m., New York City time, on Dec. 14, 2004, subject to extension. In addition, holders of Notes will receive accrued and unpaid interest to but not including the applicable Settlement Date. Holders who tender their Notes and deliver their consents to the proposed indenture and security document amendments at or prior to the applicable Consent Payment Deadline will also receive a consent payment of $40 for each $1,000 in principal amount of the 2008 Notes and 2010 Notes. Holders of the Notes tendered after the applicable Consent Payment Deadline will not receive a consent payment. Notes and related consents may be withdrawn prior to the applicable Consent Payment Deadline. Notes may not be withdrawn after the applicable Consent Payment Deadline and delivery of written notice to the trustee for the Notes that certain conditions have been met. At any time after the applicable Consent Payment Deadline and prior to the Expiration Time, the company may elect to accept for payment all Notes validly tendered on or prior to the Initial Optional Early Acceptance Date. Concurrently with any election, the company will waive all conditions to the Offers (other than those related to illegality and court orders) and thereafter will accept subsequently tendered Notes, subject to the terms and conditions of the Offer, on a daily basis. The company currently anticipates that the Initial Optional Early Acceptance Date will be Dec. 23, 2004, and that Notes accepted at that time will be paid promptly thereafter. Morgan Stanley & Co. Inc. is the dealer manager and Solicitation Agent for the Tender Offer and Consent Solicitation. Questions regarding the transaction should be directed to: Morgan Stanley Toll-Free: 800-624-1808 212-761-1941 Attn: Francesco Cipollone Requests for documents should be directed to: Georgeson Shareholder Communications Information Agent 17 State Street, 10th Floor New York, N.Y. 10004 Toll-Free: 800-377-9583 For banks and brokerage firms: 212-440-9800 About the Company ON Semiconductor offers an extensive portfolio of power- and data- management semiconductors and standard semiconductor components that address the design needs of today's sophisticated electronic products, appliances and automobiles. For more information visit ON Semiconductor's Web site at http://www.onsemi.com/ At Oct. 1, 2004, ON Semiconductor's balance sheet showed a $452.2 million stockholders' deficit, compared to a $644.6 million deficit at Dec. 31, 2003. OWENS CORNING: Chinese Unit to Pay $4.8 Million Dividend -------------------------------------------------------- Owens Corning (Nanjing) Foamular Board Co. Ltd., formerly known as Owens Corning (Jiangsu) XPS Foam Co., Ltd., is an equity joint venture limited liability company established pursuant to the laws of the People's Republic of China. OC Nanjing's business is primarily comprised of foamular board production. Foamular board is a rigid panel insulation used for insertion in walls, ceilings and the like. Three entities have a joint venture interest in OC Nanjing: (1) Owens Corning (China) Investment Company, Ltd. owns a 39.64&% joint venture interest in OC Nanjing. OCI is a direct, wholly owned, non-debtor subsidiary of Owens Corning Cayman (China) Holdings, which is a direct, wholly owned, non-debtor subsidiary of Owens Corning. OCI serves primarily as a holding company for many of Owens' foreign subsidiaries in China; (2) Owens Corning owns a 50.36% interest in OC Nanjing; and (3) Jiangsu Construction Material Assets Management Co., Ltd., a Chinese enterprise legal person established pursuant to the laws of the People's Republic of China, owns the remaining 10% in OC Nanjing. Norman L. Pernick, Esq., at Saul Ewing, in Wilmington, Delaware, tells Judge Fitzgerald that OC Nanjing has not paid dividends to its equity holders since its inception in 1996. OC Nanjing currently holds $6.5 million in retained earnings. Under the terms of the OC Nanjing Joint Venture Agreement, OC Nanjing will determine the amount of after-tax profit, after the deduction of certain allocations, to be distributed to equity holders as well as the amount to be retained for expansion of production and operations. OC Nanjing has determined to retain $1.2 million for expanding its production and operation, and distribute to equity holders $4.8 million in dividends. To ensure that OC Nanjing has sufficient cash on hand at all times, OC Nanjing proposes to pay dividends totaling $4.8 million over two years: -- $3.6 million would be paid in 2005; and -- $1.2 million would be paid in 2006. The proposed dividends would be paid ratably to OC Nanjing's equity participants, in accordance with the Joint Venture Agreement. Although OCI and OC Nanjing are non-debtors, the Final Cash Management Order governs certain of their actions. The Final CMO does not specifically address dividends. In an abundance of caution, the Debtors ask the U.S. Bankruptcy Court for the District of Delaware to authorize OC Nanjing to pay up to $4.8 million in cash dividends to Owens, OCI and JCMAM pursuant to the terms of the Joint Venture Agreement. Mr. Pernick notes that that the transaction provides for significant overall benefit to the Debtors, OC Nanjing, as well as to creditors and parties-in-interest. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARMALAT USA: Former VP F. Ferrante Asks Court to Quash Subpoena ---------------------------------------------------------------- As reported in the Troubled Company Reporter on Nov. 15, 2004, Judge Drain of the U.S. Bankruptcy Court for the Southern District of New York directs Parmalat USA Corporation's former Vice- President Frank Ferrante to: (i) immediately produce all documents and records requested by Parmalat USA and its U.S. debtor-affiliates; and (ii) submit to a deposition upon oral examination on certain matters. Ferrante Asks Court to Quash Subpoena Michael Q. Carey, Esq., at Carey & Associates, LLC, in New York, asserts that Parmalat USA Corp.'s attempt to depose its former employee, Frank Ferrante, and compel him to produce documents is a continuation of a pattern of harassment to stymie Mr. Ferrante from competing with Parmalat USA in his current job with Tuscan/Lehigh Dairies, Inc. Despite the broad scope of Rule 2004 of the Federal Rules of Bankruptcy Procedure, the case law is clear that Parmalat USA is not allowed to use the bankruptcy proceeding for the purpose of intimidation or harassment, or to obtain information about Mr. Ferrante's private affairs, which are irrelevant to the bankruptcy proceeding itself. The Court issued a subpoena for Mr. Ferrante directing him to produce documents by November 11, 2004, and to appear for deposition on November 18. On October 29, 2004, Parmalat USA consented to adjourn the time by which Mr. Ferrante had to produce documents or otherwise respond to the subpoena to November 19, and to appear for deposition on December 7. The date to produce documents or respond was further extended, as agreed by the parties, to November 26, but the time set for Mr. Ferrante's deposition was not further adjusted. Mr. Carey relates that the impact of Mr. Ferrante's departure from Parmalat USA and subsequent employment with Tuscan was dramatic for Parmalat USA. Parmalat USA knew immediately what this would mean for its business and immediately began to threaten Mr. Ferrante. The day after Mr. Ferrante resigned, Parmalat USA sought to harass and intimidate him by threatening "serious potential legal and equitable consequences" as a result of his taking a position with Tuscan. This statement was conveyed to Mr. Ferrante in a January 6, 2004 letter from Parmalat USA's then counsel, Epstein, Becker & Green, which directed him to immediately cease and desist any conduct that would violate or threaten to violate Parmalat USA's rights and interests, and further warned that Parmalat USA was conducting an investigation of his conduct while still employed with them. Despite Parmalat USA's threat of legal action and a supposed investigation into Mr. Ferrante's actions as its employee, no action has been taken against him to date, with the exception of the Rule 2004 motion. Parmalat USA's real concern was with respect to anticipated competition with Tuscan and that concern was well founded, Mr. Carey says. Many of the customers serviced by Mr. Ferrante while he was employed with Parmalat USA followed him to Tuscan with a corresponding loss of enormous amounts of revenue by Parmalat USA. Parmalat USA asserts that it requires information from Mr. Ferrante regarding: (i) bonus payments made to Mr. Ferrante during his employment with Parmalat USA; (ii) Mr. Ferrante's use of Parmalat USA's corporate funds during his employment; (iii) the Supply Agreement negotiated between Tuscan and Parmalat USA; and (iv) Mr. Ferrante's post-resignation conduct with respect to former Parmalat USA customers. However, Mr. Carey points out, there is no allegation that Mr. Ferrante has received bonus amounts or used his expense account in any manner that was not fully approved by Parmalat USA's management and executive officers. Moreover, despite allegations of false and defamatory statements made by Mr. Ferrante to Parmalat USA's customers in an attempt to lure them away, there is no specific reference to any false, misleading, disparaging, or defamatory statement made by Mr. Ferrante. Accordingly, Mr. Ferrante asks the Court to reconsider its order to produce documents and appear for a deposition. Mr. Ferrante wants the subpoena quashed because Parmalat USA will have sufficient opportunity to obtain information from him within the confines of the probable impending litigation between Parmalat USA and Tuscan regarding the Tuscan Supply Agreement. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000) PHOENIX COLOR: S&P Revises Outlook on B Rating to Negative ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on book components printer Phoenix Color Corp. to negative from stable. At the same time, Standard & Poor's affirmed its ratings, including its 'B' corporate credit rating, on the Hagerstown, Maryland-based company. Total debt outstanding at Sept. 30, 2004, was $116 million. "The outlook revision follows the recent release of disappointing third quarter earnings in which revenue and EBITDA declined by 17% and 43%, respectively. Weaker-than-expected performance was driven primarily by unstable demand for book components," said Standard & Poor's credit analyst Sherry Cai. During the nine months ended Sept. 30, 2004, Phoenix Color's sales declined by 5% and EBITDA declined by 22%. During the past few years, the weak economy has resulted in lower levels of publishing activity, which in turn has negatively affected Phoenix Color's sales. While economic recovery and overall industry volumes are expected to increase somewhat in 2005, Standard & Poor's does not expect this increase to be sufficient to alleviate the current overcapacity. As a result, the pricing environment is expected to remain acute, leading to highly competitive industry conditions. PHOENIX QUAKE: Moody's Pares $85M Notes' Rating to B3 from Ba1 -------------------------------------------------------------- Moody's Investors Service downgraded this Class of Notes issued by Phoenix Quake Wind II Ltd., a catastrophe bond issuance: -- U.S. $85,000,000 Principal At-Risk Variable Rate Notes due July 3, 2008 from Ba1 on watch for possible downgrade to B3 no longer on watch for possible downgrade. The Calculation Agent for the transaction informed Moody's that a magnitude 6.8 earthquake that occurred on October 23, 2004, in Japan with epicenter 37.30N 138.80E was deemed to be the First Event. Due to the occurrence of the First Event as defined under the governing documents, the protection provided to the sponsor by the Noteholders has been activated. Thus,the Notes are exposed to potential losses arising from a subsequent qualifying earthquake or typhoon. Consequently, the expected loss to noteholders has increased. The Notes were placed on the Moody's Watchlist for possible downgrade on October 29, 2004. Rating Action: Downgrade Issuer: Phoenix Quake Wind II Ltd. Class Description: U.S. $85,000,000 Principal At-Risk Variable Rate Notes due July 3, 2008 from Ba1 on watch for possible downgrade to B3 no longer on watch for possible downgrade. PLYMOUTH RUBBER: Applies for Voluntary AMEX Delisting ----------------------------------------------------- Plymouth Rubber Company, Inc. (Amex: PLR.A, PLR.B), filed an application with the Securities and Exchange Commission pursuant to Section 12(d) of the Exchange Act to voluntarily delist its Class A Common Stock and Class B Common Stock from the AMEX. Since May 2003, the Company had received several notifications from the AMEX that the Company was not in compliance with AMEX quantitative listing standards, related to both minimum shareholders' equity and minimum aggregate publicly held market values for its Class A and Class B Common Stock. In the summer of 2003, the Company submitted and the AMEX approved a plan by which the Company would be brought back into compliance with AMEX's listing standards by the end of fiscal 2004. The Company is not currently in compliance with these listing standards. The Company has evaluated: (1) its current non-compliance with the continued quantitative listing standards; and (2) it's continuing difficulty in attempting to regain ongoing compliance with these AMEX standards. Given the likelihood that the Company will not attain compliance with these quantitative standards by today, Dec. 3, 2004, the end of its current fiscal year, the Board of Directors has concluded that the Company should withdraw its Class A and Class B Common Stock issues from listing with the AMEX on a voluntary, rather than involuntary, basis. The Company is considering the alternative OTC markets that may be available to the Class A Common Stock and the Class B Common Stock. The Company is also considering whether either or both of such classes of stock may be eligible for deregistration under the Securities Exchange Act of 1934 and the rules and regulations of the Securities and Exchange Commission thereunder, in which event the Company's obligation to file reports under Section 13 of the Exchange Act with the Securities and Exchange Commission could be terminated. About the Company Plymouth Rubber Company, Inc. manufactures and distributes plastic and rubber products, including automotive tapes, insulating tapes, and other industrial tapes and films. The Company's tape products are used by the electrical supply industry, electric utilities, and automotive and other original equipment manufacturers. Through its Brite-Line Technologies subsidiary, Plymouth manufactures and supplies highway marking products. At Aug. 27, 2004, Plymouth Rubber's balance sheet showed a $377,000 stockholders' deficit, compared to a $612,000 of positive equity at Nov. 28, 2003. * * * Going Concern Doubt Plymouth Rubber's Audit Committee previously dismissed PricewaterhouseCoopers LLP as its independent registered public accounting firm. The reports of PricewaterhouseCoopers LLP on the financial statements of the Company for the two most recent fiscal years ended Nov. 28, 2003, and Nov. 29, 2002, contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. However, the reports included an explanatory paragraph wherein PwC expressed substantial doubt about the Company's ability to continue as a going concern. The Company's audit committee approved the engagement of Vitale, Caturano & Company, Ltd. as the Company's new independent registered public accounting firm as of Oct. 14, 2004. During the Company's two most recent fiscal years and through Oct. 14, 2004, the Company has not consulted with Vitale, Caturano & Company, Ltd. regarding any matters or reportable events described in Items 304(a)(2)(i) and (ii) of Regulation S-K. PREMCOR REFINING: Fitch Says Ratings Unaffected by Encana Pact -------------------------------------------------------------- Fitch Ratings anticipates no immediate effect on the debt ratings of The Premcor Refining Group (PRG, NYSE: PCO) and Port Arthur Finance Corp. following the announcement that Premcor Refining and EnCana Corporation (EnCana, NYSE: ECA) have reached an agreement to study upgrading PRG's Lima, Ohio refinery to process 100% heavy Canadian crude oil and increase the crude capacity to 200,000 barrels of oil per day -- bpd. The Rating Outlook is Stable. Fitch rates the debt of Premcor Refining and Port Arthur: * Premcor Refining -- $1 billion secured credit facility 'BB+'; -- Senior unsecured notes 'BB'; -- Senior subordinated notes 'B+'. * Port Arthur -- Senior secured notes 'BB+'. Upon completion of the study, the companies anticipate entering into a 50/50 joint venture whereby Premcor Refining would contribute the Lima refinery and related assets (currently valued by the company at more than $1 billion), and EnCana would contribute an equivalent amount of cash for the upgrade. Each partner would contribute 50% of any additional cash required to complete the project. Major expenditures are not anticipated until 2006, with project completion anticipated in the second half of 2008. The project will include the construction of a new vacuum unit, a new coker, a new hydrocracker, and modifications to the existing crude units. The joint venture will also enter into a crude supply agreement with EnCana to provide the 200,000 bpd of heavy crude. While the project is not expected to have an immediate impact on the credit ratings, Fitch views the transaction positively for Premcor as the project will significantly improve the profitability of the plant, and Premcor is not expected to make any sizable cash investments into the project. The upgrade will significantly reduce the cost of crude as the refinery currently processes approximately 95% light sweet crude. The upgrade will also improve the quality of the production and allow the refinery to run at full capacity. In recent years, Lima has operated at below 140,000 bpd despite a capacity of 170,000 bpd due to a lack of demand for the additional production capacity (primarily high sulfur diesel). The project is also expected to have minimal interference with operations during construction until a plant wide turnaround in 2008. Premcor Refining is a large independent U.S. refiner of petroleum products that owns and operates four crude refineries with a combined capacity of 790,000 bpd. Premcor Refining is a wholly owned subsidiary of Premcor. Port Arthur and the Port Arthur Coker Company L.P. are wholly owned subsidiaries of Premcor Refining. Port Arthur Coker owns and operates the heavy oil processing facility at Premcor's Port Arthur, Texas refinery that includes an 80,000-bpd delayed coking unit. QUANTA SERVICES: Moody's Revises Outlook on Ratings to Negative --------------------------------------------------------------- Moody's Investors Service affirmed ratings of Quanta Services, Inc. reflecting the company's large cash balance, free cash flow generation vs. its debt levels, and significant contract backlog. The rating outlook however has been changed to negative from stable. These ratings were affirmed: * $35 million Revolving Credit Facility due 2007, rated Ba3; * $150 million Senior Secured Term Loan due 2008, rated Ba3; * Senior Implied, rated B1; * Issuer Rating, rated B2. The change in outlook to negative from stable reflects the company's high leverage and thin margins. The company's operating fundamentals remain under pressure due to tough industry conditions. Furthermore, the rate of credit quality improvement, while visible in some areas, has been below Moody's expectations. In addition to being constrained by its high leverage and low margins, Quanta's ratings reflect significant goodwill and are constrained by increased competition. For the last twelve months ended September 30, 2004, total debt to EBITDA was high at 6.3 times (excluding its significant cash balance), and its operating margins decreased to 1% from 1.4% from the comparable period a year earlier. The company's operating margin have come under pressure due primarily to higher expenses related to weak demand as its customers remain cautious on general network investments, and higher insurance and benefit costs. Moody's believes that such thin operating margins could turn negative if demand were to deteriorate or even if its costs increased only slightly. Furthermore, the company continues to experience pricing pressure and increased competition for its traditionally higher margin specialty work. The ratings benefit from Quanta's competitive position as one of the largest contractors in the contracting services segment serving the electric power & gas industry, as well as the telecom and cable television industries. The company's ratings also benefit from its diversified customer base of premier utilities and also from a diversified revenue stream with its top ten customers representing under one-third of its revenues. Furthermore, none of the company's top ten customers represent over 5% of revenues. The ratings are primarily supported by the company's $218 million cash balance. The ratings also benefit from the company's strong cashflow generation relative to its debt balance, although a large portion of this free cash flow is due to low capital investments due to weak demand. For the LTM period through Sept. 30, 2004, the company's capital expenditures totaled $42 million vs. depreciation for the same period of approximately $59 million. The company's ratings also benefit from its contract backlog that totals around $1.1 billion vs. total annual sales of about $1.6 billion. The 11.9% year-over-year growth in the company's contract backlog suggests that the company's revenues may improve as these contracts materialize. Year-over-year however, the company's revenues have been flat when adjusted for the $45 million in business derived from the impact of the season's hurricanes experienced during the third quarter vs. $25 million of incremental storm work during the same period a year earlier. Additionally, the company is well positioned to benefit from higher transmission and distribution investment when investment levels rebounds from unusually low levels that began in 2002. The company is also well positioned to capitalize on investments by telecom companies that are increasingly pursuing fiber-to-the- premise. The ratings and or outlook could be upgraded if margins and leverage were to improve. The ratings could be downgraded if margins continue to contract and the company's contract backlog were to decline significantly or if the company's cash position was to weaken. Moody's notes that the company's large cash position provides a cushion that may allow the company to ride out the difficult competitive and operating climate that it is experiencing. Hence, a material reduction in cash could affect the rating. If the company's ability to access the surety bond market were to decline, then its liquidity position may be adversely affected. The company had almost $490 million in surety bonds as of September 30, 2004. However, the total estimated liability on a cost-to-complete basis is much lower. For the last twelve months ended September 30, 2004, revenue totaled approximately $1.6 billion while EBITDA totaled around $75.2 million. The company's EBITDA interest coverage for this period was around 2.8 times. Headquartered in Houston, Texas, Quanta Services, Inc., provides specialized contracting services, offering end-to-end network solutions to the electric power, gas, telecommunications, and cable television industries. REVLON CONSUMER: Moody's Downgrades Liquidity Rating to SGL-4 ------------------------------------------------------------- Moody's Investors Service affirmed the existing long-term debt ratings of Revlon Consumer Products Corporation, but maintained a negative ratings outlook following the company's report of challenging sales and market share trends into the second half of fiscal 2004. Revlon's top-line difficulties heighten its liquidity pressures, given debt-refinancing requirements by the end of October 2005. As such, Moody's has downgraded the company's speculative grade liquidity rating to SGL-4 from SGL-3. Issuers rated SGL-4 possess weak liquidity. They rely on external sources of financing and the availability of that financing is, in Moody's opinion, highly uncertain. These ratings were affected by this action: * Senior implied rating, affirmed at B3; * $160 million senior secured revolving credit facility due 2009, affirmed at B2; * $800 million senior secured term loan facility due 2010, affirmed at B3; * $116 million 8.125% senior notes due 2006, affirmed at Caa2; * $76 million 9% senior notes due 2006, affirmed at Caa2; * $327 million 8.625% senior subordinated notes due 2008, affirmed at Caa3; * Speculative grade liquidity rating, downgrade to SGL-4 from SGL-3; * Senior unsecured issuer rating, affirmed at Caa2. The downgrade of Revlon's speculative grade liquidity rating to SGL-4 reflects the company's weak liquidity profile over the coming twelve-month period, given effective debt maturities during this timeframe and Moody's expectations for continued negative free cash flow (albeit more moderate than in previous periods). Revlon will face acceleration under the senior secured term loan facility if its senior notes, which mature in February 2006 and November 2006, are not refinanced by October 31, 2005 and July 31, 2006, respectively. As such, the company is highly reliant on its equity offering commitment (required by March 31, 2006; $110 million backstopped by MacAndrews and Forbes) and on the state of the capital markets in the interim period. Revlon's SGL rating could be upgraded, if the company is able to maintain or improve profit and cash flow levels and refinance its senior notes, and thereby avoid any acceleration of its senior secured term loan facility and ensure continued borrowing access to its $160 million senior secured revolving credit facility. Although its $151 million in affiliated credit lines expire during 2005, Revlon's $160 million revolving credit facility provides adequate capacity to meet potential cash outflows and moderate term loan amortization requirements over the coming year in the absence of a debt acceleration scenario. This facility, which is governed by customary borrowing base calculations, was undrawn (excluding letters of credit) at quarter-end September 2004. Prospective compliance with financial covenants is expected (assumes no debt acceleration) with ample cushion relative to the maximum senior secured leverage of 5.5x and projected borrowing availability well beyond the $30 million level that would automatically trigger a 1.0x minimum fixed charge coverage requirement. For the third quarter ended September 2004, Revlon reported essentially flat year-over-year gross sales. Moreover, the overall mass cosmetics category continues to be weak and Revlon has lost market share during 2004 due to less than anticipated contribution from new products. Despite these challenges, Revlon has affirmed its full-year EBITDA expectations at $190 million, on the strength of efficiency gains and spending controls. While Revlon's current year profit gains support the long-term ratings affirmation, the maintenance of a negative outlook reflects concerns regarding the sustainability of profit levels given ongoing sales and market share pressures and required brand support increases next year. In particular, Moody's notes that the company plans to reinvest productivity gains into brand support and growth initiatives next year, which will have uncertain returns and, in any event, may simply enable Revlon to hold sales levels in the absence of overall growth for mass cosmetics. In this last regard, Moody's notes that the current macro-economic environment (in particular, gas and energy price increases) appears to be impacting sales of Revlon's largest customer, which could influence purchases going forward. The inability to maintain current profit levels would likely strain Revlon's already weak cash flow profile and heighten its refinancing pressures, given the effective maturity in October 2005 of its 8 1/8% notes due February 2006. Moody's recognizes that the acceleration of the company's equity offering commitment could support the refinancing, but also notes that the deadline for the offering is beyond the October 2005 effective debt maturity. If Revlon has not addressed its senior note debt maturities by March 2005, or if the company fails to hit its profit targets and turns more significantly cash flow negative during this period, the ratings are likely to be downgraded. Alternatively, a refinancing which addresses debt maturities over the next two years and the demonstration of sustainable profit gains could support a stabilization of the ratings at present levels or other positive rating actions. Revlon's ratings are restrained by weak pro forma cash flow and high leverage levels, even following over $800 million of debt reduction and the scale-down of its accelerated spending plans. Debt adjustments for under-funded pension plans further constrain the ratings. The company's leveraged profile, although improving, remains a rating concern as it participates in an industry segment that requires material upfront brand support, fixture, and product development expenditures with an uncertain consumer receptivity. The industry is characterized by larger and better-resourced competitors (such as L'Oreal and Proctor & Gamble), nimble niche companies with low entry barriers, and dominant retailers with high profit and service demands. Revlon is dependent on a limited number of brands, is under-represented in certain important beauty segments (skin care and fragrance), and may need to further invest in order to support its weaker brands, including the Almay franchise. Although, cosmetics sales are not exceptionally seasonal, merchandising and promotional activity earlier in the year tends to materially skew cash flow toward the fourth quarter. Revlon's ratings are supported by the strong brand equity and leading market share of its namesake brand, and by balance sheet improvements resulting from the $800 million debt-for-equity exchange earlier this year. The management team that has been assembled over the past few years has successfully implemented marketing, merchandising, and operating efficiency initiatives that have: -- enhanced Revlon's relationship with key retailers; -- strengthened the value of Revlon's brands; and -- enabled significant margin improvement. The ratings are also supported by the historical recession resistance that has characterized the mass cosmetics industry, and by the moderate diversification benefits offered by Revlon's international and non-cosmetic brands. Revlon, headquartered in New York, is a worldwide cosmetics, skin care, fragrance, and personal care products company. The company is a wholly owned subsidiary of Revlon, Inc., which in turn is majority-owned by REV Holdings, Inc. (Fidelity Investments also maintains a significant minority ownership position). REV Holdings, Inc., is controlled by Ronald O. Perelman through MacAndrews & Forbes Holdings, Inc., and Mafco Holdings Inc. Revlon's net sales for the twelve-month period ended Sept. 2004 were approximately $1.3 billion. RICHMOND CITY: Moody's Confirms Ba3 Rating with Negative Outlook ---------------------------------------------------------------- Moody's confirmed the Ba3 Issuer Rating (implied general obligation) of the City of Richmond, California. At this time Moody's has also confirmed the Ba3 ratings of the city's Limited Obligation Pension Bonds, Series 1999 and the Affordable Housing Agency Subordinate Multifamily Housing Revenue Bonds (Westridge at Hilltop Apartments) 2003 Series A-S. The ratings have been removed from Watchlist for possible downgrade, although the outlook on the ratings is negative. The removal of the ratings from Moody's Watchlist is based on recent budgetary actions taken by city management and the recent approval by city voters of a local sales tax increase to fund public safety and other operations. The ratings and negative outlook are based on the city's significantly reduced operating reserves and narrowed liquidity in fiscal 2003 as a result of an ongoing structural deficit in the city's general fund and continued uncertainty regarding fiscal 2004 operating results. Moody's expects to meet with the city in the coming weeks and hopes to receive financial and budgetary updates for fiscal years 2004 and 2005, which will help resolve remaining questions about the city's fiscal position. City Taking Action to Address Significant Fiscal Stress Fiscal 2003 operations resulted in a $14.4 million general fund-operating deficit (after transfers). Consequently, the city's total general fund balance decreased to $32.5 million (or 35.2% of general fund revenues). As Moody's has noted in previous credit comments, however, the bulk of this total balance has historically been reserved for long-term receivables, which are primarily comprised of a loans to the city's redevelopment agency and other city funds. More importantly, the city's actual operating reserve, the unreserved fund balance, has decreased from 6.9% in 2002 to negative 4.8% of general fund revenues, respectively. Similarly, fiscal 2003 net operating cash decreased to negative $4.4 million or -4.8% of general fund revenues. Moody's is awaiting fiscal 2004 unaudited financial statements from the city. The original fiscal 2004 budget was based on fiscal 2003 projections, which indicated a far more modest decline in general fund reserves, and anticipated higher available cash resources with which to begin fiscal 2004. The fiscal 2004 general fund-operating deficit had been projected to be $6 million. The city's Interim City Manager (a former Contra Costa County Administrator) has provided the council's finance committee with a 390-page report which includes 170 recommendations including monthly departmental reports, a line-item council budget, 6 new positions in the department of finance including an accounts receivable department and an independent audit function. The report and recommendations are awaiting full council approval. Recent budgetary actions include the elimination of 200 staff positions and a proposal for salary reductions (9% for public safety, 8% for miscellaneous employees), which has been approved by 5 of the 6 unions. On November 2, 2004, voters approved a half-cent sales tax increase expected to generate approximately $6 million annually in additional revenue to fund a range of services, including police and fire protection. This continues a recent trend of public support for tax increases -- voters approved an increase in the city's utility user's tax from 8% to 10%, which went into effect in January 2003. Officials report that the budget is balanced for the next two years. The city had initially expected to issue TRANs this year, with state legislation passed to allow Contra Costa County to make payments directly to the trustee from the city's share of county property tax collections. According to officials, the need for this cash flow borrowing seems to have subsided indicating the possibility of an improved cash position at the city. Outlook Moody's outlook on the ratings of the city's general fund obligations is negative due to continued uncertainty regarding fiscal 2004 operating results. Although the pension bonds are secured solely by the city's pension tax over-ride, debt service coverage levels remain unclear to Moody's thus posing some risk to pension bondholders. At the time of the assignment of the initial rating to the pension bonds, it was anticipated that debt service coverage would exceed 2 times after 2001 and increase each year thereafter assuming the city's pension tax override was levied at the rate of 0.14% of the assessed value. The Affordable Housing Agency Subordinate Multifamily Housing Revenue Bonds -- Westridge at Hilltop Apartments -- are secured by subordinate pledge of housing project revenues, and in the event that project revenues are insufficient to cover debt service on bonds, are additionally secured by annual lease payments to be made by the City of Richmond. The obligation of the city is structured as a standard, abatable general fund lease. While the lease payments are limited to $1 million annually, Moody's notes that this amount exceeds peak debt service requirements on the subordinate bonds, which is projected at about $904,000, and that projected project revenues provide approximately 1.4 times coverage on senior lien debt service. Given the city's apparently modest liquidity levels, Moody's believes the city's pledge of lease payments remains materially weakened. Key Statistics Current estimated population: 101,400 1999 per capita income: $19,788 (87.1% of state) 2003 full valuation: $8.2 billion Full value per capita: $81,147 Overall debt burden: 3.5% Net peak lease payment as a % of fiscal 2003 general fund revenues: 5.1% FY03 general fund balance: $32.5 million (35.2% of general fund revenues) FY03 available general fund balance: -$4.4 million (-4.8% of general fund revenues) ROBOTIC VISION: First Creditors Meeting Slated for December 22 -------------------------------------------------------------- The United States Trustee for Region 1 will convene a meeting of Robotic Vision Systems, Inc., and its debtor-affiliate's creditors at 10:30 a.m., on December 22, 2004, at Room 702, 7th Floor, 1000 Elm Street, in Nashville, Tennessee. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Nashua, New Hampshire, Robotic Vision Systems, Inc. -- http://www.rvsi.com/-- designs, manufactures and markets machine vision, automatic identification and related products for the semiconductor capital equipment, electronics, automotive, aerospace, pharmaceutical and other industries. The Company, together with its debtor-affiliate, filed for chapter 11 protection on Nov. 19, 2004 (Bankr. D. N.H. Case No. 04-14151). Bruce A. Harwood, Esq., at Sheehan, Phinney, Bass + Green represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $43,046,000 in total assets and $51,338,000 in total debts. SALOMON BROTHERS: Fitch Puts Low-B Ratings on Four Cert. Classes ---------------------------------------------------------------- Fitch Ratings has taken rating actions on these Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates: Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1993-4: -- Class A-4 affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 upgraded to 'AA-' from 'A'; -- Class B-5 upgraded to 'BBB+' from 'BBB'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1993-5: -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 upgraded to 'AA' from 'A'; -- Class B-5 affirmed at 'BBB+'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1993-6A: -- Class 6A-B1 affirmed at 'AAA'; -- Class 6A-B2 upgraded to 'AAA' from 'AA'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1994-3: -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 upgraded to 'AAA' from 'A-'; -- Class B-4 upgraded to 'AAA' from 'BB+'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1994-4A: -- Class A4-A affirmed at 'AAA'; -- Class A4-B1 affirmed at 'AAA'; -- Class A4-B2 upgraded to 'AAA' from 'AA'; -- Class A4-B3 upgraded to 'AA-' from 'B-'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1994-9: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 upgraded to 'AA+' from 'AA'; -- Class B-5 upgraded to 'A+' from 'A'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1996-2: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 upgraded to 'AAA' from 'A+'; -- Class B-5 upgraded to 'AAA' from 'BBB+'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1997-HUD1: -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'A+' from 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 downgraded to 'CC' from 'CCC'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1997-HUD2: -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AA+' from 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BB'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1999-2 Group 1: -- Class A1 affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 upgraded to 'AAA' from 'AA+'; -- Class B-4 upgraded to 'AA' from 'A+'; -- Class B-5 upgraded to 'A' from 'BBB'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 1999-2 Group 2: -- Class A2 affirmed at 'AAA'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 2000-BofA1: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AAA'; -- Class B-4 affirmed at 'AAA'; -- Class B-5 affirmed at 'A+'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 2003-NBC1 Group 1: -- Class AV1 affirmed at 'AAA'; -- Class BV-1 upgraded to 'AAA' from 'AA'; -- Class BV-2 upgraded to 'AAA' from 'A'; -- Class BV-3 upgraded to 'AA' from 'BBB'; -- Class BV-4 upgraded to 'A' from 'BB'; -- Class BV-5 upgraded to 'B+' from 'B'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 2003-NBC1 Group 2: -- Class AV2 affirmed at 'AAA'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 2003-NBC1 Group 3: -- Class AV3 affirmed at 'AAA'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass-through certificates, series 2003-NBC1 Group 4: -- Class AV4 affirmed at 'AAA'. Salomon Brothers Mortgage Securities VII, Inc., mortgage pass- through certificates, series 2003-NBC1 Group 5: -- Class AF affirmed at 'AAA'; -- Class BF-1 upgraded to 'AAA' from 'AA'; -- Class BF-2 upgraded to 'AA' from 'A'; -- Class BF-3 upgraded to 'BBB+' from 'BBB'; -- Class BF-4 affirmed at 'BB'; -- Class BF-5 affirmed at 'B'. The upgrades, affecting $87,894,715 of outstanding certificates, are being taken as a result of low delinquencies and losses, as well as significantly increased credit support levels. The affirmations, affecting over $354,181,273 of certificates, are due to stable collateral performance and moderate growth in credit enhancement -- CE. The pools are seasoned from a range of 19 to 134 months. The pool factors (current principal balance as a percentage of original) range from approximately .01% to 44% outstanding. The negative rating action on series 1997-HUD1, class B-4 affects $7,365,780 of total certificates, and reflects the decreased credit enhancement available to offset the potential losses from the increasing delinquency pipeline. As of the October 2004 distribution, there are 1,435 mortgage loans remaining, nearly 19% (271) of which are non-performing. The 90+ delinquencies represent 12.62% of the mortgage pool, and foreclosures and real estate owned -- REO -- represent 2.66% and 0.85%, respectively. The transaction is collateralized by 20 to 30 year fixed-rate seasoned mortgage loans. Substantially all of the mortgage loans have defaulted in the past and are reperforming mortgage loans. The mortgage loans were acquired from the United States Department of Housing and Urban Development -- HUD. The goal of HUD was to make mortgage credit readily available to American home buyers, particularly those with low or moderate income. SBA COMMS: 76% of Senior Noteholders Agree to Amend Indenture ------------------------------------------------------------- SBA Communications Corporation (Nasdaq: SBAC) disclosed that pursuant to its cash tender offer and consent solicitation for any and all of its $236,526,000 outstanding principal amount of 10-1/4% Senior Notes Due 2009, it has received the consents necessary to adopt certain proposed amendments to the indenture under which the Notes were issued, which will eliminate substantially all of the restrictive covenants, the merger and consolidation covenant and certain events of default. Adoption of the proposed amendments requires the consent of holders of at least 51% of the aggregate principal amount of outstanding Notes. As of 5:00 p.m., New York City time, on November 30, 2004, holders of approximately 76% of Notes have tendered Notes and consented to the proposed amendments. The proposed amendments will become operative when payment is made for tendered Notes, which is expected to be promptly after the expiration of the Offer and Consent Solicitation. The Offer and Consent Solicitation are currently scheduled to expire at 12:00 midnight, New York City time, on Dec. 14, 2004, unless extended. The Company has also extended the consent expiration date applicable to the Offer and Consent Solicitation to 5:00 p.m., New York City time, on Dec. 2, 2004. Holders who validly tender their Notes on or prior to the Consent Date will receive the total consideration of $1,060.75, consisting of: (i) the tender offer consideration of $1,050.75 and (ii) the consent premium of $10.00, per $1,000 principal amount of Notes (if the notes are accepted for payment). Holders who validly tender their Notes after the Consent Date but on or prior to the Expiration Date will receive the tender offer consideration of $1,050.75 per $1,000 principal amount of Notes (if the notes are accepted for payment). In either case, holders who validly tender their Notes also will be paid accrued and unpaid interest up to, but not including, the date of payment for their Notes (if the notes are accepted for payment). The Offer and Consent Solicitation are subject to the satisfaction of certain conditions, including consummation of the required financing, as well as other customary conditions. SBA has engaged Deutsche Bank Securities, Inc., to act as dealer manager and solicitation agent in connection with the Offer and Consent Solicitation. Questions regarding the Offer and Consent Solicitation may be directed to: Deutsche Bank Securities Inc. High Yield Capital Markets Tel. No. (212) 250-5655 Attn: Alexandra Barth Requests for documentation may be directed to D.F. King & Co., Inc., the information agent for the Offer and Consent Solicitation, by telephone at (800) 431-9643 (toll-free) or (212) 269-5550 (for Banks and Brokers). About the Company SBA Communications is a leading independent owner and operator of wireless communications infrastructure in the United States. SBA generates revenue from two primary businesses -- site leasing and site development services. The primary focus of the company is the leasing of antenna space on its multi-tenant towers to a variety of wireless service providers under long-term lease contracts. Since it was founded in 1989, SBA has participated in the development of over 25,000 antenna sites in the United States. At Sept. 30, 2004, SBA Communications' balance sheet showed a $27,472,000 stockholders' deficit, compared to a $43,877,000 deficit at Dec. 31, 2003. SOLA INTL: S&P Revises Outlook on BB- Rating to Negative -------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook of SOLA International, Inc., to negative from stable and affirmed the 'BB- ' corporate credit rating on the company. The outlook revision reflects our heightened concern that SOLA will be unable to comply with Section 404 of the Sarbanes-Oxley Act by March 31, 2005, the company's fiscal year-end. Section 404 mandates that a company's auditor identify "any material internal control weakness" in attesting to whether management has sufficient operational command to produce reliable and compliant financial reports. SOLA's external auditors have identified internal control deficiencies. "Although SOLA has taken various steps to improve these internal controls by hiring accounting staff and outside consultants, implementing more rigorous documentation, and creating audit checklists for controllers in its countries of operation, such a comprehensive overhaul of the company's procedures is daunting," said Standard & Poor's credit analyst Cheryl Richer. "Management believes its disclosure controls and procedures are not yet effective." The company's inability to meet the deadline could trigger a chain reaction, as cited in its Sept. 30, 2004, 10Q filing with the SEC, starting with its inability to obtain an unqualified opinion from its independent accounting firm. This could limit the company's access to capital and cause SOLA to breach its debt covenants. Standard & Poor's believes that SOLA will have a better assessment of its progress and additional feedback from its auditors at the end of the third quarter -- Dec. 30, 2004. SOLA International's ratings reflect the company's operating concentration in eyeglass lenses, a well-penetrated, mature, and innovative industry that faces challenges from large competitors as well as other forms of vision correction. The company is expanding its prescription laboratory network, which now contributes a material portion of sales, through a series of modest-sized acquisitions. Prescription labs provide SOLA with more control over its product and distribution channels to end- users. Still, barriers to entry in this business are relatively low. While these risks contribute to a below average business profile, SOLA benefits from a meaningful global market share (according to the company, it holds a No. 2 position in lens sales), financial parameters that are strong for the rating, and adequate liquidity. San Diego, California-based SOLA makes plastic and glass spectacle lenses and holds a leading manufacturing and technology position in the growing plastic lens segment of the market. The company generates more than $650 million of annual sales from operations in North America (42%), Europe (40%), and other international locations. Whereas SOLA is believed to supply nearly 20% of the world market, Essilor International of France and Hoya Corp. of Japan are strong competitors; the remaining providers are considerably fragmented. SOLUTIA INC: European Subsidiary Amends Fiscal Agency Agreement --------------------------------------------------------------- Solutia Europe, SA/NV, Solutia, Inc. subsidiary, entered into Amendment No. 1 to the Fiscal Agency Agreement and Terms and Conditions of Notes, thereby successfully amending its 10.00% Senior Secured Euro Notes due 2008. The Amendment allows for a sale of Solutia Europe's Pharmaceutical Services business, which includes the businesses now conducted by two Swiss subsidiaries, on or before September 1, 2005. As of December 31, 2003, the Pharmaceuticals Services business accounted for roughly 2% of the annual revenue of Solutia, Inc., and is forecasted to continue to account for 2% of the 2004 annual revenue of Solutia, Inc. Solutia Europe is actively pursuing the sale of its Pharmaceutical Services business. However, while amending the Euro Notes removes one contractual impediment to a sale, there is no assurance that a sale will occur. Upon the closing of a sale, Solutia Europe is required to redeem the Euro Notes with at least 95% of the Net Cash Proceeds actually received from the sale at a redemption price of 109% of the principal amount of Euro Notes so redeemed. Solutia Europe also entered into an Agreement of Understanding and Waivers with members of the Ad-Hoc Committee of the holders of the Euro Notes that sets forth, among other items, the process for implementing the amendments, waivers, releases, terminations or modifications to the Collateral Documents necessary to release the security interests that the Collateral Agent holds on the Euro Note bondholders' behalf in connection with the consummation of a sale of the Pharmaceuticals Services business. A full-text copy of the Amendment No. 1 to the Fiscal Agency Agreement is available for free at the Securities and Exchange Commission at: http://www.sec.gov/Archives/edgar/data/1043382/000106880004000650/ex99p1.txt Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) STELCO INC: GMP Securities Won't Pursue "Stalking Horse" Bid ------------------------------------------------------------ GMP Securities Ltd. says its deserting its plans to restructure and refinance Stelco, Inc., (STE-TSX) after Deutsche Bank's "stalking horse" commitment was approved by the Supreme Court of Justice (Ontario). "In a letter to Stelco, Inc., management dated November 30, 2004, GMP Securities indicated that we do not foresee further participation in the capital process underway at Stelco," said Harris Fricker, Managing Director, Investment Banking. "At this time, we have no further plans to pursue a bid to restructure Stelco." As reported in the Troubled Company Reporter on Dec. 1, 2004, the Court noted that the Deutsche Bank proposal had been reviewed and recommended by a number of parties including the Company's Board, its independent Board Restructuring Committee, management, bondholders plus the Court-appointed Monitor, Chief Restructuring Officer and UBS. Courtney Pratt, Stelco's President and Chief Executive Officer, said, "We welcome these decisions and believe they will benefit all of our stakeholders. We now have an opening bid that will serve as a benchmark against which other offers can be evaluated in an open, vigorous and competitive process. The Deutsche Bank commitment will stand or fall on its own merit. We're not making any foregone conclusions or assumptions about the outcome of this process. About GMP Capital Corp. GMP Capital Corp. (GMP-TSX), through its wholly owned subsidiary, GMP Securities Ltd., is a leading independent Canadian investment dealer focused on investment banking and institutional equities for corporate clients and institutional investors. The company has offices in Toronto, Calgary, Montreal and Geneva, Switzerland. The recently launched GMP Private Client division is a full-service investment firm serving the needs of the affluent Canadian investor. GMP Capital Corp. is listed on the Toronto Stock Exchange (GMP). The corporate web site is http://www.gmpcapitalcorp.com/ Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. TCW LEVERAGED: DDD-Rated Senior Secured Notes Paid in Full ---------------------------------------------------------- Fitch Ratings changes the senior secured notes to paid in full - from 'DDD' for TCW Leveraged Income Trust, L.P. These rating action is effective immediately: -- Senior secured notes change to PIF from 'DDD'. TCW, a market value collateralized debt obligation -- CDO -- that closed on March 26, 1997, is managed by TCW Investment Management Company. The senior secured notes originally comprised $150 million of senior secured fixed-rate notes and $50 million of senior secured floating-rate notes (together, the senior secured notes). On Nov. 30, 2004, TCW made a principal paydown of $10,550,000 plus accrued interest of $55,182 in accordance with the terms of the agreement regarding forbearance and acceleration, which represented the final distribution due to the senior secured notes. Fitch will continue to monitor and review this transaction for future rating adjustments. TENET HEALTHCARE: Subsidiary Completes Med. Center Sale to Midway ----------------------------------------------------------------- Tenet Healthcare Corporation (NYSE:THC) disclosed that a company subsidiary has completed the sale of 225-bed Midway Hospital Medical Center in Los Angeles to Physicians of Midway, Inc. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $12 million. The company expects to use the proceeds for general corporate purposes. Midway Hospital Medical Center is one of 27 hospitals Tenet announced it was divesting on Jan. 28, 2004. With Wednesday's announcement, Tenet has completed the divestiture of 11 of the 27 facilities and has entered into definitive agreements to divest an additional 10 hospitals. Discussions and negotiations with potential buyers for the remaining six hospitals slated for divestiture are ongoing. About the Company Tenet Healthcare Corporation, through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. Tenet can be found on the World Wide Web at http://www.tenethealth.com/ * * * As reported in the Troubled Company Reporter on June 21, 2004, Standard & Poor's Ratings Services said that the ratings and outlook on Tenet Healthcare Corp. (B/Negative/--) will not be affected by an increase in the size of the company's new senior unsecured note issue due in 2014, to $1 billion from $500 million. TEXAS GENCO: S&P Rates Proposed $1.125B Senior Unsecured Notes B ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to Texas Genco LLC's proposed $1.125 billion senior unsecured notes due 2014, and withdrew its 'B+' rating on the company's proposed second lien notes which are no longer being issued. At the same time, Standard & Poor's affirmed its 'BB-' issuer credit rating on Texas Genco LLC and its 'BB' rating and '1' recovery rating on Texas Genco LLC's proposed $1.625 billion term loan B (upsized from $1.375 billion) and $325 million revolving credit facility. The outlook is stable. Texas Genco LLC is the new name of the former GC Power Acquisition LLC. In July, GC Power announced its intent to purchase Texas Genco Holdings, Inc., from CenterPoint Energy, Inc. GC Power was a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific Group. The rating actions come as the company announced changes to its proposed capital structure, eliminating the $1.375 billion second lien notes, and instead proposing the senior unsecured notes and loan, and allocating $250 million to the term loan B, increasing its total from $1.375 billion to $1.625 billion. There is no change to the total proposed amount of debt; however, the proposal would increase the company's floating rate exposure from 50% to about 59% of total funded debt. "Despite the increase in first lien debt, Standard & Poor's continues to believe there is a high likelihood of 100% recovery for the debt," said credit analyst Scott Taylor. "Any additional first lien debt, however, would likely result in Standard & Poor's lowering its recovery rating to '2', which would also result in its lowering the rating to a level equal to the issuer credit rating, or 'BB-'." The 'B' rating on the unsecured notes is two notches below the issuer credit rating. This reflects the lack of a security interest and the magnitude of debt that would be ahead of the unsecured holders in a bankruptcy scenario, which results in weak prospects for recovery in a bankruptcy scenario. TRAILER BRIDGE: Closes $85 Million Senior Secured Debt Offering --------------------------------------------------------------- Trailer Bridge, Inc., (NASDAQ: TRBR) had closed its offering of $85 million in aggregate principal amount of 9.25% senior secured notes, which mature in 2011. Interest on the Notes will be payable semiannually on May 15th and November 15th of each year, beginning on May 15, 2005. The Notes are secured by a first priority lien on two roll-on, roll-off vessels, 53' intermodal equipment and real estate. Trailer Bridge utilized net proceeds of approximately $81.5 million to fund the purchase price for all of the outstanding stock of Kadampanattu Corp. and to retire certain indebtedness of K. Corp. Also, a portion of the proceeds were used to retire certain indebtedness of Trailer Bridge, to acquire certain containers and chassis that were previously leased to the Company and utilized in its operations and for working capital. K. Corp. previously owned and leased to Trailer Bridge two triple-deck roll-on, roll-off barges for $7.3 million per year and held $24 million of Trailer Bridge preferred stock that has been cancelled. The Notes were sold to qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended, or to institutional accredited investors within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act. The Notes have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. John D. McCown, Chairman & CEO, stated, "The acquisition of these assets and the related financing are outstanding, transforming events for Trailer Bridge. The net effect is that our fixed cash expenses have decreased by approximately $5 million per year and $2 million in annual preferred stock dividends have been eliminated. We are pleased to be closing on these accretive transactions at the same time that our operations are continuing to benefit from improving sector supply/demand dynamics." About the Company Trailer Bridge, Inc. -- http://www.trailerbridge.com/-- provides integrated trucking and marine freight service to and from all points in the lower 48 states and Puerto Rico, bringing efficiency, service, security and environmental and safety benefits to domestic cargo in that traffic lane. This total transportation system utilizes its own trucks, drivers, trailers, containers and U.S. flag vessels to link the mainland with Puerto Rico via marine facilities in Jacksonville and San Juan. * * * As reported in the Troubled Company Reporter on Nov. 12, 2004, Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Trailer Bridge Inc. The rating outlook is stable. At the same time, Standard & Poor's assigned its 'B-' senior secured debt rating to the shipping company's proposed $80 million notes due in 2011, offered under Rule 144A with registration rights. Proceeds from the notes offering will be used to acquire a special-purpose entity that leases the two roll-on/roll-off -- RoRo -- vessels operated by Trailer Bridge and containers currently operating in the Trailer Bridge fleet under operating leases, and repay the current outstanding balance under the company's bank facility. Moody's Investors Service assigned a B3 to the company's proposed $80 million senior secured notes, due 2011 with a stable outlook. UNITED AIRLINES: Strike Ballots Mailed to United Flight Attendants ------------------------------------------------------------------ Strike authorization ballots were mailed to 21,000 flight attendants at United Airlines, setting the stage for a potential nationwide CHAOS(TM) strike should United or any other contracted carrier abrogate its collective bargaining agreement with the Association of Flight Attendants-CWA. "From the start, United flight attendants have been fully engaged in helping their employer achieve a successful reorganization," said Greg Davidowich, president of the AFA Master Executive Council at United. "With this vote, they are declaring under what terms and conditions they are willing, or unwilling, to work." Both United and US Airways have asked federal bankruptcy courts for permission to walk away from their legally binding contracts with their employees, end their retirement plans and slash medical benefits for retirees. Should they do so, AFA intends to engage in CHAOS (Create Havoc Around Our System), the union's trademarked program of intermittent work stoppages on flights, dates and locations of its choice, with no advance notice. Talks between AFA and the two major carriers to reach a consensual agreement have been ongoing. Ballots are being prepared for AFA members at ATA and Hawaiian as well. In the event of a strike, secondary activity may take place at other carriers. More than 46,000 flight attendants join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. Visit us at http://www.afanet.org/ 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. US AIRWAYS: Court Disagrees with Teamster on Rule 2004 Discovery ---------------------------------------------------------------- As reported in the Troubled Company Reporter on Nov. 15, 2004, the International Brotherhood of Teamsters asks Judge Stephen Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia to compel US Airways, Inc., and Piedmont Airlines, Inc., to produce documents, as requested in a subpoena duces tecum. The Teamsters also wants Piedmont Airlines to submit to examination. Debtors Object Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, told Judge Mitchell that the International Brotherhood of Teamsters is not entitled to Rule 2004 discovery because it is not a "party-in-interest," a threshold requirement for seeking Rule 2004 discovery. The Teamsters does not represent any of the Debtors' employees who have been asked to make concessions in this bankruptcy. Even though Piedmont is a Debtor, there have been no requests for concessions from Teamsters-represented employees. The Teamsters has not been engaged in discussions on these proceedings. The Teamsters' request failed to provide any explanation for why information has been requested or why it is needed for any matter related to the Debtors' bankruptcy proceeding. The Teamsters' conclusory statements about the information it seeks merely repeated the language of Rule 2004 and do not establish a basis for discovery. These deficiencies suggested that the Teamsters lacked the necessary good cause for discovery, Mr. Leitch said. Based on these shortcomings, Debtors Piedmont and US Airways asked the Court to preclude the Teamsters from conducting discovery. Teamsters Insists It has Standing William R. Wilder, Esq., at Baptiste & Wilder, in Washington, D.C., asserted that the International Brotherhood of Teamsters has standing to make a 2004 examination request. The Teamsters is the certified collective-bargaining representative of the employees of Debtors PSA Airlines and Piedmont Airlines and is a creditor in these cases. The Teamsters' members will have claims against PSA and Piedmont that are based on grievances and the Debtors' failure to pay prepetition contributions to 401(k) plans. Other bases for claims may exist or arise in the future. The Debtors may not have asked the Teamsters-represented employees for concessions yet, but this is no guarantee it will not happen, according to Mr. Wilder. The Teamsters is being proactive because the Debtors have not committed that they will leave the Teamsters members' contracts untouched. In the prior bankruptcy, the Debtors negotiated concessions with Teamsters-represented groups through 2003, after agreements had been reached with the mainline employee groups. * * * Judge Mitchell disagrees with the Teamsters and denies the Union's request. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue Nos. 72 & 73; Bankruptcy Creditors' Service, Inc., 215/945-7000) VERESTAR INC: FCC Gives Final Nod on $18.5 Million Acquisition -------------------------------------------------------------- SES AMERICOM, an SES GLOBAL company (Euronext Paris; Luxembourg and Frankfurt Stock Exchanges:SESG) has acquired Verestar Inc. for a total cash consideration of $18.5 million, completing the transaction that was announced in April 2004. The final necessary authority for the transaction was received in an order from the FCC dated Nov. 19, 2004. AMERICOM plans to fully integrate operations of the Fairfax, Virginia-based company, including people, teleport facilities and other assets that stretch from Brewster, Washington to Leuk, Switzerland and from Singapore to Alexandria, Virginia. Romain Bausch, President and CEO of SES GLOBAL, commented, "The benefits of the Verestar transaction will be reflected in AMERICOM's financial performance and in the value we are creating for SES shareholders. In aggregate, this transaction contributes directly to the achievement of our near-term and long-term strategic objectives by strengthening our ability to deliver managed solutions to government, enterprise and media customers." 7 "With the additional expertise and resources gained through the Verestar acquisition, SES AMERICOM has significantly deepened its technical resources and expanded its product lines and services. The most notable operations impact of the acquisition is the addition of four major teleports (Alexandria, Virginia, Brewster, Washington, Holmdel, New Jersey, and Leuk, Switzerland) to the AMERICOM network and a ten-fold increase in fiber connectivity improving customer access to AMERICOM service platforms and the entire SES fleet of satellites," said Andreas Georghiou, Senior Vice President, Business Operations. Robert Kisilywicz, SES AMERICOM's Senior Vice President of Finance and Chief Financial Officer, said, "The market will see a stronger AMERICOM operating company supporting the most important customer groups in the industry. Our unparalleled technical facilities, superlative satellite fleet, strategically located teleports and terrestrial connectivity will address the dynamic evolution of customer applications and requirements." At the same time, AMERICOM has both increased and refocused the market-facing organizations affected by the acquisition: -- AMERICOM Government Services (AGS) will continue to be headquartered in Princeton, N.J., with offices in Tysons Corner, Va. and Hagerstown, Md., along with field personnel located across the U.S., dozens of earth stations on government premises, and service platforms for government use established at key teleports. The President and CEO of AGS is David Helfgott. -- SES AMERICOM Enterprise Solutions will have offices in Fairfax, Va., Princeton, N.J., Amersham, England, and Singapore. The group delivers bandwidth solutions aimed at the established telecom and VSAT networking industry, plus managed solutions which include equipment, hub services, installation, maintenance, terrestrial and satellite connectivity targeted at corporate networks. The managed solutions support disaster recovery, business continuity, IP content distribution and other data networking applications. The Senior Vice President and General Manager of Enterprise Solutions is Brent Bruun; in his prior role as the leader of Americom's Business Development efforts, Bruun lead the Verestar acquisition and integration. -- SES AMERICOM North American Media Services has teams based in Princeton, N.J. and Fairfax, Va. and a broadcast customer service group based at the Washington International Teleport in Alexandria, Va. AMERICOM's Media Services group is focused on delivering fulltime and occasional services and platform solutions for the media and entertainment community, including radio and television broadcasters, cable programmers and cable operators. The team is lead by Bryan McGuirk, Senior Vice President of North American Media Services. David Helfgott, President and CEO of AGS, added, "Verestar's people bring a depth of government knowledge and insight to the AGS team. The demands of the government market are growing exponentially, and with these complementary talents and assets, AGS is in the best position in the industry to deliver satellite bandwidth-only services as well as the most complex network solutions that might be required by civilian and defense agencies and the contractors that support them." Background on the Verestar Acquisition Since December 2003 Verestar has been operating under the protection of the bankruptcy court. In an auction conducted in New York on Tuesday, March 30th, SES AMERICOM offered a successful bid to acquire substantially all of Verestar's business and operations, which was approved by the U.S. Bankruptcy Court for the Southern District of New York in Manhattan. Since the beginning of April, SES AMERICOM has sought appropriate government authorizations, including FCC approval to transfer Verestar's communications licenses. In September, the transaction was approved by Swiss authorities. With the receipt of all governmental authorizations, a process that concluded on November 19 with an order from the U.S. Federal Communications Commission, the transaction has been finalized. About SES AMERICOM The largest supplier of satellite services in the U.S., SES AMERICOM, Inc., is recognized as a pioneer of global satellite communications services for media, enterprise, and government. Established in 1973 with its first satellite circuit for the U.S. Department of Defense, the company currently operates a fleet of 16 spacecraft in orbital positions predominantly providing service throughout the Americas. As a member of the SES GLOBAL family, SES AMERICOM is able to provide bandwidth for media content distribution and end-to-end telecommunications solutions to any region in the world. In 2001, the company established AMERICOM Government Services, a wholly owned subsidiary dedicated to providing satellite-based communications solutions to both civilian and defense agencies of the U.S. government. In 2003, SES AMERICOM formed WORLDSAT to market its international satellites covering Asia and the Atlantic and Pacific Ocean regions, and connecting premier regional satellite fleets. With its combined operations, SES AMERICOM serves broadcasters, cable programmers, aeronautical and maritime communications integrators, Internet service providers, mobile communications networks, government agencies, educational institutions, carriers and secure global data networks with efficient communication and content distribution solutions. Headquartered in Fairfax, Virginia, Verestar, Inc., -- http://www.verestar.com/-- is a provider of satellite and terrestrial-based network communication services. The Company and two of its affiliates filed for chapter 11 protection on December 22, 2003 (Bankr. S.D.N.Y. Case No. 03-18077). Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher LLP represents the Debtors. When the Company filed for protection from its creditors, it listed assets and debts of more than $100 million each. WESTPOINT STEVENS: Wants Exclusive Filing Period Stretched to Feb. ------------------------------------------------------------------ As previously reported, the United States Bankruptcy Court for the Southern District of New York extended WestPoint Stevens, Inc. and its debtor-affiliates ' Exclusive Periods subject to these milestones: Date Milestone ---- --------- September 28, 2004 Circulate Restructuring Term Sheet November 20, 2004 Circulate draft Plan of Reorganization November 30, 2004 Circulate draft Disclosure Statement The Debtors have a 10-day grace period to complete each milestone. John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that as the current exclusivity period will expire with only the circulation of a draft plan to their Creditor Groups, the Debtors require an additional short 75-day extension of their Exclusive Periods to negotiate and finalize their Chapter 11 plan. The Debtors ask the Court to further extend their: -- exclusive period to file a plan through February 15, 2005; and -- exclusive period to solicit acceptances of that plan through April 18, 2005. Mr. Rapisardi asserts that the proposed extension is realistic and necessary in light of the complex issues surrounding the ultimate resolution of the Debtors' Chapter 11 cases. The Chapter 11 cases have reached an important crossroad with respect to the future direction of the Debtors' business, which will have an important impact on the Debtors' proposed Chapter 11 plan. The Debtors have circulated a plan term sheet to the Creditor Groups and have been engaged in active negotiations with the First Lien Lenders on the terms of a Chapter 11 plan. They have also been working hard to respond to the First Lien Lenders' voluminous requests for information to assist them in assessing the Debtors' proposed term sheet. To terminate exclusivity at this critical juncture would only serve to distract the Debtors and the Creditor Groups and lead to confusion among the Debtors' customers and suppliers. Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945- 7000) * BOOK REVIEW: Wildcatters: A Story of Texans, Oil & Money ---------------------------------------------------------- Author: Sally Helgesen Publisher: Beard Books Paperback: 220 pages List Price: $34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1587982161/internetbankrupt Following three generations of Texas oilmen, Wildcatters covers the history of this field of business that had its beginnings in the late 1800s. Oil exploration, drilling, and refinement in Texas has always had the image as a rough-and-tumble business attracting the adventurous and bold. Few know much about this field beyond its somewhat mythic, larger-than-life image. Helgesen does not spoil the image. If anything, her book gives it support by her portrayals of a number of men, and a few women relations of theirs, of the different generations. In those early days of the oil industry in the United States, Texas was the "wild cutting edge of the industry." In those days before the big oil companies such as Rockefeller's Standard Oil and later Exxon and Mobil had gained control of the business, it was "open to any white man who could hustle up the money for a rig, talk a farmer into leasing the mineral rights to his land, and then maintain enough optimism or pigheadedness to drill up his leasehold until he either found oil or convinced himself that he had made a mistake." Helgesen's portrayal of the first generation of Texas oilmen connotes their characteristic energy, enthusiasm, risk- taking, and also their visions of success which were the basis for the myth that grew up around them. The ones who did tap into deposits of oil used the profits to buy up new leases and founded a dynasty. Monty Moncrief was one such man. A good part of Wildcatters focuses on the life of Dick Moncrief, Monty's grandson. Helgesen sees a symmetry between the first generation and the third generation of Texas oilmen. The second, or middle generation, was left mainly to the task of overseeing the dynasties founded by their fathers. [[[[This was in the middle decades of the 1900s. The oil giants such as Exxon and Mobil had looked abroad, mostly in the Middle East, for vast deposits of oil they could develop by dealing with an Arab sheik or regional tyrant instead of having to negotiate with numbers of individual farmers and other landowners as they had had to do in Texas in the first phases of the oil industry. Besides, all the easy drilling for oil had been done in Texas.]]]] With the giant oil companies supplying the U.S. from abroad with all the oil it needed at low cost, the Texas oil business slowed down. "The young bulls of the middle generation found no terrain on which they might challenge the old bulls' achievements." [[[[Thus this generation spent their time golfing and card-playing at the country clubs and managing the real estate and other investments their fathers had made with the fortunes they earned from drilling for oil.]]]] But circumstances changed for the third generation. In 1973, the cartel named Organization of Petroleum Exporting Countries (OPEC) decided to raise the prices of their oil. This suddenly made the Texas oil fields competitive again, and also presented opportunities for developing oil fields overseas. Dick Moncrief and other third-generation oilmen throughout Texas sprang into action to pursue the opportunities that had unexpectedly opened up for them. Separated by decades in age from their pioneering grandfathers and facing government bureaucratic regulations in the oil industry, the third generation nonetheless showed something of the same initiative, boldness, enterprise, and ambition as the first generation. By finding overlooked or underdeveloped oil fields in foreign countries, forming partnerships with Mexico's state-controlled oil industry, reviving Texas's moribund oil business, and searching for new oil fields in the West, the younger generation of Texas oilmen made their mark as their grandfathers had. Dick Moncrief was the behind-the-scenes organizer of a plan to increase production at an Israeli oil field and he sought new fields in the Rocky Mountains. Wildcatters portrays representative Texas oilmen, and is a well- woven narrative about this legendary sector of American business. Beyond this, Helgesen sees the Texas oil business as exemplifying and to some degree preserving the frontier spirit of overcoming challenges with determination, ingenuity, confidence, and optimism. As she writes in her Preface, her experiences in Texas in writing the book turned her into an "optimist in regard to the American free enterprise system, and filled [her] with hope for the future of this country." Sally Helgesen works as a speaker and consultant in the areas of leadership and workplace change. She is the author of five books in these areas, one of which, THE FEMALE ADVANTAGE - WOMEN'S DAY OF LEADERSHIP, was cited in the Wall Street Journal as one of the all-time best books on leadership. Articles on her work have appeared in Fortune and other leading business periodicals. ********* 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 ***