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/raid1/www/Hosts/bankrupt/TCR_Public/041206.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, December 6, 2004, Vol. 8, No. 268 Headlines ADVANCED MEDICAL: VISX Acquisition Cues Moody's to Affirm Ratings ACA ABS: Fitch Affirms BB Rating on $3 Million Class C Notes AMCAST INDUSTRIAL: Hires Thompson Hine as Bankruptcy Counsel ANDROSCOGGIN ENERGY: Wants to Employ Osler as Canadian Counsel ANIXTER INTL: Moody's Puts Ba3 Rating on $125M Convertible Notes APPLIED EXTRUSION: Wants to Pay Prepetition Unsecured Claims ATA AIRLINES: Committee Balks at Baker & Daniels as Lead Counsel ATRIUM COS: S&P Cuts Credit Rating to B & Junks Senior Notes BALLY TOTAL: Increases Initial Consent Fee to Sr. Noteholders CANBRAS COMMUNICATIONS: Releases Third Quarter Financial Results CATHOLIC: Portland Wants Tort Committee's Complaint Dismissed CATHOLIC CHURCH: Court Rejects Portland Claimants' Ad Campaign CLEMROSE PROPERTIES: Case Summary & Largest Unsecured Creditor COOPER-STANDARD: Moody's Assigns Low-B Ratings to Debts CSFB MORTGAGE: S&P Places Low-B Ratings on 12 Certificate Classes CSFB MORTGAGE: S&P Holds Single-B Ratings on Cert. Classes F & G DII/KBR: Judge Fitzgerald Approves AIG & Lehman Settlement Pacts DII/KBR: Halliburton Says Plan Ready to Take Effect Dec. 31 DLJ COMMERCIAL: Moody's Holds Ba2 Rating on $31M Class B-4 Certs. ENDURANCE SPECIALTY: Aon Sells 9.8 Million Shares to Goldman Sachs ENRON: Bankr. Court Assumes Jurisdiction in Sierra Dispute EXECUTIVE JET: Case Summary & 20 Largest Unsecured Creditors EXIDE TECHNOLOGIES: George Soros Discloses 6.3% Equity Stake FINE NUTRACEUTICALS: Case Summary & 11 Largest Unsecured Creditors GRAHAM HOUSING: Moody's Slices Rating on Revenue Bonds to Ba3 GEO SPECIALTY: Judge Stern Approves Disclosure Statement GORE MUTUAL: S&P Downgrades Ratings to BB based on Public Info GROUPE BOCENOR: Discloses $3 Million Investment Program HAIGHTS CROSS: Moody's Junks Proposed $20M Senior Unsecured Notes HAIGHTS CROSS: S&P Junks $30 Million Rule 144A Senior Notes HI-RISE RECYCLING: U.S. Trustee Appoints Four-Member Committee HI-RISE: Has Until Dec. 14 to Make Lease-Related Decisions IMPAC FUNDING: Fitch Puts Low-B & Junk Ratings to 7 Cert. Classes INTEGRATED ELECTRICAL: Completes $4 Million Business Unit Sale INTERSTATE BAKERIES: Wants More Time to Remove Actions & Lawsuits ITSV INC: iPayment Counsel Removed Due to Conflict of Interest IVACO INC: Closes Sale of Three Businesses to Heico Subsidiary JACK RABBIT LINES: Case Summary & 20 Largest Unsecured Creditors JACUZZI BRANDS: Donald Devine to Become CEO Effective Oct. 2005 JEUNIQUE INTERNATIONAL: Confirmation Hearing Continues on Dec. 9 METRIS MASTER: S&P Raises Secured Notes' Rating to AAA from B+ NORTHWOODS CAPITAL: Fitch Affirms BB Rating on Class VI Notes OCWEN FEDERAL: Fitch Comments on Voluntary Dissolution Plans ONSOURCE CORP: Sept. 30 Balance Sheet Upside-Down by $1.6 Million OPBIZ LLC: S&P Assigns B- Rating to $496M Senior Secured Facility OREGON ARENA: Judge Perris Confirms Fourth Amended Plan PARK PLACE: Fitch Rates $64.5 Million Class M-10 Certificates BB+ PAYLESS SHOESOURCE: November Same-Store Sales Tumble 2.3% PG&E NATIONAL: Noteholders Committee Dissolved as of Oct. 29 PRESTIGE BRANDS: Moody's Reviewing Ratings & May Upgrade PRICELINE.COM: Purchases 100% Equity Stake in Travelweb LLC QUIGLEY COMPANY: Dist. Ct. Frowns on Smorgasbord-Style Litigation RELIANCE GROUP: Still Unable to File Financial Reports with SEC RELIANCE GROUP: Taps Deloitte Tax as Tax Advisor REMOTE DYNAMICS: Auditors Express Going Concern Doubt SALTIRE INDUSTRIAL: Creditors Must File Proofs of Claim by Dec. 10 SALTIRE INDUSTRIAL: Committee Hires Lowenstein Sandler as Counsel SCHENECTADY: Moody's Revises Outlook on Ba3 Rating to Positive SCIENTIFIC GAMES: S&P Puts B Rating on $250M Sr. Sub. Debentures SFBC INTL: Moody's Rates Proposed $160M Sr. Secured Facilities B2 SOUTHWEST HOSPITAL: Committee Hires Kilpatrick Stockton as Counsel TECHNOLOGY SCIENCES: Case Summary & 8 Largest Unsecured Creditors TECO ENERGY: Fitch Revises Outlook on Ratings to Stable TECO ENERGY: S&P Says Frontera Sale Plan Won't Affect Ratings THE GERMINSKY GROUP: Case Summary & 20 Largest Unsecured Creditors UAL CORP: Wants Court to Decide on "Disguised" Financing Pact UNIVERSAL CITY: S&P Assigns B Rating to $450 Million Senior Notes US AIRWAYS: Reaches Tentative Pact with Communications Workers VAIL RESORTS: S&P Revises Outlook on Low-B Ratings to Stable VOUGHT AIRCRAFT: S&P Rates Proposed $650 Mil. Senior Facility B+ WEIRTON STEEL: Court Extends Claims Objection Deadline to Dec. 13 WESTPOINT STEVENS: Extends Lease Decision Deadline to June 30 WESTPOINT STEVENS: Has Until Jan. 20 to File a Chapter 11 Plan * Mintz Levin Welcomes John R. Higham in Boston Office * Moody's Names Andrew Huddart New President for KMV Unit * Ropes & Gray Adds Nine New Partners * BOND PRICING: For the week of December 6 - December 10, 2004 ********* ADVANCED MEDICAL: VISX Acquisition Cues Moody's to Affirm Ratings ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Advanced Medical Optics, Inc. -- AMO. Moody's affirmed the B1 Senior Implied Rating, the B1 ratings for the senior secured credit facilities, the B2 Senior Unsecured Issuer Rating, and the B3 convertible notes rating. The rating outlook for the company is stable. The rating affirmation follows the company's announcement on Nov. 9, 2004, that it had entered into an agreement to acquire VISX, Incorporated for approximately $1.27 billion. The purchase price will consist of 0.552 shares of AMO stock and $3.50 in cash for every share of VISX stock. Moody's believes that the combination will be a good complementary and strategic fit for AMO. It will enable the company to establish a strong position in the refractive surgery market, with a leading worldwide installed base of lasers, and solidify refractive offerings that include the company's existing microkeratome and phakic intraocular lens products. The combination will also diversify the company's business mix, enabling the company to expand into a leadership position in a third ophthalmic/eye care segment. In addition, the company will continue to gain scale and scope and will further strengthen its position as a leading competitor, along with larger rivals Alcon and Bausch & Lomb, in the ophthalmic surgical and eye care markets. AMO will finance the transaction conservatively, with only $184 million of the $1.27 billion purchase price to be paid in cash. As a result, the company's leverage will actually decline. Based on the quarter ended September 30, 2004, the annualized adjusted free cash flow to adjusted debt (adjustments made for operating leases) ratio was approximately 6%. Coverage will improve to approximately 10% pro forma for the transaction (based on AMO's quarter ended September 30, 2004 annualized results and VISX's twelve months ended September 30, 2004 results). The calculation assumes that the cash portion of the transaction will be funded with additional debt. However, as of September 30, 2004, the two companies had a combined cash balance of $155 million. Partly offsetting the positive credit consideration is Moody's concern about the aggressive pace of the company's acquisition program and integration risks. VISX will be the second material transaction AMO will be completing within a relatively short time frame. Moody's also notes the unsteady historical performance of VISX as a credit concern. VISX's recent performance trends have been strong, and fundamentals for the refractive laser industry have turned around. However, due to the significant operating leverage of the company's business, profitability can be significantly impacted by an adverse change in economic conditions or a decline in procedure volumes. The potential impact on the combined entity, however, should be more limited given its more diversified business mix as compared to VISX as a stand-alone company. The outlook for the company is stable. If the company makes significant progress in successfully integrating VISX, continues to improve VISX's profitability and continues to reduce debt, Moody's will consider upgrading the ratings. Prior to taking any action, Moody's will assess the potential for near term acquisition activity and the likely effect such activity may have on the company's credit profile. Advanced Medical Optics, headquartered in Santa Ana, California, is a global leader in the development, manufacturing and marketing of ophthalmic surgical and contact lens care products. ACA ABS: Fitch Affirms BB Rating on $3 Million Class C Notes ------------------------------------------------------------ Fitch Ratings affirms nine classes of notes issued by ACA ABS 2003-2 Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $10,000,000 class A-1SW notes at 'AAA'; -- $315,000,000 class A-1SU notes at 'AAA'; -- $146,500,000 class A-1SD notes at 'AAA'; -- $108,000,000 class A-1J notes at 'AAA'; -- $51,000,000 class A2 notes at 'AA'; -- $36,000,000 class A3 notes at 'A'; -- $7,000,000 class BF notes at 'BBB'; -- $15,000,000 class BV notes at 'BBB'; -- $3,000,000 class C notes at 'BB'. ACA 2003-2 is a collateralized debt obligation managed by ACA Management, L.L.C., which closed Nov. 6, 2003. ACA 2003-2 is composed of residential mortgage-backed securities, consumer asset-backed securities, commercial mortgage-backed securities, and collateralized debt obligations. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and the portfolio management strategy. Since closing, the collateral has continued to perform. The weighted average rating factor has stayed the same at 'BBB+/BBB'. The senior overcollateralization, class A3 OC, class B OC, and class C OC ratios have stayed the same since closing at 115.2%, 109.0%, 105.5%, and 105.1%, respectively. As of the Oct. 29, 2004, trustee report, ACA 2003-2 $725 million portfolio contained no defaulted assets or assets rated 'BB+' or below. The rating of the class A-1SW, class A-1SU, class A-1SD, class A-1J, and class A2 notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class A3, class BF, class BV, and class D notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. In addition, the class A-1SW notes also benefit from a financial guaranty insurance policy issued by CDC IXIS Financial Guaranty North America. Fitch will continue to monitor and review this transaction for future rating adjustments. AMCAST INDUSTRIAL: Hires Thompson Hine as Bankruptcy Counsel ------------------------------------------------------------ Amcast Industrial Corporation and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of Ohio, Dayton Division, to employ Thompson Hine, LLP, as their counsel in their restructuring. Thompson Hine will: a) advise the Debtors of their rights, powers and duties as debtors-in-possession in the continued operation of their businesses; b) advise and assist the Debtors in the preparation of all necessary applications, motions, pleadings, reports and other legal papers required in connection with the administration of the chapter 11 estates; c) represent the Debtors in certain contested matters or adversary proceedings commenced by or against the Debtors; d) assist the Debtors in negotiating a plan of reorganization with their creditors and to perform all legal services necessary to obtain creditor approval, confirmation and plan implementation; and e) perform other legal services for the Debtors, as debtors-in-possession which may be necessary herein. The Firm's professionals will bill the Debtors at their current hourly rates: Professional Billing Rate ------------ ------------ Alan R. Lepene $475 Katherine D. Brandt $400 Joseph M. Rigot $330 Louis F. Solimine $325 David A. Neuhardt $325 J. Wray Blattner $295 Lawrence T. Burick $285 Jeremy M. Campana $160 Jennifer L. Maffett $150 Other Partners $275 to $500 Other Associates $150 to $250 Paralegals $100 to $150 Alan R. Lepene, Esq., at Thompson Hine, discloses that the Debtors paid the Firm a $100,000 retainer, and $23,107 of that amount remains. To the best of the Debtors' knowledge, Thompson Hine is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Dayton, Ohio, Amcast Industrial Corporation -- http://www.amcast.com/-- is a manufacturer and distributor of technology-intensive metal products to end-users and supplier in the automotive and plumbing industry. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 30, 2004 (Bankr. S.D. Ohio Case No. 04-40504). When the Debtors filed for protection from their creditors, they listed total assets of $104,968,000 and total debts of $165,221,000. ANDROSCOGGIN ENERGY: Wants to Employ Osler as Canadian Counsel -------------------------------------------------------------- Androscoggin Energy LLC seeks authority from the U.S. Bankruptcy Court for the District of Maine, Bangor Division, to retain Osler, Hoskin & Harcourt, LLP, as its special counsel. The Debtor selects Osler Hoskin because of the Firm's experience in complex matters involving Canadian commercial law and contracts with Canadian counterparties since the Debtor's primary gas suppliers and two of its three gas transporters are Canadian entities. Osler is expected to: a) provide insolvency, restructuring and other legal advice in relation to the Debtor's CCAA proceeding; and b) provide legal advice on other issues involving Canadian law, including but not limited to those concerning the Debtor's long-term, fixed-price gas supply contracts and its transportation contracts. Steven Golick, Esq., at Osler Hoskin, discloses that his Firm received an approximate US$50,000 retainer. Osler Hoskin's professionals will bill the Debtor at their current hourly rates: Hourly Billing Rate Professional Cdn$ US$ ------------- --------------------- Joseph Steiner $700 $595 Steven Golick $625 $532 Nancy Roberts $525 $446 Natasha MacParland $450 $382 Law Clerks $75 to $375 $63 to $318 Students $175 $118 To the best of the Debtors' knowledge, Osler Hoskin is a disinterested" party as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Boston, Massachusetts, Androscoggin Energy LLC, owns, operates, and maintains an approximately 150-megawatt, natural gas-fired cogeneration facility in Jay, Maine. The Company filed for chapter 11 protection on November 26, 2004 (Bankr. D. Me. Case No. 04-12221). Michael A. Fagone, Esq., at Bernstein, Shur, Sawyer & Nelson represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed total assets of $207,000,000 and total debts of $157,000,000. ANIXTER INTL: Moody's Puts Ba3 Rating on $125M Convertible Notes ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Anixter International Inc.'s $125 million zero coupon convertible notes, due 2033. Moody's also affirmed the Ba3 rating on Anixter's 7% LYON's notes and 3.25% LYON's notes, and its Ba1 senior implied rating. The outlook is stable. The zero coupon convertible notes will be exchanged for Anixter's existing 3.25% LYON's notes and the rating on the 3.25% notes will be withdrawn when the offer is complete and all the 3.25% notes are exchanged. The ratings assignment and affirmation recognize Anixter's thin margins, relatively high-adjusted leverage, history of acquisitions and share repurchases, and current share repurchase program. However, the ratings also incorporate the company's large and diversified customer base, good supplier relationships, and geographic reach, as well as its relatively low leverage, strong interest coverage, reasonable liquidity, and good asset coverage. The ratings reflect the recent improvement in operating performance over the past couple of quarters but also recognize that operating margins remain relatively thin and below historic levels. In addition, over the last 12 months debt levels have moved slightly higher in order to fund negative free cash flows. The ratings are supported by the breadth of Anixter's revenue base in which no single customer accounts for more than 3% of total sales, the geographic reach of its distribution network that reaches over 42 countries, and diverse list of suppliers. The ratings also reflect Anixter's low leverage and good coverage as the company has reduced debt by approximately $200 million since the end of the first quarter 2001. In early 2001, Anixter's revenues began to decline considerably due in large part to the decline in customer capital spending, particularly in the telecommunication sector. By the end of 2002, revenues had fallen by approximately $1.0 billion from a high of $3.5 billion in 2000 and operating margins declined to 3.5% from 5.4% in 2000 due in part to increased competition and a decline in overall capital spending by customers. However, since early 2004, revenue and operating margins, excluding the impact of acquisitions, have been steadily improving. When acquisitions are incorporated, revenues almost matched year 2000 levels based on a run rate for the second and third quarters of 2004. Operating margins also improved to approximately 4.1% on an LTM basis as of October 1, 2004, although operating profits still remained below previous levels, due in part to business mix. Anixter's free cash flow was also negative for the twelve month period ended October 1, 2004, due to additional working capital requirements associated with higher sales levels, the acquisition of Distribution Dynamics, Inc. -- DDI, and a one-time special dividend to shareholders. As a result, adjusted debt has increased to approximately $436 million, including the accounts receivables financing (A/R), producing adjusted leverage of about 2.93x. Conversely, interest costs actually declined even though debt increased due to a higher mix of lower cost A/R and bank debt, resulting in EBITDA coverage of gross interest of about 12x. However, after incorporating average annual rent expense of approximately $50 million, on an eight-time basis, leverage on an adjusted basis was about 4.2x and coverage was approximately 3.2x. Despite these increased borrowing needs over the last twelve months, Moody's views the company's current liquidity as adequate. As of October 1, 2004, approximately $196 million was available under the revolver at Anixter, Inc., after incorporating covenant restrictions, of which $42 million was available to pay inter- company liabilities and $179 million that could be used to pay dividends to Anixter. There was also approximately $42 million available under the accounts receivable securitization program -- A/R facility. With limited balance sheet cash the bank facility will remain the company's primary source of liquidity. The stable ratings outlook reflects our expectation that operating performance will steadily improve over the near term, operating margins will at least remain at current levels, leverage will remain low, and liquidity will stay reasonable. Going forward we also believe that share repurchases will be minimal and acquisitions, if they occur, will be small "tuck-ins". Factors that could negatively impact the ratings and outlook would be deterioration in credit metrics or liquidity caused by a decline in revenues or operating margins, or a sizeable debt financed acquisition. However, a sustained improvement in sales and improved operating margins that resulted in stronger credit metrics and liquidity would likely result in an improved rating and outlook. Moody's also moved the senior unsecured issuer rating to Ba3, the same rating as the senior unsecured zero coupon notes, in order to re-align the issuer rating with the appropriate class of securities. Anixter International, Inc., located in Glenview, Illinois, is a leading global distributor of data, voice, video and security network communication products. APPLIED EXTRUSION: Wants to Pay Prepetition Unsecured Claims ------------------------------------------------------------ Applied Extrusion Technologies, Inc., and its debtor-affiliate ask the U.S. Bankruptcy Court for the District of Delaware for authority to pay prepetition general unsecured claims in the ordinary course of their businesses. The Debtors estimate they owe these creditors $20,000,000. The Debtors believe that a smooth transition into and through the chapter 11 process will preserve the value of their businesses. They stress that payment in full of all non-contingent, liquidated, undisputed unsecured prepetition claims are critical to the continued operation of their estates. Headquartered in New Castle, Delaware, Applied Extrusion Technologies, Inc. -- http://www.aetfilms.com/ -- develops & manufactures specialized oriented polypropylene 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. ATA AIRLINES: Committee Balks at Baker & Daniels as Lead Counsel ---------------------------------------------------------------- To recall, ATA Airlines and its debtor-affiliates seek the United States Bankruptcy Court for the Southern District of Indiana's authority to employ Baker & Daniels as their lead attorneys. ATA Holdings Corp. Executive Vice-President and Chief Restructuring Officer Gilbert F. Viets relates that the Debtors selected Baker & Daniels as counsel because of its considerable experience in bankruptcy matters. Moreover, Baker & Daniels has represented the Debtors in the ordinary course of their businesses on a wide variety of matters for several years before the Petition Date. Creditors Committee Objects The Official Committee of Unsecured Creditors has reviewed the Application and supporting documentation filed by Baker & Daniels, Sommer Barnard Attorneys PC, Ponader & Associates, LLP, Paul, Hastings, Janofsky & Walker, LLP, and Huron Consulting Group, LLC, However, the Creditors Committee lacked sufficient information to determine whether payment made by the Debtors to the Professionals prior to the Petition Date resulted in preferential transfers pursuant to Section 547(b) of the Bankruptcy Code. The Creditors Committee, therefore, drafted and delivered letters to each of the Professionals, seeking more specific information concerning services rendered and fees and expenses incurred by each of the Professionals on behalf of the Debtors during the one- year period prepetition. The Creditors Committee received substantive responses to the Letters from Baker & Daniels, Sommer Barnard, Ponader and Paul, Hastings, and upon review, the Committee has determined that it has no objection to the retention of Sommer Barnard, Ponader and Paul, Hastings. Although Baker & Daniels responded to the Letter initially, the Committee requested additional information from Baker & Daniels with respect to invoices submitted by Baker & Daniels to the Debtors and payments made by the Debtors during September and October 2004, which the Committee has not yet received. According to Daniel H. Golden, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, without the additional information, the Creditors Committee is unable to determine whether Baker & Daniels may have received preferential payments from the Debtors. Section 327(a) disqualifies a professional employed by a debtor if the professional hold or represent an interest adverse to the estate. Mr. Golden reminds the Court that the Third Circuit has held that a "preferential transfer to [counsel] would constitute an actual conflict of interest between counsel and the debtor, and would require the firm's disqualification." Hence, until the Creditors Committee has been provided with sufficient information to determine whether the Debtors made preferential payments to Baker & Daniels, the Creditors Committee reserves its right to object to the employment of Baker & Daniels by the Debtors. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATRIUM COS: S&P Cuts Credit Rating to B & Junks Senior Notes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Dallas, Texas-based Atrium Cos., Inc., to 'B' from 'B+'. The outlook is stable. At the same time, Standard & Poor's assigned its 'B' bank loan rating and '4' recovery rating to Atrium's proposed first-lien $50 million revolving credit facility and $325 million term loan B, based on preliminary terms and conditions. The 'B' rating is the same as the corporate credit rating; this and the '4' recovery rating indicate that bank lenders can expect marginal (25% to 50%) recovery of principal in the event of default. Standard & Poor's also assigned its 'CCC+' rating to the company's proposed $125 million holding company senior unsecured discount notes due 2012. The notes are expected to accrue interest until 2008 when the interest will become payable in cash. The notes will be issued under rule 144a without registration rights. "The rating downgrade reflects expectations that Atrium's very aggressive debt leverage, combined with its acquisitive growth strategy, will prevent credit measures from reaching, and being sustained, at levels appropriate for the prior ratings, said Standard & Poor's credit analyst Lisa Wright. In addition, Standard & Poor's believes that raw-material cost pressures and potentially weaker housing markets could present greater risks for Atrium's future profitability. Despite robust construction and remodeling markets, Atrium has not reduced debt as expected, keeping total debt to EBITDA, including capitalized operating leases, above the mid-5x level. With the proposed refinancing, Atrium's total debt to EBITDA will initially increase to above 6x. The ratings on Atrium reflect the company's very high debt leverage and aggressive acquisition strategy, which overshadow its position as a leading low-cost manufacturer of aluminum and vinyl windows and its substantial sales (about 40%) to the less-cyclical replacement market. Atrium plans to use the proceeds of the proposed bank loans and notes to refinance its $200 million term loan B and $225 million of senior subordinated notes as well as to pay related fees and expenses. BALLY TOTAL: Increases Initial Consent Fee to Sr. Noteholders ------------------------------------------------------------- Bally Total Fitness Holding Corporation (NYSE: BFT) has increased the fee payable to holders of its: -- 10-1/2% Senior Notes due 2011 and -- 9-7/8% Senior Subordinated Notes due 2007 who consent to waivers of defaults under the indentures governing the notes in accordance with the requirements set forth in Bally's Consent Solicitation Statements dated Nov. 15, 2004, and the related Letters of Consent. The Initial Consent Fee has been increased to $5.00 (from $2.50) per $1,000 in principal amount of 10-1/2% Senior Notes due 2011 and 9-7/8% Senior Subordinated Notes due 2007 with respect to which consents are timely received and not revoked. Any Additional Consent Fees payable in accordance with Bally's Consent Solicitation Statements will remain at $2.50 per $1,000 in principal amount of notes with respect to which consents are timely received and not revoked. Bally has extended the Consent Date (as defined in Bally's Consent Solicitation Statements) to 5:00 p.m., New York City time, on Dec. 7, 2004. The record date for determining noteholders eligible to submit consents remains Nov. 18, 2004. Noteholders who have previously submitted Letters of Consent are not required to take any further action in order to receive payment of the increased Initial Consent Fee in the event the Requisite Consents are received and the Initial Consent Fee becomes payable in accordance with the terms of Bally's Consent Solicitation Statements. Noteholders who have not yet consented are asked to submit the previously distributed Letters of Consent in order to consent and receive any consent fees that may be paid by the Company, including the increased Initial Consent Fee. As previously announced, Bally has retained Deutsche Bank Securities Inc. to serve as its solicitation agent and MacKenzie Partners, Inc. to serve as the information agent and tabulation agent for the consent solicitation. Questions concerning the terms of the consent solicitation should be directed to: Deutsche Bank Securities Inc. 60 Wall Street 2nd Floor New York, New York 10005 Attn: Christopher White The solicitation agent may be reached by telephone at (212) 250- 6008. Requests for documents may be directed to: MacKenzie Partners, Inc. 105 Madison Avenue New York, New York 10016 Attn: Jeanne Carr or Simon Coope The information agent and tabulation agent may be reached by telephone at (212) 929-5500 (call collect) or (800) 322-2885 (toll-free). This announcement is not an offer to purchase or sell, a solicitation of an offer to purchase or sell or a solicitation of consents with respect to any securities. The solicitation is being made solely pursuant to Bally's Consent Solicitation Statements and the related Letters of Consent, as amended hereby. Other than as expressly set forth herein, this announcement is not a waiver of any of the terms and conditions set forth in Bally's Consent Solicitation Statements and the related Letters of Consent and is subject thereto in all respects. Notwithstanding Bally's solicitation of waivers, no assurance can be given that an event of default under the indentures will not occur in the future. About the Company Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Nov. 8, 2004, Moody's Investors Service placed the ratings of Bally Total Fitness Holding Corporation on review for possible downgrade following Bally's announcement that the trustee under its senior and subordinated note indentures informed the company that it will send default notices to the company unless Bally commences consent solicitations by November 15, 2004, and has either cured the defaults or obtained the necessary waivers from the holders of a majority of each series of notes by December 15, 2004. The trustee has advised the company that it would begin notifying noteholders of default in accordance with the indentures. Moody's is concerned that an event of default under the indentures may be triggered if Bally is unable to obtain the necessary waivers or cure the default. Moody's placed these ratings on review for possible downgrade: * $175 million Senior Secured Term Loan B Facility, due 2009, rated B2; * $100 million Senior Secured Revolving Credit Facility, due 2008, rated B2; * $235 million 10.5% Senior Unsecured Notes, due 2011, rated B3; * $300 million 9.875% Senior Subordinated Notes, due 2007, rated Caa2; * Senior Implied, rated B3; * Senior Unsecured Issuer, rated Caa1. As reported in the Troubled Company Reporter on Nov. 17, 2004, Bally Total Fitness Holding Corporation (NYSE: BFT) commenced the solicitation of consents to waivers of defaults from holders of its 10-1/2% Senior Notes due 2011 and 9-7/8% Senior Subordinated Notes due 2007 under the indentures governing the notes. As reported in the Troubled Company Reporter on Nov. 5, 2004, Standard & Poor's Ratings Services lowered its ratings on Chicago, Illinois-based Bally Total Fitness Holding Corp., including its corporate credit rating to 'CCC+' from 'B'. In addition, Standard & Poor's revised the CreditWatch implications to developing from negative. The fitness club operator's total debt outstanding at March 31, 2004, was $731.8 million. CANBRAS COMMUNICATIONS: Releases Third Quarter Financial Results ---------------------------------------------------------------- Canbras Communications Corp. (NEX.CBC.H) released unaudited results for the third quarter of 2004. As the Corporation completed the sale of all of its operations in December 2003 to Horizon Cablevision do Brasil, S.A. pursuant to a share purchase agreement, the Corporation's unaudited consolidated statements of earnings for the third quarter of 2004 reflect only the winding up activities of the Corporation. On August 23, 2004, the Corporation made an initial distribution to common shareholders, in the amount of $0.21 per common share (or $11.6 million in the aggregate), of the proceeds received by Canbras from the Sale Transaction. Canbras had previously estimated that the final distribution of net proceeds of the Sale Transaction to shareholders would aggregate approximately $0.30 per share (or $16.5 million) assuming no unforeseen claims were asserted against the Corporation. On November 16, 2004, Canbras announced that it had received a written notice from Horizon asserting previously unforeseen claims for indemnification by Canbras under the SPA. The aggregate amount of claims asserted by Horizon is Reais $57.6 million, or approximately $24.7 million. Under the terms of the SPA, if Horizon desires to seek indemnification from the Corporation, it is required to send written notice thereof to the Corporation prior to December 19, 2004, describing the facts giving rise to the claim, the amount (or a reasonable estimate of the likely amount) of the claim and the provision of the SPA (or the schedules thereto) alleged to have been breached. Under the SPA, the Corporation's indemnification obligations are limited to the balance of the purchase price due under the SPA, which balance is represented by the one-year promissory note due on December 19, 2004 in the principal amount of $10.432 million, plus accrued interest thereon at 10% per annum. The Horizon notice states that it is a preliminary list of claims, and that it is reserving its rights to supplement, review, adjust and otherwise modify its list of claims in accordance with the SPA. As at this date, Canbras has not received sufficient information to enable it to assess the validity of the claims nor the propriety of any subsequent demand for indemnification under the SPA in respect of such claims. As a result, the Note and accrued interest thereon are recorded on Canbras' interim consolidated balance sheet at September 30, 2004 at their face value of $11.223 million and no provision for loss has been included in Canbras' interim consolidated financial statements. Although Canbras intends to examine all such claims and, where appropriate, to contest their validity or propriety or amount, at this time there can be no assurance that the Corporation will not ultimately be held to be contractually responsible for an amount of indemnification that equals the entire amount of the Note and all accrued interest due thereon. If the Corporation is ultimately contractually responsible for some or all of the indemnity claims asserted to date by Horizon (or for future indemnity claims which may be validly asserted by Horizon), then the amount of the final distribution of net proceeds to shareholders will be reduced, and it is possible that the amount of the final distribution to shareholders will not include any amounts previously expected to be received by the Corporation under the Note, representing approximately $0.21 per share of the originally estimated final distribution of $0.30 per share, and will be limited to cash on hand ($7.4 million at September 30, 2004) less expenses incurred to the time of the making of the final distribution, including overhead expenses, expenses related to contesting and/or defending the claims for indemnification asserted by Horizon and expenses associated with collecting amounts due, if any, under the Note. Canbras had also previously stated that the final distribution to shareholders would be made in one or more instalments after the receipt of the balance of the purchase price payable pursuant to the Note, the satisfaction of all remaining liabilities of the Corporation and the receipt by the Corporation of up-dated tax clearance certificates. Such distributions, together with all aspects of the process of winding up Canbras, were expected to have been completed by year-end 2005. As a result of the receipt of the notice from Horizon, the Corporation cannot at this time predict the length of time that may be required to finally settle any issues surrounding the asserted indemnity claims nor to finally settle any of the lawsuits underlying any valid claims for indemnification. As a result, the Corporation cannot at this time predict when the final distribution will be made nor when the process of winding up Canbras will be completed but estimates that these events will occur no sooner than year-end 2005. Third Quarter Results As at September 30, 2004, Canbras' shareholders' equity was $17.9 million, down from $29.3 million at June 30, 2004. This decrease reflects the initial distribution to shareholders of $11.6 million, partially offset by the third quarter earnings of $183 thousand (comprised of accrued interest income of $330 thousand, foreign exchange gains and other income of $38 thousand offset by $185 thousand of administrative expenses). Canbras' cash and cash equivalents and the Note (including accrued interest) as at September 30, 2004 were $7.4 million and $11.2 million respectively. Cash and cash equivalents held by the Corporation are being invested in high-grade money market instruments. Accounts payable and accrued liabilities of $779 thousand at the end of the third quarter of 2004 represent mainly the provision for estimated remaining costs of completing the Sale Transaction. During the third quarter of 2004, accrued liabilities declined by $75 thousand principally due to a previously foreseen and accrued remaining cost of completing the Sale Transaction being realized and paid in cash. The earnings for the third quarter were $183 thousand. Estimated Remaining Future Net Assets Following the initial distribution to shareholders and assuming that the Note and accrued interest will be collected in full and that no unforeseen claims will be asserted against the Corporation, the currently estimated remaining future net assets of Canbras at December 31, 2005 are $16.5 million. The currently estimated remaining future net assets at December 31, 2005 have not changed from the estimate made in connection with the Corporation's second quarter results. The difference between shareholders' equity on the consolidated balance sheet at September 30, 2004 and the estimated remaining future net assets at December 31, 2005 is the deduction of estimated future net costs from October 1, 2004 to December 31, 2005. Such future net costs are estimated at approximately $1.4 million comprised of wind-up costs of approximately $1.8 million net of interest income of approximately $0.4 million. However, these estimated future net costs exclude any amounts that may be required to contest and/or defend the claims for indemnification asserted by Horizon or to contest and/or defend and/or settle unforeseen claims against the Corporation. To the extent that the Corporation is not wound-up by December 31, 2005, then it will continue to incur overhead expenses at a rate estimated to be approximately $200 to $250 thousand per quarter, excluding amounts that maybe required to contest and/or defend and/or settle the claims for indemnification asserted by Horizon or in relation to unforeseen claims that may be asserted by others. Interest income may not be sufficient to cover all such expenses. About the Company Canbras, through the Canbras Group of companies, is a leading broadband communications services provider in Brazil, offering cable television, high speed Internet access and data transmission services in Greater Sao Paulo and surrounding areas and the State of Paran . Canbras Communications Corp.'s common shares are listed on the Toronto Stock Exchange under the trading symbol CBC. CATHOLIC: Portland Wants Tort Committee's Complaint Dismissed ------------------------------------------------------------- The Archdiocese of Portland in Oregon asks the U.S. Bankruptcy Court for the District of Oregon to dismiss, with prejudice, the Complaint to determine the Archdiocese's interests in parish property filed by the Tort Claimants Committee appointed in its chapter 11 case. Portland asserts that: -- the Tort Committee failed to join necessary parties or parties whose presence is required for just adjudication pursuant to Rules 7012(b)(7) and 7019 of the Federal Rules of Bankruptcy Procedure; -- the Tort Committee fails to state a claim upon which relief can be granted; -- the Court lacks subject matter jurisdiction over the Tort Committee's claims; -- the issue the Tort Committee raises is not ripe and is not of a sufficient immediacy and reality to warrant issuance of a declaratory judgment; and -- the adjudication of the Complaint could potentially entangle the Court in the interpretation of religious law in violation of the First Amendment and its Oregon counterpart, ORS 65.042, and other applicable non- bankruptcy law. Portland insists that it holds the Disputed Property for others under, among other things, the Code of Canon Law, restrictions by and for others, and other applicable non-bankruptcy law. Portland also seeks judgment against the Tort Committee for costs and disbursements it incurred. Court Delays Deposition of Fr. Brown The Tort Committee contacted Portland's counsel to say it wants take a deposition of Fr. D. Bruce Brown with respect to the proposed sale of a real property located at the Northwest corner of S.E. Milwaukie Avenue and S.E. Center Street, in Portland. Portland's counsel advised the Tort Committee that they weren't aware of any issues related to the sale for which discovery would be required. Portland's counsel explained that the ownership of the property was already an issue in the Adversary Proceeding and there was no reason to begin to address that issue in connection with the sale. Portland offered to stipulate to a reasonable provision in any order approving the sale, which would preserve all of the Tort Committee's rights and Portland's defenses with respect to the Property. The proceeds of the sale will be held in trust until the Court orders payment. The parties weren't able to resolve their disagreement regarding the deposition. Howard M. Levine, Esq., at Sussman Shank, LLP, asserts that there is no emergency requiring the deposition of Fr. Brown prior to the sale of the Property. According to Mr. Levine, the Tort Committee's attempt to conduct piecemeal, repetitive discovery on a property-by-property basis is inefficient, expensive and burdensome. The Tort Committee is anticipated to explore issues in the deposition relating to Canon Law, the First Amendment, church governance, matters subject to one or more privileges, and other issues which are complex, fundamental to Portland's rights and defenses and which should and will be addressed in an orderly and measured fashion in the Adversary Proceeding. Mr. Levine also notes that Portland is already the focus of discovery on numerous fronts, including requests for production of documents regarding almost every asset of Portland or 124 parishes going back to 1842. At Portland's request, Judge Perris issues a protective order delaying the Tort Committee's deposition of Fr. Brown. "The Debtor is not seeking to deny discovery to the Tort Claimants Committee with respect to the Property," Mr. Levine clarifies. Portland wants the discovery with respect to the Property to occur "in an orderly, efficient, and cost effective manner, rather than on a piecemeal 'emergency,' limited time notice and urgent basis." Judge Perris directs Portland to file an affidavit stating that after reasonable injury, it knows of no other person or entity with an interest in the Property. Judge Perris notes that any sale of the Property will be free and clear of only the liens and interest specified in the notice of the sale. The sale proceeds will be impressed with all rights and claims under Section 544(a)(3) of the Bankruptcy Code. All defenses with respect to the rights and claims are preserved. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Court Rejects Portland Claimants' Ad Campaign -------------------------------------------------------------- The Official Committee of Tort Claimants appointed in the Archdiocese of Portland in Oregon's Chapter 11 case proposed a claims bar date noticing program, dubbed a Victim Outreach Plan, targeting Oregon and Southwest Washington to directly or indirectly reach majority of the victims through family members with the critical information of a pending claims bar date. The Tort Committee believes its Outreach Plan is the best opportunity to serve meaningful notice to silent victims and would facilitate the establishment of a bar date for all future claimants that reside in Oregon and Southwest Washington. Alternatively, the Tort Committee asserts that the U.S. Bankruptcy Court for the District of Oregon could use the Outreach Plan as the first phase of an ongoing campaign. Based on the results, the campaign could be used to determine the level of outreach required in additional regional markets previously identified by Portland. Victim Outreach Plan The Tort Committee's proposed broad-based Victim Outreach Plan involves print, television, and Internet media as well as direct mail and collateral support materials directed at the primary and secondary target audiences residing in Oregon and Southwest Washington. It also includes a comprehensive earned media campaign that targets the four-state area of Oregon, Washington, Idaho and California. Earned media provides a relatively low cost approach to reaching silent victims residing outside the geographical scope of the paid media plan. The goal of the Victim Outreach Plan is to reach out to those silent victims to provide them with notice of their legal rights, and to inform them that they must come forward before the Bar Date or face discharge. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, explains that the Victim Outreach Plan represents a thorough evaluation of the situation and an understanding that there exist other tort claimants who were sexually abused by Portland clergy who have yet to come forward. The Tort Committee believes this is a reasonable and realistic approach to satisfying the needs of all parties involved, and would allow consideration of a Bar Date for all Oregon-based claimants. The salient terms of the Victim Outreach Plan are: (A) Communication Strategy Creative Materials have been developed to accomplish the goal of the Plan: (a) Three victim testimonial television spot concepts; (b) Three priest identification television spot concepts; (c) Three full-pledge priest identification newspaper ad concepts; (d) One informational brochure; and (e) One informational Web site. (B) Target Audiences The Victim Outreach Plan targets: (a) Primary Audience -- Victims * Men ages 25 to 75; * Women ages 25 to 75; * Those who attended any institution that provided contact with Catholic clergy, including churches, hospitals, schools, residential care facilities, emergency shelters and penal institutions in Western Oregon; and * Those who currently reside in Oregon and Southwest Washington, based on information provided by Portland or have left the area but have family or friends that still reside in Oregon and Southwest Washington; and (b) Secondary Audience -- Victims' Families * Relatives of victims, defined as adults 18 and up; and * Currently reside in Oregon and Southwest Washington. (C) Paid Media Strategy & Tactics Both television and newspaper coverage will be used throughout Oregon and Southwest Washington markets where victims currently reside, including Albany, Ashland, Astoria, Baker City, Bend, Coos Bay, Corvallis, Eugene, Grants Pass, Klamath Falls, La Grande, Medford, Ontario, Pendleton, Portland, Roseburg, Salem, The Dalles, and Vancouver. The advertising will run for 12 months. (D) Direct Mail Direct mail will complement the paid media campaign by allowing the Tort Committee to select exactly the audience with whom it wants to communicate, and to send its message directly, using the audiences' own language and addressing their individual needs. The direct mail piece will be sent to members of a list provide by Portland through three separate mail flights, thereby increasing the reach of the overall paid media campaign. (E) Collateral & Website Requests for additional information will come through either a confidential toll-free hotline or through a Web site. The site http://www.startthehealing.org[registered to Brad J. Wilkus & Associates, Inc., at 1440 Coral Ridge Drive, #365, Coral Springs, Florida 33071] will provide clear and explicit language in helping sexual abuse survivors confront the nature of these crimes. The Web site will reinforce the television and print campaigns, and will provide information and options for victims who are contemplating coming forward. The Tort Committee puts a $5.1 million price tag on the Victim Outreach Plan. The Archdiocese thinks the price tag is higher, by orders of magnitude. A full-text copy of the Tort Committee's Victim Outreach Plan, including three storyboards for emotional television ads, is available for free at: http://bankrupt.com/misc/victim_outreach_plan.pdf Parties Object (1) Mount Angel Abbey Mount Angel Abbey asks Judge Perris to defer any ruling on the proposed Victim Outreach Plan until thorough review and evaluation of the statements contained in the Plan have been made. Although the Victim Outreach Plan is designed to generate proofs of claim against the Archdiocese of Portland in Oregon, Richard J. Whittemore, Esq., at Bullivant Houser Bailey, PC, in Portland, Oregon, points out that in reality, the proposal could also result in the generation of a number of claims against Mount Angel Abbey. Mr. Whittemore points out that the proposal references either directly or indirectly, a number of priests who were, or continue to be, associated with Mount Angel abbey. The proposal contains numerous inaccurate and inflammatory statements regarding the priests. Mount Angel Abbey asks the Court for opportunity to formally comment on the proposal and to seal the Victim Outreach Plan for inflammatory content and potential prejudice to all defendants. (2) The Archdiocese of Portland in Oregon Portland contends that the Tort Committee's Victim Outreach Plan is unreasonable and unnecessary. Portland believes that the Plan is based on a misrepresentation of bankruptcy law concerning bar date requirements. Thomas W. Stilley, Esq., at Sussman Shank, LLP, in Portland, Oregon, asserts that the Plan fails to recognize the substantial efforts made by Portland to reach out to victims of child abuse by its personnel. The safety of children entrusted to its care has long been an important priority for Portland. Portland has taken significant measures in preventing, reporting, and responding to concerns of child abuse and to victims of child abuse by its personnel. Judge Perris Rejects Tort Committee's Plan Judge Perris reviewed the Tort Committee's Plan and says that it will not be implemented. Judge Perris Seals Tort Committee's Plan Mount Angel Abbey represented by Richard J. Whittemore, Esq., at Bullivant Houser Bailey PC, in Portland, Oregon, obtained an order from Judge Perris directing that: "[T]he Tort Claimants Committee's Victim Outreach Plan be SEALED consistent with the provisions of [Local Bankruptcy Rule] 9037-1 [of the Local Bankruptcy Rules of the U.S. Bankruptcy Court for the District of Oregon]. "The Court notes that although media were present in the courtroom and a member of the Associated Press voiced opposition, no counsel for media was present. The Court may reconsider the ruling if the media formally presents its opposition. "Pursuant to LBR 9037-1(B), no person may review or reproduce any sealed documents without obtaining an appropriate Court Order. "Pursuant to LBR 9037-1(C), not later than 60 days after the Chapter 11 case has closed or within 60 days after the conclusion of any appeal, any party may serve and file a request, which will have a copy of the Original Order attached, to have the Clerk return a document Order to be sealed." 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 COOPER-STANDARD: Moody's Assigns Low-B Ratings to Debts ------------------------------------------------------- Moody's assigned first-time ratings to the obligations of Cooper- Standard Automotive, Inc., and to its wholly owned Canadian subsidiary Cooper-Standard Automotive Canada Limited. A newly formed holding company named CSA Acquisition Corp. will be established as the direct parent of Cooper-Standard. The rating outlook is stable. Cooper-Standard Holdings proposes to acquire the stock of certain automotive division subsidiaries for sale by Cooper Tire and Rubber Company in accordance with a stock purchase agreement dated September 16, 2004. The aggregate cash purchase price will approximate $1.165 billion, equivalent to 4.7x trailing-twelve- month September 30, 2004 adjusted EBITDA. The intended investors are affiliates of the private equity firms The Cypress Group L.L.C. and GS Capital Partners 2000 L.P. Both firms will contribute $159 million of cash common equity to Cooper-Standard Holdings in order to obtain their respective 46.5% pro rata stakes on a fully diluted basis. No individual investor will own a majority of the shares. The remaining 7% of the fully diluted common shares can be obtained by management as part of a stock option plan. Cooper-Standard's operations historically contributed about half of Cooper Tire's consolidated revenues and more than seventy percent of Cooper Tire's consolidated operating earnings. These specific first-time ratings were assigned: -- B1 rating assigned for all facilities under the proposed $475 million equivalent guaranteed first-lien senior secured credit agreement for borrowers Cooper-Standard and Cooper- Standard Canada, to consist of: * $100 million ($ denominated) guaranteed senior secured revolving credit facility at Cooper-Standard, maturing December 2010; * $25 million equivalent ($ or C$ denominated) guaranteed senior secured revolving credit facility at Cooper- Standard Canada, maturing December 2010; * $50 million equivalent (C$ denominated) guaranteed senior secured term loan A at Cooper-Standard Canada, maturing December 2010; * $115 million ($ denominated) guaranteed senior secured term loan B at Cooper-Standard Canada, maturing December 2011; * $185 million ($ denominated) guaranteed senior secured term loan C at Cooper-Standard, maturing December 2011; -- B2 rating assigned for Cooper-Standard's proposed $200 million guaranteed senior unsecured notes maturing December 2012, to be initially issued under Rule 144A with registration rights; -- B3 rating assigned for Cooper-Standard's proposed $350 million guaranteed senior subordinated unsecured notes maturing December 2014, to be initially issued under Rule 144A with registration rights; -- B1 senior implied rating for Cooper-Standard; -- B2 senior unsecured issuer rating for Cooper-Standard; -- SGL-2 speculative grade liquidity rating for Cooper-Standard The rating assignments reflect Cooper-Standard's high pro forma leverage, coupled with the company's exposure to weakening North American production levels (given a greater than 70% current concentration of revenues with the Big 3 OEM's) and to rising raw materials commodity prices (for steel, manufactured components, carbon black, crude oil, and synthetic and natural rubber). Cooper-Standard is additionally characterized by a nearly complete focus on the more volatile and competitive original equipment market (with 90% of the customer base comprised of OEM's), a concentration of more than 70% of revenue generation within North America (predominantly for the Big 3), and by content per vehicle currently averaging below $150. Cooper-Standard's business would be materially and adversely affected in the event it suffered the loss of a significant portion of business from any of its largest customers, or if any of these customers were to lose market share at a faster pace than the company is able to replace lost volume with new transplant and foreign business. The company's top ten platforms accounted for 40% of net sales in 2003. Moody's is also concerned that several assumptions incorporated within management's base case financial plan are aggressive. This plan assumes that Cooper-Standard will have an ongoing ability to impose surcharges for certain rising raw materials costs and additionally to generate sufficient annual incremental lean manufacturing savings to offset customer price concessions, economic and wage increases and other increased operating costs. The base case plan also assumes that anticipated annualized restructuring savings approximating $16 million in 2005 will be fully realized, while raw materials costs will remain at the historically high levels experienced in 2004. While Cooper-Standard provides significant added value to customers by having the flexibility to accommodate late-stage design changes, Moody's has some concern that the company is not always fully compensated for the cost of these changes (particularly when recovery is realized through increases to the piece price). Moody's believes that Cooper-Standard's Sealing Systems product line, which presently accounts for about 45% of total revenues, is the company's most challenging. This product line has the most commodity-like characteristics and the shortest life cycle duration within the company's portfolio. The company faces a highly fragmented competitive landscape across all product lines. The rating assignments and stable outlook more favorably reflect Cooper-Standard's good liquidity and approximately 2x pro forma EBIT coverage of cash interest under the proposed capital structure. Moody's additionally notes the significant $318 million cash common equity investment to be made into Cooper-Standard Holdings by the sponsors, which cash will then be downstreamed in the form of common equity to the primary borrower and main operating subsidiary Cooper-Standard. The facilities comprising the proposed credit agreement are well matched with regard to the company's cash generation patterns within both the US and Canada, provide natural currency hedges, and are additionally expected to maximize the company's realization of tax benefits. The ratings and stable outlook furthermore reflect that Cooper Standard has: (1) successfully right-sized production capacity, (2) achieved substantial lean manufacturing savings, (3) moved production to low-cost countries, (4) integrated prior acquisitions, and (5) won substantial new business awards with a broadened customer base while still operating as a subsidiary of Cooper Tire. The benefits of recent restructuring actions are expected to be more fully evident in the company's cash flow performance during 2005. The company now has three facilities in China, with two wholly owned and one a joint venture. Cooper Tire does not appear to have constricted spending on capital equipment or research and development for subsidiary Cooper-Standard's business. Cooper-Standard's long-standing and effective management team will be staying on to run the business as a stand-alone company. In excess of 80% of the company's projected revenues (excluding estimated volumes from the rollover of existing platforms) reflect booked business through 2008 based upon the production volumes assumed. Cooper-Standard has #1, #2, or #3 leading market positions within each of its fragmented niche markets, in both North America and globally. The company has content on all 20 of the top-selling platforms in North America, and on 17 of the 20 top-selling platforms in Europe. As evidenced by Cooper-Standard's success with selling a broad range of product for the F150, the company's management is increasingly focused on a cross-functional customer approach, which is expected to drive the average content per vehicle steadily higher. Corporate overhead is expected to actually decline slightly to about $10 million, due primarily to reduced shared services charges (for legal, finance, and corporate jet services) as well as the elimination of charges for certain senior management bonuses at Cooper Tire. Cooper-Standard historically operated as a reportable business segment of Cooper-Tire and already has complete systems in place. Cooper-Standard's SGL-2 speculative grade liquidity rating reflects Moody's belief that the company has a good liquidity profile over the next year. While the stand-alone company will start out with zero cash under the terms of the purchase agreement, the company projects that it will generate positive free cash flow during the first year. Even if Cooper-Standard were to fall well short of expectations and only break even from a cash flow perspective over the next 12 months, the full $125 million revolving credit facility is expected to be available after accounting for financial covenants. The pro forma sources and uses and first full year of quarterly base case projections indicate that the company's only usage of the revolving credit will be about $10 million of letters of credit. The company will likely experience some intra period usage of the facility due to the relative timing of receipt of trade receivables and of reimbursable tooling, versus payment of trade payables. Future events that would potentially drive Cooper-Standard's ratings or outlook lower include: (1) a failure of the company to realize material lean manufacturing and restructuring savings sufficient to offset customer price concessions and other operating cost increases, stepped-up levels of customer price compression, (2) steadily rising raw materials prices which cannot be offset by customer surcharges and price increases, (3) troubled launches, (4) lost market share, (5) rising debt levels depleting effective unused availability under the revolving credit facility, (6) announcement of a material acquisition (particularly if debt-financed), or (7) plans for buybacks of common stock or a dividend payment to the common shareholders. Future events that would potentially drive Cooper-Standard's ratings or outlook higher include generation of positive cash flow and debt reduction at a faster pace than projected, realization of a series of incremental new business awards from both domestic transplants and foreign OEM's that will serve to diversify and globalize the customer base, evidence of technological superiority and increased market share relative to key competitors, rising average content per vehicle resulting from stepped-up cross- selling of products and the introduction of higher dollar-value- products, seamless new program launches, and full recovery of reimbursables. The B1 ratings of the $475 million of proposed guaranteed senior secured credit facilities reflect the benefits and limitations of the collateral and guarantee package. All US loans under the credit agreement will be secured by a first-priority pledge of all assets and stock of Cooper-Standard Holdings and the US subsidiaries and by up to 65% of the stock of foreign subsidiaries. The US loans will be guaranteed by Cooper-Standard Holdings and by all direct and indirect US subsidiaries. All Canadian loans under the credit agreement will be secured by a pledge of all Canadian assets to the extent of the Canadian loans, and by all of the stock of Cooper-Standard Holdings and all domestic and foreign subsidiaries. The Canadian loans will be guaranteed by Cooper-Standard Holdings, by all direct and indirect Canadian subsidiaries, and by all US subsidiaries to the extent there are not adverse tax consequences. Notably, all of the credit facilities are effectively pari passu regardless of the existence of multiple borrowers in different countries country with varying collateral and guarantee protection. This is due to sharing provisions within the credit agreement requiring reallocation of lenders' interests into pro rata interests in all loans in the event of specified circumstances constituting a defined "sharing event." Approximately 30% of Cooper-Standard's operations are outside of the US and Canada and thereby excluded from the pool of assets pledged. Excess cash flow recapture requirements will begin at 50%, and eventually reduce to 25% based upon a leverage test. The term loan A is expected to have scheduled amortization of 10%, 10%, 15%, 15%, 25%, 25% respectively over the six years, while the other term loans will amortize only 1% during each year until the year of maturity. No penalties will be imposed for voluntary prepayments. The B2 rating of the proposed $200 million of guaranteed senior unsecured notes reflects their effective subordination to the senior secured debt of Cooper-Standard to the extent of the collateral protection provided, and will be structurally subordinated to the obligations of any subsidiary which does not guarantee the notes. The senior notes will be guaranteed by all wholly owned US subsidiaries on a senior unsecured basis. The senior notes will be non-call for four years, and will contain an IPO clawback provision for up to 35% of the notes at par plus the coupon. The senior notes will also have change of control provisions at 101%. The B3 rating of the proposed $350 million of guaranteed senior subordinated unsecured notes reflects their contractual subordination to all senior obligations of Cooper-Standard and structural subordination to the obligations of any subsidiary, which does not guarantee the notes. The senior subordinated notes will be guaranteed by all wholly owned US subsidiaries on a senior subordinated basis. The senior subordinated notes will be non- call for five years, and will contain an IPO clawback provision for up to 35% of the notes at par plus the coupon. The senior subordinated notes will also have change of control provisions at 101%. Cooper-Standard's pro forma total debt/EBITDAR leverage for the year ended December 31, 2004 is approximately 4.3x, with no meaningful reductions in leverage anticipated until 2006. Total debt incorporates off-balance sheet obligations including letters of credit, the present value of operating leases, and guarantees of joint venture obligations. EBITDAR is adjusted to add back certain excess stand-alone costs and future restructuring benefits. Pro forma EBIT coverage of interest is favorable at approximately 2.1x. Cooper-Standard, headquartered in Novi, Michigan, is a leading global manufacturer of fluid handling, body sealing, and noise, vibration and harshness control systems for automotive vehicles. As a percentage of revenues, these business lines currently respectively contribute approximately 34%, 45%, and 21% of the total. The company sells about 90% of its products to automotive original equipment manufacturers. Annual revenues currently approximate $1.8 billion. CSFB MORTGAGE: S&P Places Low-B Ratings on 12 Certificate Classes ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 15 classes from three series of CSFB Mortgage-Backed Trust pass-through certificates. Concurrently, ratings are affirmed on 191 classes from eight series from the same issuer. The raised ratings reflect the increase in the credit support percentages to the respective classes due to the strong performance of the respective loan groups. Credit support percentages for each of the classes with raised ratings increased by at least 100% over their respective original credit support percentages. As of the end of October 2004, these loan groups had no delinquencies or realized losses to date. In addition, the outstanding pool balances for these loan groups were: * 19.83% (series 2002-34 loan groups three and four), * 26.47% (series 2003-1 loan group three), and * 37.51% (series 2003-7 loan group one). The classes with affirmed ratings reflect adequate actual and projected credit support percentages. As of the October 2004 remittance period, the transactions with delinquencies were: * series 2002-34 loan groups one and two (19.78%), * series 2003-1 loan groups one and two (16.21%), * series 2003-29 (1.88%), series 2004-1 (1.59%), and * series 2004-1 loan groups three and four (2.82%). Loan groups one and two from series 2002-34 and series 2003-1 were the only loan groups with losses so far, incurring 0.08% and 0.05%, respectively. The collateral contained in the loan groups consists primarily of conventional, 15- or 30-year, fixed- or adjustable-rate, first- or second-lien mortgage loans secured by one- to four-family residential properties. Credit support is provided by subordination. Ratings Raised CSFB Mortgage-Backed Trust Pass-thru certs Rating Series Class To From ------ ----- -- ---- 2002-34 C-B-1 AAA AA 2002-34 C-B-2 AA+ A- 2002-34 C-B-3 AA- BBB 2002-34 C-B-4 BBB+ BB- 2002-34 C-B-5 BB B 2003-1 III-B-1 AA+ AA 2003-1 III-B-2 AA A- 2003-1 III-B-3 A BBB- 2003-1 III-B-4 BBB BB 2003-1 III-B-5 BB B 2003-7 I-B-1 AA+ AA 2003-7 I-B-2 AA- A 2003-7 I-B-3 A- BBB 2003-7 I-B-4 BBB- BB 2003-7 I-B-5 B+ B Ratings Affirmed CSFB Mortgage-Backed Trust Pass-thru certs Series Class Rating ------ ----- ------ 2002-34 II-A-1, II-A-2, II-A-3, II-A-4, II-A-5 AAA 2002-34 A-X, II-P, III-A-2, III-A-3, III-A-4 AAA 2002-34 III-A-6, III-A-8, III-A-9, III-A-10, I-P AAA 2002-34 III-A-11, III-A-12, III-A-13, III-A-14 AAA 2002-34 III-P, IV-X, IV-A-1, IV-P, I-A-1, I-X AAA 2002-34 D-B-1 AA 2002-34 D-B-2 A- 2002-34 D-B-3 BBB- 2002-34 D-B-4 BB 2002-34 D-B-5 B- 2003-1 I-A-1, I-X, II-A-1, II-A-2, II-A-3, II-A-4 AAA 2003-1 II-A-5, II-P, III-A-2, III-A-3, III-A-4 AAA 2003-1 III-A-6, III-A-7, III-A-8, III-A-10, I-P AAA 2003-1 A-X, III-P AAA 2003-1 D-B-1 AA 2003-1 D-B-2 A- 2003-1 D-B-5 B- 2003-7 I-A-1, I-A-2, I-A-3, I-A-4, I-A-21, I-A-23 AAA 2003-7 I-A-24, I-A-25, I-A-26, I-A-27, I-A-28 AAA 2003-7 I-X, I-P AAA 2003-11 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5, I-A-6 AAA 2003-11 I-A-25, I-A-26, I-A-27, I-A-28, I-A-29 AAA 2003-11 I-A-30, I-A-31, I-A-32, I-A-33, I-A-34 AAA 2003-11 I-A-35, I-A-36, I-A-37, I-A-38, I-A-39 AAA 2003-11 I-A-40, I-X, I-P AAA 2003-11 I-B-1 AA 2003-11 I-B-2 A- 2003-11 I-B-3 BBB- 2003-11 I-B-4 BB 2003-11 I-B-5 B 2003-25 I-A-1, I-A-2, I-A-3, I-A-4, 1-A-5, I-A-6 AAA 2003-25 I-A-7, I-A-8, I-A-9, I-A-10, I-A-II, I-X AAA 2003-25 II-X, I-P, II-P, II-A-1 AAA 2003-25 C-B-1 AA 2003-25 C-B-2 A 2003-25 C-B-3 BBB- 2003-25 C-B-4 BB 2003-25 C-B-5 B- 2003-29 I-A-1, II-A-1, II-A-2, II-A-3, II-A-4 AAA 2003-29 III-A-1, IV-A-1, V-A-1, VI-A-1, VII-A-1 AAA 2003-29 VIII-A-1, D-P-1, D-P-2, D-P-3, D-X-1 AAA 2003-29 D-X-2, D-X-3 AAA 2003-29 D-B-1 AA 2003-29 D-B-2 A 2003-29 D-B-3 BBB 2003-29 D-B-4 BBB- 2003-29 D-B-5 BB- 2003-29 D-B-6 B- 2004-1 I-A-1, I-A-2, I-A-3, II-A-1, II-A-2 AAA 2004-1 III-A-1, IV-A-1, V-A-1, I-P, D-P-I AAA 2004-1 D-P-2, I-X, D-X-1, D-X-2 AAA 2004-1 D-B-1 AA 2004-1 D-B-2 A+ 2004-1 D-B-3 BBB+ 2004-1 D-B-4 BB 2004-1 D-B-5 B- 2004-3 I-A-1, I-A-2, I-A-3, I-A-4, I-A-5, I-A-6 AAA 2004-3 I-A-7, I-A-8, I-A-9, I-A-10, I-X, A-P AAA 2004-3 II-A-1, II-P, II-X, III-A-1, III-A-2 AAA 2004-3 III-A-3, III-A-4, III-A-5, III-X AAA 2004-3 IV-A-1, IV-P, IV-X AAA 2004-3 C-B-1, D-B-1 AA 2004-3 C-B-2, D-B-2 A 2004-3 C-B-3, D-B-3 BBB 2004-3 C-B-4 BB 2004-3 D-B-4 BB- 2004-3 C-B-5 B CSFB MORTGAGE: S&P Holds Single-B Ratings on Cert. Classes F & G ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes B, C, D, and E of Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates series 1998-C1. Concurrently, all other outstanding ratings from this transaction are affirmed. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. The affirmed speculative-grade ratings reflect loss expectations on the specially serviced assets. As of November 2004, the trust collateral consisted of 291 commercial mortgages with an outstanding balance of $2.039 billion, down from 324 loans totaling $2.483 billion at issuance. The pool has paid down by 17.8%. The master servicer, ORIX Capital Markets LLC, reported partial or full year 2003 net cash flow debt service coverage ratios -- DSCR -- for 78.7% of the pool. Fifty-nine credit tenant leases -- CTLs, totaling $311 million, account for 15.2% of the pool. Sixteen loans totaling $59.6 million, or 2.92% of the pool, have been defeased. Based on this information and excluding defeasance and CTLs, Standard & Poor's calculated a pool DSCR of 1.47x, down slightly from 1.51x at issuance. The current weighted average DSCR for the top 10 loans, which comprise 29.5% of the pool, improved to 1.74x, from 1.52x at issuance. Nine of the top 10 loans have improved DSCRs from issuance. There are 13 loans, with a combined balance of $88.2 million, or 4.3% of the pool, that are with the special servicer, Lennar Partners, Inc. Five are secured by lodging properties, three are secured by retail properties, two are secured by multifamily properties, and one each by an office building and a nursing home. In addition, the largest specially serviced asset, American Restaurant Group -- ARG -- is a CTL loan secured by eight Stuart Anderson's Black Angus restaurants located in California. Five of the loans are current, five are REO, two are in foreclosure, and one is 30 days delinquent. The largest specially serviced asset, ARG, has a current balance of $16.8 million (0.82% of the pool). The tenant, Stuart Anderson's Black Angus Restaurants, is undergoing reorganization in bankruptcy court. It is not known if leases at the collateral properties will be rejected. The borrower, ARG Enterprises, Inc., has kept the loan current. Each location is approximately 10,000 sq. ft. in size and loan maturity matches lease expiration in May 2023. The locations are distributed throughout California with five locations in southern California and three locations in northern California. A review of the property inspections noted good locations near heavily traveled thoroughfares. The second largest specially serviced loan, the Smith Hotel portfolio, has a balance of $16.2 million (0.79%) and is secured by three lodging properties totaling 388 rooms, which are all located in Louisiana. The borrower has brought the loan current but is disputing a required reserve. The third largest specially serviced loan, Kew Gardens Hills Apartments, has a balance of $8.9 million (0.44%) and is secured by a 429-unit cooperative apartment building. The loan is current. The loan was placed in special servicing due to a dispute over funding of capital repairs. The fourth largest, University Heights Apartments, has a balance of $8.8 million (0.43%) and is secured by a 362-unit student housing multifamily property located in Austin, Texas. The asset is REO. Lennar has completed some capital improvements, and intends to market the property for sale next quarter. Current occupancy is 94% and a recent appraisal valued the asset as is at $7.6 million. The fifth largest, Glenmont Shopping Plaza, has a balance of $8.2 million (0.40%) and is secured by a retail property located near Albany, New York. The asset is REO. Lennar has the property listed for sale. A loss is expected upon disposition. The servicer's watchlist includes 80 loans totaling $420.4 million (20.6%). The loans on the watchlist appear due to low occupancies, DSC, or upcoming lease expirations, and were stressed accordingly by Standard & Poor's. The pool has significant geographic concentrations in: * California (15.2%), * New York (9.8%), * New Jersey (6.5%), * Texas (6.5%), * Virginia (5.9%), and * Puerto Rico (4.7%). Significant property type concentrations include: * retail (42.6%), * multifamily (21.7%), * lodging (15.4%), * office (13.4%), and * industrial (2.6%). Standard & Poor's stressed various loans in the mortgage pool, paying closer attention to the specially serviced and watchlisted loans. The expected losses and resultant credit enhancement levels adequately support the current rating actions. Ratings Raised Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 1998-C1 Rating Class To From Credit Enhancement ----- -- ---- ------------------- B AAA AA+ 26.93% C AA A+ 20.23% D BBB+ BBB 13.53% E BBB BBB- 11.70% Ratings Affirmed Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certs series 1998-C1 Class Rating Credit Enhancement ----- ------ ------------------ A-1A AAA 33.63% A-1B AAA 33.63% A-2MF AAA 33.63% A-X AAA NA F B+ 4.70% G B 3.79% H CCC 1.35% DII/KBR: Judge Fitzgerald Approves AIG & Lehman Settlement Pacts ---------------------------------------------------------------- By this motion, DII Industries, LLC and its debtor-affiliates ask the United States Bankruptcy Court for the Western District of Pennsylvania to approve their settlement agreement with Halliburton Company and the AIG Companies: * AIU Insurance Company; * American Home Assurance Company; * Birmingham Fire Insurance Company; * Granite State Insurance Company; * Insurance Company of the State of Pennsylvania; * Landmark Insurance Company; * Lexington Insurance Company; * National Union Fire Insurance Company of Pittsburgh, PA; * New Hampshire Insurance Company; and * L'Union Atlantique D'Assurances S.A. The AIG Settlement Agreement effectuates a full and final settlement of: (1) all Coverage Disputes among the parties under certain insurance policies issued or allegedly issued for policy periods incepting prior to or on December 31, 1992 -- AIG Buyback Policies; (2) all asbestos and silica-related disputes of the parties under certain insurance policies incepting after December 31, 1992 -- AIG Post-1992 Policies; (3) all Coverage Actions; and (4) certain other disputes between the AIG Companies, and the Debtors and Halliburton as Policyholders, including the disputes that have arisen postpetition. Under the AIG Settlement Agreement, the AIG Companies are obligated to make a stream of payments in amounts and at times undisclosed. A full-text copy of the AIG Settlement Agreement is available at no charge at: http://bankrupt.com/misc/AIG_Companies_Settlement_Agreement.pdf Lehman Settlement Agreement DII Industries, LLC, Kellogg, Brown & Root, Inc., and each of the other Releasing Policyholders as Sellers, Halliburton Company, and HDK Purchaser Trust as Purchaser entered into an assignment agreement -- Lehman Settlement Agreement. The Sellers and the AIG Companies agreed to enter into a transaction which, subject to the terms and conditions of the AIG Companies' Settlement Agreement, includes a simultaneous payment by HDK Purchaser Trust to DII of the payment amount, which is subject to confidentiality restrictions, and an assignment to HDK Purchaser Trust of all of the Sellers' right, title, and interest in and to the AIG Settlement Payments. The sale and purchase of the right, title, and interest in and to the AIG Settlement Payments is unencumbered by any security interests, liens or other encumbrances, claims or interests of any nature. The salient terms of the Lehman Settlement Agreement include: (a) Closing On the Assignment Agreement Effective Date, which will in no event occur before January 4, 2005, in a series of transactions that will be deemed to take place simultaneously: (i) the Sellers and HDK Purchaser Trust will execute and deliver the assignment of the AIG Settlement Payments; (ii) HDK Purchaser Trust and the AIG Companies will execute and deliver a consent and agreement, which will be made by the AIG Companies in HDK Purchaser Trust's favor; (iii) HDK Purchaser Trust will pay DII, in immediately available funds, the Payment Amount; and (iv) the AIG Companies and HDK Purchaser Trust will agree to the amount and timing of the AIG Settlement Payments. (b) Security Interest Although the parties intend that the purchase and sale of the AIG Settlement Payments will be "a true sale" and not a loan, in the event that the purchase and sale is deemed to be a loan by a court of competent jurisdiction, each Seller will be deemed to have pledged to HDK Purchaser Trust, as security, its obligations with respect to the deemed loan, and will be deemed to have granted HDK Purchaser Trust a security interest in, all its right, title and interest in and to the AIG Settlement Payments and all proceeds. Accordingly, the Debtors ask the Court to approve the Lehman Settlement Agreement. A full-text copy of the Lehman Settlement Agreement is available for free at: http://bankrupt.com/misc/The_Lehman_Settlement_Agreement.pdf * * * Judge Fitzgerald grants the Debtors' request. 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) DII/KBR: Halliburton Says Plan Ready to Take Effect Dec. 31 ----------------------------------------------------------- The Honorable Terrence F. McVerry of the United States District Court for the Western District of Pennsylvania signed an order that will resolve Halliburton's (NYSE: HAL) liability after a 30-day waiting period ending on Dec. 31, 2004. Also, Halliburton is clarifying that the Third Circuit Court of Appeals decision in the Combustion Engineering (CE) bankruptcy case has no impact on the bankruptcy of DII Industries, Kellogg Brown & Root and various other Halliburton subsidiaries (DII/KBR) for a number of significant reasons: -- The structure of the DII/KBR bankruptcy is significantly different than the structure utilized in the CE bankruptcy. Specifically, in the DII/KBR bankruptcy, unlike in CE (in relation to ABB Lummus Global and Basic Inc.), there are no asbestos-related liabilities being channeled to the trust that are not the liability of the Debtors or derivative of the Debtors' liabilities. -- In the DII/KBR bankruptcy, unlike in CE, there is not even an allegation or a suggestion of disparity of treatment between the settled claimants and the unsettled claimants, including the future claimants. Moreover, to the extent that there are insurance-related matters at issue, in the DII/KBR bankruptcy, unlike in the CE bankruptcy, there is no assignment of any insurance rights and the so-called "insurance neutrality" provision in the DII/KBR bankruptcy is more protective of insurers' rights than is the insurance neutrality provision in CE. -- Unlike in CE, there are no objections at all in the DII/KBR bankruptcy as all matters with the insurers have been resolved and, unlike in CE, no asbestos claimants or law firms' representing asbestos claimants objected to any portion of the DII/KBR Plan. For all of the above reasons, the CE decision has no impact on the DII/KBR bankruptcy and Halliburton anticipates concluding the bankruptcy by year-end with funding of the trusts by the end of January 2005. Halliburton, founded in 1919, is one of the world's largest providers of products and services to the petroleum and energy industries. The company serves its customers with a broad range of products and services through its Energy Services and Engineering and Construction Groups. The company's World Wide Web site can be accessed at http://www.halliburton.com/ 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) DLJ COMMERCIAL: Moody's Holds Ba2 Rating on $31M Class B-4 Certs. ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes and affirmed the ratings of four classes of DLJ Commercial Mortgage Corp., Commercial Mortgage Pass-Through Certificates, Series 1999-CG2: -- Class A-1A, $120,968,613, Fixed, affirmed at Aaa -- Class A-1B, $890,203,000, WAC, affirmed at Aaa -- Class S, Notional, affirmed at Aaa -- Class A-2, $69,769,000, WAC, upgraded to Aaa from Aa2 -- Class A-3, $81,398,000, WAC, upgraded to Aa1 from A2 -- Class A-4, $19,380,000, WAC, upgraded to Aa2 from A3 -- Class B-1, $58,141,000, WAC, upgraded to A3 from Baa2 -- Class B-2, $23,257,000, WAC, upgraded to Baa2 from Baa3 -- Class B-4, $31,008,000, Fixed, affirmed at Ba2 As of the November 10, 2004, distribution date, the transaction's aggregate balance has decreased by approximately 7.9% to $1.4 billion from $1.6 billion at securitization. The Certificates are collateralized by 330 mortgage loans secured by commercial and multifamily properties. The mortgage loans range in size from less than 1.0% of the pool to 4.5% with the top 10 loan groups representing 25.6% of the pool. Fifteen loans, representing 5.1% of the pool, have defeased and have been replaced with U.S. Government securities. The largest defeasance is the Alliance Portfolio Loan ($43.4 million - 3.0%), the pool's fourth largest loan group. Seven loans have been liquidated from the pool resulting in aggregate realized losses of approximately $2.0 million. Nine loans, representing 4.8% of the pool, are in special servicing, including the Highland Falls Apartments Loan ($20.1 million - 1.4%) which is the tenth largest loan. Moody's has estimated aggregate losses of approximately $22.9 million for all of the specially serviced loans. Moody's was provided with year-end 2003 borrower financials for 98.4% of the pool's performing loans. Moody's loan to value ratio -- LTV -- is 84.9%, compared to 89.7% at securitization. The upgrade of Classes A-2, A-3, A-4, B-1 and B-2 is due to increased subordination levels and improved overall pool performance. Although the overall LTV has improved since securitization, the pool has experienced a slight increase in LTV dispersion. Based on Moody's analysis, 11.7% of the pool has a LTV greater than 100.0% compared to 8.5% at securitization. The top three loan groups represent 11.7% of the pool. The largest loan in the pool is the Oakwood Plaza Loan ($64.8 million -- 4.5%), which is secured by an 885,713-power center located in Hollywood, Florida. Hollywood is located approximately 10 miles south of Fort Lauderdale. The property, which is the dominant center in the area, is anchored by Home Depot, Kmart and BJ's Wholesale Club. The property is 100.0% leased, compared to 96.0% at securitization. Moody's LTV is 77.5%, compared to 87.0% at securitization. The second largest loan group is the Fifteen Southeast Realty Portfolio ($55.2 million -- 3.9%), which consists of four crossed collateralized loans secured by four class B apartment complexes located in Florida. The portfolio totals 1,520 units. The largest property is the 712-unit Arbor Lake Club Apartments, which is located in Miami. Although the portfolio's overall occupancy has declined to 92.0% from 95.0% at securitization, rental income has increased significantly. Moody's LTV is 76.5%, compared to 91.0% at securitization. The third largest loan is the Herald Center Loan ($47.5 million -- 3.3%), which is secured by a 249,504 square foot nine-story vertical mall located in midtown Manhattan in New York City. The property is anchored by Daffy's (35.0%), the Department of Motor Vehicles (11.0%) and Modells (9.0%). The property is 100.0% occupied, the same as at securitization. However the property's financial performance has been impacted by a significant increase in operating expenses. Moody's LTV is 87.9%, compared to 80.0% at securitization. The pool collateral is a mix of: * retail (36.1%), * multifamily (33.4%), * office and mixed use (14.1%), * industrial (5.3%), * U.S. Government securities (5.1%), * lodging (4.2%), and * healthcare (1.8%). The collateral properties are located in 37 states plus the District of Columbia. The top five state concentrations are: * California (19.6%), * Texas (14.1%), * Florida (13.5%), * Colorado (4.5%), and * New York (3.9%). All of the loans are fixed rate. ENDURANCE SPECIALTY: Aon Sells 9.8 Million Shares to Goldman Sachs ------------------------------------------------------------------ Endurance Specialty Holding Ltd. (NYSE:ENH) disclosed that Aon Corporation has sold 9.8 million of Endurance common shares in a block sale to Goldman Sachs. The shares were sold under the Company's Form S-3 shelf registration statement. The Company did not sell any common shares in the offering. Aon will receive all of the net proceeds from the sale. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the common shares in any state in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state. Any offering will be made only by means of a written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Copies of the written prospectus may be obtained from: Goldman Sachs Prospectus Department 85 Broad Street New York, New York 10004 Tel. no. 212-902-1000 About the Company Endurance Specialty Holdings Ltd. is a global provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance currently writes property per risk treaty reinsurance, property catastrophe reinsurance, casualty treaty reinsurance, property individual risks, casualty individual risks, and other specialty lines. Endurance's operating subsidiaries have been assigned a group rating of A (Excellent) from A.M. Best, A2 by Moody's and A- from Standard & Poor's. Endurance's headquarters are located at Wellesley House, 90 Pitts Bay Road, Pembroke HM 08, Bermuda and its mailing address is Endurance Specialty Holdings Ltd., Suite No. 784, No. 48 Par-la-Ville Road, Hamilton HM 11, Bermuda. For more information about Endurance, please visit http://www.endurance.bm/ * * * As reported in the Troubled Company Reporter's June 18, 2004, edition, Standard & Poor's Ratings Services assigned its 'BBB' counterparty credit rating to Endurance Specialty Holdings Ltd. and its preliminary 'BBB' senior debt, 'BBB-' subordinated debt, and 'BB+' preferred stock ratings to the company's $1.8 billion universal shelf registration. ENRON: Bankr. Court Assumes Jurisdiction in Sierra Dispute ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York enjoined Sierra Pacific Resources' (NYSE: SRP) electric utilities from participating in Federal Energy Regulatory Commission (FERC) hearings that were scheduled to begin Dec. 13, 2004, in the companies' ongoing dispute with Enron Power Marketing, Inc., over terminated power contracts. Judge Arthur Gonzalez, who said he will issue his final order Friday, December 3, stated that the issues involved in the proposed FERC hearings were "duplicative" of what is now before his court. On Oct. 11, 2004, the U.S. District Court for the Southern District of New York had vacated a prior summary judgment by the Bankruptcy Court calling for the Sierra Pacific utilities to pay Enron a total of approximately $336 million for terminated contracts. The court remanded the case back to Judge Gonzalez to rehear facts, issues and arguments of the case. Sierra Pacific Resources said it is reviewing its options, which include a possible appeal of Thursday's decision. About Sierra Pacific Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for most of southern Nevada, and Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power Company also distributes natural gas in the Reno-Sparks area of northern Nevada. Other subsidiaries include the Tuscarora Gas Pipeline Company, which owns a 50 percent interest in an interstate natural gas transmission partnership. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. EXECUTIVE JET: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Executive Jet Center, Inc. dba Million Air Mobile P.O. Box 850453 Mobile, Alabama 36608 Bankruptcy Case No.: 04-16934 Type of Business: The Debtor provides aviation fuel and aircraft maintenance. See http://www.millionairmobile.com/ Chapter 11 Petition Date: December 2, 2004 Court: Southern District of Alabama (Mobile) Debtor's Counsel: Robert M. Galloway, Esq. Galloway, Smith, Wettermark & Everest, LLP P.O. Box 16629 Mobile, AL 36616 Tel: 251-476-4493 Total Assets: $2,500,000 Total Debts: $5,500,000 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Dealer Capital Corporation $544,684 P.O. Box 797806 Dallas, TX 75379 Joseph Fail $488,084 P.O. Box 925 Bay Springs, MS 39422 Internal Revenue Service $200,000 600 South Maestri Place, Stop 31 New Orleans, LA 70130 Great Southern Wood Preserving, Inc. $123,662 Flight International Safety $80,750 BB&T Bankcard Corporation $66,923 Aviation Insurance Services $46,000 of Utah, Inc. Million Air Interlink $30,280 State of Alabama-Department of Revenue $26,506 United HealthCare $20,984 Howard Services, LLC $8,866 Marilyn E. Wood $8,228 Dees Lawn Care $6,300 Z-Technology $6,240 Krispy Kreme Doughnut Company $5,080 AmStat Corporation $5,000 Mobile Airport Authority $5,000 Bell South Yellow Pages $4,694 John Jewell Aircraft $4,198 Weater Service International $4,074 EXIDE TECHNOLOGIES: George Soros Discloses 6.3% Equity Stake ------------------------------------------------------------ Soros Fund Managment LLC and Mr. George Soros beneficially own 1,522,300 shares of the common stock of Exide Technologies, representing 6.3% of the outstanding common stock of Exide Technologies. Soros Fund holds sole voting and dispositive powers over the stock. The holding relates to Shares held for the account of Quantum Partners LDC, a Cayman Islands exempted limited duration company. Soros Fund Management LLC serves as principal investment manager to Quantum Partners. As such, Soros Fund Management LLC has been granted investment discretion over portfolio investments, including the Shares, held for the account of Quantum Partners. Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. FINE NUTRACEUTICALS: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Fine Nutraceuticals Inc. U.S. 5 Moulton Street Portland, Maine 04101 Bankruptcy Case No.: 04-21938 Chapter 11 Petition Date: December 2, 2004 Court: District of Maine (Portland) Debtor's Counsel: Michael J. Pearce, Esq. Michael J. Pearce & Associates, LLC Two Monument Square P.O. Box 108 Portland, ME 04112 Tel: 207-822-9900 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 11 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Pioneer Capital Corporation Trade Debt $597,000 c/o Steven Shea 25 Pearl Street, 3rd Floor Portland, ME 04101 Abrex Chemical Trade Debt $555,370 1051 Clinton Street Buffalo, NY 14206 Halton Holdings, Inc. Trade Debt $40,663 660 Keystone Road Greenville, PA 16125 Star Logistics Corporation Trade Debt $10,000 Overnite Transportation Co. Trade Debt $4,150 United Parcel Service Trade Debt $391 Roadway Express, Inc. Trade Debt $310 Estes Express Lines Trade Debt $230 M & M Forwarding of Buffalo Trade Debt $213 NY, Inc. Cintas Corporation #310 Trade Debt $65 Gordon Brothers, Inc. Trade Debt $27 GRAHAM HOUSING: Moody's Slices Rating on Revenue Bonds to Ba3 ------------------------------------------------------------- Moody's Investors Service has downgraded the rating of the Graham Housing Authority Mortgage Revenue Bonds (Section 8 Assisted Project -- Ralph Clayton Homes), Series 1978 to Ba3 from Baa1. The outlook on the $755,000 of outstanding bonds has been revised to negative. 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 .87x as of fiscal year ending 12/31/2003- down from 1.14x in 2002, and 1.35x the year prior. Debt service coverage has been paid through the use of surplus monies so that the Debt Service Reserve Fund has not been tapped. With bond maturity not until May 2009, it is not clear whether the Surplus Funds will be able to continue to plug any future operating deficits. The overall weak coverage is due large expense increases, including maintenance, utilities, and administration. Despite the unfavorable debt service coverage, occupancy is sound at approximately 98% and the property maintains a sound physical inspection score of 92b (out of 100) by the Department of Housing and Urban Development's Real Estate Assessment Center. Ralph Clayton Homes is a 100-unit apartment complex for the elderly and handicapped located in Graham, North Carolina. 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. Contract rents for this property are below HUD Fair Market Rents -- FMR -- by approximately 23% so an increase in contract rents remains a possibility. Key Statistics As of December 31, 2003 Audited Financial Statements Recent Reported Occupancy: 98% REAC score: 92b HAP expiration: 5/1/2009 Debt Maturity: 5/1/2009 1 bedroom Contract Rent as % of 2005 HUD FMR: 77% Debt Service Coverage: .87x Debt per Unit $7,550 Operating expenses per unit: $3,017 Reserve and Replacement per unit: $1,225 Surplus Fund per unit: $720 Flow of Funds: Closed loop GEO SPECIALTY: Judge Stern Approves Disclosure Statement -------------------------------------------------------- The Honorable Morris Stern of the U.S. Bankruptcy Court for the District of New Jersey approved the Third Disclosure Statement explaining Geo Specialty Chemicals, Inc., and its debtor- affiliate's Third Modified Joint Plan of Reorganization filed on Nov. 22, 2004. The Debtors are authorized to transmit the Disclosure Statement to their creditors and to solicit their votes to accept or reject the Plan. The Court approved the voting and tabulation procedures for the acceptance or rejection of the Plan. Ballots must be delivered by Dec. 15, 2004, at 4:00 p.m., to The Trumbull Group. Objections to confirmation of the Plan, if any, must be filed and served by Dec. 15, 2004, at 4:00 p.m. The Court will convene a confirmation hearing to consider the merits of the Plan at 2:00 p.m. on Dec. 20, 2004. About the Plan Under the Company's proposed Plan, which is subject to creditor approval, confirmation by the Bankruptcy Court, and consummation of exit financing, GEO's balance sheet will be substantially deleveraged. Key elements of the proposed Plan include: -- Repayment of the company's current bank debt with a new exit financing facility of up to $130M which will also be used to fund working capital and pay Plan obligations. -- Conversion of the Company's $120M 10-1/8% Senior Subordinated Notes to equity. A full-text copy of the Debtors' Third Amended Plan is available at no charge at: http://bankrupt.com/misc/GEO3dPlan.pdf and a full-text copy of the Debtors' Third Amended Disclosure Statement is available at no charge at: http://bankrupt.com/misc/GEO3dDisco.pdf Headquartered in Harrison, New Jersey, GEO Specialty Chemicals, Inc. -- http://www.geosc.com/-- develops, manufactures and markets a wide variety of specialty chemicals, including over 300 products sold to major industrial customers for various end-use applications including water treatment, wire and cable, industrial rubber, oil and gas production, coatings, construction, and electronics. The Company filed for chapter 11 protection on March 18, 2004 (Bankr. N.J. Case No. 04-19148). Alan Lepene, Esq., Robert Folland, Esq., and Sean A. Gordon, Esq., at Thompson Hine, LLP, and Brian L. Baker, Esq., Howard S. Greenberg, Esq., and Stephen Ravin, Esq., at Ravin Greenberg, PC, represent the Debtors in their restructuring efforts. On September 30, 2003, the Debtors listed $264,142,000 in total assets and $215,447,000 in total debts. GORE MUTUAL: S&P Downgrades Ratings to BB based on Public Info -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on Gore Mutual Insurance Co. to 'BBpi' from 'BBBpi'. "The rating action reflects the company's weak operating performance, marginal liquidity, and very high geographic concentration, which are partially offset by its adequate capitalization," said Standard & Poor's credit analyst Tom E. Thun. Gore is an Ontario-based company headquartered in Cambridge, with regional offices in Cambridge and Vancouver, B.C. It is a small Canadian mutual insurance company writing predominantly automobile business (55% of direct premium written in 2003) and property business (38%). Gore's geographic concentration is very high, with about 84% of it direct premium written in 2003 from the province of Ontario. Ratings with a 'pi' subscript are based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings. GROUPE BOCENOR: Discloses $3 Million Investment Program ------------------------------------------------------- At the Annual General Meeting of Shareholders of Groupe Bocenor Inc., Chris Southey, President and Chief Executive Officer, disclosed that capital expenditures of $3 million will be made over the next few quarters, including $2 million before the end of the current fiscal year in February 2005. These investments will be earmarked mainly for the purchase of new equipment to increase the Company's production capacity, enhance its quality of service and lower operating costs. "Events in recent quarters, particularly the sharp rise in the Canadian dollar, have highlighted Bocenor's need to modernize and optimize its manufacturing base to be more competitive on the market. The financial restructuring completed on August 31, 2004, has made that possible. Combined with the implementation of a marketing strategy further focused on high-end products in the United States and increased efforts to improve Bocenor's return on assets and overall profitability, these investments will enable us to partially offset the disadvantage of a strong Canadian dollar, so as to continue expanding our presence on the U.S. market," Mr. Southey explains. Commenting on the Company's outlook, Mr. Southey says he is confident Bocenor's operating results would improve, especially as of the next fiscal year. "Restoring the quality of our service along with the trust and confidence of our customers and suppliers is a priority we will steadily work on in the coming months. While recent quarters have been difficult, they have shown the strength our core assets, beginning with our base of customers who have mostly remained loyal to Bocenor throughout the process. We also have excellent products that enjoy a good reputation on the market. We can count on a solid distribution network tailored to each of our markets as well as skilled and dedicated employees. These strengths, coupled with the reinforcement of our balance sheet and the initiatives that will be implemented shortly, allow me to be optimistic about Bocenor's future, especially since the home construction and improvement is currently doing well and should remain robust in 2005." Senior Management Changes Groupe Bocenor reports the appointment of Mr. Michel Harvey, C.A., as Vice-President, Finance of the Company, replacing Mr. Alain Landry who is leaving the Company to pursue other interests. For the last 18 years, Mr. Harvey has held the position of Financial Manager of Multiver, a Bocenor division specializing mainly in the manufacture of sealed glass units for Bocenor's window and door plants and a growing external customer base. About the Company Groupe Bocenor, Inc., is a manufacturer and distributor of a complete line of windows and doors. The company sells its products in Quebec, the Maritimes, Ontario and U.S.A, under the Bonneville Windows and Doors and Polar Windows and Doors trade marks. The Multiver division manufactures sealed units and commercial glass. * * * As reported in the Troubled Company Reporter on Aug. 9, 2004, the Superior Court of Quebec has ratified Groupe Bocenor, Inc.'s proposal to its unsecured creditors on June 11, 2004, pursuant to the Bankruptcy and Insolvency Act of Canada, which was approved by the creditors on July 14, 2004. HAIGHTS CROSS: Moody's Junks Proposed $20M Senior Unsecured Notes ----------------------------------------------------------------- Moody's Investors Service has lowered Haights Cross Communications, Inc.'s senior implied rating and assigned ratings on two proposed add-on debt issues. Ratings assigned: -- Haights Cross Operating Company's * Proposed $30 million add-on second priority senior secured floating rate term loan, due 2008 -- B3 * Proposed $20 million add-on 11-3/4% senior unsecured notes, due 2011 -- Caa1 Ratings affirmed: -- Haights Cross Operating Company's * $30 million senior secured credit facilities, due 2008 -- B2 * $100 million second priority senior secured floating rate term loan, due 2008 -- B3 * $140 million 11-3/4% senior unsecured notes, due 2011 -- Caa1 Ratings downgraded: -- Haights Cross Communications, Inc.'s * Senior implied rating -- to Caa1 from B3 * Senior discount notes, due 2011 - to Ca from Caa2 * Issuer rating - to Ca from Caa2 The rating outlook is stable. The downgrade of the senior implied rating reflects: (1) the impact of the heightened debt burden which the company will carry following the proposed debt issuance, (2) the continuation of a relatively high level of acquisition activity signaled by the proposed debt issuance, and (3) the pressure which this places on existing debt holders, especially holders of structurally junior debt at the holding company level. The rating action also reflects: (1) the company's very high leverage (exacerbated by heavily accreting preferreds), (2) vulnerability to elementary and high school text book spending, and (3) competition within the educational and library publishing and audio book sectors. The proposed notes are rated at parity to the existing notes whose terms and conditions they mirror. This is largely because Haights Cross Operating Company's ratings are able to absorb the incremental debt without ratings disruption. The holders of debt and preferred stock of Haights Cross Communications bear the brunt of loss absorption as evidenced by the downgrade in the holdco ratings. In Moody's view, Haights Cross represents a fundamentally sound business model with attractive upside. However, the company runs the risk of being overstretched by the burden of its debt and preferred stock obligations and challenged by a prospectively unsustainable capital structure. Financial visibility is likely to remain clouded by a Moody's expectation of significant acquisition activity and the prospect of further debt-financed acquisitions in the near future. The ratings are supported by relative stability of Haights Cross's revenue base, its substantial level of backlist sales, a highly diversified customer base, low bad debts and recurring sales profile (especially of its backlist sales) that have helped to partially buffer Haights Cross from the full impact of the recent sales slowdown experienced by the educational publishing sector. The stable outlook incorporates an expectation of increased state spending on supplemental educational materials, the promise of higher federal support embodied in the " No Child Left Behind" Act sponsored by the Bush administration, and the long standing reputation of the company's educational, professional and library products. At the end of September 2004, Haights Cross recorded net debt of $261 million (gross debt of $319 million less cash of $58 million) representing leverage of approximately 7.8 times or $34 million, representing LTM GAAP EBIDTDA ($48 million) less cash pre- publication expenses ($14 million). Moody's has applied basket B treatment to Haights Cross preferred stock (ascribing 25% equity treatment). Adjusting for the redeemable preferred shares brings this leverage ratio up to 11.0x. Pro-forma for the acquisition of both Buckle Down Publishing and Options Publishing, leverage is expected to increase to 11.2 times by year-end 2004, then decrease to 10.6 times by the end of 2005. Considering the relatively modest levels of free cash flow generation and the high accretion rate of preferred stock (estimated to accrete to by an additional $57 million by the end of 2006), Moody's expects it will take at least two years to bring debt leverage down below 10.0 times. Management looks to an eventual IPO to remove the overhang of its preferred stock, but there can be no assurance that the public equity markets will be receptive to take out the debt and preferred any time soon. For the three months ended September 30, 2004, Haights Cross recorded $6.6 million in revenue growth compared to the prior year period, due largely to the acquisition of Buckle Down Publishing (acquired in April 2004) and the impact of timing differences at Oakstone. Gains at Recorded Books were significantly offset by continuing declines at Chelsea House. According to Moody's calculations, the company recorded approximately break even free cash flow for LTM ending September 30, 2004. In November 2004, the company agreed to acquire the assets and assume certain liabilities of Options Publishing, Inc., for a total consideration of $52 million in cash, including $2 million for property plant and equipment. Assuming that both this acquisition and the proposed debt issuance are concluded by the end of December 2004, Moody's expects that liquidity will decline only modestly to approximately $84 million by the end of 2004. The proposed add-on debt will be issued by Haights Cross Operating Company and will be governed by terms and conditions identical to those of the company's existing 2nd lien and senior unsecured debt. The incurrence of debt at opco places further pressure on the financial risks borne by all existing debt holders, particularly holders of the holdco senior discount notes. The Ca rating on the holdco discount notes reflects their structural subordination behind approximately $317 million in debt securities at the Haights Cross Operating Company. The rating of the proposed add-on notes reflects a relatively thin asset protection profile, that is nevertheless cushioned by approximately $150 million in Series "A" and Series "B" preferred stock. Haights Cross, with 2003 revenues of $162 million, provides print and audio product to schools and libraries. It is headquartered in White Plains, New York. HAIGHTS CROSS: S&P Junks $30 Million Rule 144A Senior Notes ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Haights Cross Communications Inc.'s subsidiary Haights Cross Operating Co's $30 million add-on to its second-priority senior secured loan due 2008, and its 'CCC' rating to the company's $30 million add-on to its Rule 144A senior notes due 2011. At the same time, Standard & Poor's lowered its corporate credit rating for HCC to 'B-' from 'B', and its senior unsecured rating to 'CCC' from 'CCC+'. The rating agency lowered its senior unsecured rating for HCOC to 'CCC' from 'CCC+'. The rating outlook is now stable. The second-priority senior secured loan is rated the same as the corporate credit rating because of the relatively small amount of potential first-lien debt, and because the second lien places bondholders in a better position than unsecured and subordinated creditors. "The downgrade reflects increased financial risk resulting from the pending debt issuance, modestly negative discretionary cash flow, and risks relating to the company's acquisition strategy," said Standard & Poor's credit analyst Hal F. Diamond. White Plains, New York-based HCC is a supplemental education publisher serving the school and library markets. As of Sept. 30, 2004, pro forma for the refinancing, debt was $369 million, and debt-like preferred stock was $106 million. The stable outlook reflects the lack of intermediate-term debt maturities until the second-priority senior secured loan and the undrawn revolving credit facility both mature in 2008. The company will need to improve operating performance and generate increasing discretionary cash flow to service the discount notes, which require mandatory cash interest payment in 2009. Failure to demonstrate progress toward these goals in 2005 would likely result in a revision of the outlook to negative. The lowered ratings reflect HCC's high debt leverage, securities that will require cash interest and dividends in the next few years, and the very competitive markets in which most of the company's businesses participate. These risks outweigh the portfolio benefits of owning a number of individual businesses. Key risk considerations are that these businesses' product quality and marketing are important contributors to success, and that their competitors are far larger and better financed entities. HCC is investing heavily to develop new products and is increasing marketing spending for growth. In addition, Standard & Poor's believes that larger, less leveraged players may have greater strength in product development and marketing, particularly in the supplemental educational materials business, which is experiencing a degree of technological change. HI-RISE RECYCLING: U.S. Trustee Appoints Four-Member Committee -------------------------------------------------------------- The United States Trustee for Region 9 appointed four creditors to serve on the Official Committee of Unsecured Creditors in Hi-Rise Recycling Companies, Inc.'s chapter 11 case: 1. Reliance Metal Center Attn: Michael W. Kennedy P.O. Box 2791 Phoenix, Arizona 85002 Phone: 602-275-4471 2. JC Pacific Trading Co. Attn: Jerry Chang 45 - 53 E. Bigelow St. Newark, New Jersey 07114 Phone: 973-639-9400 3. South Atlantic Steel, Inc. Attn: Randel Holland 5862 Faringdon PL, Suite 2 Raleigh, North Carolina 27609 Phone: 919-876-8842 4. Tube Service Co. Attn: Ginger McIntyre 1107 E. Jackson Street Phoenix, Arizona 85034 Phone: 602-267-9865 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Wooster, Ohio, Hi-Rise Recycling Companies, Inc., manufactures and distributes industrial recycling and waste handling equipment in North America. The company filed for chapter 11 protection on August 16, 2004 (Bankr. N.D. Oh. Case No. 04-64352). Lawrence E. Oscar, Esq., at Hahn Loeser & Parks LLP, represent 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 $10 million to $50 million. HI-RISE: Has Until Dec. 14 to Make Lease-Related Decisions ---------------------------------------------------------- The Honorable Russ Kendig of the U.S. Bankruptcy Court for the Northern District of Ohio extended, until Dec. 14, 2004, the period within which Hi-Rise Recycling Companies, Inc., can elect to assume, assume and assign, or reject its unexpired nonresidential real property leases. The Debtor tells the Court that it is party to six unexpired nonresidential real property leases. Hi-Rise reminds the Court that it entered an order on Sep. 30, 2004, approving the sale of substantially all of its assets free and clear free of liens, claims, interests and encumbrances under an Asset Purchase Agreement to Wastequip Manufacturing Company. Wastequip did not seek a Court order to have the Debtor assume and assign the six unexpired leases that were included in the Asset Purchase Agreement. The Debtor explains to the Court that the extension will give it more time to evaluate each of the six leases' importance to its reorganization process and decide which of the leases to assume, assign or reject before the closing date of the sales transaction. The Debtor assures Judge Kendig that it is current on all its postpetition obligations under the leases and that the extension will not prejudice the lessors. Headquartered in Wooster, Ohio, Hi-Rise Recycling Companies, Inc., manufactures and distributes industrial recycling and waste handling equipment in North America. The company filed for chapter 11 protection on August 16, 2004 (Bankr. N.D. Oh. Case No. 04-64352). Lawrence E. Oscar, Esq., at Hahn Loeser & Parks LLP, represent 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 $10 million to $50 million. IMPAC FUNDING: Fitch Puts Low-B & Junk Ratings to 7 Cert. Classes ----------------------------------------------------------------- Fitch Ratings has taken action on these Impac Funding Corp. mortgage pass-through certificate issues: * Impac SAC Mtge. Pass-Through Certificates, Series 1998-3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AAA'; -- Class M-3 upgraded to 'AAA' from 'A+'; -- Class B-1 upgraded to 'A' from 'BB'; -- Class B-2 affirmed at 'B'. * Impac SAC Mtge. Pass-Through Certificates, Series 1998F-1 -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'BB'; -- Class B-2 upgraded to 'BB' from 'B'. * Impac SAC Mtge. Pass-Through Certificates, Series 2000-1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 upgraded to 'AAA' from 'AA'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 downgraded to 'CCC' from 'B'; -- Class B-2 downgraded to 'C' from 'CC'. * Impac SAC Mtge. Pass-Through Certificates, Series 2000-3 -- Class A affirmed at 'AAA'; -- Class M-1 upgraded to 'AAA' from 'AA'; -- Class M-2 affirmed at 'BBB+'; -- Class M-3 downgraded to 'C' from 'CCC'. * Impac Secured Assets Corp. Mtge. Pass-Through Certificates, Series 2000-4 -- Class A affirmed at 'AAA'; -- Class M-1 upgraded to 'AAA' from 'AA'; -- Class M-2 upgraded to 'AA' from 'A'; -- Class B affirmed at 'BBB' and removed from Rating Watch Negative. * Impac Secured Assets Corp. Mtge. Pass-Through Certificates, Series 2000-5 -- Class A affirmed at 'AAA'; -- Class M-1 upgraded to 'AAA' from 'AA'; -- Class M-2 upgraded to 'AA' from 'A'; -- Class B affirmed at 'BBB' and removed from Rating Watch Negative. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-1 Pool 1 -- Class A-1 affirmed at 'AAA'; -- Class M-1 upgraded to 'AAA' from 'AA'; -- Class M-2 upgraded to 'AA' from 'A'; -- Class B affirmed at 'BBB'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-1 Pool 2 -- Class A-2 affirmed at 'AAA'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-2 -- Class A affirmed at 'AAA'; -- Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 upgraded to 'A+' from 'A'; -- Class B affirmed at 'BBB'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-3 Pool 1 -- Class A-1 affirmed at 'AAA'; -- Class M-1 upgraded to 'AAA' from 'AA'; -- Class M-2 upgraded to 'AA' from 'A'; -- Class B affirmed at 'BBB'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-3 Pool 2 -- Class A-2 affirmed at 'AAA'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-4 Pool 1 -- Class AI affirmed at 'AAA'; -- Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 upgraded to 'A+' from 'A'; -- Class B affirmed at 'BB+'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-4 Pool 2 -- Class AII affirmed at 'AAA'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-5 Pool 1 -- Class AI affirmed at 'AAA'; -- Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 upgraded to 'A+' from 'A'; -- Class B affirmed at 'BBB'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-5 Pool 2 -- Class AII affirmed at 'AAA'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-6 Pool 1 -- Class AI affirmed at 'AAA'; -- Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 upgraded to 'A+' from 'A'; -- Class B downgraded to 'BB' from 'BBB'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-6 Pool 2 -- Class AII affirmed at 'AAA'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-7 Pool 1 -- Class AI affirmed at 'AAA'; -- -Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 upgraded to 'A+' from 'A'; -- Class B affirmed at 'BBB'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-7 Pool 2 -- Class AII affirmed at 'AAA'. * Impac SAC Mtge. Pass-Through Certificates, Series 2001-8 -- Class A affirmed at 'AAA'; -- Class M-1 upgraded to 'AAA' from 'AA'; -- Class M-2 upgraded to 'AA' from 'A'; -- Class M-3 affirmed at 'BBB'. * Impac SAC Mtge. Pass-Through Certificates, Series 2002-1 Pool 1 -- Class AI affirmed at 'AAA'; -- Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 upgraded to 'A+' from 'A'; -- Class B affirmed at 'BBB'. * Impac SAC Mtge. Pass-Through Certificates, Series 2002-1 Pool 2 -- Class AII affirmed at 'AAA'. * Impac CMB Trust Series 2001-3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B affirmed at 'BBB'. * Impac CMB Trust Series 2001-4 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B affirmed at 'BBB'. * Impac CMB Trust Series 2002-6F -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'. * Impac CMB Trust Series 2002-7 -- Class A affirmed at 'AAA'; -- Class B affirmed at 'BBB'. * Impac CMB Trust Series 2002-8 -- Class A affirmed at 'AAA'; -- Class B affirmed at 'BBB'. * Impac CMB Trust Series 2002-9F -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B affirmed at 'BBB'. * Impac CMB Trust Series 2003-2F -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B affirmed at 'BBB'. * Impac CMB Trust Series 2003-5 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B affirmed at 'BBB'. The upgrades, affecting $111,416,988 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 $1.43 billion of certificates, are due to stable collateral performance and moderate growth in credit enhancement. The negative rating actions are the result of poor collateral performance and the deterioration of asset quality beyond original expectations, and affect $7,796,695 of outstanding certificates. Downgrades to the single C level (series SAC 2000-1, class B-2; series SAC 2000-3, class M-3) are indicative of an exhaustion of overcollateralization and other forms of credit enhancement to the class and signify that the class is experiencing monthly writedown as a result of monthly loan losses. The pools are seasoned from a range of 18 to 55 months. The pool factors (current principal balance as a percentage of original) range from approximately 0.08% to 51% outstanding. INTEGRATED ELECTRICAL: Completes $4 Million Business Unit Sale -------------------------------------------------------------- Integrated Electrical Services, Inc., (NYSE: IES) had completed the sale of substantially all of the assets of a commercial business for total cash consideration of approximately $4 million. This unit, based in Alabama, was one of the units contemplated in the company's October 28, 2004, press release which indicated that IES planned divestitures with combined fiscal year 2004 revenues of approximately $289 million. Roddy Allen, IES CEO commented, "I am pleased to announce this initial sale, as it is part of our previously announced strategic plan to improve IES' profitability and operating efficiency. We intend to update the market on our divestiture progress on a regular basis." The unit sold had fiscal year 2004 revenues of $19.0 million and an operating loss of $410,000. The net proceeds from this sale will be used to retire IES' senior secured indebtedness. About the Company Integrated Electrical Services, Inc. is the leading national provider of electrical solutions to the commercial and industrial, residential and service markets. The company offers electrical system design and installation, contract maintenance and service to large and small customers, including general contractors, developers and corporations of all sizes. * * * As reported in the Troubled Company Reporter on Oct. 12, 2004, Moody's Investors Service downgraded the ratings of Integrated Electrical Services, Inc., and maintained the company on review for possible further downgrade following various events including the continued postponement of release of the company's fiscal 2004 third quarter 10-Q, concerns surrounding the timing of future filings, the resignation of the company's Chief Financial Officer, and the decision by its Chief Operating Officer to step down, an adverse decision in recent litigation, and concern that recent events may impact the company's surety bonding. The downgrade also reflects difficulty in accessing the company's recent financial performance as a result of the continued delay in filing its audited financials for the third quarter of 2004. Moody's has downgraded these ratings and left them on review for further possible downgrade: * Senior Implied, downgraded to B1 from Ba3; * Senior Unsecured Issuer Rating, downgraded to B2 from B1; * $173 million (remaining balance) of 9.375% senior subordinated notes due 2009 (in two series), downgraded to B3 from B2. On August 2, 2004, Integrated Electrical said it was rescheduling its fiscal 2004 third quarter earnings release and conference call due to its ongoing evaluation of certain large and complex projects at one subsidiary that experienced project management changes in the latter part of the third quarter. On Aug. 13, 2004, the company announced that it would be delaying the filing of its fiscal 2004 third quarter 10-Q. On Aug. 16, 2004, the company disclosed that it had identified potential problems at one of its subsidiaries and an additional issue in one contract at another subsidiary. This review resulted in adjustments to operating income of $5.7 million. Integrated Electrical's auditors, Ernst & Young, advised the company that as a result of these issues, there were material weaknesses in complying with Sarbanes-Oxley and that the filing of the 10-Q would occur simultaneously with the release of the fiscal 2004 year-end audit, which is expected to occur on or before Dec. 15, 2004. Furthermore, although the company received a waiver from the senior subordinated bond holders through Dec. 15, 2004, failure to file its fiscal 2004 third quarter 10-Q by this date could trigger a default. A notice of default under the senior subordinated notes triggers a cross default under the bank credit agreement. Integrated Electrical announced on September 29, 2004, that Richard L. China has resigned his position as Chief Operating Officer to accept the appointment of Senior Vice President, Strategic Business Development. The company also announced on the same day that Jeffrey Pugh, Chief Financial Officer since June 7, 2004, resigned to pursue other opportunities. Although these factors on their own may not be a concern, these announcements have occurred during a period of turmoil and could suggest that other issues are brewing or that the problems run deeper than is currently obvious. Seemingly unrelated, a verdict against the company was announced in a case pending in the 133rd District Court of Harris County, Texas that arose out of the proposed sale of a subsidiary of the Company and an employment claim by a former officer of the subsidiary. Potential losses were initially estimated not to exceed $30 million and may be much lower if the judge reduces the amount, the company settles, or wins upon appeal. Irrespective of the eventual outcome, this is additional uncertainty that comes during a tough time in the company's history. Moody's is concerned that these factors may affect future negotiations with its insurance providers and thereby result in higher surety bonding costs or reduced availability. Recent events could also affect the company's contract win rates adversely. Integrated Electrical already seen its borrowing base (as a percent of receivables) adjusted slightly as a result of recent events. Although the lack of audited financial results makes the ratings decision more difficult, the company's last twelve months results through March 31, 2004, had placed the company weakly within its previous ratings category. Specifically, for this period, earnings before interest and taxes (EBIT) to total assets was under 8.5%, EBITDA less capital expenditures to interest was only about 2.6 times and EBIT margin was under 5%. Furthermore, free cash flow after capital expenditures to debt of 8% is more indicative of a B1 Senior Implied rating than a Ba3. Moody's continued review will focus on Integrated Electrical's progress in addressing weaknesses in its internal controls, including integrating many disparate subsidiary companies into a smoothly functioning national corporation and the methods employed in properly estimating revenues, costs and percentage of completion on contracts. In addition, the review will address Integrated Electrical's continuing relationships with its bank group and surety provider, litigation risks, and the company's ongoing liquidity. Total liquidity, comprised of unrestricted cash and revolver availability, is believed to currently total over $50 million. INTERSTATE BAKERIES: Wants More Time to Remove Actions & Lawsuits ----------------------------------------------------------------- Before Interstate Bakeries Corporation and its debtor-affiliates filed for chapter 11 protection, the Debtors were parties to approximately 200 judicial and administrative proceedings currently pending in various courts or administrative agencies throughout the United States, involving a wide variety of claims. Because of the number of Civil Actions involved and the wide variety of claims, the Debtors require additional time to determine which of the Civil Actions should be removed and transferred to the Court. Hence, the Debtors ask the Court to extend the time within which they may file notices of removal under Rule 9027(a) of the Federal Rules of Bankruptcy Procedure, until the date an order is entered confirming a reorganization plan in their cases, with respect to any particular action sought to be removed. J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom, LLP, in Chicago, Illinois, explains that the extension will afford the Debtors an opportunity to make fully informed decisions concerning the possible removal of the Civil Actions, thereby protecting the Debtors' valuable right under Section 1452 of the Judicial Procedures Code to economically adjudicate lawsuits, if the circumstances warrant removal. Mr. Ivester relates that the Debtors had sought and obtained the Court's approval to institute tort claims resolution procedure in an attempt to resolve tort claims without the parties having to engage in litigation. During the tort claims resolution process, removal of actions yields little benefit to the estates. However, if the parties do not reach a resolution and litigation becomes necessary, the Debtors should then have the opportunity to make a determination regarding the removal of the Civil Actions. Mr. Ivester assures the Court that the Debtors' adversaries and other parties-in-interest will not be prejudiced by an extension because these adversaries may not prosecute the Civil Actions absent relief from the automatic stay. Nothing will prejudice any adversary whose proceeding is removed from pursuing remand pursuant to Section 1452(b). 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) ITSV INC: iPayment Counsel Removed Due to Conflict of Interest -------------------------------------------------------------- iPayment, Inc. (Nasdaq:IPMT) was handed a defeat in the case of ITSV, Inc., v. iPayment et. al., pending in the United States Bankruptcy Court, Central District, Los Angeles, California. Bankruptcy Judge Vincent Zurzolo disqualified Greenberg & Bass, iPayment's long-time attorneys and present counsel, from defending iPayment against the fraud claims brought against the company and its principals by Howard M. Ehrenberg, the United States Bankruptcy Trustee. The Judge ruled that they were in violation of the Rules of Professional Responsibility and the California Business and Professions Code by representing iPayment after they had previously represented adverse party, ITSV. The Special Counsel to Trustee Ehrenberg, Pratter & Young, Attorneys, sought the disqualification and alleged that the conduct of iPayments lawyers was a violation of the lawyer's Canon of Ethics. Judge Zurzolo agreed and ordered their immediate removal. iPayment is now in search of new lawyers. Robert J. Young, Esq., principal of Pratter & Young, commented on this initial victory: "This is but the first step toward the eventual defeat and exposure of iPayment's fraudulent activities. We are confident of our case and its eventual successful resolution in favor of our client Mr. Ehrenberg, who represents the interests of those creditors and other parties damaged by scandalous conduct of the corporate defendants. When queried further into the particulars of the case, Mr. Young declined any further detailed discussion but did conclude: "iPayment's entire foundation could very well be at stake if we are successful. Mssrs. Grimstad, Daily, and Torino, the individual perpetrators and driving force behind these schemes, are gambling that we won't be. I'm not so sure that these businessmen will risk their entire company which is what this lawsuit is all about. The Trustee and his counsel are confident that they will come to their senses and accept responsibility before it is too late." All other motions in the case were continued until January 14, 2005, to give iPayment an opportunity to hire new counsel. ITSV, Inc., filed for bankruptcy protection on July 26, 2002 (Bankr. C.D. Calif. Case No. 02-31259). The Bankruptcy Clerk in Los Angeles notified creditors of a possible dividend in ITSV's case and the need to file proofs of claim in early May 2004. The Chapter 7 Trustee overseeing the liquidation is: Howard M. Ehrenberg, Esq. Sulmeyer Kupetz Baumann & Rothman 333 South Hope St., 35th Floor Los Angeles, CA 90071-1406 Telephone (213) 626-2311 IVACO INC: Closes Sale of Three Businesses to Heico Subsidiary -------------------------------------------------------------- Ivaco Inc. disclosed the closing of the previously announced sale of its Ivaco Rolling Mills LP, Ifastgroupe and Company, LP and Sivaco Wire Group business to a wholly-owned subsidiary of The Heico Companies LLC. Ivaco has closed the previously announced sale of the business of IMT Corporation on Nov. 26, 2004. Ivaco Inc. and the other selling parties, Ivaco Rolling Mills LP and Ifastgroupe and Company LP, have ceased or will soon cease operations and are continuing their proceedings under the Companies' Creditors Arrangement Act under the direction of Randall Benson, Chief Restructuring Officer, with the assistance of the Court appointed monitor, Ernst & Young Inc. About the Company Ivaco is a Canadian corporation and is a leading North American producer of steel, fabricated steel products and precision machined components. Ivaco's modern steel operations include Canada's largest rod mill, which has a rated production capacity of 900,000 tons of wire rods per annum. In addition, its fabricated steel products operations have a rated production capacity in the area of 350,000 tons per annum of wire, wire products and processed rod, and over 175,000 tons per annum of fastener products. The Court has extended the period of Court protection under the Companies' Creditors Arrangement Act until December 15, 2004. JACK RABBIT LINES: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Jack Rabbit Lines, Inc. 3421 West Hovland Avenue Sioux Falls, South Dakota 57107 Bankruptcy Case No.: 04-41501 Type of Business: The Debtor provides transportation services. Chapter 11 Petition Date: December 1, 2004 Court: District of South Dakota (Southern (Sioux Falls)) Judge: Irvin N. Hoyt Debtor's Counsel: Clair R. Gerry, Esq. Stuart, Gerry & Schlimgen, LLP P.O. Box 966 Sioux Falls, SD 57101 Tel: 605-336-6400 Total Assets: $1,253,500 Total Debts: $1,993,987 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Interstate Companies, Inc. $51,804 NW 7244 P.O. Box 1450 Minneapolis, MN 55485 Wells Fargo Bus. Payment Processing $50,462 P.O. Box 29491 Phoenix, AZ 85038 Holiday Credit Office $46,730 P.O. Box 1216 Minneapolis, MN 55440 MCI Financial Service $31,500 Kevin Trager $30,000 Scott Denney $30,000 Advanta Bank Corp. $19,369 Cardmember Service $19,114 MBNA America $16,960 Platinum Plus For Business $16,027 Brandt, Solomon & Anderson $10,627 Accelerated Transportation Solutions $9,033 Ludolph Service Inc. $7,695 Peoria Charter Coach Co. $4,907 M. G. Oil Co. $4,497 Southwest Coaches Inc. $3,720 Argus Leader $3,552 Athletic World Advertising $3,455 Midcontinent Radio of SD $2,532 Sisson Printing $2,295 JACUZZI BRANDS: Donald Devine to Become CEO Effective Oct. 2005 --------------------------------------------------------------- Jacuzzi Brands, Inc., (NYSE: JJZ) disclosed that President and Chief Operating Officer Donald C. Devine will become President and Chief Executive Officer of the Company, while David H. Clarke, the current Chairman and Chief Executive Officer, will retire and become Non-Executive Chairman of the Board. The appointments will be effective October 2, 2005, the beginning of the Company's 2006 fiscal year. "Don and I have worked closely during a remarkable period in Jacuzzi Brands' history," Mr. Clarke said. "Over the past three years, he has been a tireless architect and advocate of initiatives that have restructured, reorganized and reinvigorated nearly every facet of the Company's operations. Importantly, he has earned the trust and respect of our employees, investors, suppliers and customers. Don has consistently demonstrated the qualities that the Board of Directors and I believe are necessary to lead Jacuzzi Brands through the next phase of its corporate evolution, which includes further growth in sales, margins and market share. "When the Board and I appointed Don as President and COO in 2003, we did so in the belief that we had identified my eventual successor," Mr. Clarke added. "With the first phase of our corporate restructuring substantially completed and our future course set, I believe that the time has come to commence an orderly succession. Don and I will spend the next 10 months ensuring a seamless transition of responsibilities." Mr. Devine commented, "I am honored by the Board's decision. David led the transformation of Jacuzzi Brands from a conglomerate to a focused, profitable and growing operating company. I am excited by the opportunity to build upon this legacy, and look forward to David's continued counsel as Chairman. I am fortunate to have the support of a talented team of managers who are dedicated to furthering the Company's success. I am confident that together we will continue to create value for our shareholders and customers." -- Donald Devine Mr. Devine, 45, was appointed President and Chief Operating Officer of the Company in April 2003. He had served as President and Chief Executive Officer of the Company's Jacuzzi Inc. business since June 2002. From 1998-2001, he was President and Chief Executive Officer of Kimble Glass Inc., the U.S. subsidiary of Germany's Gerresheimer Group. Prior to his tenure at Kimble Glass, Mr. Devine was a senior executive at Ivex Packaging Corporation, Gaylord Container Corporation, the James River Corporation and Packaging Corporation of America. Mr. Devine is a graduate of the United States Military Academy at West Point and the University of Virginia, Darden Business School, Executive Program. -- David Clarke Mr. Clarke, 63, has served as Chairman of the Board and Chief Executive Officer of the Company since May 1995. Before joining the Company, he was Vice Chairman of Hanson PLC from 1993-1995, Deputy Chairman and Chief Executive Officer of Hanson Industries, the U.S. arm of Hanson PLC, from 1992-1995 and a director of Hanson PLC from 1989 until May 1996. About the Company Jacuzzi Brands, Inc. -- http://www.jacuzzibrands.com/-- through its subsidiaries, is a global manufacturer and distributor of branded bath and plumbing products for the residential, commercial and institutional markets. These include whirlpool baths, spas, showers, sanitary ware and bathtubs, as well as professional grade drainage, water control, commercial faucets and other plumbing products. The Company also manufactures premium vacuum cleaner systems. Products are marketed under our portfolio of brand names, including JACUZZI(R), SUNDANCE(R), ELJER(R), ZURN(R), ASTRACAST(R) and RAINBOW(R). * * * As reported in the Troubled Company Reporter on Aug. 6, 2004, Fitch Ratings affirmed its ratings on Jacuzzi Brands, Inc.'s $380 million 9.625% senior secured notes at 'B', $200 million asset based bank credit facility at 'BB' and $65 million term loan at 'BB-'. The Rating Outlook is Stable, Fitch said in August. The ratings consider the company's leading brands in its bath and plumbing segments, increased distribution of its bath products and strong operating margins of its plumbing and Rexair segments. The ratings also consider the high cost structure of the Eljer operations, the level of debt and leverage, the challenging operating environment and negative pressures on operating profit margins, particularly in the bath and plumbing segments, and sensitivity to changes in levels of consumer spending and construction activity. Jacuzzi Brands is focused on strengthening its three operating segments, bath products, plumbing products and Rexair, through brand investment, elimination of high cost manufacturing and unprofitable product lines and other cost cutting efforts. Revenues have benefited from increased distribution of bath products as well as market share gains in plumbing products. Most significantly, during 2003, Jacuzzi Brands became the principal supplier of stocked whirlpool bath products to Lowe's Companies, Inc. As a result of the Lowes business, increased market share in domestic spas and additional home center business in the UK, bath products segment revenues have increased substantially, up 21% for the first half of 2004, following revenue declines in 2000 and 2001 when the company lost inventory positions in whirlpool baths and spas at the large home improvement retailers. Nonetheless, operating margins across all segments have been challenged for several reasons. Bath segment margins in fiscal 2003 were negatively impacted by costs related to the Lowe's distribution rollout, Chino plant start-up and Southern California workers compensation. In the first half of 2004, manufacturing costs for the Eljer brand of bath products remained high given its U.S. base, however, Fitch recognizes the company's ongoing actions to rationalize these operations. In addition, Plumbing products' margins have been pressured by rising steel prices and highly competitive markets in the commercial construction market and Rexair operating margins have declined given increased costs associated with the introduction of its new vacuum cleaner model during the first half of fiscal 2004. Fitch anticipates that Jacuzzi Brands' revenues will further increase as the Lowe's distribution agreement is annualized and as the company continues to introduce new products. Operating profits should benefit from cost reductions obtained through the company's restructuring efforts to rationalize manufacturing facilities and unprofitable product lines as well as lower rollout costs as the Lowe's whirlpool bath and Rexair vacuum product launches have been completed. As a result of increased operating profits together with debt reduction from cash flow generation, credit measures are expected to strengthen over the intermediate term. For the twelve months ended March 31, 2004, leverage, measured by total debt-to-EBITDA was 4.2 times and EBITDA coverage of interest was 2.1x, this was an improvement from 6.2x and 1.7x respectively in fiscal 2002. JEUNIQUE INTERNATIONAL: Confirmation Hearing Continues on Dec. 9 ---------------------------------------------------------------- The Honorable Maureen A. Tighe of the U.S. Bankruptcy Court for the Central District of California will convene a hearing at 10:00 a.m., on December 9, 2004, to give further consideration to approving of the adequacy of the Disclosure Statement explaining the Plan of Reorganization filed by Juenique International, Inc., and evaluating whether the plan should be confirmed. The Debtor filed its Plan of Reorganization and Disclosure Statement on September 28, 2004, and the Court held a combined Disclosure Statement and Confirmation hearing on November 18, 2004. Judge Tighe ordered the hearing continued to December 9, 2004. The Debtor's Plan is funded by: a) an $870,000 infusion of capital by the Debtor's President and largest creditor, Mulford J. Nobbs; and b) Mr. Nobbs, his wife, their family trust, and other entities they control will partially subordinated their claims against the Debtor; Mr. Nobbs' capital infusion will be used to pay all priority and administrative claims, pay certain secured claims and make the other distributions called for under the Plan. Mr. Nobbs or his designee will receive 100% of the shares of the reorganized Jeunique International in exchange for his capital infusion and agreement to partially subordinate and forgive his secured and unsecured claims totaling approximately $26 million. Full text copies of the Disclosure Statement and the Plan are available for a fee at: http://www.researcharchives.com/download?id=040812020022 Judge Tighe also extended the period within which Jeunique International can file a chapter 11 plan through and including December 24, 2004. The Debtor's first exclusive period expired on November 27, 2004. Headquartered in City of Industry, California, Jeunique International, Inc. -- http://www.juenique.com/-- is a Direct Selling Company that develops and markets beauty and health products and fashion apparel. The Company filed for chapter 11 protection on June 1, 2004 (Bankr. C.D. Cal. Case No. 04-22300). Mark S. Horoupian, Esq., at Sulmeyer Kupetz A P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed over $10 Million in estimated assets and over $50 Million in estimated liabilities. METRIS MASTER: S&P Raises Secured Notes' Rating to AAA from B+ -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on the class A and B certificates from Metris Master Trust's series 2000-1 and on the accompanying secured notes from Metris Secured Note Trust 2000-1. The raised ratings are a result of Metris Cos. Inc.'s defeasance of series 2000-1, which is expected to mature in February 2005 (class A) and March 2005 (class B and C). Metris has deposited sufficient principal into the series 2000-1 principal funding account to pay each class of securities at or before maturity, and has made a separate provision in the accumulation period reserve account for the series that is sufficient to pay monthly interest on each class of securities until maturity. The interest provision has been made by depositing additional funds into the accumulation period reserve account, which was already fully funded to the required amount of 75 basis points of the class A initial invested amount. The additional amount deposited should be sufficient to cover the required interest payments for the December 2004, January, February, and March 2005 distribution dates even if the LIBOR index, to which the class interest rates are tied, increases. As part of its review of the defeasance, Standard & Poor's requested that an additional amount be deposited in order to cover the interest rate risk of these floating-rate securities. The principal provision has been made by depositing funds in the principal funding account sufficient to repay all principal on the securities at maturity. As a result of this defeasance, the securities in series 2000-1 are now collateralized by cash equal to the full amount of the principal investments in the principal funding account. The deposit in the trust accumulation period reserve account is expected to provide sufficient funds to cover monthly interest until the maturity of each security. Since the credit risk associated with the series is now limited only to the institutional risk of the cash deposits, which is rated 'A-1+', the ratings on the securities can be raised. Ratings Raised Metris Master Trust Series 2000-1 Rating Class To From ----- -- ---- A AAA A B AAA BBB Metris Secured Note Trust Series 2000-1 Rating Class To From ----- -- ---- Notes AAA B+ NORTHWOODS CAPITAL: Fitch Affirms BB Rating on Class VI Notes ------------------------------------------------------------- Fitch Ratings affirms six classes and upgrades one class of notes issued by Northwoods Capital II, Limited. These rating actions are effective immediately: -- $229,000,000 class I notes affirm at 'AAA'; -- $76,000,000 class II notes affirm at 'AA'; -- $36,000,000 class III notes affirm at 'A'; -- $35,000,000 class IV notes affirm at 'BBB+'; -- $12,000,000 class V notes affirm at 'BBB'; -- $7,000,000 class VI notes affirm at 'BB'; -- $10,000,000 combination notes upgrade to 'A+' from 'BBB'. Northwoods II is a collateralized loan obligation managed by Angelo, Gordon & Co., L.P., which closed March 23, 2000. At inception, Northwoods II targeted a composition of 80% senior secured loans and 20% discounted senior secured loans. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. Since the last rating action, Oct. 29, 2003, the collateral has continued to perform within expectations. The weighted average rating factor -- WARF -- has improved slightly from 54 to 53 ('B'). The senior overcollateralization ratio has increased from 134.7% to 135.5% as of the trustee report dated Oct. 1, 2004, versus a trigger of 112%. As of the Oct. 1, 2004, trustee report, Northwoods II's defaulted assets represented less than 1% of the approximately $357.4 million of total collateral, excluding eligible investments. Assets rated 'CCC+' or lower represented approximately 4.4%, excluding defaults. The combination note is comprised of $6.5 million of the class III notes and $3.5 million of the preferred shares. The combination notes have returned $4.85 million or 48.54% through preferred share distributions as well as interest payments from the class III notes. As of Oct. 1, 2004, the rated balance on the combination notes was $5.15 million. The ratings of the class I through class VI notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the combination notes addresses the return of the stated balance of principal by the legal final maturity date. As a result of this analysis, Fitch has determined that the original ratings assigned to the classes I through VI notes still reflect the current risk to the note holders. Fitch also feels that the risk profile for the combination notes warrants an upgrade to 'A+' from 'BBB'. Fitch will continue to monitor and review this transaction for future rating adjustments. For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralized Debt Obligations,' dated Sept. 13, 2004, available on Fitch's web site at http://www.fitchratings.com/ OCWEN FEDERAL: Fitch Comments on Voluntary Dissolution Plans ------------------------------------------------------------ Fitch Ratings has issued a comment on this week's announcement that Ocwen Federal Bank FSB -- OFB, the primary banking subsidiary of Ocwen Financial Corp. -- OCN, has filed an application for voluntary dissolution with its principal regulator, the Office of Thrift Supervision -- OTS. In the event that the sale of the bank's deposits has a nominal effect on the company's financial condition, Fitch does not expect the transaction to result in a rating action or outlook adjustment. Historically, the company's bank charter has not been a significant driver in Fitch's overall assessment of OCN given the steady decline in deposit funding. Fitch acknowledges, however, that in electing to relinquish its bank charter, the benefits of federal pre-emption will no longer be applicable to OCN and the company will be required to license and comply with the state lending laws in which it operates. Although the OTS is currently reviewing the company's application to dissolve its bank charter, Fitch believes that the application will be approved provided there is an appropriate plan for dissolution. Until such time, OFB remains subject to the supervisory agreement issued in April 2004 between the OTS and OFB. Under the terms of the agreement, OFB agreed to improve its mortgage loan servicing practices, including dealings with its customers, and enhance its compliance with applicable laws and regulations. At the time the agreement was signed, OFB had already implemented some of the recommended enhancements and had committed to address the remaining items. In addition to assessing business performance, Fitch will monitor the company's ability to secure longer term funding and its success in accessing the German retail deposit market through its recent acquisition of Bankhaus Oswald Kruber KG going forward. If the transaction receives regulatory approval and is completed, Fitch would withdraw all outstanding ratings for OFB at such time. Ocwen Financial Corp. is a financial services company based in West Palm Beach, Florida. The company provides servicing and special servicing of non-conforming, sub-performing residential and commercial mortgages to third parties. OCN is also active in developing servicing-related software. A complete list of ratings is as follows: * Ocwen Financial Corp. -- Senior Debt 'B'; -- Short-term 'B'; -- Individual 'D'; -- Support '5'; -- Rating Outlook Stable. * Ocwen Federal Bank -- Long-term Deposits 'B+'; -- Short-term Deposits 'B'; -- Subordinated Debt 'B-'; -- Individual 'C/D'; -- Support '5'; -- Rating Outlook Stable. ONSOURCE CORP: Sept. 30 Balance Sheet Upside-Down by $1.6 Million ----------------------------------------------------------------- OnSource Corporation (OTCBB: OSCE) reported its financial results for its fiscal first quarter ended September 30, 2004. Revenues for the quarter ended Sept. 30, 2004, decreased by 10% to $525,693 compared to $586,792 for the prior year period. The decline is attributed to a decrease in service revenues resulting from our assignment of facility management service contracts that occurred January 1, 2004. Those contracts previously provided quarterly revenues approximating $129,000 and incurred associated expenses approximating $61,000. Product sales for the quarter ended September 30, 2004, were $483,819, an increase of 13% compared to the $428,732 reported in the prior year period. The increase is attributed primarily to increased marketing efforts, including the addition of a sales representative. We also increased our ATM business during the period. Net income for the quarter ended September 30, 2004, increased 115% to $73,184 or $0.08 per share compared to $34,105 or $0.04 per share for the quarter ending September 30, 2003. We were able to improve net income for the quarter because we increased product sales by 13%, decreased operating expenses by 6%, and recorded proceeds of $59,175 from the assignment of facility management contracts. About OnSource Corporation OnSource Corporation is the parent company of Global Alaska Industries, Inc., which owns and operates Alaska Bingo Supply, Inc., located in Anchorage, Alaska. At Sept. 30, 2004, OnSource Corp.'s balance sheet showed a $1,591,655 stockholders' deficit. OPBIZ LLC: S&P Assigns B- Rating to $496M Senior Secured Facility ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating and a recovery rating of '2' to OpBiz LLC's $496 million senior secured credit facility, indicating that lenders would realize a substantial amount of recovery of principal (80%-100%) in the event of default. Proceeds from the bank facility were used to help the company fund the August 2004 purchase of the Aladdin Hotel & Casino. In addition, Standard & Poor's assigned a 'B-' corporate credit rating to Las Vegas, Nevada-based Opbiz. The bank loan rating is the same as the corporate credit rating given this recovery expectation. The outlook is stable. Total consolidated debt outstanding, including the company's obligation under its energy service agreement and holding The Aladdin Hotel & Casino, which opened in mid-2000, struggled from its inception as a result of lower-than-expected revenues due to a challenging design and highly competitive market conditions. The lower revenues, combined with a high initial cost structure, resulted in the previous owners filing for protection under the U.S. bankruptcy code in late 2001. OpBiz, which is indirectly owned by Bay Harbour Management LLC, Robert Earl (the founder of Planet Hollywood), and Starwood Hotels & Resorts Worldwide, purchased the asset out of bankruptcy and assumed operations in August 2004. The cash flow being generated by the Aladdin is well below the level generated by similar properties catering to the middle market customer. In an effort to drive visitor volume and improve near-term cash flow, the new owners have entered into an agreement with Sheraton to manage the Aladdin hotel and include the room inventory in its reservation system. In addition, to better position the property to compete in the longer term, the company plans on renovating and re-branding the Aladdin to incorporate the Planet Hollywood theme. This project, which is expected to cost in excess of $100 million, is expected to include redoing the exterior of the building, improving the ingress/egress to the property, renovating the casino floor, updating the slot product, etc. Construction is expected to commence during the first half of 2005 and be completed within approximately 12 months. "We expect that given the extent of the planned renovations, some disruption to existing operations is likely to occur. However, the combination of the re-branding and the presence of the Sheraton brand is expected to drive incremental visitation to the property," said Standard & Poor's credit analyst Michael Scerbo. OREGON ARENA: Judge Perris Confirms Fourth Amended Plan ------------------------------------------------------- The Honorable Elizabeth L. Perris of the U.S. Bankruptcy Court for the District of Oregon confirmed the Fourth Amended Plan of Reorganization filed by Oregon Arena Corporation. Judge Perris determined that the Plan: * properly classifies the claims, * specifies the unimpaired classes of claims, * specifies the treatment of unimpaired classes of claims, * provides for the same treatment of each claim in each class, * provides adequate and proper means for its implementation, * is not inconsistent with applicable provisions of the Bankruptcy Code, * complies with applicable provisions of the Bankruptcy Code, * was proposed in good-faith, * provides for the payment for services or costs and expenses in connection with the Debtors Chapter 11 cases, * provides for the proper treatment of administrative and tax claims pursuant to the requirements of Section 1129((a)(9) of the Bankruptcy Code, * is feasible, * calls for the payment of fees payable under Section 1930 of the Judiciary Procedures Code, * does not alter retiree benefits, * is fair and equitable, and * does not call for the avoidance of taxes or the application of Section 5 of the Securities Act of 1933. About the Plan The Plan's primary purpose is to transfer the collateral securing repayment of $192 million of outstanding bonds to the Noteholders. Pursuant to the Plan, Noteholders will receive the transfer of their collateral and assignment of all contracts necessary to operate the Debtor's sports arena on the Effective Date. The Noteholders secured claim is only $61.3 million leaving an unsecured deficiency of over $131 million. The Debtor anticipates that 99% of the fund for the class of unsecured claims will be paid to the Noteholders' which will give less than 1% to holders of other unsecured claims. Holders of convenience class claims will receive, on the Effective Date, 50% of their allowed claims. Based on the distribution, unsecured claims will be better served by making the election of a convenience class claims. Upon confirmation, all equity securities including Common Stock of the Debtor will be cancelled and nullified. Once the Plan is consummated, the Company will be dissolved pursuant to Oregon Law. Headquartered in Portland, Oregon, Oregon Arena Corporation, owns Portland's Rose Garden, one of the city's entertainment arenas and home of the NBA's Portland Trail Blazers. The company filed for chapter 11 protection on February 27, 2004 (Bankr. D. Oreg. Case No. 04-31605). Paul B. George, Esq., at Foster Pepper Tooze LLP and R. Michael Farquhar, Esq., at Winstead Sechrest & Minick P.C., represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed an estimated assets of more than $10 million and estimated debts of more than $100 million. PARK PLACE: Fitch Rates $64.5 Million Class M-10 Certificates BB+ ----------------------------------------------------------------- Fitch Ratings assigned ratings to Park Place Securities Inc.'s $4.171 billion asset-backed pass-thru certificates, series 2004-WHQ2: -- $3.416 billion classes A-1A through A-1D, A-2A, A-2B and A- 3A through A-3E certificates 'AAA'; -- $70.95 million class M-1 'AA+'; -- $197.80 million class M-2 'AA'; -- $70.95 million class M-3 'AA-'; -- $94.60 million class M-4 'A+'; -- $62.35 million class M-5 'A'; -- $27.95 million class M-6 'A-'; -- $47.30 million class M-7 'BBB+'; -- $60.20 million class M-8 'BBB'; -- $58.05 million class M-9 'BBB'; -- $64.50 million privately offered class M-10 'BB+'. Credit enhancement for the 'AAA' rated class A certificates reflects the 17.55% subordination provided by: * classes M-1 through M-10, * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the 'AA+' rated class M-1 certificates reflects the 15.90% subordination provided by: * classes M-2 through M-10, * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the 'AA' rated class M-2 certificates reflects the 11.30% subordination provided by: * classes M-3 through M-10, * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the 'AA-' rated class M-3 certificates reflects the 9.65% subordination provided by: * classes M-4 through M-10, * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the 'A+' rated class M-4 certificates reflects the 7.45% subordination provided by: * classes M-5 through M-10, * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the 'A' rated class M-5 certificates reflects the 5.35% subordination provided by: * classes M-6 through M-10, * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the 'A-' rated class M-6 certificates reflects the 5.35% subordination provided by: * classes M-7 through M-10, * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the 'BBB+' rated class M-7 certificates reflects the 4.25% subordination provided by: * classes M-8 through M-10, * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the 'BBB' rated class M-8 certificates reflects the 2.85% subordination provided by: * classes M-9 and M-10 * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the 'BBB' rated class M-9 certificates reflects the 1.50% subordination provided by: * class M-10, * monthly excess interest, and * initial overcollateralization of 3%. Credit enhancement for the privately offered 'BB+' rated class M-10 certificates reflects: * monthly excess interest, and * initial overcollateralization of 3%. In addition, the ratings reflect the integrity of the transaction's legal structure as well as the capabilities of HomEq Servicing Corporation as Master Servicer. Wells Fargo Bank N.A. will act as Trustee. The mortgage pool consists of closed-end, first and second lien subprime mortgage loans that may or may not conform to Freddie Mac and Fannie Mae loan limits. As of the cut-off date (Nov. 30, 2004), the mortgage loans have an aggregate balance of $3,500,000,021.73. The weighted average loan rate is approximately 7.293%. The weighted average remaining term to maturity is 358 months. The average cut-off date principal balance of the mortgage loans is approximately $170,640.15. The weighted average original loan-to-value ratio is 82.98% and the weighted average Fair, Isaac & Co. -- FICO -- score was 610. The properties are primarily located in: * California (29.70%), * Florida (9.47%), and * Illinois (7.81%). The loans were originated or acquired by Argent Mortgage Company, LLC, and Olympus Mortgage Company. Both mortgage companies are affiliates of Ameriquest Mortgage Company. Ameriquest Mortgage Company is a specialty finance company engaged in the business of originating, purchasing and selling retail and wholesale subprime mortgage loans. Both Argent and Olympus focus primarily on wholesale subprime mortgage loans. PAYLESS SHOESOURCE: November Same-Store Sales Tumble 2.3% --------------------------------------------------------- Payless ShoeSource, Inc., (NYSE: PSS) reported that same-store sales decreased 2.3 percent during the November reporting period, the four weeks ended Nov. 27, 2004. Company sales totaled $206.4 million, a 1.0 percent decrease from $208.5 million during fiscal November of last year. Total sales for the first ten months of fiscal 2004 were $2.34 billion, compared with $2.35 billion during the similar period in fiscal 2003. Same store sales decreased 0.6 percent during the first ten months of the fiscal year. Progress on Strategic Initiatives In August the company announced a series of strategic initiatives as part of a plan designed to sharpen the company's focus on its core business strategy, reduce expenses, accelerate decision- making, increase profitability, improve operating margin, and build value for shareowners over the long-term. These initiatives include: * exiting Parade, Peru and Chile; * the closing of approximately 260 additional Payless ShoeSource stores; * the reduction of wholesale businesses that provide no significant growth opportunity; and * a reduction of the company's expense structure. The Company estimates that the total costs relating to the strategic initiatives could be in the range of $77 million to $90 million, consistent with previous disclosures. During November, the company closed 85 stores in North America. In addition, on October 27th, 2004, the company entered into an agreement to transfer ownership of its Peruvian business entity, including all related operations and liabilities, to Orion Investment Capital Inc., an organization comprised of some owners of the company's South American joint-venture partner, in consideration of Orion assuming the liabilities of the entity. The transaction was completed on November 15, 2004. The company expects to complete all of the strategic initiatives by the end of fiscal 2004, and to end the year with its inventory assortment appropriately positioned for Spring 2005. On November 19th, the company opened its first store in Japan. The company has curtailed any other expansion into new international markets to focus on its core business. About the Company Payless ShoeSource, Inc., is the largest specialty family footwear retailer in the Western Hemisphere. As of the end of November 2004, the Company operated a total of 4,951 stores offering quality family footwear and accessories at affordable prices. In addition, customers can buy shoes over the Internet through Payless.com(R), at http://www.payless.com/ * * * As reported in the Troubled Company Reporter on Sept. 6, 2004, Standard & Poor's Ratings Services lowered its ratings on Topeka, Kansas-based specialty footwear retailer Payless ShoeSource Inc. The corporate credit rating was lowered to 'BB-' from 'BB'. All ratings were removed from CreditWatch, where they were placed with negative implications on March 2, 2004. The outlook is negative. "The downgrade reflects a continuation of weak operating trends, resulting in subpar credit protection measures, and our expectation that Payless will remain challenged to achieve a sustainable improvement in operating performance due to increased competition," said Standard & Poor's credit analyst Ana Lai. "The ratings reflect Payless' participation in the highly competitive footwear retailing industry, inconsistent sales performance, and thin credit protection measures. These risks are partly offset by the company's good market position, significant economies of scale in sourcing and distribution, and adequate financial flexibility." PG&E NATIONAL: Noteholders Committee Dissolved as of Oct. 29 ------------------------------------------------------------ Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler, in Baltimore, Maryland, informs the U.S. Bankruptcy Court for the District of Maryland that the Official Noteholders Committee is dissolved as of Oct. 29, 2004, except as to objections to certain fee claims. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) PRESTIGE BRANDS: Moody's Reviewing Ratings & May Upgrade -------------------------------------------------------- Moody's Investors Service has placed the long-term debt ratings of Prestige Brands, Inc., on review for possible upgrade, following the company's announcement that it is seeking an initial public equity offering, with a substantial portion of the proceeds to be used for debt repayment. Separately, Moody's affirmed Prestige's speculative grade liquidity rating at SGL-3. These ratings were placed under review for possible upgrade: * Senior implied rating, B2; * $50 million senior secured revolving credit facility, B1; * $373 million senior secured term loan facility, B1; * $100 million second lien senior secured term loan C facility, B2; * $210 million 9.25% senior subordinated notes, Caa1; * Senior unsecured issuer rating, B3. The review for possible upgrade is prompted by Prestige's plans to launch a $415 million initial public equity offering, with a substantial portion of the proceeds to be used to repay the company's higher interest rate debt. As such, Moody's believes that funded leverage may decline to around 4.8x EBITDA from pro forma levels at September 2004 of around 6.5x, and that interest coverage may improve to over 4.0x from just under 3.0x. Moody's believes that these prospective credit metrics would comfortably position Prestige within the B1 rating category, notwithstanding its limited scale, still large funded debt levels, heavy competition and brand support needs for many product lines, and highly-acquisitive nature. The ratings continue to be supported by Prestige's diverse portfolio of leading, niche brands (in largely stable, recession-resistant categories), by its experienced management team, and by its scalable, low-cost operating platform. In combination, these factors result in high margins, strong predictable cash flows, and high brand equities, which support Prestige's debt. Moody's also recognizes that the transaction is expected to substantially repay the equity investment made by GTCR in forming the company earlier this year, and alter the company's ownership and governance structure. Moody's review will focus on both the success and magnitude of the deleverging transaction and on the longer-term financial and strategic implications of the ownership and capital structure changes. A commitment to maintaining or improving upon prospective credit metrics and deleveraging would likely prompt a ratings upgrade. Whereas, the capacity and intention to return to current leverage levels through large, debt-financed acquisitions or shareholder return initiatives would likely result in the confirmation of the ratings at current levels. The affirmation of the SGL-3 speculative grade liquidity rating continues to reflect Prestige's adequate liquidity profile for the coming twelve-month period. Although the company's faces moderate risk of cash flow volatility due to competitive threats and brand investment needs, Prestige's: (1) diverse portfolio of relatively stable, non-seasonal brands; (2) high margins; (3) flexible, outsourced business model; and (4) low-capital expenditure requirements all suggest fairly steady and predictable positive cash flows and near full availability on its $50 million revolving credit facility. The credit facility was undrawn at quarter-end September 2004, but was modestly used to fund a recent acquisition. Moody's expects full paydown by quarter-end December 2004. The rating is materially restrained by modest EBITDA cushions relative to financial covenants. Although Moody's does not anticipate material profit declines from current levels, compliance throughout calendar 2005 could be challenging given the need to achieve synergies, stepdowns in the required maximum leverage covenant, and the impact on interest expense from potential further rate increases. The SGL rating could be raised if sustainable profit gains and reset covenant levels provide a more customary 20% cushion to financial covenants. To a lesser extent, the SGL rating is also restrained by modest cash balances, which are likely to remain so given the expectation that cash flows will largely be used to paydown term loan balances under required amortization and excess cash flow sweep provisions. Lastly, Prestige has limited alternative liquidity sources with the vast majority of its valuable assets being pledged to the senior credit facilities. For the six month period ended September 2004, Prestige reported pro forma sales and EBITDA gains of 8% and 11%, respectively, driven by strength in its OTC and Household segments -- Compound W and Comet, with some weakness evident in Personal Care -- Cutex. In addition, the company is beginning to realize synergy benefits from acquisitions made earlier this year. In October 2004, Prestige acquired the rights to the Little Remedies brand of pediatric OTC healthcare products through the acquisition of Vetco, Inc., stock for around $49 million or 8.5x LTM June 2004 EBITDA. Management expects continued niche segment growth, new product and distribution opportunities, and integration synergies to justify the high multiple. Moody's recognizes the risks posed by this fully-priced, debt-financed acquisition, particularly given its modest scale and challenges in sustaining its profit levels while seeking to grow facing off against both well-resourced and niche competitors. However, these risks are substantially mitigated by the general alignment of the acquisition with management's strategies to acquire recognized brands and leverage its existing distribution, sales and marketing, sourcing, and back office capabilities. Further, risks are offset by the modest size of the acquisition and the moderate increase in funded debt levels given the predominant use of existing cash balances to consummate the transaction. Prestige Brands, Inc., headquartered in Irvington, New York, is a provider of branded consumer products in the OTC, Household and Personal Care segments, with brands including Compound W, Chloraseptic, Comet, and Spic and Span. The company was formed by GTCR Golder Rauner to acquire Medtech Holdings, Inc., The Denorex Company, the Spic and Span Company, and Bonita Bay Holdings from February to April 2004. Pro forma sales for the twelve-month period ended September 2004 (excluding Little Remedies) were approximately $290 million. PRICELINE.COM: Purchases 100% Equity Stake in Travelweb LLC ----------------------------------------------------------- Priceline.com (Nasdaq: PCLN) has purchased InterContinental Hotels Group's (Lon: IHG, NYSE: IHG [ADRs]) equity stake in Travelweb LLC for approximately $4.1 million in cash, giving priceline.com 100 percent ownership of the reservation service. Travelweb offers specially negotiated published-price accommodations for thousands of quality hotels around the world, including those owned and affiliated with Travelweb's founding hotel partners. Initially, Travelweb had seven co-owners: -- IHG, -- priceline.com, -- Marriott, -- Hyatt, -- Hilton, -- Starwood, and -- Pegasus Systems. In May 2004, priceline.com purchased the equity stakes of all partners except IHG, as the certification of Travelweb was still pending. Also, Travelweb has been notified by IHG that it is now certified as an online distributor for IHG's more than 3,500 hotels worldwide, including InterContinental Hotels and Resorts, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites, and Hotel Indigo. Priceline.com's Name Your Own Price(R) hotel service was certified by IHG earlier this year. "Travelweb and priceline.com share our values and consistently act in the best interests of our customers and hotel owners," said Jim Young, IHG's Senior Vice President, Global Distribution. "We're pleased to certify Travelweb as a valued distributor for InterContinental Hotels Group's family of hotels." About the Company Priceline.com is a travel service that offers leisure airline tickets, hotel rooms, rental cars, vacation packages and cruises. Priceline.com also has a personal finance service that offers home mortgages, refinancing and home equity loans through an independent licensee. Priceline.com owns and operates the retail travel Web sites Travelweb.com, Activereservations.com, Lowestfare.com, RentalCars.com and BreezeNet.com. Priceline.com licenses its business model to independent licensees, including pricelinemortgage and certain international licensees. * * * As reported in the Troubled Company Reporter on Sept. 27, 2004, Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to online travel agency Priceline.com Inc. At the same time, Standard & Poor's assigned its 'B' rating to the company's two convertible senior notes due 2010 and 2025. The outlook is stable. As of June 30, 2004, Priceline.com had total debt outstanding of $223.4 million. "The ratings reflect Priceline.com's significant supplier concentration in airlines and hotels, low profit margins, acquisition-driven growth strategy, and participation in the highly competitive online travel market," said Standard & Poor's credit analyst Andy Liu. "These factors are only partially offset by the company's leading position in the consumer bid-based travel business and its good cash balances, which provide some cushion," he added. QUIGLEY COMPANY: Dist. Ct. Frowns on Smorgasbord-Style Litigation ----------------------------------------------------------------- In their attempt to halt Judge Beatty's oversight of Quigley Company, Inc.'s chapter 11 case, two committees took a two-pronged approach to seeking review of Judge Beatty's decision not to recuse herself from the case. The Official Committee of Unsecured Creditors (comprised of lawyers representing tort claimants) filed a traditional notice of appeal. An Ad Hoc Committee of Tort Victims filed a petition with the District Court for a writ of mandamus directing Judge Beatty to step down. The Official Committee joined in the Ad Hoc Committee's request. "Even as we anticipate filing [a] Notice of Appeal, the Unsecured Creditors Committee joins in the Ad Hoc Committee's Mandamus Petition to give the District Court the full panoply of procedural options for taking review of Judge Beatty's order denying the motion for recusal," the Official Committee said in its joinder. "To change the metaphor, and intimating no view on the merits," Senior Judge Haight says in an order entered last week, the District Court "does not require a smorgasbord of procedural options from which to choose. The timely appeal taken by the Unsecured Creditors Committee under the Bankruptcy Rules from Judge Beatty's November 18, 2004 order subsumes the mandamus petition filed by the Ad Hoc Committee, in which the Unsecured Creditors Committee joined." As previously reported in the Troubled Company Reporter, the Committees asked the Honorable Prudence Carter Beatty to recuse herself, pursuant to 28 U.S.C. Sec. 455, from presiding over Quigley's chapter 11 case. Judge Beatty conducted a hearing on the motion on November 1, 2004, and indicated from the bench that she would deny the motion, directing counsel for the Debtor to prepare a written order to that effect. A transcript of that bench ruling is available at no charge at: http://bankrupt.com/misc/RecusalTranscript.pdf On Nov. 12, 2004, before an order on the recusal motion had been entered, the Ad Hoc Committee filed a petition in the Distrct Court, invoking the Court's appellate bankruptcy jurisdiction, which sought a writ of mandamus under the All Writs Act, 28 U.S.C. Sec. 1651(a), directing Judge Beatty to recuse herself. On Nov. 17, 2004 the Unsecured Creditors Committee filed a "statement of joinder" for the purpose of joining in and supporting the Ad Hoc Committee's mandamus petition. On Nov. 18, 2004, before any response had been made or action taken by the District Court with respect to the mandamus petition, Judge Beatty entered an order denying the recusal motion. On Nov. 23, 2004, pursuant to Bankruptcy Rules 8001-8003, the Unsecured Creditors Committee filed with the clerk of the Bankruptcy Court a notice of appeal and a notice of motion for leave to appeal from Judge Beatty's order denying the recusal motion. Courtesy copies of these filings were submitted to the District Court. Under the protocol established by Bankruptcy Rule 8003, "[w]ithin 10 days after service of the motion [for leave to appeal], an adverse party may file with the clerk [of the bankruptcy court] an answer in opposition," Rule 8003(a); the clerk of the bankruptcy court "shall transmit the notice of appeal, the motion for leave to appeal and any answer thereto to the clerk of the district court . . . as soon as all parties have filed answers or the time for filing an answer has expired." Rule 8003(b). "The appeal will go forward in accordance with the provisions of the Bankruptcy Rules," Judge Haight says. "The adverse parties need not submit any papers in opposition to the mandamus petition," Judge Haight adds. Elihu Inselbuch, Esq., Peter Van N. Lockwood, Esq., Walter B. Slocombe, Esq., Albert G. Lauber, Esq., and Preston Burton, Esq., at Caplin & Drysdale, Chartered, represent the Committee. Headquartered in Manhattan, Quigley Company is a subsidiary of Pfizer, Inc., which used to produce and market a broad range of refractories and related products to customers in the iron, steel, glass and other industries. The Company filed for chapter 11 protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to resolve legacy asbestos-related liability. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. Pfizer has agreed to contribute $405 million to an Asbestos Claims Settlement Trust over 40 years through a note, contribute approximately $100 million in insurance, and forgive a $30 million loan to Quigley. Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represents the Company in its restructuring efforts. RELIANCE GROUP: Still Unable to File Financial Reports with SEC --------------------------------------------------------------- Paul W. Zeller, President and CEO of Reliance Group Holdings, advises the Securities and Exchange Commission in a Form 12b-25 filing on November 15, 2004, that RGH has been unable to complete the work necessary to issue audited financial statements for fiscal year 2000 or any subsequent fiscal year. Unless this work is completed by Deloitte & Touche, LLP, and an audit opinion is issued, it will not be possible to prepare a Form 10-Q for the fiscal quarter ended September 30, 2004. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) RELIANCE GROUP: Taps Deloitte Tax as Tax Advisor ------------------------------------------------ Reliance Group Holdings, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Deloitte Tax, LLP, as their tax service provider nunc pro tunc to August 22, 2004. On July 31, 2001, the Court authorized the Debtors to employ Deloitte & Touche, LLP, as accountants and auditors. At that time, Deloitte & Touche was retained to provide various services, including tax return and report preparation services pertaining to the Debtors' employee benefit plans. Deloitte & Touche has implemented a reorganization of its business units, including the business unit providing tax services. Under the reorganization, Deloitte & Touche transitioned the provision of tax services to Deloitte Tax. Subsequently, Deloitte Tax began providing tax services to former tax clients of Deloitte & Touche. As part of the reorganization, Deloitte Tax began performing tax services for the Debtors. Paul W. Zeller, President and Chief Executive Officer of Reliance Group Holdings, notes that the personnel from the Deloitte engagement team that works with the Debtors remains largely unchanged since the Deloitte & Touche Order, however, they are now affiliated with Deloitte Tax. Deloitte Tax provided no services to the Debtors prior to the Petition Date. The Debtors have provided Deloitte & Touche with a $125,000 prepetition retainer. Approximately $57,000 of the retainer was applied against fees and expenses incurred by Deloitte & Touche for various tax related services to the Debtors prior to August 22, 2004. Deloitte & Touche inadvertently submitted monthly fee applications for compensation of $45,242 during part of August and the entirety of September 2004. Pursuant to the applications, Deloitte & Touche received 80% of the referenced amount or $36,194. Mr. Zeller assures Judge Gonzalez that Deloitte Tax is well qualified to serve the Debtors. The Deloitte Tax personnel is familiar with the Debtors' business and affairs. Deloitte Tax will assist with preparation of certain tax returns and reports for the Debtors' employee benefit plans. Deloitte Tax will charge the Debtors its customary hourly rates: Partner/Principal/Director $625 per hour Senior Manager 550 per hour Manager 475 per hour Senior 400 per hour Associate 325 per hour Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Insurance Company. The holding and intermediate finance companies filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing $12,598,054,000 in assets and $12,877,472,000 in debts. The insurance unit is being liquidated by the Insurance Commissioner of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc. 215/945-7000) REMOTE DYNAMICS: Auditors Express Going Concern Doubt ----------------------------------------------------- Remote Dynamics, Inc. (Nasdaq:REDI), a leading provider of telematics-based management solutions for commercial fleets, in compliance with Nasdaq Marketplace Rule 4350(b)(1)(b), reported that BDO Seidman LLP, the company's independent registered accounting firm, issued an audit report for the fiscal year ended Aug. 31, 2004, which expressed an unqualified opinion but included an explanatory paragraph concerning Remote Dynamics' ability to continue as a going concern based upon its history of recurring losses from operations and negative cash flows from operating activities. About the Company Remote Dynamics, Inc. -- http://www.remotedynamics.com/-- markets, sells and supports state-of-the-art fleet management solutions that contribute to higher customer revenues and improved operator efficiency. Combining the technologies of the global positioning system (GPS) and wireless vehicle telematics, the company's solutions improve the productivity of mobile workers by providing real time position reports, route information and exception based reporting designed to highlight mobile workforce inefficiencies. Based in Richardson, Texas, the company also markets, sells and supports a customized, GPS-based fleet management solutions for large fleets like SBC Communications, Inc., which has approximately 30,000 installed vehicles now in operation. SALTIRE INDUSTRIAL: Creditors Must File Proofs of Claim by Dec. 10 ------------------------------------------------------------------ The U.S Bankruptcy Court for the Southern District of New York set December 10, 2004, as the deadline for all creditors owed money by Saltire Industrial, Inc., on account of claims arising prior to August 17, 2004, to file their proofs of claim. Creditors must file their written proofs of claim on or before the December 10 Claims Bar Date, and those forms must be delivered to either the Debtor's claims agent: The Garden City Group 105 Maxess Road Melville, New York 11747 or the Clerk of the Bankruptcy Court: Clerk of the Bankruptcy Court Southern District of New York One Bowling Green, 6th Floor New York, New York 10004-11408 For governmental units, the Claims Bar Date is Feb. 14, 2005. Headquartered in New York, New York, Saltire Industrial, Inc., manufactures diverse consumer and industrial products sold under a variety of brand names. The Company filed for chapter 11 protection on August 17, 2004 (Bankr. S.D.N.Y. Case No. 04-15389). Albert Togut, Esq., at Togut, Segal & Segal LLP represents the Debtor in its restructuring. When the Debtor filed for protection, it listed $1 million to $10 million in estimated assets and $10 million to $100 million in estimated debts. SALTIRE INDUSTRIAL: Committee Hires Lowenstein Sandler as Counsel ----------------------------------------------------------------- The Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York gave the Official Committee of Unsecured Creditors of Saltire Industrial, Inc., permission to employ Lowenstein Sandler PC as its counsel. Lowenstein Sandler will: a) advise the Committee with respect to its duties and powers; b) assist the Committee in investigating: (i) the acts, conduct, assets, liabilities, and financial condition of the Debtor, and (ii) the operation of the Debtor's business, potential claims, and any other matters relevant to its chapter 11 case or to the sale of assets or confirmation of a plan of reorganization or liquidation; c) assist the Committee in the formulation of a Plan of Reorganization; d) assist the Committee in requesting the appointment of a Chapter 11 Trustee or Examiner should the action be deemed necessary; e) prepare necessary motions, applications and other pleadings as may be appropriate and authorized by the Committee and appear in Court to prosecute those pleadings; and f) perform other legal services as may be required and be in the interests of those represented by the Committee. Michael S. Etkin, Esq., a Director at Lowenstein Sandler, discloses that the Firm did not receive any retainer for its services to the Committee. Mr. Etkin reports Lowenstein Sandler's professionals will bill the Debtors based on their current hourly rates: Designation Hourly Rate ----------- ------------- Members $270 - 517.50 Counsel 225 - 355.50 Associates 144 - 225 Legal Assistants 67 - 135 Lowenstein Sandler assures the Court that it does not represent any interest adverse to the Committee, the Debtor or its estate. Headquartered in New York, New York, Saltire Industrial, Inc., manufactures diverse consumer and industrial products sold under a variety of brand names. The Company filed for chapter 11 protection on August 17, 2004 (Bankr. S.D.N.Y. Case No. 04-15389). Albert Togut, Esq., at Togut, Segal & Segal LLP represents the Debtor in its restructuring. When the Debtor filed for protection, it listed $1 million to $10 million in estimated assets and $10 million to $100 million in estimated debts. SCHENECTADY: Moody's Revises Outlook on Ba3 Rating to Positive -------------------------------------------------------------- Moody's Investors Service affirmed the Ba3 rating on the City of Schenectady, New York's General Obligation bonds and revised the outlook to positive from negative. The rating and outlook change affect approximately $50 million of previously issued parity debt. Modification of the outlook for the city to positive from negative reflects accomplishments of new management, including the sale of the parking garage which operated at a deficit, the successful sale of property tax liens, which together with taxes received in excess of expectations yielded a reported $6.5 million, and the introduction of a $2.7 million recurring revenue stream waste disposal fees beginning in fiscal 2005. Affirmation of the Ba3 rating reflects negative accumulated fund balances with continued liquidity constraints as well as a weak socio-economic tax base, which is close to its constitutional taxing limit. The city's rating was confirmed at Ba3 and taken off of watchlist for possible downgrade in August 2004 reflecting some improvement in liquidity driven primarily by receipt of one-time revenues and the planned deferment of a pension payment (per changed state law) from December 2004 to February 2005 (although the city plans to accrue 75% of the February 2005 billing as a liability for the last three quarters of 2004). At that time, a negative outlook was assigned reflecting weak liquidity as well as reliance on one-time revenues which would further challenge the city's ability to eliminate fund deficits and close a 2005 operating deficit. Financial Condition Characterized by Accumulated Fund Deficits Moody's believes that the city's financial condition, characterized by accumulated fund deficits, will improve due to the strength of a new management team to increase revenues and to limit expenditure growth. According to audited results (that are not reported on a GAAP basis), fiscal year 2003 ended with an across-the-board operating surplus of $647,000, improving the fund balance for all major operating funds to negative $5.6 million, or negative 7.9% of operating fund revenues. While the fiscal 2003 budget included $1 million for deficit reduction, expenditures exceeded appropriations in general government support ($931,000) and public safety ($501,000). Liquidity constraints during 2003 required the issuance of $12 million in cash-flow notes. During fiscal 2004, property taxes were increased by 13.5% ($3.3 million). On January 1, 2004, a new administration: (1) took office and effected the sale of property tax liens which, together with property tax collections in excess of expectations, amounted to $6.5 million; (2) closed the sale of the city's parking garage for $1 million; and (3) secured $1.4 million in additional state aid. In addition, the new management eliminated 41 positions associated with the Bureau of Mechanical and Parks anticipated to save the city approximately $750,000 and successfully negotiated a 4-year extension of the sales tax agreement with the county guaranteeing $11 million in annual sales tax revenue. As a result of these initiatives, the city's liquidity position is forecast to be significantly improved, requiring a cash-flow borrowing of only $5 million in fiscal 2004, down from $12 million in fiscal 2003. After establishing reserves for potential liabilities, the city expects the accumulated fund balance deficit to be reduced to $3.2 million by year-end 2004. The achievements made by the new management team in eliminating some liability regarding the revenue base have supported the change in outlook. Moody's anticipates continuing financial pressures for the city in fiscal 2005 and fiscal 2006 due to expenditure pressures, which include wages and salaries, health benefits for current employees and retirees, and pension costs. To combat these pressures, the city has established a new recurring revenue stream (waste removal fees) anticipated to yield $2.7 million in fiscal 2005, has budgeted a property increase of 5.9% ($1.6 million), and is expecting continuation of the $1.4 million incremental state aid. Additional expenditure reductions and revenue enhancements will be required to reestablish structural balance and to eliminate the accumulated deficit given the reliance on approximately $8.7 million one-time revenues in fiscal year 2004. Major revenue sources for the city include: * property taxes (32%), * departmental income (25%), * sales taxes (18.7%), and * state aid (11%). The city has shown a willingness to increase property taxes (25% increase in 2003, 7.8% increase in 2004, and 5.9% increase in 2005). However, the city has a narrow tax margin ($4.76 million as of 2005). Therefore, without rapid tax base growth upon which the tax margin is calculated, additional increases in this primary source of revenues will be limited to another 15% -- a heavy burden for taxpayers with modest means. Departmental Income represents 25% of the city's revenues. Rates for both the water and sewer funds were increased an average of 4% in 2004 and are budgeted to increase an average of 5% in 2005, which could allow for some reduction in the deficits in these funds. The third largest revenue (18.7%) for the city is sales tax for which a four-year contract continuing the $11 million guaranty of sales tax to the city, has just been completed. Improving Cash Flow Moody's believes that liquidity continues to be a challenge for the city represented by the need for the city to borrow $5 million in cash flow notes this month. However, primarily due to one-time revenues in 2004, including the sale of property tax liens and the parking garage, the city has reduced its need for cash-flow borrowing to $5 million in fiscal 2004 from $12 million in 2003 and over $14 million in 2002. The city is exploring the possibility of selling additional property liens, which, if successful, could reduce the need for cash-flow borrowing in fiscal 2005. The city first issued cash flow notes ($14 million) in December 2002 to repay monies from the capital projects fund used for operations. The intent had been to repay the 2002 notes with $9.5 million from the 2003 levy and $4.5 million from the collection of back taxes. The city was not successful in the collection of back taxes in 2003 and the increased levy was not used to repay the notes in full. As a result, the city issued $12 million of the tax anticipation notes in December of 2003 compared to an operating budget of $52.8 million and the city now projects issuance of $5 million in TANs in December 2004. While the city was successful negotiating the sale of $11 million in bond anticipation notes in May of this year, these notes were sold at a premium relative to prevailing market rates. Improvements to Tax Base Critical to Recovery Moody's believes that the city's $1.4 billion tax base has benefited from some redevelopment in the housing stock following years of significant declines, however additional tax base enhancement is necessary to ensure tax margin flexibility and fiscal health. The full value, which had declined almost 25% from 1996-2001, largely due to the closure of targeted General Electric (rated Aaa/stable outlook) properties and a property revaluation, posted small gains in 2002 and 2003 and then a relatively sizeable 6.6% increase in 2004, largely due to the revaluation of 85% of the city's assessed property. Some of this increase can be attributed to residential home improvements and private investment encouraged by the county's economic development agency. This agency, Metroplex (sales tax bonds rated A2) provides financial commitments to city projects. Despite increases in the overall tax base, the city's two largest taxpayers, General Electric and Niagara Mohawk Power Corporation (rated Baa1, stable outlook) have significantly reduced their respective assessments shifting more of the tax burden to residents with modest means (per capita income equal to 73% of the state median and median family income equal to 71% of the state median). Further exacerbating the tax base issue is the fact that almost one-third of the development in this city, located 5 miles from Albany (rated A3), is tax-exempt and there are no "Payment in Lieu of Taxes" in place with any of the tax-exempt properties which include county offices, two colleges, a hospital, a rehabilitation center, a post office and several churches. Key Statistics 2000 Population: 61,821 (-5.7% since 1990) 2004 Full Value: $1.4 billion 2004 Full Value per Capita: $23,146 (36% of New York State median) 2003 Operating Surplus (General, Water, Sewer, Parking Funds): $0.647 million 2003 Accumulated Deficit (General, Water, Sewer, Parking Funds): $5.55 million Debt Burden: 8.0% of Full Value Per Capita Income (1999): $17,076 (73% of New York State median, down from 76.2% in 1989) SCIENTIFIC GAMES: S&P Puts B Rating on $250M Sr. Sub. Debentures ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to lottery and pari-mutuel operator Scientific Games Corp.'s $250 million 0.75% convertible senior subordinated debentures due 2024, and placed the rating on CreditWatch with positive implications. Proceeds from this offering were to reduce amounts outstanding under the company's existing senior secured credit facility. On Nov. 30, 2004, Standard & Poor's placed its ratings on Scientific Games, including its 'BB-' corporate credit rating, on CreditWatch with positive implications. The CreditWatch listing reflected New York, New York-based Scientific Games' continued solid operating performance during the past several quarters mainly as a result of continued strength of its instant ticket business and the acquisition of IGT On-Line Entertainment Systems in late 2003. The significant growth in revenues and profitability has led to an improvement in credit measures to a level that is good for the current rating. In resolving the CreditWatch listing, Standard & Poor's will meet with management to review Scientific Games' financial policies and future operating strategies, as well as the company's ability and commitment to sustain its solid credit profile. If an upgrade were the ultimate outcome of Standard & Poor's analysis, it would be limited to a one notch to 'BB'. SFBC INTL: Moody's Rates Proposed $160M Sr. Secured Facilities B2 ----------------------------------------------------------------- Moody's Investors Service assigned a rating of B2 to SFBC International's proposed $160 million senior secured credit facilities. Moody's also assigned a senior implied rating of B2 and a senior unsecured issuer rating of B3 to SFBC. The rating outlook is stable. New ratings assigned: * $160 million Senior Secured Credit Facilities, rated B2 * Senior Implied Rating, rated B2 * Senior Unsecured Issuer Rating, rated B3 The rating assignment reflects: (1) the integration risk associated with acquisitions, (2) execution challenges of the pending PharmaNet transaction, (3) smaller size relative to larger competitors, (4) the short duration and lack of visibility on future business in the early development studies typical for the industry, (5) potential cancellation of existing contracts, (6) strong customer buying power, and increased leverage associated with the PharmaNet acquisition. Further, the substantial majority of SFBC's revenues are concentrated in the U.S. and Canada. Factors mitigating these concerns include: (1) an attractive and diversified customer base, (2) high level of repeat business from existing pharmaceutical customers, (3) strong underlying growth in research and development spending by the pharmaceutical industry, and (4) solid growth prospects from generic manufacturers. Additional factors supporting the rating include minimal amount of capital expenditure requirements to support future growth, and the strategic fit and synergistic potential of the PharmaNet acquisition. Despite the listed credit strengths, Moody's is concerned with the historically low levels of free cash flow generation on a combined basis. Somewhat offsetting this risk is that management has recently expanded and improved its facilities in both the United States and Canada. While these largely discretionary investments have negatively impacted free cash flow in the short-term, they have translated into strong revenue growth. Moreover, the company will require minimal capital spending going forward to support future growth, and free cash flow is expected to rise. Further, the company is expected to continue to leverage operating expenses due to the high fixed cost nature of these expenses. The stable outlook anticipates that the company will continue to grow internally at a solid pace through repeat business from existing customers and contracts from new customers. As the company continues to control operating expenses, leverage fixed costs, and improve working capital management, internal growth will translate into expanding operating margins and higher operating cash flow. With limited incremental capital required to support future growth, increased operating cash flow should translate into higher free cash flow generation and debt reduction over time, improving debt coverage statistics. There is a risk, however, that challenges from integrating the PharmaNet acquisition, pricing pressure from its pharmaceutical customers, and potential contract cancellations could inhibit the company's progress and prevent an improvement in the company's credit metrics. SFBC International intends to issue $160 million senior secured credit facilities, consisting of a $120 million Funded Term Loan B, due 2010, and a $40 million Revolver, due 2009. SFBC plans to use the proceeds from the senior secured credit facilities to finance a portion of the pending acquisition of PharmaNet and to repay its existing mortgage debt. SFBC will acquire 100% of the outstanding stock of PharmaNet for a purchase price of $245 million. In addition to utilizing the proceeds from the proposed credit facilities, SFBC will also use cash and common equity from PharmaNet's management to finance the transaction. The B2 rating on the senior secured credit facilities reflects the security of substantially all assets of SFBC International, its present, and future subsidiaries, and by the pledges of all of the equity interests of each of the borrower's direct and indirect subsidiaries, which are limited to 65% of the foreign subsidiaries. The rating on the senior secured facilities are at the same level as the senior implied rating due to the high proportion of assets consisting of goodwill and other intangible assets. The B3 senior unsecured issuer rating considers the subordination to the senior secured facilities as well as the absence of any guarantee or security supporting this class of debt. Following the issuance of the senior secured credit facilities and the purchase of PharmaNet, leverage will increase as the ratio of long-term debt to total capital will expand from 50% to almost 66%. Despite the higher level of debt associated with this transaction, adjusted free cash flow from operations to adjusted debt is expect to expand to 20% over the next two years based on expansion in operating cash flow and debt reduction. SFBC International, based in Miami, Florida, is a leading North American contract research organization providing specialized drug development services to pharmaceutical, biotechnology and generic pharmaceutical companies. SFBC offers Phase I through Phase IV and bioanalytical laboratory services. Subsequent to its initial public offering in 2000, the company has completed nine accretive acquisitions; SFBC has 13 offices and 1,200 employees. Over the last twelve months ended September 30, 2004, SFBC generated $153.3 million in revenue and $33.0 million in EBITDA, pro-forma for the acquisition of Taylor Technology. In excess of 75% of its revenues come from Phase I, Phase II, and bioanalytical laboratory services. PharmaNet is a globally integrated contract resource organization with 750 professionals in 24 countries, primarily focused on Phase II-IV clinical development services. PharmaNet brings strong clinical, management, and technical expertise in the Phase II-IV area that compliments SFBC's strength in early development, and enables the new company to provide a full service continuum to pharmaceutical customers. PharmaNet also allows SFBC to expand its base of customers since there is minimal overlap between SFBC and PharmaNet's clients. PharmaNet provides SFBC the platform to expand servicing the European market. From a financial perspective PharmaNet has a much higher visibility and predictability into future results based on strong backlog of contracts. SOUTHWEST HOSPITAL: Committee Hires Kilpatrick Stockton as Counsel ------------------------------------------------------------------ The Honorable James Massey of the U.S. Bankruptcy Court for the Northern District of Georgia gave the Official Committee Of Unsecured Creditors of Southwest Hospital and Medical Center, Inc., permission to employ Kilpatrick Stockton LLP, as its counsel. Kilpatrick Stockton will: a) render legal advice regarding the Committee's organization, duties and power in the Debtors chapter 11 case; b) assist the Committee in its investigation of: (i) the acts, conduct, assets, liabilities, and financial condition of the Debtor, (ii) the operation of the Debtor's business and the desirability of continuing its business, and (iii) the potential sale of the Debtor's assets, and any other matter relevant to its chapter 11 case or the formulation and analysis of any plan of reorganization; c) attend meetings of the Committee and meetings with the Debtor, its attorneys, and other professionals, as Requested by the Committee; d) represent the Committee in hearings before the Court; and e) provide other legal assistance as the Committee may deem necessary and appropriate. Todd C. Myers, Esq., and Aaron R. Wanke, Esq., are the lead attorneys for the Committee. For their professional services, Mr. Myers will charge at $400 per hour, while Mr. Warnke will charge at $210 per hour. Mr. Myers reports Kilpatrick Stockton's professionals current hourly rates: Designation Hourly Rate ----------- ----------- Partners $395 - 570 Associates 195 - 280 Paralegals 130 - 170 To the best of the Debtor's knowledge, Kilpatrick Stockton does not hold any interest adverse to the Committee, the Debtor or its estate. Headquartered in Atlanta, Georgia, Southwest Hospital and Medical Center, Inc., operates a hospital. The Company filed for chapter 11 protection on September 9, 2004 (Bankr. N.D. Ga. Case No. 04-74967). G. Frank Nason, IV, Esq., at Lamberth, Cifelli, Stokes & Stout, PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed both estimated assets and debts of $10 million to $50 million. TECHNOLOGY SCIENCES: Case Summary & 8 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Technology Sciences & Services, Inc. 1605 Sheridan Drive Neptune, New Jersey 07753 Bankruptcy Case No.: 04-47877 Chapter 11 Petition Date: December 2, 2004 Court: District of New Jersey (Trenton) Debtor's Counsel: Eugene D. Roth, Esq. Law Office of Eugene D. Roth Valley Park East 2520 Highway 35, Suite 303 Manasquan, New Jersey 08736 Tel: (732) 292-9288 Fax: (732) 292-9303 Total Assets: $1,508,805 Total Debts: $717,621 Debtor's 8 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ The Judge Group, Inc. Trade Debt $641,921 c/o Steven J. Mitnick PO Box 429 French Town, New Jersey 08825 Compendia Consulting Trade Debt $20,000 PMB 307 3140-B Tilghman Street Allentown, Pennsylvania 18104 Quikteks Trade Debt $17,700 c/o Sharpiro & Croland 41 Hackensack Avenue Hackensack, New Jersey 07601 Decision Strategies, Inc. Trade Debt $12,000 Monster.com Trade Debt $10,000 Coley & Associates Trade Debt $10,000 Internal Revenue Service Business Income Tax $4,000 State of New Jersey CBT Tax $2,000 Division of Taxation TECO ENERGY: Fitch Revises Outlook on Ratings to Stable ------------------------------------------------------- Fitch Ratings has affirmed the ratings of TECO Energy and Tampa Electric Company and revised the Rating Outlook to Stable. At the same time, Fitch has withdrawn the outstanding senior secured rating at Tampa Electric as the utility's remaining first mortgage bonds have been retired. TECO announced an agreement to sell the Frontera Power Station for $134 million to a subsidiary of Centrica. This sale provides incremental cash available to fund $680 million of 2007 debt maturities at TECO and was not previously assumed in Fitch's or in management's projections. This development, along with the cumulative effect of several positive developments over the past 18 months is reflected in the Rating Outlook revision. Positive developments over the past 18 months have included the completion of several noncore asset sales, monetization of 90% of TECO's interest in synthetic fuel facilities, and refinement of management's focus on core operations. In addition, TECO has addressed its liquidity needs by entering into a $200 million three-year credit facility that was put in place at the parent in July. Tampa Electric has credit facilities totaling $275 million comprising a $125 million facility that matures in 2006 and a $150 million facility that matures in 2007. The Frontera sale is expected to close by year-end 2004, subject to certain regulatory approvals, and to generate approximately $40 million of tax benefits. The plant is a 477-megawatt natural gas-fired, combined-cycle merchant power plant in Electric Reliability Council of Texas -- ERCOT, located near McAllen, Texas. Earlier this year, TECO announced plans to exit from the Union and Gila River power projects, which Fitch viewed as neutral credit developments. While the process of an orderly transfer to the project lenders is continuing, TECO's exposure is not expected to be more than the $30 million previously announced. The current ratings and Rating Outlook assume that TECO will not provide additional support to the projects beyond the $30 million payment in exchange for full releases by the lending banks and that capital expenditures and investments will continue at maintenance levels. Longer-term ratings improvement will depend on the ability to reduce consolidated leverage through generation of free cash flow. Despite the recent improvement, TECO's ratings continue to reflect the company's weak financial profile due primarily to significant debt relative to expected cash flow generation of remaining businesses. Favorably, TECO has made significant progress in completing asset sales, including the one announced today and in strengthening the consolidated liquidity position. At the same time, TECO has no significant debt maturities until 2007. TECO's ratings also consider the contribution of regulated utility subsidiary Tampa Electric, which benefits from a growing and diverse service territory and a favorable regulatory environment. Financial measures at Tampa Electric have been and are expected to remain strong. Hurricane damage cost exposure of $60 million is not considered to be a major issue for Tampa Electric as amounts in excess of the $42 million storm reserve are expected to be recovered. TECO Energy is a holding company headquartered in Tampa, Florida. Its principal businesses include a regulated electric and natural gas local distribution company subsidiary and unregulated marine transport, coal, and synthetic fuel production facilities, unregulated electric generation with long-term contracts, and merchant generation in the U.S. Tampa Electric provides retail electric service to over 620,000 customers in western central Florida and through its Peoples Gas division distributes and markets natural gas to approximately 305,000 customers throughout the state. * TECO Energy, Inc. -- Rating Outlook is revised to Stable from Negative, along with these rating actions: -- Senior unsecured debt affirmed at 'BB+'; -- Preferred stock affirmed at 'BB'. * Tampa Electric Company -- Rating Outlook is revised to Stable from Negative, along with these rating actions: -- Senior secured first mortgage bond rating withdrawn; -- Senior unsecured debt affirmed at 'BBB+'; -- Unsecured pollution control revenue bonds (Hillsborough County, Florida IDA for Tampa Electric) affirmed at 'BBB+'; -- Commercial paper affirmed at 'F2'; -- Variable-rate mode unsecured pollution control revenue bonds (Hillsborough County, Florida IDA for Tampa Electric) affirmed at 'F2'. TECO ENERGY: S&P Says Frontera Sale Plan Won't Affect Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services said that the ratings and outlook on TECO Energy Inc. (BB/Stable/--) would remain unchanged following the company's announcement that it had reached an agreement to sell the Frontera power plant. Standard & Poor's views the sale of the merchant power plant near McAllen, Texas as generally supportive of TECO's credit quality, depending on the use of proceeds. The transaction is consistent with TECO Energy's previously articulated strategy of reducing exposure to unregulated power businesses. Ratings stability is closely tied with a successful and timely execution of this strategy, including prudent use of free cash flow to reduce debt originally incurred to build the unregulated power business. THE GERMINSKY GROUP: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: The Germinsky Group, Inc. 200-214 West 4th Street Plainfield, New Jersey 07061 Bankruptcy Case No.: 04-48052 Type of Business: The Company provides technical and energy services to commercial, industrial and institutional facilities. The Company is best known for its expertise in the field of electrical contracting, maintenance and has expanded into several energy related fields providing engineering and implementation services to end users, energy services companies and utilities. See http://www.germinskygroup.com/ Chapter 11 Petition Date: December 3, 2004 Court: District of New Jersey (Newark) Debtor's Counsel: Howard S. Greenberg, Esq. Ravin Greenberg, PC 101 Eisenhower Parkway Roseland, New Jersey 07068 Tel: (973) 226-1500 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ IBEW 102 Funds $650,000 3695 Hill Road Parsippany, New Jersey 07054 Attn: Lou Baram Tel: (973) 334-6262 Warshauer Electric $452,748 800 Shrewsbury Avenue Tinton, New Jersey 07724 Attn: Jim Warshauer Tel: (732) 741-6400 Monarch Electric Company $139,554 One Dodge Drive West Caldwell, New Jersey 07006 Attn: Steve Perlman Tel: (201) 227-4151 GE Capital $116,788 3 Capital Drive Eden Prairie, Minnesota 55344 Attn: Bob Rylance Tel: (952) 828-1557 New Jersey Manufacturers $93,283 Bell-Mill Construction $65,659 Automatic Suppression $59,964 Foley Incorporated $57,705 IBEW 164 Funds $43,407 Ace Wire & Cable Company $41,537 Computer Process Controls $35,604 Kistler Obrien $32,643 Thomas J. O'Beirne & Company $29,389 Novar PLC Finance Services Center $29,299 Durkin Agency/Selective Insurance $28,315 KatoLight Corporation $27,785 IBEW Local 269 $21,781 Rudox Engine & Equipment Company $20,722 Belham Management Industries $16,937 W.J. Casey Inc. $10,242 UAL CORP: Wants Court to Decide on "Disguised" Financing Pact ------------------------------------------------------------- UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Illinois to resolve a controversy over whether a subleasing arrangement, to finance the construction of improvements at Los Angeles International Airport, together with Special Facility Revenue Bonds issued by the Regional Airports Improvement Corporation, is a "disguised" financing arrangement. If so, the Debtors ask the Court to find that the "disguised" financing arrangement is independent of a terminal lease agreement with the City of Los Angeles. U.S. Bank is the Trustee under the Bonds and the RAIC is a California non-profit public benefit corporation. The Debtors argue that their obligation to perform under unexpired leases of real property pursuant to Section 365(d)(3) of the Bankruptcy Code, does not include the obligation to make debt service and principal payments to the extent the Bonds constitute prepetition unsecured debt. If the Court finds otherwise, the RAIC could attempt to recover possession of the terminal facilities. The City of Los Angeles could attempt the same action, despite the fact that the Bonds constitute prepetition unsecured debt for which debt service payments are not authorized or permitted under the Bankruptcy Code. The City of Los Angeles and the Debtors entered into the Terminal LAX Project Lease on June 4, 1981. The Lease governs the use and occupancy of LAX terminal facilities. On December 7, 1982, RAIC issued $50,750,000 in Series 1982 Bonds, pursuant to a Facilities Sublease Agreement. The Debtors used the proceeds from the 1982 Bonds to construct improvements to passenger terminal facilities at LAX. On October 12, 1984, RAIC issued $25,000,000 in Series 1984 Bonds. The Debtors used the proceeds from the 1984 Bonds to refund a portion of the 1982 Bonds. On October 1, 1992, RAIC issued $34,390,000 Series 1992 Bonds. The Debtors used the proceeds from the 1992 Bonds to refund the remaining portion of the 1982 Bonds. James H.M. Sprayregen, Esq., at Kirkland & Ellis, explains that the Sublease is structured as a "disguised" financing arrangement, as it governs the parties' agreement on the financing of the LAX Projects. Under the Sublease, "facility rentals" are to be used to make debt service payments on the Bonds. The "facility rentals" are paid directly to the Trustee and not to the RAIC. The Debtors further ask the Court to enjoin the Defendants from enforcing any of the remedies under the Terminal Lease or other arrangement on account of non-payment by the Debtors on the Bonds. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNIVERSAL CITY: S&P Assigns B Rating to $450 Million Senior Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Universal City Florida Holding Co. I's and co-issuer Universal City Florida Holding Co. II's Rule 144A offering of $300 million in senior floating rate notes due 2010 and $150 million in senior notes due 2010. The notes will be the joint and several senior unsecured obligations of the issuers. At the same time, Standard & Poor's assigned its 'B+' corporate credit rating to UCFH and affirmed its 'B-' senior unsecured rating on unit Universal City Development Partners Ltd. Standard & Poor's also assigned its 'BB-' bank loan rating to UCDP's $650 million senior secured credit facility. The facility consists of a $100 million revolving credit facility due 2010 and a $550 million term loan B due 2011. A recovery rating of '1' was also assigned to the facility, indicating a high expectation for a full (100%) recovery of principal in the event of a default. Orlando, Fla.-based UCFH had pro forma total debt of $1.5 billion as of Sept. 26, 2004. The rating outlook is stable. Issue proceeds will be used to refinance UCDP's bank debt and fund a $450 million distribution to its owners and a $70 million reduction in deferred management fees. UCFH is a joint venture of NBC Universal and Blackstone Capital Partners. UCFH is analyzed on a stand-alone basis because Standard & Poor's does not expect the company to receive material credit support from its owners. "The ratings on UCFH reflect its geographic concentration of earnings, cyclical and seasonal operating performance, and high financial risk," said Standard & Poor's credit analyst Hal F. Diamond. The stable outlook reflects Standard & Poor's concerns regarding the company's limited business diversity and the competitive environment. Rating upside is limited by the financial policies evidenced by this distribution financing. Longer-term questions relate to the potential sale by either NBC Universal or Blackstone Capital Partners of their 50% ownership stakes in the company under the terms of their partnership agreement, at any time after January 1, 2006. Nearly all of the company's profits are derived from its Universal Orlando resort, which owns and operates Universal Studios Florida and Islands of Adventure, and competes with market leader Walt Disney World. UO is attempting to transform itself into a multiday destination resort, with its CityWalk shopping, dining, and entertainment complex, and three adjacent non-company-owned themed hotels. However, attractions are generally not extensive enough to support longer-than-two-day passes. Revenue from sales of one- and two-day passes accounts for roughly 42% and 32%, respectively, of total attendance. UO competes with five major theme parks, of which four are Disney-owned, within a 10-mile radius in the Orlando area. The company's target market is families with children over the age of 10. Its share of Orlando theme park attendance has risen modestly over the past several years but is only about one-third of the attendance share held by the market leader, Disney. Each of Disney's four theme parks has greater attendance than either Universal Studios or Islands of Adventure. Disney's success in selling four- and five-day passes has restricted UO's ability to gain significant market share. US AIRWAYS: Reaches Tentative Pact with Communications Workers -------------------------------------------------------------- The Communications Workers of America has reached a tentative settlement with US Airways covering airport and reservations agents at the airline. The agreement is subject to membership ratification. Materials and complete information on the proposed settlement will be sent to members' home addresses; members will vote electronically in an American Arbitration Association election process. In the face of devastating demands for wage and benefit cuts and other concessions, the bargaining committee of CWA local union presidents and CWA staff was able to push back against some of the harsher and more excessive proposals made by US Airways management. US Airways filed for bankruptcy protection on Sept. 12 and has petitioned to abrogate its union contracts unless the unions agreed to concessionary settlements. 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. VAIL RESORTS: S&P Revises Outlook on Low-B Ratings to Stable ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook Vail Resorts Inc.'s low-B ratings to stable from negative, signifying the company's good operating performance and stronger credit measures. Total debt outstanding at July 31, 2004, was $625.8 million. "The stable outlook reflects the company's noticeable improvement in its credit statistics, despite average to below-average snow conditions," said Standard & Poor's credit analyst Andy Liu. While this demonstrated the quality of the company's assets, Vail Resorts nonetheless remains heavily dependent on favorable weather conditions. A poor upcoming ski season combined with a significant increase in capital expenditures could prompt a review of the outlook. The ratings reflect Vail Resorts' geographically concentrated operations, high maintenance capital expenditures, and the risks associated with a highly seasonal and weather-dependent industry. This is only slightly offset by the company's quality ski resort assets and a dominant market share in Colorado. Vail, Colorado-based Vail Resorts operates five ski resorts, the Grand Teton Lodge Co. in Jackson Hole, Wyoming, and various lodging properties, mostly near its ski resorts. The company is also engaged in real estate activities, which typically peak between April and November. VOUGHT AIRCRAFT: S&P Rates Proposed $650 Mil. Senior Facility B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' bank loan rating and '3' recovery rating to Vought Aircraft Industries Inc.'s proposed $650 million secured credit facility. At the same time, Standard & Poor's affirmed its 'B+' corporate credit rating on the aircraft structures manufacturer. The rating on Vought's unsecured notes was lowered to 'B-' from 'B', due to the increase in secured debt and leases. The outlook was revised to negative from stable. "The bank loan is rated the same as the corporate credit rating and the '3' recovery rating indicates expectations of a meaningful (50%-80%) recovery of principal of a fully drawn facility in the event of default," said Standard & Poor's credit analyst Christopher DeNicolo. The outlook revision reflects higher debt levels to fund a facilities consolidation program and participation on Boeing Co.'s new 7E7 jetliner and the risks related to these programs. The downgrade of the unsecured notes is due to secured debt and leases as a proportion of total assets (adjusted so that goodwill is 10% of total assets) increasing above the 30% level in Standard & Poor's criteria for notching, materially higher than previous expectations. Total lease- adjusted debt will increase $200 million as a result of the larger credit facility, sale-leasebacks, and operating lease financing that are part of the facilities consolidation program. To improve its cost structure and align capacity to lower demand, Vought plans to reduce its manufacturing space by 25% over the next few years. The total program is expected to cost approximately $400 million but a significant portion is to be financed by state grants, the sale-leaseback of various facilities, and $125 million of third-party operating lease financing. The consolidation is expected to result in $50 million of annual savings. Vought, along with Alenia SpA of Italy, has been selected by Boeing to produce a large portion of the fuselage for the 7E7. The total investment for Vought's participation in the program, for both R&D and capital expenditures, is expected to be $350 million-$450 million, but similar to the facilities consolidation program, a large portion will be financed by third parties, including state grants, customer payments, and investments from joint venture partners. Vought's funding requirement is expected to be approximately $140 million plus $50 million of working capital. If the 7E7 is successful, the potential revenue from this program for Vought could be $5 billion through 2021. The ratings on Dallas, Texas-based Vought reflect a weak financial profile, high debt levels, and exposure to the soft commercial aircraft industry. These factors are offset somewhat by Vought's position as the largest independent aerostructures manufacturer. The company has sustained losses the past few years due to the depressed commercial aerospace market, restructuring and other charges, and high interest expense. Credit protection measures are expected to remain weak in the intermediate term due to poor profitability, high debt levels, and the upfront costs of the company's two strategic initiatives. WEIRTON STEEL: Court Extends Claims Objection Deadline to Dec. 13 ----------------------------------------------------------------- Mark E. Freedlander, Esq., at McGuireWoods, LLP, in Pittsburgh, Pennsylvania, relates that since the filing of its Plan, Weirton Steel Corporation, and now the Weirton Steel Corporation Liquidating Trustee, has continued to address various issues relating to the administration of the Liquidating Trust and distribution of its assets, including the continued prosecution and negotiation of administrative claim disputes. However, the Liquidating Trustee has been unable to settle or otherwise dispose of all pending administrative claims due to the volume of claims filed. The Liquidating Trustee has tried to avoid incurring the costs of a prepetition claims objection process until: (a) the administrative claims process has been concluded; and (b) the amount available for distribution to each class of prepetition creditors is known. Section 7.3 of the Confirmed Plan provides the Liquidating Trustee with 60 days from the Effective Date to file objections to claims. The initial deadline to file objections to claims was November 8, 2004. At the Debtors' request, the Court extended the Claims Objection Deadline to December 13, 2004. The Liquidating Trustee continues to diligently prosecute and negotiate administrative claims objections. However, due to the volume of asserted administrative claims, protracted negotiations, and the corresponding litigations processes, it will be nearly impossible to resolve the remaining administrative claims disputes, and address the prepetition claim disputes, by the current deadline. Accordingly, the Liquidating Trustee asks the Court to extend the deadline to object to any administrative claim not allowed and any prepetition claim. About 142 Administrative and Reclamation Claims aggregating $5,744,299 has already been allowed. A list of those claims is available at: http://bankrupt.com/misc/weirton's_allowed_admin_claims.pdf Without an extension, the Liquidating Trustee will be compelled to object to hundreds of administrative and prepetition claims without having adequate opportunity to amicably resolve many outstanding claims disputes, and without knowing whether funds exist for distribution to many of the prepetition creditors. This would also impose corresponding costs on the prepetition creditors asserting claims with possibly no ultimate benefit to the creditors, even if they prevail in opposition to the Liquidating Trustee's objection to their claims. Mr. Freedlander asserts that an extension of the Claims Objection Deadline is necessary to ascertain that only those properly asserted claims are paid, thus maximizing remaining funds for other claimants and creditors, including the allowed claim of West Virginia Workers' Compensation Commission, and possibly the unsecured creditors. Mr. Freedlander emphasizes that based on the Liquidating Trustee's analysis, there are many improper claims to which the Trustee's objections would be appropriate. The objections would be necessary to assure that those creditors holding valid claims against Weirton receive their fair share of the remaining funds. A telephonic hearing on the Trustee's request has been scheduled for 1:30 p.m. prevailing Eastern Time on December 13, 2004, before Judge Friend. Parties may participate in the Hearing telephonically at the dial-in number of 800-508-7631, and enter ID number *8913849*. All Responses must be filed with the Bankruptcy Court and served on the counsel for the Liquidating Trust no later than December 6, 2004. Headquartered in Weirton, West Virginia, Weirton Steel Corporation was a major integrated producer of flat rolled carbon steel with principal product lines consisting of tin mill products and sheet products. The company was the second largest domestic producer of tin mill products with approximately 25% of the domestic market share. The Company filed for chapter 11 protection on May 19, 2003 (Bankr. N.D. W. Va. Case No. 03-01802). Judge L. Edward Friend, II administers the Debtors cases. Robert G. Sable, Esq., Mark E. Freedlander, Esq., David I. Swan, Esq., James H. Joseph, Esq., at McGuireWoods LLP represent the Debtors in their liquidation. Weirton sold substantially all of its assets to Wilbur Ross' International Steel Group. Weirton's confirmed Plan of Liquidation became effective on Sept. 8, 2004. (Weirton Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT STEVENS: Extends Lease Decision Deadline to June 30 ------------------------------------------------------------- As of the Petition Date, WestPoint Stevens, Inc., and its debtor- affiliates were party to 82 unexpired leases. Since that time, the Debtors have closed 16 stores, three offices, two plants, and, where appropriate, rejected the leases at those locations. Accordingly, the Debtors have reduced the number of their unexpired leases to 61. John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New York, contends that a reasoned determination as to all Unexpired Leases cannot be made at this critical stage in the Debtors' chapter 11 cases. The Debtors are actively involved in the process of formulating and negotiating a plan with their creditor constituencies. Depending on the outcome of their negotiations, the remaining unexpired leases may be an integral part of the future of the Debtors' businesses. Therefore, the Debtors do not want to be compelled to make precipitous decisions regarding the assumption or rejection of their unexpired leases at this stage of their chapter 11 cases. Mr. Rapisardi asserts that inadequate time for making informed decisions may result in an inadvertent rejection of a valuable lease or a premature assumption of a burdensome lease. In the absence of an extension, the Debtors will be compelled to assume their unexpired leases to avoid rejecting potentially valuable assets, with the resultant imposition of potentially substantial administrative expenses. Mr. Rapisardi assures the United States Bankruptcy Court for the Southern District of New York that an extension will not prejudice lessors. In compliance with Section 365(d)(3) of the Bankruptcy Code, the Debtors have remained current and fully intend to remain current with respect to all outstanding postpetition obligations under the unexpired leases. The Debtors will also continue to evaluate the unexpired leases on an ongoing basis as expeditiously as practicable and will file appropriate motions as soon as informed decisions can be made. At the Debtors' request, the Court extends the lease decision deadline to the earlier of June 30, 2005, or the date on which an order is entered confirming a plan for the Debtors or approving a sale of substantially all of the Debtors' assets. Headquartered in West Point, Georgia, WestPoint Stevens, Inc. -- http://www.westpointstevens.com/-- is a leading U.S. 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) WESTPOINT STEVENS: Has Until Jan. 20 to File a Chapter 11 Plan -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended WestPoint Stevens Inc.'s (OTC Bulletin Board: WSPTQ) exclusive right to file a plan of reorganization through Jan. 20, 2005. M.L. "Chip" Fontenot, President and CEO of WestPoint Stevens commented, "We are nearing the final stage of negotiations with our creditors regarding our exit from bankruptcy. We continue to be hopeful this process will be concluded in the first quarter of 2005." Mr. Fontenot added, "WestPoint Stevens is maintaining excellent customer service levels and continues to enjoy ample financial flexibility." Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is a leading 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. * Mintz Levin Welcomes John R. Higham in Boston Office ------------------------------------------------------ Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. disclosed that John R. Higham, an experienced health care attorney, has joined the firm's Boston office as a member of the Health Care Section. Before joining Mintz Levin, Mr. Higham was an attorney in the office of the General Counsel at Partners HealthCare System, Inc., a Boston-based non-profit organization comprised of academic medical centers, community hospitals and health centers, an academic and community-based physician network and other health related entities. While at Partners, Mr. Higham was in charge of negotiating the System's complex managed care arrangements along with negotiating physician practice acquisitions, affiliations and joint ventures. Mr. Higham also has experience with health care antitrust matters and counseled the System with regard to corporate governance matters, tax-exempt bond and equipment lease financing and pooled investments. Prior to joining Partners, he was Vice President, Chief of Staff for Providence Washington Insurance Company in Providence, RI where he managed the legal, human resources and corporate communications departments. Earlier in his career, Mr. Higham was a partner at Edwards & Angell in Providence, Rhode Island. At Edwards & Angell, Mr. Higham's practice focused on mergers and acquisitions, leveraged buyouts and other financing transactions. "Mintz Levin's national healthcare practice, comprised of nearly 50 highly-skilled attorneys represents a wide range of providers, suppliers, managed care organizations, and investors," said Susan Berson, head of the firm's Health Care Section. "As we continue to grow, and as the delivery of health care becomes even more complex, Jack's experience working for one of the premier health care systems in the country and his vast experience in handling a diverse array of corporate and managed care matters will be invaluable." "Mintz Levin's health care section is considered by many in the industry to be among the very best," added Mr. Higham. "I'm thrilled to be joining this dynamic and growing practice." Mr. Higham earned a B.A., summa cum laude, from Yale University, an M.A. from Oxford University where he was a Rhodes Scholar and a J.D. from Yale Law School. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is a multidisciplinary law firm with over 450 attorneys and senior professionals in Boston, Washington D.C., Reston, Va., New York, New Haven, Conn., Los Angeles and London. Mintz Levin is distinguished by its reputation for responsive client service and expertise in the areas of bankruptcy; business and finance; communications; employment; environmental; federal; health care; immigration; intellectual property; litigation; public finance; real estate; tax; and trusts and estates. Mintz Levin's international clientele range from privately held start- ups to Fortune 100 companies in a wide array of industries including biotechnology, venture capital, telecommunications, health care and high technology. Mintz Levin -- http://www.mintz.com/-- was one of the first law firms to develop complementary consulting capabilities to provide complete solutions to clients' problems, including investment/wealth management, government and public affairs and transactional insurance. * Moody's Names Andrew Huddart New President for KMV Unit --------------------------------------------------------- Moody's Corporation disclosed that effective immediately Andrew Huddart will assume the position of President, Moody's KMV, the leading provider of market-based quantitative credit risk analytics for banks, institutional investors, and corporations. Mr. Huddart was named Chief Operating Officer of Moody's KMV in July 2004. Before joining Moody's in May 2004, he was Chief Executive Officer of mPower, a San Francisco-based investment advisory firm. Mr. Huddart was with Barra Inc., a provider of institutional risk analytics, from 1997 - 2001. At Barra, he served as President of Investment Data Products, Chief Operating Officer, and President of Barra International. Prior to that, Mr. Huddart held various senior management positions with Reuters both in Europe and the U.S. "In his role as COO of Moody's KMV, Andrew designed an important organizational restructuring which will help the firm achieve solid growth in 2005," said Raymond W. McDaniel, President of Moody's Corporation. "Andrew brings to this new position a wealth of expertise in managing risk analytics and real-time information businesses from his time at Reuters and Barra." Mr. Huddart succeeds Douglas M. Woodham, who has been President of Moody's KMV since January 2003. Previously, Mr. Woodham was head of Moody's Corporate Development and Technology. He will remain with the firm through the end of February 2005 to assure a smooth transition. Moody's Corporation (NYSE: MCO) is the parent company of Moody's Investors Service, a leading provider of credit ratings, research and analysis covering debt instruments and securities in the global capital markets, and Moody's KMV, the leading provider of market-based quantitative services for banks and investors in credit-sensitive assets serving the world's largest financial institutions. The corporation, which reported revenue of $1.2 billion in 2003, employs approximately 2,300 people worldwide and maintains offices in 18 countries. Further information is available at http://www.moodys.com/ * Ropes & Gray Adds Nine New Partners ------------------------------------- Ropes & Gray is promoted seven associates and two counsel to the partnership. The new partners are: * Corporate Department: -- Alyssa Albertelli, Washington, D.C. -- Eve M. Brunts, Boston -- Byung W. Choi, Boston -- Morri Weinberg, New York -- Shari H. Wolkon, Boston * Bankruptcy & Business Restructuring: -- Ross D. Martin, Boston * Litigation: -- Robert G. Jones, Boston -- Joshua S. Levy, Boston * Private Client Group: -- Magda L. Fleckner, Boston Corporate Alyssa Albertelli specializes in regulatory and transactional matters including the formation, organization and registration of investment companies, and has experience in mergers and acquisitions of investment companies. She also counsels private companies on status issues under the securities laws. Eve M. Brunts specializes in health care regulatory matters, advising health care providers, managed care organizations and pharmaceutical and medical device manufacturers. Her practice focuses on federal, state and commercial reimbursement for health care services and related regulatory compliance issues. She regularly assists in corporate transactions and government investigations involving the health care industry by providing advice on regulatory requirements. Byung W. Choi focuses his practice in the areas of corporate finance, securities offerings and mergers and acquisitions. He represents lenders, borrowers, financial sponsors and investment banks in senior and subordinated debt offerings, syndicated credit facilities and mezzanine financings. He regularly represents financial sponsor-backed issuers of high yield debt securities and also represents issuers and underwriters in public and private offerings of debt, equity and hybrid securities. Morri Weinberg represents private equity fund sponsors in forming their funds, structuring ownership and compensation arrangements, implementing investment strategies and dealing with regulatory, operational and general corporate matters. He also represents venture capital and buyout funds and their portfolio companies in a wide variety of corporate investment and finance transactions, including mergers and acquisitions, dispositions, private offerings of securities and joint ventures and strategic alliances. Shari H. Wolkon specializes in private equity transactions, public and private company mergers and acquisitions and public company takeover defenses. She also has broad experience counseling companies on a wide range of securities law issues. Bankruptcy & Business Restructuring Ross D. Martin regularly represents bondholder committees in cases throughout the United States. He has also been involved in several significant bankruptcy acquisitions, business restructurings, and has litigated several reported cases. Litigation Robert G. Jones has experience in a variety of complex corporate and securities matters including class action securities litigation and disputes in connection with mergers and acquisitions, environmental litigation including private part and government cost-recovery claims, internal investigations and commercial litigation. He also has experience in complex class actions and environmental litigation, including private party and government cost-recovery claims. Joshua S. Levy has investigated and prosecuted a wide range of white collar crimes, including securities fraud, terrorism financing, investor fraud, health care fraud, embezzlement, Foreign Corrupt Practices Act violations, export violations, environmental crimes and telemarketing fraud. Private Client Group Magda L. Fleckner concentrates her practice in estate planning, estate, gift and generation-skipping taxation, estate settlement and trust administration. She has substantial experience in estate planning for high net-worth individuals, venture capitalists and owners of emerging businesses. She also advises individuals on all aspects of charitable planning and serves as trustee of numerous private trusts. About the Company Ropes & Gray LLP provides comprehensive legal services to leading businesses and individuals around the world. Clients benefit from expertise combined with unwavering standards for integrity, service and responsiveness. With offices in preeminent centers of finance, technology and government, Ropes & Gray is ideally positioned to address today's most pressing legal and business issues. Capabilities include antitrust, bankruptcy and business restructuring, corporate, employee benefits, environmental, health care, intellectual property and technology, international, investment management, labor and employment, life sciences, litigation, private equity, private client services, real estate and tax. The firm has offices in Boston, New York, San Francisco, and Washington, D.C. * BOND PRICING: For the week of December 6 - December 10, 2004 -------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Comm. 3.250% 05/01/21 17 Adelphia Comm. 6.000% 02/15/06 17 AMR Corp. 4.500% 02/15/24 73 AMR Corp. 9.000% 08/01/12 72 AMR Corp. 9.000% 09/15/16 71 Applied Extrusion 10.750% 07/01/11 54 Armstrong World 6.350% 08/15/03 67 Atlantic Coast 6.000% 02/15/34 39 Bank New England 8.750% 04/01/99 15 Burlington Northern 3.200% 01/01/45 56 Calpine Corp. 7.750% 04/15/09 67 Calpine Corp. 7.785% 04/01/08 74 Calpine Corp. 8.500% 02/15/11 70 Calpine Corp. 8.625% 08/15/10 70 Comcast Corp. 2.000% 10/15/29 44 Delta Air Lines 2.875% 02/18/24 66 Delta Air Lines 7.711% 09/18/11 74 Delta Air Lines 7.900% 12/15/09 56 Delta Air Lines 8.000% 06/03/23 60 Delta Air Lines 8.300% 12/15/29 42 Delta Air Lines 9.000% 05/15/16 46 Delta Air Lines 9.250% 03/15/22 41 Delta Air Lines 9.750% 05/15/21 44 Delta Air Lines 10.000% 08/15/08 66 Delta Air Lines 10.125% 05/15/10 56 Delta Air Lines 10.375% 02/01/11 54 Dobson Comm. Corp. 8.875% 10/01/13 68 Evergreen Int'l Avi. 12.000% 05/15/10 70 Falcon Products 11.375% 06/15/09 47 Federal-Mogul Co. 7.500% 01/15/09 32 Finova Group 7.500% 11/15/09 48 Iridium LLC/CAP 14.000% 07/15/05 13 Inland Fiber 9.625% 11/15/07 43 Kaiser Aluminum & Chem. 12.750% 02/01/03 18 Lehmann Bros. Hldg. 6.000% 05/26/05 64 Level 3 Comm. Inc. 2.875% 07/15/10 73 Level 3 Comm. Inc. 6.000% 09/15/09 60 Level 3 Comm. Inc. 6.000% 03/15/10 57 Liberty Media 3.750% 02/15/30 69 Liberty Media 4.000% 11/15/29 72 Mirant Corp. 2.500% 06/15/21 72 Mirant Corp. 5.750% 07/15/07 73 Mississippi Chem. 7.250% 11/15/17 66 National Vision 12.000% 03/30/09 62 Northern Pacific Railway 3.000% 01/01/47 55 Nutritional Src. 10.125% 08/01/09 67 Oglebay Norton 10.000% 02/01/09 70 O'Sullivan Ind. 13.375% 10/15/09 46 Pegasus Satellite 12.375% 08/01/06 64 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 54 Primus Telecom 3.750% 09/15/10 70 RCN Corp. 10.000% 10/15/07 52 RCN Corp. 10.125% 01/15/10 53 RCN Corp. 11.125% 10/15/07 56 Reliance Group Holdings 9.000% 11/15/00 28 RJ Tower Corp. 12.000% 06/01/13 75 Syratech Corp. 11.000% 04/15/07 54 Trico Marine Service 8.875% 05/15/12 53 Tower Automotive 5.750% 05/15/24 63 United Air Lines 9.125% 01/15/12 7 United Air Lines 10.670% 05/01/04 6 Univ. Health Services 0.426% 06/23/20 57 Westpoint Stevens 7.875% 06/15/08 0 Zurich Reinsurance 7.125% 10/15/23 63 ********* 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 ***