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/raid1/www/Hosts/bankrupt/TCR_Public/050110.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, January 10, 2005, Vol. 9, No. 7 Headlines 471 EQUITIES INC: Voluntary Chapter 11 Case Summary ACCEPTANCE INSURANCE: Files for Chapter 11 Protection in Nebraska ACCEPTANCE INSURANCE: Case Summary & Largest Unsecured Creditors AERO PLASTICS: Case Summary & 20 Largest Unsecured Creditors AEROSPACE ENG'G.: Case Summary & 31 Largest Unsecured Creditors AMERICAN INT'L: Subsidiary Completes Sale of Lake Charles Refinery A.P.I. INC: Case Summary & Largest Creditors & Asbestos Claimants ATA AIRLINES: DOT Okays Code Share Agreement with Southwest BERWALD PARTNERSHIP: Disclosure Statement Hearing Set for Feb. 1 BRANDYWINE HOLDINGS: Fitch Downgrades Subsidiaries' Rating to 'B-' BRIDGEPOINT TECHNICAL: Jerry Lewis Approved as Debtor's Accountant BRIDGEPOINT TECHNICAL: Wants Until Jan. 31 to File a Chap. 11 Plan BRISTOL CDO: S&P Places Ratings on CreditWatch Negative CATELLUS DEVT: S&P Upgrades Corporate Credit Rating to BBB- CENTURY INDEMNITY: S&P Puts Ratings on CreditWatch After Downgrade CLEARLY CANADIAN: Completes CDN$258,750 Equity Private Placement COOPER COS: Pays $600 Mil. Cash to Stockholders Following Merger CROSSROADS CHRISTIAN: Voluntary Chapter 11 Case Summary DELTA AIR: Bestfares.com Says Airfare Cuts to Challenge Carriers ENER1 INC: Distributes 5 Million Shares of Splinex Common Stock E*TRADE FINANCIAL: Promotes Lou Klobuchar, Jr., to President FEDERAL-MOGUL: Court Adjourns Jan. 13 & 14 Confirmation Hearings FINOVA GROUP: Court Enters Final Decree Closing Six Cases FLYI INC: Executes Agreement with Executive VP Richard J. Surratt FLYI INC: William Anthony Rice Resigns as Board of Director FRIEDMAN'S: Amends Vendors' Secured Trade Credit Program Agreement GENERAL NUTRITION: Intends to Offer $150 Mil. Sr. Notes Due 2011 GOLD RUSH II: Case Summary & 12 Largest Unsecured Creditors HAPPY KIDS: Court Approves Proskauer Rose as Bankruptcy Counsel HARRAH'S ENTERTAINMENT: Schedules Conference Call on Feb. 2 INTERSTATE BAKERIES: Judge Venters Approves Bidding Protocol IMPAC CMB: S&P Affirms Low-B Ratings on Bond Classes F & G INSIGHT COMMS: Cancels $4.3M Employee Loans in Exchange for Shares INTEGRATED ELECTRICAL: Names David Miller as Senior VP & CFO ISLE OF CAPRI: Moody's Rates Proposed $650M Sr. Sec. Debt at Ba2 IWO HOLDINGS: Bankruptcy Services Approved as Noticing Agent IWO HOLDINGS: Has Until March 7 to File Bankruptcy Schedules JAPAN PACIFIC: Lowndes Drosdick Approved as Examiner's Counsel KAISER ALUMINUM: Disclosure Statement Trial Continued to Feb. 23 KMART HOLDING: Syndicating $4 Billion Revolving Credit Facility L-3 COMMUNICATIONS: S&P Lifts Corporate Credit Rating to BBB- LAIDLAW INT'L: Posts $30.4M Net Income for First Quarter of 2005 MILESTONE SCIENTIFIC: Amex Delisting Stock Due to Equity Shortfall NATIONAL CENTURY: Trust Asks Court to Vacate Protective Orders NATIONAL MENTOR: Fourth Quarter Revenues Up 9.5% to $168.9 Million MIDWAY MOTORS: GMAC Says It's Disappointed With Ohio AG's Lawsuit MURANO APARTMENTS: Case Summary & 16 Largest Unsecured Creditors NDCHEALTH CORP: Moody's Reviewing Low-B Ratings & May Downgrade NDCHEALTH CORP: Moody's Reviewing Low-B Ratings & May Downgrade NORTEL NETWORKS: Look Out for 2003 Annual Report Today PARMALAT USA: Disclosure Statement Hearing Scheduled for Wednesday PRINCIPAL AT-RISK: Moody's Assigns Ba2 Rating to $150 Mil. Notes RAYOVAC CORP: Moody's Revises Outlook on Low-B Ratings to Stable RUSS TRANSMISSION: Case Summary & 9 Largest Unsecured Creditors SCHUFF INT'L: SEC Grants Voluntary Delisting from AMEX SENECA GAMING: S&P Revises Outlook on Low-B Ratings to Negative SHAW GROUP: Siemens Power Acquires Power Technologies' Assets SIX FLAGS: S&P Junks Privately Placed $195 Mil. 9.625% Sr. Notes SOLUTIA: Asks Court to Stretch Lease Decision Period to May 16 SUPER STRUCTURE: Case Summary & 12 Largest Unsecured Creditors TECO ENERGY: Fitch Holds Low-B Ratings on Sr. Debt & Pref. Stock TELEGLOBE: Creditors Meeting Jan. 26 & Sanction Hearing Feb. 8 THISTLE MINING: Gets Order to Begin Restructuring Under CCAA TORCH OFFSHORE: Files for Chapter 11 Protection in E.D. Louisiana TORCH OFFSHORE: Case Summary & 30 Largest Unsecured Creditors TUCSON ELECTRIC: S&P Holds Low-B Ratings & Says Outlook is Stable TV AZTECA: Fitch Withdraws 'B+' Rating on $300 Mil. Senior Notes UAL CORP: AMFA Submits Tentative Agreement for Membership Vote US AIRWAYS: IAM Sends Out Revised Labor Pacts for Members' Votes US AIRWAYS: December 2004 Passenger Load Factor Down by 2.2% US AIRWAYS: Wants to Purchase Three Bombardier Regional Jets VISION METALS: Prepares to Wrap Up Chapter 11 Proceeding W.R. GRACE: Maryland Casualty Objects to Disclosure Statement YUKOS OIL: Deutsche Bank AG Wants Order Clarifying Stay Denied * Alvarez & Marsal Expands Real Estate Advisory Services Group * Kamakura Says Corporate Credit Quality Up in December * BOND PRICING: For the week of January 10 - January 14, 2005 ********* 471 EQUITIES INC: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: 471 Equities, Inc. 471 Lenox Avenue New York, New York 10037 Bankruptcy Case No.: 05-10124 Type of Business: The Debtor is a real estate investor. Chapter 11 Petition Date: January 7, 2005 Court: Southern District of New York (Manhattan) Debtor's Counsel: Larry Ivan Glick, Esq. Larry I. Glick, P.C. 1305 Franklin Avenue, Suite 180 Garden City, New York 11530 Tel: (516) 739-1111 Fax: (516) 739-0896 Total Assets: $1,900,000 Total Debts: $1,300,000 The Debtor did not file a list of its 20 Largest Unsecured Creditors. ACCEPTANCE INSURANCE: Files for Chapter 11 Protection in Nebraska ----------------------------------------------------------------- Acceptance Insurance Companies Inc., the parent company of Acceptance Insurance Company, filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Nebraska on Jan. 7, 2005. Two of AICI's non-insurance company subsidiaries, Acceptance Insurance Services, Inc., and American Agrisurance, Inc., have also filed voluntary petitions for liquidation under Chapter 7 of the United States Bankruptcy Code. "We want to emphasize that the filings by AICI, AIS and AmAg do not involve Acceptance Insurance Company," said John E. Martin, Chief Executive Officer of AICI. "Acceptance Insurance Company will remain under the supervision of the Nebraska Department of Insurance. Pursuant to the McCarran Ferguson Act, the Bankruptcy Court has no jurisdiction or authority over the assets or operations of Acceptance Insurance Company. In short, we do not anticipate that the bankruptcy filings by AICI, AIS and AmAg will affect in any way the operations of Acceptance Insurance Company or its ability to promptly satisfy its obligations." AICI intends to remain in business during the Chapter 11 reorganization process. The reorganization is focused upon maximizing the value of AICI's assets for the benefit of its creditors. AICI is considering strategic alternatives available to it, including the potential sale of all or a portion of its assets. AICI has no intent to alter or affect the current operations of Acceptance Insurance Company. The documents filed by AICI, AIS and AmAg in the Bankruptcy Court are available for review. These documents may be reviewed at the office of the Clerk of the Bankruptcy Court or may be viewed at the Bankruptcy Court PACER website at https://ecf.neb.uscourts.gov/ on the Internet. If interested, individuals will need to contact the administrator of the PACER court records system at 1-800-676-6856 to get an Internet password to gain online access to the AICI documents. Headquartered in Council Bluffs, Iowa, Acceptance Insurance Companies Inc. -- http://www.aicins.com/-- owns, either directly or indirectly, several companies, one of which is an insurance company that accounts for substantially all of the business operations and assets of the corporate groups. AICI filed for chapter 11 protection (Bankr. D. Nebr. Case No. 05-80059) while two of its non-insurance company subsidiaries filed for chapter 7 protection (Bankr. D. Nebr. Case No. 05-80056 and 05-80058) on Jan. 7, 2005. John J. Jolley, Jr., Esq., at Kutak Rock represents the Debtors in their bankruptcy cases. When the Company filed for protection from its creditors, it listed $33,069,446 in total assets and $137,120,541 in total liabilities. The Troubled Company Reporter initiated coverage of Acceptance Insurance on July 19, 2002, when Fitch Ratings cut the rating on the $94.875 million of trust preferred securities issued by AICI Capital Trust to junk levels. The Nebraska Department of Insurance issued an Order of Supervision to Acceptance's crop insurance subsidiary, American Growers Insurance Company in Nov. 2002. Prior to that action by the State, AGIC tried to sell its crop insurance assets to Rain and Hail L.L.C. The USDA Risk Management Agency blocked that transaction. ACCEPTANCE INSURANCE: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Acceptance Insurance Companies Inc. 300 West Broadway, Suite 1600 Council Bluffs, Iowa 51503 Bankruptcy Case No.: 05-80059 Debtor affiliates filing separate chapter 7 petitions: Entity Case No. ------ -------- Acceptance Insurance Services, Inc. 05-80056 American Agrisurance, Inc. 05-80058 Type of Business: The Debtor owns, either directly or indirectly, several companies, one of which is an insurance company that accounts for substantially all of the business operations and assets of the corporate groups. See http://www.aicins.com/ Chapter 11 Petition Date: January 7, 2005 Court: District of Nebraska (Omaha Office) Debtors' Counsel: John J. Jolley, Jr., Esq. Kutak Rock 1650 Farnam Omaha, NE 68102 Tel: 402-346-6000 Fax: 402-346-1148 Total Assets: $33,069,446 Total Debts: $137,120,541 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Stephen J. Lococo Security $5,494,532 681 Hackberry Road Omaha, NE 68132 IRA FBO Peter Coolidge Security $4,893,461 Pershing LLC as Custodian Rollover Account 10 Gracie Square Apt 6-G New York, NY 10028 Mark H. Tallman Security $2,310,296 2800 Kucera Drive Lincoln, NE 68502 Mammel Family Foundation Security $1,794,875 8805 Indian Hills Drive 375 Omaha, NE 68114 Paoli Popcorn Co. Inc. Security $1,551,263 Attn: Pam Soper P.O. Box 40 North Loup, NE 68859 Ross F. Hamacheck IRRA Security $1,342,458 FBO Ross F. Hamacheck 75 W End Ave #R23A New York, NY 10023 Alan S. Parsow Sep IRA Security $1,321,901 Ameritrade Inc. Custodian P.O. Box 818 Elkhorn, NE 68022 Mr. Robert J. Stetson Security $1,212,754 6800 Del Norte Lane #238 Dallas, TX 75225 Stephen A. Childs Security $1,061,159 115 13th Street Del Mar, CA 92014 FMT Co Cust IRA Rollover Security $1,000,522 FBO David G. Pirrung 13117 Sargas Street Raleigh, NC 27614 David L. Brandt Security $949,495 826 N. Jackson Street Arlington, VA 22201 Thomas E. Sieckmann PSP Security $924,725 FBO Thomas E. Sieckmann TD Waterhouse Bank Custodian 18401 Poppleton Circle Omaha, NE 68130 Wilshire Insurance Company Security $912,597 IAT Reinsurance Company 48 Wall Street 30th Floor New York, NY 10005 Central States Health & Life Security $909,565 Co. Attn: Jaime Amodeo P.O. Box 34350 Omaha, NE 68134 Guarantee & Trust Co. TTEE Security $818,609 Crowell Weedon & Co DEF COMP FBO: Robert Harris Hassan Trust DTD 11/1/84 30007 Trail Creek Drive Agoura Hills, CA 91301 David G. Pirrung Security $757,971 Katherine S. Pirrung 13117 Sargas Street Raleigh, NC 27614 James A. Betts Security $757,971 Elizabeth C. Betts 3209 Millstream Place Raleigh, NC 27609 IRA FBO Anthony S. Jacobs Security $636,696 Pershing LLC as Custodian Rollover Account 95 Dell Place Glencoe, IL 60022 Brush & Co. Security $615,472 P.O. Box 40 North Loup, NE 68859 Wells Fargo Bank Rollover Security $579,090 Brian R. Randall 8116 43rd St. CT. NW Gig Harbor, WA 98335 AERO PLASTICS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Aero Plastics, Inc. 163 Pioneer Drive Leominster, Massachusetts 01453 Bankruptcy Case No.: 05-60451 Type of Business: The Debtor manufactures household products. See http://www.aeroplastics.com/ Chapter 11 Petition Date: January 6, 2005 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: J. Michael Lamberth, Esq. Lamberth, Cifelli, Stokes, & Stout, PA East Tower, Suite 550 3343 Peachtree Road, North East Atlanta, GA 30326 Tel: 404-262-7373 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Total Petrochemicals USA, Inc. $1,847,827 P.O. Box 932437 Atlanta, GA 31193 Resin Distribution Inc. $1,370,025 1 Sculley Rd. Molumco Park Ayer, MA 01432 Advantage Polymers $697,594 P.O. Box 3447 Boston, MA 02241 Basell USA, Inc. $666,170 Po Box 905019 Charlotte, NC 28290 Osterman And Co. $570,812 Dept. 2257 135 S. Lasalle St Palatine, IL 60074 International Paper $567,841 P.O. Box 644095 Pittsburgh, PA 15264 The Dow Chemical Company $554,454 7719 Collection Center Dr. Chicago, IL 60693 Performance Polymers Inc. $434,676 803r Lancaster St. Leominster, MA 01453 Cam Nip Management LLC $241,002 Matrix Polymers $231,468 Thornton & Company Inc. $190,950 Shaw Polymers, LLC $183,124 Manner Resins $171,766 Cove Four-Slide & Stamping $161,233 Stone Container Corp. $156,124 Interstate Restoration Group $155,000 Polamer, Inc. $146,926 Central Georgia EMC SEDC $138,225 Goldmark $116,643 American Express $116,168 AEROSPACE ENG'G.: Case Summary & 31 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Aerospace Engineering & Research Associates, Inc. 4550 Forbes Boulevard, Suite 310 Lanham, Maryland 20706 Bankruptcy Case No.: 05-10241 Type of Business: The Debtor designs and develops next generation air traffic control and management systems. See http://www.freeflight.com/ Chapter 11 Petition Date: January 5, 2005 Court: District of Maryland (Greenbelt) Judge: Nancy V. Alquist Debtor's Counsel: James Greenan, Esq. McNamee, Hosea, Jernigan, Kim, Greenan & Walker, P.A. 6411 Ivy Lane, Suite 200 Greenbelt, MD 20770 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 31 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service secured claims $756,587 Insolvency Department 31 Hopkins Plaza - Rm. 1140 Baltimore, MD 21201 SBA Secured claims $718,523 P.O. Box 740192 Atlanta, GA 30374 Lonnie Bowlin Unsecured claims $403,627 700 Woodland Way Owings, MD 20737 Comptroller of the Treasury Priority claims $117,408 for the State of Maryland George Hill Unsecured claims $50,000 Diverified International Unsecured claims $45,000 Data Sciences Derry Court Associates Unsecured claims $26,597 Fidelity Institutional Unsecured claims $21,048 Operations Co. American Receivable Corp. Secured claims $17,500 Optimum Choice, Inc. Unsecured claims $7,181 MAMSI Life & Health Ins. Co. Unsecured claims $6,682 Office Depot Unsecured claims $5,391 Dell Commerical Credit Unsecured claims $2,660 Fidelity Institutional Unsecured claims $2,481 Operations Co. Aero-Tech Communications Unsecured claims $1,278 First Colony Life Insurance Unsecured claims $1,912 Co. Maryland Office of Priority claims $932 Unemployment Ins. Allegiance Telecom of Unsecured claims $552 Maryland, Inc. Jeppesen Sanderson, Inc. Unsecured claims $500 Prince Georges' County Priority claims $481 Treasury Div. MHM Business Services, Inc. Unsecured claims $250 IKON Financial Services Unsecured claims $249 Internal Revenue Service secured claims $241 Joe Ragan's Coffee Unsecured claims $160 IEEE Member Services Unsecured claims $151 BCE Corporation Unsecured claims $130 DHL Express Unsecured claims $39 UPS Unsecured claims $32 DHL Express Unsecured claims $26 FedEx Unsecured claims $15 Maryland Rev. Admin Priority claims $0 AMERICAN INT'L: Subsidiary Completes Sale of Lake Charles Refinery ------------------------------------------------------------------ American International Petroleum Corporation (OTC: AIPN) and American International Refinery, Inc., a wholly owned subsidiary of AIPC, said on December 31, 2004, AIRI consummated the sale of its Lake Charles Refinery and all associated real and personal property to Pelican Refining Company L.L.C. for $9 million in cash. Pelican Refining Company L.L.C. is owned by NuCoastal Refining and Marketing Company and BayOil (USA) Limited. The sale was conducted pursuant to an auction process under the supervision of the United States Bankruptcy Court for the Western District of Louisiana, Lake Charles Division. On December 9, 2004, the Bankruptcy Court approved the sale, subject to certain closing terms and conditions, including closing of the sale by the end of 2004. AIRI used the proceeds from the sale transaction to pay certain Bankruptcy Court approved obligations, including payment of its bankruptcy expenses, real property taxes, environmental fees, and payment of approximately $4.6 million to its secured lender, Halifax Fund LP, pursuant to a settlement agreement among AIRI, AIPC and Halifax approved by the Bankruptcy Court. This sale and settlement fully satisfies all obligations of AIRI and AIPC to Halifax. Neither AIPC nor AIRI expect proceeds from the sale to be available for distribution to their common stockholders. Headquartered in Lake Charles, Louisiana, American International Petroleum Corporation is a petroleum company which, through certain subsidiaries, is involved in oil and gas exploration and development in Kazakhstan. The Company, together with its wholly owned subsidiary, American International Refinery, Inc., filed for chapter 11 protection on Oct. 7, 2004 (Bankr. W.D. La. Case No. 04-52479). Robin B. Cheatham, Esq., and Dean W. Ferguson, Esq., at Adams & Reese LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated total assets between $1 million to $10 million, and total debts between $10 million to $50 million. A.P.I. INC: Case Summary & Largest Creditors & Asbestos Claimants ----------------------------------------------------------------- Debtor: A.P.I., Inc. fka API Construction Company 2366 Rose PL St. Paul, Minnesota 55113 Bankruptcy Case No.: 05-30073 Type of Business: The Debtor is a wholly owned subsidiary of APi Group, Inc., and is an industrial insulation contractor. See http://www.apigroupinc.com/ Chapter 11 Petition Date: January 5, 2005 Court: District of Minnesota (St. Paul) Judge: Chief Judge Gregory F. Kishel Debtor's Counsel: James L. Baillie, Esq. Faye Knowles, Esq. Fredrikson & Byron, PA 200 South 6th Street, Suite 4000 Minneapolis, Minnesota 55402-1425 Tel: (612) 492-7013 Total Assets: $34,702,179 Total Debts: $63,000,000 A.P.I. Inc. reports that its UNSECURED creditor constituency consists of approximately 400 holders of asbestos-related personal injury claims. A.P.I. Inc. reports that it owed $63,000,000 to these SECURED creditors on account of guarantees of borrowings by APi Group, Inc.: Claim Amount Secured Creditor ------------ ---------------- $2,000,000 CM Life Ins Co c/o David Babson & Co Inc 1295 State St Springfield, MA 01111 Represented by: Jeffrey M Schwartz, Esq. Gardner Carton & Douglas LLP 191 N Wacker Drive Suite 3700 Chicago, IL 60606 $2,000,000 Companion Life Ins Co The Chase Manhattan Bank 4 New York Plaza - 11th Fl New York, NY 10004 Represented by: Jeffrey M Schwartz, Esq. Gardner Carton & Douglas LLP 191 N Wacker Drive Suite 3700 Chicago, IL 60606 $9,000,000 LaSalle Bank NA Attn: Ward Nixon 50 S 6th St - Ste 1400 Minneapolis, MN 55402 Represented by: Chris Lenhart, Esq. John Thomas, Esq. 50 S 6th St - Ste 1500 Minneapolis, MN 55402 $14,000,000 Massachusetts Mutual Life Ins c/o David Babson & Co Inc 1295 State St Springfield, MA 01111 Represented by: Jeffrey M Schwartz, Esq. Gardner Carton & Douglas LLP 191 N Wacker Drive Suite 3700 Chicago, IL 60606 $5,000,000 Nationwide Life Ins Co of America One Nationwide Plaza Columbus, OH 43215 Represented by: Jeffrey M Schwartz, Esq. Gardner Carton & Douglas LLP 191 N Wacker Drive Suite 3700 Chicago, IL 60606 $14,000,000 Pacific Life Ins Co Attn Securities Dept 700 Newport Ctr Dr Newport Beach, CA 92660 Represented by: Jeffrey M Schwartz, Esq. Gardner Carton & Douglas LLP 191 N Wacker Drive Suite 3700 Chicago, IL 60606 Unknown Provident Mutual Life Ins Co Attn Investment Dept 1000 Chesterbrook Blvd Berwyn, PA 19312 Represented by: Jeffrey M Schwartz, Esq. Gardner Carton & Douglas LLP 191 N Wacker Drive Suite 3700 Chicago, IL 60606 $7,000,000 Thrivent Financial Lutherans Attn Investment Div 625 - 4th Ave S Minneapolis, MN 55415 Represented by: Jeffrey M Schwartz, Esq. Gardner Carton & Douglas LLP 191 N Wacker Drive Suite 3700 Chicago, IL 60606 $10,000,000 United Omaha Life Ins Co The Chase Manhattan Bank 4 New York Plaza - 11th Fl New York, NY 10004 Represented by: Jeffrey M Schwartz, Esq. Gardner Carton & Douglas LLP 191 N Wacker Drive Suite 3700 Chicago, IL 60606 $22,000,000 Wells Fargo Bank NA Attn Peter Garretson 430 N Wabasha St - Ste 302 Saint Paul, MN 55101 ATA AIRLINES: DOT Okays Code Share Agreement with Southwest ----------------------------------------------------------- The Department of Transportation concluded its review of the code share agreement between Southwest Airlines (NYSE: LUV) and ATA Airlines, Inc., allowing the carriers to put the agreement into service. "We're delighted to receive the necessary DOT clearance, enabling ATA to bring everyday low fares to many new markets with our new partner Southwest Airlines," said J. George Mikelsons, chairman, president and CEO ATA Airlines. "We believe this 'New Age' code share will set the new standard for travelers looking for top- shelf value at affordable prices." "We are pleased that we can now move forward with this exciting opportunity," said Gary Kelly, Southwest's CEO. "We think travelers will love the destinations that will be added to the Southwest route map through the code share." 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. BERWALD PARTNERSHIP: Disclosure Statement Hearing Set for Feb. 1 ---------------------------------------------------------------- The Honorable Irvin N. Hoyt of the U.S. Bankruptcy Court for the District of South Dakota will convene a hearing at 3:30 p.m., on February 1, 2005, to consider the adequacy of the Disclosure Statement explaining the Plan of Reorganization filed by Berwald Partnership. The Debtor filed its Disclosure Statement and Chapter 11 Plan on December 21, 2004. The Plan groups claims and interests into sixteen classes and provides for these recoveries: a) Class 1 consisting of the AGSTAR claims will be paid with an interest rate of 6.85% per annum, amortized over a twenty-year term and a balloon at the end of seven years after the first Plan payment; b) Class 2 consisting of the US Bank claims will be paid with an interest rate of 6.85% per annum, amortized over a fifteen-year term and a balloon payment due at the end of ten years from the Effective Date; c) Class 3 consisting of the Dacotah Bank claims will be paid with an interest rate of 6.5% per annum, amortized over a fifteen-year term with a balloon payment due at the end of ten years from the Effective Date of the Plan; d) Class 4 consisting of the CHS Fin-Ag claims will be paid with an interest rate of 6.85% per annum, amortized over a fifteen-year term and a balloon payment due at the end of seven years from the Effective Date of the Plan; e) Class 5 consisting of the claims of Arlen and Eunice Berwald will receive $3,075.00 per month and starting 90 days from the Effective Date until their claims are paid in full; f) Class 6 consisting of the VanBeek Scientific, LLC claims will receive $1,661.04 per month with an interest rate of 7% per annum amortized over a seven-year term and payments starting 90 days from the Effective Date; g) Class 8 consisting of the Aurora County Treasurer claims will receive $564.71 per month with an interest rate of 12% amortized over a three-year term, with a balloon payment at the end of the third year and payments starting 90 days from the Effective Date; h) Class 9 consisting of the Here-U-Lift claims will be paid $299.00 per month for a term of sixty months with a final balloon balance due in the amount of $5,542.98 at the end of the sixtieth month and payments starting no later than January 2005; i) Class 10 consisting of the Farm Credit Services claims will receive $1,100.44 per month with an interest rate of 5.5% per annum over a term of seven years and payments starting from 90 days from the Effective Date; j) Class 11 consisting of the GMAC claims will receive 1,086.00 per month until those claims are paid in full and payments starting no later than January 2005; k) Class 12 consisting of the New Equipment Inc., claims will receive $931.67 per month for a term of seven years with an interest rate of 7% per annum and payments starting no later than January 2005; l) Class 13 consisting of the New Holland Credit claims will receive $2,230.38 per month for a term of seven years with an interest rate of 7% per annum and payments starting within ninety day from the Effective Date; m) Class 14 consisting of the Case Credit claims will receive $136.80 per month for a term of seven years with an interest rate of 7% per annum and payments starting within ninety days from the Effective Date; n) Class 15 claims consisting of Administrative Convenience Unsecured Creditors will be paid 100% of their claims over a term of three years with no interest, and a third of their claims will be paid one year after the Effective Date; and o) Class 16 claims consisting of Unsecured Creditors will receive Pro Rata payments with an interest rate of 5% per annum over a term of twenty years and a balloon payment seven years after the Effective Date rata. Full-text copies of the Disclosure Statement and Plan are available for a fee at: http://www.researcharchives.com/download?id=040812020022 Objections to the approval of the Disclosure Statement, if any, must be filed and served on or before January 24, 2005. Headquartered in Toronto, South Dakota, Berwald Partnership filed for chapter 11 protection on Aug. 23, 2004 (Bankr. D.S.D. Case No. 04-10273). Clair R. Gerry, Esq., at Stuart, Gerry & Schlimgen, LLP, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. BRANDYWINE HOLDINGS: Fitch Downgrades Subsidiaries' Rating to 'B-' ------------------------------------------------------------------ Fitch Ratings today downgraded the insurer financial strength -- IFS -- ratings of the insurance subsidiaries of Brandywine Holdings (the run-off companies) to 'B-' from 'B+'. These IFS ratings remain on Rating Watch Negative. At the same time, Fitch has affirmed the 'A+' IFS ratings of insurance subsidiaries of INA Holdings (the active companies) and the debt ratings of ACE Limited and ACE INA Holdings with a Stable Rating Outlook. The rating actions follow ACE's announcement that the 2004 review of the run-off companies' reserves would result in a net $298 million after-tax GAAP charge to boost asbestos and environmental -- A&E -- reserves. Concurrent with the charge, ACE announced the planned sale of Brandywine Holdings insurance subsidiary, ACE American Reinsurance Company -- AARC -- along with a planned commutation of reinsurance contracts between Century Indemnity Company and AARC. The magnitude of the charge would have consumed the remainder of the stop loss agreement if the sale and commutation had not been initiated. Approximately $60 million of available cover under the stop loss agreement remains available upon completion of this transaction. If ACE successfully consummates the AARC transaction as planned, Fitch expects to remove the run-off companies' insurance ratings from Rating Watch Negative and affirm them at 'B-' with a Negative Rating Outlook. If ACE is unable to successfully complete the transaction, Fitch may further downgrade the run-off companies' insurance ratings. The active companies' ratings are put under some stress as a result of the run-off companies' draw on the stop loss agreement. However, ACE has indicated that it expects to replenish the active companies' lost surplus through a capital contribution. As a result, Fitch has affirmed the active companies' ratings at 'A+' with Stable Rating Outlook. Additionally, Fitch notes that the active companies reported much improved operating earnings in 2003 and 2004, the result of an underwriting profit (versus an underwriting loss reported in 2002) and improved investment income. Operating leverage also improved, though reinsurance leverage remains high. Further, the active companies continue to benefit from being subsidiaries of ACE, who contributed $250 million of additional capital to them in 2003 and has committed to replenishing the capital lost through the most recent asbestos charge. Offsetting these positives, the active companies are expected to remain exposed to the run-off companies under an aggregate excess of loss contract imposed during the restructuring (after consummation of the AARC sale) and through reinsurance recoverables. The active companies' risk based capital ratios are also low for the 'A+' rating level. The affirmation of the various debt ratings reflects ACE's progress over recent years in improving profitability, reducing financial leverage and improving tangible equity. However, Fitch believes A&E liabilities will continue to be a drag on ACE's earnings in the near future and ACE's exposure to reinsurance recoverables remains high. Brandywine Holdings is an intermediate holding company that is ultimately owned by ACE. Brandywine Holdings and INA Holdings, another intermediate holding company, together comprise the domestic operations of INA Financial, their parent, and represent the US property/casualty insurance operation that ACE purchased from CIGNA Corporation in 1999. INA Holdings owns the 19 insurance companies that represent the group's active insurance operations. Brandywine Holdings owns the three domestic insurance companies which are inactive, run-off operations now largely consisting of asbestos and environmental claims. The two groups were separated in a 1996 restructuring. However, the groups remain linked through an aggregate excess of loss agreement. The excess of loss agreement originally provided Century Indemnity Company, the lead inactive company, with up to $800 million of support for either net worth maintenance or liquidity needs. The individual ratings affected are listed below: Entity/Issue/Type Action Rating/Outlook ACE Limited: Long-term issuer Affirm 'A-'/Stable; Senior notes: -- $500 million 6% due April 1, 2007, Affirm 'A-'/Stable; Preferred Stock: -- $575 million 7.8% perpetual Affirm 'BBB+'/Stable; -- $750 million commercial paper Affirm 'F2'. ACE INA Holdings, Inc.: Long-term Issuer Affirm 'A-'/Stable; Senior debentures: -- $100 million 8.875% due Aug. 15, 2029, Affirm 'A- '/Stable; Senior notes: -- $300 million 8.3% due Aug. 15, 2006, Affirm 'A- '/Stable; -- $500 million 5.875% due June 15, 2014 Affirm 'A-'/Stable; -- $2.05 billion commercial paper Affirm 'F2'. ACE Capital Trust I: Trust Preferred Securities: -- $100 million 8.875% due Dec. 31, 2029 Affirm 'BBB+'/Stable; ACE Capital Trust II: Capital Securities: -- $300 million 9.7% due April 1, 2030 Affirm 'BBB+'/Stable. ACE American Lloyds Insurance Company ACE American Insurance Company ACE Employers Insurance Company ACE Fire Underwriters Insurance Company ACE Indemnity Insurance Company ACE Insurance Company of Illinois ACE Insurance Company of Ohio ACE Insurance Company of Texas ACE Insurance Company of the Midwest ACE Property & Casualty Insurance Co. Allied Insurance Company Atlantic Employers Insurance Company Bankers Standard Fire and Marine Co. Bankers Standard Insurance Company Illinois Union Insurance Company INA Surplus Insurance Company Indemnity Ins. Co. of North America Insurance Company of North America Pacific Employers Insurance Company: -- Insurer financial strength Affirm 'A+'/Stable. ACE American Reinsurance Company Century Indemnity Company Century Reinsurance Company: -- Insurer financial strength Downgrade 'B-'; -- Remains on Rating Watch Negative. The ACE Group of Companies is one of the world's largest providers of property and casualty insurance and reinsurance. Headquartered in Bermuda, ACE provides a diversified range of products and services to clients in nearly 50 countries around the world. BRIDGEPOINT TECHNICAL: Jerry Lewis Approved as Debtor's Accountant ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Texas gave BridgePoint Technical Manufacturing Corp., permission to employ Jerry Lewis, CPA, as its accountant. BridgePoint Technical tells the Court that it employed Jerry Lewis to provide it with accounting services, including the preparation of federal and state income tax returns and extension for the fiscal year 2004. Mr. Lewis will also provide all other accounting services that the Debtor sees appropriate and necessary in relation to its chapter 11 case. Mr. Lewis reports that his compensation for his services to the Debtor consists of an annual fee of $6,000 per year. Mr. Lewis assures the Court that he does not represent any interest adverse to the Debtor or its estate. Headquartered in Austin, Texas, BridgePoint Technical Manufacturing Corp. -- http://www.bridgept.com/-- provides engineering, testing, packaging, and circuit board assembly services to semiconductor and computer companies. The Company filed for chapter 11 protection on September 3, 2004 (Bankr. W.D. Tex. Case No. 04-14555). Mark Curtis Taylor, Esq., at Hohmann & Taube, LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $10 million to $50 million. BRIDGEPOINT TECHNICAL: Wants Until Jan. 31 to File a Chap. 11 Plan ------------------------------------------------------------------ BridgePoint Technical Manufacturing Corp., asks the U.S. Bankruptcy Court for the Western District of Texas for an extension, through and including Jan. 31, 2005, of the time within which it alone can file a chapter 11 plan. The Debtor also asks the Court for more time to solicit acceptances of that plan from their creditors, through March 31, 2005. This is the Debtor's first request for an extension of its exclusive periods. The Debtor gives the Court three reasons militating in favor of its request for more time to propose and file a chapter 11 plan: a) the Debtor needs more time to discuss with the representatives of the Creditors Committee and its secured lenders in formulating a consensual plan of reorganization; b) the holidays season in December caused some of the Debtor's business working days to be irregular and some of its professionals essential to the plan formulation to become unavailable; and c) the Debtor is not using its extension motion to prejudice its creditors and other parties in interest. Headquartered in Austin, Texas, BridgePoint Technical Manufacturing Corp. -- http://www.bridgept.com/-- provides engineering, testing, packaging, and circuit board assembly services to semiconductor and computer companies. The Company filed for chapter 11 protection on September 3, 2004 (Bankr. W.D. Tex. Case No. 04-14555). Mark Curtis Taylor, Esq., at Hohmann & Taube, LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $10 million to $50 million. BRISTOL CDO: S&P Places Ratings on CreditWatch Negative ------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class B and C notes issued by Bristol CDO I Ltd., a cash flow arbitrage CDO of ABS/RMBS, on CreditWatch with negative implications. At the same time, the ratings on the class A-1 and A-2 are affirmed based on the credit enhancement available to support the notes. The class B and C notes were previously lowered Apr. 27, 2004. The current rating actions reflect factors that have negatively affected the credit enhancement available to support the notes since the April 27, 2004, rating actions. These factors include continued negative migration in the collateral pool, primarily within the manufactured housing sector. Standard & Poor's noted that the class C notes have deferred interest since the Oct. 11, 2004 payment date due to the required class A/B overcollateralization test cure. Standard & Poor's will be reviewing the results of the current cash flow runs generated for Bristol CDO I Ltd. to determine the level of future defaults the rated classes can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement available. Ratings Placed on Creditwatch Negative Bristol CDO I Ltd. Rating Class To From ----- -- ---- B A+/Watch Neg A+ C BB-/Watch Neg BB- Ratings Affirmed Bristol CDO I Ltd. Class Rating ----- ------ A-1 AAA A-2 AAA Transaction Information Issuer: Bristol CDO I Ltd. Co-issuer: Bristol CDO I Inc. Current manager: Vanderbilt Capital Advisors Underwriter: Credit Suisse First Boston Trustee: Wells Fargo Bank N.A. Transaction type: CDO of ABS Tranche Initial Previous Current Information Report Action Action ----------- ------- -------- ------- Date (MM/YYYY) 11/2002 4/2004 1/2005 Cl. A-1 notes rating AAA AAA AAA Cl. A-2 notes rating AAA AAA AAA Cl. B note rating AA A+ A+/Watch Neg Cl. A/B OC ratio 107.296% 105.885% 102.077% Cl. A/B OC ratio min. 104.50% 104.50% 96.851% Cl. A-1 note bal. $223.50mm $197.36mm $175.323mm Cl. A-2 note bal. $20.50mm $18.10mm $16.081mm Cl. B note bal. $30.00mm $30.00mm $30.00mm Cl. C note rating BBB BB- BB-/Watch Neg Cl. C OC ratio 102.436% 101.0027% 96.85% Cl. C OC ratio min. 102.00% 102.00% 102.00% Cl. C note bal. $13.00mm $11.79mm $11.946mm CATELLUS DEVT: S&P Upgrades Corporate Credit Rating to BBB- ----------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Catellus Development Corp. to 'BBB-' from 'BB+'. Additionally, the outlook is revised to stable from positive. The company currently has no publicly rated securities outstanding. "The upgrade reflects Catellus' largely completed rotation out of mixed-use urban and large-scale residential land development projects and the continued generation of comparatively good operating results during its first year as a REIT," said Standard & Poor's credit analyst Scott Robinson. "These strengths continue to be tempered by a balance sheet that is slightly more leveraged and fully encumbered by secured mortgage debt and a large developable land bank." The stable outlook is supported by management's success during the past year in transitioning the company to an industrial property- focused REIT with solid in-house development capabilities from a C Corp industrial property and land developer. As part of this process, management recognized significant value by divesting of its noncore investments. These efforts have resulted in a more stable and predictable revenue stream while modestly improving the financial profile, as disposition proceeds have been used to pay down debt. CENTURY INDEMNITY: S&P Puts Ratings on CreditWatch After Downgrade ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its counterparty credit and financial strength ratings on ACE Ltd.'s active operating insurance companies on CreditWatch with negative implications. Standard & Poor's also said that it placed its ratings on ACE, including the 'BBB+' counterparty credit rating, on CreditWatch negative. In addition, Standard & Poor's lowered its counterparty credit and financial strength ratings on Century Indemnity Co. to 'B+' from 'BB+' and placed these ratings on CreditWatch negative. "The ratings were placed on CreditWatch negative following ACE's announcement of a $298 million after-tax reserve charge and the uncertainty surrounding this event," explained Standard & Poor's credit analyst Damien Magarelli. "Standard & Poor's has questioned whether the ultimate reserve requirement to fulfill policyholder obligations for Century Indemnity Co. and affiliates -- as well as the other related entities within Brandywine -- is sufficient even with the $298 million after-tax reserve charge." This creates uncertainty about the degree to which this obligation is limited by contract. If the obligation is not limited to this legal contract, the ratings on ACE could be lowered one notch. (A two-notch downgrade is possible but less likely.) This view encompasses the uncertainties surrounding the sale of ACE American Re and the approval by the Pennsylvania Insurance Department and the U.K. Financial Services Authority. The ratings on ACE reflect its strong competitive position as a global and diversified property/casualty company as well as its strong financial flexibility and operating performance. Offsetting these considerations to some extent are the company's amount of reinsurance recoverables, runoff reserves, and intangibles. The company's execution of an aggressive growth strategy through more competitive rates is also viewed as a negative factor. Furthermore, ACE's good combined ratio must be considered in light of a relatively modest level of accident-year reserve bookings. Lastly, the ongoing investigation of the insurance and brokerage industry by the State of New York with regard to various pricing practices, given the scope of the investigations, still remains a negative factor for the company. CLEARLY CANADIAN: Completes CDN$258,750 Equity Private Placement ---------------------------------------------------------------- Clearly Canadian Beverage Corporation (TSX:CLV)(OTCBB:CCBC) reported the completion of a private placement of 1,035,000 shares at a price of Cdn$0.25 per share, generating gross proceeds of Cdn$258,750. The private placement was originally announced on December 9, 2004, and at that time the Company indicated a placement of up to 1,500,000 shares, of which 1,035,000 shares were issued. Directors, officers and employees of the Company subscribed for all of the 1,035,000 shares, which was the maximum number of shares that the non-arms-length parties were permitted to acquire under applicable Toronto Stock Exchange rules and policies. The proceeds from the private placement will be used to fund the Company's current inventory production requirements. In connection with the private placement, directors and officers of the Company acquired shares as follows: Douglas L. Mason President and C.E.O. 700,000 shares Bruce E. Morley C.L.O. 115,000 Stuart R. Ross C.F.O. 25,000 Philip J. Langridge Director 100,000 Neville W. Kirchmann Director 50,000 Glen D. Foreman Director 25,000 Due to the relationship between the directors and officers and the Company, the private placement is considered to be a "related party transaction" as defined under Ontario Securities Commission Rule 61-501, however, it is exempt from certain applications of the Rule on the basis that the common shares of the Company issued to the directors and officers represents less than 25% of the current market capitalization of the Company. On a diluted basis, directors and officers of the Company have collectively increased their ownership in the Company by 8.36%. The private placement shares are subject to a required four-month hold period and no discounts or warrants were offered or issued in connection with the private placement. About Clearly Canadian Based in Vancouver, B.C., Clearly -- http://ww.clearly.ca/-- Canadian markets premium alternative beverages, including Clearly Canadian(R) sparkling flavoured water, Clearly Canadian O+2(R) oxygen enhanced water beverage and Tre Limone(R) which are distributed in the United States, Canada and various other countries. At Sept. 30, 2004, Clearly Canadian's balance sheet showed a $681,000 stockholders' deficit, compared to $1,125,000 in positive equity at Dec. 31, 2003. COOPER COS: Pays $600 Mil. Cash to Stockholders Following Merger ---------------------------------------------------------------- The Cooper Companies, Inc.'s (NYSE:COO) merger with Ocular Sciences, Inc., has closed. At closing, Cooper paid approximately $600 million in cash and issued approximately 10.7 million shares of its common stock to Ocular Sciences stockholders and option holders. In accordance with Nasdaq trading policies, shares of Ocular common stock continued trading on The Nasdaq National Market until Jan. 6, at 4:00 pm (EST); however, those shares will represent solely the right to receive the merger consideration of 0.3879 of a share of Cooper common stock and $22.00 in cash. "This acquisition is an ideal strategic fit for Cooper," said A. Thomas Bender, Cooper's chief executive officer. "Ocular brings geographic and product line balance and manufacturing technology to our CooperVision business unit. We expect to nearly double our revenue base and enhance our cash flow and profitability," Mr. Bender added. "Combining Cooper and Ocular Sciences is a strategic opportunity that immediately creates a company with significant scale and presence in all major markets around the world," said John Fruth, Ocular Sciences' founder and chairman, who will join Cooper's board of directors. "The combined companies will offer our customers a wider choice of contact lens products for their patients," Mr. Fruth noted. The Cooper Companies' CooperVision unit, the world's fourth largest contact lens manufacturer, is a leading global supplier of specialty contact lenses. Ocular Sciences, the world's fifth largest contact lens manufacturer, supplies primarily spherical and daily disposable contact lenses. With the completion of the merger, CooperVision becomes the world's third largest contact lens company. Revenue and Earnings Per Share Guidance Cooper expects fiscal first quarter 2005 revenue of between $149 million and $153 million and earnings per share of between $.52 and $.55 per share. CooperVision expects fiscal first quarter 2005 revenue of between $122 million and $125 million and CooperSurgical expects revenue of between $26 million and $27 million for the same period. This guidance is exclusive of nonrecurring charges for accounting and restructuring. The Cooper Companies, headquartered in Pleasanton, California, manufactures and markets soft contact lenses worldwide. The company also manufactures diagnostic products, surgical instruments, and accessories for women's healthcare. For the twelve months ended July 31, 2004, the company generated approximately $470 million of revenues. * * * As reported in the Troubled Company Reporter on Oct. 18, 2004, Moody's Investors Service assigned Ba3 ratings to the proposed credit facilities of The Cooper Companies, Inc. Moody's also assigned a Ba3 senior implied rating, a B1 senior unsecured issuer rating, and an SGL-2 speculative grade liquidity rating to the company. The outlook for the ratings is stable. This is the first time Moody's has rated Cooper. New Ratings: * $275 Million 5 Year Senior Secured Revolving Credit Facility, rated Ba3 * $325 Million 5 Year Senior Secured Term Loan A, rated Ba3 * $150 Million 7 Year Senior Secured Term Loan B, rated Ba3 * Senior Implied Rating, rated Ba3 * Senior Unsecured Issuer Rating, rated B1 * Speculative Grade Liquidity Rating, rated SGL-2 The outlook for the ratings is stable. The ratings reflect: (i) the company's high leverage, integration risks associated with the Ocular Sciences, Inc. acquisition, and (ii) the company's aggressive growth strategy and continued interest in acquisitions. The ratings further reflect: (i) the highly competitive environment, (ii) the company's limited size relative to its competitors, and (iii) its primary focus on a single line of business. Credit strengths considered by Moody's include: (i) Cooper's strong historical performance and Ocular's favorable performance trends, (ii) the strong growth anticipated for the soft contact lens industry, (iii) the company's solid competitive position, and (iv) the company's history of success in acquiring and integrating companies. CROSSROADS CHRISTIAN: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Crossroads Christian Center, Inc. 154 Cohannet Street Taunton, Massachusetts 02780 Bankruptcy Case No.: 05-10128 Chapter 11 Petition Date: January 6, 2005 Court: District of Massachusetts (Boston) Judge: Robert Somma Debtor's Counsel: Richard N. Gottlieb, Esq. Law Offices of Richard N. Gottlieb Eleven Beacon Street, Suite 625 Boston, MA 02108 Tel: 617-742-4491 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20-largest creditors. DELTA AIR: Bestfares.com Says Airfare Cuts to Challenge Carriers ---------------------------------------------------------------- Delta Air Lines (NYSE: DAL) announced up to 50% cuts in its fares as the airline expands its SimpliFares for travel within the 48 contiguous United States. As part of Delta's transformation plan announced in September, SimpliFares' lower unrestricted fares will save customers hundreds of dollars each trip on flights operated by Delta and certain Delta Connection carriers. With SimpliFares, no fare -- including last-minute walk-ups -- is higher than $499 one-way* in economy or $599 one-way* in first class. Additional taxes, fees, and restrictions apply, and fares are available only for purchase on delta.com or from a travel agent. Customers booking on http://www.delta.com/can choose refundable or non-refundable tickets and save even more by purchasing tickets three, seven or 14 days in advance of travel. Roundtrip purchase is required for some fares, but customers never have to stay over a Saturday night. Additionally, with SimpliFares, Delta has reduced the ticket change fee to $50 from $100. "We're expanding SimpliFares based on feedback from our customers, who are calling for simpler, more affordable everyday fares," said Delta's CEO Jerry Grinstein. "Now customers can be sure that flying Delta means not only an extensive network, customer- friendly technology, strong partnerships and the rewarding SkyMiles loyalty program, it also means easy, accessible and reliable prices. Taking SimpliFares nationwide is part of Delta's commitment to improve the travel experience and also to produce significant savings through simpler, more efficient ways of doing business - and there's more to come." Delta introduced SimpliFares in August 2004 in Cincinnati, its second-largest hub. In addition to SimpliFares, Delta is redesigning its aircraft cabins with new brighter interiors and all-leather seats and has simplified its SkyMiles program. Later this year, Delta will unveil other changes, including improving customers' online experience at delta.com, revising its onboard food product and unveiling new employee uniforms, as part of an ongoing company-wide overhaul to make the passenger experience more comfortable, affordable, simple, stylish and inviting. SimpliFares are easily accessible at http://www.delta.com/ Customers who purchase tickets through delta.com can receive 1,000 bonus miles with no direct ticketing fees. Keeping in line with the rest of the industry, tickets purchased over the telephone from Delta Reservations will now cost $5 more per ticket and $10 more if purchased at Delta ticketing locations, including at the airport. These additional costs apply to original ticket sales on Delta, Delta Shuttle, Delta Connection, and Song, Delta's low-fare air service, and are non-refundable. A portion of travel for some itineraries may be on the Delta Connection carriers: Atlantic Southeast Airlines, Chautauqua Airlines, Comair, and SkyWest; codeshare partner, American Eagle; or Song, Delta's low-fare service. Low-Cost Airlines Face New Challenges Delta Air Lines announcement of its new SimpliFares program has one mission: to disrupt the growth of low-cost airlines, says Tom Parsons, CEO of Bestfares.com, an internet travel information web site. For the past few years, Delta, along with the other major legacy carriers have watched the low-cost carriers, such as Southwest, AirTran, JetBlue, Spirit, ATA and America West erode market share, and more importantly, lower domestic airfares dramatically. These both have had a significant impact on the legacy airlines. Today, US Airways and United are in bankruptcy, and their futures are not clear. Other major airlines have lost billions of dollars in the past year. While Delta's new fares are still higher than many of its low-cost competition, Delta's proximity to more people in smaller cities and major airports may mean more passengers will stick around and fly Delta out a close- in airport, rather than drive to an airport with a low-cost carrier. "This move will increase Delta's passenger yield, and at the same time, takes a swat at the low-cost airlines," says Mr. Parsons. "This may be the only move left to slow down the low-cost carriers." Delta Air Lines -- http://delta.com/-- is the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 493 destinations in 87 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta's marketing alliances allow customers to earn and redeem frequent flier miles on more than 14,000 flights offered by SkyTeam, Northwest Airlines, Continental Airlines and other partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. At September 30, 2004, Delta Air Lines reported a $3.58 billion shareholder deficit, compared to a $659 million shareholder deficit at December 31, 2003. ENER1 INC: Distributes 5 Million Shares of Splinex Common Stock --------------------------------------------------------------- Ener1, Inc. (OTC Bulletin Board: ENEI) has declared a dividend to its shareholders in the form of a distribution of five million shares of common stock of Splinex Technology Inc. Splinex is a developer of multi- dimensional, visual computing software and technology. The shares of Splinex Technology common stock will be issued to Ener1 in connection with a previously announced merger agreement, under which a non-active subsidiary of Ener1 will be merged into Splinex Technology. Splinex has filed a registration statement with the Securities and Exchange Commission to register the distribution by Ener1 of the Splinex common stock. Ener1's obligation to close the merger is subject, among other things, to the effectiveness of the Splinex Technology registration statement. The dividend will be paid to Ener1 shareholders of record as of the close of business on Jan. 17, 2005. Ener1 and Splinex Technology will continue to operate independently following the merger. Kevin Fitzgerald, Chairman and Chief Executive Officer of Ener1, Inc., and a member of Splinex Technology's board, stated, "The key elements are now in place to enable Splinex Technology to significantly accelerate the execution of its business strategy and capitalize on numerous market opportunities for its visual computing software and technologies. We believe our shareholders stand to benefit through ownership of registered stock in Splinex Technology. We also are very pleased to note that Splinex Technology has been able to attract Michael Stojda, a seasoned executive with expertise in the computer graphics and digital content creation software industries, as its CEO." Stojda has 17 years of high-technology experience in computer software and hardware markets. Most recently, he was a member of Avid Technology, Inc.'s executive team and was the Managing Director of the company's Canadian subsidiary, Softimage Co. At Softimage, Mr. Stojda oversaw the company's turnaround, the growth of its XSI solution into the leading animation system in its class and the completion and delivery of Softimage's revolutionary video finishing system. About Splinex Splinex Technology was formed in early 2004 to capitalize on the growing use of digital images and objects in technology-focused markets. The company is developing software to enable users to quickly analyze, search, sort and view multidimensional digital images and objects without dedicated high-end workstations or expensive limited-use software. Potential markets for the company's products and technology include geographical information, computer assisted design & manufacturing, medical imaging, geomatics -- creating maps from satellite and radar imagery, seismic imaging and national security/biometrics. More information about Splinex Technology is available at http://www.splinex.com/ About Ener1, Inc. Ener1, Inc., develops and markets new technologies and products for clean, efficient energy sources. Ener1 markets lithium batteries and battery packs through EnerDel, its majority-owned venture with Delphi Corp. Ener1 also develops and markets nanotechnology-based materials through its NanoEner, Inc., subsidiary and fuel cell components and testing services through its EnerFuel, Inc. subsidiary. Ener1's products have applications for markets that include power tools and industrial equipment, medical devices, hybrid vehicle propulsion and military communications. For more information on Ener1's products, please visit its Web site at http://www.ener1.comor call (954) 556- 4020. * * * In its amended Form 10-Q for the quarterly period ended Sept. 30, 2004, filed with the Securities and Exchange Commission, Ener1 disclosed that it has experienced net operating losses since 1997 and negative cash flows from operations since 1999 through Sept. 30, 2004, and has an accumulated deficit of $70 million as of Sept. 30, 2004. It is likely that the Company's operations will continue to incur negative cash flows through Sept. 30, 2005. Also, should the company not be able to meet the terms of the Senior Secured Convertible Debentures, $19,700,000 would become immediately due. Additional financing will be required to fund the Company's planned operations through Sept. 30, 2005, and the Company intends to seek additional debt or equity financing as required. If additional financing is not obtained, such a condition, among others, will give rise to substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. E*TRADE FINANCIAL: Promotes Lou Klobuchar, Jr., to President ------------------------------------------------------------ E*TRADE FINANCIAL Corporation (NYSE: ET) disclosed an organizational realignment designed to more directly link the Company's business operations with its high growth customer segments. The new management structure will align all operations directly to the Company's retail and institutional customer segments, marking a change from the prior business alignment of banking and brokerage. To manage the operations of the realigned organization, the Board has approved the promotion of Lou Klobuchar, Jr., to President, E*TRADE FINANCIAL Services and the election of Dennis Webb to a newly created executive officer position, President, E*TRADE Capital Markets. Both Mr. Klobuchar and Mr. Webb will report to E*TRADE FINANCIAL President and COO R. Jarrett Lilien. "[Thursday]'s announcement signals the next chapter of the Company's evolution," said Mitchell H. Caplan, the Company's Chief Executive Officer. "With all business operations directly aligned with high growth customer segments, we are poised to deliver top line revenue growth and bottom line results for shareholders by providing our key customers a wide range of value- priced, integrated financial solutions that offer advanced functionality and service." Lou Klobuchar Jr., formerly the Company's Chief Brokerage Officer and President of E*TRADE Securities LLC, will be responsible for all businesses serving the global retail customer. In this expanded role, Mr. Klobuchar will be responsible for driving complete integration of all of E*TRADE FINANCIAL's retail products, launching the next generation of product innovation and driving overall growth in the Company's retail business. In his capacity as President, E*TRADE Capital Markets, Dennis Webb will be responsible for all businesses serving the global institutional customer. Mr. Webb, formerly Executive Vice President, Capital Markets -- Banking, has been employed by E*TRADE FINANCIAL since 2000, and has served in the roles of Asset Liability Manager, Head of Whole Loan Secondary Markets and President of E*TRADE Global Asset Management. As part of the organizational shifts, the Company will realign its external financial segment reporting around the new retail and institutional customer segments. The Company anticipates that systems adjustments will be in place to enable the Company to report in this manner for periods beginning on or after January 1, 2005. The financial performance for 2004 will continue to be reported as Bank and Brokerage, in accordance with the manner in which the business was managed during this period. About the Company The E*TRADE FINANCIAL family of companies provides financial services including brokerage, banking and lending for retail, corporate and institutional customers. Securities products and services are, and will continue to be, offered by E*TRADE Securities LLC (Member NASD/SIPC). Bank and lending products and services are, and will continue to be, offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries. Bank deposits are FDIC-insured up to $100,000. Subject to credit approval. * * * As reported in the Troubled Company Reporter on Dec. 14, 2004, Standard & Poor's Ratings Services assigned its preliminary ratings to E*TRADE RV and Marine Trust 2004-1's $307.5 million asset-backed notes series 2004-1. The preliminary ratings are based on information as of Dec. 10, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the initial credit enhancement in the form of a nonamortizing reserve account (1.50%), overcollateralization (0.50%), subordination (2.25%-12.00%), and excess spread. The credit enhancement percentages are expressed as a percentage of the initial receivables pool balance, which, as of Nov. 30, 2004, was $308,996,120. The preliminary ratings also reflect the credit quality of the underlying pool of recreational vehicle and marine loans, the structural features that preserve the available credit enhancement, and the sound legal structure. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned E*TRADE RV and Marine Trust 2004-1 Class Rating Amount (mil. $) ----- ------ --------------- A-1 AAA 60.900 A-2 AAA 65.600 A-3 AAA 76.400 A-4 AAA 32.700 A-5 AAA 34.772 B AA 10.042 C A 9.270 D BBB 10.815 E (not offered) BB 6.952 FEDERAL-MOGUL: Court Adjourns Jan. 13 & 14 Confirmation Hearings ---------------------------------------------------------------- Judge Lyons of the U.S. Bankruptcy Court for the District of Delaware adjourned the Jan. 13-14, 2005, hearing on confirmation of the Third Amended Joint Plan of Reorganization filed by Federal-Mogul Corporation and its debtor-affiliates, together with the Unsecured Creditors Committee, Asbestos Claimants Committee, Equity Security Holders Committee, the Legal Representative for Future Asbestos-Related Claimants, and JPMorgan Chase Bank as Administrative Agent for the Debtors' prepetition lenders. The rescheduled date will be determined after the Jan. 25, 2005, hearing on the Joint Motion by the Debtors and the Futures Representative to: (a) clarify Judge Wolin's Dec. 10, 2001, Order; and (b) delineate the roles of the District Court and the Bankruptcy Court regarding the asbestos estimation and confirmation matters. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service, Inc., 215/945-7000) FINOVA GROUP: Court Enters Final Decree Closing Six Cases --------------------------------------------------------- The Finova Group, Inc. and its debtor-affiliates ask the Court to issue a final decree closing the Chapter 11 cases of: Reorganized Debtor Case No. ------------------ -------- The FINOVA Group, Inc. 01-697 FINOVA (Canada) Capital Corporation 01-699 FINOVA Capital, PLC 01-700 FINOVA Loan Administration, Inc. 01-701 FINOVA Mezzanine Capital, Inc. 01-702 FINOVA Technology Finance, Inc. 01-704 FINOVA Finance Trust 01-705 Section 350(a) of the Bankruptcy Code provides in pertinent part that "after an estate is fully administered . . . the court shall close the case." Rule 3022 of the Federal Rules of Bankruptcy Procedure, which implements Section 350 in a Chapter 11 case, states that "[a]fter an estate is fully administered in a Chapter 11 reorganization case, the court, on its own motion or on motion of a party in interest, shall enter a final decree closing the case. The term "fully administered" is not defined in either the Bankruptcy Code or the Bankruptcy Rules. However, the Advisory Committee Note to Bankruptcy Rule 3022 provides a non-exclusive list of factors to be considered in determining whether a case has been fully administered. These factors include: -- whether the order confirming the plan has become final; -- whether deposits required by the plan have been distributed; -- whether the property proposed by the plan to be transferred has been transferred; -- whether the debtor or the successor to the debtor under the plan has assumed the business or the management of the property dealt with by the plan; -- whether payments under the plan have commenced; and -- whether all motions, contested matters, and adversary proceedings have been finally resolved. The Advisory Committee Note also states that entry of a final decree closing should not be delayed solely because payments required by a plan of reorganization have not been completed. Rebecca L. Booth, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, explains that the seven cases should be closed since: * the Confirmation Order has become final and unappealable; * the Debtors' Plan of Reorganization has been implemented; * no significant property transfers remain unexecuted under the Plan with respect to the Debtors; * the Debtors have been successfully reorganized under the Plan; * all Plan payments required to date, including all fees under 28 U.S.C. Section 1930 through the third quarter of 2004, have been made; and * no requests or contested matters remain that would preclude the closing of the cases. Because the Chapter 11 case of The FINOVA Group, Inc., is among those to be closed, the Debtors further ask Judge Walsh to modify the Joint Administration Order dated March 7, 2001, to provide that all pleadings filed in this matter be filed in the case of FINOVA Capital Corporation, Case No. 01-698 (PJW), the remaining open case. To avoid confusion, the Debtors propose to amend the caption in their bankruptcy cases to reflect FINOVA Capital Corp.'s case number, rather than the case numbers for all of the Debtors: UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re: | Chapter 11 | FINOVA Capital Corporation, | Case No. 01-0698 (PJW) | Reorganized Debtor. | Jointly Administered __________________________________| * * * Judge Walsh enters a final decree closing six Chapter 11 cases: Reorganized Debtor Case No. ------------------ -------- The FINOVA Group, Inc. 01-697 FINOVA (Canada) Capital Corporation 01-699 FINOVA Capital, PLC 01-700 FINOVA Loan Administration, Inc. 01-701 FINOVA Technology Finance, Inc. 01-704 FINOVA Finance Trust 01-705 Judge Walsh keeps the Chapter 11 case of FINOVA Mezzanine Capital, Inc., open in view of the pending adversary proceeding commenced by Teltronics. The Debtors' right to renew their request to seek closure of the FINOVA Mezzanine Case in the future, notwithstanding the pendency of the Teltronics Adversary Proceeding, is reserved. The Closing Cases may be reopened at any time in accordance with and for the purpose established by Section 350(b) of the Bankruptcy Code. Judge Walsh directs the Clerk of the Court to maintain one file and docket for the Remaining Case of FINOVA Capital Corporation, Case No. 01-698 (PJW). All subsequent pleadings will be filed in the Remaining Case. Headquartered in Scottsdale, Arizona, The Finova Group, Inc., provides commercial financing to small and mid-sized businesses; other services include factoring, accounts receivable management, and equipment leasing. The firm has three segments: Commercial Finance, Specialty Finance, and Capital Markets. FINOVA targets such markets as transportation, wholesaling, communication, health care, and manufacturing. Loan write-offs had put the firm on shaky ground. The Company and its debtor-affiliates and subsidiaries filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del. 01-00697). Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., represents the Debtors. FINOVA has since emerged from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway and Leucadia National Corporation (together doing business as Berkadia) own FINOVA through the almost $6 billion lent to the commercial finance company. FLYI INC: Executes Agreement with Executive VP Richard J. Surratt ----------------------------------------------------------------- FLYi, Inc., has executed agreements with certain of its executive officers on terms approved in Fall 2003 by the Compensation Committee. The Company executed an agreement with Richard J. Surratt, under which he serves as Executive Vice President, Chief Financial Officer, Treasurer and Assistant Secretary. The Surratt Agreement is substantially similar to an agreement that the Company has with Thomas J. Moore, the Company's President and Chief Operating Officer. The Surratt Agreement provides for a one-year term that is continuously extended unless terminated. The Surratt Agreement provides for a minimum annual base salary of $193,500, which amount may be increased from time to time by the Board's Compensation Committee and currently is $215,000. The Surratt Agreement further provides for a deferred compensation accrual at a rate of 75% of the annual base salary subject to nine year graduated vesting, with benefits under the deferred compensation arrangement being applied in part to indirectly finance an insurance policy for Mr. Surratt's benefit, and provides that Mr. Surratt shall participate in any bonus plan provided to executive officers generally and in employee benefit and medical plans and other arrangements as the Compensation Committee shall determine. Under the deferred compensation program, participating executive officers will receive upon termination of employment an amount equal to the specified vested percentage (which shall be 100% upon a change in control) of the executive officer's annual accruals as provided under his employment agreement. These amounts are applied against amounts payable under Company-paid life insurance policies obtained prior to July 2002 for the executive officer. Under the Surratt Agreement, if Mr. Surratt's employment is terminated by the Company without cause, or if he terminates his own employment with good reason (including any termination by the Company or by Mr. Surratt within twelve months after a change in control), or upon Mr. Surratt's death or disability, then: (1) all of Mr. Surratt's options become immediately exercisable; (2) he is paid a lump sum amount calculated by the formula [(x + y) * z] where (x) is Surratt's base salary earned in the year from January 1 to the Termination Date, (y) is the amount which is two times Surratt's annual base salary in effect at the time of Termination, and (z) is the percentage which under each plan is the highest percentage of base salary that Surratt was paid during any one of the five years immediately preceding the year in which the Termination Date occurred his year-to-date bonus plus two times his annual bonus; (3) he will continue to benefit from deferred compensation contributions and vesting for 24 months; and (4) he is provided with insurance and flight pass benefits for 24 months. Upon a change in control of the Company, as defined in the Surratt Agreement, Mr. Surratt would receive (a) an amount equal to three times his annual salary, (b) a lump sum bonus payout in the amount calculated by the formula [(x + y) * z] where (x) is Surratt's base salary earned in the year from January 1 to the date of the Change in Control, (y) is the amount which is three times Surratt's annual base salary in effect at the time of the Change in Control, and (z) is the percentage which under each plan is the maximum percentage of base salary that Surratt was eligible to earn during the year in which the Change in Control occurred assuming all targets were met in full; (c) the Company will prepay, to the time of Surratt's reaching age 65, the premiums due on any disability insurance policy as was provided to Surratt as of the time of Change in Control; and (d) a tax gross-up/make-whole payment in the event that the payments or benefits to Mr. Surratt in connection with a Change in Control are treated as "parachute payments" under Section 280G of the Internal Revenue Code. For 12 months following any termination of employment, Mr. Surratt would be subject to a nonsolicitation, non-competition, and confidentiality provision. Under separate agreements between the Company and Mr. Brown and Mr. Nordling, the Company agreed to employ Mr. Brown as Senior Vice President - Operations and Mr. Nordling as Senior Vice President - Marketing, each for a one year term. The Officer Agreements provide for automatic twelve-month extensions unless earlier terminated, and for annual base salaries, which may be and, for officers subject to Officer Agreements in the past, have been increased from time to time by the Compensation Committee to amounts above that specified in the original agreements. The Officer Agreements provide that Messrs. Brown and Nordling shall participate in any bonus plan provided to executive officers generally, and in employee benefit and medical plans and other arrangements as the Compensation Committee shall determine. In the event of termination by the Company "without cause," the terminated officer shall receive his full base salary and medical insurance coverage for a period of twelve months, and a portion of any annual bonus shall be prorated to the date of termination. Change in control provisions are similar to the Surratt Agreement except that compensation would be at a rate of two years of base pay and bonus. FLYi, Inc., is the parent company of low-fare airline Independence Air. The company employs over 4,700 aviation professionals. For more information about FLYi, Inc., please visit our website at http://www.FLYi.com/ Independence Air is the low-fare airline that makes travel fast and easy for its customers with a customer-first attitude, innovative thinking and a willingness to challenge the status quo. As reported in the Troubled Company Reporter on Nov. 2, 2004, Standard & Poor's Ratings Services lowered its ratings on FLYi Inc., including lowering the corporate credit rating to 'CCC-' from 'B-', and removed them from CreditWatch where they were placed on Oct. 20, 2004. As reported in the Troubled Company Reporter on Oct. 27, 2004, Moody's Investors Service downgraded: * the Senior Implied rating of Atlantic Coast Airlines to Caa2 from B3, * the rating for the $125 million senior unsecured convertible notes issued by Atlantic Coast's parent holding company, FLYi, Inc., to C from Caa3, and * the ratings assigned to the company's Enhanced Equipment Trust Certificates -- EETC -- were also downgraded. The ratings action concludes a review initiated on August 27, 2004. The outlook is Negative. FLYI INC: William Anthony Rice Resigns as Board of Director ----------------------------------------------------------- FLYi, Inc., reported that Mr. William Anthony (Tony) Rice has resigned from the Company's board of directors, effective January 7, 2005. The Company and Mr. Rice stated that Mr. Rice resigned to avoid any appearance of conflict with aircraft manufacturers and lenders as the Company works to address its liquidity issues. The Company's Board of Directors has appointed James C. Miller III to serve as chair of the Board's Audit Committee and named director Susan MacGregor Coughlin to the Board's Audit Committee. FLYi, Inc., is the parent company of low-fare airline Independence Air. The company employs over 4,700 aviation professionals. For more information about FLYi, Inc., please visit our website at http://www.FLYi.com/ Independence Air is the low-fare airline that makes travel fast and easy for its customers with a customer-first attitude, innovative thinking and a willingness to challenge the status quo. As reported in the Troubled Company Reporter on Nov. 2, 2004, Standard & Poor's Ratings Services lowered its ratings on FLYi Inc., including lowering the corporate credit rating to 'CCC-' from 'B-', and removed them from CreditWatch where they were placed on Oct. 20, 2004. As reported in the Troubled Company Reporter on Oct. 27, 2004, Moody's Investors Service downgraded: * the Senior Implied rating of Atlantic Coast Airlines to Caa2 from B3, * the rating for the $125 million senior unsecured convertible notes issued by Atlantic Coast's parent holding company, FLYi, Inc., to C from Caa3, and * the ratings assigned to the company's Enhanced Equipment Trust Certificates -- EETC -- were also downgraded. The ratings action concludes a review initiated on August 27, 2004. The outlook is Negative. FRIEDMAN'S: Amends Vendors' Secured Trade Credit Program Agreement ------------------------------------------------------------------ Friedman's, Inc., entered into a First Amendment to Secured Trade Credit Program Letter Agreement and Secured Trade Credit Program Terms and Conditions and Statement of Qualifications with substantially all of the participating vendors under its secured trade credit program on Dec. 31, 2004 The original Secured Trade Credit Program was inked on Sept. 8, 2004. The Amendment modifies the conditions vendors must meet for continued qualification under the Secured Trade Credit Program, including provisions relating to future shipments by participating vendors to support Friedman's Valentine's Day sales plan. The Amendment also revised the schedule of amortization payments to vendors under the Secured Trade Credit Program. A full-text copy of the Amended Secured Trade Credit Program Letter Agreement is available for free at: http://pa.cannoncreek.com/SEC/20050106/0000950172-05-000070.txt Founded in 1920, Friedman's Inc. -- http://www.friedmans.com/-- is a leading specialty retailer based in Savannah, Georgia. The Company is the leading operator of fine jewelry stores located in power strip centers and regional malls. * * * As reported in the Troubled Company Reporter on Nov. 4, 2004, Friedman's Inc. said it anticipated breaching the financial covenants contained in its amended and restated credit facility. In particular, Friedman's expected to fail to meet cumulative EBITDA requirements and a minimum ratio of Accounts Payable to Inventory. Friedman's senior secured credit facility, entered into in Sept. 2004, consists of a senior revolving loan of up to $67.5 million (maturing in 2006) and a $67.5 million junior term loan (maturing in 2007). Friedman's issued some warrants to Farallon Capital Management, L.L.C., in connection with that refinancing transaction. Friedman's also entered into a secured trade credit program providing security to vendors. Part of the deal allows Friedman's to stretch payment of invoices past due in July 2004 through 2005. The company's most recently published balance sheet -- dated June 28, 2003 -- shows $496 million in assets and $190 million in liabilities. The Company explains that its year-end closing process was delayed because of an investigation by the Department of Justice, a related informal inquiry by the Securities and Exchange Commission, and its Audit Committee's investigation into allegations asserted in a August 13, 2003, lawsuit filed by Capital Factors Inc., a former factor of Cosmopolitan Gem Corporation, a former vendor of Friedman's, as well as other matters. Ernst & Young has been working on a restatement of the company's financials. The company's signaled that a 17% or greater increase to allowances for accounts receivable can be expected. GENERAL NUTRITION: Intends to Offer $150 Mil. Sr. Notes Due 2011 ---------------------------------------------------------------- General Nutrition Centers, Inc., intends to offer, subject to market conditions, $150,000,000 aggregate principal amount of Senior Notes due 2011. The offering will be made only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended, and to non-U.S. persons in off shore transactions in accordance with Regulation S under the Securities Act. GNC intends to use the net proceeds of the offering, together with cash on hand, to refinance in part its senior term loan facility. The securities to be offered have not been registered under the Securities Act of 1933 or any state securities laws and unless so registered may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933 and applicable state securities laws. About the Company General Nutrition Centers, Inc., with headquarters in Pittsburgh, Pennsylvania, retails vitamin, mineral, and nutritional supplement products domestically and internationally through about 5700 company-operated and franchised stores. Revenue for the twelve months ending September 2004 was about $1.4 billion. * * * On Dec. 17, 2004, Moody's Investors Service downgraded all ratings of General Nutrition Centers, Inc., including the Bank Loan to B2 from B1 and the 8.5% senior subordinated notes (2010) to Caa1 from B3. Moody's expectation that sales and debt protection measure trends will remain poor over the medium-term, the uncertainty regarding long-term strategy, and the need for continuous product development prompted the downgrade. Providing credit support are the belief that the company will obtain the announced bank loan amendment, Moody's opinion that free cash flow will not fall below break-even in spite of continued weak sales, and potential advantages from GNC's position as the leading retailer of vitamin, mineral, & nutritional supplement -- VMS -- products. The rating outlook is stable. Ratings lowered are: * $358 million secured Bank Facility to B2 from B1, * $215 million of 8.5% senior subordinated notes (2010) to Caa1 from B3, * Senior implied rating to B2 from B1, and the * Long-term unsecured issuer rating to B3 from B2. Moody's does not rate the 12.0% redeemable preferred stock. GOLD RUSH II: Case Summary & 12 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Gold Rush II, Inc. 1830 Cobb Parkway South Marietta, Georgia 30060 Bankruptcy Case No.: 05-60412 Chapter 11 Petition Date: January 5, 2005 Court: Northern District of Georgia (Atlanta) Judge: Margaret Murphy Debtor's Counsel: Gus H. Small, Esq. Cohen Pollock Merlin Axelrod & Small 3350 Riverwood Parkway, Suite 1600 Atlanta, GA 30339 Tel: 770-858-1288 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 12 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Kimberly Olmstead Loan to Corporation $303,800 605 Meuse Way Alpharetta, GA 30022 Prime Rate Premium Finance Trade debt $9,800 Corp. P.O. Box 100507 Florence, SC 29501 BMI Trade debt $7,700 10 Music Square East Nashville, TN 37203 AETNA Trade debt $5,600 ASCAP Trade debt $1,318 Georgia Natural Gas Trade debt $458 BFI Waste Trade debt $201 Comcast Trade debt $162 Ark Self Storage - Cobb Trade debt $159 Premier Security Trade debt $156 BellSouth Ad & Pub Corp. Trade debt $127 National Linen Service Trade debt $81 HAPPY KIDS: Court Approves Proskauer Rose as Bankruptcy Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Happy Kids Inc. and its debtor-affiliates permission to employ Proskauer Rose LLP as their bankruptcy and reorganization counsel. Proskauer Rose will: a) advise the Debtors with respect to their powers and duties as debtors-in-possession; b) assist the Debtors in the preparation of their financial statements, schedules of assets and liabilities, statements of financial affairs and other reports and documentation required pursuant to the Bankruptcy Code and the Bankruptcy Rules; c) represent the Debtors at all hearings on matters pertaining to their affairs as debtors-in-possession; d) prosecute and defend litigated matters that may arise in the Debtors' chapter 11 cases; e) counsel and represent the Debtors in connection with the assumption or rejection of executory contracts and leases, administration of claims and numerous other bankruptcy- related matters arising from their chapter 11 cases; f) counsel the Debtors with respect to various general and litigation matters relating to their chapter 11 cases; g) assist the Debtors in obtaining confirmation of a plan of reorganization, approval the disclosure statement and all other matters related to the plan and disclosure statement; and h) perform all other legal services that are necessary and desirable for the efficient and economic administration of the Debtor's chapter 11 cases. Sheldon I. Hirshon, Esq., a Member at Proskauer Rose, is the lead attorney for the Debtors' restructuring. Mr. Hirshon discloses that the Firm received $100,000 retainer. Mr. Hirshon reports Proskauer Rose's professionals bill: Designation Hourly Rate ----------- ----------- Partners $525 - 750 Senior Counsel 465 - 625 Associates 250 - 475 Paraprofessionals 150 - 220 Proskauer Rose assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in New York, New York, Happy Kids Inc. and its affiliates are leading designers and marketers of licensed, branded and private label garments in the children's apparel industry. The Debtors' current portfolio of licenses includes Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its debtor-affiliates filed for chapter 11 protection on January 3, 2005 (Bankr. S.D.N.Y. Case No. 05-10016). When the Debtor filed for protection, it listed total assets of $54,719,000 and total debts of $82,108,000. HARRAH'S ENTERTAINMENT: Schedules Conference Call on Feb. 2 ------------------------------------------------------------ Harrah's Entertainment, Inc. (NYSE: HET) will host a conference call Wednesday, Feb. 2, 2005, at 9:00 a.m. Eastern Standard Time to discuss its 2004 fourth-quarter and full-year results http://www.newscom.com/cgi-bin/prnh/20021220/LAF055LOGO Those interested in participating in the call should dial: 1-888-399-2695, or 1-706-679-7646 for international callers, approximately 10 minutes before the call start time. A taped replay of the conference call can be accessed at: 1-800-642-1687, or 1-706-645-9291 for international callers, beginning at 10:00 a.m. EST on Wednesday, February 2. The replay will be available through 11:59 p.m. EST on Tuesday, February 8. The passcode number for the replay is 3289511. Interested parties wanting to listen to the conference call may do so on the company's Web site -- http://www.harrahs.com-- in the Investor Relations section. Various subsidiaries of Harrah's Entertainment, Inc., own or manage 28 casinos in the United States, primarily under the Harrah's and Horseshoe brand names. Founded 67 years ago, Harrah's Entertainment is focused on building loyalty and value with its valued customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. * * * As reported in the Troubled Company Reporter on July 19, 2004, Fitch Ratings has affirmed the following long-term debt ratings of Harrah's Entertainment and placed the long-term ratings of Caesars Entertainment on Rating Watch Positive. HET -- Senior secured debt 'BBB-'; -- Senior subordinated debt 'BB+'. CZR -- Senior unsecured debt 'BB+'; -- Senior subordinated debt 'BB-'. INTERSTATE BAKERIES: Judge Venters Approves Bidding Protocol ------------------------------------------------------------ To further their reorganization efforts, Interstate Bakeries Corporation and its debtor-affiliates have been working with their advisors to streamline operations by eliminating and reducing unnecessary operating expenses in disposing of surplus assets. As part of this strategy, the Debtors have previously rejected 94 real property leases. Paul M. Hoffman, Esq., at Stinson Morrison Hecker, LLP, in Kansas City, Missouri, informs the Court that the Debtors continue to assess and evaluate numerous vendor agreements, executory contracts, and opportunities for asset disposition in an effort to maximize cash flow, minimize excessive carrying costs, and increase return on invested capital. According to Mr. Hoffman, there are at least two procedures customarily followed when a debtor desires to sell certain of its assets. One procedure involves a "two-step" process in which the debtors first obtain approval of the sales process, including bidding and auction procedures, termination fees, and related matters, followed by approval of an actual sales transaction. The second procedure, a "one-step" process, entails the debtors' request for approval of a sales transaction, including ratification of the marketing and sales process itself, in one hearing. To facilitate prompt dispositions of their non-core assets, the Debtors ask the Court to approve the proposed standing bidding procedures and bid protection. The Debtors believe that the proposed standard bidding procedures and bid protection are the most likely mechanisms for maximizing the realizable value of various sales opportunities that may arise, while providing clear, advance notice to parties-in- interest of the ground rules. Standing Bidding Procedures The salient features of the proposed procedures are: A. Only Qualified Bidders may participate in the asset sales process. Qualified Bidders are those prospective bidders who deliver to the Debtors: a. an executed confidentiality agreement in form and substance satisfactory to the Debtors; b. current audited financial statements or other financial information of the bidder or its equity holder(s) demonstrating the bidder's financial capability to consummate the proposed asset sale, as determined by the Debtors in their sole discretion; and c. a preliminary, non-binding proposal identifying the assets to be purchased, the purchase price range, the nature and extent of any due diligence it wishes to conduct, any conditions it may wish to impose, and financial information demonstrating its ability to consummate the sale. Qualified Bidders may be allowed to conduct due diligence on the assets at the Debtors' option. B. For a bid to be a Qualified Bid, it must be: a. in the form of an asset purchase agreement acceptable to the Debtors; b. accompanied by a good faith deposit in an amount equal to at least 10% of the value of the bid; c. accompanied by a financing commitment or other evidence of ability to consummate the transaction; and d. received by the Debtors before the Bid Deadline established by the Debtors. By making a bid, a bidder will be deemed to have agreed to keep this offer open until the earlier of: (x) two business days after the assets on which the bidder is bidding have been disposed of pursuant to the Bidding Procedures; and (y) 30 days after the Sale Hearing. C. To induce Qualified Bidders to submit offers to the Debtors, the Debtors seek the Court's authority to offer to the first Qualified Bidder, submitting a Qualified Bid acceptable to the Debtors Bid Protection, the right to receive a termination fee in an amount equal to no more than 2% of the cash value of the Qualified Bid in the event another Qualified Bidder ultimately is the Successful Bidder and the transaction closes. The termination fee would not be offered with respect to insiders, nor will the Bid Protection be granted more than once as to any particular asset. As an additional inducement for a bidder to make the first bid with respect to a particular sale, the Debtors also seek Court authority to provide the bidder reasonable and documented expense reimbursement of up to $50,000, likewise payable only in the event the Debtors close on a higher or otherwise better offer submitted by a competing bidder. D. If one or more Qualified Bidders submit Qualified Bids before expiration of the Bid Deadline, the Debtors will file with the Court and serve a copy of the first Qualified Bid and, to the extent not already provided, a copy of the Debtors' Request or Order on: a. the United States Trustee; b. counsel to the statutory committees officially formed in the Debtors' bankruptcy cases; c. counsel to the agent for the pre-petition lenders; and d. counsel to the agent for the postpetition lenders. E. If the Debtors receive more than one Qualified Bid for a particular asset or pool of assets, the Debtors may conduct an auction for the asset or assets on a date and at a location as the Debtors may determine. Bidding at the Auction will commence with the highest or otherwise best Qualified Bid, as determined by the Debtors in their sole discretion, and continue in a manner as the Debtors may determine will result in the highest or otherwise best offer. F. At the conclusion of the bidding, the Debtors will announce their determination as to the person or entity submitting the highest or otherwise best bid. In making that determination, the Debtors will consider, among other things, the total consideration to be received by their estates as well as other financial and contractual terms relevant to the sale process, including those factors affecting the speed and certainty of consummating the sale. G. The Debtors may determine, in their business judgment and in consultation with the representatives of the Committees, which Qualified Bid is the highest or otherwise best offer and reject, at any time before entry of a Court order approving a Qualified Bid, any bid that is: a. inadequate or insufficient; b. not in conformity with the requirements of the Bankruptcy Code, the Bidding Procedures, or the terms and conditions of the sale; or c. contrary to the best interests of the Debtors, their estates and their creditors. H. The Debtors will immediately submit any Successful Bids to the Court before the omnibus hearing for which the Debtors have, by request, requested a hearing for the approval of the sale of affected assets. To the extent that the Bidding Procedures are implemented with respect to a sale that is subject to the Order Pursuant to Sections 105 and 363 of the Bankruptcy Code Approving Procedures to Sell Certain De Minimis Assets Free and Clear of Liens, Claims, and Encumbrances and to Pay Market Rate Broker Commissions in Connection with Such Sales Without Further Court Approval, notice of the Successful Bidder will be sent pursuant to the notice provisions of the De Minimis Sale Order. I. The Debtors will be deemed to have accepted a bid only when the bid has been approved by the Court at the Sale Hearing or at the time as the Debtors would otherwise be authorized to consummate the sale in accordance with the terms and conditions of the De Minimis Sale Order. If there is failure to consummate any sale because of a breach or failure on the part of any Successful Bidder, the Debtors seek the Court's permission to select the next highest or otherwise best Qualified Bid to be the Successful Bid without further Court order. Bid Protection To induce potential purchasers to expend the time, energy, and resources necessary to submit a Qualified Bid that the Debtors can use as a minimum or "stalking horse" bid, the Debtors propose to offer to potential purchasers, excluding insiders, a termination fee of up to 2% of the first Qualified Bid accepted by the Debtors, payable to the bidder in the event the Debtors close a higher bid or otherwise better offer with a competing bidder. The Debtors, Mr. Ivester states, may also provide a "stalking horse" bidder reasonable and documented expense reimbursement of up to $50,000, likewise only payable if the Debtors close on a competing transaction. The Debtors believe that the proposed Bid Protection: * is fair and reasonable in relation to any Qualified Bid received; * will benefit the estates by providing an incentive to potential purchasers to expend the resources necessary to formulate offers; and * will induce bids that potentially may have never been made and without which bidding may be limited. "[A]ny Qualified Bid submitted with the assistance of Bid Protection will provide a minimum bid on which other bidders can rely, thereby increasing the likelihood that the sales price will represent their true worth," Mr. Ivester explains. "The Debtors will work with the Committees to ensure that the Bid Protection with respect to any given asset, if any, is designed to maximize the value of the affect asset to the Debtor's estates." According to Mr. Ivester, the Debtors' ability to offer Bid Protection enables them to ensure sales to contractually committed bidders at prices they believe to be fair, while providing the Debtors with the potential of even greater benefit to the estates. * * * Judge Venters approves the Bidding Procedures and Bid Protection. At least 10 days before an Auction, Judge Venters directs the Debtors to serve by overnight courier a notice identifying, the asset(s) to be sold, the Bid Deadline, the date of the Auction and a copy of the Bidding Procedures as modified for the sale of the asset(s), to: (a) counsel to the statutory committees officially formed in the Debtors' cases; (b) counsel to the agent for the prepetition lenders; (c) counsel to the agent for the postpetition lenders; and (d) all parties, including any brokers, who have expressed in writing an interest within the past six months in purchasing the asset(s) to be sold at the Auction. In addition, the Debtors will, to the extent practicable but in all cases before the commencement of an Auction, provide the Notice Parties with reasonable notice of any stalking horse bidder, including a copy of the relevant asset purchase agreement, extensions of the Bid Deadline or Bid Protection to be provided to any bidder. At least five business days before an Auction, the Debtors will provide to the Notice Parties: (i) a description of all advertising efforts taken or to be taken by the Debtors with respect to the Auction; and (ii) a disclosure of any prior relationship between the Debtors and any stalking horse bidder, if any. Unless otherwise agreed to by the Notice Parties, for any sale of an individual asset or group of assets with a minimum purchase price exceeding $2,000,000 per sale, the Debtors will publish in a manner that is reasonable and practicable under the circumstances, a notice identifying the asset or assets to be sold, the Bid Deadline, the date of the Auction and the minimum purchase price for the assets, if any. According to Judge Venters, the Bidding Procedures will not apply to any sale of an individual asset or group of assets for a purchase price in an amount exceeding $15,000,000 per sale without the prior consent of the Notice Parties. If consent is obtained with respect to a proposed sale, the Bidding Procedures will apply to the sale without further Court order. Otherwise, the Debtors will file a request seeking approval of bidding procedures with respect to any sale. The Debtors' DIP Lenders hold valid, duly perfected security interests in and liens on certain of the Debtors' assets. Judge Venters further rules that any and all proceeds obtained by the Debtors from any sales of the assets will be applied, as required by that certain Revolving Credit and Letter of Credit Facility approved by the Court. 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 Sept. 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 Aug. 12, 2004) in total debts. IMPAC CMB: S&P Affirms Low-B Ratings on Bond Classes F & G ---------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes C, D, and E of IMPAC CMB Trust 1998-C1's collateral commercial mortgage bonds. Concurrently, all other outstanding ratings are affirmed. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the December 2004 remittance date, the trust collateral consisted of 123 commercial mortgages with an outstanding balance of $205.2 million, down 35.4% since issuance. To date, there have been three realized losses totaling $934,425 (0.29% of initial pool balance). The master servicer, Midland Loan Services, Inc., reported partial or full year 2003 net cash flow debt service coverage ratios -- DSCRs -- for 94.5% of the pool. Based on this information, Standard & Poor's calculated a pool DSCR of 2.01x, improved from 1.37x at issuance. There are no defeased loans in the pool. The largest exposure in the pool is the Danis Fixed Portfolio, which consists of seven cross-collateralized and cross-defaulted loans totaling $17.3 million (8.4%). The loans share a common borrower, the Danis Co., which is also the borrower on three floating-rate loans totaling $3.4 million (1.7%). The floating-rate loans are also cross-collateralized and cross-defaulted. Both portfolios have been transferred to the special servicer, Midland, due to imminent default. All of the Danis properties are located in Ohio, most in the Dayton area. The borrower is suffering from considerable financial difficulties and has expressed an inability to pay. The fixed- and floating-rate portfolios have a weighted average DSCR of 1.12x and 0.35x, respectively, as of year-end 2003, down from 1.19x and 1.18x at issuance. Interim 2004 financial statements reflect further deterioration for both portfolios. Further information is not available at this time. Excluding the Danis loans, the weighted average DSCR for the top 10 loans, which comprise 26.4% of the pool, rose to 1.63x, up from 1.36x at issuance. Eight of the top 10 loans have improved DSCRs from issuance. In addition to the Danis loans, there are four loans, with a combined balance of $8.8 million (or 4.3% of the pool) that are in special servicing. One loan is current and three are 90-plus days delinquent. They are the only delinquent loans in the pool. The largest specially serviced loan is secured by Cedar Plaza Shopping Center. The loan is current and has a balance of $5.37 million (2.6%, $59 per sq. ft.). The center, which is located in Mountainlake Terrace, Washington, is 90,293 sq. ft. Most recent occupancy and NOI DSCR are 98% and 2.0x, respectively. The borrower disputed the required escrow payments but has kept the loan current. Valuation estimates are in excess of the loan amount. No loss is expected on this asset. Losses are expected on all of the 90-plus day delinquent assets. Details are: -- The Norfolk Country Inn loan has a balance of $1.60 million and a total exposure of $1.85 million (0.78%, $14,500 per room). It is secured by a 127-room unflagged limited-service lodging property in Norfolk, Neb., which was built in 1964. The property suffers from very low occupancy (25%). The primary source of cash flow for the property is the restaurant and lounge, which are operated by the borrower. -- The Flagstaff Inn loan has a balance of $1.22 million and a total exposure of $1.82 million (0.60%, $18,200 per unit). A 100-room Super 8 motel in Flagstaff Arizona, built in 1972, secures the loan. Midland has received two purchase offers for the property for approximately $1.1 million, which are subject to a due diligence period. The property has some deferred maintenance that needs to be cured in order to retain the Super 8 flag. -- The Pioneer Square loan has a balance of $594,000 and a total exposure of $718,000 (0.29%, $32 per sq. ft.). It is secured by a 22,380-sq.-ft. office property in Omaha Nebraska that was built in 1976. Midland has received an offer of $620,000 to purchase the property. The servicer's watchlist includes 28 loans totaling $42.5 million (20.7%). 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 (45.8%), * Ohio (11.3%), * Texas (10.3%), * Washington (7.4%), * Arizona (7.0%), * Wisconsin (5.4%), and * Oregon (5.1%). Significant property type concentrations include: * retail (25.6%), * office (20.6%), * multifamily (18.0%), * industrial (15.9%), * mixed use (12.67%), and * lodging (4.5%). 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 IMPAC CMB Trust 1998-C1 Collateral Commercial Mortgage Bonds Series 1998-C1 Rating Class To From Credit Enhancement ----- -- ---- ------------------ C AAA AA 32.17% D AAA A 22.10% E AA BBB+ 19.78% Ratings Affirmed IMPAC CMB Trust 1998-C1 Collateral Commercial Mortgage Bonds Series 1998-C1 Class Rating Credit Enhancement ----- ------ ------------------ A-1B AAA 49.21% A-2 AAA 49.21% B AAA 41.46% F BB+ 10.87% G B 5.45% INSIGHT COMMS: Cancels $4.3M Employee Loans in Exchange for Shares ------------------------------------------------------------------ In connection with Insight Communications' initial public offering in July 1999, certain of its employees received shares of our common stock. In October 1999 and April 2000, the Company made non-recourse loans to certain of these employees, the proceeds of which were used to satisfy the individual income tax obligations with respect to the receipt of these shares. The loans that remained outstanding as of Dec. 31, 2004 were represented by notes with identical terms secured by a pledge of the shares of common stock received by the individuals. The Loans had a scheduled maturity date of Oct. 1, 2009, and accrued interest at the annual rate of 5.07%, with accrued interest payable on October 1 of each year. The Loans, including accrued interest, were payable by employees 180 days following the termination of their employment, except that certain debtors who are now former employees were granted an additional 12 months following their termination of employment to repay their respective Loans. The aggregate principal amount of the Loans as of Dec. 31, 2004 was approximately $4.3 million. None of the Loans were owed by executive officers or former executive officers. Between Dec. 8 and 31, 2004, the Company made an offer to each of the individuals with a Loan obligation to: -- cancel the individual's Loan (including accrued interest) upon the surrender to the Company the individual's pledged shares; and -- issue restricted shares of our Class A common stock as an incentive to surrender the Shares and, (i) in the case of current employees, to encourage the employee's long-term future performance, and (ii) in the case of former employees, to reward the former employees for their past services to the Company. As of Dec. 31, 2004, each of the individuals with a Loan obligation accepted the offer and surrendered an aggregate of 395,210 shares of common stock in cancellation of the aggregate $4.3 million of Loans. The closing price of our Class A common stock on such date was $9.27. Within five business days after the Company receive stockholder approval of certain amendments to our 1999 Equity Incentive Plan, which amendments relate to the issuance of the Restricted Stock, the employees and former employees will be granted an aggregate of 825,641 shares of Restricted Stock. Employee Restricted Stock The Restricted Stock to be issued to employees will vest in five equal installments beginning on Nov. 15, 2005. Any shares of Restricted Stock that have not vested on or before a voluntary termination of employment, involuntary termination of employment without cause or termination of employment with cause will be forfeited. All of the Restricted Stock will become fully vested and nonforfeitable upon (a) a change of control or (b) a termination of employment due to death or disability. Former Employee Restricted Stock Fifty percent of the Restricted Stock will vest on the date of grant and the balance will vest in five equal installments beginning on November 15, 2005. All of the Restricted Stock will become freely transferable upon (a) a change of control or (b) death or disability. Insight Communications (NASDAQ:ICCI) is the 9th largest cable operator in the United States, serving approximately 1.4 million customers in the four contiguous states of Illinois, Kentucky, Indiana and Ohio. Insight specializes in offering bundled, state-of-the-art services in mid-sized communities, delivering basic and digital video, high-speed data and the recent deployment of voice telephony in selected markets to its customers. * * * As reported in the Troubled Company Reporter on Dec. 21, 2004, Moody's Investors Service changed the rating outlook for the debt of Insight Communications Company, Inc. -- Insight -- and its subsidiaries, including 50%-owned Insight Midwest LP -- Midwest -- and its wholly owned subsidiary Insight Midwest Holdings, LLC -- Midwest Holdings -- to stable from negative. Moody's also raised the company's speculative grade liquidity rating to SGL-2 from SGL-3 and affirmed all other ratings. The outlook change broadly reflects a reduced probability of default based on expectations for the recently evident improvements in subscriber trends and free cash flow generating ability to continue, notwithstanding acknowledged expense growth in future periods. As a result, the prospect of a requisite ratings downgrade is deemed less likely. The liquidity rating upgrade similarly reflects evidence of improving cash flow trends and Moody's expectation for their continuation. Moody's now characterizes Insight's liquidity over the forward 12 months to Dec. 31, 2005 as "good." Moody's ratings for Insight and its subsidiaries are: -- Insight Communications Company, Inc. * $350 million (remaining face amount) of 12-1/4% Senior Unsecured Discount Notes due 2011 -- Caa2 (affirmed) * Senior Unsecured Issuer Rating -- Caa2 (affirmed) * Senior Implied Rating -- B1 (affirmed) * Speculative Grade Liquidity Rating -- SGL-2 (upgraded from SGL-3) * Rating Outlook (all ratings) - Stable (changed from Negative) -- Insight Midwest, L.P. * $630 million (including add-on) of 10-1/2% Senior Unsecured Notes due 2010 -- B2 (affirmed) * $385 million of 9-3/4% Senior Unsecured Notes due 2009 -- B2 (affirmed) -- Insight Midwest Holdings, LLC * $425 (original amount) million Senior Secured Revolver due 2009 -- Ba3 (affirmed) * $425 (original amount) million Senior Secured Term Loan A due 2009 -- Ba3 (affirmed) * $1.125 (original amount) billion Senior Secured Term Loan B due 2009 -- Ba3 (affirmed) As reported in the Troubled Company Reporter on May 11, 2004, Fitch Ratings has initiated coverage of Insight Communications Company, Inc. -- ICCI, Insight Midwest, LP and Insight Midwest holdings, LLC -- Holdings. Fitch has assigned a 'CCC+' rating to ICCI's 12.25% senior discount notes due 2011. Additionally, Fitch has assigned a 'B+' rating to Insight's 9.75% senior unsecured notes due 2009 and the 10.50% senior unsecured notes due 2010. Lastly, Fitch has assigned a 'BB+' rating to the senior secured bank facility at Holdings. The Rating Outlook for all of the ratings is Stable. Fitch's rating actions effect approximately $2.8 billion of debt as of the end of the first-quarter 2004 (1Q'04) of which approximately $1.5 billion is senior secured. INTEGRATED ELECTRICAL: Names David Miller as Senior VP & CFO ------------------------------------------------------------ Integrated Electrical Services, Inc. (NYSE: IES - News) reported that David A. Miller has been named Senior Vice President and Chief Financial Officer. Mr. Miller will assume the role immediately. Mr. Miller has 10 years of financial and public accounting experience. Mr. Miller has been with IES since its inception in January 1998 and most recently has been the Company's Vice President and Chief Accounting Officer, a position he has held for the last three years. During his tenure at IES, he has been involved in all aspects of the finance function, including accounting and reporting, Sarbanes-Oxley and SEC compliance, internal audit, treasury and risk management, acquisitions and dispositions, tax and strategic planning. Mr. Miller also participated in the Company's recent bank amendments and convertible debt issuance and played an integral role in the Company's strategic realignment and related divestitures. Prior to joining IES, Mr. Miller held positions in private industry and with a Big Five public accounting firm. While in public accounting, Mr. Miller performed audits and advised clients for multiple public and private companies covering a wide range of industries. Additionally, Mr. Miller has participated in several public company registrations and IPOs. Mr. Miller holds both a Bachelor of Business Administration and a Master in Professional Accounting degree from The University of Texas at Austin, and he is a Certified Public Accountant. "We are extremely pleased to name David as our CFO. His leadership, integrity, skills, and company knowledge uniquely position David to assume this role in our organization," said Roddy Allen, IES' President and CEO. 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. ISLE OF CAPRI: Moody's Rates Proposed $650M Sr. Sec. Debt at Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Isle of Capri Casinos, Inc.'s proposed $650 million senior secured bank facility. Proceeds from the new bank facility will be used to refinance the company's existing Ba2 rated bank debt, and to help fund expansion projects. Moody's also confirmed Isle's Ba3 senior implied rating, B1 senior unsecured long-term issuer rating, and B2 senior subordinated rating. The ratings outlook remains stable. The confirmation considers Isle's stable operating history, and diverse portfolio of slot based, regional casino properties. The rating also considers the company's continued significant development activity within the restricted group that is expected to keep Isle's restricted group debt/EBITDA level above 5.0x through fiscal 2006, a level higher than the restricted group has experienced over the past few years. Moody's anticipates that Isle's existing and current properties, as well as planned expansion projects, will generate returns that will ultimately assist in achieving a debt/EBITDA level more consistent with Isle's restricted group Ba3 senior implied rating. Isle's current development activity and resulting leverage limits any near and intermediate term ratings upside. A combination of certain factors could put downward pressure on Isle's ratings. These factors include flat or declining operating results and a material increase in restricted group capital spending above what is known at this time. Also considered are Isle's possible new developments in Illinois, Florida, the United Kingdom, and other jurisdictions. The current expectation is that most, if not all, of these possible future developments will likely be financed outside of the restricted group structure when, and if, Isle is able to move forward on these projects. Isle's decision regarding the ultimate timing, amount, financing, and management of these potential developments will also be key to the company maintaining its Ba3 senior implied rating. The new bank loan will be secured by the assets and capital stock of Isle's restricted subsidiaries, and will be guaranteed by all direct and indirect restricted subsidiaries. The one-notch rating differential between Isle's Ba2 senior secured bank loan rating and its Ba3 senior implied rating reflects the superior recovery profile of the credit facility relative to other debt obligations in the company's capital structure. Moody's analysis of distressed asset and enterprise values determined that senior secured lenders would be adequately protected under distressed circumstances. These new ratings were assigned: -- $400 million senior secured 5-year revolving credit facility, at Ba2; and -- $250 million senior secured 6-year term loan B, at Ba2. These existing ratings were confirmed: -- Senior implied rating, at Ba3; -- $200 million 9% senior subordinated notes due 2012, at B2; -- $500 million 7% senior subordinated notes due 2014, at B2; -- $250 million senior secured revolving credit facility due 2007, at Ba2; -- $206 million senior secured term loan facility due 2008, at Ba2; and -- Senior unsecured issuer rating, at B1. The ratings on Isle's existing revolver and term loan will be withdrawn once the new bank facility takes effect. Isle of Capri Casinos, Inc., owns and operates riverboat and dockside casinos in: * Biloxi, Vicksburg, Lula and Natchez, Mississippi; * Bossier City and Lake Charles (2 riverboats), Louisiana; * Bettendorf, Davenport and Marquette, Iowa; and * Kansas City and Boonville, Missouri. The company also owns a 57 percent interest in and operates land-based casinos in Black Hawk (two casinos) and Cripple Creek, Colorado. Isle of Capri's international gaming interests include a casino that it operates in Freeport, Grand Bahama, and a two-thirds ownership interest in casinos in Dudley, Walsal and Wolverhampton, England. The company also owns and operates Pompano Park Harness Racing Track in Pompano Beach, Florida. IWO HOLDINGS: Bankruptcy Services Approved as Noticing Agent ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware gave IWO Holdings, Inc., and its debtor-affiliates permission to employ Bankruptcy Services LLC as their official noticing agent. Bankruptcy Services will: a) notify all potential creditors of the filing of its bankruptcy petition pursuant to the provisions of the Bankruptcy Code; b) file with the Bankruptcy Clerk a copy of the notice of the bankruptcy petition served by Bankruptcy Services, a list of persons and entities to whom is was mailed, and the date the notice was mailed; c) record all transfers of claims and provide notices of those transfers of claims as required by Bankruptcy Rule 3001; d) maintain the official mailing lists of the Debtors' claimants; and e) assist the Debtors in providing notices to their creditors and interest holders of the hearings to approve their disclosure statement and confirm their plan of reorganization. Kathy Gerber, a Senior Vice-President at Bankruptcy Services, is the lead professional performing services to the Debtors. Ms. Gerber will charge at $210 per hour. Ms. Gerber reports Bankruptcy Services' professionals bill: Designation Hourly Rate ----------- ----------- Senior Consultants $185 Programmers 130 - 160 Associates 135 Data Entry/Clerical 40 - 60 Bankruptcy Services assures the Court that it does not represent ant interest adverse to the Debtors or their estates. Headquartered in Lake Charles, Louisiana, IWO Holdings, Inc., -- http://iwocorp.com/-- through its Independent Wireless One Corporation subsidiary, is a PCS affiliate of Sprint PCS. IWO Holdings provides mobile digital wireless personal communications services, or PCS, under the Sprint and Sprint PCS brand names in upstate New York, New Hampshire (other than Nashua market), Vermont and portions of Massachusetts and Pennsylvania. The Debtors filed for chapter 11 protection on January 4, 2005 (Bankr. D. Del. Case Nos. 05-10009 to 05-10011). Jeffrey L. Tanenbaum, Esq., at Weil Gotshal & Manges LLP, and Mark D. Collins, Esq., at Richards Layton & Finger represent the Debtors. When the Debtors sought bankruptcy protection, they reported assets amounting to $246,921,000 and debts amounting to $413,275,000. IWO HOLDINGS: Has Until March 7 to File Bankruptcy Schedules ------------------------------------------------------------ The Honorable Peter J. Walsh of the U.S. Bankruptcy District of Delaware gave IWO Holdings, Inc., and its debtor-affiliates, more time to file their Schedule of Assets and Liabilities, Statement of Financial Affairs, and Schedule of Executory Contracts and Unexpired Leases. The Debtors have until March 7, 2005, to file those documents. The Debtors tell the Court that due to the scope of their business operations, collection and compilation of the necessary information of their Schedules and Statements will require an enormous expenditure of time, effort and resources on their part and on their employees. The Debtors relate that in preparing their required Schedules and Statements, they must compile information from books, records, and documents relating to a myriad of assets at numerous locations throughout the Debtors' area of services in the U.S. The Debtors assure Judge Walsh that the extension will not prejudice their creditors and other parties in interest and the extension will give them more time to accurately compile and prepare all the information needed for their Schedules and Statements. Headquartered in Lake Charles, Louisiana, IWO Holdings, Inc., -- http://iwocorp.com/-- through its Independent Wireless One Corporation subsidiary, is a PCS affiliate of Sprint PCS. IWO Holdings provides mobile digital wireless personal communications services, or PCS, under the Sprint and Sprint PCS brand names in upstate New York, New Hampshire (other than Nashua market), Vermont and portions of Massachusetts and Pennsylvania. The Debtors filed for chapter 11 protection on January 4, 2005 (Bankr. D. Del. Case Nos. 05-10009 to 05-10011). Jeffrey L. Tanenbaum, Esq., at Weil Gotshal & Manges LLP, and Mark D. Collins, Esq., at Richards Layton & Finger represent the Debtors. When the Debtors sought bankruptcy protection, they reported assets amounting to $246,921,000 and debts amounting to $413,275,000. JAPAN PACIFIC: Lowndes Drosdick Approved as Examiner's Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida gave Michael Moecker, the Chapter 11 Examiner for the estate of Japan Pacific Trading Corporation and its debtor-affiliates, permission to employ Lowndes, Drosdick, Doster, Kantor & Reed, P.A., as his general counsel. Lowndes Drosdick will: a) assist Mr. Moecker in fulfilling his duties as the Chapter 11 Examiner for the Debtors and in representing its estate; b) advise Mr. Moecker in the areas of general bankruptcy issues and real estate advise in relation to the Debtors' chapter 11 cases; and c) provide Mr. Moecker will all other legal services that are necessary and appropriate for the Debtors' bankruptcy cases. Robert F. Higgins, Esq., a Shareholder at Lowndes Drosdick, is the lead attorney for Mr. Moecker. Mr. Higgins will charge the Debtors' estates $350 per hour for his services. Mr. Higgins reports Lowndes Drosdick's professionals bill: Designation Hourly Rate ----------- ----------- Partners $300 - 400 Associates 145 - 225 Paralegals 120 Lowndes Drosdick assures the Court that it does not represent any interest adverse to Mr. Moecker, the Debtors or their estates. Headquartered in Groveland, Florida, Japan Pacific Trading Corp. and its debtor-affiliates filed for chapter protection on Oct. 7, 2004, (Bankr. M.D. Fla. Case No. 04-11049). R. Scott Shuker, Esq., at Gronek & Latham LLP, represents the Debtors in their restructuring. When the Debtor filed for protection from its creditors, it estimated $1 million to $10 million in assets and $10 million to $50 million of liabilities. KAISER ALUMINUM: Disclosure Statement Trial Continued to Feb. 23 ---------------------------------------------------------------- Jack A. Hockema, President and Chief Executive Officer of Kaiser Aluminum Corporation, reports that on December 22, 2004, the United States Bankruptcy Court for the District of Delaware considered the Debtors' request for approval of the two disclosure statements on the liquidating plans for Alpart Jamaica, Inc., and Kaiser Jamaica Corporation, and Kaiser Alumina Australia Corporation and Kaiser Finance Corporation. "Several parties to the cases filed objections to these plans, which were not unexpected, and the Court heard everyone out on these issues," Mr. Hockema says. "Because today's hearing did not result in any definitive resolution of these objections, the Court said it would consider the arguments and have another hearing on these two plans on Feb. 23, 2005." Headquartered in Houston, Texas, Kaiser Aluminum Corporation -- http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represent the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART HOLDING: Syndicating $4 Billion Revolving Credit Facility --------------------------------------------------------------- Sears Holdings Corporation, currently a wholly owned subsidiary of Kmart Holding Corporation created to facilitate the business combination between Kmart Holding Corporation and Sears, Roebuck and Co., launches syndication for a $4.0 billion Senior Secured Revolving Credit Facility. Sears Holdings Corporation will be the holding company for the Sears and Kmart businesses after completion of the business combination, which is expected to close by early March 2005. $3.5 billion already has been committed toward the facility by eight financial institutions. The facility is to be available for five years to fund working capital needs, capital expenditures, acquisitions and other general corporate purposes. "The strong start to the syndication reflects confidence within the bank market in the financial strength of Sears Holdings Corporation, the leadership of the combined management teams and the focus on profitability provided by its Chairman, Edward S. Lampert, whose ESL investment partnerships will be the company's largest shareholder," said James B. Lee, vice chairman of JPMorgan Chase & Co., one of the Joint Lead Arrangers. The credit facility would become effective upon consummation of the business combination between Kmart Holding Corporation and Sears, Roebuck and Co., which is subject to shareholder and regulatory approvals and is expected to occur by early March 2005. The company has engaged JPMorgan, Citigroup and Bank of America as Joint Lead Arrangers and Joint Bookrunners with JPMorgan serving as Administrative Agent. About Sears Holdings Corporation Created in connection with the merger of Kmart and Sears announced on Nov. 17, 2004, and subject to the receipt of shareholder and regulatory approvals and the satisfaction or waiver of other conditions, upon close of the merger, Sears Holdings Corporation is expected to be the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, 2,350 full-line and off-mall stores and 1,100 specialty retail stores. Sears Holdings is expected to be the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands are expected to include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It is also expected to have Martha Stewart Everyday products, which are now offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. About Kmart Holding Corporation Kmart Holding Corporation and its subsidiaries is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Martha Stewart Everyday and Route 66. For more information visit Kmart's website at http://www.kmart.com/ About Sears, Roebuck and Co. Sears, Roebuck and Co. is a leading broadline retailer providing merchandise and related services. With revenues in 2003 of $41.1 billion, Sears offers its wide range of home merchandise, apparel and automotive products and services through more than 2,300 Sears-branded and affiliated stores in the U.S. and Canada, which includes approximately 870 full-line and 1,100 specialty stores in the U.S. Sears also offers a variety of merchandise and services through http://www.sears.com,http://www.landsend.com,and specialty catalogs. Sears is the only retailer where consumers can find each of the Kenmore, Craftsman, DieHard and Lands' End brands together -- among the most trusted and preferred brands in the U.S. The company is the largest provider of product repair services with more than 14 million service calls made annually. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Martha Stewart Everyday, Route 66 and Sesame Street. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. L-3 COMMUNICATIONS: S&P Lifts Corporate Credit Rating to BBB- ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings, including the corporate credit rating to 'BBB-' from 'BB+', on L-3 Communications Corp. and parent L-3 Communications Holdings Inc. The outlook is stable. "The upgrade reflects L-3's improved program diversity, rapidly growing earnings and cash flow, and its unique position as the leading merchant supplier of defense electronics," said Standard & Poor's credit analyst Christopher DeNicolo. Acquisitions are an important part of the company's growth strategy, and leverage has periodically become somewhat elevated because of debt-financed transactions. However, management has historically restored financial flexibility by issuing equity, and in the past year has called $720 million of convertible notes, which were subsequently converted into common equity. Significant increases in revenues and profits in recent years have been driven largely by acquisitions, but organic growth has also been solid due to the favorable environment for defense spending. Although the growth rate of defense budgets is likely to slow in the next few years due to the large federal budget deficit and competing domestic priorities, L-3's focus on high-priority areas for the Department of Defense, such as communications, surveillance, and homeland security; its broad range of programs; and limited platform dependency should enable the company to maintain good organic growth. Most of L-3's business relates to upgrading or modifying existing platforms with new electronics, programs that are less likely to be cut than expensive new aircraft or ships. New York, New York-based L-3 provides secure communication systems, specialized communications devices, and flight simulation and training. Products include secure, high-data-rate communication systems, microwave components, avionics, telemetry, and instrumentation devices, and simulator training products and services. Some well-supported programs, with a high percentage of sole-source contracts, mitigate the company's exposure to a competitive environment. The company had a funded backlog of $4.4 billion at Sept. 30, 2004. Good earnings and cash generation from existing operations and the contribution from acquisitions is expected to enable L-3 to maintain a financial profile consistent with current ratings, despite likely increases in debt to fund the acquisitions. L-3's position as a leading merchant supplier of defense electronics and its broad base of programs should mitigate the impact of slower defense budget growth. LAIDLAW INT'L: Posts $30.4M Net Income for First Quarter of 2005 ---------------------------------------------------------------- Laidlaw International, Inc. (NYSE:LI) reported net income of $30.4 million for its first quarter fiscal 2005, an increase of 34.5% from net income of $22.6 million for the first quarter of the last fiscal year. Earnings per share were $0.29 for the first quarter of 2005 as compared to earnings per share of $0.22 in the prior year's quarter. Revenue of $1,227.3 million was up $17.0 million, or 1.4%, from $1,210.3 million for the prior year period largely due to revenue growth from Laidlaw International's healthcare companies. Operating income for the first quarter of 2005 of $80.1 million was up $10.6 million, or 15.3%, compared to $69.5 million for the prior year quarter. Operating income benefited from the revenue growth and a focus on cost controls, despite a difficult fuel environment. First quarter EBITDA (a non-GAAP financial measure, representing operating income plus depreciation and amortization) was $161.3 million as compared to an EBITDA of $150.2 million in the first quarter of fiscal 2004, a 70 basis point expansion in margin to 13.1% from 12.4%. Schedules reconciling EBITDA to net income and EBITDA to net cash used in operating activities are provided as a supplement to this release. "Our focus continues to be on the improvement of the operational performance of each of our businesses," said Kevin Benson, President and Chief Executive Officer of Laidlaw International, Inc. "The initiatives underway in our school bus operations are developing as planned and should result in a steady improvement in margins over the next few years. Greyhound is also implementing changes in response to customer demand and will continue to refine its services as it pursues the optimum network." Mr. Benson added, "As we announced in December, we expect to complete the sale of the healthcare companies by the end of March 2005, the result of which will be a much improved balance sheet." As of November 30, 2004, the company had unrestricted cash and cash equivalents of $99.4 million and debt outstanding of $1,166.2 million. Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc., -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. * * * As reported in the Troubled Company Reporter on Dec. 27, 2004, Moody's Investors Service has placed the long-term debt ratings of Laidlaw International, Inc., under review for possible upgrade. The review is prompted by the recent announcement by the company that it had entered into a definitive agreement to sell both of its healthcare businesses to Onex Partners LP, an affiliate of Onex Corporation, for $820 million. Net proceeds after fees and assumption of a small amount of debt by the buyer is estimated at $775 million, with a majority of the proceeds intended to be used to repay substantial levels of Laidlaw's existing debt. Moody's has also assigned a Speculative Grade Liquidity Rating of SGL-2 to Laidlaw International, Inc. As part of the rating action, Moody's has reassigned to Laidlaw International, Inc., certain ratings, including the senior implied and senior unsecured issuer ratings, originally assigned at Laidlaw, Inc., in order to reflect more appropriately the company's current organizational structure. As reported in the Troubled Company Reporter on Dec. 9, 2004, Standard & Poor's Ratings Services placed its ratings, including its 'BB' corporate credit rating, on Laidlaw International Inc. on CreditWatch with positive implications. The rating action follows Laidlaw's announcement that it has entered into definitive agreements to sell both of its health care companies, American Medical Response and Emcare, to Onex Partners L.P. for $820 million. Laidlaw expects to receive net cash proceeds of $775 million upon closing of the transaction, which is expected by the end of March 2005. Naperville, Illinois-based Laidlaw currently has about $1.5 billion of lease-adjusted debt. MILESTONE SCIENTIFIC: Amex Delisting Stock Due to Equity Shortfall ------------------------------------------------------------------ Milestone Scientific, Inc. (AMEX: MS), has been notified by the American Stock Exchange that the Company is not in compliance with the $6 million minimum shareholders' equity requirement for continued listing on the Exchange. In its quarterly report on Form 10-Q for the period ended Sep. 30, 2004, the Company reported shareholders' equity of approximately $5 million. The American Stock Exchange has requested that the Company provide information as to how it intends to regain and sustain compliance with this requirement, and the Company is cooperating with that request. Milestone will submit a plan to the Exchange by Jan. 14, 2005, detailing the Company's ability to improve shareholders' equity, generate earnings and regain compliance with the Exchange's continued listing standards. If the plan is accepted, Milestone will remain listed on the American Stock Exchange, subject to periodic review by the Exchange to determine whether it is progressing consistent with the plan. Milestone Scientific, Inc., is the developer, manufacturer and marketer of CompuMed(R) and CompuDent(R) computer controlled local anesthetic delivery systems for medical and dental applications. These systems are comprised of a microprocessor controlled drive unit and single patient use disposable handpieces. The Company recently announced its entry into the consumer tooth whitening market via the licensing of its proprietary CoolBlue system to a third party mass-marketing organization. Milestone has also developed and patented its CompuFlo(TM) technology, which advances the delivery and removal of a wide array of fluids from the human body by providing real time displays of pressures, fluid densities and flow rates. In 2002, Milestone Scientific received United States patent protection on a safety engineered sharps technology that allows for fully automated true single-handed activation with needle anti-deflection and force-reduction capability. In 2003, Milestone received FDA Clearance to market SafetyWand(R), which incorporates engineered sharps injury protection features to aid in the prevention of accidental needlesticks. The Company is headquartered in Livingston, New Jersey, and its common stock trades on the American Stock Exchange under the symbol "MS". For additional information, please visit the Company's website at http://www.milesci.com/ NATIONAL CENTURY: Trust Asks Court to Vacate Protective Orders -------------------------------------------------------------- The Unencumbered Assets Trust, successor-in-interest of National Century Financial Enterprises, Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Ohio to vacate the Protective Orders it previously entered, subject to the prior entry of a single, comprehensive Protective Order in the parallel proceedings pending before Judge James L. Graham in the United States District Court for the Southern District of Ohio. Sydney Ballesteros, Esq., at Gibbs & Bruns, LLP, in Houston, Texas, tells Judge Calhoun that the Trust has asked Judge Graham to enter the Proposed Comprehensive Protective Order, which would protect the information currently protected by the Protective Orders entered by the Bankruptcy Court. As reported in the Troubled Company Reporter on Jan. 07, 2005, the Court approves protective agreements entered into by the Debtors and nine additional individuals and entities: (1) Lance K. Poulsen, (2) Barbara L. Poulsen, (3) KULD Partners, (4) Intercontinental Investment Associates, (5) Healthcare Capital LLC, (6) Flohaz Partners LLC, (7) South Atlantic Investments, LLC, (8) Thor Capital Holdings LLC, and (9) Kachina Inc. As reported in the Troubled Company Reporter on June 16, 2004, with the Court's consent, the Debtors entered into separate protective agreements with: (1) Bank One, as Indenture Trustee, (2) Deloitte & Touche, LLP, (3) Goldman Sachs & Co., (4) Harold W. Pote, (5) JP Morgan Chase Bank, (6) PricewaterhouseCoopers, LLC, (7) Thomas G. Mendell, and (8) The Official Subcommittee of Noteholders of NPF XII, Inc. The UAT and MDL Lawsuits On November 17, 2004, the Trust filed a lawsuit against several of the targets of the Rule 2004 discovery authorized by the Bankruptcy Court and affirmed by Judge Graham. In addition, there are numerous other lawsuits concerning the collapse of National Century Financial Enterprises, Inc., and related entities that have been transferred to Judge Graham's court as part of an MDL proceeding. The MDL Lawsuit includes several lawsuits brought by NCFE investors against many of the same defendants in the UAT Lawsuit. Judge Graham's Opinions Judge Graham has noted in his opinions affirming the Bankruptcy Court's authorization of the issuance of the Trust's Rule 2004 subpoenas the possibility that the Rule 2004 discovery has created a temporary "informational advantage" in favor of the Trust and its counsel, which is also counsel for several of the noteholder plaintiffs in the MDL Lawsuit. During the course of the bankruptcy and proceedings relating to the Rule 2004 discovery phase of the Debtors' cases, the Trust was asked by numerous people and entities -- some of whom are prosecuting claims in the MDL Lawsuits and some of whom are defending claims in both the MDL and UAT Lawsuits -- to make the Trust's information available to them. In ruling that Rule 2004 discovery should proceed notwithstanding the initial "information advantage," Judge Graham expressed his expectation that the Trust would be prepared to make an orderly production of this information to others. Judge Graham also stated in a later opinion that one of the "corrective measures" for addressing the temporary informational disadvantage was the exchange of documents in the MDL proceeding. To facilitate the progression of the MDL and UAT Lawsuits, to meet the expectations expressed by Judge Graham, to meet the requests of the various parties who have asked to be granted access to the Trust's information, and in an effort to transmit written information that the Trust would be required to eventually disclose anyway under the mandatory disclosure provisions of the Federal Rules of Civil Procedure, the Trust has contemporaneously sought Judge Graham's permission to voluntarily transmit or make available for transmission three categories of information: (a) Documents formerly belonging to NCFE and currently within NCFE's possession; (b) Documents that the Trust has received from its legal counsel in connection with the Trust's investigation of its claims; and (c) Documents and deposition testimony received by the Trust in response to its Rule 2004 subpoenas. This information would be made available for production to all parties in the UAT and MDL Lawsuits. Ms. Ballesteros notes that the majority of the information the Trust seeks to produce in the MDL and UAT Lawsuits is not currently governed by any protective order. The majority of the information to be produced consists of NCFE's own documents. A subset of the information the Trust is volunteering to produce was transmitted to the Trust under various Protective Orders entered by the Bankruptcy Court. Although the terms of the Protective Orders are not exactly the same, the Protective Orders all preclude the Trust from producing certain of the Protected Information without the producing party's consent or Bankruptcy Court order. Accordingly, the Trust asks the Court to vacate the Protective Orders so that the Protected Information may be produced to the parties in the UAT and MDL Lawsuits, pursuant to the Proposed Comprehensive Protective Order. Ms. Ballesteros avers that the Proposed Comprehensive Protective Order will give the producers of the Protected Information the same level of protection that they had under the Bankruptcy Court's current Protective Orders, except that the Protected Information would be shared with the other parties to the MDL and UAT Lawsuits. The standard for designating documents as "Confidential" under the proposed Comprehensive Protective Order would be the same as the standard governing the designation under the Bankruptcy Court's Protective Orders, except that the scope of the recipients would be expanded to the parties in those proceedings. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the Debtors in their restructuring efforts. (National Century Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL MENTOR: Fourth Quarter Revenues Up 9.5% to $168.9 Million ------------------------------------------------------------------ National MENTOR Holdings, Inc., reported the financial results for the fourth quarter and fiscal year ended September 30, 2004. National MENTOR Holdings, Inc., which markets its services under the name The MENTOR Network, is a leading provider of home and community-based human services for individuals with mental retardation and other developmental disabilities, at-risk youth and persons with acquired brain injury. Revenues for the fourth quarter ended September 30, 2004 were $168.9 million, an increase of $14.7 million, or 9.5%, over revenues for the fourth quarter ended September 30, 2003. EBITDA for the quarter was $17.9 million, an increase of $3.8 million, or 27.0%, compared to EBITDA for the fourth quarter of fiscal 2003. Adjusted EBITDA for the quarter, which is EBITDA adjusted for integration expenses, losses on disposals of business units, property and equipment, and certain other costs, was $19.2 million, up $2.3 million, or 13.6%, over Adjusted EBITDA for the fourth quarter of fiscal 2003. The increase in fourth quarter revenues was due to growth in the company's existing service lines, its expansion into new markets and the development of new services for the company's existing customer base. The increase in fourth quarter EBITDA and Adjusted EBITDA was due to the increase in revenue noted above, as well as cost containment measures instituted by management during the third and fourth quarters of fiscal 2004. Revenues for the fiscal year ended September 30, 2004 were $648.5 million, an increase of $235.7 million, or 57.1%, over revenues for the fiscal year ended September 30, 2004. EBITDA for fiscal 2004 was $66.9 million, an increase of $27.6 million, or 70.2%, over EBITDA for fiscal 2003. Adjusted EBITDA for fiscal 2004 was $72.7 million, an increase of $27.9 million, or 62.3%, over Adjusted EBITDA for fiscal 2003. The reported results do not include the effects of a refinancing completed on November 4, 2004, which included the creation of a new senior credit facility and the issuance of senior subordinated notes of our wholly owned subsidiary National MENTOR, Inc. About the Company National MENTOR, Inc., headquartered in Boston, Massachusetts, is a leading provider of home and community-based services for individuals with mental retardation and other developmental disabilities, at-risk youth and persons with acquired brain injury. * * * As reported in the Troubled Company Reporter on Oct. 12, 2004, Moody's Investors Service assigned B1 ratings to the proposed credit facilities of National MENTOR, Inc., and a B3 rating to the company's proposed senior subordinated notes. Moody's also assigned a B1 senior implied rating, a B2 senior unsecured issuer rating, and a SGL-2 speculative grade liquidity rating to the company. The outlook for the company is stable. This is the first time Moody's assigned public debt ratings to MENTOR. MIDWAY MOTORS: GMAC Says It's Disappointed With Ohio AG's Lawsuit ----------------------------------------------------------------- General Motors Acceptance Corp. General Counsel William Solomon issued a statement in response to news that the Attorney General of Ohio has filed a civil lawsuit against GMAC in connection with an odometer fraud scheme perpetrated on GMAC by Midway Motor Sales, Inc. "This lawsuit is without merit. GMAC is deeply disappointed by the actions of the Ohio Attorney General's Office, particularly since GMAC discovered the problem, put a stop to it, corrected the harm, and brought it to the Attorney General's attention in the first place. In April 2004, GMAC voluntarily reported to the Attorney General's Office that it discovered that Midway Motor Sales, a Youngstown, Ohio, automobile dealership, rolled back odometers on a number of vehicles leased by Ohio-based Modern Builders Supply, Inc. On its own initiative, GMAC identified the owners then in possession of the vehicles, 23 of whom were in Ohio, and either paid them a monetary adjustment for the odometer discrepancy on their vehicles, or bought back the vehicles. The Attorney General's Office approved of this action by GMAC. In total, GMAC spent more than $1.2 million in payments and other expenses related to these efforts. Midway Motor Sales filed bankruptcy shortly after GMAC discovered the fraud. "The Attorney General is trying to hold GMAC responsible for a third party's bad acts that GMAC knew nothing about. GMAC is a victim of Midway's odometer fraud scheme and further, is absolutely not liable for any acts or consequences related to Midway's odometer tampering and odometer fraud scheme. GMAC will vigorously defend this lawsuit and expects to be fully vindicated. "GMAC expected that the Attorney General's Office would commend GMAC for its exemplary handling of this matter instead of filing a 'strict liability' civil lawsuit against GMAC, itself a fraud victim who fully remediated the harmed owners, voluntarily reported the wrongdoing to the Attorney General's Office, and provided the Attorney General with evidence to use against Midway. Unfortunately, the effect of this lawsuit may be to discourage others from coming forward with information about illegal conduct. "GMAC is pleased that no owners have suffered physical or financial harm due to Midway's activities. GMAC has and will continue to aggressively pursue Midway and any individuals involved in this fraud scheme to bring them to justice, and despite today's development, will continue to work with law enforcement agencies in their pursuit of Midway." Headquartered in New Waterford, Ohio, Midway Motor Sales, Inc., filed for chapter 11 protection on June 3, 2004 (Bankr. N.D. Ohio Case No. 04-42726). Melissa M. Macejko, Esq., at Suhar & Macejko, LLC, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it estimated $50,000 in assets and $10 Million in debts. MURANO APARTMENTS: Case Summary & 16 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Murano Apartments, LLC 9475 West Tompkins Road Las Vegas, Nevada 89147 Bankruptcy Case No.: 05-10067 Type of Business: The Debtor owns and operates 10 buildings consisting 88 residential apartments. Chapter 11 Petition Date: January 6, 2005 Court: District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtor's Counsel: Michael E. Kulwin, Esq. Law Offices of Michael E. Kulwin 317 South 6th Street, 2nd Floor Las Vegas, Nevada 89101 Tel: (702) 387-5533 Financial Condition as of December 31, 2004: Total Assets: $8,750,000 Total Debts: $7,460,000 Debtor's 16 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ William A. Gayler $529,984 4035 South Tenaya Way, Suite 200 Las Vegas, Nevada 89147 R.G. & Associates $509,806 4175 South Riley Street, Suite 202 Las Vegas, Nevada 89147 Diamond Construction $80,037 7885 Westwind Road Las Vegas, Nevada 89139 Rinker Materials West $44,967 AR Ornamental Iron $39,935 AMPAM LDI Mechanical $23,655 Nations Flooring $16,032 Pools by Grube $9,878 The Roofing Company $9,200 Nevada Gypsum Floors $7,854 White Cap Industries, Inc. $5,635 Concrete Pumping (ROB'S) $4,377 L & S Air Conditioning $1,914 Busy Bee Pest Control $1,196 Allvalley Concrete Pumping $816 Post Tension of Nevada $814 NDCHEALTH CORP: Moody's Reviewing Low-B Ratings & May Downgrade --------------------------------------------------------------- Moody's Investors Service downgraded the senior secured bank facility rating of NDCHealth Corporation to B1 from Ba3, the senior subordinated notes rating to B3 from B2 and the issuer rating to B2 from B1 and has placed the ratings on review for further possible downgrade. The downgrade is prompted by continued erosion of its fundamental financial performance. The review for possible downgrade is prompted by the company's failure to timely file its quarterly financial statements due to its determination to restate prior period results beginning with its fiscal year end May 31, 2002, which precludes access to its revolving credit facility. Ratings on review for further possible downgrade: * Senior Secured Bank Facility Rating B1 (previously Ba3) * Senior Subordinated Debt B3 (previously B2) * Senior Implied Rating B1 (previously Ba3) * LT Issuer Rating B2 (previously B1) The review will focus on the company's progress to achieve a waiver from the lenders and to gain access its credit facility. In addition, the review will focus on the company's plan to achieve sequential improvement in revenues and profitability to its Information Management and Network Services business. The company temporarily does not have access to its revolving credit facility and internal liquidity is modest ($6 million cash balances as of its last reported quarterly 10Q filing of August 2004). For the trailing twelve months ended Aug. 27, 2004, the company's free cash flow has declined almost 50% year over year to $30 million. To the degree that plans to stabilize declining revenues within its Information Management and Network Services businesses and to stabilize EBITDA are attainable and the companys improves financial flexibility through access to external liquidity sources, the ratings could likely be confirmed at the existing rating level. To the degree a waiver from lenders is not obtained and the plan to achieve financial stability is unlikely, further downgrade is likely. NDCHealth, headquartered in Atlanta, Georgia, is a network-based health information company. NDCHEALTH CORP: Moody's Reviewing Low-B Ratings & May Downgrade --------------------------------------------------------------- Moody's Investors Service downgraded the senior secured bank facility rating of NDCHealth Corporation to B1 from Ba3, the senior subordinated notes rating to B3 from B2 and the issuer rating to B2 from B1 and has placed the ratings on review for further possible downgrade. The downgrade is prompted by continued erosion of its fundamental financial performance. The review for possible downgrade is prompted by the company's failure to timely file its quarterly financial statements due to its determination to restate prior period results beginning with its fiscal year end May 31, 2002, which precludes access to its revolving credit facility. Ratings on review for further possible downgrade: * Senior Secured Bank Facility Rating B1 (previously Ba3) * Senior Subordinated Debt B3 (previously B2) * Senior Implied Rating B1 (previously Ba3) * LT Issuer Rating B2 (previously B1) The review will focus on the company's progress to achieve a waiver from the lenders and to gain access its credit facility. In addition, the review will focus on the company's plan to achieve sequential improvement in revenues and profitability to its Information Management and Network Services business. The company temporarily does not have access to its revolving credit facility and internal liquidity is modest ($6 million cash balances as of its last reported quarterly 10Q filing of August 2004). For the trailing twelve months ended Aug. 27, 2004, the company's free cash flow has declined almost 50% year over year to $30 million. To the degree that plans to stabilize declining revenues within its Information Management and Network Services businesses and to stabilize EBITDA are attainable and the companys improves financial flexibility through access to external liquidity sources, the ratings could likely be confirmed at the existing rating level. To the degree a waiver from lenders is not obtained and the plan to achieve financial stability is unlikely, further downgrade is likely. NDCHealth, headquartered in Atlanta, Georgia, is a network-based health information company. NORTEL NETWORKS: Look Out for 2003 Annual Report Today ------------------------------------------------------ Nortel Networks Corporation (NYSE:NT)(TSX:NT) Nortel Networks Limited, will file their audited financial statements for the year 2003 prepared in accordance with United States and Canadian generally accepted accounting principles, and related Annual Report on Form 10-K and Canadian filing, today, January 10, 2005. Further, the Company expects that it and NNL will file their unaudited financial statements for the first and second quarters of 2004, and related periodic reports, before the end of January 2005 and follow as soon as practicable thereafter with the filing of their unaudited financial statements for the third quarter of 2004 and related periodic reports and any required amendments to periodic reports for prior periods. Outlook The Company now expects revenues in the fourth quarter of 2004 to be approximately US$2.8 billion. EDC Support Facility As previously announced, NNL obtained a further waiver on December 10, 2004 from Export Development Canada of certain defaults under the EDC performance-related support facility related to the delay by the Company and NNL in filing the Company's and NNL's 2003 Annual Reports on Form 10-K, and Quarterly Reports on Form 10-Q for the first, second and third quarters of 2004, in each case with the U.S. Securities and Exchange Commission, the trustees under the Company's and NNL's public debt indentures and EDC. The waiver also applies to certain additional breaches under the EDC Support Facility related to the delayed filings and the planned restatements and revisions to the Company's and NNL's prior financial results. The current waiver from EDC will expire on January 15, 2005. As the Company and NNL do not expect to deliver the 2004 Quarterly Reports by January 15, 2005, EDC will have the right, on the date, unless EDC has granted a further waiver in relation to these delayed filings and the Related Breaches, to terminate the EDC Support Facility, exercise certain rights against collateral or require NNL to cash collaterize all existing support. While NNL is seeking a new waiver from EDC in connection with the delay in filing the 2004 Quarterly Reports, there can be no assurance that NNL will receive a new waiver or as to the terms of any the waiver. In addition, the Related Breaches will continue beyond the filing of the 2003 Annual Reports and the 2004 Quarterly Reports. Accordingly, EDC will have the right (absent a further waiver of the Related Breaches) to terminate or suspend the EDC Support Facility or exercise certain rights against collateral notwithstanding the filing of the 2003 Annual Reports and the 2004 Quarterly Reports. While NNL expects to seek a permanent waiver from EDC in connection with the Related Breaches, there can be no assurance that NNL will receive a permanent waiver, or any waiver or as to the terms of any such waiver. The EDC Support Facility provides up to US$750 million in support, all presently on an uncommitted basis. The US$300 million revolving small bond sub-facility of the EDC Support Facility will not become committed support until all of the delayed reports are filed with the SEC and NNL obtains a permanent waiver of the Related Breaches. As of December 31, 2004, there was approximately US$296 million outstanding support utilized under the EDC Support Facility, approximately US$212 million of which was outstanding under the small bond sub-facility. The Company's and NNL's next bi-weekly status update is expected to be released during the week of January 17, 2005. About Nortel Nortel Networks is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at http://www.nortel.com/ * * * As reported in the Troubled Company Reporter on Dec. 10, 2004, Standard & Poor's Ratings Services placed its B-/Watch Developing credit rating on Nortel Networks Lease Pass-Through Trust certificates series 2001-1 on CreditWatch with negative implications. The rating on the pass-through trust certificates is dependent upon the ratings assigned to Nortel Networks, Ltd., and ZC Specialty Insurance, Co. This CreditWatch revision follows the Dec. 3, 2004, withdrawal of the ratings assigned to ZC Specialty Insurance, Co. Previously, the rating had a CreditWatch developing status due to the CreditWatch developing status on the rating assigned to Nortel. The pass-through trust certificates are collateralized by two notes that are secured by five single-tenant, office/R&D buildings that are leased to Nortel ('B-'). Nortel guarantees the payment and performance of all obligations of the tenant under the leases. The lease payments do not fully amortize the notes. A surety bond from ZC Specialty Insurance Co. insures the balloon amount. The notes mature in August 2016, at which time a final principal payment of $74.7 million is due. If this amount is not repaid, the indenture trustee can obtain payment from the surety, provided certain conditions are met. The notes will remain on CreditWatch while Standard & Poor's examines the impact of the withdrawal of the ratings on ZC Specialty Insurance Co. PARMALAT USA: Disclosure Statement Hearing Scheduled for Wednesday ------------------------------------------------------------------ Judge Drain of the U.S. Bankruptcy Court for the Southern District of New York will convene a hearing to consider the Disclosure Statement on the Plan of Reorganization of the Parmalat USA Corporation and its U.S. debtor-affiliates this Wednesday, January 12, 2005. As reported in the Troubled Company Reporter on Dec. 9, 2004, Farmland Dairies LLC has filed its Disclosure Statement and Plan of Reorganization with the United States Bankruptcy Court for the Southern District of New York. The cornerstone of the plan is an agreement that was reached between GE Commercial Finance, the lessor of a majority of Farmland's manufacturing equipment at its New Jersey and Michigan production facilities, and the Unsecured Creditors Committee. The plan calls for the satisfaction of the company's prepetition liabilities through the issuance of cash, notes, stock and rights to pursue certain causes of action. Specifically, Farmland's unsecured creditors will receive cash, a note, and preferential rights of recovery from causes of action pursued by a litigation trust. Farmland is expected to emerge as a stand-alone entity that will be majority owned by GE Commercial Finance on behalf of the lessor group. At the hearing, the Court will consider whether the Disclosure Statement contains "adequate information" within the meaning of Section 1125 of the Bankruptcy Code. Pursuant to Section 1125, a disclosure statement must contain information "of a kind, and in sufficient detail . . . that would enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan." Objections to the Disclosure Statement were due January 5, 2005. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000) PRINCIPAL AT-RISK: Moody's Assigns Ba2 Rating to $150 Mil. Notes ---------------------------------------------------------------- Moody's Investors Service assigned ratings of Ba2 to $150 million of Principal At-Risk Variable Rate Notes due January 9, 2007, issued by Redwood Capital VI, Ltd., a Cayman Islands special purpose company. Investors in the securities effectively provide 2 years of coverage, limited to $150 million against potential cumulative losses from earthquakes in California, including losses due to fire following such earthquakes. Principal reductions to the Notes are accrued on a linear schedule from 0% to 100% of the nominal amount when insured property losses in the State of California estimated Property Claim Services -- PCS, a division of Insurance Services Offices, Inc. -- ISO, vary from $19.5 billion to $24 billion. Moody's ratings address the ultimate cash receipt of all required interest and principal payments as provided by the governing documents, and is based on the expected loss posed to the noteholders relative to the promise of receiving the present value of such payments. Thus, the rating is based on Moody's analysis of the probability of occurrence of qualifying events, their timing and the severity of losses experienced by investors should those events occur during the risk period. Moody's review of the transaction has included extensive review of the technical basis, methodology and historical data used to develop the earthquake risk model used by EQECAT for the analysis of potential earthquake losses. In addition to the review of EQECAT's model, Moody's developed an independent, in-house simplified model to evaluate the earthquake risk in California, and stress tested some of the key assumptions in the risk model. This review together with a detailed analysis of the transaction's legal structure and the financial strength of the various parties to the transaction, provided Moody's with sufficient comfort that the resulting rating adequately captures the risk to investors in these securities. RAYOVAC CORP: Moody's Revises Outlook on Low-B Ratings to Stable ---------------------------------------------------------------- Moody's Investors Service has affirmed the ratings of Rayovac Corporation and United Industries Corporation and has revised Rayovac's rating outlook to stable from positive, following the announcement that Rayovac has agree to purchase UIC for around $1.3 billion in cash, stock, and debt assumption. UIC's rating outlook remains stable. In addition, Moody's has assigned a B1 rating to Rayovac's proposed $1.2 billion senior secured credit facilities and a B3 rating to its proposed $500 million senior subordinated notes offering, which will be used to finance the cash portion of the transaction and related fees, as well as to refinance of all of UIC's debt and Rayovac's existing senior secured facilities. The ratings affirmation recognizes the meaningful scale and diversification benefits that may be achieved through the combination of the two businesses, as well as the potential for improved operational efficiency given Rayovac's strong track-record of integration and facility consolidation savings. Notwithstanding these benefits, the revision of Rayovac's outlook to stable from positive reflects a deceleration of the time-frame over which Moody's is likely to consider a ratings upgrade, given the relative complexity of the integration, the moderate increase in Rayovac's leverage, and the likelihood of additional acquisitions in the pet supplies business. These ratings of Rayovac were affected by this action: * $300 million six-year revolving credit facility, assigned at B1; * $740 million seven-year US term loan B, assigned at B1; * USD140 million -- equivalent EUR denominated seven-year European term loan B, assigned at B1; * USD50 million -- equivalent CAD denominated seven-year Canadian term loan B, assigned at B1; * $500 million ten-year senior subordinated notes, assigned at B3; * Senior implied rating, affirmed at B1; * $120 million senior secured revolving credit facility due 2008, affirmed at B1; * E40 million senior secured revolving credit facility due 2008, affirmed at B1; * $257 million senior secured term loan C facility due 2009, affirmed at B1; * E114 million senior secured term loan C facility due 2009, affirmed at B1; * $350 million 8.5% senior subordinated notes due 2013, affirmed at B3; * Senior unsecured issuer rating, affirmed at B2. These ratings of UIC were affected by this action: * Senior implied rating, affirmed at B1; * $130 million senior secured revolving credit facility due 2010, affirmed at B1; * $560 million senior secured term loan B due 2011, affirmed at B1; * $75 million second lien senior secured term loan due 2011, affirmed at B2; * $233 million 9.875% senior subordinated notes due 2009, affirmed at B3; * Senior unsecured issuer rating, affirmed at B2. Under the terms of the acquisition agreement, Rayovac will pay approximately $466 million for UIC's common stock and assume UIC's debt and capital leases (around $864 million at quarter-end September 2004). The total consideration represents over a 9x multiple of UIC's LTM EBITDA, but the majority use of Rayovac equity in the stock purchase (largely for Thomas H. Lee affiliates) and the prospective benefits of UIC's tax shield moderates the burden of the fully-priced acquisition on debtholders. Rayovac's leverage, which is currently low relative to the rating category at around 4.1x, is anticipated to increase to around 5.0x on a pro forma basis following the transaction. Further, management expects significant synergies to be realized over the next few years in the areas of manufacturing, distribution, purchasing, marketing, systems, and administrative costs. The affirmation of Rayovac and UIC's ratings reflects some key potential benefits offered by the combination of the two companies. The most significant of these relates to the strong track record Rayovac has established in integration and facility consolidation, and the value that may be created from bringing this expertise to UIC, which has not achieved the full potential from consolidating operations of its acquisitions over the past few years (including Nu-Gro and United Pet Group in 2004). Rayovac's acquisitions of VARTA consumer batteries (2002) and Remington electric shavers (2003) have been successfully integrated with better-than-expected results in terms of savings, costs and timeframe. Additional benefits from the business combination, include: (1) significant product diversification for both companies, especially Rayovac given the deflationary pricing environment for consumer batteries over the past few years and the higher growth prospects for UIC's product lines; (2) balanced seasonality, with sales of lawn and garden products peaking in the spring/summer months and shaver/battery being strongest in the winter holiday time period; and (3) enhanced scale and customer relationships, with modest cross-selling/new customer opportunities. As a result of the transaction, Rayovac's consumer battery-related sales are expected to represent less than 40% of total revenues, versus current levels at over two-thirds. Notwithstanding these benefits, the revision of Rayovac's outlook to stable from positive recognizes that the increased leverage and relative complexity of the UIC integration will delay a potential ratings upgrade. In addition to the unique and unfamiliar nature of UIC's product categories, Rayovac faces the challenge of essentially integrating three businesses at once, as UIC has struggled somewhat with its integration of Nu-Gro and has only recently purchased United Pet Group -- UPG. The outlook change also recognizes the potential for further acquisitions given the industry roll-up strategy upon which UPG has embarked. Lastly, Moody's notes that in nearly all of its product categories, the combined business faces larger branded competitors with more financial flexibility, including Gillette, Energizer, S.C. Johnson, Phillips, Scotts and Central Garden & Pet. The company also continues to be exposed to potential raw material and energy price volatility, unfavorable weather impacts (lawn & garden), customer concentration issues, and deflationary pricing pressures (largely batteries). The stable outlook, however, reflects Moody's opinion that current rating levels appropriately capture the risks associated with acquisition or the potential need to use synergies to offset challenges within the main businesses. Support for this view is furthered by management's measured integration plans and by appropriate credit metrics and strong free cash flow potential relative to the current ratings. As such, Moody's believes that negative ratings actions over the coming year are highly unlikely, and a rating downgrade would require a material erosion in earnings and cash flow generation such that debt-to-EBITDA increased to near 6.0x, interest coverage decreased below 2.0x, and free cash flow declined below 5% of funded debt. Conversely, Moody's could consider positive rating actions through the successful execution of Rayovac's business plan, particularly if the integration goes smoothly and occurs on a more timely pace than currently anticipated, and/or through management's commitment to lower leverage levels. Specifically, sustainable debt-to-EBITDA and free cash flow-to-debt levels below 4.5x and above 10%, respectively, could be consistent with higher rating levels under the current business mix. Rayovac's leading market positions (especially outside the U.S. and in specialty battery, lighting, and electric shavers) and UIC's leading value brands and niche pet products provide ongoing support for the B1 rating levels. Despite significant historical pricing and promotional actions, the global battery industry has remained largely controlled by four main operators (Gillette/Duracell, Energizer, Panasonic and Rayovac), has stabilized promotionally in recent periods, and has grown over the long-term with the expansion of low-drain gadgets, high drain/rechargeable battery-operated electronics, and the trend towards higher-margin alkaline products from zinc carbon. Similarly, North American shaving and grooming categories are dominated by three branded competitors (Phillips/Norelco, Braun and Remington). Lawn & garden, household insecticide and pet products have enjoyed above-average growth trends, owing to strong demographic trends (home ownership, pet ownership, and high participation from older adults) and to the growth and expansion of associated big box retailers. Upon completion of the transactions, Moody's will withdraw all of UIC's debt ratings and the relevant Rayovac ratings. Moody's expects the new debt facilities to be governed by customary provisions and limitations and to contain similar security and guarantee packages to Rayovac's existing debt agreements. Notching of the senior secured and subordinated ratings relative to the senior implied rating continues to reflect the high priority and limited tangible asset coverage of the credit facilities, and the significant subordination of the notes to secured debt. The ratings and outlooks are subject to the completion of the transactions as proposed and to a review of final documentation. With headquarters in Atlanta, Georgia, Rayovac Corporation is a global consumer products company with a diverse portfolio of consumer battery and electric shaving products, primarily under the Rayovac, VARTA and Remington brands. Reported sales for the fiscal year ended September 2004 were approximately $1.4 billion. Headquartered in St. Louis, Missouri, United Industries Corporation is a leading manufacturer and marketer of lawn and garden, insect control, and pet supply products in the United States and Canada. Pro forma annual sales, including recent and prospective acquisitions, are nearly $1.0 billion. RUSS TRANSMISSION: Case Summary & 9 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Russ Transmission Inc. 6801 Folsom Boulevard Sacramento, California 95819 Bankruptcy Case No.: 05-20041 Type of Business: The Debtor provides truck repair services. Chapter 11 Petition Date: January 3, 2005 Court: Eastern District Of California (Sacramento) Judge: Michael S. McManus Debtor's Counsel: Efren B. Williams, Esq. 1010 F. Street Sacramento, CA 95814 Tel: 916-443-1010 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 9 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Bank of America Trade debt $100,000 P.O. Box 30750 Los Angeles, CA 90030 Axiom Trade debt $10,000 1099 Vine St. #204 Sacramento, CA 95814 Transtar Trade debt $5,000 4350 Raley Blvd. Sacramento, CA 95838 Harrold Ford Trade debt $2,000 Daugherty Chevrolet Trade debt $2,000 Swift Auto World Trade debt $1,000 Snap-on Diagnostics Trade debt $1,000 Grainger Trade debt $1,000 AmeriPride Services, Inc. Trade debt $1,000 SCHUFF INT'L: SEC Grants Voluntary Delisting from AMEX ------------------------------------------------------ Schuff International, Inc. (formerly traded:(AMEX:SHF)), a family of companies providing fully integrated steel construction services, has received notice from the Securities and Exchange Commission, granting the Company's application to voluntarily withdraw from listing on the American Stock Exchange effective Jan. 6, 2005. The Company intends for its common stock to be quoted on the Over the Counter quotation system; however, activity on the Pink Sheets is dependent on the willingness of market makers to establish and maintain an ongoing market in the Company's common stock. No guarantee can be made that trading will occur, or continue, once begun. The Pink Sheets is a centralized quotation service that collects and publishes market maker quotes for OTC securities in real-time. Pink Sheets is neither a Securities and Exchange Commission registered stock exchange nor a broker-dealer. Schuff International, Inc. -- http://www.schuff.com/-- is a family of steel fabrication and erection companies providing a fully integrated range of steel construction services, including design engineering, detailing, joist manufacturing, fabrication and erection, and project management expertise. The company has multi-state operations primarily focused in the U.S. Sunbelt. * * * As reported in the Troubled Company Reporter on June 21, 2004, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Schuff International, Inc., to 'CCC' from 'B-'. The outlook was negative. SENECA GAMING: S&P Revises Outlook on Low-B Ratings to Negative --------------------------------------------------------------- Moody's Investors Service revised Seneca Gaming Corporation's ratings outlook to negative from stable in response to the company's delay in filing its Annual Report on Form 10-K. This delay follows the election of a new President of the Seneca Nation, appointment of new Board members, and the decision by the Seneca Nation to hire an independent counsel to conduct a review of all actions taken, including actions taken by the Seneca Nation, in the building, financing, management and operation of the Nation's gaming facilities, including the Seneca Niagara Casino and the Seneca Allegany Casino. SGC's Ba3 senior implied rating, B2 senior note rating, B2 long-term issuer rating, and SGL-2 speculative grade liquidity rating were affirmed. As reported in the Troubled Company Reporter on Apr. 23, 2004, Standard & Poor's Ratings Services assigned its 'BB-' rating to the Seneca Gaming Corporation's $225 million senior unsecured notes due 2012. In addition, a 'BB-' corporate credit rating was assigned to the Niagara Falls, New York-based company. The negative outlook considers the near-term uncertainty associated with the independent counsel investigation. Material negative financial and/or governance findings would likely result in a ratings downgrade of at least one-notch. Assuming operating results continue as expected, satisfactory resolution of the independent investigation would likely result in a revision of the ratings outlook back to stable. Seneca Gaming Corporation is an incorporated instrumentality of the Seneca Nation of Indians of New York, is federally recognized, and has a compact with the State of New York that provides the Nation with the right to establish and operate three Class III gaming facilities in western New York. Seneca Gaming currently owns and operates the Seneca Niagara Casino and the Seneca Allegany Casino. SHAW GROUP: Siemens Power Acquires Power Technologies' Assets ------------------------------------------------------------- BATON ROUGE, La.--(CCNMatthews - Jan 6, 2005) The Shaw Group, Inc., (NYSE: SGR) sold substantially all of the assets of its Shaw Power Technologies, Inc., and Shaw Power Technologies International, Ltd., units to Siemens Power Transmission and Distribution Inc., a unit of Siemens AG (NYSE: SI). The sale was effective as of December 31, 2004. J.M. Bernhard, Jr., Chairman and Chief Executive Officer of Shaw, said, "We made a strategic decision earlier this year to divest ourselves of relatively small, non-core business units so that we may focus on business activities where we can generate the most value for our shareholders. This sale is simply the execution of that business strategy. In this transaction, we realized significant immediate value for a non-core business unit. We will redeploy this capital into our core businesses." The Shaw Group, Inc., -- http://www.shawgrp.com/-- is a leading global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation, and facilities management services for government and private sector clients in the power, process, environmental, infrastructure and emergency response markets. A Fortune 500 company with revenues over $3 billion, Shaw is headquartered in Baton Rouge, Louisiana, and employs approximately 17,000 people at its offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region. * * * As reported in the Troubled Company Reporter on Dec. 8, 2004, Standard & Poor's Ratings Services lowered its corporate credit rating on The Shaw Group to 'BB-' from 'BB.' Other ratings were also lowered one notch. The outlook is negative. At Aug. 31, 2004, the Baton Rouge, Louisiana-based engineering and construction services provider had about $476 million total debt outstanding (including present value of operating leases). "The ratings downgrade reflects weak earnings quality and cash flow generation that is more consistent with the lower rating," said Standard & Poor's credit analyst Paul Kurias. "Ratings may be lowered further if liquidity were to decline meaningfully, which might occur if operations underperform expectations or if challenged projects require greater-than-expected resources to complete." SIX FLAGS: S&P Junks Privately Placed $195 Mil. 9.625% Sr. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC' rating to Six Flags Inc.'s privately placed, Rule 144A $195 million add-on to its 9.625% senior notes due 2014. Proceeds from the offering will be used to redeem the company's 9.5% senior notes due 2009. At the same time, Standard & Poor's affirmed its ratings for the company, including the 'B-' corporate credit rating. The rating outlook is stable. The Oklahoma City, Oklahoma-based operator of 30 regional theme parks had total debt and preferred stock of $2.4 billion as of Sept. 30, 2004. "The rating reflects Six Flags' high debt leverage, disappointing operating performance trends, and slightly negative discretionary cash flow, despite lower capital spending," said Standard & Poor's credit analyst Hal F. Diamond. These issues overshadow considerations such as the company's critical mass as a regional theme park operator and its degree of geographic and cash flow diversity. Six Flags' parks are generally the largest and most extensive in their regions and benefit from significant barriers to entry. Most of the parks face limited direct competition, except in the intensely competitive Los Angeles market, where Six Flags competes against The Walt Disney Co., Universal Studios, and others. However, theme parks have significant fixed costs, and their profitability is highly sensitive to attendance levels. Standard & Poor's believes that Six Flags' expectations of a roughly 14% decline in EBITDA for 2004 suggest that it has a challenging job ahead to restore the appeal of its attractions. Attendance was down 4.5% in the first nine months of 2004 despite increased advertising expenditures, reflecting the absence of major new rides and attractions and a difficult target audience that is still weighted toward teenagers and repeat local visitors. Even with several new rides and improvements, the outlook for the 2005 summer operating season may still be challenging, and the company will need to maintain marketing expenses and ticket price discounts in order to increase attendance. The stable outlook incorporates the expectation that Six Flags' EBITDA and debt leverage will not deteriorate further in 2005. Any shortfall from these expectations, or a narrowing margin of covenant compliance, could lead to an outlook revision to negative or to a downgrade. SOLUTIA: Asks Court to Stretch Lease Decision Period to May 16 -------------------------------------------------------------- Solutia, Inc., and its debtor-affiliates continue to review and analyze their unexpired non-residential real property leases. However, the Debtors believe that they will not be able to decide whether to assume or reject all of their Unexpired Leases before the current February 14, 2005, deadline. Thus, the Debtors ask the U.S. Bankruptcy Court for the Southern District of New York to further extend the time within which they may assume, assume and assign, or reject their Unexpired Leases to and including May 16, 2005, without prejudice to their ability to request a further extension. M. Natasha Labovitz, Esq., at Gibson, Dunn & Crutcher LLP, in New York, relates that notwithstanding the Debtors' diligent efforts to date, the process of evaluating all of the Unexpired Leases in connection with their business plan remains time consuming. The Debtors do not wish to make premature assumption or rejection decisions with respect to an Unexpired Lease. The Debtors want to continue to address the process in a rational and practical manner that will benefit their estates, their creditors and all other parties-in-interest. Ms. Labovitz assures that Court that the Debtors have been avoiding undue delay in deciding whether to assume or reject each of the Unexpired Leases and are moving as quickly as practical to evaluate each lease and file an appropriate motion with the Court. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000) SUPER STRUCTURE: Case Summary & 12 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Super Structure Builders Inc. 99 Street Nicholas Avenue Brooklyn, New York 11237 Bankruptcy Case No.: 05-10189 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Port Ewen Trucking Corporation 05-10192 Super Structure Crane Rentals, Inc. 05-10194 Type of Business: The Debtors are affiliates of New York Steel Fabricators, Inc. The Debtors are engaged in the business of pre-cast concrete flooring, erection for various construction projects in the New York City metropolitan area. Chapter 11 Petition Date: January 6, 2005 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: J. Ted Donovan, Esq. Kevin J. Nash, Esq. Finkel Goldstein Berzow Rosenbloom Nash, LLP 26 Broadway, Suite 711 New York, New York 10004 Tel: (212) 344-2929 Fax: (212 422-6836 Total Assets Total Debts ------------ ----------- Super Structure Builders Inc. $624,999 $1,118,576 Port Ewen Trucking Corporation $0 $13,057 Super Structure Crane Rentals, Inc. $1,909,185 $2,430,983 A. Super Structure Builders Inc.'s 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jenkins & Gilchrist Parker Chapin LLP $227,221 PO Box 842552 Dallas, Texas 75284-2552 Infra Metals $35,000 8 Pent Highway Wallingford, Connecticut 06492 B. Port Ewen Trucking Corporation's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Ford Motor Credit Company $7,299 c/o Rubin & Rothman, LLC 1787 Veterans Highway Islandia, New York 11749 C. Super Structure Crane Rentals, Inc.'s 9 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Inter-Reco Inc. $236,415 175 Froehich Farm Boulevard Woodbury, New York 11797 Jenkins & Gilchrist Parker Chapin, LLP $44,787 405 Lexington Avenue New York, New York 10174 Hunters Point Steel $17,135 2903 Hunters Point Avenue Long Island City, New York 11101 Paul's Wine & Rope $15,545 Liebherr Cranes Inc. $9,572 Nextel Communications $4,894 Structural Systems Inc. $3,350 Schiller Service Corporation $2,921 J.W. Rufolo & Associates, Inc. $2,393 TECO ENERGY: Fitch Holds Low-B Ratings on Sr. Debt & Pref. Stock ---------------------------------------------------------------- Fitch Ratings does not expect any changes to the current ratings or Outlook for TECO Energy following their announcement earlier today that they plan to record impairment charges of $480 million (after-tax) in the fourth quarter of 2004 related to the Dell, McAdams, and Commonwealth Chesapeake power plants, as well as some remaining unused steam turbines. The charges come as a result of annual reviews of the carrying values of the assets and will affect both net income and the balance sheet. Fitch rates TECO: -- Senior unsecured debt 'BB+'; -- Preferred stock 'BB'; -- Rating Outlook Stable. For some time, Fitch has considered these assets to have little to no ability to generate cash flow and in fact were assumed in analysis to be a cash flow drain. In addition, since TECO no longer has covenants at the parent level requiring minimum debt to capital, this writeoff does not represent a significant change in the company's circumstances in Fitch's view of the credit profile. TECO Energy is a holding company headquartered in Tampa, Florida. Its principal businesses include a regulated electric and natural gas local distribution company subsidiary, unregulated marine transport, coal, and synthetic fuel production facilities, and merchant generation. Tampa Electric provides retail electric service to over 600,000 customers in western central Florida and through its Peoples Gas division distributes and markets natural gas to approximately 281,000 customers throughout the state. TELEGLOBE: Creditors Meeting Jan. 26 & Sanction Hearing Feb. 8 -------------------------------------------------------------- CONSOLIDATED PLAN OF COMPROMISE OR ARRANGEMENT OF TELEGLOBE INC., TELEGLOBE FINANCIAL HOLDINGS LTD., TELEGLOBE CANADA LIMITED PARTNERSHIP, TELEGLOBE MANAGEMENT SERVICES INC., TELEGLOBE MARINE, INC., TELEGLOBE MARINE, L.P. TELEGLOBE CANADA MANAGEMENT SERVICES INC., 3692795 CANADA INC. AND TELEGLOBE VISION CALL CENTER SERVICES, GENERAL PARTNERSHIP PURSUANT TO THE COMPANIES' CREDITORS ARRANGEMENT ACT (CANADA) NOTICE OF MEETING OF CREDITORS AND SANCTION HEARING NOTICE IS HEREBY GIVEN that a meeting (the "Meeting") of unsecured creditors (the "Creditors") of Teleglobe Inc., Teleglobe Financial Holdings Ltd., Teleglobe Canada Limited Partnership, Teleglobe Management Services Inc., Teleglobe Marine, Inc., Teleglobe Marine, L.P., Teleglobe Canada Management Services Inc., 3692795 Canada Inc. and Teleglobe Vision Call Center Services, General Partnership (collectively, the "Canadian Debtors") which are described in the Information Summary accompanying this Notice, will be held for the following purposes: 1. to consider and, if deemed advisable, to pass a resolution -- the full text of which resolution is set forth in Schedule "A" to the Information Summary to approve a Consolidated Plan of Compromise or Arrangement (the "Plan") proposed by the Interim Receiver on behalf of the Canadian Debtors, pursuant to the Companies' Creditors Arrangement Act (the "CCAA") (the "Plan Resolution"); and 2. to transact such other business as may properly come before the Meeting and any adjournment thereof. For purposes of the Meeting, the Plan provides for voting by Creditors. The Meeting will be held in Toronto, Ontario, pursuant to the following schedule: Time of Date of Meeting Meeting Location of Meeting --------------- ------- ------------------- January 26, 2005 11:00 a.m. Intercontinental Toronto Centre 225 Front Street West Toronto, Ontario Unless otherwise indicated, terms defined in the Plan shall have the same meanings herein. The Plan is summarized in the Information Summary accompanying this Notice. The Plan is being considered pursuant to an Order of the Ontario Superior Court (Commercial List) (the "Court") dated November 26, 2004. In order to become effective, the Plan must first be approved by a majority in number of the Creditors entitled to vote on the Plan Resolution (in person or by proxy) and that represent at least 66-2/3% in value of the Proven Voting Claims of the Creditors that vote on the Plan Resolution (in person or by proxy) at the Meeting. The Plan must also be sanctioned by a final Order of the Court. This Plan is being submitted by the interim receiver, Kroll Restructuring Ltd. (the "Interim Receiver"), on behalf of the Canadian Debtors, on a joint and consolidated basis for the sole purpose of permitting the Creditors affected by the Plan to vote on the Plan and receive distributions thereunder. Creditors, other than holders of the debentures listed below and any lenders who have provided credit facilities to the Canadian Debtors (such lenders are hereafter referred to as, the "Teleglobe Lending Syndicate"), who are not attending the Meeting in person are requested to complete the enclosed form of proxy entitled "Creditor Proxy" as instructed. The completed proxy must be delivered or faxed to the Monitor: Ernst & Young Inc. 222 Bay Street Ernst & Young Tower P.O. Box 251, Toronto-Dominion Centre, Toronto, Ontario, M5K 1J7 Attention: Ms. Leslea Gordon Telephone: 416-864-1234 Telecopier: 416-943-3300 on or before 5:00 p.m. (Eastern Standard Time) one (1) Business Day preceding the Meeting or any adjournment thereof, or by registering such form of proxy in person with the Chair of the Meeting at the place fixed for the Meeting immediately prior to the commencement of the Meeting or any adjournment thereof. Members of the Teleglobe Lending Syndicate and holders of: (i) 7.2% debentures due July 20, 2009; (ii) 7.7% debentures due July 20, 2029; (iii) 8% debentures due October 23, 2006; (iv) 8.35% debentures due June 20, 2003; and (v) 8.85% debentures due November 26, 2002 (such debenture holders are hereafter referred to as, the "Bondholders"), who are not attending the Meeting in person, are requested to complete the appropriate enclosed form of proxy entitled either "Bank Proxy" or "Beneficial Bondholder Proxy", respectively. The completed proxy must be delivered or faxed to the Monitor at the address noted above on or before 5:00 p.m. (Eastern Standard Time) one (1) Business Day preceding the Meeting or any adjournment thereof, or by registering such form of proxy in person with the Chair of the Meeting at the place fixed for the Meeting immediately prior to the commencement of the Meeting or any adjournment thereof. The forms of proxy give discretionary authority to proxyholders to consider any amendments to the Plan proposed at or prior to the Meeting. NOTICE IS ALSO HEREBY GIVEN that if the Plan is approved by the requisite majority of Creditors at the Meeting, the Interim Receiver on behalf of the Canadian Debtors, will bring a motion to the Court on the 8th day of February, 2005 at 10:00 a.m. (Toronto time) at 393 University Avenue, Toronto, Ontario for an order sanctioning the Plan under the CCAA and ancillary relief consequent upon such sanction. Any Creditor who wishes to appear before or to be represented and to present evidence or arguments to, the Court hearing the sanction of the motion must serve upon the legal counsel for the Canadian Debtors, the Monitor, the Interim Receiver, Ernst & Young Inc. in its capacity as the Interim Administrator, the Teleglobe Lending Syndicate, the Bondholders and upon all other parties who have filed a notice of appearance, a Notice setting out the basis for such opposition and a copy of the materials to be used to oppose the motion for approval of the Plan, not later than February 1, 2005. Creditors requiring information or claim documentation may contact the Monitor at the address noted above, or access the information at http://www.ey.com/ca/teleglobe/ THISTLE MINING: Gets Order to Begin Restructuring Under CCAA ------------------------------------------------------------ Thistle Mining Inc. (TSX: THT and AIM: TMG) obtained an order, with the support of its senior creditor, Meridian Capital Limited, to formally commence Thistle's restructuring under the Companies' Creditors Arrangement Act. As previously announced on Dec. 21, 2004, in accordance with a restructuring and lock-up agreement signed on Dec. 20, 2004, among Thistle, Meridian and Meridian's affiliate, Thistle Holdings Limited, the proposed restructuring will result upon implementation in the existing equity of Thistle being cancelled and in Meridian holding approximately 70% of the then outstanding Thistle shares, holders of secured and certain unsecured convertible loan notes of Thistle holding approximately 25% of the then outstanding Thistle shares and affected unsecured creditors and existing shareholders of Thistle holding approximately 5% of the then outstanding Thistle shares. Upon implementation of the restructuring, Thistle will be indebted to Meridian in the principal amounts of approximately US$20 million and Cdn$3.93 million (exclusive of any debtor-in-possession financing which remains outstanding). Holders of a significant principal amount of Thistle's secured convertible loan notes are in support of the restructuring. Thistle also announced that Meridian has agreed to provide debtor- in- possession financing of up to a principal amount of Cdn$15 million so that Thistle and its subsidiaries have sufficient financing to carry on their businesses during the restructuring process. Thistle Mining -- http://www.thistlemining.com/-- says its goal is to become one of the fastest gold mining growth operations in the world. Thistle has focused on acquiring companies with established reserves and will not be developing green field sites. The company operations in South Africa and Kazakhstan are in production, while the Masbate project in the Philippines is forecast to commence production in the latter half of 2005. * * * As reported in the Troubled Company Reporter on Dec. 23, 2004, Thistle Mining Inc. intends to undertake a restructuring of its debt and equity in accordance with a restructuring and lock-up agreement signed Dec. 20, 2004, among Thistle, Meridian Capital Limited and Meridian's affiliate, Thistle Holdings Limited. The proposed restructuring will result, upon implementation, in the following percentages of all the issued shares of Thistle being held as follows: -- 70% Meridian Capital Limited; -- 25% Holders of secured and certain unsecured convertible loan notes; and -- 5% Affected unsecured creditors and existing shareholders of Thistle Mining Inc. The existing equity issued by Thistle will be cancelled. The 5% of new equity to be issued by Thistle to its affected unsecured creditors and its existing shareholders upon implementation will be allocated between them in a manner to be determined by Meridian Capital Limited. The percentage of shares to be received by the existing shareholders will depend on the amount of claims by Thistle's affected unsecured creditors. Upon implementation, Thistle will be indebted to Meridian in the principal amount of US$ 20 million (and in the additional principal amounts loaned by Meridian to any subsidiary of Thistle after Dec. 16, 2004 and before the date of the initial CCAA Order). The amount will include the principal amount of Cdn $3,930,000 loaned by Meridian to a subsidiary of Thistle on Dec. 20, 2004. Holders of a significant principal amount of Thistle's secured convertible loan notes are in support of the plan. Thistle is confident that the proposed plan will enable the Company to restructure in a manner, which will be beneficial to Thistle and its creditors. TORCH OFFSHORE: Files for Chapter 11 Protection in E.D. Louisiana ----------------------------------------------------------------- Torch Offshore, Inc. (NASDAQ: TORC) and certain of its affiliates filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Eastern District of Louisiana to facilitate a restructuring of the Company's debt. In conjunction with the filing, the Company has received a commitment for $6.9 million in new debtor-in-possession financing from Regions Bank and Export Development Canada. Also, the Banks have agreed to provide a discretionary facility of up to $2 million for bonding and letters of credit. Upon Bankruptcy Court approval and execution of definitive agreements, the DIP financing will provide funding for the Company's ongoing operations. "The Company has been operating with a highly leveraged balance sheet for some time now, mostly due to the conversion efforts associated with the Midnight Express, " said Lyle G. Stockstill, Torch Offshore, Inc., Chairman and Chief Executive Officer. "Our liquidity issues were worsened by the competitive marketplace in which we operate as the Gulf of Mexico offshore construction industry remained very competitive in 2004 with an extremely tight pricing structure." In late December 2004, the Company announced that three of its vessels, the Midnight Express, Midnight Wrangler and Midnight Eagle, had been arrested by U.S. Marshals based upon actions taken by certain creditors of the Company. "When we determined that it would be difficult to have these seizures released so that our vessels could go back to work, it was concluded that Chapter 11 reorganization was the best course of action for the Company," said Mr. Stockstill. "The decision to seek protection under Chapter 11 will allow the Company to restructure its balance sheet while we continue to operate our fleet of vessels." During the Chapter 11 proceedings, Torch will continue to operate in the ordinary course of business. The Company said that it intends to request Court approval to, among other things, continue payment of pre-petition and post-petition wages, salaries, incentive plans, and medical, disability, vacation and other benefits. The Company intends to do business with customers and vendors in the same manner as before. "We appreciate the loyalty and support of our current employees," said Mr. Stockstill. "The dedication of our employees is critical to the success of the Company. In addition, I would like to thank our customers, vendors and business partners for their continued support during this process. We will do our best to have a successful reorganization." Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, subsea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. Jan Marie Hayden, Esq., at Heller, Draper, Hayden, Patrick & Horn, L.L.C., represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $201,692,648 in total assets and $145,355,898 in total debts. TORCH OFFSHORE: Case Summary & 30 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Torch Offshore, Inc. 401 Whitney Avenue, Suite 400 Gretna, Louisiana 70056 Bankruptcy Case No.: 05-10137 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Torch Offshore, LLC 05-10138 Torch Express, LLC 05-10140 Type of Business: The Debtor provides integrated pipeline installation, subsea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. See http://www.torchinc.com/ Chapter 11 Petition Date: January 7, 2005 Court: Eastern District of Louisiana (New Orleans) Judge: Jerry A. Brown Debtors' Counsel: Jan Marie Hayden, Esq. Heller, Draper, Hayden, Patrick & Horn, L.L.C. 650 Poydras Street, Suite 2500 New Orleans, LA 70130 Tel: 504-581-9595 Fax: 504-522-0949 Financial Condition as of October 31, 2004: Total Assets: $201,692,648 Total Debts: $145,355,898 Debtor's Consolidated List of 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Cable Shipping Inc. Trade $4,100,000 Tamal 3, 36 Birkirkara Hill St. Julians STJ 15, Malta C-Mar America, Inc. Trade $1,655,955 11231 Richmond Ave. "D" Suite 111 Houston, TX 77082 Fugro Chance, Inc. Trade $1,581,886 P.O. Box 200724 Houston, TX 77216 Bollinger-Morgan City Trade $1,341,065 P.O. Box 62600 Dept. 1102 New Orleans, LA 70162 Adams Vessels (Bilbao) Trade $1,300,000 Limited P.O. Box 1240 Dammam, 31431 Kingdom of Saudi Arabia A R T Catering, Inc. Trade $909,468 132 Jarrell Drive, Suite A Belle Chasse, LA 70037 USI Trade $856,012 3900 N. Causeway Blvd. Metairie, LA 70002 ASCO USA, L.L.C. Trade $779,526 P.O. Box 201617 Dallas, TX 75320 Thales Geosolutions, Inc. Trade $757,744 c/o Suntrust Lockbox Mail P.O. Box 116964 Atlanta, GA 30368 Sonsub Trade $750,890 P.O. Box 4346 Dept 50 Houston, TX 77210 Bender Shipbuilding & Trade $618,145 Repair Co., Inc. P.O. Box 42 Mobile, AL 36601 A & B Bolt & Supply Inc. Trade $609,153 P.O. Box 201243 Dallas, TX 75320 Tesla Offshore, LLC Trade $479,170 36499 Perkins Road Prairieville, LA 70769 Morgan City Rentals Trade $438,158 P.O. Box 2946 Morgan City, LA 70381 Huisman Trade $402,034 P.O. Box 150-3100 AD Schiedam Admiraal Trompstraat 2-3115 HH Schiedam The Netherlands Harbour 561 Quay Marine Trade $344,449 10-118 Wyse Road, Ste. 311 Dartmuth, Nova Scotia Canada B3A IN7 BJ Services Trade $300,000 P.O. Box 23656 Houston, TX 77228 Deep Marine Technology, Inc. Trade $279,083 P.O. Box 4652 Dept. 986 Houston, TX 77210 Smit Terminals W. Africa Trade $275,138 P.O. Box 1339 Capetown 8000 Republic of S. Africa Central Gulf Towing, Inc. Trade $263,868 P.O. Box 207 Cut Off, LA 70345 ITC Ships Holding Trade $252,797 P.O. Box 19 2100 AA Heemstede The Netherlands North Bank Towing Trade $247,411 Pacific Gulf Wire Rope, Inc. Trade $232,360 Tesoro Coastwide Service Co. Trade $230,509 DYNA Torque Technologies Trade $211,821 O.W.I. Limited Trade $208,265 Epic Divers, Inc. Trade $203,735 Coastal Wire Rope & Supply Trade $196,585 Acme Truck Line, Inc. Trade $190,295 Vacco Marine, Inc. Trade $186,585 TUCSON ELECTRIC: S&P Holds Low-B Ratings & Says Outlook is Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services removed from CreditWatch with negative implications and affirmed its ratings on Tucson Electric Power Co. -- TEP. The outlook is stable. As reported in the Troubled Company Reporter on June 24, 2004, Standard & Poor's Ratings Services assigned its 'BB+' rating and a recovery rating of '1' to Tucson Electric Power Co.'s (TEP; BB/Watch Neg/--) $401 million secured banking facility, due June 2009. The 'BB+' rating is one notch higher than TEP's corporate credit rating to reflect, together with the '1' recovery rating, a high expectation of full recovery of principal in the event of a default. The facility provides $60 million of revolving credit to the utility for general corporate purposes, while the balance is dedicated to supporting about $329 million in second mortgage, tax-exempt variable-rate bonds. The rating action reflects the Dec. 30, 2004 announcement that a consortium led by Kohlberg Kravis Roberts & Co. has terminated its efforts to acquire UniSource Energy Corp, TEP's parent. The prospects for the transaction were all but ended with the Arizona Corporation Commission's 4-1 vote on Dec. 21 to reject the buyout proposal, but the consortium's decision formally terminates the year-long effort to obtain the regulatory approvals necessary to complete the deal. TEP is already heavily leveraged and the acquisition would have added a net $400 million in consolidated UniSource debt. As a result, the original structure of the transaction was emphatically negative for consolidated credit quality. To address ACC staff concerns, the company later pledged to ring-fence TEP and agreed to other credit enhancements. Because the ACC rejected the acquisition despite these concessions, the opportunity for Standard & Poor's to review the effectiveness of a formal ring-fencing structure did not arise. TEP's cash flow coverage ratios continue to support the current ratings at a business profile of '6' on Standard & Poor's 10-point scale, where '1' is the strongest. The stable outlook reflects the expectation that management will continue to make slow but steady progress to reduce TEP's obligations through the early retirement of notes and investments in utility lease debt. TV AZTECA: Fitch Withdraws 'B+' Rating on $300 Mil. Senior Notes ---------------------------------------------------------------- The recent U.S. Securities and Exchange Commission filing of civil fraud charges against TV Azteca S.A. de C.V. and some of its officers will likely result in litigation and the continuation of legal risks for TV Azteca over the near future, according to Fitch Ratings. Fitch has incorporated a measure of litigation risk into the ratings of TV Azteca since early 2004 after the SEC launched an investigation into several related party transactions between Mexican wireless provider Unefon, a subsidiary 46.5% owned and controlled by TV Azteca until its spin-off last year, and investment company Codisco, co-owned by Ricardo Salinas Pliego, chairman of TV Azteca, and Moises Saba, chairman of Unefon. Litigation risk also includes several pending shareholder lawsuits. Independent of the SEC announcement and following the prepayment of all of TV Azteca's international debt securities on Dec. 23, 2004, Fitch has affirmed and withdrawn the 'B+' international scale foreign and local currency senior unsecured ratings of TV Azteca as well as the 'B+' rating of TV Azteca's $300 million 10.5% senior notes due 2007. The prepayment was funded with proceeds from a $125 million bank loan and a $175 million issuance of peso-denominated certificados bursatiles. Fitch rates the structured certificados bursatiles issuance 'AA' on the Mexican national rating scale and will continue to monitor this security. TV Azteca is the second-largest broadcasting company in Mexico. The company operates two national television channels, Azteca 13 and Azteca 7, through more than 300 owned and operated stations across the country. TV Azteca is controlled by holding company Azteca Holdings, which is not rated by Fitch. UAL CORP: AMFA Submits Tentative Agreement for Membership Vote -------------------------------------------------------------- The Aircraft Mechanics Fraternal Association -- AMFA -- said, in accordance with the bankruptcy court-mandated section 1113c process, a tentative concessionary agreement was reached by the contract negotiators representing AMFA and United Airlines (OTCBB:UALAQ.BB). AMFA will now submit the tentative agreement to its United Airlines membership, who will vote within 7-10 days on whether to ratify the tentative agreement, according to AMFA National Director O.V. Delle-Femine. No details will be disclosed until AMFA's United Airlines members have had time to read the tentative agreement. AMFA's craft union represents aircraft maintenance technicians and related support personnel at Alaska Airlines, ATA, Horizon Airlines, Independence Airlines, Mesaba Airlines, Northwest Airlines, Southwest Airlines and United Airlines. AMFA's credo is "Safety in the air begins with quality maintenance on the ground." To learn more about AMFA, visit http://www.amfanatl.org/ Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. US AIRWAYS: IAM Sends Out Revised Labor Pacts for Members' Votes ---------------------------------------------------------------- US Airways disclosed that the International Association of Machinists and Aerospace Workers -- IAM -- has agreed to put out for separate ratification votes revised company proposals on new labor agreements for the mechanic and related, fleet service, and maintenance training specialist workgroups. The IAM has agreed to complete the ratification votes by Friday, Jan. 21, 2005. Earlier Thursday, Judge Stephen S. Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia ruled in favor of the company's request to reject the IAM's current collective bargaining agreements and to permit termination of the company's three mainline defined benefit plans. US Airways will delay implementation of the court ruling as applied to the IAM collective bargaining agreements until after the ratification process has been completed, in the hope that all proposals will be ratified. The company will, however, proceed with respect to the court's granted relief that involves termination of the three mainline defined benefit pension plans, and will start working with the Pension Benefit Guarantee Corp. to begin the orderly transfer of the plans. The company had pending before the court a motion for permanent relief from the existing labor agreements with the IAM, as well as for relief with respect to retiree medical benefits and termination of the mainline defined benefit plans. All other US Airways workgroups -- the Air Line Pilots Association (ALPA), the Association of Flight Attendants (AFA), the Communications Workers of America (CWA), and three units of the Transport Workers Union (TWU) -- had ratified new labor agreements and were no longer included in the company's request. Also, the company reached settlements with current retirees and the IAM concerning the relief it had sought for retiree medical benefits. The company said that it was hopeful of ratification of all three IAM proposals. "We have worked very hard to craft alternative proposals that still meet the company's cost savings targets, but preserve jobs and pay as much as possible," said Jerrold A. Glass, US Airways senior vice president - employee relations. "Regrettably, we cannot save every job and every function, and these employees, like all other workgroups, must share in the changes that the company needs to make. But we are quite hopeful that our employees will see these proposals as viable alternatives, and they will quickly be ratified." Mr. Glass said that the IAM will be providing its members a detailed analysis of the proposals, but among the key provisions: -- Mechanics & Related workgroup: * Pay rates for mechanics would be significantly better than the current pay that reflects a 21 percent temporary cut * Heavy maintenance on Airbus narrowbody aircraft will be brought in-house and certain Boeing 737 work will continue to be done in-house. Widebody heavy maintenance and other work to be specified, including some Boeing 737 inspection activity, will be done using outside maintenance vendors * Base maintenance will continue to be performed in Charlotte, N.C., and Pittsburgh * Line maintenance positions will increase with anticipated schedule changes in 2005 * Utility classification and certain utility positions will be preserved at base maintenance facilities only, with other utility and cleaning services to be outsourced * IAM employees displaced by outsourcing will be offered existing and future fleet service positions -- Fleet Service workgroup: * Pay rates for fleet service employees at hubs and major stations would be significantly better than the current pay that reflects a 21 percent temporary pay reduction * Most existing fleet service work will be preserved * A majority of scope provisions will remain unchanged except the right to outsource fleet work at the smaller cities and a second-tier pay scale for medium-sized cities * Continuation in the pre-existing IAM multi-employer national pension plan at unreduced levels Overall, these three workgroups include approximately 8,500 employees. If the agreements are ratified and implemented, the company said that the majority of IAM jobs will be preserved. "We need the support and participation of our employees to complete our transformation into a competitive airline," said Mr. Glass. "The announcements by other airlines this week further underscore the rapid changes that are taking place. I believe our employees understand the gravity of the situation, and will support these proposals as the best way to send a message to our customers and the financial community that we are united in our efforts to be successful." Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. US AIRWAYS: December 2004 Passenger Load Factor Down by 2.2% ------------------------------------------------------------ US Airways reported its December 2004 passenger traffic. Mainline revenue passenger miles for December 2004 decreased 2.8 percent on a 0.2 percent increase in available seat miles compared to December 2003. The passenger load factor was 70.7 percent, which is a 2.2 percentage point decrease compared to December 2003. Fourth quarter 2004 revenue passenger miles increased 1.5 percent on a 0.8 percent increase in available seat miles compared to October through December 2003. The passenger load factor was 73.2, which is a 0.5 percentage point increase compared to the fourth quarter 2003. Revenue passenger miles for US Airways mainline during the full year 2004 increased 5.9 percent on a 3.4 percent increase in available seat miles compared to the same period in 2003. The passenger load factor for January through December 2004 was 75.1 percent, a 1.8 percentage point increase compared to the same period in 2003. The two wholly owned subsidiaries of US Airways Group, Inc., Piedmont Airlines, Inc. and PSA, Inc., and MidAtlantic Airways, reported a 117.5 percent increase in revenue passenger miles for December 2004, on 98.9 percent more capacity, compared to December 2003. The passenger load factor was 61.9 percent, a 5.3 percentage point increase compared to December 2003. The triple digit increase in revenue passenger miles is attributed to the company's continued expansion of regional jet flying. Fourth quarter 2004 revenue passenger miles for the two wholly- owned subsidiaries of US Airways Group, Inc., and MidAtlantic Airlines increased 117.5 percent on a 94.8 percent increase in available seat miles compared to October through December 2003. The passenger load factor for the fourth quarter 2004 was 63.6 percent, a 6.6 percentage point increase compared to the same period in 2003. Revenue passenger miles for the two wholly owned subsidiaries of US Airways Group, Inc., and MidAtlantic Airways for the full year 2004 increased 61.8 percent on a 40.7 percent increase in available seat miles compared to January through December 2003. The passenger load factor for the 12 months of 2004 was 61.4 percent, an 8.0 percentage point increase compared to the same period in 2003. Mainline system passenger unit revenue for December 2004 is expected to decrease between 10.5 percent and 11.5 percent compared to December 2003, excluding a positive adjustment to revenue of $34.2 million in December 2003 to reduce the company's Air Traffic Liability. The mainline load factor in December in markets where US Airways offers GoFares was 72.5 percent, compared to a 69.9 percent load factor in non- GoFares markets. GoFares now are offered on 29 percent of US Airways' flights. US Airways ended the month of December by completing 97.9 percent of its scheduled departures. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. US AIRWAYS: Wants to Purchase Three Bombardier Regional Jets ------------------------------------------------------------ Increased use of regional jets is critical to the Transformation Plan of US Airways, Inc., and its debtor-affiliates and business plan upon emergence from bankruptcy. In the past two years, the Debtors have increased their reliance on Bombardier regional jets. The Master Purchase Agreement, dated May 9, 2003, between Bombardier and the Debtors provides that the Debtors will purchase and take delivery from Bombardier of certain regional jets pursuant to a delivery schedule. On the bankruptcy petition date, Bombardier quit delivering regional jets to the Debtors. At that time, Bombardier held approximately $37,000,000 in Pre-Delivery Deposits advanced by the Debtors for scheduled aircraft deliveries. Bombardier continues to hold a portion of the PDPs on account of reconfiguration costs, losses, damages and other expenses that the Debtors may owe. Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado, informs the U.S. Bankruptcy Court for the Eastern District of Virginia that the Debtors worked aggressively to resolve their issues with Bombardier in order to: a) continue the use of Bombardier regional jets; b) ensure delivery of three Canadair CRJ700 Regional Jet 701s; c) limit potential claims arising under the Master Purchase Agreement on account of additional aircraft deliveries, other than the New CRJ-701s; and d) realize value in the PDPs. The Debtors and Bombardier have reached an agreement on the Bombardier regional jets. The Debtors will use $3,700,000 in PDPs to satisfy existing defaults under previous Aircraft Agreements. Bombardier will set off and apply $3,000,000 in PDPs to satisfy all costs, expenses, losses and damages related to reconfiguration of aircraft that were not delivered. Bombardier will allow the Debtors to apply $28,000,000 in PDPs to the acquisition of the Bombardier New CRJ-701s, as long as the Debtors secure financing. If the Debtors do not complete their end of the transaction by January 31, 2005, Bombardier may retain the remaining PDPs, and recover up to $1,500,000 in costs, expenses, losses and damages. In addition, the Debtors will have to remit the $3,700,000. The Debtors will purchase the New CRJ-701s for $62,500,000 from Bombardier. To finance the transaction, DVB Bank AG will loan the Debtors $32,500,000 in a structured lease transaction. The Debtors will enter into new regional jet aircraft leases, which will protect their interest in the PDPs and ensure delivery of the aircraft title when all obligations under the Financed Lease Facility have been paid. The key terms of the Financed Lease Facility are: Borrower/Lessor: A bankruptcy remote special purpose vehicle established on behalf of DVB Lessee: US Airways or a subsidiary Lease Term: 18 months Rent: Due monthly in arrears based on principal and interest payments on the Loan Amount Loan Amount: $10,833,333 per aircraft, or $32,500,000 in total for the New CRJ-701s Interest Rate: 1-month LIBOR plus 500 basis points Loan Availability: At signing of the Financed Lease Facility until February 28, 2005, in installments corresponding to delivery of each New CRJ-701 Loan Term: No later than 18 months from the date of Drawdown for each Tranche Lender: DVB Bank AG Collateral: Perfected first priority security interest in New CRJ-701s, with the full benefits of Section 1110 of the Bankruptcy Code, and assignment of Lease and Purchase Option, insurances, airframe and engine warranties, and other customary aircraft security Cross Collateralization: New CRJ-701s will be cross-collateralized and cross-defaulted among themselves and with respect to the financing of N702PS and N703PS, but not to any other aircraft in the Debtors' fleet or any other assets of the Debtors. Repayment: Amortization to balloon payment of $9,208,333 in 18 monthly installments equal to 0.625% of the initial drawn amount, or $67,708 per New CRJ-701 per month Balance of Price: The $30,000,000 balance of the purchase price will be realized by $28,000,000 in manufacturer reimbursement/credit for the PDPs, plus $2,000,000 from the Debtors. Purchase Option: At the end of the Lease Term, the Debtors may purchase the New CRJ-701s from the Lessor for the outstanding debt, including interest and expenses. The Purchase Option is collaterally assigned to DVB. Events of Default: In addition to customary events of default, termination of the Debtors' use of cash collateral under the Cash Collateral Order Fees and Expenses: DVB will receive: a) a Facility Fee of 200 basis points on the Loan Amount. b) a Commitment Fee of 200 basis points per annum on the average undrawn Loan. c) a Lease Commencement Fee of 100 basis points on the Loan Amount for each Lease. d) a Security Deposit equal to 60 days of interest for each Lease. At Maturity of the final tranche, DVB will refund the fees to the Debtors, unless a payment default is in effect. e) an Aircraft Remarketing Fee of $250,000 per aircraft upon a default and return. f) reimbursement by the Debtors of costs and expenses related to negotiation of the Financed Lease Facility, including legal fees, appraisal costs and travel expenses. DVB will be reimbursed for costs and expenses related to exercise of remedies during an event of default. Mr. Leitch states that the New CRJ-701s and the Financed Lease Facility will benefit the Debtors' estate and enhance the prospects for a successful reorganization. The Debtors will enhance the rationalization of their aircraft fleet, a key component of the Transformation Plan. The Debtors will productively utilize approximately $28,000,000 in PDPs that Bombardier holds and to which the Debtors might not be entitled. If the Debtors do not secure the Financed Lease Facility with DVB and fail to acquire the New CRJ-701s, they will subject the $28,000,000 of PDPs to the claims of Bombardier and be forced to advance an additional $3,700,000 for their Section 1110 cure. Accordingly, the Debtors ask the Court for authority to enter into the Financed Lease Facility with DVB in connection with their acquisition of three new Bombardier CRJ-701s. Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) VISION METALS: Prepares to Wrap Up Chapter 11 Proceeding -------------------------------------------------------- Vision Metals, Inc., and its debtor-affiliates are preparing to wrap up their chapter 11 proceedings commenced in 2000 and will present a motion to the Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware on Feb. 23, 2005, asking the Court to: (A) direct the disposition of the company's remaining assets; (B) appoint a Responsible Person to handle the wind- down; and (C) dismiss their bankruptcy cases. Objections to the Debtors' requests, if any, must be filed and served by February 16, 2005. Ashley B. Stitzer, Esq., at The Bayard Firm, local counsel to Vision Metals says that the Debtors have nearly completed the wind-down of their estates. In order to achieve an efficient resolution of the Debtors' cases, the Debtors have previously arranged for the sales of the vast majority of their remaining assets, negotiated an agreement for the payment to the Official Committee of Unsecured Creditors, for the benefit of unsecured creditors, of a portion of the net proceeds from a sale of certain of their assets, and negotiated an agreement with CIT Group/Business Credit, Inc. and certain other lenders for the payment of certain proceeds to the DIP Lenders and for the release of those liens granted pursuant to that certain Debtor-in- Possession Financing and Security Agreement entered into by the Debtors and approved by the Court. The Debtors now propose the disposition of their remaining assets and the appointment of a Responsible Person to oversee that disposition, including the remaining payments to the Committee, and creditors, pursuant to their agreements with the Committee and to the DIP Lenders, and negotiation of remaining administrative expenses, in conjunction therewith, the Debtors also seek the dismissal of their bankruptcy cases. Aside from the payments to the Committee and the administrative expenses if any, no other claims against the Debtors' estates, whether asserted or unasserted, known or unknown, fixed or unliquidated, contingent or mature, will be paid. The Debtors' Remaining Assets The Debtors' remaining known assets consist of: a. their remaining personal property, mainly choses in action, and the proceeds of the sales of the Personal Property mostly from the sale of assets at the GST facility in Texas, which are currently held in the Debtors' accounts or by Daley Hodkin Corp, the auctioneer; b. the claims that the Debtors have asserted in Adversary Proceeding No. 02-06528 in this Court, against SMS Demag, Inc.; c. the claims that the Debtors have asserted in adversary proceedings against: 1. PTC Alliance Corp., No. 02-4577 (a claim for $75,924.91, for goods sold to this defendant; the defendant has filed an answer and counterclaim, to which the Debtors filed a reply, but the proceeding has not otherwise been litigated), and 2. Allied Precision Products, Inc., No. 02-4579 (a claim for $7,418.01, for goods sold to this defendant; the defendant was duly served in 2002 and never answered, but did make certain payments, such that only $3,300.00 remains due to the Debtors), There are also two other adversary proceedings brought by the Debtors which are currently pending, but which need to be dismissed: No. 02-4575, against Marietta Mine Tools Inc., makes a claim for $9,317.86, but the Debtors have reached an agreement with this defendant and received the agreed-upon payments, and No. 02-4581, against Potts Welding & Boiler Repair Co., as to which the Court previously entered an order in the bankruptcy cases (D.I. 826) approving a settlement. The Debtors will file motions or stipulations to dismiss these two proceedings, as answers have been filed in both proceedings. d. a default judgment, in the amount of $10,765.34, plus interest and $150.00 in costs, that the Debtors obtained against R&R Machine, in Adversary Proceeding No. 02-45941; e. Rights, under a gas futures contract relating to the GST Facility, to monthly proceeds of approximately $6,800.00 until September 2005 with a net present value of approximately $60,000.00 (the "Reliant Asset"). Disposition of the Debtors' Remaining Assets Under Agreements with the Committee and the DIP Lenders The Debtors have reached agreements, previously approved by the Court, with the Committee and with the DIP Lenders providing: a. for the payment to the Committee, for the benefit of unsecured creditors, of 2% of the net proceeds, up to a maximum of $250,000, from the sale of the Personal Property; and b. for the payment to the DP Lenders of up to a maximum of $500,000 (which has been paid) from the sale of the Personal Property and the first $1,200,000 of net proceeds derived from the Demag Litigation. To the extent any assets remain after these payments, neither the Committee nor the DIP Lenders will have any claims against those proceeds. Disposition of the Personal Property and the Personal Property Proceeds With respect to the Personal Property, the agreement (as amended) for the sale of the GST Facility from which the Debtors received approximately $1.2 million. As stated above, the Committee is entitled to receive 2% of said amounts, net of costs of sale. Based upon the total expected proceeds from the sale of the Personal Property, it is not anticipated that the portion due to the Committee will exceed the maximum of $250,000. The Debtors propose that the Responsible Person receive the sale proceeds, pay the agreed-upon amounts to the Committee, and pay the remainder to the Debtors, which such remainder will revert to the Debtors, outside of bankruptcy, subject to resolution of administrative claims against the Debtors' estates. The Demag Litigation With respect to the Demag Litigation, that litigation remains pending. Counsel representing the Debtors in the Demag Litigation has agreed to do so on a contingent fee basis. Upon any successful conclusion of the Demag Litigation, the first $1,200,000 of the net proceeds ("net proceeds" being those proceeds remaining after payment of counsel fees for the Demag Litigation and any unpaid expenses incurred in the Demag Litigation) are to be paid to the DIP Lenders. The Debtors specifically propose that the Court's jurisdiction of the Demag Litigation continue subsequent to the dismissal of the Debtors' bankruptcy cases. The Debtors further propose that the Responsible Person have complete authority to make all decisions with respect to the Demag Litigation, including but not limited to decisions with respect to the ultimate disposition of the Demag Litigation, in consultation with the DIP Lenders, that he receive any proceeds of the Demag Litigation, pay the agreed-upon amount to the DIP Lenders, and pay the remainder to the Debtors, and the remainder will revert to the Debtors, outside of bankruptcy, subject to resolution of administrative claims against the Debtors' estates. The Collection Litigation and the Default Judgment With respect to the Collection Litigation and the Default Judgment, neither the Committee nor the DIP Lenders has any claim to any potential proceeds thereof under the agreements the Debtors have reached with the Committee and with the DIP Lenders. Furthermore, in light of the amounts at issue, costs of litigation, and the likelihood of recovery, the Collection Litigation and the Default Judgment do not represent appreciable assets that would be available to the Committee and the DP Lenders. As such, any rights thereunder should revert to the Debtors, outside of bankruptcy, subject to resolution of administrative claims against the Debtors' estates. Therefore, so that the Debtors' rights in the Collection Litigation are fully maintained, the Debtors specifically propose that the Court's jurisdiction of the Collection Litigation continue subsequent to the dismissal of the Debtors' bankruptcy cases. As to the Default Judgment, no further action is required thereon, other than to the extent the Debtors, through the Responsible Person, should seek to enforce the Default Judgment, in which event the disposition of any proceeds shall be in the same manner as disposition of the proceeds of the Collection Litigation. The Reliant Asset As with the Collection Litigation and the Default Judgment, neither the Committee nor the DIP Lenders has any claim to the Reliant Asset under the agreements the Debtors have reached with the Committee and with the DIP Lenders. The Debtors will file a motion respecting the Reliant Asset to approve a settlement with Reliant. Accordingly, the Reliant Asset should revert to the Debtors, outside of bankruptcy, subject to resolution of administrative claims against the Debtors' estates. Appointment of a Responsible Person, Turnover of Remaining Proceeds and Resolution of Administrative Expenses The Debtors propose that the Court appoint Robert T. Bassman as the Responsible Person to perform handle the disposition of the Debtors' remaining assets. Mr. Bassman has served as the Chief Executive Officer of the Debtors and is familiar with the Debtors' remaining assets. Funds held by DHC will be remitted to the Responsible Person immediately upon entry of the order on this Motion. In addition, besides the disposition of the Debtors' remaining assets, Mr. Bassman would be responsible for the negotiation of the remaining administrative expenses of the Debtors. It is believed that the vast majority of any such administrative expenses are for the fees and expenses of counsel in these bankruptcy cases, with almost all of those fees and expenses being those of the Debtors' counsel. To the extent that the Debtors' estates are administratively insolvent at the time of the dismissal of their bankruptcy cases, Mr. Bassman would be authorized to pay administrative claims on a pro rata basis using any of the Debtors' available cash and to assign any of the Debtors' remaining non-cash assets, also on a pro rata basis. Dismissal of the Debtors' Bankruptcy Cases Upon appointment of the Responsible Person, the Responsible Person would perform the remaining obligations of the Debtors and no other obligations would remain. As such, it would then be appropriate for the Court to dismiss the Debtors' bankruptcy cases. In conjunction with the dismissal of the Debtors' bankruptcy cases, the Court should maintain in force any and all orders that it has previously entered in the Debtors' bankruptcy cases. Vision Metals, Inc., and Vision Metals Holdings, Inc, filed for chapter 11 protection on Nov. 13, 2000 (Bankr. D. Del. Case No. 00-04205). Michigan Seamless Tube LLC purchased the assets of the Michigan Specialty Tube Division of Vision Metals, Inc., in a Section 363 sale in 2002. Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represents the Debtors. Sharon L. Levine, Esq., at Lowenstein Sandler PC, represents the Official Committee of Unsecured Creditors. W.R. GRACE: Maryland Casualty Objects to Disclosure Statement ------------------------------------------------------------- Maryland Casualty Company, Zurich American Insurance Company and Zurich International (Bermuda) Ltd. entered into certain insurance contracts with W.R. Grace & Co., and its debtor-affiliates, which Contracts, subject to their terms and conditions, may have been called on in response to certain asbestos claims. Maryland and the Debtors are also parties to certain settlement agreements relating to certain of the Contracts. The Agreements address, inter alia, claims asserted against the Debtors by third parties for alleged bodily injuries from the exposure to asbestos, alleged loss resulting from the presence of asbestos in buildings, and alleged contamination from the Debtors' operations. The Agreements require the Debtors to defend and indemnify Maryland for the claims asserted against it. Maryland has carefully reviewed the Debtors' Plan and the Disclosure Statement and found that the documents represent a good faith effort to resolve their Chapter 11 cases. However, the Disclosure Statement, as filed, fails to fully and clearly provide Maryland with the information necessary to make an informed decision on the Plan. Therefore, Maryland objects to the Disclosure Statement on the basis that it fails to satisfy the requirements of Section 1125 of the Bankruptcy Code. Maryland specifically base its Objection on six findings: (a) The unrestricted and undefined ability of Reorganized Grace to arbitrarily alter the Asbestos Insurance Entity Injunction leaves Asbestos Insurance Entities uncertain as to their treatment under the Plan; (b) Through the Plan's statement that Asbestos Insurance Entities are not intended beneficiaries of the Asbestos Insurance Entity Injunction, it appears that the Debtors intend to render Asbestos Insurance Entities unable to enforce the Asbestos Insurance Entity Injunction. Maryland believes that this must be clarified so that Asbestos Insurance Entities fully understand the utility of the Asbestos Insurance Entity Injunction; (c) The definition of an Asbestos Insurance Policy excludes any insurance policy or settlement agreement "insofar as the insurance policy or settlement agreement relates to Workers' Compensation Claims." This definition, when coupled with the definition of a Worker's Compensation Claim, creates an ambiguous and overly-broad exclusion. This definition must be narrowed and clarified. (d) Maryland believes that it is a Resolved Asbestos Insurance Company with respect to the Agreements, but cannot be certain that it will be treated as such until the list of Resolved Insurance Companies is filed. Until then, Maryland is uncertain as to how it will be treated under the Plan. (e) To the extent that it is deemed not to be a Resolved Asbestos Insurance Company, Maryland believes that it is a Settled Asbestos Insurance Company, but cannot be certain that it will be treated as such until the list is filed by the Debtors. (f) As the holder of a Third-Party Indemnification/Contribution Claim, Maryland is deemed "unimpaired" by the Plan. However, it is not certain that the Asbestos Trust will have sufficient funds to pay attorney's fees and other costs that it may assert pursuant to its indemnity rights under the Agreements. Thus, Maryland is impaired, and the Plan and Disclosure Statement must be modified accordingly. Headquartered in Columbia, Maryland, W.R. Grace & Co., -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor- affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. (W.R. Grace Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service, Inc., 215/945-7000) YUKOS OIL: Deutsche Bank AG Wants Order Clarifying Stay Denied -------------------------------------------------------------- As previously reported, Yukos Oil Company presents Judge Clark with an "Emergency Motion for Entry of Order Pursuant to Sections 105, 106, 362 and 366 of the Bankruptcy Code (a) Authorizing the Debtor to Operate its Business, and (b) Implementing the Worldwide Automatic Stay." Yukos asks Judge Clark to enter an order on an emergency basis "enforcing the automatic stay pursuant to Sections 105, 106, 362 and 366 of the Bankruptcy Code against all persons, entities and governmental units, including the Russian Federation, prohibiting them from taking any actions in violation of the worldwide automatic stay, including participation in the auction scheduled for December 19, 2004, which seeks to sell the most valuable property of the Debtor's bankruptcy estate." If the automatic stay is not immediately enforced against the Russian Federation and the persons or entities that may participate in the auction, the most valuable assets of the Debtor's bankruptcy estate will be sold at a price significantly below market. The Debtor's estate will suffer complete, immediate and irreparable harm. Deutsche Bank Responds Jeffrey E. Spiers, Esq., at Andrews Kurth, in Houston, Texas, asserts that the Debtor's request for a temporary restraining order has already been granted by order of the Court or by the operation of the Bankruptcy Code. Mr. Spiers relates that on December 14, 2004, the Debtor filed a complaint initiating an adversary proceeding seeking a temporary restraining order. On December 16, 2004, the Court issued a memorandum opinion and a TRO enjoining the defendants, with the exception of the Russian Federation, from taking any action with respect to the stock or shares of Yuganskneftegas. Mr. Spiers contends that to the extent that the Debtor seeks an injunction or equitable relief in addition to the automatic stay, the temporary restraining order or the balance of the relief requested in the adversary proceeding, the Debtor has not followed proper procedure. Rules 7001 and 7003 of the Federal Rules of Bankruptcy Procedure provide that "a proceeding to obtain an injunction or other equitable relief" must be commenced by filing an adversary proceeding complaint. Any request for injunctive relief requested by the Debtor in its request for the automatic stay application is therefore improper, Mr. Spiers says. Accordingly, Deutsche Bank AG asks the Court to deny the Debtor's request. Headquartered in Houston, Texas, Yukos Oil Company -- http://www.yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in the energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for chapter 11 protection on Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq., C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq., Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright & Jaworski, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $12,276,000,000 in total assets and $30,790,000,000 in total debts. (Yukos Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Alvarez & Marsal Expands Real Estate Advisory Services Group -------------------------------------------------------------- Alvarez & Marsal, a global professional services firm, has expanded its Real Estate Advisory Services group with the addition of four top real estate industry professionals: * New Managing Directors: -- Jay Brown is based in A&M's Washington, D.C. office,; -- Greg Gotthardt is based in A&M's Los Angeles office; * New Senior Directors: -- Anthony Nazzaro is based in A&M's New York office; -- Maureen Welch is based in A&M's New York office; and -- Hunt Holsomback is based in A&M's Denver office. Over the course of his career, Mr. Brown, who specializes in providing strategic, transactional, and public/private real estate development services to government and quasi-government entities, has advised the Department of Defense and the Department of the Air Force in support of military housing privatization; the Department of the Army in support of enhanced used leasing; the Department of Energy in support of "third-party financing" for laboratory-related developments; and the District of Columbia in support of the Anacostia Waterfront Development Initiative. Prior to joining A&M, he was a Partner in the Real Estate Advisory Services Group of a Big Four firm. Before that, he served as Deputy Director for the Department of Planning and Economic Development for King County, Washington and was a financial economist and budget examiner for the Executive Office of the President, Office of Management and Budget where he specialized in federal credit policy. Mr. Gotthardt has over 20 years of real estate consulting experience including capital acquisition, asset acquisition and dispositions, investment due diligence, valuations and market and financial feasibility studies for development, financing, litigation, acquisition, and disposition purposes. Mr. Gotthardt has provided real estate advisory services to owners, investors and developers including Boeing Company, Northrop Grumman, The Irvine Company, Amgen, Bank of America, Department of Defense, Aerospace Corporation, and Lennar Homes. Prior to joining A&M, Mr. Gotthardt was a Partner in the Real Estate Advisory Services practice of a Big Four firm, where he directed the transaction advisory and capital markets activities on the west coast. Mr. Nazzaro specializes in strategic planning, organizational and operational design, internal controls and systems planning. With more than 19 years of real estate experience, he has advised numerous real estate clients including homebuilders / developers, hospitality companies, investment managers, opportunity funds, real estate investment trusts (REITS), and real estate operating companies. Additionally, he has assisted corporate entities in designing and implementing project management infrastructures to manage complex construction projects. Example clients include, AMB Property Corporation, AMP / Henderson Global Investments, Citigroup Alternative Investments, Deutsche Bank, Lend Lease, Prime Hospitality, The Ryland Group and Vornado Realty Trust. Prior to joining A&M, Mr. Nazzaro served as Senior Manager in the real estate group of a Big Four firm. Ms. Welch has diverse experience in information management, business management, product management and supply chain management within the real estate, facilities management and technology industries. Over the course of her 20-year career, she has developed extensive expertise in strategy, organizational design, process reengineering, software selection, facilities programming, strategic occupancy planning, and spend analysis. She has worked as a systems implementation leader of a large-scale ERP application and as a Project Manager for a Web-based B2B real estate transaction platform. Ms. Welch has also created and implemented multiple real estate and facilities applications, frameworks, and processes to streamline planning, management, and decision-making for such clients as Citigroup, Cushman & Wakefield, M&I Bank, U.S. Sprint, IBM, Nortel Networks, Prudential, Bank of America, Capital One, and a National Nuclear Laboratory. Mr. Holsomback has 17 years of diverse real estate consulting experience including assisting real estate clients with strategic planning, regulatory compliance, business process improvement, program management, systems planning and implementation, merger integration, benchmarking/balanced scorecards and due diligence analysis. His real estate clients have included real estate investment trusts (REITs), homebuilders, hospitality companies and developers. Additionally, he has assisted public entities, health care providers, financial services companies, telecom companies, manufacturers, and oil and gas companies with real estate issues. Mr. Holsomback has also advised clients on takeover strategy, process redesign, technology planning, software evaluation and implementation and regulatory compliance. Prior to joining A&M, he was a Senior Manager for a Big Four accounting firm where he focused on assisting real estate clients in implementing complex regulatory requirements, including SOX 404 and FIN 46. Alvarez & Marsal's Real Estate Advisory Services group, with offices in six U.S. cities, provides a range of services including: transaction advisory services for real estate buyers, sellers, investors and lenders; restructuring and real estate litigation services, including consulting and expert witness services related to real estate matters; strategy and operations services, including executive management consulting to institutional owners, investors, lenders and users of real estate; and owner advisory services, including financial strategies and execution for private companies and institutional owners of real estate. About Alvarez & Marsal Founded in 1983, Alvarez & Marsal is a global professional services firm that helps businesses organizations in the corporate and public sectors navigate complex business and operational challenges. With professionals based in locations across the US, Europe, Asia, and Latin America, Alvarez & Marsal delivers a proven blend of leadership, problem solving and value creation. Drawing on its strong operational heritage and hands-on approach, Alvarez & Marsal works closely with organizations and their stakeholders to help address complex business issues, implement change and favorably influence results. For more information about the firm, please visit http://www.alvarezandmarsal.com/or contact Rebecca Baker, Chief Marketing Officer at 212.759.4433. * Kamakura Says Corporate Credit Quality Up in December ------------------------------------------------------- Kamakura Corporation reported that its monthly index of troubled companies in the United States showed strong improvement in December. Kamakura reported that the troubled company index fell to 12.0% of the public company universe in November, down 1.6% from the previous month. Kamakura classifies any company with a default probability of more than one percent as troubled. This is the largest monthly drop in the troubled company index since it reached its peak of 30% in March 2003. "The improvement in credit quality that began in November continued each week throughout December," commented Dr. Donald R. van Deventer, Kamakura Chairman and Chief Executive Officer. "Except for the most troubled companies, all components of the troubled company index showed significant monthly improvement. The number of companies with default probabilities between 1% and 5% was 7.0% of the public company universe, down from 7.8% in November. Companies with default probabilities between 5 and 10% were down to 1.6% of the universe from 2.0% in November. Companies with default probabilities between 10% and 20% also improved 0.4% to 1.2% of the universe. The riskiest firms in the universe, those with default probabilities over 20%, increased slightly to 2.3% of the universe, up 0.1%." Kamakura is offering free trials of its KRIS default probability service to qualified institutions. For more information on Kamakura's free trial offer, contact Kamakura at info@kamakuraco.com More information can also be found on the Kamakura Corporation web site at http://www.kamakuraco.com/and in "Advanced Financial Risk Management" (John Wiley & Sons, 2004) by Kamakura's van Deventer, Kenji Imai, and Mark Mesler. About Kamakura Corporation Kamakura Corporation is a leading provider of risk management information, processing and software. Kamakura has been a provider of daily default probabilities for listed companies since November, 2002. Kamakura launched its private firm modeling product in January, 2004. Kamakura is also the first company in the world to develop and install a fully integrated credit risk, market risk, asset and liability management, and transfer pricing system. Kamakura has clients ranging in size from $3 billion in assets to $1 trillion in assets. Kamakura's risk management software is currently used in the United States, Germany, Canada, the United Kingdom, Australia, China and many other countries in Asia. Kamakura's research effort is led by Professor Robert Jarrow, who was named Financial Engineer of the Year in 1997 by the International Association of Financial Engineers. Professor Jarrow and Dr. van Deventer were both named to the 50 member RISK Hall of Fame in December 2002. Kamakura management has published twenty-one books and more than 100 publications on credit risk, market risk, and asset and liability management. Kamakura has world-wide distribution alliances with IPS-Sendero -- http://www.ips-sendero.com/and Unisys -- http://www.unisys.com/- - making Kamakura products available in almost every major city around the globe. * BOND PRICING: For the week of January 10 - January 14, 2005 ------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Comm. 3.250% 05/01/21 21 Adelphia Comm. 6.000% 02/15/06 22 AMR Corp. 4.500% 02/15/24 73 Applied Extrusion 10.750% 07/01/11 57 Armstrong World 6.350% 08/15/03 75 Bank New England 8.750% 04/01/99 21 Burlington Northern 3.200% 01/01/45 59 Calpine Corp. 7.750% 04/15/09 73 Calpine Corp. 8.500% 02/15/11 74 Calpine Corp. 8.625% 08/15/10 75 Cendant Corp. 4.890% 08/17/06 51 Chic East Ill. RR 5.000% 01/01/54 60 Comcast Corp. 2.000% 10/15/29 44 Delta Air Lines 7.900% 12/15/09 65 Delta Air Lines 8.000% 06/03/23 63 Delta Air Lines 8.300% 12/15/29 47 Delta Air Lines 9.000% 05/15/16 48 Delta Air Lines 9.250% 03/15/22 51 Delta Air Lines 9.750% 05/15/21 47 Calpine Corp. 10.000% 08/15/08 71 Delta Air Lines 10.125% 05/15/10 57 Delta Air Lines 10.375% 02/01/11 59 Dobson Comm. Corp. 8.875% 10/01/13 73 Falcon Products 11.375% 06/15/09 41 Federal-Mogul Co. 7.500% 01/15/09 33 Finova Group 7.500% 11/15/09 49 Iridium LLC/CAP 14.000% 07/15/05 16 Inland Fiber 9.625% 11/15/07 50 Kaiser Aluminum & Chem. 12.750% 02/01/03 20 Lehmann Bros. Hldg. 6.000% 05/25/05 64 Lehmann Bros. Hldg. 21.680% 02/07/05 66 Level 3 Comm. Inc. 2.875% 07/15/10 68 Level 3 Comm. Inc. 6.000% 03/15/10 59 Level 3 Comm. Inc. 6.000% 09/15/09 62 Liberty Media 3.750% 02/15/30 67 Liberty Media 4.000% 11/15/29 71 Mirant Corp. 2.500% 06/15/21 75 Mississippi Chem. 7.250% 11/15/17 73 Northern Pacific Railway 3.000% 01/01/47 57 NRG Energy Inc. 6.500% 05/16/06 0 Nutritional Src. 10.125% 08/01/09 66 Oglebay Norton 10.000% 02/01/09 72 Pegasus Satellite 12.375% 08/01/06 64 Pegasus Satellite 13.500% 03/01/07 1 Pen Holdings Inc. 9.875% 06/15/08 53 Reliance Group Holdings 9.000% 11/15/00 26 Syratech Corp. 11.000% 04/15/07 43 Trico Marine Service 8.875% 05/15/12 66 Tower Automotive 5.750% 05/15/24 70 United Air Lines 9.125% 01/15/12 10 United Air Lines 10.670% 05/01/04 8 Univ. Health Services 0.426% 06/23/20 57 Westpoint Stevens 7.875% 06/15/08 0 ********* 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, Dylan Carlo Gallegos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo and Peter A. Chapman, Editors. Copyright 2005. 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 ***