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/raid1/www/Hosts/bankrupt/TCR_Public/050113.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, January 13, 2005, Vol. 9, No. 10 Headlines A.P.I. INC: Wants to Hire Fredrikson & Byron as Bankruptcy Counsel A.P.I. INC: Wants to Hire Thomas Carey as Futures Representative ACCEPTANCE INSURANCE: First Acceptance Clarifies Own Operations ACCEPTANCE INSURANCE: Files Schedules of Assets and Liabilities AIRGATE PCS: Soliciting Consents to Amend 9.375% Sr. Sub. Notes ATA AIRLINES: Can Assume Oracle Term License Lease ATA AIRLINES: Wants to Lift Stay to Pursue Woods Lawsuit BANK OF HAWAII: Fitch Affirms Individual Classes with a Single B BEVERLY ENTERPRISES: Starts Exchange Offer for $215MM 7-7/8% Notes BOYD GAMING: To Webcast Fourth Quarter Results on Feb. 9 CAESARS ENT: Nears Completion of Caesars Indiana Acquisition CARRIAGE SERVICES: Moody's Rates Proposed $130M Sr. Notes at B2 CARRIAGE SERVICES: S&P Rates Planned $120M Sr. Unsec. Notes at B- CATHOLIC CHURCH: CNA Wants to Stay Lifted in Spokane Case CATHOLIC CHURCH: Spokane Wants to Hire Gordon Murray as Counsel CHEVYS INC: Real Mex Buys 126 Restaurants for $90 Million CHIQUITA BRANDS: Completes Five-Year $150 Million Credit Facility CITY OF RICHMOND: Moody's Upgrades Bonds Ratings from Ba3 to Baa3 COLORADO EDUCATIONAL: Moody's Pares Revenue Bond Ratings to Ba1 CURATIVE HEALTH: Executives May Sell Shares to Repay Loans DEL LABORATORIES: S&P Junks Proposed $150M Senior Sub. Notes E*TRADE ABS: Moody's Rates Preference Shares & Composites at Ba1 ELIZABETH U STOR: Case Summary & 8 Largest Unsecured Creditors EMSC LP: S&P Rates Affiliates' Proposed $100M Sr. Sec. Debt at B+ ENRON CORP: Court Approves Pasadena Settlement Agreement ESI TRACTEBEL: S&P Affirms BB Rating on $194M Senior Secured Notes ESI TRACTEBEL: Moody's Affirms Ba1 Rating on Senior Sec. Bonds FAIRFAX FINL: French Unit Buys Markel Subsidiary for EUR44 Million FLYI INC: S&P Downgrades Corporate Credit Rating to CC from CCC- FORD CREDIT: S&P Places BB Ratings on $90M Class D Certificates FRIEDMAN'S INC: May File for Bankruptcy Due to Cash Shortage GALLERIA CDO: Moody's Pares Ratings on $14M Class B Notes to B3 HAMPSHIRE DISTRIBUTORS: Case Summary & Largest Unsecured Creditors HARBORVIEW MORTGAGE: Moody's Rates $13.6M Class B-4 Debt at Ba2 HAUSER INC: Dissolved Following Confirmation & Bankruptcy Exit HAYES LEMMERZ: Judge Walrath Okays Modified Plan Clarification HIA TRADING: Files for Bankruptcy Protection in S.D. New York HIA TRADING: Case Summary & 25 Largest Unsecured Creditors HEALTHCARE PARTNERS: Moody's Rates $145M Sr. Sec. Loans at B1 HOLLINGER INC: E&Y Wants to Examine Ex-Directors Radler & Boultbee HOLLINGER INC: Holds $10.23 Million of Cash as of January 7 IMMUNE RESPONSE: Completes Remune Studies in Italy & Spain IMPERIAL PLASTECH: Former Lawyers Petition for Receiving Order KARGO CORPORATION: Case Summary & 16 Largest Unsecured Creditors KINETICS GROUP: Fitch Withdraws 'B' Rating on $55 Mil. Sr. Debt LAIDLAW INTERNATIONAL: Taps PwC as Independent Accountants LAMBERT FABRICATORS: Assets to be Auctioned on Jan. 20 LEAP WIRELESS: Promotes S. Douglas Hutcheson to President and CFO LESLIE'S POOLMART: S&P Rates Planned $170M Sr. Unsec. Notes at B- LORAL SPACE: Trade Creditors Say Plan is Unconfirmable MERRILL LYNCH: S&P Affirms Low-B Ratings on 24 Certificate Classes METRIS: S&P Lifts Credit Rating to CCC+ & Says Outlook is Positive MICRON TECH: Moody's Holds Low-B Ratings Due to Operating Results MKP CBO: Moody's Junks Classes B-1A & B-1L NATIONAL BENEVOLENT: Fitch Rates Outstanding Debt at Triple-D NORTEL NETWORKS: Files Restated 2003 Annual Report NORTEL NETWORKS: Names Shepard Chief Ethics & Compliance Officer NOVA CHEMICALS: To Webcast 4th Qtr. Earnings Result on Jan. 26 NRG ENERGY: Inks Pact with New York to Reduce Emissions OWENS CORNING: Overview of the Asbestos Claims Estimation Trial OWENS CORNING: Index of Key Asbestos Claims Estimation Pleadings OWENS CORNING: List of Key Players in the Estimation Proceeding PEOPLESUPPORT INC: Posts $1.9 Million Restated 3rd Qtr. Net Income PERRY ELLIS: Inks License Agreement with Lantis Eyewear QUEBECOR MEDIA: Names J. Richard as VP for Advertising Convergence QWEST COMMUNICATIONS: Hosting Fourth Quarter Webcast on Feb. 15 R.H. DONNELLEY: Moody's Rates Planned $300M Sr. Unsec. Debt at B3 R.H. DONNELLEY: S&P Rates Proposed $300 Million Senior Notes at B RCN CORP: Court Approves Assumption of E! Entertainment Pact SANMINA-SCI: Fitch Puts Low-B Ratings on Three Layers of Debt SBC COMMUNICATIONS: Expects $250 Mil. Charges in 2004 4-Q Earnings SOLECTRON CORP: Fitch Affirms $1.2 Bil. of Debt with Low-B Ratings SOUTH STREET: S&P Junks Four Certificate Classes SPHERION CORP: Names William Halnon SVP & CIO for KnowledgeSphere SUTTER CBO: Fitch Affirms $20 Million 1998-1 Notes at 'B-' SUTTER CBO: Fitch Affirms Three 1999-1 Classes with Low-B Ratings TELEGLOBE COMMS: Chap. 11 Plan Confirmation Hearing Set on Feb. 10 TEXAS DOCKS: Wants to Sell Real Property to John Frantz for $38M TEXAS DOCKS: Asks Court to Approve Bid Procedures & Break-Up Fee TRICO MARINE: Court Will Consider Plan Confirmation on Jan. 19 TRUMP HOTELS: Court Moves Disclosure Statement Hearing to Feb. 3 U.S. PLASTIC: Taking Bids for Ocala, Fla., Plant ULTIMATE ELECTRONICS: Taps Skadden Arps as Bankruptcy Counsel ULTIMATE ELECTRONICS: Look for Bankruptcy Schedules by Mar. 12 UNISYS CORP: S&P Revises Outlook on Low-B Ratings to Stable WESTPOINT STEVENS: Wants to Alter Ernst & Young's Engagement WITHERSPOON CDO: Moody's Rates $18 Mil. Preference Shares at Ba2 X10 WIRELESS: Court Approves Second Amended Disclosure Statement YUKOS OIL: Gets Interim Okay to Waive Investment & Deposit Plan * GrayRobinson Expands Services into Northeast Florida * Steptoe & Johnson Expands Litigation Practice in New York ********* A.P.I. INC: Wants to Hire Fredrikson & Byron as Bankruptcy Counsel ------------------------------------------------------------------ A.P.I. Inc., asks the U.S. Bankruptcy Court for the District Of Minnesota for permission to employ Fredrikson & Byron, P.A., as its general bankruptcy counsel. Fredrikson & Byron is expected to: a) analyze the Debtor's financial situation and render advice and assistance in determining how to proceed with its chapter 11 case, and advice the Debtor with the negotiation and preparation of documents for a pre-packaged plan of reorganization; b) assist the Debtor with the preparation and filing of the petition, exhibits, attachments, schedules, statements, and lists for stay motions, and other documents required by the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and the Court in the course of the Debtor's chapter 11 case; c) represent the Debtor at the meeting of creditors and negotiate with creditors and other parties in interest; d) Make and respond to motions, applications and other requests for relief on behalf of the Debtor; e) work with the Debtor and other parties to obtain approval of the prepacked plan of reorganization and disclosure statement; and g) perform all other services requested by the Debtor that are necessary in its chapter 11 case. James Baillie, Esq., a Shareholder at Fredrikson & Byron, is the lead attorney for the Debtor's restructuring. Mr. Baille discloses that the Firm received a $40,000 retainer. Fredrikson & Byron has not yet submitted to A.P.I. Inc., the hourly rates of its professionals when the Debtor submitted to the Court its motion to employ the Firm as its bankruptcy counsel. Headquartered in St. Paul, Minnesota, A.P.I. Inc., -- http://www.apigroupinc.com/-- is a wholly owned subsidiary of APi Group, Inc., and is an industrial insulation contractor. The Company filed for chapter 11 protection on January 5, 2005 (Bankr. D. Minn. Case No. 05-30073). When the Debtor filed for protection from its creditors, it listed total assets of $34,702,179 and total debts of $63,000,000. A.P.I. INC: Wants to Hire Thomas Carey as Futures Representative ---------------------------------------------------------------- A.P.I. Inc. asks the U.S. Bankruptcy Court for the District Of Minnesota for permission to employ retired Judge Thomas H. Carey as the Legal Representative for Future Asbestos-Related Claimants. The Debtor explains to the Court that a key element of its since Prepackaged Plan of Reorganization filed on January 7, 2005, will be to channel all current and future asbestos-related claims involving the Debtor into a trust for claims payment and satisfaction. Mr. Carey, as the proposed Futures Representative will have the responsibility of acting as the legal representative of the future claimants for the purpose of representing and protecting the rights of claimants that might subsequently assert asbestos- related claims. Mr. Carey will also have the authority to retain attorneys and professionals to assist him in the performance of his duties and responsibilities upon prior approval of the Court. Mr. Carey will bill the Debtor $300 per hour for his services. Mr. Carey assures the Court that he does not represent any interests adverse to the Debtor, its estate and other parties in interest. The Court will convene a hearing at 10:00 a.m., on January 20, 2005, to consider the Debtor's motion to approve Mr. Carey's appointment. Headquartered in St. Paul, Minnesota, A.P.I. Inc., -- http://www.apigroupinc.com/-- is a wholly owned subsidiary of the APi Group, Inc., and is an industrial insulation contractor. The Company filed for chapter 11 protection on January 5, 2005 (Bankr. D. Minn. Case No. 05-30073). James Baillie, Esq., at Fredrikson & Byron P.A., represents the Debtor's restructuring. When the Debtor filed for protection from its creditors, it listed total assets of $34,702,179 and total debts of $63,000,000. ACCEPTANCE INSURANCE: First Acceptance Clarifies Own Operations --------------------------------------------------------------- First Acceptance Corporation (NYSE:FAC), whose insurance subsidiaries provide non-standard private passenger automobile insurance and operate in many states under the trade name "Acceptance Insurance", said "it is not affiliated nor involved in any manner" with Iowa-based Acceptance Insurance Companies Inc., which filed for reorganization under Chapter 11 of the US Bankruptcy Code on Jan. 7, 2005. AICI is the parent of Acceptance Insurance Company, which is currently in Rehabilitation and under supervision by the state of Nebraska's Department of Insurance and writes crop insurance policies. Steve Harrison, President and CEO of First Acceptance Corporation, said he wanted to clarify any possible confusion about the Nashville-based company's operations with AICI. "It's apparent from several inquiries we have received that the similarity in names has caused some misunderstanding. We have never had any association whatsoever with the Iowa or Nebraska companies, nor are we familiar with any aspect of their business," Mr. Harrison emphasized. First Acceptance Corporation, as previously announced with its first quarter earnings, provides non-standard private passenger automobile insurance primarily through employee-agents in 165 retail offices in seven states. The Company's insurance company subsidiaries are licensed to do business in 22 states. 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: Files Schedules of Assets and Liabilities --------------------------------------------------------------- Acceptance Insurance Companies Inc. filed with the U.S. Bankruptcy Court for the District of Nebraska its schedules of assets and liabilities disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $33,069,446 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured $137,110,126 Nonpriority Claims ----------- ------------ Total $33,069,446 $137,110,126 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. The Company filed for chapter 11 protection on Jan. 7, 2005(Bankr. D. Nebr. Case No. 05-80059). The Debtor's affiliates -- Acceptance Insurance Services, Inc., and American Agrisurance, Inc., filed chapter 7 petitions (Bankr. D. Nebr. Case Nos. 05-80056 & 05-80058). John J. Jolley, Esq., at Kutak Rock LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $33,069,446 in total assets and $137,120,541 in total debts. AIRGATE PCS: Soliciting Consents to Amend 9.375% Sr. Sub. Notes --------------------------------------------------------------- AirGate PCS, Inc. (Nasdaq: PCSA) is soliciting consents from holders of its outstanding 9.375% Senior Subordinated Secured Notes due 2009 and its First Priority Senior Secured Floating Rate Notes due 2011 to proposed amendments to certain provisions of the indentures governing the Notes. The consent solicitation will expire at 5:00 p.m., New York time, on Jan. 25, 2005, unless extended by AirGate. Only holders of Notes as of Jan. 10, 2005, the record date for the consent solicitation, may participate in the solicitation. As previously announced, on Dec. 7, 2004, AirGate entered into an Agreement and Plan of Merger with Alamosa Holdings, Inc., pursuant to which AirGate will merge with and into a direct wholly-owned subsidiary of Alamosa. The purpose of the consent solicitation is to obtain the requisite consents to amend the indentures governing the Notes so that neither AirGate nor Alamosa will be required to make a repurchase offer for the Notes upon completion of the merger. Completion of the consent solicitation is conditioned upon receipt of consents from holders of a majority in aggregate principal amount of all outstanding Notes of each series at or prior to the expiration time and the completion of the merger on or before June 30, 2005. If AirGate receives the requisite consents by the expiration time and the merger is completed on or before June 30, 2005, holders of Notes as of Jan. 10, 2005, that validly delivered their consents before the expiration time will receive a consent payment equal to 0.25% of the principal amount of Notes represented by such consents. The detailed terms and conditions of the consent solicitation are contained in the consent solicitation statement of AirGate, dated January 11, 2005, and the related consent letter, which have been mailed to holders of record of the Notes. Holders can obtain additional copies of the consent solicitation statement and related materials from MacKenzie Partners, Inc., the Information Agent for the consent solicitation, at (800) 322-2885 (toll free) or (212) 929-5500 (collect). UBS Securities LLC is acting as the Solicitation Agent. Holders with questions about the consent solicitation can contact UBS' Liability Management Group at (203) 719-4210 (call collect) or (888) 722-9555 x4210 (toll-free). This press release does not constitute a solicitation of consents of holders of the Notes and shall not be deemed a solicitation of consents with respect to any other securities of AirGate. The consent solicitation will be made solely by the consent solicitation statement of AirGate, dated Jan. 11, 2005, and the related consent letter. About AirGate PCS AirGate PCS, Inc. is the PCS Affiliate of Sprint with the right to sell wireless mobility communications network products and services under the Sprint brand in territories within three states located in the Southeastern United States. The territories include over 7.4 million residents in key markets such as Charleston, Columbia, and Greenville-Spartanburg, South Carolina; Augusta and Savannah, Georgia; and Asheville, Wilmington and the Outer Banks of North Carolina. At Sept. 30, 2004, AirGate PCS' balance sheet showed an $80,292,000 stockholders' deficit, compared to a $376,997,000 deficit at Sept. 30, 2003. * * * As reported in the Troubled Company Reporter on Oct. 6, 2004, Moody's Investors Service assigned a B2 rating to the proposed $175 million of senior secured floating rate notes due 2011 of AirGate PCS, Inc., and affirmed the company's other ratings. The rating outlook is positive. The affected ratings are: * Senior implied rating B3 (affirmed) * Issuer rating Caa1 (affirmed) * $175 million senior secured floating rate notes due 2011 -- B2 (assigned) * $159 million 9.375% senior subordinated secured notes due 2009 -- Caa1 (affirmed) * $141 million senior secured credit facility due 2007/08 -- WR (withdrawn) ATA AIRLINES: Can Assume Oracle Term License Lease -------------------------------------------------- Oracle Corporation, ATA Airlines and ATA's debtor-affiliates are parties to a Term License Lease Schedule No. 10197. According to Jeffrey C. Nelson, Esq., at Baker Daniels, in Indianapolis, Indiana, the Lease provides perpetual licenses to the Debtors for nine Oracle software applications used by the Debtors and licenses for Oracle databases used by applications developed or purchased by the Debtors. The Lease also provides support for the applications and database software included in the Lease. On May 13, 2003, the Debtors and Oracle Credit Corporation executed a Payment Plan Agreement, which provided the terms and conditions for the Debtors' payment of the price for the System. On May 9, 2003, National City Bank of Indiana issued an Irrevocable Standby Letter of Credit, No. SCL 008880, for $500,000, pursuant to a Letter of Credit Agreement between the Debtors and Oracle Credit, under which the Debtors furnished the Letter of Credit to secure their performance under the Lease and the Payment Agreement. On June 23, 2003, Oracle Credit assigned to Key Equipment Finance all of its rights, title and interests in and to the payments due under the Lease and the Payment Agreement. The Debtors and Key Equipment Finance have reached an agreement pursuant to which: (a) Key Equipment Finance will refrain from drawing on the Standby Letter of Credit and the Debtors will seek the United States Bankruptcy Court for the Southern District of Indiana's authority to assume the Lease; (b) The Debtors will pay Key Equipment Finance $133,875, as cure for the quarterly payment due under the Payment Agreement on October 1, 2004, plus late charges. Commencing on January 1, 2005, and continuing each calendar quarter thereafter, the Debtors will make the remaining payments required under the Payment Agreement as they become due; and (c) Upon receipt of the Payment, Key Equipment Finance will provide the written confirmation required in the Letter of Credit Agreement to allow reduction of the Letter of Credit Amount for the first Renewal Letter of Credit. The Debtors heavily rely on the System, and the System is essential for their continued operation. In addition, the assumption of the Lease will result in a net positive cash flow to the Debtors because the cure amount contemplated by the Agreement is less than the reduction in the Letter of Credit Amount called for. Therefore, the Debtors believe that assumption of the Lease is warranted. Accordingly, the Debtors sought and obtained the Court's authority to assume the Oracle Term License Lease. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Wants to Lift Stay to Pursue Woods Lawsuit -------------------------------------------------------- On May 17, 2004, Andre Woods filed a complaint against American Trans Air, doing business as ATA Airlines, Inc., in the United States District Court for the Northern District of Illinois, Eastern Division. Mr. Woods alleged that he sustained personal injury as a result of his removal from an ATA aircraft. Mr. Woods' claim is based on theories of false imprisonment, malicious prosecution and intentional infliction of emotional distress. United States Aviation Underwriters, ATA's insurer, retained Cozen O'Connor to defend ATA in the Woods Lawsuit. Melissa M. Hinds, Esq., at Baker Daniels, in Indianapolis, Indiana, relates that prior to the Petition Date, significant discovery and motion practice had taken place in the Woods Lawsuit. On September 20, 2004, ATA sought to dismiss the Woods Lawsuit. Mr. Woods has demanded damages for $25,000. However, Aviation Underwriters informed Cozen O'Connor that it has provided ATA with adequate liability insurance to cover the damages. In addition, Mr. Woods has agreed that his recovery, if any, will be sought solely from the insurance policy issued by Aviation Underwriters and not from ATA. Thus, the Debtors ask Judge Lorch to: (a) lift the automatic stay to permit the Woods Lawsuit to proceed; and (b) if Mr. Woods is successful, allow him to recover from applicable insurance coverage. Ms. Hinds asserts that pursuant to Section 362(d), cause exists for granting the Debtors' request because: -- the Woods Lawsuit does not involve issues particular to the Chapter 11 cases and will not affect the progress of the Debtors' reorganization; -- if successful, Mr. Woods' damages will be paid by Aviation Underwriters, not from the Debtors' estates; and -- it is in the Debtors' best interests to allow the District Court to rule on the Motion to Dismiss and to resolve the Woods Lawsuit. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) BANK OF HAWAII: Fitch Affirms Individual Classes with a Single B ---------------------------------------------------------------- Fitch Ratings upgraded the long-term ratings of Bank of Hawaii Corporation -- BOH -- and its bank subsidiary, Bank of Hawaii to 'A-' from 'BBB+', as well as Bank of Hawaii's short-term ratings to 'F1' from 'F2'. The Rating Outlook is Stable. Fitch's rating action reflects the success of BOH's strategic repositioning, which has strengthened the overall financial condition of the company. BOH has steadily improved profitability and reduced the risk profile of the company. Furthermore, Fitch believes the company can sustain its current level of core profitability, as it is poised to benefit from an improving Hawaiian economy, and maintain solid credit fundamentals despite its remaining higher risk exposures. BOH's capital and reserve position is strong. Fitch expects BOH to maintain strong capital and reserve positions relative to peer- rated institutions given its geographic concentration, as well as its remaining exposure to some higher risk credits. Additionally, the company has a liquid balance sheet and a solid core-funding base. Due to limited capacity to upstream dividends to the parent company without prior regulatory approval, Fitch has maintained the 'F2' short-term rating of the parent company. Fitch upgrades these ratings: Bank of Hawaii Corporation -- Long-term senior debt to 'A-' from 'BBB+'. Bank of Hawaii -- Long-term deposits to 'A' from 'A-'; -- Long-term senior debt to 'A-' from 'BBB+'; -- Subordinated notes to 'BBB+' from 'BBB'; -- Short-term deposits to 'F1' from 'F2'; -- Short-term debt to 'F1' from 'F2'. Bancorp Hawaii Capital Trust I -- Preferred securities to 'BBB+' from 'BBB'. Fitch affirms these ratings: Bank of Hawaii Corporation -- Short-term debt 'F2'; -- Individual 'B'; -- Support '5'. Bank of Hawaii -- Individual 'B'; -- Support '5'. BEVERLY ENTERPRISES: Starts Exchange Offer for $215MM 7-7/8% Notes ------------------------------------------------------------------ Beverly Enterprises, Inc. (NYSE: BEV) announces an offer to exchange up to $215 million in aggregate principal amount of its 7-7/8% Senior Subordinated Notes due 2014, which have been registered under the Securities Act of 1933 as amended, for its outstanding unregistered 7-7/8% Senior Subordinated Notes due 2014. The exchange offer will expire on Friday, February 11, 2005, at 5 p.m. The exchange agent is: BNY Midwest Trust Company c/o Bank of New York Reorganization Unit 101 Barclay Street, 7 East New York, NY 10286 Attn: Ms. Carolle Montreuil Beverly Enterprises, Inc., and its operating subsidiaries are leading providers of healthcare services to the elderly in the United States. Beverly currently operates 351 skilled nursing facilities, as well as 18 assisted living centers, and 52 hospice and home health centers. Through Aegis Therapies, Beverly also offers rehabilitative services on a contract basis to facilities operated by other care providers. * * * As reported in the Troubled Company Reporter's June 18, 2004, edition, Fitch Ratings has assigned a 'B+' rating to Beverly Enterprises, Inc.'s planned up-to $225 million, 10-year, subordinated debt issue. Proceeds from the new issue will be used to fund the recent tender offer for the company's 'BB-' rated, $200 million, 9-5/8% senior unsecured notes due 2009. Those 9-5/8% Notes trade around 112, according to pricing obtained from the Bloomberg Professional Service. S&P rates the 9-5/8% Notes at B+ and Moody's gives them its B1 rating. In conjunction, Fitch affirmed the company's 'BB' secured bank facility, 'BB-' senior unsecured debt and 'B+' rated subordinated convertible notes. Fitch's Rating Outlook was Stable. Fitch notes that BEV's credit profile is improving following a difficult 2003 that saw profitability negatively impacted by rising patient liability costs and reduced Medicare reimbursement. Key factors Fitch sees driving the improvement include strong volume growth, increased Medicare and Medicaid per- diem rates, a significant reduction in patient liability-related costs and lower interest costs due to refinancing activities. BOYD GAMING: To Webcast Fourth Quarter Results on Feb. 9 -------------------------------------------------------- Boyd Gaming Corporation's (NYSE: BYD) fourth quarter 2004 conference call to review the Company's results will take place on Wednesday, Feb. 9, 2005 at 4:30 p.m. Eastern. The conference call number is 800.901.5259 and the reservation number is 50501023. Please call up to 15 minutes in advance to ensure you are connected prior to the call's initiation. The Company will report its results on the same day at approximately 4:00 p.m. Eastern. The conference call will also be available live on the Internet at http://www.boydgaming.com/ Following the call's completion, a replay will be available by dialing 888.286.8010 on Feb. 9, beginning two hours after the completion of the call and continuing through Wednesday, Feb. 16. The passcode for the replay will be 57353044. The replay will also be available on the Internet at the Company's web site. Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) -- http://www.boydgaming.com/-- is a leading diversified owner and operator of 18 gaming entertainment properties, plus one under development, located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. * * * As reported in the Troubled Company Reporter on Nov. 25, 2004, Fitch Ratings affirmed Boyd Gaming Corporation's senior secured bank debt ratings at 'BB' and raised the senior unsecured and subordinated debt ratings one notch to 'BB-' and 'B+', respectively. The Rating Outlook is Stable. Approximately $2.3 billion of debt securities are affected by Fitch's action. Ratings reflect: (1) Boyd's sizable and uniquely diversified portfolio of high quality, (2) recently renovated assets, (3) successful operating history, and (4) strong track record of making high-return acquisitions. CAESARS ENT: Nears Completion of Caesars Indiana Acquisition ------------------------------------------------------------ Caesars Entertainment, Inc. (NYSE: CZR), one of the world's leading gaming companies, has reached agreements to acquire its partner's 18 percent interest in the company that owns and operates the Caesars Indiana casino resort. Caesars expects to complete the transaction, which is valued at approximately $70 million, in the first quarter of 2005. The Caesars Indiana property comprises the riverboat casino and associated hotel and golf course. At the conclusion of the transaction, Caesars Entertainment will own 100 percent of the property through its Indiana affiliate, which will be renamed Caesars Riverboat Casino, LLC, upon approval by the Indiana Gaming Commission. Headquartered in Las Vegas, Nevada, Caesars Entertainment, Inc. (NYSE: CZR) has $4.5 billion in annual net revenue, 28 properties on four continents, 26,000 hotel rooms, two million square feet of casino space and 52,000 employees, the Caesars portfolio is among the strongest in the industry. Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names. In July 2004, the Board of Directors of Caesars Entertainment approved an offer from Harrah's Entertainment to acquire the company for approximately $1.8 billion and 66.3 million shares of Harrah's common stock. The offer must be approved by shareholders of both companies and federal and state regulators before the transaction can close. * * * As reported in the Troubled Company Reporter on Sept. 30, 2004, Fitch Rates Caesars Entertainment ('BB+/BB-') and remains on Rating Watch Positive. CARRIAGE SERVICES: Moody's Rates Proposed $130M Sr. Notes at B2 --------------------------------------------------------------- Moody's Investor Service assigned a B2 rating to the proposed offering of $130 million of senior notes by Carriage Services, Inc. In addition, Moody's assigned a senior implied rating of B2 and a speculative grade liquidity rating of SGL-2. The ratings outlook is stable. This is the first time Moody's has rated the debt of Carriage Services. The rating action follows the announcement by the company that the proceeds from the senior notes offering will be used to refinance certain existing indebtedness, pay fees and expenses and provide additional short- term liquidity. Moody's assigned these ratings: * $130 million Senior Notes due 2015, rated B2; * Senior Implied, rated B2; * Senior Unsecured Issuer, rated B3; * Speculative Grade Liquidity Rating, rated SGL-2. The ratings outlook is stable. The ratings are subject to the review of executed documents. The ratings reflect: (1) high pro forma leverage for a relatively small company; (2) weak revenue growth in recent years; (3) strong local competition in key markets which could result in market share losses or pricing pressure; (4) declining death rates in recent years; (5) the increasing use of cremation services which tend to generate lower revenues and gross profit than traditional funeral services and could cause the company to lose market share to firms specializing in cremations; and (6) the company's exposure to the performance of its trust funds. The ratings also reflect: (1) the stability of the funeral and cemetery business; (2) strong operating margins; (3) management's focus on debt reduction and margin improvement in recent years; and (4) a significant backlog (about $290 million at Sept. 30, 2004) derived from preneed funeral and cemetery contracts supported by trust funds or insurance contracts. Carriage Services is expected to have about $238 million of indebtedness at December 31, 2004 on a pro forma basis for the issuance of the senior notes and refinancing of certain existing debt. This compares to a revenue base of about $155 million for the latest twelve-month -- LTM -- period ended September 30, 2004. In addition to $130 million of senior notes, the company is expected to have about $94 million of convertible junior subordinated debentures and $14 million of other indebtedness. The Debentures accrue interest at 7%, mature in 2029 and allow for the deferral of interest payments for up to twenty consecutive quarters at the option of the company. All accrued and unpaid interest on the Debentures is expected to be paid in cash in connection with the refinancing. The company also expects to enter into a $35 million revolving credit facility which is expected to be undrawn at closing. The Debentures and the revolving credit facility are not rated by Moody's. The assignment of the SGL-2 speculative grade liquidity rating reflects the company's good liquidity profile and Moody's expectation of stable free cash flows from operations, significant projected availability under the proposed revolving credit facility and adequate cushion under bank covenants. Cash on hand and cash flow from operations are expected to cover ongoing cash needs for the next twelve months, which primarily consist of capital expenditures and limited debt amortization requirements. Liquidity also benefits from the company's ability to defer interest payments on the Debentures for up to twenty quarters, although Moody's expects such interest payments to be paid in cash in 2005. The company is expected to have about $13 million of cash upon completion of the refinancing and Moody's expects the company to generate about $10 million in free cash flow from operations (after the payment of cash interest on the Debentures and capital expenditures) in 2005. Moody's believes the company may engage in acquisitions of funeral and cemetery properties during the next twelve months and as a result may need to borrow under its proposed revolving credit facility. Although financial covenant levels under the proposed revolving credit facility have not been finalized, Moody's expects the company to have adequate cushion against the covenants over the next twelve months. The stable ratings outlook reflects Moody's view that the company will experience modest revenue growth and operating margin improvements. Moody's expects that the company's strategic initiatives to improve revenues and reduce costs will offset the impact of declining death rates and increases in cremation rates. The ratings or outlook could be pressured if the company increases leverage due to greater than expected acquisition activity or revenues and margins decline due to decreases in funeral volume, increases in cremation rates or declines in trust performance. The ratings or outlook would likely benefit from a significant reduction in leverage or improvement in free cash flow due to stronger than expected revenue increases or operating margin improvements. The senior notes will be senior unsecured obligations of the company and will rank equally with all of the company's existing and future senior unsecured indebtedness. The senior notes will be effectively subordinated to borrowings under the senior secured credit facility but will benefit from guarantees on a senior basis by substantially all the subsidiaries of the company. Moody's considers the Debentures as 75% debt and 25% equity consistent with Moody's December 1999 rating methodology, "Moody's Tool Kit: A Framework for Assessing Hybrid Securities" and Moody's November 2003 Rating Methodology, "Hybrid Securities Analysis New Criteria for Adjustment of Financial Ratios to Reflect the Issuance of Hybrid Securities". Free cash flow (as adjusted to reflect cash interest payments on the Debentures in 2004 and 2005) to adjusted debt (which reflects 75% of the Debentures) is expected to be about 6% in 2004 and 5% in 2005. Pro forma adjusted debt to EBITDA at December 31, 2004 is expected to be about 5.3 times and pro forma adjusted debt to revenues is expected to be about 1.4 times. EBITDA coverage of interest (including the full amount of interest on the Debentures) for 2005 is expected to be about 2.4 times. Headquartered in Houston, Texas, Carriage Services, Inc., is the fourth largest provider of funeral and cemetery services in the United States. For the LTM period ended September 30, 2004, revenues were approximately $155 million. CARRIAGE SERVICES: S&P Rates Planned $120M Sr. Unsec. Notes at B- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to the funeral home and cemetery operator Carriage Services, Inc., and assigned its 'B-' debt rating to the company's proposed $130 million in senior unsecured notes due in 2015, issued under Rule 144A with registration rights. The company is expected to use the proceeds from the issue for existing debt refinancing and general corporate purposes. Pro forma debt outstanding (including the company's term income deferrable equity securities, or TIDES) is $238 million. The outlook is stable. Carriage's unsecured senior notes are rated 'B-', or one notch below the corporate credit rating, in line with Standard & Poor's criteria. Although these notes are considered senior, the rating assumes that in a distress scenario there would be a significant amount of priority debt, including the company's unrated $35 million revolving bank facility (expected to be fully drawn) and its capitalized leases. Because of the magnitude of priority debt, totaling more than 15% of total eligible assets, the unsecured notes are considered materially disadvantaged. "The low-speculative-grade ratings reflect Carriage's still-significant financial burden in an industry that, while fairly predictable, is subject to uncertainties," said Standard & Poor's credit analyst David Peknay. Houston, Texas-based Carriage grew rapidly through the 1990s to become the fourth-largest cemetery and funeral home operator in North America. The company's expectations for industry growth proved too optimistic, however, and as a result, its earnings and financial profile suffered. In the past few years, it has pruned its marginal properties, selling 36 funeral homes, 12 cemeteries, and other real estate, and its continuing operations now consist of 137 funeral homes and 30 cemeteries. Carriage is now more focused on increasing its net revenues per funeral and improving margins rather than aggressive expansion, as it was in the past. Carriage will benefit in the medium term from the changes in its operations, and in the long term from more normal death rates. However, it is smaller than prominent peers Stewart Enterprises, Inc., Service Corp. International, and Alderwoods Group, Inc., and it has a weaker financial profile. Thus, it has less insulation against weak industry conditions and adverse competitive developments. The company continues to face challenging industry trends that could impede its progress. North America has been experiencing death rates below historic levels, resulting in lower funeral volumes and weaker-than-average cemetery and cemetery merchandise sales. Cremation services, which generate higher margins but less revenue than funeral services, will continue to increase from their current level of 31% of funeral service volume. Price competition among providers is also considerable (although Carriage's revenue per funeral has increased as the company has adjusted its pricing and mix of merchandise and services). These factors are only partially mitigated by the relatively favorable long-term predictability of the funeral home and cemetery business and by the company's backlog of contracted pre-need sales, which should convert to revenue as services are rendered. CATHOLIC CHURCH: CNA Wants to Stay Lifted in Spokane Case --------------------------------------------------------- The Diocese of Spokane, by its own account, faces over 125 claims by individuals who allege that they were sexually abused as children by priests associated with the Diocese. Spokane has asserted defense and indemnity coverage claims for certain of the sexual abuse claims under primary general liability insurance policies allegedly issued to Spokane by CNA between 1976 and 1977 and between 1979 and 1989. CNA consists of: (a) American Casualty Company of Reading, (b) Pennsylvania, Columbia Casualty Company, (c) Continental Insurance Company, (d) Pacific Insurance Company, and (e) The Glens Falls Insurance Company With the exception of The Glens Falls Insurance Company, whose policy specifically bars coverage for sexual abuse-related claims, CNA has been funding Spokane's legal defense pursuant to a reservation of rights and cost-sharing arrangement with certain of Spokane's other alleged insurers. Before the Petition Date, Spokane demanded that its insurers settle many of the claims, waive coverage defenses, and accept Spokane's position on all disputed matters. CNA rejected the unreasonable demands. Many of the pending sexual abuse claims are related to alleged abuse by Fr. Patrick O'Donnell. The claimants allege that while a Diocesan priest, Fr. O'Donnell molested children in the Diocese. As early as his seminary years, Fr. O'Donnell informed his superiors of his attraction to young boys. According to claimants, throughout the 1970s to mid-1980s, children, parents, and fellow priests complained about Fr. O'Donnell's ongoing child abuse. Despite multiple reports indicating that Fr. O'Donnell was unwilling or unable to control his compulsions to engage in sexual activity with children, CNA complains that Spokane permitted and even promoted Fr. O'Donnell's continued unsupervised access to children. It was only in 1986 after receiving numerous complaints concerning Fr. O'Donnell's conduct that the Diocese notified Fr. O'Donnell that he was no longer permitted to function as a priest and that his priestly faculties had been removed. Failed Mediation From November 1 to 4, 2004, CNA attended a mediation of 28 claims relating to alleged sexual abuse by Fr. O'Donnell. Before the mediation, CNA requested Spokane's chosen defense counsel to provide it with claim-specific analyses of exposure to liability, damages, and settlement values. Spokane refused to supply the requested information. CNA also provided Spokane with a detailed analysis of the coverage issues presented by the O'Donnell Claims and offered to attempt to resolve the issues prior to mediation so that the underlying claims could, if possible, be settled. Spokane rejected CNA's offer to discuss a compromise. Following mediation, Spokane failed to inform CNA of settlement demands made by claimants. As of January 3, 2005, Spokane has not presented to CNA any demand to settle any of the O'Donnell Claims or any other sex abuse claims for an amount within any CNA policy limit. To expedite the resolution of the insurance coverage disputes, which, in turn, will narrow the issues before the U.S. Bankruptcy Court in Spokane's Chapter 11 case, CNA, on November 22, 2004, commenced a state court action by filing a complaint for declaratory relief against Spokane, certain of its alleged insurers, and certain claimants who alleged abuse during any of CNA's alleged policy periods, styled as Pacific Insurance Company, et al. v. Catholic Bishop of Spokane, et al., before the Superior Court of the State of Washington in and for Spokane County. The Complaint includes a demand for a jury trial. CNA Wants to Proceed with Suit By this motion, CNA asks Judge Williams to lift the automatic stay under Section 362(d)(1) of the Bankruptcy Code so it may continue the Declaratory Judgment Action. Charles R. Ekberg, Esq., at Lane Powell, PC, in Seattle, Washington, asserts that lifting the automatic stay would promote judicial economy. Mr. Ekberg explains that the Spokane County Superior Court is in the best position to hear and resolve the coverage litigation in an economic manner and consistent with the requirements and limitations of Article III and the Seventh Amendment of the United States Constitution. Mr. Ekberg notes that there is no reason to suspect that lifting the stay to continue the State Court Action would harm Spokane or other parties to the bankruptcy case. To the contrary, the Spokane County Superior Court would be able to resolve the coverage litigation in an expeditious manner, which in turn would facilitate Spokane's formulation of a Plan of Reorganization and emergence from Chapter 11. Delays in adjudicating the insurance coverage disputes would result in unnecessary administrative expenses that ultimately would be borne by the estate, abuse claimants and other creditors. In addition, the delays could be expected to exacerbate feelings of frustration and mistrust that are already prevalent in the case, and thereby pose additional barriers to the good faith negotiations upon which the reorganization depends. Mr. Ekberg believes that the Bankruptcy Court would be required, or at a minimum permitted, to abstain from deciding the insurance coverage disputes between the parties. Mr. Ekberg points out that under Section 1334(c)(1), a federal district having jurisdiction of an action related to a bankruptcy proceeding must abstain from jurisdiction under these conditions: ". . . district court shall abstain from hearing [a] proceeding if an action is commenced, and can be timely adjudicated, in a State forum of appropriate jurisdiction." Mandatory abstention, Mr. Ekberg reminds Judge Williams, applies to insurance coverage disputes because these disputes: -- are based on state law; -- are related to Spokane's Chapter 11 case, but did not arise in or under the case; -- could not be commenced in federal court absent Section 1334 jurisdiction; -- are already at issue before the Spokane County Superior Court; and -- can be timely adjudicated by the Spokane County Superior Court. If the Bankruptcy Court determines that mandatory abstention does not apply to the insurance coverage disputes, CNA asks Judge Williams to find that permissive abstention is appropriate under the circumstances. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Wants to Hire Gordon Murray as Counsel --------------------------------------------------------------- The Diocese of Spokane is the named insured on numerous historical Comprehensive General Liability Insurance Policies underwritten by various insurance companies. Spokane has made claims with respect to those policies as to underlying lawsuits, actions, and claims by various plaintiffs for alleged negligent supervision by Spokane of certain priests. The various insurance companies have either reserved rights or denied the claims. There is a dispute between Spokane and the insurance companies as the existence and extent of insurance coverage. One of the insurance companies, CNA, had filed a state declaratory judgment action prior to the Petition Date. Against this backdrop, the Spokane Diocese seeks authority from the U.S. Bankruptcy Court for the Eastern District of Washington to employ Gordon Murray Tilden, LLP, as insurance coverage counsel. William S. Skylstad, Bishop of the Diocese of Spokane, explains that Gordon Murray is experienced in all aspects of insurance coverage advice and litigation. Gordon Murray specializes in civil trial litigation and, in particular, has extensive experience throughout Washington as well as the rest of the country in advising policyholders with respect to their rights under insurance policies. James R. Murray, as lead counsel, has 20 years experience advising policyholders in insurance coverage litigation. The firm's coverage practice ranges from large-scale litigation on behalf of international corporate policyholders under complex coverage lines, to advising individual insureds under disability, property, auto and other policies. Gordon Murray will advise the United States Trustee regarding the Diocese's rights under its historical insurance liability policies and will represent the Diocese in insurance coverage litigation pending, or to be filed, with respect to some or all of Spokane's insurance companies. Spokane will compensate Gordon Murray for its services in accordance with its hourly rates: Senior Partners $300 Partners $275 Associates $165 to $190 Legal Assistants $105 Legal Clerks $55 Bishop Skylstad relates that since September 13, 2004, Gordon Murray has served as coverage counsel to Spokane. The scope of the representation has included advice as to insurance coverage under its historical liability policies and negotiations with the insurance companies in an attempted resolution of underlying claims against Spokane. There are no actual or possible conflicts at issue. This is the only transaction participated in by Gordon Murray with Spokane. As of November 15, 2004, the total amount billed to Spokane was $34,439. Mr. Murray assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code as modified by Section 1107, and does not hold any interest adverse to Spokane. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHEVYS INC: Real Mex Buys 126 Restaurants for $90 Million --------------------------------------------------------- Real Mex Restaurants, Inc., the Long Beach-parent company of El Torito Restaurants and Acapulco Mexican Restaurants, has formally acquired 126 of Chevys Inc.'s Chevys Fresh Mex(R) Restaurants and Fuzio Universal Pasta(R) for more than $90 million. As a result of the transaction, Real Mex is now the largest operator of full- service, Mexican restaurants in the country. Michael I. Gottfried, a lawyer for Chevys, told Bloomberg News that from the sale proceeds, Chevys' secured creditors will be paid 100 percent of what they are owed. Unsecured creditors will split $11 million, he said, or as much to 46 percent of what they are owed. Real Mex Restaurants has appointed Charles "Chuck" Rink as president of Chevys Fresh Mex(R) Restaurants. Mr. Rink brings more than 20 years of operations experience, at Visions Restaurants, Inc., Restaurant Enterprises Group and W.R. Grace, in multiple segments of the restaurant industry to his new position. Additionally, Mr. Rink will maintain his role as Real Mex Restaurants' chief operating officer, a position he's held since 2002. "This acquisition provides our customers the widest array of Mexican food options in the United States, from the Fresh Mex(R) experience of Chevys, to the authentic Mexican cuisine of El Torito, and the casual California Mexican cuisine of our Acapulco Mexican Restaurants," said Fred Wolfe, president and CEO of Real Mex Restaurants. "We welcome Chevys and Fuzio into our family of restaurants and are excited to provide new growth and development opportunities for our employees throughout the Real Mex Restaurants organization." Real Mex Restaurants will be retaining 100 percent of the field organization, 31 corporate employees, and maintaining a Chevys' Northern California office while adding 35 new positions in Long Beach. "Real Mex Restaurants is dedicated to the continued growth of the Chevys brand and will continue to work with Chevys employees to service its local communities," said Mr. Rink. "Furthermore, the franchise organization will continue to flourish under the leadership of Nicholas Mayer, vice president franchise operations." With the acquisition, Real Mex Restaurants' combined systems sales will exceed half a billion dollars, becoming the largest operator of casual dining Mexican restaurants in the country. "This is an exciting time for our organization as we look forward to continued growth in same store sales in our core El Torito and Acapulco brands, opening 5 to 6 new units in 2005 and bringing Chevys into the Real Mex Restaurants portfolio," said Mr. Wolfe. Chevys Inc., which operates 69 company-owned Chevys Fresh Mex(R) restaurants and 37 franchised restaurants located in 15 states, along with five company-owned Fuzio Universal Pasta(R) Restaurants and four franchised properties located in Northern California, has been operating as a debtor in possession under Chapter 11 of the U.S. Bankruptcy Code since October 2003. The acquisition is part of a plan of reorganization, and the properties will continue to operate as Chevys Fresh Mex(R) Restaurants and Fuzio Universal Pasta(R) Restaurants under the agreement. About Real Mex Restaurants Headquartered in Long Beach, Real Mex Restaurants -- http://www.eltorito.com/and http://www.acapulcorestaurants.com/ -- is one of the largest full-service, casual dining Mexican restaurant chain operators in the United States, with 120 restaurants in California and six other states. These include 69 El Torito Restaurants, 39 Acapulco Mexican Restaurants, six El Torito Grill Restaurants and Las Brisas in Laguna Beach, along with several regional restaurant concepts such as Who-Song & Larry's, Casa Gallardo, El Paso Cantina, Keystone Grill and GuadalaHARRY'S. Real Mex Restaurants is committed to the highest standards and is dedicated to serving the freshest Mexican food with excellent service in a clean, comfortable and friendly environment. Headquartered in Emeryville, California, Chevys, Inc. -- http://www.chevys.com/-- operates and franchises more than 170 restaurants in about 20 states, mostly its flagship Chevys Fresh Mex and Rio Bravo chains. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 10, 2003 (Bankr. N.D. Cal. Case No. 03-45879). Michael I. Gottfried, Esq., at McDermott, Will and Emery, represents the Debtors in their restructuring efforts. The Bankruptcy Court confirmed the company's Plan of Reorganization on Dec. 21, 2004. CHIQUITA BRANDS: Completes Five-Year $150 Million Credit Facility ----------------------------------------------------------------- Chiquita Brands International, Inc.'s (NYSE: CQB) main operating subsidiary has successfully completed a new five-year $150 million secured revolving credit facility, with Wells Fargo Bank as co- lead arranger and administrative agent and Wachovia Securities as co-lead arranger and syndication agent. The credit facility may be increased up to $200 million under certain conditions. The other members of the bank syndicate are: -- Rabobank International; -- Harris Nesbitt; -- LaSalle Bank, a subsidiary of ABN- AMRO; -- ING Bank; and -- Nordea Bank. "This credit facility provides ample liquidity and flexibility to successfully operate our business and deliver on our sustainable growth strategy," said Jay Braukman, chief financial officer. "Our banking partners, with their unique knowledge of our industry and important franchises in Europe and the United States, have recognized our very strong balance sheet and given Chiquita a vote of confidence." Proceeds from the loans available under the credit facility may be used for working capital, capital expenditures and other general purposes, including acquisitions. The interest rate is based on prevailing U.S. or LIBOR market rates. The initial interest rate will be LIBOR plus 1.50%, which may be adjusted based on future debt levels of the operating subsidiary. The loan is secured by liens on substantially all of the tangible and intangible assets of the borrower and its U.S. subsidiaries and by pledges of stock of the borrower and certain of its subsidiaries. No revolving loan borrowings have been made to date; however, approximately $8 million of previously issued letters of credit are now deemed to be issued under the credit facility. About the Company Chiquita Brands International is a leading international marketer, producer and distributor of high-quality bananas and other fresh produce, which are sold under the premium Chiquita(R) brand. The company is one of the largest banana producers in the world and a major supplier of bananas in Europe and North America. The company also distributes and markets fresh-cut fruit and other branded, value-added fruit products. Additional information is available at http://www.chiquita.com/ * * * As reported in the Troubled Company Reporter on Sept. 23, 2004, Moody's Investors Service assigned a B2 rating to the prospective senior unsecured note issue of Chiquita Brands International, Inc., and affirmed Chiquita's B1 senior implied rating. The outlook is stable. CITY OF RICHMOND: Moody's Upgrades Bonds Ratings from Ba3 to Baa3 ----------------------------------------------------------------- Moody's has upgraded the Issuer Rating (implied general obligation) of the City of Richmond, California to Baa2 from Ba3. At this time Moody's has also upgraded the city's Limited Obligation Pension Bonds, Series 1999 to Baa3 from Ba3 and the Affordable Housing Agency Subordinate Multifamily Housing Revenue Bonds (Westridge at Hilltop Apartments) 2003 Series A-S to Ba1 from Ba3. The upgrades primarily reflect the city's improving liquidity and financial position and reduced uncertainty regarding financial operations and fiscal oversight. The City of Richmond's fiscal 2004 operations generated a modest $1.2 million surplus and significantly improved liquidity. This was in stark contrast to the prior fiscal year, during which operations resulted in a $14.4 million general fund operating deficit (after transfers) and a narrow and somewhat uncertain liquidity position. The fiscal 2004 surplus was largely driven by revenue growth from a voter approved increase in the city's utility user's tax (from 8% to 10%) and significant expenditure reductions from three rounds of layoffs in late fiscal 2003 and 2004 (totaling 300 budgeted positions; 200 employees). Other notable budgetary actions included the closing of fire stations, and the elimination of 13 firefighter and 15 police positions. As a result, the city's fiscal 2004 unaudited financial statements indicate a total general fund balance of $33.7 million (or 33.5% of general fund revenues) and an unreserved fund balance of negative 3.3% of general fund revenues. Though the unreserved fund balance remained negative at fiscal year end, the city's cash position improved markedly, to $12.7 million (12.6% of general fund revenues) from negative $4.4 million (-4.8% of general fund revenues) the prior year. Officials continue to take a variety of budgetary and organizational actions in the current fiscal year, which should solidify the past year's fiscal turnaround. The Interim City Manager (a former Contra Costa County Administrator) provided the council's finance committee with a 390 page report which included 170 recommendations including monthly departmental reports, a line-item council budget, 6 new positions in the department of finance including an accounts receivable department and an independent audit function. The recommendations were approved by the council on September 14, 2004. On November 18, 2004 the reorganization of the finance department was also approved by council. The reorganization included the dismissal of a high level manager in the department and the removal of the audit function from finance and its transformation into an independent department, which reports to council. An advisory committee for internal audit also reports to council. Additionally, new finance staff will be added to the cash management, accounting, general ledger, and accounts receivable functions. City departments have been directed to share more responsibility for financial oversight and will be required to prepare monthly status reports to be presented to council. A proposal for salary reductions (9% for public safety, 8% for miscellaneous employees), which has been approved by 5 of the 6 unions, was approved by the city council. On November 2, 2004, city voters approved a half-cent sales tax increase expected to generate approximately $6 million annually in additional revenue to fund a range of services, including police and fire protection. Collection of the tax increase begins in April 2005. This revenue has not been factored into budget projections. Officials also took action to have the general fund repaid by the city's redevelopment agency and port enterprise in the amounts of $5.1 million in 2004 and $6.4 million in 2005. The city had initially expected to issue TRANs during fiscal 2005, with state legislation passed to allow Contra Costa County to make payments directly to the trustee from the city's share of county property tax collections. According to officials, the need for this cash flow borrowing seems to have subsided, which we view as further evidence of an improved overall cash position at the city. Direct Debt Burden is Modest The city's direct debt burden, adjusted for self-supporting debt, is modest at 0.4%. The city's direct debt is composed primarily of general fund leases (some of which are supported by revenues outside of the general fund) and the pension tax over-ride bonds. After adjusting for self-supporting debt, the city's net lease and general fund obligation burden is manageable at 4.7% of unaudited fiscal 2004 general fund revenues. Although the pension bonds are secured by the city's pension tax over-ride, clarity on debt service coverage levels had been lacking. At the time of the assignment of the initial rating to the pension bonds, it was anticipated that debt service coverage would exceed 2.0 times after 2001 and increase each year thereafter assuming the city's pension tax override was levied at the rate of 0.14% of the assessed value. Recent data provided to Moody's by the city indicates that debt service coverage averaged 2.4 times over the last four years and that peak debt service coverage by fiscal 2004 pledged revenues is 3.0 times. The city is in the preliminary stages of planning an issuance of standard, limited tax pension bonds in the spring of 2005 to finance its unfunded PERs liability. The magnitude of this borrowing is pending an updated valuation of the city's actuarial unfunded liability. Moody's expects to conduct a further review of the city's ratings prior to the issuance of the pension bonds. The Affordable Housing Agency Subordinate Multifamily Housing Revenue Bonds (Westridge at Hilltop Apartments) are secured by subordinate pledge of housing project revenues, and in the event that project revenues are insufficient to cover debt service on bonds, are additionally secured by annual lease payments to be made by the City of Richmond. The obligation of the city is structured as a standard, abatable general fund lease. While the lease payments are limited to $1 million annually, Moody's notes that this amount exceeds peak debt service requirements on the subordinate bonds, which is projected at about $904,000, and that projected project revenues provide approximately 1.4 times coverage on senior lien debt service. Given the city's improved liquidity levels, Moody's believes the city's pledge of lease payments provides satisfactory security. Key Statistics Current estimated population: 101,400 1999 per capita income: $19,788 (87.1% of state) 2004 full valuation: $8.6 billion Full value per capita: $84,980 Direct debt burden: 0.4% Overall debt burden: 3.2% Net peak lease payment as a % of fiscal 2004 general fund revenues: 4.7% FY04 general fund balance: $33.7 million (33.5% of general fund revenues) FY04 available general fund balance: -$3.3 million (-3.3% of general fund revenues) FY04 net cash: $12.7 million (12.6% of general fund revenues) COLORADO EDUCATIONAL: Moody's Pares Revenue Bond Ratings to Ba1 --------------------------------------------------------------- Moody's Investors Service has removed the Baa3 rating for the Colorado Educational and Cultural Facilities Authority Charter School Revenue Bonds (Bromley East Charter School Project), Colorado Series 2000A and Series 2000B from Watchlist and lowered the outstanding rating to Ba1 from Baa3. The downgrade, which affects approximately $11.7 million in outstanding revenue obligations, reflects uneven enrollment growth with shortfalls and declines in student population levels that are likely to weaken debt service coverage levels and impair the school's ability to accumulate adequate reserve levels. The downgrade also incorporates the school's uneven financial performance resulting from an earlier dispute with the Adams & Weld County School District 27J (Brighton) over funding levels and state aid pass-through amounts, the failure to fully reduce staffing levels to offset declines in enrollment, and operating weaknesses in some of the schools' programs including food service. The revenue bonds are secured by annual appropriations made from charter school revenues (primarily comprised of state aid) that are paid directly to the trustee from Brighton School District (rated A2 by Moody's.) The Ba1 rating, while incorporating expectations for improved financial results in fiscal 2005 and continued, though slowed, population growth in the surrounding community that should support enrollment demand, reflects the heightened volatility in enrollment levels and financial results that are inconsistent with an investment grade rating. The rating also reflects Moody's expectation that combined enrollment between the two schools, while recovering from losses in the fall of 2003, remains unlikely to reach initial forecasts in excess of 1,000 students over the near term. Legal provisions that include a pledge of revenues from both the financed school, Bromley East, and a second school, Brighton charter; the two schools' charters that extend until maturity of the bonds in 2030; the preclusion of any additional parity obligations; a one-year debt service reserve and the pledge of the financed asset remain satisfactory. While the number of students at Bromley East appears to have recovered somewhat in the fall of 2004, enrollment growth at the two charter schools remains uneven. The opening of a new K-8 elementary school within the Brighton school district contributed to a decline in enrollment in the fall of 2003. Significantly, overall enrollment between Bromley East, the elementary school, and Brighton High School fell from 927 in the fall of 2002 to 860 in 2003, falling sharply below a projected enrollment in excess of 1,000, and an estimated breakeven figure for average annual debt service of 950 students. Enrollment at Bromley East did improve to 700 students in the fall of 2004. While increasing from 647 in the fall of 2003, this figure remains below initial projections of 760, and Moody's does not expect the school to consistently hit this target over the near term. Moreover, enrollment at Brighton High School continues to slip, with fall 2004 enrollment of 209 edging downward from 213 in the fall of 2003, reflecting limitations on the competitiveness of that school. Combined enrollment between the two schools of 909 in the fall of 2004, while improving from 860 in the fall of 2003, falls short of both an estimated breakeven level of 950 students to support average annual debt service and an initial projected enrollment in excess of 1,000, a level that Moody's believes is critical in supporting comfortable debt service coverage margins of around 1.25x. Positively, population within the underlying school district, which encompasses the City of Brighton (general obligation rated A2) as well as Thornton (general obligation rated Aa3) and Commerce City, continues to grow, although at a somewhat slowed pace reflecting continued stagnation in the statewide economy. The charter schools, however, face continued challenges in attracting an expanding number of these students, as the district adds additional neighborhoods schools and as new charter schools also enter the market. Competition from the newly opened elementary school and the limitations of the high school's physical plant, which is located in a former county jail facility, continue to present major challenges in the charter schools' efforts to increase enrollment to the projected levels necessary to provide satisfactory coverage of debt service obligations. School officials report that continued housing developing in the surrounding communities should help support future enrollment growth. Nevertheless, the potential for ongoing shortfalls in student population levels may impede the school's ability to meet debt service obligations, which will escalate from $815,000 in fiscal 2002 to an average of $1.1 million beginning in fiscal 2005. Sustained enrollment growth that meets earlier expectations and provides satisfactory debt service coverage remain central to sustaining the school's rating level. Financial results for both schools remained generally stable in fiscal 2003, although operating deficits at both schools in fiscal 2004 reflect both enrollment declines and the failure to adequately adjust staffing levels, especially at Brighton High School, to reflect student shortfalls. In fiscal 2003, an operating surplus of close in excess of $167,000 at Bromley increased the ending General Fund balance to close to $363,000, or 9.4% of revenues. While audited results are not yet available, this figure is expected to decline to $336,554 in fiscal 2004, despite the receipt of one-time revenues of approximately $157,000 reflecting a retroactive payment covering three fiscal years (2001 - 2003) from the school district following settlement of a dispute involving pass-through of state aid amounts. Importantly, the school reportedly continues to meet both its required TABOR reserve as outlined in its lease agreement as well as an annual $50,000 mandatory deposit to a repair and replacement reserve. In fiscal 2003, Brighton demonstrated essentially breakeven results, with an ending General Fund balance of close to $87,000 (7.5%), although results are expected to weaken considerably in fiscal 2004, with yearend reserves dropping to $19,000 despite one-time settlement revenues of $106,000. Significantly, the sizeable operating deficit resulted in large part from the school's decision not to reduce staff following its failure to implement a number of specialized programs, including part-time and continuing education programs, that were hoped to increase student enrollment levels. The Ba1 rating in part reflects the failure to consistently pass and amend budgets reflecting balanced operations at both of the schools. Operating deficits in both of the schools' food programs of $50,000 at Bromley and $12,000 at Brighton reportedly also contributed to the weakened financial results, but officials state that these weaknesses have been corrected. Positively, operating surpluses are expected at both schools in fiscal 2005 in part due to one-time enrollment adjustment payments of $63,000 at Brighton and $93,000 at Bromley. State building aid funding has also increased from $150 to $171 per student, providing additional operating flexibility. In fiscal 2005, officials project an operating surplus of $50,000 at Bromley and $70,000 at Brighton. While positive, these operating surpluses effectively restore ending reserve levels to their position at the end of fiscal 2003, and the volatility in ending results is inconsistent with the school's prior investment grade rating. In fiscal 2003, Bromley's net operating revenues provided 1.18 times coverage of debt service equal to $914,000 with merely sum-sufficient coverage (1.0 times) of average annual debt service of roughly $1.1 million, beginning in the coming fiscal year, fiscal 2005. Coverage of debt service by net revenues declined in fiscal 2003 from 1.24 times the prior year. These extremely narrow coverage levels highlight the school's need to maintain enrollment growth over the next two years to meet these obligations. While net operating revenues from Brighton High School are also pledged for debt service, recent operating results reflect negligible credit enhancement. The school continues to explore other capital funding that may be available under state law. Moody's does not expect, however, that the school is likely to move from its present facilities over the near term. Resumed enrollment growth that more closely matches forecasted levels and provides adequate debt service coverage, along with ending reserve levels sufficient to offset the greater risks and operating variability faced by the schools will represent critical considerations in Moody's future evaluations of credit quality. Key Statistics Fall 2004 Enrollment (Brighton): 209 (213 fall 2003) Fall 2004 Enrollment (Bromley): 700 (647 fall of 2003) FY03 General Fund balance (Bromley): $362,865 (9.4%) FY 04 Unaudited General Fund balance (Bromley): $336,554 FY03 General Fund balance (Brighton): $86,962 (7.5%) FY04 Unaudited General Fund balance (Brighton): $19,000 FY03 Debt service coverage: 1.18 times Coverage of average debt service by fiscal 2003 net operating revenues: 1.0 CURATIVE HEALTH: Executives May Sell Shares to Repay Loans ---------------------------------------------------------- Curative Health Services, Inc., (Nasdaq: CURE), reported that certain of its executive officers and directors may sell some of their shares of Curative common stock in the near future in order to fund the repayment of loans owed to the Company. These loans were made in the first quarter of 2002 to encourage equity ownership by the Board and management by facilitating the exercise of stock options held by these officers and directors. These loans come due at various times during the first quarter of 2005. The Sarbanes-Oxley Act of 2002 does not permit loans previously issued to executive officers and Directors of the Company to be amended or modified. About Curative Health Services Curative Health Services, Inc. -- http://www.curative.com/-- seeks to deliver high-quality care and clinical results for patients with serious or chronic medical conditions. The Specialty Infusion business, through its national footprint of Critical Care Systems' local pharmacy branches, provides products, related clinical services and disease management support to patients with chronic or severe conditions such as hemophilia and other bleeding disorders, chronic or severe infections, gastrointestinal illnesses that prohibit oral digestion and other severe conditions requiring nutritional support, immune system disorders, cancer and susceptibility to respiratory syncytial virus. The Wound Care Management business is a leader in the area of disease management specializing in chronic wound care management. The Wound Care Management business manages, on behalf of hospital clients, a nationwide network of Wound Care Center(R) programs that offer a comprehensive range of services for treatment of chronic wounds. In August 2004, Standard & Poor's Ratings Services revised its outlook on Curative Health to negative from stable. At the same time, S&P affirmed its 'B' corporate credit rating and its 'B-' senior unsecured debt rating on the company's $185 million of 10-3/4% senior unsecured notes due May 1, 2011. Moody's Investors Service rated those notes at B3 in on April 6, 2004. Bloomberg bond pricing data shows those notes currently trade in the high 80s. DEL LABORATORIES: S&P Junks Proposed $150M Senior Sub. Notes ------------------------------------------------------------ Standard & Poor's Ratings Services assigned a 'B' corporate credit rating to Del Laboratories Inc. In addition, a 'B' rating and a '2' recovery rating were assigned to Del's planned $260 million bank facility, indicating Standard & Poor's expectation of substantial recovery of principal (80%-100%) in the event of a default. A 'CCC+' rating was also assigned to Del's planned $150 million senior subordinated note offering due 2012. The outlook is positive. Kelso & Co. will use proceeds from these offerings and $138 million of equity to finance the acquisition of the company for $504 million. The ratings reflect Uniondale, New York-based Del's high leverage as a result of the Kelso acquisition. Additionally, despite the leading consumer brands in both nail care and oral analgesic, the company has a narrow product focus and limited geographic diversity. These concerns are exacerbated by the company's operating difficulties in 2004 relating to production start-up problems in its Rocky Point, North Carolina manufacturing facility. "While Del will have a highly leveraged capital structure as a result of planned acquisition by Kelso, the company has implemented cost savings initiatives that, if successful, could significantly reduce leverage over the near term. If the company is able to achieve these cost savings and maintain operating stability, a higher rating could be considered over the intermediate term," said Standard & Poor's credit analyst Patrick Jeffrey. E*TRADE ABS: Moody's Rates Preference Shares & Composites at Ba1 ---------------------------------------------------------------- Moody's Investors Service announced today that it had assigned ratings to five classes of notes issued by E*Trade ABS CDO III, Ltd. Moody's assigned these ratings: * Aaa to the U.S.$201,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2025, * Aaa to the U.S.$37,750,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2040, * Aa2 to the U.S.$37,900,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2040, * Baa2 to the U.S.$13,250,000 Class C Fourth Priority Mezzanine Secured Floating Rate Notes Due 2040 * Ba1 to the U.S. $12,900,000 Preference Shares. Moody's Investors Service also assigned Baa2 to the U.S.$14,600,000 Series I 2% Composite Securities Due 2040, and Ba1 to the U.S.$5,000,000 Series II Composite Securities Due 2040. E*Trade Global Asset Management will serve as the Investment Advisor for this transaction. Moody's ratings on the Notes 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. The rating on the Preference Shares addresses the ultimate receipt of principal only, and is based on the expected loss posed to holders of the Preference Shares relative to the promise of receiving the present value of such payment. The rating does not address any other payments that may be receivable by the holders of the Preference Shares. Moody's rating on the Series I Composite Securities addresses the ultimate cash receipt of principal as well as the receipt of interest at a coupon rate of 2% per annum, and is based on the expected loss posed to the holders of the Series I Composite Securities relative to the promise of receiving the present value of such payments. Moody's rating on the Series II Composite Securities addresses the ultimate cash receipt of principal as well as the receipt of interest at a coupon rate of LIBOR flat, and is based on the expected loss posed to the holders of the Series II Composite Securities relative to the promise of receiving the present value of such payments. ELIZABETH U STOR: Case Summary & 8 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Elizabeth U Stor LLC PO Box 790 Breckenridge, Colorado 80424 Bankruptcy Case No.: 05-10504 Chapter 11 Petition Date: January 11, 2005 Court: District of Colorado (Denver) Judge: Michael E. Romero Debtor's Counsel: Nancy D. Miller, Esq. Kennedy, Christopher, Childs & Fogg, P.C. 1050 17th Street, Suite 2500 Denver, Colorado 80265 Tel: (303) 825-2700 Total Assets: $1,203,100 Total Debts: $1,323,330 Debtor's 8 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lotus Ltd. Value of Security: $272,272 2360 South Quebec Street $1,200,000 Suite 305 Denver, Colorado 80231 Elbert County Treasurer $19,740 PO Box 67 Kiowa, Colorado 80117 Safeway Stores 46, Inc. Trade Debt $3,300 6900 South Yosemite Street Englewood, Colorado 80112 Parker Sprinkler Company Trade Debt $370 L.P.M.C. Trade Debt $105 Waste Management Trade Debt $54 Sentinel Systems Corporation Trade Debt $13 Aquila Trade Debt $4 EMSC LP: S&P Rates Affiliates' Proposed $100M Sr. Sec. Debt at B+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to EMSC LP, the parent company of ambulance transport services provider AMR Holdings and physician staffing services provider EmCare Holdings. Financial sponsor Onex Partners LP is acquiring AMR and EmCare for $836 million. After the transaction, Onex will own 98% of EMSC, and the management team will own 2%. Standard & Poor's has also assigned its 'B+' senior secured debt rating and '2' recovery rating to AMR Holdings and EmCare Holdings' proposed co-issue of a $100 million senior secured revolving credit facility maturing in 2011 and a $350 million senior secured term loan B maturing in 2012. Standard & Poor's also assigned its 'B-' subordinated debt rating to AMR Holdings and EmCare Holdings' proposed co-issue of $250 million in senior subordinated notes maturing in 2015. The company is expected to use the proceeds from the $350 million term loan and the $250 million of senior subordinated notes for the Onex acquisition, along with $17 million of revolving credit borrowings and $219 million of equity. Pro forma for the transaction, AMR and EmCare will have approximately $616 million of total debt outstanding. The outlook on EMSC is stable. "The low-speculative-grade ratings reflect EMSC's heavy exposure to reimbursement changes, its relatively thin operating margins, the rising malpractice costs associated with its EmCare business, its high levels of bad debts, and its aggressive use of debt," said Standard & Poor's credit analyst Jesse Juliano. "These concerns are only partially offset by the revenue diversity of the two different businesses, EMSC's leading or near-leading positions in both of its industries, its relatively diverse payor and contract mix, and the improvements in its operations under current management." Greenwood Village, Colorado-based American Medical Response, Inc., the operating company of AMR Holdings, mainly provides emergency and non-emergency ambulance transports, and has more than 2,400 contracts in 34 states. Dallas, Texas-based EmCare, Inc., the operating company of EmCare Holdings, predominantly provides emergency department physician staffing, and has more than 300 contracts in 39 states. AMR's revenues are more than $1 billion and EmCare's revenues more than $550 million on a trailing 12- months basis, net of doubtful accounts. EMSC receives approximately one-third of its total net revenue from Medicare and Medicaid reimbursement. Nearly 40% of the company's AMR revenue comes from Medicare and Medicaid, with Medicare contributing the most. This is a concern, given the historically difficult government reimbursement environment for ambulatory services and EMSC's thin operating margins. However, AMR derives its other revenues from commercial payors, managed-care companies, self-pay patients, and hospital subsidies. Payment trends from these sources have recently been more favorable than those of government sources, though it is uncertain whether this will continue. EmCare receives only 17% of its revenue from Medicare, and will benefit from a 1.5% increase in physician services reimbursement through 2005. ENRON CORP: Court Approves Pasadena Settlement Agreement -------------------------------------------------------- Enron Corporation and its debtor-affiliates and the City of Pasadena were parties to one or more prepetition contracts for the sale of natural gas and power. As credit support for certain of the Contracts, Enron Corp. issued a Guarantee Agreement. After discussions between the Debtors and the City, the parties negotiated a Settlement Agreement under which: (1) the City will pay the Debtors payments due under the Contracts; (2) the Debtors and the City will exchange a mutual release of claims related to the Contracts; and (3) to the extent not already cancelled, the Guaranty will be cancelled. The Settlement Agreement further contemplates that the claims filed by or on behalf of the City against the Debtors in connection with the Contracts and the Guaranty, will be irrevocably withdrawn with prejudice and, to the extent applicable, expunged and disallowed in their entirety. Among the claims are: Claim No. Debtor Entity Claim Amount --------- ------------- ------------ 5769 Enron Energy Marketing Corp. $14,337 24751 Enron Corp. 7,564,173 24752 Enron Power Marketing, Inc. 7,564,173 24753 Enron Energy Marketing Corp. 7,564,173 24754 Enron North America Corp. 7,564,173 24767 Enron Energy Marketing Corp. 7,564,173 24768 Enron North America Corp. 7,564,173 24769 Enron Power Marketing, Inc. 7,564,173 24770 Enron Corp. 7,564,173 The scheduled liability related to the City will be deemed irrevocably withdrawn with prejudice and, to the extent applicable, expunged and disallowed. According to Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, LLP, in New York, the Settlement Agreement will clearly benefit the Debtors and their creditors, as it will: (a) result in a payment to the estate, which will adequately compensate for the value of the Contracts; (b) avoid future disputes and litigation concerning the Contracts and the Guaranty since the parties have agreed to release one another from claims; and (c) allow the Debtors to capture the value of the Contracts for their estate, while avoiding the costs associated with possible future litigation. Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, the Debtors sought and obtained the Court's approval of the Settlement Agreement. Headquartered in Houston, Texas, Enron Corporation is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. ESI TRACTEBEL: S&P Affirms BB Rating on $194M Senior Secured Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BBB-' rating on ESI Tractebel Funding Corp.'s -- ETFC -- $301 million senior secured notes and its 'BB' rating on ESI Tractebel Acquisition Corp.'s -- ETAC -- $194 million senior secured notes. The outlook is stable. The affirmation is in response to the proposed restructuring of the power purchase agreements -- PPA -- with NSTAR subsidiaries, Boston Edison Co. (A/Stable/A-1) and Commonwealth Electric Co. (A/Stable/--). In order to close on the contract restructuring, the bond ratings on the ETAC debt must be affirmed. Under the existing contract terms, revenues from the NSTAR subsidiaries represent about half of the project's revenue stream and less than half of the cash available for debt service. "The projects' strong operating record and contract-based cash flows should enable ETAC to provide stable debt service coverage over the next several years," said Standard & Poor's credit analyst Jeffrey Wolinsky. "However, Standard & Poor's is concerned about the long gas position and potential volatility caused by the restructured NSTAR contracts." Standard & Poor's also said that competitive pressures could push utilities to reduce high purchased power costs, especially in the context of ongoing state electricity sector restructuring plans. However, ETAC strongly believes, and Standard & Poor's concurs, that there is no legal basis upon which it can be forced to renegotiate its contracts, especially in light of favorable stranded cost recovery provisions within current deregulation legislation. ESI TRACTEBEL: Moody's Affirms Ba1 Rating on Senior Sec. Bonds -------------------------------------------------------------- Moody's Investors Service has affirmed the Ba1 rating on the 7.99% senior secured bonds due 2011 for ESI Tractebel Acquisition Corporation. The rating outlook is stable. The rating affirmation takes into account the proposed restructuring of four long-term power purchase agreements -- PPA -- between two utility subsidiaries of NSTAR (A2 senior unsecured) and Northeast Energy Associates -- NEA -- and a proposed termination of an additional PPA with Montaup Electric Company. NEA is a natural gas-fired combined-cycle cogeneration facility located in Bellingham, Massachusetts and owned equally by subsidiaries of FPL Group, Inc., and Tractebel S.A. Historically, NEA has produced approximately 45% of Acquisition Corp.'s cash flow, and the four NSTAR contracts are critical sources for bondholder repayment. Termination of the Montaup contract has no material impact on NEA's cash flow. The remaining cash flows are derived from North Jersey Energy Associates -- NJEA, a similarly configured generating station located in Sayreville, New Jersey that supplies power under a contractual arrangement with Jersey Central Power & Light (JCP&L: Baa2 issuer rating). The proposed restructuring would now allow NEA the option to deliver power that it purchases in the open market to meet its supply obligations to its two utility counterparts, Boston Edison Company (BECO: A1 senior unsecured) and Commonwealth Electric Company -- COM. Additionally, BECO and COM's payment structure would be revised from largely a fixed price formula to one that includes market value for products (energy and capacity) and monthly fixed support payments totaling approximately one billion dollars (nominal) through 2016. The fixed support payments are front end loaded, thereby providing adequate cash flow during the tenor of the Acquisition Corp. bonds. The proposed restructuring would significantly reduce NEA's operating risk and provide for more stable and predictable cash flows by converting existing PPA payments into fixed payments. NJEA's PPA with JCP&L was restructured in January 2004 to provide the generating station the option to deliver power that it purchases to meet its contractual supply obligations. This restructuring has provided NJEA an opportunity to improve operating margins as current wholesale power prices are lower than NJEA's production costs. Moody's rating affirmation is based on the high probability that the proposed amendment will result in improved operating margins and cash flows. Moody's, however, has analyzed an unlikely stress scenario whereby margins are negatively impacted by the proposed amendment. Acquisition Corp.'s financial performance in this scenario remains reflective of the current rating. Acquisition Corp.'s Ba1 senior secured rating reflects the fundamental strengths of NEA and NJEA, whose residual cash flows are used to repay bondholders. Each remains well structured and feature long-term power purchase agreements with creditworthy utilities. Operating risk will have been largely mitigated. The rating however also reflects structural subordination to approximately $324 million of existing rated senior secured debt (ESI Tractebel Funding Corp.: Baa2 senior secured) and limited portfolio diversification. Bondholders benefit from a six-month debt service reserve account that is guaranteed by a subsidiary of FPL Group, Inc. ESI Tractebel Acquisition Corp. is a special purpose holding company located in North Palm Beach, Florida, owned equally by subsidiaries of FPL Group, Inc., and Tractebel S.A. FAIRFAX FINL: French Unit Buys Markel Subsidiary for EUR44 Million ------------------------------------------------------------------ Fairfax Financial Holdings Limited (TSX:FFH.SV)(NYSE:FFH) reported that its French subsidiary, Compagnie Transcontinentale de Reassurance Holding -- CTRH, purchased Compagnie de Reassurance d'Ile-de-France -- Corifrance, a French reinsurance subsidiary of Markel Corporation, which was placed into runoff in November, 2004, and its French holding company Terra Nova SAS -- TN SAS. Corifrance and TN SAS had consolidated total assets of EUR 137 million, on a pro forma US GAAP basis as at Sept. 30, 2004. Before being placed into runoff by Markel, Corifrance wrote a small diversified mix of reinsurance business on a worldwide basis, including property, aviation, marine and credit. Corifrance had net written premiums, on a pro forma US GAAP basis, of EUR 21 million in 2003. The purchase price was EUR 44 million, which was determined on the basis of a discount to book value. As part of the consideration for the purchase, CTRH received a reserve indemnity capped at the purchase price. As at September 30, 2004, Corifrance had gross claims reserves of EUR 38 million. Payment is scheduled to occur upon the earlier of the dissolution and merger of Corifrance into an affiliate of CTRH or April 7, 2005. Subject to regulatory approvals, Fairfax intends to merge Corifrance into its European runoff subsidiary, Riverstone Insurance UK. Fairfax Financial Holdings Limited is a financial services holding company, which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance, investment management and insurance claims management. * * * As reported in the Troubled Company Reporter on Nov. 12, 2004, Fitch Ratings commented that Fairfax Financial Holdings Limited's ratings and Rating Watch Negative status are unaffected by its recent disclosures via its third-quarter 2004 financial filings and investor conference held on November 8, 2004. These ratings remain on Rating Watch Negative by Fitch: * Fairfax Financial Holdings Limited -- No action on long-term issuer rated 'B+'; -- No action on senior debt rated 'B+'. * Crum & Forster Holdings Corp. -- No action on senior debt rated 'B'. * TIG Holdings, Inc. -- No action on senior debt rated 'B'; -- No action on trust preferred rated 'CCC+'. * Members of the Fairfax Primary Insurance Group -- No action on insurer financial strength rated 'BBB-'. * Members of the Odyssey Re Group -- No action on insurer financial strength rated 'BBB+'. * Members of the Northbridge Financial Insurance Group -- No action on insurer financial strength rated 'BBB-'. * Members of the TIG Insurance Group -- No action on insurer financial strength rated 'BB+'. * Ranger Insurance Co. -- No action on insurer financial strength rated 'BBB-'. The members of the Fairfax Primary Insurance Group include: * Crum & Forster Insurance Co. * Crum & Forster Underwriters of Ohio * Crum & Forster Indemnity Co. * Industrial County Mutual Insurance Co. * The North River Insurance Co. * United States Fire Insurance Co. * Zenith Insurance Co. (Canada) The members of the Odyssey Re Group are: * Odyssey America Reinsurance Corp. * Odyssey Reinsurance Corp. Members of the Northbridge Financial Insurance Group include: * Commonwealth Insurance Co. * Commonwealth Insurance Co. of America * Federated Insurance Co. of Canada * Lombard General Insurance Co. of Canada * Lombard Insurance Co. * Markel Insurance Co. of Canada The members of the TIG Insurance Group are: * Fairmont Insurance Company * TIG American Specialty Ins. Company * TIG Indemnity Company * TIG Insurance Company * TIG Insurance Company of Colorado * TIG Insurance Company of New York * TIG Insurance Company of Texas * TIG Insurance Corporation of America * TIG Lloyds Insurance Company * TIG Specialty Insurance Company FLYI INC: S&P Downgrades Corporate Credit Rating to CC from CCC- ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on FLYi, Inc., including lowering the corporate credit rating to 'CC' from 'CCC-', and placed all ratings on CreditWatch with negative implications. The airline announced that it has reached an agreement with General Electric Capital Aviation Services (GECAS, a unit of General Electric Capital Corp., AAA/Stable/A-1+) to restructure aircraft leases and return some leased regional jets early. The agreement also provides for a secured $19.5 million five-year term loan, contingent on the lease restructurings and on other lenders and lessors agreeing to restructure their obligations. Dulles, Virginia-based FLYi has about $1.3 billion of lease-adjusted debt. "The planned lease and loan restructurings, though they may avert a bankruptcy filing by FLYi, would still very likely be considered a default by Standard & Poor's, resulting in lowering the corporate credit rating to 'D'," said Standard & Poor's credit analyst Philip Baggaley. The company has reported heavy losses in recent quarters, including a third-quarter 2004 loss of $83 million on revenues of $120 million. As a result, the company's unrestricted cash and short-term investments declined significantly, to $198 million at Sept. 30, 2004, from $345 million at June 30, 2004. The company has indicated it expects to lose a similar amount in the fourth quarter of 2004. In June 2004, FLYi began operating as Independence Air, a low-fare airline based at Washington Dulles Airport. It subsequently terminated its relationships with United Air Lines, Inc., and Delta Air Lines, Inc., in which it served as a regional feeder partner. Since FLYi began operating independently, it has suffered from weak load factors and has been hurt by the industrywide fare competition and high fuel prices. Standard & Poor's will evaluate the rating implications of FLYi's restructuring plan and its prospects for avoiding bankruptcy to resolve the CreditWatch review. FORD CREDIT: S&P Places BB Ratings on $90M Class D Certificates --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Ford Credit Auto Owner Trust 2005-A's $4.59 billion asset-backed notes and certificates series 2005-A. The preliminary ratings are based on information as of Jan. 11, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: (1) credit support including subordination of 7.0% for class A, 4.0% for class B, and 2.0% for class C; and (2) a nonamortizing, fully funded reserve account equal to 0.50% of the initial gross principal balance. The payment structure also features a turbo mechanism through which excess spread after covering losses and building up the reserve fund to its required level will be used to pay the securities until the requisite overcollateralization is reached. 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 Ford Credit Auto Owner Trust 2005-A Class Rating Amount (mil. $) ----- ------ --------------- A-1 A-1+ 723.000 A-2 AAA 1,549.000 A-3 AAA 1,383.000 A-4 AAA 620.000 B A 135.000 C BBB 90.000 D BB 90.000 FRIEDMAN'S INC: May File for Bankruptcy Due to Cash Shortage ------------------------------------------------------------ Friedman's Inc.'s (OTC non-BB: FRDM.PK) senior lenders have limited funding to a discretionary basis under the Company's senior credit facility. As a result of this discretionary funding, the Company has not been able to satisfy all of its cash requirements. Earlier this month Friedman's had disclosed that it was not meeting various covenants under its credit facility. Friedman's continues to be in discussions with its senior lenders regarding its funding needs and amendments to the credit facility. Friedman's is currently conducting a review of various strategic alternatives available to the Company, including seeking judicial relief in a chapter 11 reorganization. About the Company Founded in 1920, Friedman's Inc. -- http://www.friedmans.com/-- is a leading specialty retailer based in Savannah, Georgia. The Company operates 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. GALLERIA CDO: Moody's Pares Ratings on $14M Class B Notes to B3 --------------------------------------------------------------- Moody's Investors Service has taken these rating actions on three tranches of Notes issued by Galleria CDO IV, Ltd. (formerly named Beacon Hill CBO II, Ltd.): * U.S.$160,500,000 Class A1 Senior Secured Floating Rate Notes, Due 2034, previously rated A1 on watch for possible downgrade, are now rated A3, * U.S.$160,500,000 Class A-2 Senior Secured Floating Rate Revolving Notes, Due 2034, previously rated A1 on watch for possible downgrade, are now rated A3, and * U.S.$14,000,000 Class B Second Priority Floating Rate Term Note, Due 2034, previously rated B1 on watch for possible downgrade, are now rated B3. Moody's noted that the rating actions were taken in response to the deterioration in the credit quality of the portfolio supporting the Issuer's liabilities, explaining that while structurally required amortization has benefited the Class A-1 and Class A-2 Notes, the current credit quality of the portfolio represents a risk of expected loss that is no longer consistent with the previous ratings. According to the deal surveillance report dated November 30, 2004, the Weighted Average Rating Factor is 1938 (vs. limit 475) and the portfolio asset securities rated below Baa3 by Moody's Investors Service is more than 39% (vs. limit 7.5%) The new collateral manager is Zais Group, LLC. Rating Action: Downgrade Issuer: Galleria CDO IV, Ltd. (formerly named Beacon Hill CBO II, Ltd.) Description: U.S. $160,500,000 Class A1 Senior Secured Floating Rate Notes, Due 2034 Previous Rating: A1 on watch for possible downgrade Current Rating: A3 Description: U.S. $160,500,000 Class A-2 Senior Secured Floating Rate Revolving Notes, Due 2034 Previous Rating: A1 on watch for possible downgrade Current Rating: A3 Description: U.S. $14,000,000 Class B Second Priority Floating Rate Term Notes, Due 2034 Previous Rating: B1 on watch for possible downgrade Current Rating: B3 HAMPSHIRE DISTRIBUTORS: Case Summary & Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Hampshire Distributors, Inc. P.O. Box 1015 Romney, West Virginia 26757 Bankruptcy Case No.: 05-00074 Type of Business: The Debtor provides petroleum and heating oil needs. See http://www.hampshiredistributors.com/ Chapter 11 Petition Date: January 7, 2005 Court: Northern District of West Virginia (Martinsburg) Judge: L. Edward Friend II Debtor's Counsel: James T. Kratovil, Esq. Kratovil & Amore PLLC 211 West Washington Street P.O. Box 337 Charles Town, WV 25414 Tel: 304-728-7718 Fax: 304-728-7720 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Grant County Bank Business - Hampshire $870,000 P.O. Box 929 Distributors, Inc. Petersburg, WV 26847 US Route 50 in Romney District Senior lien: $707,000 Bank of Romney Business - Hampshire $707,000 P.O. Box 876 Distributors, Inc. Romney, WV 26757 US Route 50 in Romney District West Virginia State Tax Taxes $499,166 Department Compliance Division P.O. Box 229 Charleston, WV 253210229 Farm and Home Oil Company Utilities $156,479 Petroleum Products Corp. Purchases $124,714 Space Petroleum Company Purchases $81,579 West Virginia Workers Workers Comp. $58,000 Compensation Trinity Industries, Inc. Other $19,833 Northwest Pipe Company Purchases $16,121 JCV Other $16,044 Liberty Candy Company Vendor Purchases $11,567 Bowles Rice McDavid Graff & Legal Fees $9,484 Love PLLC Total Environmental Services $8,752 Concepts, Inc. Laird Plastics Purchases $6,639 Royal Crown Bottling Purchases $5,698 Fairfax Material, Inc. Purchases $5,403 American Welding and Tank Services $3,787 Kenney Signs Services $3,189 Mountain State Blue Cross Insurance $3,091 Blue Shield United Disposal Services $2,928 HARBORVIEW MORTGAGE: Moody's Rates $13.6M Class B-4 Debt at Ba2 --------------------------------------------------------------- Moody's Investors Service has assigned a rating of Aaa to the senior certificates issued in the HarborView Mortgage Loan Trust 2004-11 securitization of negative amortization loans secured by first liens on one- to four-family residential properties. In addition ratings of Aa2, A2, Baa2 and Ba2 were also assigned to Classes B-1, B-2, B-3 and B-4, respectively. According to Moody's analyst Amita Shrivastava, the ratings of the certificates are based on the quality of the underlying mortgages, the credit support provided through subordination, the legal structure of the transaction, as well as the capability of the servicers of the mortgage loans. The underlying collateral consists predominantly of adjustable rate negative amortization mortgage loans with an original term to maturity of 30-years. All of the loans in the mortgage pool are originated by Countrywide Home Loans, Inc. The loan pool is divided into three loan groups. The prefix of the certificates corresponds to the loan group they are associated with. The complete rating actions are: Certificates: Mortgage Loan Pass-Through Certificates, Series 2004-11 Seller: Greenwich Capital Financial Products, Inc. Depositor: Greenwich Capital Acceptance, Inc. Servicer: Countrywide Home Loans Servicing LP * Class 1-A, $657,515,000, Aaa * Class 2-A1A, $118,722,000, Aaa * Class 2-A1B, $20,951,000, Aaa * Class 2-A2A, $180,000,000, Aaa * Class 2-A2B, $120,000,000, Aaa * Class 2-A3, $33,509,000, Aaa * Class 3-A1A, $316,630,000, Aaa * Class 3-A1B, $55,877,000, Aaa * Class 3-A2A, $50,000,000, Aaa * Class 3-A2B, $21,430,000, Aaa * Class 3-A3, $75,000,000, Aaa * Class 3-A4, $39,550,000, Aaa * Class X-1, Notional Amount, Aaa * Class X-2, Notional Amount, Aaa * Class X-3, Notional Amount, Aaa * Class X-B, Notional Amount, Aaa * Class A-R, $100, Aaa * Class B-1, $38,204,000, Aa2 * Class B-2, $29,106,000, A2 * Class B-3, $22,739,000, Baa2 * Class B-4, $13,644,000, Ba2 HAUSER INC: Dissolved Following Confirmation & Bankruptcy Exit -------------------------------------------------------------- In connection with the order of the United States Bankruptcy Court for the Central District of California confirming the Fourth Amended Joint Chapter 11 Plan of Reorganization as modified in the chapter 11 bankruptcy cases of Hauser, Inc., and its debtor- affiliates and the occurrence of the Effective Date of the Plan on Jan. 12, 2005, Hauser was dissolved and all shares of its common stock were cancelled. Accordingly, Hauser filed a Form 15 with the United States Securities and Exchange Commission providing notice of and terminating its responsibility to file any further public reports with the SEC. Under the Plan, former holders of record of the cancelled Hauser common stock will have certain limited nontransferable rights under an Equity Trust formed thereunder. Headquartered in El Segundo, California, Hauser Inc. supplies herbal extracts and nutritional supplements and provides chemical engineering services and contract research and development. The Company and its debtor-affiliates filed for chapter 11 protection on April 1, 2003, in Los Angeles (Bankr. C.D. Calif. Case No. 03- 18795). Christine M. Pajak, Esq., at Stutman, Treister & Glatt, serves as legal counsel to the Debtors. HAYES LEMMERZ: Judge Walrath Okays Modified Plan Clarification -------------------------------------------------------------- As previously reported, HLI Creditor Trust asks the United States Bankruptcy Court for the District of Delaware to clarify Section 4.7 of the Modified Plan to provide that, upon the assignment of the BMO Synthetic Lessors' Claims, in accordance with Sections 4.3 and 4.7 of the Modified Plan, the aggregate amount of the Allowed Class 5 Claims is increased to $321,130,000. * * * Judge Walrath grants the Debtors' request for clarification of Section 4.7 of the Modified Plan. The Court adds this language at the end of the first sentence of Section 4.7: "; provided, however, that, upon the assignment of the BMO Synthetic Lessors' Claims, in accordance with Sections 4.3 and 4.7 of the Plan, the aggregate amount of the Allowed Class 5 Claims shall be increased to the aggregate amount of $321,130,000." Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Dela. Case No. 01-11490). Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom represent the Debtors' in their restructuring efforts. (Hayes Lemmerz Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000) HIA TRADING: Files for Bankruptcy Protection in S.D. New York ------------------------------------------------------------- HIA Trading Associates and 24 of its subsidiaries filed for bankruptcy protection under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York in Manhattan after defaulting on a $56 million loan arranged by Fleet Retail Group Inc. and other lenders in June 2004. The Debtors owe $20 million to Fleet Retail, General Electrical Capital Corp., and Black Bay Capital Funding LLC under the credit agreement, which comprise of: -- $11,400,000 revolving credit obligations; -- $6,000,000 term loan obligations; and -- $2,350,000 outstanding letters of credit. The Debtors said it experienced a dramatic decrease in customer traffic and a significant decline in sales, following the merger between Amazing Savings Holding LLC and Odd Jobs Stores, Inc. In June 2003, its wholly owned subsidiary, Amazing Savings acquired a 90.3 percent stake in Odd Jobs Stores for approximately $24.6 million. Following a merger, Amazing Savings currently holds 92 percent of the outstanding common shares of Odd Jobs. Headquartered in South Plainfield, New Jersey, HIA Trading Associates -- http://www.oddjobstores.com/-- operates 87 retail stores under the name Amazing Savings Stores. The Debtors purchase overproduced, overstocked and discounted first-quality, name brand close out merchandise from manufacturers, wholesalers and retailers, as well as a blended mix of imports and everyday basic commodity items to be sold at deep discount prices in its stores located in key regional centers in New York, New Jersey, Connecticut, Ohio, Pennsylvania, Kentucky, Delaware, Maryland and Michigan. The Company, along with its subsidiaries, filed for chapter 11 protection on Jan. 5, 2005 (Bankr. S.D.N.Y. Case No. 05-10171). Adam L. Rosen, Esq., and Jil Mazer-Marino, Esq., at Scarcella Rosen & Slome LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $67,500,000 in total assets and $90,000,000 in total debts. HIA TRADING: Case Summary & 25 Largest Unsecured Creditors ---------------------------------------------------------- Cherry Lead Debtor: HIA Trading Associates 200 Helen Street South Plainfield, New Jersey 07080 Bankruptcy Case No.: 05-10171 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Odd-Job Acquisition Corporation 05-10172 Odd-Job Trading Corporation 05-10173 PJ's of Baltimore LLC 05-10174 PJ's of Rockville LLC 05-10175 AMZAK Realty Group LLC 05-10176 Amazing of Lawrence LLC 05-10177 JBS Liquidators LLC 05-10178 Jenny Supply LLC 05-10179 Amazing of Avenue M LLC 05-10180 Amazing Savings of Monroe LLC 05-10181 Amazing Savings of Teaneck LLC 05-10182 Amazing Savings.com LLC 05-10183 Amazing Savings of East Hanover LLC 05-10184 Amazing Savings Of East Brunswick LLC 05-10185 Amazing Savings of Howell LLC 05-10186 Amazing Savings of Queens LLC 05-10187 Amazing Savings of South Fallsburg LLC 05-10188 Amazing Savings Holding LLC 05-10189 Amazing Savings Of Edgewater LLC 05-10190 Amazing of McDonald Avenue LLC 05-10191 Amazing Savings Of Bridgewater LLC 05-10192 Amazing Savings Inc. 05-10193 Amazing of Monsey LLC 05-10194 Amazing of New Utrecht LLC 05-10195 Type of Business: The Debtors operate 87 retail stores under the name Amazing Savings Stores. The Debtors purchase overproduced, overstocked and discounted first-quality, name brand close out merchandise from manufacturers, wholesalers and retailers, as well as a blended mix of imports and everyday basic commodity items to be sold at deep discount prices in its stores located in key regional centers in New York, New Jersey, Connecticut, Ohio, Pennsylvania, Kentucky, Delaware, Maryland and Michigan. The products for sale in its stores typically include electronics, appliances, housewares, toys, party goods and domestics. See http://www.oddjobstores.com/ Chapter 11 Petition Date: January 5, 2005 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtors' Counsel: Adam L. Rosen, Esq. Jil Mazer-Marino, Esq. Scarcella Rosen & Slome LLP 333 Earle Ovington Boulevard Ninth Floor Uniondale, New York 11533-3622 Tel: (516) 227-1600 Fax: (516) 227-1601 Special Counsel of the Board of Directors of Amazing Savings Holdings LLC: Weil, Gotshal & Manges LLP Consultant and Financial Advisor: Abacus Advisors Group LLC Ad Hoc Committee of Unsecured Creditors' Counsel: Otterbourg, Steindler, Houston & Rosen PC Consolidated Financial Condition as of November 27, 2004: Total Assets: $67,500,000 Total Debts: $90,000,000 Debtor's 25 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Guard Security $639,099 1 South Middlesex Avenue Monroe Township, New Jersey 08831 Attn: Tony Favale Tel: (609) 860-9990 American Color Graphics, Inc. $582,773 PO Box 409597 Atlanta, Georgia 30384-9597 Tel: (615) 377-7452 ADVO, Inc. $528,514 PO Box 30345 Hartford, Connecticut 06150 Tel: 1-888-238-6437 Aspire Digital $528,514 1606 West Lockness Place Torrance, California 90501 CIVF-I0 NJ1B01, LLC $504,813 c/o Lincoln Properties, Inc. 101 Fieldcrest Avenue 4th Floor Edison, New Jersey 08837 Tel: (732) 407-5180 Forget Me Not American Greetings $470,802 PO Box 640782 Pittsburgh, Pennsylvania Attn: Joe Cipollone Tel: (216) 252-7300 Plus Mark, Inc. $405,869 PO Box 92330-N Cleveland, Ohio 44193 Attn: Joe Cipollone Tel: (216) 252-7300 Newport Sales Inc. $318,958 PO Box 58 One Newport Plaza Freeport, New York 11520 Attn: Mendy Klein Tel: (516) 771-4444 Sherwood Brands Inc. $302,012 PO Box 85080 Richmond, Virginia 23285-4136 Attn: Chris Willi Tel: (301) 309-6161 The Mazel Company $267,647 PO Box 691027 Cincinnati, Ohio 45269-1027 Attn: Larry Hylkema Tel: (440) 248-5200 Summit Marketing International, Inc. $219,108 6375 Old Avery Road Dublin, Ohia 43016 Attn: Bonnie Ball Tel: (614) 760-9886 Garmentex International LLC $204,962 330 Hurst Street Linden, New Jersey 07036 Attn: Alan Haddad Tel: (908) 862-2888 King Zak Industries, Inc. $202,781 17 Sorrento Drive PO Box 1029 Goshen, New York 10924 Tel: (845) 291-1200 Digiview Productions $198,186 100 South Washington Avenue Dunellen, New Jersey 08812 Attn: Menachem Shmool Tel: (732) 752-7500 Salton/Toastmaster Log., LLC $196,622 Department 77-5222 Chicago, Illinois 60678-5222 Attn: Nancy Adrian Tel: (573) 446-5600 Telcom, USA, Inc. $196,622 SGT - Nations, Inc. $196,551 Consolidated International $194,369 SHC Direct, LLC $192,608 Q. Vanderberg, Inc. $181,226 Home Fashions Distributor, Inc. $178,060 Hatzlachh Supply Inc. $174,588 Zimmerman Partners $150,000 Sophia Foods $144,083 Dart Seasonal Products, Inc. $142,290 HEALTHCARE PARTNERS: Moody's Rates $145M Sr. Sec. Loans at B1 ------------------------------------------------------------- Moody's Investors Service assigned a B1 senior implied rating and B1 senior secured bank rating to HealthCare Partners, LLC -- HCP. The rating outlook is stable. HCP is a limited liability company, which has a subsidiary that manages the medical practices of the HealthCare Partners Affiliates Medical Group -- HCP Medical -- under a management services agreement. HCP Medical and all subsidiaries of HCP and HCP Medical are unconditional guarantors of the secured bank debt. The ratings are subject to review of final documentation. HCP Medical, a large multi-specialty staff model physician group, employs about 400 primary care physicians and serves several regions in Southern California. HCP is undergoing a recapitalization that includes partnering with a financial sponsor. Ratings assigned: * HealthCare Partners, LLC: -- B1 $135 million senior secured bank facility; -- B1 $10 million senior secured revolver; -- B1 senior implied rating; -- B2 issuer rating. The ratings reflect HCP and HCP Medical's strengths as seasoned medical services and physician organizations, which have had longstanding relationships with health plans in the Southern California market and have demonstrated their ability to manage global capitated risk. Moody's believes that a more moderate growth strategy and a single information technology platform has helped HCP Medical distinguish itself from many other physician groups in California that have become unviable due to ineffective management of global capitated contracts with health plans. The B1 ratings assume that HCP will not raise debt levels, but will continue to pursue growth organically and through targeted acquisitions that do not require cash or equity contributions. Financial performance of the combined organization improved dramatically, beginning in fiscal 2003. As a result, consolidated cash flow to debt metrics (after adjusting cash flow for tax-related dividend distributions) are expected to be in the high-teens to 20% range following this transaction - stronger than those typical of a B1 rated entity. However, these consolidated ratios have benefited from significant improvements in commercial rate increases during the 2002-2003 timeframe that are now moderating. As a result of this and other negative industry trends, Moody's believes that the sustainability of these ratios is uncertain. In Moody's opinion, the risk that cost trends will exceed revenue growth may be increasing. Health plan premiums and per-member per-month rate increases are showing signs of slowing while at the same time, hospital cost trends in California are rising due to a number of factors. These factors include industry-wide increases in medical costs and a rising number of uninsured patients - as well as state-specific nurse staffing and seismic requirements. Although California continues to show a greater preponderance toward closed-HMO versus choice-type products compared to the rest of the nation, Moody's believes there is risk that the commercial HMO membership that works best for HCP Medical's staff model will continue to decline as consumers desire more choice and health plans offer more PPO and POS products. Currently, about 94% of HCP Medical's members are covered under global capitated contracts, with the remainder under fee-for-service contracts. In the past, declines in both commercial and senior membership have been offset, in part, by better contracting supported by stronger health plan premiums, which are now moderating. On the senior side, HCP Medical expects to benefit from growth in Medicare HMO risk business as health plans, including PacifiCare and Health Net, are once again embracing Medicare risk since higher rate increases (6.3% in 2005) have been stipulated by the Modernization Act of 2003. However, Moody's believes that growth in the Medicare HMO risk business may be constrained by: (1) uncertainty regarding future rate increases as the government grapples with a growing deficit; (2) potential competition from Medicare PPO products; and (3) possible competition from fee-for-service Medicare as drug benefits kick-in in fiscal 2006. In addition, HCP Medical depends heavily on membership (32%) and revenue (44%) from one health benefits company, PacifiCare. Finally, Moody's believes that there is some risk that the company's partnership with a financial sponsor may result in a more aggressive growth strategy. The rating outlook for HCP is stable. Moody's expects that HCP Medical will be able to adjust its cost structure to help offset possible shifts to fee-for-service members and any negative cost trends. If the proportion of fee-for-service membership rises, Moody's believes the physicians would need to shift their focus to manage higher numbers of procedures versus reducing utilization. The stable outlook also assumes that debt levels will not rise with future growth initiatives. If the combined organization is able to demonstrate its ability to continue to improve cash flow to debt ratios through membership increases or continued management of cost trends, despite changes in the sector, the ratings may improve. If the organization is not able to price above rising cost trends or cannot adjust costs in the face of membership declines, the ratings may face pressure. The bank debt is secured by the stock and assets of HCP, HCP Medical and their subsidiary organizations. However, since the cash investments of the combined entity are largely offset by trade and medical claim payables, Moody's has notched the secured bank holders at the same level as the B1 senior implied rating. The holding company, HealthCare Partners Holding, will issue $75 million in preferred stock, which must be paid - along with any unpaid accumulated dividends - in seven years, assuming no liquidation event occurs, such as an IPO. Although HCP has the option to not pay any annual dividends - equal to 7% of net income - to the financial sponsor until 2011, Moody's analysis considers this preferred stock to be debt. HealthCare Partners, LLC, headquartered in Torrance, California, is a limited liability company. A subsidiary of HealthCare Partners, LLC manages the medical practices of HealthCare Partners Affiliates Medical Group. HOLLINGER INC: E&Y Wants to Examine Ex-Directors Radler & Boultbee ------------------------------------------------------------------ Hollinger, Inc., (TSX:HLG.C)(TSX:HLG.PR.B) reported that Ernst & Young, Inc., the Court-appointed Inspector, is continuing the inspection of Hollinger's related party transactions pursuant to an Order of the Superior Court of Justice of Ontario made pursuant to s. 229(1) of the Canada Business Corporations Act. The Inspector has provided five interim Reports with respect to its inspection of Hollinger. Hollinger and its staff have given their full, unfettered and unrestricted assistance to the Inspector in carrying out its duties, including access to all files and electronic data. Hollinger International has also assisted the Inspector in this regard. Counsel for the Inspector and various parties appeared before Justice Colin L. Campbell of the Superior Court of Justice of Ontario on January 6 and 11, 2005. The Inspector wishes to examine certain former directors of Hollinger, including Lord Black, F. David Radler and J.A. Boultbee. Counsel for Lord Black and Messrs. Radler and Boultbee each submitted at the hearing on January 6, 2005, that it is premature for the Inspector to take the position that it is essential for their examinations to be conducted in order to write its report. A Notice of Constitutional Issue was served by counsel for Lord Black on December 22, 2004, on the Attorney General of each of Canada and Ontario on the basis that certain of the examinations proposed by the Inspector breach certain provisions of the Canadian Charter of Rights and Freedoms. Hollinger's principal asset is its approximately 68.0% voting and 18.2% equity interest in Hollinger International. Hollinger International is a newspaper publisher whose assets include the Chicago Sun-Times and a large number of community newspapers in the Chicago area, a portfolio of new media investments and a variety of other assets. * * * As reported in the Troubled Company Reporter on August 31, 2004, as a result of the delay in the filing of Hollinger's 2003 Form 20-F (which would include its 2003 audited annual financial statements) with the United States Securities and Exchange Commission by June 30, 2004, Hollinger is not in compliance with its obligation to deliver to relevant parties its filings under the indenture governing its senior secured notes due 2011. Approximately $78 million principal amount of Notes is outstanding under the Indenture. On August 19, 2004, Hollinger received a Notice of Event of Default from the trustee under the Indenture notifying Hollinger that an event of default has occurred under the Indenture. As a result, pursuant to the terms of the Indenture, the trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the Notes will have the right to accelerate the maturity of the Notes. Approximately $5 million in interest on the Notes was due on September 1, 2004. Hollinger has deposited the full amount of the interest payment with the trustee under the Indenture and noteholders will receive their interest payment in a timely manner. There was in excess of $267.4 million aggregate collateral securing the $78 million principal amount of the Notes outstanding. Hollinger also received notice from the staff of the Midwest Regional Office of the U.S. Securities and Exchange Commission that they intend to recommend to the Commission that it authorize civil injunctive proceedings against Hollinger for certain alleged violations of the U.S. Securities Exchange Act of 1934 and the Rules thereunder. The notice includes an offer to Hollinger to make a "Wells Submission", which Hollinger will be making, setting forth the reasons why it believes the injunctive action should not be brought. A similar notice has been sent to some of Hollinger's directors and officers. HOLLINGER INC: Holds $10.23 Million of Cash as of January 7 ----------------------------------------------------------- Hollinger, Inc., (TSX:HLG.C)(TSX:HLG.PR.B) and its subsidiaries (other than Hollinger International and its subsidiaries) had approximately US$10.23 million of cash or cash equivalents on hand and Hollinger owned, directly or indirectly, 782,923 shares of Class A Common Stock and 14,990,000 shares of Class B Common Stock of Hollinger International As of the close of business on January 7, 2005. Based on the January 7, 2005 closing price of the shares of Class A Common Stock of Hollinger International on the NYSE of US$15.07, the market value of Hollinger's direct and indirect holdings in Hollinger International was US$237,697,949. All of Hollinger's direct and indirect interest in the shares of Class A Common Stock of Hollinger International are being held in escrow with a licensed trust company in support of future retractions of its Series II Preference Shares. All of Hollinger's direct and indirect interest in the shares of Class B Common Stock of Hollinger International are pledged as security in connection with Hollinger's outstanding 11.875% Senior Secured Notes due 2011 and 11.875% Second Priority Secured Notes due 2011. In addition, Hollinger has previously deposited with the trustee under the indenture governing the Senior Notes approximately US$10.5 million in cash as collateral in support of the Senior Notes (which cash collateral is also collateral in support of the Second Priority Notes, subject to being applied to satisfy future interest payment obligations on the outstanding Senior Notes as permitted by amendments to the Senior Indenture). Consequently, there is currently in excess of US$236.3 million aggregate collateral securing the US$78 million principal amount of the Senior Notes and the US$15 million principal amount of the Second Priority Notes outstanding. On December 17, 2004, the Board of Directors of Hollinger International declared a special dividend of US$2.50 per share of Class A Common Stock and Class B Common Stock of Hollinger International to holders of record of such Shares on Jan. 3, 2005, payable on January 18, 2005. The Board of Directors of Hollinger International also declared a regular quarterly dividend of US$0.05 per Share to be paid on January 18, 2005 to shareholders of record on January 3, 2005. On January 18, 2005, Hollinger will be entitled to receive an aggregate of US$39,432,307.50 in respect of the special dividend and an aggregate of US$788,646.15 in respect of the regular dividend on the Shares. As announced by Hollinger yesterday, upon further analysis, and following the receipt of further particulars in respect of the Hollinger International special dividend and the views of the trustee and collateral agent for the Senior Notes, Hollinger has determined that none of the special dividend is required to be lodged as collateral security for the Senior Notes or Second Priority Notes at this time. Hollinger has not yet made any determination as to the use of the proceeds of the special dividend, which determination will be made by its Board of Directors. Hollinger International previously agreed not to block any payment to Hollinger of any dividend or other distribution unless it is required to do so by a court order (which it will not seek), statute or regulation. There is to be no reduction or set-off. Hollinger in turn previously agreed to an extension of the injunction granted by Vice-Chancellor Strine in Delaware limiting Hollinger's control of Hollinger International beyond its original October 31, 2004, expiration date to the earlier of the date the proceeds from the strategic process have been distributed to Hollinger International's shareholders and January 31, 2005. The special dividend declared by Hollinger International will result in it distributing approximately US$227 million of the net proceeds from the sale of The Telegraph Group. In announcing the declaration of the special dividend, Hollinger International stated that it was committed to distributing to its shareholders, including Hollinger, a total of US$500 million of the net proceeds of the sale of The Telegraph Group. It has stated that it proposes to distribute the balance of these proceeds in the form of a tender offer for shares of its Common Stock after it publishes its delinquent financial statements and other reports. Alternatively, Hollinger International may consider a further special dividend but it gave no assurances that it would distribute cash to shareholders in either form. Hollinger commenced honouring retractions of its Series II Preference Shares on October 28, 2004. On retraction, each Series II Preference Share is exchangeable into a fixed number (being 0.46) of shares of Class A Common Stock of Hollinger International or, at Hollinger's option, cash of equivalent value. To date, such retractions have been effected by Hollinger delivering 0.46 of a share of Class A Common Stock of Hollinger International owned directly or indirectly by it in exchange for each retracted Series II Preference Share. Since October 28, 2004, Hollinger has delivered 9,637 shares of Class A Common Stock of Hollinger International and no cash pursuant to retractions of its Series II Preference Shares. Retractions of Hollinger's outstanding retractable common shares submitted after May 31, 2004 continue to be suspended until further notice. Hollinger's principal asset is its approximately 68.0% voting and 18.2% equity interest in Hollinger International. Hollinger International is a newspaper publisher whose assets include the Chicago Sun-Times and a large number of community newspapers in the Chicago area, a portfolio of new media investments and a variety of other assets. * * * As reported in the Troubled Company Reporter on August 31, 2004, as a result of the delay in the filing of Hollinger's 2003 Form 20-F (which would include its 2003 audited annual financial statements) with the United States Securities and Exchange Commission by June 30, 2004, Hollinger is not in compliance with its obligation to deliver to relevant parties its filings under the indenture governing its senior secured notes due 2011. Approximately $78 million principal amount of Notes is outstanding under the Indenture. On August 19, 2004, Hollinger received a Notice of Event of Default from the trustee under the Indenture notifying Hollinger that an event of default has occurred under the Indenture. As a result, pursuant to the terms of the Indenture, the trustee under the Indenture or the holders of at least 25 percent of the outstanding principal amount of the Notes will have the right to accelerate the maturity of the Notes. Approximately $5 million in interest on the Notes was due on September 1, 2004. Hollinger has deposited the full amount of the interest payment with the trustee under the Indenture and noteholders will receive their interest payment in a timely manner. There was in excess of $267.4 million aggregate collateral securing the $78 million principal amount of the Notes outstanding. Hollinger also received notice from the staff of the Midwest Regional Office of the U.S. Securities and Exchange Commission that they intend to recommend to the Commission that it authorize civil injunctive proceedings against Hollinger for certain alleged violations of the U.S. Securities Exchange Act of 1934 and the Rules thereunder. The notice includes an offer to Hollinger to make a "Wells Submission", which Hollinger will be making, setting forth the reasons why it believes the injunctive action should not be brought. A similar notice has been sent to some of Hollinger's directors and officers. IMMUNE RESPONSE: Completes Remune Studies in Italy & Spain ---------------------------------------------------------- The Immune Response Corporation (Nasdaq:IMNR), a biopharmaceutical company dedicated to becoming a leading immune-based therapy company in HIV and multiple sclerosis, has completed two Phase II clinical trials, one in Italy and one in Spain, investigating its lead HIV immune-based therapeutic REMUNE(R) in HIV-positive subjects. "With the conclusion of these studies, we are delighted to end the year having met all of our stated REMUNE(R) related milestones," said John N. Bonfiglio, Ph.D., President and Chief Executive Officer of The Immune Response Corporation. "We are currently in the process of auditing and analyzing the data from these two trials. Once finalized, we will submit the data to the FDA as part of ongoing discussions regarding next steps in the REMUNE(R) clinical program. We will also submit for publication in peer- review journals and presentation at scientific conferences." The trial in Spain, called REMIT, included 39 patients who had previously received REMUNE(R) in an open label study, who were then randomized to receive blinded REMUNE(R) or Incomplete Freud's Adjuvant (IFA) during REMIT, and a comparative control group of 19 subjects. This trial was designed as an exploratory Phase II trial with multiple endpoints to give the Company more information on the potential role of REMUNE(R) during antiretroviral treatment interruption. All patients interrupted their antiretroviral therapy regimens, and were followed for 48 weeks. Endpoints included time to virologic rebound and time to re-initiate antiretroviral therapy. An independent Data Safety Monitoring Board (DSMB) reviewed the preliminary unblinded results of the study, and concluded that long-term use of REMUNE(R) posed no safety concerns. "We are encouraged by the preliminary results of this study, which suggest that long-term exposure to REMUNE(R) may be of benefit in particular subjects. We look forward to the final analysis of the data," said Dr. Louis Aledort, The Mary Weinfeld Professor of Clinical Research at Mount Sinai Hospital, New York, and a member of the DSMB. Study IR101-215, a multi-center, randomized study, conducted in Italy, investigated 51 antiretroviral-naive patients over 28 weeks following treatment with REMUNE(R), IFA or saline. Preliminary analysis of the final data suggest that REMUNE(R) can induce HIV- specific T cells that are believed to be important in the control of HIV, and may also stabilize total CD4+ T-cell counts. These results confirm preliminary data that were presented last year. A rollover study to IR103, which combines REMUNE(R) with Amplivax(TM), an immunostimulatory oligonucleotide adjuvant, is planned. REMUNE(R) is in Phase II development by The Immune Response Corporation and is not approved by any regulatory agencies in any country at this time. About the Company The Immune Response Corporation (Nasdaq:IMNR) is a biopharmaceutical company dedicated to becoming a leading immune- based therapy company in HIV and multiple sclerosis (MS). The Company's HIV products are based on its patented whole-killed virus technology, co-invented by Company founder Dr. Jonas Salk, to stimulate HIV immune responses. REMUNE(R), currently in Phase II clinical trials, is being developed as a first-line treatment for people with early-stage HIV. We have initiated development of a new immune-based therapy, IR103, which incorporates a second- generation immunostimulatory oligonucleotide adjuvant and is currently in Phase I/II clinical trials in Canada and the United Kingdom. The Immune Response Corporation -- http://www.imnr.com/-- is also developing an immune-based therapy for MS, NeuroVaxTM, which is currently in Phase II and has shown potential therapeutic value for this difficult-to-treat disease. * * * Going Concern Doubt The Immune Response Corporation's former independent certified public accountants, BDO Seidman, LLP, indicated in their report on the 2003 consolidated financial statements that there is substantial doubt about the Company's ability to continue as a going concern. The Company has incurred net losses since inception and has an accumulated deficit of $323,494,000 as of September 30, 2004. The Company says it will not generate meaningful revenues in the foreseeable future. These factors, among others, raised substantial doubt about the Company's ability to continue as a going concern. IMPERIAL PLASTECH: Former Lawyers Petition for Receiving Order -------------------------------------------------------------- Gowlings, Imperial Plastech Inc.'s (IPC) former solicitors, has issued a Petition for Receiving Order under the Bankruptcy and Insolvency Act against IPC, Imperial Pipe Corporation and Imperial Building Products Corp. IPC will defend the petition and seek court assessment of the fees in dispute. About the Company Imperial PlasTech is a diversified manufacturer supplying a number of markets and customers in the residential, construction, industrial, oil and gas and telecommunications and cable TV markets. The company currently operates manufacturing facilities in Atlanta, Georgia, Peterborough, Ontario, and Edmonton and Nisku, Alberta. KARGO CORPORATION: Case Summary & 16 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Kargo Corporation 1210 New Bern Avenue Raleigh, North Carolina 27610 Bankruptcy Case No.: 05-00101 Chapter 11 Petition Date: January 11, 2005 Court: Eastern District of North Carolina (Raleigh) Debtor's Counsel: James B. Angell, Esq. Howard, Stallings, From & Hutson, PA P.O. Box 12347 Raleigh, NC 27605 Tel: 919-821-7700 Fax: 919-821-7703 Estimated Assets: $0 to $50,000 Estimated Debts: $10 Million to $50 Million Debtor's 16 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ AMRESCO Commercial Finance 1210 New Bern Ave., $1,103,788 Attn: Managing Agent Raleigh NC and 412 East Parkcenter Blvd. personal property Ste. 300 Boise, ID 83706 Community West Bank Equipment located $112,523 Attn: Managing Agent 455 Pine Avenue Goleta, GA 93117 Duke Power Company Utility Unknown Attn: Managing Agent P.O. Box 1090 Charlotte, NC 28201 Durham County Tax Taxes due Unknown Administrator P.O. Box 3397 Durham, NC 27702 Employment Security Taxes due Unknown Commission P.O. Box 26504 Raleigh, NC 27611 Girish & Kokila Amin Money loaned Unknown 110 Bardsley Court Cary, NC 27513 Global Express Money Orders Inventory, Equipment, Unknown Attn: Managing Agent ARs, GIs P.O. Box 8608 Silver Spring, MD 20907 IRT Parkwest Crossing, LLC Real Estate Lease Unknown Attn: Managing Agent 1275 Powers Ferry Road, Ste. 100 Marietta, GA 30067 Internal Revenue Service Taxes due Unknown 320 Federal Place Attn: Special Procedures Staff Greensboro, NC 27402 NC Department of Revenue Taxes due Unknown Office Service Div. Bankruptcy Unit P.O. Box 1168 Raleigh, NC 27602 Quiznos Corporate Office Franchise Agreement Unknown Attn: Managing Agent 1475 Lawrence St., Ste. 400 Denver, CO 80202 Verizon South Telephone Unknown Attn: Managing Agent P.O. Box 920041 Dallas, TX 75392 M&I Bank FSB Line of Credit $73,607 Ambika Enterprises, Ltd. Money loaned $31,937 Wake County Tax Collector 1210 New Bern Ave. $3,179 Raleigh, NC Progress Energy Carolinas Utility $713 KINETICS GROUP: Fitch Withdraws 'B' Rating on $55 Mil. Sr. Debt --------------------------------------------------------------- Fitch Ratings withdrew the 'B' rating on Kinetics Group Inc.'s $55 million senior secured bank facility. The rating is withdrawn following the sale of Celerity Group Inc., Kinetics' previous outsourced manufacturing services unit, to Texas Pacific Group, which was completed in December 2004. The proceeds from the sale of Celerity are expected to be used to fully repay the amounts outstanding under the bank facility. LAIDLAW INTERNATIONAL: Taps PwC as Independent Accountants ---------------------------------------------------------- The Audit Committee of the Board of Directors of Laidlaw International, Inc., has appointed PricewaterhouseCoopers, LLP, as independent registered public accountants, to audit the company's books and accounts for the fiscal year ended August 31, 2005. In a regulatory filing with the Securities and Exchange Commission, John F. Chlebowski, Chairman of the Audit Committee, relates that PwC examined Laidlaw and its subsidiaries' financial statements, including those set forth in the company's 2004 Annual Report, during fiscal 2004. According to Mr. Chlebowski, PwC's representatives are expected to attend the Annual Shareholders' Meeting on February 8, 2005, with the opportunity to make a statement if they so desire. PwC will be available to answer appropriate questions. PwC's Audited Fees Mr. Chlebowski discloses that PwC billed Laidlaw (y) $3,617,800 in fiscal 2004 and (z) $5,302,300 in fiscal 2003 for: -- professional services rendered for, and relating to: 1. the audit of Laidlaw's annual financial statements; 2. the reviews of the interim financial statements included in Laidlaw's Quarterly Reports on Form 10-Q filed during 2003 and 2004; and 3. subsidiary audits; and -- work on Laidlaw's debt issuance in fiscal 2003. Audit-Related Fees PwC billed $226,200 to Laidlaw in fiscal 2004, and $215,200 in fiscal 2003, for assurance and related services rendered that were reasonably related to the performance of the audit or review of Laidlaw's financial statements and are not included in "Audit Fees." These services include: -- subsidiary benefit plan audits; -- attestation services related to subsidiary contract requirements; and -- consultation on Section 302 of the Sarbanes-Oxley Act of 2002 for Disclosure Controls and Procedures, and due diligence services, in fiscal 2003. Tax Fees PwC billed Laidlaw $6,500 in fiscal 2004, and $7,500 in fiscal 2003, for professional services rendered on issues concerning tax compliance, tax advice and tax planning. These services are related to a subsidiary's tax returns. Other Fees For products and services related to employment tax issues and access to accounting research software other than those services covered in "Audit Fees," "Audit-Related Fees," and "Tax Fees," PwC billed Laidlaw: -- $8,000 in fiscal 2003; and -- $6,500 in fiscal 2004. Mr. Chlebowski informs the Commission that 100% of the services described under "Audit-Related Fees," "Tax Fees" and "All Other Fees" were pre-approved by the Audit Committee during the fiscal year 2004. Laidlaw believes that none of the time expended on PwC's engagement to audit the company's financial statements for fiscal 2004 was attributable to work performed by persons other than PwC's full-time, permanent employees. Based in part on consideration of the non-audit services provided by PwC during fiscal 2004, the Audit Committee has determined that the non- audit services were compatible with maintaining PwC's independence. 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. LAMBERT FABRICATORS: Assets to be Auctioned on Jan. 20 ------------------------------------------------------ Collar City Auctions will conduct an absolute auction of Lambert Fabricators, Inc., on Thursday, January 20, 2005, at 10:00 a.m. at 8265 Loop Road in Baldwinsville (Syracuse), New York. The assets include a Complete Metal Fabricating Plant, Real Estate, Trucks, Equipment & Materials. An auction catalog is available from the auctioneer at: http://www.collarcityauctions.com/pdf/LambertCatalog.pdf Lambert Fabricators, Inc., filed for chapter 11 protection on July 31, 2002 (Bankr. N.D.N.Y. Case No. 02-64563). Kelly C. Griffith, Esq., and Lee E. Woodard, Esq., at Harris Beach LLP, represent the Debtor. LEAP WIRELESS: Promotes S. Douglas Hutcheson to President and CFO ----------------------------------------------------------------- Leap Wireless International, Inc. (OTCBB:LEAP), a leading provider of innovative and value-driven wireless communications services, disclosed the promotion of S. Douglas Hutcheson to president and chief financial officer. Mr. Hutcheson, who most recently served as executive vice president and CFO, led the financial restructuring of Leap after becoming CFO in Aug 2002. "Doug's broad financial and telecom background combined with his long-standing commitment to the company makes him the ideal candidate for his new role as president and CFO," said William Freeman, Leap's chief executive officer and director. "In addition to leading the financial restructuring of our business, Doug was the chief architect of the Cricket business plan and has an intimate understanding of the company and its bottom-line business objectives. We congratulate him on this important promotion and look forward to the guidance and leadership he will continue to provide as the company continues to grow." As president and CFO, Mr. Hutcheson is responsible for the continued development of the Company's business strategy. Mr. Hutcheson will also continue to be responsible for the financial planning and accounting practices of the organization, and for overseeing and directing treasury, budgeting, audit, tax, accounting, capital equipment purchasing, long-range forecasting and insurance activities. He is also responsible for continuing to oversee the company's information technology department. Prior to his role as executive vice president and CFO, Mr. Hutcheson served as senior vice president and CFO, a position that he assumed in 2002. Mr. Hutcheson has also held the position of chief strategy officer for Leap. Prior to joining Leap when it was founded in Sept 1998, Mr. Hutcheson established and led the marketing and international operations group in QUALCOMM's wireless infrastructure division. While at QUALCOMM, Hutcheson also led multiple teams negotiating financing agreements, equipment purchases and joint ventures throughout the world. Hutcheson earned a bachelor's degree in mechanical engineering from California State Polytechnic University, San Luis Obispo and obtained a master's degree in business administration from the University of California, Irvine, where he graduated Beta Gamma Sigma. About the Company Leap Wireless -- http://www.leapwireless.com/-- headquartered in San Diego, Calif., is a customer-focused company providing innovative mobile wireless services that are targeted to meet the needs of customers who are under-served by traditional communications companies. With a commitment to predictability, simplicity and value as the foundation of our business, Leap pioneered Cricket(R) service, a simple and affordable wireless alternative to traditional landline service. Cricket(R) service offers customers unlimited anytime minutes within the Cricket(R) calling area over a high-quality, all-digital CDMA network. Operating in 39 markets in 20 states stretching from New York to California, Cricket(R) service is available to customers in more than 840 different municipalities. * * * As reported in the Troubled Company Reporter on Nov. 15, 2004, Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to San Diego, California-based wireless telecom carrier Leap Wireless International Inc. The outlook is stable. At the same time, Standard & Poor's assigned its 'B-' bank loan rating to subsidiary Cricket Communications Inc.'s $650 million in senior secured bank facilities (guaranteed by Leap), based on preliminary documentation. A recovery rating of '3' also was assigned to the loan, indicating an expectation for a meaningful recovery of principal (50%-80%) in the event of a default. Borrowings under the bank loan will primarily be used to repay $350 million of debt issued to existing secured creditors under the company's reorganization in bankruptcy. "The ratings are constrained by the very high degree of business risk facing Leap given the limited mobility of the company's product offering compared with that of its competitors," explained Standard & Poor's credit analyst Catherine Cosentino. Leap uses 1.9 GHz spectrum to offer an unlimited calling service within a designated local franchise area for $29.99 (before taxes and fees) within 39 separate market clusters across the U.S. Leap also offers additional services and functionality for incremental monthly fees, including calling features and long-distance services, but does not provide any roaming capability currently. Pricing is not substantially lower than that for the lower-end offerings of the company's competitors (which also offer roaming), making Leap's growth prospects uncertain. LESLIE'S POOLMART: S&P Rates Planned $170M Sr. Unsec. Notes at B- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Phoenix, Arizona-based Leslie's Poolmart Inc.'s proposed $170 million senior unsecured notes, to be issued under Rule 144A with registration rights. The existing ratings on the company, including the 'B' corporate credit rating, were affirmed. The outlook was revised to stable from positive. The rating on the proposed senior unsecured notes is one notch lower than the corporate credit rating in accordance with Standard & Poor's policy of notching down senior unsecured debt when there is significant senior secured debt that has a priority claim to the company's assets. Note proceeds will be used to partly fund the recapitalization of the company. Leslie's $59.5 million 10.375% senior unsecured notes will be refinanced as part of the transaction, and the 'B-' rating on them will be withdrawn. A five-year, $75 million revolving credit facility is also part of the financing associated with the recapitalization. Standard & Poor's does not rate this revolver. This facility will refinance the company's existing $75 million revolver. The 'B+' rating on the existing facility will be withdrawn when the transaction is completed. "The ratings reflect the highly seasonal nature of Leslie's business, which can be affected by unfavorable weather, the company's participation in the relatively small pool supply market, and weak financial ratios," said Standard & Poor's credit analyst Kristi Broderick. While Leslie's 474 stores in 36 states make it the largest U.S. pool-supply chain, the company competes with many local stores, regional chains, home improvement centers, and discounters in a highly fragmented industry. Although it is a national chain, Leslie's does have some geographic concentration: About 41% of its store base is in California and Texas. The company's business exhibits substantial seasonality. Sales are significantly higher in the quarters ending June and September -- the peak months of swimming pool use. Hot weather and extended warm seasons (summers that start early and end late) usually result in favorable trends for the business, while cold, rainy, and shortened warm seasons (summers that start late and end early) generally result in unfavorable trends. LORAL SPACE: Trade Creditors Say Plan is Unconfirmable ------------------------------------------------------ The Trade Creditors of Loral Space & Communications Ltd. and its debtor-affiliates inform the U.S. Bankruptcy Court for the Southern District of New York that they will move to terminate the exclusivity period of the Debtors' because they do not believe that the Revised Chapter 11 Plan is legal, equitable and confirmable. These trade creditors claim that since Loral Space is solvent, it must pay creditors in full with interest before returning any value to its shareholders. The Plan intends to pay creditors only 32 cents on the dollar and transfers the vast majority of its value (hundreds of millions of dollars) to its shareholder parent. The trade creditors will push to end the exclusivity if the Debtors and the Official Committee of Unsecured Creditors will persist with aggressive litigation rather than consensual restructuring. The Revised Plan On October 22, 2004, Loral Space filed a revised plan of reorganization and a disclosure statement with the Bankruptcy Court. The Plan, which revises the terms of a plan previously filed on August 19, 2004, reflects a consensual agreement on financial terms between Loral and the creditors' committee appointed in the Chapter 11 Cases. The Plan provides, among other things, that: * Loral's two businesses, Satellite Manufacturing and Satellite Services, will emerge intact as separate subsidiaries of reorganized Loral ("New Loral"). The Disclosure Statement establishes the enterprise value of New Loral at between approximately $650 million and approximately $800 million. * SS/L will emerge debt-free, but will guarantee $30 million of the new senior secured notes to be issued by the reorganized satellite services company ("New FSS"). * The common stock of New Loral and the new senior secured notes of New FSS will be owned by Loral bondholders, Loral Orion bondholders and certain other unsecured creditors, as follows: -- Loral bondholders and certain other unsecured creditors will receive approximately 19.4 percent of the common stock of New Loral. -- Loral Orion unsecured creditors, including Loral Orion bondholders, will receive approximately 79.0 percent of New Loral's common stock plus $200 million in new senior secured notes of New FSS. These creditors also will be offered the right to subscribe to purchase their pro-rata share of an additional $30 million in new senior secured notes of New FSS. This rights offering will be underwritten by certain creditors who will receive a fee payable in the notes. -- All other general unsecured creditors will have an option to elect to receive either their pro rata share of approximately 1.6 percent of New Loral common stock or their pro rata share of $30 million in cash, subject to adjustment for over-subscription or under-subscription. * Existing common and preferred stock will be cancelled and no distribution will be made to current shareholders. * New Loral will emerge as a public company and will seek listing on a major stock exchange. Examiner Ordered Loral's shareholders asked the Bankruptcy Court to appoint an Examiner pursuant to 11 U.S.C. Sec. 1104. The Bankruptcy Court declined the invitation. The shareholders appealed to the U.S. District Court for the Southern District of New York. On Dec. 23, 2004, the District Court reversed the Bankruptcy Court's decision, and directed the appointment of an Examiner. Loral Stockholders Protective Comm. v. Loral Space & Communications Ltd., No. 04-CV-8645 (RPP) (S.D.N.Y. Dec. 23, 2004). About the Company Loral Space & Communications is a satellite communications company. It owns and operates a fleet of telecommunications satellites used to broadcast video entertainment programming, distribute broadband data, and provide access to Internet services and other value-added communications services. Loral also is a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including direct- to-home television, broadband communications, wireless telephony, weather monitoring and air traffic management. The Company and various affiliates filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003. Stephen Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the company filed for bankruptcy, it listed total assets of $2,654,000,000 and total debts of $3,061,000,000. MERRILL LYNCH: S&P Affirms Low-B Ratings on 24 Certificate Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on five classes from four series of Merrill Lynch Mortgage Investors Inc.'s mortgage pass-through certificates. At the same time, ratings are affirmed on 302 classes from 37 series by the same issuer. The raised ratings reflect the increase in the actual and projected credit support percentages to the respective classes. The higher credit support percentages resulted from the significant paydown of the collateral enhancing the shifting interest structure of the transactions. As of the December 2004 remittance period, the remaining pool balances for these transactions were 6.53% (series 1999-H1), 3.10% (series 2001-A1), 1.03% (series 2001-WMC1), and 31.40% and 28.23% for the fixed- and adjustable-rate loan groups, respectively, for series 2002-AFC1. Total delinquencies, however, have remained relatively high (more than 28%) except for series 2001-WMC1, where total delinquencies were 6.14%. The fixed and adjustable loan groups from series 2001-AFC1 had cumulative realized losses of 3.21% and 3.63%, respectively. Series 2001-WMC1 had no realized losses, whereas series 2001-A1 had about 0.01% and series 1999-H1 had 1.91% in cumulative realized losses. Series 2001-A1 and 2001-WMC are structured as senior subordinated transactions and the other two transactions have overcollateralization and excess spread as additional credit support. The affirmed ratings reflect adequate actual and projected credit support percentages, low-to-moderate total delinquencies and cumulative realized losses. As of the December 2004 remittance period, total delinquencies ranged from 0.69% for series 2003-H to approximately 36.50% for series 1999-CB1 loan group one. However, approximately half of the 37 transactions had total delinquencies below 5%. Cumulative realized losses ranged from 0.00% for a number of transactions to approximately 1.92% for series 1999-CB1 loan group two. This transaction has reperforming collateral. Credit support for these transactions is provided by bond insurance, pool insurance policies and subordination, overcollateralization, and excess interest cash flow. The collateral for the prime transactions consists of 30-year adjustable-rate mortgage loans secured by first liens on one- to four-family residential properties. The collateral for the subprime transactions consists of 30-year fixed- and adjustable-rate subprime home equity mortgage loans secured by first and second liens on one- to four-family residential properties. Ratings Raised Merrill Lynch Mortgage Investors Inc. Mortgage pass-thru certs Rating Series Class To From ------ ----- -- ---- 1999-H1 M-1 AA+ AA 2001-A1 M-3 AAA AA 2001-WMC1 M-3 AAA AA 2002-AFC1 MF-1, MV-1 AA+ AA Ratings Affirmed Merrill Lynch Mortgage Investors Inc. Mortgage pass-thru certs Series Class Rating ------ ----- ------ 1994-F A-5 AAA 1997-FF3 M-1 AAA 1998-1 PO, X, M-1, M-2A AAA 1998-GN1 A AAA 1998-GN1 M-1 AA+ 1998-GN1 M-2 A 1998-GN1 B BBB- 1998-GN2 A AAA 1998-GN2 M-1 AA+ 1998-GN2 M-2 A 1998-GN2 B BBB- 1998-GN3 A AAA 1999-CB1 1A, 1A-IO, 1A-PO, 2A AAA 1999-CB1 1M-1, 2M-1 AA 1999-CB1 1M-2, 2M-2 A 1999-CB1 1M-3, 1M-4, 2B BBB 1999-H1 A-5 AAA 1999-H1 M-2 A 1999-H1 B BBB- 2000-3 A-IO, M-1, M-2, B-1 AAA 2001-A1 I-A-IO, II-A-IO, III-A-IO, M-1, M-2 AAA 2001-WMC1 M-1, M-2 AAA 2002-AFC1 AF-3, AV-1 AAA 2002-AFC1 MF-2, MV-2 A 2002-AFC1 BF-1, BV-1 BBB- 2002-NC1 A-1, M-1, M-2, B-1 AAA 2002-NC1 B-2 A+ 2002-HE1 A-1, A-2 AAA 2002-HE1 M-1 AA+ 2002-HE1 M-2 AA- 2002-HE1 B A- 2003-A2 I-A-1, I-A-1-IO, II-A-2, II-A-2-IO AAA 2003-A2 II-A-3, II-A-3-IO, II-A-4, II-A-4-IO AAA 2003-A2 I-M1, II-M1 AA 2003-A2 I-M-2, II-M-2 A 2003-A2 I-M-3, II-M-3 BBB 2003-A2 I-B-1, II-B-1 BB 2003-A2 I-B-2, II-B-2 B 2003-A4 I-A, II-A, III-A, IV-A, II-A-IO AAA 2003-A4 M-1 AA 2003-A4 M-2 A 2003-A4 M-3 BBB 2003-A4 B-1 BB 2003-A4 B-2 B 2003-A5 I-A, II-A-2, II-A-3, II-A-4, II-A-5 AAA 2003-A5 II-A-6, II-A-7, II-A-IO AAA 2003-A5 M-1 AA 2003-A5 M-2 A 2003-A5 M-3 BBB 2003-A5 B-1 BB 2003-A5 B-2 B 2003-A6 I-A, II-A AAA 2003-A6 M-1 AA 2003-A6 M-2 A 2003-A6 M-3 BBB 2003-A6 B-1 BB 2003-A6 B-2 B 2003-HE1 A-1, A-2A, A-2B, S AAA 2003-HE1 M-1 AA+ 2003-HE1 M-2 A+ 2003-HE1 M-3 A 2003-HE1 B-1 BBB+ 2003-HE1 B-2 BBB 2003-HE1 B-3 BBB- 2003-OPT1 A-1, A-2, A-3, S AAA 2003-OPT1 M-1 AA+ 2003-OPT1 M-2 AA 2003-OPT1 M-3 A+ 2003-OPT1 B-1 A- 2003-OPT1 B-2 BBB 2003-OPT1 B-3 BBB- 2003-WMC1 A-1, A-2, S AAA 2003-WMC1 M-1 AA 2003-WMC1 M-2 A 2003-WMC1 B-1 BBB 2003-WMC1 B-2 BBB- 2003-WMC2 A-1, A-2 AAA 2003-WMC2 M-1 AA+ 2003-WMC2 M-2 A+ 2003-WMC2 B-1 BBB+ 2003-WMC2 B-2 BBB 2003-WMC3 A-1, A-2, S AAA 2003-WMC3 M-1, M-2 AA+ 2003-WMC3 M-3 A+ 2003-WMC3 M-4 A- 2003-WMC3 B-1 BBB+ 2003-WMC3 B-2 BBB 2003-WMC3 B-3 BBB- 2003-A 1A, 2A-1, 2A-2, X-1A, X-2A1, X-2A2 AAA 2003-A X-1B, X-2B, X-3B AAA 2003-A B-1 AA+ 2003-A B-2 A+ 2003-A B-3A BBB+ 2003-A B-3B BBB 2003-A B-4 BBB- 2003-A B-5 BB- 2003-B A-1, A-2, X-A-1, X-A-2, X-B AAA 2003-B B-1 AA+ 2003-B B-2 A+ 2003-B B-3 BBB+ 2003-B B-4 BBB- 2003-B B-5 BB- 2003-C A-1, A-2, X-A-1, X-A-2, X-A-3, X-B AAA 2003-C B-1 AA+ 2003-C B-2 A+ 2003-C B-3 BBB+ 2003-C B-4 BBB- 2003-C B-5 BB- 2003-D A, X-A-1, X-A-2, X-B AAA 2003-D B-1 AA+ 2003-D B-2 A+ 2003-D B-3 BBB+ 2003-D B-4 BBB- 2003-D B-5 BB- 2003-E A-1, A-2, X-A-1, X-A-2, X-B AAA 2003-E B-1 AA+ 2003-E B-2 A+ 2003-E B-3 BBB+ 2003-E B-4 BBB 2003-E B-5 BB 2003-F A-1, A-2, A-3, X-A-1, X-A-2, X-B AAA 2003-F B-1 AA+ 2003-F B-2 A+ 2003-F B-3 BBB+ 2003-F B-4 BBB 2003-F B-5 BB 2003-G A-1, A-2, A-3, A-4A, A-4B, X-A-1 AAA 2003-G X-A-2, X-B AAA 2003-G B-1 AA+ 2003-G B-2 A+ 2003-G B-3 BBB+ 2003-G B-4 BB+ 2003-G B-5 B+ 2003-H A-1, A-2, A-3A, A-3B, X-A-1, X-A-2, X-B AAA 2003-H B-1 AA+ 2003-H B-2 A+ 2003-H B-3 BBB+ 2003-H B-4 BB+ 2003-H B-5 B+ 2004-A1 I-A,II-A-1,II-A-2,II-A-IO,III-A,IV-A AAA 2004-A1 M-1 AA 2004-A1 M-2 A 2004-A1 M-3 BBB 2004-A1 B-1 BB 2004-A1 B-2 B 2004-A A-1, A-2, X-A-1, X-A-2, X-B AAA 2004-A B-1 AA+ 2004-A B-2 AA- 2004-A B-3 A- 2004-A B-4 BBB- 2004-A B-5 BB 2004-B A-1, A-2, A-3, X-A, X-B AAA 2004-B B-1 AA+ 2004-B B-2 AA- 2004-B B-3 A- 2004-B B-4 BBB- 2004-B B-5 BB 2004-WMC1 A-1, A-2, S AAA 2004-WMC1 M-1 AA+ 2004-WMC1 M-2 AA 2004-WMC1 M-3 A+ 2004-WMC1 B-1 A 2004-WMC1 B-2 BBB+ 2004-WMC1 B-3 BBB- 2004-WMC1 B-4 BB+ 2004-WMC2 A-1, A-2A, A-2B1, A-2B2, S AAA 2004-WMC2 M-1 AA 2004-WMC2 M-2 A+ 2004-WMC2 M-3 A 2004-WMC2 B-1 A- 2004-WMC2 B-2 BBB+ 2004-WMC2 B-3 BBB- 2004-WMC3 A-1, A-2A, A-2B, A-2C, S AAA 2004-WMC3 M-1 AA+ 2004-WMC3 M-2 AA 2004-WMC3 M-3 A+ 2004-WMC3 B-1 A 2004-WMC3 B-2 BBB+ 2004-WMC3 B-3 BBB- 2004-WMC3 B-4 BB+ METRIS: S&P Lifts Credit Rating to CCC+ & Says Outlook is Positive ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its long-term counterparty credit rating on Metris Cos., Inc., to 'CCC+' from 'CCC.' The outlook was also revised to positive from stable. Metris' senior unsecured debt rating was affirmed at 'CCC.' "The rating action was driven by positive trends in asset quality, profitability, and capital metrics at the Minnetonka, Minnesota-based credit card company," said Standard & Poor's credit analyst Jeffrey Zaun. Since the ratings were raised to 'CCC' in May 2004, the asset quality of Metris' securitized receivables has improved to the extent that the three-month average excess spread in the firm's master trust has increased to 5.09% in November 2004 from 4.11% in May 2004. Thus, the master trust has been releasing cash to the company. "Metris' positive outlook is based on the likelihood that improved asset quality and lower funding costs will enable the firm to remain profitable in 2005," Mr. Zaun said. "Our optimism is tempered by asset quality levels that remain below those of Metris' peers in the card industry and challenges that management will face as competitive rivalry intensifies in a consolidating industry. Standard & Poor's will closely monitor Metris' noninterest expenses, its funding cost, its managed asset quality, and its status vis-a-vis regulators." MICRON TECH: Moody's Holds Low-B Ratings Due to Operating Results ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Micron Technology, Inc., reflecting its improved operating results over the last few quarters and expectations that, while perhaps less robust, Micron should demonstrate good results over the next year. The ratings outlook, however, remains negative, driven by continued concerns of its ability to sustain positive cash flow from operations after meeting investment requirements. Ratings affirmed include: * Senior Implied rating at Ba3 * Issuer rating at Ba3 * Senior unsecured shelf registration rated at (P) Ba3 * Subordinated shelf registration rated at (P) B2 * $632 million 2.5% convertible subordinated notes due February 2010 at B2 * $210 million 6.5%, junior subordinated notes due September 2005 at B2 The affirmation reflects Micron's improved performance over the last several quarters notably in terms of revenue growth, profitability, and the generation of cash flow from operations. On a latest twelve-month basis through its first quarter November 2005, Micron's revenue has increased to $4.6 billion from $3.5 billion, operating profit has increased to $400 million from negative $780 million, and cash flow from operations has expanded to $1.2 billion from $440 million. In addition to good internal execution: (1) good unit growth of PC's (a key driver to Micron's performance), (2) the continued expansion of megabit consumption per PC unit, and (3) the improved balancing of overall DRAM sector supply and demand has contributed to generally stable pricing, all of which have contributed to Micron's improved operating results and internal ability to fund necessary investments in process technology and manufacturing capacity. Additionally, Micron continues to slowly expand its product portfolio to include image sensors, and other forms of non DRAM memory for key end markets such as digital still cameras and cell phones. While Micron's performance will still be driven by its DRAM activity, this expansion serves to; (1) diversify its revenue sources, (2) reduce its reliance on the very volatile DRAM product, (3) contribute to potential improvement in the intermediate term sector supply situation given that, while not seamlessly done, the allocation by Micron and other DRAM participants of wafer starts from DRAM to non DRAM naturally reduces supply in the DRAM market and thus helps pricing, and (4) reduce overall asset intensity since these newer products, while complex can reuse process and capacity investments as they tend to require the same elements, but on a slightly lagging basis. The perennial challenge to the highly advanced but largely commoditized DRAM sector is that it goes through boom and bust periods driven by the recurring installation and then absorption of excess production capacity. Notwithstanding its recently improved results and the incremental benefits from a gradual diversification of its product set, the negative outlook reflects continued concern with respect to its ability to sustain cash flow from operations sufficient to internally fund necessary investments in process technology and manufacturing capacity. While over the last several quarters, in a good external environment, Micron's internal funding ability has improved, it still remains negative as of the most recent quarter. Offsetting the cash flow burn, the company maintains slightly over $1 billion of cash and equivalents as of the first quarter ended November 2004 to service $259 million of debt maturities over the next year, most of which is in September 2005. A key rating criterion over the near term will be Micron's ability to demonstrate continued improvements in operating cash generation after capital expenditures and the likelihood that such improvement can be sustained. To the extent that these conditions are not met, the rating would likely decline. Conversely, the rating could be stabilized if the company demonstrates the ability to fund investment needs with internal cash generation. Micron Technology, Inc., headquartered in Boise, Idaho, is a manufacturer of DRAMs, and other memory and semiconductor components. MKP CBO: Moody's Junks Classes B-1A & B-1L ------------------------------------------ Moody's Investors Service lowered the ratings of four classes of notes issued by MKP CBO I, Ltd.: * to A3 (from Aa3 on review for downgrade), the U.S. $250,000,000 Class A-1L Floating Rate Notes Due February 2036; * to B3 (from Baa3 on review for downgrade), the U.S. $25,000,000 Class A-2L Floating Rate Notes Due February 2036; * to Caa3 (from B3 on review for downgrade), the U.S. $7,375,000 Class B-1A 8.75% Notes Due February 2036; and * to Caa3 (from B3 on review for downgrade), the U.S. $7,000,000 Class B-1L Floating Rate Notes due February 2036. This transaction closed on February 8, 2001. According to Moody's, its rating action results from continuing deterioration in the weighted average rating factor of the collateral pool and overcollateralization ratios. Moody's noted that, as of the most recent monthly report on the transaction, the weighted average rating factor of the collateral pool is 1597 (425 limit) and that about 26% of the collateral pool currently has a Moody's rating of below Baa3 (5% limit). Moody's further noted that despite the partial paydown of the Class A-1L Notes on the December 8, 2004 Payment Date, the overcollateralization tests are still in violation: the Class A Overcollateralization Test is currently at 102.8% (106% covenant) and the Class B Overcollateralization Test is at 97% (101% covenant). Rating Action: Downgrade Issuer: MKP CBO I, Ltd. Class Description: the U.S. $250,000,000 Class A-1L Floating Rate Notes Due February 2036 Prior Rating: Aa3 (under review for downgrade) Current Rating: A3 Class Description: the U.S. $25,000,000 Class A-2L Floating Rate Notes Due February 2036 Prior Rating: Baa3 (under review for downgrade) Current Rating: B3 Class Description: the U.S. $7,375,000 Class B-1A 8.75% Notes Due February 2036 Prior Rating: B3 (under review for downgrade) Current Rating: Caa3 Class Description: the U.S. $7,000,000 Class B-1L Floating Rate Notes due February 2036 Prior Rating: B3 (under review for downgrade) Current Rating: Caa3 NATIONAL BENEVOLENT: Fitch Rates Outstanding Debt at Triple-D ------------------------------------------------------------- Fitch Ratings revised the rating on National Benevolent Association's -- NBA -- outstanding debt to 'DDD' from 'DD'. The ratings of obligations in this category are based on their prospects for achieving partial or full recovery in a reorganization or liquidation of the obligor. 'DDD' obligations have the highest potential for recovery, around 90%-100% of outstanding amounts and accrued interest. The rating revision is due to the proposed plan to repay bondholders 100% of principal plus accrued interest on NBA's outstanding debt. The repayment will come from the $210 million sale of NBA's 11 senior living facilities to Fortress NBA Acquisition LLC. The proposed plan still needs to be approved by creditors and other parties, but is targeted to be in effect on Feb. 28. NBA has continued to provide notice of material events and financial information to the nationally recognized municipal securities information repositories. These outstanding debts are rated by Fitch: -- $9,650,000 Jacksonville Health Facilities Authority Industrial Development revenue bonds (NBA-Cypress Village Florida Project), series 2000A; -- $10,080,000 Colorado Health Facilities Authority revenue bonds (NBA-Village at Skyline Project), series 2000C; -- $9,390,000 Colorado Health facilities Authority revenue bonds (NBA-Village at Skyline Project), series 1999A; -- $3,980,000 Oklahoma County Industrial Authority health care revenue bonds (NBA - Oklahoma Christian Home Project), series 1999; -- $2,695,000 Health and Educational Facilities Authority of the State of Missouri health facilities refunding and improvement revenue bonds (NBA - Central Office Project), series 1999; -- $15,145,000 Colorado Health Facilities Authority health facilities revenue bonds (NBA - Village at Skyline Project), series 1998B; -- $10,715,000 Colorado Health Facilities Authority health facilities refunding revenue bonds (NBA - Multistate Issue), series 1998A; -- $5,935,000 Iowa Finance Authority health facilities revenue bonds (NBA - Ramsey Home Project), series 1997; -- $2,235,000 Oklahoma County Industrial Authority health care refunding revenue bonds (NBA - Oklahoma Christian Home Project), series 1997; -- $2,160,000 Health and Educational Facilities Authority of the State of Missouri health facilities revenue bonds (NBA - Woodhaven Learning Center Project), series 1996A; -- $625,000 Colorado Health Facilities Authority tax-exempt health facilities revenue bonds (NBA - Colorado Christian Home Project), series 1996A; -- $2,650,000 Illinois Development Finance Authority health facilities revenue bonds (NBA - Barton W. Stone Christian Home Project), series 1996; -- $4,485,000 Colorado Health Facilities Authority tax-exempt health facilities revenue bonds (NBA - Village at Skyline Project), series 1995A; -- $4,655,000 Jacksonville, Florida Health Facilities Authority industrial development revenue bonds (NBA - Cypress Village Florida Project), series 1994; -- $3,645,000 Health and Educational Facilities Authority of the State of Missouri Health facilities revenue bonds (NBA - Lenoir Retirement Community Project), series 1994; -- $8,015,000 Jacksonville Health Facilities Authority industrial development revenue bonds (NBA - Cypress Village Florida Project), series 1993; -- $23,950,000 Jacksonville Health Facilities Authority revenue refunding bonds (NBA - Cypress Village Florida Project), series 1992; -- $22,590,000 City of Indianapolis, Indiana economic development refunding and improvement revenue bonds (NBA - Robin Run Village Project), series 1992; -- $4,485,000 Industrial Development Authority of Cass County, Missouri industrial revenue refunding bonds (NBA - Foxwood Springs Living Center Project), series 1992; -- $1,850,000 Bexar County, Texas Health Facilities Development Corp. tax-exempt health facilities revenue bonds (NBA - Patriot Heights Project), series 1992B. NORTEL NETWORKS: Files Restated 2003 Annual Report -------------------------------------------------- Nortel Networks Corporation (NYSE:NT) (TSX:NT) has completed filing its 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 corresponding Canadian filings. The 2003 Annual Reports reflect the restatement of the years ended 2001 and 2002, and the revision of previously announced results for the year ended 2003. "With the completion of our restatements we have a solid foundation on which to move forward with our business," said Bill Owens, president and chief executive officer. "I want to thank all our employees and partners, who have tirelessly dedicated their time and efforts. The restatement has been a monumental task, both complex and demanding. I also want to thank our customers for their consistent support that has allowed us to maintain our business and strong financial position during this time and continue our expansion in critical markets. We are well-positioned for the future with an extensive global presence." "We have a number of important initiatives we expect to announce in the near future including those focusing on Asia and China, and those associated with converged, solutions-oriented networks," continued Mr. Owens. "We also expect to make announcements regarding our progress in important new areas of business such as security and Federal solutions. We are committed to continued innovation leadership through our strong investment in R&D. We are focused on cash, cost and revenue to ensure our business model better serves our targeted operating performance. I am pleased with our cash performance in Q4, 2004 and we enter 2005 in a strong position." Audit Committee Independent Review The independent review examined the facts and circumstances leading to the earlier restatement of the Company's and Nortel Networks Limited's financial results for 2002, 2001 and 2000 and the first two fiscal quarters of 2003 (which independent review was later extended to cover the balance of 2003). The Audit Committee initiated this review to gain a full understanding of the events that caused significant excess liabilities being carried on the Company's balance sheet that needed to be restated and to recommend to the Board of Directors the adoption of necessary remedial measures to address personnel, internal control, compliance and discipline issues. In carrying out this task, the Audit Committee was assisted by the law firm of Wilmer Cutler Pickering Hale and Dorr LLP and the forensic accounting firm of Huron Consulting Services LLC. As discussed in the accompanying summary, the independent review has resulted in extensive recommendations by the Audit Committee for remedial measures that are intended to prevent the recurrence of the inappropriate accounting conduct that gave rise to the restatement, to rebuild the Company's finance environment based on principles of transparency and integrity, and to ensure sound financial reporting and comprehensive disclosure. The Board of Directors has adopted these recommendations in their entirety and instructed management to develop a detailed plan and timetable for their implementation, which will be monitored by the Board. "My fellow board members and our Nortel management team have been dedicated to the long term best interests of the Company and its shareholders and to conducting our activities with the utmost transparency and integrity," said L.R. Wilson, chairman, Board of Directors. "While this has been a challenging period, the outcome of the independent review is a set of comprehensive recommendations that will leave the Company stronger and better served in the future." In light of the substantial revenue adjustments required to be made in the restatement due to accounting errors related to revenue recognition, the Audit Committee has determined to review the facts and circumstances leading to the restatement of this revenue for specific identified transactions. The review will have a particular emphasis on the underlying conduct that led to the initial recognition of these revenues. The Audit Committee wants a full understanding of the historic events that required the revenue for these specific transactions to be restated and to develop any additional remedial measures, including those involving internal controls and processes. Wilmer Cutler Pickering Hale and Dorr LLP will be assisting the Audit Committee with this review. As a matter of corporate leadership and integrity, twelve senior executives of Nortel's core executive leadership team have voluntarily undertaken to pay to the Company over a three year period the amount of their Return to Profitability bonuses awarded in 2003 (net of tax withheld at source) aggregating the equivalent of approximately US$8.6 million, and to disclaim any potential award of the remaining two installments of the 2003 Restricted Stock Unit Plan, in each case regardless of whether the profitability metrics for these bonuses or awards were met on a restated basis. While none of these executives was found to have been directly involved in the inappropriate provisioning conduct, these members of the core executive team share the Board's deep disappointment over the circumstances that led to the restatement. "These voluntary actions reflect the strength of character and quality of leadership of Nortel's core executive team," said Mr. Owens. "These actions are a tangible demonstration of senior management's commitment to Nortel." Further, the Board has cancelled the remaining two installments for all eligible employees under the 2003 Restricted Stock Unit Plan. Nortel Networks Limited 2004 Quarterly Filings The Company expects that its principal operating subsidiary, Nortel Networks Limited -- NNL, will file shortly its 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 corresponding Canadian filing. Mr. McCormick and Mr. Pearce have also been appointed to the NNL Board of Directors, effective upon the completion of these filings. 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. 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/ For the latest Nortel news, visit http://www.nortel.com/news * * * 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, provides 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. NORTEL NETWORKS: Names Shepard Chief Ethics & Compliance Officer ---------------------------------------------------------------- Nortel Networks Corporation (NYSE:NT) (TSX:NT) appointed Susan E. Shepard to the recently created position of Chief Ethics and Compliance Officer reporting to the chairman of the Board and the president and chief executive officer effective February 21, 2005. Over the course of her career, Ms. Shepard has served in a number of positions specifically related to ethics and compliance. Ms. Shepard has been a Commissioner for the New York State Ethics Commission since May 2003. In addition, prior to becoming engaged in private practice in 1997, Ms. Shepard was Commissioner of Investigation for New York City (1990 to 1994), Chief Counsel to the New York State Commission of Investigation (1986 to 1990), and an Assistant United States Attorney for the Eastern District of New York (1976 to1986). Board Renewal Board renewal has been an important focus throughout 2003 and 2004. Following a search initiated in 2003, Nortel's Board of Directors was strengthened by two additions in the first half of 2004, Dr. Manfred Bischoff and the Hon. John Manley, each of whom will be standing for election as Directors at Nortel's upcoming Annual Shareholders' Meeting in 2005. "The regular rotation of directors provides an appropriate balance of renewal with continuity and orderly succession," said L.R. Wilson, chairman, Board of Directors. "Given we were unable to hold a shareholders' meeting in 2004, the Board felt it essential that the process be accelerated at the upcoming Meeting. Accordingly, after discussions with the Board, five directors, including myself, all initially elected to the Board between 1991 and 1997, have decided not to stand for re-election." In addition to Mr. Wilson, the four other retiring directors are L. Yves Fortier, Sherwood Smith, Jr., Guylaine Saucier and the Hon. James Blanchard. The Board of Directors has appointed two additional directors to the Board of Nortel Networks Corporation: * Richard McCormick Former Chairman and Chief Executive Officer of U S WEST -- and -- * Harry Pearce Retired Chairman of Hughes Electronics Corporation Retired Vice Chairman of General Motors. "I have had the privilege of serving on the boards of a number of public companies and I have never seen a board - or more specifically a Chairman - more committed to doing the right thing for a company and its shareholders," said Mr. Owens. "On behalf of the Company, I want to thank Red Wilson and Messrs. Fortier, Smith and Blanchard and Mrs. Saucier for their decisive actions in stewarding Nortel through this very challenging period. On behalf of Nortel, I also want to welcome Messrs. McCormick and Pearce. The caliber of these individuals and their breadth of experience will be great assets in building on the fine work of their predecessors." In addition to the appointment of Messrs. McCormick and Pearce, John MacNaughton, who will be retiring later this month as the President and Chief Executive Officer of the Canada Pension Plan Investment Board, will be nominated for election to the Board at the Meeting. The Board of Directors expects to nominate additional candidates in the proxy circular for the next Meeting. 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/ For the latest Nortel news, visit http://www.nortel.com/news * * * 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, provides 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. NOVA CHEMICALS: To Webcast 4th Qtr. Earnings Result on Jan. 26 -------------------------------------------------------------- NOVA Chemicals (NYSE:NCX)(TSX:NCX) will release its fourth quarter earnings results on Jan. 26, 2005 at 7:30 a.m. PST. A conference call to discuss the Company's financial results will be on the same day, at 1:00 p.m. EST. To access the live webcast, dial 416- 405-9328, or visit http://www.vcall.com/(ticker symbol NCX) or go to the Company's website at http://www.novachemicals.com/ (Investor Relations -- Events/Presentations -- 2004 Fourth Quarter Earnings Report Conference). A replay of the conference call will be available at 416-695-5800 (passcode #3099729) through Wednesday, Feb. 2, 2005. About the Company NOVA Chemicals -- http://www.novachemicals.com/-- produces ethylene, polyethylene, styrene monomer and styrenic polymers, which are used in a wide range of consumer and industrial goods. NOVA Chemicals manufactures its products at 18 operating facilities located in the United States, Canada, France, the Netherlands and the United Kingdom. The company also has five technology centers that support research and development initiatives. NOVA Chemicals Corporation shares trade on the Toronto and New York stock exchanges under the trading symbol NCX. * * * As reported in the Troubled Company Reporter on Dec. 23, 2004, Standard & Poor's Ratings Services revised its outlook on petrochemicals producer Nova Chemicals Corp. to stable from negative. At the same time, Standard & Poor's affirmed the 'BB+' long-term corporate credit and senior unsecured debt ratings on Nova. NRG ENERGY: Inks Pact with New York to Reduce Emissions ------------------------------------------------------- NRG Energy, Inc. (NYSE:NRG) has reached an agreement with the State of New York and the New York Department of Environmental Conservation to reduce levels of sulfur dioxide by over 86 percent and nitrogen oxide by over 80 percent in aggregate at its Huntley and Dunkirk facilities in Western New York. "This milestone agreement signifies NRG's commitment to the State of New York and the environment - it delivers many benefits to the State and its residents, including a faster reduction in emissions than might have otherwise occurred with federal or state legislation," said David Crane, President and Chief Executive Officer. "NRG is committed to the communities where we live and do business and has worked constructively with New York's Office of the Governor, the Attorney-General and the DEC to achieve major environmental improvements. The settlement provides us with the regulatory certainty that we need to ensure these plants continue to meet consumer demand for electricity, in an environmentally sound manner, into the next decade." To meet the requirements of this settlement, NRG will retire units 63 and 64 at its Huntley facility after receiving the appropriate regulatory approvals. Units 65 and 66 will be retired eighteen months later. NRG also has agreed to limits on the transfer of certain federal SO2 allowances. The agreed upon emissions reductions will occur progressively over the next eight years. "NRG's Huntley and Dunkirk plants play a critical role in providing competitively priced and reliable electric power to the region and we are proud that we can achieve this in an environmentally responsible manner," said Caroline Angoorly, NRG Vice President, Environmental & New Business. The agreement resolves a lawsuit brought by the State of New York for alleged noncompliance with the Clean Air Act. The lawsuit arose out of a Notice of Violation (NOV) issued by the DEC for alleged non-compliance with New Source Review regulations that occurred before NRG's acquisition of the facilities. NRG purchased the Huntley and Dunkirk Generating Stations from Niagara Mohawk in June of 1999. Dunkirk Station, a four-unit, 600 MW plant, is located 55 miles southwest of Buffalo, New York. Huntley Station, located three miles north of Buffalo is comprised of six units with a total generating capacity of 760 MW. NRG Energy, Inc., owns and operates a diverse portfolio of power- generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring. * * * As reported in the Troubled Company Reporter on Dec. 14, 2004, Standard & Poor's Ratings Services assigned its 'CCC+' rating to NRG Energy Inc.'s (NRG; B+/Stable/--) proposed $400 million convertible perpetual preferred stock. The outlook is stable. The proceeds of the preferred stock issuance will be used to redeem a portion of NRG's outstanding second priority notes due 2013. In addition, NRG will repurchase 13 million shares of common stock held by investment partnerships managed by MatlinPatterson Global Advisors LLC using available cash. NRG, previously a 100% owned subsidiary of Xcel Energy Inc., emerged from bankruptcy on Dec. 5, 2003, and has operated for one year. It is engaged in the ownership and operation of power generating facilities, primarily in the U.S. merchant power market, thermal production and resource recovery facilities, and various international independent power producers. "NRG has benefited in the past year from high natural gas prices, which have allowed it to maintain high gross margins," said credit analyst Arleen Spangler. "There is little room for a ratings upgrade in the near term based on the high business risk of operating as predominantly a merchant generator where cash flows may be volatile." OWENS CORNING: Overview of the Asbestos Claims Estimation Trial --------------------------------------------------------------- Owens Corning has proposed a plan of reorganization under which it can emerge from chapter 11 free from asbestos-related liabilities. The current draft is labeled a Proposed Fourth Amended Joint Plan of Reorganization and dated October 24, 2003. Owens Corning intends to redraft the Fourth Amended Plan to incorporate a June 2004 Agreement in Principle among the Company, its Official Committee of Asbestos Claimants, the Legal Representative for the class of future asbestos claimants, and the official representatives of the Company's pre-petition bondholders and trade creditors. That Agreement in Principle provides that all holders of bonds, bank debt and senior trade debt recover a basket of cash, new notes and new stock equal to 38.5% of their claims when Owens Corning emerges from Chapter 11. The deal described in the Agreement in Principle is built around these cornerstones: (A) Substantive Consolidation: The Agreement in Principle and the Plan call for the substantive consolidation of Owens Corning and certain of its direct and indirect subsidiaries (but not the Fibreboard Settlement Trust for the purposes of voting, determining which claims and interests will be entitled to vote to accept or reject the Plan, confirmation of the Plan, and the resultant discharge of and cancellation of claims and interests and distribution of assets, interests and other property under the Plan. On October 5, 2004, Judge Fullam issued a Memorandum and Order Concerning Substantive Consolidation that granted the Debtors' motion for substantive consolidation and ordered that counsel for the participating parties meet for the purpose of attempting to achieve an agreed-upon plan of reorganization. On October 13, 2004, the holders of the debt under the Pre-Petition Credit Facility filed an appeal of the Memorandum and Order with the Third Circuit. On November 2, 2004, the Debtors, the Official Committee of Asbestos Claimants, the Legal Representative for the class of future asbestos claimants, and the official representatives of the Company's pre-petition bondholders and trade creditors filed a joint motion to dismiss the appeal on the grounds that the Memorandum and Order is interlocutory (meaning it's not a final judgment) and can't be appealed until after a chapter 11 plan is confirmed. (B) $16 Billion Minimum Value of Asbestos-Related Claims: The Agreement in Principle and the Plan require the Court to find that the value of Owens Corning's present and future liability on account of asbestos-related personal injury claims is no less than $16 billion. On August 19, 2004, Judge Fullam scheduled a claims estimation hearing to begin on January 13, 2005. The purpose of the claims estimation hearing is to establish the amount of current and future asbestos liability to be allowed in the Chapter 11 Cases. If the Court finds that the value is less than the agreed $16 billion amount that the Official Committee of Asbestos Claimants and the Legal Representative for the class of future asbestos claimants have established, the asbestos constituencies have the right, under the Agreement in Principle, to withdraw their support of the Plan. (C) Non-Asbestos Related Claims totaling: Bond debt $1,389,000,000 Senior Trade & Unsecured claims 265,000,000 Bank debt 1,472,000,000 Junior Trade & Unsecured claims 109,000,000 -------------- $3,235,000,000 (D) Enterprise value equal to $3.9 billion; and (E) Distributions to creditors consisting of: Cash $562,000,000 New Debt 1,260,000,000 New Equity 2,400,000,000 -------------- $4,222,000,000 A full-text copy of the Fourth Amended Plan is available at no charge at: http://www.sec.gov/Archives/edgar/data/75234/000095017203003123/balt776357.txt A full-text copy of the Fourth Amended Disclosure Statement is available at no charge at: http://www.sec.gov/Archives/edgar/data/75234/000095017203003123/balt776351ds.txt A full-text copy of the Agreement in Principle is available at no charge at: http://www.sec.gov/Archives/edgar/data/75234/000119312504131427/dex2.htm ASBESTOS PERSONAL-INJURY CLAIMS VALUATION Pick a Number The current question before Judge Fullam is what's the value of Owens Corning's present and future liability on account of asbestos-related personal injury claims? The parties ask Judge Fullam to rule that the $16 billion number ascribed to the company's liability for asbestos-related personal injury claims is too high, on the mark or too low, or can't be determined without more information. $16 Billion Minimum Owens Corning and the signatories to the Agreement in Principle ask Judge Fullam to find that the value of the company's liability is no less than $16 billion. Owens Corning has cut a deal with every constituency except the Banks and a group of dissident bondholders that culminates in a plan of reorganization the Company thinks will pass each of the 13 standards for confirmation under 11 U.S.C. Sec. 1129, and can be confirmed over those two creditor groups' objections. Owens Corning is in the position that, frankly, it doesn't care what the right number is. Owens Corning will plug any number equal to or greater than $16 billion into its Plan, hold the signatories to the Agreement in Principle to that settlement pact, and push the plan through the confirmation process. Owens Corning, in fact, believes that any plan delivering more than a 13% distribution to unsecured creditors that has the support of its asbestos constituencies is confirmable over the objection of its commercial creditors. In a best-case hypothetical chapter 7 liquidation, Owens Corning estimates in the Fourth Amended Disclosure Statement that its estates would reduce to a $1.6 billion to $1.7 billion pile of cash. That would deliver a 13% dividend to unsecured creditors. Because the Plan does not contemplate any distribution to existing Owens Corning shareholders and treats all unsecured creditors equally, any deal delivering more than 13% to unsecured creditors is confirmable under 11 U.S.C. Sec. 1129 whether commercial creditors vote to accept or reject the proposal. $18.6 Billion or More Dr. Mark A. Peterson, the Official Committee of Asbestos Claimants' asbestos claims valuation expert, says that, as of October 5, 2000 (the date Owens Corning filed for chapter 11 protection): * the present value of Owens Corning's liability for present and future asbestos-related bodily injury claims was $11.1 billion; and * the present value of Fibreboard's liability for present and future asbestos-related bodily injury claims was $7.7 billion. The Official Committee of Asbestos Claimants is expected to argue that the $16 billion number is a painful compromise of the real $18.6 billion liability as of four years ago and something larger than that today, and, in all events, multiples of Owens Corning's asset base and enterprise value. That stratospheric valuation, right, wrong or otherwise, renders the Debtors hopelessly insolvent and means the asbestos claimants' take the largest slice of the pie. Dr. Peterson brings 20 years of mass tort litigation experience, having served as an expert or consultant to tort claimants' committees for The Babcock & Wilcox Company, Pittsburgh Corning Corporation, Armstrong World Industries Inc., Burns & Roe Enterprises Inc., G-I Holdings Inc., W.R. Grace & Company, United States Gypsum Corporation, Dow Corning, Raytech Corporation, Fuller Austin Insulation Company Inc., H.K. Porter Company Inc., and six other Chapter 11 restructurings. In addition, he has also rendered consultancy services to the Manville Personal Injury, Eagle-Picher, Celotex and H.K. Porter Asbestos Trusts and other claims resolution settlement trusts. Through his firm, Legal Analysis Systems, Dr. Peterson commands $600 an hour for his services. $13.1 to $18.2 Billion James J. McMonagle, the Legal Representative for Future Claimants, hired Dr. Francine F. Rabinovitz, at Hamilton, Rabinovitz & Alschuler, Inc., as his expert to value the Debtors' pending and future asbesots-related personal injury liability. Dr. Rabinovitz concludes that: * Owens Corning's liability falls between $8.2 billion and $10.7 billion and * Fibreboard's liability falls between $4.9 billion and $7.5 billion $7.4 Billion or Less The Ad Hoc Committee of Bondholders directs Judge Fullam's attention to a report prepared for the Debtors by Thomas E. Vasquez, Ph.D. On the Debtors' behalf, at the request of Debevoise & Plimpton, Dr. Vasquez prepared a report on _____ __, 200_, estimating the Debtors' asbestos-related liability for the period from October 5, 2000 through 2049, at: Summary of the Total Cost Necessary to Resolve All Future Claims to be Filed Against Owens Corning and Fibreboard (in Billions of Dollars) Low Estimate High Estimate ---------------- ---------------- Nominal Present Nominal Present Value Value Value Value ------- ------- ------- ------ Owens Corning $4.2 $2.0 $6.9 $3.2 Fibreboard 2.9 1.3 5.1 2.3 Administrative & Defense Costs 0.3 0.1 0.3 0.1 ------- ------- ------- ------ $7.4 $3.5 $12.2 $5.7 Pending claims against Owens Corning, which the Debtors have separately valued at $1.4 billion to $1.7 billion, must be added to Dr. Vasquez's estimates of future claims to tabulate total asbestos-related liability. Dr. Vasquez bases his estimates on negotiated settlement amounts for future claims agreed to under the National Settlement Program and other historical data obtained from the Debtors. Dr. Vasquez employs a valuation methodology similar to the methodology used by Drs. Peterson and Rabinovitz. The Bondholders make their position clear to Judge Fullam: they despise the Plan. They contend that the Plan can't be confirmed over their dissent because it unfairly discriminates against them and is inequitable because it provides for an unreasonably low $3.9 billion enterprise value and an unfathomable $16 billion valuation of the Debtors' asbestos-related liability. The Bondholders assert the $16 billion estimate is an unsupportable, fictitious number backed into so that the Plan Proponents can allocate a disproportionate percentage of the estate to asbestos claimants. The Bondholders observe that the $16 billion number is: * nearly triple the amount reported by the Debtors in their 2004 SEC filings; and * more than four times the value of asbestos liabilities disclosed by the Debtors in their pre-petition SEC filings. The Bondholders say Dr. Vasquez's $5.7 billion estimate is artificially inflated. The Bondholders tell Judge Fullam that they are aligned with the Banks in the Estimation Proceeding and support the Banks' argument that the liability is far less than the negotiated $16 billion amount underpinning the Agreement in Principle. $1.3 to $2.5 Billion Credit Suisse First Boston, as Agent for Owens Corning's prepetition lending consortium, arguez that the value of Owens Corning's asbestos-related liability is a fraction of what Drs. Peterson, Rabinovitz and Vasquez think. CSFB has retained Dr. Frederick C. Dunbar as its asbestos claims valuation expert. Dr. Dunbar is Senior Vice President at National Economic Research Associates, Inc., and has been involved in estimating mass tort liability in Combustion Engineering, Inc.; The Babcock & Wilcox Company, et al.; National Gypsum Company; Robert A. Falise, et al., v. The American Tobacco Company, et al.; Pacific Gas & Electric Company; Johns-Manville Corporation and Dow Corning Corporation. Dr. Dunbar is prepared to testify that Owens Corning's and Fibreboard's present and future asbestos-related personal injury liability: * has a net present value of $1.3 billion to $1.6 billion; and * has a nominal value of $2.1 billion to $2.5 billion. Dr. Dunbar's computation excludes $439 million of liability associated with contract claims. What Drives the Different Valuations Drs. Peterson and Rabinovitz, the asbestos claimants' experts, rely on epidemiological forecasts of cancer deaths attributed to asbestos exposure to extrapolate the number of future claims. Their estimates of future nonmalignant claims are calculated by applying a multiple to the number of projected cancer claims. These numbers of future claims are then multiplied by estimates about a claimants' propensity to sue Owens Corning based on historical data. The number of future claims is then multiplied (on a disease-class-by-disease-class basis) by Owens Corning's historical settlement payments to claimants, inflated for increases in the cost of living over time, and the sum of all of that is discounted to present value. Dr. Dunbar, the Banks' asbestos valuation expert, starts his analysis using epidemiological forecasts similar to his colleagues'. Dr. Dunbar's lower valuation is the result of using lower multiples, higher discount rates, and restricting payments to claimants who can demonstrate that they are sick or were actually exposed to Owens Corning's products. The asbestos constituencies argue that a claim in a bankruptcy case is determined based on a creditor's right to payment under applicable substantive non-bankruptcy law. The asbestos constituencies say that this hornbook principle means that the estimation must approximate as reliably as possible the likely amounts that Owens Corning would, but for its bankruptcy filing, have had to pay to dispose of claims brought against it in the tort system. This, the asbestos constituencies argue, is what the law requires and what's been done in every mass-tort bankruptcy to date. The Banks, in turn, argue that people who aren't sick or can't demonstrate that they were ever exposed to the Debtors' products don't have valid claims in a bankruptcy case and their claims in bankruptcy must be disallowed. The Banks tells Judge Fullam that Dr. Peterson's forecast of Owens Corning's future asbestos liabilities "is merely a mechanical exercise in arithmetic, cloaked in complicated statistical jargon and a plethora of charts and graphs." The asbestos constituencies charge that Dr. Dunbar's uses junk science estimates based on improper assumptions that use arbitrary criteria he created to arrive at conclusions about what he thinks should happen in a bankruptcy case rather than what the law requires. The Bondholders intend to present evidence at the Estimation Hearing to convince Judge Fullam that the Debtors' settlement history alone does not tell the true story of the Debtors' asbestos-related liabilities and that more information is necessary. In the tort system, Owens Corning says it and other asbestos defendants tried to address the problem of unimpaired cases by taking the medical weaknesses of the claims into account during settlement negotiations. Contrary to the Bank Debt Holders' arguments, Owens Corning tells Judge Fullam, these unimpaired cases cannot simply be cut out of the estimation. Owens Corning says these cases' strengths and weaknesses have already been factored into the Debtors' overall settlement history. Owens Corning explains that the current $3.6 billion reserve on its financial statements is based on a valuation of pending cases calculated in-house by Mark Mayer, the Company's Vice President for Corporate Accounting and External Reporting based, in part, on Dr. Vasquez's work. Consistent with generally accepted accounting principles, Mr. Mayer selected the low point in the range of those reasonable estimates. Financial reserves established under GAAP require the estimation of "probable and reasonably estimable" contingent liabilities. In practice, that means forecasting liabilities a few years into the future and allows companies to select the low point in a range of reasonable estimates. GAAP has nothing to do with estimating a debtor's total present and future liabilities in a chapter 11 proceeding in accordance with Sec. 502 of the Bankruptcy Code to meet the requirements of Secs. 524(g) and 1129 of the Bankruptcy Code, the Debtors argue. Owens Corning notes that it's always indicated in its SEC filings that other reasonable estimates could exist and that those estimates could be substantially higher than $3.6 billion. The Banks provide Judge Fullam with a handy chart showing the high end of the four experts' average forecast claim values: Disease Level Dunbar Vasquez Rabinovitz Peterson ------------- ------ ------- ---------- -------- Mesothelomia $134,877 $137,863 $196,664 $185,462 Lung Cancer 31,858 32,276 38,160 40,883 Other Cancer 15,494 13,997 15,893 17,471 Nonmalignant 10,278 8,415 6,427 7,080 Unimpaired 0 5,870 6,427 7,080 Understanding the Economics The Plan and the Agreement in Principle are the product of a compromise among the Debtors, the Official Committee of Asbestos Claimants, the Legal Representative for the class of future asbestos claimants, and the official representatives of the Company's pre-petition bondholders and trade creditors. The parties' agreement to a fixed 38.5% recovery delivers greater value to creditors than, based on the economics buried in the Fourth Amended Plan and Agreement in Principle, they'd receive if asbestos-related claims were valued at anything less than about $7 billion. By arguing that the Debtors' asbestos liability is $1.3 to $2.5 billion, the Banks, accordingly (and not accounting for any compromise of the substantive consolidation ruling), are fighting for a 70% to 80% recovery on account of their claims rather than the 38.5% recovery under the existing Plan premised on a minimum $16 billion value attributable to asbestos-related personal injury claims. If Judge Fullam accepts Dr. Peterson's $18 billion to $19 billion valuation, the Banks' recoveries would fall to 17% absent the deal under the Agreement in Principe, and (again, assuming no compromise of the substantive consolidation issue) fall further if Judge Fullam found the value to be higher: And a Pro-Rata Assuming And Then Distribution to Owens' Cornings' Non-Asbestos Owens Corning's all Unsecured Asbestos-Related Claims Total Debts Creditors Would Be Liability Equals Total Equal Equal to ---------------- ------------- --------------- ------------------ $750,000,000 $3,235,000,000 $3,985,000,000 98% 1,500,000,000 3,235,000,000 4,735,000,000 82% 2,250,000,000 3,235,000,000 5,485,000,000 71% 3,000,000,000 3,235,000,000 6,235,000,000 63% 3,750,000,000 3,235,000,000 6,985,000,000 56% 4,500,000,000 3,235,000,000 7,735,000,000 50% 5,250,000,000 3,235,000,000 8,485,000,000 46% 6,000,000,000 3,235,000,000 9,235,000,000 42% 6,750,000,000 3,235,000,000 9,985,000,000 39% 7,500,000,000 3,235,000,000 10,735,000,000 36% 8,250,000,000 3,235,000,000 11,485,000,000 34% 9,000,000,000 3,235,000,000 12,235,000,000 32% 9,750,000,000 3,235,000,000 12,985,000,000 30% 10,500,000,000 3,235,000,000 13,735,000,000 28% 11,250,000,000 3,235,000,000 14,485,000,000 27% 12,000,000,000 3,235,000,000 15,235,000,000 26% 12,750,000,000 3,235,000,000 15,985,000,000 24% 13,500,000,000 3,235,000,000 16,735,000,000 23% 14,250,000,000 3,235,000,000 17,485,000,000 22% 15,000,000,000 3,235,000,000 18,235,000,000 21% 15,750,000,000 3,235,000,000 18,985,000,000 21% 16,500,000,000 3,235,000,000 19,735,000,000 20% 17,250,000,000 3,235,000,000 20,485,000,000 19% 18,000,000,000 3,235,000,000 21,235,000,000 18% 18,750,000,000 3,235,000,000 21,985,000,000 18% 19,500,000,000 3,235,000,000 22,735,000,000 17% 20,250,000,000 3,235,000,000 23,485,000,000 17% 21,000,000,000 3,235,000,000 24,235,000,000 16% 21,750,000,000 3,235,000,000 24,985,000,000 16% 22,500,000,000 3,235,000,000 25,735,000,000 15% 23,250,000,000 3,235,000,000 26,485,000,000 15% 24,000,000,000 3,235,000,000 27,235,000,000 14% 24,750,000,000 3,235,000,000 27,985,000,000 14% 25,500,000,000 3,235,000,000 28,735,000,000 14% 26,250,000,000 3,235,000,000 29,485,000,000 13% 27,000,000,000 3,235,000,000 30,235,000,000 13% 27,750,000,000 3,235,000,000 30,985,000,000 13% 28,500,000,000 3,235,000,000 31,735,000,000 12% 29,250,000,000 3,235,000,000 32,485,000,000 12% 30,000,000,000 3,235,000,000 33,235,000,000 12% Of course, any ruling by Judge Fullam that the value of the asbestos liability is anything less than $16 billion causes the Agreement in Principle to fall apart by its own terms. Insurance Coverage Issues Century Indemnity Co., as successor-in-interest to CCI Insurance Company, as successor-in-interest to Insurance Company of North America and Central National Insurance Company, is engaged in an on-going dispute with Owens Corning about whether or not policies have been exhausted or whether additional coverage is available under a "non-products" coverage theory. That theory is built around an argument that policyholders who have long since exhausted their asbestos "products" coverage can re-classify their prior claims as "operations" and then argue that additional coverage is available. That dispute, Century tells Judge Fullam, has no bearing on estimation of the Debtors' asbestos-related liability. Century delivered a Motion in Limine to Judge Fullam asking for a ruling in advance of the estimation hearing that no discussion of "products" or "non-products" claims will be entertained and that any evidence about "products" or "non- products" claim classification is irrelevant to the estimation proceeding. Trial Starts Today Judge Fullam has scheduled a seven-day trial to answer the question of what number appropriately reflects Owens Corning's asbestos-related liability. The Trial commences today, Jan. 13, and is scheduled to run day-to-day through Fri., Jan. 21. Judge Fullam has indicated that, at this juncture, the historical data available from Owens Corning's and Fibreboard's asbestos claims databases and the parties' experience in other asbestos- related litigation and restructurings, viewed in light of the expert testimony to be presented by the parties at the claims estimation hearing "should probably suffice for Claims Estimation purposes." If by the end of the hearing Judge Fullam thinks he needs more information, he'll ask for it at that time. OWENS CORNING: Index of Key Asbestos Claims Estimation Pleadings ---------------------------------------------------------------- The key pleadings before Judge Fullam in connection with the estimation of the Debtors' present and future asbestos-related personal injury liabilities are available to subscribers of OWENS CORNING BANKRUPTCY NEWS and the TROUBLED COMPANY REPORTER at no charge: 1 Motion of the Debtors for Estimation of Present and Future Asbestos Personal Injury Liabilities http://bankrupt.com/misc/OWCTab1.pdf 2 Response and Objection of Credit Suisse First Boston, as Agent, to Motion of the Debtors for Estimation of Present and Future Asbestos Personal Injury Liabilities http://bankrupt.com/misc/OWCTab2.pdf Exhibit C -- Booklet entitled "Asbestos Litigation and Judicial Leadership: The Courts' Duty to Help Solve the Asbestos Litigation Crisis" by Griffin B. Bell published June 2002 http://bankrupt.com/misc/OWCTab2C.pdf Exhibit D -- Article by Joseph N. Gitlin entitled "Comparison of 'B' Readers' Interpretations of Chest Radiographs for Asbestos Related Changes published August 2004 http://bankrupt.com/misc/OWCTab2D.pdf Exhibit E -- Article by Murray L. Janower, MD, entitled "'B' Readers' Radiographic Interpretations in Asbestos Litigation: Is Something Rotten in the Courtroom?" published August 2004 http://bankrupt.com/misc/OWCTab2E.pdf 3 Opposition of the Ad Hoc Committee of Bondholders to Debtors' Motion for Estimation of Present and Future Asbestos Personal Injury Liabilities http://bankrupt.com/misc/OWCTab3.pdf 4 Order dated August 19, 2004, directing Estimation Hearing to commence on Jan. 13, 2005, before Judge Fullam in Philadelphia and Memorandum and Order denying CSFB's request to delay hearing and obtain a sample of medical records http://bankrupt.com/misc/OWCTab4.pdf 5 Transcript (1 of 2) preceding Judge Fullam's Aug. 19 ruling to hold an Estimation Hearing http://bankrupt.com/misc/OWCTab5.pdf 6 Transcript (2 of 2) preceding Judge Fullam's Aug. 19 ruling to hold an Estimation Hearing http://bankrupt.com/misc/OWCTab6.pdf 7 Report of Samuel P. Hammar, M.D., on Asbestos-Induced Lung and Pleural Disease prepared for the Asbestos Claimants Committee concerning the history of asbestos usage and the pathology of asbestos-related diseases. http://bankrupt.com/misc/OWCTab7.pdf Exhibit 1 -- Dr. Hammar's Curriculum Vitae http://bankrupt.com/misc/OWCTab7A.pdf Exhibit 2 -- Dr. Hammar's List of Trials & Depositions http://bankrupt.com/misc/OWCTab7B.pdf 8 Report prepared by Loreto T. Tersigni, CPA, CFE, on behalf of the Asbestos Claimants Committee concerning the discount rate that should be used to calculate the present value of Owens Corning's asbestos obligations and Mr. Tersigni's Resume http://bankrupt.com/misc/OWCTab8.pdf 9 Expert Report prepared by Laura S. Welch, MD, FACP, FACOEM, for the Asbestos Claimants Committee concerning the diagnosis of asbestos-related diseases and challenging Dr. Gary K. Friedman's conclusions http://bankrupt.com/misc/OWCTab9.pdf Exhibits 1, 2 and 3 -- Dr. Welch's Curriculum Vitae and List of trials and depositions http://bankrupt.com/misc/OWCTab9A.pdf Exhibit 4 -- Charts, graphs and data tables concerning asbestosis mortality and morbidity rates and other asbestos exposures http://bankrupt.com/misc/OWCTab9B.pdf 10 Report on Owens Corning and Fibreboard Projected Liabilities for Asbestos Personal Injury Claims as of October 2000 prepared for the Asbestos Claimants Committee by Mark A. Peterson of Legal Analysis Systems valuing the liability north of $18 billion http://bankrupt.com/misc/OWCTab10.pdf 11 Expert Report of James E. Hass of Hamilton, Rabinovitz & Alschuler, Inc., for the Future Claimants Representative Regarding Interest Rates and Discount Rates for the Estimation of Asbestos Personal Injury Liabilities http://bankrupt.com/misc/OWCTab11.pdf 12 Motion by Credit Suisse First Boston, as Agent, for Authority to File Under Seal Expert Report of Dr. Joseph N. Gitlin, and notice of limited service of a redacted version on core parties-in-interest http://bankrupt.com/misc/OWCTab12.pdf 13 Joint Expert Report by Hans Weill, M.D., and Angrew Churg, M.D., Ph.D., entitled, "The Asbestos-related Diseases: Current and Future Status," prepared for CSFB http://bankrupt.com/misc/OWCTab13.pdf Exhibit A -- Dr. Weill's Resume, Curriculum Vitae and list of 201 publications http://bankrupt.com/misc/OWCTab13A.pdf Exhibit B -- Dr. Churg's Curriculum Vitae and list of more than 250 publications http://bankrupt.com/misc/OWCTab13B.pdf Exhibit C -- List of Dr. Weill's Trial and Deposition Testimony http://bankrupt.com/misc/OWCTab13C.pdf Exhibit D -- List of Dr. Churg's Trial and Deposition Testimony http://bankrupt.com/misc/OWCTab13C.pdf 14 Expert Report by Michelle White, Ph.D., for CSFB, concerning the plaintiffs' damage awards based on trail venue and consolidation and Dr. White's Curriculum Vitae http://bankrupt.com/misc/OWCTab14.pdf 15 Expert Report by Professor Lester Brickman for CSFB concerning the Entrepreneurial Model in asbestos litigation and concluding that historical nonmalignant claim filing and settlement patterns are not an accurate prediction of future asbestos liability http://bankrupt.com/misc/OWCTab15.pdf Exhibit A -- Statement of Qualifications of Lester Brickman http://bankrupt.com/misc/OWCTab15A.pdf 16 Expert Report by Dr. Lee Sider for CSFB concluding that the International Labour Organization (ILO) x-ray classification system often is used improperly and was never intended as a litigation tool http://bankrupt.com/misc/OWCTab16.pdf 17 Expert Report by Frederick C. Dunbar for CSFB estimating Owens Corning's and Fibreboard's present and future asbestos-related personal injury liability at $1.8 to $2.2 billion (see Report at 24 and summary in Exhibit 6) http://bankrupt.com/misc/OWCTab17.pdf 18 Expert Report of Gustavo E. Bamberger, Sr. Vice President of Lexecon, Inc., on behalf of Century Indemnity Company, criticizing Dr. Peterson's future asbestos claims valuation methodology and sensitivity analysis http://bankrupt.com/misc/OWCTab18.pdf 19 Report by Dr. Francine F. Rabinovitz on behalf of the Future Claimants Representative estimating Owens Corning's pending and future asbesots-related personal injury liability at $8.2 billion to $10.7 billion and Fibreboard's liability at $4.9 billion to $7.5 billion http://bankrupt.com/misc/OWCTab19.pdf 20 Supplemental Report of Dr. Joseph Gitlin on behalf of CSFB concerning the protocol used in his most recent study and the study on which an article in the August 2004 edition of Academic Radiology is based http://bankrupt.com/misc/OWCTab20.pdf 21 Rebuttal Report of Frederick C. Dunbar on behalf of CSFB challenging the Asbestos Claimants Committee's experts' estimates, and forecasts and projections http://bankrupt.com/misc/OWCTab21.pdf 22 Supplemental Report of Hans Weill, M.D., on behalf of CSFB, criticizing Dr. Welch's Expert Report http://bankrupt.com/misc/OWCTab22.pdf 23 Supplemental Report of Lester Brickman, on behalf of CSFB, saying that the Trust Distribution Procedures contained in the Debtors' Fourth Amended Plan are flawed because they fail to recognize only legitimate claims http://bankrupt.com/misc/OWCTab23.pdf 24 Supplemental Report by Mark A. Peterson at Legal Analysis Systems, defending his use of data based on Owens Corning's actual experience in asbestos litigation to make his forecasts and criticizing Dr. Dunbar for applying a set of rules that he and his clients favor and produce results that are wildly inconsistent with Owens Corning's past experience http://bankrupt.com/misc/OWCTab24.pdf 25 Supplemental Report of Frederick C. Dunbar for CSFB estimating the net present value of Owens Corning's and Fibreboard's present and future asbestos-related personal injury liability at $1.3 billion to $1.6 billion (a nominal value of $2.1 billion to $2.5 billion) (excluding $439 million of liability associated with contract claims) http://bankrupt.com/misc/OWCTab25.pdf 26 Objection and Response of Mark A. Peterson, Ph.D., to the Subpoena Issued by Credit Suisse First Boston, as Agent for the Bank Group http://bankrupt.com/misc/OWCTab26.pdf 27 Rebuttal Report of Dr. Francine F. Rabinovitz in Connection with Asbestos Estimation, on behalf of the Future Claimants Representative, criticizing Dr. Dunbar's assumptions, contentions, methodology, and conclusions http://bankrupt.com/misc/OWCTab27.pdf 28 Bondholders' Witness List http://bankrupt.com/misc/OWCTab28.pdf 29 Designated Members' Witness List http://bankrupt.com/misc/OWCTab29.pdf 30 Century Indemnity's Witness List http://bankrupt.com/misc/OWCTab30.pdf 31 Plan Proponents' Trial Witness List http://bankrupt.com/misc/OWCTab31.pdf 32 Banks' Trial Witness List http://bankrupt.com/misc/OWCTab32.pdf 33 Plan Proponents' Motion In Limine to Exclude Expert Testimony of Dr. Frederick C. Dunbar and Memorandum of Law in Support http://bankrupt.com/misc/OWCTab33.pdf 34 Motion of Credit Suisse First Boston, as Agent, for an Order Barring the Plan Proponents from Offering Evidence or Testimony for the Purpose of Challenging the Statistical Validity or Methods or Samples Underlying Medical Reports prepared by Dr. Gary K. Friedman, a team at John Hopkins Medical Institutions http://bankrupt.com/misc/OWCTab34.pdf 35 CSFB's Conditional Motion In Limine to Exclude Expert Testimony of Mark Peterson and Francine Rabinovitz straying from the narrow statistical and quantitative analyses underlying their forecasts (i.e., CSFB doesn't want Drs. Peterson and Rabinovitz opining about medical and epidemiological standards, trends in asbestos litigation, the impact of judicial developments in asbestos litigation or attorney-sponsored screenings) http://bankrupt.com/misc/OWCTab35.pdf 36 Century Indemnity Co.'s Motion In Limine to Preclude Testimony or Evidence on Insurance Coverage Issues http://bankrupt.com/misc/OWCTab36.pdf 37 Asbestos Constituencies' Pre-Trial Statement http://bankrupt.com/misc/OWCTab37.pdf 38 Bondholders' Pre-Trial Statement http://bankrupt.com/misc/OWCTab38.pdf Exhibit A -- Report entitled Forecast of Future Asbestos Claims and Indemnity: Owens Corning and Fibreboard, prepared for Owens Corning and Fibreboard Corporation by Thomas E. Vasquez, Ph.D. http://bankrupt.com/misc/OWCTab38A.pdf 39 Debtors' Pre-Trial Statement http://bankrupt.com/misc/OWCTab39.pdf 40 Banks' Pre-Trial Statement http://bankrupt.com/misc/OWCTab40.pdf OWENS CORNING: List of Key Players in the Estimation Proceeding --------------------------------------------------------------- The major constituencies participating in the Owens Corning Asbestos Claims Estimation Hearing and their professionals are: THE HONORABLE JOHN P. FULLAM, presiding: United States District Court Eastern District of Philadelphia United States Courthouse 601 Market Street, Courtroom 15614 Philadelphia, Pennsylvania 19106-1780 Judge Fullam was born in 1921 in Gardenville, Pa. He was nominated to serve as a U.S. District Court judge by President Lyndon B. Johnson on January 19, 1966, to fill a seat vacated by Abraham Lincoln Freedman. The Senate confirmed his nomination August 10, 1966, and he received his commission on August 11, 1966. Judge Fullam served as chief judge of in the E.D. Pa. from 1986 to 1990, and assumed senior status on April 1, 1990. Judge Fullam graduated from Villanova University with a B.S. in 1942. He then served in the U.S. Naval Reserve for two years before entering Harvard Law School in 1946 and graduating in 1948. Prior to his lifetime appointment to the Federal judiciary, Judge Fullam spent a dozen years in private practice in Bristol, Pennsylvania (1948 to 1960), and served for six years as a Judge in the Court of Common Pleas of Bucks County, Pennsylvania (1960-1966). THE PLAN PROPONENTS: OWENS CORNING, the Debtor: Lead Counsel: Norman L. Pernick, Esq. J. Kate Stickles, Esq. SAUL EWING LLP 222 Delaware Avenue Wilmington, DE 19899 Telephone (302) 421-6800 - and - Charles O. Monk, II, Esq. Jay A. Shulman, Esq. Edith K. Altice, Esq. SAUL EWING LLP 100 South Charles Street Baltimore, Maryland 21201-2773 Telephone (410) 332-8668 - and - Adam H. Isenberg, Esq. MaryJo Bellew, Esq. SAUL EWING LLP Centre Square West 1500 Market Street, 38th Floor Philadelphia, PA 19102-2186 Telephone (215) 972-7777 Special Counsel: Roger E. Podesta, Esq. Mary Beth Hogan, Esq. Sean Mack, Esq. DEBEVOISE & PLIMPTON LLP 919 Third Avenue New York, New York 10022 Telephone (212) 909-6000 - and - Mitchell F. Dolin, Esq. Anna P. Engh, Esq. COVINGTON & BURLING 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2401 Telephone (202) 662-6000 - and - D.J. Baker, Esq. Ralph Arditi, Esq. Skadden, Arps, Slate, Meagher & Flom Four Times Square New York, New York 10036-6522 Telephone (212) 735-3000 - and - David. R. Hurst, Esq. Skadden, Arps, Slate, Meagher & Flom One Rodney Square P.O. Box 636 Wilmington, Delaware 19899 Telephone (302) 651-3000 THE OFFICIAL COMMITTEE OF ASBESTOS CLAIMANTS: Lead Counsel: Elihu Inselbuch, Esq. CAPLIN & DRYSDALE, CHARTERED 399 Park Avenue, 27th Floor New York, New York 10022 Telephone (212) 319-7125 - and - Walter B. Slocombe, Esq. Nathan D. Finch, Esq. Peter Van N. Lockwood, Esq. Julie W. Davis CAPLIN & DRYSDALE, CHARTERED One Thomas Circle, NW, 11th Floor Washington, DC 20005 Telephone (202) 862-5000 Local Counsel: CAMPBELL & LEVINE, LLC Maria R. Eskin, Esq. Mark T. Hurford, Esq. 800 King Street, Suite 300 Wilmington, Delaware 19801 Telephone (302) 426-1900 Experts: Samuel P. Hammar, M.D., F.C.C.P. PAKC/DSL 700 Lebo Boulevard Bremerton, WA 98310 Telephone (360) 479-7707 - and - Loreto T. Tersigni, CPA, CFE L Tersigni Consulting P.C. ____________________________ ____________________________ - and - Dr. Laura Stewart Welch Center to Protect Workers Rights 8484 Georgia Ave. Silver Spring, MD 20910 Telephone (301) 578-8500 - and - Mark A. Peterson Legal Analysis Systems 1700 Main Street Santa Monica, CA 90406 Telephone (310) 393-0411 THE FUTURE CLAIMANTS' REPRESENTATIVE: The FCR: James J. McMonagle, Esq. Vorys Sater Seymour & Pease LLP 2100 One Cleveland Center 1375 E. Ninth Street Cleveland, OH 44114 Telephone (216) 479-6158 Facsimile (216) 937-3734 Lead Counsel: Jane W. Parver, Esq. Michael J. Crames, Esq. Andrew A. Kress, Esq. Edmund M. Emrich, Esq. KAYE SCHOLER LLP 425 Park Avenue New York, New York 10022 Telephone (212) 836-8000 Local Counsel: James L. Patton, Esq. Edwin J. Harron, Esq. YOUNG CONAWAY STARGATT & TAYLOR, LLP The Brandywine Building 1000 West Street, 17th Floor P.O. Box 391 Wilmington, Delaware 19899-0391 Telephone (302) 571-6600 Experts: Francine F. Rabinovitz, Ph.D. Hamilton, Rabinovitz & Alschuler, Inc 6033 W. Century Boulevard, Suite 890 Los Angeles, CA 90045 Telephone (310) 645-9000 - and - James E. Hass Hamilton, Rabinovitz & Alschuler, Inc Washington, D.C. Telephone (202) 841-8555 DESIGNATED TRADE CREDITORS AND BONDHOLDERS OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS (PPM America, Inc., and John Hancock Life Insurance Company): Counsel: J. Andrew Rahl, Esq. Howard D. Ressler, Esq. ANDERSON KILL OLICK, P.C. 1251 Avenue of the Americas New York, NY 10020 Telephone (212) 278-1000 - and - Francis A. Monaco, Jr., Esq. MONZACK & MONACO, P.A. 1201 Orange Street, Suite 400 Wilmington, DE 19801 PARTIES OPPOSING & OTHERWISE CHALLENGING THE PLAN: CREDIT SUISSE FIRST BOSTON, as agent for the prepetition institutional lenders: Lead Counsel: Martin J. Bienenstock, Esq. Richard A. Rothman, Esq. WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, NY 10153 Telephone (212) 310-8000 Facsimile (212) 310-8007 - and - Ralph I. Miller, Esq. WEIL, GOTSHAL & MANGES LLP 100 Crescent Court, Suite 1300 Dallas, TX 75201-6950 Telephone (214) 746-7700 Facsimile (214) 746-7777 - and - David A. Hickerson, Esq. WEIL, GOTSHAL & MANGES LLP 1501 K Street, N.W., Suite 100 Washington, D.C. 20005 Telephone (202) 682-7000 Facsimile (202) 857-0940 - and - Kenneth H. Eckstein, Esq. Jeffrey S. Trachtman, Esq. KRAMER LEVIN NAFTALIS & FRANKEL LLP 919 Third Avenue New York, NY 10022 Telephone (212) 715-9100 Facsimile (212) 715-8000 Local Counsel: Richard S. Cobb, Esq. Rebecca L. Butcher, Esq. LANDIS RATH & COBB LLP 919 Market Street, Suite 600 Wilmington, DE 19810 Telephone (302) 467-4400 Facsimile (302) 467-4450 Experts: Dr. Frederick C. Dunbar Senior Vice President National Economic Research Associates, Inc. 1166 Avenue of the Americas, 34th Floor New York, NY 10036 Telephone (212) 345-5378 - and - Dr. Joseph N. Gitlin - and - Andrew Marc Churg, M.D., Ph.D. - and - Hans Weill, M.D. 755 Hearthstone Dr. 10 Falcon Drive Bassalt, CO 81621 or Mandeville, LA 70471 Tel. (970) 927-9321 Tel. (985) 624-5458 - and - Michelle J. White, Ph.D. Professor of Economics Department of Economics University of California, San Diego La Jolla, CA 92093-0508 Telephone (858) 534-2783 - and - Professor Lester Brickman Cardozo Law School 55 Fifth Avenue New York, NY 10003 Telephone (212) 790-0327 - and - Lee Sider, M.D., MBA Beth Israel Medical Center Department of Radiology, 2nd Floor 16th and First Avenue New York, NY 10003 AD HOC COMMITTEE OF BONDHOLDERS, asserting that they collectively hold $469.8 million of prepetition bonds: The Ad Hoc Committee Members: King Street Capital Management, L.L.C. 65 East 55th Street, 30th Floor New York, New York 10022 D.E. Shaw & Co. 120 W. 45th Street New York, NY 10036 Harbert Management Corporation 555 Madison Avenue, Suite 1600 New York, NY 10022 Canyon Partners Inc. 9665 Wilshire Boulevard, Suite 200 Beverly Hills CA 90212 Lehman Brothers Inc. 745 Seventh Avenue New York NY 10019-6801 Committee Counsel: Lewis Kruger, Esq. Kenneth Pasquale, Esq. STROOCK & STROOCK & LAVAN LLP 180 Maiden Lane New York, NY 10038-4982 Telephone (212) 806-5400 Facsimile (212) 806-6006 - and - William S. Katchen, Esq. Michael Lastowski, Esq. Richard W. Riley, Esq. DUANE MORRIS LLP 1100 North Market Street, Suite 1200 Wilmington, DE 19801 Telephone (302) 657-4942 CENTURY INDEMNITY COMPANY, as successor-in-interest to CCI Insurance Company, as successor-in-interest to Insurance Company of North America and Central National Insurance Company: Counsel: Tancred V. Schiavoni, Esq. Gerald A. Stein, Esq. Robert Winter, Esq. O'MELVENY & MYERS LLP Times Square Tower 7 Times Square New York, NY 10036 Telephone (212) 326-2000 - and - Linda M. Carmichael, Esq. WHITE AND WILLIAMS LLP 824 Market Street, Suite 902 Wilmington, DE 19899-0709 Telephone (302) 467-4502 Facsimile (302) 467-4552 Expert: Gustavo E. Bamberger Senior Vice President Lexecon, Inc. 332 South Michigan Ave., Suite 1300 Chicago, IL 60604 Telephone (312) 322-0276 PEOPLESUPPORT INC: Posts $1.9 Million Restated 3rd Qtr. Net Income ------------------------------------------------------------------ PeopleSupport, Inc. (Nasdaq: PSPT), reported that it is restating its financial statements for the quarter ended Sept 30, 2004 to exclude a charge related to payment obligations of $4.8 million under its management incentive plan in connection with the company's initial public offering and to make other adjustments related to obligations under the plan. The charge will instead be reflected in the fourth quarter of 2004 and reported when the company reports its 2004 year-end results. As a result of the adjustments, restated net income calculated in accordance with GAAP for the third quarter of 2004 was $1.9 million, as compared with a previously reported net loss of $2.7 million. The accounting adjustments have no impact on the pro forma financial results reported for the third quarter of 2004, which already excluded the incentive payments. The adjustments will not affect 2004 revenues, net income (loss) or cash flows because the charge will be shifted from the third to the fourth quarter. As a result of its IPO, the company became obligated to make $4.8 million in payments under its management incentive plan to senior management and other employees. The IPO priced on Sept 30, 2004 and closed on Oct. 6, 2004, with the payments being made shortly thereafter. In preparing the company's financial statements for the quarter ended Sept 30, 2004, the $4.8 million paid under the incentive plan was recorded on Sept 30 because by Sept 30 the registration statement for the offering had been declared effective by the SEC, the offering had priced and the management payments were highly probable. The decision to record the charge in the third quarter was made after consultation with, and the concurrence of, the company's independent accountants. Subsequently, upon further analysis, the company concluded that the event triggering the payment obligations was the closing of, and the receipt of funds from, the offering, and the charge should have been recorded at that time. About the Company PeopleSupport, Inc., is an offshore business process outsourcing provider that offers customer management and accounts receivable management services for U.S.-based clients from its facilities in the Philippines. At Sept. 30, 2004, PeopleSupport's balance sheet showed a $51,477,000 restated stockholders' deficit, compared to a $56,611,000 at Dec 31, 2003. PERRY ELLIS: Inks License Agreement with Lantis Eyewear ------------------------------------------------------- Perry Ellis International (NASDAQ:PERY) has entered into a license agreement with Lantis Eyewear for the manufacture and domestic distribution of men's and women's sunglasses under the Perry Ellis(R), Perry Ellis Portfolio(R) and Perry Ellis America(R) brands. The agreement is a three year term that lasts through the end of 2007. "Lantis Eyewear has built a strong reputation for the quality of its product and for the strength and breadth of its distribution," said Rachel Barnett, president of licensing for Perry Ellis International. "This agreement enables us to expand the range of accessories offered under the brand and to offer our consumer another opportunity to proudly wear Perry Ellis(R)." Scott Sennett, executive vice president at Lantis Eyewear, said: "We are thrilled to partner with Perry Ellis International. This powerful brand will occupy a special place in our portfolio and will create many new opportunities for success." Lantis will launch the eyewear for fall 2005. The target distribution is through department stores and sunglass specialty stores. About Lantis Eyewear Lantis Eyewear Corporation is a leading designer, marketer and distributor of quality eyewear products, including sunglasses, readers and optical frames. Its licensed and proprietary brand name products are distributed extensively throughout the Americas. About Perry Ellis International Perry Ellis International, Inc. -- http://www.pery.com/-- is a leading designer, distributor and licensor of a broad line of high quality men's and women's apparel, accessories, and fragrances, including dress and casual shirts, golf sportswear, sweaters, dress and casual pants and shorts, jeans wear, active wear and men's and women's swimwear to all major levels of retail distribution. * * * As reported in the Troubled Company Reporter on Dec. 21, 2004, Standard & Poor's Ratings Services revised its outlook on apparel company Perry Ellis International Inc. -- PERY -- to negative from stable. At the same time, Standard & Poor's affirmed its ratings on the Miami, Florida-based company, including its 'B+' corporate credit rating. Total debt outstanding at Oct. 31, 2004, was about $222 million. QUEBECOR MEDIA: Names J. Richard as VP for Advertising Convergence ------------------------------------------------------------------ Mr. Serge Gouin, President and Chief Executive Officer of Quebecor Media, reported the appointment of Mr. Jean-Francois Richard to the newly created position of Vice President, Advertising Convergence. Mr. Richard's mandate will be to ensure that the Company's customers realize the full benefits of the multitude of advertising opportunities offered by the Quebecor Media family of companies. "Quebecor Media can offer advertisers a unique media mix and produce maximum impact for their messages to consumers," said Mr. Gouin. "By creating this new position on our management team and entrusting it to a professional of Mr. Richard's calibre, the Company is taking a new step forward. We are counting on Jean-Francois Richard to help our many clients develop advertising and promotional approaches that multiply the impact of their messages by fully leveraging all our advertising vehicles." Prior to joining Quebecor Media, Jean-Francois Richard served as Vice President, Marketing with a clothing retailer. He previously worked for many years for a major telecommunications firm. He takes up his new duties immediately. Quebecor Media, Inc., a subsidiary of Quebecor Inc. (TSE: QBR.MV.A, QBR.SV.B), has operations in Canada, the United States, Chile, France, Spain, Italy and the UK. It is engaged in newspaper publishing (Sun Media Corporation), cable television (Videotron ltee), broadcasting (TVA Group Inc.), Web technology and integration (Nurun Inc. and Mindready Solutions Inc.), Internet portals (Netgraphe Inc.), books and magazines (Publicor and TVA Publishing Inc.), retailing of cultural products (Archambault Group Inc. and Le SuperClub Videotron ltee) and business telecommunications (Videotron Telecom ltee). * * * As reported in the Troubled Company Reporter on Nov. 17, 2004, Moody's Investors Service affirmed all ratings and the stable outlook of the Quebecor Media, Inc., group and assigned a Ba3 senior unsecured rating to Videotron Ltee's proposed US$300 million debt issue. The ratings have not changed as a result of the new debt issue because the proceeds will ultimately be used to reduce other debt within the Quebecor Media group, as funds flow relatively freely amongst group members. Ratings affected by this action are: * Quebecor Media Inc. -- Senior Implied, Ba3 (unchanged) -- Issuer, B2 (unchanged) -- Senior Unsecured Notes, B2 (unchanged): * 11.125% due July 2011 US$715 million -- Senior Unsecured Discount Notes, B2 (unchanged): * 13.75% due July 2011 US$232 million (US$295 million principal amount) * Videotron Ltee -- Senior Unsecured Notes, rated Ba3 (unchanged): * 6.875% Due January 2014 US$335 million -- Proposed Senior Unsecured Notes, Ba3 (assigned): * Due January 2014 US$300 million * CF Cable TV Inc. -- Senior Secured First Priority Notes, Ba3 (unchanged): * 9.125% due July 2007 US$76 million * Sun Media Corporation -- Senior Secured Revolving Bank Facility, Ba2 (unchanged): * Due 2008 C$75 million (C$nil outstanding) -- Senior Secured Term Loan B, Ba2 (unchanged): * Due 2009 US$202 million (original amount US$230 million) -- Senior Unsecured Notes, Ba3 (unchanged): * 7.625% Due Feb 2013 US$205 million As reported in the Troubled Company Reporter on Nov. 17, 2004, Standard & Poor's Ratings Services assigned its 'B+' rating to Montreal, Quebec-based Videotron Ltee's proposed US$300 million 6.875% senior unsecured notes due Jan. 15, 2014, to be issued under Rule 144A with registration rights. The loan is rated one notch below the long-term corporate credit rating, reflecting its junior position in the company's capital structure. At the same time, Standard & Poor's affirmed its 'BB+' bank loan rating and assigned a recovery rating of '1+' to Videotron's proposed C$450 million senior secured five-year revolving credit facility. The loan is rated two notches higher than the long-term corporate credit rating; this and the '1+' recovery rating indicate that lenders can expect full recovery of principal in the event of a default or bankruptcy. The ratings are based on preliminary documentation and are subject to review on receipt of final documentation. In addition, all ratings outstanding on Videotron and its parent company, Quebecor Media, Inc., along with the ratings on its subsidiaries Sun Media Corp. and CF Cable TV, Inc., including the 'BB-' long-term corporate credit rating, were affirmed. The outlook is stable. QWEST COMMUNICATIONS: Hosting Fourth Quarter Webcast on Feb. 15 --------------------------------------------------------------- Qwest Communications International Inc. (NYSE: Q) will release full year and fourth quarter 2004 earnings and operational highlights on Tuesday, Feb. 15, 2005, at approximately 7:00 a.m. EST. Qwest will host a conference call Feb. 15, 2005, at 9:00 a.m. EST. This call will feature Richard C. Notebaert, chairman and CEO, and Oren G. Shaffer, vice chairman and CFO, who will jointly provide the company's perspective on full year and fourth quarter results. You can access a live audio webcast or a replay of the webcast at: http://www.qwest.com/about/investor/meetings About the Company Qwest Communications International Inc. (NYSE: Q) -- http://www.qwest.com/-- is a leading provider of voice, video and data services. With more than 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. At Sept. 30, 2004, Qwest's balance sheet showed a $2,477,000,000 stockholders' deficit, compared to a $1,016,000,000 deficit at Dec. 31, 2003. R.H. DONNELLEY: Moody's Rates Planned $300M Sr. Unsec. Debt at B3 ----------------------------------------------------------------- Moody's Investors Service has assigned a B3 rating to R.H. Donnelley Corporation's proposed $300 million senior unsecured notes. Full details of Moody's rating action are: Ratings assigned: -- R.H. Donnelley Corporation * proposed $300 million senior unsecured notes, due 2013 -- B3 * senior implied rating -- Ba3 * issuer rating B3 Ratings affirmed: -- R.H. Donnelley Inc. * $175 million senior secured revolving credit facility, due 2009 -- Ba3 * $792 million senior secured tranche A term loan due 2009 -- Ba3 * $1,441 million senior secured tranche D term loan, due 2011 -- Ba3 * $621 million in 10 7/8% senior subordinated notes, due 2012 -- B2 Ratings withdrawn: -- R.H. Donnelley Inc. * senior implied rating -- Ba3 * issuer rating -- B1 R.H. Donnelley's liquidity rating is affirmed at SGL-1, however it is re-assigned to RH Donnelley Corporation. The rating outlook is stable The ratings reflects the company's high leverage (which is accentuated by the proposed preferred stock repurchase), the challenge involved in turning around the declining top line of its recently acquired SBC branded directory publishing business, the risk of further acquisition activity, the limited growth prospects of the directory business, and the prospect of heightened competition within all of R.H. Donnelley's markets. Ratings are supported by R.H. Donnelley's strong market position as the "official" directory, its dependable revenues and strong cash flow generation, which provide the opportunity for significant organic deleveraging. The withdrawal of R.H.Donnelley Inc.'s senior implied and issuer ratings and their re-assignment to R.H.Donnelley Corporation results solely from the first-time issuance of debt at the holding company level. Moody's assigns its senior implied and issuer ratings to the senior-most rated debt issuer within a corporate organization. The stable rating outlook incorporates: (1) the reliability and visibility of R.H. Donnelley's revenues, (2) the resilience of the yellow page advertising business to economic downturns, and (3) the company's strong free cash flow generation which sprovides potential for significant organic deleveraging. The affirmation of the SGL-1 liquidity rating reflects Moody's expectation that the company will maintain very good liquidity, and that its strong internally generated cash flow will be sufficient to fund its working capital, capital expenditures and dividend requirements for the next four quarters and will also permit the company to pay down debt. The SGL-1 rating is supported by Moody's expectation that the company will generate $350 million in free cash flow in the next twelve months and will have no reliance on its $175 million revolving senior secured credit facility. Assuming no further acquisitions or stock repurchases, substantially all of the company's excess cash flow would be available to repay senior secured term loan indebtedness. Proceeds from the proposed issuance will be largely used to repurchase approximately 50% of the company's unrated convertible preferred stock held by Goldman Sachs. Moody's considers that this repurchase may signal a willingness by management to use cash generation for future stock repurchases, to the detriment of debtholder interests. In addition, the decision to relever suggests that management is comfortable with leverage in the high five times range. Pro-forma for the proposed debt issuance, Moody's expects leverage (total debt and preferred stock to EBITDA) to increase to 5.9 times EBITDA from 5.6 times EBITDA by the end of 2004, returning to 5.6 times by the end of 2005 and falling below 5 times by the end of 2006. Although leverage suffers an initial spike, its reduction below 5 times by the end of 2006 is consistent with the assumptions underpinning Moody's prior ratings. The timing of recent acquisition activity and the use of purchase accounting distorts comparison of R.H. Donnelley's financial performance based upon GAAP reporting. Accordingly, Moody's analysis uses pro-forma adjusted results in order to provide more meaningful comparison. Moody's considers that R.H. Donnelley will enjoy adequate liquidity, with an unused revolver availability estimated at approximately $135 million at closing. Given the company's expected strong cash flow generation, Moody's does not project any further need to draw under these facilities, absent acquisitions, stock repurchases or other non-recurring events. The senior implied rating of R.H. Donnelley remains at parity with the senior secured ratings, since senior secured bank debt represents the predominance of the company's capital structure. As a result of a "springing lien" provision in the senior note indenture, the security rights of R.H. Donnelley Inc.'s senior noteholders rank pari passu to those of bank lenders. Accordingly, the senior notes are rated at parity with the senior secured credit facility ratings. The proposed holdco notes are rated three notches below the senior implied rating, reflecting their junior-most position in RH Donnelley's debt structure, ranking behind almost $3.1 billion of structurally senior debt. The stable rating outlook incorporates: (1) the reliability and visibility of R.H. Donnelley's revenues, (2) the resilience of the yellow page advertising business to economic downturns, and (3) the company's strong free cash flow generation which provides potential for significant organic deleveraging. Moody's expects the company to effect a meaningful delevering of its balance sheet given the strong free cash flow characteristics of its business and the relatively conservative fiscal governance policies employed by management historically. Ratings could be upgraded or the outlook revised to positive if the company uses it strong free cash flow to further reduce debt. Conversely, a negative rating bias might result from further acquisition activity, stock repurchases or a significant erosion of market share, particularly in the Chicago, Las Vegas or the Central Florida markets. Headquartered in Cary, North Carolina, R.H. Donnelley operates in 18 states with a total circulation of 28 million. R.H. DONNELLEY: S&P Rates Proposed $300 Million Senior Notes at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to R.H. Donnelley Corp.'s proposed $300 million senior notes, reflecting the issue's structural subordination to debt issued at RHD's operating subsidiary R.H. Donnelley Inc. -- RHDI. At the same time, Standard & Poor's affirmed its 'BB' corporate credit and other ratings on RHD. The outlook is stable. RHD had about $3.4 billion of pro forma consolidated debt outstanding as of December 2004. RHD will use $277 million of the notes proceeds to redeem 50% of the company's outstanding convertible preferred stock from investment partnerships affiliated with The Goldman Sachs Group. Debt to EBITDA, pro forma for the proposed notes, is expected to be weak for the 'BB' corporate credit rating. Still, RHD has a track record over several years of using its stable levels of free operating cash flow to significantly reduce outstanding borrowings. "We expect RHD to demonstrate its commitment to meaningful levels of debt repayment over the next two years," said Standard & Poor's credit analyst Emile Courtney. RHD's pro forma financial profile is not consistent with the 'BB' corporate credit rating. However, ratings stability reflects the expectation that the company will significantly strengthen its financial position in the intermediate term by using its free operating cash flow for debt reduction. RCN CORP: Court Approves Assumption of E! Entertainment Pact ------------------------------------------------------------ On October 13, 2004, RCN Corporation and its debtor-affiliates served a Notice of Assumption of Executory Contracts and Unexpired Leases pursuant to their confirmed Plan of Reorganization. The Assumption Notice refers to a programming agreement to which E! Entertainment Television, Inc., is a third-party beneficiary. The terms of the Programming Agreement are clarified in a letter agreement dated January 1, 2002, between E! Entertainment and RCN Corporation. In response to the Debtors' Notice, E! Entertainment stated that it is not against the Debtors' assumption of the Programming Agreement given that the assumption is as to the entirety of the Programming Agreement, which includes both of E!'s television programming services: -- the E! Entertainment Television Service; and -- the Style Network. Subsequently, the Debtors and E! Entertainment reached agreement on the treatment of the Programming Agreement. The parties entered into a letter agreement dated December 1, 2004. In the letter agreement, RCN agreed to assume and perform its obligations with respect to the style. programming service as set forth in: (i) that certain Side Letter Agreement between E! and RCN dated as of January 1, 2002, and (ii) style.'s National Cable Television Cooperative affiliation agreement, dated January 1, 2000, which RCN agreed to perform when it joined the NCTC in 2002. Provided that RCN take all necessary actions to effectuate the assumption of the style. Programming Agreement, E! will permit RCN to reposition style., without penalty, solely in its Philadelphia system, from the analog expanded basic level of service to a lesser penetrated digital level of service, notwithstanding the prohibition against that repositioning contained in the style. NCTC affiliation agreement. Pursuant to a Court-approved stipulation between the parties, the Debtors and E! Entertainment agree that the Debtors will assume the Programming Agreement as it relates to both E! Service and the Style Service, subject to the modifications contemplated in the 2004 Letter Agreement. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) SANMINA-SCI: Fitch Puts Low-B Ratings on Three Layers of Debt ------------------------------------------------------------- Fitch Ratings affirms Sanmina-SCI Corporation: -- Subordinated debt 'B+'; -- First-lien senior secured bank credit facility 'BB+'; -- Second-lien secured notes 'BB'. The Rating Outlook is Stable. Approximately $1.9 billion of debt is affected by Fitch's action. The ratings reflect Sanmina's relatively high debt levels, less than optimal capacity utilization rates, and customer concentration. Additionally, the contract-pricing environment remains pressured, particularly for traditional electronics manufacturing services -- EMS, which continue to represent the majority of industry revenues despite efforts to expand service offerings. Positively, the ratings are supported by strengthened operating performance, improving credit protection measures, and consistent operating cash flow and free cash flow. Also considered is Sanmina's top-tier position within the EMS industry with significant scope and global footprint of operations, along with long-term trends favoring continued manufacturing outsourcing. Despite Fitch's expectations of lowered industry demand in 2005, Sanmina's vertical integration model is expected to drive some, albeit limited, operating margin expansion, and Fitch expects the company will continue to generate modest levels of quarterly free cash flow. Revenue trends for the fourth quarter ended Oct. 2, 2004, continued to be positive and were highlighted by double-digit growth in the company's largest end markets, communications infrastructure, and personal and business computing, which represent almost two-thirds of total revenues. While demand strength existed in all of the company's segments except multimedia, primary revenue drivers included stronger-than- expected spending by telecommunications carriers and networking equipment-makers. Demand is expected to be modest for 2005, and capacity utilization for the tier-one EMS providers may have stalled at current levels, potentially resulting in more industry restructuring, albeit at much lower levels than the previous three years. Sanmina continues to win new customer business and, in the process, reduce its significant customer and end market concentration. IBM (rated 'AA-', Rating Outlook Stable by Fitch) represents almost 30% of Sanmina's total revenue. IBM recently divested its desktop and notebook business to Lenovo Group Limited, with an expected closing date in the second calendar quarter of 2005. While the transaction is not expected to adversely affect Sanmina through the remaining life of the contract with IBM, which expires in 2006, the long-term impact of this transaction is less clear. The impact of Flextronics' (the world's largest EMS provider, senior subordinated debt rated 'BB+', Stable Outlook) transaction with Nortel, a key customer for Sanmina, is unknown, but it is expected that Sanmina will lose some of its Nortel business to Flextronics. Although improved in each of the past seven quarters, Sanmina's operating margins remain relatively weak in comparison with its peer group and historical levels. Improvements have been driven by higher volumes, benefits from past restructuring programs, and operating leverage from being vertically integrated. Operating margins in fiscal 2004 were 2.0%, up from 1.3% in 2003 and 2002, but below long-term target levels in the mid-single digits. As a result, credit protection measures have improved over the past year, despite flat debt levels from one year ago. Total leverage was 4.4 times for 2004, versus 5.4x in 2003, and 6.2x in 2002, and interest coverage increased to approximately 4.0x in 2004, compared with 3.4x in 2003. Liquidity was sufficient as of Oct. 2, 2004, and consisted primarily of unrestricted cash of approximately $1.1 billion. On Oct. 26, 2004, Sanmina augmented its liquidity by entering into a $500 million first-lien senior secured revolving credit facility expiring October 2007, $250 million of which is currently available. The Company will have access to the full $500 million revolving credit facility if, by the end of January 2005, Sanmina raises a specified amount (currently $300 million) of additional debt or equity capital and uses or sets aside these proceeds to repay approximately $630 million accreted value of zero-coupon convertible subordinated debentures that will be putable to the Company in Sept. 2005; otherwise, the credit facility will be reduced to $100 million. Total debt was $1.9 billion as of Oct. 2, 2004 and consisted of: -- Approximately $608 million accreted value of zero-coupon convertible subordinated debentures due 2020 but putable in September 2005; -- Approximately $520 million 3% convertible subordinated notes due 2007; -- $750 million 10.375% senior secured notes due January 2010. SBC COMMUNICATIONS: Expects $250 Mil. Charges in 2004 4-Q Earnings ------------------------------------------------------------------ SBC Communications Inc. (NYSE: SBC) expects its fourth-quarter 2004 reported earnings will include charges totaling approximately $250 million, or $0.05 per diluted share, related to previously announced work force reductions and changes to its management pension plan. Approximately $150 million of the total are cash charges for severance payments related to the work force reductions. During 2004, SBC had a net reduction in its total work force of more than 6,000, as the company continued to streamline and standardize operations while enhancing service. Approximately half of SBC's full-year force reduction came in the fourth quarter. SBC said in the fourth quarter that expected work force reductions could exceed 10,000 jobs through the end of 2005. Also, in the fourth quarter, SBC amended its management pension plan to use only its traditional service pension formula alternative for future benefit accruals. This change, which required the recognition of unamortized prior service costs associated with its cash balance pension formula alternative, is expected to result in approximately $100 million of non-cash charges. These charges are separate from previously announced expected merger integration and accounting costs at Cingular Wireless, of which SBC owns 60 percent. SBC's overall operating results for the quarter will be addressed in its earnings release scheduled for Wednesday, Jan. 26, 2005. SBC is a leading independent owner and operator of wireless communications infrastructure in the United States. SBA generates revenue from two primary businesses -- site leasing and site development services. The primary focus of the Company is the leasing of antenna space on its multi-tenant towers to a variety of wireless service providers under long-term lease contracts. Since it was founded in 1989, SBC has participated in the development of over 25,000 antenna sites in the United States. * * * At Sept. 30, 2004, SBC Communications' balance sheet showed a $27,472,000 stockholders' deficit, compared to a $43,877,000 deficit at Dec. 31, 2003. SOLECTRON CORP: Fitch Affirms $1.2 Bil. of Debt with Low-B Ratings ------------------------------------------------------------------ Fitch Ratings affirmed Solectron Corporation's debt ratings: -- 'BB-' senior unsecured debt; -- 'BB+' senior secured bank credit facility; -- 'B' subordinated debt. The Rating Outlook is Stable. Approximately $1.2 billion of debt is affected by Fitch's action. The ratings reflect Solectron's ongoing relatively weak, albeit improving, operating performance versus tier-1 electronic manufacturing services -- EMS -- peers, less than optimal capacity utilization rates, and expectations for flat revenue growth for fiscal 2005. Additionally, the contract pricing environment remains pressured, particularly for traditional electronics manufacturing services, which continue to represent the majority of industry revenues despite efforts to expand service offerings. Positively, the ratings are supported by Solectron's significantly improved capital structure and liquidity position, the resultant improvements in credit protection measures and debt maturity profile, Solectron's top tier position within the EMS industry with significant scope and global footprint of operations, and long-term trends favoring continued manufacturing outsourcing. The Stable Rating Outlook reflects Fitch's belief that Solectron has sufficient liquidity to meet near-term debt obligations and will most likely be free cash flow neutral in 2005 given the company's muted demand expectations. In addition to a more modest industry demand environment in 2005, Solectron's recent downward revenue revision is likely to postpone significant further improvements in operating performance. Nonetheless, Solectron continues to win new customer business, and these new programs are expected to offset any potential revenue losses related to Flextronics' (rated 'BB+', Rating Outlook Stable by Fitch), the world's largest EMS provider, acquisition of Nortel's manufacturing facilities, as well as continue to reduce customer concentration and diversify end markets. Solectron's operating margins remain weak but have demonstrated the greatest improvement among its peer group, increasing in five of last six quarters. Operating margins for the latest-twelve- months -- LTM -- ended Nov. 30, 2004, were 1.6%, versus -0.2% for the prior year, driven by higher volumes and the ongoing benefits of past restructuring and efficiency programs. However, Fitch believes that utilization rates may have peaked for the tier-1 EMS providers, and as a result, Solectron may be challenged to achieve previously announced operating margin targets in fiscal 2005. Revenues fell short of the low end of Solectron's guidance by approximately 7% in the seasonally strong quarter ended Nov. 30, 2004, driven by weaker than expected revenues from the consumer segment, which experienced technical issues related to one of its set-top box programs and delays in a customer transitioning to next generation 3G handsets, as well as Solectron's largest customer, Cisco Systems. While revenues were weaker than expected in the first quarter ending Nov. 30, 2004, declining more than 10% sequentially, operating margins improved to 2.3% versus 0.5% a year ago and improved 10 basis points sequentially. As a result of this profitability improvement and debt repayments during fiscal 2004, Solectron's credit protection measures meaningfully improved in the first quarter of fiscal 2005. Total leverage (Total debt-to- EBITDA) improved significantly to 3.1 times for the LTM ended Nov. 30, 2004, versus 5.6x for the previous year. Interest coverage (EBITDA-to-interest incurred) was approximately 4.8x for the LTM ended Nov. 30, 2004, versus 2.0x for the twelve months ended Nov. 30, 2003. Fitch expects credit protection measures will remain stable, driven by a relatively stable demand environment in the company's key-end markets and lower debt service requirements. Liquidity was solid as of Nov. 30, 2004, and consisted of unrestricted cash of approximately $1.7 billion and an undrawn $500 million secured revolving facility, expiring August 2007. Solectron also has various committed and uncommitted revolving lines of credit related to its foreign subsidiaries, totaling approximately $210 million. Solectron's cash conversion cycle, which is the weakest of Tier 1 competition and approximately ten days higher than its nearest competitor, will likely make it more challenging for the company to grow revenue without using cash to support working capital. However, free cash flow is likely to be neutral for fiscal 2005, driven by expectations for a muted albeit relatively stable demand environment, a slight improvement in working capital management, and continued capital spending discipline. Total debt was $1.2 billion as of Nov. 30, 2004, and maturities are manageable and consist primarily of: -- $150 million 7.375% senior notes due March 2006; -- $63 million 7.97% subordinated notes due November 2006; -- $500 million 9.625% senior notes due February 2009; -- $450 million 0.5% convertible senior notes due February 2034 (convertible any time by the holders if Solectron's stock price reaches $11.60 per share). SOUTH STREET: S&P Junks Four Certificate Classes ------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on the class A-3L and A-3 notes issued by South Street CBO 2000-1 Ltd., a high-yield arbitrage CBO transaction managed by Colonial Advisory Services Inc., on CreditWatch with positive implications. At the same time, the 'AAA' rating on class A-2L is affirmed. The CreditWatch placements reflect factors that have positively affected the credit enhancement available to support the notes since the ratings were previously lowered in September 2003. These factors include paydowns of approximately $84.022 million to the class A notes since the last rating action. On the most recent payment date of Nov. 30, 2004, the class A-1L notes were completely paid down. According to the Dec. 17, 2004 trustee report, the senior class A overcollateralization ratio was 133.16% (the required minimum is 120.00%), versus a ratio of 120.05% at the time of the September 2003 rating action. Standard & Poor's will be reviewing the results of the current cash flow runs generated for South Street CBO 2000-1 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 rated 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 Positive South Street CBO 2000-1 Ltd. Rating Balances (mil. $) Class To From Orig Current ----- -- ---- -------- -------- A-3L BBB-/Watch Pos BBB- 15.000 15.000 A-3 BBB-/Watch Pos BBB- 30.000 30.000 Rating Affirmed South Street CBO 2000-1 Ltd. Balance (mil. $) Class Rating Orig Current ----- ------ ------- -------- A-2L AAA 95.000 72.678 Rating Previously Withdrawn South Street CBO 2000-1 Ltd. Balance (mil. $) Class Rating Orig Current ----- ------ ------- -------- A-1L NR 76.000 0.000 Other Outstanding Ratings South Street CBO 2000-1 Ltd. Balance (mil. $) Class Rating Orig Current ----- ------ ------- -------- A-4L CCC- 20.000 20.000 A-4A CCC- 8.000 8.000 A-4C CCC- 10.000 10.000 B-2 CC 4.915 4.775 SPHERION CORP: Names William Halnon SVP & CIO for KnowledgeSphere ----------------------------------------------------------------- Spherion Corporation (NYSE:SFN) has appointed William G. Halnon as senior vice president and chief information officer. Mr. Halnon will oversee the Company's efforts to leverage KnowledgeSphere, the recently implemented enterprise-wide information system that was designed to enhance business effectiveness and reduce operational costs across its network of offices. "As the largest company in the staffing industry to implement such a robust technology infrastructure, we believe Bill is the right leader to help Spherion leverage the advantages the system can bring to both our clients and candidates," said Roy Krause, Spherion president and chief executive officer. "Bill has a proven track record of success and a strong background in leading the design and management of diverse technology systems that include supply chain, customer information and financial applications, and we are proud to have him as part of our team." Mr. Halnon commented, "I am honored to join the Spherion team at such an exciting time. I am confident that our team will be able to fully leverage this new infrastructure to improve the quality and efficiency of our service delivery, enabling us to provide even greater value to our clients." With more than 20 years of experience in information technology, Mr. Halnon most recently served as chief information officer of DIMON Inc., the world's second largest dealer of leaf tobacco. Prior to DIMON, Mr. Halnon served in a senior management position at BSG Consulting where he led technology initiatives for clients such as Johnson and Johnson Medical, Mary Kay Corporation and GTE. He also spent more than 10 years in various technology management positions at American Airlines. Mr. Halnon replaces Doug Cormany, who is leaving the Company to pursue other interests. KnowledgeSphere, the staffing industry's only fully integrated web-based system in use throughout North America, is designed to allow Spherion to respond to customer needs and fill open positions with greater speed and efficiency through a single candidate and customer database, streamline business processes and provide more detailed metrics and analysis of the services it delivers. About the Company Spherion Corporation is a leader in the staffing industry in North America, providing value-added staffing, recruiting and workforce solutions. Spherion has helped companies improve their bottom line by efficiently planning, acquiring and optimizing talent since 1946. To learn more, visit http://www.spherion.com/ * * * As reported in the Troubled Company Reporter on Sept. 6, 2004, Moody's Investors Service has withdrawn the ratings of Spherion Corporation to reflect the redemption of the company's rated debt securities. These ratings have been withdrawn: * $89.6 million convertible subordinated notes due 2005, previously rated B2 (withdrawn as of August 27, 2004); * Senior Implied, rated Ba3; * Issuer Rating, rated B1. Moody's withdrawal of Spherion Corporation's ratings reflects the company's redemption of its rated debt with proceeds from the sale of its discontinued operations and an expansion of its current credit facility. SUTTER CBO: Fitch Affirms $20 Million 1998-1 Notes at 'B-' ---------------------------------------------------------- Fitch Ratings affirms six classes of notes issued by Sutter CBO 1998-1 Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $48,481,380 class A-1 notes at 'AAA'; -- $46,088,683 class A-2A notes at 'AAA'; -- $8,334,301 class A-2B notes at 'AAA'; -- $15,000,000 class A-3 notes at 'BBB'; -- $30,000,000 class A-3L notes at 'BBB'; -- $20,000,000 class B notes at 'B-'. Sutter 1998-1 is a collateralized bond obligation -- CBO -- managed by Wells Fargo Bank, NA which closed Sept. 1, 1998. Sutter 1998-1 is composed of approximately 97.5% high yield bonds and 2.5% high yield loans. Included in this review, Fitch discussed the current state of the portfolio with the asset manager, and their portfolio management strategy going forward. To date, the class A-1, A-2A, and A-2B notes have been paid down by approximately $121 million, representing 45% of the original class A note balance. Since the last rating action on May 27, 2003, the class A overcollateralization -- OC -- ratio has increased from 108.05% to 112.47%, versus a trigger of 120%, while the class B OC has been reduced from 98.37% to 95.95%, versus a trigger of 107%, as of the Dec. 2, 2004, trustee report. The primary factor for the reduction in the class B OC ratio is the deferring interest on the class B notes of $5.25 million, as opposed to several new defaults or significant realized losses. As of the most recent trustee report available, Sutter 1998-1 defaulted assets represented approximately 15.8% of the $190.4 million of total collateral. Assets rated 'CCC+' and lower represented approximately 25.1% of total collateral, excluding defaults. A high rate of refinancings has been a contributing factor in the declining weighted average coupon -- WAC -- from 9.21% to 8.80% since the previous rating action. The interest coverage -- IC -- ratio has been reduced from 112.2% to 72.5% since the previous rating action. The IC ratio includes the class B deferred balance of $5.25 million contributing to the reduction in the reported IC ratio. The ratings of the class A-1, A-2A, A-3, and A-3L notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class B notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class A-2B notes addresses the likelihood that investors will ultimately receive the stated balance of principal by the legal final maturity date. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that the current ratings assigned to the class A-1, A-2A, A-2B, A-3, A-3L, and B notes still reflect the current risk to noteholders. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ SUTTER CBO: Fitch Affirms Three 1999-1 Classes with Low-B Ratings ----------------------------------------------------------------- Fitch Ratings affirms seven classes of notes issued by Sutter CBO 1999-1 Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $61,696,785 class A-2L notes at 'AAA'; -- $75,000,000 class A-3L notes at 'AAA'; -- $5,000,000 class A-4L notes at 'BBB+'; -- $24,000,000 class A-4 notes at 'BBB+'; -- $5,000,000 class B-1L notes at 'BB+'; -- $6,000,000 class B-1 notes at 'BB+'; -- $10,000,000 class B-2 notes at 'B+'. Sutter 1999-1 is a collateralized bond obligation -- CBO -- managed by Wells Fargo Bank, NA which closed Nov. 17, 1999. Sutter 1999-1 is composed of: * high yield bonds (89.5%), * commercial mortgage-backed securities -- CMBS, * asset-backed securities -- ABS -- securities (8.9%), and * high yield loans (1.6%). Included in this review, Fitch discussed the current state of the portfolio with the asset manager, and their portfolio management strategy going forward. To date, the class A-1L notes have been paid in full and the class A-2L notes have been paid down by approximately $13.3 million, representing 36.4% of the original senior class A (A-1L, A-2L, and A-3L) note balance. Since the last rating action on Oct. 15, 2003, the senior class A, class A, and class B overcollateralization -- OC -- ratios have all increased from 126.5%, 111%, and 101.8% to 140.7%, 115.4%, and 101.9%, respectively, as of the most recent trustee report dated Dec. 17, 2004. The weighted average rating has remained stable at approximately 'B-'. As of the most recent trustee report available, defaulted assets represented 10.3% of the $207 million of total collateral. Assets rated 'CCC+' or lower represented approximately 22.3% of total collateral, excluding defaults. Sutter 1999-1 has been adversely affected by faster than anticipated prepayments causing a misalignment in the interest rate hedge and a declining weighted average coupon -- WAC. Higher than expected refinancings has caused the portfolio to be overhedged by approximately $24 million. The refinancings have also been the main cause of a declining WAC from 9.25% to 8.88% since the previous rating action. The hedge misalignment and declining WAC have been depleting excess spread, as evident in the declining interest coverage -- IC -- ratio from 168.1% to 114.6%. The interest rate hedge has a fixed notional balance of $165 million and matures on May 30, 2007. The rating of the class A-2L and A-3L notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class A-4, A-4L, B-1, B-1L, and B-2 notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that the current ratings assigned to the class A-2L, A-3L, A-4, A-4L, B-1, B-1L, and B-2 notes still reflect the current risk to noteholders. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ TELEGLOBE COMMS: Chap. 11 Plan Confirmation Hearing Set on Feb. 10 ------------------------------------------------------------------ The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware will convene a hearing at 9:30 a.m., on February 10, 2005, to consider confirmation of the First Amended Joint Liquidating Plan of Reorganization filed by Teleglobe Communications Corporation and its debtor-affiliates. The Debtors filed their Disclosure Statement and First Amended Plan on December 7, 2004, and the Court approved the adequacy of the Disclosure Statement on December 8, 2004. The Plan has been sent to Teleglobe's creditors for a vote. The Plan contemplates the appointment of a Plan Administrator who is authorized to administer and distribute the proceeds of the remaining assets of the U.S. Debtors to allowed claims holders. The Plan provides for cash distributions to the Holders of Allowed Claims and Interests in each of the Debtors' U.S. entities, consisting of Teleglobe USA Inc., Optel Telecommunications Inc., Teleglobe Holdings (U.S.) Corp., Teleglobe Holding Corp., Teleglobe Telecom Corp., Teleglobe Investment Corp., Teleglobe Puerto Rico Inc., and Teleglobe Luxembourg LLC. The Plan groups claims and interests into two classes and nine sub-classes and provides for these recoveries: a) Class 1A unimpaired claims consisting of Other Priority Claims against the Consolidated U.S. Debtors will be paid in full on the Effective Date; b) Class 1B impaired claims consisting of the Secured Claims against the Consolidated U.S. Debtors will be paid in full after the Effective Date upon the option of the Plan Administrator; c) Class 1C impaired claims consisting Unsecured Claims against the Consolidated U.S. Debtors will receive their Pro Rata share of the Available Cash, the Liquidation Proceeds and the VarTec Proceeds; d) Class 1D impaired claims consisting the U.S. Debtors' Intercompany Claims and the Canadian Debtors' claims against the Consolidated U.S. Debtors will not receive any distribution under the Plan on account of those claims and interests; e) Class 1E impaired claims consisting of Interests in the Consolidated U.S. Debtors will not receive any distribution of property under the Plan on account of those interests; f) Class 2A unimpaired claims consisting of Other Priority Claims against Teleglobe Luxembourg will be paid in full on or after the Effective Date; g) Class 2B impaired claims consisting of Secured Claims against Teleglobe Luxembourg will be paid in full after the Effective Date upon the Plan Administrator's option; h) Class 2C impaired consisting of Unsecured Claims Teleglobe Luxembourg will receive its Pro Rata share of the Cash in Teleglobe Luxembourg's Estate; i) Class 2D impaired claims consisting of Interests in Teleglobe Luxembourg of the remaining proceeds in Teleglobe Luxembourg's Estate after the full payment of Allowed Class 2C claims. Full-text copies of the Disclosure Statement and Amended Joint Plan are available for a fee at: http://www.researcharchives.com/download?id=040812020022 All ballots accepting or rejecting the Plan must be completed and returned by February 3, 2005. Objections to the Plan, if any, must be filed and served by February 3, 2005. Headquartered in Reston, Virginia, Teleglobe Communications Corporation is a wholly-owned indirect subsidiary of Teleglobe Inc., a Canadian Corporation. Teleglobe currently provides services in more than 220 countries via a fully integrated network of terrestrial, submarine and satellite capacity. During the calendar year 2001, the Teleglobe Companies generated consolidated gross revenues of approximately $1.3 billion. As of December 31, 2001, the Teleglobe Companies has approximately $7.5 billion in assets and approximately 44.1 billion in liabilities on a consolidated book basis. The Debtors filed for chapter 11 protection on May 28, 2002 (Bankr. D. Del. Case No. 02-11518). Cynthia L. Collins, Esq., and Daniel J. DeFranceschi, Esq., at Richards Layton & Finger, PA represent the Debtors in their restructuring efforts. TEXAS DOCKS: Wants to Sell Real Property to John Frantz for $38M ---------------------------------------------------------------- Texas Docks & Rail Company, Ltd., and its debtor-affiliate ask the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, for authority to sell its 72.5 acres of land located in Nueces County, Texas. John Frantz proposes to buy the property for $38 million. Bank of America, NA, holds a lien on the real property to secure repayment of an $18.4 million promissory note issued by the Debtors on Jan. 23, 2003. The property was first offered to Great Oaks Holdings, LLC, for $50 million. The Debtors gave Great Oaks until Dec. 31, 2004, to close the sale. Great Oaks failed to close. The Debtors are hard-pressed to find a purchaser for the property since the note will mature on Jan. 23 and they have no source of funding to satisfy the obligation. The Debtors urge the Court to approve the sale subject to higher and better offers and to schedule a sale hearing on Feb. 3, 2005, at 1:30 p.m. Headquartered in Corpus Christi, Texas, Texas Docks & Rail Ltd. -- http://www.texdockrail.com/-- is a marine terminal operator and stevedore for ports of Corpus Christi and South Texas. The Company and its debtor-affiliate filed for chapter 11 protection on Jan. 7, 2005 (Bankr. S.D. Tex. Case No. 05-20047). When the Debtor filed for protection from its creditors, it listed $38,097,085 in total assets and $20,435,639 in total debts. TEXAS DOCKS: Asks Court to Approve Bid Procedures & Break-Up Fee ---------------------------------------------------------------- Texas Docks & Rail Company Ltd. and its debtor-affiliate ask the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, to approve their bid procedures and break-up fee of $100,000 in relation to the proposed sale of their 72.5 acres of land located in Nuences County, Texas. The Debtors also ask the Court to set Jan. 28 at 5:00 p.m. as the bid submission deadline. The stalking horse bidder for the property is John Frantz who proposes to buy the land for $38 million. A full-text copy of the bidding procedures is available for a fee at: http://www.researcharchives.com/bin/download?id=040812020022 Any party wishing to submit a bid for the purchase of the real property must deliver its bid in writing to: Harrell Z. Browning Law Office Attn: Harrell Z. Browning, Esq. 600 Leopard Street, Suite 103 Corpus Christi, Texas 78473-1601 with a copy to: Cox Smith Matthews Incorporated Attn: Deborah D. Williamson 112 East Pecan Street, Suite 1800 San Antonio, Texas 78205 Grubb & Ellis Company Attn: Doyle G. Toups 1330 Post Oak Boulevard Suite 1400 Houston, Texas 77056 The property will be auctioned on Feb. 1, 2005, at 10:00 a.m. at the Law Office of Harrell Z. Browning. Headquartered in Corpus Christi, Texas, Texas Docks & Rail Ltd. -- http://www.texdockrail.com/-- is a marine terminal operator and stevedore for ports of Corpus Christi and South Texas. The Company and its debtor-affiliate filed for chapter 11 protection on Jan. 7, 2005 (Bankr. S.D. Tex. Case No. 05-20047). When the Debtor filed for protection from its creditors, it listed $38,097,085 in total assets and $20,435,639 in total debts. TRICO MARINE: Court Will Consider Plan Confirmation on Jan. 19 -------------------------------------------------------------- The Honorable Robert M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on Jan. 19, 2005 at 10:00 a.m., to consider Trico Marine Services, Inc.'s: (a) compliance with the disclosure requirements imposed under 11 U.S.C. Sec. 1125 and any objections to the adequacy of Trico's Disclosure Statement; (b) confirmation of Trico's Prepackaged Chapter 11 Plan and any objections to plan confirmation, and (c) approval of the DIP financing motion on a final basis. The Combined Hearing will be held in Room 733 of the U.S. Bankruptcy Court, One Bowling Green, New York, New York 10004- 1408. The Combined Hearing may be continued from time to time by announcing the continuance in open court or in a hearing agenda. Additionally, the Plan may be modified, if necessary, pursuant to 11 U.S.C. 1127, prior to, during, or as a result of the Combined Hearing, without further notice to parties in interest. Headquartered in New York, New York, Trico Marine Services, Inc. -- http://www.tricomarine.com/-- provides marine support services to the oil and gas industry around the world. The Trico Companies operate a large, diversified fleet of vessels used in the transportation of drilling materials, crews and supplies necessary for the construction, installation, maintenance and removal of offshore drilling facilities and equipment. Trico Marine and its debtor-affiliates filed for chapter 11 protection on Dec. 21, 2004 (Bankr. S.D.N.Y. Case No. 04-17985). Leonard A. Budyonny, Esq., and Robert G. Burns, Esq., at Kirkland & Ellis LLP represent the debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $535,200,000 in assets and $472,700,000 in debts. TRUMP HOTELS: Court Moves Disclosure Statement Hearing to Feb. 3 ---------------------------------------------------------------- Prior to the bankruptcy petition date, Trump Hotels & Casino Resorts, Inc., and its debtor-affiliates engaged in extensive negotiations with holders of their secured bonds regarding a consensual restructuring and deleveraging of their capital structure. The negotiations resulted in the Debtors' Joint Plan of Reorganization that has the overwhelming support of all affected classes. Robert A. Klyman, Esq., at Latham & Watkins LLP, in Los Angeles, California, tells the U.S. Bankruptcy Court for the District of New Jersey that representatives of the two informal committees of Bondholders and Donald J. Trump, the beneficial holder of over 56% of the Debtors' equity, have extensively reviewed and commented on the Disclosure Statement accompanying the Plan. Section 1125(b) of the Bankruptcy Code requires that, prior to plan solicitation, a plan proponent provide a disclosure statement that contains adequate information regarding the proposed plan. Section 1125(a)(1) defines "adequate information" as: "Information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, 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." The Debtors ask the Court to approve the adequacy of the Disclosure Statement as conforming with the requirements of Section 1125(a)(1). Judge Wizmur adjourns the Disclosure Statement Hearing previously scheduled on Jan. 21, 2005. The Court will convene a hearing on Feb. 3, 2005, at 9:00 a.m. to consider the adequacy of the information contained in the Debtors' Disclosure Statement. Mr. Klyman assures the Court that the Disclosure Statement is comprehensive and contains all these types of information: * the events leading to bankruptcy filing; * a description of the available assets and their value; * the anticipated future of the company; * the source of information in the disclosure statement; * a disclaimer; * the present condition of the debtor while in Chapter 11; * the scheduled claims; * the estimated return to Creditors under a Chapter 7 liquidation; * the accounting method utilized to produce financial information and the name of the accountants responsible for that information; * the future management of the debtor; * the Chapter 11 plan or its summary; * the estimated administrative expenses; * the collectibility of accounts receivable; * financial information, data, valuations or projections relevant to the creditors' decision to accept or reject the Chapter 11 plan; * information relevant to the risks posed to creditors under the plan; * the actual or projected realizable value from recovery of preferential or otherwise voidable transfers; * litigation likely to arise in a nonbankruptcy context; * tax attributes of the debtor; and * the relationship of the debtor with affiliates. The Disclosure Statement contains sufficient information so that each voting class will be able to make an informed decision in voting to accept or reject the Plan, Mr. Klyman adds. The Debtors believe that the Disclosure Statement contains adequate information pursuant to the requirements of Section 1125, and must be approved. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. U.S. PLASTIC: Taking Bids for Ocala, Fla., Plant ------------------------------------------------ U.S. Plastic Lumber Corp., is taking bids for its manufacturing plant located in Ocala, Fla. The plastic manufacturing plant is located on 39 acres and houses 158,976 square feet of space. For additional information about the facility, contact: Joseph Sarachek Triax Capital Advisors Telephone (212) 332-4010 jsarachek@triaxadvisors.com Lees Development Company, Inc. (represented by Robert R. Hendry, Esq., at Hendry, Stoner, DeLancett & Brown, P.A.) has offered $3,250,000 for the Real and Personal Property located in Ocala. A copy of Lees' Purchase Agreement is available at no charge at: http://www.usplasticlumber.com/files/index.php?fileID=77 Competing offers must exceed Lees' bid by $32,500. As previously reported in the Troubled Company Reporter, U.S. Plastic is exiting its composite decking and OEM composite businesses. This move comes as part of USPL's plan to focus on its PE product lines -- which include its Trimax structural lumber and CareFree Xteriors HDPE Decking, as part of its restructuring plans. About Triax Capital Advisors Triax Capital Advisors provides advisory services to parties involved with highly leveraged companies and special situation investments. Triax offers expertise in three distinct areas: Financial Restructuring, Operational Restructuring, Forensic Accounting and Litigation Support and is further distinguished by these core characteristics: focus on quality of work versus quantity of engagements, hands-on involvement by senior professionals, and flexible compensation structures that include focus on success fee formulas. Triax Capital Advisors' Web site is located at http://www.triaxadvisors.com/ Headquartered in Boca Raton, Florida, U.S. Plastic -- http://www.usplasticlumber.com/-- manufactures plastic lumber and is the technology leader in the industry. The Company filed for a chapter 11 protection on July 23, 2004 (Bankr. S.D. Fla. Case No. 04-33579). Stephen R. Leslie, Esq., at Stichter, Riedel, Blain & Prosser, P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $78,557,000 in total assets and $48,090,000 in total debts. ULTIMATE ELECTRONICS: Taps Skadden Arps as Bankruptcy Counsel ------------------------------------------------------------- Ultimate Electronics, Inc. and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Skadden, Arps, Slate, Meagher & Flom LLP as its general bankruptcy counsel. Skadden Arps is expected to: a) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their businesses and properties; b) advise the Debtors with respect to corporate transactions and corporate governance, and in any negotiations with creditors, equity holders, prospective acquirers, and investors and assist the Debtors with respect to employee matters; c) attend meetings and negotiate with representatives of creditors and other parties in interest and advise and consult the Debtors on the conduct of their chapter 11 cases, including all of the legal and administrative requirements of operating in chapter 11; d) take all necessary action to protect and preserve the Debtors' estates, including (i) the prosecution of actions on their behalf, (ii) the defense of any actions commenced against the Debtors' estates and negotiations concerning all litigation in which the Debtors may be involved, and (iii) objections to claims filed against the estates; e) review and prepare on behalf of the Debtors all motions, administrative and procedural applications, answers, orders, reports and papers necessary to the administration of the their estates; f) negotiate and prepare on the Debtors' behalf a plan of reorganization, disclosure statement and all related agreements and documents and take any necessary action on behalf of the Debtors to obtain confirmation of the plan; g) review and object to claims and analyze, recommend, prepare, and bring any causes of action created under the Bankruptcy Code and advise the Debtors in connection with any proposed sale of assets; h) appear before the Court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtors' estates before those courts and the U.S. Trustee; and i) perform and provide all other necessary legal services and legal advice to the Debtors in connection with their chapter 11 cases. J. Eric Ivester, Esq., a Member at Skadden Arps, is the lead attorney for the Debtors' restructuring. Mr. Ivester discloses that the Firm received $427,870,000 postpetition retainer. Mr. Ivester reports Skadden Arps professionals bill: Designation Hourly Rate ----------- ----------- Partners $540 - 825 Counsel/Special Counsel 535 - 640 Associates 265 - 495 Legal Assistants 90 - 195 Skadden Arps assures the Court that it does not represent any interest adverse to the Debtors or their estates. Headquartered in Thornton, Colorado, Ultimate Electronics, Inc. -- http://www.ultimateelectronics.com/-- is a specialty retailer of consumer electronics and home entertainment products located in the Rocky Mountain, Midwest and Southwest regions of the United States. The Company operates 65 stores and focuses on mid- to high-end audio, video, television and mobile electronics products. The Company and its debtor-affiliates filed for chapter 11 protection on January 11, 2005 (Bankr. D. Del. Case No. 05-10104). When the Debtor filed for protection from its creditors, it listed total assets of $329,106,000 and total debts of $160,590,000. ULTIMATE ELECTRONICS: Look for Bankruptcy Schedules by Mar. 12 -------------------------------------------------------------- Ultimate Electronics, Inc. and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Delaware for more time to file their Schedules of Assets and Liabilities, Statements of Financial Affairs, Schedules of Current Income and Expenditures, Statements of Executory Contracts and Unexpired Leases and Lists of Equity Security Holders. The Debtors want until March 12, 2005, to file those documents. The Debtors tell the Court that they have thousands of creditors and parties in interest and operate their business from over 65 locations in the United States. The Debtors add that due to the size and complexity of their businesses and the fact that certain prepetition invoices have not yet been received and entered into their financial systems, they have not had the opportunity to gather the necessary information to prepare and file their respective Schedules and Statements. The Debtors assure the Court that the requested extension will be sufficient enough for them to accurately prepare and complete their Schedules and Statements. Headquartered in Thornton, Colorado, Ultimate Electronics, Inc. -- http://www.ultimateelectronics.com/-- is a specialty retailer of consumer electronics and home entertainment products located in the Rocky Mountain, Midwest and Southwest regions of the United States. The Company operates 65 stores and focuses on mid- to high-end audio, video, television and mobile electronics products. The Company and its debtor-affiliates filed for chapter 11 protection on January 11, 2005 (Bankr. D. Del. Case No. 05-10104). J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represents the Debtors' restructuring. When the Debtor filed for protection from its creditors, it listed total assets of $329,106,000 and total debts of $160,590,000. UNISYS CORP: S&P Revises Outlook on Low-B Ratings to Stable ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' corporate credit and senior unsecured debt ratings on Blue Bell, Pennsylvania-based Unisys Corp., and revised its outlook to stable from positive. "The outlook revision reflects announced expected declines in services and technology revenues, as well as lowered expectations for free cash flow for fiscal 2004," said Standard & Poor's credit analyst Philip Schrank. The prior positive outlook was predicated on the progress Unisys has made growing the revenue base, as well as demonstrating consistent earnings and cash flow performance. The ratings on Unisys Corp. reflect a strengthened financial profile and an improving business profile in the company's information services segment, offset by challenging industry conditions. Most of the business for Unisys is derived from its growing information services and customer support segment, with reduced dependence on hardware systems (less than 20% of revenues). The company has focused its efforts on business- process outsourcing, security initiatives, and enterprise-server opportunities, while de-emphasizing low-margin, commodity-based areas of the market. In addition, Unisys has increased its funded services backlog to about $6.4 billion, which adds a measure of earnings predictability. WESTPOINT STEVENS: Wants to Alter Ernst & Young's Engagement ------------------------------------------------------------ As previously reported, WestPoint Stevens, Inc. and its debtor- affiliates employed Ernst & Young, LLP, as their audit and tax advisors. However, E&Y's Engagement Letters provided that the Auditing and Accounting Services would be rendered with respect to the year ending December 31, 2003. Thus, on November 29, 2004, the Debtors entered into a Supplemental Engagement Letter with E&Y, which provides that E&Y will continue to perform the Auditing and Accounting Services on the Debtors' behalf, during the pendency of their Chapter 11 cases. John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New York, tells the United States Bankruptcy Court for the Southern District of New York that E&Y will perform these additional services for the Debtors: (a) Annual audit of the consolidated financial statements of WestPoint Stevens, Inc., included in its Annual Report on Form 10-K, for the year ending December 31, 2004; (b) Quarterly reviews of the consolidated financial statements of WestPoint Stevens, Inc., included in its Quarterly Reports on Form 10-Q for the year ending December 31, 2004; (c) Annual attestation report on management's assessment of the effectiveness of the Company's internal control over financial reporting and on the effectiveness of internal control over financial reporting of WestPoint Stevens, Inc., to be included in its Annual Report on Form 10-K, for the year ending December 31, 2004, as required by Section 404 of the Sarbanes-Oxley Act of 2002; (d) Consents or comfort letters related to filings with the Securities and Exchange Commission or other transactions; (e) Research and consultations with management of the Company regarding financial accounting and reporting matters, including fresh-start reporting and reporting under Section 404 of the Sarbanes-Oxley Act; (f) Participation in all scheduled meetings of the Audit- Committee of WestPoint Stevens, Inc.; and (g) Attendance at Annual Meeting of the Shareholders of WestPoint Stevens, Inc. Accordingly, the Debtors seek the Court's authority to amend the terms of E&Y's employment to include the services contemplated in the Supplemental Engagement Letter. Mr. Rapisardi relates that E&Y is intimately familiar with the Debtors' current financial situation and uniquely qualified to efficiently perform the services contemplated in the Supplemental Engagement Letter. In fact, the services to be performed consist mainly of accounting and auditing services for the year ending December 2004, which E&Y had previously performed for the years ending 2002 and 2003. Other than specific inclusion of the services for the year ending 2004, the terms of E&Y's employment remain substantially the same. E&Y will continue to seek compensation for professional services rendered on an hourly basis, plus reimbursement of actual and necessary expenses incurred. The customary hourly rates, subject to periodic adjustments, charged by E&Y's personnel anticipated to be assigned to the Debtors' cases are: Partners and Principals $500 - $751 Senior Managers $445 - $646 Managers $343 - $522 Seniors $252 - $408 Staff $180 - $338 Headquartered in West Point, Georgia, WestPoint Stevens, Inc., -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945- 7000) WITHERSPOON CDO: Moody's Rates $18 Mil. Preference Shares at Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned these ratings to Witherspoon CDO Funding, Ltd.: (1) Aaa to the U.S.$258,000,000 Class A-1 LT-a Floating Rate Notes Due 2039, (2) Aaa to the U.S.$602,001,000 Class A-1 LT-b Floating Rate Notes Due 2039, (3) Aaa to the U.S.$50,000,000 Class A-2 Floating Rate Notes Due 2039, (4) Aa2 to the U.S.$40,000,000 Class B Floating Rate Notes Due 2039, (5) A2 to the U.S.$23,000,000 Class C Floating Rate Deferrable Interest Notes Due 2039, (6) Baa2 to the U.S.$9,000,000 Class D Floating Rate Deferrable Interest Notes Due 2039, (7) Ba2 to the U.S.$18,000,000 Aggregate Liquidation Preference of Preference Shares, (8) Baa1 to the U.S.$5,000,000 Combination Securities Due 2039. Princeton Advisory Group and Structured Asset Investors, LLC, are jointly managing this transaction. The ratings assigned to the Term Securities address the ultimate cash receipt of all required interest, if any, and principal payments as provided by the Term Securities' governing documents, and are based on the expected loss posed to holders of the Term Securities relative to the promise of receiving the present value of such payments. The rating of the Preference Shares addresses only the likelihood that the holders thereof will receive payment of the preference share rated balance thereof by their scheduled maturity. The ratings of the Combo Notes address only the likelihood that the holders thereof will receive payment of the combination security notional balance thereof by their scheduled maturity. The ratings of the Combo Notes and the Preference Shares do not address any interest or other distributions or payments thereon. X10 WIRELESS: Court Approves Second Amended Disclosure Statement ---------------------------------------------------------------- The Honorable Samuel J. Steiner of the U.S. Bankruptcy Court for the Western District of Washington approved the Second Amended Disclosure Statement explaining the proposed plan of reorganization filed by X10 Wireless Technology, Inc. The Debtor is now authorized to solicit acceptances to its plan. The Court set a plan confirmation hearing on Feb. 3, 2005, at 9:30 a.m. All ballots and objections are due by Jan. 27. According to the Plan, X10 will continue its operations after paying the majority of all unsecured claims on a pro-rata basis over a ten-year period from the Effective Date. The Debtor intends to implement the Plan a year after its confirmation. General Unsecured creditors' claim amounting to approximately $9 million will be paid in eight equal annual installments. The Debtor's largest creditors: -- Advertisement Banners.com's original claim of $5,975,683 has been reduced by the Court to $1.9 million. $1.4 million is treated and will receive payment similar to other general unsecured creditors. The remaining $500,000 is treated as punitive damages award and will be paid in two annual installments beginning on the tenth year after the confirmation of the Plan; -- X10 Ltd. agreed to subordinate its claim of $11,010,800 to the general unsecured creditors in exchange for the Debtor to waive all avoidance claims against X10 Ltd. The Debtor will start paying $500,000 annually and continuing until paid, after Advertisement's punitive claim is fully satisfied. X10 Ltd. will extend a product line of credit for $5 million to the Debtor. The debt will be secured against all product delivered and all sales proceeds will be kept in a bank account which security interest will be in favor of X10 Ltd. Headquartered in Kent, Washington, X10 Wireless Technology, Inc., is an internet pop-up advertiser and offers an integrated suite of affordable hardware and software products that provide powerful and affordable wireless solutions for homes and small business. The Company filed for chapter 11 petition on Oct. 21, 2003(Bankr. W.D. Wash. Case No. 03-23561). Mary Jo Heston, Esq., at Lane Powell Spears Lubersky LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $10 million in assets and $50 million in debts. YUKOS OIL: Gets Interim Okay to Waive Investment & Deposit Plan --------------------------------------------------------------- To recall, Yukos Oil Company asks the United States Bankruptcy Court for the Southern District of Texas waive the investment and deposit requirements under Section 345 of the Bankruptcy Code in light of the unusual circumstances it finds itself regarding its bank accounts. Section 345(a) authorizes deposits or investments of money of a bankruptcy estate, like cash, in a manner that will "yield the maximum reasonable net return on such money, taking into account the safety of such deposit or investment." For deposits or investments that are not "insured or guaranteed by the United States or by a department, agency or instrumentality of the United States or backed by the full faith and credit of the United States," Section 345(b) provides that the estate must require from the entity with which the money is deposited or invested a bond in favor of the United States secured by the undertaking of an adequate corporate surety. * * * The Court granted the Debtor's request on an interim basis. 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) * GrayRobinson Expands Services into Northeast Florida ------------------------------------------------------ Continuing its strategic expansion across Florida, GrayRobinson disclosed the opening of its Jacksonville office - the full- service law firm's third new office in the past 12 months and its ninth in the state. The latest development comes two months after GrayRobinson opened an office in Naples, providing the practice areas of health care, land use and state and local government law. The Key West office opened in December 2003. GrayRobinson also serves Orlando, Clermont, Lakeland, Melbourne, Tallahassee and Tampa. "We are excited about our new office in Jacksonville and our continued expansion throughout Florida," said Byrd F. "Biff" Marshall, president and managing partner of GrayRobinson. "Our plan has been to grow the firm strategically and with purpose. We will continue to expand to serve our clients' needs in other parts of the state as well as to reach new clients." The attorneys in the Jacksonville office are Kenneth B. Jacobs, Jason B. Burnett, Lee S. Haramis, Daniel A. Nicholas and Richard J. Plotkin. They practice in the areas of commercial and civil litigation, employment law, bankruptcy and financial restructuring. The office space is on the 16th floor of the Bank of America Tower. "The addition of these fine attorneys in Jacksonville deepens our resources in meeting our clients' needs," Mr. Marshall said. "GrayRobinson will continue to look for opportunities to grow in tandem with the development that is occurring in northeast Florida." "We are pleased to be a part of GrayRobinson," said Kenneth B. Jacobs, Jacksonville managing partner. "We are joining a very strong team that is capable of delivering highly effective legal services to our clients. We can offer our clients access to attorneys throughout the state and the depth of resources that only a statewide law firm can provide." GrayRobinson -- http://www.gray-robinson.com/-- one of Florida's fastest-growing law firms, is at the forefront of emerging legal issues in Florida. The full-service firm provides legal services for Fortune 500 companies, emerging businesses, lending institutions, local governments, major developers, entrepreneurs and individuals across Florida, the nation and the world. * Steptoe & Johnson Expands Litigation Practice in New York ----------------------------------------------------------- Steptoe & Johnson LLP today disclosed the opening of a New York office in Manhattan and that local attorneys Evan Barr and John Lovi have joined the firm as partners there. The firm has already established a strong presence in New York as a result of representations in high-profile white-collar criminal defense cases, insurance, and commercial litigation engagements. Steptoe's national white- collar practice, headed by Reid Weingarten, is frequently drawn to New York in high-stakes financial fraud and white-collar prosecutions. The New York office, located at 750 Seventh Avenue, will permit Weingarten to be located in New York on a part-time basis as he and partner Mark Hulkower, a former Assistant US Attorney, develop local strength and capabilities in this growing practice. Their representations include the successful defense of former Teamsters President Ron Carey, recently acquitted former general counsel of Tyco International Mark Belnick, and World Com co-founder Bernie Ebbers, whose fraud and conspiracy trial is set to begin this month. Steptoe's successes in New York go beyond the white-collar practice. For three years, Steptoe litigators Howard Stahl and Steve Davidson have successfully represented Motorola in federal trial and appellate courts in New York in a suit that resulted in a $2 billion judgment against the Uzan family, the principal owners of Telsim, one of Turkey's largest cell phone companies. In addition, Steptoe's representation of insurance and financial services clients in New York goes back more than a decade. "This is not a spur-of-the-moment decision, nor is it driven by any single event; rather it is a decision that is well-aligned with our clients' needs, the firm's strategic growth plan, and our core strengths in litigation, federal regulation, and international business" says Steptoe managing partner Roger Warin, who noted that the firm has been evaluating an expansion into New York City for some time. "Over the months and years ahead, we plan to add substantially to our New York base," added Mr. Warin. John Lovi's practice focuses on securities, derivatives, and broker-dealer litigation. He has been involved in high-profile securities cases, including the Orange County bankruptcy and recent international disputes involving failed derivative swap transactions in Korea. In joining Steptoe from McDermott Will and Emery, Mr. Lovi noted "I have the highest regard for McDermott Will and my former colleagues at the firm. Steptoe's excellent litigation, international, and financial regulatory practices presented a great opportunity for me to continue to build my practice and provide top-notch service to clients in the United States and abroad. "Earlier this month, Mr. Lovi was joined by Evan Barr, former Assistant US Attorney and Chief of the Major Crimes Unit of the US Attorney's office. Mr. Barr has supervised 25 prosecutors in the financial crimes unit in the US Attorney's office for the Southern District of New York and was an associate at Steptoe prior to his government service. Mr. Barr commented, "I am excited to be re- joining Steptoe, which has established itself as one of the premier litigation and white-collar defense firms in the country." Mr. Barr and Mr. Lovi join Steptoe litigation and bankruptcy partner Greg Yates, who relocated to New York in late 2004. Steptoe's initial focus in New York will be white-collar defense and criminal investigations, insurance, mass tort, bankruptcy, and commercial litigation. The New York office will also call on numerous disciplines in Steptoe's five other offices to fulfill client needs. ********* 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 ***