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/raid1/www/Hosts/bankrupt/TCR_Public/050221.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, February 21, 2005, Vol. 9, No. 43 Headlines AEP INDUSTRIES: Launches Offer to Purchase 9-7/8% Sr. Sub. Notes AK STEEL: Moody's Upgrades Senior Implied Rating to B1 from B2 ALLEGHENY ENERGY: S&P Upgrades Rating on Secured Debts to BB- AMERICAN BUSINESS: Gets Interim Court Nod on $179 Million DIP Loan AMERICAN BUSINESS: Cuts 134 Jobs at Philadelphia Headquarters AMERITYRE CORP: Historical Losses Trigger Going Concern Doubt ASPEN FUNDING: S&P Rates Class B-1 Notes & Pref. Shares at Low-B ATA AIRLINES: Wants to Extend Lease Decision Period to May 3 BEAR STEARNS: Fitch Assigns Low-B Ratings on Six Mortgage Certs. BLOCKBUSTER INC: Hollywood Ent. Tells Shareholders to Reject Offer BRISTOL CDO: Moody's Junks $30M Floating Rate Notes After Review BREUNERS HOME: Court Converts Chapter 11 Case to Chapter 7 CAL PAK DELIVERY: Case Summary & 20 Largest Unsecured Creditors CATHOLIC CHURCH: Spokane Litigants Wants to Retain Pachulski Stang CCC INFORMATION: Dec. 31 Balance Sheet Upside-Down by $121.9 Mil. CENTURY CARE: Plan's Effective Date Tolled for Asset Sale Closing CHEVY CHASE: Moody's Rates Classes B-4 & B-5 Certificates at Low-B CITATION CAMDEN: Taps Mercer as Employee Compensation Advisor COLONIAL PROPERTIES: Expands Accounting Team with New Executive COMMERCIAL MORTGAGE: Moody's Junks $5.813M Class N Certificates CORAL STREET: Case Summary & 20 Largest Unsecured Creditors CYVON IMAGING INC: Case Summary & 18 Largest Unsecured Creditors DENNY'S CORP: Dec. 29 Balance Sheet Upside-Down by $264.7 Million DEX MEDIA: Board Declares $0.09 Common Share Quarterly Dividend DIAL THRU: Deficits Trigger Going Concern Doubt DOBSON COMMS: 4th Qtr. Net Loss Narrows to $13.9-Mil from 2003 DONNKENNY INC: Mahoney Cohen Approved as Auditors and Accountants DONNKENNY INC: Can Continue Hiring Ordinary Course Professionals DPL CAPITAL: S&P Places B Ratings on CreditWatch Positive ENERGY CONVERSION: Accountants Raise Going Concern Doubts FIRST VIRTUAL: Court OKs Bidding Procedures to Test $5.2 Mil. Bid FIRST VIRTUAL: Gets Final Approval of $2 Million DIP Facility GADZOOKS INC: Inks Pact to Sell All Assets to Forever 21 for $33M GADZOOKS INC: Wants Until May 2 to Decide on Leases GE COMMERCIAL: Fitch Puts Low-B Ratings on 6 Mortgage Certificates GENEVA STEEL: Court Says Anderson Must Submit to Rule 2004 Exam GREENPOINT CREDIT: Fitch Junks Six Mortgage Securitization Classes GTC TELECOM: Deficits & Defaults Trigger Going Concern Doubt HAYES LEMMERZ: Amalgamated Gadget Discloses 5.9% Equity Stake HIGH VOLTAGE: No DIP Financing & Court Appoints Chapter 11 Trustee HOLLYWOOD ENT: Tells Shareholders to Reject Blockbuster's Offer LANOPTICS LTD: Dec. 31 Equity Deficit Narrows to $9.9 Million LAUNCH RESOURCES: Enters Receivership and Directors Resign LEARNING CENTER: Moody's Affirms Ba2 Rating on $9 Million Bonds LYNX 2002-1: S&P Junks Class D Notes After Review MAL FOODS ILLINOIS: Case Summary & 5 Largest Unsecured Creditors MASONITE INTL: Stile Acquisition Lifts Offer for Shares to $42.25 MCCANDLESS KM ASSOCIATES: Voluntary Chapter 11 Case Summary MONTESOLE USA LTD: Case Summary & Largest Unsecured Creditor NEWAVE INC: 3 for 1 Forward Stock Split Takes Effect NORTHWESTERN CORP: Proposed Settlement with Magten Asset Collapses OWENS-ILLINOIS: Names Helge Wehmeier to Board of Directors PANACO INC: Wants to Avoid Paying $5.6M of Purported Sec. Claims PARAGON HOLDINGS: Case Summary & 3 Largest Unsecured Creditors PEABODY ENERGY: Discloses Management Changes in Legal Departments PINNACLE ENT: Secures Additional Property in Downtown St. Louis PLATTE VIEW FARM: Case Summary & 15 Largest Unsecured Creditors RAYOVAC CORP: Sets Annual Shareholder Meeting for April 27 REDDY ICE: Hosting Fourth Quarter Conference Call on Thursday RURAL/METRO: Soliciting Consents Until Mar. 5 to Amend Sr. Notes SMA FINANCE: Moody's Puts B1 Rating on $10.130MM Class G Certs. SOLECTRON CORPORATION: Expands Enclosures & Sheet Metal Facility SOLECTRON CORP: Completes Senior Convertible Debt Exchange Offer SPIEGEL INC: Files Reorganization Plan in New York ST. JOHN KNITS: Moody's Puts B1 Rating on $255MM Senior Sec. Loans ST. JOHN KNITS: S&P Rates Proposed $255M Bank Facilities at B+ SYBRON DENTAL: Names Bernard Pitz as Chief Financial Officer SYP ENTERPRISES INC: Voluntary Chapter 11 Case Summary TEKNI-PLEX INC: Poor Operating Results Cue S&P to Junk Rating TEXEN OIL: Raising $500,000 from Private Equity Placement TRIAD HOSPITALS: Earns $49.2 Million of Net Income in 4th Quarter TRIMAS CORP: S&P Downgrades Corporate Credit Rating to B+ TRINITY LEARNING: Can't Operate Past April Without New Funds TRW AUTOMOTIVE: Posts $62 Million Net Loss in Fourth Quarter UAL CORP: Court Approves Amended DIP Financing Facility UAL CORP: Gets Four Offers for $2.5 Billion Exit Financing ULTIMATE ELECTRONICS: Court Okays $118.5-Mil Final DIP Financing ULTIMATE ELECTRONICS: Shareholders Lobby for an Equity Committee US AIRWAYS: Inks $125 Million DIP Term Loan with Investor Group VARTEC TELECOM: Wants to Auction Some Personal Property on Mar. 2 VARTEC TELECOM: Taps Rosen Systems as Auctioneer WELLS FARGO: Fitch Puts Low-B Ratings on Two $3.939 Mil. Certs. WESCORP ENERGY: Looks to Raise $1.25M from Debenture Financing WORLDCOM INC: Mississippi Power Wants $1.5MM Cure Claim Paid Now YUKOS OIL: Asks Court to Fix May 1 as Claims Bar Date * BOND PRICING: For the week of February 21 - February 25, 2005 ********* AEP INDUSTRIES: Launches Offer to Purchase 9-7/8% Sr. Sub. Notes ---------------------------------------------------------------- AEP Industries Inc. (Nasdaq: AEPI) has commenced an offer to purchase for cash any and all of its outstanding $200 million aggregate principal amount of 9.875% Senior Subordinated Notes due 2007 (CUSIP No. 001031AC7). The Notes were issued on Nov. 19, 1997. In conjunction with the tender offer, the Company is soliciting consents to amend the indenture governing the Notes that would eliminate substantially all of the restrictive covenants and certain events of default contained in the indenture. The tender offer will expire at 12:00 midnight, New York City Time, on March 17, 2005, unless extended or earlier terminated by the Company. Holders of the Notes cannot tender their Notes without delivering their consents to the amendments and cannot deliver consents without tendering the Notes. Tenders of Notes may be withdrawn at any time on or prior to 12:00 midnight on March 3, 2005, unless the Company extends the withdrawal deadline. The total consideration for each $1,000 principal amount of Notes will be $1,021.80. The total consideration includes a consent payment of $20 per $1,000 principal amount of Notes that will be payable to holders who validly tender their Notes prior to the consent payment deadline, which is 12:00 midnight, New York City time, on March 3, 2005, unless such consent payment deadline is extended by the Company. Holders who validly tender Notes after the consent payment deadline but prior to the expiration date will be entitled to receive $1,001.80 for each $1,000 principal amount of Notes, which is equal to the total consideration less the consent payment. In either case, tendering holders will receive accrued and unpaid interest from the most recent interest payment date to, but not including, the date of payment for the tender offer. The Company has engaged Merrill Lynch & Co. to act as the exclusive dealer manager and consent solicitation agent for the tender offer and the consent solicitation. Questions regarding the tender offer and the consent solicitation may be directed to Merrill Lynch & Co. at (212) 449-4914 (call collect) or (888) ML4- TNDR (toll-free). The terms and conditions of the tender offer and the consent solicitation are described in the Offer to Purchase and Consent Solicitation Statement dated Feb. 17, 2005. Any questions or requests for assistance or for copies of documents may be directed to D.F. King & Co., Inc., the Information Agent for the tender offer and the consent solicitation, at (212) 269-5500 or (800) 714-3313 (toll-free). The Depositary for the tender offer and the consent solicitation is The Bank of New York, which can be reached at (212) 815-3750. The Company's 9.875% senior subordinated notes due 2007 hold Moody's B3 rating and Standard & Poor's 'B-' rating. About the Company AEP Industries Inc. manufactures, markets, and distributes an extensive range of plastic packaging products for the food/beverage, industrial and agricultural markets. The Company has operations in ten countries throughout North America, Europe and Australasia. AK STEEL: Moody's Upgrades Senior Implied Rating to B1 from B2 -------------------------------------------------------------- Moody's Investors Service upgraded AK Steel Corporation's debt ratings (Senior Implied to B1 from B2) and affirmed the company's SGL-1 rating. The rating outlook is stable. The upgrade recognizes the company's improved operating performance and cash flow generation achieved during 2004, greatly improved liquidity, and a very favorable business outlook for 2005. The positive earnings and cash flow generation achieved in 2004 allowed AK Steel to reduce leverage, strengthen its overall financial condition and debt protection measures, and provide voluntary cash funding to its pension plan. The company also made progress on cost reductions, realizing approximately $300 million in annual sustainable savings, although much of these improvements were overshadowed by sharply higher raw material costs. These ratings were raised: (i) senior implied rating, to B1 from B2, (ii) guaranteed senior notes to B1 from B3 (iii) senior unsecured issuer rating to B1 from B3. The stable outlook reflects Moody's expectation that AK Steel's current business mix, degree of value-added products and contract position for 2005 will enable the company to continue to show good earnings performance and cash flow generation, despite Moody's expectation that steel prices, particularly for hot rolled in the spot market, will moderate during the year. The outlook also considers that AK Steel has no material funding requirements as its earliest mandatory pension funding obligation is in 2006 and its earliest debt maturity is in 2009. Upward rating movement is viewed as challenging at this time given the company's disadvantageous employee benefit costs, the magnitude of its pension and OPEB liabilities, continued raw material cost pressures, and vulnerability to sharp margin contraction during a cyclical downturn. However, should the company be able to sustain average margins of at least $80 in EBITDA/ton, continue to generate positive free cash flow, continue to improve its liability position with respect to pension obligations and maintain a strong liquidity position, the outlook or rating could be favorably impacted. Given the company's contract position for 2005, sound liquidity position and the still favorable fundamentals for the steel industry, a downward change in outlook or ratings is unlikely over the time horizon envisioned by this outlook. In addition, should the company be unable to better position itself with respect to the competitiveness of its overall labor and benefit costs prior to the cyclical downturn in the steel industry, the outlook or rating could be pressured. AK Steel's improved financial performance reflects higher realized pricing and shipment levels achieved by the company in 2004, which were more than sufficient to mitigate increased operating costs. On a macro level, the domestic steel industry continues to benefit from strong demand and an end user market willing to pay near record steel prices to ensure an adequate supply. In 2004, higher spot prices, the introduction of surcharges on top of base prices, and a more favorable sales mix helped AK achieve an average selling price of $833/ton (vs. $677/ton in 2003). The increase would have been greater if the company had not committed to sales agreements prior to the run-up in prices. The higher prices, combined with very high operating rates raised AK Steel's full year 2004 EBITDA (excluding pension and OPEB related corridor charges), nearly $550 million from negative $89 million to $457 million, dramatically improving most debt protection metrics. In Moody's view the contract nature of AK's business and the recent announcement that 90% of its contract sales were re-priced for 2005 provides some confidence that AK Steel's operating performance will show continued earnings strength in 2005. AK also announced that approximately 50% of its contracts for 2005 now have some cost adjustment mechanism, which may help pass through costs and alleviate potential margin pressures. Additionally, we note that the company has no near-term material debt maturities, has an acceptable cash balance and $500 million of borrowing availability at year-end 2004 under its bank facilities (as determined by borrowing base levels and used only for letters of credit). In addition to the favorable earnings outlook, the upgrade considers the improvements made to AK's capital structure. We note the company reduced balance sheet debt by approximately $150 million in 2004, and made a voluntary cash payment to its pension plan of $150 million in January 2005. This will contribute to reduced mandatory pension funding requirements in 2006. Despite the generally positive market prospects, certain industry and company specific issues continue to constrain the rating. These include cyclical earnings volatility, high fixed costs and capex requirements, potential challenges from competing products and lower priced imported steel products. They also include areas such as elevated pension, OPEB, and raw material costs. As a mid-size steel producer AK Steel now operates in a changed landscape for steel makers due to the industry consolidation that has occurred in recent years. Although the company's long-term customer relationships and high value-added product offerings can enable the company to compete in a market now dominated by fewer producers, the company still operates at a cost disadvantage in a number of areas including raw materials, where its degree of self sufficiency is less than some of its competitors (Moody's estimates costs increased to $785/ton in 2004 from $667/ton the prior year), and labor, where benefit costs remain higher than competitors. The ratings on the guaranteed senior notes have historically been notched down from the senior implied rating to reflect the secured borrowings in the capital structure. With the repayment in 2004 of the secured notes, repayment of outstandings under the bank facilities, and the improvement in collateral value that would be available to bondholders, Moody's has equalized the senior unsecured ratings with the senior implied rating. For the year ended December 31, 2004, AK Steel reported operating income of negative $80 million. Excluding the "corridor" pension and OPEB charges taken in the fourth quarter, operating earnings totaled $251 million, and on that basis AK Steel ended the year with total debt to EBITDA of 2.4 times. Inclusive of the corridor charge, debt to EBITDA remained high at slightly greater than 8x. AK Steel Corporation, headquartered in Middletown, Ohio, produces flat rolled carbon, stainless and electrical steel products for automotive, appliance, construction, and other markets. It shipped 6.2 million tons of steel and had revenue of $5.2 billion in 2004. ALLEGHENY ENERGY: S&P Upgrades Rating on Secured Debts to BB- ------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on Allegheny Energy Supply Inc.'s secured bank loan (which had $1.044 billion of debt as of October 2004) and $380 million secured bonds to 'BB- ', from 'B+'. In addition, the recovery rating on these debt issues was raised to '1', from '2'. The upgrades reflect the declining balance of AE Supply's outstanding secured debt as proceeds from asset sales were used to pay down debt. The '1' recovery rating indicates that holders of the bank loan can expect strong likelihood of full recovery of principal in the event of default or bankruptcy. The 'BB' rating on the secured debt is currently one notch above AE Supply's 'B+' issuer credit rating. With the recent sales of its ownership interest in Ohio Valley Electric Corp. and the Lincoln facility, Standard & Poor's estimates that AE Supply has paid down about $280 million of its secured loan and bonds since October of 2004, leaving the company with a total of $1.14 billion of first-lien debt and $280 million of pollution control bonds outstanding. As a result, AE Supply's value to debt coverage is likely to have improved to 1.20x, from about 1x in October of 2004. The positive outlook reflects Standard & Poor's expectation that consolidated parent Allegheny Energy, Inc., will continue to execute its plan to pay down $1.5 billion or more of debt between December 2003 and the end of 2005. Continued progress in selling assets, paying down debt, and stabilizing cash flow, or positive outcomes from rate filings could lead to a ratings upgrade. AMERICAN BUSINESS: Gets Interim Court Nod on $179 Million DIP Loan ------------------------------------------------------------------ American Business Financial Services, Inc., received interim Court approval last week to use $179 million of a $500 million debtor- in-possession financing facility which will allow the Company to resume its loan origination business, pay certain secured creditors and pay current business expenses. The Company has been working diligently with its Creditors Committee and other interested parties to resolve a number of issues over the past few weeks. Commitment Fee Kerfuffle One of those issues was a complaint by ABFS' unsecured creditors to payment of a $15 million fee to the DIP Lenders when its unlikely that ABFS would ever borrow more than $250 million from Greenwich Capital. At the outset of the multi-day Interim DIP Financing Hearing last week, Judge Walrath noticed that American Business told the public it was asking the Court to authorize $250 million of interim DIP financing. In fact, Judge Walrath observed, the company would only get access to $158 million on an interim basis under the proposed DIP financing arrangement. "It's not appropriate to mislead the public," Judge Walrath told ABFS and its lawyers from Blank Rome LLP at Tuesday's hearing. Judge Walrath rejected the $15 million commitment fee under the proposed DIP Facility. ABFS, Greenwich Capital, and the unsecured creditors sat down to talk after that ruling. Those talks culminated in Greenwich's agreement to cut the fee from $15 million to $6.3 million. Judge Walrath approved the lower fee and gave ABFS interim authority to borrow up to $179 million under the revised DIP financing arrangement. "We are gratified to have achieved a resolution of the various issues and to have obtained the Court's interim approval of our financing," said Anthony J. Santilli, chairman and chief executive officer of ABFS. "We can now get back to our core business of originating, selling and servicing home mortgage loans." Mr. Santilli said he expected that the Company would be able to begin accepting applications and fund new loans after ABFS closes on the financing agreements with the DIP lender next week. Under the terms of the DIP facility, $100 million will be used to provide warehouse financing that will enable the Company to fund new home mortgage loans, and the remaining $75 million would be used to pay certain secured creditors as well as obtain working capital. A hearing on final approval of the DIP financing will be held in the next few weeks. "This is a critical first step in the restructuring of the Company," Mr. Santilli continued. "With a portion of the DIP financing in place, we are hopeful that, through the restructuring process, the Company can improve its capital structure and take advantage of the fundamental strength of its loan origination business." The Fight Isn't Over Scott D. Cousins, Esq., at Greenberg Traurig, LLP, in Wilmington, representing the objecting unsecured creditors, told Judge Walrath that his clients understand ABFS is looking for a new DIP lender and will be delighted to see one. His clients want to pursue what they think are viable causes of action against Greenwich Capital, Chrysalis Warehouse Funding LLC, and Clearwing Capital LLC, for continuing to fund ABFS while the company was insolvent. Although ABFS provided the lenders with broad indemnification under the prepetition financing agreements, Mr. Cousins says that ABFS didn't and can't indemnify the lenders against claims arising from their gross negligence or willful misconduct. Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. AMERICAN BUSINESS: Cuts 134 Jobs at Philadelphia Headquarters ------------------------------------------------------------- American Business Financial Services, Inc., has reduced its workforce in Philadelphia by 134 employees. "It is never easy to make the decision to take this kind of action and we deeply regret having to do so," Anthony J. Santilli, chairman and chief executive officer of ABFS, said. "With our interim DIP financing in place," Mr. Stantilli continued, "we must concentrate on rapidly growing our home mortgage loan origination business with maximum efficiency. Though very difficult, these reductions are necessary cost reductions under our business plan, and demonstrate the Company's commitment to regenerating our loan origination business and meeting our business plan projections." Headquartered in Philadelphia, Pennsylvania, American Business Financial Services, Inc., together with its subsidiaries, is a financial services organization operating mainly in the eastern and central portions of the United States and California. The Company originates, sells and services home mortgage loans through its principal direct and indirect subsidiaries. The Company, along with four of its subsidiaries, filed for chapter 11 protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203). Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,083,396,000 in total assets and $1,071,537,000 in total debts. AMERITYRE CORP: Historical Losses Trigger Going Concern Doubt ------------------------------------------------------------- Amerityre Corporation has historically incurred significant losses, which have resulted in a total accumulated deficit of approximately $34,404,913 at December 31, 2004. Those recurring losses and the accumulated deficit raise substantial doubt about the ability of the Company to continue as a going concern. To supplement cash needs during the fiscal year the Company intends to: (1) obtain supplemental funding through the exercise of outstanding in the money options; (2) issue common stock in lieu of cash as compensation for employment, development, and other professional services; and (3) sell its equity securities for cash in either a private placement or registered offering. Amerityre estimates that the combination of its accounts receivable and its cash and cash equivalents will meet its operational needs through April 2005. Management anticipates that for the balance of this fiscal year the Company will need an additional $900,000 to implement its plan and to meet working capital requirements. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its plan, and eventually attain profitable operations. In January 2005, Amerityre issued 15,000 shares of its common stock for cash of $60,000, in connection with the exercise of 15,000 outstanding stock options at $4.00 per share. Also in January 2005, pursuant to a resolution of its Board of Directors, the Company granted several employees stock awards aggregating 19,300 shares of common stock valued at $123,520, or $6.40 per share. Additionally, in January 2005, pursuant to a resolution of its Board of Directors, the Company issued 10,000 shares of its common stock valued at $77,000, or $7.70 per share, to a third- party consultant for professional services. In February 2005, Amerityre engaged Keystone Equities Group, a NASD licensed broker-dealer to act as placement agent in a best-efforts offering to raise up to $11,000,000 through the private placement of Amerityre's equity securities. The securities will be offered by Keystone on a "best-efforts, all or none" basis. Since early 1995 and the inception of Amerityre Corporation (fka: American Tire Corporation), the Company has developed additional proprietary technology relating to Flatfree[TM] polyurethane foam tires. It has completed the fundamental technical development of the processes to manufacture Flatfree[TM] polyurethane foam tires for non-highway use. In addition, since August 2001, the Company has been engaged in the development of the technology to produce polyurethane elastomer tires for highway and agricultural use. ASPEN FUNDING: S&P Rates Class B-1 Notes & Pref. Shares at Low-B ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A-3L and B-1 notes issued by Aspen Funding I Ltd., a cash flow arbitrage CDO of ABS/RMBS, and removed them from CreditWatch with negative implications, where they were placed Dec. 2, 2004. At the same time, the ratings on the class A-2L and preference shares are affirmed and removed from CreditWatch negative, where they were also placed Dec. 2, 2004. Additionally, the 'AAA' rating on the class A-1L notes is affirmed. The affirmations are based on the credit enhancement available. The lowered ratings reflect several factors that have negatively affected the credit enhancement available to support the notes since the class A-2L and A-3L notes were downgraded in May 2004, primarily due to par erosion. Standard & Poor's reviewed the results of the current cash flow runs generated for Aspen Funding I Ltd. to determine the level of future defaults the rated classes can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. When the results of these cash flow runs were compared with the projected default performance of the performing assets in the collateral pool, it was determined that the ratings assigned to the class A-3L and B-1 notes were no longer consistent with the credit enhancement available. Ratings Lowered And Removed From CreditWatch Negative Aspen Funding I Ltd. Rating Class To From ----- -- ---- A-3L BBB BBB+/Watch Neg B-1 BB+ BBB-/Watch Neg Ratings Affirmed And Removed From CreditWatch Negative Aspen Funding I Ltd. Rating Class To From ----- -- ---- A-2L A+ A+/Watch Neg Preference shares BB BB/Watch Neg Rating Affirmed Aspen Funding I Ltd. Class Rating ----- ------ A-1L AAA Transaction Information Issuer: Aspen Funding I Ltd. Co-issuer: Aspen Funding I (Delaware) Corp. Underwriter: Bear Stearns Cos. Inc. Trustee: Wells Fargo Bank N.A. Transaction type: CDO of ABS Tranche Initial Prior Current Information Report Downgrade Action Date (MM/YYYY) 7/2002 5/2004 2/2005 Class A-1L note rating AAA AAA AAA Class A-2L note rating AA A+ A+ Sr. class A OC ratio 114.501% 116.123% 106.102% Sr. class A OC ratio min 103.0% 103.0% 103.0% Class A-3L note rating A BBB+ BBB Class A OC ratio 108.105% 108.932% 107.615% Class A OC ratio min 102.0% 102.0% 102.0% Class B-1 note rating BBB- BBB- BB+ Class B OC ratio 104.882% 105.763% 104.099% Class B OC ratio min. 101.50% 101.50% 101.50% Prefernce share rating BB BB BB Class A-1L note bal $157.0mm $139.491mm $104.124mm Class A-2L note bal $12.0mm $12.00mm $12.00mm Class A-3L note bal $10.0mm $10.00mm $10.00mm Class B-1 note bal $5.50mm $4.840mm $4.620mm Preference shares $7.945mm $7.945mm $7.945mm* * According to the payment date report dated Jan. 10, 2005, the rated notional for the preference shares stands at $2.224 million. This compares to an initial notional of $7.945 million. Portfolio Benchmarks Current -------------------- ------- S&P Wtd. Avg. Rtg. (excl. defaulted) BBB S&P Default Measure (excl. defaulted) 0.62% S&P Variability Measure (excl. defaulted) 1.73% S&P Correlation Measure (excl. defaulted) 1.25% Wtd. Avg. Coupon (excl. defaulted) 7.053% Wtd. Avg. Spread (excl. defaulted) 2.453% Oblig. Rtd. 'BBB-' and Above 87.72% Oblig. Rtd. 'BB-' and Above 92.82% Oblig. Rtd. in 'CCC' Range 7.18% Oblig. Rtd. 'CC', 'SD' or 'D' 0% Rated OC Ratios Current --------------- ------- Class. A-1L notes 102.71% (AAA) Class A-2L notes 103.85% (A+) Class A-3L notes 104.03% (BBB) Class B-1 notes 102.06% (BB+) For information on Standard & Poor's CDO Portfolio Benchmarks and Rated Overcollateralization (ROC) Statistic, please see "ROC Report February 2005," published on RatingsDirect, Standard & Poor's Web-based credit analysis system, and on the Standard & Poor's Web site at http://www.standardandpoors.com/ Go to "Credit Ratings," under "Browse by Business Line" choose "Structured Finance," and under Commentary & News click on "More" and scroll down to the desired article. ATA AIRLINES: Wants to Extend Lease Decision Period to May 3 ------------------------------------------------------------ Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, tells Judge Lorch that due to the complexity of ATA Airlines and its debtor-affiliates' Chapter 11 cases, and at this early stage in the proceedings, the Debtors are unable to make a fully informed decision with regard to their unexpired non- residential real property leases by February 25, 2005. Pursuant to Section 365(d)(4) of the Bankruptcy Code, the Debtors ask the United States Bankruptcy Court for the Southern District of Indiana to extend the time within which they may assume, assume and assign, or reject the Leases, to and including the earlier of May 3, 2005, or the date on which a Plan is confirmed. Mr. Nelson relates that the Debtors are in the process of evaluating the property covered by the Leases. The Debtors are evaluating a variety of factors to determine if it is appropriate to assume, assume and assign, or reject each Lease. The Debtors' decision with respect to each Lease depends in large part on whether the location will play a future role under the Debtors' plan or reorganization. Whether each Lease is assumed, assumed and assigned, or rejected, Mr. Nelson says, will depend, most significantly, on whether the Debtors will continue operations at such location once a plan of reorganization is implemented. 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) BEAR STEARNS: Fitch Assigns Low-B Ratings on Six Mortgage Certs. ---------------------------------------------------------------- Fitch Ratings affirms Bear Stearns Commercial Mortgage Securities Inc.'s mortgage pass-through certificates, series 2003-PWR2: -- $78.2 million class A-1 'AAA'; -- $115.8 million class A-2 'AAA'; -- $97.2 million class A-3 'AAA'; -- $608.3 million class A-4 'AAA'; -- Interest-only classes X-1 and X-2 'AAA'; -- $26.7 million class B 'AA'; -- $28 million class C 'A'; -- $9.3 million class D 'A-'; -- $12 million class E 'BBB+'; -- $10.7 million class F 'BBB'; -- $9.3 million class G 'BBB-'; -- $13.3 million class H 'BB+'; -- $5.3 million class J 'BB'; -- $5.3 million class K 'BB-'; -- $4 million class L 'B+'; -- $5.3 million class M 'B'; -- $2.7 million class N 'B-'. Fitch does not rate the $12 million class P. The rating affirmations reflect the minimal reduction of the pool collateral balance since closing. As of the January 2004 distribution date, the pool has paid down 2.1%, to $1.04 billion from $1.07 billion at issuance. To date, there have been no delinquent or specially serviced loans in the pool. The transaction contains five loans (19.8%) which Fitch considers investment grade. Fitch reviewed the most recent operating data available from the servicers for these loans. 3 Times Square (9.2%) Is a $256.3 million pari passu note with $96.1 million serving as collateral for this transaction. There is an additional $94.8 million B-note held outside the trust. The most recent operating data available from Prudential, the master servicer for this loan is March 2004. Occupancy remains flat at 98.9%. The remaining four credit assessed loans: * Barrett Pavilion (4.2%), * Westside Center (2.8%), * Royal & SunAlliance Building (1.8%) and * Dartmouth Towne Center (1.8%) have remained stable since issuance. BLOCKBUSTER INC: Hollywood Ent. Tells Shareholders to Reject Offer ------------------------------------------------------------------ Hollywood Entertainment Corporation's (Nasdaq: HLYW) Board of Directors unanimously recommended that shareholders reject Blockbuster Inc.'s (NYSE: BBI) unsolicited offer to purchase all of the outstanding shares of Hollywood for consideration consisting of $11.50 in cash and Blockbuster class A common stock with a value of $3.00. Hollywood reported that the Board believes the uncertainties and possible delays inherent in Blockbuster's offer outweigh the approximately 9.4% premium being offered by Blockbuster over the consideration of $13.25 in cash per share to be paid pursuant to an agreement and plan of merger with Movie Gallery (Nasdaq: MOVI) entered into on January 9, 2005. As a result, after careful consideration, including its receipt of the unanimous recommendation of a Special Committee of independent directors, the Board unanimously recommends that Hollywood shareholders reject the offer and not tender their shares to Blockbuster. The Board and Special Committee, in reaching these conclusions, considered, among other things, that: (1) Blockbuster's offer raises significant antitrust issues that cause substantial uncertainty as to whether the transaction would be allowed to proceed by the Federal Trade Commission at all or could be completed without significant delay; (2) Blockbuster's offer is subject to numerous conditions which reduce the likelihood of Blockbuster completing the transaction; (3) Blockbuster's offer does not adequately protect Hollywood's shareholders from, or compensate shareholders for, the numerous risks and conditions to which the offer is subject; and (4) the FTC, on February 11, 2005, permitted the Movie Gallery transaction to proceed without a request for additional information pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, eliminating the antitrust regulatory hurdle to the Movie Gallery transaction. A more complete list of the factors considered by the Board and the Special Committee is included in a Solicitation/Recommendation Statement on Schedule 14D-9 that was filed by Hollywood with the Securities and Exchange Commission and mailed to shareholders. In considering the Blockbuster offer, the Board and the Special Committee noted that if there were any material positive developments relating to the offer subsequent to their recommendation and prior to the shareholder vote on the Movie Gallery transaction, they would reevaluate their recommendation. Additionally, the Board reaffirmed its previous recommendation that Hollywood's shareholders vote in favor of the merger agreement with Movie Gallery. UBS Investment Bank and Lazard provided financial advice to the Special Committee in connection with the proposed transaction. Gibson, Dunn & Crutcher LLP provided legal advice to the Special Committee and Stoel Rives LLP provided legal advice to Hollywood in connection with these matters. As reported in the Troubled Company Reporter on Feb. 4, 2005, Blockbuster has filed a registration statement with the Securities and Exchange Commission for an exchange offer for all outstanding shares of Hollywood Entertainment Corporation at a value of $14.50 per share, comprised of $11.50 in cash and $3.00 in Blockbuster class A common stock. The exchange offer will formally commence on Feb. 4, 2005. The proposed transaction would have an estimated total value of more than $1.3 billion and would be immediately accretive to Blockbuster's earnings per share and cash flow. The exchange offer represents a premium of $1.25 per Hollywood share, or 9.4%, over the value of Movie Gallery's $13.25 cash offer for each share of Hollywood common stock. Following completion of the exchange offer, Blockbuster intends to consummate a second step merger in which each remaining Hollywood shareholder would receive the right to the same consideration in cash and stock as paid in the exchange offer. About Hollywood Entertainment Hollywood Entertainment Corporation is a rental retailer of digital video discs -- DVDs, videocassettes and video games in the United States. During the year ended December 31, 2003, the Company operated 1,920 Hollywood Video stores in 47 states and the District of Columbia. Hollywood Entertainment also operates 595 Game Crazy stores, which are game specialty stores where game enthusiasts can buy, sell and trade new and used video game hardware, software and accessories. Hollywood Video stores represented approximately 89%, and its Game Crazy stores represented approximately 11% of the Company's total revenue in 2003. About Movie Gallery Movie Gallery, Inc., is the third-largest company in the specialty video retail industry based on revenues and the second-largest in the industry based on stores. As of December 31, 2004, Movie Gallery owned and operated 2,482 stores located primarily in the rural and secondary markets throughout North America. Since the company's initial public offering in August 1994, Movie Gallery has grown from 97 stores to its present size through acquisitions and new store openings. Blockbuster, Inc., headquartered in Dallas, Texas, is a leading global provider of in-home movie and game entertainment with nearly 9,000 stores throughout the Americas, Europe, Asia, and Australia. Total revenues for fiscal year 2003 were approximately $5.9 billion. * * * As reported in the Troubled Company Reporter on Feb. 11, 2005, Moody's Investors Service placed the long-term debt ratings of Blockbuster Inc., on review for possible downgrade and downgraded the speculative grade liquidity rating to SGL-2 following the commencement of a hostile exchange offer for all outstanding shares of Hollywood Entertainment Corporation. The ratings placed on review for possible downgrade are: * Senior Implied of Ba2; * Long Term Issuer Rating of Ba3; * Senior Secured Bank Credit Facilities of Ba2; * Senior Subordinated Notes of B1. The rating downgraded is: * Speculative Grade Liquidity Rating to SGL-2 from SGL-1. BRISTOL CDO: Moody's Junks $30M Floating Rate Notes After Review ---------------------------------------------------------------- Moody's Investors Service announced that it has taken action on notes issued by Bristol CDO I, Limited, a collateralized debt obligation issuance. The tranches affected are: (i) U.S.$30,000,000 Class B Second Priority Senior Secured Floating Rate Notes Due 2037, currently rated Aa1 on watch for downgrade have been downgraded to A2 no longer on watch for downgrade. (ii) U.S.$13,000,000 (current balance of $12,114,308) Class C Third Priority Secured Floating Rate Notes Due 2037 currently rated Ba2 on watch for possible downgrade have been downgraded to Caa3 and no longer on watch for downgrade. Moody's also removed the Classes of Notes issued by Bristol CDO I, Ltd. from the Moody's Watchlist for possible downgrade and has confirmed the current ratings: (i) U.S.$223,500,000 (current balance of $167,533,401) Class A-1 First Priority Senior Secured Floating Rate Notes Due 2032, currently rated Aaa on watch for possible downgrade, have been confirmed at Aaa. (ii) U.S.$20,500,000 (current balance of $15,366,598) Class A-2 First Priority Senior Secured Floating Rate Notes Due 2032, currently rated Aaa on watch for possible downgrade have been confirmed at Aaa. Moody's stated that these rating downgrades were prompted primarily by deterioration in the credit quality of the underlying collateral pool. The transaction continues to violate its Weighted Average Rating Factor Test as reported in the monthly deal surveillance report dated as of January 2005. BREUNERS HOME: Court Converts Chapter 11 Case to Chapter 7 ---------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware approved on Feb. 8, 2005, the request of Breuners Home Furnishings Corp. and its debtor-affiliates to convert their Chapter 11 bankruptcy cases to a Chapter 7 liquidation proceeding. Judge Walsh also approved the U.S. Trustee's appointment of Montague S. Claybrook as the Interim Chapter 11 Trustee for the Debtors' estate. Judge Walsh based his decision on the three facts cited by the Debtors in their request: a) most of the proceeds from the Debtors' going-out-of-business sales for substantially all of their assets and the Designation Rights Agreements for the most of their unexpired nonresidential real property leases, were used to fund the Debtors' operations for 2004 and pay their obligations to the Pre-Petition Lenders; b) the Debtors have not been able to reach an agreement with the Pre-Petition Lenders for funding their Four Month 2005 Budget, from Jan. to April, because the Lenders want the Debtors to agree on a budget that would require them to pick and choose which administrative claims to pay, which the Debtors believe is inappropriate; and c) since the Debtors have no more sufficient cash to fund their operations, conversion to a Chapter 7 liquidation proceeding is in the best interest of their estates, their creditors and other parties in interest. Judge Walsh concludes that these facts demonstrate causes to convert the Debtors' Chapter 11 bankruptcy cases to a Chapter 7 liquidation proceeding under Section 1112(a) of the Bankruptcy Code. Headquartered in Lancaster, Pennsylvania, Breuners Home Furnishings Corp., -- http://www.bhfc.com/--is one of the largest national furniture retailers focused on the middle the upper-end segment of the market. The Company and its debtor-affiliates, filed for chapter 11 protection on July 14, 2004 (Bankr. Del. Case No. 04-12030). The Court converted the case to a Chapter 7 proceeding on Feb. 8, 2005. Great American Group, Gordon Brothers, Hilco Merchant Resources, and Zimmer-Hester were brought on board within the first 30 days of the bankruptcy filing to conduct Going-Out-of-Business sales at the furniture retailer's 47 stores. Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors. When the Debtors filed for chapter 11 protection, it reported more than $100 million in estimated assets and debts. CAL PAK DELIVERY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Cal Pak Delivery, Inc. 1951-A Fairway Drive San Leandro, California 94577 Bankruptcy Case No.: 05-40650 Type of Business: The Debtor provides transportation services. See http://www.calpak.com/ Chapter 11 Petition Date: February 14, 2005 Court: Northern District of California (Oakland) Judge: Edward D. Jellen Debtor's Counsel: Kevin W. Coleman, Esq. McNutt and Litteneker, LLP 188 The Embarcadero #800 San Francisco, CA 94105 Tel: 415-995-8475 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Fairway Properties Landlord $222,426 2200 Powell Street #970 Emeryville, CA 94577 Caltop Logistic Trade $59,560 9415 Sorensen Avenue Santa Fe Springs, CA 90670 Reserve Truck Lines Trade $55,349 959 North Grove Street Anaheim, CA 92817 State Compensation Fund Trade $46,242 D Scourtis Employee $44,981 Healthnet 40755A Trade $26,398 Tip066- Transport Int'l Pool Employment lease $12,723 XTRA Lease Trade $11,076 Hartsell Trucking Trade $10,376 Golden Gate Truck Center Trade $9,508 Kalmar AC, Inc. Trade $9,002 Citicorp Del-Lease, Inc. Equipment lease $8,417 Suburban Propane Trade $8,216 Western State Oil Co. Trade $5,910 UW Freight Lines, Inc. Trade $5,331 PG&E Trade $5,068 ATECH Trade $4,995 Express IT, Inc. Trade $4,932 Hartsell Building Lease Lease $4,809 Lee Financial #1 Trade $4,624 CATHOLIC CHURCH: Spokane Litigants Wants to Retain Pachulski Stang ------------------------------------------------------------------ The Official Tort Litigants Committee seeks authority from the U.S. Bankruptcy Court for the Eastern District of Washington to retain Pachulski, Stang, Ziehl, Young, Jones & Weintraub, PC, as bankruptcy counsel in the Diocese of Spokane's Chapter 11 case. The Litigants Committee also asks Judge Williams to approve Pachulski's appearance pro hac vice as its attorney. Richard Frizzell, Chairman of the Litigants Committee, relates that Spokane's case raises complex legal issues that must be resolved as part of its reorganization. This includes: -- a determination of the scope of the property of the estate; -- the relationship of the Diocese and parishes, schools and affiliated Catholic institutions; -- the procedure for filing and allowance of claims, including personal injury claims against the estate; and -- the ability of the Diocese to confirm a reorganization plan. The members of the Litigants Committee require Pachulski's legal assistance in determining positions on the issues and in the representation of these issues, Mr. Frizzell explains. Pachulski is a firm of over 60 attorneys with a practice concentrated on reorganization bankruptcy, litigation, and commercial issues. Pachulski attorneys have extensive experience representing creditors' committees, debtors, creditors, trustees and others in a wide variety of bankruptcy cases. As counsel, Pachulski will: (a) assist, advise and represent the Litigants Committee in: * its consultations with Spokane regarding the administration of the Chapter 11 case; * analyzing Spokane's assets and liabilities, investigating the extent any validity of liens and participating in and reviewing any proposed asset sales, any asset dispositions, financing arrangements and cash collateral stipulations or proceedings; * any manner relevant to reviewing and determining Spokane's rights and obligations under leases and other executory contracts; * investigating Spokane's acts, conduct, assets, liabilities and financial condition, the operation of the Diocese's business and the desirability of the continuance of any portion of the business, and any other matters relevant to the case or to the formulation of a plan; * its participation in the negotiation, formulation and drafting of a plan of liquidation or reorganization; * the performance of all of its duties and powers under the Bankruptcy Code and the Bankruptcy Rules and in the performance of other services as are in the interests of those represented by the Litigants Committee; and * the evaluation of claims and on any litigation matters; (b) provide advice to the Litigants Committee on the issues concerning the appointment of a trustee or examiner under Section 1104 of the Bankruptcy Code; and (c) provide other services to the Litigants Committee as may be necessary in the case. Pachulski will be paid based on these hourly rates: Shareholder, partner, and of counsel attorneys $400 Associates $275 Paralegals $150 Pachulski received no retainer in Spokane's case. Neither the Litigants Committee nor any of its members or their representatives are or will be liable for any fees or costs incurred by Pachulski in its representation of the Litigants Committee. Pachulski will also receive reimbursement of necessary expenses. Pachulski will not charge for non-working travel time. Mr. Frizzell assures Judge Williams that Pachulski 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 the estate. Prior Representation Mr. Frizzell discloses that since October 2004, Pachulski represented a prepetition group of creditors who filed state court suits against Spokane based on sexual abuse by a member of the clergy, a worker, a teacher, a volunteer, or other person or entity associated with or representing the Diocese or parishes, schools or other Diocese-related institutions served by the Diocese. Pachulski resigned from its representation of the prepetition group of creditors on February 3, 2005, when it agreed to represent the Litigants Committee. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) CCC INFORMATION: Dec. 31 Balance Sheet Upside-Down by $121.9 Mil. ----------------------------------------------------------------- CCC Information Services Group Inc. (Nasdaq:CCCG) reported net income of $6.5 million for the fourth quarter ending December 31, 2004, compared to net income of $8.2 million for the same quarter in 2003. Included in the fourth quarter 2003 results is a $1.4 million tax related benefit associated with the completion of a tax audit. Fourth quarter 2004 results reflect the full impact of the company's self-tender transaction. Revenue for the fourth quarter increased 3.2 percent to $50.5 million, compared to $48.9 million for the same quarter in 2003. Operating income for the quarter was $12.8 million compared to operating income of $11.1 million for the fourth quarter of 2003. Operating margin for the quarter was 25.3 percent compared to 22.6 percent for the same quarter in 2003. "We finished 2004 on a positive note," Githesh Ramamurthy, Chairman and Chief Executive Officer said. "Key customer wins in the quarter will generate momentum and drive revenue growth in 2005. We expect the majority of this new customer revenue to materialize in the second half of the year." Fourth Quarter Revenue & Expense Highlights Key revenue highlights for the quarter: -- The CCC Pathways(R) portfolio increased 3.9 percent from prior year. Key drivers continued to be the growth of the company's estimating solutions in the repair facility and insurance channels as well as growth from CCC's recycled parts solution. -- The CCC Valuescope(R) portfolio grew 4.8 percent compared to prior year. Growth came from new customers and higher transaction volume from current customers. -- The Workflow portfolio increased 3.4 percent compared to prior year as revenue expansion in CCC Autoverse(R) drove growth through a combination of existing customers expanding their use geographically, as well as new customer adoption. Key operating expense highlights for the quarter are: -- Production and customer support expenses declined from prior year as a result of efficiencies related to the new customer support model. -- Selling, general and administrative expenses increased from prior year due to increased incentive compensation costs tied to business performance. -- Product development and programming expenses decreased from prior year because of the organizational realignment of the company that took place in the second quarter. The sequential decrease for the quarter is due to the completion of development work on several new products. Full Year Financial Highlights Full year net income totaled $18.6 million for 2004, compared to net income of $26.0 million, or $0.94 per share, for 2003. Operating income for the year was $32.8 million compared with $40.5 million in 2003. Revenue for the full year 2004 was $198.7 million, an increase of 2.7 percent compared to $193.4 million for the full year 2003. 2005 Guidance For the full year, the company expects to report earnings per share of $1.25 - $1.35, assuming 17.5 million shares outstanding on a fully diluted basis. This is a change to prior guidance, principally due to the inclusion of a non-cash charge of $3.0 million or $0.11 per share for performance based restricted stock grants for senior managers. These grants, which are being expensed over two years, vest at the end of 2006 based on 2006 earnings performance. The company expects the annual charges from these grants to be comparable to what it has historically granted in options and disclosed in Note 1 to the financial statements. The company also expects additional charges from the adoption on FAS 123R beginning July 1, 2005. This new accounting standard will require the company to expense the value of previously granted stock options that remain unvested at July 1, 2005. As the company has not yet fully evaluated its FAS 123R adoption and valuation alternatives and related financial statement impact, the above guidance excludes the impact of FAS 123R for existing stock options. On an operating basis, guidance includes revenue growth in the low to mid single digit range, which remains unchanged from the company's prior guidance. Growth will occur largely in the second half of the year as the company completes the implementation of customer wins from 2004. Full year operating income is expected to be in the range of $46 to $49 million. Again, this includes a non-cash charge of $3.0 million, spread ratably throughout the year, for the company's restricted stock incentive plan. The major non-operating items are interest expense and taxes. The company expects interest for the full year to be around $11 million and the tax rate to approximate 38%. For the first quarter of 2005, the company expects relatively flat revenue compared to the first quarter last year, but improved operating margins due to the benefit from the expense reduction program put in place last June. Earnings per share for the first quarter should range from $0.26 to $0.29 per share, which includes a $0.03 per share impact for non-cash stock compensation expense. About the Company CCC Information Services Group Inc. (NASDAQ:CCCG) -- http://www.cccis.com/-- headquartered in Chicago, is a leading supplier of advanced software, communications systems, Internet and wireless-enabled technology solutions to the automotive claims and collision repair industries. Its technology-based products and services optimize efficiency throughout the entire claims management supply chain and facilitate communication among approximately 21,000 collision repair facilities, 350 insurance companies and a range of industry participants. At Dec. 31, 2004, CCC Information's balance sheet showed a $121,875,000 stockholders' deficit, compared to $51,583,000 in positive equity at Dec. 31, 2003. CENTURY CARE: Plan's Effective Date Tolled for Asset Sale Closing ----------------------------------------------------------------- The Honorable Frank R. Monroe of the U.S. Bankruptcy Court for the Western District of Texas extended until Feb. 28, 2005, the Effective Date of the confirmed First Amended Joint Plan of Reorganization of Century Care of America, Inc., and the closing date for the sale of the Debtor's Granbury Nursing Facility to Southwest L.T.C. Management, Inc. Judge Monroe confirmed the Debtor's Joint Plan on Dec. 16, 2004. The Plan is premised on the sale of the Debtor's Athens Nursing Facility, Whispering Oaks Nursing Facility, Granbury Nursing Facility and the Tomball Nursing Facility, collectively called the "Non-Austin Facilities," to Southwest L.T.C. Management, Inc., for a total purchase price of $12,700,000 under an Asset Purchase Agreement. At an auction conducted for the Debtor's Non-Austin Facilities on Dec. 10, 2004, no competing bids topped Southwest L.T.C.'s offer, and the Court approved the sale of the Facilities to Southwest L.T.C. The Debtors projected the sale would close and the Plan would take effect on Jan. 31, 2005. During a Health Survey conducted by the Texas Dept. of Aging and Disability of the Granbury Nursing Facility from Jan. 11-13, 2005, the Agency discovered that the Granbury Facility did not meet the required State licensure requirements and it was not in substantial compliance with Federal requirements for nursing facilities under Medicare and Medicaid programs. Because of this situation, the Debtor and Southwest L.T.C. asked the Court to extend the projected closing and effective dates to Feb. 28, 2005, in order to address the issues cited by the Health Survey. Southwest L.T.C. is prepared to close and pay the proportionate portion of the Purchase Price for the Granbury Nursing Facility once the licensure issues are resolved. The Debtor and its Creditors Committee assure Judge Monroe that they are working diligently to resolve the Granbury Facility's licensure issues before the Feb. 28 extension deadline. Headquartered in Marble Falls, Texas, Century Care of America, Inc., is a provider of healthcare services. The Company filed for chapter 11 protection on February 11, 2004 (Bankr. W.D. Tex. Case No. 04-10801). J. Craig Cowgill, Esq., at Cowgill & Holmes, PLLC represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $51,471,523 in total assets and $21,052,563 in total debts. CHEVY CHASE: Moody's Rates Classes B-4 & B-5 Certificates at Low-B ------------------------------------------------------------------ Moody's Investors Service has assigned ratings ranging from Aaa to B2 for certain classes of investor certificates of the Chevy Chase Funding LLC, Mortgage-Backed Certificates, Series 2004-B residential mortgage securitization. Moody's analyst, Kruti Muni, said the ratings are based on the credit quality of the underlying loans and the credit support provided through subordination of the subordinate certificates. The ratings are also based on the transaction's cash flow and legal structure and on the servicing ability of Chevy Chase Bank, F.S.B. The complete rating actions are: -- Chevy Chase Funding LLC, Mortgage-Backed Certificates, Series 2004-B * Class A-1, rated Aaa * Class A-1I, rated Aaa * Class A-NA, rated Aaa * Class IO, rated Aaa * Class B-1, rated Aa2 * Class B-2, rated A2 * Class B-3, rated Baa2 * Class B-4, rated Ba2 * Class B-5, rated B2 The notes are being offered in privately negotiated transactions without registration under the 1933 Act. The issuance was designed to permit resale under Rule 144A. CITATION CAMDEN: Taps Mercer as Employee Compensation Advisor ------------------------------------------------------------- Citation Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Alabama, Southern Division, for permission to employ Mercer Human Resource Consulting, Inc., to provide advice about employee compensation matters. The Debtors believe that because of the size and complexity of their operations, they need Mercer to render advisory services regarding the structure and implementation of an appropriate executive employee compensation program in connection with their chapter 11 cases. The current hourly billing rates of professionals at Mercer: Designation Billing Rate ----------- ------------ Principal $500 - $700 Associate $250 - $450 Consulting Analysts $150 - $300 Administrative Support included in consultant billing rates John Dempsey, a principal at Mercer, assures the Court of his Firm's "disinterestedness" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Camden, Tennessee, Citation Camden Castings Center, Inc. -- http://www.citation.net/-- an affiliate of Citation Corporation, manufactures ductile iron parts for disc brakes. The Company filed for chapter 11 protection on Dec. 7, 2004 (Bankr. N.D. Ala. Case No. 04-10781). Cathleen C. Moore, Esq., and Michael Leo Hall, Esq., at Burr & Forman represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $655,575 in total assets and $324,334,598 in total debts. COLONIAL PROPERTIES: Expands Accounting Team with New Executive --------------------------------------------------------------- Colonial Properties Trust (NYSE: CLP) appointed John E. Tomlinson as Executive Vice President and Chief Accounting Officer effective Feb. 14, 2005. Mr. Tomlinson, who is a Certified Public Accountant, will be responsible for internal control functions, GAAP compliance, SEC reporting, regulatory agency compliance and reporting, management reporting and accounting operations. "This move positions us to tap into a tremendous resource of experience and expertise and is consistent with our forward looking strategic initiatives," says Weston Andress, Chief Financial and Chief Investment Officer. Mr. Tomlinson has over 12 years experience in public accounting and comes to Colonial Properties Trust from Deloitte & Touche LLP where he served as Senior Manager from May 2002 through January 2005. He holds a Bachelor of Science of Professional Accountancy and a Master of Business Administration from Mississippi State University. Prior to Deloitte & Touche, Mr. Tomlinson served as a Senior Manager / Manager at Arthur Andersen LLP from September 1996 through May 2002. Mr. Tomlinson's experience includes independent audits of public and private entity financial statements, merger and acquisition due diligence, business risk assessment and registration statement work for public debt and stock offerings. Colonial Properties Trust's senior accounting team will include Ken Howell, a 24-year veteran of the Company, as Senior Vice President of Accounting Operations and Charles "Trey" Fulton who is joining Colonial Properties as Senior Vice President for Regulatory Reporting. Mr. Fulton also joins Colonial Properties from Deloitte & Touche. He is a CPA and received both his B.S. in Accounting and Masters of Accountancy from Auburn University. About Colonial Properties Colonial Properties Trust -- http://www.colonialprop.com/-- is a diversified REIT that, through its subsidiaries, owns a portfolio of multifamily, office and retail properties where you live, work and shop in Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Virginia, Tennessee, Texas, Arizona, Nevada and New Mexico. Colonial Properties Trust performs development, acquisition, management, leasing and brokerage services for its portfolio and properties owned by third parties. Colonial Properties Trust is a diversified REIT, which has a total market capitalization in excess of $3.5 billion. The foundation of Colonial Properties' success is its live, work and shop diversified investment strategy. The Company manages or leases 29,100 apartment units, 6.8 million square feet of office space and 15.6 million square feet of retail shopping space. The Company, headquartered in Birmingham, Ala., is listed on the New York Stock Exchange under the symbol "CLP" and is included in the S&P SmallCap 600 Index. * * * As reported in the Troubled Company Reporter on Feb. 15, 2005, Standard & Poor's Ratings Services affirmed its ratings on Rayovac Corporation, including its 'B+' corporate credit rating, after completion of its acquisition of United Industries Corporation. Due to the reduced size of its new bank facility to $1.03 billion from the previously planned $1.23 billion facility, Standard & Poor's affirmed its 'B+' senior secured bank loan rating and raised its recovery rating to '2' from '3'. The revised recovery rating indicates Standard & Poor's expectation of substantial recovery of principal (80% to 100%) in the event of a default. The reduced bank loan offsets the increased senior subordinated note issue of $700 million (from $500 million) as part of the United Industries transaction. As a result of the completed transaction, Standard & Poor's withdrew its ratings on United Industries. The outlook on Rayovac is stable. Approximately $1.8 billion of debt is affected by these actions. "While we view the United Industries acquisition as enhancing Rayovac's business profile, high leverage and integration risk limit the potential for a higher rating over the intermediate term. Furthermore, a significant near-term acquisition that affects either leverage or the company's ability to integrate United Industries could pressure the existing ratings," said Standard & Poor's credit analyst Patrick Jeffrey. COMMERCIAL MORTGAGE: Moody's Junks $5.813M Class N Certificates --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of seven classes, downgraded the ratings of two classes and affirmed the ratings of eight classes of Commercial Mortgage Asset Trust, Commercial Mortgage Pass-Through Certificates, Series 1992-C2. Moody's rating actions are: * Class A-1, $77,777,519, Fixed, affirmed at Aaa * Class A-2, $319,833,000, Fixed, affirmed at Aaa * Class A-3, $108,770,000, Fixed, affirmed at Aaa * Class CS-1, Notional, affirmed at Aaa * Class X, Notional, affirmed at Aaa * Class B, $38,759,000, Fixed, upgraded to Aaa from Aa2 * Class C, $38,759,000, Fixed, upgraded to Aaa from A2 * Class D, $11,627,000, Fixed, upgraded to Aa1 from A3 * Class E, $29,069,000, Fixed, upgraded to A1 from Baa2 * Class F, $15,503,000, Fixed, upgraded to A3 from Baa3 * Class G, $15,503,000, Fixed, upgraded to Baa3 from Ba1 * Class H, $15,503,000, Fixed, upgraded to Ba1 from Ba2 * Class J, $7,751,000, Fixed, affirmed at Ba2 * Class K, $11,627,000, Fixed, affirmed at Ba3 * Class L, $7,751,000, Fixed, affirmed at B1 * Class M, $7,751,000, Fixed, downgraded to B3 from B2 * Class N, $5,813,000, Fixed, downgraded to Caa2 from B3 As of the January 18, 2005 distribution date, the transaction's aggregate principal balance has decreased by approximately 6.5% to $724.6 million from $775.2 million at securitization. The Certificates are collateralized by 81 loans secured by commercial and multifamily properties. The loans range in size from less than 0.1% to 5.7% of the pool, with the top loans representing 45.0% of the pool. The pool consists of a conduit component, representing 88.9% of the pool, and a credit tenant lease -- CTL -- component, representing 11.1% of the pool. Fifteen loans, representing 18.0% of the pool, have defeased and been replaced with U.S. Government securities. The defeased loans include two of the original top 10 loans, Marina Pacifica Shopping Center ($32.2) and Luckman Plaza ($32.0). One loan has been liquidated from the pool resulting in a realized loss of approximately $2.7 million. Three loans, representing 4.4% of the pool, are in special servicing. Moody's has estimated aggregate losses of approximately $6.4 million for all of the specially serviced loans. Moody's was provided with year-end 2003 operating results for 97.5% of the performing conduit loans and partial year 2004 results for 98.6% of the performing conduit loans. Moody's weighted average loan to value ratio -- LTV -- for the conduit component is 83.1%, compared to 85.7% at securitization. The upgrade of Classes B, C, D, E, F, G and H is due to increased subordination levels, stable pool performance and a high percentage of defeased loans. The downgrade of Classes M and N is due to realized and expected losses from the specially serviced loans and LTV dispersion. Based on Moody's analysis, 21.7% of the pool has a LTV greater than 100.0%, compared to 4.3% at securitization. The top three loans represent 15.7% of the outstanding pool balance. The largest loan is the Westin Denver Tabor Center Loan ($41.3 million - 5.7%), which is secured by a 430-room full-service hotel located in downtown Denver, Colorado. The hotel is part of an upscale multi-use condominium complex that includes a 570,000 square foot office building and an urban mall. RevPAR for the twelve month period ending December 31, 2004 was $102.90, compared to $113.50 at securitization. The borrower is an affiliate of Starwood Hotels & Resorts. Moody's LTV is 67.9%, essentially the same as at securitization. The second largest loan is the 208 South LaSalle Street Loan ($40.8 million - 5.6%), which is secured by a 854,000 square foot Class B office building located in downtown Chicago, Illinois. Although the property's occupancy has declined slightly to 87.0% from 95.0% at securitization, rental rates have increased significantly. The largest tenant is ABN AMRO Capital Markets (29.0% GLA; lease expiration December 2005). Moody's LTV is 69.8%, compared to 81.4% at securitization. The third largest loan is the Henry W. Oliver Building Loan ($32.1 million - 4.4%), which is secured by a 472,000 square foot Class B office building located in downtown Pittsburg, Pennsylvania. The building is 93.2% occupied, compared to 89.0% at securitization. The largest tenant is Kirkpatrick & Lockhart (56.2% GLA; lease expiration December 2009). Moody's LTV is 78.8%, compared to 83.4% at securitization. The CTL component includes 8 loans secured by 22 properties under bondable leases. The largest CTL exposures are ACCOR ($40.3 million), Circuit City ($21.5 million) and Cinemark USA ($18.3 million). The weighted average shadow rating for the CTL component is Ba2, the same as at securitization. The pool's collateral is a mix of: * office (31.6%), * U.S. Government securities (18.0%), * retail (17.7%), * CTL (11.1%), * multifamily (10.3%), * lodging (5.7%), * industrial (4.7%), and * other (0.9%). The collateral properties are located in 28 states plus Washington, D.C. The highest state concentrations are: * Illinois (11.3%), * Pennsylvania (10.7%), * Colorado (9.0%), * California (7.8%), and * New York (6.6%). All of the loans are fixed rate. CORAL STREET: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Coral Street Productions, Inc. dba Bayshore Press P.O. Box 67303 Scotts Valley, California 95067 Bankruptcy Case No.: 05-50681 Type of Business: The Debtor provides printing services. See http://www.bayshorepress.com/ Chapter 11 Petition Date: February 10, 2005 Court: Northern District of California (San Jose) Judge: James R. Grube Debtor's Counsel: Henry B. Niles, III, Esq. Law Offices of Henry B. Niles III 340 Soquel Avenue, #105 Santa Cruz, CA 95062 Tel: 831-457-4545 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Steve and Anna Crawford Note $235,000 2630 Custer Drive San Jose, CA 95124 Unisource Corporation Trade Debt $125,128 Pleasanton Division 4225 Hacienda Drive Pleasanton, CA 94588 Robert W. and Karen A. $100,000 Peterson c/o EBCO 6955 Sierra Court, Suite 206 Dublin, CA 94568 Gleason Industries Trade Debt $79,997 State Board of Equalization $62,608 Creo America, Inc. Trade Debt $44,147 Kirk XPEDX Paper Co. $40,849 Apex Die Corporation Trade Debt $30,555 Printing Industry Benefit Trade Debt $25,405 Trust Creo Americas, Inc. Trade Debt $25,065 John Hope Electric, Inc. Trade Debt $20,168 HP Indigo America, Inc. Trade Debt $15,022 Western Printing Ink Corp. Trade Debt $14,782 Golden West Envelope Co. Trade Debt $14,593 Silver Press Trade Debt $13,550 Taylor Made Dies Trade Debt $13,430 Spicers Paper, Inc. Trade Debt $13,099 Pacific Gas & Electric Utilities $12,430 Charles E. Harris, Esq. Legal Fees $11,323 The Gluers Trade Debt $10,596 CYVON IMAGING INC: Case Summary & 18 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Cyvon Imaging, Inc. dba Community Diagnostics 1810 North I-35 Lancaster, Texas 75134 Bankruptcy Case No.: 05-31844 Type of Business: The Debtor operates a diagnostic clinic. Chapter 11 Petition Date: February 17, 2005 Court: Northern District of Texas (Dallas) Judge: Steven A. Felsenthal Debtor's Counsel: Eric A. Liepins, Esq. Eric A. Liepins, P.C. 12770 Coit Road, Suite 1100 Dallas, Texas 75251 Tel: (972) 991-5591 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 18 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $350,000 1100 Commerce Street Mail Code 5027-DAL Dallas, TX 75242 Hitachi Medical Systems $58,000 PO Box 75053 Cleveland, OH 44101 Buddy Morahan $15,000 515 N. Cedar Ridge, Suite 9 Duncanville, TX 75116 Konica Minolta $13,405 411 Newark-Pompton Turnpike Wayne, NJ 07470 RFDI $12,500 2013 Elm Creek Lane Flower Mound, TX 75028 TXU $10,664 PO Box 660409 Dallas, TX 75266 TWCC $9,000 400 South I-35 Austin, TX 78704 David Childs $5,000 Dallas County Tax Assessor PO Box 620088 Dallas, TX 75262 Aldridge Enterprises $3,650 Latino Times $3,000 Mallinkrodt $2,000 Angelica Textile Service $1,730 Grande Communication $1,200 McKesson $1,080 Department 0701 Landauer $1,000 T Mobile $1,000 American 3CI $500 St. Johns $495 DENNY'S CORP: Dec. 29 Balance Sheet Upside-Down by $264.7 Million ----------------------------------------------------------------- Denny's Corporation (OTCBB: DNYY) reported results for its fourth quarter and year ended Dec. 29, 2004. Highlights: -- 2004 same-store sales increased 5.9% at company units and 6.0% at franchised units. -- 2004 total operating revenue increased $19.1 million, or 2.0%, to $960.0 million. -- 2004 operating income increased $7.8 million, or 16.9%, to $53.9 million. -- Fourth quarter same-store sales increased 5.8% at company units and 5.9% at franchised units. -- Fourth quarter operating income increased $1.6 million, or 17.4%, to $10.6 million. -- Denny's announces a $3.2 million cumulative restatement related to changes in lease accounting. Nelson J. Marchioli, President and Chief Executive Officer, said, "Our solid results in the fourth quarter of 2004 capped a year of strong sales and earnings momentum. Same-store sales for the year were Denny's best in over a decade. In fact, we have now reported 17 consecutive months of positive same store sales which demonstrates the appeal of our concept and the compelling value proposition we offer our customers. Our continued focus on operational excellence at the restaurant level and our proven national advertising campaign should help us build upon this success in 2005." Fourth Quarter Results For the fourth quarter of 2004, Denny's reported total operating revenue of $243.7 million compared with $251.7 in the prior year quarter. As previously disclosed, the fourth quarter of 2003 included an additional week of operations, or 14 weeks in total, compared with a standard 13 weeks in the fourth quarter of 2004. The extra week in 2003 resulted in an estimated impact of $22.4 million in additional operating revenue, consisting of $20.7 million in company restaurant sales and $1.7 million in franchise and license revenue. Company restaurant sales for the fourth quarter were $221.3 million compared with $228.4 million in the prior year quarter. This sales comparison was impacted by the additional week of operations in 2003 and an eight-unit decline in company-owned restaurants which more than offset a 5.8% increase in same-store sales. Franchise revenue was $22.5 million compared with $23.3 in the prior year quarter. This revenue comparison was impacted by the additional week in 2003 and a 27-unit decline in franchised restaurants which more than offset a 5.9% increase in franchise same-store sales. Company restaurant operating margin for the fourth quarter increased 2.0 percentage points to 13.5% of company sales compared with 11.5% in 2003. A key driver of this margin improvement was a 1.3 percentage point decrease in payroll and benefit costs resulting, in particular, from lower benefits costs following a medical plan redesign for 2004. Also contributing to the operating margin improvement was a 0.7 percentage point decrease in product costs attributable to effective menu mix management and selective price increases taken to offset commodity cost pressures. General and administrative expenses for the fourth quarter increased $7.7 million due primarily to higher performance-based incentive compensation expense (approximately $2.8 million) as well as the incurrence of stock-based compensation expense (approximately $5.2 million) attributable to options and restricted stock units granted under Denny's Corporation's Omnibus Incentive Plans. Operating income for the fourth quarter increased $1.6 million to $10.6 million, as improved operating margins more than offset the impact of the additional week in 2003 and higher general and administrative expenses this quarter. Interest expense for the fourth quarter decreased $8.0 million to $12.9 million reflecting lower borrowing costs resulting from the financial recapitalization completed during the third and fourth quarters of 2004. Net loss for the fourth quarter of 2004 was $14.1 million, compared with the prior year's fourth quarter net loss of $13 million. Net loss for the fourth quarter of 2004 included $12.2 million of expenses attributable to the financial recapitalization, of which $0.2 million was included in general and administrative expenses with the remaining $12.0 million included in other nonoperating expenses. Full Year Results For the full year of 2004, Denny's reported total operating revenue of $960.0 million, up $19.1 million from 2003. As noted above, 2003 included an extra week of operations, or 53 weeks in total, representing approximately $22.4 million in additional operating revenue. Company restaurant sales for 2004 increased $19.4 million to $871.2 million as a 5.9% same-store sales increase more than offset the impact of the additional week of operations in 2003 and an eight-unit decline in company-owned restaurants. Franchise revenue for 2004 decreased $0.3 million to $88.8 million as the impact of the additional week in 2003 and a 27-unit decline in franchised restaurants more than offset a 6.0% increase in franchise same-store sales. Company restaurant operating margin for 2004 increased 2.1 percentage points to 13.3% of company sales compared with 11.2% in 2003. Contributing to the margin improvement was positive operating leverage resulting from same-store sales growth. Another key driver of the margin improvement was a 1.8 percentage point decrease in payroll and benefit costs resulting from lower medical benefit costs throughout the year as well as lower restaurant labor costs predominantly during the first half of the year. General and administrative expenses for 2004 increased $15.7 million due primarily to higher performance-based incentive compensation expense (approximately $9.1 million), the incurrence of stock-based compensation expense (approximately $6.5 million), as well as higher transactions costs attributable to the financial recapitalization (approximately $2.4 million). Operating income for 2004 increased $7.8 million to $53.9 million as a result of higher sales and improved operating margins, partially offset by the impact of the additional week in 2003 and higher general and administrative expenses this year. Net loss for 2004 was $37.6 million, or $0.58 per diluted common share, compared with the prior year's net loss of $33.7 million, or $0.83 per diluted common share. Net loss for 2004 included $25.8 million of expenses attributable to the financial recapitalization, of which $4.1 million was included in general and administrative expenses while the remaining $21.7 million was included in other nonoperating expenses. Recapitalization During the fourth quarter, Denny's completed its financial recapitalization through the sale of $175 million of 10% Senior Notes due 2012. The net proceeds from the notes offering, along with borrowings under the new credit facilities closed in the third quarter, were used to redeem or repurchase the balance of Denny's prior 12.75% notes and 11.25% notes and pay associated premiums, transaction expenses and accrued interest. As of December 29, 2004, Denny's new $75 million revolver had no outstanding advances, while letters of credit totaled $37.5 million, resulting in a net availability of $37.5 million. As of today, these balances remain unchanged. Mr. Marchioli concluded, "Strengthening our balance sheet and controlling costs as we steadily grow the top-line are critical to enhancing shareholder value. With our recapitalization complete, additional focus will be directed towards investing in and enhancing core operations in 2005. We are confident that we can realize the full potential of our existing restaurant base and grow our company in a effective and disciplined manner." Restatement of Financial Statements Similar to recent announcements by other restaurant and retail companies, Denny's has reviewed its lease accounting treatment and relevant accounting literature in consultation with KPMG LLP, its current independent registered public accounting firm. As a result, the Company and its audit committee determined that it was appropriate to restate previously issued financial statements to correct its accounting treatment for leasehold improvements, resulting in the acceleration of depreciation for certain leasehold improvements. The restatement had no impact on the Company's previously reported cash flows, revenues or same-store sales, or on the Company's compliance with covenants under its current credit facilities or other debt instruments. The cumulative balance sheet effect of the restatement was an increase in accumulated depreciation of $3.2 million as of December 31, 2003 relating to fiscal years 1998 through 2003. Of this amount, $0.9 million was recorded as additional depreciation and other amortization expense for the quarter and year ended December 31, 2003. The Company also determined it was appropriate to record additional adjustments related to fiscal years 1998 through 2003 which previously were deemed immaterial. The cumulative balance sheet effects of these adjustments as of December 31, 2003 consist of a decrease in goodwill of $0.2 million, an increase in other long-term assets of $0.9 million, an increase in liability for insurance claims of $1.3 million, and an increase in other noncurrent liabilities and deferred credits of $2.0 million. Of these amounts, $1.3 million was recorded as additional payroll and benefits expense for the quarter and year ended December 31, 2003. The financial statements and schedules contained herein have been restated to reflect these adjustments. The adjustments noted above are subject to change as the Company's current and former independent registered public accounting firms complete their review of these matters. Additional details related to the restatement can be found in the Form 8-K filed with the Securities and Exchange Commission. Business Outlook Based on 2004 results and management's expectations at this time, Denny's anticipates total operating revenue for 2005 of between $975 million and $985 million based on same-store sales increases at both company and franchised units of approximately 2 to 3 percent. With regard to new unit development, Denny's expects to open 2 to 3 new company units while franchisees are expected to open 15 to 20 new units. Denny's anticipates earnings before interest, taxes, depreciation and amortization (EBITDA) for 2005 of between $110 million and $115 million. Included in anticipated EBITDA is approximately $10 million of stock-based compensation expense along with other noncash and nonoperating items. Denny's anticipates 2005 cash capital spending of between $55 million and $65 million, including investments in a new point-of-sale system and new company restaurant development. Annual Board Meeting The Board of Directors of Denny's has set Wednesday, May 25, 2005, as the date for the 2005 Annual Meeting of Denny's Shareholders to be held in Spartanburg, South Carolina. About the Company Denny's is America's largest full-service family restaurant chain, consisting of 552 company-owned units and 1,048 franchised and licensed units, with operations in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. For further information on Denny's, including news releases, links to SEC filings and other financial information, please visit our website referenced above. At Dec. 29, 2004, Denny's Corporation's balance sheet showed a $264,711,000 stockholders' deficit, compared to a restated $318,729,000 stockholders' deficit at Dec. 31, 2003. DEX MEDIA: Board Declares $0.09 Common Share Quarterly Dividend --------------------------------------------------------------- Dex Media, Inc.'s (NYSE: DEX) Board of Directors declared on Feb. 17, 2005, a quarterly cash dividend of $0.09 per common share, payable April 15, 2005, to shareholders of record as of March 18, 2005. "This is our second consecutive quarterly dividend and reflects our desire to grow shareholder value through quarterly dividends and capital appreciation," said George Burnett, president and CEO of Dex Media. "We are pleased to enhance shareholder value through strong free cash flow, debt pay down and quarterly dividends." About the Company Dex Media, Inc., is the exclusive publisher of the official White and Yellow Pages directories in print, Internet and CD-ROM for Qwest Communications International Inc. The company publishes 259 directories in Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. The company's leading Internet based directory, DexOnline.com, is the most used Internet Yellow Pages in the states Dex Media serves, according to market research firm comScore. In 2003, after giving effect to the acquisition of Dex Media West, LLC, Dex Media, Inc. generated revenues of approximately $1.6 billion. * * * As reported in the Troubled Company Reporter on June 18, 2004, Fitch Ratings affirmed these ratings on Dex Media's subsidiaries, Dex Media East LLC (DXME) and Dex Media West LLC (DXMW): DXME -- $1.1 billion senior secured credit facility 'BB-'; -- $450 million senior unsecured notes due 2009 'B'; -- $525 million senior subordinated notes due 2012 'B-; DXMW -- $2.1 billion senior secured credit facility 'BB-'; -- $385 million senior unsecured notes due 2010 'B'; -- $780 million senior subordinated notes due 2013 'B-'. In addition, Fitch has assigned a 'CCC+' rating to the holding company's, Dex Media Inc., $500 million 8% notes due 2013 and its $750 million 9% aggregate principal discount notes due 2013, which has a current accreted value of $512 million. Approximately $6.3 billion of debt is affected by Fitch's actions. The Rating Outlook is Stable. On July 28, 2004, Moody's Investor Service upgraded its credit ratings by two notches to B3. In anticipation of a common stock offering and the use of a portion of the proceeds to reduce debt, on May 17, 2004, Standard & Poors revised the outlook on Dex's single-B credit ratings to stable from negative. DIAL THRU: Deficits Trigger Going Concern Doubt ----------------------------------------------- Dial Thru International Corporation has been generally unable to achieve positive cash flow on a quarterly basis to date although it has significantly reduced its operating loss, primarily due to the fact that its present lines of business do not generate a volume of business sufficient to cover its overhead costs. Furthermore, approximately 50% of the Company's trade accounts payable and accrued liabilities are past due. Dial Thru's future operating success is extremely dependent on its ability to quickly generate positive cash flow from its VoIP lines of products and services. Any failure of this business plan will result in a cash flow crisis and could force the Company to seek alternative sources of financing, or to greatly reduce or discontinue operations. Going Concern Doubt Although various possibilities for obtaining financing, or effecting a business combination have been discussed from time to time, there are no agreements with any party to raise money or combine with another entity. Further, negotiations with the Company's existing lenders has not resulted in any extension of past due obligations, which could therefore be declared due and accelerated at any time. Any additional financing Dial Thru may obtain will involve material and substantial dilution to existing stockholders. In such event, the percentage ownership of its current stockholders will be materially reduced, and any new equity securities sold by Dial Thru may have rights, preferences or privileges senior to the current common stockholders. If unable to obtain additional financing, Company operations in the short term will be materially affected and Dial Thru may not be able to remain in business. These circumstances raise substantial doubt as to the ability of the Company to continue as a going concern. Dial Thru International Corporation has an accumulated deficit of approximately $46.5 million as of October 31, 2004, as well as significant working capital deficit. Funding of its working capital deficit, current and future operating losses, and expansion will require continuing capital investment which may not be available to the Company. KBA Group LLP, of Dallas, Texas, independent auditors for the Company, in its December 9, 2004, Auditors Report, observes: "The Company has suffered recurring losses from continuing operations during each of the last three fiscal years. Additionally, at October 31, 2004, the Company's current liabilities exceeded its current assets by $9.3 million and the Company has a shareholders' deficit totaling $6.5 million. These conditions raise substantial doubt about the Company's ability to continue as a going concern." Dial Thru International Corporation's primary business concentrates on the marketing of IP telephony services, including voice, fax, data and other Web-based services. The term Bookend Strategy describes its primary focus, which is to provide telecommunication services originating in foreign countries and in the corresponding ethnic segment domestically in the United States via the Internet to transport various forms of communications. These services are provided primarily via the public Internet, utilizing VoIP and other digitized voice technologies. VoIP is voice communication that has been converted into digital packets and is then addressed, prioritized, and transmitted over any form of broadband network utilizing the technology that makes the Internet possible. DOBSON COMMS: 4th Qtr. Net Loss Narrows to $13.9-Mil from 2003 -------------------------------------------------------------- Dobson Communications Corporation (Nasdaq:DCEL) reported a net loss applicable to common shareholders of $13.9 million for the fourth quarter ended Dec. 31, 2004. The net loss included a $34.7 million gain from extinguishment of debt and a $16.8 million income tax expense (non-cash) for the fourth quarter. For the fourth quarter of 2003, Dobson reported a net loss applicable to common shareholders of $70.3 million. The net loss included a $24.2 million loss from extinguishment of debt, a $26.8 million loss on redemption and repurchases of mandatorily redeemable preferred stock, and a $12.8 million income tax benefit. Dobson's 2004 results include the operations of Michigan 5 Rural Service Area (RSA), which the Company acquired on Feb. 17, 2004, and the Michigan markets acquired from NPI-Omnipoint Wireless, LLC on June 15, 2004. Excluded as not meaningful are financial results for RFB Cellular, Inc., certain assets of which the Company acquired December 29, 2004. Dobson reported EBITDA of $87.0 million for the fourth quarter of 2004, compared with EBITDA of $94.2 million for the fourth quarter of 2003. Please see Table 3 for EBITDA reconciliation to GAAP measures. Total revenue was $264.9 million for the fourth quarter of 2004, of which $53.3 million, or 20 percent, was roaming revenue. For the fourth quarter of 2003, Dobson reported total revenue of $250.3 million, of which $56.1 million, or 22 percent, was roaming revenue. Average service revenue per unit (ARPU) per month for the fourth quarter of 2004 was $42.17, compared with $40.01 for the fourth quarter last year and $41.20 for the third quarter of 2004. ARPU includes postpaid, prepaid and reseller ARPU. Dobson Communications reported approximately 393 million roaming minutes of use (MOUs) for the fourth quarter of 2004, with a blended yield of approximately $0.136 per MOU. Roaming MOUs for the fourth quarter of 2004 were approximately 10 percent higher than roaming MOUs of approximately 356 million for the fourth quarter of 2003 on a "same-store" basis that includes Michigan RSA 5 and NPI throughout both periods. GSM roaming accounted for approximately 221 million roaming MOUs, or 56 percent of total roaming MOUs, for the fourth quarter. This compared with 43 percent of roaming MOUs in the third quarter of 2004 and 25 percent in the second quarter of 2004. Operating Trends Dobson reported approximately 112,300 total gross subscriber additions for the fourth quarter of 2004. This compared with approximately 121,600 total gross subscriber additions in the third quarter of 2004, and approximately 117,100 gross subscriber additions in the fourth quarter of 2003. Among postpaid gross additions in the fourth quarter of 2004, approximately 64,500, or 93 percent, selected GSM calling plans. (See Table 3.) Postpaid customer churn was 2.35 percent for the fourth quarter of 2004, compared with 2.05 percent for the third quarter of 2004 and 1.86 percent for the fourth quarter of 2003. For the fourth quarter of 2004, excluding the effect of the RFB acquisition, the Company reported a net subscriber reduction of approximately 25,600, compared with 1,200 net additions in the third quarter of 2004 and 14,400 net subscriber additions in the fourth quarter of 2003. Dobson acquired approximately 26,200 subscribers during the fourth quarter with the purchase of the non-license wireless assets of RFB Cellular, Inc. Consequently, as of year-end 2004, the Company's total subscriber base was approximately 1,609,300. During the fourth quarter of 2004, approximately 75,100 TDMA subscribers migrated to GSM calling plans, compared with 74,500 migrations in the third quarter of 2004 and 68,700 migrations in the second quarter of 2004. At year-end 2004, approximately 415,300 customers, or 26 percent of Dobson's total subscriber base, were on GSM calling plans, compared with approximately 286,500 GSM subscribers, or 18 percent of its subscriber base, at September 30, 2004. Capital expenditures were approximately $24.2 million in the fourth quarter of 2004, bringing total 2004 capital expenditures to $142.0 million. The Company ended 2004 with $178.9 million in cash and cash equivalents, $2.5 billion in total debt, and $358.6 million in preferred stock obligations. Outlook for 2005 In 2005, Dobson's growth strategy will focus on increasing ARPU and gross subscriber additions, mitigating churn and strengthening the Cellular One brand in the Company's markets. Dobson expects ARPU to continue increasing as it adds new GSM subscribers and transitions existing TDMA subscribers to GSM calling plans. As the Company proceeds through this transition, it expects its total subscriber base to remain stable or to decline slightly during 2005. Consistent with the fourth quarter trend, Dobson expects roaming MOUs in 2005 to increase eight to 10 percent, compared with its total for 2004, and expects that its roaming yield for 2005 will be approximately 13 cents. Dobson anticipates increased operating expenses in 2005, compared with 2004. Network operating expense is expected to increase during 2005 as the Company's subscriber base continues to migrate from TDMA to GSM. Sales and marketing expense for the year is expected to increase due to the cost of TDMA migrations and initiatives to strengthen the Cellular One brand. Finally, the Company intends to implement SFAS No. 123R, the expensing of stock options, which will increase operating expenses in 2005. Dobson expects to generate 2005 EBITDA in a range of $345 million to $365 million. Capital expenditures are expected to be up to $140 million in 2005, reflecting the construction of additional GSM cell sites to improve network performance, the upgrading of acquired networks, and approximately $36 million in E911 compliance investment. About the Company Dobson Communications -- http://www.dobson.net/-- is a leading provider of wireless phone services to rural markets in the United States. Headquartered in Oklahoma City, Dobson owns wireless operations in 16 states. * * * As reported in the Troubled Company Reporter on Oct. 22, 2004, Moody's Investors Service assigned a B2 rating to the proposed first priority senior secured notes due 2011 and a B3 rating to the second priority notes due 2012 being issued by Dobson Cellular Systems, Inc., a subsidiary of Dobson Communications Corp. In addition, Moody's downgraded Dobson Communications' senior implied rating to Caa1 and its senior unsecured rating to Ca, among other ratings actions. The ratings outlook remains negative. Dobson Communications Corporation -- Senior implied rating downgraded to Caa1 from B2 -- Issuer rating downgraded to Ca from Caa1 -- $300 million 10.875% Senior Notes due 2010 downgraded to Ca from Caa1 -- $594.5 million 8.875% Senior Notes due 2013 downgraded to Ca from Caa1 -- 12.25% Senior Exchangeable Preferred Stock due 2008 downgraded to C from Caa3 -- 13% Senior Exchangeable Preferred Stock due 2009 downgraded to C from Caa3 American Cellular Corporation, (f.k.a. ACC Escrow Corp.) -- $900 million 10% Senior Notes due 2011 downgraded to Caa1 from B3 Dobson Cellular Systems, Inc. -- $75 million (reduced from $150 million) senior secured revolving credit facility due 2008 affirmed at B1 -- $550 million senior secured term loan due 2010 rating withdrawn -- $250 million (assumed proceeds) First Priority Fixed Rate Senior Secured Notes due 2011 assigned B2 -- $250 million (assumed proceeds) First Priority Floating Rate Senior Secured Notes due 2011 assigned B2 -- $200 million (assumed proceeds) Second Priority Senior Secured Notes due 2012 assigned B3 The downgrade of the senior implied rating to Caa1 reflects the much weaker than expected cash flow in 2004 and beyond for the Dobson Communications family and the resulting negative consolidated free cash flows of the company. Further, the downgrade reflects the expectation that, absent material improvement in cash flow generation from the Dobson Cellular subsidiary, Dobson Communications' capital structure is unsustainable. DONNKENNY INC: Mahoney Cohen Approved as Auditors and Accountants ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Donnkenny, Inc., and its debtor-affiliates permission to retain Mahoney Cohen & Company, CPA, P.C., as their independent auditors and accountants. Mahoney Cohen has worked for the Debtors since September 2003, rendering extensive auditing and accounting services for their businesses and operations. Mahoney Cohen will: a. audit the Debtor's annual financial statements included in the Form-10K to be filed with the Securities and Exchange Commission; b. review the Debtor's quarterly financial statements included in the Form-10Q to be filed with the Securities and Exchange Commission; c. audit the annual financial statements of the Donnkenny Apparel, Inc. Employees' Savings 401(k) Plan; d. appear before the Court, if needed, with respect to the acts, conduct and property of the Debtors and attend conferences with the Debtor, creditors and their attorneys; e. perform any other auditing and accounting services to the Debtors as may be necessary and desirable in their bankruptcy proceedings. Ted Chasanoff, C.P.A., a Shareholder at Mahoney Cohen, discloses the Firm received a $316,276 retainer. Mr. Chasanoff reports Mahoney Cohen's professionals bill: Designation Hourly Rate ----------- ----------- Partners $365 - $450 Managers $205 - $275 Senior Accountants $135 - $200 Staff Accountants $100 - $120 Mahoney Cohen assures the Court that it does not represent any interests adverse to the Debtor or their estates. Headquartered in Manhattan, New York, Donnkenny, Inc., designs, imports, and markets broad lines of moderately and better-priced women's clothing. Almost all of the Debtors' products are produced abroad and imported into the U.S., principally from Bangladesh, China, Guatemala, Hong Kong, India, Korea, Mexico, Nepal, and Vietnam. The Company and its debtor-affiliates filed for chapter 11 protection on February 7, 2005 (Bankr. S.D.N.Y. Case No. 05-10712). Bonnie Steingart, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $45,670,000 and total debts of $100,100,000. DONNKENNY INC: Can Continue Hiring Ordinary Course Professionals ---------------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York gave Donnkenny, Inc., and its debtor-affiliates permission to continue to retain, employ and pay professionals they turn to in the ordinary course of their business without bringing formal employment applications to the Court. In the day-to-day operation of their businesses, the Debtors regularly call upon certain professionals, including accountants and lawyers to assist them in their ongoing business operations and the resolution of any related operational difficulties. The Debtors submit that in light of the additional costs associated with the preparation for employment applications for the Ordinary Course Professionals who will receive relatively small fees, it would be impractical, inefficient and costly for the Debtors to require each of those Professionals to submit individual employment and compensation applications to the Court. The Debtors assure the Court that: a) no Ordinary Course Professional will be paid in excess of $10,000 per month, and those Professionals' total payments will not exceed in the aggregate of $75,000 per month; b) in the event an Ordinary Course Professional's fees and expenses exceeds $10,000 per month, that Professional will be required to file a formal fee application to the Court; c) no Ordinary Course Professional will be involved in the administration of the Debtors' chapter 11 cases; and d) each Ordinary Course Professional will submit to the Court an invoice detailing the nature of services of those Professionals and the fees and disbursements they incurred for each month. Although some of the Ordinary Course Professionals may hold minor amounts of unsecured claims, the Debtors do not believe that any of them have an interest materially adverse to the Debtors, their creditors and other parties-in-interest. Headquartered in Manhattan, New York, Donnkenny, Inc., designs, imports, and markets broad lines of moderately and better-priced women's clothing. Almost all of the Debtors' products are produced abroad and imported into the U.S., principally from Bangladesh, China, Guatemala, Hong Kong, India, Korea, Mexico, Nepal, and Vietnam. The Company and its debtor-affiliates filed for chapter 11 protection on February 7, 2005 (Bankr. S.D.N.Y. Case No. 05-10712). Bonnie Steingart, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP, represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $45,670,000 and total debts of $100,100,000. DPL CAPITAL: S&P Places B Ratings on CreditWatch Positive --------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on three synthetic transactions related to DPL Capital Trust II on CreditWatch with positive implications. The CreditWatch placements reflect the placement of the ratings on DPL Capital Trust II's $300 million 8.125% trust preferred capital securities on CreditWatch with positive implications on Feb. 14, 2005. These DPL Capital Trust II-related transactions are swap-independent synthetic transactions that are weak-linked to the underlying collateral, DPL Capital Trust II's $300 million 8.125% trust preferred capital securities, which are guaranteed by DPL, Inc. Ratings Placed on CreditWatch Positive Structured Asset Trust Units Repackagings (SATURNS) DLP Capital Security Backed Series 2002-3 $54.55 Million Callable Units Series 2002-3 Rating Class To From ----- -- ---- A units B/Watch Pos B B units B/Watch Pos B Structured Asset Trust Units Repackagings (SATURNS) DLP Capital Security Backed Series 2002-4 $42.5 Million Rating Class To From ----- -- ---- A units B/Watch Pos B B units B/Watch Pos B Structured Asset Trust Units Repackagings (SATURNS) DLP Capital Security Backed Series 2002-7 $25 Million Rating Class To From ----- -- ---- A units B/Watch Pos B B units B/Watch Pos B Ratings Placed on CreditWatch Positive Structured Asset Trust Units Repackagings (SATURNS) DLP Capital Security Backed Series 2002-3 $54.55 Million Rating Class To From ----- -- ---- A units B/Watch Pos B B units B/Watch Pos B Structured Asset Trust Units Repackagings (SATURNS) DLP Capital Security Backed Series 2002-4 $42.5 Million Rating Class To From ----- -- ---- A units B/Watch Pos B B units B/Watch Pos B Structured Asset Trust Units Repackagings (SATURNS) DLP Capital Security Backed Series 2002-7 $25 Million Rating Class To From ----- -- ---- A units B/Watch Pos B B units B/Watch Pos B ENERGY CONVERSION: Accountants Raise Going Concern Doubts --------------------------------------------------------- Energy Conversion Devices has recurring losses from operations and needs additional working capital. On August 12, 2004, the Board of Directors approved management's business restructuring plan to take full advantage of the favorable battery settlement agreement announced on July 7, 2004, and the increasing market interest in solar energy systems and hybrid electric vehicles. In evaluating the business, history and prospects of the Company management has pointed out that: * the Company has a history of losses, its future profitability is uncertain, and its financial statements are subject to a going concern explanatory paragraph by its independent registered public accounting firm; * the Company needs to obtain debt or additional equity financing to continue to operate its business and financing may be unavailable, reduce its stock price or be available only on disadvantageous terms; * the Company has disclosed several material weaknesses in its internal controls that, if not remedied, could result in material misstatements in its financial statements, cause investors to lose confidence in its reported financial information, and have a negative effect on the trading price of its stock; * Energy Conversion receives a significant portion of its revenues from a small number of customers; * the ability of the Company to succeed will be dependent upon its ability to successfully implement its business plan, as to which no assurance can be given; * the Company's product development and commercialization programs involve a number of uncertainties and it may never generate sufficient revenues to become profitable; * the Company's commercialization programs will require substantial additional future funding which could hurt its operational and financial condition; * its securities may not allow its holders to receive a return on such securities other than through the sale of the securities. Management believes that funds generated from operations; new business agreements; equity financing, including the exercise of common stock purchase warrants and exercise of stock options; debt financing; new government contracts and the cost-containment initiatives, together with existing cash and cash equivalents, will be adequate to support the Company's operations for the coming year. However, the amount and timing of such activities are uncertain. Accordingly, no assurances can be given as to the timing or success of the aforementioned plans, negotiations, discussions and programs. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern in the absence of sufficient additional funds and the sustained achievement of profitable operations. Going Concern Doubt The report of the independent registered public accounting firm states, "the Company's recurring losses from operations and need for additional working capital raise substantial doubt about its ability to continue as a going concern." The Company has recurring losses from operations and is actively engaged in discussions to obtain the needed additional working capital. Energy Conversion Devices, Inc., is a technology, product development and manufacturing company engaged in the invention, engineering, development and commercialization of new materials, products and production technology in the fields of alternative energy technology and information technology. FIRST VIRTUAL: Court OKs Bidding Procedures to Test $5.2 Mil. Bid ----------------------------------------------------------------- The United States Bankruptcy Court for the Northern District of California approved First Virtual Communications, Inc.'s (Pink Sheets: FVCCQ.PK) bidding procedures and timing for interested parties to submit competing proposals based on an improved "stalking horse" bid of approximately $5.2 million for the company from Millennium Technology Value Partners, L.P. and First Virtual's secured lenders. "The Company has made great strides to date in its reorganization. First Virtual entered Chapter 11 with a letter of intent for the sale of its assets for $5 million, and the Company is now launching a competitive bidding process for restructuring proposals with a definitive agreement for more than $5.2 million in consideration," reported CEO Jonathan Morgan. Pursuant to an asset purchase agreement executed on Feb. 12, 2005, an investment partnership led by Millennium Technology Value Partners, L.P. a New York-based private equity fund, and the Company's other secured lenders made a proposal for substantially all of the Company's assets through a credit-bid of $5.2 million, $250,000 in cash and assumption of costs payable at closing. "We recognize the value in the world-class product solutions that First Virtual develops, markets, and supports and we are prepared to assist the company through the DIP period as well as once First Virtual emerges from Chapter 11 reorganization," said Tom Todaro, a Senior Advisor of Millennium Technology Value Partners, L.P. "The Company expects a robust competitive process," Mr. Morgan also confirmed. The order approved by the Bankruptcy Court requires that competing proposals for the company be submitted by Feb. 21, 2005. A final determination will be made on Feb. 28, 2005. The initial proposal by the Company's secured lenders sets the baseline for the bidding process. Any subsequent offers must satisfy the conditions set forth in the Bankruptcy Court's order in order to qualify for the auction. Headquartered in Redwood City, California, First Virtual Communications, Inc. -- http://www.fvc.com/-- delivers integrated software technologies for rich media web conferencing and collaboration solutions. The Company and its affiliate -- CUseeMe Networks, Inc. -- filed for chapter 11 protection on Jan. 20, 2005 (Bankr. N.D. Calif. Case No. 05-30145). Kurt E. Ramlo, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $7,485,867 in total assets and $13,567,985 in total debts. FIRST VIRTUAL: Gets Final Approval of $2 Million DIP Facility ------------------------------------------------------------- The United States Bankruptcy Court for the Northern District of California approved a $2 million debtor-in-possession credit facility for First Virtual Communications, Inc.'s (Pink Sheets: FVCCQ.PK) on a final basis. The finance will help stabilize the business during the company's Chapter 11 reorganization. Following interim approval of the DIP credit facility on Jan. 26, 2005, the Company recalled 56 employees that had been furloughed at the beginning of January. Final approval of the DIP Facility allows the company to continue resumed operations as planned. CEO Jonathan Morgan commented, "The Company and its employees are committed to the business and it's restructuring. We now have the appropriate resources and will continue to provide our next generation products and support to our installed-based customers, partners, and new prospects." Headquartered in Redwood City, California, First Virtual Communications, Inc. -- http://www.fvc.com/-- delivers integrated software technologies for rich media web conferencing and collaboration solutions. The Company and its affiliate -- CUseeMe Networks, Inc. -- filed for chapter 11 protection on Jan. 20, 2005 (Bankr. N.D. Calif. Case No. 05-30145). Kurt E. Ramlo, Esq., at Skadden, Arps, Slate, Meagher & Flom represents the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $7,485,867 in total assets and $13,567,985 in total debts. GADZOOKS INC: Inks Pact to Sell All Assets to Forever 21 for $33M ----------------------------------------------------------------- Gadzooks, Inc. (OTC Pink Sheets: GADZQ) has entered into an asset purchase agreement with an affiliate of Forever 21, Inc., a national specialty retailer of apparel and accessories for fashion-oriented women operating over 200 retail stores, to sell substantially all of the operating assets of the Company and its 243 retail stores pursuant to Section 363 of the United States Bankruptcy Code. At a Bankruptcy Court-sanctioned auction taking place in Dallas, Texas on Feb. 14, 2005, the Company received several bids culminating in the final bid from Forever 21 valued by the Company in excess of $33 million. The Company and Forever 21 executed an asset purchase agreement on Feb. 16, 2005, that contemplates closing of the transaction on March 11, 2005. The effectiveness of the asset purchase agreement is conditioned upon, among other things, the entry by the U.S. Bankruptcy Court for the Northern District of Texas of an order approving the transaction on Wednesday, Feb. 23, 2005. Jerry Szczepanski, Chairman and Chief Executive Officer of Gadzooks said, "I thank our dedicated and talented associates both at the corporate office and in our stores for their exceptional service to the Company. It has been a tremendous honor and pleasure for me to work with them these many years. As co-founder of the Company, I am very proud of what Gadzooks has meant to people, and it has been a great privilege for me to work with my colleagues and our vendor and landlord partners. I wish Forever 21 the best of luck, and have every expectation that they will be very successful." Don Chang, CEO and Founder of Forever 21 said, "We are very thankful for the opportunity to build upon the strong brand created by the Gadzooks' team. In particular, the Gadzooks' team has recently generated sales momentum that has impressed us. Coupled with Forever 21's fashion capabilities, we look forward to working together to build an even stronger brand." Financo, Inc. served as investment bankers to the Company; Akin Gump Strauss Hauer & Feld, LLP served as legal advisors and Glass & Associates, Inc., served as restructuring advisors. Dallas-based Gadzooks is a specialty retailer of casual clothing, accessories and shoes for 16-22 year-old females. Gadzooks currently operates 243 stores in 40 states. About Forever 21 Forever 21, Inc. is a national specialty retailer of apparel and accessories for fashion-oriented women operating over 200 retail stores. Forever 21, Inc. was founded in Los Angeles, California in 1984 and has grown consistently over the last 21 years achieving sales of $640 million this year. Headquartered in Carrollton, Texas, Gadzooks, Inc. -- http://www.gadzooks.com/-- is a mall-based specialty retailer selling casual clothing, accessories and shoes for 16-22 year old females. The Company now operates 243 stores in 40 states. The Company filed for chapter 11 protection on February 3, 2004 (Bankr. N.D. Tex. Case No. 04-31486). Charles R. Gibbs, Esq., and Keith Miles Aurzada, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $84,570,641 in total assets and $42,519,551 in total debts. GADZOOKS INC: Wants Until May 2 to Decide on Leases --------------------------------------------------- Gadzooks, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, for an extension until May 2, 2005, of their time to decide whether to assume, assume and assign, or reject leases of nonresidential real property pursuant to Section 365(d)(4) of the Bankruptcy Code. The Debtor concluded held an auction on Feb. 14 for the sale of substantially all of its assets. Forever 21 delivered the highest bid, at $33 million. The Asset Purchase Agreement provides that the successful bidder will have 60 days from the completion of the auction to determine which leases it wants to assume or reject. Without the extension, the purchaser won't have sufficient time to make well-informed lease-related decisions. Headquartered in Carrollton, Texas, Gadzooks, Inc. -- http://www.gadzooks.com/-- is a mall-based specialty retailer selling casual clothing, accessories and shoes for 16-22 year old females. The Company now operates 243 stores in 40 states. The Company filed for chapter 11 protection on February 3, 2004 (Bankr. N.D. Tex. Case No. 04-31486). Charles R. Gibbs, Esq., and Keith Miles Aurzada, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $84,570,641 in total assets and $42,519,551 in total debts. GE COMMERCIAL: Fitch Puts Low-B Ratings on 6 Mortgage Certificates ------------------------------------------------------------------ GE Commercial Mortgage Corporation, series 2005-C1 commercial mortgage pass-through certificates are rated: -- $75,842,000 class A-1 'AAA'; -- $419,280,000 class A-2 'AAA'; -- $155,000,000 class A-3 'AAA'; -- $36,781,000 class A-4 'AAA'; -- $48,230,000 class A-AB 'AAA'; -- $457,852,000 class A-5 'AAA'; -- $146,374,000 class A-1A 'AAA'; -- $110,916,000 class A-J 'AAA'; -- $1,674,199,523 class X-C* 'AAA'; -- $1,624,676,000 class X-P* 'AAA'; -- $41,855,000 class B 'AA'; -- $16,742,000 class C 'AA-'; -- $27,206,000 class D 'A'; -- $14,649,000 class E 'A-'; -- $23,020,000 class F 'BBB+'; -- $14,649,000 class G 'BBB'; -- $25,113,000 class H 'BBB-'; -- $4,186,000 class J 'BB+'; -- $8,371,000 class K 'BB'; -- $10,464,000 class L 'BB-'; -- $2,092,000 class M 'B+'; -- $6,279,000 class N 'B'; -- $4,185,000 class O 'B-'; -- $25,113,523 class P 'NR'. *Notional Amount and Interest Only Classes A-1, A-2, A-3, A-4, A-AB, A-5, A-1A, A-J, X-P, B, C, D, and E are offered publicly, while classes X-C, F, G, H, J, K, L, M, N, O, and P are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 127 fixed-rate loans having an aggregate principal balance of approximately $1,674,199,523, as of the cutoff date. For a detailed description of Fitch's rating analysis, please see the Report titled 'GE Commercial Mortgage Corporation, series 2005-C1' dated Jan. 31, 2005 available on the Fitch Ratings web site at http:/www.fitchratings.com/ GENEVA STEEL: Court Says Anderson Must Submit to Rule 2004 Exam --------------------------------------------------------------- Geneva Steel LLC sought and obtained an order from the U.S. Bankruptcy Court for the District of Utah, Central Division, directing its creditor -- Anderson Geneva, LLC -- to submit to an examination under Rule 2004 of the Federal Rules of the Bankruptcy Procedure. The Debtor will be fishing for information from Anderson about whether its plan of reorganization is really in the best interests of the estate and its creditors. Among other items, the Debtors want to be sure that Anderson has the cash it says it has and whether Anderson has the capacity to pay what it's promising creditors under a proposed chapter 11 plan. The Court directs Anderson to produce documentary evidence no later than 5:00 p.m. on March 7, 2005, for inspection. A hearing to consider the adequacy of disclosure statements explaining competing plans submitted by Geneva, the Committee and Anderson is scheduled on March 23, 2005, at 9:00 a.m. The Anderson Plan As previously reported, Anderson's Plan of Reorganization proposes to acquire the bulk of the Debtor's remaining assets for cash on the Effective Date and through a series of periodic cash payments thereafter. The Anderson Plan contemplates the continuation of the Official Committee of Unsecured Creditors to administer the claims and resolve disputed claims and pursue causes of action on the estate's behalf. Holders of general unsecured claims who opt not to be treated as administrative convenience claims are projected to receive 55% to 57% of the face amount of their claims under the Anderson Plan. Headquartered in Provo, Utah, Geneva Steel LLC, owns and operates an integrated steel mill. The Company filed for chapter 11 protection on January 25, 2002 (Bankr. Utah Case No. 02-21455). Andrew A. Kress, Esq., Keith R. Murphy, Esq., and Stephen E. Garcia, Esq., at Kaye Scholer LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $262 million in total assets and $192 million in total debts. GREENPOINT CREDIT: Fitch Junks Six Mortgage Securitization Classes ------------------------------------------------------------------ Fitch Ratings has taken rating actions on the Greenpoint Credit Manufactured Housing Trusts listed below, which include four downgrades and 12 affirmations, and encompass approximately $652.8 million in outstanding principal. Series 1999-5: -- Classes A-3 through A-5 are affirmed at 'AAA'; -- Classes M-1A and M-1B are affirmed at 'A-'; -- Class M-2 is affirmed at 'BB-'; -- Class B remains at C. Series 2000-1: -- Class A-2 is affirmed at 'AAA'; -- Class A-3 is affirmed at 'A'; -- Class A-4 is affirmed at 'BBB'; -- Class A-5 is downgraded to 'B' from 'BBB'; -- Class M-1 is downgraded to 'C' from 'BB-;' -- Class M-2 remains at 'C'; -- Class B-1 remains at 'C'. Series 2000-3: -- Class I A is affirmed at 'BBB-'; -- Class I M-1 is downgraded to 'B-' from 'B'; -- Class I M-2 is downgraded to 'C' from 'CC'; -- Class I B-1 remains at 'C'. Series 2001-2 Group 1: -- Class I-A-1 affirmed at 'AAA' Series 2001-2 Group 2: -- Class II-A-1 affirmed at 'AAA'. The downgrades (representing approximately $88.2 million in outstanding principal) are a result of poor performance on the underlying collateral. Losses to date have significantly exceeded Fitch's initial expectations. Series 1999-5 currently has a pool factor (current mortgage loan principal outstanding as a percentage of the initial pool) of 45%. Although losses have been higher than initial expectations, all tranches except for class B have the benefit of a $32 million letter of credit - LOC -- to absorb future losses. To date, there have been no draws on the LOC. Series 2000-1, with a pool factor of 48%, has experienced significant losses and, subsequently, a reduction of credit enhancement -- CE. CE for all classes is below their original levels. In particular, classes A-2 through A-5 have seen CE decrease to 25% (originally 27%), and the CE for class M-1 is down to 10.6% (originally 20.5%). It is expected that losses will result in the full write-down of class M-2 in the very near future, at which time class M-1 will encounter write-downs as a result of monthly losses. Series 2000-3, with a pool factor of 46%, has also seen a dramatic deterioration in CE. Class I-A has lost more than 200 basis points - bps -- from its initial CE, 23% down to 20.5%. Class I M-1 has seen a severe reduction in CE, with a drop of more than half its original level of 17.25% to 8.1%. Class I M-2 has just started experiencing writedowns stemming from collateral losses. Series 2001-2 has sufficient enhancement for both class I-A-1 and II-A-1. Class I-A-1 is supported by an $85 million non-rated certificate that amounts to more than 70% of the current pool. Class II-A-1 benefits from the subordination of a $100 million non-rated certificate that is over 75% of the pool. GTC TELECOM: Deficits & Defaults Trigger Going Concern Doubt ------------------------------------------------------------ GTC Telecom Corporation has negative working capital of $7,762,388, an accumulated deficit of $16,414,210, and a stockholders' deficit of $7,312,177 as of December 31, 2004. The Company is in default on several notes payable, including approximately $5 million to MCI, Inc. In addition, through December 31, 2004, the Company historically had losses from operations and a lack of profitable operational history, among other matters, that raise substantial doubt about its ability to continue as a going concern. The Company hopes to continue to increase revenues from additional revenue sources and increase margins through continued negotiations with Sprint and other cost cutting measures. In the absence of significant increases in revenues and margins, the Company says it intends to fund operations through additional debt and equity financing arrangements. GTC Telecom Corporation (OTC:GTCC) provides various services including, telecommunication services, which includes long distance telephone and calling card services, Internet related services, including Internet Service Provider access, and business process outsourcing services. GTC Telecom Corp. was organized as a Nevada Corporation on May 17, 1994, and is based in Costa Mesa, California. For more information visit http://www.gtctelecom.com/ HAYES LEMMERZ: Amalgamated Gadget Discloses 5.9% Equity Stake ------------------------------------------------------------- Amalgamated Gadget, L.P., discloses in a regulatory filing with the Securities and Exchange Commission dated February 11, 2005, that it is now deemed to beneficially own 2,247,632 shares of Hayes Lemmerz International, Inc., Common Stock, which constitutes 5.9% of all outstanding shares. Amalgamated Gadget acquired the shares for and on behalf of R2 Investments, LDC, pursuant to an Investment Management Agreement. Under the Agreement, Amalgamated Gadget has sole voting and dispositive power over the shares and R2 Investments has no preferential ownership of those shares. Additionally, the acquired shares include 48,630 shares of Common Stock obtainable upon exchange of 9,936 shares of Series A Exchangeable Preferred Stock issued by HLI Operating Company, Inc. The exchange rate of the Preferred Stock is equal to $100, plus any accrued and unpaid dividends whether or not declared, divided by $23.125, or approximately 4.894. The number of shares of common stock outstanding as of December 9, 2004, was 37,822,962 shares. Because of its position as the sole general partner of Amalgamated, Scepter Holdings, Inc., may be deemed to be the beneficial owner of 2,247,632 shares of the Stock. Because of his position as the President and sole shareholder of Scepter, which is the sole general partner of Amalgamated, Geoffrey Raynor may also be deemed to be the beneficial owner of 2,247,632 shares of the Stock. 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. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) HIGH VOLTAGE: No DIP Financing & Court Appoints Chapter 11 Trustee ------------------------------------------------------------------ The Honorable Joan N. Feeney of the United States Bankruptcy Court for the District of Massachusetts, Eastern Division, denied High Voltage Engineering Corporation and its debtor-affiliates' request to obtain debtor-in-possession financing from GE Commercial Finance last week. Judge Feeney expressed her disdain concerning the Debtors' tumble back into bankruptcy 163 after emerging from chapter 11 last year. She beat up the professionals. She said she needed more financial information. She questioned management and expressed doubts about their business judgment. American Landmark Master LLC and U.S. Trustee complained that the GE-backed "financing scheme" would "pre-ordain the future course of this case." An ad hoc committee of trade creditors lent their support to the DIP Financing proposal. Judge Feeney sided with the objectors. As reported in the Troubled Company Reporter on Feb. 14, 2005, the Debtors sought authority to borrow up to $5 million on an interim basis from GE Commercial Finance, and planned to borrow up to an additional $11.2 million upon final approval of the DIP Financing Arrangement. The Company said it needs the money to pay expenses that will come due between now and the time Jefferies & Company, Inc., can orchestrate sales of the Robicon Corp., ASIRobicon S.p.A., High Voltage Engineering B.V., and Charles Evans Group businesses as going concerns. Those going concern sales, the Debtors argue, will maximize creditor recoveries. Judge Feeney expressed doubts. The Debtors told Judge Feeney that GE is the only lender they know who's willing to advance the money they need. Judge Feeney rejected that argument. Judge Feeney went a step further and directed the appointment of a Chapter 11 Trustee in High Voltage's case. A full-text copy of Judge Feeney's Feb. 17 Order denying the Company's DIP Financing Motion and for sua sponte appointment of a Chapter 11 Trustee is available at no charge at: http://bankrupt.com/misc/05-10787-111.pdf Friday morning, High Voltage's lawyers raced to the Courthouse asking Judge Feeney to reconsider the financing request, and they asked her to back down on the appointment of a Chapter 11 Trustee. "[D]enial of the DIP Finance Motion and the appointment of a Chapter 11 Trustee will cause irreparable harm to the estates and damage the sale process which is likely to produce significant value for the Debtors' estates," High Voltage's lawyers told Judge Feeney. Phillip Martineau, High Voltage's Chief Executive Officer, reminded Judge Feeney that the Company's has 22 preliminary and non-binding indications of interest in hand for varying combinations of their assets, and those indications of interest suggest that the going concern value of the Debtors may significantly exceed the outstanding claims against the estate. "The Debtors believe that the appointment of a Chapter 11 Trustee will be perceived by prospective bidders as a fire sale, which would severely diminish the prospects of obtaining maximum value for the Debtors' assets." High Voltage's request for reconsideration fell on deaf ears and drew further criticism of the Debtors, their management, and their professionals from Judge Feeney. Judge Feeney rejects the Debtors' conclusions that the estates will lose substantial value and the sale process will be doomed to failure unless it can borrow money from GE and management remains in place. A full-text copy of Judge Feeney's Feb. 18 Memorandum substituting her business judgment for the Debtors' is available at no charge at: http://bankrupt.com/misc/05-10787-121.pdf The U.S. Trustee has appointed: Stephen S. Gray The Recovery Group, Inc 270 Congress Street Boston, MA 02210 Telephone: (617) 482-4242 E-mail: ssg@trgusa.com to serve as the Chapter 11 Trustee. Mr. Gray is the Founder and Managing Principal of The Recovery Group, Inc. He has more than 30 years experience developing and implementing restructuring and crisis management plans for public and private companies, general creditors, secured parties, acquirers of non-performing companies and judicial bodies. Prior to forming TRG, Mr. Gray was President of Gray and Company, a professional service firm specializing in turnaround and workout consulting. He also served as Vice President for Exeter Management Corp., a firm specializing in consulting for distressed businesses and as member of the Corporate Development Staff at Arthur D. Little. Mr. Gray is a member of the American Bankruptcy Institute and the Turnaround Management Association, and holds a BS from George Washington University and a MS in mechanical engineering from Tufts University. Headquartered in New Kensington, Pennsylvania, High Voltage Engineering Corporation -- http://www.asirobicon.com/-- owns and operates several affiliated companies specializing in generators and motors. The Company's chief subsidiary, ASIRobicon, manufactures variable frequency drives that reduce energy use in industrial electric motors, motors, generators, power conversion products, and electronic controls for heavy-duty vehicles. The Company and its debtor-affiliates filed for chapter 11 protection on February 8, 2005 (Bankr. D. Mass. Case No. 05-10787). S. Margie Venus, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $457,970,00 and total debts of $360,124,000. HOLLYWOOD ENT: Tells Shareholders to Reject Blockbuster's Offer --------------------------------------------------------------- Hollywood Entertainment Corporation's (Nasdaq: HLYW) Board of Directors unanimously recommended that shareholders reject Blockbuster Inc.'s (NYSE: BBI) unsolicited offer to purchase all of the outstanding shares of Hollywood for consideration consisting of $11.50 in cash and Blockbuster class A common stock with a value of $3.00. Hollywood reported that the Board believes the uncertainties and possible delays inherent in Blockbuster's offer outweigh the approximately 9.4% premium being offered by Blockbuster over the consideration of $13.25 in cash per share to be paid pursuant to an agreement and plan of merger with Movie Gallery (Nasdaq: MOVI) entered into on January 9, 2005. As a result, after careful consideration, including its receipt of the unanimous recommendation of a Special Committee of independent directors, the Board unanimously recommends that Hollywood shareholders reject the offer and not tender their shares to Blockbuster. The Board and Special Committee, in reaching these conclusions, considered, among other things, that: (1) Blockbuster's offer raises significant antitrust issues that cause substantial uncertainty as to whether the transaction would be allowed to proceed by the Federal Trade Commission at all or could be completed without significant delay; (2) Blockbuster's offer is subject to numerous conditions which reduce the likelihood of Blockbuster completing the transaction; (3) Blockbuster's offer does not adequately protect Hollywood's shareholders from, or compensate shareholders for, the numerous risks and conditions to which the offer is subject; and (4) the FTC, on February 11, 2005, permitted the Movie Gallery transaction to proceed without a request for additional information pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, eliminating the antitrust regulatory hurdle to the Movie Gallery transaction. A more complete list of the factors considered by the Board and the Special Committee is included in a Solicitation/Recommendation Statement on Schedule 14D-9 that was filed by Hollywood with the Securities and Exchange Commission and mailed to shareholders. In considering the Blockbuster offer, the Board and the Special Committee noted that if there were any material positive developments relating to the offer subsequent to their recommendation and prior to the shareholder vote on the Movie Gallery transaction, they would reevaluate their recommendation. Additionally, the Board reaffirmed its previous recommendation that Hollywood's shareholders vote in favor of the merger agreement with Movie Gallery. UBS Investment Bank and Lazard provided financial advice to the Special Committee in connection with the proposed transaction. Gibson, Dunn & Crutcher LLP provided legal advice to the Special Committee and Stoel Rives LLP provided legal advice to Hollywood in connection with these matters. As reported in the Troubled Company Reporter on Feb. 4, 2005, Blockbuster has filed a registration statement with the Securities and Exchange Commission for an exchange offer for all outstanding shares of Hollywood Entertainment Corporation at a value of $14.50 per share, comprised of $11.50 in cash and $3.00 in Blockbuster class A common stock. The exchange offer will formally commence on Feb. 4, 2005. The proposed transaction would have an estimated total value of more than $1.3 billion and would be immediately accretive to Blockbuster's earnings per share and cash flow. The exchange offer represents a premium of $1.25 per Hollywood share, or 9.4%, over the value of Movie Gallery's $13.25 cash offer for each share of Hollywood common stock. Following completion of the exchange offer, Blockbuster intends to consummate a second step merger in which each remaining Hollywood shareholder would receive the right to the same consideration in cash and stock as paid in the exchange offer. About Blockbuster Blockbuster, Inc., headquartered in Dallas, Texas, is a leading global provider of in-home movie and game entertainment with nearly 9,000 stores throughout the Americas, Europe, Asia, and Australia. Total revenues for fiscal year 2003 were approximately $5.9 billion. About Movie Gallery Movie Gallery, Inc., is the third-largest company in the specialty video retail industry based on revenues and the second-largest in the industry based on stores. As of December 31, 2004, Movie Gallery owned and operated 2,482 stores located primarily in the rural and secondary markets throughout North America. Since the company's initial public offering in August 1994, Movie Gallery has grown from 97 stores to its present size through acquisitions and new store openings. Hollywood Entertainment Corporation is a rental retailer of digital video discs -- DVDs, videocassettes and video games in the United States. During the year ended December 31, 2003, the Company operated 1,920 Hollywood Video stores in 47 states and the District of Columbia. Hollywood Entertainment also operates 595 Game Crazy stores, which are game specialty stores where game enthusiasts can buy, sell and trade new and used video game hardware, software and accessories. Hollywood Video stores represented approximately 89%, and its Game Crazy stores represented approximately 11% of the Company's total revenue in 2003. * * * As reported in the Troubled Company Reported on Aug. 10, 2004, Standard & Poor's Ratings Services' ratings for Hollywood Entertainment Corporation, including the 'B+' corporate credit rating, remain on CreditWatch with negative implications. The ratings were initially placed on CreditWatch March 29, 2004, when Hollywood had announced it entered into a definitive merger agreement to be acquired by an affiliate of Leonard Green & Partners L.P. Wilsonville, Oregon-based Hollywood Entertainment operates more than 1,900 Hollywood Video stores in 47 states and approximately 600 Game Crazy video game specialty stores. LANOPTICS LTD: Dec. 31 Equity Deficit Narrows to $9.9 Million ------------------------------------------------------------- LanOptics Ltd. (NASDAQ: LNOP), a provider of network processors, reported results for the fourth quarter and year ended December 31, 2004. For the three months ended December 31, 2004, LanOptics reported revenues of US$ 1,721,000 versus US$ 559,000 in the fourth quarter of 2003. All of these revenues were attributable to LanOptics' subsidiary, EZchip Technologies. Operating loss amounted to US$ 2,224,000, versus US$ 2,243,000 in the fourth quarter of 2003. The majority of the expenses that resulted in the operating loss were attributable to EZchip's research and development efforts on future products, and the balance of the expenses related primarily to EZchip's sales and marketing activities. Net loss for the fourth quarter was US$ 2,378,000, compared to net loss of US$ 2,411,000 for the same period last year. For the twelve months ended December 31, 2004, LanOptics reported revenues of US$ 4,746,000, compared with US$ 1,756,000 for the same period last year. All of these revenues were attributable to LanOptics' subsidiary, EZchip Technologies. Operating loss for the twelve months amounted to US$ 8,416,000, versus US$ 9,986,000 in the same period last year. Net loss for the twelve months was US$ 9,154,000, compared to the year-earlier loss of US$ 10,404,000. "During 2004, we made a great leap forward and according to independent market analysts EZchip is the clear leader in the 10- Gigabit Network Processor market with a majority market share," said Dr. Meir Burstin, Chairman of the Board. "We currently have 44 customers in total with eleven NP-1c based products in production. Most of these products are in early production stages and we wait for deployment and volume ramp-up, which we hope, will contribute to our 2005 revenues. Several of these products have already reached volume production and, as a result, revenues increased 160% to $4.7 million in 2004, up from $1.8 million in 2003. Our future revenue growth will continue to depend on market acceptance of our customers' products and on the pace of recovery in the telecommunications and related markets. In 2004, we announced the development of EZchip's NP-2, a powerful 10-Gigabit Network Processor combined with a Traffic Manager on the same chip. Whereas our current chip NP-1c is targeted mainly at service cards in communication applications, the NP-2 will address line card and pizza box applications, offering a ten-fold increase in EZchip's market opportunity. We expect NP-2 to tape out during the first quarter of 2005 and to sample in the second quarter. The NP-2 has been favorably accepted and we are generating a growing number of design wins that relate to it. We expect to see volume production of the NP-2 in 2006." As previously announced, effective the first quarter of 2004, LanOptics' financial statements are being prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Since its inception, LanOptics' consolidated financial statements had been prepared in U.S. dollars in accordance with generally accepted accounting principles in Israel (Israeli GAAP), which differ in certain material respects from U.S. GAAP. As previously disclosed by LanOptics in its financial statements and quarterly earnings releases, the principal consequence of the change from Israeli GAAP to U.S. GAAP relates to the accounting for Preferred Shares of LanOptics' EZchip Technologies subsidiary. Under Israeli GAAP, a subsidiary's losses are attributed to the different classes of the subsidiary's shares according to the ownership level, which is determined by liquidation preference. Under U.S. GAAP, the issuance of a subsidiary's Preferred Shares to a third party is accounted for as a separate component of minority interest, "Preferred Shares of Subsidiary," that does not participate in the losses of the subsidiary. As a result, under U.S. GAAP the reported net loss reflects all of the losses of our EZchip Technologies subsidiary, in which we hold 53.4%, without any minority participation. The cumulative effect of this change results in a deficiency in the consolidated shareholders' equity. About the Company LanOptics is focused on its subsidiary EZchip Technologies, a fabless semiconductor company providing high-speed network processors. EZchip's breakthrough technology provides packet processing, classification and traffic management on a single chip at wire speed. EZchip's single-chip solutions are used for building networking equipment with extensive savings in chip count, power and cost. Highly flexible processing enables a wide range of applications for the metro, carrier-edge and core- enterprise. At Dec. 31, 2004, LanOptics Ltd.'s balance sheet showed a $9,891,000 stockholders' deficit, compared to a $14,320,000 deficit at Dec. 31, 2003. LAUNCH RESOURCES: Enters Receivership and Directors Resign ---------------------------------------------------------- Launch Resources, Inc., (TSX VENTURE:LAU) has entered receivership. Despite disappointing results from the drilling in 2003 and early 2004, the Board of Directors felt there was reasonable potential to recoup value to all the stakeholders. On September 3, 2004, the company entered CCAA as part of a plan to reorganize the company. The Board then retained Collins Barrow Securities, Inc., to canvas the market and solicit the best offers for the merger or sale of company or its assets. A second independent engineering report was prepared to assist in this process. The Corporation's assets attracted considerable interest in the marketplace and 21 non-binding offers for the Corporation, its assets or some of them were received before the expiry of the bid period. After extensive negotiation with the parties providing the most attractive offers, it became clear that the best offers did not support a reorganization or merger that would return value to the unsecured stakeholders. As a consequence, the secured creditors of the Corporation indicated they would place the Corporation into receivership and the directors of the Corporation resigned from the Board. It does not currently appear that there will be sufficient assets to fully pay out the secured creditors. Launch Resources (formerly Kicking Horse Resources), explores for, develops, and produces oil and gas in Western Canada. As of Sept. 30, 2004, Launch Resources' balance sheet reflected a $2,277,389 stockholders' deficit. LEARNING CENTER: Moody's Affirms Ba2 Rating on $9 Million Bonds --------------------------------------------------------------- Moody's Investors Service has affirmed the Learning Center for Deaf Children's Ba2 long-term rating. The outlook for the rating is stable. The rating applies to $9 million of outstanding Series 1999 bonds issued through the Massachusetts Health and Educational Facilities Authority. Credit strengths are: -- Established history and strong reputation in providing services for deaf children, with a focus on bilingual education including both sign language and spoken English. -- Consistent, although thin, operating history (cash flow margin of 2.3% in 2004) expected to be sustained by stability of government paid revenue streams -- Limited additional capital needs should keep relatively high leverage steady (cash to debt ratio of 30%). Credit challenges are: -- Thin levels of cash compared to debt or annual expenses (88 days cash) -- Primary source of revenue growth is subject to state regulation and has been limited over recent years by state economics Opinion: The Learning Center for Deaf Children has continued to generate thin, but very consistent levels of operating cash flow (2.3% in 2004, with an average operating deficit of 6.4% over the last four years (operating margin excludes contributions and investment income). Given the Center's reliance on stable municipal and State government payors for the vast majority of revenues, Moody's expects operating performance to remain stable. The Center operates primarily as a school for deaf children, with some programs incorporating residential services for students with additional needs. Local school districts and towns pay the Center for educational services provided at tuition rates that are set by the Commonwealth of Massachusetts. The Center responded well to a rate freeze by the Commonwealth in FY2004, by managing salary and other expenses and growing enrollment to sustain operating performance. The Commonwealth has approved a 3.29% increase in rates for FY2005, but lowered the rate for 2006 to 2.66%. Rate increases have averaged between two and three percent over the long-term. The Center has applied to the state for a restructuring of its rates, which could lead to a substantial increase in revenues. The Center's liquidity has grown modestly over time, with unrestricted cash and investments rising to $2.9 million in 2004 and representing 88 days cash on hand. Moody's does not expect liquidity to grow substantially as the Center will begin to amortize principal on its bonds in FY2005, which combined with modest cash flow generation in recent years, would limit cash growth. However, the Center is undergoing a comprehensive fundraising campaign with a goal of raising $4 million. Proceeds would be targeted for the construction of a library facility and for other programmatic purposes. As pledge payments are received liquidity could be positively impacted. Enrollment in the Center's various schools has grown over time, with over 200 students currently enrolled across various locations and programs. The largest programs include the Randolph School (45 students) and the Elementary School (33 students). The Walden School, as the residential program, generates the most significant revenue (over $4 million) due to the nature of the high need students enrolled and the higher tuition rates charged commensurate with its student population. The Center reports that it continues to operate near capacity in most programs, with modest room for additional growth in the elementary school. No significant expansion plans are anticipated at the Center beyond construction of the library that will be financed with gifts. Debt levels have risen slightly since the Center's bond issue, primarily representing mortgage notes utilized to purchase homes around the Center's campus, which are used to house students and have expanded available capacity. Outlook The Learning Center for Deaf Children's rating outlook remains stable reflecting our expectation for steady demand for its programs, maintenance of break-even or positive operating results and no additional borrowing plans. Key Ratios And Data (based on audited Fiscal Year ending 6/30/04 results): -- Total Revenue: $11.7 million -- Days cash on hand: 88 days -- Debt to Cash flow: 22 times -- Total Debt Outstanding: $9.8 million -- Operating Cash flow Margin: 2.3% -- Maximum annual debt service coverage with actual investment income as reported: 1.09x -- Maximum annual debt service coverage with investment income normalized at 6%: 1.30x LYNX 2002-1: S&P Junks Class D Notes After Review ------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class C and D notes issued by Lynx 2002-1 Ltd., a cash flow arbitrage CDO of ABS, and removed them from CreditWatch negative, where they were placed June 18, 2004. At the same time, the rating on the class A notes is affirmed based on a financial guarantee insurance policy issued by MBIA Insurance Corp. Additionally, the rating on the class B notes is affirmed based on the credit enhancement available to support the notes. The lowered ratings reflect several factors that have negatively affected the credit enhancement available to support the notes since the transaction closed in May 2002, including a number defaults and interest deferments among CDO assets in the underlying collateral pool, and a negative migration in the overall credit quality of the assets within the collateral pool. The transaction has experienced approximately $45.727 million in defaults (as defined in the indenture) since closing in May 2002. According to the most recent trustee report, dated Feb. 1, 2005, defaulted assets now account for $30.000 million, or 6.922%, of the collateral pool. According to the transaction's indenture, these defaults include assets that have deferred interest payments for a period of 12 consecutive months or longer. In addition, the transaction's class D notes have been deferring interest since the August 2003 payment date. Standard & Poor's also noted that the overall quality of the collateral pool has declined to a current level of 'BB+' from a weighted average rating of 'BBB' at the time of the initial trustee report (August 2002). Standard & Poor's has reviewed the results of current cash flow runs generated for Lynx 2002-I Ltd. to determine the level of future defaults the rated notes can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. Standard & Poor's will continue to monitor the performance of the transaction to ensure that the ratings currently assigned to the notes continue to reflect the credit enhancement available to support the notes. Ratings Lowered and Off CreditWatch Negative Lynx 2002-1 Ltd. Rating Class To From ----- -- ---- C BB BBB/Watch Neg D CCC+ BB/Watch Neg Ratings Affirmed Lynx 2002-1 Ltd. Class Rating ----- ------ A AAA B A- Transaction Information Issuer: Lynx 2002-1 Ltd. Co-issuer: Lynx 2002-1 Corp. Underwriter: Wachovia Securities Trustee: LaSalle Bank N.A. Transaction type: CDO of ABS Tranche Initial Current Information Report Action ----------- ------- ------- Date (MM/YYYY) 5/2002 2/2005 Class A notes rating AAA AAA Class A OC ratio 167.11% 174.3% Class A OC ratio min. 125.0% 125.0% Class B notes rating A- A- Class B OC ratio 137.35% 136.5% Class B OC ratio min. 115.0% 115.0% Class C note rating BBB BB Class C OC ratio 108.51% 103.2% Class C OC ratio min. 105.0% 105.0% Class D note rating BB BB/Watch Neg Class D OC ratio 104.01% 94.2% Class D OC ratio min. 102.0% 102.0% Class A note balance $300.00mm $228.014mm Class B note balance $65.00mm $65.00mm Class C note balance $97.00mm $97.00mm Class D note balance $20.00mm $22.399mm Portfolio Benchmarks Current -------------------- ------- S&P Wtd. Avg. Rtg. (excl. defaulted) BB+ S&P Default Measure (excl. defaulted) 1.43% S&P Variability Measure (excl. defaulted) 2.70% S&P Correlation Measure (excl. defaulted) 1.44% Oblig. Rtd. 'BBB-' and Above 68.21% Oblig. Rtd. 'BB-' and Above 82.52% Oblig. Rtd. in 'CCC' Range 9.69% Oblig. Rtd. 'SD' or 'D' 4.74% Rated OC Ratios (ROCs) 6/2004 2/2005 ------------------------------ ------ Cl A notes (Insured) N/A* N/A* Cl B notes 124.18% (A-) 125.18%(A-) Cl C notes 97.21% (BBB/Watch Neg) 102.06% (BB) Cl D notes 96.45% (BB/Watch Neg) 97.40% (CCC+) * ROC is not published for insured tranches because the insurance policy, rather than the tranche credit support, determines the public rating. MAL FOODS ILLINOIS: Case Summary & 5 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Mal Foods, Illinois LLC 20 South Route 45, Suite 1D Frankfort, Illinois 60423 Bankruptcy Case No.: 05-05370 Type of Business: The Debtor is an affiliate of Mal Food, Inc., which filed for Bankruptcy on Jan. 10, 2005 (N.D. Ind. Case No. 05-60127). Chapter 11 Petition Date: February 17, 2005 Court: Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtor's Counsel: Chester H. Foster, Jr., Esq. Foster & Kallen 3825 West 192nd Street Homewood, Illinois 60430 Tel: (708) 799-6300 Fax: (708) 799-6339 Total Assets: $1 Million to $10 Million Total Debts: $1 Million to $10 Million Debtor's 5 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Princeton Builders $322,000 17324 Queen Anne Lane Tinley Park, IL 60477 AFC Enterprise $38,000 6 Concourse Parkway, Suite 1700 Atlanta, GA 30728 Tom Buchar & Associates $9,750 722 Essington Road, Suite D Joliet, IL 60435 Muzak $9,256 655 West Grand Avenue, Suite 250 Elmhurst, IL 60126 Prism Data Systems $2,040 16108 University Oak San Antonio, TX 78249 MASONITE INTL: Stile Acquisition Lifts Offer for Shares to $42.25 ----------------------------------------------------------------- Masonite International Corporation (TSX and NYSE: MHM) has amended its agreement with Stile Acquisition Corp., an affiliate of Kohlberg Kravis Roberts & Co., to provide for an increase in the price at which Stile would acquire all the common shares of Masonite to C$42.25 per share cash from C$40.20 per share cash, an increase of C$2.05 per share. Masonite's Board unanimously recommends that shareholders vote in favour of the revised transaction. In light of the increased price, Masonite has rescheduled its shareholders meeting to approve the acquisition by way of plan of arrangement from February 18, 2005 to March 31, 2005. The record date for entitlement to receive notice of and to vote at the shareholders meeting will be March 1, 2005 and a proxy circular will be mailed not later than March 10, 2005. These dates are subject to approval by the Ontario Superior Court of Justice. Masonite's Special Committee of directors has been advised by Merrill Lynch that the consideration under the revised offer is fair from a financial point of view to the shareholders of Masonite other than senior management. The Special Committee has unanimously concluded that the revised offer is fair to the shareholders other than senior management and in the best interests of the Company and has recommended that the Board approve the transaction as revised. The Board agreed with the Special Committee's conclusions and unanimously recommends that Masonite's shareholders vote in favour of the revised transaction. KKR -- http://www.kkr.com/-- is one of the world's oldest and most experienced private equity firms specializing in management buyouts, with offices in New York, Menlo Park, California and London, England. Over the past 28 years, KKR has invested in more than 115 transactions with a total value of US$138 billion. Masonite is a unique, integrated building products company with its Corporate Headquarters in Mississauga, Ontario, Canada and its International Administrative Offices in Tampa, Florida. Masonite operates more than 70 facilities with over 12,000 employees worldwide, spanning North America, South America, Europe, Asia, and Africa. Masonite sells its products -- doors, components, industrial products and entry systems -- to a wide variety of customers in over 50 countries. * * * As reported in the Troubled Company Reporter on Dec. 28, 2004, Standard & Poor's Ratings Services placed ratings on Mississauga, Ontario-based Masonite International Corp., including its 'BB+' long-term corporate credit rating on CreditWatch with negative implications. The CreditWatch placement follows the announcement that it is to be acquired by an affiliate of Kohlberg Kravis Roberts & Co. -- KKR -- in a transaction valued at C$3.1 billion. MCCANDLESS KM ASSOCIATES: Voluntary Chapter 11 Case Summary ----------------------------------------------------------- Debtor: McCandless KM Associates 285 Hawthorne Road Pittsburgh, Pennsylvania 15209 Bankruptcy Case No.: 05-21763 Type of Business: The Debtor is a law firm. Chapter 11 Petition Date: February 16, 2005 Court: Western District of Pennsylvania (Pittsburgh) Judge: Judith K. Fitzgerald Debtor's Counsel: Michael A. Shiner, Esq. Tucker Arensberg 1500 One PPG Place Pittsburgh, Pennsylvania 15222 Tel: (412) 566-1212 Fax: (412) 594-5619 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. MONTESOLE USA LTD: Case Summary & Largest Unsecured Creditor ------------------------------------------------------------ Debtor: Montesole USA Ltd. P.O. Box 391 Oakville, California 94562 Bankruptcy Case No.: 05-10265 Chapter 11 Petition Date: February 15, 2005 Court: Northern District of California (Santa Rosa) Judge: Alan Jaroslovsky Debtor's Counsel: Richard V. Day, Esq. Law Offices of Richard V. Day 563 Jefferson Street Napa, CA 94559 Tel: 707-253-8500 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Mark S. Pollock Legal Fees $5,500 1766 Third St. Napa, CA 94559 NEWAVE INC: 3 for 1 Forward Stock Split Takes Effect ---------------------------------------------------- NeWave, Inc. (OTC Bulletin Board: NWAV) will begin trading on Feb. 18, 2005, under the new ticker symbol "NWWV". Additionally, the previously announced 3 for 1 forward stock split will be effective at the market open on Feb. 18, 2005. About the Company NeWave Inc. -- http://www.newave-inc.com/-- is a direct marketing company which utilizes the internet to maximize the income potential of its customers, by offering a fully integrated turnkey ecommerce solution. NeWave subsidiary Onlinesupplier.com, offers a comprehensive line of products and services at wholesale prices through its online club membership. Auction Liquidator, a NeWave subsidiary is an online portal that provides customers with a quick and efficient method for selling unwanted items on eBay and other online auction sites. * * * As reported in the Troubled Company Reporter on June 8, 2004, Kabani & Company's report on the Company's consolidated financial statements for the fiscal years ended December 31, 2003, and December 31, 2002, included an explanatory paragraph expressing substantial doubt about NeWave's ability to continue as a going concern. Losses have continued in 2004. For the nine-month period ending Sept. 30, 2004, NeWave posted a $3,344,334 net loss. NORTHWESTERN CORP: Proposed Settlement with Magten Asset Collapses ------------------------------------------------------------------ NorthWestern Corporation d/b/a NorthWestern Energy (Nasdaq: NWEC) said the Plan Committee, the successor to the Creditors' Committee formed during the pendency of the Company's Chapter 11 case, and its major shareholders have objected to the Company's previously announced agreement in principle to settle all pending legal actions, appeals, claims and disputes by and among NorthWestern, Magten Asset Management Corporation and Law Debenture Trust Company of New York LLC. For the reasons set forth in the objections, NorthWestern will not present the proposed settlement to the bankruptcy court for approval. Because the settlement will not be going forward and pursuant to the terms of the Company's confirmed Plan of Reorganization, 368,626 shares of NorthWestern common stock that was not distributed to "non-accepting" Class 8(b) creditors are being distributed on a pro rata basis to holders of allowed claims in Class 7 (unsecured note holders) and to holders of allowed claims in Class 9 (general unsecured). Holders of Class 7 claims will receive a supplemental distribution of 324,134 shares of NorthWestern common stock and holders of allowed claims in Class 9 are entitled to the remaining 44,492 shares. Also pursuant to the terms of the reorganization plan, 684,265 warrants that were not distributed to "non-accepting" Class 8(b) creditors have been cancelled. Details about the proposed settlement appeared in the Feb. 10, 2005, edition of the Troubled Company Reporter. Headquartered in Sioux Falls, South Dakota, NorthWestern Corporation (Pink Sheets: NTHWQ) -- http://www.northwestern.com/ -- provides electricity and natural gas in the Upper Midwest and Northwest, serving approximately 608,000 customers in Montana, South Dakota and Nebraska. The Debtors filed for chapter 11 protection on September 14, 2003 (Bankr. Del. Case No. 03-12872). Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, and Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker, LLP, represent the Debtors in their restructuring efforts. On the Petition Date, the Debtors reported $2,624,886,000 in assets and liabilities totaling $2,758,578,000. The Court entered a written order confirming the Debtors' Second Amended and Restated Plan of Reorganization, which took effect on Nov. 1, 2004. OWENS-ILLINOIS: Names Helge Wehmeier to Board of Directors ---------------------------------------------------------- Owens-Illinois, Inc., (NYSE: OI) has appointed Helge H. Wehmeier to serve on the Company's Board of Directors effective Jan. 25, 2005. Mr. Wehmeier will serve on the Audit Committee and Nominating/Corporate Governance Committee of the Board. He was appointed to fill the vacancy created by the retirement of Michael W. Michelson whose term will expire May 2006. From 2002-2004, Mr. Wehmeier served as vice chairman of Bayer Corporation, the $11 billion US-based subsidiary of Bayer AG of Germany, a $27 billion international life sciences, polymers and specialty chemicals group. In 2002, after more than 35 years with Bayer, he retired as president and chief executive officer of Bayer Corp. after 11 years in that position. During his career, he served as general manager for the fibers business in the UK and as head of the Photo Division on the Board of the Bayer subsidiary Agfa-Gevaert AG. In 1989, he was elected to the board of directors and executive committee of Bayer USA Inc. He is an alumnus of IMEDE, Lausanne, Switzerland, and INSEAD, Fontainebleau, France. Mr. Wehmeier serves on the Board of Directors of PNC Financial Services Group, Inc., and TEREX Corporation. He is an executive vice president and member of the Board of Directors for the Pittsburgh Symphony Society and also serves on the Board of the American Council on Germany and the Advisory Board of the Curtis Institute of Music. "I am very pleased to welcome Helge to the O-I Board," said Steve McCracken, O-I chairman and chief executive officer. "Not only does his business leadership experience make him a great addition to our team, but Helge's international and healthcare background will provide expertise consistent with, and additive to, our new portfolio alignment." About the Company Owens-Illinois is the largest manufacturer of glass containers in the world, with leading positions in Europe, North America, Asia Pacific and Latin America. O-I is also a leading manufacturer of healthcare packaging and specialty closure systems. * * * As reported in the Troubled Company Reporter on Sept. 28, 2004, Fitch Ratings affirmed the ratings for Owens-Illinois (NYSE: OI) as follows: -- Senior secured credit facilities at 'B+'; -- Senior secured notes at 'B'; -- Senior unsecured notes at 'CCC+'; -- Convertible preferred stock at 'CCC'. The Rating Outlook is Stable. As reported in the Troubled Company Reporter on Aug. 2, 2004, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Owens-Illinois, Inc., and removed it from CreditWatch where it was placed on Feb. 19, 2004. The outlook is negative. PANACO INC: Wants to Avoid Paying $5.6M of Purported Sec. Claims ---------------------------------------------------------------- These entities filed proofs of claim in Panaco, Inc.'s chapter 11 case asserting some type of security interest: Creditor Claim Amount -------- ------------ Broussard Brothers, Inc. $ 15,707 Cudd Pressure Control, Inc. 44,967 Halliburton Energy Services, Inc. 14,298 Delta Towing 237,621 Newpark Drilling Fluids, LLC 239,445 N.R. Broussard Landing, Inc. 15,494 Offshore Drilling Company 2,967,664 Ryan Energy Technologies 458,904 Schlumberger Technology Corp. 449,690 Smith International, Inc. 175,991 Superior Energy Services, LLC 59,750 Tesco Corporation 338,414 Thomas Energy Services, Inc. 15,291 Trinity Storage Service 251,542 Weatherford US, LP 345,375 Wood Group Logging Services, Inc. 26,676 ----------- TOTAL: $ 5,656,828 =========== The Debtor asks the U.S. Bankruptcy Court for the Southern District of Texas, through the commencement of an adversary proceeding, to declare that these creditor-defendants do not hold secured claims or any valid lien on any estate property. Debtor's Arguments The Debtor sought and obtained the Court's authority to assume and assign all of its right, title and interest in certain oil and gas properties located in the North White Lake Field Prospect, Vermilion Parish, Louisiana, to Peoples Energy Production-Texas, LP. The Court also ruled that the North White Lake Property sale be subject to the liens described in the company's motion papers. The Debtor did not receive any proceeds from the sale of the North White Lake Property. Peoples simply assumed the plugging and abandonment obligations with respect to that property. Omar J. Alaniz, Esq., at Neligan Tarpley Andrews & Foley, LLP, in Dallas Texas contends that because there were no sale proceeds from the assignment, no liens attached to any proceeds the Debtor received. Accordingly, claims asserting an interest in those proceeds do not constitute valid secured claims against the Debtor's estate. Smith International, Inc., one of the Creditor-Defendants, asserted that their claims are also secured by a lien on property located in Galveston Bay, Chambers County, Texas described as State Tract 73, Well #6, API#42-071-32208, also known as the Umbrella Point Property. Smith has not provided the Debtors with any documentation to support its alleged lien on the Umbrella Point Property. The Court confirmed the Debtor's Plan of Reorganization on Nov. 3, 2004. The Plan took effect on Nov. 16, 2004. Under the Plan, holders of general unsecured claims will recover 10% of their claim in cash and a pro rata share of anything the Debtor receives from any avoidance action. By eliminating these purported secured claims, recoveries by holders of general unsecured claims will increase. Panaco, Inc., is in the business of selling oil and natural gas produced on property it leases to third party purchasers. The Company filed for chapter 11 protection on July 16, 2002. Monica Susan Blacker, Esq., at Neligan Stricklin LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $130,189,000 in assets and $170,245,000 in debts. PARAGON HOLDINGS: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Paragon Holdings, Inc. 4927 North River Shore Drive Tampa, Florida 33603 Bankruptcy Case No.: 05-02311 Chapter 11 Petition Date: February 10, 2005 Court: Middle District of Florida (Tampa) Judge: Alexander L. Paskay Debtor's Counsel: Richard J. McIntyre, Esq. Trenam, Kemker, Scharf 101 East Kennedy Boulevard, #2700 Tampa, FL 33602 Tel: 813-223-7474 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 3 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ R. Gordon Cormie, Esq. 736 5th Avenue, SW, Ste. 1500 Calgary, Alberta T2P, 3T7 Canada Metalade $40,000 1770 East Lake Mary Boulevard Sanford, FL 32773 Mark Laprade $9,500 8701 Bay Pines Boulevard PEABODY ENERGY: Discloses Management Changes in Legal Departments ----------------------------------------------------------------- Peabody Energy (NYSE: BTU) disclosed several management changes within its legal and government relations departments. Fredrick D. Palmer has been named Senior Vice President - Government Relations, reporting to Chairman and Chief Executive Officer Irl F. Engelhardt. In this position, Mr. Palmer will be dedicated to advancing state and federal policies related to the production and use of coal. Mr. Palmer is a 20-year coal industry veteran, and most recently served as Executive Vice President - Legal and External Affairs for Peabody. He is a graduate of the University of Arizona with a Bachelor of Arts Degree and Juris Doctorate from the College of Law. Mr. Palmer was recently designated chairman of the policy committee of the National Coal Council, an advisory council to the U.S. Secretary of Energy. Executive Vice President and Chief Financial Officer Richard A. Navarre is expanding his responsibilities to include the legal function. Mr. Navarre has been with Peabody for 12 years, and has overseen a number of financial, sales and administrative functions. He continues to be responsible for Peabody's investor relations, public relations, accounting, treasury, tax, closed and suspended mines and materials management functions, and reports to Irl. Reporting to Mr. Navarre is Jeffrey L. Klinger, who has been named General Counsel and Corporate Secretary. Mr. Klinger has served in a variety of legal and government relations positions with Peabody over the past 27 years, and most recently was Vice President of Legal Services. Joseph W. Bean has been named Vice President and Associate General Counsel. In this new position, Mr. Bean will oversee all legal services within the company and report to Mr. Klinger. Mr. Bean joined Peabody in 2001 after serving with The Quaker Oats Company. He has most recently served as Senior Counsel and Assistant Secretary, directing the company's compliance and legal activities related to governance, SEC and acquisitions. Mr. Bean holds a Bachelor of Arts Degree from the University of Illinois and a Juris Doctorate from Northwestern University School of Law. About the Company Peabody Energy (NYSE: BTU) is the world's largest private-sector coal company, with 2004 sales of 227 million tons of coal and $3.6 billion in revenues. Its coal products fuel more than 10 percent of all U.S. electricity and 3 percent of worldwide electricity. * * * Moody's Rating Services and Standard & Poor's assigned their low-B ratings to Peabody Energy's $650 million of outstanding 6-7/8% Senior Notes in March 2003. Bloomberg data shows that those notes, maturing on Mar. 15, 2013, trade around 108 today. Peabody posted losses for two quarters in the middle of 2003 and has reported profits every quarter thereafter. PINNACLE ENT: Secures Additional Property in Downtown St. Louis --------------------------------------------------------------- Pinnacle Entertainment, Inc. (NYSE: PNK) has entered into an agreement with a subsidiary of Isle of Capri Casinos by which Pinnacle will acquire property located along North First Street in downtown St. Louis. The property is directly adjacent to the company's proposed casino and luxury hotel in Laclede's Landing and to the 297-suite Embassy Suites Hotel, which Pinnacle has previously agreed to purchase. Both the Isle and Embassy Suites transactions are expected to close in the first quarter of 2005. "For more than a year, Pinnacle Entertainment has been working closely with the City of St. Louis to invest a minimum of $258 million in an entertainment and hotel project central to the revitalization of Laclede's Landing and downtown St. Louis. This agreement is another important milestone in our effort to lead this renewal," said Daniel R. Lee, Chairman and CEO of Pinnacle Entertainment. "The addition of this key property will enable Pinnacle to design a master plan for the entire area." With this agreement in place, Pinnacle now owns, has agreed to purchase, or has an option to lease all real estate in a large area north of the Gateway Arch. The Pinnacle redevelopment area is approximately 18-acres bounded by Third Street, Carr Street, Lenore K. Sullivan Drive and Dr. Martin Luther King Boulevard. The Company also announced today its reaction to legal action filed by Columbia Sussex Corporation regarding the location of Pinnacle's downtown casino and seeking an injunction to block commencement of construction. "In January 2005, after careful scrutiny, the Missouri Gaming Commission concluded that the location of the proposed casino site is suitable and complies with Missouri law. We stand by their decision in this matter," Mr. Lee said. "Although Pinnacle now controls all of the land from Interstate 70 to the Mississippi River between Carr Street and Martin Luther King Boulevard, we continue our plans to build the casino in the same location as initially proposed and approved by the City and the Missouri Gaming Commission. This site, near the southwest corner of Pinnacle's property on North Second Street, is closest to the Convention Center and the Laclede's Landing tourism district. We believe the successful redevelopment of the downtown area must encourage synergies between the casino and the nearby convention and tourism infrastructure. "Regrettably," Lee continued, "Columbia Sussex continues its attempts to obstruct this vital redevelopment and the creation of thousands of jobs for the St. Louis region. They are clearly trying to delay a potential competitor of the bankrupt President Casino on Laclede's Landing, which they may or may not purchase. Regardless of this legal action, Pinnacle Entertainment will continue to lead the renewal of downtown St. Louis. We remain firmly committed to the City and to our exciting project, and we are moving forward with all deliberate speed to ensure its timely completion." About Pinnacle's St. Louis Projects Pinnacle has proposed a $208 million project on Laclede's Landing, including a 75,000-square-foot, 2,000 slot casino; a luxury hotel; retail space; and a large parking structure. As part of the agreement with the City, Pinnacle also intends to build (potentially with one or more development partners) an additional $50 million of residential housing, retail, or mixed- use developments in the City within five years of the opening of the casino and hotel, which is projected for early 2007. In south St. Louis County, Pinnacle has proposed a $300 million gaming and mixed-use project in the community of Lemay, located approximately 10 miles south of downtown St. Louis. The proposed development will be situated on approximately 56 acres of land leased from the St. Louis County Port Authority and will include a 90,000-square-foot, 3,000-slot casino; a 100-guestroom hotel; and extensive retail and entertainment space. An additional 24 acres will be developed into a public park and will include community and recreational facilities to be constructed by the Company. Because the County project requires extensive remediation of the former industrial site as well as construction of a new road and flood control measures, the company estimates that construction will take approximately one year longer than will be required for the City project. About Pinnacle Entertainment Pinnacle Entertainment owns and operates casinos in Nevada, Mississippi, Louisiana, Indiana and Argentina, and receives lease income from two card club casinos, both in the Los Angeles metropolitan area. The Company is currently building a major casino resort in Lake Charles, Louisiana and has been selected for two casino development projects in the St. Louis, Missouri area. Each of these development projects is dependent upon final approval by the Louisiana Gaming Control Board and the Missouri Gaming Commission, respectively. * * * As reported in the Troubled Company Reporter on Dec. 23, 2004, Standard & Poor's Ratings Services raised its ratings on Pinnacle Entertainment Inc., including its corporate credit rating to 'B+' from 'B'. S&P said the outlook is stable. Total debt outstanding at Sept. 30, 2004, was $633 million. Las Vegas, Nevada-based Pinnacle is a casino owner and operator. "The upgrade follows Pinnacle's steadily improved operating results over the past several quarters and our expectation that this trend is likely to continue in the near term," said Standard & Poor's credit analyst Michael Scerbo. The company's recent completion of a 4.6 million share secondary stock offering (approximately $80 million in net proceeds), combined with several other cash generating transactions over the past few quarters, have provided significant excess cash balances that will be used to fund the completion of its ongoing Lake Charles, Louisiana development project and to help fund the company's two planned projects in St. Louis. As a result, consolidated credit measures over the next few years are expected to remain in line with the new rating, despite the company's aggressive capital spending plans. The stable outlook reflects Standard & Poor's expectation that Pinnacle's portfolio of gaming assets will continue to generate a relatively stable cash flow stream, despite the intense competition and low growth in many of the markets it serves. The opening of the company's Lake Charles project in Spring 2005 will further diversify the company's portfolio of assets and will likely decrease its dependence upon its Belterra facility. PLATTE VIEW FARM: Case Summary & 15 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Platte View Farm, LLC aka Platte View Landing Apartments 8310 South Valley Highway, Third Floor Englewood, Colorado 80112 Bankruptcy Case No.: 05-12365 Chapter 11 Petition Date: February 11, 2005 Court: District of Colorado (Denver) Judge: Sidney B. Brooks Debtor's Counsel: Bonnie Bell Bond, Esq. Harvey Sender, Esq. Sender & Wasserman, P.C. 1999 Broadway, Suite 2305 Denver, CO 80202 Tel: 303-296-1999 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 15 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Colorado First Construction Construction debt $1,215,000 E.J. Olbright, President 1819 Denver West Dr. Ste 100 Golden, CO 80401 Tatonka Capital Corporation Construction debt $850,000 Laura A. Fiemann, VP 1441 18th St. Ste. 400 Denver, CO 80202 City of Brighton Utility charges $545,000 c/o Margaret R. Brubaker, City Atty. 21 N. 1st Ave. Ste. 290 Brighton, CO 80601 Colorado First Construction Construction debt $385,000 E.J. Olbright, President 1819 Denver West Dr. Ste 100 Golden, CO 80401 Quincy Partners, LP Personal loans $300,000 7000 E. Quincy Ave., #D-210 Denver, CO 80237 Community Banks of Colorado Bank loan $250,000 Newport Community Services, Personal loans $175,000 LLC KB Home Colorado, Inc. Construction debt $165,000 Citywide Banks Bank loan $105,499 Hutchinson Building Corp. Construction debt $100,000 Newport Profit Sharing Trust Personal loans $66,000 Lantz-Bogglo Architects, PC Construction debt $56,000 FN Resources, c/o Jeff Novak Personal loans $50,000 Senn Visciano Kirachenbaum Legal fees $44,800 Merrick PC Hahn Smith Walsh & Mancuso Legal fees $18,000 RAYOVAC CORP: Sets Annual Shareholder Meeting for April 27 ---------------------------------------------------------- Rayovac Corp.'s (NYSE: ROV) annual shareholder meeting will be held on April 27, 2005, at 8:00 a.m. CST, at Rayovac's North American headquarters located at 601 Rayovac Drive in Madison, Wisconsin. Shareholders of record as of March 15, 2005, will be entitled to vote at the meeting. A more detailed description of the matters to be discussed at the annual meeting will be included in a proxy statement to be filed with the Securities and Exchange Commission and mailed to shareholders in March 2005. About the Company Rayovac is a global consumer products company and a leading supplier of batteries, lawn and garden care products, specialty pet supplies and shaving and grooming products. Through a diverse and growing portfolio of world-class brands, Rayovac holds leading market positions in a number of major product categories. The company's products are sold by the world's top 20 retailers and are available in over one million stores in 120 countries around the world. Headquartered in Atlanta, Georgia, Rayovac generates approximately $2.5 billion in annual revenues and has approximately 9,300 employees worldwide. The company's stock trades on the New York Stock Exchange under the symbol ROV. * * * As reported in the Troubled Company Reporter on Oct. 27, 2004, Standard & Poor's Ratings Services placed its 'BBB-' corporate credit and 'BB+' preferred stock ratings for Colonial Properties Trust on CreditWatch with negative implications. REDDY ICE: Hosting Fourth Quarter Conference Call on Thursday ------------------------------------------------------------- Reddy Ice Holdings, Inc., plans to release results for the fourth quarter and year ended Dec. 31, 2004, on Thursday, Feb. 24, 2005, at 6:00 a.m. eastern time. In conjunction with the release, Reddy Ice has scheduled a conference call on Thursday, Feb. 24, 2005, at 10:00 a.m. eastern time. What: Reddy Ice Fourth Quarter and Year End Earnings Conference Call When: Thursday, February 24, 2005 - 10:00 a.m. eastern How: Live via phone, by dialing 303-262-2143 and asking for the Reddy Ice call 10 minutes prior to the start time. A telephonic replay will be available through March 3, 2005 and may be accessed by calling 303-590-3000 and using the passcode 11024562#. For more information, contact Karen Roan at DRG&E at 713-529-6600 or email kcroan@drg-e.com About the Company Reddy Ice manufactures and distributes packaged ice, serving approximately 82,000 customer locations in 31 states and the District of Columbia under the Reddy Ice brand name. * * * As reported in the Troubled Company Reporter on Oct. 20, 2004, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Dallas, Texas-based Reddy Ice Holdings Inc., the parent company of packaged-ice provider Reddy Ice Group Inc. Standard & Poor's also assigned its 'B-' rating to Reddy Ice Holdings Inc.'s proposed $100 million senior discount notes due 2012. At the same time, Standard & Poor's affirmed its ratings on Reddy Ice Group, including its 'B+' corporate credit rating and revised its outlook to negative from stable due to increased consolidated debt burden resulting from the proposed transaction, which deviates from Standard & Poor's expectations of deleveraging in fiscal 2004. At closing, the company will have approximately $437 million in debt. For analytical purposes, Standard & Poor's views Reddy Ice Holdings and Reddy Ice Group as one economic entity. The net proceeds of the proposed issue will be used to repurchase all the outstanding preferred stock at the parent company and pay a dividend of $11.7 million to common equity shareholders. The new ratings are based on preliminary terms and are subject to review upon final documentation. "The ratings on Reddy Ice Holdings and its operating subsidiary Reddy Ice Group reflect its narrow product focus, its participation in the highly fragmented and competitive packaged ice industry, the seasonal nature of demand for its products, and high debt levels," said Standard & Poor's credit analyst Paul Blake. RURAL/METRO: Soliciting Consents Until Mar. 5 to Amend Sr. Notes ---------------------------------------------------------------- Rural/Metro Corporation (Nasdaq/SC: RURL) extends its previously announced consent solicitation relating to its tender offer for any and all of the $150 million aggregate principal amount outstanding of its 7-7/8% Senior Notes due 2008. The company initiated the tender offer on Feb. 3, 2005. As part of the tender offer, the company is soliciting consents from holders of the notes for certain proposed amendments that would eliminate or modify substantially all of the restrictive covenants, certain events of default, and certain other provisions contained in the indenture governing the notes. Noteholders who tender the notes will be required to consent to the proposed amendments, and noteholders who consent to the proposed amendments will be required to tender their notes. The company has extended the expiration date of the consent solicitation to 11:59 p.m., New York City time, on Thursday, March 3, 2005. Originally, the consent solicitation was scheduled to expire at 5:00 p.m., New York City time, on Wednesday, Feb. 16, 2005. The tender offer continues to be scheduled to expire at 11:59 p.m., New York City time, on Thursday, March 3, 2005. The total consideration being offered in the tender offer and consent solicitation is an amount equal to $1,017.00 per $1,000 principal amount of such notes. The total consideration includes a consent payment of $20.00 per $1,000 principal amount of the notes. The obligations of the company under the tender offer and consent solicitation are conditioned upon the satisfaction or waiver of various conditions, including, among other things: -- There being validly tendered (and not withdrawn) at least a majority in aggregate principal amount of the notes; -- The execution of a supplemental indenture to the indenture governing the notes, following the receipt of the required consents; and -- The borrowing under a new credit facility and through the issuance or incurrence of other indebtedness proceeds in an amount sufficient to repay the company's existing credit facility, pay total consideration for the tendered notes, and fund the redemption of any notes not tendered on terms and conditions satisfactory to the company. This press release is not an offer to purchase, a solicitation of an offer to sell, or a solicitation of consent with respect to any securities. The offer is being made solely by the Offer to Purchase and Consent Solicitation Statement and the related Consent and Letter of Transmittal dated February 3, 2005, and the information in this press release is qualified in its entirety by reference to the information contained therein. The company has retained Citigroup Global Markets Inc. to serve as the Dealer Manager for the tender offer and Solicitation Agent for the consent solicitation. Requests for documents may be directed to Global Bondholder Services Corporation, the Information Agent at 866-488-1500 (toll free) and 212-430-3774. Questions regarding the offer may be directed to Citigroup Global Markets Inc. at 800- 558-3745 (toll free). About the Company Rural/Metro Corporation provides emergency and non-emergency medical transportation, fire protection, and other safety services to approximately 365 communities in 23 states. * * * As reported in the Troubled Company Reporter on Feb. 11, 2005, Moody's Investors Service assigned ratings to the proposed debt of Rural/Metro Corporation and Rural/Metro LLC, a newly created subsidiary of Rural/ Metro Corporation. The proceeds from the proposed transactions will be used to refinance the existing debt of Rural/Metro. Concurrently, Moody's upgraded Rural/Metro Corp.'s senior implied rating to B2 from B3 reflecting improved operations and its return to profitability over the past few years. The change in the ratings outlook to stable, from negative, reflects the expectation of continued enhancement of the ratio of free cash flow relative to total debt to the middle - upper single digits. At the same time, Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Rural/Metro Corp. Standard & Poor's has also assigned its 'B' senior secured debt rating and '2' recovery rating to Rural/Metro LLC's proposed $20 million senior secured revolving credit facility maturing in 2010 and a $120 million senior secured term loan B maturing in 2011. Standard & Poor's also assigned its 'CCC+' subordinated debt rating to Rural/Metro LLC's proposed $140 million senior subordinated notes due 2015 and to Rural/Metro Corporation's proposed $50 million paid-in-kind notes maturing in 2016. As part of this transaction, the company is also establishing a $15 million letter-of-credit facility, with a $30 million accordion feature, maturing in 2011. This facility is primarily for insurance purposes and is not rated by Standard & Poor's. The company is expected to use the proceeds from the term, subordinated, and holding company debt, in addition to about $7 million of on-hand cash, to refinance $150 million of existing senior notes, repay approximately $153 million of outstanding revolving credit facility borrowings, and fund $15 million of related transaction fees and tender premiums. Pro forma for the transaction, Rural/Metro will have $313 million of total debt outstanding (including the $50 million of holding company debt). S&P's outlook on Rural/Metro is stable. "The low-speculative-grade ratings reflect the company's exposure to government reimbursement combined with its relatively thin operating margins, as well as concerns regarding the sustainability of price increases from its commercial payors," said Standard & Poor's credit analyst Jesse Juliano. "The ratings also reflect Rural/Metro's large debt burden. These issues are only partially offset by the company's diverse and long-standing client list, and the improvement in the Medicare reimbursement environment." SMA FINANCE: Moody's Puts B1 Rating on $10.130MM Class G Certs. --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes and affirmed the ratings of three classes of SMA Finance Co., Inc. Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 1998-C1. Moody's ratings are: * Class A-2, $21,606,877, Fixed, affirmed at Aaa * Class X, Notional, affirmed at Aaa * Class B, $11,256,000, Fixed, affirmed at Aaa * Class C, $11,255,000, Fixed, upgraded to Aaa from Aa2 * Class D, $10,130,000, Fixed, upgraded to Aa3 from A3 * Class E, $3,376,000, Fixed, upgraded to A1 from Baa1 * Class F, $9,004,000, Fixed, upgraded to Baa3 from Ba1 * Class G, $10,130,000, Fixed, upgraded to B1 from B2 As of the January 18, 2005 distribution date, the transaction's aggregate principal balance has decreased by approximately 63.9% to $81.2 million from $225.1 million at securitization. The Certificates are collateralized by 11 loans secured by commercial and multifamily properties. The loans range in size from 1.2% to 17.5% of the pool. The pool has not experienced any losses since securitization. There are no loans in special servicing and there are no loans delinquents beyond their applicable grace period. Two loans representing 17.7% of the pool are on the master servicer's watchlist. As of the January 2005 distribution date, unrated Class H has experienced interest shortfalls of approximately $100,000. Moody's was provided with year-end 2003 operating results for 100.0% of the pool and partial year 2004 operating results for 28.8% of the pool. Moody's weighted average loan to value ratio ("LTV") is 65.7%, compared to 61.1% at Moody's last full review in March 2003 and 71.4% at securitization. The upgrade of Classes C, D, E, F and G is due to increased subordination levels and stable pool performance. The top three loans represent 46.3% of the outstanding pool balance. The largest loan is the Federal Express Loan ($14.2 million - 17.5%), which is secured by a 291,000 square foot single tenant industrial building located in Atlanta, Georgia. The property is 100.0% occupied by Federal Express on a lease expiring in October 2011. Moody's LTV is 65.5%, compared to 68.7% at last review and 77.0% at securitization. The second largest loan is the Sand Hill Plaza Loan ($12.4 million - 15.2%), which is secured by a 160,000 square foot shopping center located in Newton, Connecticut. The center is anchored by Super Stop & Shop (38.0% GLA; lease expiration November 2010) and TJ Maxx (16.0% GLA; lease expiration January 2006). The property is 100.0% occupied, compared to 98.0% at last review and 92.0% at securitization. Moody's LTV is 60.8%, compared to 68.2% at last review and 74.0% at securitization. The third largest loan is the 3525 Sage Street Loan ($11.0 million - 13.6%), which is secured by a 290-unit multifamily property located in Houston, Texas. The property's performance has declined since securitization due to competitive market conditions, which have impacted occupancy and rental rates. The property is 85.0% occupied, compared to 89.0% at last review and 94.0% at securitization. Moody's LTV is 72.1%, compared to 68.0% at securitization. The pool's collateral is a mix of retail (54.9%), industrial (17.5%), office (14.0%) and multifamily (13.6%). The collateral properties are located in 10 states. The highest state concentrations are New York (17.7%), Georgia (17.5%), Connecticut (15.2%), Texas (13.6%) and Pennsylvania (12.7%). All of the loans are fixed rate. SOLECTRON CORPORATION: Expands Enclosures & Sheet Metal Facility ---------------------------------------------------------------- Solectron Corporation (NYSE:SLR) has expanded its enclosures and sheet metal facility in Milpitas, California. This expansion is part of the company's strategy to offer market-leading systems-integration solutions and showcases its commitment to interact and collaborate with customers in the most critical development stages, improving their time-to-market capabilities. To further emphasize the importance of this new facility and its capabilities, Solectron has appointed two executives who will be responsible for managing and leading these operations -- Tony Princiotta as vice president, Enclosures Systems Business; and Hossein Saadat, vice president of Operations, Enclosures. Princiotta will be responsible for driving the overall growth of the enclosures business, ensuring its commercial viability, while seeking strategic opportunities for expansion. Saadat will be responsible for managing the existing enclosures sites including: * Hillsboro, Oregon; * Laval, Quebec; * Milpitas, California; * Shanghai, China; * Singapore; and * South Ockendon, United Kingdom. "This expansion and appointment of the new managers will ensure that enclosures and sheet metal operations are managed consistently, leveraging new opportunities across all sites," said Dave Purvis, Solectron executive vice president, Design and Engineering. "We are prepared for high growth in this area, working closely with our local and global customers, to ensure they receive the best support." "Our supplier's new product introduction capabilities, coupled with local support, are extremely important for product development and time-to-market," said Saeed Seyed, Cisco Systems' Hardware Engineering Manager. "We welcome and expect the success of Solectron's enclosures and sheet metal center in Milpitas as an important step for better product development and key for conducting business. This is important to us for fast prototype turnaround and smooth transition to production. We are counting on this facility's success." Solectron Corporation -- http://www.solectron.com/-- provides a full range of worldwide manufacturing and integrated supply chain services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, California, and had sales from continuing operations of $11.64 billion in fiscal 2004. * * * As reported in the Troubled Company Reporter on Jan. 13, 2005, 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. SOLECTRON CORP: Completes Senior Convertible Debt Exchange Offer ---------------------------------------------------------------- Solectron Corporation (NYSE:SLR) disclosed the final results of its offer to exchange all its outstanding 0.50-percent convertible senior notes due 2034 for an equal amount of its newly issued 0.50-percent convertible senior notes, series B due 2034 and cash. The offer expired at midnight, New York City time (Eastern Standard Time), on Thursday, Feb. 10. Solectron accepted for exchange $447,298,000 aggregate principal amount of outstanding notes, representing approximately 99.4 percent of the total outstanding notes. In accordance with the terms of the exchange offer, Solectron has accepted for exchange all the validly tendered outstanding notes. The settlement and exchange of new notes and payment of cash for the outstanding notes is being made promptly. Immediately following consummation of the exchange offer, approximately $2,702,000 aggregate principal amount of outstanding notes will remain outstanding. Goldman, Sachs & Co. was the dealer/manager and Georgeson Shareholder Communications, Inc., was the information agent for the exchange offer. Additional details regarding the exchange offer are described in the prospectus relating to the exchange offer. Copies of the prospectus may be obtained free of charge at the Securities and Exchange Commission's Web site at http://www.sec.gov/or from Georgeson Shareholder Communications Inc. by writing or phoning: Georgeson Shareholder Communications Inc. 17 State St.--10th Floor New York, NY 10004 Telephone: 212-440-9800 (banks and brokers) or 800-460-0079 (all others) Solectron Corporation -- http://www.solectron.com/-- provides a full range of worldwide manufacturing and integrated supply chain services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, California, and had sales from continuing operations of $11.64 billion in fiscal 2004. * * * As reported in the Troubled Company Reporter on Jan. 13, 2005, 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. SPIEGEL INC: Files Reorganization Plan in New York -------------------------------------------------- Spiegel, Inc., has taken a significant step toward completion of its restructuring by filing its proposed joint plan of reorganization and related disclosure statement with the U.S. Bankruptcy Court for the Southern District of New York. The Plan contemplates that the business will be reorganized around the Eddie Bauer division of Spiegel, Inc., establishing a new parent company, Eddie Bauer Holdings, Inc. Eddie Bauer is a premium outdoor-inspired casual wear brand, which specializes in offering distinctive clothing, accessories and home furnishings for men and women. Eddie Bauer will continue to serve its customers through its stores, catalogs and Internet site and be headquartered in Redmond, Washington. "We are pleased to be submitting this Plan to the Court, which reflects the combined efforts and extensive negotiations between Spiegel, Inc., its Creditors' Committee and its majority shareholder as we worked together to maximize value for Spiegel, Inc.'s creditors," said Bill Kosturos, interim chief executive officer and chief restructuring officer for Spiegel, Inc., and managing director with Alvarez and Marsal. "Having reached agreement with a broad base of our economic stakeholders, we believe that this Plan will serve as a sound platform as we work with the Court and our stakeholders toward acceptance and implementation of the Plan." Fabian Mansson, president and chief executive officer for Eddie Bauer, Inc., stated, "We have made significant progress throughout the restructuring process, reducing our cost structure and positioning Eddie Bauer to be a stronger competitor providing best-in-class customer service and product. As a result, the profitability of the Eddie Bauer business improved substantially in 2003 and 2004. I am particularly encouraged by the strong support of the Plan from our Creditors' Committee and in their desire to participate in the company's future as equity holders." Upon approval by the Court of the disclosure statement, Spiegel, Inc., will solicit votes on the Plan from those stakeholders who are entitled to vote on the Plan. The Plan is subject to supplementation, modification and amendment prior to confirmation. Plan of Reorganization The key elements of the proposed plan of reorganization include: -- Spiegel, Inc.'s general unsecured creditors, excluding Spiegel Holdings, Inc. and its affiliates, will recover approximately 90 percent of their allowed claims through a combination of cash and common stock. Spiegel, Inc. estimates that approximately $1.28 billion of general unsecured creditors' claims will be satisfied in this manner, including bank debt and trade payables. Based on current estimates, each recovery will be comprised of approximately 52 percent cash and 48 percent equity. -- A settlement agreement reached with Spiegel Holdings, Inc. and its affiliates will provide a cash payment of $104 million that will be distributed to all qualified unsecured creditors on a pro rata basis. This amount is included in the recovery estimates noted above. The settlement agreement also includes the allowance and specifies the treatment of approximately $200 million of claims held by Spiegel Holdings, Inc. and related parties. -- A new corporate structure will be formed. Spiegel, Inc. will transfer its interest in Eddie Bauer, Inc. and its subsidiaries and other affiliated support companies to Eddie Bauer Holdings, Inc. Spiegel, Inc., also will transfer its interest in Spiegel Acceptance Corporation and Financial Service Acceptance Corporation to Eddie Bauer Holdings, Inc. These companies will emerge as reorganized entities. On the effective date, Eddie Bauer Holdings, Inc. will be the new parent company of the Eddie Bauer business. Eddie Bauer Holdings, Inc. will operate as an independent business, with a separate board of directors independent of Spiegel, Inc. -- Spiegel, Inc.'s creditors, with certain exclusions, will initially receive 100 percent of the equity in the emerging company, Eddie Bauer Holdings, Inc. Eddie Bauer Holdings, Inc. plans to register its class of common stock with the Securities and Exchange Commission and have its shares approved for trading on NASDAQ. -- Assets of the Debtors' Chapter 11 estates not transferred to Eddie Bauer Holdings, Inc. or its subsidiaries will be transferred to a trust (Creditor Trust) established for the benefit of creditors. -- The recovery estimate takes in account that qualified general unsecured creditors would receive their pro rata share of: (1) corporate cash, (2) the cash settlement payment from Spiegel Holdings, Inc., (3) cash raised through the incurrence of $300 million in debt, (4) common stock of Eddie Bauer Holdings, Inc. and (5) beneficial interests in the Creditor Trust. -- As part of the Plan, Eddie Bauer has decided to pursue a new strategic direction for its Eddie Bauer Home division, focusing on home products through licensing agreements rather than operating its own retail and direct business dedicated to home. As a result, 34 Eddie Bauer Home stores will close, with the majority of the store closings expected to occur in the second half of 2005. This move will better utilize Eddie Bauer's resources and allow the brand to focus solely on its core apparel and accessories business. -- The plan provides for substantive consolidation of the Debtors' estates. Accordingly, most creditors holding claims that have the same status will receive the same recovery regardless of which Debtor incurred the debt. -- All of the shares of Spiegel, Inc. will be cancelled for no consideration. -- A "convenience class" will be created for creditors with smaller claims who will receive all distributions in cash. The company expects a hearing to be held on its disclosure statement in U.S. Bankruptcy Court on March 29, 2005. A copy of the company's court documents, including the proposed plan of reorganization and the accompanying draft disclosure statement, can be accessed through the Spiegel, Inc., Web site at http://www.thespiegelgroup.com/under the heading - Reorganization Information. Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/-- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. ST. JOHN KNITS: Moody's Puts B1 Rating on $255MM Senior Sec. Loans ------------------------------------------------------------------ Moody's Investors Service assigned a B1 rating to St. John Knits International, Inc.'s proposed $255 million senior secured credit facilities and affirmed its senior implied and issuer ratings. The outlook remains negative. Ratings on the existing term loan facility and the $100 million senior subordinated notes will be withdrawn once the transaction closes. The proceeds from the new senior secured facilities will be used to refinance the Company's existing bank facilities and redeem its $100 million senior subordinated notes, as well as fund the purchase of $13.5 million of the founding family's interest in the company. The ratings reflect St. John's well known brand, its diversified distribution network with growing revenues from the Company's retail stores and from international sales, and its higher sales and improved cash flow coverage for the fiscal year ended Oct. 31, 2004. Concurrently, the ratings recognize the challenges and uncertainties faced by the Company as it attempts to reposition the brand and improve cost efficiencies, the remaining high concentration of sales to department stores, the decline in the company's operating margin in recent years, the high debt leverage, the risks involved with the temporary exit from non- apparel products (shoes, jewelry, and handbags), the higher market and inventory risks associated with the growing retail business, and the undetermined amount that the redeemable common stock will ultimately cost the company. Positioned in the luxury women's apparel market, the St. John Knits brand has a high degree of customer loyalty. Even though St. John now attains over half of its revenues from the combination of its retail stores and its international sales (approximately 52%) it still relies on three major U.S. department stores for approximately 42% of revenues. In spite of the increase in sales to $395 million in 2004 from $370 million in 2003, the Company's operating margin declined to 10.4% from 13.6% in 2003 (and from 17.6% in 2002), contributed to a lower EBITDAR, and resulted in adjusted debt (debt plus 8X rent) / EBITDAR remaining at a relatively high 4.8 X. Free cash flow / adjusted debt rose to 4.7% from 3.2% thanks to the lower capital expenditures in 2004. New strategic directions designed to reposition the Company's brands that have been undertaken by recently appointed management include leveraging its image to appeal to a broader age group while retaining its present customer base, gaining greater control over its distribution, increasing international awareness of its brand, lifting margins by concentrating on improving cost efficiencies in its retail stores and manufacturing operations and, after improved sourcing and marketing, re-launching non- apparel products. The outlook recognizes the challenges to the successful execution of these strategies especially given the intensely competitive nature of the apparel business. Positive rating action could ensue if St. John's new strategic initiatives prove successful and result in operating margin improvements to above 14%, adjusted debt / EBITDAR below 4 times, interest coverage (EBIT/ interest expense) above 4 times and free cash flow / adjusted debt exceeding 7%. However, negative ratings pressure could occur if the company is unable to reverse the declining operating trends; in particular, if operating margin falls below 10%, adjusted debt / EBITDAR increases to the 5.5 times range, interest coverage remains at 2 times or below for an extended time period, and free cash flow / adjusted debt drops to below 4%. The Senior Secured Credit Facilities consist of a $210 million 7 year term loan and a $45 million 5 year revolving credit facility guaranteed by St. John's domestic subsidiaries and secured by substantially all of the assets of the company and the guarantors. The $45 million revolving credit will remain undrawn at close and be available for liquidity purposes. As the new maturity schedule will require repayments of only approximately $2 million in each of the first two years, $21 million in the third year, and $31 million in the fourth year, the transaction significantly improves SJKI's near-term liquidity. The credit facilities will represent substantially all of the company's funded debt. It is understood that the credit agreement will include certain financial covenants and that flexibility under these covenants may be somewhat limited. The ratings assigned are subject to the receipt of final documentation with no material changes to the terms as originally reviewed by Moody's. The ratings assigned are: * $210 million 7 year Term Loan B Facility -- B1 * $55 million 5 year Revolving Credit Facility -- B1 The ratings affirmed are: * Senior Implied -- B1 * Issuer Rating -- B2 The ratings to be withdrawn are: * $115 Million Senior Secured Term Loan Facility, due 2007 -- Ba3 * $100 Million 12 1/2% Senior Subordinated Notes, due 2009 -- B3 The outlook is negative. Headquartered in Irvine, California, St. John Knits International, Inc., is a designer and producer of fine women's clothing. Its core product is classic women's business, casual, and leisure knit-wear. St. John also designs, produces, and markets sportswear, markets fragrance, and licenses swimwear. Marie and Robert Gray founded St. John in 1962. The Company distributes wholesale to leading high-end retailers and through its own network of boutiques and outlets in the U.S. The Company also supplies specialty stores in 27 foreign countries. The Company's reported revenues were approximately $396 million for the fiscal year ended October 31, 2004. ST. JOHN KNITS: S&P Rates Proposed $255M Bank Facilities at B+ -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating and '3' recovery rating to St. John Knits International Inc.'s -- SJKI -- proposed $255 million secured bank facilities, indicating that lenders can expect meaningful recovery of principal (50%-80%) in the event of a payment default or bankruptcy. Proceeds from the new bank loan will be used primarily to refinance existing indebtedness, including the redemption of the company's subordinated notes due 2009. The above ratings are based on preliminary offering statements and are subject to review upon final documentation. At the same time, Standard & Poor's affirmed the company's 'B+' corporate credit rating and revised the outlook to stable from negative. The Irvine, California-based apparel manufacturer's total debt outstanding at Oct. 31, 2004, was about $207 million. "The outlook revision reflects our expectation that SJKI will be able to improve its operating margins due to better sourcing and cost efficiencies, as the one-time operating expenses associated with investing in its retail operations begin to yield results," said Standard & Poor's credit analyst Susan Ding. SYBRON DENTAL: Names Bernard Pitz as Chief Financial Officer ------------------------------------------------------------ Sybron Dental Specialties, Inc. (NYSE: SYD), a leading manufacturer of a broad range of value-added products for the professional dental market and the specialty markets of orthodontics, endodontics, implants and infection prevention, disclosed that Bernard J. Pitz will join the Company effective March 1, 2005. After a transition period, Mr. Pitz will succeed Gregory D. Waller, who announced last November his intention to retire during 2005, as Chief Financial Officer. Mr. Waller will remain with the Company through April 1, 2005 to assist with the transition to the new CFO, and will also remain as a consultant to Sybron for a period of at least one year. Mr. Pitz, 44, joins Sybron from Universal Electronics Inc. (Nasdaq: UEIC), a leading wireless technology developer, where he served as Senior Vice President and Chief Financial Officer since November 2003. In this position, Mr. Pitz helped lead UEI through a period of significant financial growth, while also overseeing the Company's Sarbanes-Oxley compliance efforts. Prior to UEI, Mr. Pitz served as Vice President of Finance for Corning Incorporated's worldwide frequency control operations. Mr. Pitz joined Corning Incorporated as a result of its acquisition of Oak Industries in 2000, where he served as Vice President of Finance, North America. From 1983 to 1998, Mr. Pitz held a variety of financial and operating positions at Motorola in the United States and China. Mr. Pitz holds an MBA from the University of Chicago and a Bachelors of Science degree from Northern Illinois University. "We are very pleased to welcome Bernie to the Company," said Floyd W. Pickrell, Jr., Chief Executive Officer of Sybron Dental Specialties. "He has a wealth of experience managing the financial activities of manufacturing companies with global operations and an exceptional track record of helping to generate profitable growth. Bernie also has an excellent M&A background that will be valuable as we continue to utilize strategic acquisitions as a core element of our growth strategy." Mr. Pitz commented, "I am very pleased to join Sybron at a time when the Company has excellent momentum. Over the past few years, the Company has strengthened its position in its core dental and orthodontic markets, while making strong inroads into newer markets such as endodontics and dental implants. Sybron has also made exceptional progress in improving its working capital management and strengthening its balance sheet, and these will remain top priorities for the Company. I look forward to working with the rest of the management team to help Sybron capitalize on the strong growth opportunities available and taking the Company to the next level." Mr. Pickrell concluded, "We are very appreciative for the many years of outstanding service that Greg Waller provided to Sybron, and we wish him well in his retirement. We are pleased that he will remain involved with the Company in his role as a consultant." About the Company Sybron Dental Specialties and its subsidiaries are leading manufacturers of a comprehensive line of consumable general dental and specialty products for the orthodontic, endodontic, implant and infection prevention markets worldwide. * * * As reported in the Troubled Company Reporter on May 21, 2004, Moody's Investors Service upgraded the ratings of Sybron Dental Specialties, Inc., to reflect the merger of Sybron Dental Management, Inc. into SDS. Ratings affected are: -- $150 million Senior Secured Revolver due, 2007, to Ba2 from Ba3 -- $90 million Senior Secured Term Loan due, 2009, to Ba2 from Ba3 -- $150 million Senior Subordinated Notes, due 2012, to B1 from B2 -- Senior Implied Rating, to Ba2 from Ba3 -- Senior Unsecured Issuer Rating, to Ba3 from B1 The outlook for the ratings is stable. As reported in the Troubled Company Reporter on April 2, 2004, Standard & Poor's Ratings Services raised its corporate credit and senior secured ratings on Sybron Dental Specialties Inc. to 'BB+' from 'BB-', and its subordinated debt rating to 'BB-' from 'B'. The outlook is stable. SYP ENTERPRISES INC: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: SYP Enterprises, Inc. 2000 North Collins Street Arlington, Texas 76011 Bankruptcy Case No.: 05-41616 Type of Business: The Debtor operates a gasoline station. Chapter 11 Petition Date: February 17, 2005 Court: Northern District of Texas (Ft. Worth) Judge: D. Michael Lynn Debtor's Counsel: Robert M. Nicoud, Jr., Esq. Olson, Nicoud & Gueck, LLP 1201 Main Street, Suite 2470 Dallas, Texas 75202 Tel: (214) 979-7300 Fax: (214) 979-7301 Total Assets: $500,000 to $1 Million Total Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. TEKNI-PLEX INC: Poor Operating Results Cue S&P to Junk Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Tekni-Plex, Inc., to 'CCC+' from 'B-', and placed the rating on CreditWatch with negative implications. Other ratings were also lowered and placed on CreditWatch with negative implications. This follows the company's disappointing operating results for the second quarter of fiscal 2005, strained liquidity, and violation of financial covenants under its credit agreement for the period ended Dec. 31, 2004. Coppell, Texas-based Tekni-Plex had total debt outstanding of about $752 million at Dec. 31, 2004. "The CreditWatch placement reflects heightened concerns regarding the company's ability to preserve access to its credit facility, its strained liquidity given its upcoming interest payments, and deterioration in the company's already stretched and highly leveraged financial profile," said Standard & Poor's credit analyst Liley Mehta. Tekni-Plex's liquidity position is expected to remain constrained, given higher working capital needs in the current quarter ended March 31, 2005, resulting from an inventory build ahead of the garden hose selling season in the spring and summer months. At Dec. 31, 2004, the company had cash and equivalents of about $12 million and availability of $2 million under its $100 million revolving credit facility. However, the company was in violation of the minimum EBITDA and minimum fixed-charge coverage ratio covenants under its amended credit agreement at Dec. 31, 2004. Tekni-Plex has obtained a waiver from lenders through March 31, 2005, by which time the company is required to raise at least $18 million of equity capital. The company has reached an in principle agreement with an existing investor to provide the required equity investment, subject to customary terms and conditions including execution of definitive documentation. Even if the company obtains an equity investment by March 2005, liquidity is expected to remain strained, given the company's limited cash flow from operations and sizable interest payments of about $30 million in May and June 2005 on its 8.75% senior secured notes and 12.75% senior subordinated notes. If Tekni-Plex's operations do not improve and working capital needs are greater than expected, liquidity could diminish further and the rating could be lowered. Standard & Poor's will monitor developments related to the proposed equity infusion and the company's operating performance and expects to resolve the CreditWatch listing in the next few months. Standard & Poor's will also evaluate management's ability to improve the company's operating and financial profile, and other potential strategic actions to improve liquidity. TEXEN OIL: Raising $500,000 from Private Equity Placement --------------------------------------------------------- Texen Oil and Gas, Inc.'s (OTCBB:TXEO) Board of Directors of the Company has approved a subscription for a private placement in the amount of $500,000 by Texen Holdings, LLC, an entity controlled by the Company President, D. Elroy Fimrite. The terms of the subscription provides for the placement to be priced at the average closing price of the company's shares for the ten market days prior to funding. The funding is expected to complete within the current quarter. The shares issued in this private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements of the Securities Act of 1933. Texen Oil and Gas, Inc. -- http://www.texenoilandgas.com/-- is a Houston based oil and gas exploration and development company. The company leases approximately 6,000 acres of crude oil and natural gas producing properties in Victoria, DeWitt and Waller Counties, Texas. The Company trades under the stock symbol TXEO on the OTC bulletin board. Going Concern Doubt The company's auditors in its September 30, 2004, quarterly financial report have issued a going concern opinion. This means that the auditors believe there is doubt that the company can continue as an on-going business for the next twelve months unless the company can obtain additional capital to pay our bills. The company have generated limited revenues and expected revenues during the ensuing period are subject to fluctuation based on the availability of additional capital necessary in order to fully exploit the unproven potential of our Oil & Gas portfolio. Accordingly, we must raise cash from sources other than from the sale of Oil & Gas found on our properties. Our only other source for cash at this time is investments by others in our company. We must raise cash to implement our project and stay in business. TRIAD HOSPITALS: Earns $49.2 Million of Net Income in 4th Quarter ----------------------------------------------------------------- Triad Hospitals, Inc. (NYSE:TRI) reported consolidated financial results for the three months and year ended Dec. 31, 2004. For the three months, the Company reported revenues of $1.1 billion; earnings before interest, taxes, depreciation, amortization, and other items of $160.3 million; income from continuing operations of $50.7 million; net income of $49.2 million; and diluted EPS from continuing operations of $0.66. On a same-facility basis compared to the prior year three-month period, inpatient admissions decreased 1.1%, adjusted admissions decreased 0.1%, and inpatient surgeries increased 1.3%. Patient revenue per adjusted admission increased 5.2%, patient revenues increased 5.1%, and revenues increased 4.8%. Same-facility results included facilities owned for the full fourth quarter of both years, including McKenzie-Willamette Hospital, which was acquired October 1, 2003. Revenue growth rates reflected the impact of the Company's new self-pay discount policy implemented October 2004; without the self-pay discount, the Company estimates that patient revenue per adjusted admission would have increased 6.2%, patient revenues would have increased 6.1%, and revenues would have increased 5.8%. For the three months, the Company reported a provision for doubtful accounts of $103.8 million, or 9.1% of revenue. Without the new self-pay discount, the Company estimates that the provision for doubtful accounts would have been 10.0% of revenue. The Company continued to include in the allowance for doubtful accounts on its balance sheet approximately $15 million beyond what the Company's historical experience would require, in order to reflect the potential for further deterioration in the collectibility of receivables from uninsured patients. For the three months, cash flow from operating activities was $76.3 million, or $140.4 million excluding cash interest payments of $49.6 million and cash tax payments of $14.5 million. The Company spent $105.6 million on capital expenditures, largely for expansion and construction of new facilities, and paid debt principal of $20.9 million. On October 1, 2004, the Company acquired Dukes Memorial Hospital, a 60-bed facility in Peru, Indiana, near the Company's existing facilities in the Ft. Wayne area, for $16 million. On January 12, 2005, the Company opened its newest facility, Northwest Medical Center - Oro Valley, a 96- bed facility in Tucson. At December 31, cash and cash equivalents were $56.8 million, and the Company had $378 million available under its $400 million revolving credit facility, which was reduced by $22 million of outstanding letters of credit. Long-term debt outstanding was $1.7 billion, and stockholders' equity totaled $2.3 billion. For the year, the Company reported revenues of $4.5 billion; adjusted EBITDA of $612.5 million; income from continuing operations of $138.0 million; diluted EPS of $2.49; diluted EPS from continuing operations of $1.80; and diluted EPS from continuing operations of $2.43 excluding refinancing transaction costs of $76.0 million related to the Company's May refinancing of its $600 million of 8.75% Senior Notes. On a same-facility basis compared to the prior year period, inpatient admissions increased 2.4%, adjusted admissions increased 3.2%, and inpatient surgeries increased 4.4%. Patient revenue per adjusted admission increased 5.4%, patient revenues increased 8.7%, and revenues increased 8.3%. Same-facility results included facilities owned for both full year 2003 and 2004. For the year, cash flow from operating activities was $358.0 million, or $572.2 million excluding cash interest payments of $117.9 million and cash tax payments of $96.3 million. Triad spent $436.0 million on capital expenditures, largely for expansion and construction of new facilities. The Company paid debt principal of $769.8 million during the year, including $75 million from draws on its revolving credit facility during the first quarter, and received proceeds of $600 million from the issuance of new debt in the second quarter. Triad initiated a company-wide self-pay patient discount policy in October 2004 under which each hospital offers discounts to self- paying uninsured patients with limited financial ability to pay, the magnitude of which varies based on each hospital's location and each patient's ability. In addition, beginning April 2005, each hospital will also offer all self-pay patients an initial discount, regardless of ability to pay and commensurate with the local managed care discount. The anticipated effects of the Company's comprehensive self-pay discount policy, including the additional component to be reintroduced in April, include reduced provision for doubtful accounts as a percent of net revenue and reduced net revenue relative to what they would have been without the self-pay discount. Throughout 2005, the Company expects to report on the estimated impact of the policy on its revenues, provision for doubtful accounts, and related indicators. As announced on January 25, for 2005, Triad expects to achieve diluted EPS from continuing operations of approximately $2.69-2.79 on revenues of approximately $4.6-4.9 billion and same-facility admissions growth of approximately 2-3%. The Company's diluted EPS guidance does not include the impact of expensing stock options, which the Company expects to commence no later than the second half of 2005 in accordance with Statement of Financial Accounting Standards 123(R). The Company is currently evaluating the particular methodology it will use to determine such expense and intends to update its 2005 EPS guidance to incorporate the impact of stock option expense after it completes the evaluation. The Company's diluted EPS guidance incorporates an expected provision for doubtful accounts of approximately 9.0-9.5% of revenue in 2005. This range reflects the expected impact of the Company's new self-pay discount policy, including an additional component to be implemented April 1, which is expected to reduce both revenue and the provision as a percent of net revenue in 2005 relative to what they would have been without the discount. Without the self-pay discount, the Company would have expected the provision to be approximately 10.2-10.7% of revenue in 2005. Triad believes that the provision will likely fluctuate from quarter to quarter during 2005, even possibly outside of this range. Triad also believes that the annual range itself will be subject to change, possibly positive or negative, based on evolving business conditions and the effectiveness of Company actions in response, and this may impact 2005 EPS. The Company's current EPS guidance excludes any impact from reversing any or all of the $15 million that it continues to include in the allowance for doubtful accounts on its balance sheet. Beyond 2005, the Company expects to achieve annual EPS growth in at least the mid-teens percent range and expects to achieve further gradual improvement over time, with occasional fluctuation, in its overall return on invested capital. About the Company Triad Hospitals -- http://www.triadhospitals.com/-- through its affiliates, owns and manages hospitals and ambulatory surgery centers in small cities and selected larger urban markets. The Company currently operates 52 hospitals and 14 ambulatory surgery centers in 15 states with approximately 8,340 licensed beds. In addition, through its QHR subsidiary, the Company provides hospital management, consulting and advisory services to more than 200 independent community hospitals and health systems throughout the United States. * * * Last year, Moody's Investor Service, Standard & Poor's, and Fitch Ratings assigned their low-B ratings to $600,000,000 of 7% Senior Notes issued by Triad Hospitals maturing on May 15, 2012, and a $600,000,000 issue of 7% Senior Subordinated Notes coming due on Nov. 15, 2003. TRIMAS CORP: S&P Downgrades Corporate Credit Rating to B+ --------------------------------------------------------- Standard & Poor's Ratings Services downgraded TriMas Corp., including lowering its corporate credit rating on the company to 'B+' from 'BB-', and removed all ratings from CreditWatch where they were placed on Dec. 13, 2004. The outlook on Bloomfield Hills, Mich.-based TriMas is negative. At Sept. 30, 2004, total debt outstanding was about $780 million. "The downgrade results from the higher-than-expected debt leverage because of weaker EBITDA and higher debt levels," said Standard & Poor's credit analyst John Sico. At Sept. 30, 2004, the ratio of total debt to EBITDA, adjusted for operating leases and nonrecurring restructuring and consolidation charges, was about 6x. This compares with Standard & Poor's expectation of 4x. TriMas Corp. has about $1 billion in sales from manufactured engineered products -- transportation towing systems, packaging systems, fastening systems, industrial specialty products--serving niche markets in a diverse range of commercial, industrial, and consumer applications. "Debt usage is expected to diminish as free cash flow over the next two years is earmarked for debt reduction," Mr. Sico said. "Debt-financed acquisitions are not expected and, therefore, not factored into the ratings. Ratings will be lowered if TriMas fails to make steady progress over the next year in strengthening its financial profile. Although TriMas has filed an S-1 for an IPO of common stock, it has not yet proceeded with the IPO, because of unfavorable market conditions. If the company proceeds with the IPO in the future, Standard & Poor's would reassess TriMas' credit profile." TRINITY LEARNING: Can't Operate Past April Without New Funds ------------------------------------------------------------ Trinity Learning Corporation currently does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The Company does not currently have access to financing from any financial institution and it cannot be certain that its existing sources of cash will be adequate to meet its liquidity requirements. Based on its cash balance at February 1, 2005, the Company will not be able to sustain operations for more than two months without additional sources of funding. To meet its present and future liquidity requirements, the Company will continue to seek additional funding through private placements, conversion of outstanding loans and payables into common stock, development of the business of its newly acquired subsidiaries, collections on accounts receivable, and through additional acquisitions that have sufficient cash flow to fund subsidiary operations. There can be no assurance that Trinity Learning will be successful in obtaining more debt and equity financing in the future or that its results of operations will materially improve in either the short- or the long-term. If the Company fails to obtain such financing and improve its results of operations, management has stated that it will be unable to meet its obligations as they become due. That would raise substantial doubt about the ability of the Company to continue as a going concern. Trinity Learning Corporation's expenses are currently greater than its revenues. The Company has a history of losses, and its accumulated deficit as of December 31, 2004 was $26,551,141, as compared to $22,650,976 as of June 30, 2004. Trinity Learning Corporation is creating a global learning company by acquiring operating subsidiaries that specialize in educational and training content, delivery, and services for particular industries or that target a particular segment of the workforce. TRW AUTOMOTIVE: Posts $62 Million Net Loss in Fourth Quarter ------------------------------------------------------------ TRW Automotive Holdings Corp. (NYSE: TRW), reported fourth quarter 2004 sales of $3.2 billion, an increase of 7% over the prior year quarter, and net losses of $62 million, compared to net losses of $1 million during the same period a year ago. The fourth-quarter 2004 results included $125 million of expenses relating to financing transactions completed in the fourth quarter, primarily for the loss on retirement of debt related to the repurchase of the Company's $600 million acquisition related seller note from Northrop Grumman. Excluding these debt retirement and refinancing expenses, net of the assumed tax impact, fourth quarter earnings were $34 million. The Company's net debt position was reduced by $413 million during the fourth quarter, down to its lowest quarter-end level since the February 2003 acquisition of the Company by affiliates of The Blackstone Group. L.P. "The fourth quarter and 2004 year were very challenging for us, marked not only by a number of capital base transactions following our emergence as an independent company in 2003, but also by an unrelenting industry environment that drew heavily on our operational strengths at every turn," said John C. Plant, president and chief executive officer. "In addition to our initial public offering, we successfully achieved our 2004 financial and operational objectives and furthered our strategic initiatives, despite facing significant inflationary cost pressures and the negative impact of declining vehicle market share at our major North American customers. Much of our success in achieving these objectives can be attributed to the strength of our diversified product portfolio and geographic balance, along with the effectiveness of our cost reduction initiatives and the commitment and resolve demonstrated by our employees." For full-year 2004, the Company reported sales of $12.0 billion and net earnings of $29 million, which included pre-tax expenses of $173 million primarily for debt retirement expenses associated with the redemption of public bonds at the time of the initial public offering, repurchase of the Seller Note, and credit facility refinancing actions. Excluding these debt retirement and refinancing expenses, net of the assumed tax impact, full year earnings were $173 million or $1.72 per diluted share. In comparison, the Company reported sales of $9.4 billion and net losses of $101 million or $(1.16) per share for the ten-month period ended December 31, 2003. This ten-month period represents the reporting period following the February 28, 2003, acquisition of the former TRW Inc.'s automotive business by Blackstone from Northrop Grumman Corporation. Prior to the Acquisition, the predecessor company reported sales of $1.9 billion and net earnings of $31 million for the two-month period ended February 28, 2003. As a result of the Acquisition, certain consolidated and combined financial information relating to the full year period ended December 31, 2003, contained within this release (labeled as pro forma) has been adjusted to illustrate the estimated pro forma effects of the Acquisition, and the Company's July 2003 debt refinancing, which included pre-tax charges of $31 million, as if these transactions had occurred on January 1, 2003. For a reconciliation of the full year GAAP historical financials to full year pro forma financials, please see the financial schedules that accompany this release. Fourth Quarter 2004 Compared to the Prior Year Period The Company reported fourth-quarter 2004 sales of $3.2 billion, an increase of $204 million or 7% compared to prior year sales of $3.0 billion. The increase resulted primarily from foreign currency translation and sales from new product areas, partially offset by pricing provided to customers and a reduction in sales due to a first-quarter 2004 divestiture. Operating income for fourth-quarter 2004 was $133 million, a decrease of $6 million compared to the prior year period. The prior year operating income included non-cash unrealized foreign currency exchange gains of $17 million that did not recur in the 2004 quarter. Additionally, pre-tax restructuring costs increased by $6 million to $20 million for fourth-quarter 2004 compared to the prior year. Excluding the year-to-year effect of these items, operating income improved by $17 million or 13% compared to the prior year. This increase resulted primarily from an increased level of sales and a higher level of cost savings, partially offset by pricing provided to customers and inflation, primarily in the area of ferrous metals. Net interest expense for the fourth quarter of 2004 totaled $69 million, which included approximately $6 million of expenses relating to refinancing of the Company's bank debt facilities. Net interest excluding these expenses was $63 million for the quarter, down considerably from the prior year level of $83 million, reflecting the impact of the Company's reduction in debt and capital structure improvement efforts. In the fourth quarter, the Company incurred $112 million of loss on retirement of debt resulting from the repurchase of the Seller Note, which was a component of the original Acquisition financing. At the time of the Acquisition, the Company determined that the fair value of the Seller Note, and corresponding book value at March 1, 2003, was $348 million. The loss on retirement of debt resulted primarily from the difference between the purchase price and the accreted book value of the Seller Note on the Company's balance sheet at the time of the transaction in early November 2004. The book loss associated with the transaction was U.S. based and therefore carries zero tax benefit due to the Company's tax loss position in this jurisdiction. Loss on retirement of debt also included $7 million of expenses re lated to the December 2004 refinancing of the Company's bank debt. The Company reported fourth-quarter 2004 net losses of $62 million, which included $125 million of debt retirement and refinancing expenses for financial transactions completed during the quarter. Excluding these debt retirement and refinancing expenses, net of the assumed tax impact, fourth quarter earnings were $34 million or $0.34 per diluted share compared to net losses of $1 million or $(0.01) per diluted share in the prior year. Earnings before interest, loss on sales of receivables, taxes, depreciation and amortization, and loss on retirement of debt were $264 million for fourth-quarter 2004, which compares to prior year EBITDA of $268 million. As mentioned previously, fourth-quarter 2004 EBITDA was negatively impacted by the non-recurrence of unrealized foreign currency exchange gains of $17 million that occurred in the 2003 quarter and by $6 million of higher restructuring costs when compared to the prior year. Excluding the year-to-year effect of these items, fourth-quarter 2004 EBITDA improved by 7%. Full-Year 2004 Versus Pro Forma Full-Year 2003 The Company reported sales of $12.0 billion for full-year 2004, an increase of $703 million or 6% compared to prior year pro forma sales of $11.3 billion. Operating income during the full-year period was $583 million, an increase of $4 million compared to the prior year pro forma operating income. Although operating income improved in 2004, the year-over-year comparison was negatively impacted by a $39 million first-quarter 2004 decline in net pension and OPEB income, resulting primarily from the application of purchase accounting at the time of the Acquisition, and the non-recurrence of certain 2003 non-cash unrealized foreign currency exchange gains of $32 million. The negative year-over- year impact of these items was more than offset by the Company's new business growth, currency translation and overall cost performance. Net interest expense for the year totaled $252 million, which included approximately $6 million of expenses relating to refinancing of the Company's bank debt facilities. Net interest excluding these expenses was $246 million compared to $327 million in the prior year. Loss on retirement of debt totaled $167 million in 2004, which consisted of the fourth quarter losses previously described and $48 million related primarily to prepayment premiums on high yield notes redeemed with proceeds from the Company's IPO and other expenses related to a January 2004 bank debt refinancing. Income tax expense for 2004 was $135 million resulting in an effective tax rate of 82%. Due to the Company's tax position in the United States, losses and expenses associated with the refinancing transactions described previously provide no accounting tax benefits in the period. Excluding the expenses related to these capital transactions, the Company estimates that its effective tax rate would have been approximately 49% for the year. The Company reported full-year 2004 net earnings of $29 million or $0.29 per diluted share, which, as described previously, included $173 million of debt retirement and refinancing expenses for financial transactions completed during the year. Excluding these debt retirement and refinancing expenses, net of the assumed tax impact, full year earnings were $173 million or $1.72 per diluted share compared to pro forma earnings of $93 million or $1.03 per diluted share in the prior year. EBITDA was $1,080 million for full-year 2004 compared to pro forma EBITDA of $1,065 million in the prior year. When compared to the prior year period, 2004 EBITDA was negatively impacted by the previously mentioned $39 million first quarter decline in net pension and OPEB income and $32 million for non- cash unrealized foreign currency exchange gains in 2003, which did not recur in 2004. Excluding these two items, EBITDA increased by approximately 9% for full-year 2004 compared to pro forma EBITDA in the prior year. Capital Structure At December 31, 2004, the Company had $3,181 million of debt and $809 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,372 million. Net debt declined by $592 million compared to the prior year 2003 level resulting primarily from the cash flow from operations and net proceeds to the Company from the February 2004 IPO of approximately $287 million. Capital expenditures for 2004 increased to $493 million compared to $416 million in the prior year, which is partially due to currency translation between the years. In the fourth quarter, cash provided by operating activities was $791 million. Capital expenditures for the quarter were $245 million compared to $198 million in the prior year quarter. In December 2004 the Company completed a refinancing of its bank credit facilities, whereby it replaced $1.7 billion of its existing $2.0 billion facilities with $1.9 billion of new facilities. Under the new agreement, the Company gained greater financial flexibility by increasing the amount of its revolving credit facility and improving its borrowing terms. The majority of related fees associated with the transaction were included in fourth-quarter 2004 results. 2005 Outlook For full-year 2005, the Company expects revenue in the range $12.3 to $12.7 billion and earnings per diluted share in the range of $1.50 to $1.75, reflecting a less favorable production environment and the impact of higher raw material prices as compared to a year ago. This guidance range includes approximately $3 million of expenses related to refinancing transactions initiated in the fourth quarter of 2004. In addition, this guidance includes pre-tax expenses of approximately $8 million for the adoption of FASB Statement No. 123 Revised, which requires the recognition of book expense related to stock-based compensation, approximately $35 million related to restructuring actions and $33 million of expenses for amortization of intangibles resulting from the February 2003 Acquisition. The earnings range also assumes an effective tax rate in the range of 45% to 50%. Lastly, the Company expects capital expenditures to total approximately 4% of sales for the year. "The objectives we have set for 2005 will again stretch the resources of the organization as we brace for another year of significant commodity inflation and customer pricing pressures, combined with anticipated lower production volumes in North America," said Mr. Plant. "As our 2005 guidance implies, we expect to offset a major share of these challenges with new business growth, aggressive cost reduction efforts, and interest savings generated by prior year deleveraging activities." For the first quarter of 2005, the Company expects revenue of approximately $3.1 billion and earnings per diluted share in the range of $0.24 to $0.38. This guidance range includes approximately $3 million of expenses related to refinancing transactions initiated in the fourth quarter of 2004. Additionally, first quarter guidance includes restructuring costs for various initiatives of approximately $30 million, which constitutes a major share of the Company's planned restructuring for the year. About the Company With 2004 sales of $12.0 billion, TRW Automotive -- http://www.trwauto.com/-- ranks among the world's top 10 automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, employs approximately 60,000 people in 24 countries. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems (seat belts and airbags), electronics, engine components, fastening systems and aftermarket replacement parts and services. * * * As reported in the Troubled Company Reporter on Dec. 8, 2004, Moody's Investors Service assigned Ba2 ratings for TRW Automotive Inc.'s $1.9 billion of proposed guaranteed senior secured credit facilities, which will be utilized to refinance approximately $1.7 billion of the company's existing credit facilities and also provide some additional liquidity. Moody's will withdraw the ratings of any credit facilities that are refinanced upon TRW Automotive's execution of an amended and restated credit agreement. These specific ratings were assigned in December: * Ba2 ratings for TRW Automotive's $1.9 billion of proposed new guaranteed senior secured credit facilities, consisting of: -- $425 million US revolving credit facility due December 2009; -- $425 million global multi-currency revolving credit facility due December 2009 (which will also have multiple permitted foreign subsidiary borrowers); -- $250 million term loan A due December 2009; -- $800 million term loan B due June 2012 UAL CORP: Court Approves Amended DIP Financing Facility ------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois approved an amendment to UAL Corporation and its debtor- affiliates' debtor-in-possession financing facility with its current lenders, including JPMorganChase, Citigroup, CIT and GE Capital. Key terms of the amendment include an extension of the maturity date from June 30, 2005, through Sept. 30, 2005, and a significant reduction in the interest rates United must pay under the loan. Also, the amendment waives the January 2005 EBITDAR covenant and adjusts the minimum monthly EBITDAR targets for United going forward. The amendment also allows for a potential reduction in the minimum cash balance requirement from $750 million to $600 million if United meets a certain EBITDAR milestone. "We are pleased to have amended our DIP financing facility on favorable terms for United and our stakeholders," said Jake Brace, United's executive vice president and chief financial officer. "The willingness of lenders to participate in the amended DIP is reflective of our solid business plan." "The changes to the financing agreement reflect our belief that United has made significant progress to date in lowering its costs and executing on its business plan," Bill Repko, managing director at JPMorganChase. Mr. Brace added, "While we still have a number of difficult issues to address, including reaching long-term labor agreements with two of our unions and pension resolution with three of our unions, this amendment will continue our access to the DIP facility while we focus on those efforts and move forward with additional restructuring initiatives in the months ahead." Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Gets Four Offers for $2.5 Billion Exit Financing ---------------------------------------------------------- United Air Lines received four offers of up to $2,500,000,000 in debt financing to emerge from bankruptcy, Michael Tarm at The Associated Press reports. United spokeswoman Jean Medina, however, would not specify the financial institutions that made the offers, Mr. Tarm says. Mr. Tarm relates that the exit financing package would be contingent upon the Debtors' realization of another $2,000,000,000 in savings on salaries, pensions and operating expenses. The offers are contingent on United completing the work identified in its business plan. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., 215/945-7000) ULTIMATE ELECTRONICS: Court Okays $118.5-Mil Final DIP Financing ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted Ultimate Electronics, Inc. (Nasdaq: ULTEQ) final approval of up to $118.5 million in debtor-in-possession financing provided by Wells Fargo Retail Finance and Mark Wattles. The Debtors are authorized to: -- borrow and re-borrow up to $100 million on a revolving basis; -- issue up to $5 million of new letters of credit; -- borrow $13 million under a Tranche B subfacility; and -- borrow $5.5 million under a Tranche C subfacility. Based on testimony offered at the DIP financing hearing on Feb. 14, 2005, by FTI Consulting, it appears unlikely that the outcome of the Company's reorganization will result in any value for the holders of common stock, the Company indicated in a regulatory filing. The Company says, however, that it believes with additional capital, the reorganization will result in an ongoing business that will be good for its customers, creditors and employees. Ultimate is making no prediction about how long it'll be in chapter 11. 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 in their restructuring efforts. 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: Shareholders Lobby for an Equity Committee ---------------------------------------------------------------- Shareholders holding in excess of 16.5% of the shares of Ultimate Electronics, Inc. (NASDAQ: ULTEQ), which recently filed a petition for relief under Chapter 11 of the Bankruptcy Code, have asked the United States Trustee appoint an official committee of equity interest holders. The Shareholders say that equity is clearly "in the money," citing the fact that the Company's new Chairman and CRO, Mr. Mark Wattles, spent in excess of $4 million to purchase shares sufficient to obtain a controlling equity interest in the Company only one day before the bankruptcy filing. By a letter dated Feb. 15, 2005, shareholders Atticus Capital and Contrarian Capital Management requested that an official committee of non-insider equity interest holders be appointed to protect the interests of such constituents. "We understand that certain other shareholders have recently joined in the request," Atticus and Contrarian indicate. As stated in the Feb. 15, 2005, letter, "the Shareholders are concerned that Mr. Wattles may use his position as the Debtors' current Chairman and leading shareholder, as well as a secured lender pursuant to Tranche C of the Debtors' proposed DIP facility, to gain undue leverage and authority to dictate the future outcome of these cases, and could potentially hamstring the Debtors from pursuing various future restructuring strategies (including potential sales transactions) that might otherwise be in the best interest of all the various constituencies herein." In addition to the potential conflict of interest raised by Wattles' dual position as the Debtors' secured debtor-in- possession lender and Chairman/controlling shareholder, the Shareholders also believe that the relevant criteria for establishing an equity committee are satisfied. Namely, the case is large and complex, the stock is widely held and actively traded, the interests of shareholders are not otherwise adequately represented, the Company is not hopelessly insolvent, such that the shareholders appear to have a real economic interest at stake, and the timing of the request is appropriate. Notably, the stock price of Ultimate Electronics rose significantly following the Chapter 11 filing. Although the market price per share has fallen in the past few days after the Company made statements in open court and in various press releases that it does not believe that the outcome of this reorganization will result in any value for the common shareholders, the stock continues to be actively traded and still has a market capitalization approaching $30 million. As of the time of this release, the stock price has rebounded substantially from Feb. 17's close. Karl Okamoto, Senior Managing Director of Atticus Capital stated: "I think it was inappropriate for the Company to state in a press release that its equity may be worthless. We simply do not agree. Furthermore, it seems to me premature for the Company to have decided to abandon the owners of this business - its shareholders. This underscores the need for an Equity Committee." The Shareholders believe that the Company's enduring market value (despite the Company's adverse statements), coupled with Wattles' recent purchase of a significant amount of equity, adequately demonstrate that equity does exist in the Company. Accordingly, despite recent public announcements to the contrary, there could be a rehabilitation of the Debtors' business without adversely affecting the interests of non-insider shareholders. Ultimate Electronics shareholders interested in participating in the equity committee or obtaining a copy of the letter requesting the appointment of an equity committee or joining in the request should contact counsel to the Shareholders: Glenn E. Siegel, Esq. Dechert LLP Telephone (212) 698-3569 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 in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $329,106,000 and total debts of $160,590,000. US AIRWAYS: Inks $125 Million DIP Term Loan with Investor Group --------------------------------------------------------------- US Airways Group, Inc., has reached agreement with Eastshore Aviation, LLC, an investment entity owned by Air Wisconsin Airlines Corp., and shareholders, on a $125 million financing commitment to provide a substantial portion of the equity funding for a plan of reorganization. The $125 million facility will be made in the form of a debtor-in- possession term loan, to be drawn in the amount of $75 million (immediately upon approval by the U.S. Bankruptcy Court) and two subsequent $25 million increments. This loan would be second only to the Air Transportation Stabilization Board -- ATSB -- loan with regard to the company's assets that are pledged as collateral. Upon emergence from Chapter 11, the $125 million financing package would then convert to equity in the reorganized US Airways. Air Wisconsin, based in Appleton, Wis., is the nation's largest privately held regional airline. In 2004, its 87 all-jet fleet generated approximately $700 million in revenue and flew more than 7 million passengers under the United Express brand. As part of this agreement, US Airways and Air Wisconsin will enter into an air services agreement under which Air Wisconsin may, but is not required to, provide regional jet service under the US Airways Express brand. Air Wisconsin's arrangements with United Airlines are unaffected by this agreement with US Airways. "This agreement has a number of benefits that are consistent with our restructuring efforts," said Bruce R. Lakefield, US Airways president and chief executive officer. "As an initial investor, Eastshore is providing us with short-term liquidity and also is demonstrating support for our restructuring and interest in a longer-term relationship with US Airways. Air Wisconsin is a top- notch airline that has had its own success in completing a turnaround, so we see tremendous upside from building a business and financial relationship." "US Airways has done a remarkable job in its restructuring efforts and has built a solid foundation from which to grow. We and Air Wisconsin look forward to the opportunity to be part of its success," said Eastshore principal Richard Bartlett. Terms of the agreement will be filed with the U.S. Bankruptcy Court for the eastern district of Virginia, where the US Airways case is being heard. The DIP facility, which is subject to Bankruptcy Court approval, will be secured by liens and security interests in the same package of US Airways assets that are pledged as collateral to the ATSB, with the ATSB in the first priority position, and Eastshore in the second position. In addition to the DIP financing facility, the agreement provides for the conversion of the DIP into equity, in the form of new common stock, that will be issued in conjunction with US Airways' emergence from Chapter 11. "This agreement with Eastshore Aviation provides the cornerstone from which we can obtain additional financing and construct a plan of reorganization," said Mr. Lakefield. "While we have more work to do, this is another positive signal to the marketplace." Headquartered in Arlington, Virginia, US Airways' primary business activity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC. Under a chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it lists $8,805,972,000 in total assets and $8,702,437,000 in total debts. VARTEC TELECOM: Wants to Auction Some Personal Property on Mar. 2 ----------------------------------------------------------------- Vartec Telecom, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas for permission to sell or dispose of certain aged and unnecessary personal property (including furniture, equipment, and inventory) located at 4550 Excel Parkway in Addison, Texas. The Debtors want to hold an auction on March 2, 2005 at 10:00 a.m. The Auction has been advertised to accommodate scheduling restrictions of the proposed auctioneer, Rosen Systems, Inc. The Debtors anticipate the auction will generate $150,000 to $250,000. Richard H. London, Esq., at Vinson & Elkins, L.L.P., in Dallas, Texas, tells the Court that the continued storage and maintenance of the Property is and will be burdensome to the Debtors' estates and will interfere with the Debtors' efforts to sell or lease all or a portion of Addison Property. The Debtors will be required to incur expenses without any corresponding benefit to their estates if the request is not granted, Vartec says. Headquartered in Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81695). Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. VARTEC TELECOM: Taps Rosen Systems as Auctioneer ------------------------------------------------ Vartec Telecom, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Northern District of Texas to employ Rosen Systems, Inc., as their liquidator and auctioneer to sell or dispose of some aged and unnecessary personal property (including furniture, equipment, and inventory) located at 4550 Excel Parkway in Addison, Texas. The Debtors retained Rosen Systems to serve as auctioneer to sell the excess personal property. The Debtors agree that Rosen Systems will receive a 10% commission based on the gross selling price of the items auctioned, payable by the buyers. In addition, the Debtors will reimburse Rosen Systems for certain expenses relating to the sale and the preparation for the Auction. The Debtors want to retain Rosen Systems as auctioneer because of its expertise and extensive knowledge in chapter 11 cases. Rosen Systems is on the list of approved auctioneers maintained by the United States Trustee, and it subscribes to the blanket bond program arranged by the United States Trustee. Further, Rosen Systems is familiar with the United States Trustee's Guidelines for Conduct of Auction Sales. The Debtors have been advised that Rosen Systems maintains casualty and liability insurance sufficient to cover all of the property entrusted to it for sale. The liquidation of the Property will be a valuable source of cash to the Debtors and that the sale of the Property by auction is the most efficient means of liquidating that personal property. Headquartered in Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81695). Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. WELLS FARGO: Fitch Puts Low-B Ratings on Two $3.939 Mil. Certs. --------------------------------------------------------------- Fitch rates Wells Fargo mortgage pass-through certificates, series 2005-AR2: -- $1,905,414,100 classes I-A-1, I-A-2, I-A-R, I-A-LR, II-A-1, II-A-2, II-A-3, II-A-4, II-A-5, and III-A-1 (senior certificates) 'AAA'; -- $33,480,000 class B-1 'AA'; -- $11,817,000 class B-2 'A'; -- $6,893,000 class B-3 'BBB'; -- $3,939,000 class B-4 'BB'; -- $3,939,000 class B-5 'B'. The 'AAA' rating on the senior certificates reflects the 3.25% subordination provided by: * the 1.70% class B-1 certificates, * the 0.60% class B-2 certificates, * the 0.35% class B-3 certificates, * the 0.20% privately offered class B-4 certificates, * the 0.20% privately offered class B-5 certificates, and * the 0.20% privately offered class B-6. Classes B-1, B-2, B-3, B-4, and B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their respective subordination. The class B-6 certificates are not rated by Fitch. Fitch believes the amount of credit enhancement available will be sufficient to cover credit losses. The ratings also reflect the high quality of the underlying collateral, the integrity of the legal and financial structures, and the servicing capabilities of Wells Fargo Bank, N.A. (WFB; rated 'RPS1' by Fitch). The transaction is secured by three pools of mortgage loans, which consist of fully amortizing, one- to four-family, adjustable-rate mortgage loans that provide for a fixed interest rate during an initial period of approximately five, five, and seven years, respectively. Thereafter, the interest rate will adjust on an annual basis to the sum of the weekly average yield on U.S. Treasury securities adjusted to a constant maturity of one year and a gross margin. Approximately 85.36% of the aggregate mortgage loans are interest-only loans, which require only payments of interest until the month following the first adjustment date. The mortgage loan groups are cross- collateralized and aggregated for statistical purposes as represented below. The mortgage loans have an aggregate principal balance of approximately $1,969,422,711 as of the cut-off date (Feb. 1, 2005), an average balance of $385,859, a weighted average remaining term to maturity - WAM -- of 358 months, a weighted average original loan-to-value ratio - OLTV -- of 71.76%, and a weighted average coupon - WAC -- of 4.971%. Rate/term and cashout refinances account for 22.35% and 9.63% of the loans, respectively. The weighted average FICO credit score of the loans is 740. Owner-occupied properties and second homes constitute 93.06% and 6.94% of the loans, respectively. The states that represent the largest geographic concentration are: * California (40.11%), * Florida (6.89%), and * Virginia (5.94%). All other states represent less than 5% of the outstanding balance of the mortgage loans. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' dated May 1, 2003, available on the Fitch Ratings web site at http://www.fitchratings.com/ All of the mortgage loans were generally originated in conformity with underwriting standards of Wells Fargo Home Mortgage, Inc. -- WFHM. WFHM sold the loans to Wells Fargo Asset Securities Corporation -- WFASC, a special purpose corporation, who deposited the loans into the trust. The trust issued the certificates in exchange for the mortgage loans. WFB, an affiliate of WFHM, will act as servicer, master servicer, and custodian, and Wachovia Bank, N.A. will act as trustee and paying agent. For federal income tax purposes, elections will be made to treat the trust as two separate real estate mortgage investment conduits. WESCORP ENERGY: Looks to Raise $1.25M from Debenture Financing -------------------------------------------------------------- Wescorp Energy, Inc., (OTCBB:WSCE) intends to complete a US$1,250,000 convertible financing by Private Placement. Proceeds from the financing will be used to increase inventory for the growing demand of FlowStar's DCR Series Electronic Flow Measurement Solutions, as well as funding the future growth of the company. Wescorp Energy, Inc., is situated in the Calgary - Edmonton corridor near the geographic centre of North America's oil and gas reserves, sharing the same language and work ethic as the continent's other dominant energy capitals - Houston, Dallas and Denver. Strongly networked within this culture and a major shareholder of energy holdings itself, Wescorp has the long-established relationships and financial resources necessary to bring new energy solutions to market. Wescorp initiates testing and development with major energy players to establish industry acceptance, and then provides the sales, service and distribution infrastructure necessary to market these innovations globally and profitably. FlowStar is a 100% owned Wescorp subsidiary. FlowStar's DCR 900 Digital Chart Recorder, which was developed in late 2001, represents cutting edge technology with significant competitive advantages. The product's compact technology will replace a number of existing measurement devices and encompasses data capture and wireless transmission capabilities. * * * As reported in the Troubled Company Reporter on Dec. 15, 2004, Wescorp Energy Inc.'s financial statements show an $8.2 million accumulated deficit through September 30, 2004. This deficit, the company's auditors say, raises substantial doubt about the Company's ability to continue as a going concern. WORLDCOM INC: Mississippi Power Wants $1.5MM Cure Claim Paid Now ---------------------------------------------------------------- Mississippi Power Company and Southern Company Services, Inc., as agent for Mississippi Power and each of the other Southern Company operating companies, ask the United States Bankruptcy Court for the Southern District of New York to compel MCI Telecommunications, Inc., to satisfy its cure obligations pursuant to Section 365(b) of the Bankruptcy Code. MCI's predecessor-in-interest and Southern Company entered into an agreement for the provision of fiber optic facilities and services on August 12, 1991. Pursuant to a stipulation resolving Mississippi Power's limited objection to WorldCom, Inc. and its debtor-affiliates' Plan of Reorganization, MCI assumed the Agreement on April 20, 2004. The stipulation provides that: "[T]he Debtors shall cure any and all undisputed defaults under the Agreement in accordance with Section 8.05 of the Plan. The Debtors and MPC . . . shall negotiate in good faith to determine the nature and amount of any and all disputed defaults under the Agreement. Should the parties not be able to reach agreement on any disputed default, the parties shall promptly submit such dispute to the Bankruptcy Court for adjudication. . . ." Steven M. Abramowitz, Esq., at Vinson & Elkins, LLP, in New York, tells the Court that Mississippi Power and Southern Company have attempted in good faith to resolve MCI's cure obligations without court intervention. However, Mississippi's efforts have proven unsuccessful. According to Mr. Abramowitz, on the Effective Date, MCI's monetary defaults under the Agreement totaled $1,408,398. From the Effective Date through November 30, 2004, Mississippi Power and Southern Company also incurred costs and expenses, including reasonable attorney's fees totaling $81,714, in their attempts to obtain payment of the cure amount. Mr. Abramowitz itemizes MCI's obligations: Category Amount -------- ------ Costs associated with title research acquisition of rights-of-way $419,560 Pre-effective date legal fees, legal costs and expenses incurred by Mississippi Power and Southern Company as a result of MCI's default under the Agreement 685,523 Costs incurred by Southern Company for maintenance of the cable 217,514 Costs incurred by Georgia Power Company for maintenance of the cable 85,801 Post-effective date costs 81,714 --------- $1,490,112 These costs will increase as Mississippi Power's and Southern Company's cure amount collection efforts continue, Mr. Abramowitz notes. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) YUKOS OIL: Asks Court to Fix May 1 as Claims Bar Date ----------------------------------------------------- In connection with the development of its proposed plan of reorganization, Yukos Oil Company will be required to carefully examine the liabilities of the bankruptcy estate and formulate a structure for the treatment of claims. "It will assist Yukos to require creditors seeking a distribution from the bankruptcy estate to quantify their alleged claims," Zack A. Clement, Esq., at Fulbright & Jaworski L.L.P., in Houston, Texas, notes. Accordingly, Yukos proposes May 1, 2005, as the Bar Date by which the claims of all creditors, including governmental creditors, must be filed. "The proposed bar date gives all creditors plenty of time within which to research and prepare their claims," Mr. Clement says. In addition, Yukos seeks the United States Bankruptcy Court for the Southern District of Texas' authority to prepare and publish (i) a Notice Of Claims Bar Date, (ii) a professionally prepared translation of the Notice, (iii) a modified proof of claim form, and (iv) a professionally prepared translation of the proof of claim form to the creditors of the bankruptcy estate. Yukos proposes to modify the format of the Notice and proof of claim form to facilitate the translation process as well as to minimize the difficulty for creditors unfamiliar with the standard proof of claim format. Mr. Clement relates that Yukos has more than one and fifty hundred creditors. Many of Yukos' creditors conduct their business operations in a language other than English. 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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) * BOND PRICING: For the week of February 21 - February 25, 2005 --------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 8 Adelphia Comm. 6.000% 02/15/06 9 Allegiance Tel. 11.750% 02/15/08 30 Allegiance Tel. 12.875% 05/15/08 30 Amer. Comm. LLC 12.000% 07/01/08 5 American Airline 7.377% 05/23/19 70 AMR Corp. 4.500% 02/15/24 70 AMR Corp. 9.000% 08/01/12 75 AMR Corp. 9.750% 08/15/21 65 AMR Corp. 9.880% 06/15/20 69 AMR Corp. 10.000% 04/15/21 70 AMR Corp. 10.200% 03/15/20 67 AMR Corp. 10.450% 11/15/11 66 Apple South Inc. 9.750% 06/01/06 19 Applied Extrusion 10.750% 07/01/11 59 Armstrong World 6.350% 08/15/03 69 Armstrong World 6.500% 08/15/05 69 Armstrong World 7.450% 05/15/29 68 AT Home Corp. 0.525% 12/28/18 8 AT Home Corp. 4.750% 12/15/06 14 ATA Holdings 12.125% 06/15/10 40 ATA Holdings 13.000% 02/01/09 38 Atlantic Coast 6.000% 02/15/34 44 Avado Brands Inc. 11.750% 06/15/09 20 B&G Foods Holding 12.000% 10/30/16 8 Bank New England 8.750% 04/01/99 10 Bank New England 9.500% 02/15/96 7 Big V Supermarkets 11.000% 02/15/04 0 Borden Chemical 9.500% 05/01/05 1 Burlington Northern 3.200% 01/01/45 63 Calpine Corp. 7.750% 04/15/09 68 Calpine Corp. 7.875% 04/01/08 74 Calpine Corp. 8.500% 02/15/11 68 Calpine Corp. 8.625% 08/15/10 68 Cendant Corp. 4.890% 08/17/06 51 Chic East Ill. RR 5.000% 01/01/54 60 Comcast Corp. 2.000% 10/15/29 46 Cone Mills Corp. 8.125% 03/15/05 12 Continental Airlines 8.499% 05/01/11 75 Cray Research 6.125% 02/01/11 73 Delta Air Lines 7.711% 09/18/11 67 Delta Air Lines 7.779% 01/02/12 60 Delta Air Lines 7.900% 12/15/09 52 Delta Air Lines 8.000% 06/03/23 55 Delta Air Lines 8.300% 12/15/29 42 Delta Air Lines 8.540% 01/02/07 71 Delta Air Lines 9.000% 05/15/16 44 Delta Air Lines 9.200% 09/23/14 54 Delta Air Lines 9.250% 03/15/22 43 Delta Air Lines 9.375% 09/11/07 75 Delta Air Lines 9.750% 05/15/21 44 Delta Air Lines 10.000% 06/01/10 64 Delta Air Lines 10.000% 08/15/08 61 Delta Air Lines 10.060% 01/02/16 49 Delta Air Lines 10.125% 05/15/10 52 Delta Air Lines 10.375% 02/01/11 52 Delta Air Lines 10.375% 12/15/22 39 Delta Air Lines 10.430% 01/02/11 73 Delta Air Lines 10.790% 03/26/14 44 Eagle Food Center 11.000% 04/15/05 3 Eagle-Picher Inc. 9.750% 09/01/13 75 Enron Corp. 6.400% 07/15/06 32 Enron Corp. 6.500% 08/01/02 30 Enron Corp. 6.625% 11/15/05 29 Enron Corp. 6.725% 11/17/08 33 Enron Corp. 6.750% 08/01/09 33 Enron Corp. 6.750% 09/15/04 30 Enron Corp. 6.875% 10/15/07 30 Enron Corp. 7.125% 05/15/07 33 Enron Corp. 7.625% 09/10/04 33 Enron Corp. 7.875% 06/15/03 30 Enron Corp. 9.125% 04/01/03 31 Enron Corp. 9.875% 06/15/09 34 Falcon Products 11.375% 06/15/09 38 Federal-Mogul Co. 7.375% 01/15/06 32 Federal-Mogul Co. 7.500% 01/15/09 32 Federal-Mogul Co. 8.370% 11/15/01 30 Federal-Mogul Co. 8.800% 04/15/07 34 Finova Group 7.500% 11/15/09 45 Fleming Cos. Inc. 10.125% 04/01/08 36 HNG Internorth. 9.625% 03/15/06 66 Impsat Fiber 6.000% 03/15/11 62 Inland Fiber 9.625% 11/15/07 49 Intermet Corp. 9.750% 06/15/09 67 Iridium LLC/CAP 10.875% 07/15/05 17 Iridium LLC/CAP 11.250% 07/15/05 17 Iridium LLC/CAP 13.000% 07/15/05 16 Iridium LLC/CAP 14.000% 07/15/05 16 Kaiser Aluminum & Chem. 12.750% 02/01/03 15 Kmart Corp. 8.990% 07/05/10 72 Kmart Funding 8.800% 07/01/10 75 Lehman Bros. Holding 6.000% 05/25/05 71 Lehman Bros. Holding 7.500% 09/03/05 67 Level 3 Comm. Inc. 2.875% 07/15/10 50 Level 3 Comm. Inc. 6.000% 03/15/10 45 Level 3 Comm. Inc. 6.000% 09/15/09 49 Liberty Media 3.750% 02/15/30 68 Liberty Media 4.000% 11/15/29 72 Loral Cyberstar 10.000% 07/15/06 73 MacSaver Financial 7.400% 02/15/02 9 MacSaver Financial 7.600% 08/01/07 8 MacSaver Financial 7.875% 08/01/03 9 Metro Mortgage 9.000% 12/15/04 0 Mississippi Chem. 7.250% 11/15/17 73 Muzak LLC 9.875% 03/15/09 60 Nat'l Steel Corp. 8.375% 08/01/06 3 Nat'l Steel Corp. 9.875% 03/01/09 3 Northern Pacific Railway 3.000% 01/01/47 62 Northwest Airlines 7.875% 03/15/08 73 Northwest Airlines 8.070% 01/02/15 70 Northwest Airlines 8.130% 02/01/14 70 Northwest Airlines 10.000% 02/01/09 75 NRG Energy Inc. 6.500% 05/16/06 0 Nutritional Src. 10.125% 08/01/09 72 Oakwood Homes 8.125% 03/01/09 25 Oglebay Norton 10.000% 02/01/09 75 O'Sullivan Ind. 13.375% 10/15/09 28 Owens Corning 7.000% 03/15/09 69 Owens Corning 7.500% 05/01/05 66 Owens Corning 7.500% 08/01/18 65 Owens Corning 7.700% 05/01/08 62 Owens Corning Fiber 8.875% 06/01/02 65 Pegasus Satellite 9.750% 12/01/06 62 Pegasus Satellite 12.375% 08/01/06 62 Pegasus Satellite 12.500% 08/01/07 62 Pegasus Satellite 13.500% 03/01/07 1 Pen Holdings Inc. 9.875% 06/15/08 50 Penn Traffic Co. 11.000% 06/29/09 38 Penton Media Inc. 10.375% 06/15/11 74 Piedmont Aviat. 10.300% 03/28/06 7 Polaroid Corp. 7.250% 01/15/07 1 Polaroid Corp. 11.500% 02/15/06 1 Primus Telecom 3.750% 09/15/10 64 Read-Rite Corp. 6.500% 09/01/04 49 Reliance Group Holdings 9.000% 11/15/00 27 Reliance Group Holdings 9.750% 11/15/03 0 RDM Sports Group 8.000% 08/15/03 0 RJ Tower Corp. 12.000% 06/01/13 62 S3 Inc. 5.750% 10/01/03 0 Salton Inc. 12.250% 04/15/08 67 Solutia Inc. 6.720% 10/15/37 71 Specialty Paperb. 9.375% 10/15/06 73 Syratech Corp. 11.000% 04/15/07 25 Tower Automotive 5.750% 05/15/24 19 Twin Labs Inc. 10.250% 05/15/06 16 United Air Lines 7.762% 10/01/05 3 United Air Lines 8.310% 06/17/09 47 United Air Lines 9.000% 12/15/03 8 United Air Lines 9.125% 01/15/12 8 United Air Lines 10.250% 07/15/21 8 United Air Lines 10.670% 05/01/04 8 Univ. Health Services 0.426% 06/23/20 57 United Homes Inc. 11.000% 03/15/05 0 Westpoint Stevens 7.875% 06/15/08 0 Winn-Dixie Store 8.875% 04/01/08 65 Zurich Reinsurance 7.125% 10/15/23 63 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. 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